Full text of Commercial and Financial Chronicle : June 19, 1947, Vol. 165, No. 4604

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2 0

ESTABLISHED 1S39

Financial
Reg. U. S. Pat. Office

Volume 165

Number

4604

New

Unscrambling
the Indian Eggs

prices

not

since their de¬

war

b y

ob¬

now

can

occur

and

The

will

tionships.
Every one is
high
and

Nevertheless,

decision, reiw^^ -b

the

implications.

latter

also

are

fairly important.
There

that

now

reason

wholesale

hope

destruction
of
property through civil war will be

avoided,

at any

rate it will be

confined to relatively
its
in
the

narrow

lim¬

principal
contested
damage caused up to
now, though substantial, has not
impaired India's economy. In the
The

areas.

absence

further

(Continued

one

prices.

high

living,

higher
higher prices

with

-without complaint.
One oi the
relations I shall point
out is that
high prices and

high

incomes
coin.

are

The

two sides of the same

serious

charge against

high prices, and the

I will
direct your

they will
that they

are

one

to which

attention, is that

cause

buyer's strike;

evidence of

(Continued

substantial

page

continuous

declines

page

un-

24)

34)
*An

address

before
the

Leland Electric

interest rate, together with

"pegging," is resulting in a squeeze to white collar workers, pen¬
sioners, and investment institutions and is also discouraging thrift.
We

have become so accustomed
that many of us now think of it

curve

to
as

present

the

by Mr. Newbury
Regional Meeting of

Comptrollers

America, French
June 13, 1947.

Institute
Lick

yield

convex

In this talk I want
to

show

present

had

We It
See

origin,
defla¬

the

early
that

Patron to the World

the

The

conception of the United States as patron to the world
being carried to ridiculous extremes, and the sooner the
fact is
recognized both here and in Europe the better for

which

upon to assist) in a style expected to
bring at least a measure of contentment to a discontented
continent; unless we "put Europe on its economic feet
again," as the saying goes; and unless we ship the
goods
necessary for the purpose without thought of
payment, we
shall not only risk
being engulfed in a world filled with
strange political doctrines, but suffer some sort of
atrophy
of our own productive
capacity.

Adminis¬

able gold

pol¬
that the
which

icy;

curve

thus

was

Stephen

M. Fester

ued

under

tions.

point
the

Finally, I should
out

some

present

some

curve

the

effects

and

draw

conclusions

that I hope you
may find at least provocative.
Prior to 1930 a
yield curve con-

continued
*An

fore

page

28)

address by Mr. Foster be¬

the

New

York

State

Bank¬

Que.,

ers

merely to label them nonsense—and pass
analysis of current world problems.

Springs,

(Continued

26)

page

♦■'

State and

R. H. Johnson & Co.
Established

STATE

1927

Municipal

MUNICIPAL

AND

Bonds

BONDS

INVESTMENT SECURITIES

Hirsch & Co.
Afembers

New

and

Stock Exchange
Exchanges

25 Broad St., New York
4, N. Y.
HAnover 2-0600

Chicago

Teletype NT 1-210

Cleveland

Geneva

64 Wall

Streat, New York

York

other

London

(Representative)

BOSTON

Troy

PHILADELPHIA

Albany

Baltimore

Buffalo
Dallas

Pittsburgh

THE NATIONAL CITY BANK

Syracuse

Bond

Dept. Teletype: NY

THE CHASE

Members
New

Wilkes-Barre

Williamsport Springfield Woonsocket

Bond Department

HART SMITH & CO.

OF NEW YORK

Harrisburg

Scranton

York

Security Dealers

WILLIAM ST., N. Y.
Bell

1-708

Assn.

HAnover 2-0980

Teletype NY 1-305

New York

Montreal

Toronto

NATIONAL BANK
OF

THE

CITY OF

NEW YORK

SERVING SOUTHERN
CALIFORNIA

Air

SINCE 1927

Products, Inc. Com.

& "A"

Detroit Harvester Co. Com.

Hfige/tsefferSDurst, Inc,
Investment Securities
626

$2.40 Conv.

OTIS & CO.
(Incorporated)

ClAREMONT

•

PASADENA

•

Established

REDLANDS

CLEVELAND

MEMBER LOS ANGELES STOCK
EXCHANGE
DIRECT PRIVATE WIRE TO NEW
YORK

1899

New York

Cincinnati

Chicago

Columbus

Denver
Toledo Buffalo

120

York

Stock

Exchange

Broadway, New York 5, N. Y.
Telephone:
Bell

Company
Preferred

Analysis

and Dealers

upon

request

Reynolds & Co.
Members New

Power

for Banks, Brokers

Preferred
on

Portland Electric

Prior

Raytheon Manufacturing Co.
*Prospectus

Brokerage

Service

Co.

Common

ST.

Bond

Common

^Georgia Hardwood Lumber

Corporate Securities

SPRING

ANGSLES

Underwriters and
Distributors of Municipal
and

TRInlty 5761
LOS

Emery Air Freight Corp.

REctor

Teletype: NY

Hardy & Co.
Members

New
Members ;New

York

Stock

York

Curb

2-8600

30 Broad St.

1-635

TaI. Dltrbv 4-7800

Exchange
Exchange

New York 4
Tele. NY 1-733

wartime policy which is
inappro¬
priate to present economic condi¬

to more rational

de¬

veloped is now
being contin¬

Association, Quebec,
Canada, June 16, 1947.

Current proposals and current
arguments to this
effect appear, however, to be
persuasive to so many that

it will not do

was

tration's highly
question¬

The

called

are

'30s;

maintained by

all concerned.

that

curve

its
the

tion

Aerovox Corp.
Havana Litho. Co.

the

normal.

our

^notion that we are obligated, morally
as
they
did or otherwise to bind
up the wounds (political as well as
^■^^fetononiie) in Europe resulting from a war which Europe
-vr
d War,
started is
strange" enough. \ The argument reaches new
and, naturally,
is in favor of
paying high heights of absurdity when it is reasoned that unless we
But we all
accept the support much of
Europe (to say nothing of other regions
incomes
that

been

the

cost

yt V.

far

about
prices

Co.

yield

interest-

talking

•

Insurance

EDITORIAL

mental rela¬

not alto¬

Life

ing funda¬

par¬

the imil

FOSTER*

-3>

bring out

some

gether removed the risk of
grave
civil
disturbances, the chances of
..a
m&iov.uphor U.W'-'
••

little attention has
paid to its economic

peacetime,

influences and

war

York

price situation

new

principal

Owing

result of

are

ap-^

prospects
thro ugh the

ties concerned
received with great relief
in
Britain. For, while it has

moved.

ness

was

cations of the

de¬

partition
o f
dia by all the
Einzig

discussion of prices and the relation
of prices to business
prospects is timely because
high prices are very much in the news,

Brit¬
ish planforthe

Paul

sees

proach to busi¬

acceptance

Dr.

Calculates

year.

STEPHEN

Advisor, New

Monetary expert reviews interest rates since 1931, and shows condi¬
tions which led to
declining trend. Stresses heavy U. S. gold accu¬
mulation and wartime
"pegging" policy as leading to low rates.
Points out policy is
inflationary and should not be continued in

declining business.

LONDON,
ENG.

By
Economic

drop of 10% in
only if income payments decline 25% and con¬

viated.

the

Rate Controls

Corp.

Says present circumstances differ

tends recent stock market breaks

India

struction

Copy

NEWBURY*

radically from those of other postwar inflations, and

invest¬

ments in

early depression.

cline in labor costs in

now

encouraged
retain

look for

not

Says Brit¬
are

Asserting high prices and high incomes are two sides of same
coin,
Mr. Newbury sees both
undergoing gradual adjustment, but does

reports general relief in
Britain regarding
plan to partition
India, but points out economic diffi¬

ons

Director, Westinghouse Electric

Einzig

culties that will result.

Price 30 Cents

High Prices and Business Prospecfs Implications of Interest

By PAUL EINZIG

Dr.

York, N. Y., Thursday, June 19, 1947

ira haupt &co.
Members New York Stock
Exchange
and other Principal Exchanges

111

Broadway, N. Y. 6

REctor 2-3100
Boston

Teletype NY 1-2708

Telephone:

Enterprise 1820

COMMERCIAL &

THE
2

Thursday, June 19, 1947

FINANCIAL CHRONICLE

(3226)
'.Trading
x,

Markets in;'.
/

Rails

Professor of

Preferreds

Commons

Executive

Aereo
Higgins, Inc.

Expreso

Established, 1920

1942,

Board's contentions

Members N. Y.

A1~

charge"

Vanderhoef & Robinson
York Curb Exchange
Street, New York 5

New

Members

SI Nassau

the

Teletype NY

Bell System

implications

of May
WftIter E. Spahr

to be made on

Public Service

Engineers

$15,269,000. It is
Reserve Board
that "This action will add about
$60 million to the receipts of the
approximately

Rights

Gulf States

Utilities

Request

within the province

calendar
first time

vaded

Members

New

■

120

York

Is There

Co. WD

Iron & Steel
Finishing com. & pfd. ;

Taylor Wharton
U.

Trust
Northern New England
United Piece Dye Wks.
United Artists Theatre
Boston & Maine R.R.

if I would

the

same

subject.

Fabrics

son,

Time, Inc.

with
Parkin¬

many

Dealers Assn.
Hanover 2-4850

Y. Security

counterfeit

j_
Mr. Parkinson's

point of * view

important

cost

demands

inflationary

to you my
problem of "too much

money,"

that

you

may

see

Trading Markets in

by Mr.

New York State

American-La France

Sproul, before

for wage

Securities

Asst. Mgru

WALTER KANE,

least

far-seeing man¬
credit supply is
the job of the
System,, but the
Reserve System is not

Federal

increases.

HEANEY, Mgr.

MICHAEL

will

Joseph McManus & Co.
Members New
Chicago

York Curb Exchange

Stock Exchange

New York 6

Broadway

Teletype NY 1-1610

Digby 4-3122

We Maintain

bank

cial
ment

nance

purchases

Govern¬

securities—funds used to fi¬
the destruction of war,

not

production of goods for peace¬
time consumption. (Mr. Parkinson

said

Active Markets in

little hyperbole when
this was precisely like
a

redundant

The
forces

down,

money

supply

interest rates
and the maintenance of low
prices up and

interest rates

ernment

especially for Gov¬

Troster,Curries Summers
Members N. Y.

74 Trinity

Security Dealers

Detroit

Cleveland

Wires to

Private

financial policy there

Pittsburgh

Co.

Butolo

Gold

;' ■

Minn.

Mfg.

& Ont.

Canadian

Standard Stoker

Paper

Department

Transmission

•

Water

Brook

—

SOLD

170 PINE ST., N. Y. 5 WHitehall 4-4970 > I

Members N.

JL15

Y. Stock

BROADWAf

Telephone

BArclay 7-0100

Exchange and Other
...

Principal Exchanges

NEW *ORK 6, N, Y. „
Teletype NY 1-672

Conv.

$1.25

Conv.

QUOTED

90c

Conv.

NEW YORK 5

.ESTABLISHED 1890

2-9300

request V ' *' -

Company

Preferred & Common

Reynolds & Co.
Members New

Tel. HAnover

*UniversaI Winding Company
—

INCORPORATED

STREET

•

Preferred

•Prospectus on

37 WALL

Alloys,

Preferred

*Twin Coach

Service

Common

BOUGHT

Goodbody&Co.

G. A Sax ton & Co., Inc.
Teletype NY 1-609

Scranton Spring

J-G-White 6 Company

available to

St,: Louis

Solar Aircraft Company1'
90c Conv. Preferred
'

Common

British Securities

Securities

$1.10

Gas Corp.

'90

Gaumont-British
Scophony, Ltd.

(Continued on page 30)

Rhodesian Selection

Brown

& Milling

Ass'n!

HA 2-2400
1-376-377
,

Place, N. Y.6

Teletype NY

obligations is the heart

of whatever

U. S. FUNDS for

United Kingdom 4 %

Abitibi Pow. & Paper

^National Alfalfa Dehydrating

for the doing its job because it has fallen
increase in the under the control of the Treasury.

Grinnell

only

Unlisted

Curb and

Federal Water
.

^Standard Ry. Equipment

accomplish this, astute,

Dictaphone

i-iiii

Acme Aluminum

General Portland Cement

banks

Teletype NY

(3) The principal reason

Chamber of Com¬ indulged in

June 12, 1947.

merce,

(5)

our

shared by disproportionate
it may money supply has been commer¬

helpful to present

♦Remarks

Giddings & Lewis

?,•+.' «'

Ifltw vr..l
J * X .

1 •

V.ALL

/vt5; Cv v

Members

r' " ;

— fiat
money,
surely not counter¬

(4)1 The supply of money
have to be reduced, or at

the

*Prospectus
dealers and

Jf X

•[

money

perhaps, but
feit money.)

others; and I think

views of the

1-1126 & 1127

in his address. He

suspect,

which,

&Teei\e<miCompan^

forth

set

the

but I was

ably

skillful, patriotic,
economic situa¬
agement of the
presses prices upward, and
needed.
This is
reason for
the increased
Federal Reserve
living and the resultant

tion—it

Allan Sproul

much interested

Argo Oil

•

burden of

influence

to debate
M r.

and wherein

agree

most

the

want

I don't

Albert Pick

^Tennessee Gas St

of .mcmey;
Holds
consistent

prevented from increasing further,
take the if its inflationary effects are to be
summarizing;
.
j
avoided. This can be done in only
(1) There has been a tremen¬
two ways—by achieving a surplus
dous increase in the money supply
in the Federal budget and paying
during and since the war, and the
off debt, or by refinancing bankpresent supply of money bears rio
held debt with longer term bonds
proper relation to the volume of
and a higher coupon attractive to
production and business.
permanent non-bank investors.
(2) This has been and still is

not talk to you

Int'l Detrola

rtqvj

rot

y.'t-V't.iK.J

risk of

asked

think,

Chemical

N. Y. 5

utx mm

'%Prug?*efjj.1

Bank of -.Ww York •

argument was, if I may

dent,
sensing
a
debate, I

Swasey

Bell Teletypes—NY

•>

Parkinson's Argument

The

Presi¬

Your

Foundation Co.

;

copy

son's remarks.

Moxie Common

37 Wall St.,

Com.

Packing Common

AJ-.iJU

■

of hearing a talk, "Too

disagree.
Mr.

Parkin¬

Mr.

Newmarket Mfg.

Members N.

Grimm

for" a

Standard Eng.
Punta Alegre Sugar
Detroit Int'l Bridge

Lea

wherein

caused
to
ask

Peter

Aetna

Hood

way

which

Title Guaranty &

Warner &

had the pleasure

Tide Water Power
»

(Va.)

Stock

Common

Stubs
New Eng. Electric System
j
Gen'l Aniline & Film "A"

Electric Bd. & Share

Central States Elec.

Much Money," by your
former president, Thomas Parkinson.: Some of the newspapers, in reporting the talk, gave
it
little more spice, even though it was already pretty hot < in spots, and presented
March you

1-1227

Teletype NY

System spokesman

Last

i."

flu

Actual TiYarket i>

I U

WOrth 2-4230
Bell

discusses in detail Mr. T. I. Parkinson's warnings about daggers
over-supply. ; Concedes "we have too much money," but ascribes this to war's requirements/
Reserve System is not subservient to Treasury; both together are taking all remedial steps
v/ith high production, full employment, and foreign emergency.

Virginia Electric Power

120

SPROUL4

President, Federal Reserve

Reserve

-•>

Baltimore Stock Exchange
Broadway, N. Y. 5

Members

v; i

Carborundum Cd.%'%

31)

page

Really "Too
By ALLAN

YORK S

2-7815

& Pfd.

International Elevating

■m

Curb Exchange

Tel.'REctor

power

Stock Exchange

BROADWAY, NEW

;

Elk Horn Coal Com.

MCDonnell &fo
New York

province of Congress.
given the Reserve
tax
Federal Reserve

the

Under Section

■tf

percentage

the -small"

from

r
The
7 of the Federal Board
Reserve Act,
Congress proViv
l
that the earnings of the Re?u 1«

of Congress.

year."
Although this is the

Bought-—Sold—Quoted

;V,v v, Kingan & Co.
or any other-percentage
Centrifugal Pipe
earnings for any year,

surplus, as specified in
Section 13 (b),"(e), in connection
with provisions for industrial ad¬
vances;r, should be paid' to ; the

disturbing

May, McEwen & Kaiser

affecting

v:'\j^

and

arresting

matter lying

this

for

government
on

the

estimated

Common

Prospectus

to amount to

24, and was

April

•-

aside

reasons

■:

mmZL

;

their

518), was

(p.

branch offices

Direct wire* to our

aspect of this action by the Board
is the fact that it,, rather: than,
United States Treasury. •.*
■ •
Congress, has decided that a cer¬
tain
percentage of the Reserve
Board Has Exceeded Authority
bahks' net earnings shall be paid
In levying this so-called "inter¬
into the United States Treasury.
est charge" or tax on Federal Re¬
No law
authorizes the Reserve serve notes, to reduce the net
Board
to
determine what per¬
earnings of the Reserve banks for
centage of the ^Reserve - banks' 1947 by 90%, the Reserve Board
earnings shall be paid to
the has, in the opinion of this author,
United States Treasury.
That is exceeded its authority and in¬

in
"Federal
Bul¬

letin"

the

and

given for it.

^ An

that 90%

the. Reserve

.of

action

Board's

Reserve

1-1548

in the opin¬
of this author, the nature and

factors involved are,
ion

NY 1-1557

2-0700

HAnover

J^ew Orleans, La.-Birmingham,Ala.

has been
dendsy should be paid into* the
placed on the Federal Reserve surplus fund of each of the Re*:
notes outstanding, the important
serve; banks.
It does not provide^

earn¬

York Stock Exchange

St, Mew York 4, N. Y.

25 Broad

after .expenses and pay¬
- •.
ment of annual (cumulative) divii
banks,

System that a tax

serve

Netp

Members

—

———:

'• '

1 9~
in the history of the -Federal,Re¬

Board

t h e"

COrtlandt 7-4070

Telephone

ings" are to
be paid to the
Treasury. The
first payment,
covering the
first
quarter
of
1947, said

Mfg. Co.

Worumba

Steiner, Rouse & Co.

1947, the Reserve Board stated thai it had in¬
of the Federal /Reserve Act to levy a so-called
Federal Reserve notes in circulation as a means of reducing by 90%

year

"excess

WANTED

BID

Bought—Sold—Quoted

under Section 16

These

1947.

"A"

Class

the

for

banks

serve

Savoy Plaza

irrelevant.

•

earnings

the

3/6s, 1956

of Federal Reserve System

(Z-2040) tof April 23,

release

"interest

•

are

voked its authority

Savoy Plaza

Louisiana Securities

Committee on

for decreeing an "interest
earnings for 1947. Says this is unauthorprovision in Federal Reserve A:1 and which
only for a tax on Federal Reserve notes outstanding in excess of gold certificates. Points out
Federal Reserve Board took similar unauthorized action to save banks from a legal tax. Holds

provided

SECURITIES CORP.

Security Dealers Assn.
Nat'I Ass'n of Securities Dealers, Inc.
40- Exchange PI., N. Y. 5 HA 2-2772
BELL TELETYPE NY 1-423

Vice-President, Economists' National
Monetary Policy
yV

Alabama &

University

charge" on Federal Reserve notes up to 90% of surplus
ized by Congress, which in 1933 repealed the franchise tax

Lear, Inc.

KING & KING

Economics, New York

Board of Governors

Spahr takes to task

Dr.

•

SPAHR %';• "

By WALTER E.

% '"'-."/'V

;

Old Reorg.

Out of Bounds Again

Federal Reserve Board

-V

(

Standard G & E, Com.

Tele. NY 1-1815

120

York Stock

Broadway,. New
Bell

Exchange

York 5, N. Y.'

REctor 2-8600
Teletype: NY 1-635

Telephone:

Volume 165

INDEX
Articles

and

We Mnst

News

Page

Implications of Interest Rate Controls—Stephen M. Foster Cover

High Prices and "Business Prospects—F. D. Newbury-...
Federal Reserve Board Out of Bounds Again

Cover

[ buy anti-Communist

i 2

Really "Too Much Money"?—Allan Sproul-.--' 2
.

Future of Our Exports—Hon. Willard L.

•.

„

"'h

•

t '

•

Thorpl^™^**-'; 4

It cannot compete

dust.

sensati

Davidson, Jr

with

Optimistic Pessimist!—Jules Backman

write

editorial

a n

would

which
I Am

news.

make Daniel

Building Controls Soon to Be Removed—Frank R. Creedoni

Webster

look

Argentina's Shift to Creditor Status—Elba A. Gomez del Rey

pool

player..
5%
of
the
.

Industry's Responsibility for Employment
—Emerson

people

World Bank Loan to France and Future of Foreign Private

—Max

Our Economy

write

■

Winkler

The Military Money Muddle—Herbert M. Bratter_
Our Interest in German Foreign

Edward

constable

the

McCloy Defines World Bank Relations

to European Relief

Freer of FTC Urges More Merger Curbs.—-I— 14

National

Guarantee

Committee

Cyrus S. Eaton Asks Capitalists to Seek Labor's Support...

superceded by the
doctrine, it would

ever

mean

treadmill of the ' state for

Flexible Exchange Rates.

the people; your right to con-*
duct your affairs would be at an
end, the goodwill and assets, all
your possessions, would be at an
end. Your key to your home, un¬

Requests Exceed $2}^ Billion.

to the state..

we,

Kielmann

SEC Lifts Curb on Sale of State-Banned Issues

Rep. Kean Wants Treasury to Use
Pineo Says World Bank Loan

der

Communism, ' would

The press to be

Regular Features

form

(EditorialCover

Bank and Insurance Stocks....*

Business Man's Bookshelf.

;

Canadian

...

Securities...

Field

..........................

............

Einzig—Unscrambling the Indian
Eggs
......Cover

Bargeron.......

Indications of Business Activity.

Mutual

News—Carlisle

Funds

—..

About Banks

News

and

Public

Real

Companies

Salesman's

Securities Now in

Whyte Says)......

a See

article

$25.00

and

per

per year.

Note—On

WILLIAM DANA SEIBERT, President

WILLIAM D. RIGGS, Business Manager

Thursday, June 19, 1947
Every Thursday

teftfgfng Issue)

issue

—

|
;

(com-

bank clearings,

135 S. La Salle St.,
i telephone: State 0613);

Gardens-, London,

Drapers'

New

E. C„ Eng¬

land, e/o Edwards & Smith.

postage extra.)

Monthly,

the fluctuations In

It is

York,

Interiors

Sifton, Department of

Y„

establish

workers'

govern¬

Haile Mines

ment."

U. S. Finishing

Federal Power Commis
"Ownership
will
become

Olds,
sion:

Com. & Pfd.

and more divorced from any

active part in

the business Of so¬
will cease to

ciety. The owners
be necessary."

J.K.Rlce,Jr.&Co.
Established 1908

Trippett of OPA*. "Take control
of

the

abolish

Members

and
government;
present
capitalistic

industry

system and build a workers'

Security Dealers Assn.

REctor 2-4500—120

Broadway

Bell System Teletype N. Y. 1-71*

public."
Ex

Wallace,

Vice

President:

government can't take its
heavy hand off of business after
the war.
Furthermore, no Silas
Marher will be allowed to close
"The

his plant for banking reasons
let his workers starve."
Mrs.

Evelyn

Haytian Corporation
Punta Alegre

and

U. S.

Resources

which

America

President

urged

report

Sugar

Susquehanna Mills

Planning Board, Report on Post¬
war

Sugar

Lea Fabrics

Chief

Burns,

Author of the National

the

Congress: "So¬

ciety will have to devise methods
that would refuse individuals the
right to make what use they wish
of. their own labor and property."

DUNNE SCO.
Members New York Security Dealers Assn.

25 Broad St., New

York 4, N. Y.

WHitehall 3-0272—Teletype NY 1-956

will be spent."

What

LeRoi Company

Happen Here

Can

happened to Hun¬
gary can happen to the U. S. A.
Those men in appointed key po¬
Tugwell,
Governor
of
Porto sitions in government are at¬
Rico; ."Business will logically be
tempting to make it happen. That
required to disappear."
is a fact, not a theory.
i
To endorse this, Senator Byrd
Berle,
Assistant
Secretary of
has stated in 1942: "The people
State: "The
jgovernment will grad¬
this dictatorship
ually come to own most of the must realize
has

production plants in the U. S."

Common
BOUGHT

Remarks

by Mr.

Hutton

be¬

—

SOLD

—

QUOTED

FIRST COLONY

CORPORATION

thing born of war. It was
conceived 10 years ago, when the
New Dealers, came into office and
is not

tiptoed * toward
the
abandonment of government by
stealthily

1947.

(Continued

page

New York 5, N. Y.

52 Wall St.

Tele. NY 1-2425

Tel HA 2-8080

28)

TITLE COMPANY

♦♦Stern & Stern
We

CERTIFICATES
Bond &

fr-

are

Textile, Inc.

interested in offerings of

**Offering Circular on request

*"**

Mtge. Guar. Co./

♦Public National Bank

High Grade Public Utility and Industrial

Lawyers Mortgage Co,

Mtge. Co.

Prudence Co.

tinder

the Act of

& Trust Co.
*lst

PREFERRED STOCKS

Members

United States/ U. 8.

Territories

and

Members

quarter analysis on request

♦♦♦Rome

Spencer Trask & Co.

New

York

IS Broad St, N.T. S
Bell

Stock

York Stock Exchange

Street, New York 4

Members

TeLt

HAnover

2-4300

New

York Curb

135 S. La Salle
~

Tel

Exchange

1-20.13

C. E.

Albany

Boston

Worcester

request

Unterberg & Co*
Security Dealers Ass'n

81 Broadway, New

Andover 4690

Teletype—NY 1-5
Glens Falls
Schenectady

Analysis

Members N. Y.

St., Chicago 3

Exchange

WHitehall 4-6330

Teletype NY

New

25 Broad

Cable Corp.

4% Conv. Preferred
***

Members

March

Newburger, Loeb & Co

Subscriptions

HANOVER 2-0612

Gulf States Utilities

Subscription Rates

Possessions,

Exchange

NEW YORK

ST.,

we've got a war on—a war

them

they who have been
sniping at our Republic form of
government?
■

Westbury, Long Island, June 10,

N. Y. Title &

| 3, 1679.
.

WALL

Sugar

American Overseas Airlines

capitalistic shell game
and be - damned.
Tell

sink

can

are

eign subscriptions and advertisements must

1942, at the post office at New

Coffee

Assoc.

peacefully, if possible,
otherwise, if necessary."

and

fore, the Long Island Association,

Reentered as second-class matter Febru¬

SB,

Exch.

Curb

TEL.

Lawyers Title & Guar. Co,

Company

ary

York
120

York

would do it

One's judg¬

for fort

*r-t,

Other Offices:
|

government and shelved the Su¬
Court, we socialists would
nationalize
as
many
large
in-,
dustries as we could chew.
We

Exchange
Member

Members New York Stock
New

preme

than one's in¬

(Foreign postage e*xtra.)

account

CO.

FARIt &

the rate of exchange, .remittances,

etc.).' 1

atate and fcity news,

Chicago 3. pi.

—

State Depart¬
"Having once captured the

ment:

market quotation

records, corporation news,

[

year.

be made In New York funds.

per

Record—Monthly,

Record

PRICE

2% sales tax in New York

(general news and ad-

and every Monday

Btatistical

$38.00

(Foreign

Earnings

HERBERT D. SEIBERT, Editor & Publisher
*

•

$35.09 per year;

Quotation

year.

Monthly

banking."

Blanchard,

money

Who

Other Publications
Bank

and

print, it as news after it does hap¬

24th Edition

industry

commerce,

wing to make it happen, our press
will '* never * have
the chance to

16.
page 7.

Canada,

facturing,

page

Union,

"Congress

enact laws to provide
for the ownership/operation and
management of j business, manu¬

pen.
on

SUGAR

COMPANIES

power

............

Washington and You.'......

$25.00
'

MANUAL OF

Assistant Attorney
shall
have

Aimlee,
General:

Industry

WHitehall 4-6551

Telephone:

produced."

and how much is to be

Hansen, of the same board:
"Congress will surrender to the
administration the power to tax
and to direct when and how the

Registration...

STREET, NEW YORK

WALL

Federal Trade Commis¬
government will pro¬
market and say what

press talks about this, in terms of
what can happen by those plan-

Tomorrow's Markets (W:*iter

S. Patent Office

REctor 2-9570 to 9576

Other Countries, $42.00 per year.

WILLIAM B. DANA COMPANY, Publishers
25 Park Place, New York 8, N. Y.

>.".... ;v*

better

print the news of those sniping at
our
constitution,
to erode our
Bill of Rights, to make our Dec¬
laration of Independence, one of
Dependence based upon the doc¬
trines Of Communism; Unless the

Corner....

Dominion

The COMMERCIAL and

.;.

Pan-American

Weekly

FINANCIAL CHRONICLE
Reg.

Estate Securities.....;

Securities

*See article

Trust

Utility Securities.........

important and a
"must" program to have the press

Report.

Published Twice

Governments...'

The State of Trade and

Washington Ahead of the

From

Reporter

Railroad Securities

Dealer-Broker Investment
Recommendations

Our

Our Reporter's

formation.

Observations—A. Wilfred May.. ;,'

people.-

belong

free should in¬
The press cre¬

public opinion.

ment

NSTA Notes...

Prospective Security Offerings.

Coming Events in the Investment

the

ates

Page'
As We See It

earth.

which rests the

upon

communistic

Banking—The Heart of Free Enterprise

foundation

the

document

freedom

strongest

goodwill and assets of all private
and free enterprise and liberty.

—William

nation

Loans..:

"The
the

This

Opposes Federal Reserve

Los Angeles Bond Club Organized..

Durr,
sion:
vide

makes America

the

Truman's Veto of Tax Bill Sustained—

"The whole

ter document.

The Canadian Dollar Discussed by Bank of Nova Scotia^____ 16

9^ Wall Street.

monwealth bonds."

him, > as it should to the press,
just this: It is our bread and but¬

obsolete stocks and

surrender them in return for com¬

act.

3. Herbert Case Honored—~

bonds

it's odorless!

easy,

bonds,

land,
buildings
shall be required

Government, they say, is for
the politicians. The Constitutional
Bill of Rights should convey to

of the stocks,

owners

it's

Just dump your

Board:

Labor

War

Porter/ of
"All

mortgages,
equipment

act to those who refuse to think and

Hinshaw Bill's Passage Seen Vital to States and Local

dry

clean,

—

——

kiss

housemaid, dramatize it,
and 95% of the people would read
it. The responsible American citi¬
zen
has withdrawn from politics
and apparently is indifferent to
public questions. They have sur¬
rendered their rights to think and

Our Foreign Aid Policy—Herbert Hoover---^6

Economists'

grounds that he stole

from the

Depression in 1950?—A Challenge—Alonzo B. May—22

Governments

F. Hutton

attack¬

ing the local

Trade—M. S. Szymczak____ 18

edi¬

torial

Banks Are in Strong Condition—Roger Wt Babson_^_19

press. I
know I could

would

their

Lending—Ernest H. Weinwurm________

International Lending Policies—The Effects

read

Schmidt

COLLECTION

juicy divorce proceeding or any

of^

n a

could

The Employment Act and Economic Outlook

Nourse__

remove

kind

other

;

—Edwin \;G:

will

To talk about the Constitution and Bill of Rights sounds as

cornier

SANITARY GARBAGE

contrary, dissipation
only remaining restraining hand
on

It's

High Personal Taxes Slash Stock Values
—Clinton

with dollars) that

cure

economic power

our

and

press,

in world.

We Must Fight for Freedom—Edward F. Hutton_„_^__«... 3
I

»llCHTfDSTflll

bar associations, businessmen, and
fight the Communist challenge. Declares we cannot

churches to

;

--Walter 'E.

Hutton -calls

Mr.

Fight for Freedom

By EDWARD F. HUTTON*

Is There

(3227)

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4604

York 6, N. Y.

Telephone BOwHnR Greet* 9-3565
Teletype NY 1-1666

THE COMMERCIAL

EST

By HON.

WILLARD L. THORP*
•

which $9 billion has already been dis¬
grants are necessary to maintain present

of $13 trillion—of

Declares new

level.

export

I doubt if

Abitibi Power

world was done on as

for the
ternational

Bendix Home App.

some

post-war

There.were

the

Chicago R. I. & Pac.
General Machinery
General Tin

great step

forward towards

economic recovery.

. .

postwar

the

Under

fortuitous fac¬

have

Hydraulic Press
Jack & Heinz

Lanova*

& sy4&

Moxie

Nu-Enamel

Willard

Thorp

institutions were to

of life and which
adequate resources
with
which
to
purchase them
ing concern and can give us all
abroad.
Its purpose was essen¬
lope that a way has been found
;o maintain peace on earth.
The tially to maintain life, although it
did distribute some basic rehabili¬
advance planning in the political
tation items like tractors and sew¬
field has served its original pur¬
ing machines.
It also assisted in
pose and a fresh approach to the
the
repair of railroads, bridges
problem of dealing with interna¬ and the
like, without which even
tional problems and controversies
relief supplies could not be dis¬
has been initiated.
We must now
tributed within the countries in¬
pass on to the difficult stage of
volved, and in the restoration of
developing and strengthening the
other equally essential facilities,
cal

Liberty Aircraft Prod.
Majestic Radio & Tel.
Michigan Chemical
Minn. & Ontario Paper
Missouri Pac.

plan, four

ap¬

It is

peared.

Hoover Co.

basic necessities

period.

The United

Nations is now a go¬

did

have

not

"Why won't you sell me a

new

Philip Carey
Polaroid
Purolator Prod.*

High Personal Taxes

institution to

ganized fashion.

Com.t

Stromberg Carlson
.

Textron-Pfd.

Upson Corp.*
U. S. Air Conditioning
United Artists*

United Drill & Tool "B"

economic

the

institution was
International Bank for

Slash Stock Values
By CLINTON DAVIDSON, JR.

Economist, Fiscal Counsel, Inc.

Market analyst points out high income taxes

The second new

field, there
was also a plan, fashioned to meet
the difficult postwar period.
Well
before the end of the war, the con¬
cept of lend-lease had been estab¬
lished, thus going away with one
of the great obstacles to any post¬
war recovery.
Occasionally, men
do
learn from experience, and
this was a clear lesson from the
last war.
Under this approach,
the burdens of war costs on our
In

Remington Arms

the

Reconstruction and
One

determine market

•

Development.

its functions was

12. 1947.

Vacuum Concrete*

break

Bought—Sold—Quoted at Net Prices

Amer. Gas & Power

EASTERN

CORPORATION

Com.
NORTHERN INDIANA

Derby Gas & Elec.
Federal Water & Gas

PUBLIC SERVICE CO.

Lays
1946 stock market
desire of speculators to cash in on capita! gains,

due to

investors to

and

says

large incomes, there were not enough
Sees diverse trends in speculative •

and because of high taxes on

cushion the decline.

and investment

stocks.

off a substantial part of the
demonstrated by the recent low level
of industrial stock prices relative ^—
;——
ket value would benefit small in¬
to
corporate
profits.
Whereas
vestors as well as large. In other
many investment advisers believe
recent low stock prices have dis¬ words, investors with incomes be¬
low $5,000 should be interested in
counted the forthcoming business
recession, there is reason to be¬ reducing tax rates on incomes
above $10,000 because that will
lieve they merely reflect the ef¬
make
their
investments worth
fect of high individual tax rates
high personal tax rates lop

How

equity investments is

value of

Warner & Swasey

was

income

yield.

If the following

analysis of taxes paid by investors
on
dividend income is correct,
current stock prices do not yet re¬
the

flect

Why

prices are low is re¬

following table:

vealed in the

in corporate
expec.ted later this

that

Price Range

paid by large investors de¬
the
market value of January
stocks held by small investors. Febraury
For example, the tax reduction March
bill vetoed by President Truman
April
could raffce average stock prices
May

Central National

Corporation

ESTABLISHED 1927

22 East 40th

Tide Water Pwr. Com.

Telephone: LExington

Street, New

York 16, N. Y.

Teletype: NY 1-2948

2-7300

Upon Request

20%

reducing taxes on divi¬
received by large in¬
20%. Such a rise in mar-

dend income
vestors

Month Aver.

187-178 '
180-172
190-186 ,r 184-177
194-180 - ,182-172
185-170
177-167
176-167
174-163
182 ,k

(Continued on page 39)
*

•
.

*Bulletin

Circular

upon

request

ACTIVE

Fashion Park, Inc.

Ward & Co.
EST

Stock selling

Tennessee

1926

Argo Oil

120 BROADWAY, N. Y. 5
1-1286-1287-1288

Seligman,

Direct Wires To

Fhlla., Chicago & Los Angeles
.

ENTERPRISE PHONES

Oartf'd 6111

Buff. 6024

, ■

/VI

Bos. 2100

Hsg

Noc Co.

,4U■

t'D.

•' •,

MINING and
Soya Corp.
Great Amer.

INDUSTRIAL
SECURITIES

Indus.

request

G. F.

Lubetkin & Co.

Incorporated . ,
...
Dealers Association

Members New York Security
Broad Street, New York 4
.

Corporation

Analyses upon

REctor 2-8700
N. Y.

Chemical

Consolidated Dearborn

Ktfembtrs N. V. Security Dealers Asset.

Specializing in

Weber & Heilbroner)
about twice earnings

Products &

MARKETS
.

(Owners of

1947

1937

____

;

Industrials

Jones

Dow

taxes

Puget S'nd P.
L. Com.
Southwest Natural Gas
Standard Gas Elec.

Table

Monthly

analysis also indicates

analysts

security

many

think stock

decline

earning power
year.
This

more.

termine

tProspectus

paid by large investors

value of stocks held by small investors.

prices to present high taxes

low stock

to pro¬

extraor¬
dinary damage done by the war*
It was obvious that the destruc-;
tion was tremendous.1 In fact,- de¬
struction is the objective of global
war, where the effort is not di¬
rected exclusively at the military
forces of the enemy but at the
whole fabric
of production and
transportation by which the mili¬
*An address by Mr. Thorp be¬
tary
is supported.
The Bank
fore the American Marketing As¬
would make long-term loans for
sociation, New York City, June
(Continued on page 36)
to repair the

vide credits

cents?

dollar for sixty-seven

read that's all it's worth!"

accomplish its
However, it was primarily a relief
high purposes.
At least, the pos¬
organization with food the chief
sibility is present at last of deal¬
element in its program.
ing with problems of international
importance in an orderly and or¬ The International Bank and Fund

Pathe Industries

Cent. States Elec.

economic

important international
be established
—two to bring about economic re¬
still too early
to know how many of the hopes covery and two to provide a basis
for a more abundant life in the
implied in the early prospectus
will be fully realized.
But the future. The first institution was
established to provide
fact remains that a magnificent UNRRA,
relief on a non-reimbursable basis
job was done and as Americans
to the citizens of countries which
we should take great pride in the
leadership provided in that criti¬ could not themselves proyide the

tors

Industries
Higgins Inc.

Gt. Amer.

.Taca
Tavlor-Wharton*

was

and

dictable

lend-lease

This

certain unpre¬

war purposes.
settlement policy

for

provided

aid

and

correct

other countries paid
United States for the material

the

inter-allied

to be no

debts whereby

assumptions
have
nbt

proved

in the
period—transfers which
they clearly are not able to make
and we are not eager to receive
the United States

them

future,

for the

Cinecolor

tate

planning

any

Brockway Motors
BudaCo.

Stand. Ry. Equip.

inevitable

items of postwar
not to necessi¬
huge payment transfers from

civilian use, were

As is

period.

•

allies, excluding

problems
o f
the
postwar

Barcalo Mfg.*

'•

* ■:

time when advance planning for the
grand a scale as that by the American Govern¬
<$•

there ever was a

ment

Aspinook Corp.*

old pfd.

by United States, evidenced in com¬

foreign trade given

tributed.

American Hardware

indispensable sup¬

Department cites

spokesman of State

mitments

Economic, Affairs

of State for

Assistant Secretary

port to

■

BUSINESS BUZZ

1926

Ecnomic

FINANCIAL CHRONICLE

Our Exports

Future of

Ward & Co.

HAnover 2-2100

HULSEBOSCH & CO.

62 William

SIEGEL & CO.
39 Broadway, N.

Y. 0

DIgby 4-2370

Teletype NY 1-1942

St.

;

113

Branch Office
St., Jersey

Hudson

N. V.Teletype f
NY 1-261$£

New York 5,

Telephone
WHitehall 4-484S

City, N. 3.

«Am*

(3229)
Number 4604

165

Volume

THE

COMMERCIAL &

Production

Steel

Bellamy and Sanders
With Ira Haupl & Co.

Observations

Electric Output

The

FINANCIAL CHRONICLE

Carloadings

Ira

New
New

York

Food

By A. WILFRED

Price Index

Auto

and Industry

Production

Business

Failures

Paper Output

indications

Notwithstanding

through

output, business

that

business is presently

helpings of phoney

ministration's

As a result, the

of engulfing us. For example,
Leon H. Keyserling, Vice-Chairman of the Presi¬
dent's Council of Economic Advisers, last week

opinion

■

again asserted as economists' prevalent
a depression is inevitable unless decisive steps
are taken. The chief such step to which the Ad¬
ministration has been consistently committed, is
the maintenance of higher and higher wages, al¬

that

consumer

prices, it notes, have increased at an aver¬
month, "one of the most rapid rises that has
ever taken
place."
Increases in retail food prices and living costs
were almost as great, it continues, making for a large loss in the pur¬
chasing power of the dollar and the ability of a large segment of
rate of almost 3% a

the consuming

fixing

venat
M.

productivity without a

Wilfred

May

Yet in his

ity.

dent insists on

South La

providing the sorely pressed
sufficient to ab¬
our war-enlarged plant capac¬

tailor-made tax "brief"

worrying about

Bank of Montreal

TAX AS
<

•

PERCENTAGE OF INCOME IN

(Net income of

EACH BRACKET

married man with two

Year

$2,500

Bank of Toronto

No tax

3.35%

Dominion Bank

Imperial Bank of

$500,000

52 WILLIAM

22.%

1932

No tax

9.8

17.

No tax

9.3

17.

61.

1939

0.5%

26.

40.

3.8

34.

49.

2-0980

1-395

81.

1946

Teletype NY

CO.

67.

1941

HAnover

ST., N. Y. 5

Bell

53.

Canada

Royal Bank of Canada

8.2%

of Commerce

Can. Bank

HART SMITH &

dependents)
$50,000

$25,000

1929

produc¬
rise
substantial increase

unusual demand and large *
these relationships between i
they will sooner or later be

Bank of Nova Scotia

cessive periods.

In other

conditions such as
volume of production may conceal
wages, prices, and productivity but
apparent."
"Temporary

the staff of H.

Chicago, 111,

Salle Street,

the Presi¬
inflation—viz.: "the
time for tax reduction will come when general inflationary pressures
have ceased and the structure of prices is on a more stable basis than
prevails. How long it will take for this point to be reached is
impossible to predict. Clearly, it has not been reached as yet."
Another manifestation of feebly camouflaged political demagoguery is Mr. Truman's revival of the canned refrain that uniform
or even near-uniform tax relief represent a form of windfall for the
rich. He complains of dollar "increases in take-home pays" of various
groups; wilfully disregarding the fact that the changes would merely
result in alleviating somewhat the burdens which, as wartime emer¬
gency measures, were levied drastically and discriminatorily against
the higher gross incomes. This can be seen in the following tabu¬
lation of comparative tax levies on high and low incomes at suc¬
A.

price level.

in the

joined

has

Byllesby & Co., 135

with purchasing power

product of

sorb the

Dealing with the question of wage increases in the mass
tion industries, the survey notes, that such increases cannot

than that in

NEB.—Victor F. Ju-

LINCOLN,

much higher

Chronicle

Special to The Financial

now

public to buy.

responsibility for this condition, single groups have
come in for a large part of the blame by various commentators, the
paper points out.
Some of the causes for the sharp rise in prices
.are being attributed by these critics to price-fixing by sellers of goods,
increased wage rates in a number of fields, the vast expansion in
money supply, including both currency and bank deposits in the war
years, coupled with low interest rates.
Holding that most of the comments being made contain much
fthat is valid and true, the survey adds, not one is a complete ex-,
planation of the situation.
As for a sellers' market and its effect
on prices, the "Bulletin" has this to say:
"Examples of this kind can be found in several products,
such as steel scrap and cotton textiles.
These conditions are
likely to be quite temporary, however, and as supplies increase
!
prices work back toward more reasonable levels.
That trend
has already taken place in a number of products and more are
being affected by it each week."
In

With Byllesby

Jouvenat

legedly necessary for

production."

Wholesale commodity

age

& Co.

B. Carroll

with John

just on the verge

responsible for the trend, it

and

of the municipal bond de¬
partment for Van Alstyne, Noel &
Co.
Mr. Sanders in the past was

of inflation and deflation. Ever since
V-E Day it has. been, and still is, predicting the
unemployment and deflation that supposedly is

makes the following point: •'
"So far in the conflict between the favorable and unfavorable
factors the ones which stimulate and maintain a high level of
activity have been as strong as those which handicap both sales

complete

formerly man¬

Mr. Bellamy was
ager

concept

♦

ments

again reveals the Ad¬
confusion over its own

Tax Veto message

The

overall picture cur-i
rently reflects little change in the rate of business activity.
Discussing this slight though unfavorable change in the pace of
business, the June issue of "Business Bulletin," published by the
La Salle Extension University, Chicago, states, that while business
is "far above all previous peacetime levels," the preseht trend shows
signs of a slight downward tendency in contrast to the upward trend
prevalent for some time in the past.
Weighing the respective ele¬
high level.

tinue to hold at a

pointed out.

sistencies can be

eannot escape the fact that
volume, and consumers' sales con¬

Albert W.

and

his Congressional disciples two
economic principles. Although space pre¬
vents detailed exposition of Mr. Truman's fallacies contained in his
Tax Veto and Consumer Credit messages, a few of his glaring incon¬

going

William M. Bellamy
Sanders have be¬
come associated with the firm in
its bond department.
that

nounce

President has fed

This week the

„d>4,

of readjustment, one

process

current industrial

MAY

"ECONOMICS"

HOUSE

MORE WHITE

(

City, members of the
Stock Exchange, an¬

York

Commodity Price Index

State of Trade

Broadway,

Haupt & Co., Ill

Retail Trade

words the President

captured

relaxation of the

of the upper bracket fanu
these steeply; graduated taxes, an unjustified

overwhelming proportion
lies

chooses to call any

Municipal

Railroad, Industrial

Fictions

Public

another; instance of doubtful White House
economics in the President's pronunciamento on instalment-buying.
Here the Chief Executive, in stating he would follow the will of
too great a reduction in buying, thus encouraging "a downward spiral
Congress, at least voiced an attitude more reasonable than he exhib¬
which will lead to unnecessary deflation and depression."
ited in vetoing the tax legislation. But his plea for continued con¬
Balanced prices should be the objective and in attempting to
sumer credit control likewise falls into gross inconsistency with his
achieve that balance, "many considerations of costs, volume, and in¬
Administration's professed economic; principles. Mr. ;Truman state?
come relationships must be taken into account/The-best price is
that he agrees with his Council of Economic Advisers' that, under
the'one which enables- the maximum volume pf-exchanges to take
of
"try
•place."
•' , .v;t,
rM,
W. ' relaxation the credit controls, producers arid distributors Wouldlower
to sustain
absorptive power of the market by accepting
In a review of the current situation, the paper noting the undown payments and a long time-period rather than adjusting prices
evenness of price rises, states, "the distortions among groups of prices
to the purchasing power of current incomes."
•are slightly greater than they were at the peak of the postwar boom
Tied up with the Administration's "open-mouth operations" to
in 1920, but the general changes during the two different war periods
reduce prices by talk, this argument both contradicts his own Coun¬
were in many respects quite similar."
The

and

State

; v

Instalment Buying

"Bul¬
iri

Recognizing the fact that large demand boosts prices, the
letin" warns, that emphasis on pushing prices down may result

Toronto

United States Government

of grosi income

windfall.

Montreal

New York

past week saw

Utility

BONDS

Stocks

Investment

those whose income failed to keep pace with
it notes, they lost purchasing power and be¬
cause the balance has been upset they are not able to buy the
production at the higher costs.
I
To overcome this condition, "Business Bulletin" suggests the
Touching upon

increases,

average

following:

cil's

expressed fears of a

Members New
68

York Stock Exchange

William St.201

Devonshire St.
Boston 10

New York 5
Knowledge

Experience

•
for Investors

•
...

Facilities

insufficient consump¬

depression because of

that the only way to secure "equilibrium" is through
Apparently, if prices cannot be brought down by
talk, they are to be brought down by a curtailment of buying power.
But this has been represented as already being a shaky position.
Only last week Dr. Nourse, the Council's Chairman, in a public

tion, and assumes
a first-rate
bust.

LAMBORN & CO.

imminent marketing facili¬
"The readjustment needed now is that of having prices and
ties, "to see that they promote absorption of our enlarged post war
income in better balance, at a level which will accurately reflect
product." This, of course, being in line with Washington's past worry
fundamental money and productivity conditions."
over the post-war slump scheduled to ensue from inability to consume
INDUSTRIAL OUTPUT WELL ABOVE 1946
the product of our enormously-enlarged plant capacity.
But this argument—frequently advanced by the Board's sup¬
With goods continuing to flow more evenly, industrial produc¬
tion last week held at a level well above that of a year ago but porters—that producers and distributers use easy credit terms to
slightly under the postwar records attained earlier in the year. Huge sustain the "absorptive power of the market" and high prices—has
other fallacies. It overlooks the fact that "producers and distributors"
backlogs of unfilled orders were reported in many industries.
do not ordinarily establish the terms of consumer credit, these being
Farm machinery continued to be limited in supply, but some
functions of retailers and financing agencies.
Actually it is safes
Improvement was noted in deliveries. There was no let-up in :
finance companies and banks which establish the terms for automodemand for hardware, building materials, and plumbing items,
address

WALL

again voiced his concern over our

STREET
5. N. Y.

NEW YORK

SUGAR
Exports—Imports—Futures

■

NET TRADING

:;l

! r

American

MARKETS IN:

Cyattamid 3/z%-Conv.

American

New

Ftfd. & Rights

3/2 %

Consolidated Natural Gas Common
'

■

Public Service Rights

;j., I

Dravo

& Rights

Members New York

"V.
K.

150 BROADWAY - NEW YORK

REctor 2-8171;

MAHER & CO.

CO., IRC.

.1-; ry\- Established
MEMBERS N. Y.

Tele. NY 1-1982

Wall Street, New

apd

Corporation

FREDERIC H. HATCH S

Security Dealers Assn.

Specialists in

Philippine Mining Issues

Bought—Sold—Quoted

Gersten & Frenkel

4-2727

Domestic, Canadian

American Maize Products

Peninsular Telephone Common & Rights

"When Issued"

& Rights

Gulf States Utilities Common

Pacific Gas & Electric Common

j {

and Rights

Engineers
; h,/:'

Cyanamid

Convertible Preferred
>

,Mi n;

DIgby

(Continued on page 36)

(Continued on page 34)

SECURITY

York 5, N. Y.

62 William
Tel.

DEALERS: Aa86CIATIONv<4 / *

Bell Teletype NY 1-897
V/V/l

.f ;•

St., New

York, N. Y\

WHitehall 4-2422
"

•

113 Hudson

\
St., Jersey City, N. J.;

Branch Office

•

keep them from cutting the budg¬
With Truman, their contribu-r

Our Foreign Aid Policy

et?

tion

Washington

From

of the News

likely

plain

Terminal

Bayway

ex¬

further

debt.

was

simply

one

leading exchanges

Exchanges and other
6

CALVERT

ST., BALTIMORE

Teletype BA 393

-Bell
New York

Baltimore Stock

Telephone BEctor

would

not

The

were

aur

strategy

this
der

been

has

Carlisle

them

keep

Bargeron

from,
accom¬
plishing it, just as it has been to

B
•

Members

Traded in Round Lots

Inc.

Street, Boston 10

originated with him. And

Hagerstown, Md.
Telephone^—WHitehall 3-7253

Pittsburgh, Pa.

Private WirA-Sgstem

Tele. BS 128

between

Philadelphia, New York and Los

ther disseminate

WARNER

message,

COMPANY
Light Co.

Preferred

Stock

DES

New Memo

H. M.

Byllesby & Company

Stock Exchange Bldg. Phila. 2

BUILDING

MOINES

Phone 4-71R9

pressed and pro-i

Telephone

Teletype

RIttenhouse 6-3717

IOWA

PH 73

Bell Tele. DM 184

business

conviction that unless

complete revulsion is very firm-*
ly manifested, it will be loaded oh
us in the next few months.
• j

PHILADELPHIA OFFICE
EQUITABLE

it in his veto

Stock

Meredith Publishing Co.
Common

the idea and
Mr. Truman

Insofar

future tax reduction,

concerned, the main thing is
that if it is not one spending pro¬

position, it will be another one,
and that having failed to get the
reduction this year, it will be

that

rather than any caginess

and it is my

3.30%

tion

it in
simply to fur-!

pagandized like nobody's

Send for

followed in

adopted.

resources

free economy?

by which
gifts and
available

Are there methods

increase

could

will be too bad if the econ¬
drive does flop, tax reduc¬

omy

stage

his part.

But it is being

Continuing Interest in

Jit

get)
us
used to it.
hasj
not yet accepted this proposition)
This is indicated by the deartl^

we can reasonably
foreign nations annually
seriously impairing our

above

those

our
now

billions abroad;

of attention he gave

give

without

foreign obli-i

is still in a shapeless selling
and the purpose of sticking

Hoover

least suspect, has from our present production?
■
been terrific. But they could say;
3. What
policies should be
"Do .you want a tax reduction or
adopted to make our resources
not?" Without the tax reduction more effective in world rehabili¬
their tendency
will be to lose tation?
The Problem
j;
heart, to think up some spending
plans of their-own. •
•
As
a
background to this ap¬
The Senate has so far acted on
praisal I wish at the outset to
only, two or three of the appropri¬ state:
^ '
ation bills.
Originally committed
Upwards of a billion people in
to cut Truman's budget by $4.5 the
war-torn areas of Western
billions, it will, be interesting to Europe and Asia are asking for
see now how much of the House's
help. In these nations some have
reductions they restore.
not recovered one-third of their

proposition of spreading fur-i

INCORPORATED

Iowa Power &

our

the tax debate was

■■

Angeles

DES MOINES

WHEELOCK & CUMMINS

about

ther and unlimited

Los Angeles

•

one

gations only bobbed up in con-;
nection with the tax bill - about
;wo
or three
weeks ago,. and>it
was intended as a propaganda de-4
vice more than a fiscal necessity.)
The

Street, Philadelphia 2

New York

N. Y.

York Curb Exchange

1420 Walnut

Tel. Hubbard 3790

Member

Also
New

Walter J. Connolly & Co.,

and

Philadelphia
Stock Exchanges

York,

New

Los Angeles

and loans that
Herbert

loans

justice to him he didn't
He started on

letter asking me to

would

you

premise that he didn't want
because it

The

BUCKLEY BROTHERS

Preferred

re¬

any program

he grabbed hungrily for alf
arguments in support of his
stand that were handed to him.
•

Request

own

and
lays down
eight princi¬

the

I have your

give you and your associates my
views upon the following poihts:
1.'.What are the limits of relief

sources,

then

Southwestern Public Service

My dear Senator:

depleting

our

tax reduction bill

the

Boston & Maine RR.

24 Federal

out

ment.

had not

Warner Company

Memos

Prior

accepted

deception when he makes the
makes the debt reduction argu¬

the

Elevator

Colorado Milling &

Washington, D. C.

with¬

nations

intend it that way.

PHILADELPHIA

message

Appropriations

United States Senate

Baruch,
calls
a study of
our ability to
aid
foreign

dishonesty if

Styles Bridges,

Chairman

Committee

obligations to the world.
If
be so, then one would won-,
ples which should be
if he is practicing downright

But in

BOSTON

Sen.

for

satisfy a group of
his advisers.It is his reference
to our not knowing what will be

Demo¬

cratic

The Honorable

Bernard

and

York, N. Y-

June 15, 1947

with
of

Mr-

letter follows:
New

Va mdenberg

..."

fact that he

The

Hoover's

views

text

complete

American
to foreign

line

almost hid-J

veto

his
mean

limits

countries. Mr.
Hopver, in

it reluctantly to

2-3327

but with him it

little

President, Herbert Hobver, in a letter dated June 16, to
Styles Bridges (R.-N. H,), presented in detail his views

Former

the

aid

lack of comprehension

line

which

A s

national

ex-President Hoover analyzes problem

essential to relieving crisis.

Senator

not intellectual dis¬

to what is cooking.

den

they promised.

There

something

New York

the

increase

ment. Tax re¬

STEIN BROS. & BOYCE

year

duction

Members

after that. By the time
rolls around enough
spending schemes will have de¬
veloped to eat up any surplus and

ally he was
opposed to a

Radio

conse-*

year

Republic a n
accomplish¬
Monumental

the

not likely to be,

Fundament¬

& Coke

Coal

Davis

of the

his part when he said
that the surplus should be applied
to a reduction of the debt.
It is

else.

anybody

some

going, there won't be
reduction next year or

tax

any

honesty

is not

message

BALTIMORE

veto

his

the bill

way we are

——<*>And

In letter to Sen. Bridges,

of American contribution to foreign relief and reconstruction, and
points out limitations that should be imposed. Sees exports exces- J
sive and lists eight principles to be observed in program, and
stresses prompt unity and mutual aid between other nations is

;

well overwhelm him.
The most important is that unless
there is a complete reversal of the

assumption has been that Mr. Truman's op¬
position to the tax bill was based on his desire to get credit for . a
tax reduction next year on the eve of the Presidential»campaign.
This, in fact, has been the theme of the Republican assertions.
It is doubtful if he had anything like that in mind. The fact is
that he is probably hard put to explain his attitude to himself.
*

has

quences may

general

The rather

gayety

Now, however, that he has ve¬

CARLISLE BARGERON

national

been to obstruct.

toed

Ahead

the

Thursday, June 19, 1947

FINANCIAL.CHRONICLE

THE COMMERCIAL &

(3230)

Because

not.

has

become

to those who were

it,

is that

one

thing

perfectly clear
associated with

the high cost of gov¬
a secondary evil.
learned from this drive

prewar industrial production; most
of them have not recovered over

tion.

There
litical

What

is that in the

past 14 years, a tre¬

greater danger of po¬
economic chaos in the

today

world
since
more

and

ernment is but
was

produc¬

75% of their prewar food

the

than

war

any

time
is
than

There

ended.

hunger and want today

'
\
threatening
terest' in
government spending. situation the American people
There are the more than 2,000,000 must continue to do the utmost
Federal officeholders with their to prevent starvation in the world.
families and relatives and friends, We must do our utmost to aid
of course. But in addition, there nations in the recovery of their
are
the thousand and one busi¬ own productivity. That underlies
peace and progress on earth.
ness enterprises that have become
But the greatest danger to all
so
dependent upon the spending,
civilization is for us to impair our
so much a part of it, that such a
drive as that which the House economy by drains which cripple
Republicans have been waging, our own productivity. Unless this
has economic effects seemingly as one remaining Gibraltar of eco¬
segment of our people
to have a vested in¬

mendous
have

there was during

drastic

the

closing

down

strength
is
maintained,
be inevitable over the

of nomic

Steel, for example. So aside
from cutting down the costs of
U. S.

the war.

the face of this

come

chaos will

whole world.

To discover the common sense
before we do get one, government, the Republicans were
course
requires clear objectives
if ever.
The spenders were tem¬ accomplishing an essential major
and organization on our part. The
porarily routed by the Republican operation against the statism into
burden is beyond our resources
efforts.
But the tax veto will put which we are drifting.
unless there is immediate unity
them in the saddle again.
Even
"My fear and feeling is that
and cooperation among other na¬
Taft has spending plans, modified- without the tax reduction, the ac¬
tions to lessen our unnecessary
health and housing plans.
They, complishment, which was only a
burdens and thus enable the ap¬
were being held up while the Re-j
beginning, will be wiped out, and
plication of our resources to the
publicans put the emphasis on that we will revert right back
most effective use.
cutting the budget. The compen-^ into the trend, You say we can
sation for cutting the budget was
The Economics of the Problem
elect a Republican President in
a tax reduction.
The House Re¬
1948 to go along with a Republi¬
Too often gifts and loans to for¬
publicans stepped on plenty of
can Congress.
With the grandiose eign peoples are visualized as just
toes and generally showed plenty
money transactions. The only way
of courage. They not only had the schemes we are entertaining we
money of important volume can
bureaucrats to contend with. They will
likely be so loaded down by
be transferred from one nation to
had
also business interests and
then, nobody will be able to get another is by goods (including
civic groups. The organized pres-J
many years

LOUISVILLE

SPARTANBURG

American Air Filter

Southern

American Turf Ass'n
Consider
Girdler

II.

Textile Securities

Willett

Corporation

AND

Murphy Chair Company
Varnish

Reliance

Properties

Co.

BANKERS BOND £?:

A. M. LAW & COMPANY
1892)

(Established

Incorporated
1st Floor, Kentucky Home Life Bldg.

LOUISVILLE 2, KENTUCKY

I/>ng Distance 238-9

SPARTANBURG, S. C.
Teletype SPBG 17

L. D. 51

sure

against

them

from -sources

out from under.

when

ATLANTA,

SPOKANE. WASH.

LYNCHBURG

it is not money
transfer; it is goods and

There is thus a

NORTHWEST MINING
Trading Markets

SECURITIES
For Immediate Execution
or

Bassett Furniture Ind.

—'it

STATE AND MUNICIPAL

BONDS

of Orders

Exchange

Std.

Pac.

10:45

from

Time:

11:30

CORPORATE

BONDS

Sp-82

Tele. LY 83

LD 11

miatiiiiiiiiiiiiiiiiiiriiiiiiiiiiiiiiiiiiii

of
-

Peyton

LOCAL STOCKS

Underwriters

Building,

Spokane

""""

Branches

at *"

Kellogg, Idaho and Yakima, Wn.

difficulty, it

goods. If we shin more than oqr
surplus We are taking it from the
standard of living of tne American

Stock Exchange

Spokane

Dealers

for our

recognized that we cannot
loans, ex¬
port more goods than our surplus.
And the surplus applies to spepific
commodities, for we do not pro¬
duce a surplus in
all kinds of

Corporation

Brokers

pay

safely, through gifts and

Standard securities

Lynchburg, Va.

'
exports, to

must be

other hours.

Members Standard

of .loaps

gifts.

imports cause us no

—

Scott, Horner &
Mason, Inc.

that we
services.

direct relationship

exports to the volume

and

While

Quotes call TWX Sp-43 on Floor

A.M.,

Dan River Mills

loan,

CA.

MIliiiiiiiiiiiiiiiiiiiiiiiiiuiiifiiiiHiiii

American Furniture Co.

and
services.
Therefore,
make a gift, credit, or

gold)

Bell Tele. LS 186

Established

RHODES-HAVERTY BLDG.
Teletype AT 288

Further, the

people.

1894
ATLANTA

GEORGIA

Long Distance 108

result

immediate

exporting more than a

(Continued on page 35)

Volume 165

THE COMMERCIAL & FINANCIAL
CHRONICLE

Number 4604

The Employment Act

By FRANK R. CREEDON*
U.

By EDWIN G. NOURSE*

Chairman, Council of Economic Advisers

Chief Government economist stresses purpose of Employment Act
of 1946 is to achieve maximum

employment

so as

production under high efficiency

The title "National Economic Outlook" sent

disposal. Ow¬
ing to a very
full
working

tor

made

with reference to the goal of eco¬

scriptive

nomic

send

they had to
headed

Functioning

/Act

National

Edwin

Nourse

Eco¬

nomic

Outlook." In thinking of
what it might be most useful for

behalf

Economic
with

the

Advisers

the

Council

take

American

Marketing
Association in the next half
hour,
I have set down two points.
Of the Council and of the Employ¬

Act

ment

whole to the

fore

the

10th

Annual

Convention

of the American

Marketing Asso¬
ciation, New York City, June 12,

Frank R. Creedon

refinements

job

ever

start

happen

you

central

of letting

as a means

the

shall undertake

same

a very

what

the

footing, I
brief state¬
to

seems

theme

hold.

know

direct

must

1947.

themselves

it in

manner

demands

(Continued

33)

on page

But

are

using all the
that

I Am

Optimistic Pessimist!

■

Dr. Backman states although

;

•

■

that

I am
an
optimistic
pessimist. My
position
may

the

level

the

first

these

indicators

summar¬

ized briefly as
follows. Some

exceptions,

most

al¬
taking
place;
others
are
required.

offset

Prophets of
Jules

are

Backman

hasic elements
of

For

strength which strongly suggest

,1937-^38,

rule

out

com¬

pletely the likelihood of a repeti¬
tion of the 1929-32 collapse. Per¬
haps the best way to present the
picture is to indicate first where
we

are,

appears
*

and

that

Regardless

secondly,/where it
we are

which

index

general business activity is

ined— emplqyment,

national

in¬
car-

loadings,! etc.—the

first

half

showed the highest level of

*An
before

address

National

Association,

Dr.' Backman

Retail

Cleveland,

Hardware

June -18,

1947.

two

have

distract
I

smaller

the

from

have

efforts

consistently

take

the

powers

encountered

which

raised

Federal government, we have at¬

to assist those in

the

problems lie.

velopment of

whose

Revision

safety codes, de¬

new

materials

and

increasing use of modulor design
examples of the kind of thing

are

I
.

mean.

These

problems are not
within the province of the Fed¬
eral Government.
lems

been

the

Some

field

management; others
of

local

are

prob¬

labor

are

and

problems

government, and still
a challenge to
industry.

others

They have been advancing
the date of doom steadily.; First,

biggest problem affecting
housing today is the supply of

wrong.

was

supposed

occur

Spring of 1946 when ten

are

pression
of

The

Then

was

the

date

.time

Film Center 4s, 1949

advanced to the Fall

When it failed to put in
appearance at that time the

1947

amount

The

neither

Over One Million Units
was that with the
controls continuing,

My statement
few

present
could

complete
dwelling
units of all
year, of
which more than 750,000 will be
new permanent units.
This num¬
ber of completed dwelling units
would give us the best year of
housing
completions
since
the
we

slightly

20's.

1,000,000
types this

These

non-residential

tighter,

industrial

construction

private commercial,

and other non-residen¬

cast-iron

soil

pipe

manu¬

since

any year

the middle 20's; and a larger vol¬
ume of other
private construction
under way than in any other year

(Continued
*A

page

23)

speech by Mr. Creedon be¬

fore th£

Washington, D. C., Build¬
ing Cohgress, Washington, D. C.f
June 9, 1947.
;

Davis, Hunter, Scott
Opens in Detroit
DETROIT, MICH.—Davis, Hun¬

ter, Scott & Co. is engaging in the
investment

business

from

offices

in the Penobscot Building.
ners

are

Part-

only

would

manufacturers

Hunter

and

Waiter

Davis

and

Mr.

Scott.

Scott

were

formerly partners in Chapin & Co.

soil

the

J. Boigegrain, both

Chapin
new

Co.

previously with

will

with

the

firm.

pipe

the pig iron for

use

other than building pro¬
but

pig
their

sell

they choose.

iron suppliers
pig
whereAnd this is no

criticism of their action.

But how

inter¬

REAL ESTATE

ested in the housing or construc¬
tion field believe that by permit¬

SECURITIES

the

ting

world

can

any

one

to happen the housing
program would be helped? Well,

this

just can't follow such reasoning.

This

would

not

only

★

Members New York Stock Exchange
Members New York Curb Exchange

it would make

★

SHASKAN & CO.

the

soil pipe unavailable

builders of housing,
it "not"

make

40 EXCHANGE PL., N .V.
Bell Teletype

Dlgby 4-4950

NY 1-95f

available, period!

early 1948. The more
pessimistic pessi¬
mists anticipate a decline of 20%
,

Firm Trading

Sherneth Corp.

Greeley Sq. Bldg. Corp. Stock
Lexington Units-

i-y

2 Park Ave. 2nd

40 Wall St. 5s,

4s, 1955 *

5%s, 1956 WS

Westinghcuse Bldg. Part. Ctf. CBI

London Terrace 3s, 1952 WS
New York Athletic Club
N. Y. Athletic Club 2nd 1

Markets:

Roosevelt Hotel 5s, 1964

Savoy Plaza 3s, 1956 WS

Hotel

1955

New York Majestic 4s, 1956 WS

California & New York

3s, 1946

Real Estate Issues

1966 WS

Broadway Corp. Stock

79 Realty

Corp. 5s, 1948 WS

870 7th Ave.

4I/2s, 1957 WS

extreme of the

and

in industrial

production,

Amott,Baker & Co.
Incorporated

decline in wholesale prices

about 20 to 25%.

(Continued

I think

that

150 Broadway
Tel. BArclay 7-4880

page

26)

J. S. Strauss & Co.
155

New York 7, N. Y.
Teletype NY 1-588

W. Fred Davis, Frederick

Julius W. Baldwin and Charles

miums, what would happen?

purposes

put in place

part

Without this power of allocation
and without the power to pay pre¬

duction

was

completed than in

Mr.

ever

be¬
were

than in any other peace time year
in the nation's history. Now with
this record of more homes being

would

were

in 1946 when controls

cause

duction of merchant pig iron and

Not

results

achieved without undue impact on

tional with the industry, they have
been induced to increase the pro¬

the

expect

over

middle

pig iron

would

their place, but by the use of pre¬
mium payments, which are op¬

not

and

OFFERINGS WANTED
Beacon Hotel 2-4s, 1948 WS "
Chanin Bldg. 1st 5s, 1965

of >de-.

date was advanced to
early-1947.
Now it varies from the latter part
of

estimate

prediction.

the

1946.

estimate, and I reiter¬

or more

this

meet

and

cast-iron

Supply of Materials

million persons were scheduled to
be unemployed.
American busi¬

failed

direct the

manufacturers don't like to be di¬

rected

year.

factors to be

many

permit¬

facturers.

Government's

Of building and

the

years,

disaster

now

By the allocation

by direction have delivered

field

Wrong

Doom

multiplicity

premise

War I

schedule.

exam¬

are
.

repetition of the past
collapse. Thus far?
fortunately, they have been proven
World

•

production, retail sales,

come,

1947

past

nredicting

ness

going.

the

prophets

that this period of adjustment will
not parallel those of 1920-21 or
even

There

satisfactory solu¬
housing need.
Con¬
have refrained from

objective, and in line with

tempted

of which the
automobiles will

sectors of the economy.

But neverthe¬

readily occur to you. But
exceptions are more than
by the increases in other

these

are

ready

powers

problems which I felt to be, and
know to be, not in the field of

was

year

before attained.

production

a c-

reached

-this

some

business

less, there

never

adjustments in

tivity

business

ted to go ahead.

and

needed

the'non-residential

be frank about this.

were

But excluding that period,
half

are

and

construction which is

re¬

Federal

than the over-stimulated wartime

peaks.

which

many

that field. Where certain obstacles

lower

are

materials

solutions of problems which I be¬
lieve to exceed the scope of the

group.

pipe is one of the scarcest
building materials today.
There
just isn't,, enough cast-iron soil
pipe to satisfy the demands for

housing

obviously

ate—this

soil

the

resisted

peacetime activity in our history.
many lines, of course, several

first

with

main

<§>-

belong

the

of pig iron. You all
takes pig iron to
make cast-iron pipe and cast-iron
case

that

this

clear

citing the

problems

Today, business prophets fall into three categories: Optimistic
pessimists, pessimists, and pessimistic pessimists. At the outset, let me
it

have the opposite effect. The
prob¬
lem can be simply illustrated
by

with the job

and

men

remaining

pig iron which must go to castiron pipe manufacturers. Now let's

sistently
letting a

will be counterbalanced by activity to satisfy
pent-up hard goods demand.

make

few

utes

some

soft goods activity

the

tion

get

which are very desirable in reach¬
ing a solution of the housing prob¬
lem, and each refinement contrib¬

further adjustments are still
required, there are sufficient elements of strength to preclude
depression paralleling 1920, 1929, or 1937. Predicts decline in

are

finements

Associate Professor of Economics, New York University
'

Removal

know

houses

this

•

controls at this time will not re¬
sult in the production of
any ad¬
ditional housing 'but in fact will

for

need

tial construction

available.

are

,/; There

By DR. JULES BACKMAN*

;

whole.

measurements.

our

the

permit,

comparable to the

going

housing program or
the economy of the
country as a

assemble sufficient

and materials to

men

the

unable

are

the major effort to which all par¬
ties
in and out of government

same

harm

and

tremendous

the

has

been removed,.and
policy will be applied
the
few
remaining controls
when they can be lifted without

this

may

Every control that could be

housing so we have the measure
the job but unfortunately we

the

Act

other factors

and

for all the ills that
should be pretty well ex¬

removed

to base

been backed up with positive ac¬

tion.

sought for
&nd incorporated in the project.
We have approached the housing
problem in the same manner. We

in connection with what¬

time

know; I

scapegoat
us

are

built

considered that not until then did

ing field not only have I repeat¬
edly stated my views on the sub¬
ject, but these statements have

there

may

you

I ought to

number
be

can

I have sufficient facts upon which

solved.

hausted by this time. In the hous¬

the legislative his¬

ing

ment

*An address by Dr. Nourse be¬

one

some

all

na-

-•

"home work" either for this meet¬

First, what is the relationship Therefore,

(

of the National

There

season.

beset

the

are
many
more
synthetic
"housing" experts.
1
Having had some experience as
tory of the Employment Act of
1946
and
every
word that the an engineer and construction man¬
Council or any of its members ager, I have always found that in
have written about the interpre¬ order to build a job, the thing to
tation of that Act. Most of you, do is measure the size of it, get
however have not accepted any the necessary tools, equipment and
fnen and get on with the job. Then
such
formidable
assignment
of

Possibly

the

and

problem. Gen¬
tlemen, in my brief experience as
Housing Expediter I have found

Economy

have read all

Employment

the

and

Act

be made

always looking down the gun bar¬
rel, but it seems to me that the
subject of government controls as

experts

engaged
Employment

"The

paper

was

•

to press. But I

effect

e r

can

the

which

the other prob¬

upon,

Monday for the first time

mating

delivery

course, a government
official is fair game and never out

synthetic rub-'
b

The

before

Now,

amazed at the

in the

relied

lems will not be

by him

number

Employment Act?

your

Program Com¬
mittee

set

and

pipe-lines

Last

since becoming Housing Expediter,
I made a public statement esti-1

firm

promises and prices

that

supply
that

once

the

materials
filled

are

was

remark

Try as you
problems to

other

solve, until this nut is cracked and

during the
I

materials.
find

the

struck with the

and

UP a more ac¬

stabilization

Jef-

Rubber Direc¬

war,

curately de¬
title

will

fers, former

Program
talents or the

reconversion

building

with

William

pected of marketing in the process
economic

<$-

In my asso¬

ciation

outlook, not just
today, but in terms of the future
functioning of our national econ¬
omy? Second, what is to be ex¬

X
shape

failed to

tional economic

schedule,

Congress.

your

Committee seemed much too pretentious either for my
time at our
<e>-

Housing Expediter

Housing Expediter, my chief concern is with the problems of housing—but the
problem of housing is as broad as the entire c obstruction field.
It is, therefore, very ap¬
propriate for me as Housing Expediter to discuss this
problem with the Building Trades

to create "maximum purchasing power."

Analyzes role played by marketing in attaining these objectives,
and warns against wasteful selling methods and high-pressure
salesmanship. Emphasizes price reductions as factor in increased
output, and points out excessive use of salesmen will intensify dis¬
crepancy between maximum production and real income.

Housing Expediter, though opposing abolishing present controls, says building materials
supply situation is improving and all restrictions on
construction are likely to be removed this fall.
Expects one
million new housing units this
year.

and full

Building Controls Soon To Be Removed

And Economic Outlook

(3231)

Montgomery St., San Francisco 4

Tele. SP 61 & 62

EXbrook 8515

Thursday, June 19, 1947

CHRONICLE

& FINANCIAL

THE COMMERCIAL

(3232)

Argentina's Shift to Creditor Status

Dealer-Broker Investment

By ELBA A. GOMEZ del KEY

Former

UN.

Officer, Fiscal Division,

Affairs

Recommendations and Literature

of New York;

Economist of Federal Reserve Bank

Economic

after First

abroad, and

repurchase of domestic securities held

iakeji form of repatriation of foreign-held debt,
granting of substantial external loans.

Investment
ance

Foreign Indebtedness

Russ

Calif.

—E.

ties dealers, bankers and

the

debt

still

ex¬

during

1946 the proc¬
ess

middle

the

454.7

E. A.

Gomez del Rey

mil¬

debt and 44.0 million pesos of her
Swiss franc obligations.
A small

balance
could

million

9.2

consisting

pounds,
sterling loans,
retired, owing to

two

not

Total

United

fixed repayment dates in the loan

French

contracts, which run to 1953 and
1972, respectively. With the dol-

riation,

Argentina

has

part of her ambition to
free herself from foreign indebt-

Long-Bell

Lumber

Company

Common Stock
Approximate Price, 11 '/2

Earnings

1st

$1.37
1946

Earnings,

Dividends
Last

Paid

Declaration,
June

1947,

share.

$2.50

share.

per

Quarter,

per

share.

Semi-annually.
share

per

complete

analysis

interested

available

-dealers.

CHICAGO 4
231 So. La Salle St.

Dearborn 1501

Teletype CG 955

Central Public

Utility
of

'52

CHICAGO 4, ILLINOIS
Telephone Randolph 4068
direct

Private Wire to New
Bell

Svstem

Discounting?

45.7
595.4

York

587

Cur¬

circular

—

43.1

foreign

Service

tion

plan—Stern & Co., 25 Broad

Street, New York 4, N. Y.

of them

may

Oil

June 14,

1941 the citizens
93 million

demand

and

time

de¬

accumulation

continuing

likely that this figure understates
the actual present position.
Be¬

centration

knowledge,

common

though figures are not avail¬

that

the

The

control

economic

resulted

reform.
to

of debt repatria¬
facilitated by the con¬

program

was

from
new

central

the

powers

bank

banking

could

tina
ment

vided

have

made

the

pay¬

blocked sterling as pro¬

for

under

the

Anelo-Ar-

into

converted

welfare

bonds

vestment

social

reserved

for

in¬

Official Social
Security Institute. Cash redemp¬
by

the

gentine treaty of Sept. 17, 1946 tion of internal bonds and the
(Continued on page 20)
(Great Britain had promised to

Bird

are

memoranda

Son, Inc. and Eastern

Corporation.

Oil Corporation —
Memorandum — Doyle,
O'Connor
135 South La Salle

& Co.,

Standard Silica Corp.—Descrip¬
tive

Street,

•**-,

<■',« '

•

.memorandum

■

A.
Salle

David

—

Noyes & Co., 208 South La

Chicago 3, 111.

Street, Chicago 4, 111.

Bridge Co.

Detroit International

analysis with particular
reference to the so-called tax free
distributions

Sterling Electric Motors, Inc.—

dealers
& Co.,
Spring Street, Los An¬

Trading memorandum for

J. 647 South
52 Wall Street, geles 14, Calif.

of .dividends—F.

Young & Co., Inc.,
New York 5, N. Y.

Utica
C. H.

land

Dutton—Late data—More-

Pehobscot Building,
Mich.

Co.,

Detroit 26,
Fashion

Also

Corp.

Inc.

available are analyses of

Oil
and Consolidated Dearborn.

Mohawk

Circular

—

Casualty

earnings comparison
1940—Laird, Bissell & Meeds,

General

re-

for
120

delphia 2, Pa.
-

Osgood Company —
-future
outlook—

Wheeler,

Electric

Corp.—Study

opinion—E. F. Hutton & Co.,
Broadway, New York 6, N. Y.

Minton

South

209

Company,

Inc.,

Street,

Chi¬

Salle

4, 111..

cago

York 5, N. Y.

and
61

& Co.,
Building, Phila¬

Byllesby

Exchange

Stock

Insurance Sills,

Stocks

Broadway, New

Gen¬

Argo

Products,

and

Cotton Mills*
Mohawk Val¬

Warner Company—New memo¬

randum—H.

Discussion
Fire

—

ley Investing Co., Inc., 238
esee Street, Utica 2, N. Y.

Park, Inc.—Analysis—

Seligman, Lubetkin & Co., Inc., 41
Broad Street, New York 4, N. Y.

Tennessee

Marshall

only—Maxwell,

granted

contributed

able, that a great deal of Argen¬ greatly to the success of the con¬
tine capital has been invested in version of the foreign debt into
neighboring countries, especially a domestically held debt.
The
process was as follows:
Paraguay and Uruguay.
The government in August 1946,
The latest example of Argen¬
tina's pol'cy of reducing its for¬ through the central bank, success¬
eign indebtedness is its action in fully converted 3,884 million pesos
January, 1947, when it repaid the of the old 4% bonds into 3%
balance which had accumulated in bonds. Cash repayments amounted
Brazil's favor as a result of the to 86 million pesos. Of the total
July, 1941 clearing agreement be¬ of 5,082 million pesos of old bonds,
tween the two countries.
than
It is more
1,100
million pesos
were

available

Also
on

Rock

Deep

■New

payments.

tion

Brothers,

Street, Philadelphia

prises, debts and claims, etc. Since
total of 179.8 million
represents stocks and bonds whose
value has risen since 1941, it is

This

Service—

Public

2, Pa.

N. Y.

exchange from the active balance
of

Walnut

1420

York 5,'

1 Wall Street, New

Co.—

brochure —
Co., Landreth
Building, St. Louis 2, Mo.

United Ar¬
Concrete; Barcalo

Vacuum

Manufacturing

descriptiveScherck,
Richter

Ginger Ale, Inc.—
Memorandum—A. M. Kidder &

amounted to roughly
1,700 million. The drain on these
holdings
from
the repatriation
policy has undoubtedly been off¬
set to a considerable extent by
the

4, N. Y.

Southwestern

Co.,

— H.
Street,

Analysis

Beaver

New

Canada Dry

exchange

posits and currency in the United
States, 36.1 million in government
securities and common stocks, and
32.5 million in commercial enter¬

—

Memorandum—Buckley

begun in August 1946, the central
bank holdings of gold and foreign

owned

Co.

Co.,

Rockwell

memoranda

are

Mfg.

When this program was

reserves.

New York

Products; Upson Corp.;

altogether will cost Ar¬
of the size of a part gentina
927.7 million dollars of
be gained from the her gold and foreign exchange

Argentina

Broadway,

120

program

Foreign-Owned Assets
in the United States which shows
that

Hentz

and
Taylor
Wharton Iron & Steel; Purolator

repatriation

Corporation

Jersey—Comparison of val¬
markets
of
preferred
stocks in relation to recapitaliza¬
and

Corp.

Lanova

tists;

investment

The

Rome

5, N. Y.

available

Also
on

balance in dollars.

Unfortunately, information
as
to total current Argentine in¬
vestments abroad is not available.
An indication

pounds of the

♦

Co.,

offering

New

Aspinook Corporation—Circular
New York

Broadway,
an

ues

William

Co.,

61
is

analysis

Public

Prices
declines

Earnings

Co.,

Stern & Stern Textiles,

and

Inc.

Street, New York 5, N. Y.

Argentine blocked sterling to be
transferred to Brazilian account),
it settled the 43.1 million dollar

assets.

Trust

Cable Corp.

anticipated by present market in¬
dicated
in
comparisons—R. W.

927.7

million

release

noteworthy that, although Argen¬
*08 SOUTH LA SALLE ST.

—

the industry
Vilas & Hickey, 49 Wall Street,
New York 5, N. Y.

—Ward

even

5Ws

Developments

rent developments in

What Are Common Stock

indebtedness

To gain a complete picture of
Argentina's net creditor position,
account
must
be
taken of the

Bank

available

Also

Pure

sides,

Fsed. si Fairman
ImmmmW.nce im Co. L

National

95.0

1946

part of the

COMSTOCK & CO.

Public

6, N. Y.

dollars

1st.

Broadway, New York 6, N. Y.

—

The

—

148.5

—l

Payment of Brazilian Balances.-

value of Argentine-owned

Unterberg

736.1

January 18, 1947,

Census

<■

per

30c

—

Total

HI.

South

135.4
13.1

12, 1947

Total decrease of foreign

The

booklet

of New York,
Wall Street, New York 5, N. Y.

Railroad

—

18,

Service

Banking

illustrated

accom¬

plished

231

pany—Analysis—Ira Haupt & Co.,

Pressprich

l^r and Swiss franc bond repat¬

Co.,

New York

Investments
Telephone Co. of River Plate—October, 1946__
railroad—Dec.

Street, Chicago 4, 111.

Co.—First quarter analysis—C. E.

August, 1946

1946

British railroads—Feb.

Salle

Ill

Repatriation of Direct

Comstock

City).

and

Overseas

debt—December, 1946—

Swiss franc

Oil Exploration Co.—Bulletin—

copy

dollars)

Repatriation of Public Debt
Dollar debt—Aug. 15 to Nov. 15,

dollar

National City Bank

Foreign Indebtedness Since

(In millions of
I.

Argentina's

pesos

gas

companies.

TABLE I
Decrease in Argentine

Y.—Paper—500

111.

Co., Inc.—Tarry-

P. O. Box 147, Tarry-

(250 to public libraries and non¬

Color

the repayment
of

foreign-owned

some

electric

policy of Argentina, according to

thirties, was
virtually com¬
pleted with

lion

and 0.4 billion

begun

Foreign investments in Argen¬
are reported to have amounted
some 9.1 billion pesos in June

by Spaniards), 0.5 billion French,
other. The present

of repatri¬

ation,

town,

Axe

the profit institutions).
American telephone company for
Pepsi-Cola—Analysis—Bache &
Manual of Sugar Companies—
95
million
dollars, the French
Co.,, 36 Wall Street, NeW York 5,
railroad for 45.7 million, and the 24th Edition—Farr & Co., 120 Wall N. Y.
British railroads for 595 million, Street, New York 5, N. Y.—$2.00
(plus 2% sales tax in New York
Portland Electric Power Com¬
as well as the planned acquisition

1946, of which 5.4 billion were
British, 1.8 billion American, 1.0
billion Belgian (but largely held

ternally-held,
and

town Press,

purchasing

actions

cent

tina

outstanding
was

is to repatriate

official statements,

however,

goes beyond
the repatriation of only the foreign capital invested
in public debt and in public util¬
public debt and involves also some
of the direct foreign investments. ities. This is confirmed by its re¬

million pesos)
-of the total

federal

ambition,

This

edness.

1945,
only 7% (668

institutions—Comstock & Co., 231
South La Salle Street, Chicago 4,

Industry, The—Part

Machinery

<e>-

complete

request to investment securi¬
financial

II—Study and analysis of outlook

ment.
end

Company—

containing

Francisco 4, analysis from 1935-1946 available'

since August, 1946, is shown in
Argentina's public debt amounted to 12.3 billion pesos on Dec. 30, 1945. Of this
9.7 billion was federal, and the remaining 2.6 billion provincial and local govern¬
Argentine foreign indebtedness

The decrease in

Table I.

total,

Brochure

Co.,

Securities

San

Building,

Long Bell Lumber

comparison—

American

North

Decrease in

Perform¬ <$>-

Company

Reprint

—

interested parties the following

send

will be pleased
literature:

that the firms mentioned

It is understood

U. S. A. experience
since 1941; and has

Argentina's transition from debtor to creditor position resembles
World War.
States it is direct outgrowth of favorable trade balance

Ecnomist holds

—*

Wilcox-Gay Corporation—* De¬
curities
way,

Se¬
Broad¬

memorandum—. Aetna

tailed

Corporation,

111

New York 6, N. Y.
available is a: memoran¬

Also

Compari¬ dum on York Corrugating.
son
with Radio Corporation of
America as to earnings and diyidend record in view of similarity Joins Brush, Slocumb
General Machinery

Descriptive Memorandum

Nekoosa-Edwards Paper Co.

Regarding

COMMON STOCK

Standard Silica Corp.
Common Stock

Available

Bought

Sold.

of current

Prospectus Furnished On

&
63 Wall Street, New

market price—Bond

Goodwin, Inc.,

Quoted

Request!

Request

N. Y.

Co., Inc.,
York 5, N. Y.

Guide"—G. A. Saxton &

DAVID A. NOTES & COMPANY
Members

New

208 SOUTH

York

Stock

Exchange

LA SALLE STREET

CHICAGO 4, ILLINOIS
Tele. CG 730

70 Pine Street, New
Members:

Tel.: State 0400

Chicago

Stock

225 EAST MASON ST.

PHONES—Daly

539$

Chicago: State 0933

Exchange

MILWAUKEE (2)

Teletype MI 488

Special to The Financial

Staff

Chronicle

.
CALIF.—
is now??con¬
nected
Slocumb &
Green Mountain Power Corp.—
Co., 1 Montgomery Street.
Memorandum in the current issue
of
"The
Public
Utility
Stock

York 5,

—

FRANCISCO,

M, Heron
with Brush,

With W. J. Kelsey
Special to The Financial

& Co.

Chronicle

SAN
FRANCISCO,
CALIF.—
Co.—Analysis—Adams
Salle Street, Angus C. Fox, Jr. is with W. J.
Kelsey & Co., 25 Taylor. Street.
Chicago 4, 111.: •.
R. Hoe &

SAN

Douglas

Co., 231 South La

»Volume 165

Number

4604

THE COMMERCIAL & FINANCIAL
CHRONICLE

(3233)

Industry's Responsibility for Employment
By

EMERSON

SCHMIDT*

Director, Economic Research, Chamber of Commerce of United
States

Holding full employment is

diffused responsibility, shared in by all ^ elements of the

Schmidt points out private business alone r'oes

have power to create
prosperity

not

sion.

Dr.

economy,

Wisconsin Electric Power

depres¬

prevent

Contends, because labor movement is highly political and wage demands
highly contagious,
heavy responsibility for economic stability rests on organized labor. Says only closest
cooperation of
government, banks, business management and labor can solve stability
problem.

Wisconsin

A free
enterprise society is one under which free men show enterprise.
The com¬
petitive motive, properly supported by governmental anti-trust
policy, helps to keep enter¬
prise alive, and makes for economic progress.
Profit expectation is the dynamo of our
The3>

system.

motive

wage

will

cause

job

voluntary
voluntary

creates

the

p os

it ion

some

ness"

the

Once

for

the

placed,

free

are

price — in
has been

its
re¬

—

perity.

socialize

can

the

production—capital
land—without also having to

sibility"

children after curfew unless

also gave him the power and

children

remove

eridge is

and
so¬

au¬

from

the

So-called

uniquely a voluntary system—a
system under which the owner of
investment funds is free to invest
or to
hoard, the buyer is free to
to postpone buying,
is free to work or

work

finding

the

The

sets

the

directly

money

nearly

all

which

are

essential in business planning; but

king

in
are

wit

abandoned
to

enable

free

support?
what

hold

responsible,
else

takes

during prosperity,

to
we

are

bid

norms

with

this

fair, although brief

and

over-simplified, description

our

economic

system, can we hon¬
estly say, "Business must be held
responsible for jobs and produc¬

excess

money

supply

its

effects, after the war,
the price, wage and income
We have to go through

period

ment."

too

painful

"readjust¬

This readjustment
may go

far,

thereby

maladjustments
cumulative; and it takes

become

tion"?

Or do

responsibility:
the

all share in this

the

businessman,

labor

leader, the consumer,
investor, the Government and
even
the people's lobbyists?
If we are going to hold business
responsible for jobs, do we not
have to grant it all the necessary
the

power

and freedom to implement

that responsibility?

Is this not

requisite
of
those
who
say,
"Private
enterprise
must find jobs, or else
."? Yet,
how many of us are prepared to
give business that degree of free¬
.

dom and power which is thereby
implied? Even if business had this
freedom, could it deliver?
"Business"
is

"free

enterprise"

not

entity which we can look
up in the telephone book.
Rather
it is a concept, a short-cut
phrase
describe

complex and
heterogeneous grouping of persons
and organizations none of
whom,
very

which, have much

fluence

power

the economy

to in¬

whole.

Free enterprise is not
just some¬
thing for the businessman; it ap¬
plies equally to the free worker,

the

free

investor

the

free

consumer.

and

indeed,

Free

prise is the opposite of

X).

enter¬
unfree

Lobby, Inc., Washington,
C., June 10, 1947.

being traversed

distortions.

ment,

subject

economic

our

perfectly

Wars

system

stresses

enormous

and

strains.

Wars expand parts of our
economy at the expense of other
parts.
Wars
distort
the
wage

structure.
crease

Wars

our

these

money

wars

the

long

are

lerr>

which

fabulously in¬
supply.
Once

over,

and

have

arduous

prob"readjust¬

label

ment";
but
we
use
the
glibly that frequently

word

not

fully comprehend the painful

travail
order

that must be traversed
to

bring

balance
the

about

price

structure,

kind

parts

various

among

the

wage

structure, of the capital structure
which is the sine quo non of sta¬

bility.
We may ask, for
example, why
did we have the depression of the
1930's?

War

During

the

economies

countries,

ropean

first

World

many Eu¬
twisted
and

warped, extended the effects to
shores.
to

Just

1914

our

illustration: Prior

one

Europe

factory space and perhaps
housing.
After the war we
through a "catching-up" period

new

achievement.

produced

about

which may take years and
during

this period the

continues

bilizing
in

1 The

nature

our

economy

fully explored in: "The American
Enterprise
System,"
of

Commerce

2 See

analysis of his
Government
Guarantee
ment?"

20,

Chamber

USA,

views
Full

Commerce

Com¬

The

1946.
in

"Can

Employ¬
of

USA,

catching

up process

wave-like

Recently however it
90%

North

will retire

Ameri¬

which

can's

holdings (which amount to
2,493,710 shares) will be distrib¬

amount

for

North

each

100

American.

present

rqarket

tribution

about

price,

would

total

all the

Wisconsin

Electric

Power,

and

31, 1947.
Because of special tax
adjustments in 1946, it is difficult

dis¬
6

Power

the

state

Wisconsin

the

get an exact picture of the
transit earnings and possible sales
value.
Net income in 1946 was
stated

and

the

rest

system

part

the

North

dential

being

2.690

national

around

average

by residential
KWH

are

with

the

3.250.

about

direction

unsta-

for

over

maintenance 7.4%,

After wars, certain countries

ravaged and devastated.
victorious nations

vs.

about

revenues

Apparently
from

the

new

quished to rehabilitate.
last
to

war

After the

made enormous loans

Germany.

these loans

van¬

income

was

property except
(a rela¬
tively small item).
Share earn¬
ings were after deduction of $500,000

and

the bonds

contingent losses
(equivelent

properties

total of 18%.

180

share).

were

spent here.

our

are

doing, helping to create

own

uneconomic
ble burst and

Liberty Aircraft Products

Rockwell Manufacturing Co.
S. Potash

exports,

*Crowell-ColIier

Buckeye Steel Castings Co.

The proceeds from

financed
now

Trading Markets in Common Stocks
Bates Manufacturing Co.

boom.

The

deepened

the

♦Prospectus

Request

bub¬
de¬

pression.
The post-war boom in
the 1920's
still further expanded the
money

Paine, Webber, Jackson & Cum
Established

1879

supply (credit) and when the tide
turned
a

tortuous

1929

period

went

history

here, because
tims of the

American Gas & Power
recounted

are now

same

through

constriction

in the
money supply.
All this

the vic¬

should

fool

not

thinking that

ginning in overcoming the enor¬
maladjustments and distor¬

tions created by World War II
and
page

6s, 1959

stabilize

mous

Portland Electric Power

ourselves

we can

the economy unless we first make
this a peaceful world.
We have
not even made a
substantial be¬

(Continued

3.6s, 1953

forces, only this

time they are much more
power¬
ful and all-pervasive.

3-5s &

32)

Gilbert J. Postley

29 BROADWAY, NEW YORK 6, N. Yr
Direct

Wire

drawn

transit

for interest

Bausch & Lomb Optical Co.

sav¬

Revenue Act.

are

Even the

help the

year.

parent company basis $1.76

enough in another direction. This
capital formation feeds prosperity

and may over-feed
it, making sub¬
sequent contraction inevitable.

re¬

basis compared

the

ings under the

one-third of plant account, an un¬
usually high percentage.
In 1946
provision
for
depreciation was
revenues

the

March

together with substantial tax

$60,000,000 amount to nearly

ended

earnings of $1.87

reported

crease

which

10.6%

$1.15.) This big
jump in earnings reflected an in¬

small

very

12 months

$1.22

(On

($456,000 out of $184,000,is being amortized.
reserves
Depreciation
totaling

000)

about

far

with

national

amount

going too far
not

bid

date.

consolidated

was

except

the

ported

one-

the
was

31, Wisconsin Electric Power

The plant account of the three
companies is stated at "original
cost"

buying

surve^

tion in time to make

of electricity
customers was 1,-

which

and

specified

use

larger than the

interested

City officials some
weeks ago, but the City
may not
be able to complete its
investiga¬

resi¬
KWH in 1946

compared

Average annual
542

rates

the $4,000,000 bonds)
neighborhood of $9-13 mil¬
City of Milwaukee has

ordered

average

revenues per

5-10

The

property

are

American

company's

extremely low, the

perhaps

(including
in the

with

common

This

proceeds

The electric sys¬

inter-connected.

$926,815.

could be capitalized at some
times making estimated

includ¬

ttfree companies

share have been report¬

per

North

considerable

subsidiary
is
in
condition; earnings of

$4.34

Wisconsin-Michigan

serve

transit

prosperous

ed for the 12 months ended March

its subsidiaries, Wisconsin Gas
Electric

stocks).

The

over

by Wisconsin
(which also owns

the

mean

points
per
share
for
American stockholder.

owned

Based

$4,000,000 bonds all of

are

Electric Power

uted by the end of this
year, and
the balance by June 1948.
Total

holdings

the

suburban

October.

was

System, including bus lines,
railway
service
and
miscellaneous
properties.
From
the proceeds of sale the
company

indicated

over

bids

on
July 21 for
company's $32,Metropolitan Transporta¬

000,000

100

that

invited

tion

dis¬

each

The

that,

Holding Company Act
property would have
disposed of. President Pink-

purchase

early in May that the

management
expected
tribute five shares for
North
American
next

and

movement

one

into

petitive
Chamber

ley

every 100 shares of
North American held. It was also
announced

and

transit

to be

July 15, 2V2 shares will

average.

♦Address by Dr. Schmidt before
People's

logical
glibly

doubtful

the

stockhold¬

own

Mil¬

company recently announced
due to the

paid for

quarter

will not at¬

the legitimate goal of
stability is

ers.

ated

en¬

economic

holdings to its

years, perhaps decades, to com¬
pletely neutralize these war-cre¬

War and Stability

inate war,

pro¬

Company

has decided to begin to distribute
its

property,
Railway

Electric

earnings.

integration

American

transit

controls

Transport but the operations of
this company are not
consolidated
with the system

yields

been

upon

There is general
agreement, for
example, that unless we can elim¬

greater

North

important

tems

structure.

Europe and Asia.

Responsibility Diffused
If

part of its

gram

the money supply, including bank
Wars
greatly reduce, and in
tain our goals.
And worse, in its
some cases
credit, now may be favorable for
completely stop, pro¬
mal-functioning we may be lured, duction
of essential civilian com¬
employment, and again it may be step
by step, down the authori¬
modities:
deflationary.
machines
and
tarian routes
equip¬
now

currently

also

company

waukee

waukee district.

created

ignore

sustain

the stock
about 5.4%.

of the

excess

Prices

basis,

The

lion.

business

and

productive capacity is
fashioning the instru¬
war,
but this creates

■=-

was

ing the highly industrialized Mil¬

forces

persion and diffusion of power, to
function so effectively that its un-

solely

Socialist

671/2^<5>

paid and in 1946
$1 (less the
3% Wisconsin dividend
tax). This
year two 250 dividends have been
paid to date.
On the $1 dividend

indirect currency inflation to raise
the necessary funds.This war-

an,d

out of line with pre-war

com¬

derminers will receive little

surely for

Power Company is a
subsidiary of North
American Company, which owns
about 94% of the common stock.
The publicly-held stock in the
past has not been actively traded in
New York, but had a
Milwaukee market.
However, a New York
market has now
developed in "when delivered" stock, which was
recently quoted about 18-19.
Dividend payments have been some¬
what irregular, but in 1945

Equally important, Governments
during war, resort to direct and

York

Have

probably out of line
post-war stable relations.

castle

(New

our

progress

and

way.

his

planned

available supplies.

England,

This holds

our

ments

petitive enterprise system, under
which we have the greatest dis¬

commitments

ward

hard

"Times," May 18, 1947).

many

indirectly creates
supply, the basis for
transactions and for¬

being

man

the

of the condi¬
tions of employment and takes a
heavy toll in taxes. The Govern¬
ment

the

out

liberty-loving

economic

our

money income far in

Europe people

adequate

stabilizing

devoted

Socialism

contradiction

over

this

must

izen is free, within his means and
ability, to become employee, selfemployed or employer. The Gov¬
ernment

tion of

Cabinet Minister Lewis Silkin has
just announced that the tradition

cit¬

even

All

Even

not

to strike.

terms.

appears

make

so-called

democratic

illustration

one

societies, as it does for a voluntary
society such as ours.
During wars a substantial por¬

volve the abolition of free labor.2

Voluntary Economic System
Our type of economic system is

buy

abolition

but

activities.

private property
in production is also
likely to in¬

the streets.

worker

cannot

the few persons

one

wars

towards

(outside of the USSR, Nazi Ger¬
many and the other authoritarian
countries) who see clearly that

sugar

distort the economy. AH
reasonable men
may
agree that
unless we can eliminate
wars, we

implies co-equal power cialize the
human factor of pro¬
and authority to
implement that
duction, namely, labor and the
responsibility. It would not make labor union.
Sir William
Bevmuch sense to hold the
policeman
responsible for clearing the streets

during

and

years,

This
how

inanimate

factors of

inter-war
in

economy and accentuated the de¬
pression of the 1930's.

the road to to¬

substantial surplus

depressed state for near¬
ly a fifth of a century.
In time
it helped to break down*the whole

talitarianism.
One of the great
delusions of modern times is that

jobs

sustained

pros

thority to

of
sugar
reached 30c a pound.
After the war,
Europe's produc¬
tive capacity, added to
ours, cre¬

pro¬

was

broadest meaning

But the very
concept of "respon¬

price climbed.
Our farmers
were urged to meet the deficit. In
spite of our expansion the price

Labor Coordinate

respon¬

sible
and

The

Socialization of Capital and of

quarters

During the

sugar.

this dropped to 2,000,000 tons.

ated

to hold "busi¬

Schmidt

through

war

Authority

There is dis-

E. P.

and

getting done the
ductive work of society.1

Correlative

Dr.

cooperation

8,000,000 tons of

upon

devices for

job.

Responsibility
and

action

price system in¬
cluding free wages, and the free
price of capital—as the organizing

motive

first

emphasis

uncoerced

free and flexible

the

profit

Its

economy.

to take a

man

Electric

Chicago

Co.

transit

about

THE

COMMERCIAL & FINANCIAL

Connecticut Brevities

France and
of Foreign Private Lending

World Bank Loan to
Future

approved a recommendation of the directors to increase the capi¬
tal stock to 4C0 0C0 .shares by the issuance of 200,000 shares of $10

Co.

to holders of record June 4, 1947, at the rate of one new
sh^re held. The new shares are to be paid by
transfer of surplus to capital account. «This represents undistributed
earnings from operations of prior ?■
——
month of April, 1947, compared
years.
;
with $3,035,692 for April of 1-946.
It was '£ 1-0 voted to increase the
authorized number of shares from Net income was $24,391 'against
par common

;

Bank, in completing

lias
has

difficulties
confusion

and

step

toward its

flotation

step:
of

sue

pilot is¬
of deben¬

tures

by prospective
investors alike
vitally interested

scrutinized closely

and

both groups are

there are

However,

of the
Big Five among the United Na¬
tions and one of the leading capi¬
tal lenders of the past had to be

the

Netherlands

The

all pending
questions could be settled
satisfactorily. Moreover, the Bank

for

time to come. These
fully guaranteed by

some

of the

terms

bonds will be

Bank.

recently. ,sold

French loan should

French

will

and

opinion

public

have to improve

appear

Any
of the
to be
1 See

rate letter to
Bank

ible.

the

the issue

article in

second sets forth the amount

of Aug.

and

the

"Commercial and Finan¬
a detailed analysis of

for

rate

articles

interest

whieh have beer!

Charter.

Evidently, the Bank

.first

deals

12,110

July 2 tc
20, 1947.

90% of
of common
stockholders

stock

the

offered

$24

The

fiscal

share.
❖

stead

-4s

borrowers

real incentive to re¬

(Continued on page 38)

given wide pub¬

* '

to end March 31 in¬
of June 30. The report cov¬

nine
1947,
to
Of
dividends of $20,000, de¬
for
March

operations
ended

-urolus

$1.11 per share,

compared with

President

sjt

1947.;
?

■

•

tors of

of Whitney

The dis¬
July 21 to
An initial
dividend of 250 a share has been
declared payable July 2 to stock¬
provide additional annual revenue holders of record June 24.
shares to

200 000 shares..

be made
stock of record June 24.
tribution will

approximately $4,680,000.
company
reported gross
revenue
of
$2,982,106 for the

of
.

"The

!
*4
:

i >

Members

Merrill Lynch Dept.

New

York and Boston

Associate Members

New York

Exchange

Primary

Stock

Gordon S. Kerr

Curb

'
*

■

Common Stock
$10 Par Value

9-2211

Bell System

Price $31.75 per

Hano

members
New York Stock Exchange, ''an¬
nounce
that Thomas DeSalvo is
! now associated with the? firm in
its midtown office, 1441 Broad¬
Newburger,

*New York:
BOwling Green

the

Department.

With Newburger &

Securities

Hartford 7-3191

that
associated
in its Municipal

with

Markets in

Connecticut

firm

York
York

is now

Bond

"Hartford and

Packing Company

Beech'Nut

of the New
Exchange, announce

City, members

■

Pierce, Fenner &

Pine Street, New

Exchanges

140,000 Shares

■

Blake

Hamden, voted .a
100% stock dividend which will
increase its capital from 100,000
of

Company

Tifit Brothers

the securities herein mentioned.

The directors

was

Board of Direc¬
Landers, Frary & Clark.

elected to the

'•

■'

•
*

Company,

Trust

necticut

Torrington
Company declared an extra div¬
idend of 400 a share along with
their
regular
quarterly divi¬
dend of 400, both payable July
1 to holders of record June 16,
directors

The

Viceof The Hartford-Con¬
Rodman,

Samuel

Mr.

i'fi

$516,432, or $0.57 per share for the
12 months ended March 31, 1946.

Beane, 70

be construed as an offer to sell or as an offer to buy
The offering is made only by the prospectus.

31,

ended March 31,1947
$217,004,
with $7,227,724. for preciation of $62,984, and a trans¬
the preceding fiscal year. Net in-,
fer to reserve for possible loss on
come
was $1,015,216, or earning?
inventories of $75,000.

This compares

Merrill Lynch,

This announcement is not to

the

$117,596 net addition
after payment of taxes

showed

for the year

World Bank loans as

their

pay

of the loan

has changed its

company

months

income account

year

ering

Pitney-Bowes, Inc., showed ne!
sales and rentals of $9,936,940 ir
their consolidated

♦

Camnbell of
Hartford, President of the Con¬
necticut Light &
Power Co.,
was elected to the Board of Di¬
rectors of Peck, Stow & Wilcox
Company at the annual meeting.

Manufacturing " Co.

Russell

;

❖

Charles

Mr.

The
Southern
New England
...
should re¬ Telephone Company on June 6,
1947, applied to the Connecticut;
consider this policy and adopt a
Public Utilities.. Commission for
more
realistic one which gives
permission to increase rates to

flotation.

bond

with
The

The

with a

sponding month a year ago.

sales

division,

Haven

24,915,253 kilowatt hours,
a 19.1%
increase over the 20,943,074 kilowatt hours for the corre¬

stockholders purchased

expenses-and

inconveniences connected

the French Minister

all the

saves

rower

articles and a sepa¬
the President of the

■

4.9%. In

totaled

holders of record June

floated
In addition, the bor-<

privately.

kilowatt

31,196,213

with

for May, 1946—up

New

the

National

-';r -

dividend of 250 payable

cheaper than the one

definitions of the legal terms.

agreement will have

provisional only for the time
the

■

Finance.

provisions

analysis. of the
loan

22, 1946 of the
cial Chronicle"
the

sists of eleven

advisable and feas¬

to be

Manhattan

the

prevail will pay

agreement itself com-

The loan

the terms of fu¬

agreement wherever this may

ture

ported sales of 32,600,812 kilowatt
hours for the month of May com¬

'
pared
$675,000 '
hours

Farrell-Birmingham Co., Inc.,
declared an extra dividend of 250
in addition to its regular quarterly

4*4% for a much
unpaid subscription of the
will certainly give careful study the
larger and long-term credit.
Ob¬
U. S. Treasury and, therefore, will
to the reaction in financial cir¬
viously, the World Bank loan will
nut be subject to any doubt what¬
cles of the U. S. A. as well as to
ever.

and

Providence

and

Co.

Co.,

Bank

from

17.9%.

Bridgeport
division
of
Illuminating Company re¬

The

England Mutual Life

that direc¬

;

But no easy or
$20 million of ten-year bonds to
quick result could be , expected a group of investment bankers at
especially in this particular case. 99 and at 3%% interest. Total cost
Those deficiencies of the Char¬ of the loan certainly will be above
4%.
The
same
government is
ter and the loan agreement will
have no effect upon the prospec¬ slated to get a loan from the World
tive debenture issues of the Bank Bank in the near future and if the

possible, perhaps before

give little incentive in
tion.;

favor of investors.

special consideration in
many ways. Moreover, the Bank
was under strong pressure to con¬
clude negotiations as quickly as
given

repeatedly its
intention not to compete with the
free market but, on the contrary,
to make every effort of inducing
borrowers to apply to the market
if they are eligible for accom¬
modation
there.- Many
of the
Bank's clients should be border¬
line
cases
that should improve
their credit rating quickly enough
for a try on the open market. But
the
Bank's interest policy will

provisions of the Charter

Insurance

1946. This

repreoiinfs an increase of

United

$1,325,000 '

purchase:

the

nance

from New

reported sales of 40,782,000
hours compared with

34,669,000 in May of
,

The Universal Winding Co.
obtained 15-year loans to fi¬

the JJv~S.

indicated

Bank has

any

that were discussed in
above-mentioned article are
naturally / reflected in the loan
agreement and, the Bank should
not be blamed for such deficien¬
cies.
However, this should not
exclude future efforts to improve

Obviously, France as one

Li?ht

Electric

kilowatt

Co., Inc.

of Farrel-Birmingham

seems
to contradict
another of its basic policies.- The

the

future.

•

pany

the
Com¬

of May,

month

the

For

Hartford

justment for certain accruals
for plant and inventory of The
Atwood Division
(Stonington)

guarantee

■comings

good reasons

considering the French agree¬
ment as a class by itself rather
than a general precedent for the

for

in view of

borrow upon

and practic¬

particular, the Bank had to be
guided and was bound by the pro¬
visions of the Charter; its short

how the vague

see

rates

actual

policy of giving debtors the
of the low- interest
the Bank will be • able to

ad-4

$772,981

was

$1,119,770, respectively.

Co.

subject to

$1,109,000

paid

income

net

while

recently announced that it had

benefit

full

provisions
of the Bank Charter would be
interpreted in an actual case.1
to

This

France
total charge of
p.

Winding

Universal

The

3%%

41/4%.

event, the agreement
will have to be appraised with a
view to actual conditions rather
than from any ideal standpoint.
In

common

new

; ■

deben¬

rate, of

the

Tnus

will have to pay a

ability.

Weftiwurro

Ernest H.

the

for its own

pay

commission

record

practice and given an

interest
rate it will

charged to France would indicate
that
the Bank expects^ to pay
about 3% for long-term debenture
issues.
Including
the
special

they are put

of performance

borrowers

test

agreement
would,

only

into

that
loan

this first

clear

come

been

aware

possible of that

tures. /

Second, the scope of certain pro¬
visions of the agreement will be¬

short time.
The B a n k

has

much

pected within

have

public

possibility of making

the

ex¬

a
above

the

payable July 1 to-holders of
record June 5, 1947.

stock

rate of

setting

somewhat

proposed by
the Bank are fully known as well
as the reasons' for the:f inclusion
or dropping from the' final draft, it
will be difficult to get a full pic¬
ture of the Bank's intentions and
'future
policies.
Therefore, the
Bank should give consideration to

assigned goal.
The second

icy

declared,

announced a pol

The Bank has

$12-,-

against- $11,785,922 for the
corresponding months last year
331 207

initia! dividend of $0.63 was

months.

same

The four months' gross was

sion for the above increase.

special discussion.

some

original terms as

the

made
first decisive

and has
a

main reasons. First
mucn
pertinent material has not
been, made public; this refers par¬
ticularly to the record of the pro
tracted loan negotiations. Unless

being for two

for its first loan
finally become operative. I
managed to overcome initia

negotiations

these

$251,516

making provi¬

to SCO.000,

375 000

determina¬
rate needs

licity.
However, the
tion of the interest

for each old

The "World

Arrcw-Hart & Hegeman Electric

the stockholders of

On June 4,

' ■,. '
Writer analyzes provisions of World Bank French ban.
Criticizes interest rate as too low, biit says
restictions on use of loan conform to Bank's charts/ and afford reasonable protection, bat will lead
French opposition on ground of political interference. Upholds proposal a code to govern relations
between government borrowers and private lenders be applied to bank.
j

WEINWURM

ERNEST II.

•

Thursday, Tune 19, 1947

CHRONICLE

(3234)

Teletype: HF 365

Hano!,

way/New York City.
;t'ir

share
Fifty-sixth Year of Dealing

i
i

♦

•
.

-* ,

•

«
•

♦

» •

Copies of the prospectus may be obtained from the undersigned only
in states in which the undersigned is qualified to act as a dealer ..
in securities and in which the prospectus may legally be distributed.

F. Eberstadt & Co.

*•

Connecticut Securities

1'"

Primary

CHAS.W. SCR ANTON &

Ing

Members New
m

June 19,1947.

Markets—Statistical Information

2-4301
Hartford 7-2669

Npw

London

York Stock Exchange

New Haven
New York

CO.

6-0171

Canaf 6-3662

Teletype NH 194

Waterbury
Danbury

3-3166
5600

Volume 165

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4604

(3235)
verts

Missouri Brevities

Michigan Brevities
National

Detroit

Bank

Vice-Presidents

Assistant

Harold

Asplin, Gerald F. Dewhirst, Wm. H. Hoey and John H. Wells have
been promoted to Vice-Presidents,
Chairman Walter -S. McLucas
announced.

divi¬

Detroit

has approved
list

200,000

Stamping
plus

Exchahge

Stock

Lansing
common
stock,
of

Co.

additional 100,000 shares
common shares, R. C.

of unissued

Chairman

O'Donnell,

the

Stock List Committee, said, sub¬

ject to registration becoming ef¬
Trading in the issUe is

fective.

expected within 30 days.
*

Directors of Dow. Chemical Co.
of

Michigan, have rec¬

Midland,

ommended

stockholders

forrl split of outstanding common
stock and a change in the com¬

issued

The

stock.

stock¬

holders will meet July 12.
He

H--

beeri admitted

has

called

special

meeting

change.

Accordingly,

the

headed

••

proposed

20% stock divi¬

dend, President Howard P. Parshall
semi

payable

Co.

Thomas Graham, ,the Bankers
Bond;Co., Inc., Louisville, has
made public- a circular which he

basis.

ranging from .90% to 1.50%
f

Co.

Power

com¬

cumulative
has been ad¬
mitted to trading on the Detroit
Stock Exchange, according to
"It. C. O'Donnell, Chairman of
the Exchange Listing Committee. It includes 4,123,432 shares
*
of common and 547,788 shares of
stock and $4.50

stock

preferred

preferred.
H:

Trading volume on
Stock

the Detroit

dropped slightly

Exchange

in May compared with the previ¬
ous
month.
Total
transactions

271,599 shares with a market
$3,355,483, compared with

were

volume of 285,153
valued at $3,617,273.
April

un¬

June

shares for each
be voted on at a
meeting . at the
company's
Detroit offices on
July 8. A vote will he taken

Louis public

•

setting.

and local gov¬
ernments

be -dated

July

(H. R.
The

1881).

measure,

a c

duced by
and

is- intended

prohibit

the

On June

f
t

California,
expressly

Securities

and

;

Ex-^

number of

nated by statute.

The

material

Mr.

Graham

April,

year

due

was

21,243,

after
taxes, was

1947,

increased

material

and

costs,

Gas

„

income

Net

Light

months

for

Co.

March

ended

...

Laclede

The

the three
31, 1947,

$757,066,

was

cents

per

24^ per share in the cor¬
period
last
year.
March

responding

For the 12 months ended

1947,

31,

the

$1,967,319,

earned

company

81 cents per share.

or
*

H«

The

37th

report of The

annual

Co. and
ended
31, 1947,
shows net sales
amounting
to
$330,331,868
(in¬
cluding sales of Kaufmann and
Department Stores

Jan.

Taylor

aggregating

Stores

$75,-

well

profit after taxes were $18,-

net

826,697

filed

the

for

1947

year,

after

equal

dividends,

preferred

According to

letter of notifi¬

June

5 with the

per

number

the

average

common

out¬

year,

and

standing

during

sion, the Central States Paper &
Bag Co., St. Louis, plans to issue
1,500 shares of preferred stock at
par
($100 per share); and 2,000
shares o,f $10 par common stock

compares

with $7,680,039, or $2.94

$16.50

will be

share, for the year

Common

ended Jan. 31,

1946.

to be used for addi¬

operating capital.
no underwriting.
*

There

KING SEELEY
5% Convertible Preferred

Stores

Bros.

Edison

per

the

share, the proceeds

per
are

Sales

Metropolitan St. Louis
COMPANY

718 Locust Street

Louis

Saint

Mo.

Central 8250

St. L. 499

L. D. 208

written

The directors, at a subsequent

meeting, authorized the issuance

being distributed
-includes

letters

Charles

Congressman

Wolverton,

New.

Jersey,

Chairman of the House Interstate
and

Foreign

Commerce

Commit¬

municipal law firm of Wood,

King &
Wachs

of the

new

about

July

clared

22*

cash

cents per share
issued
on

The

June

the presently

June

payable

with

stock,

the

Edward

The

Co.

and

which

was

Feb.

City, on

business

9, its agreement of merger
its
subsidiary,
Schulze

Bread

Interstate

to make effective

opening

the

to holders of record

1947.

directors

6 voted

stockholders

merger

approved
on

May

ST. LOUIS

plan,
the

13,

con¬

H. Dieruf of

POSITION MARKETS IN

Kentucky Municipal League.

Included also is text of Rep. Hinshaw's

Bakeries Corp., Kansas

1947,<. and de¬
dividend dfL 40

common

Aug. 1

stock

common

Dawson, and by Carl B.

and

bill,

previously

given

the "Chronicle" of March 13
page

1379.

last,

Peltason Jenenbaum Co.

Berkshire Fine Spinning Assoc. Com. &

Pfd.

BUILDING

LANDRETH

ST. LOUIS 2, MO.

Chicago & Southern Air Lines

L.D.240

Teletype—SL 486

.Hearst Consolidated Publications "A"

;

Mid-Continent Airlines

■

in the SEC Act of 1934 are elimi¬

15,000,000 with a $2.50 par per
*

shares outstanding at the

were

change Commission from regulat¬ man
Inc., St. Louis, for May, 1947
Refrigerator Co., and (2) to
ing transactions in
State
and
amounted
to
$6,569,198,
as
increase the authorized common
municipal securities. As Mr* Gra¬ stock from
250,000 shares to 1,- -against $5,797,928 in the same
ham and others have pointed out,
month
last
year,
or
an
in¬
000,000 shares of no par value.
the threat of such possible control
crease
of 13.3%.
For the five
The directors were then author-'
over financing operations of States
months
ended
May
31,
1947,
ized to issue two shares of com¬
and local units by .the presently
sales totaled $27,533,496, a gain
mon
stock in exchange for each
constituted
Commission
or. its
of 8.5% over the $25,368,224 re¬
present outstanding share of com¬
successors will prevail until such
ported for the same period in
mon stock.
time as the ambiguities contained
•.
Hs
Hs
Hs
v1946.

authorised shares from 6,000,600 with a par value of $5 to
■1

equal

Securities and Exchange Commis¬

approved proposals (1) to change
the name of the company to Huss-

21,

the total

State

was

This

its subsidiaries for the year

cation

1, this year, the company

change

and

Federal

close of the fiscal year.

$7.12

1'6," the stockholders of

July

stockholders to amend
the certificate of incorporation

all

income.

May

5.12%.
income

Hussman-Ligonier Co.,- St. Louis,

May

■

for

of which

tee; David M. Wood of the New

among

for

sion

Rev¬

carried

compared

loss ; for

tional.
o

allowances, showed net
earnings of $503,450 after provi¬

Revenue

21.23%.

passengers

litigation testing its validity.

Rep

Hinshaw

1946.

decrease in passenger loaded
factor.
as

outcome of the

stances pending

month

labor

corporate and other busi¬
Payments of this tax had
been
withheld
in
many
in¬

Thomas Graham

increase

compared with the

decrease

this

Judge

nesses.

intro¬

turns and

$19,394, as compared to a net .758,537). This compares with total
profit, after taxes, for April, 1946, sales of $202,449,639 for the pre¬
of $20,796; The loss for April of
ceding fiscal year.
Consolidated

tionbythe
House of Repr e
sentatives,

Carl

reports that

$424,680,.

was

5.44%

Net

34 of 1% on the gross earnings
of individuals and net profits

now

awaiting

corporation

provision

$2,500,000
annually from the
tax,
which
went
into
effect
on
Aug. 1,.last, at y'a rate of

Hinshaw

Bill

Circuit

•

York

to
'

St. Louis would derive

City of

b y

Congress

Inc., St. Louis, in its first full
peacetime year on a gross sales
amounting to $9,324,512, less re¬

882,

underwritten.

not

20,156,

ago

Notwithstanding adverse con¬
ditions prevailing in the industry,
Midwest Piping
& Supply Co.,

share, as compared with $586,-

enue

Court,

June

...

Commis¬

stock

common

706 to 496,673* or

opinion handed down on
9, sustained a lower court
ruling that the St. Louis munici¬
in

issuance

miles flown increased from 409,-

Missouri' Supreme

after charges and Federal taxes,

same

an.d accrued interest will be
*

The

Exchange

the

1947,

considered.

dividend

share, the proceeds to be add¬
to working capital. The issue

1951, inclusive. No bid at less than
par

quarterly

per

common

the operating revenue for April,

1947,

mature serially from .1948 to

and

old.

30,601.4
at $7.50

The

It had been expected that the

and

for

will

improvement

$2.50 par value

purchase of $4,000,000 City

St;

$5 share will
stockholders'

•

per

Robert J. Kirkwood at St. Louis.

Ken-.

the; States

plan to split
stock into two

the

Corp.

Chrysler

'Ht

sion

24,
by Louis Nolte, City Comptroller,

Details

curities

months

tucky

value of

certain

(CDST)

a.m.

the

share on the new pre¬
ferred stock, payable July 1 to
holders of record June 16.

shares
10

•

lines, Inc., Kansas City, filed a
letter of notification With the Se¬

cials

was

mon

stock

shares
of

to $1.30 per share on the 386,28D

On May 14, Mid-Continent Air¬

pal income tax is unconstitutional.
It unanimously affirmed the deci¬
sion-invalidating the tax which
had been
handed down several

is distributing, among public offi¬

the

1V2 % road bonds due Dec. 1,
1950 through 1959.
The account
bid 100.61 for I V2S equal to a net
interest cost
of
1.42375%.
The
bonds were
reoffered at prices

Consumers

Sealed bids will be received
til

And Local Governments

approval

S. C.,

;

purchas¬
Spartanburg,

issue

per

received

bonds

Hinshaw Bill's Passage
Seen Vila! fo States

Charlestown,

S. C. were the successful
ers

portance to all

declared

was

Michigan Corp.
with its associates, R. S. Dickson
& Co. of Charlotte, N. C. and E. H.

Pringle

$1)

$42,714,000,

four

three

taxes

•

selling stockholders.

First

The

dividend,

$2.50

Aug.

regular

(par

Candy Co. at $8.50

Nutrine

preferred

for

sponding period in' 1946.

forth the im-

annual

by the board.
•.

The

announced.
-

stock

common

the

against $38,744,000 for the corre¬

June 12 publicly offer¬
issue of 100,000 shares of

of the current year

cago, on

stockholders for June 24 to vote
on

Co., Inc., of St. Louis and Chi¬

for. the

,...

syndicate,
Nicolaus

,,:

(Mo.)
reports total sales for May, 1947,
of $11,024,000, compared with $8,625,000 for the same month last
year, and for the first five months

Stifel,

deal¬

stricken from the N. Y. Curb

Market.

common

Western Auto Supply Co.

acquisition of additional

underwriting

the

property, etc.
An

each

shares,

share, the net proceeds of which

The Commonwealth Bank has

and

tion

the New York Stock; Ex¬

cents

Traction Co.,
of Michigan Consolidated,

will

Udylite Corp.'s $1 par common

were

common

stock

common

will'be used to finance construc¬

■

to American Light &

] pgirent

shares of similar par value.

also asked stockholders for

into

4,484,375—

Manufactur¬
ing Co. with a plant in Wyandotte,
Mich., is considering the issuance
of a new preferred stock to obtain
capital for expansion. Stockhold¬
ers
on
July 3 will act to create
150,0007shares of new preferred,
$100 par, and to increase the pres?
ent authorized* capital stock, ;,$1Q
par, from
1,000,000 to 1,500,000

ings

thorization of 400,000 shares
of
second preferred stock, which it
is expected will be convertible

Pennsylvania Salt

stock

au¬

is
Hs

Michigan to Delaware. Dr,„ Willard Dow, President, said directors
an

total, of

The

share.
now

pany's state of incorporation from

$1.20

and

basis

stock

initial

interest. The net proceeds, together with the sum of
received
on
June
9,<S>—
—
—
—&
1947, from the sale of 276,805 ad¬
paid quarterly dividends of 25

ditional

<S>-

application to

102.05

date

The directors also declared

Gardner, all of St. Louis, offered to the public $6,000,000 of Michi¬
Consolidated Gas Co. first mortgage bonds, 2%% series due 1969,

the

new

..V $3,875,270

share, payable July 1 to holders of record June 24.

dividend

$4.80
on

banking-group, headed by Halsey, Stuart & Co.

gan

Directors of Manufacturers National Bank-have declared a

The

12,

effective

$5 dividend preferred stock into

Inc. of Chicago, which included, among
others, JNewhard, Cook & Co.;'
Stiielr Nicolaus & Co., Inc.; Metropolitan St.-Louis Co. and Reinholdt
&

'
*

dend of $3 per

June

the

Old Ben Coal Corn

Southern Union Go*

Charles A. Parcells & Co.
Established 1919
Members Detroit

C. H. BUTTON

Velvet Freeze

Collins Radio

Stock Exchange
Latest Information

639 Penobscot

Building

DETROIT 26, MICH.
slephone

lolph 562S

Teletype
DE 206

^teel

Taca Airwave
1

Michigan Markets

-tional Oats

Delhi Oil
.

Stix & Co.

Products Eng

Universal Match

INVESTMENT
509

Moreland & Co.
Member

105!

Detroit

Stock

Exchange

Bay City

SCHHI k. *11111 Ell COMPAN Y

—

Lansing

Bell

Filety*

♦

Mo.

(tABFilu*

ID
—

olive:

street

St. Louis l.Mo,

ilcfing

Penobscot Building

DETROIT 26, MICH.

SECURITIES

"liffs Corp.

Rockwell Mf"

Muskegon

■ST4**

"wasgggy

-*•

I»2V

123

Members

St.

Louis

StocE

Exchange

Thursday, June 19, 1947

FINANCIAL CHRONICLE

THE COMMERCIAL &

(3226)

by total earnings, nevertheless, is far greater

ter's dividend coverage

Municipal Forum
Genera
New York

Home

This Week

—

Insurance Stocks

Total Net

Profit

Income

$0.61

$1.81

Operating
$2.41

1942

0.21

1.66

0.95

1.60

1943—

1.91

1.50

2.28

1.60

1944

though

0.34

1.53

1.61

1.20

1941—

The Mu¬

Presidency of

the

of New York,
David M. Ellinwood,

nicipal Forum
succeed

Co., has been

Forgan &
T.

Glore,

nominated

Vice-Presidency; George

the

for

Russell, Jr., of

Service.

Moody's Investors
Paris

Brothers,

Ragsdale, of Lehman

Secretary,
of Fidu¬
ciary Counsel, Inc., for Treasurer.
John Pershing, of Masslich &
Mitchell, and Dr. Frederick L.

has been

have been
the Board

years.

meeting of the Club,
the new officers and

The annual

which

be elected, is
scheduled for Monday, June 23, at
the Lawyers Club, 115 Broadway.
The Nominating Committee con¬
sists of the following: Melbourne
will

Governors

Trust Com¬
pany; John R. Camp, of Central
Hanover
Bank
and Trust Co.;
Harold H. Hahn, of Wood, King
and Dawson; Jerome C. L. Tripp,
of Tripp & Company, and John A.
Stephenson, Jr., of Dun & Brad-

of Fulton

Moyer,

Reynolds to Be

Reynolds will be

1942

Income

Operating
$2.79

Vine

Street,

and

York

Exchanges,

nolds,

admitted to part¬
Bartlett & Co.,
members-of the
Cincinnati Stock

July 1st.

member of the

4.73

8.42

3.50

4.24

5.15

7.59

3.00

2.57

4.35

5.87

3.00

1.07

5.12

5.26

3.00

$4.72

$6.65

1.75

3.55

3.40

2.67

4.63

2.92

2.95

1.80

0.08

3.03

3.13

1.80

0.69

2.99

3.78

time

1.80

Total Net

Profit

Income

Operating

Dividends

$2.50

Year

—

6-year average-

National

Fire

Co.

Insurance

Net Und.

Net Inv.

Total Net

Profit

Income

Operating

Dividends

$3.45

$3.44

$2.00

3.32

3.66

2,00

4.71

2.00

Year
1941

1942.

$0.68

1.60

3.16

—3.36

1943_

3.12

—

1944

•

1945-

1946

1.30

3.11

v—1.81

•

3.37

—3.27

—

2.00

.—0.23
1

• •

■

0.10

2.00

•

$2.00

$2.16

National's $2 dividend
while Aetna's $1.80 is
by $3.47.
Note Aetna's underwriting experience in com¬
with National's, and note also Aetna's better investment
trend, even though its six-year average is below that of

hardly need any comment.
is backed by average net earnings of $2.16,

'
Another interesting comparison is that of Great American with
Security of New Haven, both stocks of which are selling at approxi¬
-

mately $28.
Great

American

Co.

Insurance

Net Und.

Net Inv.

Total Net

Operating
$2.38

$4.38

$3.29

0.24

4.46

2.20

—0.02

4.20

3.97

—0.68

4.19

3.44

—0.81

3.52

2.61

2.50

—1.22

4.01

2.75

2.50

$3.04

$2.50

Dividends

Fire

States

United

Co.

Insurance

Net Und.

Net Inv.

Profit

$1.28

$2.57

—0.85

2.52

1.41

—

2.50
2.50

2.50

(Parent)

Total Net

Income

•v

Operating
$3.74

Dividends

$2.00
2.00

2.63

3.23

2.00

2.68

3.36

2.00

0.68

2.65 '

2.81

2.00

2.17

States

<1.60

1.41

2.85

4.75

2.00

$2.65

$3.25

$2.00

$1.02

6-year averageUnited

$4.13

—$0.56

Year

$3.26

6-year average- _—$1.03

2.00

—$0.86

1943—.

$1.80

$3.47

$2.86

$1.01

1941—.

affiliates, hence figures are on a

Fire owns no

The striking thing to note in this comparison is the
underwriting experience of Fire Association over the period
versus the relatively favorable experience of United States Fire, par¬
ticularly in 1946. True, current dividend yield favors Fire Associa¬
tion, but not current earning yield. It is significant that Fire Asso¬
ciation used to sell between 70 and 80 in 1941 compared with around
50 for U. S. Fire, while today the former is 51V2 asked and the

"parent" basis.
poor

0.87

1.75

1.99

1.20

latter 52

Cincinnati

1943.

1.12

1.74

2.19

1.20

1944,

0.95

1.82

2.27

1.20

1945_

0.65

1.82

2.21

1.20

1946.

—0.14

1.96

1.78

1.20

other equally interesting and instructive
could be presented,, but the selections offered may prove
the inquiring investor, especially if he carries these
studies a few steps further and includes comparative
dividend yields, earning yields and so forth.

$2.14

$1.20

Year

$0.71
Security

$1.80
Insurance

$1.20

Net Und.

Net Inv.

Income

Operating

Dividends

$1.99

$2.40

$4.36

$1.40

0.56

2.73
2.31

1.40

—1.30

2.18

0.82

1.40

1945———

Stock Exchange

N. Y.

7-3500
1-1248-49

Telephone: BArclay

Trading Dept.)

—0.20

2.30

1.88

1.40

—4.20

2.23

—2.05

1.40

6-year average——$0.47

$2.28

$1.68

$1.40

again, little comment is necessary, for the record tells the
story. Note especially the uptrend in the investment income of Great
American, compared with a moderate downtrend for Security. How¬
ment

Security does cover its $1.40 dividend 1.6 times by net invest¬
income, compared with 1.5 times for Great American The lat

Bank Stocks

of INDIA, LIMITED
Bankers

the

Government

Head
,

SEUKTH

Office:

26,

4,500 aged and retired min¬
of the Baptist faith.,
Mr.
Case
has just recov.erpcl

some

isters

aries

Branches

STREET

India,

Colony

and

Burma, Cevlon, Kenya
Aden and Zanzibar

TELEPHONE

TRINITY 7«7I

Paid-Up

TELETYPE: LA 271, LA 280

AND

Reserve

Jbitecl *n.l
80STON

Connecting

NEW YORK
CHICAGO

OALLAS

•

PHILADELPHIA • DETROIT.
•

ST. LOUIS

SAN FRANCISCO

•

SEATTLE

The

Bank

Capital
conducts

banking

and

every

exchange

description
business

Trusteeships and Executorships
also

William
J. Herbert

Case

eon was

undertaken

the Board and

of distin¬

service as a member of
also the able man¬
whieh he-ajaddhis associates

guished
ner

the

•

Finance Board.
Conklin, President

Board,

presided

the

introduced D,r. Har¬
old R. Husted, Dr. G. Pitt' Beers,
Dr. Oren H. Baker, Mr. Malcalin
R. Carey, Dr. M. Frest Ashbrook
(Continued on page 40)

luncheon and

Case's 25 years

of Mr.

succeeded
Bovenizer
Co., an associate

Kuhn, Loeb &

member of the

given
recognition

£2,000,000
£2,300,000

Fund

member of the, Fi¬

Chairman by G. W.

lunch¬

The

Subscribed Capital—-£4,000,000

Board, he will be

tion.

10S ANGELES 14. CALIFORNIA

ANALYTICAL

nance

Conven¬

tist

hjs public

capacity as

the

Northern Bap¬

and is noyy

connections and while he has- con¬
sented to continue in a consultant

Mission¬
Benefit
of

major operation

relinquishing many of

from a

Ministers

the

Board

Bishopsgate,

London, E.

California

WEST

■t.

210

000

members
staff

finances of this $31,000,Foundation created to pension

dled the

circle

and

Board have han¬

the Finance

large
of
his
friends,
in¬
a

and

Kenya Colony and Uganda

General Over-the-counter

SALES SERVICE

attended

was

and

rates.

Street bankers

NATIONAL BANK

Insurance Stocks

Securities

of New York Federal Reserve
Relinquishes chairmanship of

cluding several
Wall

TRADING MARKETS

Honored

Bank deplores low
Finance Board of
Ministers & Missionaries Benefit Board.
Succeeded by G. W.
Bovenizer of Kuhn, Loeb & Co.
Mr. Case in his 75th year, con¬
tinues as active Director of City Bank Farmers Trust Company.
A testimonial luncheon was held in honor of Mr. and Mrs. J.
Herbert Case at the Biltmore Hotel, this city, last Tuesday, which
<§>
:
'
"
interest

Here,

ever,

comparisons
helpful to
comparative
market action,

Former Chairman

1.40

2.01

1944

Laird, Bissell & Meeds
BROADWAY, NEW YORK 5,

2.50

0.30

J. Herbert Case

Total Net

Profit

1943———

V2.

Many

Co.

1946

Gibbs, Manager

Net Inv.

1942_

STOCKS

Teletype—NY

of Philadelphia

Association

Net Und.

Mr. Rey¬

with the firm
Manager of the

York

Fire

$1.71

INSURANCE

New

comparison is between Fire Association of Philadelphia
the stocks of which both sell around $51.
:

and United States Fire,

1942—.

1946

Year

Members

$3.00

period.

of the

1.80"

1944

0.07

••

of dividends by net
investment income. To put it another way, Home generally pays out
in dividends a larger share of net investment income than do most
companies. It reduced the dividend in 1944 through elimination of
the $0.40 extra. Insurance of North America's coverage of dividends
by net investment income is much wider, also its coverage by total
net operating profits.
It should be noted, furthermore, that North
America reported moderately good underwriting profits in each year

1.80

—

$3.55 1

The next

2.78

1942—

___

Income

and

2.59

6.61

$3.00

$0.79

BANK

5.80

Characteristic of Home is its slim coverage

$1.80

$2.77

6-year average--

Bell

4.51

Profit

Unlisted Department.

3.24

Dividends

1941.

Exchange, has been
some

$4.44

6-year average-

Dividends

$0.06

1941

National.

nership-in Benj. D.
New

$3.55

Operating
$6.94

1945

Total Net

Profit

parison

CINCINNATI, OHIO—Joseph

for

Net Inv.

income

Benj. Bartlett Partner

313

Total Net

Income

1944—

Co.

Insurance

Aetna

Net Und.

backed

Jos.

America

North

Net Inv.

These figures

street, Inc.

119944536562—:

Insurance

Profit

comparisons are therefore presented
for the six years 1941

1943

$1.40

$1.65

$0.71

1946

1945

& Bradstreet, Inc.,
nominated to serve on
of Governors for three

of Dun

Bird,

$1.87

1.20

1943

$48 per share.

Year

1.69

1942-

which show the rec¬
to 1946, inclusive. In
each case earnings are consolidated, unless noted otherwise; under¬
writing profits (which are adjusted for the change in premium re¬
serve equity), and net investment income, are before Federal income
taxes, but total net operating profits are after these taxes.
The first comparison is between Aetna Insurance Co. and Na¬
tional Fire Insurance Co., the stocks of which are each priced around

nominated for

2.26

1.82

1941__

his pick.

A few

1.58

Net Und.

ord of selected companies

Rudolph J. Harper,

and

1.35

Year

the operating earnings of one year alone are not suf¬
ficiently significant or conclusive to stamp the stock of a company
either desirable or undesirable.
The inquiring investor will want to
know how the company has fared for a series of years, before he
takes

$1.60

1.20

6-year average

Of course,

for

■

—

1946

results in 1946.

Dividends

—0.16

1945—

vehicle experience, combined with the
necessity of setting aside exceptionally high unearned premium re¬
serves, rendered underwriting results quite unfavorable for many
companies. To some extent, the same was true for the year 1945.
However, a number of the stock fire insurance companies, despite
these factors, were able to report comparatively good underwriting

Paris S. Russell, Jr.

Co.

Insurance

Net Inv.

Year

1946, and unfavorable motor

Shelley

in prices, however, Home sell-

Net Und.

"comparisons are odorous," as Shakespeare once
remarked, or "odious," as John Fortescue said, the investor is com¬
pelled to make them if he would be successful.
Therefore, in order
to help the investor in fire insurance stocks, this column proposes
to make some "odorous" comparisons.
It's an old story by this time that abnormally high fire losses in
Even

Leander I.

There is a big difference

DEUSEN

By E. A. VAN

nominated

been

has

Authority,

the market.

Shelley,

Leander

Bank and Insurance Stocks

Nominees for Office
Counsel of the Port of

Security's.
1
'
comparison of Home Insurance with. Insurance Company
North America is always interesting, for both stocks are favorites
than

.Volume 165

Number

4604

THE COMMERCIAL & FINANCIAL
CHRONICLE
June

McOloy Defines World
Bank Relations to

Investment

Bank

struction and

for

Recon¬

Development, in the

course

New

York

address

before

the

State Bankers

York

(New

June

Field

Day

(Los

Angeles,
of

Los

Angeles annual spring party
the North Shore
Tavern, Lake

June 27, 1947

York.

Bond

Day

the

Echo

Westfield,

Club,

New York Stock Exchange 48th
Annual Golf Tournament at the

Winged Foot Golf Club.
July 10, 1947

(Boston, Mass.)

ciation annual outing at the Wood¬
land Golf Club, Newton, Mass.

July 11, 1947

New

Jersev

(Philadelphia, Pa.)

Investment Traders Association

Philadelphia Silver Jubilee and

25th

(Westfield, N. J.)

Club

summer

July 22, 1947 (Detroit, Mich.)
,?
Security Traders Association of
Michigan Annual Sum¬

outing

Llanerch

Country Club, Havertown, Pa.

Golf

mer

Party, Orchard Lake
Club.
Also a
cocktail
and buffet dinner on July

Country
party
21

at the Savoyard
Club, Detroit.
Aug. 10-14, 1947 (Boston, Mass.)
National Security Traders Asso¬
ciation annual convention..

Sept.

20,

1947

(Chicago, 111.)

Municipal Bond
cago Outing.

Club

Annual Convention

Beach

wood

Hotel.

program of fi¬

nancial aid for

reconstruction
and

rehabili¬

tation is to be

John

The small-town bank that

J. McCloy

carried out by

grew

the World Bank.

According

to Mr. McCloy:

"The

emphasis on the produc¬
tive character of the
loans which

be First in World-Wide Banking

The City Rant
o)

incorporated

Xew Tori

atK2

be made and the
emphasis on
their
repayment, both of which
can

were

Woods, spell

the Articles

the

out

area

operation
of
the
International
Bank for
Reconstruction and De¬
velopment.
It is the function of
the Bank to create
and

productive

develop

member

facilities

countries.
"There are,

however, such

damental needs

fun¬
food and fuel to

keep people alive
the

world's

and

operation in order to help
basic economy
moving.
"I

State

not

know

how

Department's

been

and

warm

needs

consequent1;"
beyond the Bank's area of

may £o

developed

far

the

has

program

what

get

its

full

extent

may be in Europe.
If, as
result of some
general economic

plan,

the

supply

nations

the

concerned

immediate

and

can

basic

necessities such

as food and fuel,
International Bank will have

the

that much better
to

operate.

mental

countries

will be made
in

ahead,

loans

and

years

productive
become

can

the

where

months

Bank's loans

in the

are

by the International

the

greater

which

The better the funda¬

living conditions

member

Bank

base

abilities

the

and

the

the
bor¬

rowing countries will be to repay
them.

Xn 1812,

"May I emphasize that the role
of

the

make

and

International

possible

the

Bank

development

that

reconstruction
of

member

own

In this way, we

areas.

work toward correcting their
present abnormal need to buy al¬
most
everything in the United
can

States, and we can move toward
goal of reducing the present
dollar shortages, restoring to those
the

member

able

countries

relationship

exports
will

and

afford

their

some

their

imports.

This

sound

reason¬

between
basis

for

create

ber

countries

Eiirope ' and
needs

time

the

ested

met.

Bank

also

have

the

vitally
can

same

inter¬

done

to bring forward a
plan on which fur¬

ther aid particularly in the fields
of'food
and
other
basic
living
necessities

can

advanced

national governments.
fore
to

not

16, 1812, the
conflict

only prepared but

au¬

thorized scope in any constructive
overall economic plan that
may

develop."

Europe

over

the

was

City Bank

ANNI-VERSARY-

young

A lot has

tomers

its

start

own

the

war

verge

soil.
two

days later.

Only 96,373 people

Manhattan Island. Now the Bank's

cus¬

in Greater New York and in
every commercial

that

population by

hundreds of thousands. During every one of its
135 years the Bank (a national bank since
1865) has
expanded its services and widened its enormous
many

circle of clients and friends.

ARGENTINA

Buenos Aires
Flcres
Phza Once

Rosario
BRAZIL

Rio de Janeiro

Recife

(Pernambuco)
Santos
Sao Paulo
CANAL ZONE

Balboa

CHINA

OF NEW YORK

Tientsin
COLOMBIA

•

MEXICO

■,

Santiago
Valparaiso

Mexico City
PERU

CUBA

Lima

Havana

Manila

Lonja
j

Cardenas

Manzaniilo
Matanzas

Santiago
ENGLAND

London

PUERTO

RICO

San Juan

Arecibo

Bayamon
Caguas
Mayaguez
Ponce

117, Old Broad St.
11, Waterloo Place
HONG

REP.

PANAMA

KONG

INDIA

Bombay
Calcutta

for 'color-illustrated booklet describing w Overseas Banking Service"
Deposit Insurance Corporation

Medellin

IS.

Cebu

Galiano

Caibarien

PHILIPPINE

SINGAPORE
URUGUAY

Montevideo

66 Branches in Greater New York

Barranquilla
Member Federal

BRANCHES

Panama

Shanghai

Head Office: 55 Wall St., New York

CHILE

Cuatro Caminos

Cristobal

THE NATIONAL CITY BANK

Write

1947

OVERSEAS

President

happened between 1812 and 1947. Then

of the world outnumber

area

io 12

a suc¬

founded, June

was

was on

18 states in the Union.

were

business

generations through

republic

fought

develop

and downs.

Madison announced the

eager

its

It is there¬

cooperate fully within

local

jobs. The Bank has

Indeed, the day the City Bank

mem¬

not

are

which

whatever

in
Europe
substantial

many

which

Mr.

first

better

and

cession of national ups

lived

Bank,"

worked forward

and other member countries.

McCloy1 added, "has

mission
and

there

International

just in

serving the whole world in its

steady and natural export and im¬
port trade in the United States

,u'The

the start, the City

The iS States in /812

will

their

Not

or un¬

countries

the people in those coun¬
be able to produce in

tries

in little old New York.

way

productive

facilities in war-devastated

derdeveloped

Bank functioned

JAPAN

Tokyo (Limited)

VENEZUELA

Caracas

It alt

tbl2

Agreement concluded at Bret-

ton

Chi¬

30-Dec. 6, 1947 (Hollywood,
Fla.)
Investment Bankers Association

Europe,

Nov.

people

Detroit &

July 1, 1947 (Mamaroneck, N. Y.)

Arrowhead.

Club,
Hudson, New

Field

Country

Boston Securities Traders Asso¬

1947

Calif.)

New

Lake

(3237)

New Jersey.

)

20-22,

Security Traders Asociation

Country

Golf

from June 6

annual

York)

Club

Annual

Hollow

Outing at
Club,
Roslyn,

Country Club (note change of date

Hills

Bond

Scarborough

the

14th

Sleepy

supplying
through relief
fundamental

living needs

20, 1947

Summer

Long Island.

Country
Club, Waukesha County, Wis.

Municipal

ada, on June
16,
stressed

Club

Bond

Merrill

Spring

Security Dealers As¬

1947

Engineers'

(Milwaukee, Wis.)

Milwaukee

picnic

June

Association, at
Quebec, Can¬

need

June 20, 1947

(New York)

June 20, 1947 (Toledo, Ohio)
Bond Club of Toledo 13th An¬
nual
Golf
Outing at Inverness

Field

McCloy, President of the

International

the

sociation

EVENTS

European Relief
John J.

New York

COMING

20, 1947

St.

the

Hollyr*

Co.,

six

the average

12 months and

HENRY HUNT

Commonwealth Edison

indi¬
sub¬

These 'economics' appear to mean

$1,000,000, Then Invest

nothing,

of their convictions
purchase of $1,000,000 worth of common
stocks with borrowed money when the Dow-Jones Industrial 'Aver-,
:
i
—-<$>age was around 165,; These pur¬
chases were made for the account
of Affiliated Fund Inc., the only
large open-end mutual fund with
leverage. Total bank loans of Af¬
filiated Fund now amount to $6,& Co. have the courage

That Lord, Abbett

000,000
assets

EQUIPMENT

—
as compared
of $20,098,000 at

SHARES
Group Securities, inc.

lij

request

with net

investment dealer or

Distributors Group,

Incorporated

Street, New York 5, N. Y.

"In

totaling

Mr.

SECURITIES

NATIONAL

CORPORATION

RESEARCH

120 broadway,

man

The

has

about
"The
we

the

convinced

the

that

o m

•

only

retarded

evan¬

their

followings."
stated

that sales of

Investors

Syndicate to
17% over

Crabb

Mr.

1947

same

have

run

period last year.

First

and
ngly ad¬

First Mutual Trust Fund, spon¬
sored

Research

Securities

National

purchased

Corporation,

following common stocks dur¬
ing the month of May: American
Can Co., American Cyanamid Co.,
American Tobacco Co. "B", Cleve¬
the

fall

ter

addi¬

comparable period since 1931 and
20% above the level of the

fourth quarter

the

that

"Monopolis¬
among

Robert H. Freer

the

for

than

1947

in 1946, are 20%
first quarter of

the

fourth quarter

1946," said Mr. Freer.
"More than 1,800 formerly inde¬

pendent manufacturing and min¬
ing concerns have been swallowed
up

merger and

through

acquisi¬

1940," Commissioner
"Their combined as¬
was
$4.1
billion, or

since

tion

Freer added.
set

value

nearly 5% of the total asset value
of all manufacturing concerns in
Moreover, it was

the larger

corporations each having assets of
$5 million (in many instances
achieved through earlier acquisi¬

over

early as 1914 Congress rec¬

and in Section 7 of the
Act prohibited acquisi¬
tions of the capital stock of a com-*
petitor when the effect might be

eliminate competi¬

to suppress or

tion.

enforcement of the
been a practical impossi¬

However,
law

has

bility" since

1926 decision of the

Supreme
Court
curtailing
the
power of the Federal Trade Com¬
mission. Bills are currently pend¬

ing in both Houses of Congress to
amend the

"Thus

law, he said.
law

the

amended,

"To

would

competition

preserve

letter and

spirit of the laws against
monopolistic practices
correction by legislative ac-*'
of the obvious deficiencies

information
on the wartime growth of concen¬
tration available from the Bureau
of Internal Revenue shows that

unfair and

manufacturing corpora¬
tions, those with assets of $50 mil-

ment

"The

most

recent

and

tion

which

hamper adequate enforce¬

laws,"

of- such

concluded.

Mr.

I J
97Te

pig

upon request

Bond Fund

-li
,,
*

"•

- v

•vK: •:

,
♦

</'/, ,VX

,
X

OF BOSTON

Lord, Abbett & Co.
incorporated

New York

Chicago

„

—-

Los Angeles

Trust

^Massachusetts Investors
Massachusetts

SHARES OF CAPITAL STOCK OF

Investors Second Fund
e

;{!

C
A

prospectus nc Ia ting to
each

F unci IS

of which is

the shares of any of these investment funds,
managed independently of the others,
■

may

be obtained from the

VANCE, BANDERS
Prospectus
from

your

The

may

be obtained

local investment dealer or

Keystone Company

of Boston
50 Congress

Street, Boston 9, Mass.

Prospectus

may

PARKER

CORPORATION

ONE COURT STREET, BOSTON 8, MASS.

■

& COMPANY

NEW

THE

BOSTON

dealer,

undersigned

DEVONSHIRE STREET

be obtained from

y6ur local investment

acquisitions.

fill
Prospectus

primary regulatory force in Amer¬
ica there must be observance in

Fund C

un¬

retard
the
merger,movement and its accele¬
rating trend to concentration;
doubtedly

Union Bond

...

tions)
that accounted for some
three-fourths of these recent 1,800

the larger

■

....

explain

Clayton

nesses, numerous

for

mergers,

busi¬

greater

of 1946."

went

ognized the problem of corporate

inde¬

pendent

Freer

Mr.

tic mergers

that the rate of

activity in the first quar¬
of 1947 was higher than in any

merger

was

1943.

Mutual Porfolio Additions

unpublished informa¬
the Com¬

mission indicates

legislation

family in¬

gelists of business gloom and

say

"New and

tion recently coming to

tional Federal

be¬

52% in 1943," Freer con¬

tinued.

atten¬

r o

each, increased their

1S33

mission,

vocated

This
naturally and

activity

merger

share of total assets from 42%

mergers

closed.

about

come

gap

Says rate of

lion

the

growth
cor p orate

c e n

much

and

Chair¬

called

of living.

standard

there

must

that

will
will

"What has caused stocks

normal

come

security
prices is influenced more by mass
emotions than by economics.
course

reports that

tween real income and

Psychology vs/ Economics:
we
become, the more

time

Syndicate,

Temporarily

older

are

man

incomes
during
recent
and are now returning to

Vice

curb

the

following

time since 1931.

any

movement.

their

but,
the

Fund

higher than at

si oner

"Naturally," he said, "there is
longer the plushy buying by
families
who
had
doubled and

often right

Putnam

the

Prices."

Speaking at the University of Cincinnati on June 11, on "The
Commission," Robert E. Freer, Commis-

Economics

George

Boston

now

nation's greatest business year."

date
vs.

we can't afford or a.
stretch of Hard Times at Popular

Prosperity

Urges More Merger Curbs

who predicted a 'bust' in 1946, our

new york 5, n. y.

Phychology

we're to have

Work of the Federal Trade

some

irresponsible crystal gazers

same

Successful Trader

when he is wrong, recognizes
fact before it is too late.

further restrict corporation mergers.
is

major business
recession are being created by a
few 'business crepe hangers,' the

years

about the market than wrong

"It's difficult to tell wheth¬
a continuation of

cago:

Vice-Chairman of Federal Trade Commission wants legislation to

another

"fears

Economist

Freer

Ameri¬

Crepe Hangers
E. Crahb, Chairman

tripled

who is

op¬

some

Investors

The

subjected to a
of prophecy and pro¬

and

Business

impress

Definition of

the

pamphlet entitled: "A

a new

tion to the re-

people with theories
that nobody understands.

Prospectus upon request from
your investment dealer, or from

wise-crack

following

from "These Things
Seemed Important" published by
Selected Investments Co., of Chi¬

Incorporated Investors declared
dividend of 250 a share bring¬

the surest

of it from high
of it from low
places. The effect of much of this
has been to confuse and frighten
many people rather than to bring
us squarely face to face with the
real problems of the day."
places

who, having written a
book that nobody reads, manages
to

•;. '

The

Dividend Check Each Month."

been

deal

paganda,

A Ph.D.

Tit® funds

months

recent

great

news

Successful

de¬
100

year ago

have

cans

the
weather: "Everybody talks about
.it,
but nobody does
anything
about it." When most investors get
over
their depression psychoses,
common stocks will probably be
selling
at
considerably higher
prices, but at levels more in line
with
current
and
prospective
earnings^
Definition

sued

ago.

correspondent

commentary

Twain's

lies

recently

dividend

quoted

joined

has

Long

Fund

initial

share.

the first

for

is construc¬
tive. It is certainly in sharp con¬
trast to the attitude of the average
investor toward the stock market,
which
is
reminiscent of Mark
the above

that

ijg
llffhh

from your

to your

seems

■

Whitehall

clared

Check-a-Month Club and has is¬

sense

have become
today's prophets of gloom.
It is
at least permissible to. question
whether they are any more right
now
than they were 12 months

purchases advisable.

ther
A CLASS

Hugh

to disappointments.

way

the year-

lihe of credit,

Therein

400
•

•

common

,to the psychology of the

a prey

with

half of 1946.

discouraging
<

our

•'...

compared

Notes

not to become too read¬

timists of

announced that an

also

was

today's

yet

moment.

$4,000,000 at 2%, has been ar¬
ranged. Presumably these funds
will be invested in common stocks
when the management deems fur¬

a prospectus

ily

end.

additional

"And

warns

ELECTRICAL

atmosphere.

is evidenced by their recent

Illuminating

Electric

land

the past

over

many, many

•

Borrow

total dividends for the first
months of this year to 500 a?

ing

Co., Con¬
vidual issues to drop by a
tinental
Can
Co., Dome Mines
stantially
large r' percentage? Ltd., Hercules Powder Co., HomeBusiness activity, as measured by stake Mining Co.,1 Mclntyre Por-f
the New York "Times" index, is cupine Mines Ltd., Public Service
currently 23% above a year, ago Corp. of N. J., Reynolds (R. J.)
and
earnings and dividends are: Tobacco Co. "B", United Fruit Co.,
running well ahead of last year., and Wrigley (Wm.) Jr. Co.

23%

63 Wall

Thursday, June 19, 1947

THE COMMERCIAL & FINANCIAL CHRONICLE

(3238)

CHICAGO

YORK

Broadway

120

LOS

South JiaSalle Street

2io

West

ANGELES,
Seventh Street

Freer

jVolume 165

Number

THE COMMERCIAL & FINANCIAL CHRONICLE

4604

stable

International Lending Policies—
The Effects On Our Economy

world

Those

10% of

foreign trade amounts to only
total business volume, this represjpts nation's margin
Maintains our international economic cooperation Will

result in greatest material prosperity in
faith in World Bank.

position, through sound,

U. S. history.' Expresses

the

toward

America's willingness and ability to cooperate with, rather than

all

the

'■

ac-

tivity
more

after

founding

The

Despite

existing

the
fric¬

in¬

Dr.

Max

Winkler

transigent and
unreasonable

attitude

amicable

bound

the

So¬

adjustment

reached

sooner

later, removing, or reducing to
minimum the existing fear over

cataclysm

large

small,

afford.

can

which

is
or

desires

There must be world

; Secretary
tions in his

mistakes

nations

be,

can and

are

observa¬
4, to
Senator Vandenberg, Chairman of
Senate Foreign Relations Commit¬
tee, stressing, inter alia, America's
desire for a
Europe "which is not
divided against itself," and that it
of

the

businessmen 1

even

the

throughout

the

Europe,

political

could

from

trade

econ-

tion

While the arithmetic of the'
argument id correct, the reasoning
is 'erroneous:

America's

international

business

10%

represents

liable

the

place

sources

nation's

total number of employees in en¬

terprises

directly identified with
foreign business at 6V2 to 8V2 mil¬
lions;

the

rectly

those

number of

indi¬

employed in international
P/2 to 3V2 millions. In

eign business could

mean an

addi¬

economic

population of 2V2 millions, of 8 to

jl2

millions

—

the difference be¬

restrictions and exchange tween prosperity and depression.
shortages. An economically stable The choice should not prove dif¬
mean

is
HerbertM. Bratter

politically

ficult.

•

United

the

ponderous

the

and

military

our

While

and

the

Russians,

cers

our

a*s

well

would

own

particularly

often

millions
this

dollars

wartime

funny

money.

Senator

Government

Bridges may be able to strip the

through

1946:

December

veil from

war

over

expensive story.

very

Heavy'receipts [i.e., of military

•

and

other

countries

currencies

certain

Army establish¬
ments] reduced net troop pay to
a
small or, in some cases, to a
negative sum. Dollar obligations
to the governments which had ad¬
vanced

currencies

were

thus

re¬

duced.

However, to the extent
that U. S. personnel acquired lo¬
cal
of

Joins Paine,

our

currencies through

the resale
supplies received from home or

Special

Webber Staff

The Financial

BOSTON,

alliances.

■

international

the

Paine, Webber, Jackson & Curtis,
24 Federal

New York

Street, members of the
,

and Boston

This announcement is neither
1

exchanges.

The

offer to sell

nor a

solicitation of an offer to buy any of these Bonds,

offer is made only by the Prospectus,

■

$19,000,000 Ten Year 3*6% Bonds

concrete

Dated June 1,

19If!

Due June 1, 1957

tan¬

gible aspect, leading to the hope
or
belief
that
the
forthcoming
Conference of Foreign Ministers
at London will succeed, a more

$19,000,000 Twenty Year 3V2% Bonds
••

■

Dated June

1, 1947

•'

■■

..4T\

Due June 1, 1967

cordial

reception is bound to- be
accorded the securities which will

Interest payable June 1 and December 1

offered

later this year by,

under

the auspices of, the Inter¬
national Bank for Reconstruction
and

the

Development, created
terms

the

Bretton

under
Woods

PRICES

Agreement.
Lending and Prosperity

Ten Year Bonds 97J/2% and Accrued Interest

the 1920's

The
were

fact

that

sustained

vestors in

marked

losses

Twenty Year Bonds 9V/2% and Accrued Interest

by individual in¬

foreign loans sold dur¬

the '2G's, and which were
cither defaulted or adjusted on the
basis of important concessions by
ing

■Creditors,

does

the unsoundness

international
more

than

not

aJJ

Copies of the Prospectus may be obtained from only such of the undersigned as may legally
offer these Bonds in compliance with the securities laws of the respective States.

r>rove

the futility of
investments.
It is
or

a mere

coincidence that

the

prosperity of the '20's synchro¬
nized With the large; voluirie of
American loans to the rest of the

;

wojrld. The difficulties which were
experienced in the '30's stemmed
not.; so much from

the fact

MORGAN STANLEY & CO.

THE FIRST BOSTON CORPORATION

HARRIMAN RIPLEY & CO.
Incorporated

that

■yast sums had been loaned abroad,

BLYTH &

GOLDMAN, SACHS & CO.

KIDDER, PEABODY & CO.

but| were the result, solely
largely,
mapy

or very
unwise lending.
In
instances, large amounts
of

yere employed by borrowers for
hod-productive projects , so that
business activity created by loans

HAZARD FRERES & CO.

SALOMON BROS. & HUTZLER

WHITE, WELD & CO,

UNION SECURITIES CORPORATION

DREXEL & CO.

HALLGARTEN & CO.

rperely

accompanied them, but
creased with the cessation of lend¬
ing^ Had foreign loans been made

With

EASTMAN, DILLON & CO,

view to creating perma¬
nent benefits to the borrower, the

LEE HIGGINSON CORPORATION

R. W. PRESSPRICH & CO.

SWISS AMERICAN CORPORATION

DOMINION SECURITIES CORPORATION

latter would not have been forced
'

*A talk

Stock Ex¬

changes and other leading national

world,

sphere -assume

Jones, Jr. has joined the staff of

; Should the improvement in the
somewhat

Chronicle

MASS.—Clarence

sinister

value

Now that the

the

has

face

bewildering
accounting
of
the
foreign transactions of the U. S.

Russians,
that
designs
upon the Old Continent, or is aim¬
ing at the creation of anti-Russian
America

others

found wayp of getting Uncle
Sam to redeem, it seems, hundreds

=71

"to im¬
the peoples of Europe
any particular form of political or
economic association,'' should con¬
nations

States,
GIs—offi¬

men—and

pose upon

the

not

United

June

vince

currency
has
been,

have

otherwise

generally

War

in the Con¬
unravel
the

anyone

States

redeemed

ex-

f r'o

erpted

the

claimed that the military currency
was
not
the ; obligation
of the

for

here

Treasury

sought

aaventures.

investiga¬
with

the

and

mystery of

following de¬
cryption which

the country's margin of profit. Re¬

dislocations,

gress—

sets

stage

the

currency

will

the

;

beginning,

including

sense

omy.

unrest

with

humor

not

world, especially tion to the normal unemployment

derives

disturbances,

ment

the

was

have consistently passed the buck
back and forth whenever anyone

Com¬

international activities

other words, the total loss of for¬

Much

From

Department

deli g h t f u 1

business

the local population
probably short of ideal.
among

Depart¬

merce

business.

seriously affect the nation's

the

Someone

well-meaning:

some

the

represents
only about 10 % ~of' the country's
total volume, a drastic reduction
;
or even the
complete loss of such :

America's purpose

not

ducing projects.

Europe

Marshall's

letter

unde

leadership of
Senator Styles
Bridge s.

the

for constructive and revenue-pro¬

nation,

either

peace, and what must
will be.

personnel, its aims and objectives,
will approve and grant loans, only
after it is thoroughly satisfied that
their proceeds will be employed

primarily

new

•

they likely to be repeated to¬
day; because the Bank, due to the
very character of its set-up,> its

among

viets,

•

in Prospect

Now

are

resulting
the

Safety

been handled by an agency similar
to the International Bank.
Nor

Big Pow¬

from

There

ternational

'20's,, it is
safe to assert, would not have
been made had foreign lending

the Republic.

ers,

lending stopped.

Greater

ex-

perienced
s in c e
the

the

States

ever

tion

suspend

reduce payments,
and
business
actively resulting
from loans, would have continued

material

United

who feel, that since America's in¬
to

and

prosper ity
than
the

has

•

aloof'from, the rest of the world, is bound to result in greater legislators and

business

investigation of the#muddle in Ger¬ purchased in the PX, those areas
many and perhaps elsewhere is to received needed consumer goods.
be made in Washington, shortly, The distribution
of
such
goods'
money

ity, not only to the United States,
but

•

HERBERT M. BRATTER

Senate

military

greatly

rehabilitation

world,-willing to cooperate.
remain

non-political

contribute

war-torn world and to the resto¬
ration of normality and prosper¬

and

measures,

our

of profit.

businesslike

Dr. Winkler asserts that although

Senate to investigate our military currency adventures,
responsibility
for which, Mr. Bratter states, has been bandied about.

charged with guiding the

destinies of the International Bank

Military Money Muddle

The Wcrld Bank's Opportunity

are

Bernard, Winkler & Co.

(3239)

The

peacevare unthinkable.

By DR. MAX WINKLER*

Europe without which
stability * and
universal

by Dr. Winkler before

June 16,

1947.

V. Society of Security Analysts,

June 1(3, 1947.

THE

(3240)

The Canadian Dollar

NSTA Notes
accordance

with

the

provisions of the

President

Nominating Committee for the

Lays present depreciation to temporary

soundness.

constitution and by¬

laws, R. Victor Mosley, Stroud & Co., Inc., Philadelphia,
of the National Security Traders Association, has appointed
lowing

of Canadian dollar and sees no reason to doubt its
situation arising from Canadian cash payments
U. S. for imports, interest, and dividends, while Canadian exports are made on credit basis.
Points
high internal purchasing power of Canadian dollars.

Bank of Nova Scotia analyzes present position

NSTA NOMINATING COMMITTEE
In

Thursday, June 19, 194/

COMMERCIAL & FINANCIAL CHRONICLE

the fol¬

selection of a slate for

The May "Monthly Review" of the Bank of Nova Scotia contains a thoroughgoing an¬
Mericka & Co., Inc.,
alysis of the U. S.-Canadian exchange situation i^ which the causes of present discounts on
Wilmer Butler, Baker Watts & Co., Baltimore,
Canadian dollars are clearly stated and conclusion drawn that the situation is temporary
and the basic factors of strength in the position of tne Canadian dollar will ultimately be demonstrated.
According to the analysis:
;
* '
.....
*
During 1946, Canada's deficit in her current transactions with the United States was about $600

the ensuing year;
Edw. E. Parsons,

Cleveland, Ohio; J.

Jr.,

Chairman, Wm, J.

•

CANADA'S

CURRENT

RECEIPTS

BALANCE

(Figures

Merchandise

trade

519

875

103

(__•

transactions

Freight

Debits

;

Tourist

and

184

millions.

202

—172

220

—193

899

1,336

896

-116

1945

1946.

balance in

stantial
virtual

The principal

approxi¬

into

1945

sub¬

the
cessation of U.S.purchases
in

deficit

war

1946

were

goods including expendi¬
Canada for defense, and
in Canadian

increase

marked

the

780

—437

comparison with 1939 is that

Harold B. Smith

Md.; John L. Canavan, Rauscher, Pierce & Co., Dallas, Texas; Law¬
rence S. Pulliam, Weeden & Co., Los Angeles, Calif.; Harold B. Smith,
Collin Norton & Co., New York, N. Y.

comparable peacetime

The most

in terms of business activity

year

1929 when employment, income

investment

and

that

tourist

effects
expenditures by U. S.

entirely offset the

tourists in Canada.

Comparison of the 1946 accounts
with those of 1939 is of interest

National Committeemen or any only in bringing out the contrast
between conditions now and just
fifty members may make nominations for any or all of the offices
in addition to those chosen-by the-Nominating Committee.
Such before the war. While the deficit
was
relatively small in 1939, the
nominations must be forwarded to the National Secretary not less
scale
of
transactions was at a
than one week prior to the annual election.
The election will be held
comparatively low level and em¬
on Aug. 14, 1947 in Boston at the Convention.
ployment, income, and investment
Please forward any suggestions for nominations directly to the
had only partly recovered from
Chairman or any one of the members of this committee.

the current

year,

volume

smaller

high

were

about $440 millions at

level

lower

prices and at a
of transactions.

If allowance is made for the

1929

above

27%

facts

in 1946 were
the United

that wholesale prices

that the volume of
transactions was larger, the deficit
and

States,

last

not

does

year

disproportionate

appear

that

to be
of the

'twenties.

late

By-laws provide that any seven

outstanding

The

factor in

the

development of the current deficit
is clearly the marked expansion
imports from the United States.
It is clear that imports are still

tending to increase more than ex¬

ports and that the deficit on mer¬
chandise
account
is
widening.
How

will con¬

long this tendency

estimate. But
doubt that a
abnormal and tem¬

tinue is difficult to

This announcement is not

there

offer to sell or a solicitation of an offer to buy these securities.
offering is made only by the Prospectus.

The

number

There

little

can

influences

porary

$40,000,000

operative.

are

impor¬
replenishment and

undoubtedly

tant element of

available in

not been

had

which

quantity for some years, is extra¬
ordinarily* high.
Furthermore,
normal

supply

not yet been able to restore
production and exports, with
result that Canadian demands

the

alternative countries of

for

number

goods

Bonds, 2Vs% Series due 1977
Due

June 1, 1947

States.

United

Last, but not least, is the abrupt
rise in U. S, prices since the mid¬
sale

prices

1946

the average 27%

were

—

to some

may

were

level in
an advance which
extent be regarded
1929

the

1947

March

higher

they

1929

than

above

57%

Whereas whole¬
in the United States

of last year.

dle

abnormal.

the

Despite
current

rate

evidence

that the

of imports from the

abnormally high,
that any sharp
decline is in immediate prospect.
The abnormal conditions have not

United States is
it

not folow

does

of
of

been corrected and some
such as the difficulty

yet

tnem,

getting supplies from other coun¬
tries, may continue for a consider¬
able time. Even after lull allow¬
ance

for these abnormal

made

there can be little doubt
that imports would still tend to
exceed
exports
to
the
United

factors,

States

substantial

very

nrooensity

Canada's

^mounts.

import from the United States is
very great, especially in times of
high activity. Among the main
reasons
for this are the use of
U. S. methods of production, the

acceptance

styles fostered by

S. models and
widespread and

continuous exposure
dia

to U. S. me¬

of publicity.

Size

The

Gold

and U.

Dollar Reserves

June 1, 1977

was

fortunate

riving at the end of the war

CANADIAN BONDS

and accrued interest.

Price

concentrated more
the

ever

Canada

Dated

-603

2,178

replacement demand both for in¬
dependence of many manufactur¬
ventories and capital equipment
ing concerns on Ur S. parts and
in the current heavy volume of
components, the dependence , on
purchases from the United States.
the
United States for coal, * oil,
Consumer
demand for imported
steel and other basic
materials,
goods and for Canadian goods
the close proximity and ties be¬
with a substantial import content,
tween the two countries, and the

of Colorado
First Mortgage

their

than

of increased

■

have

for imports are

was

expenditures in the United States
were
so
much larger that they

gold

■

deficit

almost

241

1,575

time loss.

levels.

the United

same

considerably and Canadian

Lawrence S. Pulliam

output has not recovered its war¬

States.

the

Perhaps

conditions.

only significant point of the

the

time, dividend pay¬
ments to U. S. investors increased

from

imports
At

1,710

250

159

—204

current accounts with the United States for 1946
the figures for 1945, 1939, and 1929, the most active peace¬

ex-<t>
drastic change depression

influences in turning an

tures

1,740

128

131

194

—

214

—150

169

'•

•-

—430

was

pected, there was a

Balance

178

accompanying table summarizes our

The

year.

mate

—

comparative purposes also includes

for

from

137

items_

transactions

rent

time

+ 103

112

96
163

—

1946-

Debits
' 1,3 78

bid

total of all cur¬

Grand

and

184

188

124

—

dividends--

"invisible"

Other

John L. Canavan

—

1,4.4.

Credits

Balance

Debits

—128

184

trade

Interest

J. Wilmer Butler

472

Balance Credits

Debits

344

Gold

Edw. E. Parsons Jr.

Credits

—356

Balance

-1945-

-1939-

-1929-

Credits

THE UNITED STATES
Statistics)

PAYMENTS WITH

AND

Source: Dominion Bureau of

millions.

in $

ar¬

with

greatly increased official reserves
in U. S. dollars and gold—some

millions

$1,508

valued

in U.

dollars at Dec. 31st, 1945, as com¬

pared with less than $400
at the outbreak of war.

GOVERNMENT

anticipated

PROVINCIAL
The

Prospectus may be obtained in any State in which this announcement is circulated from only such of
the undersigned and other dealers as may lawfully offer these securities in such State.

would

that

millions
It

was

these

heavily

reserves
drawn upon

during the transition period: the
Governor of the Bank of Canada,

MUNICIPAL

Bank¬
Committee in
page 39)

testifying before the Senate

CORPORATION

ing and Commerce

(Continued

HALSEY, STUART &, CO. INC.
BLAIR

&, CO.,

EQUITABLE SECURITIES CORPORATION

INC.

W. C. LANGLEY & CO.

GLORE, FORGAN & CO.

E. H. ROLLINS &

PHELPS, FENN &, CO.

OTIS & CO.
L. F. ROTHSCHILD

A. C. ALLYN

&, CO.

AND COMPANY

A. G. BECKER

INCORPORATED

REPUBLIC COMPANY

& COMPANY
84

PAINE, WEBBER, JACKSON

CO.

INCORPORATED

DICK

COFFIN & BURR

MERLE-SMITH

INCORPORATED

(INCORPORATED)

WHitehall 3-1874

A. E. AMES &

CO.

INCORPORATED

R. W. PRESSPRICH

& CURTIS

&, CO.

TWO WALL

STREET

NEW YORK 5,

TUCKER, ANTHONY & CO.

Wall Street, New York 5

HCRNBLCWER & WEEKS

HEMPHILL, NOYE5 & CO.

HAYDEN, STONE &, CO.

TAYLOR, DEALE

SONS

INCORPORATED

(INCORPORATED*

CENTRAL

CANADIAN STOCKS

LEE HIGGINSON CORPORATION

BURR &, COMPANY, INC.

N. Y.

GRAHAM, PARSONS &, CO.

CANADIAN

SECURITIES
Government

GREGORY & SON
INCORPORATED

June 19, 1947.

STROUD

COMPANY

INCORPORATED

RECTOR 2-7231

NY-1-1045

Municipal

Provincial

Corporate

Volume

Number

165

THE COMMERCIAL & FINANCIAL CHRONICLE

4604

needed to

Truman's Veto of Tax

kind

reduction

tax

wrong

pressures

tion

structure

imum

measure

many
power

ple
The House of

Representatives, on June 17, the day after receiv¬
ing President Truman's message vetoing the tax bill as passed by

failed to

over¬

ride

the

veto

narrow

are

not

income

rates

expansion.

the

House action
makes

wide

essary
in the

unnec¬

a vote
Senate,

sector

our

porations

veto

present time is

practi-

1 1 y

pre-

eludes

any

changes in the
tax

ing

President Truman

law

this

sion

000,000.

and

individuals

ployment.
in

these

toward

reduction

pro¬

Necessary adjustments

made

by wise policies

and

now

improved

ness

circum¬

stances, tax reduction is not

Tax

as not

continued

incomes, production, and prices

should

nearly $200,000,-

Under

our

sumers

the

people,
on

situation and its effect upon con¬
and upon prospective em¬

economy.

brakes

recession.

a
matter of fact, the amount of
liquid funds in the hands of cor¬

the President's

put

our

posed in H. R. 1 is not the proper
way to remedy the current price

shortage
of funds for this purpose in any
There

file of

prosperity and lead

necessary

votes.

stable

general

have
of

bilitation that have

inflationary

ceased

prices is

and

bearing

the

lasting

basis

than now prevails.
How long it will take for this
point to be reached is impossible

and labor, not by hastily in¬

practices of

busi¬

peace.

In his

these facts, common
a realistic and

policy also requires

high

existing tax rates be main¬
tained for the present. I have al¬
ways been keenly aware of the
necessity for the utmost economy
in government and of the need for

such

prices,

the

ized it
The

cation of all

much of this

text

the

expenditures to the greatest
possible consistent with

interests.
However,
expenditures for essen¬
tial
government
operations
are
still high.
We are still meeting
heavy obligations growing out of

public debt during the most active
and inflationary periods there is
little prospect of material reduc¬
tion at any time, and the country

progressive reduction in

ment

govern¬

national

our

necessary

the

We continue

war.

government

does

(Continued

con¬

not

State of New York
1.60% Housing

of Veto

Text
Below

give the text of the

individual

income

$575,000 annually
June 18, 1949 to 1997 inclusive

Principal and semi-annual interest payable in lawful money of the United States of America at the
Company, 40 Wall Street, New York City. Semi-annual interest payable June 18 and December 18.
nations of

tax

payments."
The right kind of tax reduction
at the right time, is an
tic
to which I am deeply cumm-tcea.

A/pupei^priA.ed in the City pf'New York and

one in the City of Albany. Interest shall cease to
redemption, from and after the date fixed for the redemption thereof.

called for

But I have reached the conclusion

that this bill represents the wrong
kind of tax reduction, at the wrong
time. It offers dubious, ill appor¬

tioned, and risky benefits at the
of a sound tax policy, and
is, from the standpoint of govern¬
ment finances, unsafe.
Proposals

These bonds

the

light of sound and
carefully-related fiscal and eco¬
nomic policies.
Unless they are
consistent

with

the

demand

trust funds and savings banks and are
security for State deposits, to the Superintendent of Insurance
the Superintendent of Banks in trust for banks and trust companies.

policy holders and to

secure

by law,
areas,

for the clearance, replanning, reconstruction and rehabilitation of substandard

(Accrued interest
!

con¬

in May
million and a half

now

tically

minimum.

Due

Price

Due

Price

.65%

1956

1.10%

1971-73

1.45%

1982

1003/4

1991

.75

1957-58

1.15

1974-76

1.50

1983

100i/2

1992

983/4

.85

1959-60

1.20

1977

102

1984

IOC1/4

1993

981/2

100

1994

98i/4

Price

.90

1961-62

1.25

1978

1013/4

1985-87

.95

1963-64

1.30

1979

ioiy2

1988

993/4

1995

1954

1.00

1965-67

1.35

1980

1011/4

1989

991/2

1996

973/4

1955

unemployed is
less than two million, prac¬
of

number

Yield

1952

employed is over 58,000,000.

The

Due

1953

that in April, and the total

now

added)

1951

Developments since January do

increased by a

to be

1950

clusion. Total employment

over

Yield

1949
/

in that

insanitary

appurtenant

public debt. There
justification now for tax

not warrant a change

cities,

defined

Yield
Due

tirement of the

reduction."

and

MATURITIES AND PRICES

meet

providing monies out of which to make loans

thereto.

current expenditures
but also leave a surplus for re¬
is

amended, Chapter 827 of the Laws of 1941 and Section 60

for both such purposes, and for recreational and other facilities incidental

tax revenues at levels that will not

only

towns, villages and authorities for and in aid of low rent housing for persons of low income

maintain

should

tution, Chapter 946 of the Laws of 1939,

10, 1947, I said:
"As long as business, employ¬
ment
and national income con¬
we

legal investments in the State of New York for

of the State Finance Law, for the purpose of

policies, they should not be
approved.
In my"budget message of Jan.

high,

bonds

These bonds will be issued under the provisions of Sections
1, 2 and 3 of Article 18 of the State Consti¬

such

tinue

are

acceptable to the State of New York

for tax reduction must be exam¬
in

accrue on

Interest exempt from all present Federal and New York State Income Taxes

expense

ined

Bank of the Manhattan

Coupon bonds in denomi¬
$1,000 and in registered form in denominations of $1,000, $5,000, $10,000 and $50,000 at the
option of the purchaser.
The Comptroller reserves to the State the
privilege of redeeming, at par value and accrued interest, on June 18, 1987, or
on any interest
payment date thereafter, all of such bonds then outstanding, or ajl of the bonds of a
single maturity beginning
*~v*-he '-'verse ore#?,their
maturity, upon not less than 30 nor more than 40 days' notice thereof published in at least two

approval, H.R. 1 entitled: "An Act
reduce

Due

Dated June 18, 1947

To the House of Representatives:
I return herewith, without my
to

(Serial) Bonds

Message

President's veto message:

1.05

1968-70

1.40

1981

101

1990

991/4

1997

971/2

Income pay¬

ments to individuals are estimated

to
of

the

record annual

$176 billion.

were up 6% over
equaled the all-time
high in dollar volume. The num¬
ber of houses begun by private
enterprise in May was the largest
in
any
month since V-J Day.

sales

April

The above Bonds

rate

Department store

are offered subject to allotment or to
prior sale, for delivery when, as and if issued and received
and subject to the approval of legality by the Attorney General of the State of New York.

Interim Certificates will be issued
pending delivery of Definitive Bonds.

May

and

Despite m^ny convincing evidence
that a recession is imminent.
Says Tax Reduction Is
tionary

Ample

evidence

Infla¬

Tax reduction now

increase them.
are

tial

long

If these

would

continued, and if essen¬
are

long

Ladenburg, Thalmann & Co.
E.H. Rollins & Sons
Incorporated

pressures

readjustments within the price

structure

C. J. Devine & Co., Inc.

points to the

continuation of inflationary pres¬
sures.

•

Bank of the Manhattan Company

•

deferred, we

New York, June 18, 1947.

B.J.Vanlngen&Co.Inc.

Adams,McEntee&Co.,Inc.

reduce

page

message

follows:

sur¬

extent

$28,175,000

"unsafe."

full

profits,

calls

plus to the reduction of the public
debt.
Continuing public confi¬
dence in government finances de¬
pends upon such a policy. If the

ISSUE

finances," he character¬

and

present,

expense

ernment

prudence
conserva¬

for a
surplus in government revenue
over expenditures and
the appli¬

that

said

of sound tax policy"
and "from the standpoint of
gov¬

employment and

wages

ses¬

Congress was both wrong and un¬
timely, and "offered dubious, illapportioned and risky benefits at

Wants Revenue Surplus

economic

Con¬

NEW

secure

tive management of the fiscal af¬
fairs of government.

dur¬

veto message, the Presi¬
the bill, as passed by

still

which

gress.

dent

important

many
continue. In the face

A time of high

Sound fiscal

are

demands

Clearly, it has not been
reached as yet. Tax reduction now
would add to, rather than correct,
the

efforts

our

uncertainties
of

to predict.

transition period

structure.

and

required now to permit
investment and business

margin of two

of large groups of our peo¬
been seriously reduced.

has

when

17,

fronted with great responsibilities
for international relief and reha¬

gov¬

The time for tax reduction will
come

maladjustments

tax

I have pointed out
times, that the purchasing

remedy the disparity between
prices and the incomes of the rank

seek to avoid.

Reductions in

max¬

levels.

powers of
broad scale.

We must take every step possible

likely to induce the very re¬

cession

em¬

Congress two^
ago,

maintain

It is true, as

finances unsafe:

weeks

needed

are

ployment and production at

following reading of
provides "wrong
time" and makes government

in which President states

ernment

ing pow£r through this tax reduc¬

fails to override by narrow margin,

veto message,

voking the fiscal

business expansion.
The argument is made that the
funds added to consumer purchas¬

Bill Sustained
House

provide additional funds

for

(3241)

18)

the

THE COMMERCIAL &

(3242)'

duced by
income

nearly $5,000, and on an
$500,000
by
nearly

Our Interest in German

$60,000.
Insofar

jis

"take-hoijn§" pay

Thursday, June 19, 1947

FINANCIAL CHRONICLE

Foreign Trade

concerned under H. R. T the fam¬

earning $2,500 would receive
increase of only 1.2%, the fam¬

ily
an

who are firmly convinced that the
ultimate salvation of the industry lies in wide scale consolidations.
It is contended, and with considerable truth, that there are far too
many weak units in the field and too much duplication of facilities
and services, and that the general credit standing of the entire indus¬
try suffers thereby.
The answer to this difficulty is seen in the
^formation of a limited number of^
cerned, it is contemplated that it
large systems while, at the same
will be sold either to Burlington
time, maintaining a full measure
and Santa Fe together or Burling¬
of competition.
Railroad consol¬
ton alone.
In either event Gulf,
idation has been under discussion
Mobile & Ohio will retain trackafor many, many years and a num¬
age rights over that section.
ber of comprehensive plans have
Prior to merger Chesapeake &
been drawn up. However, to date
Ohio had exercised stock control
there has been very little concrete
over
Pere Marquette for a long
rail analysts

There are many

progress.

considerations,
the
conflicting interests and claims of
individual
security groups, the
Political

Ohio
cago

delay mergers and consolidations
almost endlessly and in most in¬

were

made their consum¬
mation impossible.
Nevertheless,
some progress is being made from
time to time and two such merg¬
been under

have

that

ers

were

could

government
fair

make

entire tax structure.
Now

Pere

nego¬

time

the

plan for

[a'

food,

fuel,

raw

materials, of

personal income tax

structure. We should also consider

excise tax laws, gift
and estate taxes, corporation taxes

phase of the

dropped. By

result of this situation,

situation of

nomic

and
Un¬

covery

stability.

the

critical.

Food

mained

til Europe can

ration

export enough
to pay its own
revenues.
Such a program of tax
way in
the
adjustment
and
tax
reduction world,
jye
should be geared to the financial
shall find our¬
and economic needs of this coun¬
selves contin¬

zones

re¬

imports

sufficient to keep the

just

were

and, in fact, the entire field of tax

Marquette-Chesa¬

•

the
American and British occupation
authorities had to finance an im¬
port surplus into their zones of
occupation
amounting to about
$500 million in 1946. Despite such
a large outlay of money, the eco¬

system. We should consider not most, cf
the
only individaul; income tax rates,! essential
in¬
personal ekgredients for
emptions and many other adjust¬ economic re¬

changes

negli¬

were

gible.

but also the level of

ments in the

goods

industrial

struggling
with shortages

thoroughgoing revision of the tax

the roads

country has
Still we find the

Since V-E Day, this

lagging.

continen t

time in the form of a care¬
considered revision of our

proper

fully

provided billions of dollars of assistance to Europe.

the

prschcfcich rcust be reoriented in U. S.-Bratish zones.

Recovery in Europe is

afford

ill

reductions

tax

without such agreement/

uiiftcatkn bf fbejr zeees, and predicts,

'indas'.rial

receipts -resulting from
this bill would be,such that the

Nickel Plate, however,
considered the terms offered as

itself the

the. tax

into

ernment

holders of

inequitable so that
proposal had to be

•.to-S£*r?e.G?.rmn

The reduction in gov¬

structure.

Preferred stock¬

included.

cial burden arisirg

provisions

its

frozen

would

to become law,

inequity

inseparable from Germany's
difficult situation and finan¬
farm Germany's inability to expsrt. Says efforts
trade would be eased if four Powers agreed

rshabiLtalioc, Mr.. Szymczak poinls out

years.

contemplated all four of

stances have

If H. R.

the

Federal Reserve System

Asserting Europe's reccnslructicn is

$500,000 would receive an

increase of 62.3%.

Wheeling & Lake Erie.
consolidation was originally

When

come

Government, Germany

Divi:ion, U. S. Military

Member, Board of Governors,

18.6% and the family with an in¬

controls

question of labors' rights, and
many other factors tend at best to

Director, Economics

increase

By M. S. SZYMCZAK*

$50,000

income

receive

would

Chesapeake &
also controls New York, Chi¬
& St. Louis which in turn
of

period

with

ily

the

consumer

average

1,550 calories per day, an
amount
one-fourth
below
the
minimum standard set up by the
around

peake & Ohio merger was a logi¬
and a half to cal
one, particularly from a traffic
recently finally point of view. Pere Marquette re¬
S. Szymczak
United Nations Food and Agricul¬
been "completed.
The Alton was ceives a substantial volume of
tural Organization, and two-fifths
merged into the Gulf, Mobile & coal from Chesapeake & Ohio for try.- It will be an important con¬
ually
confronted with a hard below the quantity needed for
Ohio the last day of May.
The
tribution
to
economic progress. choice:
delivery to industry throughout
We must either provide the maintenance of an efficient
Pere Marquette was merged into
Th^ Timing of such a program* is further billions of assistance or labor force. The scarcity of im¬
Michigan. ' ■ ,.
.
..
the Chesapeake & Ohio on June 6.
The next step among this group highly important to achieve eco¬ see economic, social, and political ported raw materials was an im¬
By themselves neither of these will presumably be merger- of nomic stability, to promote the
disintegration in that vital area. portant
factor
restricting
the
mergers
is particularly import¬ New York, Chicago & St. Louis investment
of
capital
and
to We face exactly this problem in revival of industrial activity. Stag¬
ant in the general transportation
maintain employment, purchasing
and Wheeling & Lake Erie. Both
Germany; but more importantly, nation in Germany industry has
scheme nor in relation to general
power and high levels of produc¬ our failure to-handle it there on
boards of directors have already
orevented
an
adequate flow of
consolidation. Nevertheless, they
i an adequate scale will seriously German exports to pay for im¬
appointed committees to look into tion.
are
steps in the right direction the
For the compelling reasons
possible means of consummat¬
I reduce the chances of our success ports and to contribute to the re¬
and do indicate that it is possible,
ing such a plan. With this further have* set forth I return H. R. 1* in the rest of Europe. Other Euro¬ covery of other European coun¬
although difficult, to consummate evidence of the feasibility of rail¬ without
my approval.
pean
countrie's are vitally de¬ tries.
railroad consolidations.
road mergers it is
hoped that
HARRY S. TRUMAN.
pendent upon; the renewed flow
The merger of Alton and Gulf, other carriers will, in the near
Anglo-American Program
The White House, June 16, 1947. of supplies from Germany, first
Mobile & Ohio sets up a new future, begin to think along the
and foremost of coal.
The recon¬
In December 1946, the United!
through system from the Gulf of same lines.
struction of the European econ¬
Secy. Snyder Approves
States and the United Kingdom
Mexico at Mobile and New Or¬
omy is inseparable from the re¬
Immediately after the release of
agreed upon a new German for¬
leans to Chicago and completes
habilitation of Germany.
the foregoing veto message of the
eign trade program based up an
..
^an
expansion program instituted tarn's Veto
Before the war Germany, next economic merger of the American
President, Secretary of the Treas¬
many years ago.
This expansion

tiation for

two

have

years

year

has

accomplished largely
acquisition of railroads

been

through

undergoing reorganization.
Ini¬
tially the old Gulf, Mobile
&
Northern acquired control of, and

the

leased,

Northern as

Mobile

the

quently

Orleans.

New

the line

giving

thus

ceivership,
access

New Orleans Great
it emerged from re¬

Subse¬

Ohio,

emerging from reorganization, was
merged with the Gulf, Mobile &
Northern to form the Gulf, Mobile

extended the
Mobile & North¬
north from Jackson,.Tennes¬
to St. Louis. The latest acqui¬

& Ohio.

This merger

lines of the Gulf,
ern

see

north from St.

Louis to Chicago."

of the old Gulf,
Mobile & Northern and Mobile &
The

merger

considerable benefit
both from the
point of view of earnings from
the property and the service ren¬
dered.
In particular, it allowed
Mobile & Ohio traffic to reach
New Orleans over system lines
and Gulf, Mobile & Northern traf¬
fic to reach St. Louis over owned
Ohio was of

all

concerned,

thus materially increasing
the system haul and revenues on
a substantial volume of traffic.
It

position to extend

expected that

system lines as
cago

extension of the

far north as Chi¬

will have a

similar effect;
City line of

the Kansas

So far as

the newly

acquired Alton is con-

supports to the

Reduction Bill is thoroughly

world.
efforts

clear
statement of the impropriety of
tax reduction at this time. '
"It constitutes firm

of the public debt

and the

rity

our

„

kept

obligations are, and

rgust be, our foremost considera¬
tions. With these objectives clear¬

More
ly attained, then proper attention
than half of the American people
can be given to tax adjustment."
are
direct owner of government
'* imm
securities. A major portion of the
•

banks,

assets

insurance. com¬

panies and trust funds is invested
in government bonds.
To main¬
tain the integrity of the public
debt we must now reduce it by
substantial amounts.
Reductions Not Fair and

Equitable

In addition to the faet

is not the

there

that this

time for tax reduction
fundamental objection

particular bill. An adjust¬
the tax system should
provide fair and equitable relief
for individuals from the present
to this

ment

reductions
1 are neither
equitable. H. R. 1 reduces

burden,

tax

nor

taxes in the
to

but

the

compared to the reduction
low

the

income

brackets.

would give
greater proportion of relief to

good tax reduction bill
a

the low

Malliscn IMor

the

of making the 1 combined
self-supporting within' a

zones

pre-war

Germany that today conr

the American and

stitute

British

About twoimports were raw
materials and semi-finished goods
needed for the operation of the
German industrial system. Almost
nine-tenths of the exports were
finished industrial products.
Ger¬
of occupation.

zones

thirds

the

combined
by an
Executive Committee representing
states

the

located
It

zones.

will

the

assisted

governments

the German

states, and by a number of execu¬
tive directors,

heading bizonal ad¬

ministrative departments. Through
these

organizations the popula¬
occupied zones will be
for attaining the goals

tion of the

mobilized

many

Empire Iras! Go.

The election of Graham

market

D. Mat-

raw

ties Corporation.

materials for German

indus¬

try, mainly American cotton , and
British wool. • The importation of
industrial materials thus was

Carsiairs A Co. to
PHILADELPHIA, PA.

—

Car-

Chestnut Street,

only

small fraction of the quan¬
tity which-the zones used to -im¬
port before the war. Exports were
equally small. They amounted to
only some $150 million and threefourths of that sum was provided

Admit Pail Miller
stairs & Co., 1421.

income group.

as 1937, despite
Nazi regime to

occupation.
set the

provided a highly important
for many foreign coun¬ set by the Agency.
It was hoped
tries, and its exports met essential that France and the Soviet Union
tison to the Board of Directors needs in \yide areas, especially in would join in the agreement and
thus
reestablish
the
economic
of Empire Trust Company of New the rest of .Continental Europe.
York was announced on June 10
unity of Germany, which is indis¬
In
1946,
imports from other
pensable for the eventual rehabil¬
by Henry C. Brunie, President of
countries into - the American and
itation of the
German economy
the Bank. Mr. Mattison, a Colonel
British zones of Germany totaled
and to which all four powers had
in the Air Corps during World
about $650 million.
More than
War II, and a former partner in
agreed at the Potsdam Confer¬
four-fifths, of that amount repre¬
ence of 1945.
Unfortunately, I;he
the law firm of White & Case," is
sented .foodstuffs needed to avert
other occupying powers refused, to
a
partner of Dominick & Domoutright
starvation among ; the
join
in
the
merger, 1 arid
the
inick, members of the New York
German population.
Only about American and British authorities
Stock Exchange, and Director of
one-tenth of the total consisted of
had
to
proceed on their own,
the American European* Securi¬

high income brackets

grossly disproportionate ex¬

tent

Special Securities

assurance' to

balanced budget
maintenance of the integ¬

basis.

late

period-of three years by stimu¬
independent of lating both imports and exports,
and markets, the and in the meantime agreed to
country's foreign trade represent¬ share equally in financing the
ed about 9% of the world's entire necessary important surplus. They
international commerce.
Its ex¬ set up ■* a Joint Export-Import
ports reached $2.4 billion and its Agency and implemented their
imports $2,2 billion, equivalent agreement a few days ago by
at present prices to $4 billion in
establishing a German Economic
This
Council will be
each direction.
More than half Council.
of these exports and imports came
composed of representatives of
from or went into those areas of the
legislatures of the German

national economy rests.

our

fair

Bonds

continue

sound

zones

two occupying powers

foreign suplies

will

British

and

was

Germany

make

people that, the Adr
ministration is determined that
the
finances of its government

proposed in H. R.

Guaranteed Stocks

the American

financial bedrock on which

is the

message

and employment.

The integrity

uation

President's

the

and

the most The
important trading nation in the goal
Kingdom,

United

justi¬
existing financial sit¬
the government.
The

States

United

the

fied by the

actionary period

income

statement:

"The President's veto of the Tax

subsequent re¬
develop.
With the present huge public
debt it is of first importance that
every effort now be made to re¬
duce the debt as much as possible.
If H. R. 1 were to become lav/
the
amount available for debt
retirement would be entirely too
low
for
this period of unnaralleled high levels of peacetime
should

economy

John W. Snyder, made pub¬

lic the following

(Continued from page 17)
result, be in a poorer

lines,

ury,

would, as a

these owned lines

sition extends

Bill-SBstaiBsd

Tax

very

give relief where members of the New York and by coal exports from the * Ruhr
mines in the British zone. Most
Under H, R. 1 Philadelphia Stock Exchanges, will
of the remainder was raw materi¬
admit Paul F. Miller to partner¬
savings to the average family
als like lumber and hops. Exports

H. R. 1 fails to

leaving the door open, however,
by the other

for future adherence
two powers.

meeting

our

share of Hie cost

Germany!; during

supporting

this -interim

period, we rely upon
appropriations by the Congress to
cover
food requirements.
< Raw
materials and equipment for in¬
dustrial
rehabilitation,
on
the
other hand, are financed-through

it is needed most.
fiimUNTEED

25 Broad

RAILROAD

Street

New York 4, N.

BOwling Green 9-6400
Teletype NY 1-1063 ,

Telephone

credits

tax

STOCKS-BONDS

agencies.
The Commodity Credit
Corporation shipped $30 million

with
less

income of $2,500 would

than

income

be ship in the firm as of July 1st. Mr.

$30, while taxes on an

of $50,000

would be re¬

Miller
ager

was

formerly

Sale^ Man¬

for Paul & Co., Inc.

!•

■mo/

*A radio talk
over

by Mr. Szymczak

NBC Network, June

13, 1047.

from

Worth, of

American

S., Government

surplus cotton into the
zone

processed

Volume

THE COMMERCIAL & FINANCIAL CHRONICLE

Number' 4604

165

:by German firms.
The finished
materials are exported to &n ex¬
tent sufficient to pay for the im¬
ported cotton and the remainder
is either exported in order to pay
'for the importation of additional
materials

.raw

the

is made available

domestic

Germany econ¬
omy. The U. S. Commercial Com-'
.pany
agreed to finance similar'
.shipments

materials

raw

for

•the ceramics, glass, chemical, toys
and other industries.
At present,

Chicago Stock Exch,

Banks Are in

Elects Officers;
Committees

Chairman

Appointed

the

Gov¬

Board

of The Chicago

Babson, holding that money in the bank today is safer than
money in hogs, cautions against savers seeking high interest and
sending savings to large cities which may be destroyed in next war.
uring
six C

recent western trip I spent most of

external assets transferred to the
two occupying powers by neutral
countries.

This provides the Joint

Export-Import Agency with a nec¬
essary working balance for prim¬
ing the pump of German export
industries.

Vice-President

.The

actual

trade

drive

delayed.

start

has

For

the

been

Mr.

Hargrave

foreign

months

many

the

unprecedented

hardships of last
disrupted
transportation

winter
and

production

Europe.
The
new
export-import organizations
had to be set up and
proper rules

©f procedure established.

The

ex¬

act

specifications for the exportimport program, which had to be
submitted

ever,

to the Agency
by the
authorities, often were
Already, how¬
the Agency is approving, ex¬

port

and

German

found unworkable.

import contracts at

accelerating rate. Moreover, the
Agency has issued regulations
facilitating the renewal of con¬
tacts

between

German

eign businessmen.

and

for¬

American and

ether businessmen

now

may

visit

Germany in substantial numbers,
and

after

June

German

ex¬

porters and foreign importers will
he permitted to conclude contract
negotiations by mail. The Agency,
however, has to approve all. im¬
port and export contracts, either
at its

headquarters

Perrigo,

Our efforts to reconstruct Ger-r

foreign
trade
would. be
greatly facilitated if Germany's
•economic unity were restored in
,

accordance

with

Agreement

Since the four

the

Potsdam
zones

interdependent to a very high
degree, full merger would make
possible a much more efficient
economic operation.
If, however,
the four powers cannot agree on
the
terms
of
unification,
the
are

American and British authorities
will have to press forward in their
efforts to put at least their area
•of occupation back on its own feet.

"This will

require a reorientation
<of industrial production in the two
zones, and an increase in indus¬
trial activity above the level set

■toy

the

'
.

Reuben

Thorsori,
Paine, Webber, Jackson &' .Curtis,
Chairman; Walter J. Buhler, ViceChairman; Francis F. Patton,. A.
G. Becker & Co., Inc.; Harry M.
Payne, .Webster, Marsh'& Co.;
Charles R. Perrigo, Hornblower &
—

Weeks.
Barrett

—

Lee

Wendell,
Chairman;

Higginson Corp.,
Ralph W. Davis, Paul H. Davis &
Co., Vice-Chairman; John W. Bill¬

ings;

D. Dean McCormick,. Kebbon, McCormick & Co.? Robert F.
Schenck, Jr. . -..

how

normal

high prices for implements, feed
and other things; but he is getting
high prices for his products.
means that the farmer who
his feed is making extra¬

This

the

Finance

George E. Booth,
&
Co., Chairman
Edwin T. Wood,;Vice-Chairman;
Sidney L. Castle, Lazard Freres
& Co.; Norman Freehling, Freehling, Meyerhoff & Co.;- William
A. Fuller, Wm. A. Fuller. & Co.

Lamson

;

all of Europe.

Floor Procedure—Hugh H. Wil¬

Chairman; Chancellor Dougall, Vice-Chairman; George E.
Booth; Walter J. Buhler; Irving
E. Meyerhoff, Freehling; Meyer¬
hoff & Co.; George F. Noyes, The
Illinois Company; Edwin T. Wood.
Judiciary
The

WLr' Baird,

Robert

—

Wisconsin

tions—Patrick F.

Buckley, Harris
Upham & Co., Chairman; Gilbert
M. Clayton, Vice-Chairman; James
J. McNulty, Ames Emerich & Co.;
George F. Noyes; Frederick J.
Stannard.
Stock

'
,

(Special to The Financial Chronicle)

products: Lard
pound 15 years

increases of farm

which sold at 5$ a

has been up to 35(5 a pound
now
sells at 28$ a pound'.

ago'
and

Hogs- which sold at $2.00
per
hundred pounds in the "thirties,"

hundred.

sell at $25.00 per

where the
auctioneer sold six-weeks-old pigs
attended

.auction

and he told me
at 5$ a piece
Wheat and corn sell at

at $15.00 a piece;

sold them

that

1932.

prices

high

very

and may

now,

The World Bank and

SAN

FRANCISCO,

CALIF.—

West has become

con¬

Charles

Hornblower

Perrigo,

-Weeks,

Chairman; Walter
Brailsford & Co.;

Vice-*

•

Brailsford,

Francis F, Pat-

ton, A. G. Becker & Co., Inc.; Al¬
fred E.

Turner.

;

Goodwin, 265 Montgomery Street,
,

members
San
He

of the

Francisco

was

fornia

New York and

Stock

Exchanges.

previously with First Cali¬
Company.

A
lot

are

Money

with your
He replied: "Buy some

livestock

Those

who

practice

him: "What will you do

money?"

are
made by selling
prices are high and when
every one is optimistic; then put¬
ting the money in banks and wait¬
ing a few years until prices are
again low and every one is pesr

simistic.

•

the

farmer whom I visited sold
of cows and hogs. T asked

country

wealth
for themselves, but also render an
important service to the entire

helping

level

off

the booms and busts.
Remember that the best invest¬

ahd

week

this

not only roll up

Thereupon he
asked me: "What would you do,
Mr. Babson, with the money?" To
this I replied: "I would put the
money in banks and give my wife
one good vacation.
She certainly
deserves it." To this he replied:
"I airi afraid the banks might bust

ments continue to be in the

while I'm away." This last

the worst!

start

over

again!"

This is under

Loan to Denmark
....

:■■■■.

Further

likely,

remark

Stat©

where you made

the money which
you now have.
Don't send your
savings to any large city which
perhaps may be destroyed during
next

the

war

if it

comes.

Invest

at home in property andl
businesses about which you know
money

circumstances to he construed

offer to buy,

or as a solicitation
The offer is made only

offer to buy I

June 18,1947

$32,000,000

Bank

World

loan to be
institution

announced

the first
by - the

would be to

Denmark.

pected that

and

Danish matter did

smoothly

nounced

Bank officials stated that they ex¬

pected
in

But.

since

then

than

Now it is re¬

hurry for World Bank help.*

would

.Denmark

what emerges from

ILL. —Thomas M.
John
R. Molloy
staff

see

Europe

during

years or so,

need

not
Bank

Department.*

;

into

three

perhaps Denmark will
expensive

loan

the

billions

dozen

Harriman

Hutchinson

connected

with

has

—

Ken¬

become

Stanley &

Co., 177 Main Street.

Central Republic
.:

Hogle

after all.

The Financial Chronicle

NEB.

—

has

become

Arthur

E.R Rollins & Sons

Ford

ducted
ness

his

for.

years con¬
investment-busi¬

many

own

associated

with Cruttenden & Co., 204 South

in Boulder.

government work and in
conducted

Tiis,

own

Alex. Brown & Son*

A. G. Becker & Co.

Incorporated

Baker, Watts & Co.

Dean Witter & Co.

Company

G. H. Walker & Co.

Tucker, Anthony & Co.

Equitable Securities Corporation
THe Wisconsin

Paine, Webber, Jackson & Curti*

Moseley & Co.

...

Estabrook & Co.

the past

investment

business in Omaha for many years.

Auchincloss, Parker & Redpath

Whiting, Weeks & Stubbs

Company

The Ohio Company

,The Milwaukee Company

Bacon,. Whipple & Co.

R. S; Dickson & Company

Fahey, Clark & Co.

Field, Richards & Co.

Incorporated

The First Cleveland Corporation

First of Michigan Corporation

Maynard H. Murcb & Co.

Granbery, Marachc & Lord
Merrill, Turbcn & Cow

Kebbon, McCormick & Co.

R. 17th Street. Mr. Graham was pre¬
Ford has become associated with viously with
John M. Douglas.
the staff of J. A. Hogle &
Co., Prior thereto he was engaged in
Mr.

(Incorporated)

F. S.

Hayden, Miller & Co.

COLO. —Louis

Equitable Building, Denver, Colo.

Company

.(Incorporated)

Hornblower & Weeks

White, Wei d & Cot

Hemphill, Noyes & Co.

Harris, Hall & Company

•'

OMAHA,

Merrill Lynch, Pierce, Fenner & Bean©

Union Securities Corporation

Corporation

Laurence M. Marks St Co.

Grultenden & Gontpany
Graham

Ford With J. A.
BOULDER,

Ripley & Co.

World

Arthur W. Graham With
Special to

Goldman, Sachs & Co.

Incorporated"

Incorporated

(Special to The Financial Chronicle)

Kidder, Peabody & Co.

Stone & Webster Securities

Stroud &

Stanley & Co.

Corporation

Glore, Forgan & Co.

Eastman, Dillon & Co.

ported that Denmark is not in a

couple-

and

The First Boston

fortnight.

another

month has elapsed.

Danish

the

announce

about

loan

(Special to The Financial Chronicle)

With E. H.

only in States in which such underwriters are qualified to act as
Prospectus may legally be distributed.

dealers in securities and in which such

At that time

May 9.

United. States is going to pour a

the

writers

ain—and the French loan was an¬

Thomson & McKinnon

Copies of the Prospectus may be obtained from any of the several under¬

Brit¬

indebtedness

Denmark's

Added to Staff of

added

April 1, 1977

Price 103.1647% and accrued interest

not move

contem¬
plated — reportedly • because
of
complications
connected
with
along

and

been

Due

French loans simultaneously.

The

State

have

Mortgage Bonds, 2V%% Series due 1977

Dated April I, 1947

announcement

the

CHICAGO,

First

Later Mr.

reported as favoring
of the Danish

was

Company

ex¬

was

wait

Markham

The Toledo Edison

during the McCloy administration

McCloy

of such securities.

any

of the Prospectus.

clarification

WASHINGTON, June 18—(Spe¬
to the "Chronicle")—Early
the

offering of these securities for saley or at

means

NEW ISSUE

postponement of credit

pending

cial

over-alF relief intentions.

our

seems

(Special to The Financial Chronicle)

nected with Walston, Hoffman &

■jmim

Ernest L.

Fortunes

thinking only of temporary
profits. They refuse to curtail un¬

Another

when

now

so.

makes

the biggest
suggestion is to
buy government bonds.

things go up and down
together. Human nature is hard
to change. Farmers, labor leaders,

What to Do With

who

man

losses.

Listing—John J. Griffin,

Chairman;

neth

With Walston. Hoffman

the

of the industrial cities of the

son,

WATERVILLE, MAINE

on your deposits.
The man
who seeks high interest is usually

East. Most

til forced to do

are

easily dis¬

terest

analysis, the price of
tied up with in¬

merchants and manufacturers

can

—

Bros.

four

restoration- of - economic
stability in Germany and thus in
.

tighten their belts—that is,
long "parity legislation" will

come

to $5,000 in all

Farmers

tribute their money in a number
of banks. Do not bother about in¬

farm products is

ordinary profits on his livestock.
As an illustration of the price

will ms&e a decisive contribution

insured.

hold.
In the last

in hogs.

National and most other banks

The

trouble.

get caught
depression at
my humble judgment,
in the bank is safer today

...

year ago.

must

judgment and
willingness to
work, is now
prosperous. Of
course,
he is
obliged to pay

Babson

not

All accounts up

only difference of opinion is as to
how long it will be before farmers

in this area,

with

will

there

later

Every farm¬
er

now

Admissions

occupying powers
Thomson & McKinnon, 231 South
In this frame¬
La Salle Street.
work the foreign trade program
^bout

raises

New Business and Public Rela¬

man

time

war."

very

all export proceeds are mobilized

for the payment of essential im¬

and the safest

ship of the Board and' the ap¬
pointment of the following stand¬

Co.,
Chairman;
George E. Booth, VicCrChairman;
John
R.
Burdick, Jr.; Hulburd
Johnston, - Hulburd, ' Warren
&
Chandler; Barrett Wendell,

ports.

ing

peace

than money

talked recognizes

will

money

with
whom
I
that he is enjoy¬
honeymoon and sooner or
farmer

"the richest in

Roger

least.

and

the

during

What of the Future?

Every

every reader that

are

price

thirties

higher levels before

even

time

Hornblower & Weeks, to member¬

through one
•of its branches, and it is desig¬
nated to receive all foreign ex¬
change proceeds from export ship¬
ments. These precautions are nec¬
essary in order to make sure that
or

time in the

assure

strong today. When
of hogs drops back to
$5.00 per hundred the banks will
still be open and doing business;
They learned their lesson in the
the

the slump comes.

the

"Magic Circle"
of
America,

also: announced

the election of Charles R.

Executive

somewhat

made

was

day of his 20th year wTith
Exchange. He acted as Secre¬
tary since 1942.

ing committees:
Foreign Trade Drive Delayed
J

comprise

the first

the

sell. at

homa. These!

$20 mil¬

have not been used already for
import payments, and of German

Let

and Okla-$>

sas

to the subject of this

the banks

;ntral States; namely Iowa, Nebraska, Kansas, Missouri, Arkan¬

Stock Ex¬

change, announced the re-election
of James EL Day to the office of
lion is being negotiated with the! President, and the reappointment
of following officers?.
:
"
Export-Import Bank of WashingF. Joseph Butler, Raymond M.
.ton
and
American
cotton
ex¬
Day, Vice-Presidents; Carl E. Ogporters.
The two occupying powers also ren, Vice-President & Secretary;
.have established a joint revolving Walter R. Hawes, Treasurer; Mar¬
fund of foreign exchange that can tin E. Nelson, Treasurer Emeritus;
he used for importing other goods George J. Bergman, Assistant Sec¬
needed by German industries. The retary.
Mr. Ogren's title was changed
fund consists of the proceeds of
from Secretary to Vice-President
exports from the combined zones
His appointment
in 1945 and 1946, insofar as they and Secretary.

'a second cotton credit of

brings

week's column.

Mr.

ILL. — Homer P.
Hargrave, Merrill Lynch,. Pierce,
Fenner & Beane, newly elected

Strong Condition

By ROGER W. BABSON

CHICAGO,

ernors

(3243)

•

E. M. Newton & Company

Curtrss, House & Co.

Riter & Co.

Boettcher and Company
Courts & Cov

Julien Collins & Company

Bosworth, Sullivan & Company

Clement A. Evans &

J. M. Dain & Company

Company

Incorporated

Pacific Company

of California
Webster & Gibson

William R. Staats Co.

Stern Brothers & Cow

Yarnall & Co.

divine providence has brought

Thursday, June 19, 1947

CHRONICLE

THE COMMERCIAL & FINANCIAL

(3244)

forth

upon

this earth, refuses to protect debt. The other part (350 million
against its law pesos) is a new overdraft facility.

property rights, kills initiative, conducts inquisitions

Securities Salesman's Corner

abiding citizens, and assassinates the character of those who coura¬
geously oppose its corrupt policies, is not only an enemy of the
investor group; such a government is a menace to the future welfare
and freedom of all the citizens of this Republic whether they under¬
stand what

By JOHN DUTTON

going

not.

The purpose of the overdraft
agreements is to provide the re¬
cipients
with operating credits
with which they can obtain Ar¬

gentine products, pending the time
their
exports
can
again

when

relates that the Securities &
investigation. Sometimes it
inside manipulaton, or what happened when there
was a sharp break in the market, or what was omitted from a regis¬
tration statement, that is being investigated; yet the public continues
to take one licking after another on the funds which it invests.
often

Quite

newspaper

story

Exchange Commission is engaged in an

getting a fleecing—they are getting
it every day—but not by the same culprits for whom the SEC is
constantly seeking. It is their own government that is taking them
over the jumps.
The government's taxing program is doing more to
ruin the value of investments than all the promoters of downright
fraud could accomplish since the dawn of history. What do you think
happens to the going value of a business venture after the Treasury
boys highjack some corporation out of 40% of its net, and if the
stock is closely held they force a dividend payment of 70% of the
profit which remains? If this sort of thing is continued for any
length of time it can destroy the value of more investments than the
little barristers in the SEC could protect if they wrote the prospec¬
tuses themselves.
Double taxation which now has approached the
point where it is outright confiscation is killing the incentive to
assume risk.
Our little friend the American investor needs protection
all right—he needs it from fellows like Snyder and all those who
think as he does—that taxes should not be reduced and that those
Yes, American investors are

securities should be milked dry.

own

now

When Mr. American Investor puts up

his dough for a new

busi¬

Mr. Truman's OPA
went
Porter was so busy
protecting the great American public from the demon of high prices,
this particular segment of the American public that put up the money
to start this business practically lost their shirts.
Their company is
now in the bankruptcy courts, thanks to Messrs. Truman and Porter.
Before they could determine the cost of producing a new product,
the OPA by switching and turning until no one in business knew
whether they were going or coming, caused this business to operate
at a loss.
Sure the investors who risked their money to start this
business need protection.
They need it from the kind of ill-con¬
sidered nonsense that time after time is forced upon them by petty
bureaucrats such as Bowles and Porter and that bunch who try to
tell us that they know more about what is good for the people of
this country than even God himself.
This business to which we
refer was literally choked to death before it had a chance to breathe.
And what happens if our investor looks around for a good safe
bond?
His government says to him, "No, Mr. American citizen, you
can't own gold, interest rates from now on will be regulated by your
government, so if you want to invest, you can buy a bond that yields
2%% instead of 4% the way it used to be. Buy a bond, and then we
will once again send some of the Internal Revenue Department boys
around to see you and we will even take part of that 2 V2% away
from you.
All you have to do, Mr. Investor, is work, struggle and
save the dough and your government will allow you the questionable
satisfaction of clipping some mightly small coupons while it takes
the lion's share of even that greatly reduced return on your invest¬
(the way some I know did last year) and
on again and off again, and a fellow named

ness

all-wise, paternalistic American Government doesn't stop
there. No, it doesn't overlook its little friend the American Investor
while it is busily engaged in taking care of all the rest of its pals
such as the sick, the needy, the veteran, the aged, the indolent, the
union labdr leader, the Mongols, Turks, Greeks, Armenians, Britons,
Bulgars, Russians, etc., including all the boys in Kansas City.
No,
But this

with our little pal whom the
fondly call the investor. After our beneficient government
through its fiscal policies forces the returns on bank deposits, insur¬
ance policies and good bonds down to the vanishing point, they really
start in to do a job on Mr. Investor in earnest. Up go the prices on

our

government is not yet through

SEC boys

-everything he has to buy to fill his little
:back

levels

decades

and decades.

belly and cover his skinny

in these United States for
Mr. Truman's party of the people and savior

that have

not been

seen

funny money,
all printed up on nice new machines (which print government bonds,
too, lots of 'em) and all the while they are increasing the supply of
.this pretty paper to levels unheard of in the history of this land
of the brave and home of the free. There is so much of this lovely
stuff around that prices naturally keep on going up and all the while
this same benevolent government tells us that all is well.
It isn't
those fine, honorable statesman in Washington who by their unsound
financial policies have caused inflationary price rises in this country.
No, it is these very same investors and owners of businesses that
have caused high prices to prevail. Yes, our long suffering, striving,
saving, saperoo of an American investor needs protection all right!
He needs it from hypocrites—or is it too much to ask that the men
who hold public office in this country should not trifle with the very
foundation of our civil and religious liberties—in plain English,
tamper with the sanctity of the American dollar?
of the world keeps

And

years

our

investor needs

some

protection.

has been called a New Deal
will

dead

until

men

are

believe in standing upon

their

own

in the world.
No investment is

safe in this country, including our money

1946

lending

foreign

its

products.

Chile and Bolivia, how¬
will, utilize Argentine foreign
exchange only when Argentina
cannot
supply the articles they

result of them,

Belgium,

Brazil,

Chili,

Ecuador,

need

current

■

world

prices.
part of the

Accordingly,

a large
utilized in Argentina,
and if this is done, would not rep¬

total may be

France, India, Spain, Switzerland,
and the Union of South Africa,

blocked

resulted in the British

overdrafts, as well as the
lead to the

The

barter agreements, can

resent a drain on her

foreign

ex¬

produce.

Argentina has enjoyed active
balances of payment steadily since
has

This

1941.

been

due

the

which heavily cut imports
from abroad, especially from the
United Kingdom and Continental

war,

Europe, although the war period
also witnessed a threefold expan¬
sion in the value of imports from

taking change holdings.
Part of
the the United States. Total imports,
place
with
Bolivia,
Bulgaria, Spanish credit (400 million pesos) covering mainly textiles and their
manufactures, machinery and ve¬
Czechoslovakia, China, Denmark,
represents
overdraft
facilities
hicles, combustibles and lubri¬
Italy,
Peru, Paraguay, Sweden,
the Soviet Union, the Netherlands, granted in 1942 and 1946 now be¬
cants, iron and its manufactures,
and Uruguay.
ing converted into a long-term chemicals and drugs, wood and

while negotiations are now

its

their

Argentina's International Lending
j

Long-term Loans

Bolivia, 3/8/47

Years

of Pesos

100

Placed

Bolivia,

300

3%%

2.45%

96%

400

3%%

2.45%

96%

100

3%%

____

110
100

3%%

350

3/8/^7

600

.«

—

1943, the inability of the for¬
eign manufacturing countries to
supply

machinery and combus¬
needed by Argentina, to¬
gether with the latter's desire to
avoid depletion of her interna¬
reserves by using them for
purchases of inferior second-hand

machinery from abroad, accounted

31/2%

Will

for the continuance of active trade

Argentina
Supply

5yrs. Tires,

Will

Obtain

raw

rubber

Wheat, wood and
casein

cotton textile,
3

balsa

wood, etc.
Wheat

Wheat, maize,
edible oils, bacon,

cigarette paper

tallow,

spare

Wheat, maize,
barley, oats, rye

parts,

Union of So. Africa

pharmaceuticals

Tin, rubbermq;

also contributed.

The value of exports to the United
States

tripled from 1939 to! 1944,

Kingdom while the Latin Ameri¬
can

countries

times
As

imported from Ar¬

1944

as much as

than

five

in 1939.

result of all these develop¬

the cumulative net active

Wheat

Coal

of exports

increase in the

ments,

chemicals and
.

very marked

gentina

Machinery and

■

eggs

Switzerland,
"

other than those under price
'
1

control.

and almost doubled to the United

sheets, cork,

areas

value

Rubber, petroleum, Wheat, cattle
Burlap, jute
Steel flats, block

India, 9/27/46
Spain, 10/30/46

Bolivia, 3/8/47

ter

carded cotton

1/20/47

1932

tional

Argentina

Ma¬

Ecuador, 8/46

reached in

balances in spite of the high prices
of
merchandise
imported
from

Barter Agreements turity

Brazil, 10/4/46

lowest

tibles

'•''Renewable

in.

the

during
the
depression).
Even
though the situation improved af¬

Overdraft Facilities

Belgium, 5/14/46
Chile, 12/13/46
France, 12/1/46
Spain, 10/30/46

they amounted to only $236 mil¬
lion
(a figure not far removed
from

at which

zation

Interest

300

Chile, 12/13/46
Chile, 12/13/46
Spain, 10/30/46
Bolivia, 3/8/47
II.

Price

Amorti¬

Maturity

Millions

manufactures, reached
$430
in 1938, but declined to
lowest point in 1943 when

million

TABLE

long as our government

clear-cut patterns:

dollars.

treaties have been concluded with

itself,

continues to rob those who save. The end
; of such a road is state socialism—call it New Dealism or what you
^will—in the last stages of New Dealism it is the same as Communism
or Fascism.
All are the same—freedom dies! -A government that
.controls money rates and the banking system makes the possession
of gold a criminal offense, imposes ruinous taxation, employs favor¬
itism among groups at the expense of other groups in order to enlist
majority support for its unsound policies, destroys the food that

case.

signed

agreements

of three

ever,

operations. Argentina has received
several foreign missions seeking

and which is not dead yet and

feet and making their own way

credits

creditor status is its engagement

elected to Washington that will

is constantly
country who

The
one

unlimited

such

(1) Long-term loans, amounting granting of longer-term credits if
1,200 million pesos, to
buy the outstanding balances of the
are
not repaid at a
the central bank for gold spent goods in Argentina or in other overdrafts
in redeeming the foreign debt, by markets
(600 million
pesos
to later date, or in the case of the
delivering funds raised by the Chile and 200 million pesos to barter agreements, when the for¬
issue of 3% bonds.
Bolivia),' or to pay outstanding eign country is unable to export
The
central
bank
authorities balances due to Argentina (400 promised commodities.
All the barter agreements are
carefully paved the way for the million pesos to Spain);
similar, Argentina promising to
conversion, and for the sale of the
(2) Overdraft facilities amount¬
export
to
the partners in the
new "F" series for debt repatria¬
ing to 1,210 million pesos (350
agreement certain percentages of
tion, by calling in the 4% mort¬ million pesos to Spain, 110 million
its agricultural export surpluses.
gage bonds of the National Mort¬ to Belgium, 100 million to Chile,
The agreements run from 3 to 5
gage Bank
(the traditional form 600 million to France, and 50
years, and the majority contain
of private
investments) and re¬ million pesos to Bolivia);
specific lists of articles to be ex¬
placing them by a 2J/2% central
(3) Barter agreements with Bo¬
An interesting clause
bank mortgage issue redeemable livia, Brazil, Chile, Ecuador, In¬ changed.
preferential ship¬
on
demand.
The
old
mortgage dia, Spain, Switzerland, and the provides for
ment under the flag of the signa¬
bonds, which had been consis¬ Union of South Africa.
Since Argentina
The total amount lent reaches tory countries.
tently quoted at a higher price
has been trying to enlarge her
than
government
bonds,
were 2,410 million pesos, a sum that
merchant marine, this provision is
thereby eliminated.
As was in¬ might
increase
if
the
barter
clearly intended to benefit it, and
tended, the public responded by agreements give rise to overdrafts
in addition will tend to diminish
heavy purchases of government or loans.
the
payments
for freight
and
obligations. While the conversion
The
Chilean
and
Bolivian
shipping that have always consti¬
of 4% to 3% bonds was successful, treaties
contain commitments that
tuted
an
important balance of
the conversion of mortgage bonds
might call for an actual transfer
payments liability.
into central-bank mortgage bonds
of
Argentine foreign
exchange
The scope and terms of these
proved largely a failure.
holdings to a maximum of 800 broad programs of international
By converting the foreign debt million pesos. By their provisions,
trading and financing can best be
into domestic debt, Argentina will Argentina grants 200 million for
gauged from an examination of
save foreign exchange. The Banco
the development of industries in
Table II.
Bolivia and -oOO million for the
Central, in its annual report for
1945, computes the outgo of ex¬ development of Chilean resources
Causes of Changed Argentine
change on account of servicing the and for the construction of public
Economic Position
total non-sterling debt at 67 mil¬ works in Chile.
Total gold and
What were the factors that en¬
lion pesos.
The annual saving in foreign exchange holdings of Ar¬
abled Argentina to reach the pres¬
foreign exchange will amount to gentina, reaching 5.8 billion pesos
ent turning point in her economic
some 50 to 55 million pesos annu¬
oh Dec. 15, 1946, have since de¬
position? Argentina has been able
creased by 927.7 million dollars
ally in the next few years.
to embark upon the far-reaching
due to repatriation operations; the
repatriation and lending policy
credit granted to Chile and Bo¬
International Lending
primarily because of her active
livia might further decrease the
The second important factor in¬
balance of payments and the sell¬
dicative of Argentina's change to Argentine holdings by 241 million er's market for her
issue

Argentine Government reimbursed

He needs to be

repeal and correct the fraud, deceit and destruction that
being perpetrated upon the men and women in this

were

merrly on spending more and more

protected from all those in our government who believe that votes
come
before property rights. He needs to be protected from the
decisions of a Supreme Court that has condoned mob violence, sit
down strikes and mass picketing. He needs it from what for many
never

(Continued from page 8)
of the external debt
financed by an additional
of 3% internal bonds. The

since

ment."

ings placed

Creditor Status
patriation

with

ments

Argentina's Shift to

is short selling, or

who

their balances of pay¬
Argentina. The ceil¬
on the balances in the
Belgian and French agreements
are designed to avoid the building

equalize

Protecting the Investor

position in Argentina's balance of

Wheat, oil, sugar

payment in the period

1941-45 is

(Volume 165
estimated
414

Number

billion

have

THE COMMERCIAL 8c FINANCIAL CHRONICLE

4604

totaled

about

pesos.

unless serious losses from weather
or

locusts occur, will not decrease,

but

the

contrary may be stim¬
with most
countries in the world) is ulated
by
mechanization.
The
"at present experiencing a seller's prospects
for cattle-raising are
market for its customary
equally good. Moreover, disposi¬
large
surpluses, and accordingly can tion of the products of agriculture
charge higher prices than under and cattle-raising has been as¬
•normal conditions. The country's sured until 1951 by the
recent
agricultural output, however, is commercial treaties, and in any
much greater than what its rela¬ event, Argentina can always sub¬
tively small population can con- sidize her exports by exchange
■sume.
Even
if
the
projected depreciation as long as she is not

Argentina

(along

other

increasing
manufacturing seems to be a good approxima¬
production will make for greater tion since a few transactions have
self-sufficiency at
home.
The produced great profits. For in¬
five-year plan for "Economic and stance, sales of wheat up to the

The exceptionally high current
"demand for Argentina's agricul¬
tural exports is not likely to per¬

sist

indefinitely.

When the dev¬
astated areas of Europe are again
able to produce agricultural
prod¬
ucts, Argentina will have to de¬
pend once
customers.

her traditional

more on

should

subsidize

her

exports,

she might lay herself open to col¬
lective retaliation under the terms
of the charter of the International

Trade Organization.
Since domestic industrial output
has risen, the country will be in a
position to export not only agri¬
cultural

products but

finished

and

ucts

also

some

semifinished

prod¬
How

This is one of the main
its light industry.
that led it, in the recent far Argentina can compete with
older manufacturing countries is
treaty
negotiations
with
Great
Britain, to accept prices for the not known because the cost of
meat to be exported to
England production is only one factor,
that were relatively lower than since the government may subsi¬
dize exports of some of the prod¬
the market prices.
ucts of the light industries or cre¬
During the difficult period of
abroad
through
the '30's, grain was burned and ate \ markets
of

reasons

the government bought
crops at
minimum prices in a scheme de¬

signed to help farmers, which was
financed through the Banco de la
Nacion in part with funds obtained
from the operation of the exchange
control and in part with credit
granted by the Banco de la Na¬
cion.
In the period
of agricultural
prosperity, during and after World
War II, the situation has been

reversed.

The government is buy¬
"cheap" from producers and

ing
selling

"dear" to buyers.
This
practice is not followed with all
buyers alike, however, because in
order to avoid cost of living increases, the government monopoly
sells cheap in the domestic mar¬
ket and dear in th$ foreign. For

instance,
wheat
pesos

the

from
per

government
buys
the farmers at 17

100 kg

and at 15 pesos per

quantity in

to 300 tons
100 kg for any

excess of 300 tons ac¬

quired from any one producer
The Institute for Trade Promo¬
tion

sells wheat to

turn

local

millers

at 10 pesos per 100 kg,
•the 7-peso subsidy being paid out
of its profits on wheat exports,

for

which

enjoys

monopoly

per
are

only to keep down the domestic
cost of living but also to finance
the new five-year industrializa¬
tion plan.

likely to

need

considered:

first, the ability of other manu¬
facturing
countries
to
supply
their foreign markets in the next
few years; secondly, the ability
of the countries needing manu¬
factures to buir them. As for the
first,

the case of the United
Canada, it will depend

States and

their willingness to allocate a

larger part of their output to ex¬
ports; in the case of Britain and
the Western European industrial

countries,

their

success

meeting their targets for exports
hard

the

future

nomic policy.

latter,

the

the
eco¬

With respect to the

success

failure

will

depend

the

exchange

prospect

struction

the size of their

accumulated

resources,

securing

recon¬

cred¬

developmental

its, and above all, on general eco¬
nomic stability at high levels of
international trade.

possibility that in
the next few years Argentina will
be able
to sell extensively the
There is the

process

balance of pay¬
likely to be favor¬

Argentina's

ments that is

the

toward
there

Argentina for
not seem

tended

has

capital

will

arise

between

the

from

greater

domestic
Argentina's im¬

plan' should be a failure, its net
result may be intensified infla¬
tion from the government's pour¬
ing 6.5 billion pesos into the econ¬
omy, and a possible deterioration
of the balance of payments posi¬
tion;
The
prospect for Argentina's
maintaining and possibly strength¬
ening her present favorable posi¬
•

tion entails
ance

an analysis of the bal¬

of payment

tie±t few years.
seems

items over the
Such an anlysis

to indicate the

following:

(1) On the receipts side. As re¬
gards the export of grain, the sit¬
uation is not likely to change

much, even if prices should
greatly decline, because Argen¬
tine production costs are relative¬
very

ly. low.

Agricultural production,

has

become

increase

serv¬

Weekly Firm Changes

Finally, in view of the fact that

The New York Stock Exchange

has announced.the following firm

is somewhat difficult to estimate.
President

Argentina

figure of 780 million

gave

pesos on a

major sale of linseed alone.
Chairman

ary,

with

businessmen in

various

billion

1947 would be around
p e so s.

This

Ghriskey

June

ji+

H. Williamson

Rodie

Co.,

522

with

Neville,

Fifth Avenu6,

figure

agers.
was

Mr. Ghriskey in the past

with the First Boston Corpo¬

ration.

30th.

Transfer of the

Ghriskey has be¬

associated

come

Stanley M. Roth & Co. will be

dissolved, effective June 26th.
Schafer Bros, will dissolve

With Neville, Eodie

Janu¬ New,York City, investment man¬

stated that estimated profits

for the year
2

held

are

H. Williamson

The

of the central bank, in

conferences
groups

ditions

man

Exchange

June

26th.

Mr. Newman will do
an

repatriation

offset this.

offering

160,000 Shares

The Toledo Edison Company
4Vi% Cumulative Preferred Stock
(Par Value $100 Per Share)

foreign

Price $103,625 per

Since Argentina

plus accrued dividends from June 1,1947

needs

capital for its industrial de¬
velopment, the government has
that

direct

other

field

declared
in

any

utilities

will

investments

than

public

welcome.

Copies of the Prospectus

however, that a form
of mixed enterprise, with partici¬
pation of Argentine capital and
management, will be the out¬
standing form of foreign invest¬
ment in the future. Special legis¬
lation has been passed to facili¬

whom the

expected,

enterprise.

It has rightly been said that in
Argentina there will be a place
for private enterprise only as a
junior partner from 1947 on. An
appraisal of businessmen's expec¬
tations, however, which so largely

determine

vest,
in

their

decisions

W. E. Hutton & Co.

the

A. C. Allyn and Company

On- the

present internal

expenditure

L. F. Rothschild & Co.
Wertheim & Co.

Blair & Co., Inc.

Drexel & Co.

Incorporated

Hallgarten & Co.

McDonald & Company

in¬

situation.

(2)

Lee Digginson Corporation

Salombn Bros. & Hutzler

Dick & Merle-Smith

must be largely guesswork

view

be obtained from the undersigned only by persons to
legally ofer these Shares under applicable securities laws.

may

Blyth & Co., Inc.

tate the establishment of this type
of

undersigned

Phelps, Fenn & Co.

June 18,1947.

side.',

that

business as

individual floor broker.

New Issue

will

the Exchange

is understood

ai' a matter of record only and is under no circumstances to be construed as
of these Shares for sale, or as an offer to buy, or as a solicitation of an offer to buy, any of
such Shares. The offering is made only by the Prospectus.

investor

mem¬

Herbert C. Newman

be considered by

This advertisement appears

While

bership of the late Claude S. New¬

confidence, the government's in¬
tervention in economic activities
the

associated

differentials

buying and selling prices

investment

likely.

and

Chronicle)

ILL. —Joseph

world demand and economic con¬

position undoubtedly

creditor

its

shipping

payments for

payments accruing
international

movements

Large

The Financial

recent

than

ports will then decrease while
her'exports will increase. If the

•

ment of the merchant marine will

direct investment may have more

result

Hammel

per

ably affected by her rise to cred¬
itor
status is
the interest and

policies.
will

(Special to

CHICAGO,

industries that

products' both of

greatly

self-sufficiency.

Mason, Moran & Co.

totaled

1946

changes;
Joseph Klein will retire from
likely to be favorable
partnership in Faroll & Company
price
(and by implication the
from Argentina's poiqt of view
on June 30th.
only exporter, under government- in
the near future, it .would seem
DeCourcy L. Taylor withdrew
arranged
contracts)
of
wheat, that the
preservation and enlarge¬ from limited
partnership in W.
corn,
meat, vegetable oils, oats, ment of her cerditor status will
E. K. Taylor & Co. on June 18th.
barley, millet, rye, sorghum, bird¬
primarily depend on the sound¬
Irene Acosta will be admitted to
seed, etc. The spread between the ness and success of her domestic
limited partnership in John J.
buying and selling prices will go
policies. The responsibility which O'Brien & Co. on
to
finance
the entire five-year
July 1st.
Argentine
statesman
have
to
Randolph C. Grew, partner in
plan for Argentine industrializa¬
shoulder
will
be
correspond¬
tion.
Paine, Webber, Jackson & Curtis,
ingly heavy.
The size of the profits which
died on June 12th.

internal buyer, at an officially set

increase the country's output will

depend on government
If the five-year indus¬
trialization plan is successful, it

November

The

the

loans, which will increase her re¬
ceipts from abroad.

and secondly
course, of
domestic

industries, transporta¬

The Institute for the Promotion

As for

ability

preserve

products,

of.

nearly 1.3 million tons which, on
the basis of a profit of 150 pesos

ton, would afford a total
with Mason, Moran & Co., 135
tion, public works and natural re¬ profit to the State of nearly 195
sources, .Other aspects include re¬ million pesos. These figures rep¬
organization of the import tariff resent gross profits, and allow¬
and customs administration, edu¬ ance must be made for subsidies
cation, labor legislation, immigra¬ to industries, such as the 70 mil¬
tion, social insurance, etc. Its to¬ lion peso subsidy granted to the
tal cost has been
estimated at sugar industry.
In any case the
slightly over 6.5 billion pesos (or five-year plan will call for a 1.3
about $1.6 billions). Present gold billion peso expenditure annually
and foreign exchange reserves are and it seems that the Institute's
able to absorb any moderate dis¬ profits will be enough to cover
equilibrium in the balance of this sum.
The
payments, and the success of the
foreign trade monopoly,
five-year plan will therefore have besides enabling the government
to be judged by its success in en¬ to. subsidize the prices of essen¬
abling Argentina to cut down tials and to push specific exports,
imports from abroad in the longer has in effect created a system of
run.
;How far the-' government lidden taxation of producers and,
Joseph F, Hammel
seems willing to go in this direc¬
in certain cases, of domestic con¬
South La Salle Street. Mr. Ham¬
tion is indicated by the plan for sumers.
•
" ■
mel was
previously w.'th J. J.
the domestic production of steel,
A further factor in the situation
a
plan that may prove uneco¬ is the fact that the repatriation of O'Connor & Co. and prior thereto
with Doyle, O'Connor & Co.
nomic in view of Argentina's lack
foreign investments Will decrease
of readily available power and
public debt service and dividend
iron ore.
remittances
while
the
enlarge¬ New York Stock Exchange

of domestic

areas.

currency

second,

countries to import manufactures

and

her

14th

Joseph Hammel Willi

ices.

from

enlarge her creditor status?
The answer depends on two vari¬
ables, first the world demand for

Indus¬

cut

Creditor

Status
Is Argentina

and

agreements.
Success
in of Trade has been assigned re¬
manufactured
goods sponsibility for the five-year in¬
abroad
also
depends on world dustrialization plan.
Through it
economic conditions.
Here two the government is now the sole

amortization

Prospects for Retaining

Development

selling

agricultural products and
100 kg.
These differentials of the light industries in general.
to be used in the future not Another item on the receipt side

and for which it charges 35 pesos

Social

trial Expansion" has been started.
It provides for the development

barter

factors

The

relatively large-scale immigration a member of the International
policy is put into effect, the popu¬ Monetary Fund. If, however, she
lation increase would not suffice
to absorb these huge surpluses.

(3245)

Thursday, June 19, 1947

THE COMMERCIAL & FINANCIAL CHRONICLE

<3246)

Calling of the 4*/4S due 1947/52

Our

Reporter

was

operate close to
tion.
" '.

foregone con¬

The sale of
$338,623,000 of government securities, during May, by the monetary
authorities not only kept prices within trading ranges, but brought

clusion, in the program to reduce interest charges.

Governments

Oct. 15

about small declines.

By JOHN T. CHIPPENDALE, JR.

The government market is

digesting the large amount of securities
managers during May and the early
part of June.
Inactivity with minor price changes is the char¬
acteristic of this process.
As a result of the light volume the
technical position of the market is building up with investors again
showing interest in selected issues.
sold

were

by the

...

excess

obligations by

and

$500,000,000.

agencies have

government

pands. This means cash and credit*
In
1800 we had $38 million in

been

cash; by 1929 cash and credit had
to $55,171,000,000—an in¬
crease
of more than 1,400 times.

There is little doubt the powers that be will continue to dispose
securities in order to keep a ceiling on government security

Federal

grown

prices until there is clarification of the business picture.

attractive yields.

The

This

attributed

June, could give some clues as
about the rate pattern.

chasing

the

past

basis.

because

believed

they

the

would

return

somewhat from these levels,
kind of buying strike as some ofCthem like
now.
But it should be remembered that

to believe they
the

are

purchases,

because

in order to

that

the

rule

146.7.

recession.

There

seems

obligations

disagreement

the fact that Treasury

over

All

and other securities does not

securities.

to warrant commitments in other

seem

...

make Treasuries look very attractive.
Likewise there has
been and still is buying by the commercial banks of state and
.

that

municipal obligations at yields which would indicate
ernment

securities

due

sell

should

years

and

deflation

...

The

feeling seems to be growing in certain quarters that the
monetary authorities will do nothing in the near future to radically
change the course of the money market.
Hints dropped here and
there by important monetary powers, appear to give support to the
©pinion that as long as existing methods of handling the government
market will do the job as they want it done, then the authorities are
...

(Content to let well enough alone.
It

cerned

believed

primarily

some

with

the

that

keeping

money

prices

managers

are

con¬

;

other

will

still

have

demand

for

will

I believe that 1950 and 1951

By that time

unemployment may be well above

discussion going on in financial circles over

the way that the September financing could be taken care of, it is
still too early to get the market very much excited about it."
.
.

Exchange offers with rights have been dragged out and dusted off
again, because it is believed that such a plan would tend to keep
non-bank investors from selling their holdings of maturing or call¬

The talk is that

stead of certificates.

...

average; expenditure may
sufficient to pay for all

term issue with greatly

There

are

Council

not be
that

also rumors of

Advisors and to the efficacy

Employment
character

challenge

restricted marketability.

doubt

depend in
Impending developments that Should be cleared
iner.

...

face

1950s.

grave
In my

world

during the

sum-

themselves.

commercial

banks are still going on,
decided liking for the 2s due Dec.
15, 1952/54.
The 2*4s due 1956/59 are being acquired from the
proceeds of the sale of earlier maturities of bonds.
among

with these institutions showing a
.

2%s due

1955/69 and the 2%s due 1960/65 the most prominent issues for
switching from shorter obligations.

...

some

selling of the 2*/2s due 1956/58 with these funds

going into the 2*/2s due Sept. 15, 1967/72 and the 2%s due 1960/65
Savings

banks,

according

reports,

are

likewise

making

Jackson:
is

Arnold J.

(

Into the 2*4s due 1959/62 and the Victory 2%s.

going

the

for

man

with courage

Toynbee, the English

historian, whose work "A Study
of History," is
no\y
being dis¬
covered by the American public,
points out that the 26' civilizations
in

the

last

declined

6,000

years

accordance

rose

and

with

the

*An address by Dr. May before
the

are

The

"One

Association,
11, 1947.

These funds

the

majority.",

portfolio changes, with the 2s due June and December 1952/54
.

mot

same

nations

provide

and the 2*4s due 1956/59 being let out.

resources

only
question
that I raise on this point is:
Do
we have the courage?
I am re¬
minded of a statement by Andrew

The partially exempts are being taken on with the

There

depression in the
opinion we have the

other

the

upon

PORTFOLIO CHANGES

changes

will

1951

and

measure

some

The
to the

response

1950

of the

1946.

provide high level em¬
ployment and - consumption for
ourselves but also to materially

...

Portfolio

our

determine whether the nation will

assist

What will be done will

Act

only

2*4% long-

Economic

know-how and the

1*4% four-year note might be given in¬

a
.

the

same

American

Industrial Bankers

Denver,

Col.,

nation

and

the executive employs are

which

scien¬

•

eco¬

(11) Promote tax reforms which
venture capi¬

will encourage new
tal.

Business, labor and gov¬

(12)

regional

Encourage

(10)

nomic development.

Power

President's

able issues to the commercial banks.

with

ernment must plan together

Critical Years

be the critical years.

some

economic prob¬
our economic

our

nations which make up the

Executive

Problem of Deficient Purchasing i

The

1950-1951

...

While there is

of all the
world.
work,
therefore,
is
statemanship, and the techniques

tiny

study

bilities.

SEPTEMBER FINANCING
•

the personalities
of entire peo¬

only incidental to the forces which
tific attitude that our atomic sci-, he sets in motion and
helps to
entists studied
the problem
of direct."

being produced; a serious shrink-;
age in our foreign markets may
have taken place.
This, indeed,;
will be a serious challenge to the

should

boldly

and

to determine what

power

happen to

ples, the power to shape the des¬

the.

have

the

and to the happiness

is necessary for us

institutions

opening up about the same time as the
mortgage market which would relieve part of their need for Treas¬
ury obligations.

channels

to prevent a depression in

1950s.

lems

"The

shall

;

will

described
following

words:

recently

management

principle problem that, our
faces is the deficiency of

June

purchasing power.
When there
isn't enough money to buy all the;
goods produced unemployment re-1
suits and depression sets in.
In

had too
much purchasing power but soon
the problem of .deficiency will be
with us again,
-i
I suggest that we explore the
following ideas for use when de¬
pression threatens us again:
(1) A program insuring the
construction of at least 1,200,000
dwelling units annually for the
next 10 years.
There are 30,000
parts in a small house.
A lively
construction industry 9an do more;
for employment and small busi¬
ness than any other type of eco-j
recent

years

have

nomie activity.

•

;

security

unemployment - insurance and
old
age
and survivors to
the
14,000,000 workers who are not
covered.
We should also abolish

—

the old

age

Reserve Account

and

put social security on a pay as you

basis.
(3) Eliminate the trade barriers
between the states.
Many excises

I leave you

with one final word:

"Be not the first to adopt the new
nor

old."

the last to give up the

Kalb, Voorhis & Co. to
Admit Three Partners f
Kalb, Voorhis & Co., 15 Broad
Street, New York City, members
of the New York Stock Exchange,
will admit John R., Meaney to

partnership
Oscar

Miller to

and

26th,

June

Schafer

Benjamin

and

July 1st.
the Ex¬
change membership of Stanley M.
Roth. Mr. Schafer was previously
partnership

Mr. Meaney will acquire

a
-

(2) Extension of social

for a

to combat the next de¬
pression.
This must be done if
we
are
to avoid a Planned So¬

program

ciety.

economy

but

governments

war.

think that

to face

total of five millions

...

Member banks

the

into a spiral
large scale un¬

labor force.

pressure will be off the restricted issues, and it will no longer be
a question of keeping prices of these securities from going up too

for¬
eco¬

question

the

degree

courage

by the end of the year. Our un¬
employed since World War I has
averaged 5 to 6% of the nation's

months

fast and too far.

crease

or so, until the mortgage market opens up. . . . With a
larger amount of mortgages available for non-bank investors

;

large

our

well-being, the pattern of
governments,
and to a

third world

however,

the next six

in tow for

foreign

writer

One

increase,

institution but who arc

in time to avoid ruin.

concerns

re¬

our

Did you ever
however. ; We hear a scientist or engineer, call a
now have around 3,000,000 unem-. colleague a communist because he
We must
ployed out of a civilian labor force disagreed with him?
of around 58 *4 millions.
We can; have the courage to listen to new
ideas, and explore
their possi¬
expect the unemployed to in-;
tend

arise

which

problems

within

Unemployment will purifying uranium.

employment.

PRICE RESTRAINTS

nomic

and need not send us

at sub¬

stantially higher levels than those currently prevailing.

sponse

This will be

in character,

corrective

gov¬

solving

can

the decade of the 1950s.

the character of
rests the fate of

eign relations program,

the next 18 months.

near,

Upon

opinion there will be
no depression in the near future..
The general price level will fall—
perhaps as ' much as 10% within
In

Nevertheless, there have been substantial purchases of cor¬
porate issues by non-bank investors at prices that most certainly

draw

going
to
Alonzo
B. May
a
depression?
If
so,
when?
Next year?
1950?
Can we pre¬
vent a depression? How many un¬
employed people constitute a de¬
pression?
Can we achieve full
employment within a free society?
we

are
,

Are

raised.

the most attractive issues available for institutional
one has to do is to compare the spread in yields
between governments and other obligations. -.
The risk factor,
marketability as well as the protection against wide price move¬
ments is so overwhelmingly in favor of government securities, that
the narrow spread in return that exists now between Treasuries
investors.

estions
being

now

are

FAVORABLE FACTORS

we are

say
a

was

Some

con¬

achieve, within the framework skilled
at
handling
problems
of a free society, a high level of which
arise out
of
changes ir>
employment and consumption? It; mores,
philosophy,
psychology,
is easy to achieve high level em¬
technology and power.
Business
ployment.
All you need to do is enterprise should provide in its
to reason or have a super WPA. in-service
training program sem¬
The challenge, however, is high inars which train men to
recog¬
level employment and high level nize broad social forces in their
consumption within the frame¬ germinal stages so that manage¬
work of a free society.
This is the ment may be able to change the
challenge that confronts us as we structure
and
policy
of
their

For

index

that be stand ready to sell securities
keep prices from advancing seems to indicate what they

challenge: How

ing May 3 the

are

powers

fronted with

month.

civilization

own

There must be a rea¬

why before the war more new
enterprises failed than succeeded.
There is a great need for person¬
nel', who are not only adept at

son

challenge of the time.
Our

and labor.

of the civilizations to the

response

14,000,000

equivalent

The
(B.L. S.) for the week

the

has

energy
tons of
exploding TNT.
"
^ (9) Management must be im¬
proved in government, business,

pur¬

serious

that one pound

means

matter

of,, any

formula

Einstein's

it.

equals rac2

publicized price-decline in history.

the week end¬

think of the near-term trend of the market.

of deficient

one

take

depression

week

the

of securities is by

obligations

few

very

block

in the most

the

for

last

acquire

way

bought at the bottom.
The fact

effective

most

scale

147

was

149

now

Commodity Price Index Number
April

compared

...

with investors

serious

Lays down 12 precepts for preventing

power.

are

ending
26

To be sure, prices could recede

problem will be

wholesale

available in
to a 2.35%

of Denver

depression.

longest ineligible issues have been in a favorable buying area when
they, were selling to yield 2.32% as they do now. . . . Quite a few
,did not take advantage of this opportunity when it was

will have

Use the new forms of en^
fast as the economy earn

(8)

MAY*

Economics, University

Nevertheless, income is still very important to investors and
they do not like to keep funds idle because there is no nourishment
in that.
It is also being realized by non-bank buyers that the
.

ALONZO

until the 1950s and then the

GOOD RETURN

Western economist contends

Professor

of the money
depression phenom,-

failure

enon.

ergy

the month of
to what the authorities are likely to
to the belief that

part

supply

Depression in 1950?—A Challenge

potential demand is still very great, but there does not seem
same anxiety there was a few weeks ago, to put funds to

$41,680,000,000

had

shrinkage of $13,491,000,000.

Clearly,

...

to be the

work.

1933

Nonetheless, there is hope in some quarters that prices may
edge off a bit from here so that securities may be picked up at
more

for the economy as it exr

money

also heavy, which probably means that eliminations of Treasury

money

Provide for needed public
not in competi¬
tion with private enterprise.
(7) Insure an ample supply of
(6)

works which are

It is indicated that sales during the early days of June were

that

■

and to>
capacity produc¬

of lower prices)

the form

REDEMPTION

HIGH COUPON

partner in Schafer Bros., which

is dissolving.

June

30th, John C, Newsome, Exchange member, will re¬
tire from general partnership and

;

Eva E. Merrill and Elaine L. RosS
from limited

partnership in

Voorhis & Co.

Kalb,r
4
' J
,

and
tax

inspection laws, such as the
on
oleomargarine and truck

OSark, Dodge £ 0®. to
Admit BssseEi £ Crant

really
protective tariffs enacted by states

inspection

programs

are

Clark,

Dodge

Co.,

Wall

against each other.

Street, members of the New York

(4) Invest abroad an amount
equal to */4 to *4 of the nation's
annual savings for at least the

Exchanges, will admit Edward C.

other leading

Stock Exchange and

and

Bench

Grant

Robert

next five years.

partnership

(5)
"Encourage" monopolistic
enterprises to pass on decreased

production costs to consumers (in

M.-P.

the

past

3rd

July 1st. Mr. Grant

was

partner in G.

Murphy & Co.

COMMERCIAL & FINANCIAL CHRONICLE

THE

Number 4604

Volume 165

You

Opposed

Reserve Guarantee of Loans

know

happened

what

41, the order which lim¬
ited
building construction, was
lifted shortly after V-J Day. Many
builders requested that it be re¬
stored and controls on building

Forty-nine members of the Economists' National Committee on

Ae proposal that any Federal Reserve
Bank may guarantee any financing: institution against loss up to
90% of the unpaid balance of any loan.
Monetary Policy

all

With

when L

oppose

were

(3247)'

LOS
ward

ANGELES,

CALIF.—Ed¬

T. McCune has been added

staff of Buckley Brothers,
530 West Sixth Street.

Buckley Brothers

(Special to Thb Financial Chronicle)

the

are

Cooper Opens

NEWTON,
MASS. —Abraham.
Cooper is engaging in the securi¬
business

ties

from

offices

Park Avenue.

re-instituted.

Now we

Walks S. Turner Dead

all anxious to re¬

With Herman, Hampton

Wallis Smythe Turner, a mem¬
The Tobey Bill, S. 408, introduced in the Senate of the- United
SALINAS, CALIF.—Frank M. ber of the New York Stock Ex¬
trols. It is my judgment that the
States on Jan. 27, 1947, and H.R. 3268, introduced by Representative
change for the past forty-three
time for lifting all controls is ap¬ Meyer has been added to the staff
Hays on April 30, 1947, provide in<^ ■
-—
of Herman, Hampton & Co., 341 years, died at his home at the age
Section 2 that the following new University of" Pittsburgh); DonaI£L._Kem- proaching—but most assuredly, it
of sixty-nine.
merer
Main Street.
(University of Illinois); William H. is not
yet here.
move

paragraph be added to Section 13
of the Federal Reserve Act:

Kiekhofer

Wil.iam

"Subject to such limitations, re¬
strictions, and regulations as the
v

Leonard

ovan,
New

[At this point the House
the following
words:

(Mercersburg Acad¬
Tostlebe (The College of
Trant (Louisiana State
University); Rufus S. TUcker" (Westfield,
N. J.); Russell Weisman (Western Reserve

commitment

cinnati); Edward Wiest

BsBiitlfog Qoairofs Soon

was

other parts of

affecting

the nation's economy.

remaining con¬
this time, my
1,000,000 homes will
he reached. We may lose over
if the few

But
trols

of
per

of the combined surplus
the Federal Reserve banks at
such time."

the

Committee

Monetary Policy consider this
proposal unsound and urge Con¬
on

reject it for the following

not

completions. But let us
believing that

200,000

(1) There is apparently no de¬
basis for subjecting the
surplus of the Federal Reserve
banks to such contingent liabil¬
fensible

ities.

materials which will
these lost houses will
needed commercial and

the building

such

loans

ing institutions.
"

(3) It is undesirable to

encour¬

into

Based

the number of applica¬

all types of

tions of

construction

denied there is

been

demand of

estimated pent-up

which

billions

includes

This

market.

may

hit

other social objec¬

some

economists

are:

the

opposing

Benjamin

Anderson
(University of
Angeles);
Charles C.
Reserve University);

California

Arbuthnot

(Western

James

Los

Washington Bell

(Northwestern Uni¬

versity); William A. Berridge (Metropolitan
life Insurance Co., New York City); Ernest

(New Yojk--City); Wilbur P.

I. Bogart

Cal¬

houn (University of Cincinnati); Edward H.

Collins

William

Thalmann &

Cumberland

.*
(Ladenburg,
William

Co., New York City);

E. Dunkman (The

"William

"Times"); Frederick A.

(Lehigh University).'

Bradford
■

York

(New

University of Rochester);

Ennis

Institute

(Stevens

"Technology); Fred R. Fairchild (Yale Uni¬
versity!;
Clyde
Olin
Fisher
(Wesleyan
University); J. Anderson Fitzgerald (The

of Texas);
Major B. Foster
i Alexander" Hamilton
Institute and New
York University); Roy L. Garis (University

large

easily deferrable and
much less desirable types of proj¬

curious paradox
projects can,
in the open market, out-bid the
sponsors of
commercial and in¬
dustrial construction as welT as
But

these

less necessary

Soujthe^iv California). "

(New York University);
E.
C.' Harwood
(American Institute for
Economic Research); Hudson B. Hastings
!

Lewis Kf.

Haney

University); • William
F'.
Hauhart
<Dean Emeritus, Southern Methodist Uni¬
versity);
John. Thorn
Holdsworth
(The
University of Miami); Montfort Jones (The
<Yale

•4

*House

bill

"'chartered

institution."

substitutes

bank"

for

words

"financing

tion

rent

lift

premium and interest to July
and surrender of their

should

year

ago- are now

.plentiful supply;
Others in
supply at present are be¬

short

and more' plentiful.
only a very few which
are not satisfactory from the pro¬
duction standpoint.
So. I say to
more

builders who have struggled

almost two years

patient just

I believe I

tions

promptly forward their Debentures to

New York

payment

The Chase

City of New York, 11 Broad

Street,

15, N. Y.

Notice of the

the Indenture is

Redemption

required by the terms of

being published and this announcement

is made in the interest of those

holders who may not see

legal notice and who may wish to take

advantage

of the

Company's offer to make immediate payment

interest to

This
the

with

July 28, 1947.

Redemption out of treasury funds, together

with'

redemption of $35,000,000 of Debentures in June

completes the retirement of the entire issue

last year,

are

with shortages and

desiring to receive such advance

National Bank of the

such

come

terials short

you

:■

Holders

There

28,1947, upon presentation
the

Debentures and coupons to

Trustee.

this time. The
control, is of

housing.
The building materials situation
has improved greatly. Many ma¬

coming

of the principal,

privilege of receiving immediate payment

somewhere nearer
the demand.
This day
will
certainly not be
reached
sooner by doing anything to delay
or hamper the construction of new

subject to this call, the

offering holders of Debentures

when the supply of hous¬

course,

ing has;
meeting

interest and is

July 28, 1947 at 102 and accrued

control entirely at

University

©f

for redemp¬

amount

time

The
bill

outstanding 5% Debentures due 1950

of its

the

housing for the scarce materials
the loose lending that such an
which will then become scarcer.
arrangement, as that proposed,
If this happens it certainly will
probably would invite. It would
not result in lowered prices but
tend to encourage a speculative
the very opposite will happen and
type of expansion in manufactur¬
you
know and I know where
ing, commercial, and distributive
prices are today.
activities.
Everyone in the country is more
(4) In time of business recession or less familiar with rent control
the guarantee might be employed on existing housing. Rent control
to pump credit into uneconomic will eventually be lifted but I do
enterprises in an effort to main¬ not believe that many people will
tain "full employment" or to ac¬ recommend
the
lifting of rent
tive.

the balance

construction.

types- of

industrial

age

complish

service company is calling

not go into

ects.

risks

should be shouldered by the lend¬

Cities

not be misled into

which have

lifted at

are

estimate

(2) The

5% Debentures due 1950

record .housing year
accomplished without
ad¬

versely

centum

should

nations history, we-

note that this

outstanding at any one time and
loans held at the same time, which

reasons:

■

(Continued from page 7)
of the

time; and the aggregate amount of
such guaranties and commitments

gress to

,578,100

To Is teovsd

the Federal Reserve banks at such

York).

City of New

banks under this paragraph
outstanding at any one time, to¬
gether with the amount of loans
acquired thereunder and held by
them at the same time, shall not
exceed the combined surplus of

members

Max Winkler

and

tucky),

serve

National

Gamble Co., Cin¬
(University of Ken¬
(College of the

(The Procter &

Whitney

commitments of the Federal Re¬

Forty-nine

William
O. Weyforth
(The
Hopkins University); Nathanial R.

Johns

balance of any loan. The aggre¬
gate amount of guaranties and

Economists'

ion

University);

make

individually
are
in
excess
$100,000, shall not exceed 50

Notice

Wooster); James B.

purchase more
centum of the unpaid

than 90 per

Tippetts

Alvin S.

emy);

Reserve bank under this

paragraph shall guarantee

Steiner

Chanes

through
ordinary banking channels at rea¬

terms.']

(New York University);
(Brooklyn College);

Walter E. Spahr
William

adds

'and could not be secured

and

& Irvine,
(Indiana

any loan made to a
enterprise which has a
maturity of not more than ten

business

rates

W. McDonald (Don¬

Roy

City);

Leisure, Newton, Lumbard
City); Mark C. Mills

York

Margaret G. Myers (Vassar
College);
Melchior Palyi (Chicago, 111.);
Frank
Parker
(University, • of Perinsylvar
nia); Leland Rex Robinson .-(2 West. 45th
Street,
New
York City'); R. ' <X Rodkey
(University of Michigan); Olin Glenri Saxon
(Yale University); Joseph A. Schumpeter
(Harvard University); Carlton A. Shively
(New York "Sun").

institution,

Federal

Ver¬

University);

interest on, or may make a com¬
mitment to purchase and there¬
after purchase from a financing

sonable

York

New

guarantee any financing institu¬
tion* against loss of principal or

Bill

(University of

Lohman

A.. Wilfred May (Executive Editor,
"The Commercial and Financial Chronicle,"

System may prescribe,
Federal Reserve bank may

years.

Co.,

mont);

Reserve
any

Kniffin

Philip

con¬

University ' of Wisconsin);
(Bank of Rockville
Long
Island);
J. L.
(University of Southern Califor¬
-

nia)"

Board of Governors of the Federal

remaining

(The

Trust

Centre

few

these

can say

restrictions for

that all restric¬

construction

removed this fall.
this brief talk to
ture

you

with

see

many

can

be safely

I have tried in

give

it,

which was

since V-J Day,

little longer and

$118,115,600 of 5% Debentures due in 1950,
sold in 1930.

you

the pic¬

without boring

of the details

CITIES

SERVICE COMPANY
Sixty Wall Street
New York 5,

N. Y»

v*jii

Thursday, June 19, 1947

THE COMMERCIAL & FINANCIAL CHRONICLE

(3248)

three times the rate of the past

High Prices and Business Prospects
mediately by

(Continued from first page)

stable
will

condition;

lead

and
and

crisis

they

tnat

depression

There is

prices

question that some
high that they are

are

people
lor

they did in 1920.

,as

are

looking apprehensively
equally drastic price cor¬
to follow the price rise

the past seven years.

Manufacturers'

have been
the target for most official com¬
plaint, but prices of industrial
goods have risen much less than
the prices of many farm products
and

will

And

materials.

raw

enough people stop buying suffi¬
ciently to cause a significant lower
demand for goods?

questions can be answered
and

These

satisfactorily only by asking

other
more
searching questions. I think it is
answering
worth

while to do this

our

the

understand

can

some

that

reasons

why prices have gone up during

major war, and why they
have come down again, and how
we
should
reasonably
expect
every

prices to behave during the re¬
maining months Of 1947 and over
the longer term.

Raw Materials just as

well, but the method and the fig¬

But historical analogies are sel¬

prices

would

tion and the situation that existed

They

different.

would

ures-

dom
complete, and are usually
misleading. I believe the analogy
between our present price situa¬

dex of prices

will

1920

also

prove

reliable guide.
It will be useful

un¬

lead

look more

the

It is possible to

OPA

occurred in about
prices declined ir¬

which

came

since 1932, and until
into the picture in

three

years,

regularly for fifteen years, until
1879.
Following the First World
War rise of

major

drop

nearly five years, the

occurred within

one

year—from the middle of 1920 to
the middle of 1921. Judging from

three

These

measures

forces of

factors

have

measure

and

best

the

are

found

the

of the forces

the

of demand

the price

same

way

level
total

how

matter

high

average

Prices

Just

tention

of background,

way

would

bring

at¬

your

that

book

small

was

Written about 400 years ago, that
discusses the reasons for price

which

suffered

France

in¬

crisis

financial

the

and

flation
from

the sixteenth century.
was

The author
economist, Jean

French

Bodin, and he is credited with the
first extended explanation of the
revolution in prices that followed

forces of

seen

He is given credit also

products and in¬
products.
In the First

dustrial

that Jean Bodin's little book was
written

refutation

claim

by the King's Minister and Comp¬
troller of the Royal Mint in Paris,
to the Effect

that, in spite of what
people believed, and in spite

the
of

what

they thought

they could

be¬

different

the

of farm

World War there

was

little effec¬

Prices of both
farm
products
and
industrial
products increased to the same
tive price control.

1914.

above

150%

extent—about

latter

two

significant difference be¬
tween the price inflation of World
War I and the current price rise is
One

havior

nating
the
theory
connecting
prices with the volume of money.
It is
interesting also to note

The
cost

the discovery of the New World.

for origi¬

war

inflations.

factors

that

factors

are

measure

the

that prices and

analogy between the price infla¬

all

groups

and

strongly

tions

of workers.

incomes

The

some

large

some

farmers

groups

increased

much

incomes of annuitants,

than

school

closely for the ten
until

middle

the

years

from 1932

1942, when
OPA price controls started to hold
back the official BLS Price Index.
As

nearly

anything
"proven" by statistics, we can
as,

is
say

that these factors used in the cal¬
culated

suppose we look at the have happened to industrial prices
price inflation and what without OPA controls during the
may be expected to come out of four years, 1942-46.
it.
As I have just indicated, I
What OPA did was to postpone

enced answers

expect

to economic prob¬

lems.
I

wish

point

correct 400 years ago

and

are

They have, in fact,

today.

Jean

out

because they were

reasons

true

a very

modern flavor.

pointed to the
great stocks of new gold and sil¬
that had been found in South

ver

America and shipped to Spain; the

great expansion in trade between

Spain and neighboring countries,
especially France, that brought a
flood of new money into France
as

goods flowed out; the scarcity

commodities

relation

the

what

would

Now,

different pattern will for four years the natural price
that we need not fear increase that would have occurred,
deep, sharp price drop such as without OPA, during 1942 and

occurred in

evil

'King's
So

the

debase¬
by
the

currency

ministers.

own

the

is not

of the

practice

problem
It

new.

of high prices
problem that

has plagued political rulers, busi¬
ness
ever

the

and

men,

when¬

consumers

supply has been

money

greatly increased in relation to
the goods that can be bought in
the market.

serious

tory,
tween

goods

has occurred

our

American his¬

maladjustment
and

four times

be¬

supply

money

about

1813-14, during the
final Napoleonic Wars; in 1861-64,
'during the Civil War; in 1915years:

1920. in connection with the First

World War; and from 1940 to the

In all four of these
experiences, major wars led to the
curtailment of civilian goods, and
present day.

the creation of
stock of
In
ences

the

new

three

that

greatly-enlarged

money.

historical

have

been

experi¬

completed,

t^e price rise was followed im¬

1943.

Then,

to be correct, it
auspicious price ad¬
justment period,
and one that
should bring about confident op¬
timism rather than fear and pessi¬
mism.

calculated index.

will be
over

gradual, and may extend
of years. If this

number

opinion
will be

proves

very

has

What
much

better

than

pushed prices

Jean

the

1939?

since

the

con¬

during the two years of
1944 and 1945, there was no nat¬
ural tendency for prices to rise,
and OPA had an easy job.
There
would have
been no price rise
during these two years without an
OPA, but prices would have been
at the higher level shown by the

because of this trade with
Spain
ard
for
other
reasons,
among them high wages and the
luxury spending of the nobility
and the newly-rich; and, finally,
ment

On the

1920-21.

trary, I believe any price decline

man,

150

show

recent

increased stocks .of gold and silver
money,

income

two

continued
in

the

source

danger

when

important
other dif¬

are

the favorable and

I discuss

unfavorable factors of the current

business situation.
I believe a
more
trustworthy
measuring rod for estimating the
chances of panic and depression

can

found

basic

some

eco¬

nomic

relationships that I have
already referred to in explaining
the causes of price changes.
Factors in Changing

that

found

Price Levels

changes

the

level of industrial
products can be accounted for by
changes in these four factors:

prosperity for all lies
of prices and of

There

ferences that I will refer to later

Adjustments
chief

inflations.' The
money supply and

credit

difference.

actual

The

extent

price

difference

bank

I have pointed

difference

the

price

(1)

income payments

National

individuals.

extremes

(2) Average prices of raw

;

ma¬

incomes—in abnormal differences

terials.

within the averages.

(3) Average hourly wage rates
in manufacturing.
;
(4) Production per man-hour. ■

watchword

The impor¬
the

coming
months is orderly adjustments to
reduce
any
extreme. differences
among incomes and among prices.

tant

over

I propose to

drop
can

show that

sizable

the average price level
occur only if and when" siz¬
in

able nhanges' occur in all of these
In more

related economic factors.

general terms,
in the

sizable reduction

price level of manufactured

continues

emerge;

Bodin's

real

price index," do account
satisfactorily for price changes of
Prices of commodities that are
commodity prices have increased manufactured goods over this tenabnormally high should and will
more than they did from
1914 to year period-of depression and par¬ come down. In this group will be
1920, but industrial products have tial recovery. -}
V '
J' found many foods, cotton textiles,
increased only one-third as much.
Therefore, it is a reasonable de¬ lumber,
paints,
oils
and fats,
duction that the calculated index
leather and shoes.
Contrary to
The Present Price Inflation

During the current inflation, farm

out

has been disturbed.

Danger of Disparities in Income

there really had been no in¬
crease in prices for 300 years.
It
is unnecessary and
unprofitable
to go into the loyal Minister's rea¬
sons, because they were all wrong,
as
are
so
many politically-influ¬
see,

distribution of

the first World War and

of the recent war.

organized wage earners these

teachers, and white-collar work¬
ers, generally.
To make matters
worse, the prices of such necessi¬
ties as food and clothing have in¬
creased much more than the prices

This calculated price index fol¬
the
actual
BLS
index

people
have answered
in favor of panic and

this question

ratio for all commodities and

same

lowed

by depres¬

followed

sion.

depression simply by the apparent

increase

not

the

supply.

orderly

the

usual

of these other

both

those of

whether the process of
step-by-step adjustment,
that is now going on, will be cut
short by some kind of panic or
and

Many

The difficulty is

incomes

Jean Bodin's Reasoning

question that is really be¬
is whether time is running

out;

match.

for

continuing.
The

crisis

would

incomes

and

two cases alone, it would money
supply;
of less necessary things.
As a re¬
equally reasonable to expect
(2) The average price of raw
sult, the workers whose incomes
the current price inflation to be materials;
have lagged behind the average
followed by a long, irregular fif¬
(3) Unit labor cost.
cannot buy the goods produced by
Unit labor cost is increased by
teen-year drop in prices, or by
the workers whose incomes have
an
explosive one-year' drop. Ac¬ any increase in average hourly
exceeded
the
average.
In this
tually, we should expect neither, wage rates, and is decreased by sense there can be insufficient
because the circumstances of the any increase in production per
purchasing power, because the
current rise differ radically from man-hour.

these

increased

ratio.

the

income payments
which is a good

which acts

much

together, and if all in¬
by
the
same

fore

have

supply and demand:

National
individuals,

(1)
to

moved
comes

calculate an in¬
that has agreed very
had been.
with the BLS- Wholesale

closely

never

averages

prices rose, under these uniform
conditions, everybody would be in
exactly the same position as they

closely at the two most recent 1942.
This series of calculated prices
price inflations and their after¬
maths. The general shape of their is based on three factors that are
rise and fall differed substanti¬ most important in determining the
ally.
Following the Chvil War price level of manufactured goods.
rise,

and

further increase of high wage

But

conclu¬

same

sions.

Price Index

level. A

the average price

nor

tell the salary rates would be just as un¬
as
Averages desirable, at this juncture,
commodities.
I will discuss the really significant story.
would be a further increase in the
can conceal wide disparities, great
average prices of industrial goods
highest prices.
in terms of the BLS Wholesale dissatisfactions, and possible trou¬
But, in spite of all the difficul¬
Price
Index
(excluding
Farm ble.
There
would
be
no
dangers ties, this process of adjustment has
Products
and
Foods), with
been going on since last fall and
1939=100.
I
could
use
Farm lurking in high prices, if all prices
Products

Analogous Periods

prices too high?

average

equally disrupt¬

are

rection

Keepxng some people irom buying*

But

ing decline.. Because of this, many

six

years.

call

same

our

Bodin,

can

When

laxed and

French¬

because

causes

have

many

been

the BLS

controls

OPA

were

re-^

finally removed in 1946,
index jumped nearly 40

points.
to

But half of this jump was
close
the gap between con¬

trolled prices and "free market"
supply—considering prices. There was created the ilonly the most liquid, spendable lus'on of an extremely steep price
during the 12 months
forms of monejt, which are cur¬ inflation
from March, 1946 to March, 1947.
rency outside of the banks and
It is the false impression created
bank
deposits in
checking ac¬
counts—has increased more than by this double jump in prices that
has probably caused the concern
three times in volume since 1940.

present.

Our money

over the existing price level and
hand, the related
the fear of a correspondingly sharp
industrial
production
has
in¬
creased
only
50%
since
1940. price decline.
In the first quarter of 1947, the
Since 1929 our money supply has
increased about five times, from official BLS index and the calcu¬
25 billions to 125 billions.
This lated index again came together;
increase is, partly, the result of since last March prices have been
deficit spending during the 1930's, in line with the natural forces of
but mainly it is the result of is¬ supply and demand.

the

suing

other

new money

one-half

the

to finance about

war

expenditures.

This vast money supply gives ef¬
fective force to the still-unsatisfied
demand for durable

producer

goods.

consumer

and

Many kinds of
are still
in short

The real price picture of indus¬
trial products since 1940 is a total
rise of about 60
—an

year.

average

points in six years
rise of 10 points per

popular and official opinion, the
of steel, automobiles, and
most durable goods are in line or
below their usual position com¬
prices

pared with the average price in¬

products (and in farm products,
also) can occur only if there is
such a decline in income, employ¬

ment, and wage rates, that would
serious depression.
I pro¬

mean

to show that we cannot have
drop of even 10% in the price
level of industrial products unless

pose

dex.

Our

price problem is one of or¬
derly adjustment; of bringing in¬
dividual prices and group incomes
in line with the new higher post¬
war levels.
The situation is not
one that requires any drastic re¬
duction in the average price level,
and, I am tempted to add—any
drastic reduction in total national
I

income.

group

these,

because

price and income are two sides of
the same coin.
They go up to¬
gether, and they come down to¬
gether. We all would like to see
prices come down—but we don't
want incomes to come down.
What kind of adjustment, then,
can we achieve?
Will the price
situation develop into crisis and a

steep drop as in 1920? Or can we
get by with- a slow, step-by-step

adjustment

and incomes, as

Orderly

do have

Just

suppose

economic

51%.
labor

Unit

other

the

together.
Suppose

dropped

sub¬

Adjustment

the

reductions

some

we assume,

for

our ex¬

periment, that the price level of
March declines by the much

over

food

Additional
across-theboard wage and salary increases
will only serve to-make the cor¬
prices.

factors

last

low salary scales

difficult.

35%.

stantially when the average price
level declined. They are all tied

costs

immediately

dropped

costs

Income payments dropped 18%.
It should be noted that all of

Time is required for
getting some high prices down.
Foreign
demand
for American
farm products may prevent desir¬

rection

occurred

that

price decline.
The index of BLS wholesale prices
(excluding
farm
products
and
foods) dropped 40% from June,
1920, to June, 1921.
During the same 12 months:
Raw
material
prices dropped

out-of-line prices
I believe?

level.

factors

during the 1920-21

smaller

able

look at the extent or
these same related

the changes in

Orderly adjustment is not an
easy job.
Time is required for
bringing up the incomes of groups
that are now below their custom¬
ary

real depression.

background information

still
Obviously, those

concerned will han¬

amount

10%.

Under current labor

conditions,

it would be unrealistic to assume

at all in unit labor
manufactured
products

decline

any

months.

Any

gain in production per man-hour
will undoubtedly be offset by in¬
creases in average wage rates.
Suppose also that
decine in the

raw

assume a

material

aver¬

(which would be on

age

of 15%

the

high side for

10%

drop in

wholesale prices).

To place this World War II price
With these apparently reason¬
dle
their
individual
problems
history in its proper perspective,
able assumptions, we can calculate
more wisely if the nature of the
it should be compared with a rise
We have better statistical tools of 135 points (on the same 1939
general problem is understood; the corresponding value of na¬
to work with than did Jean Bodin base) from late 1915 to the mid¬
tional income payments to indi¬
that the problem is one of bring¬
400 years ago, and we can measure dle
of
1920, during and after
viduals.
The
calculation shows
ing up low incomes and bringing
the forces acting on prices and World War I.
The World War I
down high prices.
The problem is that under the assumed values, a
give them their due weight. Sun- average rise of industrial prices
10% drop in prices could occur
pose we try this for industrial was nearly 30 points per year, or not one of total purchasing power

durable

supply.

goods

iVolume 165

dumber-4604

THE COMMERCIAL & FINANCIAL
CHRONICLE

(3249)

only if income payments declined

it is because they don't have it to

years

25%.

other amusements.

spend.

and

will

We know from the

;

ior

national

income

statistics

that
total
wages
and
salaries
would drop in step with total in¬
come

payments.

dropped

25%,

ments

past behav¬

income

pay¬

and

wages

There

are

and

believing

that

level

busi¬
will

demand

1941, and $7.3 billion in 1929. The
of
Department
Commerce
and
SEC, in a joint report, estimate

will

salaries would also drop about the
same 25%. But we assumed that

provide the time for the orderly
correction

unit labor costs would remain

justments

amoftg

changed.

un¬

Without burdening you

with any more figures, a
drop of
25% in total wages at the same
unit labor cost would mean, rough¬

ly,

25%

decline

number

workers employed or
ers

work¬

employed at reduced hours.

In the

actual case,

reduction

some

rates

wage

there would

and

less

reduction

employment, income, and
wages. But, in any event, no one
would

happy over the
if the price level of

very

consequences

manufactured goods dropped even
10%, when the other related con¬
ditions
of
income,

employment,

and total wages
and again in

became effective

equilibrium,

Consequently,

ommends
average

who

any one

rec¬

sizable decline in the

prices

manufactured

products is in reality recommend¬
ing a considerable decline in na¬
tional

income, in total wages, and

employment

recommendation

sizable

drop

recommendation

in wage

rates.

prices

prediction of

nevertheless, that

some

leaders of public opinion are rec¬

ommending

sizable reduction in

in¬

four highly favorable

are

The supply of bank credit.
The conditions within the

(2)
heavy manufacturing industries.
(3) The export market.
(4) Investment in new facilities.
I

will

discuss

these

briefly

term.

portents"

industrial average prices in order
to prevent depression. We cannot

have

^same

. coin.
One cannot be re¬
duced without reducing the other.

Serious

\ S "1 '' 7

Depression

largely because of the ex¬
of bank credit.
In. the
present instance, the price rise has
been

induced, and wdl be rather

permanently

supported

present

supply

cannot

stantially

banks,

selling

such

(1)

prices, L comes, and em¬
ployment, will not happen within
average

The

factor

one

that

must

decline in prices,
of
depression
proportions,
wih
occur, is a considerable aecline in
invest ment ant.' consumer demand.

usually been brought about by the
sudden exhaustion of bank
credit;
by a sudden drop in exports; or by
a sudden
change in the favorable
expectations of businessmen.
wonder

may

why

not mentioned the fear of

strike

one

of these

question whether

have

buyers'

reasons.

general con¬
sumer
refusal to spend has ever
occurred except under the obvious
condition of

lack of funds, Peo¬

ple who habitually spend all of
their income do not stop
spending
because some prices are too high.

They buy other things. Also,
ple who

save

some

come,

continue

spend

peo¬

their

in¬

according

and

save

to their habit.
refuse to buy $1
butter, but they continue to buy

Housewives
food of
-

The

show

may

some

kind.

National

Income

that individuals

widely

boom

and

declines

statistics

save

about

occur

these

heavy industries.
In

the

current

particular

situation,

industries

these
the

have

surest prospects

of continued de¬
mand. I think it is safe to say that
no one expects any slump in pro¬
duction of steel, automobiles, elec¬
trical equipment, railway equip¬
ment, or farm equipment during
the

have

months.

And,

until

appreciable declines

these and similar basic

tries, there will be

indus¬

general bus¬

iness decline.

signal

danger

States

danger of

exports in

any

1947.

port amounted

1946,

and

There

exports.

such decline in
Commercial

to about $8

the

billion

estimated

mercial exports for

1947

ex¬

are

com¬

50%

statistics

the

available,

savings,

1920,

and

not

nevertheless,

dropped back to 11%.
supposed to have been
strike

still

were

There
a

this

buyers'
buyers'

strike initiated the depression. In
that year consumers spent more

billions than they did in 1919, and
no more than the usual
10%
of the money they received.
I am

saved

not

impressed by the bogey of a
"buyers' strike."
When all the
people stop spending their money,

good
be¬

general busi¬

war,

and

moved

stock
market
prices
and down together. In
this long record, the stock

view of

market

break

disconcerting,

was

the least. What has gen¬
erally been overlooked is the fact
say

that, beginning with 1939, the
stock market broke this long part¬
nership with production. The stock
market, on the one hand, and
heavy
industry
(and
business,
generally), on the other, have fol¬
lowed quite different courses dur¬
ing and since the war, because of
the different influences of the

these

forms

two

war

business

activity.
Stock

prices were in a long cyc¬
lical depression during 1940-42;
there was a slight decline in 194344; the stock market is currently

stock

prices, during the
heavy industry follow

did
it

phase of

has not followed suit

the

post-war

cline.

bear

In neither of the declines

After

production

large

volume

new

invest¬

production facilities, and
construction.

stock
V-J

suit;
far, in

market

Day

war,

different

This

kind

dynamic force
up
higher levels of
total employment and income.
builds

For the

15 years,

between 1929
and
1946, the American people
added little or nothing to their
store
of
fixed
capital in land,
buildings and equipment.
It is
more probable that
they lived off

will

their capital to some extent. But
since the end of the war, we have
been
working on the biggest in¬
vestment program of
In

1946, the value of

history.
gross capital
our

wealth

$32

produced is estimated at
billion.
The highest corre¬

sponding figures for

any

Street,

consumption, for example,

cycle of about two
length. Heavy industry
a longer
cycle whose length has averaged
in

and general business have
40

months

over

long

period.

With these different cyclical char¬

acteristics, it is obviously impos¬
sible

for

the

and

ups

downs

hard goods and soft goods to fol¬
low the same course.
The fact

Edward

H. Morfeld

that textile production and retail
sales

are now declining has little
significance for the over-all busi¬

situation.

The Delayed Building Boom?

High costs have cut down total
building activity. How much is
anyone's guess. Building costs will
reduced

reduced,

delays on site
if labor rates

even

are

per

reduced.

not

costs
rise

will

The

tend

effect

are

high
postpone the

again

industrial

and

in step;

get

not now in

step,

but

nor

the building cycle, rather
bring the cycle to a sudden
end. In spite of the adverse effect
of high costs, total construction

have

they

will they
run

their

Until there are

signs that
prices again

moving together, businessmen

should
over

stock

not

the

greatly

present

concerned

bear market

prices.

I have mentioned the
consumer

relatively

spending in

goods. Consumer spend¬

ing in 1946

was

heavily weighted

in favor of foods, soft

jewelry,

liquor,

goods, furs,

night-clubs,

Moss

dealers in

term

one

factors

situation,

the

strong

the

near-

though

even

All

partners

formerly

were

Samish.

Brokaw &

Friedman,

some

residential building may be post¬

until

poned

price
adjustments
have been completed. As is well
known, construction has the long¬
est industry fe^cle, and construc¬
tion will be
hn
important sus¬
Morgan Stanley & Co. headed
taining factor as soon as the cur¬ a nationwide
underwriting group
rent price and
cost adjustments that on June 16
publicly offered
are completed.
$38,000,000
Commonwealth
of
Australia Bonds, comprising $19,Conclusion
000.000 of 10-year 3%% bonds,
In concluding this talk, I should
due June 1, 1957, and $19,000,009
not leave with you any impression
of 20-year 3%% bonds, due June
I may have given that all these
1, 1967.
The 3V4s were priced

Morgan Stanley Group

Offers Australian Bonds

favorable
rent

indefinitely.
in

are

conditions

business

the

Business

cur¬

will

situation

last

always

state of flux, and conditions
changing constantly.

The

current heavy demand for
automobiles,
refrigerators,
and
house furnishings will gradually
decline. The heavy industries will
probably decline in new orders
within 12 months. Production will
decline

few months later.

Heavy investment
new

for
completed.
Europe will im¬
programs

facilities will be

The situation in

let

prove,

wieldy
cline.

hope,

our

un¬

will de¬
high level

balance

export
Still

and

later,

the

of construction will also decline.
I expect

decline'

there will be

to yielfi 3.55% and the
3%s at 97%% to yield 3.68%.
This offering marks the fourth
and final step in a program for
refunding- approximately
$126,000.000 of the Commonwealth's
callable dollar debt in the United

States into lower interest bearing

obligations.

The

Commonwealth
dollars

only

issue

which

will

prewar

payable

remain

out¬

standing upon completion of this
step is the $71,728,000 issue of 5%
bonds due in 1955 and which first
become

callable

1952.

The

earlier steps consisted of the sale
last August of $20,000,000 10-year

3%% bonds due Aug. 1, 1956, the
sale

gradual

business,

general

at .97%%

20-year

December

3%%

bonds

$25,000,000
due

Dec.

active business years as 1947. But
this decline will not mean depres¬

1966, and the sale in February of
year
of $45,000,000 15-year
3%%
bonds due< Feb.
1,
1962.
Total
debt
outstanding
in
the

sion, in

United

opinion.

the chance to

It will give
the wide

narrow

in prices and

that the

in incomes

and post-war infla¬

war

tions have produced.

difficult

ciated

with

problems asso¬
in exports,

declines

investment,

new

struction.

These

in con¬

can

lead

over

the

say,

to se¬

States

after

the $36,055,000

giving effect

this

financing will amount to
$199,503,000.
Net proceeds from the sale to¬
gether with Treasury Funds will
be used
for the redemption at
102% and interest on Sept. 1, 1947,

of Australia

Commonwealth

bonds, due Sept.

1, 1957, now outstanding.
Each series of bonds of the new

prospective de¬

clines in demand

depression

and

this

issue} will have the benefit of a

sinking fund of 1% per annum
longer payable semi-annually in cash or

our

most

in bonds.

Cash payments will be

important problem now is one of

1946, despite the lack of durable
consumer

Morris

and

still

will

sustaining

term.' But again, I
Sales
i

high rate of

brokers

rious

Decline in Retail

Hartnett

exceed

war

H.
as

act

fluences of the

stock

William

securities.
Partners
buildings and public investment
1947, is expected to .are Edward H. Morfeld, Morris
the high volume of 1946. M. Moss and William H. Hartnett.

works,

Over the longer term—say, dur¬
ing the next five years—there will

and

than

get in step until the abnormal in¬

are

formed

Olive

short

years

de¬

Ultimately, the cycles of stock
market prices and heavy industry
are

been

818

side, soft goods
always snown
cyclical
experience.

spreads

other

has

On the statistical

Underlying the strength in de¬
mand for steel, and for the
prod¬
ucts of other heavy
industry, is
the

offices

and hard goods have

that 1948 and 1949 will not be

ment in

MO.—Morfeld, Moss

Hartnett

with

not
de¬

employment de¬
larger.
There
is
no
threat
of clined,
but stock
prices
went
nearby depression in these fig¬ right on up. For nearly eight years
ures.
industrial
production and stock
Investment in New Facilities— prices have been out of step.

business

goods

and

run,

ginning of the

course.

consumer

•

because, for ^as far back

that

are

was

generally observed by busi¬
and the public.
Emphasis
on
the
decline
of
security prices is natural enough,

of investment is the

goods

the

and

nessmen

market.

United

and
forerunner

process,
a

ST. LOUIS,

commercial

very

in the depression

the decline in

was

headlines,

newspaper

receive, when

consumer

that

was

surprising then that re¬
tail sales of soft goods are declin¬
ing in 1947.
It is part of the re¬
necessarily
pression. '

Hartnett in St. Louis
and

It is not

adjustment

Form Morfeld, Moss ft

other less desir¬

activity, including industrial and

Decline?

there

hour and the cost of materials

August;

Export Situation—The largest
single physical factor in the 1920depression

decline

sharp break in stock market
prices early last September was a

During the war years,
individual savings rose above 20%.
But: in 1946, when many kinds of

market

The

10% of the income payments they
available.

stock

How About the Stock Market

;

1947

able entertainment.

The

ness

decline in gen¬

business^ that will be suf¬
ficiently marked for the general
public to know it is going on, only

The conditions that have led to
such
declines in the past have

You

the industries that fluc¬

We need fear

men¬

(3) The failure of the construc¬
industry to come up to ex¬
pectations.

ma¬
decline.

also

eral

when

the next few years?

present before

industries

depression.

Year

Why do I question that a serious
depression, with; its declines in
-

tion

equipment, and other
are

should

portents

The decline in retail sales,
and of soft goods,
particularly;

unLkely that conditions governing
bank credit will be
changed sud¬
denly, and it is out of sudden
changes that panics and crises
usually develop.
Heavy
Industry — Experience
with past business cycles shows

most

that

other

(2)

inves¬

amusements and

ness

three

are

trouble

since last

This situation makes it very

consumer

have

There

bank-

private

securities

These

on.

already discussed the
current worry about the
high level
of prices.

off

paying

tors.

chinery

worry

tioned:

held

trical

going

inflated
money
be reduced sub¬

except

have

since last

worry

Although I believe this

still

government debt.
Our

that

unnecessary, it has had
good effect. It has undoubtedly
helped in the step-by-step adjust¬
ments of prices
and inventories
that started last fall, and that are

the

trouble

one

crises

haustion

has been

induced and supported by private
bank credit. Tney developed into

tuate

much

fall.

has it ever
had such a permanent foundation.
Past pnce inflations, and specif¬
ically those of 1920 and 1929, were

a change
in prices without
change in incomes, and the
other factors of which prices are
the result. Of course, those who
think average prices are too
high
that we have recognizable declines
do not thing
average incomes are
in general business only when the
too high.
But these two go to¬
gether.. Let me repeat: Prices and heavy manufacturing industries,
such as steel, automobiles, elec¬
.incomes are the two sides of the
a

■caused

nor

spending
for
durable
goods—automobiles,
refrigerators, and house furnish¬
ings, and less for soft goods and

has

leave this subject withont saying
about the "signs and

present bank¬
ing situation is unique in our fi¬
nancial history.
Bank credit was
plentiful,

something

Bank Credit—The

This completes my catalog of
favorable factors.
I
should not

Cotton
*

turn:

never

This kind of capital investment

activity has moved in fairly long
cycles
of
six
years
or
longer,
which promises a
sustaining influ¬
ence for business over the
longer

supports of current demand:

(1)

plants and purchases of
equipment at $13.9 billion.

new

government securities held by the

serious depression.

We find,

and

There

prediction

malad¬

current

prices

1947 expenditures for construction

comes.

average

total

the

were $19.4 billion in
1941,
$17.6 billion in 1929. Corre¬

sponding figures for investment in
producers'durable equipment were
$12 billion in 1946, $8.9 billion in

strong

high levels, and that

high

uemand

consumer

continue
this

number

for

reasons
ness

and

applied to the purchase of bonds

adjustment and ig not a problem

depression.

make these

price and income adjustments suc¬
cessfully

ahead,
up

now,

will have time to take

other and

lems

and in the months

they arise.

difficult prob¬

their

redemption by

lot.'

The initial redemption price for
the 10-year bonds will be 102%%
and for the

20-year bonds 103%%.

Both maturities
able

are

also

redeem¬

by operation of the sinking

fund at 100%.

•

««y>

candor, it appears from the record that, most of the coun¬
Europe, regardless of what they may demand or
expect of the United States, are making real headway in
restoring their-economies to something approximately pre¬
war normalcy.

As We See It

tries of

(Continued from first page)

Many assertions of this sort

less forthright than

are

might be wished, but, strangely enough, others which
spell out such conclusions as this in great detail and

giant exception, of course,' is Germany, and
as
to that country the course of affairs is far more
largely in the hands of the victor powers than in those
of the people of Germany. These victors* Russia, Brit¬
ain, France and the United States have created condi¬

foolish the statement the

followers it attracts.

Without being unduly cynical, it might be observed that
the ease with which some of the prospective recipients

tions

one

Germany which

very

recovery*

able to convince themselves of these strange be¬
possibly less mystifying than the readiness with
which so many of our own citizens accept and parrot¬

appear

RETAIL

HARDWARE

Depk

Year—

STORES,

of Commerce)

If current commentators

were

651
563

1989

629

1940'

709

X941

908

980

1942
1948

902

—

1944

—

1945

1946,, total1st

half*—™

2nd half*-—,-.
1947

1st

fully informed and fully
.

They apparently often, exaggerate

576

1938

nearly precludes real

existing in Germany.

1937
'

suspect, associate most of their asser¬
tions of continued dire straits in Europe with the situation

frank, they would,

(Millions of Dollars)

1936

The German Mess

The True Inwardness

Retail Sale®

liefs is

like repeat them.

SALES

(Source:

The

directness appear to be fully as effective with the puhlic
—at times it appears that the more extreme and the
more

Thursday, June 19, 1947

THE COMMERCIAL & FINANCIAL CHRONICLE

(3250)1

1,007
1,177
1,700
1,608
1,792

'
(

quarter*.,

1,872

*SeasonaUyv adjusted at. annual

rates,
In the four years, 1936 to 1930,
sales averaged about $600 million

Let actual conditions in any case, but where they relate the annually; in 1929 the total was
about $700 million.
During the
it be very positively asserted at the outset that we regard story with fidelity to fact the extreme situations to which
war
years 1941 to 1944, annual
that impulse in the American individual which leads him they refer usually either are within Germany ox else grow sales exceeded
$900 million. Last
to be generous with any human being in trouble—particu¬ rather directly out of conditions in Germany.
Once the year, the total had increased to
■

Now what is the true inwardness, of this situation?

larly those human beings who either are not to blame for politicians here and in other countries bring themselves to
their own predicament or are without the ability to help face this fact squarely and candidly a beginning will have
themselves—as altogether praiseworthy.
There have been been made in the real rehabilitation of Europe—and much
both in Europe and Asia many individuals and many groups less would be heard of the mountains of goods we must
which were able to continue to live, certainly to retain their deliver free,
•
As to the rest of the nonsense of the day on this topic,
health, only by American generosity. Doubtless there are
still a good many in that predicament—some from causes let just two questions suffice:
quite beyond their control, and some as a result of our
Precisely how does a nation, more than an individ¬
policies and practices. No one in his senses could find fault
ual, either prosper or ward off poverty by giving away
with us for dealing as generously as circumstances permit
its resources and its work with a reckless hand?
„

with these

cases.

the Atlantic thinks it can re¬
quickly and more ^vigorously
by adopting some political system which we do not
approve, had we not better let them experiment—with
their own resources, of course. Indeed, is there really

analysts of the situation in Europe

store

have reached the conclusion that the most effective way
to deal with at least

some

of this destitution is to take

which would enable

the victims to return as
possible to a fully self-sustaining basis. For
such purposes, supplies of raw materials, aid in restor¬
ing capital equipment, as well as the more direct forms
of relief have been suggested, and at times provided.
Where steps of this sort are indicated, they should of
course be taken. Relief does not cease to be relief
merely
because it goes to industry rather than direct to the con¬
sumer, or take the form of wheat rather than flour,
copper rather than of eggs, or locomotives rather than

quickly

its economy more

anything else

we can

do?

places the United States

the

I Am

eco¬

Optimistic Pessimist!

What is

important is the fact that ideas of this nature,

they do not reach its grandioseness,

confined to

few "on the

are

even

means

fringe" of economic sanity.

As to all this there

all that

never

can

are

be lost to

prove to

will

once

few fundamental facts

produce could not

and Consumers'

mentators
.

pean

apparently aspire. We

nearly suffice

of the current

can

com¬

not restore Euro-

and Asiatic production to normal

provide the

peoples of those continents with the goods which they
lack by reason of subnormal production.

well understand that fact here and

Neither

resources

nor

our

manpower—nor yet our

genius—could turn out the goods
pose.

We could not do

might be in sharing

work to provide for itself.

or,

may as
our

production

for the

pur¬

generous we

with others.

that,

as any

sensible

man

being told that Europe, regardless of

erosity, must work out its
notion that

necessary

regardless of how

our own

This means, of course,

know without

now.

must

our gen¬

salvation.
It must go to
It must—all of it—forsake the

own

the outside world somehow

owes

living,

at all events, a very large part of its living. And in all

lem in which you are most inter¬
ested, however, is where we are

Let

examine the

now

comes.

the

meeting some of the
during the war.

for all retail stores
part of the picture.
There is the relationship for dur¬
able goods as contrasted with non¬
durable goods.
It will be noted
■that throughout the war years the

data
only

volume

sales

non-durable

sales

supplies and hardware,

classification

which

level

disposable

fundamental factor in'

affecting the volume of
disposable income indicates some
which are pressing for a decline
in income, some which will re¬

main about unchanged, and others
which will be somewhat higher*

The factors which will contribute"
to a decline in .disposable ..income
inelude the following:

(1) Farm

prices

seem

headed

downward with an accompanying
reduction in farm incomes.

(2) Some

decline

govern-^

ment spending is. scheduled* How¬
ever, the magnitude
will be determined
of

our

of this decline
by the extent
foreign commitments and

the ability of Congress to reduce
the area of entrenched bureauc¬
racy.

business

re¬

particularly in 19.42, 1943,
(4). The high level of building
1944, the total level ,of sales costs has caused some businesses
failed to change much from 1941 to'defer expansion programs. But
despite the sharp increase in con? despite these deferments^ the total
sumers' incomes during that pe¬ volume will remain high. Accord¬
riod; In 1945, the total volume of ing to the estimates ot the IT. S*
hardware sales increased sharply Department of Commerce, expen¬
and in
1946. reached new high ditures for new plant and equip¬
level'records. In the first half of ment aggregated $7,048,000,000 in years,

In contrast,
of durable

the volume
goods were
sharply below the level warranted
by the prevailing disposable in¬
come.
Starting in 1946, sales of
non-durable goods stores jumped
sharply above the long-term rela¬
tionship. In the first quarter of
1947 total, volume of non-durable
goods sales was estimated to M
at the annual rate of $15.0 billion
above the level warranted by cur¬

! comes.

(3)_ A decline in the volume of
profits. This decline has
already been apparent in the re¬
ported by the U. S. Department tail field where first quarterly
of
Commerce
which
compiles profits have been as much as 50%
these data. It is evident that dur¬ below those in the first quarter
ing the 1930's and in 1940 and of 1946. However, it is probable
1941 there was a close, relation¬ that dividend
payments will not
ship between the volume of hard¬ show any decline because such
ware
and building supply sales payments have
represented in(
and
disposable
income.
It is most industries only about half
equally clear that during the war the 1946 earnings.
"
building

combination of price

demand deferred

The

the

the forces

would have from their current in¬

flected the

Since

determining the total volume, of
retail sales, we. can best relate the

durable

goods was about in line with jneven

Factors Affecting the Outlook

In the foregoing survey, I have
attempted to sketch the highlights
of where we are today. The prob¬

the
present situation to- the future by
early part of ,1947 reflected in
examining the outlook for dispose
part, if not to a major extent, the able
income. A, balance sheet- of

non-durable goods in 1946 and

be inaccurate,

Retail Sales

shows

sight. One of them is that

to achieve the ends to which many

(Continued from page 7)
such, forecasts

increases and

Basic Facts

which must

cut of more than 50%r
would have to take place.

income is

to mfc, will necessarily mean a re¬
Finally, in 1946, when duction in the volume of textiles
goods became available in more and other non-durable goods sales,
are those who
bluntly say that our gifts to the world must adequate supply, although many while durable goods sales continue
shortages continued to prevail, the
assume lend-lease
proportions in the very near future, and normal relationship once more to be maintainor and probably
will expand. Evidence of this re¬
be made as free of "the curse of the dollar sign" as were prevailed; During the first quar¬
adjustment
is
already
clearly
ter of 1947, however, retail sales
available in a number of industries
lend-lease shipments. They usually do not specify the length
on
an
annual basis were about
of time they think this kind of generosity should continue, $6.0 billion higher than indicated including textiles, liquor, cosmet¬
ics, etc.
but such details or the mountainous cost of such procedure on the basis of available dispos¬
Then there is the picture for
able income.
This situation re¬

(and often political patron) of the world. There

does not appear to trouble these day dreamers.

For retail

of 1941, a

going.

Incomes

of the doctrine which

put it. differently.

sales of your products to decline
to the record level (up to then>

trend..

inability of consumers to secure
goods in the quantities
they desired. One of the elements
The general level of retail sales
But all this is as nothing compared with what is now
of distortion which is today pres¬
is
usually determined
by
the
being suggested every day—suggested by many of our own amount of income available to ent in the business picture and
which is now in the process of
leaders of political thought, and by as many abroad.
Some consumers. During the war years,
being corrected, is this unbalance
have spoken directly and forthrightly. Others do not always a shortage of goods and services
between non-durable goods sales
made it impossible for people to
give chapter and verse, but obviously are under the spell spend as much as they normally and durable goods sales. The cor¬
rection of this unbalance, it seems

factors which will influence that

meat

nomic patron

in
1929 and more. than, double,
sales in the banner year 1941. Let

If any country across

A number of

steps

$1,700 million. In the first quarter
of. 1947,. sales of hardware > anct
building .supplies were .at the an¬
nual rate of. $1,872, million. This
was
three times as large as irt
1936 to '39; 2Vz times as large as

and

1946, sales were about in line with
incomes while since

For the first [
1947, estimated'.spending1
that time they have been moder¬ will be $7,000,000,000 while the
ately higher than, warranted by estimates for the second half arct •
rent income.
While the sales' of such incomes.
However, this is $6,890,000,000. For manufacturing1
durable goods also rose in 1946
not a disturbing situation, in this industries alone,
the * total * was <
and 1947, the total volume was
industry, because .the large de¬ $3,410,000,000 • in 4 the second half
still at the annual rate of $9.0 bil¬ ferred demand which accumulated
of 1946. It is expected that this
lion below the level called for by
during the war years would call total will decline to $3,150,000,000
today's incomes—to say nothing for sales which were substantially in the first half of 1947 and to
of
the huge deferred demands higher than warranted by the
$3,020,000,000 in the second half
which accumulated during the war level of current consumers' in¬
of 1947. However, for the entire
years and is particularly impor¬ comes.
year of 1947, it is estimated thaf
tant in this field.
Retail sales of hardware and total spending of $13,890,000,000
Maify close observers of the building supplies were at an all- will be about 15% higher than
business situation are convinced time peak in 1946 and in the first the $12,040,000,000 in 1946.
(5) Declines in activity in some
that the "out of line" sales for quarter,^Qf 1947.^_„,
consumers'

the last half of ,1946.

half, of

■

mtwaopr^hw'twwb

waawwvii niiwwtfiwwmntyi

~""

;'°.Tk:l","^TTl:r-J TOW

•

...

iVolume 165

Number 4604

goods

industries

previ¬

ously described, but also residen¬
tial'building. Business inventories
./were

expanded at a record rate
1946.
This was inevitable be¬
cause of the need to fill
the in¬

ventory

pipelines

for the

wartime

and

make

oped between retail sales of dur¬
able and non-durable goods even

though total sales
line

with

balance

not far out

are

This

incomes.

lead

must

un¬

of two

one

types of correction, either of which
will

mean

ness

activity

of busi¬

lower level

lower profits.

continue to spend a disproport¬

depletion of in¬

ionate amount for food and cloth¬

ventory. A curtailment of inven¬
tory accumulation will also act

ing regardless of the reason, there

,to slow up production.

the

other

hand,

there

are

;powerful forces contributing to a
maintenance "or an increase in the
levels of disposable income. These

will be less available for the pur¬
chase of durable goods with the

consequent adverse impact
sector

food

tively stable at the highest peace¬
time plateau in history. While a

which

oped—particularly

soft

goods

and

aro

other

of the economy.

(1) The increases
in
wages
which have taken
place since V-J
Day and which have been ex¬

However,

the

past two months.
the extent that un-

fall

off

and

that these

decline

three groups are

same

the

only ones for which prices in
June, 1947 were higher than at the
peak of the 1920 inflation.

(2)
tion

The high
which

level

seems

tinue
over
this year in

produc¬

likely to

the

con¬

remainder

such

key

industries

steel, automobiles, electrical
equipment,
railroad
equipment,
farm equipment, and
building.
•

(3) The continued high level of
export .trade.

Bureau

(1926=100)

balancing

these

difficult

Labor

Statistics
June 7,

the
all

the

produce and
while other durable goods indus¬
are

bracket

has

around

1947

179.5

ing to

activity

163.1

171.3

1-36.6

unbalance

Textile

164.8

138.5

scribed.

104.4

tors spells out a

149.4

142.5

this

150.1

177.5

avoid

way

alternatives

have

a
large increase in * dispos¬
income, with the additional
amounts spent for durable goods.!

Products

Fuel and
Metals

able

Lighting.

and

163.7

risen so

people cannot afford to
homes
despite
their

our

buy

important

which

not

area

corrected

unbalance,
soon, will

have repercussions throughout the

its

relief

before

This is

particularly

develop¬

important

ment

for

pand,

larger

industry such
hardware, because as incomes
able

with

make

pur¬

but

criticism

favor—

description

at work in

now

foreign

our

program—which

rather

forces

our

the

econ¬

The

foregoing

areas

unbal¬

reflect in large part the dis¬
tortions which have developed in
ance

small
low

$1,500 income

group

spent $15.66

$2,500-$3,000

$42.65
come

the

and

in that

Price

group

year

spent

$3,000-$5,000

in¬

group spent $48.85.!
—Expenditures for—
«

Income

Under

Kitchen

Group—

Cleaning
Equipm't

Equipm't

$500____

$1.40

$0.19

$500-1,000
1,000-1,500
1,500-2,000

15.66

1.95

24.06

3.14

2,000-2,500

28.18

5.51

5.75

2,500-3,000
3,000-5,000
A

42.65

similar

8.60

48.85

7.74

trend

individual

items.
expenditures
for
hulbs

0.42

averaged

For

shown

for

example,
light

electric

cents for

the

$1,000 ' to $1,5(50 income group.
$L35 for the $2,500-$3,000 group",
and
$1.55. for the $3,000-$5,000
jgroqp. In light.of such spending
patterns^ the importance of this

large increase in the number of
families in the $2,000-$5,000 cate¬
gory, should

this

the

sales

emphasize

too, I would

ample,

the

reached

115.9

154.4

147.9

substantially

Commodities...

These

comparisons

because it is

cant

that

gued

since

signifi¬

are

greater

sometimes

ar¬

can't

push
prices by government
action
(although we might get
them down by government inac¬
tion), some relief from high prices
we

down farm

First

Boston—BIyth & Co.
Head Syndicates

Two

prices of other

products.

reductions in those

sectors of the

economy in which higher wages
have played an important role in

pushing
limiting

costs and hence in
magnitude of any

the

be made with¬

can

issues of senior

new

ities

with

the

aggregate

$48,000,000
vestors

ment
at

Co.,

value

par

in¬

18 by underwriting
follows:

First Boston Corp.

nationwide group of 60

secur¬

Edison

offered

were

June

managers

The

Toledo

headed
invest¬

banking firms which offered

103.1647

2%% series due 1977.

The

was

issue

group

Blyth
firms

bid

the

bidding

102.589.

Co., Inc. headed a
investment
banking

group

awarded

competitive

June

which is offered at

103.625

June 16

its bid of 101.19.

Con¬

cession to selected dealers is

share with 25 cents

per

re-allowance

$1.25
share

members.

apparel

store

sales in

company

ceeds

from

bonds

and

will

NASD

the

sale

pro¬

the

160,000
cumulative

414%

the

new

use

preferred
adjust its capitalization
through the redemption of its
presently outstanding bonds, de¬
stock

bentures and preferred shares ag¬
gregating $53,836,000.
A $4,500,000 bank loan from the Chase Na¬
tional Bank and

$5,000,000 cash

contribution from its parent com¬
pany, Cities Service Co.,
used by Toledo Edison to

New York City.

How will these price distortions
be corrected?
I believe that the

will be
supply

ment of the securities.

increase

living

the

form

will

necessarily
of

take

lowering of the
prices which have shown the larg¬
est advances rather than by price
declines for those products which
a

1946, about
70 cents out of every dollar in¬
crease
has been due to higher
food prices. Industry can do little

for lower prices for farm

funds

the

for

retire¬

Upon completion of the refi¬
nancing the company will have
outstanding
the
$32,000,000
of
27/s%

bonds, the $4,500,000 bank
160,000 shares of 414% cu¬
mulative preferred stock, and 2,loan,

foods,

lower

food

prices. Processor's
profit margins in 1946 averaged
2 to 5% of sales depending upon
the company. The difficulty here
is high farm prices over which
industry has no control. That it is
farm prices and food prices which
are

out of

comparisons

line

can

with

indicated

the

past.

Thus, since 1941 farm prices have
risen 155% and food prices by

have

risen

the

food

prices have recorded

materials
ease

off

have

from

common

seems

likely that

textile prices will decline

have

Although

prices

were

forward

as a re¬

previously described.

higher

rents

balance,
a

seem

can

moderately

in¬

look

lower

Areas of Unbalance
A

third

factor

relatively low before the

considerable

let

see

parison would show.

several

with

areas

of unbalance in

our

I have described earlier,
unbalance which has devel¬

fhe

are

63 %
1

"Family Spending and Saving in War¬
Bulletin No. 822, U. S. Bureau of

time,"
Labor

Statistics.

what longer range com¬

importance is the development of
economy.

war.

As compared

1926, farm products currently

79.5%

higher, food prices

are

higher while items other than

level of living costs.

fecting the business outlook,
gests

that

highly

probable

that the peak was reached
the first half of 1947.

sug¬

during

During this

farm products and foods ard only

period, the total volume of busi¬

32%

ness

higher.

One

group

of non¬

activity has remained rela¬

of good fellowship
spirit of cooperation among

couragement
and

members.

elected

Officers

for

first

the

follows:

President,
Rudolph
J.
Eichler,
Bateman,
Eichler
&
Co.;
Vice-President,
Carey S.r Hill, Hill, Richards &
Co.; Secretary, Gerald M. Good¬
man,
Lord, Abbett & Co.; and
Treasurer, Benjamin A. Walter,
Bingham, Walter & Hurry.
are

Members
rectors

the

Board

Di¬

John E.

Jardine, Sr.,
William
Staats
Co.; Robert H.
Parsons, Pacific Company; Francis
Moulton, R. H. Moulton & Com¬
pany; Guy Witter, Dean Witter &
are:

Co.; and Willis H. Durst, Wagenseller & Durst, Inc.
"Invitations to membership in
The Bond

Club will

be extended

immediately to every registered
security dealer and to the bond
departments
of
commercial
banks," Mr. Eichler said. "It is
expected that the membership of
the

club

will

represent

cross

city of Los Angeles and will
closer

personal rela¬

tionship among those actively en¬
!
NEW

gaged in

our

business."

ORLEANS, LA. Lewis B.
is

Scranton

associated

now

with

Bank

Two With Sodsn-Zahner

Building,

repre¬

(Special

The Financial

KANSAS

CITY,

Chhonicle)

MO.—John F.

sentative in South Louisiana.

Mr.

Fogarty, Jr. and Joseph M. Luby

Scranton,

Or¬

have

banking
tional

native

entered

leans,

was

An evaluation of the factors af¬

group.

establish

the

business

New

investment

with

the

later

with

Dillon,

Reed

Company, and conducted his own
investment
years.

and

business

for

many

He served in World War I

again in World War II

Lieutenant

Corps and

Colonel
saw

the

Air

action in England,

North Africa and

Italy.

joined

Zahner

the

staff

Soden-

Co., Dwight Building.

Na¬

City Company in 1921.

;

in the

L. B. Scranton Wi

bernia

addition, it

the result

section of the investment industry

evitable,

farm

already begun

recent peak levels.

such

Newman, Brown & Co., Inc., Hi-

foods

only 55.8%.

Admittedly,

775,000 shares of $5 par

I expect' these trends to continue.

farm

and

de¬

survey

stock.

cline
of
about
10%.
Prices of
lumber and certain other building

sult of forces

products

look

products!

and
building
materials.
Since the March peaks wholesale

127.4% while products other than

risen

least.

its organiza¬

and

about

come

made last
spring
among
local
security
dealers,
which indicated virtually unani¬
mous approval of the formation of
a

year

The

its

other

correction

tion has

club

share and; Accrued dividends,
The purposes of the club, as set
160,000 shares of 414% cumulative
forth in its charter, are the pro¬
preferred stock, $100 par value.
motion and maintenance of high
The
issue was
awarded
to
the
standards and principles in the
group at competitive bidding on
securities business
and
the en¬

out

decline

out such

per

reducing profits significantly
converting them into losses.
One effect of relatively high

Gerald Goodman

$32,000,000 first mort¬

gage bonds

much

January

Rudolph Eichler

S. Hill

Carey

Two Issues Marketed

directed

that

criticism

since

additional

industrial prices by high govern¬
ment officials
has been pointed
in the wrong direction. For ex¬
costs

has

will still find
volume of hard¬

you

167.5

rise of less than 10% for depart¬
ment store sales nationally and a

Disparities

connection

recent

be apparent.

'i-

point,

ware

kitchen equipment.

moderate reduc¬

activity. But when

recession

than in the prosperous year 1941,
which was the year of greatest

our
price structure.
Declines in farm prices has been to raise farm
prices of food, clothing, and build¬ incomes to record levels—far sur¬
which to improve the home.
even
the
inflationary
ing materials would go far to cor¬ passing
While no current data are avail¬ rect these areas of
danger. How¬ peaks of the post World War I
able, the tendencies of spending ever, we cannot talk these prices inflation. Record farm incomes in
can be indicated on the basis of
down. Lower prices will develop turn have been reflected in rural
data collected by the U. S. Bureau only with high level production. retail sales. In the first quarter
;©f Labor Statistics in a
study of One important factor in maintain¬ of this year rural retail sales were
more
than 15% above the same
average
expenditures
of
urban ing or increasing
production is
families and single consumers in greater labor
period of 1946 as compared with
productivity.

The

with-

jor city in the United States

previously de¬

124.7

chases of products other than the
basic necessaries of life and with

1941; Consumers in the $1,000 to

Secretary of State. Los An¬
geles has long been the only ma¬

activity prior to Pearl Harbor.
All

price cut that

omy.

ex¬

become avail¬

sums

which

that this comment is not intended

have

129.5

It should al^o be notfed that the
gently needed by these fixed in¬
come
groups.
Let me emphasize Administration is calling for price
to

ever

ur¬

charter to the new group by

164.7

economy.

the decline in living costs so

time,

same

141.8

new

pressing needs. Investors have be¬
come increasingly reluctant to as¬
sume the
heavy risks involved in
building new rental housing. This

yourselves with

sharply that the majority

the announcement of the issuance

the

This combination of fac¬

tion in business

Metal

Products

number

ANGELES, CALIF. —Or¬

LOS

ganization of The Bond Club of
Los Angeles was made public with

ignore the signs point¬
goods
and the other areas of

137.4

only

Angeles Bond
Organized

Clnb

reduction in soft

Hides and Leather...

of.these

high volume

At the

Foods

for demand

than has

for

place.

20,000,000 as compared with only
6,000,000 before the war. This de¬
velopment assures a broader base
existed in this country.

assured

cannot

1920

factors

$2,000 to $5,000

increased

can

months ahead.

of families in the

cars

recession in that sector will take
either

major

activity while
automobile industry can sell

150.7

Products

visualize

in business

production

can be obtained through lower in¬
1
Income-price relationships have dustrial prices. Two observations
suggests the probability of a mod¬ also
become
seriously distorted may be made concerning this ap¬
erate reduction in the level
of for a large sector of the popula¬ proach to the price problem. First,
disposable income as the current tion.
unbalance in our economy
Rises in living costs and the
year progresses and in the early taxes
during the war and postwar which needs correction requires
part of 1948;
\
period have reduced significantly lower farm, food, and building
material prices, the latter of course
A second major factor which the ability to
buy of those living
receives
too
little
attention
in on fixed incomes, government em¬ falling in the industrial category.
many appraisals of the business ployees, many white collar work¬ But second, and equally impor¬
picture is the major increase in ers and others who have not
par¬ tant, is the fact that reductions in
incomes which has taken
place ticipated in the rise in income other prices while farm and food
.during the war and postwar years. previously described. Recent in¬ prices remain high will only ag¬
To my mind, there are few
the currently distorted
fig¬ creases in wages, low productivity, gravate
ures which
are
so
significant in and extensive programs of relief price structure. We cannot correct
the adverse effects of high farm
appraising the businses picture as to unfortunate peoples
abroad
.those which show that the number have contributed to
and food prices by lowering the
holding back

of strength — particularly
heavy goods industries. I find

the

tries

Wholesale Prices
(Source:

■employment increases moderately
Building Materialsas a result of a
non-durable goods As I indicated earlier, I do not Chemicals and
Al¬
Recession, there will be at least believe such a development is
lied Products..—
a partial offset
to the increase in probable.
House Furnishings.
wages insofar as the contribution
Similarly, building costs have Miscellaneous

.of wages and salaries to total
dis¬
posable income is concerned.

in
building—there

points

Farm

The

Los

number of weak spots have devel¬

Finally, a comparison with the
post World War I peak reached
by wholesale prices in 1920 shows

If, on the
other hand,- spending returns to
its prewar pattern,'then' sales of
will

77.5% higher than

now are

in 1926.

that

(3251)

products does show a rise
comparable to that for farm prod¬
ucts. I refer to building materials

non-durables

include:

panded- in

«i7A

THE COMMERCIAL & FINANCIAL CHRONICLE

industries have already appeared.
.These include not
only the non¬
durable

Stewart, Scanlon Adds
(Special

SAN

Jack L.
the

The

Financial

FRANCISCO,

Chronicle)

CALIF.—

Block has been added to

staff

Stewart,

Scanlon

Co., 220 Montgomery Street, members

the

Exchange.

San

Francisco

was

Stock

previously

with the First California

Co.

.28

THE COMMERCIAL & FINANCIAL CHRONICLE

(3252)

We Must

Fight for Freedom

(Continued from page 3)
the

people

dreamed of
control

the authority
have always
to take complete

the

enacts statutes or pronounces

the

and

fortunes

conduct of every

Unless

who

timent

have
they

powers,' they
to
do
what

deeper than he

under these war

decisions

possible,

those

exposes

impossible,

big undertaking at this

present moment. Seeking courage,
fortitude

self-sacrifice

and

from

the
businessmen, from the Bar
of life for other
"isms," if they fail to do so, they Association, from the Life Insur¬
ance
companies
who
advertise
the press are in danger of their
freedom.
Little Hungary is now security and longevity to sell their
products and also the press is not
a land of Russia.
Freedom of the

stroy

form

our

press

longer

country no

that

exists.

now

government

road

-easy

Those

who

contentment.

willing

are

the torch for freedom

carry

far and

are

Our press should be on
few between.
It is the obligation
guard. It can happen here. But
of we of this generation to keep
not, if the people are told how
and why it can happen. The press open the road for the young, our
should be feeding the people this children and posterity, which road
has
been
darkened
by
type of news.
Permit them to today
to
liberty.
know
the
directions, of
world philosophies foreign

press.

the

and

events

dangers

their

liberty right here in the U. S. A.
It is—our Republic form of gov¬
ernment
or
Communism.
I re¬

peat:

one

strong.

press

uncertain

One

us.

defense

the

liberty

liberty and the front

our

attack

line

The first line of de¬

will survive.

fense of

two

not

going

our

of America.
the

terms,

press

should resume the responsibilities
that
of

vested in it at the birth

were

the

liberty,

voice of

the

we,

people.

individuals as¬
system, the press should

When groups or

sault

our

flank

week

truth.

the

with

more,

run

Once

front page in defense of
and in language we the
people can understand. Show the
on

your

liberty,

trends, point out the dangers, state
both

sides, expose those who ex¬
ercise free speech under the Bill

of Rights to

discredit the Ameri¬
Would it be news if
paid by a foreign
paymaster?
Would it be news
that if the foreign idea to take
over
is accomplished, you would
not be a newspaper and we the
people would be in a closed shop,
system.

can

their bills

were

communistic

the

and

becomes

what

Then,

Freedom?

tell

closed

that

shop?

liberty

fact,
So

would that be news?

us,

much for the press.

into

the

cause

No.

world

had

insurance

power,

This gave

can business, high wages and mass
production. Mass production cre¬

Bill

has

Rights

and

Bill

the

You

Rights
done for you gentlemen here to¬
night? Without our Bill of Rights,
I couldn't be talking to you and
you couldn't be listening!
We are
what we are, whether it be doc¬
tor, lawyer, businessman, scientist,
because our Bill of Rights per¬
mitted

rungs

choose

the

ladder

climb

the

success.

Without that document, we would
not have had sucfy rights.
Com¬
munism

nofc

does

give

right

the

to ambition or the
right to exercise our affairs with¬
success,

the

framework

order.

law

want to

and

change this

atmosphere, we must have a stom¬
ach for a fight and a combative
instinct.

Otherwise,

America
it is

picture

know

and

over.

most

the

people,

Constitu¬

our

tion is

Constitution "so help me God." If

tears.

there has been any public protest

business, and the Bar Association,
do a good selling job on these two

Bar

abstract document. May¬
has ceased to be a human
an

document,

born
of
blood - and
Unless the press, American

foundation

stones

people, then

the

Ameri¬

Republic will

Association, I have not heard
of it.
The lawyers and the Bar
Association have put aside their
oath of office for legal expedien¬

can

cies.

obsolete, decrepit and in need of
replacement by a glorious Com¬
munistic State. If they would re¬

America

dom,

then

loses

its

gentlemen

the

free¬

Bar Association will not be

ticing law.

want to

you

the

prac¬
con¬

tinue

our

be out of business.

If only the press will re-sell the
fact that our system is far from

cite
a

the

fact

that

not

are

downtrodden,
frustrated
people, not yet, but

your legal
activities, your
obligation is to protect your right

ploited

under

could

constitutional

the

Bill

Rights to continue to practice law.
The businessmen of

country
same responsibility. They
spending in national and local
.advertising over $2 billion reach¬
ing the consuming public to pro¬
mote acceptance of their products.
They fight like a pack of wildcats
to protect their competitive posi¬
our

have the
are

tions

while

neglecting the very
gives them the
right to advertise and remain in
which

product

business.

That

Constitution

Bill

the

Rights

one

re-sold

product which

the

American

people.
The existence of freedom

held

and

can

secured

by an aroused
public opinion. This
accomplished only by the
awakening as to the consequences

and informed
can

of their loss of

Lincoln

be.

Those

who

ex¬

frus¬

are

trated and downtrodden need our
dollars because their system has
failed to

produce that which

our

system has produced.

That is the
great prize the Communist party
wants to grab. Recite these truths
and

state them

loud.

out

stretches

often; shout them

The

across

such

carry

which

press,
free

our

land, can
Otherwise,

messages.

the future looks dark.
The

Communists here have the

right of free speech—so have the
press—and we,

the people, busi¬

liberty.

summed

all

Abraham
up

when

shouting

than

take from

affairs,

and

live

our

own

within

who

would

rights to conduct

us our

our

those

the

country?

own

homes

Constitution.

only be
done by
those, I repeat, who have
a stomach for a fight and a com¬
can

bative instinct.

Communism! That

quently, he who molds public

fronted

"Public

sentiment

sen¬

has

cancer.

thing to consider.
to direct

our

will

wealth

national

serve

That

world.

the first thing, we

should put it first.

If the last few
have failed to convince us
the need of our fullest possible

years

theory.

strength, then it would appear that
nothing will ever convince us.

fact, not

remedy, not just to
help the pain but to prevent re¬
currence.
No palliative will suf¬

That is unthinkable.

fice.

not by incipient appeasement de¬
bilitate the very power we have

It must be

develop into

cure

it will

fatality later.

The

centers wherever our mor¬

cancer

tal enemy
talons.

Communism spreads its

One of us, Communism or our
Republic form of government, is
going to be strong. Not two of us.
One will survive. If ever a people
were
charged by Almighty God
with the preservation

of freedom
earth, that people is this gen¬

eration.
We

to keep

buy with American

liberty.
Let us

...

A task with vision is

the

Will

victory."

the Bar As¬
sociation,
the businessmen, the
churches, accept this challenge to
press,

country with vision and

our

make it your

task?

if uncontrolled, appear to have no

predetermined stopping place.

means

just this:

These

United

the

States

are

con¬

biggest problems

phe¬

National
Research, in
a
detailed study of yields from
1900 to date, tells us that in only
two years prior to 1930, in 1916
and again in 1925, was there a
definite, though brief, tendency
for

short

term

low long

Lanston

the

hold

rates

be¬

Mr. Aubrey

term rates.

Cor¬

of the First Boston

poration says that January,

1930,
date of

the

marks

Effect

of Open

particular

measure

which I want to call attention

was

this:

Immediately after the pas¬
sage of the Glass-Steagall Law in
February, 1932, the Federal Re¬
Banks

serve

let
of

review the recent history

the

yield curve.
It is always difficult to be

economic

sure

there
have, it seems to me, been four
periods since 1929 each one of
which has been characterized by
different

but

causes,

set

causal

factors

market

went

in for what

operations.

Mainly in the

second quarter of 1932, they pur¬
chased about $900 million of Gov¬

They thus created sizable amounts
of excess reserves. By September,

total

1932,

excess
reserves
ex¬
total bills discounted, and

ceeded
you

cial

that the commer¬
for the first time in
the Federal Reserve

might
banks,

say

the history of

System,

were,

consolidated

basis, out of debt to the Federal.
conditions very

That made money

tors has been more artificial than

easy

its

predecessor.

cuss

these

four

factors

causal

I want to dis¬
periods and their
in
chronological

order because they

have, it seems,
important bearing on our pres¬
ent
monetary situation, how it

operates

and how

should in¬

The

first

period included very
years 1930-1931.
A
of interest rates

roughly

the

general

easing

took

place

under

those

Bank

both

years,

influence

the

Reserve

Federal

market and
rediscount policies, and because
of a tendency for bank loans and
bank deposits to decline under the
impact of a general deterioration
in

business.

rates

open

Short

the

were

interest

term

first

this

feel

easing and they felt it most. They
fell somewhat below long terms
in what presumably started out to
be nothing but a perfectly under¬

standable, normal and probably
temporary movement.
The second period into which I
am dividing the recent history of
the yield curve includes the years

and

In this

working

the

curve

period the

interest

rates

began

clearly to reflect the powers of the
monetary control authorities.
the

measures

authorities

they

were

adopted

were

thinking

and brought short term in¬
terest rates to well below long

the yield curve
began to assume something of its
present appearance. However, no
great assurance of permanence to
term

this

rates,

and

situation

was

given

were

reserves

excess

because

still, at the

end of

terpret it.

orthodox

line

central

with

bank

But

these

in that

current

policy;

taken for the purpose

of arresting

the cycle of deflation,

liquidation and bankruptcy which,

vide him with the best all around

and

1933, well under $1 billion,
open market
operation
not necessarily a one way

the

was

affair.
The third

period into which the
recent
history of interest rates
divides itself is the period 1934 to
1941,

inclusive,

rubles, pounds or dol¬
lars; third, in terms of the physi¬
cal, social and political climate of
the various countries; and, fourth,
in terms of movement out of the

physical inflow, became the domi¬
nant factor working on the mone¬

situation.
I want to speak
particularly about this period be¬
cause the influence that gold, of
tary

of his choice, into some
country, in case his first se¬

country
other

lection

was

If the

wrong.

from Mars had, from

man

1934 to 1941, been

able to get only

$20.67 for each ounce of his gold
it may

cided

be that he would have de¬
that, all things considered,

the United States offered him the

best

when

his

for

run

don't

the

anyway.
that.
But

money,

know

about

the United

increased

States suddenly

exchange

value

$35.00, then
mere was only one place for the
inter-planetary
traveller to
go
with, his gold if he wanted real
value1 then, and peace, safety and
comfort in his old age; and that
gold

from

$20.67

to the United

was

about

know

We do

States.

that, because, begin¬

ning with the new price in 1934
ending with the inauguration
of lend-lease in 1941, all the men

and

from Mars of whom we have any

record, together with a lot of peo¬
ple from this earth, brought gold
to

the

United

States

and

were

pleased indeed to turn it over to
the United
States Treasury and
to

take

advantage

the Treas¬

ury's arbitrary and very generous
offer of 35 good American dollars
for every ounce of gold turned
over

when gold, both

of its revaluation and its

because

He would
this question, first,

arrangements.
answer

rubles, pounds or dollars that he
could get for one ounce of gold;

that time seemed very heavy open

the
yield
curve,
where each succeeding set of fac¬
working

it isn't very
scholarly.
But I am going to say
it anyway because I think it gives
a
good non-technical idea of the
fundamental importance that the
price of gold plays in interna¬
tional gold movements.
If a man came down from Mars,
without any predilection as to the
country in which he should live,
and
carrying with him several
thousand ounces of gold, he would
be greatly interested in seeing in
what country his gold would pro¬

his francs,

Operations
The

going to say

now

second, in terms of the comforts
of living that he could buy for

Market

approximate
change over to a, convex curve.:
The question is, why has this very ernment
securities, and in the
radical change taken place.
In an final three quarters of 1933, they
attempt to answer this question, purchased another $600 million

they

the issue facing us.

unknown

Indeed,

because

gold

try to

(Continued from first page)
almost

figure.

in terms of the number of francs,

end

of Economic

nice round

living

Mate Controls
was

frightened."
Mr. Morgenthau's description of
how the daily buying price for
gol<$Lwas increased from day to
day may give us some insight into
the reasoning or lack of reasoning
behind the eventual price that was
given
to gold
by
Presidential
proclamation.
Certainly, so far
as I know, that price of $35.00 has
never
been given statistical jus¬
tification except that it
was
a

about

Implications of Interest

Bureau

etc., I think they would be really

like what I

...

A vision without task is
dream

Morgenthau wrote
knew how we

ever

My economist friends will not

drudgery
a

As Mr.

anybody

really set the gold price through
a
combination of lucky numbers,

freedom.

"A task without vision is

save

cannot

We stand

consecrated to
oppose Communism.

people

importance should
so
carelessly deter¬

been

"if

cancer.

have

mined.

it vkmld be cheap. And we
the price, but money
will not suffice, no matter how
much there is.
A dissipation of

has, that's

world-wide

could forget

if the world didn't have

We ask for

Unbelievable that matters of such

peace,

thinking to how nice it would be

1932 and 1933.

gift and do

Americanism

stated:

freedom.

our

purpose

forces

God-given

everything.
With public senti¬
ment, nothing can fail.
Without
it, nothing can succeed."
Conse¬

It serves

nessmen, life insurance activities,
Bar Association, should
exercise

Save

lars

our

world

that

and that is the
must

product

and

The

That's the first

nomenon.

What

with its dol¬
If we could buy

tinuously down at the short term

The

respecting the whittling away of
the rights of the people by the

time.

and less hours of
work.
But high wages and less
work did not create mass produc¬
tion.

task

wages

Every man and
woman
practicing law took an
oath to uphold and defend
the

responsibility.

What

vicious

for Communism.

cure

America did not buy

lib¬

erty, freedom and enterprise. This
romance of Ameri¬

high

dollars the

pile up ahead
mortgage, fall¬ only the purpose of removing the
ing due at the most inopportune one remaining strong hand in the

and

developed the

ated

maker.

be¬

Constitution

Bill of Rights.

see

Bar Association also has

life

and

companies, should be telling the
people how and why this country
grew from three cornered pants

The Bar's Responsibility

The

business, Bar

editorial

Our press, American

Association

Expediency

always turns into

to be executed.

This is

who have been attempting to de¬

de¬
and

statutes

makes

cisions.

citizen."

press

goes

history has revealed within its re¬
corded past. If we discover a last¬
ing solution, it will come from
ordered thinking backed by cour¬
age by those who, I repeat, have
a stomach for
fight.

Thursday, June 19, 1947

to it.

me.that unacademic

discus¬

sion

largely explains the move¬
ment
of
gold into the United
States.

Gold

came

in because, all

things considered—exchange val¬

ue,
purchasing power, liquidity,
and political and social security—♦
the yield the United States offered the best
curve
has, it seems to me, been "deal" of any country on earth.
the most powerful and the most
The
movement was preceded,
lasting, and because gold itself on February 1, 1934, by an' arbi¬
has been subject to highly arbi¬ trary write up of the monetary
trary and artificial manipulation value of our gold stock ffom ■ &
for the express purpose of restor¬ little over $4 billion to ^lightly
ing the 1926 price level—a dubi¬ under $7 billion.
Then came the
ous objective by
movement
dubious means.
itself; it further in¬
creased the monetary value of our
Gold Price Manipulation
gold stock from almost $7 billion
No doubt many of you read the in February, 1934, to almost $23
dispatch to the "New ifork Times" billion near the end of 1941." Ahd
last December in which the first this movement took place, dori't

recent years, has

details

the

had

contents

of Secre¬

forget,
because
Americans and
Morgenthau's
diary
were
foreigners, and maybe some Mar¬
made public.
That dispatch dealt
particularly with the gold buying tians too, for all I know, practi¬
tary

program

tuted

late in 1933 that consti¬

the transition from

price

$20,67 to a price of $35.00 for

ounce

of gold.

seems

almost

cally tumbled

over

themselves in

their desire to turn in their
at

the

rate

one

ounce

for

gold
the

physical comforts and the safety,

iVolume 165

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4604

this country for $35.00.

elimination

of most of the

reserves, on

and security purchasable in

peace

But the movement of gold

early in 1934 to 1941, built excess

from under $1 billion
to almost $7 billion.
And it was
this unbelievably huge volume of

reserves

in turn, which
put the commercial banks under
heavy pressure to acquire income
producing assets, particularly
short terms, at higher and higher
prices and lower and lower yields
and which, by 1941, had securely
established
the
yield
curve
in
excess

present form, with the

its

term end* close

short

the

with

zero

and

long term end close to

2y2%,
and effect relation¬

cause

was

the

purpose

fact

The

that the monetary

arbitrarily revalued at $35.00. The

won

point that I want to make is that
when this country began to fight
the second World War, the exist¬

say,

ties

ing interest rat? structure was a
legacy of depression economy and
of monetary action that had been
taken some seven or eight years
earlier in a futile attempt to cure

depression.

That

brings

the fourth

period in this history of the yield
curve—a' period
that covers ap¬

proximately
the
full
calendar
years of 1942 to 1945, inclusive.
Early in 1942, the monetary con¬
trol
authorities, not wanting to
anything, so to speak, to rock
boat, decided to fight the war
and to finance it on approximately
do

the

pattern of interest rates that
existed.
However, by that

the

then

time, gold had stopped coming in¬
our monetary system; currency

was
were

expanding; excess reserves
tending to be rapidly elim¬

can

why

reasons

are

you

the

First:
curve

early

war

had

resorted

would have to be
chief

The

that

measure

the

control authorities
adopted was the pegging of the
Treasury bill rate at % % early in

of the yield

indicated that,

later,

of the certificate

and

free

the

out,

the

and

the

curve

pegs

just pointed

itself is abnormal
with which it is

maintained constitute one of those

In themselves these

tremendously powerful and arbi¬

; peg's might, at first plance, seem
of no more importance than any
other attempts at price control;
But when you
think how such

trary devices which in this coun¬

rate at

%%.

pegs are

maintained, you can im¬

mediately realize that they have
greatly transcend in

effects which

importance the mere fixing

of a

price.

try

think of as desirable, if
only in time of war. As a

ever,

of the device during the war

when borrowings were so
excessive, indicated that this par¬
ticular control should be carefully
re-examined before it was applied

years,

to the

Pegging the Bill Rate
The

Banks peg the

and determinedly
maintained, constitutes an abdica¬
tion by the Federal Reserve Banks
it

seriously

quantitative
market

money

maintenance
rates.

For

these

pegged

pegs,

the

interest

conditions

commercial

the

present

time,

how¬

the monetary control author¬
ities have not scrapped the war¬

ever,

curve.

pegging the yield
And interest rates continue

device

time

pattern that was conceived in

depression, accepted as a matter
of wartime expediency and car¬
ried over into the boom conditions
of postwar.

control over the
in favor of the

under the

moderate financial re¬

npore

quirements of peace.

that the Federal Re¬

way

interest rate
of a certain security is to stand
ready to buy all of that security
that is offered at the interest rate
in question. That means, in plain¬
est terms, that the peg, provided
serve

fact, the very effective¬

matter of
ness

let

Now

it,

are

quences

what,

the unfavorable conse¬

of the

pegs

and

of the

sell all pattern of interest rates (the yield
their holdings of the pegged se¬ curve) that is maintained by them.
curities to the Federal, they know Perhaps the best way to see how
! that as long as they own the the yield curve works is for us to
pegged securities they can never think of how a banker tends to
be caught short of reserves, and react when he is given a permaithey feel therefore that they can ment bid for a one-year obliga¬
tion at % %' when other obligations
gp about their business of expand! ing their own credit and of ac¬ of the same credit rating and of.
quiring't income producing assets a little longer maturity are avail¬
almost without regard to the re¬ able at a slightly higher yield.
banks know that they can

striction of reserve
or

requirements

to a lack of excess reserves.

pegging device proved to
be strong medicine.
It was so
strong, in fact, that even under
the impact of the Treasury's war¬
time
borrowing of as much as
The

,
.

billion in a
period, on the one

$70
i

twelve-month
hand, and the

His

tendency first is, within the

limits of

properly balanced port¬

reach out and acquire
some of the higher yielding obli¬
gations and then, as and if he
needs funds, to sell the % % obli¬
gation against the permanent offer
that he has already received. But
the reaching out for theacquisifolio,

though

first and

trary 7/s % short-term interest rate,
could
again
become
the
chief
criterion of Federal Reserve Bank

open-market operations.

the

At the

end

pegging

And

President Truman, in his message
to Congress, said that our chief

give you my opinions, I should
like, before I close, to take the
time that is necessary to give you
the conclusions that I myself draw

from this discussion.

inflation.
How¬
so little quantitative control
credit did the monetary con¬

worry

ever,
over

still

was

authorities

public's

that

exercise

the

viously, because of the magnitude
and importance of the forces with
which we are dealing, that process
would
necessarily be slow and
might,

quantitative con¬

the Federal Reserve banks
the money market. Quite ob¬

over

31, last.

No Check

the

unpeg

trol by

money

Dec.

should

and re-establish

supply actually in¬
during 1946 by $12 billion
the huge total of $144 billion

think

short-term end of the yield curve

creased

to come here

1946

January

have asked

you

and commercial bank de¬
posits owned by the public, was
excessive.

But because of the impor¬
subject, and because

tance of this

currency

trol

This talk has already been too

long.

de¬

1945, it was
very generally supposed that the
public's money supply, the sum of

might have done.

have

This increase in the

end of

1945.

money

supply is Vather generally

considered

have

influence

about the

exercised
in

bringing

and postwar

infla¬
tion of living costs and in increas¬
ing, therefore, the costs of the
government's wartime as well as
peacetime operations. Under the
circumstances, there is some rea¬
believe

son

war

that

the

twofold

effect of financing the war

partly

bank credit and of simulta¬
neously
keeping
interest rates
down was achieved at too great a

sacrifice, and that the control de¬
vice which caused this twofold ef¬

too powerful.
That we
probably never know, al¬
though the fact that the Treasury
found.it necessary to restrain the
commercial
banks'
appetite for
credit expansion by issuing over

fect

Inflation

for

time,

long

ex¬

pressed in terms of policy rather
than in terms of important chang¬

With the public's money

was

expanding

billion of bank
restricted
bonds is certainly a straw blow¬
$50

ing in that direction.
Too

Strong

What

know

that

for

Federal

Reserve

And it

continues

gradually and irregularly to press
downward

interest

rates.

it is hard, if not impos¬
sible, to prove these statements
statistically. I think, however, that

course,

Board

recom¬

ing

very

of a very broad nature be
given to it whose objective was
provide
tighter
quantitative

are

ers

control

bank

commercial

over

credit.

was

feeling,

own

generally shared, I think, by

very

other

ject,

commentators

that

would

none

control

eliminating

and white-collar workers of mod¬
erate

if only the
quantitative
the money market by
its
pegged
buying

rates.

still
a

service and

sub¬

whole

this

have adopted and

clinging to an artificial
dangerous yield curve. As
yet there are no definite indica¬

tions that

the

propose

curve

to give

the

control device by which the curve
has been preserved. There has, of

been much talk about

course,

and

there

has

been

talk

some

raising the certificate rate
As
yet, however, the
monetary control authorities have
always shied away from taking the
actual plunge. I myself feel that
unpegging the bill rate and allow¬
ing it to move upward to the cer¬
little.

tificate

rate

change

would make

the

underlying

real

pres¬

that I have been discussing,

day operations both

of the com¬
Federal

Reserve banks.

The

pressures

the
so

first

place,

powerful

that

the

device

almost

completely neutralized the effect
short-term interest rates of

that

full

the

reason

unpegging

would

not be an

why

bill rate

and

rising

living is well served

standard

goal

economic

our

production

un¬

the bill rate which has
%% for over five years,

in need of gov¬

Finally, I find it impossible to
believe

by having a financial system
tends to discourage

savings

it.

It is

physical wealth
they are translated that

and the

into which
have

that

thrift and the

savings that result from

about
a

ernment help.

wartime

mercial banks and of the

also

and

are

was

squeeze

are

consideration

ject is that

of what I

set up by the pegging of
yield curve are in fact too
strong for peacetime use.

two-way

same

irfr

—

given

productive

our

capacity and our high standard of
I say that we should

living.

everything we
them,

although, of course, it would make
a
change in some of the day-to¬

the

enough
their

and

themselves

applies to all of our endowed in¬
stitutions
hospitals, churches,
schools and colleges, and makes
them less able to render public

thought that I get from a

cerned with investment problems

probably recognize the truth
say.
In any case, here
a
few indications that the

have

who

incomes

country to put aside some of their
earnings into government bonds,
other investments, banks and life
insurance. A second point is that
this

The

sures

will

democracy—laborers

of American

faith

necessary

over

they exercise a two-way squeeze
on what I think
is the backbone

sub¬

Federal would regain

the

think, that both these results
undesirable.
For one thing,

powers

the

these

direction

the
rate.

short-term

all of you

who are following mon¬
etary developments and are con¬

move

mended that three additional pow¬

been at

credit.

both intermediate
interest rates tend¬
slowly and irregularly

with

sag,

and long-term

with its resulting yield
curve, is altogether too strong. It
continues
gradually and irregu¬
larly
to
push the
commercial
banks towards an over-expansion
their

strong for peacetime use.
In its Annual Report for 1945 the

pegging

curve

too

either

Peacetime Device

by the pegging of the yield
are

will

gether

Consequences

discuss

raising the bill rate, al¬
that might perhaps be a
preliminary step. What
we need is to unpeg the certificate
rates.
For with that step, quan¬
titative control over credit, rather
than the maintenance of an arbi¬

merely

indication of

second

strength

vice.

the ex¬

of the government's borrow¬

Here

the

of a
than

step

nature

Conclusions

peacetime, the pegging device, to¬

Unfavorable

see

dominant

As I have

Second:

the

supply
rapidly as $12 bil¬ es in interest rates.
lion in a year, it is small wonder
If we do not unpeg the shortbeen merit in the two effects that
that inflation, in 1946, continued term end of the yield curve, then
I have just been discussing be¬
unchecked.
Furthermore, with I believe the results will be a con¬
cause there are many thoughtful
public debt being redeemed by the tinuation of trends that we have
people who feel that these effects, government and with private debt already witnessed. These are:
even under the stress of war, were
being monetized by the monetary
(1) A broad, long-range ten¬
achieved at too great a cost. Large¬ and
banking system, it is small dency for bank credit and the
ly because of the monetary and wonder that
ii^yestors other than money supply to expand qut of
banking system's acquisition of banks experienced renewed dif¬
proportion to the country's needs,
government securities, the public's ficulty, during 1946, in investing and, therefore, for the value of
money
supply increased during their funds at satisfactory yields.
money to be slowly diluted.
the war from $64 billion at the
Let me give you one more in¬
(2) A broad, long-range ten¬
end of 1941 to $132 billion at the dication
that the pressure set up dency for the whole yield curve

market.

monetary

1942,and

bargaining

substantially.

I said above that there may

controls and the restoration of col¬
lective

to.

having

wise

inated; and it was obvious that, if to the extent possible without en¬
the then existing yield curve was dangering the stability of the econ¬
to be maintained, strong measures, omy, he favored the removal of
possibly of a highly artificial na¬ price, wage, production and other
ture,

rates

little rather than to move
dramatically upward as it other¬

Aug. 18, 1945, Presi¬

Truman

dent

risen

have

interest

need

fundamental

gone.

to sag a

wartime device, and

for credit expansion

What

the only constructive effect of the

expansion and thence upon inter¬
est
rates
that the yield curve
tended to remain fixed or perhaps

at least two
would
have

The pegging

market,

free

place,

Treasury's rapid redemptions was
to
prevent the pegging device
from making interest rates go as
low as they otherwise might have

have been merit, too, in hav¬
ing this wartime control device
react so strongly upon bank credit

supply of and the de¬

was

credit

Bank

interest rates.
In fact,
one
would almost conclude that about

may

for credit.

mand

Reserve

ings over and above what could
be readily sold to individuals, in¬
stitutions and corporations. There

thought that the monetary control
authorities
would
be
quick to
scrap the pegging device and to
allow interest rates more nearly
to
reflect
the
relationship be¬
tween the

entirely out of the

credit that they took up

with

there

ad¬

and it was almost un¬

borrowed

cess

termination

these two ef¬

without their

have been merit
wartime control de¬
vice which put so much pressure
on
commercial banks to expand

the final War
Loan Drive of December, 1945, the
financial emergency incident to
conducting a great war was over.
Logically, we should have entered
a fifth period in the recent casual
history of the yield curve. For,
the

war

not

foregone conclusion that if they
so borrowed in a reason¬

Rates

emergency,

Federal

apparently,
almost
automatically through the power¬
ful operation of the pegs at the
short end of the yield curve, and
the Treasury's redemption exer¬
cised very little upward pressure

Hence there may

all

Postwar Continuation of Pegged

with

the

were

would

well done!

However,

rate

ably

of all history.

I think

bill

certificate

tificates to the Federal.

supplied the money; the country
war.

the
the

room

had been

They accepted the challenge; they
the

leave

from the

savings of individuals and corpo¬
rations. Or, at least it was almost

control authori¬
greatest

financing problem

still

rate pegged at 7/8% with the com¬

took

faced with the

were

unpegging

would

Such tak¬

effect of purchases by these banks.
As it was, the necessary purchase

of money,

matter

rates

mercial banks still owning enough
certificates to give them a lot of

thinkable that these amounts could

it is
discuss them

the

other

ing bf securities out of these port¬
folios
would,
of
course,
have
brought about a forced reduction

vantages. The government had to
borrow simply staggering amounts

be able to decide, and

now.

with

basis of the sale of additional cer¬

During

taxes that were
levied.
Just how justified these
criticisms were we will probably
never

the

portfolios

line

certainly does not form a part
of the yield curve. Furthermore,

had it not been for the offsetting

fects

established, the type of bonds that

sold,

the

and

merely shifts it from one part of
the system to another.
Second,
the acquisition of the longer term,
higher yielding obligation tends to
raise the price and lower the yield
of that obligation.

particularly since the end of the
war, we have heard many criti¬
cisms of the financing
methods
hat were used—the pegs that were
were

short-term security

from

Federal Reserve Banks.

out

monetary and banking system: It

During the war, and

achievement.

ship that I have just described is
a
correct one, then we can say
that the yield curve that existed
in 1941 was largely attributable
to the fact that gold had been

the

this

remarkable

most

bills,

This is be¬

Federal

does

government securities, other than

hence

7/s % security to
not
eliminate

the

rise.
This

supply.

the sale of

cause

anything,

not

If the

of the money

con¬

total

the

having the Treasury, in 1946, re¬
deem for cash over $4 billion of

term

two

First,

addition

very

longer

has

of bank credit and

volume

think one would
probably say that the overall ten¬
dency during this fourth period,
;he war-borrowing period, was for
interest rates to sag rather than
!f

reserves,

about

stitutes

level of the pegs.

%-%%

the

slightly

effects:

important

rise during the

not

the

instrument

credit

except, of course, that short
erm rates moved up fractionally

into

monetary system was by all
odds the chief factor which, from

excess

war

Reserves

our

did

rates

est

and Excess

Accumulation

Gold

tion

the other hand, inter¬

(3253)

and

can

should

vices that discourage
iHM) ii»

McMannus &

to encourage

avoid de¬

them.
—'

Mackey

Admit
Frank

the

New

Shea, Jr., member of

York

Stock

Exchange,

important step is because most of will be admitted to partnership in
the bills are held by the Federal
the Exchange firm of McMannus
Reserve banks anyway, and the
New
bill rate, at about % of 1% for & Mackey, 1 Wall Street,
;
any of" the 13 maturities, seems to .York City, on July 1st.

THE COMMERCIAL & FINANCIAL CHRONICLE

(3254)

Is There Really

with longer term bonds and a
higher coupon attractive to per¬

"Too Moch Money"?

manent

where you supply due to business and com¬
is in the
the run the risk of gross inequities mercial lending in 1946 could have
Federal Reserve System today.
and
impaired productive effort. been offset, or more than offset,
(6) This matter is of so much Probably we should have, sold if we were really intent on avoid¬
importance to all citizens that the more Government securities to ing the inflationary effects of an
time has come for a re-examina- non-bank investors; certainly some excessive money supply inherited
That
tion of the whole working of our aspects
of war-drive financing from our war financing*
Federal
Reserve System
by a contributed to the large bank pur¬ would encompass Mr. Parkinson's
chases of Government securities. next point-—the necessity for re¬
monetary
commission or some
similar committee, created by the But within the realm of practical ducing or at least preventing a
Congress to do the same sort of possibilities, the overall picture at further increase in the money sup¬
job as was done by the National the end of the war wouldn't have ply. To accomplish this, two meth¬
If you ods were suggested: (1) achieving
Monetary Commission which been greatly different.
evolved the Federal Reserve Sys¬ want to place the primary blame a surplus in the Federal budget
for our now having "too much and paying off debt; (2) refinanc¬
tem in 1913.
I don't believe I have done vio¬ money," place it on-war. If you ing bank-held debt with longer
want to be sure it will never hap¬ term bOnds and a higher coupon
lence to Mr. Parkinson's views—
attractive to permanent non-bank
certainly not consciously—and I pen again, abolish war.
there

(Continued from

page 2)
administration of

comes

point

think his bill of particulars

reads
The Inflationary Influence
well as I have set it down.
It is also true that this great
Why, then, do I take up your time
and my own in going over the volume of money—of purchasing
same ground?
Only because there power—is an important inflation¬
were certain simplifications in his ary
influence in- our economic
remarks which seemed to me to be situation. But the relationship be¬
tween the quantity of money and
obscure rather than to clarify, be¬

investors.

very

there

cause

ences or

were

certain

infer¬

implications which I

can¬

not

accept, because I do not agree
with- part of his solution of our
immediate problem, and because
I think it important that these
matters be clearly understood by
the business comrhhnity.
I have another reason, also. It
"seems to me that it is time that
neighbors of Liberty Street
getting a little better acquained. A few weeks ago I read
in the paper that the Chamber
had declared that Regulation W.
which relates to consumer credit,
we

were

had

outlived

should
eral

its

usefulness

eliminated^

Reserve

System,

and

The Fed¬

including

the Federal Reserve Bank of New

York, administers Regulation W
and yet, so far as I know, no one
from the Chamber talked with us

the regulation and heard
point of view. At about the
same time, I read that a commit¬
tee of the Chamber is considering
the question of a return to the
gold standard. That is a pretty
complex question and we central
bankers have given if quite a bit
of attention—it might be useful to
consult us as well as the gold
miners.
I am moved to suggest
that if your committees which are
about
our

concerned

prices is not so direct and causal
as is often implied.
The volume
of production of goods and serv¬
ices and the velocity of money are

important parts of the equation.
If

volume

the

duction,

unre¬

money

itself

expressed

strainedly
terms of

static volume of pro¬

should indeed be in

But the expansion of out¬

a mess.

put was the outstanding economic
feature of the war, and the view
is widely

held among students of
in other countries as well
as ours, that the wartime mone¬
tary expansion was an essential
(contributing factor in the expan¬
sion of production. For our pres¬
ent relative well-being, we must
give credit also to the horse sense
of that part of the American pub¬
lic which has preferred, in some
measure, to maintain idle balances
rather than to engage in a spend¬
ing spree which could only bid
up prices. We must hope that this
good sense will continue to pre¬
money,

until

vail

duction

—

rising} peacetime
rising

production

pro¬
per

Now let

address myself to

to the points of Mr. Parkinson's
indictment, of present monetary
and credit policy.
I share fully
his concern about

our

overgrown

highest point on record in relation
to the gross national product, and
the velocity of these funds is still
low;
It may well be that we
haven't yet seen the last of the
monetary
consequences
of
the
war.
This swollen money supply
did not come into existence, how¬
ever, solely or even primarily be¬
cause of the failures of particular
men in particular positions of re¬
sponsibility during the war years.
Expansion of the money supply,
given our kind of economic sys¬
tem, is an inevitable result of war.
No
country,
and certainly not
ours, was ready, willing, and able
to finance its recent war expendi¬

into

think that most of

question. I
realized that

the first problem of monetary and
credit policy in 1946 was to try
to

keep the enormous supply of
purchasing power, which had been
created during the war, from in¬
creasing further in undesirable
ways' which would accentuate in¬
flationary pressures. During the
year three restraints were put upon

bank

purchases

securities
tors.

For

however,

from

the

such

Government

non-bank
year

debt

Federal Reserve Banks eliminated
the

preferential discount rate of
1% on borrowing collateraled by Government securities
maturing within one year, so that
all borrowing thereafter was at
the regular discount rate of 1%.
That was a- small move in itself,
but larger in its implications. It
carried the very important impli¬
cation that the pressure for easier
V2

credit and lower interest rates was

off.

were

left,4 however, With

commitment to support the % %
on
certificates of indebted¬

which tied our hands with

inves¬

five months of 1947, the Treasury
redeemed
a
substantial
amount

held

Federal

ply.

Bank purchases of Treasurywere
offset by sales of
short-term securities by the banks
to non-bank investors. The prin¬
cipal factor in the growth of the
money supply during the past year
was
the rapid increase in bank

squeezes

the

reserve

positions

bonds

of member banks tended

loans other than loans ori securi¬

Business loans increased by
amount greater than in any

their
their

to' limit

restrain
eagerness, to make further
ability

or,

rather,

purchases of Government securi¬
ties or to extend credit in other

Even such a program can
overdone, however. I should

ways.

not

want to

continue

program

expansion
of tionary pace.
But there is, of
pretty burdensome, only sary to finance
more
than 40% of our peacetime production,1 which
is course, no prospect that the Treas¬
Government's wartime expendi¬ essential to a better balance be¬ ury will continue to have net cash
tures was met out of tax revenues. tween the supply of and demand receipts of this magnitude,, so that
-Of the remaining 60%, borrowings for goods, they were desirable, we probably need not worry about
from
non-bank
deflationary
pressure
investors
ac¬ even though they did result in a excessive
little

and borrowing further increase in the money from this source.
including savings supply.
*
In the field of debt management
It might be argued, however, there remains the question of the
banks, to 28%. Maybe we could
for 32%,

banks,

have increased taxes

further, but that

other non-bank investors. As Gov¬

tion to

ernment receipts and expenditures

ary tendencies, because
should be. temporary

while they
and mild,,
rigidities in our eco¬
during 194-3 to pay off short-term nomic system do enhance the dan¬
debt, mostly held by the banking, ger of a recession feeding on itself.
system. This was a refunding op¬
came

nearly

into

balance,

these superfluous funds were used

Treasury Dominance

reverse.

Higher Debt-Carryover

Cost

further

Since

the

increase

the

the increased

replacement of
debt with long rather

higher cost of carrying the
such a program, must be
tested against broad objectives of
credit and debt management pol¬
a

debt,

icy, I think the proposal.can meet
test, but care must be taken

Up to now, I have tried to tell
you what we in the Federal.Re-r*
serve System have .been doing, in
cooperation with the Treasury, to
discharge our responsibilities in
these postwar months.
We have
not done all I should like to have

done,; and we have done some
things I would not have done, but
I submit that

have done some¬

this

thing, even though it has not been
that, we do not merely provide a as "astute, skillful,, patriotic-and
"Safe haven" for institutional and far-seeing"
as
Mr.. Parkinson
savings funds which should be might have Wished.. He goes on
to say that our failures arise from,
placed in private investment; that

too

attractive; that business and tain extent it should and must be
mortgage borrowers "should have true. But it carries a false conno¬
first

call

vestment.
that the

savings for in¬

our

They

new

suggest, second,

issue should not be

connotation that

the

Federal Reserve System has
come
a
sort of bureau of

be¬

tation

—

the

without will or pur¬
it should not encourage sales of pose
of its own.
That is- not
outstanding issues, in order to ob¬ true. The Federal Reserve System
a

fully marketable issue, and that

tain funds for its purchase. That
sort of rollover was one of the

Treasury

develops
views

its

about

own
independent
credit policy, advo¬

headaches of the-war loan drives,

cates

them

that too

some

of them through independ¬

and

one

many

the

reasons

Government securities went

into the banking system. Institu¬
tional srrd;other investors, in or¬
der to pad

strongly, and carries

but .the

ently,
cannot

now

fact is that

you

discuss credit policy

without discussing debt manage¬
ment. That is one of the major

make

which

have ho

reason

to pre¬

eral

with

one-seventh of

budget

(more

commercial,

the Fed¬

less),, and

banks

the

country holding about $6$ billion^
or 40% of the $170 billion of mar¬
ketable

meht

United

securities

cannot

States

Govern-

outstanding,

you

far away from
debt management, hi considering:
credit^ policy. It isn't a question
of abject subservience of the. cen¬
get

very

periodic

ties.

employment; and in¬
occupations. I would
monetary policy or ac¬
accentuate these deflation¬

not want

cipitate, and which private inves¬ tral banks to the Treasury—-it is
or
investing
institutions part of the economic landscape.
($29.9 billion) of its outstanding tors,
market securities, first out of bal¬ should have no reason to desire, What it should mean is that the
Treasury and the central banking
ances accumulated during the Vic¬
Defrostingr Short-Term Rates
system^ have to work together 011
tory Loan in December, 1945 and,
this problem, with due regard for
this year out of budget surpluses.
Finally, in our battle to hold
The debt retirement program ex¬ down the supply of money, there one another's powers and respon¬
erted recurrent pressure on the re¬ was the third restraint I men¬ sibilities; This has been difficult*
at times, hut it is not impossible?
serve positions of members banks,
tioned
earlier—talk—talk about
in my judgment, the. difficulties
as it involved the. withdrawal of
possible changes in policy which
funds from these banks to redeem would lead to the defrosting of at present are being overcome.
by the
These

the money sup¬

tailment of; busiriess activity, and

around

Banks,

achieved without temporary cur¬

volume of Federal Reserve credit

Reserve

little net effect

that

facts
of
our - economy
growing:
largely out of the financing of the
war.
With an interest-bearing
Federals debt
of approximately
$250 billion, with'the gross service
on that debt totaling $5 billion, or

seemed

counted

in some

and

their subscriptions and
a
profit,
sold large
amounts of outstanding issues, at
portant, left the availability of a premium, to the banks and sub¬
Federal Reserve credit largely to scribed- for- new issues of- longbe determined by our member term -securities in amounts in ex¬
banks. Despite this handicap, the cess of their currently accumulat¬

involving net cash receipts, bv the
an increase in the previous year, and there were also Treasury, at the rate of $6 billion
substantial increases in consumer each three months, as was the
money supply—without some bor¬
rowing from the banks.. (Despite loans and loans on real estate. In case during the first quarter of
increases
in
tax
rates
which so far as these loans were neces¬ 1947—that is too brisk a defla¬

from

loss of

come

of high level production
employment. It, i? unlikely
this
adjustment
can
be

period

management,

tures without

some

postwar

credit pol¬ we do not recreate the "rollover the fact that we have, fallen under*
and talk racket," and that wert do not upset the control of the Treasury. That
—what has been referred to as the
balance in the market for ex¬ is an opinion that is-quite widely
an open mouth operation as dis¬
isting long-term Government ob¬ held*, I know, and to a certain
tinguished from an open market ligations, These caveats suggest, extent it is true. Indeed, properly
operation. In April and May the first, that the issue should not be stated and understood,, to a cer¬
icy,

whole,
transactions had securities
as

the ,war

period,
readjustment in our econ¬
omy were not necessary to pro¬
vide a firm basis fof an extended

sented by sales of 2%%,long-term
bonds to insurance companies and

ing cash. The result was,: and
outstanding was reduced by ap¬ could easily be again, increased
proximately $1 billion during the rather than reduced monetization
commercial bank buying of Gov¬ year—the principal offset being a of-the- public debt. Finally, these
ernment securities. It remains for decline of $900 million in the ex¬ caveats suggest that- to breach the
cess reserves of member banks.
2Vz% rate on long-term Govern¬
me to take up what has been hap¬
The admitted gap in our de¬ ment securities, except in the Case
pening since. There was a further
increase in the total of currency fenses was partially plugged by of a bond of the type of Series E,
outstanding and of bank deposits debt management. During the last would have results * in terms of
belonging to the public during ten months of 1946 and the first prices of outstanding obligations

the first months of 1946 there was,
to be sure, a further "monetization" of the public debt through

dislocations of

immediate

and

the banks by means of

respect to any increase in short*
term interest rates and, more im¬

It is an actual and
potential menace. Despite the
possibility of a decline, or a reces¬ 1946, although the rate of increase
sion, or a mild readjustment in was considerably below that of
business this year we still have an the war years. The significant fact
explosive situation on our hands. is, however, that' this postwar in¬
The public's holdings of money— crease was not due to bank buying
of Government securities. During
currency 'and deposits—are at the

money supply.

called

unprecedented if, after the tre¬

mendous

Government debt during 1946 was
an operation of this sort.
This is
not
surprising
since
the
cart
seemed to be pulling the horse.
The fact is, of course, that the
Treasury overborrowed very heav¬
ily in the Victory Loan drive of
December, 1945, and that most of
the
overborrowing was
repre¬

than short-term issues will result

ground for action
time comes.r It- would

the

when
be

the

clear

some

which

ness,

Recent Happenings

overlooked

maturing

the balance and to begin to offset

monetary
and
I have already, indicated the
credit problems care to talk with extent of
my agreement with Mr.
us at any time, they will find good Parkinson's
statement, in so far
neighbors at 33 Liberty Street.
as it relates
to the war period,
that the principal reason for our
An Overgrown Money Supply
excessive money supply has been

investors.

often

that the retirement of bank-held

done, so that evidently it is the

rate

with

too

speed of
the operation or the
method
of
its
accomplishment

unit of capital equipment and per
to help redress

swollen money supply.

In effect, that is just what was

manhour—comes
our

non-bank

think

eration in

Off Inflation

Heading

Thursday, June 19, 1947

money refinancing

bank-held

debt

frozen

short-term

interest

rates

I hope I have made it clear that

securities which the questions which were raised
would, in turn, harrow* the spread by Mr. Parkinson about credit
in -rates between short and long- policy and debt management are
term securities, and - reintroduce precisely the questions which have
some element of uncertainty into demanded and received the atten¬
the interest rate picture. I think tion of the Treasury and the' Fed¬
this discussion of the jproblem had eral Reserve System,. and I think
I have made it clear that we have
a salutary effect, largely because
the action propoied^seemed logi¬ been moving in the direction in
cal and desirable to the business which he would have us go!* Evi¬
and banking community, and be¬ dently in his view,, we have not
cause the discussion gave evidence moved far enough nor fast enough*
that
the
monetary . authorities That is a matter of opinion " and
judgment; I can only say that his
were thinking in terms of shifting
the emphasis frOm maintaining a mood might be less uncompromis¬
wartime pattern of rates to pre¬ ing if he were charged witjhtheventing an unnecessary expansion fateful decision of determining
of bank credit. The continuance how much of a decrease im die
of the debt' retirement program, money supply is compatible'with
high production and
out of net^cash receipts of the continued
Treasury, during recent months, high employment, how rapidly it
should be attempted, and bow. it
and changes
in the immediate
business outlook, have made ac¬ can best be brought about,.
5
These questions, which face us
tion on this front less urgent, but
meanwhile steps have been taken here and now, cannot be solved by
on

Government

Volume

the

appointment

national

System in 1913.
That commission took four years

larly conceived study of the or¬
ganization and operations of the
Federal Reserve System, and of
our whole
credit mechanism and
lending

Government

machinery.

Probably because of the intrusion
©J two world wars, we have gone

restrictive

their

forcing
exert
ume

some

retirement,

of reserves held

One

control

Board

the

authority

their

of
the

uted.

enable

the

the notes placed in

not

purposes

volume

the

circulation."

against these

the

statements

These weapons can

used for good or ill, but
at

are

only part of a

best

This

step

taken

recalls

that

Board's

upon,

son

they
well-

rounded economic policy. Nor can

there is no good rea¬
suppose
that
Congress

not have written

would

such

release

that it is

into the Federal

thority

Board's

The
its

au¬

Reserve
It would have been pointto
confine
the
"interest

which

find domestic shelter,

policies,

ever

antici¬
impinge
domestic economy with

sanguine among us

matters

These

pated.
upon

our

knock awry the
adjustments we may make

brutal force, and
little

In interest

rates or in our manage¬

the

est

Reserve
would

of the

earnings

charge"

even

public debt. It is high
time that we again took stock of
the world situation and of our
position in it, for admittedly the
schedules originally set down for

Reserve
to pay

Board had

the

authority

Reserve

The

to do the

banks.

fact

that

Congress has a';

Reserve

banks

to pay

vasion

banks

bank

than

This

their liabilities.

the
cost

followed

was

ized

any

Treasury

The

law.

objectives. We mua;
clear.our minds ,of slogans anc.
redefine our purpose in fighting
the war. I think the kernel of the
answer can be found in the words

Memorandum

Professor Robert Warren of
Princeton, when he said a year
end a half ago that the war was

'minor

salvation
integrity, and that

..primarily a war for the
•

©f

European

'j, which we sacrificed hundreds of
thousands of lives and billions of
,i, dollars, cannot now be approached
•in a niggling spirit.
Great gen
i, erosity and great sacrifice still lie
'(;

Counsel of the
Board" to Paul

galiy-required

to the

Reserve

Warburg, of the Board, Oct. 15
1915, says in part that "the obvi¬
ous intent of Congress [in respect

tax

set aside

was

short,

that

episode

of De¬

serve

charges on Federal Re¬
notes in Section 16 was] to

enable the Federal Reserve Boarc
to control and to enable

the Boarc

adapt not only rediscount rates
but also the volume of Federal

ahead.

than to

the various issues
serve

W. B. Hibbs Co. Partners
WASHINGTON/D. C. — W. B
Hibbs & Co.,

725 15th Street, N. W

Board to

im¬

of Federal Re

notes. The paragraph

quoted

above [from Section 16 relating to
interest on Federal Reserve notes_

clearly

Bruen and Dunn to Be

enable the

different rates of interest on

pose

authorizes

the

Board

control not only the issue of notes
to a particular bank but also to
fix

put

determine
upon

any

the pressure to
particular ban

to retire such notes when issued

(Reproduced In
Henry Parker
Willis',
"The
Federal
Reserve
Washington Stock Exchanges and System," The Ronald Press Co„
other Exchanges, will admit James New York, 1923, pp. 883-884.)
members

Bruen

the New York

and

John J. Dunn to

partnership on July 1st.

The

Board

"Digest of

Rulings of the

of Governors of

the

Fed¬

law

provides

specific manner for the
of the earnings of the

have

been

Does

disposal

The

Board

also

arises

thinks it

Board

has

the

why

the

right to

alter the
It

provisions of the law.
seems quite clear that if the

Reserve Board can decide to dis¬

Reserve

bank

the Federal Reserve banks?
other

directors

and

officers,
this

earnings

before the so-called franchise tax

the

about

appropriation and gift to the
Reserve Board,

Treasury, by the

90% of the net earnings of the
Reserve banks for 1947?
What of

law

under the
of these
What, in partic¬

responsibilities

their

banks?

ular, of the
Class

the

and

Reserve

owners

responsibilities of the

directors

who

are

sup¬

represent the
stock-""
holding banks?
Above all, what is Congress go¬
ing to do about this matter?

posed

New York Curb Exch.

Nominating Comm.
Walter E.

by the Board. It points out what
the law was in respect to the dis¬

Treasury

Federal Reserve banks done

some

posal

the

What have the Presidents,

relatively

reviews

official

case,

This does not jus¬
tify the step taken by the Board.

all money offered it re¬
gardless of tne fact that it may
represent funds taken improperly
from the rightful owners—in this

length the "so-called fran¬
Reserve chise tax provisions of the law
banks, as the Board by its state¬ which had a similar effect," as
ment indicates it understands, the related to the action now taken
question

rela¬

high levels."

of the Law

existing

are

Board

the

cember, 1942, and the present levy
Federal Reserve notes provide

Banks

the

banks

Reserve

rection of

Right to Alter Provisions

The

for its.,'
earnings

excuse

nancing."

by the Reserve Board in coopera¬
tion with the Treasury.

Treasury

integrity has been
restored and the continued exist¬ Reserve notes to the varying needs
of different sections of the coun
ence of European culture and civilization has been assured, the war try. There would not seem to be
is not over. This overriding task a more -effective way of checking
to which we put our hand, and to an undesirable inflation of credits
until European

Federal

This points in the di¬
belief on the part of
that it is proper for
of Federal Reserve bank or "Na¬ the Treasury to borrow from the
tional
Currency"
notes
turned Reserve banks at little or no cost
over to the Reserve banks.
These to itself.
This sort of thinking
banks
improperly and illegally approaches too closely, for com¬
added $660,000,000 of fiat paper fort,
the fiat money brand of
money to their reserves.
thought.
The question also arises as to
A particularly noteworthy as¬
pect of the Board's manipulation just what official at the Treas¬
of December,
1942, is this: Had ury becomes a party to this trans¬
those notes been issued in accord¬ action by receiving the funds paid
ance
with the law, they would into the Treasury by the Reserve
Board
without
legal
authority.
have borne a tax.
But that le

the bulk of their net
earnings after providing for nec¬
essary expenses and the statutory

to interest

are

tively high "us a result of opera¬
tions essential to government fi¬

postwar period are not being
this picture: The Reserve Board
times specified by legislation the dividend.".
(A copy of release
met. It is reassuring to know that
in 1942 set aside a tax required
portion of the net earnings of the Z-2040, dated April 23, may be
the Government has taken cog¬
Reserve banks that was to be paic
found In "Federal Bank Service" by Congress, and in 1947 it levied
nizance of this problem, and tha';
a
tax
to
accomplish a purpose
into the Treasury, without any Prentice-Hall,
Inc.,
New York,
the Secretary of State has called
not
authorized
in the
Reserve
reference to the provisions of Sec¬ Vol.
II,
"Current Matter," pp.
for a world-wide survey of eco
Act and one that involves a mat¬
tion 16, should be further
anc
25,589-25,590.
It is also in the
nomic
conditions -to* determine
ter falling solely within the jur¬
conclusive proof as to the intent "Federal
Reserve
Bulletin"
of
what
are
the present demands
isdiction
and
responsibility of
of Congress and of the fact tha'; May, but there it bears the date
upon the United States for recon¬
Congress.
the
Reserve
Board
is
out * of of April 24.)
struction aid. In the light of tha';
One of the outstanding char¬
bounds legally and has again de¬
The Board says further in its
survey we shall have to determine
cided to distort the clear mean¬ statement of April 23 or 24: "In acteristics of the Board's state¬
bow those demands can best be
ing of the Federal Reserve Act to effect, this will involve paying ments of April 23-24, 1947, is the
met, and what will be the reper¬
accomplish a purpose not author¬ currently to the Treasury funds large porportion of irrelevancies
cussions in our domestic situation
ized in law.
which under existing law [italics incorporated in it. For example,
One
thing
seems
obvious —we
If one needed any further evi¬ by this author], would otherwise the Board points out that "As a
cannot be effective everywhere
result of operations essential to
In the same strength, at the same dence on this matter the official come to it only in the event of
time.
We must decide what are statements of the Reserve Board liquidation of the Federal Reserve government financing . . . earn¬
ings of the 12 Federal Reserve
©ur
it.
For
example,
"A Banks."
major objectives and what provide

the

Reserve

fact that

the

improperly and illegally received
a deposit on the books of the Re¬
serve
banks for the $660,000,000

It says
rela¬

payment

government is reducing its
of
borrowing
from
and

action

not author¬

was

Con¬

earnings into the Treasury,

Board offers

outright fiat money and the pro¬
cedure

province

through the Reserve banks.

rather

assets

reserve

there

the

by the Reserve Board in
respect to the disposal
of the
earnings of the Reserve banks.
There are some other questions
involved in this action by the Re¬
serve
Board.
To the extent that
gress

sleight-of-hand performance, put
out by the Treasury as its liabil¬
ities and received by the Reserve

tively large "the Board concluded
that it would be appropriate for
the

the Reserve banks
liabilities,
were,
by

only
their

worcjls, it decided

legislating itself.

notes, intended to be Federal Re¬
bank
notes
and
issuable

that since earnings are now

into the Treasury any per¬

centage of the net earnings of the

In other

1933.

the total notes out¬

began

Treasury

serve

cided, so it points out, to restore
the terms of the law repealed in

would have been
simpler to specify that the

standing.

ment of the

net

banks. A simpler procedure

have been to authorize the "inter¬

the

$660,000,000 of "National
Currency" notes into circulation
through
the
Federal
Reserve
banks.
These partially - printed

by what¬
Act.
1933
under which
the Reserve
world swept ess
banks were "required to pay a
by unrest and hunger. Repair of
charge" to that part of the Federal franchise tax to the government
the political, social and economic
Reserve
notes, not covered by
equal to 90 % of its earnings after
dislocations of war proceeds with
gold certificates, if Congress had it
had
accumulated
a
surplus
maddening slowness. The burdens intended
to
give
the
Reserve
equal to its subscribed capital."
we must bear are larger and will
Board authority to fix a tax rate
But inasmuch as Congress has not
have to be borne longer than the
high enough to dispose of 90% of so
legislated since, the Board de¬

the

capital stock of the Federal De¬
posit Insurance Corporation; rec¬
ommended provisions for a return
of this cum to the Treasury in a

pump

repealed

authority

De¬

that the

Reserve

the Treasury bill now before Congress; and the
Board, by a manipu¬ proposal
that Federal
Reserve
lation, involving a so-called "re¬ aanks guarantee bank loans. There
tirement" before "issuance," en¬ seems to be nothing in this dis¬
tered
into an agreement under cussion
that
justifies
the
in¬

acting in the absence of

statutory

Act

be
dis¬

and Reserve

in
clear

quite

Reserve

such

requirement,

the

Act of Congress in 1933,
banks subscribe

Board

the

violation

At that time

notes.

argument

own

makes

cussion

appear

other irrelevancies

cember, 1942, in connection with
the Treasury's unauthorized issu¬
ance
of
"National
Currency"

Reserve Banks for 1947."

cide

Federal

the

would

what

tains

present

Treasury.

The Board's statement also con¬

Violation

First

Not

was

in undertaking to
of the net earnings of

States

United

Weakness of Board's Position
The

the

the Reserve banks for 1947 to the

extra

banks.

and to
the vol¬

demonstrated

bounds

give 90%

Reserve

these

owners

out

dividend for the-member banks—

(tax), Reserve Board in describing this
current transaction reveal in large
too long without a thorough and according to the
law/ is to be
evied "on only the amount of degree the weakness of the Board's
objective
study of our central
banking system, and its relations such notes which equals the total position. Although the Board in¬
sists that it is exercising authority
to Government agencies and pri¬ amount of its outstanding notes
vate business. Amendments to the
ess
the amount of gold certifi¬ granted it under Section 16 oS
the Federal Reserve Act, it does
original law, sweeping as some of* cates held by the Federal Re¬
them have been, have not repre¬ serve agent as collateral security." not demonstrate that it is levying
this so-called rate of interest in
sented an overall annraisal of per¬
(Sec. 16.)
accordance with the intent of that
formance in the light of original
This author has never seen any
After pointing out in its
conceptions and subsequent devel¬ evidence that the provisions of Act.
release of April 23, 1947, that the
opments. It is time we had a new Section 16 were to serve any other
surplus of the Reserve banks at
statement from the people, through
purpose.
The fact that the "in¬
the end of 1946 was equal to their
the Congress, of our responsibili¬
terest charge" was to be levied
subscribed capital, the Board said
ties and of our powers.
only against the amount of Re¬
And now, having taken, up a serve notes outstanding to the ex- that it "has now decided to estab¬
lish such rates of interest as will
good deal of your time, I should lent that they are not covered by
make it possible to transmit to the
like to try to bring my remarks
gold
certificates
should reveal
Treasury approximately 90% of
into focus. I would not want you
reasonably
well
the intent of
the net earnings after dividends
to gain the impression that I think
Congress in this matter.
of each of the Federal Reserve
monetary and credit policy is con¬
Had Congress intended to place
Banks for 1947." It says specific¬
trolling in our economic affairs,
in the hands of the Reserve Board
ally that "The purpose of this in¬
nor that monetary and credit pol¬
authority to use Section 16 to pay terest charge is to pay into the
icy combined with debt manage¬
any percentage of earnings of the
Treasury approximately 90% of
ment and fiscal policy have given
Reserve
banks to
the Treasury
the net earnings of the Federal
us the power to control economic
that the Reserve Board might de¬
fluctuations.

have

Board the extent to which it

decided to declare

have

The rate of interest

notes.

should

Board, that has
determine how
earnings shall be distrib¬
Congress might very well
Reserve

notes

Oct.
on

charges—

interest

the

primary
provision is to

this

Re¬

issued, to aid in

pressure

System

form

form,

of Federal

notes being

serve

in this

power,

volume

the

over

Reserve

1937," says, p. 183: "Tax

notes,

job. Yet I would
it is time for a simi¬

that

eral

(Continued from page 2)
under Section 16 of the
Federal Reserve Act, was to en¬
able the Board to exercise some

Reserve

to complete its
agree

Federal Reserve Board Out of Bounds Again

monetary commission such as'preceded the establishment of the
Federal

(3255)

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4604

165

Co.;

Charles

Kimm,

James
M.

Finn

A.
of

Sr. of Kimm

McDermott;
Adriance

Finn; and Joseph F. Reilly were
elected Class A members of the
New York Curb Exchange nom¬

inating committee for a one year
term at the final elections held on
the floor of the exchange, June
10th.

repealed in 1933, and
Albert G. Redpath of Auchinthe
subsequent treat¬
serve
banks to the
ment
of
earnings
and surplus closs, Parker & Redpath; Marshall
accordance
with any notions it under existing law. After stating S. Foster of Gammack & Co.; and
Conrad H. Liebenfrost of Stern,
may have—for
example, 90, 80, what
the
law
is — specifically,
Lauer & Co. were elected Class
or
50%—it could distribute the that all earnings above expenses
B members of the committee for
earnings in some other manner. and dividends are to be paid into
the
surpluses
of
the Reserve a similar term.
The fact that Congress levied a
Banks — the
Board then says:
The nominating
committe re¬
franchise tax of 90% on net earn¬
"Under
the
circumstances
the
ports to the exchange membership
concluded
it would
be
ings at one time does not mean Board
at least five weeks prior to the
that the Board is justified now, in appropriate for the Federal Re¬
serve banks to pay to the Treas¬
annual election in February nom¬
the absence of statutory author¬
ury the bulk of their net earn¬ inees for members of the board
ity and contrary to a law passed ings. v . ."
Just what justifica¬
of
governors, ' chairman
of the
by Congress, to exact 90% of the tion for its action the Board could
and trustees of the ex¬
net earnings and turn this amount find in this review of the law and board,

tribute

over

the

earnings

Re¬
Treasury in
of

owned

by the

law

was

discusses

earnings of the Reserve banks is
not
clear
to this
author.
The

to the Treasury.

The Federal Reserve

this

the

banks are

member banks of

country, and it is Congress,

change gratuity fund.
David

Board's discussion not only seems
irrelevant
pear

but

also

would

ap¬

that a review of the facts

McCormack

Greenspan,
and

Frank J.

Joseph E. Petta

acted as tellers of election.

THE COMMERCIAL & FINANCIAL CHRONICLE

(3256)

but,

in the next year or two, it will be

rather, that a firmer foundation
for long-run successful operation

impossible to create economic staif

tunities

Industry's Responsibility for Employment
(Continued from page 9)
its aftermath.
We are living to¬
day in

inflationary fool's para¬

ministrative

agencies as well as
the cooperation of both banks and

business.

diversified

government

itself

concern

try and the continued disorganiza¬
abroad, probably will prolong

tion

post-war boom, although this

the

Our ex¬

high price to pay.

panded commitments abroad, our

participation in
Bank and Fund, all

aid and

financial

World

the

help

Funds

supply of money.
The
gives Congress the
to "coin money, regulate

Excessive

countries

yield the largest
build for
prosperity as

just

stabilize

our

in the face of these
world-shaking forces which are
economy,

beyond the control of the ham¬
burger stand down the street, or
the lumber dealer in your town,

Detroit, or
General Electric in Schenectady?
Motors in

General

Can these firms really

ed to

operate

be expect¬

on an even

keel?

Governmental Expenditures
When

economic

private

activ¬

ity is operating at all time highs,
we
should
shrink governmental
activities

minimum.

the

The

that

government
should
hoard public works, improvements
idea

and

even

some

dur¬

maintenance

and

are

every

standing

peace,

the

military, not merely in
terms of reducing the tax burden

businessmen

among

buying would do something to re¬
duce them.

A refusal to accumu¬

late

inventory on a speculative
basis, both raw materials and fin¬

bility for this periodic inventory
accumulation.

Private Capital Construction

Private

business does

that every

not have

which

this

the

reduce

may

amplitude

conditions

boom

after

erates

incomes

major

enormous

and

prevail,

increase

which

and

over-developed

were

Industry," engages in

excellent

self-analysis of the causes of the
plight to which this industry was
A more
analysis
of
demand,
a
searching
examination
industry

by industry of mistakes as to ex¬
pansion, as to methods of financ¬
ing and related matters could do
a
great deal to mitigate depres¬
sion.
The only danger from such
an
industry by industry self-an¬
alysis is that over-caution might

wellmight

policies,

retard economic progress.

may

be regarded as dan¬

if all businesses, when

depression, drastically
the outlays for replacements,
new equipment and plant, this is
also dangerous, both in,terms of
the bankruptcy rate and in terms
of
the
political
counter-forces
a

cut

extreme

contraction

gen¬

Had
and

had better information

prompt statistics and
interpretation of statistics
in the 1920's, then more investors,
credit agencies, contractors, build¬
ing material suppliers and others,
would
have
been
apprised
of
more

better

over-expansion earlier. This would
the

encourage

long

view,

rather

upon

erates, as in the 1930's both here

than the short view and could do

and in Europe. By

much to mitigate

threatens to

expansion when others are ex¬
panding in response to a mere
speculative boom, the long-run
basis for steady expansion is more
thoroughly grounded.

the people, but also in terms
seeing what expenditures can
safely be delayed until some fu¬
ture date when private activity
move

lower ebb.

We.^are told that there are many
reasons why little can be, done in
this direction; if this is true, then
are

that

forced

Business

conclusion

the

is booming the
boom and is not capable of plan¬
ning its own expenditures so as
to have a contracyclical effect. We
should not accept such a defeatist
view, without the most critical

borrowers

especially

the

boom

threatening
to
reach
irrational proportions,
the government should generate a
substantial
surplus
of
revenue
over expenditures and retire that
part of the debt held by banks.
The
the

inflationary forces
enormous

and bank
the

The

fed by

their

reduction

owners.

the

spending and if ^skillfully handled
could

consumer

much

sustain

pros¬

perity.

important
power

Monetary Policy

fiscal (tax¬

ation and expenditures) problems

durable

goods

market

have

introduce

within
an

corrective factor in this

their

important
same

con¬

Credit
due

policies should avoid

expansion

any

line,

especially should avoid undue
pansion
in

of credit

many

lines

With different suppliers,
expecting to take delivery from
only one and cancelling the others
at the time.
Some persons today
boast that they have placed a half
dozen orders for

the normal relation of

sales

new

inventories

and

would help

other

cars.

information

statistical

Better

motor

new

the

each

distinguish be¬

tween such artificial

demand and

genuine intentions.

greatly
their reporting facilities

mprove

this

should

end

business

and

firms

furnishing
this type of information.
Unless
data from an adequate and repre¬
cooperate

sentative

number

firms

ex¬

and of other supervisory and ad¬

Conclusion

general

can

in
be

when

the

concerns

many

products

into

wartime

the

action

The

problem of economic sta¬
bility has been of concern to the
Chamber

number

companies Jbave

products during periods when

Its pub¬
lication, "A Program for Sustain¬
ing Employment," brings together

depression threatens, it may the basic suggestions of our Com¬
possible for many producers to mittee on Economic Policy.
mitigate or avoid declines in their
Government,
banks,
business
own operations. The way in which
management and labor, only with
the production and sales of radios the closest and most
sympathetic
mechanical

and

the

sisted

indicates

duction

refrigerators

re¬

depression in 1931-35
that general over-pro¬
general

during

major

depression.
By
analysis of market

skillful

conditions, greatly expanded pure
and applied research, and better
preparation for periods of greater
sales resistance, it should be pos¬
sible for many business units to
aid themselves, as well as the en¬
tire economy, to resist layoffs and

production cutbacks.
As

buffer

against impending

is possible frequently
research, develop¬
ment and market testing activities
in order to introduce new prod¬
accelerate

Price

peat,

cutting

threatens

depression

prevent

may

because,

situation

eral

important

cuts and thereby

the economy.
However, selective price and wage
adjustments on a more or less
continuous basis may do much to

further

paralyze

During

short-lived

the

booms,

excessive demand may

push some
prices and wages upward and out
of line.
When demand threatens
careful examination

recede,

costs and prices may in many
indicate
possibilities
of

cases

promptly tapping new but lower
levels

3 For

labor

from

war

our

extended

discussion

the

problem

see:

"Industrial

Relations

and

Perverted,"

Chamber

Commerce of US.A.

Bond Club of Cleveland

Anniversary Parly
CLEVELAND, OHIO—The Bond

demand

held

Cleveland

Anniversary
the

Club

history

its

25th

booklet, issued by
souvenir, contains
the organization to

date.

Pictures

taken

party will

sary

the

anniver¬

in the "Fi¬

appear

nancial Chronicle" of June 26th.

Wall St. Soft Ball

thereby

and

League Scores Reported
The teams
thai

Co.

league
their

ing

representing Josephand

the

each

the

Wall

New

Street

both

won

doubleheaders

the

The

week

York

Softball

games

played

dur¬

ended

,June 13th.
Exchange
defeated

Curb

Hirsch & Co. by 6 to 1 and 4 to
2
scores,
while Josephthal & Co.
bested Carlisle & Jacqueline 6 to
0 and 10 to 4. The Curb
Exchange

remains
games

undefeated
and

won

the

depression of the 1930's, in some
cases both wages and prices were

actually raised as volume declined
and
overhead costs had to be

with

six:

losses, while

record.

this week

smaller output. This

spread over a

Each business
should review constantly

self-defeating.

was

concern

Josephthal &

second

place with

other

Co.

Merrill
5

V.
to

and

bility rests upon organized labor.
the American people

fronted with

are

con¬

nightcap

Foster

Doremus

also

winning the

and

split,

opener

standings

week

the

follow:

LEAGUE STANDINGS

Friday,

sta¬

economic

for

played

DeCoppet & Doremus

of the

mands

responsibility

league

unions, and with wage de¬
highly contagious, a heavy

bor

Foster

The

million workers in la¬

one

the second 2 to 0.

Wage Policy
With

doubleheaders

while

Lynch, Pierce, Fenner &

high order of business
statesmanship and economic anal¬
ysis.

team

five and

Beane 6 to 1 and lost the

DeCoppet

Co.

Carl M. Loeb, Rhoades
won the first contest from

price
policies in terms of
counteracting
these
alternate
booms and depressions.
This re¬
its

June

13
Per-

Team

Won

New York Curb

Josephthal
Carl

demands backed by

Exchange

Co._

,833.

.667
.333

Rhoades

______

Lost centaga
0
1.000

Loeb,

Co.

Hirsch

arge

threats of strikes for

annual wage increases, eco¬
attained.

Co,

Foster

333

.333

DeCoppet & Doremus

.333

Carlisle

strikes and

.167

Merrill

Lynch,

Fenner

per

wage

General, massive

year.

movements across the board

demanding more than 2 or 3 % an¬
nual

increases

will

booming

nately

the

mean

highly

great responsibility

eadership
Dasic

the

instability.

partner

and

Board

labor
a

rests on union
of

in Hutchins & Parkinson of Bos¬

political,

undertake

reconsideration

economic

Constantine Hutchins,

and

boom

some

the

im¬

plications of the labor movement

can

Suspended by NYSE

ton,

because
is

Beane

Constantine Hutchins Is

alter¬

causing depression.

and

Pierce,

Jacquelin

Efficiency rises only about 2 or

profitable oppor¬

re¬

remove

—Frustruated

mitigate the tendency toward re¬
cession. In the early stages of the

for

that

can

fair trial.

Curb

markets.

clear

But to

the
society
these suggestions cannot be given
of

scourge

raise anticipa¬

may

of further

tions

This does

mean

just where it was
cuts,, and even more

the

before

unless

Anniversary celebration on Fri¬
day, June 13th. A special Silver

Policy

General price and wage
not

and counter-measures.

Club

quickly.

ucts somewhat more

when

the prob¬
The

solve

can

decline,
to

cooperation,

lems of economic instability.

foregoing analysis and suggestions
saturation of merely outline the broad issues

demand does not take place even

demand for established prod¬

begins to fall off.

the

Commerce

U. S. A. for many years.

movement

hastening the introduction

new

not

uidated.

power

experimented with the possibility

ucts

System

Because of its cohesiveness

and

the

Reserve

experience of
making
new
translated

goods

saturated.

never

re¬

ported consistently and promptly,
confidence in the reports cannot

Federal

for

less

nomic stability cannot be

Trade associations could

Products

whole

spe¬

at times
saturated,

orders,

Introducing New Consumer

This requires the lead¬

demand

orders,

ership of the Board of Governors
the

shortages,

periods, of

During

buyers frequently place multiple

un¬

simultaneously

quires

collapse.

be built up.

nection.

economy.

While monetary and

manufac¬

in which installment financing is

debt

would do much to temper private

larger

turing companies catering to the

deposits outstanding in

hands

selective

are

amount of currency

boom

rpake bank credit more

available.

ing of expansion which should be
financed by long-term capital. On
the other hand, in recessions and
depressions every effort should be

Prosperity
When

Borrowing

times to avoid short-term financ¬

made

Debt Retirement During

over-

Every effort should be made by

government

examination.

avoiding

become

subjected in the 1930's.

careful

whole or in part,
unemployment,
in
investment and expansion

which

hindsight, it
that certain types of

Association in its report, entitled:
"The Future Outlook of the Hotel

nearly

units

for

demand

while this would cut costs, it may

in the 1920's. The American Hotel

threatening

facing

been

many

While

also cut incomes leaving the gen¬

construction

experiment with the possibility of

This

have

demands

is easy to see

termine in advance.

ignoring,

union

prices and before

With the benefit of

being sustained.
But
"overexpansion," "undue"
"artificial" is not easy to de¬

business

accumulate inventory

current

society, free labor and free in¬
dustry will disappear together and
establish¬ other freedoms will also be liq¬

Information

capable of

growing

Better Statistical and Other

what is
or

retailers,

consumers,

at an

recovery

implemented.
This phenomenon
was responsible, in part, in 193637, for the premature collapse of
the partial recovery.

false
sense
of prosperity,
as when a
dozen
skyscrapers are built in
New York simultaneously. If sub¬
sequent contraction is to be avoid¬
ed, then ways and means must be
found for discovering the differ¬
ences
between artificially stimu¬
lated capital expansion and the
kind of expansion which rests Qn
demand

the

war,

give

may

causes

attempt

the
tendency toward overexpansion of
housing, commercial property, as
well as manufacturing facilities, is
strong. This expansion itself gen¬
as

business

appear

wholesalers and manufacturers to

of cyclical swings.

When

would

early stage reaches a "flash point"
when the unions, growing restless,
make demands for higher wages;

the power by itself to create pros¬
perity, nor prevent a depression;
yet it has a possible range of op¬
erations

eliminate this

Unquestionably,
labor
unions
have a partial but direct responsi¬

vidual business do?

gerous. But

item closely, including that

under¬

Better

the effect of these fluctuations in

argument, that
moving into an era of
what then can the indi¬

their

$37.5 billion for 1948 was a shock
to the people.
The Administra¬
tion
should
constantly examine

ac¬

Once

buying had reached
stage, contraction was

almost inevitable.

for the sake of the

ties

bone.

prior

the

aggravating factor.
All this suggests how difficult
it is to stabilize our economy at a
high level.. But let us assume

Strong,

The Administration's budget of

inventories.

disturbing element.
As a correc¬
tive, a special tax on inventory
profits has been suggested; but
because of
its complexities and
inevitable arbitrariness, it is of
doubtful utility.

established

such
a
program, now certainly is the
time when governmental activities

forward

certain

develop

due

ished goods, would

pand
these
activities
during
periods of reduced private activ¬
ity is of long standing.
While
there are many practical difficul¬
standing in the way of

means

ing periods of prosperity and ex¬

should be pared to the

this

not by itself prevent depres¬
sion, will at least not become an

such

little ridiculous

"business'

ask

efforts

for others abroad.

Is it not

expert talent,

part

free society.3 And
regimented

forced into a

are

durable goods may

cific

was

bility within

experience has greatly
the
manufacturing

war

ments.

may

sustained

own

well

all

In this way we

return.
our

their

direct

where they will

time

same

peoples

the

recession

cumulation

monetary system which, while it

may influence come of our
aid to other countries, every effort

encourage

aid

ways

are

should be made at the

the

1937

small

study

ex¬

gencies

Congress to make

our

running nearly $20 bil¬
lion annually, while our imports
are only about $8 billion. We may
be riding for a fall,
v
While the only gaip from for¬
eign trade to a nation consists of
its imports, it is important that
a
proper
balance, different for
every
country at a given time,
between exports and imports be
established.
While military exi¬
ports

with

our

present

The

(Art. I, Sec. 8.)
From 1929 to the depression-low
we
experienced an unpardonable
shrinkage of our money supply.
This shrinkage of bank deposits
greatly deepened the depression
Never again should such shrink¬
age take place, and now is the
time for

Inventory

Accumulation

the value thereof."

products

man-hours.

spent here and

are

the

export

boom at

underwrite the

home.

The

know-how

the

power

The strikes of 1946 in our coun¬

sacrificed

is laid down.

Constitution

Foreign Trade Policies

must

inextricably intertwined to¬
day, it is peculiarly the function
are

with

dise.

Thursday, June 19, 1947]

Unless

develop more responsible

leadership along these lines with¬

has

been

York Stock
of

three

was

suspended

Governors

Exchange for

months.

found

Mr.

the
a

the
New

period

Hutchins

guilty of having "vio¬

lated Rule 515 by failing to place
account

names

designations

oin

certain orders for certain accounts
over

which

had

discretionary

authority until after such orders
were

executed."

[Volume 165

Number

THE COMMERCIAL & FINANCIAL CHRONICLE

4604

The Employment Act and Economic
(Continued from
basic

purpose

tnat

this line of economic action affect

page

legislation

is to be achieved.
;

nation's

The Act is based

tion

the

reaffirma¬

on a

system

competitive

the productive

"private

enterprise"

and

fresh affirmation of the economic

attention

utilized

omises,

fully

the

resources

can

na¬

will, it

is provided that these same
people
shall
utilize
the
organizational

machinery of democratic

govern¬

ment so that

complementary pub¬
enterprise shall enable us to

lic

come as close as a

free, ingenious,
economically literate people

and

toward

may

"maximum

produc¬

Employment Act of 1946

and

live under the work with this

measure, the more our interpre¬
tation will center on the first of

its three terms, namely maximum
production. We might have max¬
imum number of jobs but
many
of them so reduced in time under
a

work-spreading

•

that

program

would not be having an ade¬
quate total work input. We might
even
have this large number of
jobs raised to a full-time basis

and, through lack of proper equip¬
ment or organization, be working
at
such low efficiency
that we
were still falling far short of max¬
imum production. But if we really
have

maximum

desirable

the

production,

amount

both

and

highly
employment

efficient

quality of
be going forward.

must

"maximum

power"
that is

too,

seems

that

incidental factor

accompaniment of maximum

pro¬

duction

that

than

state

be brought .about as a means

can

rather

securing maximum production
the years, which is the pri-

over
..

the

Employment

Act

and

the prob¬

lem of how to make it work.

The

Scriptures say, "Seek first the
Kingdom of God and all these
things will be added unto you."
To me the Employment Act says:
Seek

first the

kingdom of abun¬
production—the practicable

dant

maximum,

quantitatively

and

qualitatively, in the use of the
nation's
resources,
human
and
material, and all these other things
such as employment and purchas¬
ing power will be added unto you.
You

can't

attain

maximum

and

production

maintain

without

them.

statement of the

cur¬

rent drive to prove that the Amer¬
ican way of economic life can be

made

truly satisfying way for
the whole people is
accepted, what
does that mean on the
marketing
sector? Before I attempt to sketch
a few points in the answer I would
a

propose

just

say

that

question, let

word about

general—or groups
factions.

sectors

interests

issue

the

Economic

and

the

have to

reaffirm

gigantic war to what
be a long-continued
refurbishing of

This

peace.

marketing sys¬
tem takes place at a time when,
as I
have already indicated, we
are
trying to inaugurate a more
systematic and effective &vay of
co-ordinating all agencies within
our

na¬

tional
a

economy be looked at as
whole. From this time
forward,

our

goal

How must

paper:

maximum

national

production?
What

Be Expected

hearing

are

which is both

way

hensive and
thus

are

deal

with

economy as

compre¬

co-ordinated.

mobilize ourselves
the

probJexMs

the

such, the test question

for any agency is not:
we

"What can
get out of it?" but "How will

deal

great

saying that market agencies
gird themselves for a greater

service

than

known

ever

the

past.
With this general proposi¬
tion, I am, of course, in full agree¬
ment.
I would, however, like to
this important role interpreted
in terms of efficiency of economic

see

service,

not merely quantity
vigor of commercial effort.1

Marketing, of

consists of

course,

two

quite dissimilar parts: one,
physical handling and the other
that rather ill-defined array of
functions
known
as
sell'ng.
It
really should include commercial
and institutional

the

buying also since
office

procurement

and

pur¬

chasing agent are part of the ma¬
chinery of distribution quite as
much

the minions

department

bing,

the sales

the wholesale, job¬

retail firm.

them

the

de¬
guiding

consumer

people

our

and

most

suitable

and

assembling, packaging, storing, and
delivering goods, I am not much
concerned.

technical

These

jobs.

lie

They

well

the proven abilities of our

people that I

they will be
If
wastes

sure

handled

efficiently.
in,
such
as
burdensome
cross-hauling charges, excessive
storage costs, or inordinate pack¬
aging expense, they are due, not
so
much to poor technical per¬
creep

formance

failure

skillfully the economic
cost-price relations.
What

the

price

shall
will

issues

discuss
relate

interrelated

strategy,

handle

with

you

exclusively
problems of

interpretation

the

selling function, and the im¬
pact of selling costs on the actual
too

many

to perform

the function of trans¬

ferring ownership from the
the

less

even

consumer,

than

and

real

shall

purchasing

income

pro¬

maximum

for

with maximum

—and

pro¬

power

consumers

employment

disproportionately

standard of

labor force

our

living with

any

low

lower

level of employment.
I have

seen the statement made
business paper within the last

few. days that recruitment of two
million salesmen is required.

tainly
and

companies

many

staffing

their

training

sales

ing old workers

for

re-

departments

new men

task of selling a

are

Cer¬

retrain¬

(or she)

must

men

lovers.

poor

that they

must

satisfy

ourselves

most of this effort is

that

really being
toward
thus

usefully expended
serving the consumer rather than
being frittered

away

in proselyting

each other's customers

within the

or a shrinking area of final
consumption.
We
must
satisfy
same

ourselves

too

this

the

that

amount of

consumer

overcome

In
if

needling to

dangerous propensity

woman's heart.

to crude dis¬

true

This

also

current

thinking on the place
marketing in our economic re¬

conversion is not tinged too much

Are

back

too prone to

we not

the

into

comfortable

development

company

have

familiar

been

than

that

with

rather

facing robustly the changes

that

will

have

made

American

to establish a more fully and
steadily productive economic sys¬
tem in

It is

the future?
a

matter of

knowl¬

common

edge that during the war, the per¬
centage of national effort that
into

went

marketing

mously reduced. In

was

enor¬

seller's

mar¬

ket, the cost of,finding,>stimulat
ing, or directing demand prac¬
tically disappears. To some extent
this drop is fictitious since a cer¬
tain

effort

is simply
who now
bears the cost of trying to locate
and "land" a seller. Insofar, how¬
amount

shifted

ever.

the

buyer,

demand

war

that

meant

Uncle Sam became the only buyer
and

his need for the utmost speed

output

for

called

highest

the

possible standardization, merchan¬
dising costs—even manufacturing
absolutely
reduced
merely shifted from the
market to the procurement agen¬
and

not

cies of government.
But

all

that

He is prone to put more and more
force into high-pressure salesman¬

ship and to overlook the subtler
problem

of gauging

price

the

power and basic
of the consumer.

prefer¬

now,

It has become pretty well estab¬
in American business that

competitor

effort, pile

can

pour

sales

advertising

expense,

and

develop the most novel and
glamorous finish or package and
be strictly within the competitive
code.

But

when

starts

prices,

he ,is a "chiseler"
renegade from his lodge.

cut

and

the

pay

individual
in

narrow

the

their

all

the

wrapped

bundle?

consumer

with

user,

time, place, and

utilities

sion

final

posses¬

the

The other side

of the question is how high a de¬
gree of efficiency can our market
agencies attain, or how low a cost
will they exact for their contribu¬

tion to this end product?
There are two ways of describ¬

ing

the

marketing

situation

problem that lie ahead of
is to call it
other

say

and

One

us.

buyers' market, the
it will be a highly

competitive market. They amount
to pretty much the same thing.
But

what

you

buyers' market?

about

Or how

can

you

make the competition of a highly
competitive market beneficial and
not

wasteful?

one

which

A
is

sellers'

market

abnormal

and

the

they

economy

right athwart the

for

efficiently from producer to

con¬

million

men

But

sumer.

and

work,

two

are

women

have

shall

fewer

many

allocated

that

just that
applying

persons

their labor to enlarging the stock

goods to be distributed. Here
of the sources of discrep¬

one

between maximum produc¬
real income that must,

ancy

and

tion
in

the

command

judgment,

thoughtful attention of this asso¬
ciation and of marketing men and
marketing agencies generally.

Postlethwaite, Antes

Lundborg Partners
CALIF.—J.

FRANCISCO,

SAN

Postlethwaite

Russell

Law¬

and

C. Ames will be admitted to

rence

lie

taining maximum production and
the highest real income for our
people as a whole. Price reduc¬
tion

in step with every techno¬
logical and organization improve
ment,
however, moves directly
toward that

If
uct

tiated

goal.

post-war industrial prod¬

our

were

staple

undifferen¬

character

and

through organized
markets, I would have

great deal

of confidence in the way

personal
would

forces

work

the "im¬

the

matters

when either

moved

market'

out—except

supply
factor got frozen for

demand
time. Mar¬

or a
a

keting effort would naturally focus
almost entirely on expediting the
flow
of
goods from producers,
often scattered, through the most
direct and economical channels to
ultimate consumers. But even in
normal

times, the modern indus¬
,

trial product is a highly differenti¬
ated array of goods and is sold by
a

most varied

merchandising sys¬
It operates not on a basis of

tem.

fungible

competition

supply

Lawrence C. Ames

Postlethwaite

commodity

but

partnership in Irving Lundborg &
Co., 486 California Street, mem¬
bers

New

the

York

San

and

Exchanges,

Stock

Francisco

Both were formerly of¬

July 1st.

ficers of the First California Com¬
pany.

National Federation of

Analyst Societies
Representatives of the Financial
Societies
operating
in
Boston, Chicago, Philadelphia and
New York, met last week as guests
Analyst

the

York Society of Se¬

New

Analysts, Inc. and organ¬
ized a national organizat'on to be
tic competition nn which
every
known as the National Federation
device for the differentiation of
of Financial Analyst Societies.
'

under arrangements of monopolis¬

product

should

not

should

one

What I

try

that

any¬

out.

root

saying is that it, like

other

any

proposing that it

abolished

set

economic

Woodworth

Kennard

some

part of market demand for
each particular seller.

lines.

curity

of marketing service is

invoked to attract and hold

Eaton

Incorporated, Boston,,
elected President; Lucien O.

Howard,

was

Hooper

E. Hutton

Co.,

New York, was named Vice-Pres¬

ident, and Richard H. Samuels of
Continental Casualty
cago

elected

was

Co. of Chi¬
.

Secretary-

Treasurer.

ar¬

coordinate

Federation will

The

rangements, has its peculiar diffi¬
culties, weaknesses, and dangers.

the work of the Societies working

With the great rush to reconstitute

marketing facilities and to see
that they promote the market ab¬

extend

our

sorption of our enlarged postwar
product with the greatest certainty
and completeness, it seems to me

highly important that marketing
men
re-think their responsibility
and their opportunity in serious
contemplation of the meaning of
the.

Employment
mean

tures
feel

not

terms of

struc¬

new

changed practices but I do
it does not

sure

"doing what
Let.

comes

not

mean

merely

naturally."

multiply

not

the

consumer

nomically; let

cities

Gohu & Torrey

Opens
Branch in Los Angeles
ANGELES, CALIF—Cohu

LOS
&

members of the New

Torrey,

York Stock Exchange,
a

have opened

branch office at 634 South Spring

Street

under

admission

Sill's

Mr.

the management of

Sill, resident partie.;.

previously

was

the

reported

firm

the

"Financial Chronicle" of May

29th.

advisers who confuse his mind and

and

expects

yet represented.

ways

healthy enterprise system is one
in which producers turn out prod¬
ucts that they believe consumers
want and for which they will trade

and

membership

its

Charles

so-called

cities

various

to know just what that

presume

win

Act.

tions.

market

force

of at¬

purposes

that waste his time in fighting off
a horde of solicitors and technical

normal

marketing

our

and

service

The

order to operate the whole system

when

run

be found

only in periods of deficit
financing and inflationary condi¬

be very briefly summarized. Per¬
lion

of the indi¬
But from the stand¬

vidual firm.

point

seller

short

going to change in its basic out¬

delivered

perspective

marketing agencies
render by way of attaining maxi¬
mum production in terms of
goods
can

point I have sought to
your attention may

one

comment

These

Now this general situation is not

service

efficient and profitable basis.

The

added costs may and normally do

is: How perfect

accept¬

consumer

and of producer operation on

lished

coveted

behind

the question

and

com¬

pete for the favor of the market.

are

to me

seems

the

businessman in his effort to

looked

word, I sometimes wonder

told

of wealth or domineering
personality instead of practicing
the suaver ways that subtly win a

this disposition of the labor force
we

often

are

prone

are

bearings of

ance
an

haps we do need to add two mil¬
said

are

plays

ence

of the market place.

fying them.

concrete and

are

by the competitive suitors

American

the

simply

wooed

buying

But before

that

most economical sources for satis¬

costs—were

As to the technical processes of

duction

lapse

one

approached

stimulating the

part

pattern of economic behavior and

marketng functions after the dis¬
ruption of the war years. Every¬

through integrated study and ac¬
tion. In; this
approach, the needs,
the; aims; • and the responsibilities
of capital and
labor, of industry
and agriculture, of city and coun¬
try, of producer and consumer
shall, so far as is humanly possi¬
with

large

cusiomer

which

—

and

what

buy

"The

right"

always

too

quality.

these days about the restoration of

achieve

ble, be considered and dealt

sales

new

salesmen may

with that easy "back to normalcy"

Should

Marketing?
We

the

sires

marketing be
organized and its responsibilities
be discharged if we are to reach

ducer

shall

and

to save.

functions

it is intended that the welfare of
nation

salesmen

Two million

question of
the

standard of living attained.

the

con¬

techniques.

needs

take

that

wdn

with

brackets; with changed
tastes and possibilities for many
people to gratify new tastes if we
really
utilize
our
productive
power in the future, we shall need
more

means

unaccustomed

income

the national economy. It is in this
context that I raise the central

advisory labors of the Council of
Advisers

and

hope will

Economic

guise

our

therefore

Report

reappears in new

now

business relations in
the light of our transition from a

It is of the very essence of the
President's Economic Report, the
Joint Congressional Committee on

not

within

If such

goods;

and

shifted

labor force to allocate to the task

what criteria for approval
or
blame could properly be ap¬
plied to the men or agencies that
operate in this area.
The whole

mary purpose of those who framed
who must wrestle with

our

econ¬

different

and

consumers

that function should be performed

must

purchasing

within

goods
sumers

free

where he likes.

far greater than any we have ever
distiibuted in the past. With more
new

pleases, but also that the buyer

shall

and just

because

predecessor bill was known as
the "Full Employment"
bill, I am
inclined to think that the longer

divisions

businessmen,
and the consuming public, there
has been debate, both long and at
times acrimonious, as to just how

realign

Although this Act is known

relation¬

operative

power."
the

focuses

Among academic

economy.

tion, employment, and purchasing

functional

the

This

ships and the promotion of inter¬
related economic efficiency.
Marketing is one of the major

responsibility of government. That
is, after private enterprise has
tion

functioning of the

business?"

Outlook

(3257)

then

trade

workable

find

the

ones

advantageous
terms.

Our

who

will

at least

free

enter¬

prise system demands not merely

the expected
that the producer shall have the
national product .chance to produce what and how

burden his time rather than really

helping

him

select

Nobles With Scheimer

better

Special

product and procure it more eco¬
us

not cumber

pliances with features that only
"talking points"
to
con¬
fuse the buyer rather than serve
the actual user. All these things

GRAND

ap¬

Nobles

Financial Chronicle

The

RAPIDS, MICH.—Elmo
has

been

make

add

to costs and thus

put sand in

staff

John

added

Schermer

the

and

Company, Grand Rapids National
Bank

Building.

THE COMMERCIAL & FINANCIAL CHRONICLE

(3258)

Thursday, June 19, 1947

Census

The State of Trade and

Bureau
reports, showed
an
increase of approximately
1,500,000, lifting the total working force in May to 58,300,000.

Industry

(Continued from page 5)
and,

in past months, demand for refrigerators, freezers, and

washing machines continued unabated.

production in the United States and Canada was
hampered somewhat last week by labor disputes, model changeover
operations and material shortages and again failed to reach the
Car and truck

100,000 unit mark, states Ward's Automotive
of 98,499 for last week, and

Reports.

98,471, against a revised figure
comparing with 50,206 vehicles in like

week

times

Failures

$5,000

than

class

the

third

with

compared

week to

consecutive

sponding date

$6.09

stand at $6.12 on June

Grain markets

previously been postponed, "The Iron Age" notes. Demand
from oil, water and gas companies is at an unprecedented high with
small chance of pipe requirements being completely met for at least

which

begin in June, had
partly becausethe Ministers of the provisional,
Government
are
too
busy, and
to

active in the past week and prices,

were more

Corn was the feature as prices rose sharply

ing 1946 period.

first

fol¬

istan

scarcity of offerings in the cash market.

Steel output, according to the above trade authority, should re¬
around

96.5%

until

mills

steel

forced

are

definite

make

wheat reached substantial proportions but
downward under pressure of hedging sales, after

coal operators and the United Mine Workers.

sales dropped off after early

The American Iron and Steel Institute announced
of this
of

week

the

week

one

of the industry will be

beginning June

96.1%

ago,

Monday

This represents a

16, 1947,

month

one

futures market

95.8% of capacity

which

compared with 96.9%

and 84.2%

ago

decrease of 1.1 points

year

points

ceding week.
The
steel

week's operating rate is equivalent to

ingots and

castings compared

tons

month

one

ago

1,676,400 tons of

1,695,700 tons
1,483,900 tons

and

one

There

year

PRODUCTION 16.7%
Electric Institute

Edison

The

ABOVE

YEAR

Volume consisted

that

reports

RETAIL AND

of retail trade.

This

was

increase of

the preceding week, which included
and

70,619

cars, or

70,364 cars,

8.5% above

Prices
after

1.8%, is shown.

level

noted in

were

active

last

week

but

previous weeks continued to he apparent.

evidence of

slackening in demand but buyers

ing their orders to immediate needs.

There

were

OF THE

The volume of sales in the

Following moderate selling

mid-week

came

in for

Monday of last week the market

sharp upward revision in prices which
points.

lifted better stocks by from 2 to 8

view

ticipated

of the fact that all

in fhe

advance

the

sections of the

market's

big board

par-

improved tone could be

interpreted in the light of

a more optimistic outlook by traders
regard 4o the prospects for business and industry in the

future.

On Monday of this week President Truman did what the

trading
fraternity expected he would do by vetoing the much discussed tax
bill.

The House sustained the President's veto

TOTAL
J

the

following day.

EMPLOYMENT IN MAY AT 58 MILLION

The number

of persons employed

pick

dollar

week

was

between April and May, the

good

retail

trade

for

the

ing
.

down

ended

cial

the

ordering generally was

last

improved

dal

j
-

sales increased by 11% and for the year to

date

by 11%.

in New York City
up fractional gains in sales volume above last week with
estimates placing turnover at 5% ahead of last year.
According to the Federal Reserve Board's index, department
store sales in New York City for the weekly period to June 7, 1947,
increased 4% above the same period last year.
This compared with
an
increase of 15% in the preceding week.
For the four weeks
ended June 7, 1947, sales rose 9% and for the year to date 10%.
As

chalked

result

Father's

Day retail

stores

currency

between

various

and whether the
system will oper¬

innumerable

then

The

finan-'

links-would

commercial

and

even

difficult and pain¬

ful operation.

Should- the Indian

States embark

on a

iiomic

ism

Department store sales on a country-wide basis, as taken from
the Federal Reserve Board's index for the week ended June 7, 1947,
increased 7% above the same period of last year. - This compared
with an increase of 12% in the preceding week.
For the four weeks
ended June 7, 1947,

possible to maintain a

union

severance

. -

Deliveries of many

inby

both sides.

ate all over the sub-continent.

holiday

accounts of all sizes.

of India,

parts

after slow¬

production levels remained steady.
An
creasingly large percentage of sales were being financed
credit and reports indicated that payments were slowing

items

it will

above that of the

shortened week.
Although
restricted to immediate needs in the week,
above that of the previous week and con¬

its

It remains yet to be seen whether

same

from

Calcutta

center

the grave detriment of

year ago.

The par¬

the separa¬

natural agricultural hinterland, to

customs

week

tion of the industrial and commer¬

strong.

estimated to be from 6 to 10%

...

capped by her lack of industrial
and financial resources.

tition of Bengal means

volume

partition of India is an ideal
Far from it,
All that
be said in its favor is that it
is a necessary evil. Its disadvan¬
tages are fully realized in London.
In
particular it is feared that
Pakistan will be gravely handi¬

week.

•

can

of rationing to all but industrial
vegetables became more plentiful,
Dairy products were easily available.

tinued moderately above that of a year ago.

recouped.

•

the

and

seasonal

wholesale volume rose

STOCK MARKET

was

arbitrator.1

solution.

lower supplies

Activity increased in wholesale centers last week

was

The Stock Market last week took another big step forward and
chalked up the fourth consecutive week of advancing prices.
It" is
also worthy to note that all of the losses sustained in the previous
were

same

restrict¬

with

The

caution

slightly above that of the previous holiday week.

was

THE COURSE

month

during the

slightly above
the

Sugar

is
of

Nobody pretends that, from an,
of view any more
than from any other point of view,

the removal
fruits

fresh

was

Wednesday

centers

output.

she

unless

apart,

assist in the capacity

„

continued to increase
Buying of sporting
goods, garden supplies and summer furniture was seasonally
heavy.
Automotive parts and accessories sold in good volume

year ago.

Wholesale

week

consequence

It
the

economic point

The volume of sales of durable goods

summer

sales volume

week

demand for hard goods remained

used to maintain

were

mediator

in apparel buying.
Men's light¬
weight suits, slacks, and straw hats sold in increasingly large vol¬
ume.
With the approaching vacation time, women's resort wear was
eagerly bought.
There

in full swing and stores
offering goods in greater quantities and styles than a year ago, retail
sales volume moved upward during the week.
Promotions and markdowns

rose

stand

asked

continued to be somewhat above last

Memorial

frozen food sales declined.

1946 week, according to the

SUMMARY OF TRADE

that of

meats

some

reduced

users.

This does not include mills
producing newsprint exclusively.
Paperboard output for the same
week was 98% compared with 98% in the preceding week and 96%
fpr the corresponding week a year ago.

buying for the

the

supply following

Paper production in the United States for the week ended June 7
104.4% of mill capacity, against 105.6% (revised figures) in the

consumer

will

full business

high and sales volume
during the week despite indications of some price resistance.

rose

PAPER AND PAPERBOARD PRODUCTION ABOVE YEAR AGO

With

Sales volume

that

inconceivable

almost

parties could reach an agreement
this question. Yet some agree-'
ment must
be reached.
Britain

ABOVE WEEK AGO
a

On,

the assets and lia¬

are

....

8.5% above the corresponding week for 1946.

preceding week and 104% in the like
American Paper & Pulp Association.

Food prices generally continued to be

the Memorial Day holiday,

Compared with the similar period of 1945, an increase of 16,089
cars, or

type|7were more

weather and

simplicity itself -com-,

bilities of India to be divided?

year's level.
Extensive advertising campaigns were undertaken to
help spur buying.
Clearance sales continued to be numerous and
mark-downs occurred in many items.
.V

the Association of American Railroads

cars,

wool

centered chiefly in the worsted types.

of better

will

what basis
raw

week, over-all retail volume for the week rose slightly above that
of the previous week, Dun & Bradstreet, fnc., reports in its summary

1947, totaled $900,747
announced/

pared with the problems raised by,
the economic disentanglement.

mostly of odd lots to fill out existing orders.

the influence

Indian
point of
political

the

disentanglement is bound to be, ]

Inquiries in woolen

was

question of

cents per pound, up 111

of this year.
"
pick up in activity in the Boston

WHOLESALE TRADE

Reflecting

RAILROAD FREIGHT LOADINGS RISE UP 8.5% OVER 1946
Uar loadings of revenue freight for the week ended June 7,

some

but interest

numerous

AGO

the output of elec¬
tricity increased 4,701,992,000 kwh. in the week ended June 14, 1947,
from 4,635,218,000 kwh. in the preceding week. Output for the week
ended June 14, 1947, was 16.7% above that for the corresponding
weekly period one year ago.

was

to the

from an economic
view,.
Difficult as the

good volume of business booked through the third

market in the past week.

ELECTRIC

prices and

unscrambling

eggs

Demand was stimulatedjiby reports
stiffening jbaugray goods

week earlier.

This leads

Spot cotton qii the New

months.

crop

Exchange closed at 37.74

and fourth quarters

week

one

ago.

was

new

the

aiMj ^widened its

points in the week

responsibility.

The

thel July contract

tightness in

far

the matter

concerned,

Indian

from textile markets indicating a further

1,681,700

ago,

over

100

amount

pasffweek.

steadily during the

featured

than

the

over

York Cotton

pre¬

one

was

rose

premium

ago.

1.1% from the

activity.

Cotton prices advanced

new

whole, and the division of the
agreed upon between the
States is a purely Indian

erratically during the week.
Oats followed corn and
prices moved up despite the closeness of the new crop~harvest. Flour

operating rate of steel companies having 94%

steel capacity

for the
'

the

worked

has to be negotiated with India as

fluctuating

prices

kind

some

Hindustan.

and

Britain

Government buying of

plans should the coal miners fail to return from their vacation on
July 7.
The probability of a "no contract, no work" strike is in¬
creasing as valuable time is lost without wage negotiations between

form

authority representing both Pak¬

main

postponed,

partly because it will be necessary

lowing reports of delayed planting due to adverse weather and a

the next two years.

were

•

except for wheat, moved higher.
Sales volume on the Chicago
Board of Trade was more than three times that of the correspond¬

the

to obtain would have been unsat¬

Bradstreet, Inc., closed at 256.76 on June 10, as compared with 255.71
June 3, and with 195.79 at this time a year ago.

which had

sell,

isfactory. As it is, they now may
prefer to stay in India, at any rate
until they are in a position to
dispose of their holdings at a lei¬
surely pace and at a good price.
The negotiations for the fund¬
ing of Indian sterling balances,,

the corre¬

attempts

prices they would have been able

This

10.

such

many

until the hard-to-get items have been built up.
Industrial
construction has picked up recently with some jobs going forward

be made

has

war

capital

owing to the uncertainty, to¬
gether with the competition of

SUCCESSIVE RISE

The general price level registered a slight gain in the past week,
largely reflecting a stiffening of prices for farm and -food products.
daily wholesale commodity price index, compiled by Dun &

steel, continue to find these inventories
no complete use of these stocks can

civil

the

anxious

The

result that

raised

enterprise in India were very
to realize their holdings.

corre¬

DAILY WHOLESALE COMMODITY PRICE INDEX HIGHER

ports, would he far greater than at the present time.
Large consumers such as automotive companies, while maintain¬

point of view,

And

week earlier, and with $4.21

value
and the potential yield of British
investments in India.
Owing to,
the
uncertainty of the outlook,
many Britons owning investments

<'.

year ago.

British

absence

greatly

irregular trends in the past week.
higher as against ten declines, the
price index, compiled by Dun & Bradstreet, Inc., rose

wholesale food
for

scale.

gether removed.

Food prices developed highly
With eleven commodities moving

survey

large

important,

materially mitigated if not alto¬

this week

in the

equally

the
paralyzing effect of the uncer¬
tainty on business has now been,

year ago.

increased

times the eight occurring

ago.

year

From

FOOD PRICE INDEX SHOWS THIRD

indicates that major steel com¬
panies are only placing orders on their books which they know can
be completed within the steel mill production schedules.
Were all
bars to be let down incoming steel order volume, the magazine re¬

stocks of

What

previous week, declining from 20 to 9.

some seven

sponding week

tremendous

reconstruction

reported.

losses

starting without

handicap imposed on
by the necessity of physical,

them

with four failures in this size

with

from 46 to 57,

easing in steel products by July 1.
Some minor soft-spots have developed in recent weeks but th£se
are offset by the overall strong requirements from other steel con¬

unbalanced with the

chance of

major

This compared

drop in steel ingot output because of the demand factor is
expected to take place much before the first quarter of 1948, if then,
according to "The Iron Age," national metalworking weekly.
This
strong surge in steel buying which has been maintained for months
on end has confounded some observers who had expected a definite

ing

were

half the number in the

No sub¬

stantial

A quick

totaled

unemployment

change appeared in the total failures registered
during the week, considerable fluctuations did occur in the size
and type of concerns going out of business with loss to creditors.
Small failures involving liabilities of less than $5,000 fell off to
While

HOLDS AT HIGH RATE

expected decline in steel activity is months away.

have

May

industrial failures
Dun & Bradstreet,
failing, however, continued to be over five
year ago.
In the comparable week of 1946,

Concerns

numerous

only 12 failures

plant.

suming customers.

ended

insured
6% from the previous week.

Inc., reports.

difficulties hindering ouerations noted by
the agency were the continued strike of the Foremen's Associa¬
tion of America, which indirectly hurt production at Ford's Rouge

The

E
(Continued from first page)
damage the new Indian States will

In the week ending June 12, commercial and
remained at 66, the same as in the previous week,

Among the labor

STEEL DEMAND

the

1,950,700,

136,682 in the corresponding week of 1941.

week last year and

that about 1,090,000

reports

BUSINESS FAILURES SHOW LITTLE CHANGE

output is estimated at

Total

further

ployment the month before.

SLIGHTLY IN WEEK

AUTOMOTIVE OUTPUT TAPERS

Unscrambling

of the gain was in
agricultural employment, which was in a state of seasonal ex¬
pansion, but even more notable was the increase of about 500,000
in non-farming work as this reversed a decline in factory em¬
It

nationalism

then

policy of eco-;"
and

isolation¬

difficulties,

the

become materially

However,

elimination

would

aggravated.

face

the

reduction

the

collapse and

immediate danger of

chaos, all disadvantages and dif¬
ficulties disappear in

Difficult
ble the

tion,
major

their total destruc¬

eggs,

which

significance.

it will be to unscram¬

would

disaster,

been obviated.

have been a-

has

fortunately1

.Volume

165

Number

4604

THE COMMERCIAL & FINANCIAL CHRONICLE

Foreign Aid Policy

(Continued from page 6)
surplus in our free economy is to
raise prices.

From that

get

dangerous spiral of increased costs
of living and
wages.

To appraise

Situation

present national

our

situation, it is

necessary to exam¬
ine our experience in
the
two
years since the war. In so
doing,

many debit and credit items must
be estimated.
We must estimate
the exports, including army sup¬

plies to foreign civilians, and we
must estimate imports of the last
months of the present fiscal
year.
Until full data is available many
months

hence,

the

given
illustrative

sums

Our exports of goods and serv¬
ices in dollars were about as fol¬

(In billions of dollars)

1945-46

Exports
Imports

have

loans

7.7

6.3

7.8

amounts

these

since

the

war

lows:

loans

and

years

about

was

fol¬

have

provided

about

$4.5

billion

in gifts from our govern¬
through relief. We have pro¬

about

$1.5 billion in gifts
eitizens for relief and by

our

remittances

way
of
abroad.

relatives

have

billion

Import

provided

about $5.5
by government
including the Exportcredits

agencies
to

Bank

the

loans,

World

subscription

Bank

the

and

Sta¬

bilization Fund.
Loans by these
institutions are, in the final anly-

sis,

largely

dollars and

for

drafts on American
dependent upon us

are

resources

maintain

their

operations.
We
have
provided
about $1.5 billion in private cred¬
its and loans.
Thus

have provided

$7 billion in loans
of

in the

credits,

or a

$13

billion. The differ¬
between these amounts and

ences

gifts

and loans

are

immediate

taxpayer.

The

burden

goods

the

furnished

under loans also must be paid for

immediately while the repayment
is

deferred for years.

This has

35%

free

nation

that

long without. impairing
its productivity.
To pay .for our imports and to
satisfy the probable gift and loan
commitments already made for the
next! fiscal

the trade deficits given above are
no doubt accounted for
by draw¬

lumber and
our

present prices, we would need to
export at about the same ratio as

$14 to
$16 billion annually of goods and
years

The

eign

most
of

Relief

definite

nations

test

the

ability to aid

our

whether

for¬
have

over-exporting our resources
during the past two years, and
thus unduly
straining our econ¬
omy.
For example, we have ex¬
ported gigantic amounts of agri¬
cultural products.
During the past
months

the

index

living has advanced

20%.

Increases

cost

our

than

the

cost

agricultural

products
were
re¬
for about 70% of this
This
has
contributed

sponsible
increase.

greatly to set in motion the infla¬
tion spiral
of increasing wages
with

good
and

increases in prices. 'A

deal
waste

ruptions in
these

and

exports

Other examples
of

be necessary to re¬
world, we cannot ignore

consequences.

Possibilities

Increasing

our

could be cited.

have

been

possible rail¬

own

way, factory ;-;and housing recon¬
struction. Sorfte part of the rise in

prices of these materials is due to
exports.
risen in

Our

Effective

So^jnuch

have

prices

thepjonstruction indus¬

tries with the Accompanying wage

certain

are

credit commitments to foreign

ous

nations

July

1947,

not
included in the above. They al¬
ready amount to over $5,000,000,©00.

are

We should add further prob¬

able

loans

gifts

and

expected

$1,000,000,000.

private
And

must add unknown further calls
from the World Bank and Stabili¬

zation

Funds.

There is also
of the

further liability

United States in the shane

foreign deposits in Ameri¬
banks, including ear-marked
gold and foreign ownership of
can

American securities.

gate

least

at all

prepared to
withdrawal.
Some

meet,, their
to

exports

for

ume

thus increasing the total vol¬
of exports required from

And! to all these commitments and

liabilities

must

the

ex¬

ports'necessary to pay for our im¬
1 :"

one

our

international

our

commitments in

loans, foreign deposits, and invest¬
ments
and

returns

the

has

ext$

been

But

United

other

from

States, etc.,

hand

probable

previous loans

and

due

cannot

not have been

''T||

conclusion

seems

refutable tha,t<as the result of

ir¬
our

rate of

giving.And lending we are
over-exporting goods and cannot

starving people. And
be called upon to do it
again unless there is a world in¬

as en¬

make

effective

aid

our

buy elsewhere than in
With

our

pres¬

requirements for currency and
bank reserves, and to cover the
very large foreign demand depos¬
its in our banks, it is
necessary
that we hold a large stock in re¬
The amount of gold that we
have free of such necessities is not
serve.

this

material

situation.

Increasing Imports by Stockpiling

(2)

One proposal is that

import more goods and thus

diminish

the

amount

gifts and
loans necessary to furnish. This is
a very minor help in the immedi¬
ate

situation.

world

help

materials

the

into

It would be

world
the

import

United

States

which are needed elsewhere.

would

which

Nor

to import goods
ourselves produce eco¬
nomically. That would create un¬

help

in the United

States

productivity.

our

is, however, a method of
increasing
Gur
imports
which
should have serious consideration.
We could import and
national

those

and

resources

stockpile for

defense many commodi¬

ties, both those
in

do not produce

which

our

natural

being depleted. We
have enough of such re¬

not

are

sources

(5)

assure

at s&jch a rate with our
production and consump¬

present

without

further

the

cannot

stability.

estimate

curtailment

how

much

and

exports,

plus in agriculture and other ma¬
jor commodities.
'
While

the

that

V|vorld situation
we

undertake to increase

tivity

decrease

goods,

reconstruction
of

our

modities

national

$50

our

consump¬

proposals

Billion.

ticability of these
present
be

have

been

expansion of loans by

rate

obvious.

com¬

structure

and

receiving commodi¬
instead of obligations.

ties

Re-establishment

War-time

The imprac¬

ideas with

production

(3) Another proposal is that we
re-establish wartime control meas¬
to increase

ures

reduce

our

thus increase
more

our

goods.

productivity

consumption

our

fact that

services

and

seeming

war¬

of the

over

our

must

years

exported in goods and
$15 billion in some
in addition to many

supplies to our armies.
must remember that war-

purpose

production

was
greatly
consumption re¬
through war-inspired pa¬
triotic impulses.

expanded

and

stricted

The
trols

restoration
would

require

lies in cooperation

foreign nations in the political
obstruction

The

Government

the

Soviet

has, during

peace

the

through

support
of
occupation
and
relief to
starvation

armies
which

would

otherwise have

not

been required.

However,

these

con¬

again

of totalitarian economy

American

people

are

can

solved if

tion

their part to build back
productivity, and if we act,
on
our
side, with sense and de¬
votion in this great crisis of man¬
on

their

kind.

form

which the
not likely to

's
Cyrus S. Eaton decries restrictive
labor legislation and suggests
muzzling NAM. Praises restraint
of John L. Lewis.
article, captioned "A Capi¬
Labor," in the cur¬
issue of the University of Chi¬

talist Looks at
rent

Review," Cyrus S.Eaton,

cago "Law

v e s

tment

banker

apparently expect little coopera¬
tion from that quarter.
But if there were full mutual

and

industrialist of
C1

our

land,
Ohio, advises
capitalists
to
placate labor,

expenditures to more
constructive channels abroad.

not survive

cooperation

tions,
dens,

and

dead

other

the

lessen

divert

much

na¬

bur¬

our

loss

For

"since

can¬

instance, cooperation in the

without

support of la¬

zones

Japan

hibitions

Germany

abolish

the

their productivity and
ports, and thus vfauld greatly
crease

duce

the drains upon
other

of their

in dustrialists

toward
and

re¬

productivity would aid all
Cooperative action

other nations.

the attitude of

ex¬

for food
Restoration

change

supplies.

the

bor." He urged

in¬

their productivity due

to wrong concepts of reparations,
and levels of industry, would in¬

and

e v e

western

three
and

from

would

new

labor
meth-

ods in dealing

Cyrus s. Eaton

with
labor,
saying, "We will have to begin by
muzzling such organizations as the

to speed peace, such as I recently

National Association of Manufac¬

outlined

turers

man

letter

Taber, would greatly reduce

demands upon us.
Such cooperation
our

Congress¬

resources

nels

beneficial

into

chan¬

all

the

world.

view

to develop
expand the following policies,
we need

which

already

are

par¬

tially in action:
(1)

We must have

our

own

indirect agencies of government—
relief funds, the Export-Im¬

the

port

discussing
Eaton

ness

man

lieve

In my

some

In
Mr.

tion

Policies to Be Adopted

and
by recognizing, and
sincerely regretting, that there is
bad feeling on both sides."

allow

would

flow

Bank,

Stabilization
Reserve

the World Bank, the
Fund, the Federal

system,

and

all

agencies which administer
ports.

front if

must
are

those

our ex¬

consolidate

our

succeed

labor

legislation,

warned, "Let no busi¬
be naive enough to be¬
that restrictive legisla¬

will

any more effective
bringing about industrial har¬
than the Volstead Act was

mony

discouraging

adds:

drinking."

and

And

that

afraid

both

many,

out

too

Con¬

gress, have misled themselves into
thinking that a maximum of in¬
dustrial
can

freedom

in this country
by putting Amer¬

be attained

ican labor in
Mr.

Eaton

strait jacket."

warned

that

labor

"not only produces the goods and
consumes

a
large part of them,"
has the votes, and that

but "also

eventual
is

political unity of labor"

practically

foregone

conclu¬

We must prevent excessive
exports and by so doing reduce

sion.

excessive prices. In the matter of
food we should begin about Aug
1st with the new harvest.

occasion to praise John L. Lewis,
President
of
the
United
Mine

(2)

(3)

If necessary to prevent star¬
we

available

should

export

increase

surplus

our

volume

his

article,

Workers,

Mr.

Eaton

exercising

for

took

wisdom
coal

and restraint during the soft

dispute, because during the time
owners "kept a torrent

the mine

by voluntary reduction of con¬ of abuse against the miners" pour¬
sumption by the public and alter¬ ing into all branches of the gov¬
ation of some trade practices.
ernment, against which "John L.
(4) We should periodically esti¬
Lewis never uttered a syllable of
mate the goods and services which
and never
issued a
we
can
safely export and limit complaint
purchases of our commodities by statement criticizing anybody." He
limiting gifts and loans.

decried

We should prepare to stock¬
pile for national defense certain
commodities
from abroad when

(5)

the

dustry and agriculture, rationing
of most commodities,
and total
government control of all eco¬
That

problem

we can

they are available in surplus.
(6) We should bluntly insist that
portant commodities; the restora¬ in return for our sacrifices, which
tion of longer work hours in la¬ are inherent in all leans and gifts
bor; the return of women to in¬ that all nations recipient of our

activities.

This

past two years, imposed bil¬
lions
in
expenditures upon
us

abolition of the production of im¬

nomic

can

there is prompt unity and mutual
aid between other nations, resolu¬

field.

ability to export vation

The

ranty of this idea arises out

which Western Civilization

preserved.

world

policies.

Control Measures

war

corresponding reduction in

for

financial

would

But

supply goods.:-.
made

such

produced by our di¬
rect debtors, but our purchase of
them would, through multilateral
trade, strengthen the whole inter¬
are

billions in

produc¬

gifts and loans for which

Various

can

for

coordinated action in all direct and

can

low the rate of the last two
years
a

resources

effective

foreign economic relations single,

re¬

must seriously
reduce the volume of-exports be¬
with

sur¬

reasonable time.

It happens that few of

productivity.

(8) We should concentrate our
limited resources in the areas in

by which the limited Amer¬

economic

available within

our

best,
view is 'that, unless we

own

immediate

utmost in increase of

Salvation

pluses
of
these
commodities
abroad, but such surpluses will be

conse¬

hence in giving and
lending to
finance the trade
deficit, might be
for the next
year until we are able
to estimate our next year's sur¬

quires

quences to our

evil

few

are

principles

Yours faithfully,

national de¬

our

supported agencies.
involve impor¬
tant questions of security, inspec¬
tion of use, and application to the
These

A most productive field of

action

made

(1) It has been suggested that we
can export gold from our seeming
large stocks and thus enable other
nations to

government

in food production.

Vital

ican

Exporting Gold

once

save

may

tain
principles in ; operation of
gifts and loans, whether directly
from our government or through

Cooperation of Other Nations

or,to increase our exports and to
foreign countries.

continue

sheet, taking into account,
hand,

the

ing costs, with its
ts.

increaseplmld

The

that

tha&with fewer exports

great.

the

Any study of
balance

be denied

that

irt|

spiri^

large

tion

add

ports amounting to probably $7.5
billion.

inflation
our

likely to be used
during

pulse to

to better bear the load

There

contend

hot

•

are

year,

withdrawals
pay

These aggre¬

$14,000,000,000.

times

biddings.

would

whole rise

tion

of the

must

homes and

Months

The estimated unexpended bal¬
of appropriations and vari¬

consumption and altering certain
food manufacturing practices. We
have here a great spiritual im¬

spiral and

ances

exports for limited periods by vol¬
untarily reducing our own food

HERBERT HOOVER.

which have been suggested

abling

dangerous shortages,

it is possible to increase our food

measures

costs; that we now have fense. Commodities of this kind
considerable^mnemployment
in are tin, manganese, iron ore, mer¬
ing upon previous foreign dollar these
trade^^vhile at the same cury, copper, lead, zinc, tungsten,
balances in the United States.
time, the country is crying for
chromite,
nickel,
and
rubber.
Our Commitments for the Next

(4) Should the next world har¬
vest indicate

crease

There

Increasing Food

Exports

Aids and Making Them

There

exports

our

charge against
While such

may

store the

the

economy.

of^economic disorder
was^ created by inter¬ employment
production in making and weaken

adjustments.

Some

future

our

productivity.

our

A Method of

com¬

renewable, their
shipment abroad is a depletion of

the United States.

been

in this sort of

our resources

increase

ent

A Test of the Limits of Loans

extent

other items*

not

are

Moreover, without emo¬

background of fighting for

defense, such measures
would more likely decrease than

iron, oil, metals,

some

resources

modities

assuming

and

year,

question of
natural re¬

involved in the export of

sources

tional

whole concept of

our

national

further

the impairment of our

income.

continue

can

for

national

our

freedom.
Resources

for it would

peace

violence to

Our Natural

There

bearing upon our tax burdens. In¬
cluding local government expen¬
ditures, they now amount to about

taken from

last two years about $6 billion in
relief and gifts together with about

total

are

sources

■

vided

These

spent in cur¬
rent purchase of
goods. These gifts

ment

ignore.

and

the

gifts for the combined two

another angle of our
national situation that we cannot

foreign nations

Strain

such materials

gifts.

creditor nation.

ex¬

imports

over

our

services.

provided for the

exports

rather than

during the past two

An examination
and

15.5

7.2

cess

1946-47

13.5

Excess of exports
over imports—

citizens'
greatly impaired foreign invest¬
ments, will iikely discover that
the United States is
today a debtor

rate

must be considered as
of the situation.

lows:"'''

Lend-lease, including

There

Our Present Economic

Our

(3259)

economic aid
to

measures

upon

and

us,

reduce

the

burdens

to promote productivity

bring
large.
(7)

cooperate with us in

peace

for the world at

We should insist

the'

cer¬

against

the

Su¬

Lewis

"productive of untold evil in the
whole

field

of labor
II

With

III

linn

relations."
—

Bailey and Selland

Special to

The Financial

Chronicle

FRESNO, CALIF.—Paul C. Ru¬
dolph,
with

Jr. has become associated

Bailey and Selland, 1157 Ful¬

ton Street.
upon

decision

Court

preme

Mr. Rudolph was pre¬

viously with Elworthy & Co.

THE COMMERCIAL & FINANCIAL

(3260)

credits

tended

Observations

countries

them

help
critical period.
This

(Continued from page 5)

total

the

total

sum

different
loans

made by the

prices.

Bank

and

the past, terms will be soundly correlated
cred-a-worti mess and needs of the buying public. And it
in

with the
must be

the

over

figure of $13 billions

bile time purchasing. These agencies will hardly set unhealthy credit
terms to enable automobile manufacturers to charge unwarranted

fortunate

less

CHRONICLE

number

the

context

its

overall

planning and

This espouses administrative tinkering with
depending en the judgment of government officials,
or
their sbLity (free of political interference) to evaluate current
cyclical movements, and accurately to prohesy their future direction
and velocity.
at least mgmy

doubtful.

economic forces,

In any

event, this is inconsistent with the Administration's pro¬
willingness to withdraw from price-control and ecpnomlc regimentation.
Also inconsistent is the Truman-Federal Re¬
serve
theory with the Administration's recurrently and volubly
expressed solicitude for the low-income consumer. For tight credit
terms constitute a weapon discriminating against the would-be buyer
without capital reserves. That this is understood better by the workingman than by the President is indicated in an article appearing
in "The Union," official organ of the Southern Lake Erie Association
of
central
labor unions,
entitled "Depression Is Threatened By
fessed post-war

Choked Buying."

President

seems

he playing

both had economics

had politics!

Future of Our
rebuilding factories, harbors, rail¬
The facilities

roads ana.tne like.

Exports

purposes

the

still

also

countries

but

for

used

development
in other countries.
On

basis

would,

and

resources

these
in

operations

guar¬

the

terms, in actual
fact they represent almost entirely
commodities

available

by the United States to

the economies of other countries.

Nevertheless,
Volume of

spite of this
grants, the

credits

period continues.
It ap¬
that the problem was more

pears

than

providing bare sub¬
sistence and of replacing machines
one

the

within

framework

can

and

effects

whose

years

since the

the

and

war

recovery

end

hoped-for

eco¬

of the wTorld has

countries, it

yet been accomplished.

not

even

just around the

In too many

It is

corner.

countries, people

are

the

should

felt

were

work

miner

coal

six

days if he could buy his allowed
with

ration

his

pair

work?

days'

house

additional

some

better,

even

or,

to his cousin

travel

get

three

that he stay home and re¬

Better

farm to

The

food.

shortage of food and the shortage
of coal set the limit

the possi¬

give reconstruction and devel¬ still at or below the subsistence bility of recovery. And other bot¬
Commodities of all types tlenecks at various
opment credits to
governments level.
points keep
and to government-sponsored bor¬ are still in short supply.
Prewar emerging from the postwar dis¬
rowers.
production figujps still look like organization.
These
two
Tlve5 siluation Is full of vicious
organizations, distant goals. "And the spirit of
UNRRA and the Bank, were thus man in many areas is not one of circles.
The shortage of goods in

and

financial

deal

with

the

war-devastated

the

needs

countries

during the early postwar period—
the

first meeting the relief needs
insolvent
situations
and
the

second

which
might be transformed into the
physical capital needed to recover
from the devastation of global war
and to encourage economic prog¬
ress in
underdeveloped areas.
It
was, of coyrse, the hope that pri¬
providing

credits

vate investment would

historic role

its

resume

critical

the

once

pe¬

institutions,
the International Monetary Fund
the

International

ganization.

Trade

Or¬

living
and expand ng pattern for the new
postwar world.
It was clearly
recognized that they could not
were

assure a

function with full effectiveness at

but would increase

sig¬
nificance as recovery brought the
economic
situation
more
nearly
once,

into

balance.

offer
cies

some

first

currencies

and

stabilizing

means

curren¬

convertible

was

that

assurance

would

provide

The

with

away

discriminatory financial

arrange¬

ments, thus reducing the monetary
hazaru in trie exchange of goofs
national

across

second

lem

boundaries.

The

to deal with the prob¬

was

reducing public

pri¬

and

vate barriers to trade and to abol¬
ish

trade

rather

than

for

the

period.

war

rested
a

discriminations.

planning

was

This

long-run

the

immediate

These

the

post¬

com¬

ea~v

access

materials

and

markets

would

achieved

and

fore

could

all

eUmient
of

the

use

benefit
than

world's

men, macijunes

and

from

ever

be¬

resources-

raw

materials.

framework

economic

plan.

tionary plan.

for

Men who go to

bed hungry are not

too critical of
glittering prom¬
ises—and wide swings of political
those

who

emotion

make

to be somehow

seem

lated to economic

first

the

superficial

gloomy

re¬

misery.

greatly limits
possibility of their exporting

foreign
the

countries

goods—a process so necessary for
obtaining of materials and
finished
products
by
countries
which
cannot possibly
be ful'y
the

self-sufficient.

obtaining

stricted

by the

picture

than

ter

are

re¬

that

years

ago.

People

have survived without outside aid.

themselves

too

were

slow in

the

was

postwar
revolu¬

It established inter¬

And

alive

are

bridges

getting under way.
That
certainly
cannot
be
said
of

UNRRA.

who

have

could

not

rebuilt,

been

fact, its full and ac¬
tive life is nearly over.
It was
ready to function as soon as the
military operations ceased and for

railroads
able

functioning,

are

move

the

traffic
rivers,

people have roofs over their
heads, and many factories are at
least in part able to produce when

two years it has provided relief at

the necessiary ingredients for pro¬
duction are at hand.
But it is not

close to.the limit of available sup¬

the

plies.

voutly hoped.
It is still a grim
picture, with dark overtones.

Thousands

people

are

alive

today who would have died
without its help.
On the other
hand,
the
International
Bank,
scheduled

carry

the

brunt

the

reconstruction, made its first
loan early in May of this year. Its
organization problems were many
and consequently it has been a
minor factor in the picture up to
the

The

present.

Fund

only

beginning to function and the
Trade Organization is not yet or¬
ganized, but neither of these in¬
stitutions

was
designed to be a
contributor to immediate

major

which had been de¬

recovery

We should feel thankful but not

gratified
with
Our

that

compare

the

ever

been

producing

that

before,

sure,

ation

the

Bank

cannot

the

American

measure,

months of 1947

addition to

participa¬

international

institu¬

tions, the United States has

countries,

Canada,

also

ex¬

The total for the first three

$4.9 billions,
rate of nearly $20
was

the

businessman

con¬

much
smaller scale, resembles the activ¬
ity of the war period when the
cerned, the situation,

Government

provided him with a
present foreign mar¬
ket is likewise in large part the
The

market.

creation

United

the

States

Government.

specific,

1946,

according to the estimates of the
Department
of
Commerce,
we
sent abroad about $15 billions of
and services.
During the
period we imported about

goods
same

$7 billions of gcods and services.
left

That

billions still to be
paid for.
Of this deficit, $2-bil¬
lions
was
paid for by gold or
other assets belonging to foreign
countries.
The remaining $6 bil¬
$8

is the

lions

measure

of U.

aid

—about half in the form of grants
and half in the form of loans. As

the

gold

payment, these

tons.

Without

ships to

this

specific aid,
would vir¬

the European economy

use

de-

are

amount

and

held in large part in countries

where the pressure of an unfavor¬
able

balance

countries

not

great-

Switzerland.

N'or

they be used to any great

can

tent without

jeopardizing the

ex¬
cur¬

rencies against which they act
a
reserve.
The
possibility

the

1947

something

from

billions

figure

this

of
$4

source

tainly cannot be repeated for
eral years

sev-

in the future.

Consequently, the situation nar¬
down to a very specific al¬
Either
the
rate
of
American exports to other coun¬
rows

ternative.

tries must be reduced

the pay¬

ments gap must be filled by cred¬
its

grants.
Of course these are
mutually exclusive solutions.

not

But they are

interdependent—the4
othqr

of one,- the less of the
and vice versa.
more

There

;

various signs

that the
present situation will lead in part
are

the individual businessman

shipping

was

man

This

$15

marizes

record sum¬
picture of the

billions
1946

the

exports of goods and services from
the

United

States

As I have

of the world.

ports

were

substantial

than

all

much
gap.

the

rest

said, im¬

less, leaving a
Slightly more

of the .total

two-thirds

gap

between

commodity exports and
imports arose from our trade with
Europe.
In the prewar years, our
shipments to Europe exceeded our
purchases by close to half a bil¬
lion dollars per year

but as com¬
pared with prewar, our exports to
Europe today have increased far
the

of the

and -imports

our

to be
approximately equal, today there
exports

substantial

used

excess

desire

the

of Ameri¬

exports over imports.-- Thus,

while the European

economic sit¬
uation is undoubtedly more criti¬

save

The

dollars.

restrictions

imposed

by
clearly in-*

Sweden in March were

tended to halt the drain on her re¬

resulting

sources

the high
the United

from

level of imports from

American

The

States.

motion

picture industry has come under

particular

pressure
to make

countries

would

which

dollars

not

by
various
arrangement^
to

lead

flow

corresponding

fully

,,f'

net earnings.

Effect

Reductions

Export

Undoubtedly,, some

reductions

be made in American

can

world, where

was

import

than imports from there. For

rest

dom

in the United King¬
inspired in large part by

tax

tobacco

Treasury.

it must be.

the

However,

of recovery.

processes

exports

jeopardizing the

without seriously

remembered that many

non-essential

apparently

items act as incentive goods
other

in the

countries, providing a

kind

pump-priming for the process
or production and exchange.
pears in the balance of payments
Such
restrictions
as
foreign
everywhere.
And even the Far
countries may place on purchases
East, which used to be a substan¬
tial net supplier has also shifted in the United States will probably
be operated to limit transactions
to a deficit position.
to the supply of available dollars

cal, the

general problem

same

Imbalance

situation

The
is

even more

out of balance. Using

1947, the annual rate of ex¬

not

late

dollars.

main

used

governmental commitments,

ance.

billions.

There

were

special

in the first quarter

factors

make it doubtful as to

will be

which

whether it

typical of the entire year.

Perhaps the 1946 gap of $8 billions
is more realistic as a forecast for
However, that rests on

1947.

the

assumption that there will be no

major adjustments in other items
in the trade balance.

the balance of ex¬
and imports, including the
so-railed invisible items, may be
Of

achieved
oi

plus the resources of the Interna-*
tional Bank and Fund.
However,
much of these funds are
to use or limited to

lar area or

both—the

tne

items,

adjustments in any
so the venous ele¬

should

reviewed.

tages

difficult

other, cquntries, this is
to

accomplish.

To be

restricted
particu¬
grant of

new

million is limited to, relief
within a rather elabo¬
conditions and the $400
million
can
be
used
only > for
Greece and Turkey and the(i$1.3
billions not yet drawn down by
$350

purposes

rate set of

the British under

the British loan

agreement
are
obviously
only
avai^ble in the first instance to
the United

Kingdom.

course,

ports

future will

determined by the vol¬
of American aid and assist¬
At the moment, there re¬
less than $5 billions of un¬

ume

about

of our foreign

be largely

that, can be set $8 billions of im¬
ports.
At the first quarter's late,
the
projected
year's
payment
made by assets of foreign coun¬
tries would be $4 billions and the
balance which would have to be
by grants or credits,

Therefore, it seems

clear that the level

trade in the immediate

ports is about $20 billions. Against

filled

endeavor to accumu¬

and

in recent months

the rate recorded in the first quar¬
ter of

ap¬

One certainly

should not disre¬

gard the International Bank as a
It has'be¬

factor in the situation.
gun

to extend

greatly increased in the imme¬
diate future.
In a world of shor¬

sent 427

amount.

resources

limited

cidedly
are

Europe
loaded with coal—about 3,800,000
we

other liquid

foreign assets available for

highly improbable that commodity
imports to the United States can

tremendous

slow process andt
be
timed
along

with the general recovery rate of
the rest of the world.

May, for exam¬

month

the

How¬

to
increased restrictions against
American goods by foreign coun¬
concerned,
tries in an effoit to husband their
he received full payment.
How¬
resources in hard currencies and
ever, in the last analysis, about
to myke sure that only essential
two-fifths of the settlement was
Tnus the
with funds originating in the U. S, imports are permitted.

far

ments

the

is therefore very doubtful and cer-

this is a
probably
will

construction

This

specialty

shipments

much of the

ple.

amount, close to $9 billions
already been spent.
Other

steadily

annual

advances

industrialized
their

resume

It is

com¬

Of this

our ex¬

billions.

has

1946,

increasing
and
totaled almost $15 billions for the

mitted itself to

foreign grants and
totaling about $13 billions.

has

ports of commodities and services

year.

the

there¬

production

other countries.

the United

for¬

supporting the economies in

governments,
breach.

levels.
part of

has gone to

substantial

were

tion

record

volume of exports of the past for
both are at record high levels.

explanation of the delay in recov¬
ery
because
various
individual

particularly that of
States, stepped into the

have

markets.
Hov/ever, when
compared to total production, the
percentage is not greater than our

been

However, the delay in the oper¬

States:

eign

fore,
S. Commitments

and

substantial

production

recovery.

IT.

United

capacity to produce is greater

than

this picture

far

Government.

can

individual

can

two

might be that the failure lies in
stitutions

purchasers.
But the
significant part is that it has been
to
a
large degree a
supported
market—supported by the Ameri¬

of gootls
•/.>:
is
the situation is bet¬
absence

There is

question about the need on the

To be suz'e,

explanation

imports

booming.

been

part of the

for

to export.

economic

is for

Their need

imports, but the normal processes

loans

These four institutions provided
the

cal field as well.

that, in

modities
readily
exchangeable,
foreign trade would expand, the

recovery

ahead, but of
weariness,
hunger and
dismay.
This is evident not merely in the
economic field, but in the politi¬
hopes

institutions

conviction

world with currencies and

goal

enthusiastic

and

high

the fact that the international in¬

riod had been passed.
The two remaining
and

excited
with

has

ket

businessman

the foreign mar¬

the farmer,

and

The economies were

disorganized.
Not
merely fixed capital but working
capital was absent. And the great
shortage of goods was itself a de¬
disrupted

American

the

and

critical

the market.
the farmer buy who

not

sources

made

services

and

everywhere. Absence of goods in
the market-place removed the in¬

must hope that a better
be achieved—but it is

nomic

re¬

are

dollar

responsibilities
where What could
existed before, and brought his goods to the city? Why

two

now

China.

centive to produce for

international agency,
of investment

as an

tap various

vVhile

corded

and

never

future

antees of all member

available,

which

devastated
would

to be

were

national

they had

not solely to the war-

of course,

Republic

terrent

(Continued from page 4

of the Bark

pine

countries

further

ever,

the occupied areas, and
assistance to the Philip¬

and mortar.

here the

and

the

activity,

of earlier years.

the United

sales of merchant ships.
It in¬
civilian
supplies distrib¬

uted

can

and

areas

their

Export-Import

loan

cludes

special

there

resume

production,

surplus property, and

material

raw

the Far East

United States may increase.

by Congress.

required

flour have

and

tremendous fleet to keep the flow

Kingdom

pipeline,

of economic

sphere

larger

price control, the President is re-offering a theory which is

wheat

the

sure, as

of food to the various countries of

postwar lend-lease civilian goods

Planning Again!

Economic

coal

own

the world at levels far above those

specifically authorized
It includes the dol¬
are fixed, that.the storekeeper is the lender of the credit.
Surely lar credits representing far greater
retailers, even if they could, will not embark on risky credit courses amounts of goods on a cost basis,
to maintain high wholesale price levels.
transferred
in the
form
of the
that it is at the retail level tnat consumer credit terms

remembered

its

for

collapse

production is far below prewar
levels.
Similarly, shipments of

includes

operations.
the

tually

Thursday, June 19, 1947

credits and can take

responsibility for re¬
requirements in the

future.

However,

cannot

be used for

ate

necessities

food and other

It is essentially
institution for aiding the pur-

consumers' goods.
an

its resources
such immedi-

j
[
[

iVolume 165

Number

4604

THE COMMERCIAL & FINANCIAL
CHRONICLE

(3261)
chase of

capital goods. This is, of could be. A new set of political
course, a prime function. < How¬ arrangements
is being painfully
ever, one of the serious flaws in constructed—and during the proc¬
the original plans was the failure ess,"
no
economic
progres^ has
to realize how extensive would be

been

when they take the form of

ing

concern."

from
it

of the general class of consumers'

vivendi

item

goods and raw materials, both in
terms of volume and in terms of

this

the

higher price level.

in turn

the result of the fail¬

was

take

ure

And this

into

account

all

the

economic, political and psycholog¬
ical factors which have delayed
of productivity.

the recovery

Reviewing

payments

all

the

sources

in sight, it is obvi¬

now

difficult

might

settlement.

time.

the

other

Thus

the

longer range future of
foreign trade is greatly dependent
the nature of developments
during the next several years
And, in turn, absence of improve¬
upon

ment in other countries will be

persistent drag

It would be
to

ous

create

completely
the

impression that
the problem of economic recov¬
ery
throughout
the
world
is
merely one of American dollars
American commodities.

To be

that is the type of assistance
•which we have been providing,
sure,

but

much

needed.

the-

For

dollars

than

example,

situation.

food

are

consider
American

•wheat cannot be, in a sense, more
than a stop-gap.
The basic prob¬

lem is the recovery of agricultural

production in France, Italy, Siam,
and all' other countries
themselves.
To
some
extent,

Japan

American

dollars

can
help when
in terms of fertilizer,
seeds,
and
agricultural
imple¬
ments.
But
the
problem is so
much more than that—a problem

expressed

•which

deal

the

local

with—a

authorities

problem

must

getting

the farmer and the land to maxi¬

productivity. This does not
of course, that each coun¬
try should try to be self-support¬
ing in food—that would be most
uneconomic.
But the present lev¬
mum

mean,

els

the

prewar

output,

appreciably below
levels in many areas,
problem which must
be tackled by the various govern¬
represent

ments and the

appropriate inter¬
national organizations. This prob¬
lem

solved

cannot

for

other

countries by the United States ex¬

cept as we can help others to help
themselves.
a

much

matter of internal domestic poli¬

cies than of outside aid.

It is not

merely a question of scientific ag¬
riculture, but one of economic
organization.
Future planning in
food

the

field

sideration

involves

recon¬

compulsory collec¬
tion systems, rationing, open mar¬
kets and price structures, all in
relation to such incentives

may

be required to raise
production
sharply.
It involves questions of

domestic
These

priorities

and

support.

all matters in which the

are

domestic policy of each

country is
paramount and where vigorous
and
carefully planned action is
vitally needed.
It is to be hoped
that the Conference of Food Min¬
isters scheduled to

begin in Paris

July 9 will make substantial
progress
in dealing with these
'•
problems.

•on

•

Domestic

Politics

Indonesia

•

American

where

another

take

type

assistance

case
can

effective

icies,

tion

are

only if internal pol¬
propitions, an illustra¬

can--be
the

Fide, of

Here

the

found

globe

East

the

other

Indonesia.

Indies

are

cus¬

of
raw
mate¬
rials needed'by the rest of the
wo lid. and presently in great de¬
tomary

sources

mand-grubber,
many

copra

and

other tropical items. Never¬

theless, there is
ume

sugar,

mere

flow—the vol¬

trickle

of what

itself is

area

not

moving forward. This case is
merely an example of a condition
which

widespread, though in
Political con¬

degrees.

troversies

all

too

for

often

are

confusion

re¬

and

dis¬

organization in the economic field.

During

the

War,

dif¬

subordinated

were

basic

political

objective.

Now

the

"peace

Banking—the Heart
Of Free

Enterprise

Banking L an extremely
tant part of our system of free
enterprise.
It is tne neart wmen
the savings of

side

homes, rail¬
roads, automo¬

assistance

can

fully

ef¬

S. Responsibility

five

with respect to the kinds of inter¬
nal policy which I'have been dis¬

cussing, the
states of

Korea,
role

states

and

where

for

the

Austria

and

There

that
make

can

the

failure

has

im¬

econ¬

question

substantial

productivity

Germany

progress

held

back

in
the

processes of European recovery in
Germany used to be a
major element in the pattern of
European
her
trade, and
coal,

general.

steel
to

and
t h

There

supply the vi¬
to

our

indus-

tries.

bankers know
that

free

e r

machinery
European

have

been

basic

were

countries.

various

factors

en¬

Association

War.

the

The fundamental economic

requirements in all the

cases

are

William

ciations

modern

economic

elected

and

State

Presi¬

Bankers

President

National

Bank

the

Trust

Co., Lynbrook, L. I.

This

S.
way,

Fuller

Incorporates

Co., 39 Broad¬
New York City, is now doing

business

not

happy

picture.

corporation. Officers

are

The

its

gave
an

assistance

then

through

unorganized process of private

so-called
investment.
It
is ob¬
vious that the destruction and dis¬

organization
War II
and

was

created

much

World

extensive,

reconstruction

and

recovery

correspondingly difficult.
This is the

mediate

its

answer,

depend both the short-rur; and
long-run possibilities of foreign
.

markets
More

for

broadly,

goods.
depend the

security

recovery must
to
as

that

them

cause

our

be taken by

quickly

aided

they do
as

other

recover,

possible.

With

were

indication

joint effort

In the long run, the cost

relatively small, and the

enormous

dollar

and

cents

use

creased

value

represent

.the

bf 'economic

ANGELES, CALIF.—John

H. Ashum is

now

connected

with

in¬

assets

anything
in

else

the past

did

came

day

progressed

tended to

cline.

This

doesn't

detract

from further

interest, is
far

this

that another

over:

decline is in the

making. How

decline

will

carry

stocks is

Dean Witter Co. Adds
Special

ent.

Before

over,

The

Financial

the

out,

that

were

would

was

enough

driven

averages

parently

underestimated

carry

their power. The
the averages to

rally carried
177.23 Mon¬

will

week

would

come

crossed

wrote

once

the

see

the

averages
level or ap¬

175

proximated it.

I emphasized

the

selling at that point would
be more important than the
buying. The buying, I pointed
out, would be mostly from the
short
had

interest

the

end

But

by:

certain

the

period.

same

and

will

Teen

during a
So it is likely
that next week's column will
market break.

give

you a

few buying points.

More next

Thursday.
Whyte

—Walter
[The
article
time

views
do

expressed

not

Chronicle.

necessarily at

coincide

those

with

They

are

this
any

the

presented

those of the author only.]

therefor

1856

Securities

H. Hentz & Co.

Orders Executed

Members

York

Stock

York

New

York

Curb

Exchange

Exchange,

Board

Schwabacher & Co.

Inc.
Trade

Members

Exchange

And other Exchanges

New
New

Cotton

Exchange Bldg.

NEW YORK

Chronicle

4, N. Y.

■

DETROIT

PITTSBURGH

GENEVA, SWITZERLAND

Exchange

Francisco

(Associate)

Stock

Exchange
Chicago Board of Trade

14 Wall Street

New York 5, N. Y.

COrtlandt 7-4150
Private

CHICAGO

York Stock

York Curb

San

N. Y.

Exchanges

Exchange

Cotton

Commodity
Chicago

Pacific Coast

Exchange

New Orleans Cotton

With Milton C. Powell Co.

Co., Security Building. *

the unexpected as well as the
expected.
Maybe the black
figures won't be as pretty at

Pacific Coast

New

PASADENA, CALIF. —William

"technical" phenom¬

If it develops that way,
fine and good.
But in any
case it is wise to
guard against
enon.

meat in it.

Established

Chronicle

E. Acker is with* Milton G. Powell

selling that Would

leading national exchanges.

Financial

trend

that

interesting to

the kind of

members
New York and San Fran¬
Stock Exchanges and other

The

kind is not to be shrugged

any
off

even

not is doubtful.

Last

Montgomery Street,

Special" to

everything before it. Long
ago I learned that a turn of

token,
though the neither will the red figures
close was at 175.81. On a
day snow you under.
to day indication, the market
Together with the top signs
now shows an
important level now appearing there are some
at 174.
This point should be
clues that point to a
possible
held if the current
rally is to substantial up move. More
mean
anything. Whether it substantial evidence of this
day, June 16,

the

cisco

week

the familiar
about 175.
Ap¬

Co.,

the

pointed

chances

SAN FRANCISCO,
CALIF.—E.
Frederick Korb has become asso¬
ciated with Dean Witter &
of

the signs of a
becoming appar

were

curities Co. and Carter H.
Corbrey
& Co.
—JB

sweep

week

rally

Slayton & Co., Inc., 3277 Wilshire
Boulevard.
Mr. Ashum was pre¬
viously with William Walters Se¬

divi¬

dends will be far exceeded
by the
intangible items of goodwill. That
is the entry which the
account¬
ants

Slayton & C$., Inc.

fol¬

achieve recovery, we should
continue to be generous with our
be

the

Special' to The Financial Chronicle

during the War be¬
clearly agreed on

will

Bradshaw,

lowing a common plan for its ac¬
complishment. If there can be a

support.

Mr.

Treasurer

individual dealer.
John J.
Fitzgerald is clerk for the firm.

were

great objective and

clear

and

corporation, formerly did business
as

LOS

However, it is impor¬

Street.

President

in the

The
answer
cannot
be
given
solely by the United States. After
all, the fundamental steps towards

tant

Mr.

BOSTON, MASS. — George L.
Bradshaw has formed George L.
Bradshaw, Inc., with offices at 24

wartorn world.

and

McGean and

also associated,

American

short-run and long-run prospects
for stability and

countries.

Mr.

were

Sradshaw Now Incorporated

Federal

problem of the im¬

future.

with which

Blanchard

Last

shorts

Stephen D. Fuller, President;
war was more destructive of
Arthur Gibb, Vice-President and
the economic machine than had Treasurer;
James
H.
McGean,
been realized. After the last war, Secretary, and Stephen L. Blanit took seven
chard,
Assistant
Vice-President.
years for the world
Mr. Fuller and Mr.
to get back to its
Gibb were
prewar level of
operation.
The
United
States previously partners in the firm,
•

have

foreseeable future.

cover

S. D. Fuller

life

makes it necessary for recovery to
be general in order to be
specific.

would have done

newly

the

Peoples

countries, except perhaps
degree.
And the interdepen¬

there

follow.—William "A.

Kieimann,

torious

dence

columns

A. Kieimann

different from those of the vic¬

bid

the buying
dry up and so did
the
selling.
Early Tuesday
the
selling cropped up again,
and
again it was during a
It must be as
boring for you rally phase of the market.
to read these columns of late
Selling such as this is typi¬
as it is for me to write
them. cal of
a
closing phase in a
I am aware that readers want
market cycle and
usually indi¬
to be told what to
buy; in¬ cates the
beginning of a de¬
stead
recent

Yet, in retrospect, I doubt

tion to hold forth the beacon and
to lead the way for smaller asso¬

dent

from

problematical. It is
great.
It is up to use to keep re- few weeks.
Actually I don't possible
they won't go under
minindg our people about this fact
know why I'm
apologizing. the 170 figure, which if true,
and to keep them from embracing
In fact I didn't intend for this
any "ism" other than American¬
would make it impractical to
ism.
While we do not have any to be an
apology at all, even sell. Yet I have seen markets
technical obligation, I believe that
though it reads like that, be¬ which
because we are actually the stew¬
give every indication of
cause the truth is that I still
ards of so much of the wealth of
nothing more serious than a
feel
the
market
is
this nation the bankers of New
going minor turn suddenly take on
York State have a moral
obliga¬ nowhere on the upside in the the characteristics
that

ganization

resulting

When

long stock hit it. As the

some

By WALTER WHYTE=

now
starting to show
signs in isolated stocks.
Expect some more strength
followed by a reaction.

country

holding back her1 progress,f: the
important of which was the
degree of destruction and disdrmost

noon

ing obvious and neither
it press..

book.

made

has

our

Whyte

Market

We know that

accepted

countries represent an

omy.

biles, steamship s, airpi a n e s
and

great

Monday

top

terprise works.

portant part of the world's
but

these

tamins

ap¬

The next

rally. In fact it is
There is no
money in that
quite likely that before you
kind of advice.
The broker
read this the
average price will
doesn't get any commission
move
up another point or two.
and the potential
buyer does But such
gains are full of
not make
any money.
froth and are
likely to dis¬
It is
occasionally amusing appear with the first adverse
to be flip and
poke fun at the breeze.
market.
I
know, however,
Summing it up this means
that that sort of a
thing does that the recent
rally, fed al¬
not fatten
anybody's pocket most entirely bv a weak short

savings build

major
limited period, Greece.

special

where

selling

persisted the rest of the
day. At no time was this sell¬

merely told them to abstain.

places

instance

have

These

of the ex-enemy

cases

Germany and Japan, the

liberated

people

our

into the thou¬
sands of

signs appeared

Says—

going concern,

in the Bible, good¬
related
to
earth."

pumps

fective.

Walter

flourish

intimately

average

and

of the greatest
expres¬

one

objective
must
be
Unless this is
clearly recognized by a nation
and its people as their basic pur¬
pose, it is hard to see how out¬

over-riding

economic recovery.

countries, the United
States has a special responsibility

errone¬

cannot

of hope

Dollars Not Enough
*

world

will

upon our own eco¬

nomic system.

the

sions

and the needed

reconstruction in the

ferences

setback to the process of recovery.

condi¬

world is retarded

the

serious

these

final

Goodwill

than

peared late Fridsv.

Markets

the

ter

Tomorrow's

atmosphere of economic dis¬
Not only is it important for

but in

undoubtedly

Under

the

sheet

The first indication
of bet¬

balance

tions. production elsewhere in the

exports for the critical period will

result

prejudice

financial

the

world.
in

sponsible

order.

present level of exports from the
United States for any considerable

period

up, although
because
of the

goodwill

sheet,
is perhaps the most
important

fear that any temporary arrange¬

differing

hand, failure to continue essential

set

the

ment

that they will not support the

ous

can

But

accounting phrase.
Although it is frequently omitted

possible. There is reason to
hope
that
an
interim
modus

the requirements for commodities

than

"go¬

San Francisco

Monterey

Teletype NY 1-928

Wires to Principal Offices

—

Santa

Oakland
Fresno

—

Barbara

Sacramento

Thursday, June 19, 1947

^HE COMMERCIAL & FINANCIAL CHRONICLE

(3262)

U. S. subscription

World Bank Loan to France and

Foreign Private Lending

Future of

into

they are eligible to go

soon as

the free market.

Should Be More

Interest Rates

Uniform

Despite the low interest rate of
the French loan, there have been

in the French press
is too high in com¬

complaints

that the rate

charges

interest

where

British

the

with

parison

question. Proof Agreement). It appears that the
that payment has been actually Bank is asking for a number of

That debtors should care¬
fully watch interest differentials
is quite natural. ,As a matter of
2% p. a.

goods

made has to be furnished

(Sect. 2).

Moreover, the borrower will have
to submit receipted bills, invoices
or other documents for inspection

bring about such streamlining of
interest rates. Lower rates should

for short-term loans
and those designed for purchase
of food and raw materials.
The
charged

rates

reconstruction

term

long-

higher for

might be

loans

are

granted by the World Bank.

provision of Article II de¬

One

attention from

serves

long range

Sect. 8 directs a bor¬
who purchases in a country

viewpoint.
rower

outside the dollar area to make a
"reasonable effort" to arrange for

domestic

payment

than

rather

France is

currency
dollars.
Since

reported to have appro¬

priated in advance in this country
virtually the total proceeds of the
loan, that clause will not be oper¬
But it may

ative in this instance.
become

significant as pro¬
other
countries in-*

duction

gradually. Thus if a bor¬
purchases in Canada
or
in
Great
Britain, payment
would be made in domestic cur¬
creases

makes

rower

not only re¬
U. S.
dollars but also afford the Bank

This would

rency.

outflow of scarce

the

duce

use

ter

try except the U. S. has done

certain

Under

circum¬

special

stances, the Bank may be relieved
from
its
obligations under the
in

particularly

(Sect. 7),

agreement

that

case

The

are

following Articles III and
the most important of the

deal with

They

agreement.

the

of the loan and the procedures

use

The purpose is to

of withdrawal.

implement the basic provisions of
Article III of the Charter.3 Accord¬
ing to the agreement, proceeds of
loan will be applied to pay¬

the

brief outline

this

From

develop

of the

provisions of these two arti¬
cles
it should
appear that
the
Bank has made a determined ef¬
main

fort

implement the somewhat

of the

clauses

vague

Charter in

proceeds
of the loan are used in accordance
with the intentions of the Bank
and the terms of the agreement.
order to assure that the

and
used

goods were simply turned
the recipient government

when

over

supervision of their
The Bank, however, has

little

with

final

use.

shown its determination to assure
that

funds

are

foreseen by the
The management of the

intended

not

lender.

high

deserves

Bank

used in a way

credit

for

having introduced this basic prin¬

the French loan agree¬
ment and thus having set a prec¬
edent not only for its own future
loans but beyond that for other
ciple

lending contracts as well.
Article

with the con¬
execution of the

deals

the

and

tents

mium

use

development

facilities

productive

sources

goods

Bank

quired for

The

France.

determined

general

the

and

and re¬
specific

purchased shall be
agreement with

whose
any

approval is

re¬

demption

outstanding

Funds

Article

headed

drawal of Proceeds
and

includes

versial
ment.

the

provisions

"With¬

of the Loan"
most

the

contro¬

able.

But to be effective it needs

to be

supported by an appropriate
discussed before.

interest policy as

Article VII sets forth

some par¬

only upon furnishing of a detailed
statement showing the cost, date
of

payment, name of supplier and
purchaser, destination and end use
2

Only one-tenth of the 20% of the
capital subscriptions paid in had to be
made in gold or U. S. dollars while 90%
could be made in domestic currency of
member country.

3 See the article mentioned abovo.

fact, both

housed in the

should

and

The

same

not

the

hand, should give full

con¬

operations.
other

sideration

Fund,

the

claims

the

Bank

outstanding in determining
its policies toward member coun¬
tries that

are

indebted to the Bank

Fund should
always earmark a part of such a
country's quota which should be
sufficient to cover its debt service

particular,

the

to the Bank for the next

maturity

date. Such a policy would greatly
strengthen the Bank and reassure
its
bondholders,.
It
should
be

closely studied by the existing
coordinating committee of the two
organizations and a policy state¬

find, writes

the

bor¬

external

other

debt

economic

the guarantor

financial

and

the

borrower

and

(the French Govern¬

shall be consulta¬
representatives of the
Bank shall have a right to inspect
goods purchased as well as con¬
There

and

tracts,

documents

and

books

accounts related to such goods and
their end-use (Sect. 2).

borrowers (such as
tralia and Norway) that the
of

credits

its

Fund Advisable

not

may

beyond $3-4 billion.
conditions

world

Aus¬
scope

extend

Moreover, as
improve
the

number of borderline cases which
Bank

the

should

designed

This

decrease.

handle

theory

of
limited activity will probably find
good many advocates for it

the simple way out of a complex
dilemma.
■

However, such
in

not

purposes

adopted,
failure

policy would

line with the original
of the Bank and, if
would " mean complete
whole

the

ambitious

For no international Bank
had been required to achieve such
limited end; the U. S. Treasury or
plan.

of its subsidiaries could have

one

job with less friction and
'

meetings.
The

The

•

fact that the original

mere

plan faces considerable difficulties

articles-, of the
agreement deal with procedures
in case of a debtor's default (Art.

for discarding it but rather an in¬

VIII), Interpretation and arbitra¬
tion (Art. IX), and, finally, provi¬

putting it into practice.

remaining

sions for notifications
cation

ratifi¬

and

(Art. X and XI).

Provision

Made

Securing

for

Loans

These conclusions may be drawn
from

analysis

the

loan

agreement:

(1) The Bank has made a strong
successful effort to give full

and
and

positive interpretation to the

Charter.

result,
satisfactory
safeguards are available for super¬
vising disbursements of the loan
and to make sure that they are
(2) As

and obstacles should be

collateral
assure

get

real

some

security
as
may
continued debt service.
of

once the
paid out,
the
only reliance is upon the
promises of the borrower and the
guarantor.
Industrial and trans¬
portation equipment to be pur¬
chased from the proceeds of the

matter

proceeds

fact,

loan

are

French loan would be well suited
as

collateral in

has

this

case

of default.

The

agreed

been

not

the
taking
things first and to proceed
a
short-run point of view.
it has been concentrating
has

management

been

right

Bank
first
from
Thus
upon

to sell the Bank's
debentures and officials have been

preparations

against American financial aid as
a matter of principle.
The provi¬
sion which reserved to the Bank

check upon the agreed

the right to
use

of the loan was denounced as

unwarranted

interference

French domestic affairs.

side, it is obvious

On the other

private lending
foreign govern¬

large-scale

that

particularly

to enterprises owned or

controlled by foreign

governments

borrowers will be of
this
type)
will
be impossible
without appropriate safeguards to
(and

most

protect the investor. The London
"Economist"—reflecting the opin¬

they

tend

groups

These nineteen-cent-

influence."6

practices have become out¬

tury

moded and any

attempt to revive

futile

would

them

the transfer problem
and other possible difficulties of
the debt service.
But there is

method

to look ahead to the

duty

period when
the U. S.

all the bonds covered by

guarantee will have been issued.
Then will come the real test of

Certainly, it is
to study means for

revive

velopment

and

international peace

dependent to

are

too

soon

private

upon

ative

character

and

the matter of informa¬

concerned, it seems some¬
what surprising that no special
provisions are made for the use
of the data which members of the

International Monetary Fund are

pledged to furnish currently (Ar¬
ticle

VIII,

Sect.

the

Fund

Bank

the

be inoper¬

may

for

obscured

time

the

being.
of

Chamber

International

The

but the World Bank

seems

particularly well equipped to re¬
concile the interest of private in¬
vestors and debtor governments.
Its directors are government rep¬
resentatives

and

governments

are

The

rowers.

staff of the

drafts

for

should

these

most

prospective bor¬
the

and

directors

Bank should prepare
such
a
code - which

submitted

inter¬

national conference for discussion
and

eventual

as a .set of
principles. Fortun¬
ately, activities of the Bank would
not be delayed for a considerable
time will be required (perhaps a
couple of years) to sell the first

adoption

international

three

billion

The

technical than

the

problem is not

Technical

debentures

Bank.

much a
educational one.

might be

able

agreement without

reach

par¬

experts

But prospective

overlook

not

out

there

that

fact

willing

billion

five

some

borrowers will

the

institution

lend

dollars

international

development

(and

for

reconstruction

such loans has

the

and

for

need

practical limit)
provided it can satisfy the just
interests of investors to safeguard
their savings.
no

Plans
for
European recovery
will have to be made by the Euro¬

themselves rather than by

peans

the United States, a3 Walter Lipphas pointed out.6 There is a

mann

similar

situation

with

the World Bank.

regard

If will be up to

the debtors,- in the first place, to
work

out proposals which afford
satisfactory
security
to
foreign
private investors without undue

its statutory lend¬
ing capacity in the interest of the
many

considerable

Evidently,
distrust

Viner has sug¬

developing a

gested the need for
to

and

one

}t,

dealing with the situation as will

code

government

govern

the relations

debtors

to * foreign

may

worth

in urgent

capital.

tremendous wall of
suspician has to be

The

tough

job is a
fail.
But

surely
undertaking.

while

Why not try it rather than concede
defeat in advance

proposed by

the advocates of the "limited

ac¬

tivity" theory.
May

29,

International Lending

Professor Jacob

are

and

overcome.

Code of

members who

need of development

1947.

r
r

Warner

Special to The Financial Citronicl*

POctom

thur

AHbur

MASS,—Royal T; Ar¬
connected with J.

Wcrn^

Devonshire

street.

Co.,

was

Jnc.,< |89
for¬

creditors. Otherwise he
merly w{th Hooner-Kimball, Inc.
Bond Issues Might Be Limited
sees great difficulties in reviving
By the U. S. Subscription
an
international private, market
One possible solution has been
Dies
government" securities.? His
advanced frequently during the for
private

As far
tion is

im¬

Commerce has published a set of
rules
for
international
lending,

degree.

the Bank's future.
not

tional

the interna-i-

preserve

principle though it

indeed.

which de¬
of world economic re~j

lending

foreign

sources

need and

Yet

conditions.

actual

portant/to

which for a
interference
with
the
domestic
guided British affairs of the borrowers. The Bank
investments oversea s—emphasized
as a representative of lenders and
in a recent editorial that private
borrowers but particularly of the
investors always relied upon their
latter should be in a special posi¬
governments to provide security tion to act as an
intermediary and
"by means varying from direct trustee so it
may be enabled to
control to diplomatic pressure and
make full use of
those

ion

tive

down

century successfully

speeches which empha¬ However, they need to be replaced
the
high rating of these
by some other and equally effec¬

Simultaneously,

institution.

„

Required

Investors

ments

Protection of

for

Devices

making

play

American

hardly be denied that such
reasoning is in accordance with
can

by those groups which are

front

New

ican

Although all French political ticular trouble. But politicians are
parties finally voted in favor of afraid to make even reasonable
the loan, there was strong public concessions if they are confronted
opposition to the limited control bv an opposition wearing the man¬
provisions of the agreement. Un¬ tle of sovereignty and national
fortunately, the sovereignty dogma independence. Moreover, there are
is now stronger than ever before. still vivid recollections how lend¬
Moreover, it is used as a con¬ ing countries abused their pre¬
venient
and, always
successful rogatives for selfish purposes.

(3) But the Bank has been un¬
able to
go
beyond the Charter
provisions and

loan

without the consent of the Amer¬

made in strict accordance with the

agreed terms.

The Bank cannot grant any

reason

centive to redouble the effort for

arise at that time.
Full Cooperation of Bank and

of New

expense.

sized

the

Bank

adopted by the Boards of Gover¬
at
their
forthcoming fall

bonds.

conditions

City

grade

nors

prior to the claims of the Bank
(Sect.
1).
The borrower shall
furnish information regarding the
use of the goods purchased as well
as

National

done the

should

effect

international .organization.

real

fact

The Bank may even

that

ment

shall be given any special security

agree¬

Withdrawals may be made

bonds

before maturity is very commend¬

tions

Safeguards For the Use of Loan

the

upon.4

ment).

re-exports.

available

special files except those
related
to
its
lending

directly

5). This policy of encouraging re¬

are

access

countries do not consider the Bank

tection to bondholders.

unnecessary

have

matter

building)
need for

But

obligations' of

purposes

pre¬

the funds other¬

rower.

cost

(as

wise in its operations (Sect. 1 and

ticular

the

reconstruction

the

Bonds

should

information

Fund

Undoubtedly, the Bank kept in
the experience of UNRRA

purchasing

all

mind

importing goods required and
exclusively for productive

ments

the

any

shall

situation

Bank

experience,, oL the World Bank'.
This is the more true since many*

avoid troubles and assure full pro¬

institutions

(Sect. 4).

outstanding bonds without

to now.

involve

may

of routine.

dence

Bank if it is able to retire its own

pro¬

give permission to such
in accordance with the Char¬

available

the

this

currencies2

domestic

their

vided they

matter

York,5 with the numerous intergovernment credits and the avail¬
ability of private credits to top-

(Art. IV, Sect. 2(a)). No coun¬

opportunity to use some of the
which
members paid
in

This

will

The

representing the outstand¬
ing debt. Article VI regulates the
redemption of these bonds.
The
debtor has a right to redeem the
outstanding bonds at any time at
par.
A redemption premium of
Vz% to 2% can be waived by the

funds

Fund

stand is strongly supported by the

Government, writes a French
commentator, and this makes it in

duplication of effort and expense.

extraordinary
which
shall make it improbable that the
American lending agencies. They borrower or guarantor shall be
able to perform its obligation un¬
do not care very much about the
"legal lender" and are willing to der the agreement. This clause has
take
the money wherever they been vehemently attacked in the
can get it.
But they are often hard French press as an interference in
put
to
find
any
reasonable her domestic political affairs un¬
explanation for rate differentials der the assumption that a change
in the composition of the French
applied by the various agencies.
To avoid unnecessary irritation, government may be considered to
be such an "extraordinary situa¬
similar rates should be fixed by
tion." The Bank has offered no in¬
all
the
agencies concerned for
similar kinds of loans.
The Na¬ terpretation of this controversial
tional
Advisory Council
which clause; but it may be assumed that
it has been clarified in the course
has to pass upon every loan appli¬
of the negotiations.
cation should be in a position to
fact, foreign countries make little
distinction
among
the
several

Which

data
the

confme its activi¬
ties to
lending funds available
from
regular amortization pay
ments.
This, of course,
would
has been done,

Bank
may
also
request other documents as evi¬

the

by representatives of
(Sect. 3);
the Bank

loan
only

are

the

(Continued from page 10)

($3,175 million),

proponents, and perhaps
include the subscriptions of a few
other solvent countries. After this
its

say

last
sell

few

months.

bonds

Let

the Bank
the

to the limit Of

Dudiev

International

letin

May,

6 A":h

bondholders,
of
course,
will
protection through the
three-and-a-half billion dollar guarantee
of the United States Government.
1
4 The

have

additional

and

Fund

and

Bank.

the

Truman Doctrine,

the

Apr

and

senior

Post

Octo-

puiifi»srt

I—I

^'i'k

nar+r^7

Exchange,
in Hawley,

Tlmou

mevel^wd

accidentally

'■

member

„

T-"-^-nnt>'>nal
Finance in
the
W?"
H Lloyd's Bank Review,
7

'"W»HW'I

Cleveland
Co

i, iwr
.

Bul¬

1947.

Commerce

was

drowned

Saturday, June 14.

Volume

Number

165

FINANCIAL CHRONICLE

THE COMMERCIAL &

4604

(Continued from page 4)
The Dow Jones Industrial Aver: age

far this year has ranged

although national income, industrial
production and corporate profits
are about twice as high. This com¬
parison is particularly interesting
because of the many similarities
between the two periods.
Both
periods represent the top of a
business
boom
accompanied by
rising commodity prices and inventory accumulation.
Further¬
more,
a
number of economists
slightly

•

;

below

predicted

ago,

years

recession

business

while the Secretary of the Treas-

•

in¬

taxable

with

investors

ior of the

stock market since the

decidedly too high in'price for
wealthy investors with taxable
t.isomes
above
$L5,OO0... Stocks

end of the

war.

$10,000.

apparently
priced
exactly
right for the average investors in
are

between.

example, an investor in the
$4,000 — $6,000
brackets
who
bought the Dow Jones Industrials
For

theoretically get an

170 would

yield
(after
personal
taxes) of 9%, if all earnings were

income

$10,000

between

brackets

the

Investors

dividends.

paid out
in

$25,000 would get 6%. Invest¬

and

above
$100,000 would get less than 2%.
having taxable incomes

businessmen ex¬
pressed optimism regarding
the
business outlook in both periods.
In the second half of 1937, stock
prices declined about 50%. Many
investment analysts believe there

ors

will not be

depends upon what tax
bracket he is in.
This raises tr.e

and

ury
•

many

similar decline in the

1947

because

profits

>\ second

will

half

\ porate

cor-

substan¬

tially higher next year than they
were
in 1938, even if industrial
production declines substantially
from the current abnormally high

•

level.

.■*.

The

why

reason

stock

believe

some

prices already discount the

Table

is disclosed

recession

business

II.

earnings per
share reported for the preceding
six month on the stocks compris¬
Dow Jones Industrial
Average in 1947 were two-thirds
higher than in 1937. This gives
the false impression that earnings
ing

•

Average

the

40%

decline

could

level without

justifying

1937

any

fur-

in stock prices.

; ther decline

■'

the

Typical Investor

Bracket

Tax

Table III indicates that the val¬

question—which of the tax brack¬
ets in that table is most typical of
purchases
and sales determine the prices of
stocks in the Dow Jones Aver¬
whose

investors

all

ury

divid^nds/ii^ceived

received

dividends

Annual
In '
:

4.77

9.64

20.00

.—12.00

Rate

early

the Dow Jones
15 times
of earn-

1937,

Industrials

were

selling

their current annual rate
'

ings.

They are now selling about
times the earnings calculated

•-

nine

in this table.

;

stocks

are

overlooked the fact
do not receive all

Uncle
Sam
a large cut out of dividends,
reducing the net income
earnings.

takes
thus

yield received by most: investors.
When
the
earnings
shown
in

Table II are
taxes

•

;

paid

dividend

income,

stocks are

that

cheaper than they
first half of 1937.
In Table

•

adjusted for personal

discovers

one

Stock Prices

investors
these

the

were
•

III, earnings per share

the Dow Jones

Industrials are

adjusted to reflect the taxes paid
•! by investors' in various income
brackets.
The brackets indicate
the taxable incomes of investors.
!
•

•

the

.jti'.

•

■

;

Table III.

Earnings Per Share
'-r T*.

•

IV:

10,000— 25,000
25,000— 50,000

50,000^-100)000
100,000—150)000

1937

10.00
9.00
6,00'
4.50

taxes

eration,

are

take

eral

Bank

Reserve

hold¬

stock

revealed that stocks

odd-lot

York

New

were

bought

that

during

buyers

period but were sold on balance
by large investors and by part¬
ners, in stock exchange firms.
In

speculators de¬
cash in on their capital
1946,

June,

cided

They did not know when

gains.

the
inflationary
boom
would
burst, but they wanted to be sure
to get out in plenty of time, just
as speculators did in 1919.
When

The decline from June to August,

tion

Statistics of

Source:

;

level

justified by current tax rates, they
became stabilized. In other words,
prices in the spring of 1946 overstock

discounted

earnings after
taxes at the top of the inflation¬

boom.
counting

When this over-dis¬

ary

corrected,

was

became
current

stock

stabilized in line
earnings after ad¬

rallies "and

The

since

market

based

fears

declines in
fall

last

have

the

been

on
alternating hopes and
regarding the outlook for

regarding the outlook for tax
reduction.
Therefore, if President
Truman signs the tax reduction

the Dow Jones Industrials
About 20% of all dividends re¬ should rally substantially until in¬

bill,

vestors become convinced the bus¬

iness

recession

$10,000 and $25,000. About
45% of dividends went to individ¬
uals earning less than $10,000 and

way.

,•

tween

with, incomes

investors

55%

$10,000. This indicates that
the typical investor has a taxable
above

$10,000.

above

somewhat

income

second

glance

really

under

•

they
become so
con¬
vinced, stocks will probably de¬
cline in the same way they de¬
clined in the second half of 1937.

Different Trends in Speculative
and

Investment

Stocks

Tax

changes do not affect all
stocks equally.
Stocks which do
not
pay
dividends,
and
stocks
whose earnings fluctuate extreme¬
per share
after his taxes, com-,
pared to $10.00 per share in 1937. ly, are usually bought for the pur¬
That explains why the Dow Jones pose of getting a capital gain, and
Industrials ; are
now
selling at sold to avoid a capital loss. That
about
were

the

same

prices

they

ten years ago.

explains why stocks of speculative
rather than investment
quality
are

Effect

Tax

Reduction Bill

reduction in
tax rates recently passed by Con¬
gress and sent to President Tru¬
How important the

the

rise in the

Industrials

Jones

Dow

things being equal.

largest

investors

200,

While

would

re¬

ceive

the

dividend

greatest

income

increases

after taxes,

in
the

smallest investors would' enjoy an

12.50

fO.OO

4.50

7.50
6.00

their stocks.

While such stocks follow the Dow

ods of

short peri¬

over

time, their movements dif¬

fer from the Dow Jones Industri¬

als

into
.

consid-.,

that

quality, dividend paying stocks at

cheap only to

value

makes

the

dicate

that

certain of

day

than

have

held

This would in¬

speculators

are

business recession to¬

Thus the
loss in 1946 of $260 millions odd,
bringing reserves down to $1,245

millions, may
unduly great.
The

dividend-paying

possible to

market

stocks

construct a

not
in

deficit

current

our

appear

ac¬

counts with the United States last
year

$600

was

loss

than
other

millions

official

half

but

the

was

reserves

that much

less

by virtue of

dollar

tain

receipts and of cer¬
capital transactions. Most of

the

they

were

last

fall.

receiving
credits
have, as part of the
agreements, undertaken to pay for
a
portion of their purchases in
convertible foreign exchange. In
1946, some $237 millions in gold
U.

dollars

through

received

were

net sale
of U. S. securities held by Cana¬

addition, there was

dians of

present

reserves

1946.
cit

$50 millions.

some

the

In
on

the

possibilities

favor lower

prices for both groups.

the drain

year,

be larger than in

may

this

has been notably
in the early months
As the year goes on, and
year

higher than
of

1946.

particularly if there
action in U. S.
trend

checked

But

whole

expect

deficit

may

even

re¬

taking

appears

larger

the year as
reasonable to
merchandise
1946.

trade deficit than in

nificant
in

the

offsetting
of

words

A sig¬

is that,

factor

Minister

the

"this year we expect to
substantially larger pay¬

Finance,
receive

ments

re¬

some

possibly

and

versed.

prices^ the upward

the

from

convertible

the

United

number

exchange

and

Kingdom
other

Special

to The Financial Chhoniclb

Simon

CITY,

has

MO.—Herman

become

affiliated-

fluctuat¬

change Control Board, "all but a
very small fraction of
Canada's
international

transactions

take

place at official exchange rates."
Summary
To

sum

basic

there

up,

factors

position

the

„

clear and

are

strength in

the

dollar.

Canadian

By the test of comparative prices,
the, currency is a Strong one.
By
test

the

•

balance of

overall

receipts and payments, it also ap¬
to be soundly based.
The

pears

gold and U. S. dollar reserves
still substantial.

better

are

others.

are

The general eco¬

prospects

those

than

country

the

most

The big

question mark is
the prospect for exchange con¬
vertibility
under
conditions
of
freer and expanding international
trade.
That depends largely on
recovery of production and res¬
toration of economic order in the

countries of Europe
Asia, which in turn depends
heavily upon the provision of suf¬

war-ravaged
and

ficient aid in U. S. dollars to per¬

the

mit

rest

the

world

fi¬

urgently needed purchases
from North America.
In closing,
nance

should

added

international

the
look

there

that

even

economic

out¬

as discouraging,
serious question as

regarded

very

to whether

reduction

in the

ex¬

coun¬

change rate would in present cir¬
addition, loans and ad¬ cumstances have much effect in
vances
through''the World Bank correcting Canada's U. S. dollar
and International Monetary Fund
deficiency. Referring to sugges¬
may help to ease the acute world¬
tions that the official rate on the
wide shortage of U. S. dollars.
Canadian
dollar
should
be
re¬
In

currency

for

the

is the economic outlook

If its
view of

country concerned.

residents

take

gloomy

its prospects they will'
increase
their
assets

countries,

and

attempt to
other

investors

foreign

turned

Canada's Economic Outlook
The final test of the value of a

discount

Minister of Finance
said in his budget address: "This
argument is based largely on pre¬
war conditions of unused capacity
funds,

and

the

limited

exist today.

demand

that

not

to asume that
exchange depreciation would re¬
strict the flow of imports or in¬
It

sems

liquidate crease the flow of
exports.
A
Under
large proportion of our imports
exchange control such actions can- from the United
States, including
be severely restricted if not en¬
for instance, such necessary prod¬
tirely prevented, though control ucts as
coal, petroleum and raw
of capital movements cannot in¬
cotton, would clearly not be af¬
duce foreigners to increase their
fected at all, and under present
investments in the country con¬
conditions
of
shortages on the
part of their investments.

cerned.

supply side and urgent and un¬
position is a satisfied demands on the other,
comparison with the effect On our volume of im¬
most other countries today. This, ports
of, say, a 10% change ir^ttie
country has come through the war cost of most other import iterhs
Canada's economic

strong

with

one

increased

productive

capa¬

with a larger and more
skilled working force, with a com¬
paratively low price structure,
and with an economic machinery
city,

that

functioning in
Canada

manner.

orderly

has

devel¬

also

Independence and
self-reliance and a much greater

oped

greater

ability

handle

her

eco¬

own

would be very

slight indeed.
side,
too,
the
change in the exchange rate [the
return to par last July] has had
relatively little, if any, effect in
reducing the amount of our ex¬
ports, except possibly to some ex¬
tent in the case of gold.
Our
On

the

export

...

judgment on this matter has, I
think, been confirmed by the ac¬
tion of many other governments.
The exchange rates which they
have selected

and maintained in¬

fairly clearly their view
that under prevailing conditions
of widespread shortages, limited
dicate

a multilateral and relatively free
supplies and urgent needs, the
trading system is established, her possibility of a country improving
future is bright. Even if the proc¬ its exchange position by currency
ess
of rebuilding production and depreciation is extremely limited."
trade in Europe and Asia is dis¬

appointingly

slow,

hard to
will not
with that of
is

favorably

most other countries.
In

assessing Canada's economic

prospects,

KANSAS

market with

narrow

nomic

The merchandise trade defi¬

compare

House,

ing supply and the Canadian dol¬
lars purchased in it have only a
limited use—-they cannot be used
to buy Canadian goods or to settle
current payments owing to Can¬
adians, According to the last An¬
nual Report of the Foreign Ex¬

coun¬

tries other than the United States.

of the tax bill has been sustained

the

purchase
funds
largely to invest in Canada. It is

the

with

transactions

The buyers are non¬

who

countries

believe that her position

official rate.

residents

from Canada

should

the

years.

Now that President Truman's veto

With Prescott, Wright Co.

two

period

above those lows.

Understanding of the impact of
taxes

It is

Dow Jones Industrials

Explanation of 1946 Market Break

high personal

the

of
several nomic affairs. The nature of her
interesting to note resources and capital equipment,
that these speculative stocks have
of course, continue to emphasize
been in a declining trend'.
They her great dependence on inter¬
have broken the lows of October,
national trade, and if reconstruc¬
1946, significantly, whereas the tion proceeds succesfully and if
over

months.

equal increase in market value of

3.00..

much higher relatively to 1937
the Dow Jones Industrials.

than

Jones Industrials

expressed the
reserve
of U. S.

will likewise "attempt to

When

Table III
shows that the average investor
who buys the Dow Jones Indus¬
trial is buying earnings of $10.50
A

:.;>•< '

had

dollars and gold might be halved

business in the second half of 1947

Income,

that

tries;"

and

Part I, 1942

•

view

1946,

from

Current Market Situation

13.5
19.6
13.8
10.4
4.0
8.0

$150,000

Over

justment for taxes.

31.0

50,000—100,000
100,000^—150,000

correc¬

speculation.

stock prices fell

with

% of Total Dividends

10,000— 25.000
25,000— 50,000

much

too

When

Received, 1942

Under $5,000

accordingly the

was

prices

7.00

obvious

today's prices are

their

reduced

(Continued from page 16)
August,

an¬

A study made by the Fed¬

ings.

IV.

10.50

'"Adjusted for tax cuts in recent bill.

income

1947
f947 1947*
$4.000--r $6,000 $11.00 $r5.00 $16.00
8)000'— 10,000
11.00
13.50 15.03

Tax'Bracket *

speculator

rose,

Distribution of Dividends

other

After Personal

Taxes

stock

specu¬

who thought it
As stock prices
investors holding stocks for

ing what proportion of total divi¬
dends was received by taxpayers
in each bracket. This is shown in

justify

the

his

sell

would go higher.

distribution of stocks by see¬

reduce earnings are the average rates levied
on -additions
to income in these man would have been to the aver¬
brackets.
To illustrate, an invest- age investor, is shown in the last
column of Table III.
These pro¬
or has $18,009 net taxable income
after all deductions.
K he then posed tax reductions would in¬
crease earnings per share by $2.00
receives $2,000 in dividends, he
for the average investor and by
pays a 50% tax on that additional
income,«leaving his only $1,000 $3.00 for the wealthiest investors.
net.
In'1937, he would have paid Theoretically, such a redaction in
a tax of 17%, leaving him $1,660
taxes would
The tax rates used to

jiet.

long

other

pro¬

■

could

ported were received by individ¬
uals having taxable incomes be¬

ii.

•

think

who

cheap; have
that

.! of
•

Taxes Explain Low
Those

•

fairly

$5,000—$10,000

2.92

Year

; Total for 6 Months. 5.83

infla¬

postwar

lator

$4.87

typical

stock market

portional to the amount of stock
owned, it is possible; to estimate

„

tionary boom.
Since the tax on
capital gains is only 25%, it was
worthwhile to speculate in the

amount of

assumed that "the

it is

Tax Bracket

Quarter Preced-

sult

in. qach bracket. If 1946,

by taxpayers

1947

ing Year
$2.91
1st Quarter Current

1946,

has published tables showing tive for investment at those prices.

the amount of

Table

4th

June,

September,
speculators

ages? It is probable that the $10,- they sold their stocks, however,
000—$25,000 tax bracket is the there were no investors around to
answer to this question.
Here are buy them, because current tax
the reasons why. The U. S. Treas¬ rates made these stocks unattrac¬

Earnings per Share on Dow Jones
Industrials
1937

particular in¬

stock to a

1945,

From

bought stocks aggressively in ex¬
pectation of capital gains as a re¬

vestor

Table

logical explanation of the behav¬

Stocks are

below

comes

The Canadian Dollar

High Personal Taxes Slash Stock Values
small

(3263)

stricted

too

emphasis

much

not be placed

the

unofficial market

Canadian

dollar in

New

investments

re¬

With King Merritt &
Special

Co.

to The Financial Chronicle

WORCESTER,

MASS.—Harlow

bank D. Adkins is with King Merritt &

with Prescott, Wright, Snider Co.,

balances but who

916 Baltimore Avenue.

ized to convert such funds at the

are

Special to The Financial Chronicle

BOSTON; MASS.—Gregory G.
Fitzgerald is with Merrill Lynch,
Pierce, Fenner & Beane, 10 Post
Office Square.

for the

York.

is supplied almost solely by non¬
residents who wish to liquidate
Canadian

Joins Merrill Lynch Staff

not author¬

Co.,, Inc.

was

with Irving P.

Marse & Co. of Boston in the past.

THE COMMERCIAL & FINANCIAL CHRONICLE

(3264)

Housing Program. The proj¬
the
only authorization

erans

ect

was

exceeding

News About Banks

when

$100,000

applications

NEW

Bankers

and

ETC.

OFFICERS,

William

meeting

the

Trustees

the

The

New

The Bank began the de¬
velopment of its overseas branch

000,000.

York Trust

system

lishrnerit

Co., held June 17, John
Bierwirth, President, announced

the

election

Clinton

Mac-

Buenos

first

its

This

to Assistant Vice-Presidents.

urers

the

time, Mr. Bierwirth
appointed Edward L. Palmer, As¬
Treasurer, • and John .H.
same

sistant

Baile and Edwin A. Lee Assistant

Mr.

Secretaries.
with

been

New

Company since
many

rate

ing

MacConnell

The

York

1909 and has for

specialized in

years

has

Trust

corpo¬

Prior to receiv¬

trust work.

leave of absence to join the

forces

armed
had
Trust

Hildt

1941, Mr.

associated

been

with

the

since 193G.
He
appointed Assistant Treas¬
urer in 1945.
Mr. Mays joined the
Trust
Company
in
September,
1934.
He was granted a leave of
Company

was

absence

to
Air

States

the

serve

and

Force

Assistant
Treasurer
in
Mr. Palmer joined the Trust

1946.

Company in 1941. He was granted
in the

leave of absence to serve

United

States Navy

Trust

the

and returned
in June,

Company

1946.

Mr. Baile and Mr. Lee have

been

associated

with

the

Trust

and
have served in several capacities
in the Corporate Trust Division.
for

Company

Sloan

Paul

Assistant

from

Company

announced

York,

promotion

President

Colt,

Trust

Bankers

years

many

18 the

June

Jr.

Bonynge,

As¬

Treasurer

the

Vice-President.

sistant

of
New

time Mr. Colt announced the

same

election to Assistant Treasurer of

Kreider, Everett Orr, Jr.,
and John Henry Schroeder.
W.

1928, marking the first time that
large bank had interested it¬
self in the small borrower.
Last

Justin R.

was

Whiting, President of

June 13 elected a member

of the board of directors of Bank¬
Trust Company of New

ers

announced

was

York,
Sloan

Colt, President of the Bank, fol¬
a
meeting of the board.
Mr. Whiting became President of
the
utility corporation in 1940,
succeeding Wendell L. Willkie.

lowing

He is also President of
Power

Consumers

Company in Michigan.
*

Stewart

the

lionth

dollar

Vice-President

Morris,
of

died

had

when

took place be¬
Manufacturers Trust Com¬

the

and

tween
pany

merger

Chatham Phenix
with which latter
he had been connected
the

National Bank,

institution
since

1923.
*

Brady,

Gage

York celebrated its

135th anniver¬

Monday, June 16. Estab¬
lished in 1812 as the City Bank of
sary

New

has grown
est bank

to be next to the larg¬

in the United States." It

is noted that the
ure

of the

outstanding feat¬

National City

Bank is

and

correspondents

Company.

M. Fish¬

Treasurer of Standard Brands
Incorporated and
its subsidiary
er,

Director of the

as a

New

Company,

Trust

16
Christenberry,

York/ was announced on June

Robert

following

Chairman,

Board

meeting of the Board. Mr. Fisher
has been Treasurer of Standard
Previously he

1942.

since

Brands

which

the

paid-in, capital

mediately

joining Stand¬

before

Earlier he had been

Brands.

ard

National City

associated with the

Lazard

and

Company

Freres

Co.

appoint¬

of the

Announcement
ment

Joseph R. Brennan as a
of the Emigrant

Vice-President

City Bank started business

Other

for

bank

elections

Bernard

who

Brennan,

Vice-President, which he has held
for
three years,
has been con¬
nected with the bank for 26'years.
He is in

office.
at

the

charge of the 42nd Street
It

sistant

also

was

made

that

time

same

O'Connell

trustees

the

follows:

dent

and

David

Of¬

Assistant Mortgage

Pirrmann

was

named

was

known

Lawrence
as

Vice-President;

As¬

Arthur

Voute, as Assistant Secretary and

Gay, was named to the
position of Personnel Officer.
*

Street

office

has

Rommel

Manager

appointed

FrederickW. Paterson
chief clerk to Auditor; and

President;
from

Edgar

Rademacher

from

head teller to Assistant Secretary.
*

tional

Cashier,

the

$500,000

$625,000 became effective on June
The Bank is to open its en¬

larged bank building on June 21,
and in the meantime a preview
of the new features therein was
held

June 18 from 3:30 to 5:3.0

An unusual feature of the

o'clock.

building is the suspen¬
the ceiling of the new

from

sion

airplane—a Republic
T. Roth, Presi¬
the Bank explains that
an

Arthur

Seabee.

dent

this

Others

ing

new

innovations.

the

one

are

children's bank¬

department, a travel bureau,
library
and
new

architectural

safeguards installed, in¬

banking

cluding the use of television to
verify
check
signatures.
Dade

Brothers,

ship¬
Aviation Corp.
will
jointly
Seabee exhibit, ac¬
of Mineola,

Inc.,

pers, and Republic
of
Farmingdale
sponsor

the
to

The

96th
River

Savings Bank of New York.

Mr.

formerly

interest

the

the bank's

announce¬

through

Pa.

Ernest

an¬

Keys,

at their regular

share, plus

extra dividend of 10 cents per

share, payable June 25 to share¬
of record June 9,
;

announced

was

ident

the

Electric

the

pany,

was

and

the

Gas,

Power

Com¬

named to fill

was

Bank's
*

directors

The

note that
they were
earning 5%%, while in 1946, the
net result

Effective
National

May

Trust

been

Na¬

the

Aetna

Companies,
the

Life

Harlem

New York

Savings

trustee

Bank

The

Schenectady, N. Y.

meeting of

voluntary

the Board of Trustees,

it was an¬
Beardsley,

was

placed in

June

nounced

Glover

President of the Bank.
has

four

offices

The Bank

New

York.

2, having been absorbed by
the Schenectady Trust Company.
The Bank had a capital of $400,000.

fairly

Lexington Avenue.
*

and Trust

Bank

tional

The

estimated

cost

authorization

struction of

Appointment by the Buffalo In¬

$175,000.
permits con¬

of
its Automobile Finance Division,
was
announced
on
June
9
by

James

Driscoll

President

cording

Carlton

the

Manager

Cooke,

Buffalo

ac¬

"Evening

News" of June 9.

Chicago,

Company,

President

Trust

Directors

the

Pilgrim

of Boston, Mass.,
meeting appointed

Company

society

of course,

by the Board of Directors. J.
Personnel Director,

M. Herrmann,
and C. A.

"I, for one, do not like it! Per¬
haps if it were not for the ladies

Hemminger, Public Re¬
elected As¬

lations Director, were

present,

Cashiers.

sistant

❖

even

might express myself
forcibly in good Min-

isters and Missionaries terms.

Through the sale of $50,000 of
new stock, the Merchants National
Bank
of Sacramento,
Calif, has
increased its

"It is

of the

case

deduction

the

£.

"Nevertheless, this is the prob¬
which we have to face.
All

May 22

the

this

payment, or refunded into securi¬
paying 3 Vz % and refinanced
currently a second time as low as
Vh %. Consequently, we, like the-

fund, in my opinion, is in an
impregnable position and I think
our

there are many good reasons for
being optimistic about the future.'*

Stocks
on

and

dividends

interim

Fairman Adds to Staff

the 27th May.

Special to

statement

the

LOS ANGELES,

the

desirability

out
the
disparity
the interim and final

tributions.

£2,146,000

was

issued

'A'

dends."

for

the Los Angeles

dis¬

With Flynn & Levitt
(Special

The

Financial

Chronicle)

LOS ANGELES, CALIF.—Ray¬

15th Jan. last does

divi¬

Stock Exchange,

imiimi ■

announced,
Stock which

subsequent

has

be¬

not rank for this interim dividend

only

staff

West

As already

the

but

the

last
when

CALIF.—Eetty

been added tn
Fairman & Co., 21D'
Seventh Street, members of

Auers#ald

Chairman's

stockholders

mentioned

The Financial Chronicle

com¬

with 3% for the correspond¬
ing period in 1946 and were fore¬

have

serves.

pare

shadowed

companies,

obliged to adjust our re¬
Notwithstanding all this,

been

18th June, to holders

RJegister

These

insurance

life

advices added:

above

the

5% bonds held 1S>
have been, called for-

good
ago

ties

"Interim dividends will be pay¬

the

our

years

income

drop from a return of 5%,
$1,500,000, to a return of pos¬

rate of 9/- in

announcing

the

lem

subject in each

tax at the standard

income

or $900,000, indicating a
shrinkage of 40%. I fear it all has
a political flavor.

Board of Directors of Bar¬

the 'B' Shares,

net

sibly 3%

Currency.

The

pretty serious matter to

annual

as ours,
or

"Bulletin" of

Comptroller of

the

Office

invested fund of $30,000,000, such,

capital from $200,000

issue

June

the

see

$250,000, it is learned from the

tween

the

formerly anticioated.
This,
applies to life insurance
benefits as well as all other forms
of savings.

elected
Vicebank on June

was

evening

The

segment

was

•of

dustrial Bank of Buffalo N. Y.

The Broadway Savings Bank of

(

large

able

The main office is at 125th Street

and

effective

liquidation

Personally, I do
Certainly it has

tough period for that

Profits to Surplus account.
who are obliged to live on income
Capital of the First National
from securities.
Today those who
Bank of Chicago
is $80,000,000,
have
been
thrifty
and
saved
and with this transfer the surplus
money in the past or who have
account is $65,000,000.
set up trust funds for the benefit
*
*
*
of their families have been and
James
H.
Clarke, Assistant
are
being penalized in having toVice-President of American Na¬
face a much lower return than

Cumulative Preference Stock and

has

course

The

Bank

this

not think it has.
been and is a

vided

Com¬

National

Union

recent

Shore,

Bay

Affiliated

and

elected

was

not

advantageous one to our

people generally.

their

in¬ clays Bank (Dominion, Colonial
Rommel, former Assistant Man¬ creased its capital from $125,000
and Overseas) have declared In¬
ager has been with the bank since to
$175,000 through the sale of terim Dividends in respect of the
1926 and has been at 96th Street
$50,000 of new stock, according year ending 30th Sept., 1947, of
since 1940.
to the weekly "Bulletin" of the 4% actual on the old 'A' Stock
*
*
*
Office of the Comptroller of the and on the 'A' Stock recently is¬
J. Edwin Lewis, Vice-President Currency.
sued
in
exchange for the 8%.
pany

have to leave it to the his¬
to appraise the value of
change, particularly as to

may

torians

va¬

whether

Chicago,

interest rates for a

time and this has been ac¬
centuated since 1933. Possibly we

First

the

28th

and

Bank

street

way

this

First

but 2.92%.

was

long

Board.

the

ago

years

"We have been traveling a one¬

June 13 directed the
transfer of $5,000,000 from Undi¬
meeting

interesting

than 25

less

Bank

tional

has

declining almost continu¬
ously since 1925 when an earning
rate of about 5.25 % was reported,
the
Institute
of Life
Insurance

noted in the Balti¬
which stated that

"Sun,"

Mr. Crane

business

insurance

life

1940.

rate of

13.

June

Consolidated

Light

the

commented.'
P.

National Bank of Baltimore,

1946,

dropped

history

the

been

1947.

Charles

Director of the Balti¬

'The investment earning

"It

funds

election

Crane,

2.92%

earned

States

invested

companies

insurance

United

meeting

the usual di¬

vidend of 30 cents per

The

the fol¬

1946:

3.61% in the prewar year of

Board of Directors of the In¬

holders

business, the Institute of Life Insurance reported yesterday.
The
1945 rate of 3.07% contrasted with

Trust

and

Harrisburg,

June 5, declared

"Times,"

earnings

their

based upon current
I recently read in

York

'Life

the

Vice-President and Treasurer that
stitution

two about the

statement concerning life

under

Bank

nounced

the

New

lowing

Mervyn E.
continue

rates.

insurance

Company

the

word

the first time the net rate

Central

the

been

the

East

"Now

future outlook for this and similar

organizations

Kprb,

will

cancy

from

prevailing low interest rates:

formerly Vice-President

County),

Clarence

Dr.

After

An increase in the

capital of the
Franklin
Square National Bank
o f
Franklin
Square,
(Nassau

paid warm tributes

Board.

Mr. Crane is Executive Vice-Pres¬

foundations, masonry at a recent
$800,000.
Today, the Na¬
City Bank of New York walls, concrete floors, and parti¬ Donald K. Taylor as an Assistant
Aproval was on the b^.sis Treasurer. Mr. Taylor had been
has a capital of $77,500,000, and tions.
examiner
for
the
State
total resources of nearly $5,000,- of negligible impact on the Vet¬ senior
was

Secretary; J. Kenneth Strifert
from Auditor to Assistant Vice-

ment.

William

Pittsburgh

Md.,

cording

the

elevated from Assistant Secretary
to

work

Vice-President.

Vice-Presi¬

Assistant

Daniel

ficer;

and

who was
Treasurer,

Burger,

Officer;

made

lobby of

made

Mr.

vances

and

years

C.
Dalziel, Assistant Vice-President,

the
ad¬
from the post of Assistant

Savings

John T. Madden, President of
Bank.

been

Vice-President

made

enlarged

was

by
as

Vice-President
was

has

secretary since 1936.

announced

Bank of New
June 16 by

Industrial

with

the

the investment
banking business, being associated
with Morgan Stanley & Co. im¬

commercially
important New York City, has received au¬
city on the globe. The Bank has thorization from the Facilities Re¬
46 branches overseas, 66 branches view Committee of the Office of
in Greater New York and hun¬ the Housing Expediter to partially
a
three-story
bank
dreds of correspondent affiliations construct
in this country and abroad.
In building at 250 West 23rd Street

1812

with

by John S.
the
Bank.

named Comptroller.
Boyle,

Bank,

Deane

Mr.

Cashier, was elected
Cashier, and Willis E. Duff, also
a former Assistant
Cashier, was

South

appreciation to Mr. Case for his
as Chairman of the Finance

Brook¬
lyn, N. Y. at the recent meeting
of the Board of Trustees, it was
announced by David Irving Mead,
President.

—all of whom

Assistant

elected

was

Treasurer

Savings

of¬

this

engaged

was

every

rgs

and

Trustee

Brooklyn

June

President

William

Deane

with

"Post Gazette" also said:

was

its 'round-the-world service, with
branches

the

Bradford is

John

election of

Clinton

announced

Lewis

President of

Jr.

York, the Bank it is claimed

Vice-President.

were

the Trust

companies,

was

1929.

in February,

pany

Investment

The

until

1923

from

has served

the Bank and Lindsay

President

Brooklyn in 1915 and was

Assistant Cashier of that insti¬

tution

affiliate, City Bank
William

trust

Farmers Trust Company.

' sjs

The National City Bank of New

Bank of

National City Bank

of the

it's

and

said

Chairman

Rentschler

Manufacturers

June

bil¬

loans,

enjoys the
highest personal loan volume in
the
banking
field.
Gordon S.

new

10, at his home in Rye,
was 53 years
old and
been with the bank since 1932

personal

Assistant

Trust Company of New York,
N.

Robert A.

Bank granted its

month

York

Commonwealth & Southern Corp.,

joined the staff of the Mechanics

ap¬

pointed

pine Islands.
An event in bank
history was the inauguration of
Department in

Board

Elster

Mr.

Reporting

the Personal Credit

today

of the
Flatbush,

10.

Follow¬
ing the merger he was appointed
an Assistant Secretary
of Brook¬
lyn Trust Company, and on Jan.
17, 1946, was elected an Assistant

of the Bank's 46th overseas
Cebu, in the Philip¬

and

offices
June

connection

Commissipner's

•

(Continued from page 12)

Gallup
followed with a presentation of a
*
*
*
book of engrossed resolutions, Mr.
Case, in a reminiscent and deeplyThe election as Vice-Presidents
of the Farmers Deposit National moving speech, made interesting
Bank of Pittsburgh, of Elbert L. remarks regarding his stewardship
Frank and Richard H. Wells was and had the following to say on

this

May

United

was

died

N. Y. and

his

fice, he had served with the Old
Colony
Trust
Company,
the
Beacon Trust Company, and the
Liberty Trust Company.

Assistant

Smith,

establishment
year

Elster,

Bank

merged with Brooklyn Trust Com¬

branch—at

Jr., and Edmund
Mays, Jr., from Assistant Treas¬

Prior

continues,' with the

development

of Thomas Hildt,

estab-

branch

Argentina.

Aires,

Connell, formerly Assistant VicePresident, as a Vice-President. He
also
announced
the
promotions

the

with

1914
of

14; from that paper
also quote:
the

officer in charge

company's
of

June

of Brooklyn,

Company

regional
Following

ap¬

J. H. Case Honored

stated in the Boston "Herald"

was

Vice-President of Brooklyn Trust

CAPITALIZATIONS

Board

REVISED

were

Banking Commission since 1933 it

proved and 29 denied.

CONSOLIDATIONS
NEW BRANCHES

June

Thursday, June 19, 1947,

mond O. Lewis has

joined the staff

Flynn & Levitt, 411 West Sev^
enth Street.
j
of

•

[Volume 165
L

Number 4604

ETHE COMMERCIAL & FINANCIAL CHRONICLE

'
,

'(3265)

Securities
•

I'll!

•

Ui'tlJl

Now

Registration

INDICATES ADDITIONS SINCE PREVIOUS ISSUE

Acme Electric Corp., Cuba,

June

filed

N. Y.

(7/7)

of its

532,996 shares of $6 cumulative convertible prior
preferred stock at the rate of 1.4 shares of first
prefer¬
ence stock for each share of
$6 prior preferred.
Shares
of first preference not issued in
exchange will be sold

123,246

shares ($1 par) common stock.
Underwriters—Herrick, Waddell & Co., Inc., and First
Colony Corp.
Offering—To be offered publicly at $5
ft share.
Proceeds—Company will receive proceeds from
the sale of 58,880 shares and four
selling stockholders
the proceeds from the sale of 64,366 shares.
Company
also will receive proceeds from the sale of
20,000 war¬
rants for common stock to underwriters at an
aggregate
price of $2,000. Net proceeds will be used to pay current
bank loans and for working capital.

to underwriters. The

Allied Finance Co.,

Dallas, Texas

filed

second preference
1,355,240 shares of
subscription to common
of the
company in the ratio of one-third

will

common

stockholders
of
,

new

scribed

publicly.

offered

for

each

common

held.

Unsub-

shares of

common
will be purchased by the
Price—Public offering prices by amend¬
Proceeds—Net proceeds will be used to retire all

unexchanged shares of $6 prior stock and to redeem its
outstanding 7% preferred stock.
George Eastwood, President, in letter to stockholders,

25,000 shares ($20 par) 5% cumulative
convertible preferred.
Underwriting—None. Offering—
To be offered to present stockholders in the ratio of one

Dec.

share for each two shares of common held.
not taken up to and
including

not be necessary to issue
any additional shares of
mon stock" as
part of

chased by Republic Insurance
Co.; balance will be sold
to or through the Dallas Texas National Association
of

•

Any shares
18,750 shares will be pur¬

Security Dealers.

Price—$20

share.

Proceeds—To

re¬

tire present indebtedness.

American
27

Broadcasting Co., Inc., N. Y.

publicly. Price by
■mendment. Proceeds—To prepay notes
payable to acquire radio station WXYZ, to construct broadcast trans¬

mitter for station KGO at San Francisco and for
working

capital.
American Cyanamid Co., New York (6/26)
May 13 filed 391,076 shares ($100 par) 3J/2% cumul. pre¬
ferred, Series A. Underwriter—White, Weld & Co., New
York.
Offering—Offered
for
subscription
to
com¬
stockholders of record June

share of

held

new

preferred for each

$102 per

ceeds—To redeem

share.

the basis of

shares of

seven

Rights expire June

one

common

the

conclusion

will
com¬

Associated

Magazine

Contributors,

June 12 (letter of
notification) $100,000 3% convertible
notes, due March 25, 1948.
Underwriters—None.
Price

increase

25.

Pro¬

Atlantic

working capital for publication

(N.J.)

include:

The

First Boston

This dividend policy was to become ef¬
15 and continue to the end of 1948.
The

fective June
has

granted

American

Gas

Electric

Co.

until

Aug. 5, 1947, to sell the shares.
•

Steel

Corp.,

New York

$3,000,000 15-year sinking fund debentures,
1962, with non-detachable subscription warrants for

due

Mar. 31 filed 133,000 shares (50c par)
common, of which
10,000 will be offered to officers and key emoloyees.

Underwriter—Townsend, Graff

Barium

June 17 filed

American Machinery Corp.

& Co.

Price—$3.50 per
share. Proceeds—For general corporate
purposes includ¬
ing reduction of bank loans and outstanding notes.
American Water Works Co., Inc., N. Y.

purchase

1946 filed 2,343,105 shs. of common (par $5)
additional number determinable only after the
results of competitive bidding are known. Underwriters
—To be filed by amendment. Probable bidders include
an

Dillon, Read & Co. Inc., White, Weld & Co., and Shields
& Co. (jointly), and W. C. Langley & Co. and The
First Boston Corp. (jointly).
Offering—Price to public
by amendment.
:

common

stock.

Underwriter

—

Name

ment of

Price by amendment.
Proceeds—For pay¬
loans and for other corporate
purposes.
Busi¬

ness}—Holding company whose subsidiaries manufacture
steel products.

Beckworth

June

Corp.,

(letter of notification)

star Rita

company;

William

der the laws of

Illinois, filed $25,000 of pre-organizatkm
Price—$5 minimum subscription. No un¬
acquire instruction material, furniture
equipment, and for working capital.

derwriting.
and

Blumenthal

(Sidney)

& Co. Inc.,

New York

Aug. 30, 1946, filed 119,706 shs. (no par) common and
subscription warrants relating to 30,000 shs. thereof
Underwriting — None.
Proceeds — For reimbursemen*

April 1, and for funds deposited in trust for redemption
Oct. 1 of remaining preferred shares. Although it wat
to offer the stock for subscription to stock¬
holders at $10 per share, company on Sept. 20 decided
on

proposed

•

Boston

June

ment business.

Bowman

Pictures

will

sold

Corp.,

Gum, Philadelphia

Sept. 27, 1946, filed 268,875 shs. ($lpar) common. Under¬
writer—Van Alstyne, Noel & Co., New York.
Price—

$7,125

per

share. Proceeds—Stock is being sold by share¬

holders who will receive

Flying

Brayton

proceeds.

Service,

Robertson,

Inc.,

mo-

March 24

(letter of notification) 50,000 shares ($1 par>
27 % cent cumulative, convertible preferred and 50,006
shares (10c par) common.
Price—$5 per unit,
consisting!
of one share of each.
Underwriter—White and Co., 3L>
Louis, Mo. For expansion of operating facilities and for
working capital.

Brooklyn

(N. Y.)

Co.

Union Gas

May 3, 1946 filed 70,000 shares of cumu. preferred stock
($100 par). Underwriters—To be filed by amendmatfL
Bids Rejected—Company July 23 rejected two bids tm~

per

dividend.

Harriman

Ripley

Co. and Melton
dividend,
in¬

Securities Corp. bid 100.779 for a 4.40%

definitely postponed.

California

Hayworth, who is Vice-President of the

Columbia

Morris

of Series

Price—$100

Fund, Inc., Boston, Mass.

filed

500,000 shares ($1 par) common. Under¬
writer—Vance, Sanders & Co., Boston. Price—Based "on
market.
Proceeds—For investment.
Businessi—Invest¬

4.30%

500 shares

ceivea for the stock.
Blyth & Co., Inc., and F. S. Mossley & Co. and associates submitted a bid of 100.06 for m

Los Angeles

stock and 500 shares of Series B stock.
share.
No underwriting.
The shares
screen

cago, as

amendment.

March 30,

Inc., Chicago

(letter of notification) Harold R. Lister, Chi¬
trustee for the corporation, to be organized un¬

subscriptions.

stock.

common

Electric Co.

bidding. Probable
Corp., and Drexel &
Co. (jointly); Shields & Co., and
White, Weld & Co.
(jointly); Dillon, Read & Co., Inc., and Smith, Barney
& Co.
(jointly); Blyth & Co., Inc.; Union Securities
Corp. Price—To be determined by competitive bidding.
Proceeds—The offering is part of American's
plan to
dispose of its holdings of 1,150,000 outstanding shares
of Atlantic City. The shares
remaining after the public
offering will be distributed as dividends on American's

SEC

Blackstone-Lister Schools,

to withould action.

City

March 19 filed 522,416 shares
($10 par) common, being
offered by American Gas & Electric Co.
Underwriters—
To
be
determined
by competitive

bidders

•

June

of
company's treasury for funds
expended in re¬
demption of 3,907 shares of 7% cumulative preferred

Inc.

outstanding 5% cumulative preference

stock and to finance expansion
program.

plus

come

"47—The Magazine of the Year."

pany to persons, firms, or corporations with whom the
corporation had network affiliation agreements on March
Bl. The remainder will be offered

mon

have

filed

950,000 shares ($1 par) common stock.
Underwriter—Dillon, Read & Co. Inc., New York. Offer¬
ing—A maximum of 100,000 shares may be sold by com¬

(

"we

company's refinancing plan.

—Par.

June

said

ing stockholders.

The

for

underwriters.
ment.

May

300,000 shares of

stock will be offered

whether such sales had the effect of making the enttt*
offering public. The Commission staff stated that regis¬
tration is required if any of the remaining 733,575 sharer
are to be sold.
Price—At market. Proceeds—Go to sell¬

Los

Angeles, and
Agency, Inc., Beverly Hills, Calif.
The

proceeds will be used for production of motion pictures.

Electric

Power

Co.

May

5 filed 80,000 shares ($50 par) preferred stock.
Underwriting—To be determined by competive bidding.
Probable bidders include Dean Witter & Co.; Blyth &

•

Benrus Watch

Arcady Farms Milling Co., Chicago

June

filed

96,000 shares

($5 par)

writer—Central Republic Co.
(Inc.),
amendment.
Proceeds—Of the total,

common.

Chicago.

Under¬

Price by

company is selling"
66,000 shares are being

30,000 shares while the remaining
sold by stockholders.
Company will use its proceeds for
payment of its indebtedness of $400,000 to the First Na¬
tional Bank of Chicago.
Business
Manufacture of
—

mixed feeds for livestock and

Arden

Farms

Co.,

Los

poultry.

Angeles,

June

4 filed 70,000 shares (no
par) preferred.
Under¬
writing—No underwriting.
Offering—The shares initi¬
ally will be offered for subscription to present preferred

stockholders in the ratio of

held.

Unsubscribed

one

share for each 2V2 shares
be offered publicly.

will

Price by amendment.
Proceeds—To pay off bank loans
and to provide funds for construction.

Proceeds—The

Inc.; Otis & Co. Proceeds—To finance expansion,
improvement program.
Bids—The company asked
the

(6/24-25)

and

common.

for bids for the purchase of the bonds on June 3, but

York.

Under¬

Price

by
being sold by
five officers of the company who will receive proceeds.
amendment.

sale

was

postponed.

are

California
March 26 filed

Berbiglia, Inc., Kansas City, Mo.

ferred

Sept. 12, 1946 (letter of notification) 41,000 shares of 5%
cumulative convertible $6 par preferred.

Calif.

Co.,

Co., Inc., M. Y.

April 24 filed 150,000 shares ($1 par)
writer—Hayden, Stone & Co., New

share.

Offering price

Underwriter—Estes, Snyder & Co., Topeka,

Kans. To pay
to open

outstanding indebtedness and expenses and
five additional stores in Kansas City, Mo. Offer¬

ing postponed indefinitely.

Berkey & Gay Furniture Co., Grand Rapids,
Mich.
Feb. 3 filed 733,575 shares ($1 par) capital stock.

writing—None.
are

Under¬

Offering—Company said all of the sharei

issued and outstanding.

The purpose of the registra-

and

Oregon Power Co.
60,000 shares ($100 par) cumulative pre¬

Co.

Inc.

408,000

($20

common. UnderT
competitive bidding.
Probable bidders include: First Boston Corp. and Blyth.

writers—To

determined

par)

(jointly); Merrill Lynch, Pierce Fenner &
Harriman, Ripley & Co. (jointly). California
Oregon will sell all of the preferred and 18,000 shares
of the common, Standard Gas & Electric Co. (parent,)
will sell the remaining 390,000 shares of common. Bids
—Bids for the purchase of the securities scheduled for
May and postponed to June 10, further delayed.
It is
stated that the SEC may approve a negotiated sale ef
the common, but it is expected the preferred will be sold
competitively.
Beane and

amendment.

Price—By

York.

Proceeds—Company

Company will use its proceeds to repay
outstanding closed mortgage 4% regis¬
tered serial bonds and to purchase plant property at
Elmwood Place, Ohio.
by stockholders.

NEW ISSUE CALENDAR
(Showing probable date of
June

offering)

19, 1947

Kentucky Utilities Co

Pref. and Common

National Glass Co

Nevada-Wyoming Mines Co
Public Service Co. of N. H.,

Common
(EDT)
Bonds
a.m.(PST)-Bonds

noon

Southern California Gas Co., 9:30
June

24, 1947
1—Common

__1

National Supply Co

Equip. Trust Ctfs.

Co., Ltd

Louisville, Ky.

Debs, and Preferred

New York

the basis of

one

presently held.

share for each five shares

Pref. and Class A

Rights will expire July 11. Price—$37.50 per share. Pro¬
ceeds—Proceeds, together with other funds, will be used

Debentures

additional shares of four operating com¬
panies, Peoples Natural Gas Co. (Penna.), Hope Natural
Gas Co. (W. Va.), East Ohio Gas Co., and New York

Southern Bell Tel. & Tel. Co.

(EDT)
June

39, 1947

Chicago Milwaukee St. Paul &
Pacific RR., noon

Equip. Trust Ctfs.

Continental
June

__Debs., Pref. and Common

Mechanics Finance Co

Body, Inc*

(6/24)

(letter of notification) 60,000 shares ($1 par)
common.
Price—$1 a share. Underwriter—Moreland &
Co.
To be offered to residents of Michigan only.
For

July 1, 1947
Manhattan Oil Corp

purchase

State Natural Gas Corp.

(CDT)

Pref. and Common

additional

machinery and

equipment and for working

capital.

July 7, 1947
Acme Electric Corp

Common

Crawford Clothes,

(Continued from
outstanding bonds.
ing capital.
•

Carlin-McCutcheon

41)

page

Balance will be added to work¬

Inc., L. 1. City, N. Y.

9, 1946, filed 300,000 shares ($5 par) common.
Aug. 9 filed 300,000 shares ($5 par) common stock.
Underwriters—First Boston Corp., New York. Price by
amendment.
Proceeds—Go to Joseph Levy, President,

•

Mining

Las

Corp.,

Cuddy

Vegas,

(letter of notification)

250,000 shares of com¬
mon, of which 100,000 shares will be used 'as promotion
stock, i The balance may be offered at $1 a share. Jtfo
underwriting. For development of mining property.'

mon.

and

June 24,

1946, filed 400,000 shares of

writer—No

underwriters.

Offering

Co.,

For mine exploration and for machinery

equipment.
Cyprus Mines, Ltd., Montreal, Canada

Toronto,
Under¬

ing—Shares will be offered to the public at 75 cents •
share.
Proceeds—Net proceeds, estimated at $300,000,
will be used for mining operations.

the public at

a share in Canadian funds.
Proceeds—For a variety
in connection with exploration, sinking of
shafts, diamond drilling and working capital.

21,

1946,

filed

Underwriter—None.
offered
rate of

for
one

90,000

(no

subscription

common

par) common.
initially will be
stockholders

share for each 7V3 shares heia.

sold to underwriters.
Price by amend¬
Proceeds—Working capital, etc. Offering indefin¬
itely postponed.
•

Price—At marKet.

June

part

tne

securities

Chicago,
behalf of three

The shares are being sold on

Los Angeles

Divco

Corp.,

geles.

used to retire

$250,000 of bank loans. The balance will
Business—Manufacture of

be added to working capital.

adding machines.
Claude

Neon,

Inc.,

are

being sold by a stockholder. Twin Coach

Co.,

•

Doug Allan Productions, Inc., N. Y.

writing—None,

subscription
share

for

each

held.

Price

by amendment.
acquisition
and development of oil properties.
Company also plans
to advance funds to Summit Airways, Inc., of whose
*

Proceeds—To finance airline operations and

stock it

owns

61%.

Cleveland
Feb.

21,

(O.) Electric Illuminating Co.

filed

1,847,908

(no

par)

June

Offering—The North American Co. owned all the shares
and offered

1,714,524 shares to

common

stockholders of

North American of record March 19 at $15 per share to
the extent of one Cleveland for every five North Ameri¬
shares held.

Rights expired May 27 and 1,648,275
shares were subscribed for. The remaining 133,383 shares
are
to
be
sold, probably through competitive sale.
Probable bidders include Dillon, Read & Co. Inc.; The
First

Boston

Corp.;

White,

Weld

(letter of notification) 100,000 shares ($1 par)
Price—$1 a share. Underwriter—Dickerson &

common

Co., New York. For purchase of equipment to sound¬
track, edit, and package film and for other corporate

Douglas Oil Co. of California,

Co.

and

Shields

Drackett

Clopay Corp.,

Cincinnati

(6/24-25)

cial Corp.,

New York, and for additional

working capital.

(Harry), Inc., Detroit

Mar. 31; filed 100,000

shares ($50 par) 4%% cumulative

preferred and 250,000 shares ($1 par) common.
Under¬
writers—F. Eberstadt & Co., Inc., New York, and Watling, Lerchen & Co., Detroit. Price by amendment. Pro¬
ceeds—To equip and improve recently acquired Cleve¬

Films

Inc., New York

filed 100,000 shs. ($5 par) CI. A stock and
shares (10 cent par) common stock, of which
200,000 shares reserved for conversion of class A. - Each
shares of class A stock is initially convertible into 2
shares of common stock.
Underwriter—Herrick, Wad-

June 25, 1946

300,000

New York.
Offering — To be offered
publicly at $8.10 a unit consisting of one share of class A
stock and one share of common stock.
Proceeds—$201,-

dell & Co., Inc.,

000 for retirement of 2,010

shares ($100 par) preferred

share; remaining proceeds, together with
other funds, will be used for production of educational
stock at $100 a

'-f

March 12

for

; '

June 10

stock

(letter of notification) 50,000 shares of common

($1 par)
12,500 shares ($1 par)

behalf of the issuer,
the account of Thomas

R. Heyward,

Jr.,

12,500 shares

Corp., Cleveland.
The company will use
for working capital.
-lav

•

Name of underwriter by amendment

(par $1).

Price—To

sold at market, total price not to

exceed

Proceeds to S. C. Korn.
Power Corp.,

St.

Petersburg, Fla.

shares ($7.50 par) common. Underwriters—To
be filed
by amendment.
Offering—The
shares will be offered for subscription to common stock¬
holders in the ratio of one share for each 10 shares held.

June 4 filed 100,000

Fundamental

Investors,

New

Inc.,

in $9,450,-

York

($2 par) capital stock.
Underwriter—Hugh W. Long & Co., Inc., New York, is
the exclusive wholesale distributor of the company's
stock.
Price—Based on market price.
Proceeds—For
16

June

filed

600,000

investment.

General

Foods Corp.

shares of preferred stock (no par).
Underwriters—Goldman, Sachs & Co., and Lehman Bros.
Proceeds—Money will be used for the company's, new

June 11 filed 250,000

building, for replacements and renewals and for the in¬
cash requirements due mainly to higher cost

creased

inventories and to repay

Aug.

bank loans required for these

■

28, 1946, filed 355,000 shs. ($1 par) common, of
55,000k shs. are reserved for issuance upon the

which

exercise -of, stock

its proceeds

purchase warrants.

Underwriterr--Van

Alstyne, Noel & Co.- Offering—Tne 3UU,OUO snares are
issued and outstanding and being sold for the account
stock

($1 par) common for the account of
Mrs. Thomas R. Hayward, Jr.
Price—At market (ap¬
proximately $3.25 per share).
Underwriter—Johnson
& Johson, Pittsburgh, Pa., and The First Cleveland
and

(letter of notification) 25,000 shares

Fleming-Kali Tobacco Co., Inc.

of certain

common

May 28 filed 250,000 shares ($1 par) common. Under¬
writer—Merrill Lynch, Pierce, Fenner & Beane, New

;

Duraloy Co., Scottdale, Pa.

common

of North American.

princi¬

states

registration

Qlensdor Textile Corp., New York

Co., Cincinnati

amendment.

& Co.

loan notes

The

share.

with $755,000 of other bonds, will be used to repay the
balance of $34,000 of a property mortgage, to pay off
loans in the amount of $1,295,000 to Bankers Commer¬

purposes.

April 28 filed 14,300 ($1 par) common shares. Under-'
writer—Van Alstyne, Noel & Co. Proceeds—Stock is
being sold by Harry R. Drackett, President (6,929 shares)
and Charles M. Drackett, 7,371 shares). Price — By

& Co.

(jointly); Kuhn, Loeb & Co. and W. C. Langley
(jointly); Otis & Co.; Blyth & Co., Inc.; Smith,
Barney & Co..
Proceeds—For prepayment of bank

Clearwater, Calif.

notification) 11,500 shares ($25 par)
5y4% cumulative convertible first preferred. To be of¬
fered at a maximum of $26 a share. Underwriters —
Pacific Co. of California, Cruttenden & Co., Pacific
Capital Corp., all of Los Angeles; Brush Slocumb & Co.,
San Francisco; and Adele W. Parker, Clearwater. To
purchase 493 shares of capital stock of G. H. Cherry,
Inc. out of a total of 625 such shares presently outstand¬

March 13 (letter of

ing.
common.

Price—$7.25

pal stockholder has granted the underwriters an option,
to purchase 45,000 shares of class B ($1 par) common
at $7.25 a share, exercisable for a period of three years.
Proceeds—Proceeds of approximately $870,000, together

Price—By amendment. Proceeds—To be used
000 construction program.

(6/23)

purposes.

New York

filed 150,000 shares ($1 par) common class A.
Underwriter—E. F. Gillespie & Co., Inc., New York.

Florida

April 30 filed 34,963 shares ($1 par) common. Under¬
writers—Reynolds & Co. and Laurence M. Marks & Co.,
both of New York. Price—By amendment. Proceeds—

March 28 filed 223,954

shares ($1 par) common. Under¬
Offering—Shares will be offered for
common
stockholders on basis of one

Newark, N. J.

Federal Electric Products Co.,
Feb. 26,

Detroit

Kent, O., which will receive all proceeds.

$750,000 15-year 5% sinking fund deben¬
Underwriter—Maxwell, Marshall & Co., Los An¬
Proceeds—Estimated proceeds of $681,000 will be

York

New

Corp.,

trucks and

(letter of notification) 2,250 shares (no par)
$5 cumulative preferred and 22,500 shares (lc par) com¬
mon.
Price—$100.50 per unit, consisting of one share of
preferred and 10 shares of common.
Underwriter—,
Eastman, Dillon & Co., New York.
To purchase ma¬
chinery and equipment and for other working capital
requirements.

$87,500.

16 filed

tures.

can

officers of the company.

Clary Multiplier Corp.,

All

be sold through Bennett, Spanier & Co.,

agent.

Unsuescribed

ment.

Materials

Fairport

April 29

■

shares will be

underwriting.
equipment.

May 8 (letter of notification) 15,000 shares Class B com¬
may

Offering—Shares

To purchase machinery,

Disticraft, Inc., Chicago
mon.

Central Soya Co., Inc., Fort Wayno, Ind.

Okla.

Bartlesville,

Corp.,

(letter of notification) 2,500 shares ($100 par)
class A cumulative preferred. Price—$100 a share.
9

films.

of purposes

ElectrodriJI

Wash.

Aug.

•

land, O. plant. Offering postponed.

Spokane,

May 31, 1946, filed 500,000 shares of common (par..$l).
Underwriters—Sabiston-Hughes, Ltd., Toronto.
Offer¬

common.

—

Mining

(letter of notification) 200,000 shares of com¬
Price—250 a share. To be sold through officers

of company.

Carscor Porcupine Gold Mines, Ltd., of
Ontario

Mountain

June

Nevada

June 10

stockholders. Offering date indefinite.

felling

Brewery, Inc., Brooklyn, N. Y.

31r 1946, filed 5,000 shares ($100 par) 5% non-cumul.
preferred. Underwriters—.None. Oxtering—To oe offered
at par to customers, officers and employees of the com¬
pany. Proceeds — For corporated purposes including
modernization and improvement of the manufacturing
plant and machinery and eauinment.

Ferguson

Aug.

deem

Edelbrew
Dec.

May

New York New Haven & Hartford--Equip. Tr. Ctfs.

a.m.

poned indefinitely.

15 filed 545,672 shares ($15 par) capital stock.
Underwriting—None.
Offering—The shares will be of¬
fered to the common stockholders of record June 20 on

Bonds

Seaboard Container Corp..

Co.; Kidder, Peabody & Co. The stock is being offered
by East Coast Public Service Co., parent. Bids for pur¬
chase of the stock scheduled for May 19 has been post¬

Underwriter—Dean Witter & Co.,

Consolidated Natural Gas Co.,

Preferred

May Department Stores Co

Co.

par)

of the company.

common

26, 1947

American Cyanamid Co
Hawaiian Electric

($25

($5 par) common. Under¬
Co., and Lazard Freres &
Co., both of flew York. Price by amendment. Proceeds
—The shares are being sold by Corning Glass Works,
New York, and represent 88.8% of the total outstanding

Debentures

June

Electric

Cohart Refractories Co.,

Common

noon

Mar. 28 filed 182,520 shares
writers—Harriman Ripley &

Common

Clopay Corp

Pennsylvania RR.,

140,000

shares of $10 par common. Under¬
writers—To be determined by competitive biding. Prob¬
able bidders include Harris, Hail & Co. (Inc.); Otis &
Mar. 28 filed 60,000

June

Benrus Watch Co

Body Co

filed

Series A.

Common
Preferred
Bonds and Preferred

Doug Allan Productions, Inc
Kay's-Newport, Inc

Gas

preferred,
San Fran¬
cisco.
Offering—Of the total, 75,000 shares will be
offered in exchange for the company's ($25 par) 5%
first preferred stock on a share for share basis, plus
accrued dividends on the old stock. The remaining 65,000
shares and all unexchanged shares of new preferred will
be offered publicly.
Price—$26 a share. Proceeds—To
retire all unexchanged shares of 5% preferred and to
repay $1,150,000 of short term bank loans.
May

1947

June 23,

Counties

Coast

Equip. Trust Ctfs..

Wheeling & Lake Erie Ry

Continental

bank loans, retire

East Coast Electric Co.

selling 35,000 shares and 215,000 shares are being sold

11:30

Thursday, June 19, 1947

THE COMMERCIAL & FINANCIAL CHRONICLE

(3266)

stockholders.

Company has also issued 55,000

purchase warrants to the selling

stockholders at

entitling them to purchase up to Aug. 1,
1949, common stock of the company at $11 a share. Prlc©
by amendment. Offering temporarily postponed.
10 cents a share

Greil

Drug & Chemical

Co.,

Pittsburgh

May 5 (letter of notification) 150,000 shares of common
stock. Price—$1. Underwriter—Willis E. Burnside & Co.,

Inc., New York. Proceeds to buy
Pharmacal Co., Inc. of Bedford,

all assets of Mid-State
Ind., which makes a

share to each six shares held.

one

complete line of over 150 drug items, and for additional
working capital.
Offering will not be made until com¬
pany has qualified the sale of its shares in various bluesky states.

(letter of notification)

April '2, 1947

New York

Inc.,

(by amendment), 30,000 shares at 4%%

common

stock.

Underwriters—Riter & Co.

and Hemphill, Noyes & Co.
Offering—Underwriters to
purchase from the company 30,000 shares of preferred
fend 70,000 shares of common; and from Fred P. Murphy
and J. C. Graham, Jr., 100,000 shares of issued and out¬
standing common.
Proceeds—To retire $6 cumulative
preferred, balance for reduction of bank loans.

Hartffcld Stores,
June

Price —$50 a share.
G. H. Walker &; Co., Providence, R, I.
bank loan and expansion of business.

Inc., Los Angolos

27,

1946 filed 120,000 shares ($1 par) common.
Underwriters—Van Alstyne, Noel & Co., New York, and
Johnston, Lemon & Co., Washington, D. C.
Offering—
To

be offered to the public at
$5 a share. Proceeds—
Company is selling 50,000 shares and stockholders are
selling 75,000 shares. The company will use its proceeds

to pay the costs of

opening additional stores and to ex¬
pand merchandise in its existing stores.
Offering tem¬
porarily postponed.
Hawaiian

Electric

Co.,

Ltd.,

(6/26)

Honolulu

(6/23)

Lay

$6.50

$10

Decatur, III.

Underwriters—By competitive bidding. Probable bid¬
Blyth & Co., Inc.; The First Boston Corp.;

Proceeds—For

pany's treasury for construction expenditures.

•

date.

balance will be added to
treasury funds.
Company has asked the SEC to defer action on its fi¬
'

nancing program because of present market conditions.

Interstate

Power

Co.,

Dubuque,

Sachs & Co., and The First Boston
Corp. (jointly);
Halsey, Stuart & Co. Inc. (bond only); Harriman Ripley
Co., and Dillon, Read & Co. Inc. (stock only). Pro¬
ceeds—For debt retirement, finance new
construction
and for working capital.

Iowa-Illinois Gas & Electric Co.
•Feb. 15 filed $22,000,000 of first
mortgage bonds due 1977.
Underwriter—To be determined by competitive
Probable bidders include

bidding.
Halsey, Stuart & Co. Inc.; The

First Boston Corp.; Glore, Forgan &
Co.; Blyth & Co.,
Inc.; Harriman Ripley & Co.; Harris, Hall & Co. (Inc.).
'Proceeds—Part of the proceeds will be used to
pay

gage debt of $10,578,000 and

mort¬

balance will be added to

general funds.
■'

Jahn & Oilier

Feb. 26, filed

Engraving Co.

102,000 shares ($1 par)

common.

-stock,
j#

are

being sold to stockholders.

C.'Working Chemical Co., Long Beach, Calif.

•June 10

($l|

(letter of notification) 15,000 shares

par)
and 10,000 ^shares

j preferred, to be offered publicly at par,
($10 par) preferred to be offered to officers,
directors
4

'arid employees at par.

To be sold through Pearson*Rich¬
ards & Co., San Francisco. To decrease current liabili¬
ties and fbr working capital.
i
.

•

•;

•June

ferred

filed
and

Kansas-Nebraska

Natural

5,000 shares
56,992

Gas

(no par)

($5

par)

Co.

$5 cumulative pre¬
common.

writers—Preferred shares will be underwritten

Market,

Appliance Corp.,

Missouri Edison Co.,

share. The preferred will

corporate

Texas

Mineola,

Los Angeles

purchase of machin¬

Louisiana, Mo.

May 7 filed 80,000 shares ($5 par) common.

Underwriter

Price—$10.50 a share. Proceeds
being sold by L. F. Rodgers, Dallas, Tex.,
and principal stockholder, who will receive

—Blair & Co., New York.
—Shares

Treasurer

proceeds.
9

Mono

Kearsarge
Lake

Consolidated Mining Co.,

City

(letter of notification) 1,500,000 shares (100 par)
Price—100 a share. No underwriting. For pur¬
chase of mining machinery and equipment and for de-

June 9

common.

velopn^ent of mines.
Morris Plan Corp. of

America, N. Y.

$3,000,000 debentures. Underwriter—East¬
man, Dillon & Co., New York. Price by amendment.
Proceeds—To retire outstanding bank loans.

Mar. 31 filed

the

new

stock

the

rate

one

preferred for each 36 shares of common owned. Rights
expire June 2. Proceeds—The money will be used to
complete a plant at Sunnyvale, Calif., and for other cor¬
porate purposes. Offering temporarily postponed.

Livingston

Mines,

Inc.,

common

and

5 cents per common

•

Lock

Nut

Corp. of America, Chicago

shares ($12.50 par) 5% cumulative
preferred and 250,000 shares ($1 par) common.
Under¬
writing—No underwriting.
Price—$17.50 per unit con¬
sisting of one share of preferred and five shares of com¬
mon.
Proceeds—For payment of outstanding notes and
for purchase of machinery and equipment.
Business—
Manufacture of nuts, bolts, washers and rivets.
Long

Beach

(Calif.)

Record

Publishing Co,

June 12 (letter of

notification) 1,000 shares of preferred
and 25,000 shares of common.
Price—$100 a preferred
share and $1 a common share.
No underwriting.
For
purchase of supplies, equipment and machinery.
•

Mallory

June

(W. E.)

Co., Ann Arbor,

(letter of notification) 15,000 shares 6% cumula¬
tive convertible preferred ($10 par), and 30,000 shares

For payment of

Mass.

•

machinery

new

National Securities &

(letter of notification) 160,000 shares of com¬
Price—$1 a share. No underwriting. For capital
items, chiefly research.

Corp., Atlanta, Ga.

(7/1-3)

May 20 filed $500,000 5% serial debentures, due 19491957; 12,000 shares ($25 par) 51/2% cumulative converti¬
ble preferred and 85,000 shares ($1 par) common.
Un¬
derwriter—Kirchofer & Arnold, Inc., Raleigh, N.

C. Price

—The debentures at 102.507, while

the preferred shares
will be offered at part and the common shares at $4
each.
Proceeds—To retire bank indebtedness and to
finance purchase

of machinery and other

plant equip¬

ment.

Manontqueb

Explorations,

Ltd., Toronto, Can.

April 10 filed 300,000 shares ($1 par) common. Under¬
writer—Name to be supplied by amendment.
Price440 cents a share.
Proceeds—For exploration and devel¬
opment of mining claims.

Business—Mining.

Research Corp., New York

44,404 shares in an investment trust fund.
Underwriter—The sponsor of the shares is National Se-*.
curities & Research Corp., New York.
Price based on

June 17 filed

market.

Proceeds—For investment.

Research Corp., New York

in investment trust fund,

May 29 filed 2,000,000 shares

open-end diversified management type. Underwriting—
Research Corp., New York. Price

National Securities &

—$10

share. Proceeds—For

National

investment.

Supply Co., Pittsburgh, Pa.

(6/24)

debentures, due 1967. Under¬
writers—Goldman Sachs & Co. and Lehman Bros. Price
—By amendment. Proceeds—To repay $11,250,000 in¬
stalment
bank
loans and other corporate
purposes.

June

filed $15,000,000

Business—Manufacture of oil and gas
Nevada
3

preferred.
Sloan

Gold

Inc.,

Dredges,

(letter of notification)

and

mon.

Manhattan Coil

and $5 a com.
Inc., Boston,
outstanding bank loans, purchase
and for additional working capital. '

($1 par) com. Price—$10 a preferred share
Underwriter—Bond & Goodwin

share.

June

Mich.

Providence (6/23)

National Glass Co., Inc.,

June 11

National Securities &

June 17 filed 50,000

•

Seattle, Wash.

June 5 (letter of notification) 40,000 shares

(5 cent par)
$40,000 6% promissory notes.
Price—
share and notes in any denomina¬
tion.
Underwriting—Lobe, Inc., and A. M. Lind, both
of Seattle.
For operating expenses.
•

Under¬

% The
Lincoln, Neb., and Cruttenden & Co.,
••Chicago.
Offering—Preferred publicly at a
pric^ to be
supplied by amendment.
Common will be offered ini¬
tially at $10 a share to common stockholders in fatio of
'First Trust Co. of

other

of notification) $7,500 of $25 par common.
Price—$25 a share. To be sold through Joe Stallings,
Mineola, Tex. To erect and maintain market houses and
market places.

ing and an office building and for
ery and equipment.

I Under¬

writer—Sills, Minton & Co., Inc., Chicago. Price—By
amendment. Proceeds—The shares, which constitute ap¬
proximately 48.5% of company's outstanding common

and

shares ($5 par) common. Under¬
writer—Lester & Co., Los Angeles.
Price—$11.50 a
share.
Proceeds—For construction of new plant build¬

Iowa

capital

—

scribe

The

May 13 filed $19,400,000 of first mortgage bonds, due
1977, and 3,000,000 shares ($3.50 par) capital stock.
; Underwriters—To be determined by competitive bid¬
ding.
Probable bidders: Lehman Brothers; Goldman,

Farmers

Mineola

Mission

'Libby, McNeill & Libby

ceeds from the sale of common will be applied for re¬
demption of 5% cumulative convertible preferred stock
not converted into common prior to the
redemption

operating

March 25 filed 58,000

April 30 filed 100,000 shares (no par) preferred stock.
Underwriter
Glore, Forgan & Co. Offering — Stock¬
holders of record May 19 will be given the right to sub¬

Net pro¬

Minneapolis

June 6 (letter

W. E. Hutton & Co.

Proceeds—Net proceeds from the
of preferred will be used to reimburse the com-

of com¬
be added

purposes.

Baltimore, Md.

Corp.,

Kansas City, Mo.

Inc.,

Cooperative Wholesale,

Midland

May 2 filed 100,000 shares ($100 par) cumulative pre¬
ferred.
Underwriter—Merrill Lynch, Pierce, Fenner &
Beane, N. Y. Price by amendment. Proceeds—To retire
31,870 shares of*4*/2% preferred at $105 a share and to
repay $4,500,000 bank loan.

ders include

sale

10,000 shares of common, class A. Price—
unit. No underwriting. For working capital.

and

per

Salt

June 17, 1946 filed 200,000 shares ($50 par) cumu. pre¬
ferred stock and 966,870 shares (no par) common stock.

City (7/1)

May 29 filed $1,000,000 4% non-cumulative preferred
Stock "D."
Underwriting—None.
Price—$103 a share.

new

Stores

20,000 shares of pre¬

of notification)

Mid-Continent Airlines,

plants at Atlanta qnd Memphis, Tenn.
Offering indefinitely postponed.
Lerner

(letter

corporate purposes.

Finance Co., Jersey

May 14 (letter of notification) 30,601.4 shares
mon. Price—$7.50 a share. No underwriting. To
to working capital.

be offered to the public at $50 a share.
The 3,000 shares
'of common not sold publicly will be offered to company
officers and employees at $5 each.
Proceeds—For con¬
struction of

ferred

Inc.,

Co.,

& Co., Inc., Atlanta

(H. W.)

will be sold publicly at

Valley Investing Co., Inc., Utica, N. Y. To erect
plant for bulk storage of propane, for installation of
equipment on customers' premises and for other plant
expansion.

Mechanics

June

April 18 filed 16,000 shares ($50 par) 5% cumulative
convertible preferred and 15,000 shares ($1 par) common.
Underwriter—Clement A. Evans & Co., Inc.,
Atlanta.
Offering—All but 3,000 shares of the common

Inc., Clinton, N. Y.

hawk

•

bank loans.

current

share. Proceeds—Net

(letter of notification) $50,000 5% sinking fund
10-year serial debentures, series B. Underwriter—Mo¬

Illinois Power Co.,

Manufacturing
Iowa

The remaining 50,000 shares
which will use its pro¬

being sold by the company,

ceeds for general

April 30 filed 60,000 shares ($25 par) 5% cumul. con¬
vertible preferred. Underwriter—Paul H. Davis & Co.,
Chicago. Price—$25 per share. Proceeds—To be added
to working capital and will be used in part to reduce

proceeds will be used to pay obligations, purchase heli¬
copters and equipment and for working capital.
Household Service,

Plant-Choate

Cedar Rapids,

Helicopter Air Transport, Inc., Camden, N. J.

June 9

are

junior preferred. Shares of new
preferred not issued in exchange will be sold at competi.tive
bidding.
Price to be determined by competi¬
tive bidding.
Proceeds—Proceeds from the sale of new
bonds will be used to redeem $21,000,000 of 4% first
mortgage bonds, due 1970, at $105.
Proceeds from the
sale of new preferred will be used to redeem un¬
exchanged shares of old preferred. Bids—The sale of
.the securities has been tentatively set for June 23.

March 14 filed 270,000 shares of capital stock. Under¬
writer—Strauss Bros., Inc., New York. Underwriters may
a

ment.

sold by seven stockholders.

for each two shares of

vious construction expenditures.

Price—$3.50

150,000 shares ($1 par) common. Under¬
Co., Inc., New York. Price by amend¬
Proceeds—Of the total, 100,000 shares are being

writer—Burr &

•

Underwriters—Dillon, Read & Co., Inc., New
York, and Dean Witter & Co., San Francisco. Price by
amendment. Proceeds—To repay $3,000,000 of short term
promissory notes and to reimburse its treasury for pre¬

such.

(J. W.) Inc., Brooklyn, N. Y.

Mays

May 9 filed $24,000,000 of first mortgage bonds, Series A,
due 1977, and 130,000 shares ($100 par) cumulative pre¬
ferred.
Underwriters—To be determined by competitive
bidding. Probable bidders for securities include Blyth &
Co., Inc.; The First Boston Corp.; Halsey, Stuart & Co.
Inc. (bonds); Union Securities Corp. and Merrill Lynch,
Pierce, Fenner & Beane (jointly) and Lehman Brothers
.and Lazard Freres & Co. (jointly). Offering—Bonds will
.be offered publicly while preferred stock initially will
be offered in exchange for its outstanding ($100 par)
6% preferred and ($50 par) junior preferred.
The basis
of exchange will be one share of new preferred for each
share of 6% preferred and one share of new preferred

due 1977.

Business—Operation of department stores.

$30,000,000.

Feb. 28 filed

Mar. 31 filed $5,000,000 first mortgage bonds, series F,

withdraw

($50
Underwriter —
For payment of

Kentucky Utilities Co., Lexington, Ky.

Society,

cumulative preferred stock ($50 par) and 170,000 shares
par

(6/23-27)

Providence

preferred.

par)

1972,

(no par) cumulative preferred. Under¬
writers—Goldman, Sachs & Co. and Lehman Brothers,
New York.
Price by amendment. Proceeds—For con¬
struction of five new stores estimated to cost a total q£

and 89,467 shares

June 5 (letter of notification) 4,080 shares of 5&%

12,000 shares (ill par)
common.
Underwriters—Kalman & Co., Inc., Stk Paul,
JTriee—$25 a share. Proceeds — For improvement and
modernization program. Offering indefinitely postponed.

of $1

Inc.,

25-year debentures, due

6 filed $15,000,000

June

for the company's distributing system.

Kay's-Newport,

Grolier

units

(6/26)

May Department Stores Co.

Proceeds—For addi¬

tional field lines, well drilling and new compressor

Griggs, Cooper & Co., St. Paul, Minn.
ffopt. 3

(3267)

THE COMMERCIAL & FINANCIAL CHRONICLE

(Volume 165* Number 4604

well equipment.

Reno,

Nev.

30,000 shares ($10 par)

Price—$10 a share. Underwriters—James
Ewing Harper, both of San Francisco.

acquire complete
ing Co.

ownership of Idaho-Canadian

Nevada-Wyoming Mines Co.

K.
To

Dredg¬

(6/23)

(letter of notification) 250,000 shares ($1 par)
common.
Price—$1 a share.
Underwriter—Steele and

May 26

Co., New York.
New York

For working

capital.

Telephone Co.

$125,000,000 of 35-year debentures. Under¬
at competitive bidding.
Probable
billers: Morgan Stanley & Co.; Halsey, Stuart & Co. Inc.;
Harris Hall & Co (Inc.).
Proceeds—Proceeds will be
used to repay $79,300,000 of demand notes to its parent,
American Telephone & Telegraph Co., and a $3,000,000
short ,"te,rm note owing the Chase National Bank, New
York; plus $25,000,000 it expects to borrow from Chase
May 23 filed
writers—To

be sold

(Continued on page 44)

(3268)
(Continued from page 43)

prior to the sale of the debentures.

•Proceeds—For repayment of

ceeds will be used to meet further construction require¬

and

Commission

action, it will issue $125,000,000

Cadmium

Battery

Corp.,

Easthampton,

Mass.
June

(letter of notification)

cumulative

share.

30,000 shares ($10 par)
preferred.
Price—$10 a

convertible

Underwriter—Harrison

White,

Service

Inc., New York.

•

Insulated

Homes,

June 12 (letter of notification)
and 50,000 shares of common.
share

and

purchase

Solar

March

Service

Co.

New

equipment

underwriting.
machinery1 and

and

To
for

of indebtedness.

Southern

May

Mexico

Old

Poindexter

Distillery, Inc., Louisville,

Ky,

Quebec

filed

50,000 shares ($20 par) 5% convertible
cumulative preferred and an unspecified number of ($1
par) common shares into which the preferred is conver¬
tible.

Underwriters—F.

Yantis

Co.,

Oneida,

Raleigh
Daniels

May 27 (letter of notification) 20,500 shares ($12.50 par)
common.
Price—$12.50 a share.
Offered at par to
stockholders of record

common

June

rate

general

(letter of notification)

1,000

diamond

drilling

and

land

Price—The

company.

stocks

unit consisting of one share

($100 par)

Proceeds—To

common.

business.

will

and

used

Pelican

Cold

Storage

Alaska

Juneau,

Co.,

(letter of notification) $201,012 of capital stock.
Price—$1 a share. No underwriting. To reduce indebt¬

edness and to

enlarge plant,

Pennsylvania-Central Airlines Corp.
May 29 filed $9,850,000 15-year 3%% convertible income

debentures, >
1969.
The (registration was filed , as a
step in obtaining consent of two-thirds of the holders
of the outstanding income debentures to changes in the
indenture to permit extension of a $4,000,000 bank loan.

one

•

share for each five held.

Gas &

Rochester
4

filed

series

Underwriter—No

ment.

15 shares of

common

held.

Salant

underwriting.

March

Price—By amend¬
facilities

•

filed

writers—None.

109,821
.

Offering—To

common

issued

stock.

Daniels &

clude untrue statements of
the SEC

'•

■ ■

Albion, Micln

Burris & Co., Chicago.

*' 1

•• •'

'
,'

a common
*
-

••

Price—$25 a pre-

share.r Proceeds—Pro:•

the public Qffaring,.of

the stock.

United

•

;f77
States Television Mfg.

June

18 filed 75,000 shares

Corp./<'.]

of 5% convertible

preferred

Underwriters—William E. Burnside &
Co., Inc. and Mercer, Hicks & Co. Offering-^To be ,of¬
fered at par. Proceeds—For general corporate purposes,
stock

(par $4).

additional working capital.

Utah Chemical & Carbon Co.,
Dec. 20 filed

1962, and 225,000 shares

Co., Inc., Boston,
per

share.

debentures due

($1 par) common.

conversion of the debentures.

-of

Salt Lake City

$700,000 15-year convertible

-ment also covers 112,000 shares

April 10 filed 32;000 shares ($25 par) $1.40 convertible
preferred and 53,962 shares ($1 par) common.
Under¬

granted company's request to waive a trial ex¬
report in stop-order proceedings.
This/will

Underwriter will

plant at Bristol, Pa.

writer— Smith,

preferred and for

material facts."

expedite the SEC's decision

ing shares of common are being sold by stockholders.
Company will use its proceeds to redeem $250.000 of
5-year debentures and to repay a $450,000 bank loan.
The balance will be used to finance construction of a

Service Caster & Truck Corp.,

statement "appears to in¬
On June 17

the fact that the registration

Co., Toronto.
mining
activities.

|§^ed shate and $10

outstanding

plant at Chicago, and for other operating expenses. The
SEC June 11 started stop order proceedings due to

Can.

Underwriting—
Price—50 cents a share.

of stock.

Herrick, Waddell & Co., Inc., New York. Price—$20 a
preferred share and $6 a common share. Proceeds—The
company will receive proceeds from the sale of all the
preferred and 37,500 shares of the common. The remain¬

redeem

May 6 filed 4,000,000 shares ($1 par) Class A common.
Underwriter—Floyd D. Cerf Co., Chicago. Price—$5 a
share. The underwriting discount will be 70 cents a
share. Proceeds—To
lease and equip manufacturing

special offering of 12,500 shs. of pfd. to holders of
6% debs, at $18.15 for a limited period.
Underwriter—

new

3,000 shares ($100 par)

Tucker Corp., Chicago

Ltd., Toronto,

sion and 69,000 reserved for warrants).

For

\7 "77. ""."'"77777" 1

additional working capital.

make

Public Service Co. of Indiana Inc.

30, 1959. Priee—Par(>

& Son Co., Camden

shares of preferred are to be issued in connec¬
old 7% preferred for the new.
Yeatman & Co., Inc., Philadel¬

phia.

aminer's

March 26 filed $11,077,800 15-year 23A% convertible debentures.
Underwriters — None.
Offering — For sub-

from May 1, 1947 to April

■

P.)

Underwriting—Suplee,

(6/26)
May 9 filed 75,000 shares ($20 par) 5Vz% cumulative
convertible preferred and 112,500 class A shares ($1 par)
commoisi (also 225,000 shares class A reserved for conver¬

75,000 shares of common
stock (par 25c.) and 5,000 shares on behalf of Raymond
Spector, President. Price—$3.75 per share. Underwriter
—Eric & Drevers and Hill, Thompson & Co., Inc., New
York.
Proceeds will be advanced to Staze Inc., a wholly
owned subsidiary, and used to eliminate factoring, to
purchase packaging materials more advantageously, for
working capital, etc.

—

Mines,

•

tion with the exchange of

New York

500,000 shares

(I.

(letter of notification)

the 2,500

operation in Rochester.

Inc.,

preferred, and 2,500 shares ($100 par) 5% preferred.
Price—$100 a share for 3,000 shares of preferred, while

Seaboard Container Corp.

(letter of notification)

scription by* corhmon stockholders in the ratio of $200
principal amount of debentures for each 20 shares ofn
common held. The debentures will be convertible into

filed

Proceeds

Under¬

exchange,

Popular Home Products Corp., N. Y.

common

Maria

Mark

64,025 shares for 19,971 shares of Wasatch Oil Refining
Refining
Co. under agreement of June 12.

May 9

June

($100 par) cumulative pre¬
competitive bidding. Probable

240,000

June

Co. and 45,796 shares for 75,768 shares of Idaho

Telephone Corp.

stockholders who will receive proceeds.

.!•

Thomas

off demand notes, and for property
of telephone system from

Salant,

filed

indefinite,

Phiiiips Petroleum Co.

June

Santa
'

■

conversion

filed

300,000 shares ($25 par) 5% convertible
Underwriters—Blair & Co., Inc., New York,
and Maxwell,. Marshall &. Co., Los Angeles.
Price by
amendment.
Proceeds—For payment of $3,950,000 of
bank loan notes; purchase of two notes issued by a subr
sidiaryr Textron Southern Inc. in the amount of $1000,000 each, and for working capital. Offering "date
Feb.

Business—Manufacture of

chemicals.
r

preferred.

shares ($2 par) capital stock.
Underwriter—Eastman, Dillon & Co., New York. Price
by amendment.
Proceeds—Shares are being sold by 13

Proceeds—For expansion of production

ahd other corporate purposes.

pay

manual to automatic dial

Offering—Shares will be offered to the company's com¬
mon stockholders on the basis of one share of preferred
for each

Inc., Providence, R. I.

Textron

Proceeds—To redeem 4V2%

and

,
•

Pierce, Fenner & Beane; Harri¬
Ripley & Co.; Blyth & Co., Inc.; Glore, Forgan &
Series A first cumula¬

Co.

sinking fund

and for other corporate purposes.

bidders—Merrill Lynch,
man

(Pa.)

stock.

(N. Y.)

ferred. Underwriting—By

Salt Manufacturing Co.
June 18 filed 50,000 shares ($100 par) convertible pre¬

ferred

Salt Lake City

(letter of notification) 25,000 units, consisting

and 225,000

67,500 shares

tive preferred,

Pennsylvania

to issue unsecured notes.

expansion
•

share. Proceeds—For additional

6% preferred and one share of common,
shares of common. Price—$10 per unit and
250 per common share.
To be sold through George F»
Schultz, a director. To acquire inventory, machinery

Electric Corp.

Blyth & Co.,
Inc.; Glore, Forgan & Co.; Merrill Lynch, Pierce, Fenner
& Beane; Harriman Ripley; Lehman Brothers; The First
Boston Corp. and Smith, Barney & Co. (jointly).
Pro¬
ceeds—To redeem all of its outstanding $7,675,000 bonds
and to repay $3,500,000 bank loan and to finance new
construction.
Corporation has temporarily abandoned
the proposed financing. It was announced June 17, due
to "unacceptable" conditions of New York P. S. Commis¬
sion. Instead company June 18 asked SEC permission

Products Co.,

Swel

June 9

May 26 filed $16,677,000 first mortgage bonds, Series L,
due 1977, and 50,000 shares ($100 par) preferred stock.
by competitive bidding.

June

York

New

Inc.,

Unsubscribed shares of preferred will be

publicly at $10
working capital.

one

(N. Y.)

held.

common

offered

be underwritten.

Rochester

until 1950.

„

Fasteners

cumulative con¬
Underwriter—Floyd D. Cerf Co. Inc.,
Chicago.
Offering—The shares initially will be offered
for subscription to common stockholders of Segal Lock
& Hardware Co. Inc., parent, at $9 a share in the ratio
of one share of preferred for each 30 shares of Segal

277,231 shares (50c par) common stock, with Sterling,
as underwriters.
Company decided to issue

5, 1946, to the extent of

White, Weld & Co. will act as dealer-manager to engage
in proxy solicitation.
Holders of the outstanding debentures will be asked to approve changes in the indenture
to eliminate present restrictions against creation of debt
and give relief from any obligations to the

„

Strauss

Probable bidders: Halsey, Stuart & Co. Inc.;

June 6

(PST) June 23, at company's office, 810
Street, Los Angeles, Calif.

a.m.

March 25 filed 25,000 shares of 60 cents

Underwriters—To be determined

•

••

Hugoton-Panhandle Fields, Texas, and to

vertible preferred.

for payment of indebtedness.

•

to 9:30

South Flower

organization of

principal amount of 4V2% debentures due 1959.
Price—To be determined by competitive bidding.
Pro¬
ceeds—For redemption of 5% first mortgage and prior
lien gold bonds due 1955..
For construction program and

Issue not to

same

(6/23)

at $105 per

sold

Co.

Gas

reimburse company treasury for construction expenses.
Bids Invited—Bids for purchase of bonds will be received

454,465 shares of common stock only, which were to be
offered for subscription to stockholders of record Sept.

Probable bidders include Halsey,

& Co.; Blyth & Co., Inc.; Harriman Ripley & Co. Offer¬
ing—$2,100,000 of the bonds will be issued to Pacific's
parent, American Power & Light Co., in'exchange for

surveys.

Grace & Co.

Stuart & Co. Inc.; The First Boston Corp.; Glore, Forgan

California

26 at

Inc.; Halsey, Stuart & Co., Inc.; Harris Hall & Co. (Inc.);
Lynch, Pierce, Fenner & Beane; White, Weld
& Co.
Proceeds—To construct natural gas pipe line con¬

of preferred and one share
be

(6/26)]

Merrill

Republic Pictures Corp., New York

V Pacific Power & Light Co., Portland, Ore.
18 filed $29,000,000 30-year first mortgage bonds.
Underwriting—Of the total, $26,900,000 will be offered at

•

Can.

Registration originally filed July 31, 1946, covered 184,823
Shares of $1 cumulative convertible preferred ($10 par)

•

Broadway, New York.
Southern

6% cumulative pre¬

Telegraph Co.

May 15 filed $12,000,000 first mortgage bonds, 27/s%
series, due 1977.
Underwriting—To be sold at com¬
petitive bidding.
Probable bidders include Blyth & Co.,

Underwriter—Mark
Price—25 cents a share.
Pro¬

Feb. 3 filed 25,000 shares ($100 par)

June

the

195

ferred and 25,000 shares (no par) common. Underwriter
—John Martin Rolph, Vice-President and director oi

preferred and 2,000 shares (no par) common.
Price—
$103 a preferred share and $20 a common share. Under¬
writer—Conrad, Bruce & Co., Seattle.
To reimburse
company for extensions and betterments.

competitive bidding.

finance

filed

nection to the

Oregon-Washington Telephone Co., Hood River,
Oregon
June

Toronto,

Ltd.,

Mines,

bonds will be received up to 11:30 a.m. (EDT) June

Montreal

Refrigerated Cargoes, Inc., New York

Rights expire Aug. 13.
For additional working capital.

underwriting.

Lake

& Co., Toronto.

ceeds—To

one

share for each 10 shares held.

new

Red

working capital.

$75,000,000 40-year debentures/ due 1987.
Underwriter—By competitive bidding.: Probable bidders:
Morgan Stanley & Co.; Halsey, Stuart & Co. Inc.
Pro¬
ceeds—For payment of demand notes held by the com¬
pany's parent, American Telephone & Telegraph Co., and
to meet further requirements of its nine-state expansion
program.
Bids Invited—Bids for the purchase of the

June 9 filed 460,000 shares of stock.

Airways, Inc., Birmingham, Ala.

Southern Bell Telephone &

13, 1946, filed 100,000 shs. (500 par) capital stock.
Underwriter—Robert B. Soden, Montreal, director ol
company.
Price—500 a share.
Proceeds—For explora¬
tion and development of mining property.

—To be added to working capital.

Ltd.,

Rocks Exploration Ltd.,

(letter of notification) 81,500 shares ($1 par)
Price—$1 a share. No underwriting. To reduce

June

Nov.

and H. M.
Byllesby & Co., both of Chicago. Price—At par. Proceeds

Oneida,

Gold

shares of 75c

filed 110,000

bank loans and to increase

balance will be added to

The

(by amendment)

expansion program.

funds to be used for expansion program.

Mar.

$12.50 Proceeds—Net proceeds will be applied to re¬
demption of bank loans and to cover part of cost of

Prob¬
Boston
Corp. and White Weld & Co. (jointly); Otis & Co.; Glore,
Forgan & Co.; Halsey, Stuart & Co. Inc. (bonds only).
Proceeds—For redemption and prepayment of $6,684,220

other corporate purposes.

Manufacturing Corp.

cumulative convertible preferred stock, series B (par $5)
Underwriters—Van Alstyne, Noel & Co. Price per share

writers—To be sold through competitive bidding.
able bidders include Blyth & Co., Inc.; The First

Fontana, Calif.

1,000 shares of preferred
Price—$100 a preferred

share.

common

supplies,

Inc.,

■'/

■

(6/23)

Hampshire

May 29 filed $6,800,000 30-year first mortgage bonds and
20,000 shares ($100 par) cumulative preferred.
Under¬

purposes.

Nu-Lite

of, New

common.

Public

Proceeds—To be added to general funds for general cor¬

porate

Co.

May 12 filed $4,500,000 of first mortgage bonds, Series B,
due 1977.
Underwriter—To be determined by competi¬
tive bidding.
Probable bidders include Halsey, Stuart &
Co. Inc.; The First Boston Corp.; Lazard Freres & Co.
and White, Weld & Co. (jointly); Kidder, Peabody &
Co., and Blyth & Co., Inc. (jointly).
Proceeds—To
finance in part a proposed construction program. Bids
Invited—Bids for the purchase of the bonds will be re¬
ceived up to noon (EDT) June 23 at 1087 Elm St., Man¬
chester, N. H.

35-year 1st mtge. bonds.
Nickel

ceeds, together with funds to be provided by a term bank

of bank loan

loan, will be used to discharge indebtedness to Domestic
Credit Corp.

Public

company had issued
invitations for bids to be received June 24, the N. Y.
Public Service Commission denied application to issue
the debentures. Company states that, subject to corpo¬

$11,500,000

notes.

The balance of pro¬

ments^ Petition Denied—Although

rate

Thursday, June 19, 1947

THE COMMERCIAL & FINANCIAL CHRONICLE

The state-

of common reserved for.

Underwriter—Carver &

Price—Debentures 98; common $3.75

Proceeds—For plant construction;

equipment and for working capitaL.

7,7

purchase

iVoluttie 165

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4604

ing—Shares will be offered for subscription to Weber's
common stockholders. Certain shareholders- have- waivedv

Ltd., Toronto, Canada
($1 par) common. Under¬
writer—Name to be filed by amendment. Price—50 cents
a share.
Proceeds—For general operating expenses.
Vauze Dufault Mines,

Subscription rights; The unsubscribed spares will be
publicly through underwriters. Price by amend¬
Proceeds—rTo retire, preferred stock and to reduce

offered
ment.

•

Alaska'

;

Cooperative

Alaska

Veterans

Chiikoot,

Co.,

bank

April 16 (letter of notification) 1,500,000 shares (no par)
common. Stockholders of record May 14 are given the
right to subscribe for the additional shares at $40 per

notification) 300,000 shares of common.

share. To be sold through officers of com¬
For purchase of cyanide milling plant and for

pany.

other mining

and debentures.

ratio

of.

for

new

one

Wisconsin Power &

equipment.

Weber Showcase & Fixture Co.,

Newark, N. J.

May 26 (letter of notification) $225,000 6% 20-year de-'
bentures.. Price—$100 per unit.
No underwriting.
TO
be sold direct or in exchange for outstanding
preferred

debtedness and to reimburse its

Victoria Gold Mines Inc./Oatman; Ariz.

Price—500

.Workers Finance Co.,

<■.

Rights expire June, 27. No underwriting. To reduce in¬

-share

June 9 (letter of

Electric Coi, New: York

Western

common

?•.

of Wisconsin, who elect to sell such share® of Wiscox>«h»
which will be distributed to them upon the
dissolution of North West Utilities Co.
common

(letter of notification) 2,000 shares ($100 par)
and 1,000 shares ($100 par) preferred. Price—
i$100 per share each. No underwriting. For promoting
small business enterprises in Alaska.

June

loans.

Co., and Harriman Ripl6y & Co. (jointly); The Wis¬
consin'Co.; Dillon^ Read'& Co., Inc.
Proceeds—Part
of the shares are to be sold by Middle West Corp.,
top holding company of the System, and part by pref¬
erence stockholders of North West Utilities Co.,
parenl

Mar. 31 filed 500,000. shares

(3269)

each five

held.

treasury.

Light Co., Madison, Wis.

•

May 21 filed 550,000 shares ($10 par) common, stock ts

Inc.

Mar. 31 filed 1Q8,763 shares ($5 par) common.
Underwriters-i-Blair & Co., Inc. and Wm. R. Staats Co. Offer¬

sold

amendment.

competitive

bidding.

Purpose—To eliminate outstanding pre¬

ferred and debentures and to carry on business.

June

Underwriters—By

(letter of notification) 500 shares ($100 par)
Price—$100 a share. No underwriting. For

common.

Probable bidders include Glore, Forgan &

Wyoming Wholesale Drug Co., Casper, Wyo.

merchandise inventory.

(NOT YET IN REGISTRATION)

INDICATES ADDITIONS SINCE PREVIOUS ISSUE

•

Arkansas Power & Light Co.

•

June, 1947, the Arkansas P. S. Commission has approved
the issuance of $11,000,000 first mortgage bonds to finance
^property expansion. Probable bidders: Halsey, Stuart &
Co. Inc.; Dillon, Read & Co., Inc.; The First Boston Corp.;
Glore; Forgan & Co. and Harriman Ripley & Co.
(jointly). Lehman Brothers and Stone & Webster Se¬

Central Republic

(jointly);

(

Equitable

(jointly).

Securities Corp.

Co.

and

Bidding expected

•

Philadelphia

•

Pittsburgh

•

purchased by investment bankers acting

st. louis

•

paid Public Service Co. of Colo¬

should

rado

week, what with some
$92,500,000
in
new
securities
slated for marketing or bids, ex¬

price of 102.7099 for $40,000,000 new first mortgage bonds,
also due 1977, specifying a 2%%
a

coupon.

This

issue

the

market

ficient within

hour to have

taken up the

entire issue.
offering today is

actual

Gratifying response to
stantial
public utility
brought out this week
any lingering doubts of

suf¬

for consideration were

ors

the

matter

return

af¬

The issues in point were both

,'or the'.type which appeal chiefly to institutional investors and

port¬
folio managers for the latter are
standing fast to their demand
I

for

quite

evident

that

minimum return slightly

-I above
*

the 2.70% figure.

Both issues

were

priced,to af¬

iToiedo

Edison Co/s $32,000,000 of new first mortgage 2%s,

due
a

1977, brought the

company

top bid of 102.589, with the

f-successful syndicate pricing the,
-

first

for better than clear

As
ary

flotation

Issue at 103.1647

fering.

for public of-

This

operation

was

group,

seem

the

to indicate

Tuesday,

the

usual

run

Monday,

promises

on authorizing an issue
150,000i shares of preferred stock (par $100), of which
100,000 will be offered publicly. Traditional underwriter,

Merrill Lynch, Pierce, Fenner & Beane.

shares of

cumulative

new

000

nia Gas Co.,

pre¬

is seeking bids for

Service of

New

securities late

month to put it in

the

had

utility

Planned

the sale of $50,000,-

Mises
nomic

funds to fi¬

the

assaying

mercial

program,

the PSC called for
changes wheh the company de-.
clared
unacceptable
since, as

however,

hardship.

determined

The

seek

through the medium of shortterm
borrowing, though calling
this
an
"unsatisfactory expedi¬

ness

Brothers,

Street, New York

16,

Research, School of Business

Administration, University of Ore¬
gon,

Eugene, Oreg.—paper—$1.00.

Operation Immigration
L.

Greaves,

Freedom,
Avenue,
D.

bankers are sched¬
$15,000,000 of 20n
ointment,
judging
front
year debentures of National Sup¬
some
comment
around
the
ply Co., for retirement of $11,Street. It seems that the World ; 250,000 bank loans and to bolster
Bank's financing plans have put
general
funds.
On
Thursday,
a bit of a drag on the several.
bankers are slated to bring out
to

Com¬

Y.—cloth—$4.50.

ent."

Hamp¬

bonds, also due in 1977.

uled

and

Lawrence

—

A—O. K. Burrell—Bureau of Busi¬

view of the matter.

•''Meantime the company plans to
finance
its
building
program

On. Tuesday

is the usual fly in

von

Study in Investment Mortality,

re¬

$250,000,000 issue.

East*33rd

board is
court

Ludwig

Trade

Policy

Towle—Harper
N.

directors hold, they would work
undue

—

Education, Inc., Irvington-

International

ing issues at lower cost.
In

Chaos

The Foundation for Eco¬

on-Hudson, N. Y.—Paper—65c.

plans and at
time retire outstand¬

expansion

same

—

this

500,000 of first mortgage series
'

•

Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler.

shire will open tenders for $4,-

1948, to July, 1957, and will finance not more than
of the cost of the equipment.
Probable bidders;

ary,

80%

new

nance

Southern Califor¬

ferred stock.

■

Wheeling & Lake Erie Ry. (6/19)
Bids for the purchase of $2,940,000 equipment trust cer¬
tificates will be received by the company up to June 19.
The certificates will mature semi-annually from Janu¬

up-State

planned

period with three utility
companies having securities up
forbids. Kentucky Utilities Co.
is offering $$4,000,000 of first
mortgage, series A bonds, 30year
maturity,
plus
130,000

Corp.

The

mu¬

to; be

Warren Petroleum

Gas & Electric Corp. to abandon Brothers, 49 East 33rd Street, New
temporarily, its projected finane- York 16, N; Y.—cloth—$4.00.
ing.

busy

(

1638

Inc.,

—

Percy

Jr.—Foundation
W.,

for

Connecticut

Washington

C.-^paper—250 (lower price in

quantity).

offer

the

dollar flotations.

Report has it that Australian
bonds, brought out early this
week,
same

case

loan

are

still available and the

is said

hold true in the

Kingdom of Norway
brought out several weeks

ago.

The

underwriting

Machinery Industry, The—Part
II —Study, and

look— E.

ferred,

head-on

collision With

the

York

Brandford

Education, Inc., Irvingtori-onHudson, N. Y.-—paper—250 (lower
rate on .quantity .orders). I

State

wind up in litigation Resulted this
week in decision by the Rochester

Co., Inc.-?»

copy

(25c to public libraries and

non-profit institutions).

mic

fraternity

—

Public .Service.
Commission which probably will

New

Analysis of Out¬

Axe

Tarrytown, N. Y.—Paper—50c
Liberty and Taxes

B. Smith—Foundation for Econo¬

50 Million Deal Sidetracked

Tarrytown Press, P. O. Box 147,

$15,000,000 of 25-year debentures
of May Department Stores, plus
89,467 shares of cumulative pre¬

of the

Good Week Ahead
on

clusive

Public

one, banker termed as a
"grand demands" in prospect for

quick success.
second

sailing.

matter of fact prelimin¬

discussions

complain

$12,000,000 of new 2%%
30year first mortgage bonds, and

what

its

And the forecast is

recent foreign

the books/ '

next month.

But there

ford c a yield of approximately
2.72 % to maturity and the task of
placement required but a brief
period following the opening of
*'in

undertake

of securities about the middle of

forded.

will

little

Thus
little

two sub¬
more than
the mere formality
offerings
of going through the motions.
removed
the mar¬
World Bank Flotation
ket's ability to absorb new offer¬
Consensus
among
investment
ings provided they are priced in
keeping with the ideas of invest¬ bankers is that the World Bank

find

about next

nicipals.
"
Five companies are set to mar¬
ket new issues, two of them by
the negotiated route and the other
three through the usual competi¬
tive bidding channels set up for
public utilities.

today, priced at 103but re¬
ports
indicated
that
orders
reaching the sponsoring bank¬
ers

Probable bidders
Salomon Bros. *&

Company plans to ask for proposals, also under
competitive bidding rules, for services in obtaining
the exchange of preferred stock and for the purchase of
unexchanged mew preferred. The exchange will be on s
share-for^share basis plus a cash adjustment. Any old

ban francisco

Halsey, Stuart & Co. Inc.;

June 30 stockholders will vote

the

cleveland

•

to be dated

Hutzler.

ferred.

chicago

are

underwriters.

to exchange or sell| 20,099 shares of new preferred stock
to refund a like number of outstanding $6 dividend pre¬

INC.

•

buffalo

include:

•

new york
boston

tion and acquisition of new equipment.

Mississippi Power Co.
June 13 company, a. subsidiary, of .Commonwealth &
Southern Corp., asked the SEC for authority to sell at
competitive bidding $2,500,000 first mortgage bonds to
aid its construction program. The company also proposes

Co.

The certificates

of series S certificates to be issued to finance construc¬

•

Corporate Securities

(6/24)

July 1, 1947, and will mature serially from July 1, 1948,
to July 1, 1962. They are part of a $32,910,000 aggregate

for each five shares held. Unsubscribed

one new

shares will be

State, Municipal and

;

Pennsylvania Railroad

ment trust certificates.

Continental Casualty Co.

than 80% of the purchase price of new
Probable bidders include: Salomon Bros. &

The company has issued invitations for bids to be re¬
ceived before noon June 24 for $11,025,000 of equip¬

•

United States Government,

Blair

(6/26)

Hutzler; Halsey, Stuart & Co. Inc.; Harris, Hall & Ox
(Inc).
'
*
V

basis of

•

RR.

equipment.

July 23 stockholders will vote on increasing stock from
5,000,000 to $6,000,000 (par $10), the additional 100,000
shares to be offered for subscription to stockholders on

not

nance

Chicago & North Western Ry.

Commonwealth & Southern Corp. in Central Illinois.

Hartford

issued invitations for bids to be re¬
ceived June 26 for $5,955,000 of l-to-15-year equipment
trust certificates.
The certificates are designed to fi¬

bidders

facilitate the disposal of the holdings of its parent, the

Haven &

New

1947, and due in 10 equal annual instalments. Probable
include:
Halsey, Stuart & Co. Inc.; Salomon
Bros. & Hutzler; Harris, Hall & Co. (Inc.).

shares from 250,000 to 1,500,000 shares and to

change outstanding 210,000 shares to 800,000 shares to

New York

Company has asked the ICC for authority tQ> issue $4,650,000 of equipment trust certificates to be dated Aug. 1,

Central Illinois Light Co.

June 25 stockholders will vote to increase the authorized
common

•

The trustees have

before end of July.
•

preferred shares not exchanged will be redeemed at $110
and accrued dividends. Probable bidders: Halsey, Stu¬
art & Co. Inc. (bonds only); The First Boston Corp.;
Blyth & Co., Inc.

Company has issued invitations for bids to be received
up to noon (CDT) June 30 at Room 744, Union Station
Bldg., Chicago, for $6,000,000 of equipment trust certifi¬
cates, series Z, The certificates will be dated July 1,
1947, and are to mature semi-annually from Jan, 1,
1948, to July 1, 1957. Probable bidders include: Halsey,
Stuart & Co. Inc.; Salomon Bros. & Hutzler.

curities Corp.

Chicago Milwaukee St. Paul & Pacific RR.
(6/30)
\
*

•

;.jnw

oV,

SiiWe$ of' Labo^1 Economics—

Florence

Peterson

—

Harper

Manual

Sugar

Companies,

24th edition—Farr & Co.,

120 Waif

Street,. New York 5, N. Y.—$2.00
(plus 2% sales tax in NeW York

City).

THE COMMERCIAL &

(3270)

FINANCIAL CHRONICLE

Thursday, June 19, 1947

Indications of Current Business Activity
statistical tabulations cover production and other figures for the latest week or month available (dates
either for the week or month ended on that date, or, in cases of quotations, are as of that date) :

The following

shown in first column are

Latest

(percent or

operations

steel

Indicated

produced (net tons)

ingots and castings

——*

2,311,000

and

(bbls.) at
distillate fuel oil

Kerosine

oil

Gas

(bbls.)

fuel oil

Residual

5,732,000

5,514,000

13,924,000
1,814,000
5,413,000
8,691,000

9,032,000

——

8,224,000

12,678,000

8,910,000

95,876,000
12,066,000

100,934,000
10,152,000

37,173,000

June
June
—————June

—

(bbls.)

and

14,351,000
1,921,000

94,802,000

(bbls.)—.—
—June
terminals, in transit and in pipe linesuminisned gasoline (bbls.) at
—
:
June

Stocks at refineries, at bulk
Finished

14,709,000
2,002,000

5,286,000

June

output

oil

fuel

4,830,000

5,148,000

36,032,000

33,363,000

45,224,000

42,875,000

46,779,000

Domestic

Exchange

Based

(number of cars)-

freight rec'd from connections

690,912

goods

ERAL

and

ENGINEERING

CONSTRUCTION,

ENGINEERING

shipped

PAPER

OUTSTANDING

BANK

NEW

—

9,087,000
168,879,000

FED-

•

$250,000,000 $256,000,000

FAILURES—DUN
Month

Manufacturing

7,289,000

228,030,000

BRADSTREET,

number

II—IIIITI'
III

119

—~I
:

117

.:155

————

—.

378

277

$10,971,000

$11,822,000

$2,066,000

12,258,000

1,493,000

3,037,000

Commercial service number

RECORD:

Total

June
June
June
municipal-—————June
1
;
—
-June
construction

construction

Private

—

construction

Public

and

State
•'

Federal

——

—

coal and lignite
(tons)———

coke

Beehive

(tons)

$121,077,000
48,970,000
72,107,000

47,756,000

52,544,000

Wholesale

40,201,000

39,297,000

33,108,000

29,842,000

Retail

25,958,000

32,810,000

14,648,000

22,702,000

Construction

91,981,000

54,724,000

Manufacturing

—

——

Total

STORE SALES—FEDERAL RESERVE
SYSTEM—1935-39 AVERAGE—100
——

.June

CIVIL

(in 000 kwh.)

Finished

ENGINEERING

lb.)

(per

PRICES

Public

273

311

250

292

„

Construction

4,701,992

4,030,058

4,615,983

4,635,218

2.85664c

.June 10

$33.15

June 10

$32.00

$31.17

$29.58

■'

COTTON

$26.12

Lead

Zinc

Stocks

21.475c

21.625c

21.225c

14.150c

_June 11

21.425c

22.825c

23.675C

14.425c

-June 11

80.000c

52.000C

-June 11

15.000c

8.250c

.June 11

14.800c

14.800C

8.100c

-June 11

(New York;

10.500C

10.500c

8.250c

Cake

corporate

Aa&_—

121.55
116.80

DEPT.

120.43

<■

■

May 31—

116.41

(pounds)

and

217,204,000

354,793,00b

849,870,000

905,075,000

May

May 31

tons

Aug.

116,987

118.60

Stocks

May

44,718
692,166

761,260
783,078

———————

to May 31

;

Hull

fiber

99,861

1—

1 to May 31—

May 31

(500 lb. bales)—

Stocks May 31—

960,491

880,518

927,141

•

„

349

604

—**«

1 to May 31_.

16,593

3,628

37,296

16,568

41,083

26,185

1 to May 31

Shipped Aug.

18,291

18,190
12,841

Produced Aug.

—

51,920

945,325

—

39,879

bales—

Shipped Aug.

121.46

121.04

Aug.

Produced Aug.

•

120.84

1,393,708
1,399,184

673,373

—

Shipped tons Aug. l to May 31_

119.20

46,782

1,297,571
1,212,212

to May 31

tons

Linters—running

116.02

118.60

987,894,000

Meal—

112.56

112.00

120.84

988,016,000

Oil-

} Stocks tons'May 31—

118.40

109.97

111.25

118.60

*———————————June 17
Group————June 17
Group
—
—
June 17

116.61
109.06

111.25

'44,682,000

33,593,000
025,296,000
925,266,000

31**—I

Aug. 1 to May

(pounds)

Produced

121.46

109.06

142,573

COM-

Huiis—

123.56

120.02

3,092,674
3,168,450

2,945,837
163,726

•

Produced

118.80

122.50

116.61

Utilities

Industrials

117.20

122.09

120.22

June 17

Public

116.80

122.09

A—_*.**—*—********—-"""--June 17
Railroad Group

PRODUCTS

Stocks tons

124.17

121.64

•

2,991,857

—

Shipped tons Aug. 1 to May 31*

AVERAGES:

.*■
June 17
——————..————-.-.June 17

Bonds

Govt.

1 to May 31:

Aug.

Produced lbs. Aug. to May 31

159,373,000

72,642,000

$560,244,000

COMMERCE—

____

(pounds)

Stocks

;

Average

3,656,000

213,667,000
327,600,000
240,804,000f 232,644,000
174,821,000
157,154,000
65,983,000
75,490,000

232,328,000

Shipped (pounds) Aug. 1 to May 31
_June 11

MOODY'S BOND PRICES DAILY

—

Crude Oil—

$19.17

$514,343,000 $454,471,000

II_I~T~IIIII
1*"
I__IIIIII

l to May 31—

May 31

SEED

—

282,'328,000

Mills tons

MERCE—

J. QUOTATIONS):

at———
at—..—.
(New York) at*:
(St. Louis) at
(East St. Louis) at—-

Lead

—

———

SEED—DEPT.

Received

2,73011c

2.85664c

2.85664C

—

60,000

—

Construction

Crushed tons Aug.

refinery

Export

Straits tin

...

State & Municipal

—

.June 10

& M.

(E.

copperrefinery

Domestic

191,000

GINEERING NEWS RECORD—For Month of

May—.

Refined

Electrolytic

EN¬

46,000

46,900

Produced

METAL

CONSTRUCTION

12,742,000

1,057,000
137,200

Federal

(per gross ton)————
steel (per gross ton)—

16,080,000

13,155,000

124,500

Total

.June 14

-16,000

1,323,000

1,015,000

835,000

COTTON

Pig iron
Scrap

739,000

17,326,000

—

12,050,000

COMPOSITE PRICES:
steel

321,000

—1*1—

*I_—I*—rI~I

liabilities

1,108,000
128,700

Stock tons
IRON AGE

1,503,000
247,000

13,500,000

EDISON ELECTRIC INSTITUTE:
Electric output

I_~"
:

liabilities

Private

DEPARTMENT

liabilities

Commercial service liabilities

——-——June 7
————June 7
-June 7

—

(tons)——*

Pennsylvania anthracite

number

66,159,000

$158,140,000

12
12
12
12
12

ASSOCIATION):
Bituminous

Total

AND NATIONAL COAL

(U. S. BUREAU OF MINES

COAL OUTPUT

$138,911,000
86,367,000

$102,480,000

$126,000,000

May—

number

YORK

May 29

Wholesale

NEWS

386,000

101,000

between

7,686,000

Construction number

CIVIL

$139,828,000 $157,709,000 $114,224,000
35,887,000
15,519,000
42,035,000
11,029,000
13,508,000
12,191,000
18,634,000
13,536,000
13,259,000

stored

RESERVE

Retail

$85,908,00(1

215,100,000

COMMERCIAL

Ago

■<

)

Total

830,128
639,124

884,242
703,509

830,383

900,747
666,071

June 7
-June 7

(number of cars)

freight loaded

Revenue

NEW

foreign countries

INC.—For

RAILROADS:

BANK

—.

Dollar

93,113,000
13,271,000
34,737,000
45,411,000

Month

$87,766,000

30—

•——.I"Z
*—————III I—
Warehouse Credits———————I"*

BUSINESS

ASSOCIATION OF AMERICAN

RESERVE

April

Domestic Shipments

„

Month

Year

Latest

For'

•

$87,833,000

Exports

4,895,650

15,350,000

Kerosine

Residual

5,004,600
4,840,000

June
*—<.—.June

output (bbls.)
output (bbls.)
——
oil and distillate fuel oil output (bbls.)

Gasoline

Gas

5,024,350
5,000,000

5,064,200

SYSTEM

DOLLAR ACCEPTANCES OUTSTAND-

YORK—As

gallons eacli)*—_ June
——June

GOVERNORS

(in billions).

ING—FEDERAL

...

Imports

output—daily average (bbls. of 42
runs to stills—daily average
(bbls.)
oil

Crude

1,483,900

INSTITUTE:

AMERICAN PETROLEUM
Crude

1,681,700

RESERVE

FEDERAL

THE

Month of May

84.2%

1,695,700

1,676,400

—June 22

—.

Ago

96.1%

BOARD

DEBITS

BANK

Year

Ago

96.9%

BANKERS

Equivalent to—
Steel

Month

Week

95.8 %

June 22

capacity).

Week

STEEL INSTITUTE:

AND

IRON

AMERICAN

39,906

Govt.

Bonds

2:81

2.79
2.53

2.48

2.64

2.63

2.58

2.82

2.83

2.73

3.22

3.17

3.03

3.10

3.06

2.85

2.72

2.69

2.61

2.60

2.58

—*.—**.,

—

-—

—

Stocks May 31

2.71

2.54

2.64

—:—

2.81

2.55

—June 17
a-——17
Aa
June 17
A
i.__
—
—_June 17
Baa
————————June 17
Railroad Group
June 17
Public" "Otilities GroupJune 17
Industrials Group ———————————
———■*—June 17
Average corporate

Aaa

1.46

1.57

1.68

June 17

—

grabbots, etc. (5O0 lb. bales)—

Moates,

DAILY AVERAGES:

MOODY'S BOND YIELD

2.72
2.61

Produced Aug.

COMMODITY

-June 17

INDEX-

286.7

400.6

397.8

403.4

FERTILIZER ASSOCIATION—WHOLESALE
GROUP—1935-39=100:

banks

.•

and

Fats

216.2

216.3

213.8

oils—

products

214.6

225.0

WEIGHTED

AVERAGE YIELD OF
For Month of May-

(125)

;

—

273.5

307.7

163.1

245.4

181.1

354.5

347.7

342.1

276.2

252.8

259.2

253.4

190.3

232.3

227.6

230.4

163.5

172.2

170.4

131.4

158.9

158.4

160.5

138.6

NEW YORK

217.8

216.4

215.8

169.6

Member

150.6

149.3

122.2

Total of customers net.

——June 14
June 14

185.7

187.2

198.3

168.1

Credit

155.6

154.7

157.4

127.5

Chemical

—*——.June 14
—
June 14
,
June 14

125.9

125.8

127.5

114.8

134.5

134.5"

134.5

119.8

125.3

125.5

105.8

June 14

192.2

196.7

196.6

149.0

—

——.

drugs

and

Fertilizer materials

—

*————

Fertilizers
Farm

—

,—•*—*—.

materials

Building

——

machinery

All groups

—

combined

Utilities

Banks

Cash

217,658

181,398

159,888

171,855

177,998

179,059

160,607

511,918

560,526

101

552,280

•

INDEX—1926-30

.June 12

AVERAGE=100

144.6

132.3

Farm

Hides

.June

products

Foods—.

and leather

166.6

products—.

Textile

products
—
Fuel and lighting materials
Metal and metal products-

—

■—

174.6

139.4
111.9

166.7

120.9

June

138.5

June

104.4

104.1

104.0

86.9

.June

142.5

142.3

140.7

110.5 i

177.5

178.0

178.5

128.2

124.7

126.4

128.6

TRUCKING

129.5

128.6

110.2

.June

115.9

116.1

115.4

97.9

Semi-manufactured articles

June
—

—June

.—June

161.1

159.4
142,2

125.5

103.4

i;r,t

142.5

143.1

142.9

142.5

142.2

106.6

7w.'fO '
7

141.0

140.7

140.6

■

ASSOCIATIONS

Month

Ago

2,190,074
1,913,94?

2,368,287

2,926,617
2,509,343

232,583

172,889

151,502

184,691

103,238

7,332,828

7,042,813

.4,072,628

For

smelter output,

all grades

lbs.)

at end

2,463,736 *

2,207,958
.(

(tons of
————

orders

270

2,436,145

INC. For Month

73,970
70,803
166,864

51,418

of period (tonS).

73,891
72,243
163,697
53,184

62,419

69,489
241,633

"38,791

132.2

132.3

131.8

104.6

For Month of May<

90,556

.
.

customers—

(tons of 2000

*88,927

110,670

lbs.)——

Refined (tons of 2000 lbs.)*————

107,270

'31,097
20,551

122,968

120,089

93,647

...

lbs.)

—_

222

Export, (tons of 200Q lbs.)—

Refined

copper

stocks at end of period

.105.4

—.June; 7);

——

Copper production—
Crude ' (tons of 2000

161.8

.—June

Manufactured products
—
All •ommodities other than farm products—————
All commodities other than farm products and foods*.

Year

April-

coma INSTITUTE

Special groups—
materials

Latest

for castings produced

carriers reporting—*
freight transported (tons)*—*-—

Deliveries

Raw

L——

motor
of

$530,330,192 $552,533,818 $856,186,164
143,830,277
61,922,510
62,771,012
368,591,057
416,700,862
420,495,662
664,915,016
669,452,643
651,605,136

96.8

.June

Housefurnishing goods —*
commodities

zinc

Unfilled

3.0

3.4

206,814

—
—

—————————

May—

2900

3.7

•

and steel

—June

Miscellaneous

Slab

3.6

INSTITUTE For

Shipments (tons of 2000 lbs.)*t—
Stock at-end of period (tons)—*;

108.03

—June

Building materials
—#.
Chemicals and allied products—

4.6

2,726,603

of May—

162.7

166.5

138.0

—

111.5

146.7

178.4

163.1

161.6

179.5

.June

—June

—
*

147.4

Volume

3:7

6.1

Month

AMERICAN ZINC INSTITUTE,

147.9

June

Month of

-••••'

tons)

Month

PRICES—U. S. DEPT. LABOR—1926=100:

commodities

ASSOCIATION For

GAS

ingots

Steel

No.

All

...

hand and in banks in U. S

Month

WHOLESALE

margin accounts
debit balances———

carrying

extended to customers

AMERICAN IRON AND STEEL

591,496'

145.8

144.6

5.3

3.2
4,5

4.9

STOCK EXCHANGE As of May 29—

firms

AMERICAN

DRUG REPORTER PRICE

—

gas

(net

DIL, PAINT AND

(200)

sales (M therms)
Natural gas sales (M therms)**—.
Manufactured gas sales (M therms)
Mixed gas sales (M therms)*:

186,073)

3.7

April—.

Total

5.0
7.3

5.3

7.5

4.6

———*

(10)

Total of customers' free credit balance*—

June

activity—————
(tons) at—:
—

Unfilled orders

(15)

AMERICAN

June

—

5.0

Average yield

June

—————

—

(25)

Insurance

June

(tons)—:

Percentage of

Railroads- (25)-

ASSOCIATION:

(tons)

Orders received

Production

—;

PAPF-RBOARD

NATIONAL

June 14
June 14

1—*—,

commodities

858,675,000

200 COMMON STOCKS

Industrials

245.4

—

109,371,000

941,020,000

147.4

267.8

——————————-.-June 14
Livestock
—
—June 14
Fuels
—_ —.———4————
—June 14
Textiles

122,527,000

••

248.1

Grains

Miscellaneous

39,961,000
157,802,000

166,094,000

—

institutions**

148.2

oil

Cottonseed
Farm

50,955,000

229,862,000

44,890,000

L.J

MOODY'S

147.6

204.3

—June 14
June 14
—————.——.———
—
.June 14
——■—-—<———.—June 14
—

—

58,912,000

248,907,000

————

COMMOD¬

INDEX BY

ITY

$299,690,000 $270,724,000

—

———

Miscellaneous lending
i.

Foods

HOUSING

April-

companies

Trust

and

Industrials

-•

NATIONAL

Month

—

loan Associations.————^—

and

Insurance A

Bank

NON-FARM

S.—NATIONAL

AREAS

AGENCY—For

Savings

;

May 31

1 to

FINANCING

ESTATE

Mutual Savings

MOODY'S

1 to May 31

Shipped Aug.
REAL

2000

♦Revised

lbs.)

—

figures.

(tons
_

77,716

*81,643

75,754

SEC Lifts Curb

Regulation A of Securities Act of

Revises

issues under $300,009

(ration of security

hibited

1933 by permitting regiswhen distribution is pro¬

Hubert O'Neil, Jr.

Requests Now More
Than $2V2 Billion

Beech-Nut Common

With Edw. Bourbeau

•

by State Authority.

On June 13, 1947, the Securities and Exchange Commission
amended Regulation A under the Securities

an¬
Act

nounced that it has

Charles C. Pineo, Loan Director,

is prohibited, struction and
Development,
reported that
ulatory body of the State for any
loan applica¬
reason other-than the misconduct

stated

However, the

.Commission would still retain its

jurisdiction over
of the security.

fraudulent sale
:
.*..'!
" j

dealer in the securities.'

The text ! of the SEC
is

merit

announce^

•

follov^src.;;;

associated

with

Edward

Co., 510 South
Spring Street.

The

O'Neil

Mr.

Halsey, Stuart Offers

formerly
Manager of
the
trading
department

Public Service of Colo.

for

Bonds—Underwrites Debs.

Los

was

share.

per

Halsey, Stuart & Co. Inc. and
are offering to the pub¬
lic today (Thursday) $40,000,000
associates

Service

Public

Colorado

Co„

first mortgage bonds,

27s% series
due June 1, 1977 at 10374% and
The group won

accrued interest.
the

;to the
Bank .already
exceed
$2%

award

the

bonds

com¬

petitive
bidding
on
a
bid of
"The
Commission
finds
that
102.70999.
7; \\ continuation: of the, above restric¬ billions. These
Net proceeds from the sale of
!'V The Securities and Exchange tion is" no longer necessary in |he
the
applications;',
bonds,
together with cash
Commission today announced the public interest, for the protection
from
the general funds of the
he said; will
adoption of an
amendment ; to of investors, or to carry out the be considered
company, will be used to redeem,
Regulation A deleting the restric¬ provisions' of the Securities Act in the light of
at
10471%, $40,000,000 principal
tion imposed by subparagraph (h) of 1933.,!It further finds that this
the urgency
amount of first mortgage bonds
of Rule 221.
i'V':
V"': amendment removes restriction and usefulness
Charles C. Pineo
372% series due 1964.
The sale
This action was taken by the and may be declared effective im¬
of the bonds is part of a compre¬
of the project
Commission after general circu¬ mediately pursuant to Section 4
for which the funds will be used, hensive financing program to be
lation of the proposal and the re¬
(c) of the Administrative Proce¬ the usefulness of the loan to both undertaken
by the company.
ceipt of comments from interested dure Act.
the borrower and world trade, the
The $7,000,000 in 3% converti¬
parties. The removal of the re¬
"The basis and purpose of this
willingness and ability of the bor¬ ble debentures are being offered

•*

ANGELES, CALIF.—Hu¬
O'Neil, Jr. has become

Arkell, a founder of the
and President until 1940.
stock was offered at $31.75

company

tions

bert

J. Bourbeau &

accrue

Barlett

•

denied, or suspended by any reg¬

The net pro¬

LOS

to the estate of

ceeds will

curities in that State

other action by the author¬

of the

close of business, by

18 after the

Buckley
in

Brothers

Angeles.
thereto

Prior

with

was

Butler-Huff &
and

Co.

Hill,
&

Richards
Co.

Hubert R.

affect the au¬

does not

amendment

thority of the various state regu¬
latory bodies over securities trans¬
actions within the states, nor the

striction
the

application of the anti fraud pro¬
visions of the Securities Act of

are

longer

public interest

tection

remove

re¬

necessary

for the pro¬

investors."

rower

the

to use its own resources to

extent,

fullest

loan

what

can

whether
the

the

common

stockholders of record
and accrued in¬

June 17 at 100%

borrower

terest

expects, and whether the borrower
can maintain service of the loan.

the basis of $8 of deben¬

each

for

tures

held.

The

past he conducted his own invest¬
ment business in Los Angeles.

DIVIDEND NOTICES
CITY INVESTING COMPANY
25

NEW YORK 4, N. Y.

STREET,

BROAD

and the Securities Exchange

Act of 1934.
The text of

Inc.

the borrower which will result in

Dubois,
"Secretary."

Commission's

...

Effective June 13, 1947

action follows:

Wants Treasury to

lationship between the Bank and

the

lege

Mr.

"orval l.
.

the

stressed the development of a re¬

continuous

1933

"By the Commission.

Use Flexible Exchange Rates

his

Pineo,

consultation

address,

and

ex¬

his

"For the past

nearly representative as is prac¬
ticable of the rates used most gen¬

Rep.

measure,

stated:

erally in foreign exchange trans¬
on that
day.
This figure

few years due to

actions

unstable exchange rates importers
of merchandise have found

customs

will then be used by the

it im¬

possible to determine their costs.
Many of the cou/ntries of the
world have set up systems of mul¬

duties and both the Gov¬

assess

ernment

the

and

outstanding.

taken

tiple exchange rates and both the
Uhited States Government and the

are

some

at.
there

60,000 cases where firms

importer have been at sea as to are awaiting a decision as to what
exactly
what
rates should
be the exchange rate should be.
"I believe that this bill should
charged for customs purposes. This
situation has not only made it dif¬ have the support of all of those
ficult for businessmen to close out who
import merchandise;
and,
transactions, but has also pre¬ with some modifications, it meets
vented many-of them from im¬ the suggestions of the Treasury
porting goods since they could not Department for legislation on this
be assured of their costs,- • •
subject as expressed by them in

"To, improve this situation I am
today introducing a bill which in
short provides that when there are
dual or multiple exchange rates,
the Federal Reserve Bank of New

letter to the Speaker

dated May

21st.
for

need

the

conva¬

development

their economic strength, we

apparent."

declared

day

1947

1,
close of

Corporation

United Shoe Machinery

clared

capital

and

Preferred

June

business

They

Trie dividends on both
stock are payable July

Common

of record at the close

stockholders

1947,

stock.

dividend of
capital stock.

Common

de¬
the
have also de¬
62V?c per share on the

of this Corporation have
dividend of 37'^c per share on

Directors

Preferred

at the

Secretary.

FRAHER,

EDWARD

The

per

5'/a% Series Cumula¬
this Company, payable

Stock

stockholders ot record
business on June 23, 1947.

July

clared

$1,375

the outstanding

Preferred

tive

1947

of this Company has

dividend

1947.

18,

WALLACE

KEMP,

Treasurer.

offered

who

for the

underwriting.

privi¬
Any

Dividend Notice

not subscribed for by

will

by the underwriters at the

offering price plus accrued inter¬

underwriters to pay the
additional amount ag¬
gregating $100.
est, the

company an

board

The

Following consummation of the
refinancing program,
the
com¬

pany's funded debt will comprise
the $40,000,000 in new bonds and
$7,000,000 in 3% convertible de¬

HELP

shall

Arundel

directors

The

Corporation has this day
share as the

declared 25 cents per

regular quarterly dividend, on the
no

value stock of the corpora-*
and outstanding, pay¬
and after July 1, 1947, to
stockholders of record on the

par

issued

tion
able

the

bentures due 1962.

corporation's books at the close of
business June 18, 1947.

contributed

MARSHALL G. NORRIS,

WANTED—MALE

great deal to

June

again

may

credit

their

receive

rating,"

Well established,
sive

small but

aggres¬

"Over-the-Counter-House" wants

expand and is offering the position
of Manager-Salesman to one who can
build
up
and manage efficiently a
to

proper

Pineo

Mr.

con¬

small

cluded.

tunity.

sales

Box

force.

619,

Excellent

oppor¬

Financial

Chron¬

icle, 25 Park Place, New York 8, N. Y.

SITUATIONS

13, 1947

MANAGER-SALESMAN

the restoration of confidence, and

The Electric Storage Battery
company

WANTED

187th Consecutive

Quarterly Dividend

TRADER-SALESMAN

Unlisted Trader

The

Many

years

dealers

and

house desires an experienced

unlisted

out of

salesman-trader

town.

tele.

Good

with

clien¬

Commercial

declared

from

the

Common

Box G

Stock,

payable
'

1947. Checks will be mailed.

liberal

salary,

H. C. ALLAN,

commission, full cooperation.

and

June 30, 1947, to stockholders of record
at
the close of business on June 16,

S529

have

dividend of seventy-five cents ($.75) per
share

experience. Well
with

Directors

Accumulated Surplus of the Company

Active over-the-counter

Salary and Commission. Box

620,The Commercial &

Financial Chronicle, 25 Park

Place,

Secretary **d Treasurer

Philadelphia 32, June 6,1947

Financial Chronicle, 25 Park

Place, New York 8, N. Y.

Addressing Service

this

Secretary

have

legisla¬

speedy

this subject is

their

during

need

lescence

acquainted

"The

tion

they

$100

stockholders

common

will business integrity and experience

importer

then kno\y where they are
"I understand that today

the

debentures

nificance

change of information during the
whole of the time that the loan is

"International Bank loans
On June 12, Rep. Robert W. Kean (R.-N. J.) introduced a bill
(H.R. 3810) in Congress which would empower the Treasury Depart¬ will benefit everyone. Not only
will
these
loans
ment to fix daily an exchange rate *
produce
the
in assessing duties on imports that York shall certify to the Secretary articles of trade,
but they will
of
the Treasury daily'what are help restore that confidence on
would be between the highest and
lowest current rate as certified these rates and the Secretary of which, in the last resort, trade de¬
for that day by the Federal Re¬ the Treasury shall select' a rate pends. If we can help to put coun¬
serve
Bank
of
New York.. In between the highest and lowest tries on their feet again, if we can
pointing out the need and sig¬ and certify one which shall be as give them the assistance which

Kean

associates

and

company

12.

June

of Directors

The Board

offer, which expires at 3 P.M
(EDT)j July 1, is being under¬
written by Halsey, Stuart & Co

O'Neil, Jr.

the

striction

Special to The Financial Chronicle

140,000' shares

F. Eberstadt & Co*

issue

of
common stock, par $10, of BeechNut Packing Co. was offered June

says loan requests will be consid¬
permitting reffistratior ^
"Acting pursuant to the Secur¬
ered in light of urgency and use¬
of exempt securities which
are
banned by a State order. Under ities Act of 1933, particularly Sec¬
fulness of projects for which
tions 3 (b) and 19 (a) thereof and
regulation A, in the case of se-jfunds are to be used as well as
after consideration of all relevant
curity issues up to $300,000 irl
matter1 presented, the Securities
ability to repay.
amounts the Commission refused
sale in1 a state if. the right to offer and Exchange Commission here
Speaking at the 27th Anniver¬
by amends Regulation A to delete
or to-sell such securities in that
sary Luncheon of the Better Busi¬
state
"is prohibited,
denied or therefrom subparagraph (h) of ness Bureau of Washington, D. C.,
Rule 221 which excludes from tile
suspended by any regulatory body
on June 17,! 1947, Charles C. Pineo,
of that state for any reason other exemption provided by Regulation
Loan Director
'Securities; sold or delivered
than the misconduct of a dealer.' A
of the Inter¬
Under ;the
.revision, ;the
SEC after sale in, or orders for which national Bank
would leaved the^enforcement of are accepted from, a State while
for Recon¬
the state prohibition to a stop or¬ the; right to offer or sell such, se¬

ities

Ebersladt & Co. Offers

of 1933 by

der

(3271)

World Bank Loan

Sale of State

FINANCIAL CHRONICLE

THE COMMERCIAL &

Number 4604

165

Volume

New

York

Safeway Stores, Incupoiated
As

ica,"

"have

bank

listed

stencil

metal

this

than

you

There

firm

every

which

puts

and

usi in

•

for

PRODUCER

N.A.S.D.

they

list

(main offices only)

appeared

addressing

N.A.S.D,

List,

arranged

Dealers."

"Security
per

Open for Good Connection

Cost

thousand.

Publishers

'Security Dealers of North America"

Park

Place

REctor

2-9570

—

New

York City

business June 19,1947,

arbitrage, correspondence, reorganization situations, co¬

with. wholesale

business,

etc.

Box

and

619,

retail,

Stock

Commercial

the

of such stock of record at the

business June

7!""

Chronicle, 25 Park Place, New York?7, N.

and $1.25 per

Company's 5 % Preferred
Stock, payable July 1,1947, to holders

Exchange

-Financial
„,

of such stock of record at the close of

Experienced in over-counter trading, wire business,

operation

Herbert D. Seibert & Co., Inc.
■/

Safeway Stores, Incor¬

porated, on June 6, 1947, declared
quarterly dividends of 25c per share on
the Company's $5 Par Value Common
Stock payable July 1,1947, to holders

Addressing charge.,$5.00 per thousand.

of Directors of

Canada, all arranged alphabetically

by States and Cities.

just

Klptice is hereby given that the Board

approximately 6,600 names in the United:

States and 900 in

Special

Stock Dividends

up-to-the-minute list

obtain elsewhere,

can

are

for

publication,

position' to offer you

Preferred and Common

publishers of "Security Dealers of North Amer¬

19,1947.

MILTON L. SELBY, Secretary.

close of

June 6,

1947'

THE COMMERCIAL & FINANCIAL CHRONICLE

(3272)

Thursday, June 19, 1947
*

Looking Before We Leap!
"Current discussion,

Washington..
Behind-the-Scene Interpretations
from the Nation's

And You

Capital

Washington question right now is international rather
than domestic—whether President Truman will risk letting Congress
go home without seeking additional authority to pump American

concoct a foreign re¬

planned to
for

Congress

administration to

"Now there's a pos¬

next year.

sibility—not yet a

home

probability—

White House will bid for
interim dollar divvying powers.

Republican economy drive.
*

moderately bullish
outlook.

(1)
Department

Here's the Truman dilemma:
He's

State

told

gumshoe men the economic situ¬
ation outside our hemisphere is

greater than
anticipated
rapidity.
(2)
He
knows Congress is set for a vaca¬
tion and dead-set against enlarg¬
ing foreign handouts right now.
Those are the factors that must
with

deteriorating

shape his decision.
How would
handle such chestnuts?

you
J

President

former

Attention

honest warning
this
week
that shipping too
many dollars abroad means dol¬
lar starvation at home may be
the straw that breaks the cam¬
el's back of Republican collaboration
with extremist Demo¬
cratic internationalists. There s
Your

Hoover:

Caffrey sounds

Chairman

SEC

decision.
*

Republican'

good chance now

Vandenberg may see
of diluting his con¬
centrated support of the Tru¬

public offerings of securi¬
corporations which will
register with us.
I take
it times will get better.
I hope
that increase will continue."
by

down

nailed

has

hire

ambitions
and

Com¬
SEC
people

Appropriations

House

mittee

SEC now

do more things.

man

global policy.
*

Commission's
in¬
the
June 23 when a House

* Power

Federal

grab for authority beyond the
tent of Congress goes under
microscope

subcommittee

Commerce

opens

amendments to the
Federal Power Act.
The hearings
-will run through the week, will
draw national acclaim.
Federal
hearings

that

pand according to plans.
*

last amended in
1935 when the New Deal wrote in
authority for the Government to
seize utilities 50 years after the

FPC

establishes

control'

over

them.
*

The

pending
amendments
objectives.
They

two

have

protect industries
producing power for their own
u<gg from FPC domination, and

would

(2)

(1)

interstate

redefine

com¬

waters in
to restrict FPC

and navigable

merce

SEC

such manner as

jurisdiction to utilities actually
selling or transmitting power
across State lines.
They can't
through Congress this ses¬
sion, may be tagged for ap¬
get

proval next year by the
Committee.

Com¬

merce

the

trebling of yearly broker-dealer

Such inspections

examinations.
now

average

500 to 600 annu¬

for enough
inspectors to hike this level to
SEC

ally.

yearns

The purpose: in¬
spection of each registered bro¬
ker-dealer every two years.

bank

examiners'

would

certainly have

assured

"Y o u
outcry,"

fees.
an

Congressional

expon¬

ents of the fee theory.
*

si--

The

survey

started

was

Republican Rep¬
resentative Miller told Congress
this week
"The Federal Power
Commission has gone far afield of
the interstate power business. The
Commission in my opinion will
never impose limitations on itself,
rather it reaches out in an at¬
..

And

been denied
by the House

Committee.
probably will end it.

That

FTC

was

collect

from

House

Cow."

comes

and
squeezing thousands of Govern¬
budget requests by billions

ment

workers from

Commission, thereby

poke at Southerners try¬

jointly
for

Interstate

the

These

were

blended

use sugar

early September.
household

in late Aug¬

The refrom

the

South in

talk

lay industrial decontrol.
*

Watch for innovations in the

$5
Supply
overtaking demand after
years lag, and Commerce

billion container industry.

now

the

war

Department trade specialists fore¬
see

competitive emphasis

tainers

with

after

on con¬

multitude

they

have

end

been

Moans

contravention

legislation
veto

Georgia's

take

the

heart

Democratic
out

the

Georgia case." The Georgia case,
now
before Supreme Court Spe¬
cial
Master
Lloyd K. Garrison,
iharges the railroads violated anti¬
trust
statutes
by conspiring to

airline legislation.

proposals

deadlock

Bank

steamship

(2) American international
blended into

carrier.

business and indus¬

should

forthwith

revert to its traditional function

engaging only in such bank¬
the

States."

United
dent

foreign

M&Bin

trade

ESTABLISHED

Presi¬

Bank

Neither

1919

Security Dealers Ass'n

HA. 2-8780

Teletype N. Y. 1-1307

Do You Wish io Sell

Your Business?

can

sin¬

in the market to

buy successful manufacturing
generally are able to pay a premium.
Offerings should meet the following conditions:
are

businesses and

pass

earnings.

2. Purchase
Commerce

has wasted weeks

Exchange PL, N. Y. S

1. A record of several years
*

Members

the

iii ■■•■■■■ 11 iiiiiuitinmin iiihiiiiiiiiiii i» ■«■»■■■■■

this session.

House

M.S.Wien&Co.

concurs.

companies be authorized to fly,
airlines

feels

Involved are

(1)

that

committee

the

New Issues

transact

strongly that the Export-

Import

late

Foreign

Securities

Develop¬

and

prepared

was

levy rates discriminatory against
Southern shippers.
There's

Domestic &

the

ing activities as directly stimu¬

"The Reed bill

recon¬

during

the International Bank for

business,
very

the

fore

ment

The

(huge

loans)

immediately
following
end of hostilities, and be¬

rates

heard at high levels.

the

reports

Old Reorganization
Rails

there

period

Reconstruction

Presidential

loans

such

struction

unfair

prescribed

of Federal Law.

ing

Committee

single American line philoso¬

not less than
than $1,000,000.

price should involve

$300,000—preferably

quibbling over

100°/o of outstanding capital stock should be
available.

It is
a

helpful if present management continues, at least for
period of time.
-^77:
_

ship operators.
the

Senate.

but talk.

That can't hurdle

End

result—nothing

INVESTMENT BANKERS:

situation

in touch with situations which you have
for public financing, but consumma¬
been prevented by the recent market. If a
meets the above conditions, we may be able to

help

solve

Perhaps

you are

been considering
tion

has

you

your

with advantage to

problem with profit to yourself and

the

company

which

you represent.

Inquiries will be freated in strictest confidence.

HILL, THOMPSON & CO., Inc.

their jobs,

t*"» House Appropriations Com¬

120

Broadway

New York 5, N. Y.

mittee has voted to give Presi¬
dent

Truman

every

dime

sought for fiscal 1948, has even
hiked the White House kitty by

sugar

rationing is not expected to de¬

"While

have

has energetic House support, but

un¬

statistics

into

lease

Banking

House
.

rails

the

prove

corporations the same type phy, won't endorse that, will com¬
of profit and loss and operating promise
on
a
bill empowering
data extracted by SEC from listed CAB to
grant airline licenses to
corporations.

ust

•

the

listed

for investors,

the White
with
another
"Sacred
After
slashing
other

now

gle

by asserting
try and Governmental agencies.
jurisdiction over companies and
activities never intended by Con¬
gress. The operations of the Com¬
mission in recent years make it
apparent that Congress must spe¬
cifically define the area in which
the Commission may operate."
tempt to grab power

Commerce

FTC and SEC schemed to renew

money

with

conference

and

it jointly, have now

passed

prosecutions for fixing rates in

SEC with WPA
funds, transferred to OPA dur¬
ing the war.
Early this year
back by

necessary

look for decontrol

in the national interest for mak¬

Joint SEC-FTC study of cor¬

years

can

industrial

might have been considerations

bill,

poration finance is dying in the
bud.

need

You

the

will

reacts

Caffrey

Commissioner

coldly, says broker-dealers would
react hotly, to the idea of an SEC
examination
charge
similar
to

The Reed-

the carriers from antitrust

Senator Russell

Congressional
joint
legislative
commission, created by the Hartley-Taft labor bill, will snag the
guaranteed wage issue for its own

Senate last Wednesday, immun¬

1,800 or 2,000.

Export-Import Bank has been
Committee

ing

Appropriations

Connecticut's

craving

it into

tournament.

leap!

told

takes

SEC

at least look before

Chalk up a round for the in¬

deals.

Another

dustrial North in its freight rate

the listed securities market
for signs of manipulation, aspires
to hire eight more and extend this
snooping to over-the-counter
ing

formula,
the 1948

emptied.

Yes, let

izes

tumble

devis¬

now

wage

agenda.

■

go¬

Safe wager right now is that the

berg.

get

President Truman's

final

be involved.

don't

but

showdown until union

Presidential

uses

Bulwinkle

has 22 agents observ¬

now

}

confirmation

long,

guaranteed

might

feud with the South.

means

calculated

are

Congress will concur,
SEC can't ex¬

$205,000.
and

ing

total balance sheet."—Senator Arthur H. Vanden¬

committeemen

have whittled that grab down

Act was

Fower

which

employes, wants 1,587,
requested that its funds for fis¬
cal 1948 be boosted by $966,300.

has 1,270

Appropriations

the

see

Economic Council is

anxieties that

before

-contract renegotiations

they

analysis all of
these programs —
though measured in dollars —
involve, at base, a burden upon American produc¬
tion out of American resources.
It is vitally neces¬
sary that our studies should mobilize our surest
information and our best available advice respect¬
ing (1) the over-all latitude within which America
may safely and wisely plan these foreign coopera¬
tion; (2) the basis upon which they should be under¬
taken, including reciprocal considerations; and (3)
the over-all necessities, in Asia as well as Europe,

ber of

si:

Vandenberg

"In

considerable increase in the num¬

have

this

needs
more
money, expects to be busier this
coming fiscal year because . . .
"we judge there is going to be a
agency

Senator

the wisdom

labor-management

You^l

ing in 1949.

At home,

invite

themselves.

the business
appropri-

He told House

his

ators

ties

abroad.

look for

they

shall rush into imprudent
inadequately seasoned plans.
Abroad, they should not be taken
as
evidence
that
our
foreign
friends can depend upon us as
a
substitute for depending on

contributing to

isn't

Presi¬
that

No indeed, the

Mansion.
dent

under

But

open.

the

irritant.

$568,840. There'll be no savings
firings—at the Executive

—or

the

Watch for an early

should not

<e>

habilitation capsule this summer

the

sur-»

Guaranteed annual wage is to

should not be misunderstood at

President's agents have

way

before Congress ad¬

even

Biggest

The

epitaph
journs.

guished from direct relief—to prevent social and
---■
economic collapse in many parts
of the world.
It is a good thing
are

Don't

mandate.

prised if the President writes the

new foreign programs of largeAmerican rehabilitation—as distin¬

that these discussions

dollars abroad.

House

in and out of official life,

is directed toward
scale post-war

Regulation W is as good as dead,
will shortly be buried by White

'lUllHIUUUUUiUMIIIIIUIIUIIUUIUUUIIUIUIIUIUUlC

Full text of Commercial and Financial Chronicle : June 19, 1947, Vol. 165, No. 4604

FRASER