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-it. Univ. of 1940' 3 ' rt ESTABLISHED Mich. Reg. U. S. Pat. Office Number 4808 Volume 169 New Internal Barriers to Foreign or Price 30 Cents York, N. Y., Thursday, June 2, 1949 Expansion Copy Trade Plight of the Equity Capital Market By IRVING S. OLDS* By WILBERT WARD* By EMIL SCHRAM* Chairman, Board of Directors, Vice-President, The National City Bank of New York President, New York Stock Exchange S. Steel Corporation U. In proposals to limit corporation profits as open¬ economic and Sees adequate path toward ing financial suicide. profits essential of as means United States Steel Stock Exchange Firms have a somewhat > : v .... direct , connec¬ tion. restrictions which e""actively ,;EX- >. been s 3-for-l Olds , been at that about rate. Of recent an years, . some¬ thing se¬ than Wilbert Ward distribution. a more "small'-' amount of our . time, United gross national product has been States Steel has approximately disposed of outside the United States." The postwar demand for 230,000 stockholders and 300,000 our goods has been so great that employees. It has operations of the President has sought, and the (Continued on page 27) Congress granted, continuance of a war emergency power to forbid *An address by Mr. Olds at the exportation of goods in scant the present At Joint Dinner of the Association of Stock Exchange of Chamber Lake and the of Firms Salt Commerce City, Salt Lake City, Utah, domestic "An ' a . study of me that might we quarter of an hour of (Continued on page 28) fore recently completed supply. So it seems to devote May 27, 1949. We have exports difference in these yields would show up in a most striking manner. ^>In 1926, com- * > r. { a address the by Mr. tors ence in financial matters recently both in private and public life, come charged by the FDIC. To him "it is inconceivable that a larger sum than $1,000,000,000 [the existing FDIC surplus!, plus an interest income of approximately $25,000,000 per year on the fund, would ever be needed to meet any situation that might arise. * * * A further factor of safety is that in an emergency FDIC can borrow up to $3,000,000,000 from Treasury.'? the United States dispassionate observer, Mr. Jones like the To the seems to mak§ a suspension at least until such time as prospect of need for further funds. Un¬ there appears some existing the most real function performed coiild buy: : high Club of (Continued on page to about 5% represented by common stock also sold at price to 5%. a In yield was at Funds, shade less than the return a high grade bonds, which seems strange, and in the succeeding (Continued dinner . by Mr. Schram at meeting of the Denver of Commerce, Denver, Colo., May 24, 1949. Municipal Canada Bonds i upon request COMMON STOCK FUND Exchange INCOME (BALANCED) Prospectus Street, New York 5 THE Providence on FUND request Government Office: 26, Bishopsgate, New York Agency: 20 Exchange Seattle Portland, Ore. NATIONAL BANK PL THE CITY OF NEW YORK Tide Water Power Company COMMON bonds & stocks Prospectus SECURITIES Distributors of Municipal OF San Francisco Los Angeles CANADIAN COAST Underwriters and London, E. C. Teletype: NY 1-708 PACIFIC in Kenya Colony and Uganda Head Bond Dept. CHASE THE OF COMMERCE OF NEW YORK York 5 of INDIA, LIMITED the CANADIAN BANK Head Office: Toronto FRANKLIN DISTRIBUTORS, Inc. 64 Wall Street, New Amsterdam Bond Department THE NATIONAL CITY BANK NATIONAL BANK to 25) Chamber • Monthly Commercial Letter UTILITIES FUND Bankers on page ♦An address State and inc. BOND FUND London SchrfUN - on PREFERRED STOCK FUND Chicago Philadelphia Emil the ' .. v worst point of the depression pe¬ riod, the yield on co.mmon stpcks 1932, 26) across A Mutual Fund Boston and the ownership 550 Branchei Franklin Custodian will be supplied on request 40 Wall a; grade yield bond < Superheater, Inc. Members New York Stock un¬ usually *well balanced, you strox^g case not only for reduced assess¬ ments, but for their der conditions now others facr„, were Cincinnati, Ohio/May 26, 1949. Engineering- copy successful experi¬ to the support of the banks of the country in their effort to obtain a reduction in the ."premium rate" has Cincinnati Chamber of Commerce, * Combustion A ! Liquidity s' Then and Now ; v Jesse Jones, a gentleman of long and •; ac-( by these assessments is that of helping directly or indirectly Wai^d be¬ to finance the United States Treasury, since all, or practically Trade Foreign nl y economic $2 currently are ^ , cepted.as a time • when" . $13 bil¬ lion, and they has f> 1 i t wider a our nro were to effort cure 1944, EDITORIAL Last J..-r yea r.' they in jobs and greater opportunities. illustrating the plight of the equity market, the spread be¬ tween the yield on bonds and common stocks is a good starting point. If I had a chart to set before you, the extent of the present wide In they billion. ; stock .ration In capital gains taxes —r————r——r ji the cent 1 y speculation instituted by SEC and Federal unnecessary and useless. Urges now is time to remedy tax inequities and promote new capital investment, which whole world needs and which will mean more on earlier; 1934, had .' of the corpor ; "small." j,Be^ common S. in other;'ex¬ changes. Irving :: decade -change and at it causing creeping paralysis in our economy. as curbs bill i o n [ in lend-lease)? A in"at the New Yorjt - kept about<s> $15 billion (including $11 .. " T .Stock had were v orporation traded > our State Department, in 1945, released proposals for the expansion of world trade, directed toward relieving trade from varL ous capital Reserve Board make ization, e venture Holds present bureaucratic planning and directives. upon " a r on To aid in drafting a Charter for an International Trade Organ¬ the of stocks c T h . bonds and Warns against dollar devaluation and commodity exports. Corporation Association of the of on contends 1T0 and other UN subsidiaries create excessive reliance j with which the mem¬ a concern bers restrict new construction and expansion, Starting by pointing out wide and growing spread on the yield of common stocks, Mr. Schram proceeds to illustrate attacks State Department efforts to relieve international Mr. Ward points out as disturbing factor larger export of our goods for which we receive no equivalent. ySees as another formidable internal barrier power of Secretary of Agriculture to set import quotas and * right given President to commenting trade from restrictions, Mr. Olds denounces is a <& Analysis upon available request and Branches in India, Burma, Ceylon, Kenya Colony, Kericho, Kenya, and Aden and Zanzibar Corporate Securities Dean Witter & Co., Exchange San Francisco Stock Exchange Honolulu Stock Exchange Members New York Stock Subscribed Capital Paid-Up Reserve The Bank Capital- OTIS & CO. every description Established also undertaken Los 1899 (Incorporated) of New York Cincinnati Chicago Columbus Angeles Stock Exchange 14 WALL ST., NEW CLEVELAND banking and exchange business - Trusteeships and Executorships Grpokattoji " £2,500,000 Fund conducts £4,000,000 £2,000,000 Dominion Securities YOttK Los Angeles Honolulu San Francisco Denver Toledo Buffalo Seattle Direct BA 7-4300 Wirea IRA HAUPT & CO. Members New York Stock 111 Broadway, N. y. 6 WOrth 4-6000 40 Exchange Place, New York 5, N. Y. Exchange and other Principal Exchanges Boston Teletype NY .1^2709 Telephone: Enterprise 1&90 Private Wire to: Ball System Teletype NT 1-702-3 Hendricks & Eastwood, Inc., Phila. 2 .» , By WALTER F. HAHN* ; evaluating these issues • /" * * , New York Hanseatic Corporation t * Teletype NY 1-583 contingent interest securities. * railrdad reor-^—1—L—— income good position and late to bonds more j t u s b" m e n n"d o Walter F. Exchange Exchange ad!- in BROADWAY, NEW YORK 5 Hahn 1895. Katy bonds income are Tel. REctor 2-7815 been been haVe which outstanding since .the reor¬ ganization of the early Twenties;" Union Pacific had income bond an that matured in 1946. The former LAMBORN & CO., Inc. STREET Frisco, predecessor of the present company, had income Cs and ad¬ justment 6s outstanding, until it the made NEW YORK 5, N. Y. mistake of fixed interest fore—this 4&% bondS there¬ with Exports—Imports—Futures which the approval of it makes different from stock In most a cases, certainly with respect to income DIfeby 4-2727 bonds that were issued in the last 10 years, income is mandatorily payable if earned, which,' of also distinguishes such in¬ course, come bonds from preferred stocks, dividends on which may be American Air Filter Co. Common earned and not paid. Corp. not cumulative and mulative Kentucky Stone Co. to as some three years' interest; in ' tive. J - KENTUCKY 2, an the are cu¬ four or cumula¬ are corporate stand¬ income bond, particular¬ a far distant maturity, ly if it has Floor, Kentucky Home Life Bldg. LOUISVILLE From point, BANKERS BOND E Long Distance 238-9 cumu¬ one way or an¬ other, most of them Incorporated The lative features vary considerably; some railroad income bonds are Common • highly regarded and higher prices. Back in 1945 when railroads weren't much, if any, . Bell Tele. LS 186 niiiiiiiiiimiiiiiimimiiitiiiiiiiiiiiiiiJ Moore-Handley Hdwe. Co. ! 54 now 4V2S To not. From the standpoint of not income after taxes, 41/2% income are the same 2.8% as get Scott, Horner &. Mason, Inc. 1 substantial price rise require a tremendous strengthening of these companies. A higher' securities market and. a lower yields common and that issued effected in outstanding today are in preferred for stocks would do the trick. of the income bonds Most the were reorganization past 10 and LD 33 iiitiiiiiiitiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii "criticism some because of the it paid as the 90s fob income 41/£§, as Which , is like people feel retiring on a 2.8 pre¬ 3% basis. Some ought to sell ,2.8 preferred stock, not buy it, but when the price is lower, of, course, that argument weakens. a company of Income financial was a resulting That Bonds doesn't a reorganization. necessarily railroad will mean always adjustment 4s, which are true income bonds and which sell 114. sell in Rock the Island low charges and last year had $4 millions fixed charges; $9 mil* lions contingent charges in 1938 and last year $4 millions. North¬ western in 1938 had fixed charges of $17 millions, which were cut down, on the basis of last year's Charges, to $2 millions fixed and $4 millions contingent charges. in Main Office 4%s, which 90s, also indicate by Mr. Hahn to the Personnel Barney & Co., May 2, 1949. charges New of Smith, York i Steiner,Rouse & Co. Members New York Stock Exchange 1938 fixed fixed year charges New Orleans, Direct wires to tingent charges of quarter fixed year 1 Vz % of charges Established about were revenues.- 1 " » H. Hentz comparisons of fixed and contingent chargek with, maintenance charges. Thes£ are City, I mention and some these'ratios New York Stock Exchange New , York Curb Exchange Cotton Exchange ' Commodity /Chicago the Interstate job the reorganization formulated. plans were item able in And other N. really control- one the railroad Y. Cotton income account. - the In enues bonds still attach very consider¬ able importance and whether to or lien not position interest is contingent. I don't think pricing railroad bonds to¬ day enough attention is being paid, to certain important changes or which have past 5 to 10 taken place in1 the These changes people are going to recognize in time but perhaps only gradually. What I am getting at is that we years. cause had an inflation. During since the termination almost every item of in PITTSBURGH GENEVA, SWITZERLAND i they were able to cut main¬ expenditures. Between tenance 1929 and 1932 most railroad panies cut about 50% for. maintenance : and lived a while. tion It figures, tenance have saved the basis cut maintenance to of would 51/2 half, in 1948 save V.' ydu an 49 On and 64 New Bond . far so £155,175,898 been reflected Associated very prices, particularly in the relationship of the price of one bond another. to Street, W. 1 TOTAL ASSETS protec¬ changed ratios which hasn't * con¬ element of an Smithfield, E. C. 1 Charing Cross, S. W. 1 tingent charges. There is Bishopsgtite, E. C. 2 Burlington Gardens, W. 1 in half, amount equal fixed 3 8 West charges the times of if ydu figures throughout Scotland LONDON OFFICES: amount an OFFICE—Edinburgh Branches main¬ cut you % of fixed charges. equal to you basis the on if charges Would HEAD that of them to pay illustration: 1938 Incorporated by Royal Charter 1727 reduc¬ fixed Using Seaboard again as some charges. an that in maintenance charges enabled Royal Bank of Scotland their fat on was com¬ charges What Banks: - Glyh Mills & Co. . Williams Deacon's Bank, Ltd. has hap¬ pened, as a matter of fact, is that the difference between junior and senior "bonds' has' been tremeh- dously- diminished. In the reor¬ ganizations of the '30s and early '40s a great deal of attention was paid to mortgage security. Senior holders came of out of junior $35 INVESTED in bank¬ bonds. and value. But "Chronicle" point, I should numerous gent small part of say, where the ideas that, if we a galore and give pay you liberal have ever reorganizations, there is not so much between first and mortgage there bonds and formerly dif¬ second debentures Commercial & Financial Chronicle 25 Park These was. changes have practical aspects not the will dividends. and revenues Thursday issues of the in such represent going to be nearly ference as the reached fixed and contin¬ cases charges expenses more have year's subscription to the Monday There very wide differences in treatment and workout market we full a the than ~ have Exchange Bldg. DETROIT CHICAGO were railroad Exchange Exchanges declines of 50%, did so be¬ holders for ' Trade Thirties early most of the companies that stayed solvent,- despite traffic and rev¬ bond prices of NEW YORK 4, N. Y. , , Effect of Inflation -Board 1 Inc. contingent charges to main¬ charges because main¬ ruptcy much better off Today's Exchange, New Orleans Cotton much in a York New fixed of Co. members - tenance tenance is the millions fixed charges, $2 millions contingent charges. You can see drastic 1856 and contingent revenues Here also one- Last revenues. charges 1V2 % of ' almost were the tion in these Commerce Commission did in the branch offices our millions and contingent charges $2 millions. In 1938 fixed and con¬ $14 millions fixed charges in 1938. and last year $2 how NYt-fc*, ' La. - Birmingham, Ala. Mobile, Ala. $2 were - St., New York 4, N. Y. MAnover 2-0700 $9 millions and con¬ charges were negligible; were tingent last millions. $133 were Rock Island had (Continued on page -'.s, "Place „« y New York 8,* .REctor 2-9570 N. Y. J 24) the railroad income account and bal¬ sheet has increased tremen¬ ance Specialists In dously—almost but not all, the im¬ portant exceptions being: debt, fixed and contingent charges and stock. down in most cases, stayed the same. These changes have been really extraor¬ dinary. I have here some' fig¬ ures Over-the-Counter FOREIGN The first three have gone while stock, has on SECURITIES the former cover the old railroad tion. were to for 36 Years Seaboard Air Line which the point very well. I using 1938 and 1948 figures; prior Quotation Services Externals—Internals illustrate am *An address Members St. Louis Stock Exchange problem, probably a problem child, as evidenced by the positions of Santa Fe and at St. Louis l.Mo, and fixed war, a its STREET in than such be INVESTMENT SECURITIES companies contingent charges of Successor companies. In 1938 Milwaukee had $15 millions and Origin An income bond usually means that at some time or another there Co. these that in been ferred Stock \ of fixed 1948 and years predecessors fixed high Lynchburg, Va. North West¬ 108, 51 sold as high as 98. now pre¬ not railroad companies should or Rock ..Island SOS OLIVE bonds income would' not has & sold, at ern buy income bonds when the prices, therefore, are high. There Dan River Mills B o ught—Sold—Q uoted . much 1 higher* sold most of those recently issued recent reorganizations. One rea¬ have, is an ideal form of capital¬ son for this v/as the fact that the ization, because interest does not reorganizations of the early Twen¬ have to be paid unless earned and ties did not work out very well; the interest is a tax, deduction, another the depression back¬ whereas preferred dividends are ground of the Thirties in which ferred stock, that is, when the tax rate is 38%, as it is now. This raises some question as to whether American Furniture Co. Stix to¬ are as bonds Trading Marketa Tele. LY 83 stronger than they day but when they were more fa¬ "the preferred Preferred income represent An income bond is a hybrid a very great scaling down of cap¬ security with bond bond and pre¬ italization, particularly bond capi¬ ferred stock characteristics. It is talization.* I am going to give you Usually secured by a mortgage, some 1938 - fixed 'Charges' of the Raw-^Befined—Liquid Black Star Coal railroad have valued at substituting the ICC. sugar s because! the cover the Seaboard Air Line/too. 6 u ts t a ftdink market generally was higher. Erie -, In 1938 fixed !and contingent since the re- 4v2s, which are today selling at charges were two-thirds of main¬ o r g a nization 64, were 104 and there was talk tenance charges and last year they adjustment 5s Of refunding them." St.'Paul 4%s were 9% of maintenance*changes. r , 4s changes in bond's vorably regarded, have Members |t Thb justrftent^ flONNELL & CO. Curb s; ~ Fe 1995 1st Western close to fact, startling matter of a order Bought—Sold-~Quoted m As were usu¬ Santa 5% Pacific number Bahks, Brtikers, Institutions WALL be well re¬ can the companies repre¬ sented would not be required in ally called ad- Stock ■ 25 Broad a in Net Trading Market for 99 attain can similarly with 4V2S which sell garded; 100. bonds and RIGHTS 120 and Forties, they were relatively few 3%% due 1959 York • ——?—- that early Amer. Tel. & Tel. York > > ~ .Thirties New Louisiana Securities large increase in public'interest in railroad income bonds in the past five years is due primarily to the fact that there are now many more bonds of this des¬ cription than there used to be. Income bonds are not a new form of capital, but until the the New , a ganizations of . Alabama & . prewar criteria for longer applicable due to changes wrought by inflation in relative import¬ Reins. Stresses low transportation costs and favorable operating ratios as That there has been 120 Broadway, New York 5 . . , . strength back of income bonds. Sees excessive spread in price between fixed interest and 1 - • t BArclay 7-5660 .'>» . , are no df income account ance request elements of i , After explaining origin and status of railroad income bonds, Mr. Hahn points out Utility Operating Companies on Thursday, June 2, 1949 Smith, Barney & Co., Members, New York Stock Exchange 49 Unlisted Electric Available CHRONICLE FINANCIAL & Evaluating Railroad Income Bonds Comparative Table of f COMMERCIAL THE '' (2370) the 'recent In 1938 reorganiza¬ operating $40 millions; last revenues year they National Quotation Bureau Incorporated zippin & company 208 South La Salle Tele. RAndoIph 6-4696 St., Chicago 4 Tel. CG 451 Established 1913 46 Front Street New York 4, CHICAGO SAN N. V. FRANCISOO Number 4808 169 Volume THE COMMERCIAL INDEX Articles and News ► • Plight of the Equity Capital Market—Emil Schramm. Fair Profits or Financial • .Cover ___L___ Business and the American Way of Life—Hon. Charles (Contained Vs • 7 Sawyer 13 Why Value of Money Has Fallen—Falkner C. Broach________ 15 Must We Control Big v.'b.i' •! .* , "Everything's '':'h "a Plans to and Interpret Expand "Information" 5% Policy Program and j ' - , First National Bank of Boston Warns of Dangers in Government Spending i . _ _______..._ _ _ _ " 17 __ ^Edward H. Foley, Jr., Treasury Aide, Cites < Federal Debt Management Policy ——18 h R. M. Nolen Foresees Reduced Investment in 1949 How Save Ourselves? (Boxed) National Banks' Capital Up ___. 19 __ 20 ______ Retained Earnings.—21 on No Signs of Quick Business Recovery, Asserts Leo Wo!man„ 21 Italian 30-Year Bonds to Be 23 Chicago Stock Exchange change Merger " ; Exchanged:!.... Chairman Favors Mid-West 30 V . 39 Purchasing Agents Report May Business Decline.. 43 See page 19 for pictures taken at St. Louis Municipal Bond Traders Outing. •> • Regular Features * • -As We See It (Editorial) " .__:_-_u__j____^_Cover Bank and Insurance Stocks_______f_>_:___:________; Business Man's Canadian 21 Securities Bookshelf_^___:._.___ 33 14 .Coming Events in the Investment Field____:______l_____^l_-__ -Dealer-Broker—Investment Recommendations Einzig—"Britain and 9 d l-.i'-r-•«: . 8 Bilateralism". losses and A From Washington Ahead of the News—Carlisle Bergeron 1 would clarify and. interpret the 5% ; even the loss of his business. previously alluded to: > 6 Indications of Business Activity which opposition within the securities industry towards the NASD, we call attention to the accompanying comments made by dealers pursuant to the CHRONICLE poll. These, of course, consti¬ tute only a portion of the hundreds of expressions that have come to hand. Others have been carried in previous issues, In this regard, it should be noted that the majority of the contributors express themselves as being unqualifiedly,'op¬ posed to the NASD and its policies. One of the Aspects roundly condemned is the claim that membership in the NASD is wholly voluntary. Actually many dealers state that there is no alternative, owing to the economic sanctions im¬ posed on nonmembers,-including inability, to obtain trade discounts and being barred from participation in underwritings handled by members, except, of course, on a profitless basis. Thus the implication is clear: unless a dealer becomes a member of the NASD, regardless of his personal wishes and inclinations, he cannot operate on a parity with his com¬ petitor-members and therefore may suffer severe financial 24 -Federal Reserve Bank of New York Says ITO Charter Is J Inadequate n't•*;:• .36 : Here are '___ : Bankers.J____ "Observations—A. Wilfred May Our on Utility selling of or 1 42;.,1 18 ___ ;L Securities Railroad Securities ■; u 20 -_ * 4 ' " 4 ■ SIEGEL & CO. 89 Broadway, N. Y. 6 DIgby 4-2870 Teletype NY 1-1942 Utah Power 6Current Yield Information on Light 6.7% request EDWARD L. BURTON COMPANY & Established 1899 Bell Teletype SU 464 1'60 S. Main St. We Salt Lake City 1 offer subject to prior sale 30,000 New York State ■ 1.60 Bonds ' ; Due June @ 18, 1970 97 ' - f GIMBERNAT & SELLWOOD New York 111 Broadway Stock Exchange New York 6, N. Y. Tel. REctor 2-0678 Tele. NY 1-280(5 generally through buying of Dow-Jones Industrials. Except as No. 6 answers 43. ..X. Governments . few strategic blue chips which are component parts a question should have been, "Do r- Prospective Security Offerings Public of the larger trusts can dominate markets - 5 Reporter's. Report..-_...__^__________;._______i.^^__ Our Reporter . 20 _ :. Phillip Carey Mfg. V Members 13 News About Banks and Southern Production • / Chicago, ill. \ See no equity or justification for the 5% rule particularly when you allow members to retail investment trusts at. 6% and up. These trusts are a growing menace to our business, they not only stifle ini¬ tiative, study, and research, but through concerted action of a few 12 NSTA Notes STREET, NEW YORK comments v Mutual Funds give we obsoletes. Telephone: WHitehall 4-6551 For additional evidence of the extent of the Ex- Republic of Peru Temporary Bonds to Be Exchanged money. nice babe a dollars extra your 90 WALL wording of the release, we hasten tc note, came as no surprise to this publication. It was merely another effort to create the impression-that the NASD as such, also its methods of operation and its policies, are heart¬ ily endorsed by the membership. The complete inaccuracy of such a claim, we believe, is best exemplified in the results of the poll conducted by the CHRONICLE to ascertain the true sentiments of both members and nonmembers regard¬ ing the NASD and its policies. This factual data was included in the editorial "Mandate to Congress" which appeared on the cover page of the CHRONICLE of May 19. • < 17 _____________ the more catch can for you The nature of the 16 Clarify with little a too the statement 16 f l)one to Increase Buying}; Says Don Francisco Not Enough and . meeting of its Board of Governors and other 3£ Case__;._.ll_.A_„ii.i ! just You Corp. - 17 OK Says NASD—But the Dealers Say Otherwise, Court Rules Against SEC in Otis & Co. NASD Richberg_:_:.li± 16 j *'•/ . the recent that Business?—Sen. Ralph E. Flanders dealers THAT YOU HAVEN'T? — Springs, Va., on May 16-17, is to the effect membership is becoming increasingly aware and appreciative of the value and contribution made to their wel¬ ACTIVE MARKETS ===== fare by this so-called voluntary organization. Complete de¬ tails of the subjects discussed at the meeting, the release Lithium adds,-will be published in an early issue of the NASD "News." Moreover, the Board'voted to; send to members Petroleum Ht. & Pr. 11 -Must We Control Bigness in Labor?—Donald R. by WHAT'S ALY GOT officials at Hot Blaisdell, Jr._I__ Business—Neil H. Jacoby on 3 AND COMPANY .The general tenor of the NASI>news release pertaining • • to 8 made y comments reprinted in these columns. G Socialism—Harry E. Humphreys, Jr._^_:;______ Impact of American Foreign Policy in u American Economy—Sumner H. Slichter___; The Foundations of World Trade—Thomas C. j and file of industry endorse organization and its poli| cies. Some more factual evidence to the contrary 4 Nobody Shoots His Customers—Arthur S. Kleeman:'_______i_ -How to Avert (2371) Press release on recent meeting of NASD Board of Governors and other officials contends that rank j j Hahn_;T* 2 LSelling Mutual Investment Funds—A. J. Wilkins Th^, Changing ; ___Cover *< F. CHRONICLE ' / Suicide—Irving S. 01ds__._____j_Cover Evaluating Railroad Income Bonds—Walter FINANCIAL Everything's OK Says the NASDj But the Dealers Say Otherwise page Internal Barriers to Foreign Trade Expansion ;—Wilbert Ward___ _* & *'/■ It, think your 8th of the NASD?"11, you approve ' CHICAGO, ILL. In .the investment securities business, V.' ...V/-: in practically alLother businesses, I believe that the less governmental supervision and regulation the more efficiently the business .can operate and the greater service, it can render. • v ' ; as , . Securities Salesman's Corner__.23 .. Securities Now in Registration.^-'.-------40 The State of Trade and Industry!__--.____!_£____i_C:r_uxJ-2 regulations let them do their wrong, to prosecute or correct /. ' ' ■ , 44; * . 1 Published Twice Weekly The COMMERCIAL FINANCIAL - ary Place, New York 8, N. Y. to , . DANA D. SEIBERT, .1 President RIGGS, Business Manager Dominion Other :* . • '• r v „ plete statlsUcal issue records, •tate Chicago market quotation corporation news, bank clearings, and city Other —j news, Offices: 3, HI. etc.). 135 S. (Telephone: / La Salle State St., 0613); $25.00 , and per Monthly $25,00 of Canada, ;• $38.00 per per Quotation *' ' ; ' postage made in New York funaa. v . v (Continued ,' . - ^ FIRST FOR YOU ; on 33) page are For 42 interested in offerings of : : . •> * . ^ • The New York . •^financial :• PREFERRED STOCKS whole financial your » v Spencer Trask & Members New V*25 York Stock Exchange Broa'' Street, N«w York 4 HAnover 2-4300 ' • • Chicago Members New 1 - • v community... tells advertising 'counts story where .it the most. York Curb Exchange; She 50 Con^rres* Street, Boston 8 Teletype-^NY 1-5 . Albany largest advertising medium. 'Why? Because it reaches the i i extra.) • years , year. - because it reaches all , High Grade Public Utility and Industrial Record—Monthly, (Foreign » - ; /Times has been the world's « J Note—On account of the fluctuations in the rate of exchange, remittances for for¬ eign subscriptions and advertisements must be We March yearf" (Foreign postage extra.) Earnings. Record — Monthly, year. .J- , police work. If we're New at per year., • own that's their job.* r Other Publications _ Bank 5very Thursday (general ftews and ad▼ertlsittg issue), and every Monday (com¬ > Countries, $42.00 " Thursday, June 2, 1949 * Eng- Subscriptions in United States, U,- 8. Possessions, Territories" and, Members of Pan-American Union $35.00 per yeari in • f" " ' . Commented Anonymously. :. second-class matter Febru¬ as 25, , V 9570 C., 1942, at the post office York,; N. - YJ( under the Act of 8, 1879. Subscription Rates D. SEIBERT, Editor & Publisher WILLIAM WILLIAM Company v. COMPANY, Publishers 2-9570 E. Copyright 1949 by William B. Dana Patent Office DANA REctor ■ERBEET Drapers' Gardens, London, and, c/o Edwards & Smith. and CHRONICLE U. S. B. 25 Park t .■ Reentered Reg. WILLIAM : - ... .(1 * * ^ ^ i tute rules and 34 Washington and You ' V My; contention is the NASD has no right of existence. A voluntary organisation? No "taxation without representation.".ff.the SEC insti¬ 5 v Tomorrow's Market (Walter Whyte Says)_-___.!__.:_x.___x!. * CHICAGO,'ILL. : .v , Hubbard 2-8200 ' ' '' Glens Falls >Schenectady . - Worcester ' fork Sirncei "All the Ney/s That's Fit to Print" 1 COMMERCIAL THE (2372) 4 FINANCIAL & CHRONICLE Thursday, June 2, 1949 Britain and Bilateralism Selling Mutual Investment Funds By PAUL EINZIG By A. J. WILKINS* | ' : ' Vice-President, Wellington Fund Mutual Funds executiye describes growing importance in investment Dr. Einzig field of these institutions, and portunities for careers in selling their shares to various investor groups. Cites cases of successful sales-, manship and technique of following up prospects and making sales approaches. Stresses importance of presenting ideas and facts clearly and of using proper procedure in summarizing sales points and in closing sales. Urges salesman to stress idea of regular and continuous investment. with assigning to me tonight's subject: "Salesmanship — a Profes¬ I could talk about any feature of this subject, and could illustrate freely me examples from Fund if my I want to talk to you tonight about Mutual In- necessary. mention cause! I than 6,776,000 families in 1948. Hew Are. You Are The know Mutual Buying V' Shares? Funds j\. Mutual Funds have not only at¬ of these Funds but is large individual and institutional mentum mo¬ each , arid r men are realiz¬ formance, A. . by ing " in Funds shares five of risk obtaining the The mists editors. and the attention the April of advantage the to vestor—is that he gets in does not have to put in jT wife. Funds have $273 over reached about 730,000 the first million. $1.5 she mately 26% last year, the New over while the year, York Stock of on there increase an creased 1948. were You just over earning there as many families $5,000 in under under had $1,000. $1,000 been tion, on that is unusual an make the talk a salesman next call to Sunday at 8:30 the miner 35 miles away $8,800 in had been cash. paid from the ed him morning. year, the there the and the to the salesman, why he want¬ at The miner second After taken over he asked the miner 1935 A lecture by Mr. one two, the 13th of a series in 8:30 miner Sunday informed salesman that he didn't want his neighbors to know he had that much money in the house. These a just are a few of the Club. 1949. Boston, Mass., April stories that I could tell you for hours covering all types of people who not 26, i only are investing in Mu- tual Funds, but who have a con¬ that ; Paul Dr. not Einzig , 3 , t- , made Britain's clined to could not the 6 on made sales made were repeat needs in other on 16 during the day 12 the first call and 10 calls. on will have no difficulty in plan¬ ning your work so that you can get the necessary interviews each go As back check on yourself, the number of calls made and see if you over have you a satisfied that you have utilized your ing time time to the best advantage. forget that we in the sell¬ profession can waste more than any one her to their meet There dollar are currency been evil. noteworthy a the immediate bilateral the merely prescribed amount spent cerned on principle. postwar pacts trade that the operation of within the Sterling tached spite sphere of the Britain is unable Area, avoid to multilateral system a limited altogether the risk at¬ multilateral trading, in to of the bilateralism rigid in the trade of application directions. other to this of co-ordination would be a of policies of Sterling Area countries, and the negotiation of joint trade countries. outside with pacts : This, is, however, prac¬ tically unattainable. To ex¬ some that the other contracting parties entitled to spend on non-Brit¬ are by the country be change from sellers' market to buyers' market is likely to shift roughly equal to the total amount by Britain on the goods of that country. In more recent agreements, howevjer, the quanti¬ ties of the actual goods bought and Immediately after ish and war a there consisted could be of luxuries objection import of luxuries in pay¬ coal and steel, and to sell oil by pro¬ British-controlled abroad, proceeds of these should accent cussions the Meanwhile of bilateral from dis¬ trade insistence re¬ on ceiving imports to insistence on being able to export in return for the goods purchased. Two With not be the oil Govern¬ basic materials frittered away on Shearson, Hammiil & Co. (Special LOS no ment for these exports. Now that Britain is in a position to export duced the large proportion of Brit¬ exports to the discarded. determined. This has been are found necessary because Britain is now in a better position to export essential goods. the recovery before bilateralism could con¬ British goods should be spent sold •It will be necessary for Britain make much progress towards to total ment is anxious to ensure that the - ish imports and exports balanced during 1948 fairly evenly in rela¬ pay Prospecting is one of the most important phases of salesmanship. 22) to Brit¬ change in the form of the appli¬ ish goods withirrthe Sterling Area. else—and page illustrate both possibilities. tent the loophole4s restricted by in goods stipulations, -: dn some bilateral Bilateralism at pacts, of the amounts of sterling can companies on instances paid for in goods a necessary has no that ensure "soft imports. present is Brit¬ time is money to a salesman. (Continued K1'* ; actual are so There is therefore countries" to limited position to help a exports to During evening; point were the choice but to seek to British years that surplus Nor would cation of the bilateralist note There do the The remedy European countries. high degree not in are each . the import dollars, and shortages. $78,300. to used be cannot her within .restored They If you can sell the fact that each in¬ terview is worth "X" dollars, you yourself week. countries of other Western recent In his letter to me he stated that he discovered each interview paid him approximately $13.00. It is were surplus from the rest of the Ster¬ no financing ain interviews interesting investments overseas for and Most of the easily sphere of Western Europe. Funds shares. His report for seven weeks' work was as follows: also the sterling to pay for its imports Britain, because of its import ling Area. decline to country and of the whole and that Britain — ensure liquidated. be to sales which" it below allowed be de¬ has reserve level of view if multilateralism Club and Boston Univer- sales gold a sary from it be very helpful from this being sponsored Total position to a proceeds of British exports can be sterling balances of that country, for payment in countries as a result of its export surplus to other than those importing the the sterling area as a whole. Or it British goods. Neither of these may be unable to raise the neces¬ from other countries. sity. 22 that, while the British Gov¬ ernment is in used ber by the Boston Investment 133 the that Britain's trade with a foreign goods—would in the long run buy country should balance on a bi¬ enough British goods to enable her lateral basis, it does not follow to pay for her imports. This as¬ that the trade of that foreign sumption is only safe, however, if country necessarily balances also therfe is a sufficiently large gold in relation to the entire Sterling reserve to supplement temporary Area. Quite possibly the year may deficiencies of export, and if the Close with a net increase for of which appears on this page, are other not -under rest of the sterling area. And other country Portugal accumulated a largestershows much willingness or ability ling balance because of her export to return to multilateralism. Brit¬ surplus to the rest of the Sterling ain's export surpluses to a num¬ Area. Evidently, owing to the Boston payable countries is British Government's control. This means , with Britain, which supply her with Moreover, should, be the to which, than coun¬ same more or exports. Don't course on Investment Salesman¬ ship, sponsored by Boston University and the Boston Investment In¬ CHRON¬ lectures, the most are 6,- Wilkins, Mutual on ^ * of checks security a Incidentally, floor on number of a tion to France, and also in relation In such cir¬ to Portugal. In spite of this Britain cumstances Britain could ill afford had to provide a large amount of to gamble on the speculative sterling to France, because of the chances of finding buyers for her latter's import surplus from the the order of the Club. The sale—A fraternal organiza¬ a asked the order to was of realizable the man the a of less important countries the trade essarily n e c being Area includes simply — greatly compli¬ that, in addition country with a large foreign trade of her she is also the center"of the Sterling Area. Now> the Sterling trust luck and tries is own, to Britain. She some system volume have been 1948. this appointment, and the brought down from the to " ■' in after to the proceeds of their exports Sterling Area. Club, Box 1604, Boston 5, Mass., and $31,- other property which him the Orders addressed money learned in spend Britain of Salesmanship being published are each. making was turn Under multilateralism cated by the fact without endangering the recovery the ICLE: 1 to 10 copies, $2 each; 11 to 50 copies, $1.75 each;, 51 or more, $1.50 visits salesman's home, but he kept the were per that purchases lived families reduced announced serially in business from sources. The owner three salesman .in¬ In 20,932,000 that the salesman earn¬ as has all of the lectures up purchase money 1948 Mutual vestment to show you how case Funds before will notice that there were earning which have by families from 1935 the miner, after listening to in I want to show you a chart illus¬ •t a a.m. incomes Club long story a twelve and pick Here 1 sociation assets increased $1.1 bil¬ how concen¬ of The Boston Investment bringing in substantial income. lion. trating sale in¬ the Prices for Reprints month. salesman owned liquid savings $4.9 billion; savings bank deposits increased $1 billion; and Federal Savings & Loan As¬ ing in first For instance, in was visit group of cabins invested a The nearly 5%. We have a huge, untapped market* and as yet Mutual Funds are not getting anywhere near their share of 1948 the on return of report a in to Britain's position under th6 bi¬ lateral tries would in conditions is fulfilled amidst pre¬ The sales¬ $12,000 of idle bank per can 000 Exchange declined people's savings. I had day salesman new order an the coun¬ vailing conditions.' in at salesman about unexpected period volume the informed Here is you approxi¬ same the understand Investment the $1,300 open-end Mutual Funds have in¬ creased their gross sales to secured vestment business who is that came second To make after had in For this of money. his that she had with shareholders. quarter and Philadelphia the second call. on other a trating beauty parlor was sold $10,000 and the idea of investing $500 per quarter, after Total billion $15,000 The how man a me nothing about securi¬ wanted about them—he The operator of a wage earners. In 1948 sales of 86 open-end Funds assets but $233,000. small totalled knew ties the salesman secured an order for than $1 billion of capital from invest¬ gross who prospectus and other made an appoint¬ call again on the doctor's informed short, ors, and have added over 400,000 new shareholders, many of whom are called at night on his wife in suburban the doctor had read the prospectus and literature and wanted to talk Mutual more He then told and with him. attracted was, not bad but he didn't like the night work. a On wife and was any left ment to all his eggs years business after I asked how that his business chure which will contain man basket." one In the past eight security in the wool one not interested in that he literature in¬ money said who The doctor investing professional his for -management small —who told me, he old-time an real dyed is goods to be imported under recent trade pacts. : of whether assume I met following schedule of prices for copies of a bro¬ man "magazine says in part, "that way is through — the Mutual Fund. The wife cheapest when man—a lhat time and informed the sales¬ "Fortune" of day, and don't night work. a little a of doctor's investing. econo¬ article An issue of aim the purchase of luxuries. Hence the-stipulation of the nature of the in buying the would $6,000 of surplus money which she might be interested in the medium of these Funds is at¬ tracting very ultimate would Regarding night work—I got the surprise of my life the other day she had capital through investor small minutes work about doctor four, which is a good time to call on a doctor if he happens to have office hours from 2 to 4 p.m. He talked with Many articles pertaining to Mu¬ tual : Funds have appeared in the first the on He bufcy. be to seem called them;;: trend- interviews from know, it is very difficult contact doctors because they your¬ You should arrange it not get less than afraid be for to firms have set up sep¬ arate departments specializing in -from list of doctors to a "cold on always the past and magazines. five As you year; some newspapers up smaller town. a organize your Government's ing circumstances this could not be otherwise. Britain selling that you do turkey." He took his list from the telephone book. selling of active into gone Mutual into move made work Many large commission houses have around He the to after work¬ Boston, decided he salesman who, a plan carefully. so was would public, which has an aggregate of $130 billion in cash and bank deposits. offer to medium income and and conven¬ assured One of the largest sales of our Fund was made in New England investment best the per¬ iences. .... junior executives, professional people, etc., as well as large investors and institutions, are prospects for Mutual Funds shares. They have found that these are es¬ satisfactory advantages many Wilkins J. businessmen, Funds their of cause ing that wage earners, small as—trustees, charitable and organizations — be¬ educational sales¬ many religious, tates, se¬ more curity interested such investors, ..More year. also have and British the multilateral system of international trade, for the present bilater¬ alism continues to remain the basis of British trade policy. In exist¬ a markets, irre- - Going to Get Your You will have to self tracted the middle income group, growth gaining ' for Share of the Business? Funds. .? Although spective it other about of ' money investment. with know about amount Who my Fund, it is be¬ more siderable 700,000 families by 1948. In 1935 there were only 901,000 families earning over $5,000 compared I If imports and exports in British bilateral trade pacts. ; be vestment Funds. . to Mr. Carrol Hoffman in sion," told contends though British ultimate aim is multilateralism, due largely to inadequate gold re¬ serves, a bilateral trade policy is necessary. Sees however, shift * from attention to mere quantities to qualitative aspects of reciprocal under existing circumstances, op¬ liam to 618 A. Sibley have Chkontcle) Ernest .•> & Street. with R. associated Hammiil Spring formerly Brothers. was and become Shearson, South were ler Financial ANGELES, CALIF. —Wil¬ Torgler with The v . Co., Both Buckley Prior thereto Mr. Torg¬ with Dempsey-Tegeler & Co., and Mr. Sibley B. Dunbar & Co. was with John 169 Volume -Number 4808 THE COMMERCIAL Carloadings . By A. WILFRED MAY Food Price Index Auto Production Industry The Business Failures J ^li■■ 7T7. ■ There ■j Investor on as well as sound techniques in agement relations. Much light is Total claims for unemployment insurance in the week ended stockholder-man¬ tinued to be noticeably above the low level of the similar week in thrown on these basic problems by Benjamin Graham in a newly-pub¬ 1948. lished On Thursday of last week the Federal Reserve Board's index of industrial production was released and showed that for the fifth con¬ (published May 25 by Harper & Brothers, May 14 rose 1% to reach a Initial claims postwar peak. new con¬ . , secutive month its seasonably-adjusted index had 276 declined. figure, for April, was 179 (1935-39 equals 100). This with 184 in March and with a postwar peak of 195 hit last compares October and November. In tions ' ' announcing its April figures, the Board said: "Present indica¬ that in May manufacturing has continued downward and also has had increased in been decline in output some April." of minerals which Mr. experts A. Wilfred May been was the news on Monday of the current week that Company maintenance workers would submit their dis¬ a. conclu¬ is one of very few a passer-by looked at a suit in show window, liked clothier's it, and walked into the store, say¬ ing to the proprietor, "I want to buy that suit." Whereupon the proprietor drew his revolver and shot the prospective buyer. Now, of course he didn't really, do that! affected by the dispute are back at work. ,( agreement Mercury plants. It up," on : reported that the walkout, caused by the alleged "speed¬ was viewed was ratified was of the most poorly-conceived of the United one as Automobile Workers' many strikes. '' in production * $ * \ Truck United the States in May will be down 82,948 units for the lowest mopthly volume since early in 1946, Ward's Automotive Reports states, while United States passenger to for the output car with 434,882 above '• estimated at 394,236 is compared in April. Production the month same of the year, first five months the for authority, approximate will 1,892,913 cars nobody shoots investment his achievement in both the of activity. role he has for a score of years who combine highly-popular writer and teacher at the in clothier, university level. United the States and 63,899 cars ments for - - fall reorders of currently STEEL OUTPUT IN CURRENT WEEK FALLS FOR SEVENTH WEEK IN ESTABLISHING NEW ROW 1949 LOW optimistic on the produc¬ tion outlook have changed their minds a bit recently, according to "The Iron Age," national metalworking weekly, in its current review of the steel trade. In the past 10 days these steel officials have noted that steel order volume is slowing down, backlogs are being pared by cancellations and that there is difficulty getting enough orders on the books for July rolling. Some smaller steel mills are struggling this week to keep their operations at the two-thirds or three-quarters mark. Other smaller firms are well fixed into June, while large steel firms see their operations at a good level only because the pressure is on to get enough product mix to keep activity at that point, the trade maga¬ zine states. Just how long they'll be successful in this effort to get orders far enough ahead for economical operation remains to People in steel who have been the most be seen. . Much has been said about ! break-even points in the steel indus¬ most plants could make a profit at around 48% of capacity operations. It's a different story today, however, since no mill has had any real experience to tell exactly what its break-even point would be. This is so because labor rates and material costs are much higher than before the war, maintenance and repair costs are somewhat different than they were 10 years ago and new capacity installed in some cases has cost three times as much as in prewar years, this trade paper notes. Some firms, the large ones especially, think an operating rate of 75% would "hurt," while smaller units are already below this rate and still in the black, mainly because of lower scrap prices, better productivity of the workers and renewed emphasis on proper try. use Before the war, this trade authority observes, and conservation Executives of of raw materials.- bigger steel units have said prviately, some political state. Everyone treats with re¬ and so¬ licitude7 the spect "The points out, that their break-even point might be around 70% of operations, but they are not sure. Two things which make Iron Age" — the or . , . . 7 f safety for the by Mr. Graham is a margin-of- common-stock buyer. As applied to equities, in lieu of being confined to bonds or preferred stocks, this allowance in the buying price for unexpected "Gems of pugnacious nation and saying, you'll put down your gun, and show me what you have to sell, to a V Safety Insurance Another novel concept espoused seasonal insisting on very prompt ,' •• ;• 7 goods were substantial with many buyers delivery. 7;,\ ' H : \ o r of a — . merchandise.... Total the head approach adopted by Mr. , ' ■ . man¬ ufacturer, man tool is unique. Such changes in earning trucks in Canada. / ' v ; power or appraisal miscalculation furnishes an added "insurance" ■' ' '• •' * * ' /* protection to the buyer. The prospective buyer enjoys the advantage Promotional sales of seasonal merchandise continued to attract of full discretion in either buying some stock when and if it reaches shoppers in many parts of the nation. Total retail dollar volume a level that includes the safety-margin, or of abstaining if it does increased slightly in the week ended and was very moderately not. There is no compulsion to enter into any particular commitment. below the level of the comparable week last year. Mr. Graham's "safety belt" can be secured through the accumula¬ The dollar volume of wholesale orders was maintained at a high tion of undistributed earnings, by diversifying holdings at historically level last week, but was slightly below that of the corresponding reasonable price levels, and by buying undervalued securities on a week in 1948. There was a slight rise in the number of commit¬ bargain basis that allows for a moderate decline in earning power, cars the or national Arthur S. Kleeman n a t i o n Graham is his opera¬ to whom tional classification of investors into the alternative roles of "defen¬ he is sive" on the one hand, and "enterprising" or "aggressive" on the other; selling his goods. Therefore, the which distinction composes the theme running through much of his simplest way this country of ours material. The defensive individual primarily is interested in conserv¬ can assure its considerate treat¬ ing his capital, avoiding serious mistakes of commission. The author's ment by all nations, is to consti¬ enterprising individual is interested in taking advantage of recurrent tute itself a professional customer opportunities to buy securities at well under intrinsic value, as deter¬ of every country which has some¬ mined by able analysis. These definitions highlight for the individual thing to sell. 7 the alternative, or twin, courses of long-term policy open to him, and An Effective Trick 7 / at least clarify his behavior to himself. It may be a mean trick to play In Mr. Graham's thinking, interest is disclaimed in the type of on a bully, but unfailingly it investor who places his main emphasis on trying to capitalize on works—this scheme of walking up important changes in an industry or a company. The basic novel and 520,635 The figures for the first five months customers, not the corner hard-boiled "Wall-Streeter," on according to and 42,295 trucks in of 1948 were 1,470,965 and 597,902 trucks in this country and 60,32-3 cars and 46,336 trucks Canada.,' a been ridiculous, for favored nostrums. Sunday by the strikers which provides for arbitration of the United Auto Workers' (CIO) claim of an assembly line "speed-up" at the Ford River Rouge and LincolnAn As have would have the other hand, he has headed an investment fund with an extraordinarily successful operating rec¬ pute to arbitration and return to their jobs, thus terminating a strike ord for its shareholders, specializing in participations in business and which began on May 5 last. • other "special" situations. This compendium of his conclusions, The company estimated that it may be two weeks before full arrived at over the years, is particularly valuable in quite excep¬ production gets under way in.all plants and the 106,000 employees tionally abstaining from single-cause explanations and personallyFord Motor To done so, academic and money-making spheres the former pro¬ is through payments for their exports. A forth honestly in a volume which has had of planning and workmanlike prepa¬ Graham Com¬ York peace, uniquely qualified authority, set many years In Heartening N. Y., investor-reader here has long-term convictions and general ration. * . a clearly and V . are that there the INTELLIGENT INVESTOR'* The $3.50). pp., to sions of The latest "THE work access now Trust New bullying nations and answer mote perspective of the market; the proper degree of policy-rigidity in security-buying; and fruitful a year ago. of Mr. Kleeman asserts best way to the appraisal of individual securities long-term value basis, versus the forecasting of the market as a whole; the attention to be paid to the historical a Colonial pany tive^ weights to be attached to no vfery moderately below the high level of Intelligent By ARTHUR S. KLEEMAN President, Questions still unresolved by the investment world of 1949 in¬ clude the difference between investment and speculation; the rela¬ change of great moment in the trend of overall industrial production for the country last week. As in past weeks Output continued to dip slightly in the week just closed and held was His Customers Retail Trade Commodity FVice Index 5 Nobody Shoots Observations Electric Output Stale of Trade u\'-. (2373) Steel Production The and CHRONICLE FINANCIAL & "If maybe It may , we be a do some business. trick, mean because whether or not. he is well armed, is strong enough in no man, his "attack complex" to withstand the chance ofhis dispose to salable goods. That is what I mean when I say that international trade is the: in¬ fallible way to create and preserve international the United Experience" can amity. States Peace with if is necessary, Graham's long and acute observation of "the Europe or Asia or any other part of the world wishes to sell goods psychological foibles of its adherents, many gems are offered to the reader. In measured objective language the inabil¬ to us, for they must lay down their ity of experts as well as the public to "beat the game," or even the guns, if they want their hands free to show samples. < averages, is set forth (" . . ; their calculated forecasts have been somewhat less reliable than the simple tossing of a coin."). • As the fruit of Mr. Street" the and To this columnist a keynote example of attachment of "customers" and the author's the terms wisdom is embodied in importance to distinguishing between "clients" in referring to those people houses. • • Exemplifying many "hard-boiled" practical pointers offered are Graham's strictures against the medium of the preferred stock,, as serviced by brokerage Mr. and the profit possibilities ol flaws in bond investment the author points out the imposition of the unfair "heads-I-win, tailsyou-lose" arrangement through the call feature usually vouchsafed lacking the legal claim of the creditor the stockholder. Likewise in citing the ' * to the borrower. Unfolding Fists politicians, but minis¬ pulpits talk about peace; almost everyone, including busi¬ ness men, prefers peace and Not only ters in peace-times: Why, then, here in America, should we miss even the slightest chance to say to all withing the reach of our. voices, "Buy from every country you can reach —import—and look for new im¬ author's opening reference to the security port opportunities, for while we are buying from abroad, the fists analysts—of which prbfession he himself is one of the recognized of the selling nation must unfold, deans: "Security analysis is now a well-established and flourishing Wise and modest is the in order that their palms may re¬ profession or semi-profession. The various societies of analysts which ceive the payments they need for make up the National Federation have well over fifteen hundred their rehabilitation, "Imports into members, most of whom make their living out of this branch * of the United States are a sure mental activity. Security analysts have textbooks, a code of ethics, method of sheathing the arms of and a quarterly journal. They also have their share of unresolved exporting countries, and as though problems." that were not enough reward for Sound, interesting and important, too, are his observations con¬ America and its people, we shall cerning the corporate management's responsibility for market price thereby also receive the added —particularly for unsatisfactory market price—and whether longdividend of a greater dollar buy¬ term market valuations are correlated with management performance. ing power in the pockets of our In discussing portfolio policy the author opposes the orthodox view that return is proportionate to risk, with the interesting con¬ return should be dependent, rather, on the amount of intelligent effort the investor is willing and able to bring to bear on his task. The minimum return goes to our passive in¬ clusions that "the rate of overseas suppliers, thus adding to export potential which only thus can be created in a dollar-hungry world. the blessings of peace an from concern. The max¬ and enterprising investor Two With Herrick, Waddell impossible to tell at this time are: (I) Probable increased costs who exercises maximum intelligence and skill. In many cases (Special to The Financial Chronicle) because of the coal contract coming up and (2) chances that the there may be less risk associated with buying a 'bargain issue OMAHA, NEB.—John H. Sulli¬ steel union will win a moderate social security package. These offering the chance of a large profit than with a conventional bond van * of. Greeley and Ralph D. vestor, who wants both safety and freedom imum return would be realized by thq alert it items, plus the higher ore costs the fall in scrap prices.: this V year, \ have offset to some ; , V extent purchase yielding under 3%." drop in scrap prices, which has amounted to about $21.25 gross ton since the first cf the year, has not all accrued to the The Crucial The a (Continued on page 37) ... This conclusion Value-Versus-Market Controversy is consistent with Mr. ■ ' s , "i Graham's full consider a- (Continued on page 28) r y\ j- ■ -s it v ./■ f 3,r ' xf Stouffer have joined the staff of Herrick, Waddell & Reed, Inc., 55 Liberty Street, New York City.. G The ' V ' j,. I ; University Professor, Harvard University Lamont ' " Ahead ' . Harvard economist lists - From SUMNER II. SLIGHTER* By as leading changes in (1) increase in productivity; (2) shift in our economy; employees; (3) public revolt against markets and replacement of private by government-, guided enterprise; and (4) development of welfare state. Lists among problems created hy these de-; velopments: (1) obtaining more production; (2) formulating basic code in industrial relations; (3).de¬ termining proper relations between industry and community; and (4) getting business leaders to parti- . cipate in public policy. Sees as most alarming symptom the fact that business is now .operating, in Hi4-y j mate hostile to enterprise. f to power » It is to be 4ng applied to Few L>- '■ ; • ■ • ,: • T ■■ " v, periods in the history pf the world have seen I wish the of some principal business to occurred the in 19th wish a of , few which lems ; one- shift in power from employees. During the century the most influential his¬ Most major pieces of legislation, such as the Federal Reserve Act* the Income Tax, the Clayton Act, the N'orU Prof. S. H. Siichter ris-LaGuardia Act, the Securities * Four changes and Exchange Act, the Wagner impress me f ' Act, and the Social Security Act, as particularly important: (1) the were adopted either in the face increase in productivity; (2) the of opposition from the predomi¬ shift in power from business to nant part of the business com¬ employees; (3) the revolt against munity or without very tfrach markets and the replacement! of participation, by businessmen in free private enterprise with gov¬ the formulation of the legislation. ernment-guided enterprise; (4) There have been some important the development of the welfare laws, it is true, which we're have been this statement is found in the produced by these and other changes. tory i state. 7 of legislation. drafted with important point. Some way of seeing unemployed people got re¬ lief was obviously necessary. Busi7 participa¬ nessmen scornful of were i unemployment for which and the to reputed were * will the to work. schemes in •, doje'v "the undermine he has which in hands Congress made the past. There - eat. out of his the. time, for ,ex-7 was ampl"pr?;,when his ^nomination as the energy com¬ mission chairman was up for confirmation.. It was never charged in any responsible quarter that I know of, that he was a Communist. but it was charged that in his administration of the . Consequently, country entered the great enough to get h'irrPout ; n s u r a n jc e labeled were . .. , 77;'.,. The historians of the; future, jioting the last 77 spaisips of the Conservatives just before the country went'completely over jftte thevSoeialist stated 7 7will undoubtedly dwell on Th&Jjeohtrast in -his present excited demeanor and the. smug way the that • munity has been slowly declining. The best evidence in support of prob¬ the 1880 to During the last 50 years the influ¬ ence of businessmen in the com¬ to cuss in single group in the community was undoubtedly the businessmen. econ¬ Then I dis¬ omy. The (2) changes which have one-fourth from seventh in 1948. . David Lilienthal will be strong to dis- briefly , ' tury, and the rapid rate of change is still going on. Some of the most important changes have been in economic conditions and institutions. My remarks will fall into two parts/Firjst; cuss . chairmanship of the Atomic Energy Commission; But it'Can be marked down as quite an accomplishment of what is left of the rapidly disappearing Conservative civilization that the gentleman's* aplombs has. been .perceptibly ruf7 fled. .(For; the first time in his pubijcicareer/ in fact, he seems-definitely -frightened. - His public statements- are-not the clearly ; devised cunning of old. Frankly, it, is with 'seme difficulty, that? "one can tell what .he is saymg.^;07:777777 V ce^ such rapid changes as the last : seriously'doubted that the Congressional heat npw.be- of the ,;v • of CARLISLE BARGERON 5 By , '^7'' . Thursday,- June 2f 1949; FINANCIAL . CHRONICLE & COMMERCIAL THE (2374) de¬ pression with Put adequate ar¬ Carlisle Bargeron rangements for compensating the unemployed. Businessmen in'the TV Ay he was quite tolerant of Communists, that he Js of the parthe position thai titular breed,:now, and for many years, dominant in the councils of. the responsibility for relief should government, who see no" particular harm irr Communists, who find be assumed by each separate com- them," in many respects -quite capable arid helpful in- agitation and munity-^despite the fact" that' lo¬ organization for the socialized state. , • 1 . 7 j calities composed in the main of 7 7 So it was arranged to have a member of the Senate Committee capital goods industries could' not studying his appointment to ask him if he believed in democracy'. assume the heavy cost of. relief Whereupon, he paused/ put. his hands to his forehead as if in deep main stood by for very many months. Business¬ gandists immediately hailed as such a brilliant expression of ? the th* meaning of democracy that it should be recited in every school of the land. There was the apparency of spontaneity about-the statement but, its preparation and the build-up for its publicity had ation by putting on a-"spreadJthe-work"- 'movement—-useful as as it went but far from ade¬ quate. The failure of businessmen far to take the country replied with a statement that the Leftists propa^ deliberation,, and attempted to relieve the "situ¬ men -been lead •in-providing the given .careful attention.; Thus it was that this brilliant "Mean¬ ing of Democracy" appeared in bold face type in the* nation's lead¬ ing newspapers' the next-day, and a few days afterwards, appeared with adequate arrange¬ compensating unem¬ ments >for lfrplaoard, form in government -bureaus throughout The city. 7* j . by business, groups and ployment caused the initiative in ? •; 1 cite this as ran. example of the tremendous propaganda pack¬ (1) The increase in productivity. tion Output ' per manhour has been passed with support of a large policy making in this field to pass age in which everything In "Washington is wrapped these days, and growing at the rate of about 2% part of the business community. to nonbusiness groups. Essentially also as, an : example of the smoothness., with which Lilienthal; has a year and output per capita [al¬ This is true of some workmen's the same thing is happening in always performed. If there were 110 other objections to him what¬ most as rapidly. The consumption compensation laws, the Railway other fields. Had business leaders soever, his very smoothness should make the.. Senate wary~in, approv¬ of goods per capita has doubled Labor Act, 1926, the Fair Labor been willing to take the lead; in ing him for such an important position as he now has. about every 50 years and ithe Standards Act, and' the Taft-Hart* attacking the problems which led 7;;"! ll'is insistence .now, as near as I can make out, isfthat he be •amount of leisure has also been ley Act. Nevertheless, it is plain, to the passage of the Securities judged by the number of atomic bombs that have been stockpiled growing. The increase in output I think, that the influence of busi¬ and Exchange Act and the Wag¬ under his management, that his tolerance of Communists and his has been faster than was generally nessmen in the community has ner Act, businessmen would have high-handedness in the" award of contracts totaling hundreds of mil¬ been diminishing, j 77 retained a substantial 7' voice \ in expected.* In order to demonstrate lions of dollars not be discussed lest the morale of our scientists be sthis, let us suppose that at a The explanation of the drop in policy. making and the country disturbed or some such nonsense. • • '4Ti [ /meeting of businessmen in 1000 the influence of businessmen is would have been given better bal¬ The plain fact is that complacency towards Communists is :dissomeone had predicted that before not far to seek.' There has been anced and more practical legisla¬ turbingly prevalent among high Washington officialdom generally* the middle of the century two out a shift in In other words, part of the power from business¬ tion. In a few weeks the renomination of Leland Olds as a member of of three children of high school men to employees. The basic rea¬ shift of power from business1 to the Federal Power Commission will be sent to the Senate and once age would be in high school, that son for ' this shift has been employees has been the result of again, as was the case jour years ago, it .will be thrashed out that virtually every family would own the increase in the relative num¬ failure of businessmen to appreci¬ he was formerly a director of the Communist-dominated Federated an automobile, radio, and a teleber of employees. In the early ate the seriousness of. the prob¬ Press and that he served on the staff of the "Daily Worker." There phone, that the number of college part of the 19th Century the com-, lems which called for attention is no doubt about this, the records are very plain on the subject, students would have increased and to understand the determinar munity was made up predomi¬ yet I suppose he will be confirmed again amidst a lot of propaganda over four times as fast as the tion of the country that something nantly of self-employed persons. that his detractors are the "selfish public utility interests." * population, that all this would The number of employees, how¬ had to be done about these prob¬ 7 There is a somewhat different atmosphere this time, however. have been accomplished after lems. 7-; .7. .7 .,;:7':ri7'7, ever, has been growing far faster Four years ago the Communists were our "allies," and the point was meeting the cost of two great than the number of self-employed. (.3) The transformation of the made in Olds' behalf that surely we wouldn't offend these "allies" wars, and that it would be iaeToday, over three out of four per¬ economy from one of free private by turning down one of their associates. 7. companied by a 40-hour work sons who work for a ,.!, ^ \ living in the enterprise to government-directed week. The maker ofthis fore¬ 7 - 7 Of recent, the concern in Congress about Communists in gov¬ United States are on ; someone enterprise. Back in the 19th Cen¬ cast would have been regarded as else's payroll. For the first time tury there was more or less gen¬ ernment has spread wider than just the House Un-American Activ¬ quite irresponsible. Nevertheless, in the history of the world there eral acceptance of the idea that ities Committee to which it was formerly confined.,, Several com¬ his forecast would have been ac¬ mittees and several members are prying into the situation from many have grown lip communities com¬ the competitive pursuit of indi¬ curate. .:•! / i ' posed predominantly of free em¬ vidual interests would satisfacto¬ angles. Senator MeCarran of Nevada; never labelled a "red baiter," Labor has fared especially well ployees. At various times there rily promote the interests that all is, for example, demanding the employment records of more than 100 alien Communists who, he says, have seeped iri under the Dis¬ ; from the growth of the economy, have been communities in which members of the community have i placed Persons Act. Virtually all of the enormous nearly everyone was a [ slave, com¬ in common. This view has grad¬ \ technological gains of the last cenmunities in which nearly every¬ 7 Expressions of disappointment are coming,-from many Con¬ ually, been abandoned. First, here y tury have gone into higher wages one was a serf, communities in and then there the gressional quarters, heretofore reticent on the subject, of the ^low community rather than into lower prices. Be¬ which progress being made by the Loyalty Board in weeding the Commun¬ nearly everyone was self- undertook to v substitute public tween 1840 and 1940 output per employed. Only within the last policies for the uncontrolled Ac¬ ists out. Since the board was created and up until a few weeks ago, manhour increased about six-fold. less than 300 employees had been dismissed and a good half of these century, however, have there de¬ tion of markets. 50 years of revolt The wholesale price level, how¬ veloped communities composed in against the results produced by were in the process of being reviewed.* The State Department, which ever, was changed very little. The the main of free given authority to dismiss any; suspect without explanation, employees, re¬ free markets has transformed the great change was the rise in the ceiving their income in the form economy from one of free enter¬ reported in its appropriation hearings before the House, that only price of labor, indicated by an of wages or salaries but 1.5 had been dropped.1 However, it was disclosed incidentally, that possessing prise into one of government62 pathologicals, as the department expressed it, had been revealed eight-fold increase in hourly earn¬ full civil and political rights, guided enterprise. Today the com¬ ings between 1840 and 1940. In and dismissed. • > : ; >7 ''" 77' -7;''-7 -:'7•7-,^;' 7:!-7 7';''7%!.:' The shift of power to employ¬ munity expects the government other words, the gains of techno> The' United Public Workers' Association, whose top officials ees has been aided by two condi¬ to put a floor under some prices, ■'} logical progress have gone to peohave refused to take the" anti-Communist oath prescribed in the tions—by the rapid organization a ceiling over others, to subsidize ; .... „ . - - • , , ■ . , .. . , , _ . . . . . v pie in their capacity rather than in Despite consumers. growth of the share of has gone dowil. about 2.3 capital is.used - production, property in the tional income present in capital employees capacity as the rapid as their ' times per as na¬ At riiuch worker ps in 1880, but the share of property in the national income has dropped of employees and by the unwill¬ : An address by Dr. Siichter be- fore the American Iron & Steel In... 1949 . XT _ posals for dealing with the prob¬ lems which have emerged. In the United States today, about 15 mil¬ lion employees are organized into trade unions through which the ideas of employees on public and business policies receive expres¬ some sion. The unwillingness to of busi¬ offer constructive so¬ on extent the for self, and to modify drastically the distribution of income by a com¬ bination of steeply. progressive Taft-Hartley Act, claim they still have 10,000 members among Federal employees in Washington. 7 t .• •' v.' ...j . taxes payments. and These large transfer changes have come so gradually that many peo¬ ple have failed to notice the fun¬ the shift in has been occurring. no , transformation Let there be mistake, however, that (Continued on which a revo- page 29) ,7 in ness busi¬ municipal continue .its will company Pruden V.-P. of New Jersey been bonds with which it has long MacBride, Miller Co. . income damental power.' The develop- purposes which it is lent, to lend money it¬ lutions to problems has also aided York City, May 26, |1 ment unemployedforwill illustrate of policies compensating the that one, to regulate the terms which money is lent and to on nessmen * this industry, to put special taxes ingness of businessmen to go very far in offering constructive pro¬ of NEWARK, N. J.—The W. Deane President and Pruden Director well-as: in corporate securities. ?•. - identified; election as of ViceMac- Bride, Miller & Co., ,744 Broad Street, is announced. Mr. Pruden will be in charge of the develop¬ ment, apd expansion of the New¬ ark firm's long-established busi¬ ness in mutual fund shares. The as Assistant Trust the Formerly Trust the of Co. Pruden Fidelity Union of Newark, N. J., later; organized first Insurance - an ' Officer general the/Life President -of and North Jersey. Trust: Council • ''7- MrT and was - ofH -1 Number 4808 169 Volume THE COMMERCIAL FINANCIAL & Business and American Way of 1 * Secretary q£ Commerce , Life ! By HON. CHARLES SAWYER* ! >;• CHRONICLE • i !ti I to talk to Few 1"'"" ;:' -'.'r' •' strated 'daily steelr is essential to that produce the weapons need. the w e Today great ; mobilized t i—-—:—r—,—; rm mild contentment. leadership have of through Under although many are willing to ex¬ press their opinions on the mat¬ j industry decision and. turning out of we a pons - peace those -r- products needed Charles' Sawyer ,a . k m.a American ized When ism," I I ■ I life. it.in use it use Other We "capital¬ no narrow sense.. describe to our of way phrases employed in other places are ful. word, hear equally meaning¬ "the free of enter¬ prise system," of "industrial de¬ mocracy," "individualism." In ef¬ fect, they all describe the way of life which we in America/enjoy and the things which distinguish that way of life from ideologies and of other lands programs n.ow. dominated by the communist the¬ This is ory. to talk is an appropriate place capitalism and this an about appropriate time comparisons. some to make ourselves to'forget that of massacre unarmed hillside snowy at Malmedy the bitter winter of 1944? [There can run well as to seems be on in • certain a sitions, their incomes, and in their bodily safety skillful to en¬ in making it Karl, Marx and FredEngels, issued the Commun¬ Germans, ist Manifesto launch the undertook and to revolution. While world a prophecies have of the Manifesto fulfilled, no in¬ man can deny the impact fervent Marxian appeal formed of been not the large upon of the world to¬ areas day; and now we croaching danger to democracy. \ While sense our communism are in some considered fail¬ way over the steel busi¬ United of the States, that as changes many an The President , suggested a of labor, like the rest of cally short supply and government loans or government action if pri¬ right, us, are the adequacies facilities not always should recognize and citizens gen¬ vate be erally should recognize that the vanguard of our battle with com¬ munism is in the ranks of labor, of production materials for in ourselves the question, "Will' way- of life survive?"- •'.? j Beyond over a One of When mention oc¬ we interests, our do it with hesitation and tim¬ idity. We most careful to are that others a lauuaoie chief our mind. in casionally are see fairly treated. We scrupulous in giving to com¬ munists all the rights granted by the Constitution which they would are to; watch great part of the rest of jth6 world. kept we borders, our great our preoccupation has been endeavor; to help and concern1, destroy. from the ravages of the war which They reward us by try¬ ing in every • way to make our courts " appear ridiculous and to they brought turn the processes of justice into has been of recovery assist to in- the recent our - rapid enemies We have given on. them much of our effort alone — hilarious and Foreign * agents In the year 1948, our Government spent for-the support of the civilian population and the recovery prolonged a time, attention and funds. jump leave shores and but in V Ger-: a our We aways. little soft. This is not gated it represent about almost - two billion a new temporary attitude, nor does the point of view of American adolescence in one stow¬ as into those countries in 1948 aggre¬ about Japan bail well-intentioned, are or in farce. their billion dollars— one-half billion dollars. Including military' "ex¬ penditures, the total moneys put many particular group or party. It is indicative of the to dollars; a maturity of otjier and credit for much of the in the should go ized of more the • men ; success because a business operation profitable or for any ever, hot was other needed - ; enterprise will meet the de¬ of our economy. If, how¬ mands members of organ¬ to labor. enterprise fails to meet our I personally feel that pri¬ vate fight against communism reason, critical materials in industry could * not; be secured Running Steel Business j Your business fundamental. and to wish could do nothing to save government those who view lightly the effects , of some gov' (Continued say on page 35) certain contrast nations facts H*1 life. - of We are j While remains fundamental pleased to that announce our-own, weaknesses with critical eye. is now ' This is state. is- true nowhere — in need that for keener pf. review a lives our very recognize we vigilance, greater awareness of what is Wm. the - . by ■; formation announcing" the lm been elected President of our organization has. Incorporated 31 * tjff/ jv; New York:<5 digby .■ - ava s-1 b b 2 . *■ fo r!" dealers brokers and dealer We banks municipal in '' \ .fl- .. : i \ John - are bor on MR. > J. Kenny of arouse complar We did ourselves from that com¬ wrong. was placency and put forth efforts of skill and which and daring and confounded won the enemies we We take get away from the unpleasantness the recent conflict. We de¬ "An address by Secretary Saw¬ ing of the is now as associated with New Company will be in charge us of Public Utilities Trading Manager of our TRADING DEPARTMENT urn & co. INCORPORATED J-G-White & Company 37 WALL STREET . and Iron York : / City, ? 63 WALL STREET, % ! established NEW YORK 5, N. Y. NEW YORK 5 General Meet¬ American Institute, May 26, 1949. our our jormerly with J. G. White & Co. JAMES I. BRENNAN INCORPORATED Steel charge of MR. FREDERICK W. VOGELL pleasure in announcing that rushed to of yer before the 57th Vice President of Public Utilities Department Immediately thereafter, however, v COWAN production our. war. that announce f Pearl Har¬ incredible our He a in to Japanese admiral said that America would lose the war be¬ cency. DAVID jormerly with Shields & Company has been elected a cause pleased to bonds mean? of us mean business.: After, the attack Teletype BS 128 Nassau•Street busi¬ We should make, sure that ness; ' HUbbard 2-3790 because the people do not want it. The minority u n d e rt aking the rest i, 1949 WALTER J. CONNOLLY & CO. of j. j. kenny co. V well-disciplined communism ■ a at communism will never come to us . J. Mericka & Co., Inc. Cleveland and New York 30 Federal Street, Boston 10, Mass. -1 pop¬ minority. But we cannot bask contentedly in the assurance that spread • to cated ?n aversion for communism; its maintenance depends upon the a a formerly associated* with effect we June ular suffrage. At every oppor¬ tunity to vote -freely peoples throughout the world have indi¬ ruthlessness. of SHEEHAN, Jr. idle threat no sustained been MR. DANIEL M. oc¬ communism that our A Senate Committee engaged guage—and turn over business to It are generous . abolish private property by vio¬ lence, liquidate the bourgeoisieprivate business men in our lan¬ the in ./jit is necessary in this worldforgiveness of our recent enemies, shaking struggle now shaping up and undertaking to rebuild their between the easy-going democrat economies and improve their hab¬ cies and the well-disciplined and its of thought and to give them ruthless minorities „• who wish tq happier lives, we are examining take control of our destinies and we 1890 Boston Chicago its I meet occasionally both in and out of1 it but to avoid any I activities of would cer¬ people from disaster. Government. ;1 probably do misunderstanding I omy Ypu must keep it strong and pros¬ perous. In that effort you are en¬ ticed to the friendly approval of not need to say enterprise, tainly not sit by and see our econ¬ disintegrate because the Gov¬ ernment believed it was helpless It i? the. bellwether of all business. your through the private Government Has No Intention of - know business but political any Examining Our Own Weaknesses curred in the communist program, one criti¬ needs. matters which ~ have • study ing in their duty to their fellow workers. Leaders of organized en¬ * " nor possi¬ a > bility. labor leaders who may be. fighting may you rumor any Government American - a business. even that the of your ness and he is appear run to marked for the first at¬ are of the communist, intention the some by f erich or as It is not do it. can man will ever business a business po¬ shame attached to any suggestion on Who v One hundred years ago last year in the ancient city of Brussels two official government has infil¬ that the welfare of the USa must ask living. the use I refer to leaders of unions into which communism about business officials. No more government seem our ties and luxuries of modern civil¬ as much spend now cause. than this tended to take Ger- the apd helpless American soldiers But for the power. we They know some in momentarily important but which sink into insignificance when we ourselves ess items which comprise the necessi¬ part in and greatly tack ojf our' time1 in argument - among the e nil co u ... to most much suffered labor permit" either we shameful is risked cases shall in cpse of the Berlin airlift, given a magnificent demonstration of firm your have Contrary have heard, the Government never in¬ t echnical of ter, some quite violently. May I ness successfully and profitably. say, however, on this occasion that And business men should be per¬ th^re are men in this country who mitted to run their own businesses. gaging in a finish fight with this insidious following. The ranks of ntans-or knowledge —r-—•—,— aged by Government in the quite proper effort to operate his busi¬ discour¬ not cases Europe, and in particular in the a n should man and encouraged trated, who have risked their d capacity business be obscured the real issue—Were the individual Germans guilty or not guilty of the crime charged, and we action prompt honest The methods of these trials has almost the President, the immediate any certain military trials in Germany. The emphasis placed upon tne our vast military forces with terrifying speed," we quickly disposed of much of our military supplies, and relaxed into a state of run us of any the encroachments of comniunism, our demon- war course, I don't condono or improper practices business. Business men should obey the law, and insofar as I have anything to do with the matter I shall see that they do. by personal tisks in. connection with you which of 7 illegal any tion at all cost to preserve the fu¬ tonight on capitalism. This is an appropriate place to do so. industrial economy is built is made of steel." The amazing growth of your industry faithfully mirrors th? industrial progress of our great nation. The propose The very structure on that, all—at firmer determina¬ —above : to make profits can operate to increase capacity when needed, but contends there may be times when joint action of government and business may be required for this purpose. Stresses importance of sound financial system/ and asserts individual initiative has been leading factor in American progress,, , ;i stake, a more realistic dealing with the problems presented, and ture of America. ' Deploring complacency regarding communistic. ilueats, Secretary Sawyer extols free enterprise1 system; and says it is not intention of the Administration to run steel business; Holds normal desire of business A (2375) Cleveland Los Angeles San Francisco 8 (2376) THE How to Avert Socialism Thursday, June 2, 1949 CHRONICLE FINANCIAL & COMMERCIAL * Dealer-Broker Investment By HARRY E. HUMPHREYS, JR.* Recommendations and Literature President, United States Rubber Company Contending America is sleeping its of greater confidence in into socialism, leading industrialist way business system. our Says more remedy inculcation urges ai the following literature'. send interested parties to will be pleased that the firms mentioned It is understood time and effort must be developed by business¬ toward creating better public relations and urges dissemination of economic information. Recom- ^ employers consider problem of employees' basic wants, such as: (1) job security; (2) oppor¬ tunity to advance; (3) humane treatment; and (4) importance of workers' role. Outlines techniques men mends of getting information to workers. be ever, to put a A that me across to next the to morning New in City — speci¬ fically at 125th Street. to the v 77/, was angry would be mildly. it put tore Harry E. Humphreys To say man He practically apart. He was Pullman tral Station. fore shouting distance what the poop should porter be that the on cetera, et cetera. Unable to obtain , et The one is to people business dence away. The con¬ at the porter and "George, your life see did a you man in ever mad?" so "Yas suh!^ |the porter replied. man aljt put Off atflarmon!" "Dat come more in our confi¬ Greater system. will among confidence more ductor looked develop the suc¬ from better un¬ derstanding. Better understanding will come, in large measure, from information which explains how of people with whom management conies into close daily contact. Furthermore, it. makes sense for a company to go about explaining the economic system by explain¬ ing itself.; Unless the employee sees in his own company a clear example of how business works, he is likely to look upon free enterprise as so much hooey. : There are at least three specific comprise why reasons tell largest the group its employees. life ; ,.■■■. productive em¬ An efficient employee is more a wants pany road to socialism. Government the on r provides un¬ employment insurance and oldage pensions; it has legally fixed minimum wages and maximum hours; it holds itself obligated to house lower income groups; it prices for farm maintains parity products; it lends and guarantees loans to individuals and corpora¬ tions. and Government—local, state, Federal—now takes 25% national income in taxes. our If you compare this 25% of with the 40% of national income which government in socialized Britain in consumes idea some fear to we 125th about to taxes, of will you where we uncomfortably close I hope we are e wake up fighting mad. Street. ; Security Becoming a Frankenstein Right here let t Is me make it clear not against the idea of social security. Social security is good as long as it serves us. It is bad am if it masters showing And us. signs of Frankenstein. 77 . it is* now becoming 7'7, 7 ' . a 777 7' Evidence of 1his is the broader and costlier program for bringing more security President to all which recommended to- the Con¬ gress early this year. the Over Stock - the - Index Industrial Counter — Booklet Bureau, Inc., 46 Front Street, New / 4, N. Y. Public mon stock Utility Co., ish questions are not as fool¬ they may sound. All these have been giving more in¬ formation—and more willingly— than the one group which is best qualified to do the job. as groups Devoted to Public Relations to ness j speak for itself. Now, and on, the men who run now American business must devote fort to their the as ef¬ public business as relations they spend the 45,000 information to be not enable only of each them edition of of on finance, production, and distribution.Unless they do, they will not need to worry about the lat¬ ter problems. * Government will be glad to handle them all. recognized that telling the story of how business serves the public interest is only a part of public -relations. First, and most important, business must be sure Soy Rubber—but also of U. S. A. quarter Broadway, 65 Third, after survey survey economy are far 1949 — in first the Tabulation Public Service Co. of Indiana— Analysis—Blair 7>& this to discussion is the finding that there is a marked Ignorance relationship between of economic collectivist attitudes facts among Railroad study made by Dr. of Opinion Re¬ Corporation revealed that search 83% were of uninformed either employees partial or Inc., 44 H. Robertson H. Company — Analysis—Francis I. du Pont & Co., 1 Wall Street, New York 5, N. Y. 7 v/. 77. '77 <".777 7 •/ 77.77 • Oil Sunray Memorandum — — Eastman, Dillon & Co., 15 Broad Street, New York 5, N. Y. v Water Power Company— Haupt & Co., Ill Broadway, New York 6, N. Y. Also Harrison & available Electric Bond are & reviews Share, of Graham Paige, and American Superpower Preference. 7 Time ; Incorporated—Analysis— Co., 209 South Street, Chicago 4, 111. William A. Fuller & Salle La Co., The Rookery, Chicago, 111. United Gas Corp. — Circular — Laird, Bissell & Meeds, 120 Broad¬ Unlisted Electric Companies Utility Oper¬ way, Comparative table of 49 companies—New York Hanseatic Corp., '!< ; 120 Broadway, — of the - ■ ' Light—Data—Ed¬ L. Burton Street, & Salt Co., 160 South Lake City 1, Utah. Manhattan Statistical Utah Power & ward Main * * Anheuser-Busch, Inc. — Special report—Stifel, Nicolaus & Co., Inc.j 314 North Broadway, St. Louis 2, Mo. Bank New York 5, N. Y., — New York 5, N. Y. pany Robinson Co., edition and A nationwide Claude Letter —1949 —Carter H. em¬ ployees. * Wall Street, New York 5. N. Y. — our wide of the facts. significance Wall 1 Street, New York 5, N. Y. Tide Earnings of dividends, capital invest¬ Of 'unusual Corp.— Co., New Goodbody & Co., 115 Broadway, New York 6, N. Y. ating shows that employees need infor¬ mation. Their n o t'i o n s about & Analysis—Ira Railroad good public rela¬ representative of U. S. tions Products Analysis—Cohu York 6, N. Y. a ments and other essentials of The 11th hour is here for busi¬ from will profits, More Time and Effort Must Be provide to the v necessary Cement—Late Co., 10 Post Office Square, Boston 9, Mass. Com¬ Company which with Inc.— Co., 120 . Stocks—Fourth & & recording 10-year performance of 35 indus¬ stocks—National Quotation York Portland Oregon trial liberties? the;. 5,000 a Utilities, Bros. data—Lerner & giving tabulation of roads solvent These South Oswego ganized by negotiation, and those in equity or bankruptcy since 1929 Com¬ comparison of capital stock with that of certain other New York City bank stocks —First Boston Corp., 100 Broad¬ way, New York 5, N. Y ; V. D. Dardi Elected By Blair & Co., Inc. The Board of Directors of Blair & Co., Inc., 44 Wall Street, New City, has elected V. D. Dardi York } *4 * " X* extreme 7 Canada Cement only 17% be¬ Company—De^ lieving in free enterprise; whereas tailed analysis—Crabtree & .Mc¬ among well informed emloyees Laughlin, 231! St.. James Street, only 25% were partial or extreme West, Montreal;!;.Que* Canada. .# 577 collectivists, and 75 % believed in i-.t.//•"Also a v a il able is at-detailed free enterprise.- *- > study of Dominion Bridge? Com¬ !r that it:is operating in the interest ; 7 Employee opinion studies show 9> pany Limited. — -""77V* of the people. j further that employees not only J. collectivists,-with It is J were fence, Middle . for 20 years or more, those reor¬ not are Co.—Circular^- Cohn & Shumaker, Circle Tower, Indianapolis 4, Ind. * Crawling peacefully As Lushas & Co., New York 6, part we the story. This in itself is such ml N. Y. R. Broadway, It is the duty of Are was a 29 of management. it At ileast 8 out of 10 field. Inc., United States who leave However, our assignment this evening calls, for discussion o|f only the first part—the telling of proached —Analysis—F. willing to turn it over to left-wingers and Com¬ munists out to destroy all our to — P. R. Mallory & Kiser, Outlook for Resumption of Trading in German Dollar Bonds business? content When I think of this addi ional welfare program, I am. reminded of the story of a large snake which open Bennett, Spanier Co., 105 South La Salle Street, Chicago 3, 111. V 7 & Broadway, New York 5, N. Y. ter than to discredit and dominate be we much—if not more—time and Social For Card N. Y. politicians who like nothing bet¬ I are ends? in the hands of collectivist minded get are. selfish own — Circular—Sutro example, we have approxi¬ mately 5,000 persons in manage¬ ment in our company. We have more than 45,000 employees in the Shall now their Philadel¬ Engineering memorandum • further Actually it is Street, Co.-— Co., 7123 j. Natural Gas—Circular—Ernst & — business systerp wotks—how our & Co., 120 Broadway, New York 5, Price-Earnings Ratios—Revised to April 1, 1949—Stroud & Co., Inc., normal competition such as the 123 South Broad Street, Philadel¬ present. j • ... 7 phia 9, Pa. Second, a company's standing in a community is largely the reflec¬ Rail Stocks—Circular Fahnetion of what its employees think enterprise. sleeping its Broad Interstate Outlook—Memorandum Market —Jacquin, Bliss & Stanley, Hotel Biltmore, New York 17, N. Y. 7 its payroll. An ef¬ on employee is the only kind of employee a company can afford to have on its payroll in times of way to the wrong destination. It thinks it is traveling the road to private is Belgium, Sweden, Netherlands, Norway and Denmark — New study—Zippin & Co., 208 South La Salle Street, Chicago 4, 111. \ the kind of employee every com¬ ficient Resistance Harrison — phia 9, Pa. Britain, Great of bonds ernment to 7; First, the employee who under¬ be Europe of Recovery should company ; a economic facts of the * provides more of the and say about it. The story of good things of life than any other American business deserves ta be told and must be told by many system. Who is going to provide the voices. Management can and should information? Shall we entrust the spearhead the job. It cannot do job to special pleaders seeking to the job alone. America International Circular and the ultimate effect upon gov¬ provide economic information own employees. They and why it America Is Sleeping Its Way to Socialism 7 Economic first for its /77<"7./- ployee. likely to with the on . will of reversing way trend which is most finally stormed said: /.: keep to way stands business and his stake in it System Is the Remedy ceed satisfaction, he any Confidence in Our Business he spot, under good work. 7 " ' ; // It is logical for a company to . Greater nincom¬ a was, fired swallowing else within everyone this nation think be¬ more rabbits. believe I back, do it—provided we can He told the porter, the con¬ ductor, the engineer, the station and by / the the road to socialism it is hard to turn \ When he tried ; still erupting like a volcano when the train pulled into Grand Cen¬ master at- backward, the lump second rabbit stopped him. ;* * 7 ^7 Alter wriggling half-heartedly a- couple of times, he gave up, saying, "There's nothing I can do about it. I'm caught by circum¬ stances beyond my control." Although history shows that after a country has started down . York that the he squirm caused was already When fence. the bottom rail. on the train the under businessman awoke He could not get out from temped to move forward, the lump caused by the first rabbit caught the iri this manner. My plea is for all companies to get going on this all-important job, and for those companies who are already Com¬ N. Y. Coffee—Study—Merrill Lynch, Pierce, Fenner & Beane, 70 Pine Street, New York 5, N. Y. programs Then he was in rabbit, too. trouble. Bridgeport for an impor¬ tant meeting." When half was under it when another rab¬ bit jumped up in front of him. Without thinking, he swallowed going to pick me up to take and way is car fence Railroad Central Illinois pany—Circular—Smith, Barney & Co., 14 Wall Street, New York 5, South the toward off at Harmon. Canada. <8>- sure me Monthly commercial Canadian Bank of — The — Commerce, Toronto, Ont., businessman boarded the 20th Century in Chicago for New York. He said to the porter: "George, I've had a tough day. Bring me three scotches and soda. Then don't bother me any more until we get to Harmon. I'm going to hit the hay early. How¬ Recently Canada letter across an snake ap¬ a free meal big job that where Program With Employees pany its is suggested that each com¬ start by explaining itself to employees. ' « own of the National Industrial There is nothing original in this Confer-, UI16U10Jrlll WIia ^ew Yor^ City, May I suggestion. Numerous companies > plant want. it. employees In said they surveyed interested in receiving in¬ formation from their company. What Employees Want to Know Start Economic Information It *An address by Mr. Humohreys the 33rd Annual Meeting wonders every information^—they / Combustion Engineering^Sbpter^ iiea,ter, 'Inc.—Study—White, Weld & Co.j '40 Wall Street, New- York 5, N. Y. * """ *■" v .»•> t -5, to take hold of it. in the shape of a rabbit popped up in front of him. He swallowed the rabbit. He slowly crawled on before one a need have launched economic education i What kinds of employees want?. information .. ;; , , A representative number of do Emery Air Freight Corp.—An¬ alysis — Reynolds & Co., 120 j Broadway, New York 5, N. Y. em¬ ployees interviewed by Dr. Robin^ son said questions such as the following would bring forth the kinds of information (Continued on that page would 30) « Haloid Company—Memorandum —Hecker & Co., Broad and Arch Streets, Philadelphia 7, Pa. Also available is on a memorandum Bingham Herbrand Corp. V. D. Dardi 7/,, Board and Chief Executive Officer. Mr. Dar¬ di will maintain his headquarters Chairman as in New of the and Chief ent the is Chair¬ Committee Executive Officer of York. man Blair of He also Executive Holdings Corporation, par¬ company of Blair & Co., Inc. 169 Volume Number 4808 THE June 21-24,1949 Investment COMING Investment June Field 24-26, Calif.) ■ 1949 (Chicago, 111.) Bond Club of Chicago annual field day at Knollwood Club, Lake June 3, Forest, 111. meeting at party at the Lochmoor Club, Grosse Pointe Woods, Mich. mer , (Los Angeles, , June 28, 1949 (Omaha, Neb.) • Nebraska " Investment Dealers * Security Traders Association oi Angeles annual spring party at the Arrowhead Springs Hotel.; 24, 1949 (New York City) Bond Club spring frolic at the Omaha Country Club, to be pre¬ ceded by a cocktail party June 27 the at ; (Connecticut) York annual outing at the West¬ Security Traders Association of chester County Club,, Rye, N. Y Connecticut annual summer * West Hartford, Conn. Bond June 3, 1949 (New York Club Bond New of Annual Field Day at low Club, Country City) York 25th Sleepy Hol¬ Scarborough, June 28, 1949 Club June 3, Club Bond (Philadelphia, Pa.) of Philadelphia an¬ nual field day at the 15th June Traders dic Hills Club Country of Sept. 9, 1949 J. J. (Pittsburgh, Pa.) The Tournament 5-9, 1949 Colo.) (Colorado Springs, ness North of Picnic Traders Security sociation- Annual As¬ Convention in outing at the Nor¬ Country Club. J. announced The firm by Dec. 4-9, 1949 (Hollywood, Fla.) at banks exclusively. Mr. formerly was a member Kenny Investment Bankers Association Annual as 31 Nassau brokers for dealers and of the firm of F. P. Lang & Co. Convention at the Holly¬ With Olson, Mill Mid- With Stix & Co. (Special to The Donnerberg Co. Chronicle) Financial (Special Grove, CHICAGO, Park. Pacific Northwest Group of the Investment Bankers Association has staff Sept. 9-11, 1949 (Oregon) ILL. Stix of been & — Lorraine added to R. the The Financial 509 & Co., Inc., 418 Olive Street, St. Louis, Mo. } - 1949 (Cincinnati, Ohio) Municipal Bond Dealers Group Annual Spring" Party. Cocktail party for out of town guests June 6th; outing June 7 at the. Kenwood ' „•V • ' City) * y.. Municipal, Forum of New York annual meeting and election., ? : -r. June 9, 1949 (Boston, Mass.) * " Boston Securities Traders Asso¬ ciation Golf 30th Annual Tournament at Outing and Weston the Golf Club, Weston, Mass. •/ York City) v Bondwomen's Club June 9, 1949 (New 't. Municipal spring luncheon meeting, at 12:30 p;rii. at The Wall Street Club. June 10,: 1949 KAtlanta, Ga.)' i ? Georgia;Security. Dealers; Asso4; ciation annual meeting and jam*boree at the dub. Capital City COuntry _V^r . June 10; 1949 (Baltimore, Md.) * Bond Club of Baltimore annual outing spring Elkridge • June 10, 1949 picnic of the at , (Buffalo, N. Y.) Club Bond : the at Club. Buffalo annual Wanakah Country Club. CELANESE IN EXPANDS THE SHUTH June 10, 1949 (Los Angeles* Calif.) Bcmd Club "of Los day and outing Country Club. at Angeles field the Bel-Air With the June 10-12, 1949 (Minneapolis, Minn.) filament Twin City Security Traders As¬ sociation Summer Party at Gull tion is centered at bringing into operation of the Celriver plant Rock Hill, S. C., for near yarn, AMERICA has research producing cellulose acetate CELANESE CORPORATION OF virtually completed its post-war pro¬ to of plant modernization and expansion. , Club of New York Field Day at Sleepy Hollow Country Club. Bond June 15, 1949 (Cincinnati, Ohio) Cincinnati Stock and Bond Club "annual spring party at the Hyde Park Country Club. June 15,1949 (Minneapolis, Minn.) Twin City Bond Club annual picnic at the White Bear Yacht Club. since the close of the 1948 Celanese had Some idea of the extent which to sented South and Southwest may sales be had from the location of located in South Caro¬ lina, Georgia, Virginia, and Maryland. A war. At the end of total investment of $216,244,314 by plants in the South and Southwest. totaled $230,384,672, as against $35,478,947 in Not spun yarn only is Celanese Corporation standards of living of the country increasing the as a whole, but its plant is located in North Carolina, with weaving and June 17, 1949 (Boston, Mass.) Municipal Bond Club of Boston Outing at the Concord Country Club, Concord, Mass. 1, growth reflects the tremendous advances made in the knitting plants in Virginia. past ten years Its large chemical opera¬ by the textile industry in the South. Annual . This is another advertisement in the series published for more than ten years by Equitable June 17, 1949 (Cleveland, Ohio) Cleveland Security Traders As¬ Securities Corporation featuring outstanding industrial and commercial concerns in sociation annual Southern states. economic development of the South summer party at Kirtland County Country Club. June repre¬ In 1948 1939. Plants for the production of cellu¬ plants. a building, machinery and equipment, largely poration has invested in the industrial future of the lose acetate filament yarn are petroleum Cor¬ Celanese in its twelve a $41,056,497, making a total of $97,837,333 for the three years June 10, 1949 (Nejr York City) Municipal Bishop, Texas, with nearby at Clarkwood, Texas. Expenditures for plant additions in 1948 amounted Lake. gram center 17, Bond 1949 Equitable welcome mil opportunities to contribute to the the further by supplying capital funds to sound enterprises. (Detroit, Mich.) Club' of Detroit annual outing at the Grosse lie Golf and Country Club. NEW N ASHVILLE DALLAS June 17, 1949 (Milwaukee, Wis.) K N OX VI LLE ; Milwaukee Bond Club annual field day and picnic at Oconomo- EQUITABLE BIRMINGHAM woc Country Club and Oconomo- woc Lake Club. NEW ORLEANS MEMPHIS ,** Brownlee O. June 17,1949 (New Jersey) YORK HARTFORD CHATTANOOGA GREENSBORO Securities AND Corporation JACKSON. MISS. ■ Currey, President Bond Club of New Jersey^Annual Field'Day; at. Rock .Club, West Orange, N. J. Spring 322 UNION STREET, NASHVILLE 3. Chhoniclb) Boggs is with Olson, Donnerberg Olive Street, St. Louis, Mo., members of the St. Louis Stock Exchange. Co., to CHICAGO, ILL.—Chauncey M. June 6-7, June 8, 1949 .{New York J. at Chicago Stock Exchange annual election. :: Country Club. John maintain Street and offices Philadelphia {Chicago/m.) Kenny will Country Club, Bala, Pa. June 6; 1949 J. will act The Broadmoor Hotel. Lasswell Chicago is Kenny. at , Pittsburgh at in bonds _ National of brokerage busi¬ general market municipal a wood Beach Hotel. Country Club. Club formation Co. to conduct Oct. July 27, 1949 (Pittsburgh, Pa.) Bond Kenny Forms Own Investment Co. Bond Club of Pittsburgh Fall Outing at Chartiers Country Club. an¬ 25, 1949 (Chicago, 111.) summer 1949 meeting at the Gearhart Hotel, Gearhart, Oregon. - 9 dealer Club Pittsburgh Spring Golf and St. Clair Summer annual 1949 Toledo of Athletic (Pittsburgh, Pa.) Bond Club of Outing (Toledo, Ohio) nual outing at Inverness Club. Bond N. Y. • June 24, 1949 Omaha honor of out-of-town guests. out¬ ing at Wampanoag Country Club, (2377) Detroit and Michigan annual sum¬ Investment Association of New June 3, 1949 CHRONICLE 1949 (Detroit, Mich.) SecuritiesTraders Association oi Los June FINANCIAL June 28, Ontario. 1949 & Association of Canada 33rd annual EVENTS In (Canada) Dealers Minaki Lodge, COMMERCIAL TWO WALL STREET. NEW YORK 5. THE (2378) & COMMERCIAL FINANCIAL Wall 63 Street, New York City, announces tne election, effective May 31, of David Cowan Vice as dent to as¬ charge of depart- a new m a Presi- - sume e to t n deal in public utility natural eral Co. in bank has insurance and stocks clusively. Mr. Cowan has been public utility specialist for Shields & Co., since 1944 and prior thereto was with the War Board in Washington joined after eight years service with Lehman Corp. Production which he Frederick W. Vogeil, formerly with J. G. White & Co., has joined the be Geyer organization in charge trading. of and public will- utilities pany, but fixed charges guaranteed bonds on and an leased aggregate of line Thus it is cient to meet to be accepted if the plan is to obvious ! f 2.1 to The Edward F. — Davey and Wilfred B. Perham with R. H. Johnson & are Co., 30 that the stocks $16,000,000 over have been not distributions proposed has concession (Special to The Financial are un- j i Stevens haV6 and' Dewey been 'added insuffi¬ be adopted. staff of accruals. Unguaranteed stocks scheduled are to receive minor was the accepted principles of not found practicable to extend the differentiation Street. so conflict holders of among over 40 different issues. The PTC's Students filed such a cash bond to a Juniper 5s 1963 Phila. Warwick Common Philadelphia ating at Cash per Passenger Railway 5s„ 1953 Transportation = • 1,060 ™™ Suburban Rapid Transit Street Railway 6s, 1953 Pittsburgh Incline Plane (par $100)...,__ 170.00 46.50 r underwriters*, Unguaranteed Bonds, per Issues Stock Members Philadelphia Stock Exchange Packard Bldg., Philadelphia 2 Teletype N. Y. Phone PH 375 COrtlandt 7-6814 Federal Street Pleasant Valley 5s, 1942 1,000 Fort Pitt Traction 5s, Samuel K. Phillips &Co. $1.,000 1,000 14 1,000 14 1935 Second Avenue Traction 5s, 1933„__— ■ | '!< The Second Avenue Traction 5s, 1934—. 1,000 City Elec. Com. Power Co. Com. Merchants Distilling Com. '"■•'V'" Southern Traction 5s, 1950™ 1997 y 1,000 J , (Alan) 1,000 14 1,000 14 are 14 Earnings Ratios E. H. Rollins & Sons Boston , J - > net income of : He also notes ; largely completed last some indications of ) ■ i ■ - . • - a reversal in the trend to - For the first time since January, steel operations in the Pittswere scheduled to drop below 100% of capacity this week. For the week ending " of •' "r."- - ' Public PEnnypacker 5-0100 " 1528 Walnut St., Philadelphia 2 York '• ' * THE CURVE , burgh district , New J t!t RR. TAKES in the year's profits recorded, ends Sept. 30. Mr. Charles E. Hires,Jr., President, points that the company's expansion {program was higher costs. Bought—Sold—Quoted Incorporated * .. year. The company's fiscal year, last four and one-half months of which about 80% of the out Price ' Hires'(To Yuh! year. Wood Steel Pfd. -Vj PHILADELPHIA—As reported in the Philadelphia "Inquirer;" sales of the Charles E. Hires Co.; for May will be about 30% above the corresponding mdnth last Richmond Cedar Wks. Com. Wood Steel Common V the first four months of the year. > 14 1,000 , $3,084,929 as compared with a deficit of $5,234,798 in April, 1948, Pennsylvania Railroad has off- ' set a 1949 first-quarter deficit and is $2,119,677 in the black for Phila. Elec. Co. Common (Alan) , 12 1,000 Liberty & Suburb. 5s, 1938™™ 'r'"" V''"V : Reporting April * ' West End Street Rwy. 5s, 1938 r 12 1,000 Washington & Canonsburg 5s, 1932West 14 ' * 1•' "" PENNA. 14 ; * , .y. * 13 1,000 Washington Elec. St. Rwy. 5s, 1927 Atlantic " . Pitts. Canons. Wash. 5s, 1937 United Traction 5s, Interstate 12 " oper¬ rate of return upon for additions and (sharqs) Ardmore Street Railway 5s, 1958-__— is a Proceeds will be used to redyce or eliminate current bank loans, imprcvements ito plant and for general corporate purposes, / v $1,000 Cash & Bonds it or PHILADELPHIA—Announcement was made last week of regis¬ tration with the SEC by Scott Paper Co. of Chester,-Pa., of 45,000 shares of cumulative no-par preferred- stock. Dividend rate and offer¬ ing price will be filed by amendment. Drexel & Co., Smith, Barney & Co. and Merrill Lynch, Pierce, Fenner & Beane are named as 52.00 „ Suburban Rapid Transit (par $50) that tickets Scott Paper Registers $48.00 ! maintains a proper Corporate News and Notes 1,090 Pittsburgh & Birmingham Traction (par $50) Co. loss and-is not receiving $1,050 — ™ a , a PUC examiner, have 8, when PTC is to present its estimates of the fair valuation of its property. $1,000 Bond •' Pittsburgh Railways Gen. 5s, 1953 Transportation Co. De Long Hook & Eye Common - hearings before Jay Eiseman, projected results under a 10-cent fare with exchange straight 7V2-cent cash fare with all transfers abolished. ready reference, the table below lists the proposed distributions in respect to the more widely held issues. Phila. Suburban Water Com. Phila. any loss suffered because of such stay should be granted anyway. i no been recessed until June matter of . indemnify PTC for writ, and that a Last week's be may ' , City's petition was filed last Friday, in it, company atternevs held that the Superior Court has no authority to suspend rates; that even if it had such authority, the city had not of the plan concede that its approach is realistic and that its pro¬ visions are, in the main, fair and equitable. Moreover, it is under¬ stood that the plan was set up after extensive conferences with sources - to the answer Cash per Share. N. E. Walnut & i City's: finality in respect to individual issues. To attempt to would subject the proposals to claims and counter-claims Monongahela Street Railway Stock (par $50) Cambridge Bldg. 3s 1953 * , is subject to approval by the Securities & Exchange Com¬ appeal to the State Superior Court. to ultimate South Side Edward E. Mathews Co., 53 State # • On Jan. 21, the Public Utility Commission deferred the plea of the transportation company for fare increases for a period of 6 months, pending a series of hearings on the matter. On May 14,the PUC permitted the higher schedule to be put into effect on a temporary basis, and it was this action that precipitated the E. of t .-•# ■ Thibault J. the to Railways D. George and Thomas Fitzgerald, present trustees. A the appointment of Mr. Bauer is scheduled for June 23. hela Street Railway Co. stock to Philadelphia Company at a cashi price of $39 per share, $9 per share less than the plan's proposed price of $48. The acceptance of the offer by Philadelphia Com-, Guaranteed Issues Ernest . Mononga-!; met. Chronicle) — - PITTSBURGH—In an effort to expedite the reorganization proceedings of Pittsburgh Railways Co., the Mellon interests have advised the management of Monongahela Street Railway Co. that they have offered to sell their substantial holdings of amounts of cash and new stock. As BOSTON, MASS. 4.2 ' . expected. Edward E. Mathews Adds ' , W. on * been regulatory bodies and that its approval by such State Street. 5.00. > agreed to by Philadelphia mission. \ i Owning all of Pittsburgh Railways preferred and com¬ mon stocks, over $12,000,000 y; \ * /. I * ' , > in demand notes and an aggregate of Rhubarb iq Philadelphia about 65% of all other outstanding system securities, the parent PHILADELPHIA—The City of Philadelphia's company is scheduled to subordinate its claims to those of the public dogged efforts to and accept 51% of the new common stock as representing its re¬ upset Philadelphia Transportation Co.'s recently granted 13-eent street car fare struckj a jagged rock last week when the maining equity. Pennsylvania Public holders of guaranteed issues will be tendered cash in Public Utility Commission, in a formal reply to the City's petition to surrender of their rights. Holders of unguaranteed bonds are to get the State Superior C^ourt, averred that it, the PUC, had not abused cash and new bonds to the extent of the principal amounts of their its discretion in ignoring alleged facts and moved that the City's petition be dismissed. I claims, plus an additional small distribution of new common in lieu ■'"y."' : : in BOSTON, MASS. preferred™™1— Company. do Chronicle) — PITTSBURGH.—Elmer E. Bauer has been appointed by the Fed¬ court to serve as reorganization trustee of Pittsburgh with hearing While the plan provides that the major groups receive differ¬ Financial Traction — Additional Trustee Appointed public claims in full and compromises will have largest equity, it (Special j 4.2 ent treatment in general accord with H. Johnson 4.2 4.2 pany The • Two With R. preferred__J j 2.5 * 5.00 United plan Pittsburgh Railways Co. has been in receivership since 1938. of ex¬ • 5.00 Federal Street Pleasant Valley.2.50 r. Since that time, interest and dividends on publicly-held guaran¬ teed issues have been paid by the guarantor, Philadelphia Com- the specialized 4.2 3.00 , Monongahela Stock Tender firm the heretofore > (shares) stock. of bu siness Stock $5.00 5.00 Dequesne Traction provides not less than $17,000,000 in cash, not more than $6,000,000 in new first mortgage 5% bonds and 1,076,096 shares of new common de¬ new broaden which satisfaction of their claims, the J - '™™_™— Consolidated Traction distributed to these holders in ™ —.—_Ti__TJ_r;-T-r. Traction Citizens . partment will Cowan Pittsburgh Railways Plan. on Hearings on the proposed reorganization plan for Pittsburgh Railways Co. and its underliers are scheduled to begin before the Federal Court in Pittsburgh next Tuesday. ■! Details cf the plan were made public last month and met with mixed reception on the part of security holders. Outstanding system securities fall broadly within three classifications: the so-called "guaranteed" issues, unguaranteed bonds and unguaranteed stocks. Public holdings of all groups aggregate about $27,000,000. To be gas i t i es. A d d i t ion David Central Traction and s e c u r this Hearings Share per Cash. Allegheny Traction Inc., Co. Unguaranteed Stocks, • Geyer & Co. Inc. & Thursday, June 2, 1949 ■ David Cowan V.-P. of Geyer CHRONICLE . 10 Utility Company •' Saturday, June 4, ingot rate is;* scheduled at.98.4%. This somewhat bears out the astute observa- # tion of one P. F. Fox, New York security dealer and savant, who believes that after a further not-too-serious readjustment in steel, * the market should be ready to go places, ? ; Common Stocks Chicago r noting first-quarter earnings of $2.37 per share against $3.39 in the like period a year ago, states that while sales volume in 1949 may equal that of 1948, net earnings for the year are likely to be lowerProfits are being adversely affected, he says, by lower fuel prices, declining demand and growing competition. • '■■■•>'■ Fourth Edition Trading Department Active Gulf Oil Corp. v > PITTSBURGH—Sidney A. Swensrud, President of Gulf Oil Corp., in Revised April 1, 1949 Western Pennsylvania ^ * Issues "... Now available upon request ... Direct Wire CHAPLIN to New and City COMPANY . Bell System WHitehall 3-4000 473 Pennsylvania Power , nounced that it plans v & Light Co. PHILADELPHIA 9 • PITTSBURGH NEW YORK . a common share for each ALLENTOWN to finance part of its needs by offering shares to stockholders in the ratio of one new shares held as of the record date, June 27* Subscrpition price and other terms and conditions will be sub¬ additional Incorporated NEW YORK. N. Y. Teletype—PG * anticipation of continuing its expansion program by the expenditure of approximately $75,000,000 by the end of 1952, Pennsylvania Power & Light Co. last week an¬ STROUD & COMPANY N. Y. Stock Exch. Pitts. Stock Exch. New York Curb Exch. (Assoc.) lCth Floor, Peoples Fk. Bldg. 61 Brosdwsy Grant 3900 * ALLENTOWN—In Members PITTSBURGH 22, PA. . , York ; seven > sequently announced** SCRANTON • LANCASTER * * . * , Philadelphia Gas Works Co. has asked SEC permission to borrow $2,500,000 from three Philadelphia banks for capital improvements. Volume 169 Number 4808 THE COMMERCIAL FINANCIAL & CHRONICLE necessary to Hbuild from the ground up practically all the gov¬ The Foundations of World Trade By THOMAS C. BLAISDELL, JR.* Assistant Secretary of Commerce ' Asserting firm foundation for, multilateral and expanded foreign trade is siiIllacking,Commerce Secre¬ as deterring factors. Sees trade regu- Contends unless adequate substitute that V Export or die!: This ,has had to be the motto of Western Europe since the war. It is no slogan; • The Western European nations became great onfy by using their specialized abilities to rpanufacture * goods from the raw materials which they brought from the ends • -V - of. the V earthr—— for S; a .1 e were created . throughout the . rope is limited in practically all raw mar tefials.. It '. have does coal, • a g r. e a t source of-'power, and it * has technic , ; < cai.knQ.wl-. edge. It has, applied * them to T. c.. raw rials Blai&dell, Jr.„ tnafev to grow, powerful, and. wealthy, Rut in the last analysis its population can be supported at present standards only if it func¬ - . .. that both short- could be made available Eu¬ , _ so term credits and long-time loans tO; those world. Western ■—■ ■ ■ the parts rOf. . world that ! quered countries destroyed. with which foreign traders of the United States expected that peace would bring the return of easier trading conditions. In< fact, - their r hopes had been raised by many state¬ ments and actions,-both by-private individuals and by < government, that it would be possible to trade with fewer hindrances been known before the of than had war! One the made charges which we had against the Axis powers was their use of discriminatory and monopolistic trade practices in international trade which we felt had had unfavorable trade. our own ural was feel to on It was that, only nat¬ when the war, the" Axis defeated, and over results those.. practices would 'become a thing of the; past, and. we would have a world in which free com¬ the traders of countries would domi¬ petition; between various nate international the economic scene. 'We know thinking now that much of this wishful and partook of the stuff that- dreams are. made of. In spite of the fact that we have just reached .the four-year was sterling was the unit of exchange an!d the British purchasing agents brought materials raw both to Political Unrest world of international trade, How slight our penetration into these cultures and economies has certain parts of the Far East1 the United seldom .onc& a the stress is. removed; businessman, straints placed under Many the re¬ on Need Firm, Foundation for Trade is It- thing! for these dreams. dream thing good a to It is a-good US that in times of stress we their bought end supplies made available to the as well as to the thought of. minded constantly, United Kingdom ernments, This venture into are with ?ome of our in trading world unless, we plan support them indefinitely. <- j. existing gov¬ j The Communist Bloc ; Op .the This weakness is dem¬ There is border; of our- Eupropean states; They do njake the atmosphere any easier? for foreign traders. Their trade is state trade; It is monop¬ ern nojt rule of thumb among that a revolution suc¬ a . oly of both export and import* They pontrol both the movement historians viet countries, the instrument of Lend- weakness- of, those against whom it is directed. This has certainly Lejase .further, disintegrated the been true in a large part of East¬ carrying out national policy, Trad¬ system of private trade. This is noi criticism of Lend-Lease. Nor ern ing in this atmosphere is not easy; Any other method at that time would have been impossible. Asia—the Chinese mainland, Indonesia, the South Sea Islands, Slam* French Indo-China, Burma. In alL of these1 countries the at¬ tempt tp establish stable govern¬ ments have been unusually diffi¬ We were cult. Union is it a and other criticism of the European use of gov¬ ernment corporations during the war. struggling against forces solpQwerful that there were times when the. balance might have fallen.either wa,y,„ However, today the far < we forget how of physical ceeds only because of the internal ■ The - ! • combination of A the instruments in trading monopoly always has advantage. It can play off competitprs against each able to get the best possible price for his exports because of the. competing buyers. The im¬ porting monopoly should get the , ■ ^ competing sellers against each ot •er* In the face of all these difficul¬ ties, the American traders have, during the past several years sipee the war, - been unusually fortu- nate. Our country was undamaged in the loss of that j by war except irreparable resource, manpower, and even in our human losses we suffered less thap any of our allies. And we living in are and business Those who are history. our have We been • $6,450,000 /;vV find international trade are fully ac¬ trade hampered and tied by quainted with the heavy machin¬ mark after V-E Day, we still our , bonds which "we"have often failed: ery oftradi'ng:the"physicaltraiis- Northern Pacific port&tiOn facilities — trains, ships and planes. They, know the vari¬ partment of con* stantly receiving complaints from: ous: types of customs, regulations traders who ' feel: certain they and! procedures,.the .business ;prac.-r could sell their products, if foreign tjces: associated with commercial countries would only issue! import- instruments, the various "angles" licenses or if their buyers were, on buying and selling of exchange, given access to exchange raor-0 apdr the appraisal of foreign trade freely.Complaints?- are-made that markets. They. ..are. less,, clearly: to identify, accurately. The Commerce is De¬ 2%% Equipment Trust Certificates ,1" .(PhiladelphiaPlan), .j j ; ; .... ~ the British area to using the sterling freeze out AmeHcan, tracL are thaLtiie .D.utch have us£d the guilder control against opr i.nterr countries, between. ,the economies est, fhrit he French hayp been of jthe various parts, oj/th^woHd; unfair in not giving freer, access linked/together .by,their trade ££to American business - iji spme rof. iivfiies, and the. balance Pt capital the- areas in. which the, franc is investment by, oms country ..agjabist the medium. Qf exchange.... There, is the noad for .industrial develop-! a ;; ; feelingLof disillusionment, par¬ Merit ih another e'Oimtrjb w ticularly; iri view of the .feeling "v'$fc£$rig. -the^norriiaL!iriier!i that the large loans and grants national trading ceased to > exist*. made by the Unitedi States should It wa? replaced; by U system de«have eased, tbe: payments- probr. signed for the'direct pr ocurement lems of the "various countries, that injdi processing oLraw materials yere devastated, by th,e.wax. Xhi> into! War gOodS*" Qpygrnment puf feeling is, strengthened sipce the. ers; „ International con^tructiQiL Bank and. for Re* Development; We divided! the- world between the i'TAti address by1 As§istapt£S.ecre* "pound and-the dollar.. Ip ope parit tary Blaisdelf before thc Foreign qf ; the world tho British h^ Trade Forum of the Miami ,Cham¬ in vauptfeer part ol the wpiHd the ber, of Commerce, Migmt rFia.,. Uqite<|,§tat& May 26," 1949. East 'synd the I ar Eash; the pound . • .. .... ... • • . ; as to pAymeitf ol pur value and Northern Pacific Railway Company . ,"f:*"• 1 , . r ,- ' - f ■ . u- ' ■ each June 15, 1950 to 15(64, inclusive on gwrmteed uvcowUtfamtty dividends by endorsement by to, 2.675%, | | i | ; Priced.to,-yii&jid: 1.40% • | ; :. _■ ■ V : ' . according ijo maturity .. . • • • • I • "-Vi » ■>' ■' I' ' • •, ;'!ft v 1 - • ■ - • t I r , ' ■ . ■ • of these Certificates are subject /ft Authorization by the Interstate Commerce Commission. The Offering Circular■ may be obtained in any State, in which this announcement if circulated from only such of thy undersigned and. other dealers aj may lawfully offer these securities in such' State, Issuance and sale, f .i r f - ' fevV R. r. fun^ipna of priyatp traders. annually $430,000 ; , Internatipnal Monetary Fund and the To he i/.v- To mature . .... , 1 of the great currents of in¬ ternational trade-which make pos¬ sible, the, overall balance bftt^eeh aw are Railway Equipment Trust of 1949, Second Series ■p HAUSEY, STUART &. CO. INC. ! ! | ..." .*• W. PRESSPRICH A, GO; -' - OTIS &. CO. HORNBLOWER & WEEKS (INCORPORATED) FIRST OF MICHIGAN CORPORATION L. F. ROTHSCH U.D- &'CO. "s- '! ^ i ■ *. ■ ' : , FREEMAN. &. COMPANY . so ? fortunate that we have been the ! envy of the . rest, of. the world! ! Even our Latin-American friends^ who have had much the same kind; prosperity which we have had, although not to the same degree* have looked upon the United I i (Continued on page 39J contacts associated with a pe- riod of trie greatest prosperity in struction of the, human relation- through which the prewar world had operated. other. be relatively peaceful estab¬ .. trie mov.ement of and The monopolistic exporter should lishment of the governments of India and Pakistan and the Philippines are landmarks in the gopds , perspqs as major, . history of governmental change, destruction with these forms of since they have taken place with¬ would like to build. We some¬ organization used during the war out the collapse of existing gov¬ times forget, however, that a made inroads on the normal, ways ernments. ? But those who hre ac¬ sound, building! can be erecte'd of I doing business. In fact,: even quainted even with these relaonly on a firm foundation.! The today the postwar conditions look tively stable parts of the Far East foundations of a world trading to know best the maghitude of the some of the European govern¬ system lie deep in our business ments so much like war that they problems which the new governsystem. II is apparent today that haVe retained some of the ma¬ ments face in establishing freethe destructive effects, of the war chinery of the wartime period. dom and justice within a stable :cn the foundations of world trade Stability in that part of They continue to carry on activ¬ society. were far greater than!: anyone ities which we have felt could be the world is another part of the realized at. the time the-wdr better, carried, on by private busi¬ foundation necessary if our interended. The physical destruction; nesses. national trade is to expand. :■ "■ ' ^ which was apparent ' on every I have left until the last in this We have forgotten also the ex¬ hand in Jlurope and in many parts brief sketch of the destructive tent to which the governmental of .the Far East, was an obvious machinery, which made the coun¬ effect of the • war, a mention of part of the trouble; But the real tries,of Europe efficient as indus- the conquered countries of- Japap problem's were much more seri¬ and - Germany* ~ The problems ous than those caused by the trifd and trading nations, was dis¬ integrated as a result ol the war- which have faced the occupying physical destruction. The real dif¬ With fhe coming of peace, it was forces in these countries were alficulties were created by the de¬ hi p s trading world is the Communist bloc—the Soviet Union and the other east¬ In the exchange of goodsrbe¬ tween the United Kingdom, the So¬ . look to the better world which we s But a to . w.ar. industry. trading. ,.Each must take* its place government purchasing,- however, onstrated by the constant; pressure weakened immeasurably many of of revolutionary activity and the thf1 private businesses which, extent to wnich revolutions- have would have carried on these ac¬ kept that part of the. world in tivities in normal times but which turmoil; >'j " ' ■ could not be used in times of tier- an impor¬ It is partly competitiy.e neither country can live without re¬ however, the weakness of the United States. We the: the Japan^ hold tant Rlace. been, few people have realized. The destruction of the businesses Complete convertibility of ex¬ change, complete freedom to com¬ pete are the essence of; our kind of; world; s So, it; is not surprising that we should have had in our minds, the picture of this kind: of trading world., It is a .trading world which those of us who are interested in, international trade, can regard as ideal. In time of stress", !'we; tend; to,;, idealise arid think that all things are possible and many formerly established- in eastern Asia, which resulted from the Japanese wartime expansion is States governments feel at home can difficult, to carry opt even most constructive policies. In Factor a England and to the United States, While, in Latin America and in saph funds. we thoroughly more New ' overrun needed him while he was in uniform,.looked to.the civ¬ tions as a .specialised part of a ilian. world .to> which he would world economy. ' : ' • return, as a. world in which; the ; We in the United States are. not restrictions and the: hardships and faced' with; „any such dire ; alter> ;ihe diifiouities associated with, his natives. Nevertheless f o r e i g n military duties would be replaced trade is an important part of our by a world in which.governmental economy. During World War II. restrictions could be. forgotten. the —-—— . is true Far East which have to grow. They have to grow by the Japanesf and from their own soil. They can which was • opened to foreign grow only as trust and confidence traders only because of the gov¬ between, victor and vanquished ernmental power exercised on are reestablished on the basis of the fringes of thosa societies by performance. It is easy to criti-* the western European and Amer¬ cize many of the actions of the ican governments. occupation author i t i e s. It is / , .• think it history were' the governmental institutions of con¬ hollow .• I in never 11 of the area was for international gold; standard is found; nations will choose security of (lower living standards rather than insecurity of depression, and thus revert tp nationalistic policies that restrict international trading. unique. that Europe. The few ex¬ ceptions only prove the rule. The destruction and rebuilding of gov¬ ernments also took place in all tary points tp disruptions due. to war and general political unrest lation essential, but holds problem lies in how. we can direct it. ; most ernments in t 1 (2379) WM. E. POLLOCK *. CO., INC. ' *; 12 FINANCIAL & COMMERCIAL THE (2380) Thursday, June 2, .1949 CHRONICLE approximate $550 million, which, although less than last year, is sub¬ stantially greater than the $490 million for 1947. '''Net income of public utility corporations (electric power) for expected to1, exceed the 1948, total of $662.5 million by about 10%, as-power production is continuing at a high level and numer¬ 1949 is 3/1 ous upon request from investment deafer, NATIONAL RESEARCH or v, -\ . industrial corporations (repre¬ 6.5% up entire the "For year 1949, it appears that the aggregate net recent discussions as to whether common earnings of all U. S. corporations will show a decline of about 15% favorable levels at this time is the following .chart to 20% from the peak record earnings, (after taxes) of $20.8 billion published by the Cleveland Trust Company which depicts the rela¬ last year. Based on this estimated decline, 1949 net earnings, after tionship between dividend payments^ and stock prices for a period taxes, will approximate $16 to $17 billion as compared to $12.5 billion of almost 5(1 years. The stocks used are those regularly traded on the for 1946 and $5 billion for the prewar year of 1939. New York Stock Exchange and the; ratio is obtained by dividing "Dividends, during the first quarter of this year, on 996 com¬ their average monthly prices by the dividends paid during the mon stocks listed, on the New York Stock Exchange were, in the preceding 12-month periods. . aggregate, 10.5% over those paid in the same period last "Apropos from , . 500-reporting senting 19 industry groups) for the first quarter of 1949 was the same period in 1948. • Prospectus for income over Price Dividends? What your rate increases are now effective. "Net By HENRY HUNT of our stock prices are at SECURITIES A CORPORATION 110 broadway, new york 5, n y. , > . , In year. 1948, dividends from all American corporations represented approx¬ imately 40% of net earnings. This low percentage of payments in relation to earnings was due to the decision of many corporations to retain a high proportion of earnings to provide funds for the con¬ LOW PRICED struction; of plants, financing of inventories and for industrial expenditures will be far less this year and it new expansion. u Such therefore seems reasonable that corporations will pay out at least 50% of their net earnings (after taxes) in dividends to shareholders. SHARES On such would OF those Group Securities, inc. basis, even allowing for a decline of 20% in earnings, it that dividends in 1949 will be at least equivalent to a appear for 1948—a favorable "National" has the '49 edition to seems outlook for income-paying "Oscars" several won securities.'* for its annual their best to date. us reports and Congratulations, Harry. Wellington Asset Value Up Since Year End The investment record good of Wellington Fund for the first quarter of this year continues. as the value of This record is particularly impressive Wellington shares is now higher than at both Jan.,1 and April 1 in spite of further weakness in the stock market. Since of the year, the net asset value of Wellington shares in¬ 2.6% while the stock market, as represented by both the Dow-Jones Industrial and Composite Averages, declined. The per¬ formance of Wellington Fund shares was about 5% better than the general market in the first four and one-half months of the year. first The a PROSPECTUS ON REQUEST creased from your investment Distributors dealer or " Group, Incorporated 63 Wall Street, New York 5, N. Y. "It will be noted that with the exception of the depression years of 1932-33, common stocks are now selling at about as low a level in relation to dividend payments as they have during the entire 50year period. It is also of some significance that in practically instance where stocks have sold at less than 15 times dividends i Investment follow that stock prices are immediately due for a big rise. On the other hand, it would be flatly contrary tc at least 50 years of stock market precedent if the level of stock prices should decline to any marked extent from the present level U. "Look at the S. Bonds and Government 2,157,470 W 1.201,650 Preferreds Bonds 2% or $74,545,595 4% "Everyone should have a a on Your Money? special interest account in depositor you can always get back need such account as an "Government ticularly for required at "But cash a 'discount as is limit a to the sound are particular a As bank. a put in—and as you you for emergencies. also objective where definite future time. there much reserve bonds' some a V 17,295,212 9,791,496 Cash- and Total Resources prominent high points in the chart. Each one—1929 ' follows: as $44,099,767 Convertible Seniors "It doesn't necessarily 1936, 1939 and 1946—corresponds in point of time with interim stock market high points; it may be recalled that substantial price declines occurred subsequent to the establishment of these peak levels. Nov look at the present level. If a decline of any proportion is to occur ."rom this level, then it will be the first time on record that major decline started from the bottom area of this graph."—From Vance, Sanders' "Brevits." invested were Stocks Appreciation Bonds and Preferreds the Fundamental 19, Wellington's assets Common 1917-1918, 1932-1933, 1938, 1942), there has been a substantial rise in level of stock prices within a comparatively short time. ' , As of May every (1907. amount one and useful, of sum should par¬ is money reasonably leave at such low rates of interest. "National" Reports The replete Prospectus from your Investment Dealer or 48-page Securities annual report of National illustrations charts, and makes interesting Series, reading, pansomply printed in two colors, it includes the following forecast or HUGH W. LONG* GO. new with 1949 ' V,.'-' earnings and dividends: income "Net the of Class I railroads WAU you'can your for 1949 is increase funds "In expected to so for income by as much your invested. former possible days, the >•! • investing in this, as 100% ;would way ; the portion of a, on i . • have . - ■■iiii .j im¬ modern been individual investor. Now, thanks to the in effect, can own many securities through one investment—and you can put in that one investment any amount of money you want to invest. And through the specialized mutual fund, lnco»»or auc 48 "Surplus accumulations beyond reasonable emergency require¬ ments can be invested institutionally at higher rates of income. Using sound bonds, and employing institutional methods, but fore¬ going the right to withdraw a fixed amount of principal on demarjd, Mutual STREET, NEW YORK 5, N Y Fund, you, invest in many steady-income producing securities and professionally managed for you while receiving interest, less expenses, paid directly to you as dividends."—From a recent Distributors Group folder. you can . . . have them Fund, Inc. Prospectus eystone THE Bottom of the Tax Barrel upon request " LOBD-ABBETT First "Taxes INVESTMENT Custodian National now Bank represent of about Boston's New 25% national of England states: Letter income and are in consider industry. This favorite source of taxation furnishes about one-fourth of total Federal revenue. It is to the best interests of all that the COMPANIES danger zone. . . Let . us . . industry should be in Lord, Abbett & Co. Funds New York Chicago — — New Orleans —• Los Angeles position because ployment. enough Certificates of Participation in The capital it is the principal source of our income . strong a and em¬ working class suffers most when there are not funds to provide the tools indispensable for new (Continued on page 13) INVESTMENT FUNDS investing tkeir capital A Frank K. Tracy Joins J. Barth in Los Angeles Diversified Investment Company IN (Special BONDS (Series B1-B2-B3-B4) C L ■ (Series K1-K2) » LOS IHUSI ner PfO$P®c*uS Keystone Company Congress Street Revest your may be obtained from local investment dealer, or THE PARKER CORPORATION ONE COURT STREET. BOSTON 8, MASS. Frost In the past he Mr. Tracy Ban¬ and was a part¬ in Kerr & Bell. • With Prospectus Boston 9, M.assacliusettt Bogardus, ning. local investment dealer or 50 Street. thereto with Gross, Martin & Co. and of Bostqn Chronicle) formerly with Pacific Com¬ pany of California and prior Prospectus from •The Financial was (Series S1-S2-S3-S4) pour The West Seventh \ COMMON STOCKS I to ANGELES, CALIF.— Frank K. Tracy has become asso¬ ciated with J. Barth & Co., 210 . PREFERRED STOCKS ivfi v (Special LOS Bingham, Walter to The Financial Chronicle) CALIF.—Ted ANGELES, W. Seguin has been added to staff of Hurry, 621 Bingham, South Walter Spring & Street, members of the Los Angeles Exchange. the Stock 169 Volume Number 4803 THE COMMERCIAL Mutual Funds (Continued from page 12) jobs and higher living standards, and in at in stake that the the reason action preservation that workers would 'kill Dean, has the most enterprise. For a . . of net income after taxes of those receiving $5)000 a year and over would be sufficient to pay the current running ex¬ penses of the Federal Government, for only about five months. : Those receiving $5,000 a year and over number about 2.6 million persons. As a group they have become, through the competitive race, . the Prior to World War r of minor mitments comparatively tion of tal sponsored those -in the under . . down to the narrows the The time has . ed under $5,000 year a want the group government services and facilities. people should know that there is to . Santa Claus but that they must no Unit¬ a lead- of Neil H. the bills."—From "These Things Seemed Important," issued : by Co. Selected Investment of Chicago. people is interdependent In these pursuing there that are prcof that foreign economic and po¬ policy must ever take into the United richest A One of these facts is that account. States nation is It world. the greatest aggregation possesses i this War II $16 other billion nations of of more assistance the It subscribed $6 billion to the Inter¬ commitment- to continue on Ohio. Planned activities include golf;: baseball, swimming, pitching, and card games.'Free beer,-lunch and be served. ' • con eluded June 15, , 1949 at the Hyde Park Country Club/Cincinnati, Party '• Reservations /• are a that the greatest savings capacity This ever seen. 'horseshoe - • - in. charge of Harry O'Brien, W. E. Hutton & same land and area world. Yet in it 1947 used and goods world : 45% about important, it able is ! asking for A bill to Dealers Association in Evans & offer to buy an ■;?.• : , freedom and the ts was held on April 20, at which time Nominating a President bold new icans in the choice of occupation, able fpr Truman • ment. Yet, during the last genera¬ tion most other nations appear to have- moved aw from a,y these ' (Continued : an 1 : : \ ; 1 ' . • offering oj these securities for safe, offer to buy, means of the any of south Prospectus* 4 Mi . as an madropfy by 31) 1 on page or OS; securitjeSf *S NEW ISSUE » June 2, 1949 $3,150,000 called for :y A r kansas-M issou ri Power Company "a making the scientific advances our industrial and eco¬ Amer¬ additional $1.5 bil¬ the signatory nations. program for benefits of Co., Chairman; Hugh Carter, Courts & Co.; Henry W. Grady, political broad consumption, savings, and invest¬ ; ■ of same same nomic alternatives open to a or as a solicitation Organization, hegotiation of which this the ■ con¬ living stand¬ hope that other coun¬ We tries will offer the of circumstances to be construed 'I;;'-"' The offer country took the lead, is pending before Congress. Finally, in his inaugural address early this year, appointed consisting of Waldo Mallorv, Clement A. was jthe The President is no ratify the Charter of the . ' meeting of the Executive Committee of the Georgia Security Committee 'I '■ '• • indispensable .an lion to arm Co., GEORGIA SECURITY DEALERS ASSOCIATION A -V-i- ThLs-is under an material wealtn and Most available out of current income highest potentiali¬ convinced that they are been ards. make to We dition of the development of our produced consumption of fuels. International Trade for non-members. have provided incen¬ opportunities for men and have the of resources almost half of the world's movable caused billion for-national defense in next fiscal year. Costs $5.00 for members'and $7.00 Cincinnati, Ohio, Dunbar 2560. they tives population and nearly the percentage of the aggregate recently- Atlantic' Pact f I fact-U and Congress to appropriate nearly $16 buffet supper will ; this laid American poor served to release the latent capac¬ ities of every individual. We think Monetary Fund and to major fraction of the world's sav¬ the World Bank for; Reconstruc¬ ings available for further capital tion | and Development. Through ECAi the United States is dur- accumulation/ in a planet ;that is rently sponding-more than $5 bil¬ starved for want of .capital. These lion annually for economic, aid to familiar facts should be recalled the 19 ^participating ..'nalionsi of Western Europe.*r it has a moral to the middle of 1952. j' The Cincinnati Stock and Bond Club will hold its annual Spring obligations under the corri- ical and economic institutions have national CINCINNATI STOCK AND BOND CLUB world capital equipment, the highest productivity of its work force, the largest per capita real income, of to world. I a fundamental ties. i country has advanced than /: second to realize their Since the end of World Sam in i dramatic is by fqr comparatively world's foreign policy has become of are clcsely related to the first—is that the United States today is the leading exponent of a "free j so¬ ciety." We believe that our polit¬ the far by the of man richest munity of neighbors. our litical Uncle the objectives, few fundamental facts a "■ country contains about 7% of the economic critical importance to the. state of domestic business. • factor - and Jacoby affairs. Amer¬ ican was a frequently; for they that the world has * pay welfare of all ership in political world for spend American . has States in role question of how much of their income those in them in the way of government . a world. cast the ~ to realize that the social welfare issue come in History ... scraping the bottom of the barrel for funds from the upper-income groups. are differ¬ ent An increasing proportion of ithe auspices must be paid for j by brackets as the government is' nearly To¬ we much government income lower national day, living entire economy. We come then to the only remaining source income, and that is from those receiving under $5,000 a year. In the aggregate this group gets about 90% of the total disposable bills production and —»■'—• economic that .the to¬ our income. of national income of the country. frac¬ small a our - formed $ ment . business, .industry, finance and in other fields. Nevertheless, the net income after taxes of the persons in the $5jOOO and over class aggregates only about 10% of national income. Any attempt to pile further burdens on this group would seriously impair ~ i/ II, the peacetime foreign policy of the United States importance in shaping the course of American business.^ Our international com¬ were few. Our military establishment was modest. Our foreign trade and invest¬ in leaders Administration, University of California, Los Angeles The Salient Issues The restricted amount Business . ' total of Jacoby reviews major economic elements of American foreign policy and points out U. S. posi-^ Century is similar to that of Great Britain in 19th Century. Sees U. S. In process of bran-! sition to an investor-creditor status in international economic relations, and contends foreign investment will become an important expansive factor to domestic business.' Concludes impact of foreign transact tions on U. S. over next two or three years, will move in deflationary direction. . only about 21 days. scope of funds available for the grandiose plans now .being advocated is sharply emphasized by the revelation • that the College tion in 20th . current bills of the Federal Government for Business on Dean greatly concerned about any lays the golden eggs.' T. favorite means of obtaining revenue. that 13 (2381) By NEIL H. JACOBY* The amount that can still be taken from the upper income groups is relatively small. In fact, if every cent of income after taxes of those receiving $25,000 a year and over were appropriated, the aggre¬ gate would be around $2.4 billion, or an amount sufficient to pay the „ r. CHRONICLE Impact of-American Foreign Policy be goose 'Soaking the rich' has been business FINANCIAL m ■ - consequence of American should the ■ & technology avail¬ the /improvement and 6/4% Interim Notes growth of under-developed areas." It,, is , natural Americans that should Due December 15, 1951. thoughtful ask whether convertible on expenditures, obli¬ gations; and plans for the future represent parts of a consistent foieign policy. Are they necessary desirable? and Can Each Note.($45 principal amount) after June 15, 1950 or these immense and Common . into, and payable at elects) in/6% Preferred Stock Stock of the Company, y z V maturity (if the Company so United the States wisely carry them through, in the light of the vastly enlarged domestic responsibilities proposed to be assumed by our Federal % ■■ •..Price $47 per Note . Government? : What are the Lex Alex. Jolley Yearley, IV James S. Budd, Jr. What fairs? ; t traveling of our Robinson-Humphrey Co.; J. R. Neil and Francis D. Willis, Merrill state Lynch, Pierce, Fenner & Beane. us nominations as fellows: t« This Committee has since made its ' - President—Lex Jolley, Johnson, • V, Co., Atlanta. Budd, Jr., Citizens y . The members Jack & & of the 1 to ;the- officers, addition Executive are nominated as for the ensuing Committee * ■* annual ; v . / meeting of the Association will be held in Atlanta Friday, June 10, 1949. A business meeting for the purpose of acting upon the committee's recommendation will be held at 11:30 a.m., on that date at the Capital City Club (Downtown). ciation's annual "Jamboree" will follow. desire to attend & Co. are invited to get in " .. The Asso¬ Out-of-State dealers who touch with Jack Glenn at Courts • - lk Let Copies of the Prospectus may be obtained from any of the several under¬ writers only in States in which such underwriters are tjualifed to act as Prospectus may legally be distributed. ' Their Determinants 7 < ; , large objectives of Amer¬ ican foreign policy may be stated simply, and in terms that questioned by few of our citizens. First, we desire peace The First Boston * Corporation will be and year: Glenn, Courts & Co.; Clement A,,Evans, Clement A. Evans Waggoner. business? The quite j Co.; Byron Brooke, Brooke, Tindall & Co.; J. R. Neal, Wyatt, Neal The on in following, & Southern ^ American Foreign Policy Objectives and • Secretary-Treasurer—James S. of IV, ' Robinson-Humphrey National Bank, Atlanta.' the consequences foreign policy for the future dealers in securities and in which such Lane, Space & Co., Atlanta. Yearley, af¬ attempt to throw light on these " Vice-President—Alexander are international issues.. -I ... in i. '/(Plus accrued interest from June I, 194?) steps in the road the United States is » * next an absence of Eastman, Dillon & Co. - Edward D. Jones & Co. E. H. Rollins & Sonfc Incorporated international discord and-ill will.. Second, (we, want to safeguard and extend free institutions, cultural and political as \yell as economic. Third, we aspire to achieve progressively higher levels of material' -veilbeing for ourselves and for other, A. C. ... . r Allyn and Company * 1 Incorporated Farwell Barrow, Leary & Co fore California Bankers Associa¬ tion, Pasadena, Cal./May 22/1949. Chapman $Ca Fe'.tason, Tenenbaum Co; Incorporated Stix & Co - If Crowell Weedon & Co Pacific Company Jacoby be¬ •}• l| fi Sills, Fairman & Harris Straus & Blosser •First California Company peoples of the world, recognizing *An address by Dean f! Metropolitan St. Louis Co f; of California 14 THE (2382) COMMERCIAL & FINANCIAL Thursday, June 2, 1949 CHRONICLE Almon Hutchinson With Canadian Securities H. M. Public Bylleshy, PHILADELPHIA, PA. L. By WILLIAM J. McKAY within remarkable in the view Dominion far caused little so This abroad. or is the all more of the possibility that within a few weeks the record long tenure of office of the Liberal Government might come to <$>_ end. an the Perhaps issues the general laurels and of management. Liberal The content to rest are record past clear-cut of apathy. incumbents their lack is accountable for much of point on their to undoubtedly able On the other hand without closely defining their own policy, the Conservatives attack the entire Liberal system of bureaucratic controls and restric¬ While the C. tions. spokesman ment question the Liberals State of F. party in general agree¬ are with C. -the on management, criticize the gov¬ timidity in So¬ cialistic experimentation. they severely its for ernment —-— of generally side one on and freedom for on private enterprise Whether or not [the the other. u department of Buckley Bros, traditional in Liberal a choice a or torate will determine whether -the Dominion makes the toward months of both between of the dy¬ unfettered indi¬ vidual enterprise in this country 50 years ago, and the present stage of Canadian economic de¬ velopment. It would appear that these response West dian JA This in the w^s demonstrated during the Conservative a course Lea'der of George Drew's tour of the Western prov¬ inces when enthusiastic reception accorded was to Conservative ideas concerning abolition of gov¬ ernmental restrictions, the re¬ moval of exchange the and the on a heaviest lowest setback Smelters controls and of to break the PHILADELPHIA, PA.—Charles Reckner, of F. P. Ristine1 & Co., former Philadelphia champion, a newcomer the annual 21st 27, with tournament 37-40-77! sparkling a Reckner expediency, the Conservative- with velopment is afforded by the de- succeeded Haroldj J. a Pa., who holds the Penn AC He carded only one ' pars. ..v-'.j to Birnbaum ' The Financial |b ILL.—Mac has .A. thereto become was Brewer Merrill associated & officer an of (Special to The Chronicle)! Financial associated with Fabian & Co., of 9500 Santa Monica Boulevard. Mr. MacNamee was formerly King Merritt & Co., Inc. With (Special with Heads W. J. Herrick, Waddell to The Financial Inc., ■ Go James G. HILLS, ■ CALIF.— Craig has been added to of staff Reed, Inc., vard. Herrick, 8943 •' ' Waddell Wilshire Stanley Pelz formed with change a ■ ■ The variety of high grade . to The Financial in curities ity. 7 The BOSTON, MASS. Pelz 40 be York Ex¬ will act City. as spe¬ upstate New York and and will Robert se¬ market tis¬ general be E. Pelz Stanley Zipp. Mr. in partner a , stock l ' pro¬ 7 ; . now . supply: castings _ Shearson, Wall Hammill Street, New members of the f Co.,; 14 York City, New York Agency become firm as . Stock Corporation, associated head of the with the commercial collateral loan department. and "——iMMBN—— ——; . a Co., 52 in York City, 4s dis brochure of testimon¬ obtaining proxies and in financing the issues of various industries. range of average utility—in 2V2 points despite the sale of • } .- be the interconnection 150,000 KW. The program i» planned so as to slowed restore down if reserve there is capacity to around 12-15%, but it slackening in demand by cus¬ should be very substantial,' especially as the new equipment will use lower-grade coal; had only one of the new units? beOn in use during 1948 the company could tomers. Economies from the any units new have saved about $1 million in fuel cost alone (maintenance savings would also be possible). Of the $200 million expansion program in 1947-51, the first three -year's requirements have been [financed by of mortgage bonds and convertible debentures (plus .internal cash). Of the remaining new money required, about $15 million may sale book value, (excepting connection: $40 million in 1950 and $25 million in 19517 Edison stock has which is been selling recently at about 91% of most leading utilities Edison). Mr. Brown remarked- in*.this low Commonwealth compared with "We believe this fact [-provides a great amount of price stockholders. There is little chance of a squeeze on our earnings, via the regulatory route. In its recent decision allowing of company'to increase its rates $13,080,000, the Michigan protection to our . . , Commission used original cost for ness of our not.confine request for the Commission give, consideration to one that amount. to any of its tests of the reasonable¬ Michigan law, however, does one reproduction cost standard of value. and new It rnay factors other in arriving at a fair or reasonable value. In our recent rate proceed¬ ings, we .presented testimony and exhibits showing the value of our property, under present day prices, to be over 160% of historical actual cost." - • - ;• : • • ■ v. 7< Wall ials for the work the company has done a units-—two this year and two in 1951—and with ConsumersPower will be increased by or "Impressions" & within operating conditions, Mr. Brown Present expansion plans call for installation of four 100,000 Detroit & equity ratio, and ■ its Shearson, Hammill 50% a calibre of its stock is reflected in the market stabil¬ fluctuates much less : than the be needed later this year, Nelson Kriebel With 7-> Sidney A. Eisemann is with Russell, Berg & Co., 75 Federal Street. — : American Light & Traction's large holdings. The plant is now: in first class KW ! will at New Partners sues. & vh»ontcleV steels. Detroit Edison has usually maintained . the investment stated. Co., offices firm new cialists Georgeson Street, New (Special *; I 7.' Mr. Brown pointed but that Detroit: Edison, is *"a;?clean com-' pany,-'U corporate! and accounting-wise.* Service is 7 almost entirely! electric,-with no gas or transit business. Since, almost7M1 the plant can With Russell, Berg & Co. tributing & Place, Boule¬ YORK 5, N. Y. 1-1045 and • To Be Formed in has BEVERLY ... Interesting of Cleveland and New '"'V-,:, .-V/.-l-v Financial Chronicle) ! 7 <i associated with Wm. J. Mericka & • NY Connolly V has been installed by the present t,j. company,: historical eost is virtually the same as original cost. The company has a simple capital struc¬ BOSTON, MASS. — Waited J. ture—^mortgage bonds, convertible' debentures, and common stock. Connolly & Co., Inc., 30 Federal The stock is now virtually all* in the hands of the public, North Amer¬ Street, announces that Daniel j M. ican Company and American Light & Traction having distributed or Sheehan, Jr., has been eledted sold their last holdings. The number of stockholders is about 54,000 President of the firm effective 7' * v ■' J ■ June 1. Mr. Sheehan was formerly compared with only 15,000 in 1940.- 77 ' Exchange, announced that Nelson S. Kriebel, formerly President of the TWO WALL STREET <7. posals have been made for'heat-treating metallic parts by electric induction, and for. drying paints and other'-substances by infra-red ; HILLS, CALIF.— Antoine J. MacNamee has becdme INCORPORATED outside Detroit cook with electricity. ; In industrial promotion, the jcoibpany's ^les*hen^re!c^ in touch with the basic problems facing customers. Daniel Mv Sheehan, diy was formerly Grody & Co. Co. With Fabian & Company BEVERLY WORTH 4-2400 | . A. E. AMES & CO half the people light:! Iron and> its alloys melted electrically ; Chronicle) MUNICIPAL NEW largest load-builders in this area, where housed heating is not practical. Saturation of electric ranges; is 26%,^ and the bond department. York. Blosser, 135 South La Salle Street, members of the New York and Chicago Stock Ex¬ change. Mr: Birnbaum was for¬ merly with Brailsford & Co. and F. CANADIAN STOCKS have in 1932. : Co., with Straus & prior CORPORATION would Office, ; Penobscot Building.-; Mr. Bowyer was formerly with- the Detroit office of Paine, Webber; Jackson & Curtis as manager of Mac M. Birnfaanm With CHICAGO, PROVINCIAL it same; as. 1948-49 it remained (Special GOVERNMENT bird 35-foot putt on the 6th j for three but strung together nine a Straus & Blosser CANADIAN BONDS in j - votes in favor of the Conservative program as the lesser of two evils. Confirmation of this probable de¬ at Friday, May Williams, of Boenning & Co., IV^eltitle. of this key likely to cast their aniatjeur in {the Philadelphia Securities Associa¬ tion, won the President's Cup| in rose, are than if the average lamp wattage had 7 Average residential: use of electricity last ;year. was?J,746 KWH, some 12% over, the national average. In merchandising appliances, the company -cooperates with manufac-7 turers, jobbers and dealers. This year it is concentrating on the sale Merle J. Bcwyer has become asso¬ ciated with the firm in its Detroit Phila, Securities Golf Quebec. Influenced possibly by a Liberal/C.C.F. alliance electorate 1948 of water heaters—the Chas. Reckner Wins of province in remained the but finally yielded "to register widespread losses.: ; > < the Province . nues ward trend fears of minded The company may benefit: by this, as lamps with adequate wat¬ tage are thus installed. The company collected $6 million more reve¬ slower to follow the down¬ his first attempt. excep¬ '7r'V.t-77<7:■ '7.7J7,7,; 7 ?y 77:C,t,7!y7;v;7f.v7'7■ 7 ., and points for 1he year. The golds were or 10,000,000 lamps and 440,000 range elements and other minor parts-were supplied free to regular customers; moreover, a supply of.lamps is furnished to new homes. Western oils traded at their low¬ est 'billion KWH over !the industrials the Conservatives have opportunity Liberals' grip on j all' were a Detroit Edison maintains sound public relations, with employees in courtesy, vlf provides free lamp .renewals, apoliance cords and even some repair work on household appliances.!: In 1948 losers 'and touched ithe level 'since September, Aronomink Golf Cliib tional in - well trained Base metals led! by while 'the 1947, years!, fate The stock market severe Consolidated ,7 . Edison 30% of its total Output to steel companies.' As the cost, of ore recovery in the Lake Superior area increases, steel manufacturing should continue to move north- benefiting Detroit: This area should be the chief source of iron for another hundred sells about hand corporate-arbitrage also steady. was other- 'v commercial business serving them. Moreover, Detroit isn't merely an auto city—it is now largely a steel production center—and to be firmly supported stern opposition to Communism.. In the East it would also appear that an f ann5UrlVe( Inc., Co. & ' dustry's electric load in Detroit. Ford Motor Com¬ pany itself has over 300,000 KW installed capac¬ ity-.: Thus when Ford shuts down, the Company Prentiss M. Brown doesn't suffer any loss of industrial load (other than some supplier business); yet it still has the residential business of Ford's 100,000 employees—together with the within internal Dominions registering losses of about 1 point. Cana¬ clearly . 7 . DETROIT, MICH, worth .; Half of all passen- ;. Detroit Edison carries only about half of in- 'y; ■> evi¬ conse¬ in the twenties. was than in 1933. 77 • Sons in con¬ siderations have at least roused favorable f and quence departments. success and thereto with E. H. Rollins & Philadelphia. internal in it two-thirds. in many and eased as mileage is business rhileage, and on tne farm : Moreover sales of .replacement parts accessories were 10 times greater in 1947 ger Almon L. Htitchittson h i a, underlying supply an external Prices bonds. item Right. was the first time for unstable business an area, due to its being the center of automotive manufacturing, the auto is no longer a luxury move the to or During' the week there suffered namic decisive a Left happier usefully drawn elec¬ Canadian city is sometimes considered Philadel- —this While the Canada, this country's best customer. York New and prior in Britain will only be decided on June 27. On the other hand the example closer at hand by the results achieved by private initiative south of ithe border might offer greater attract tion. A parallel might also! be h inson in the trading Was the , formerly government, which on basic principles have much in common Free- funds afforded c t a enjoys the advantage of good water, air and rail transportation and is the principal gateway to 7 M r. was of time Ex¬ Build-j g. o continued by the j re¬ experiment degree any either between Conservative form Stock change Edison, re-' talk about the "Future and Past" of the company before the New York Society of Security Analysts. Since the information may be of wider interest a summary is presented below. The company serves over one-half the population of Michigan in one-seventh of the area. The City of Detroit cently gave phia office cf H. M. 'Bylles- H enced to Philadel¬ Thus in spite of the present apathy the forthcoming election is likely to be the most momen¬ tous political event in Canadian history. It will no longer be the party Canadian electorate will be influ¬ sults of the Socialistic the Prentiss M. Brown, Chairman of the Board of Detroit or n of drawn partment i lines thus DETROIT EDISON trading de¬ side of the Conservatives. dence are By OWEN ELY ' the by & Co., Inc., the Nationale Although lacking at this stage any burning issue the campaign between State control with dominant Union of Premier Duplessis to throw its weight on the cision Uiility Securities Almon Hutchinson has become associ¬ ated The imminent Canadian Federal election has excitement — A. B. iSpeci?.! Morrison Co. Adds to The Fina^wial Chronicle) MIAMI, FLA.—Howell ple has been added of A. B. Morrison & duPont Building. •" J. Tem¬ to" the With Bache & Co. '' ' staff Co., Alfred I. . ' /"Sneoial. to The Bache & Street. 7 rcrtrontcle) 1 F. has joined?-the*; staff of Co., 135 South La Salle CHICAGO, Webber Financial ILL. —Walter: " '•• •' * • Volume 169 Number 4808 THE COMMERCIAL CHRONICLE FINANCIAL & balance neither extended additional credit By FALKNER C. BROACH* Vice-President, National . M.d Western Bank of Tulsa, But Okla. Lrb i ' of national debt as means ^ i'" v ' xor all of its role money. con¬ plays the in the value of ;.:v*. : •• all pler, and our sim¬ today, of Falkner C. Broach While V a exchange our money— lost usefulness,; less than in supply was a consisting money $20 billion $15% billion of "check¬ money" billion and of little a over Today supply is about $110 W the money currency. we the early. '30s. this-from our-daily: of about $69V2 billion in bank the BLS index of wholesale using 1926 as 100, stood January of this -in 1932 index 64.8 at at losing 1932 and 165.8 in the in January; In terms of wholesale prices dollar cents in worth was about January of this 40 if year consider it to have been worth we 100 cents in 1932. In terms of farm products cents in it worth was about January of this 28 if we year concede it to have been worth 100 in cents index 1932. is Although the BLS based 1926 on as 100, I prices for two-fold purpose. In the first place, have the , referred value of higher in since the bank, one if you to 1932 the 1932 dollar than prior to averaged at time any World War I. In second place,, the volume of which I consider a major " • a loan investment sold. J an *» • , • Let Loan a us of assume supply of tion, $100,000. its supply money our banking and add. Fed¬ entirely different if the increase is brought about by the purchase of securities than if brought about of securities to the Operating on a 25% ratio, the Federal Reserve reserve Bank need excess in cates a have only $6,250 of reserves—i.e., gold certifi¬ the of excess amount needed to support its existing de¬ posit liabilities—to permit it to buy the $25,000 thus securities, of tional government furnishing the $25,000 of addi¬ member bank the needed reserves to support the newly created $100,000 of de¬ posits resulting from the $100,000 loan granted its customer. It is through this have described system . makes What happens? ' will relative permanency of the addi¬ tion to the money supply may be 1 , * bank a investments supply. been add can Once ' made; process that the bank short has re¬ duction Com- is and made it is de- creased when the loan is paid. contrast, bonds turity banks of longer purchased money supply is and the are likelihood no ma¬ of early decrease through early by in¬ an re¬ payment of the bonds. Increased Supply Money Permanent The increase in our money sup¬ ply since 1932, to which I have referred, has been enormous and in my opinion constitutes a relatively permanent addition as a can be brought about only reversal of the process—i.e.; sets under the heading of loans result of the process by which it and discounts but at the same time by the paying off of loans. Let me 4 like amount to its liabilities un¬ inject here that the effect on the was brought about. The increase der the : heading of deposits. To money supply is the same regard¬ was made by a possible by the support this $100^000 of increased deposits the bank,; must deposit less' $25,000—25% ence whether the credit be in the monetary form part Bank. Reserve It the bank had deposit at the Federal on Bank amount with its Federal — in excess. of of the form tended—i.e., an of -loan a of credit it makes or investment; ex¬ differ¬ no in the form To expand of increase mous gold our enor¬ stocks of and for the most brought about by bank was the in (Continued 37) on page the required to support its de¬ posits prior to the granting of the lban—well and good. The and have less¬ may system of reserve process supply. Of course, the $(100,000 addition to the money shpply will not be left on deposit -. With the lending bank but will be Withdrawn from that bank and diffused 4.throughout blanking the entire This> ;does! not process at all, for what lowed in financing World War II, is lost to one bank is gained by from which I think we will find another,, and for the banking-sys¬ the reasons, at - least in part,, for tem as a whole; $100,000; has been the lessened value of our money. added to the money supply and Since bank money constitutes will remain a part of the, money the major part of our money sup¬ sdpply until the loan by which it ply, one of the essentials of our Was created is paid off. Again let study is an understanding" of the me emphasize that if you will look role played by gold and the rela¬ upon our 14,000 banks as one bank tionship between bank reserves, and not as 14,000 individual banks bank loans the of and investments," and demand deposits. will inverted an gold policies fol¬ Consider if you pyramid with the upper apex and bank deposits as the base and you 'will as have rough picture- of- a our de¬ alter system. \ the ypu will find it much easier, to fallow the process and' understand" the relationship between loans and investments deposits v In on, the the on hand and one the other. example ■ which have I money, factor in the value of money, had been declining for several years just cited it was assumed that the grams of gold, nine^tenths 'fine; lending bank had on deposit at constituting the dollar our system the" Federal Reserve Bank the prior to 1932 and in the following of year this trend was reversed prices turned upward In terms medium of of exchange the - as Instead of 15 5/21 a banking permits of a multiple expansion of dollars in the form necessary of and sharply. usefulness posit structure. We refer to this bank such dollar a deposits oh the basis of quantity of gold. " * j . Although of 14,000 banks has dost none of its value, but in in this country slightly less than terms of purchasing power it has 7;000 are members of the Federal lost a great deal of its value. It will be my purpose in this paper to consider with you opinion, the much its of dollar value why,, in has or my lost so purchasing power^in the hope that by so ing it throw some may light, be .possible on what to we may do¬ ex¬ pect -the future value of the dollar be; .'■/■J to ; '•:j , In this country consists money Reserve over count for about the banks that the System ac¬ 8/9ths of all com¬ mercial demand System, members are bank * of These member banks by law with to the deposits maintain Federal equal to minor part of our money supply. The great bulk bf our money* supply consists of "checkbook money" or, in other words, demand deposits in banks. In a very January ,of this .year the total money supply in the country was $110,500 million • of which " only $25,200 million was in currency, leaving $85,300 million accounted for by "checkbook money.." The importance money" t> ; of cannot this *' "checkbook be over-empha- An ac*dress by Mr. Broach at Regional Meeting of the American Institute of Chemical Engineers, Tulsa, Okla., May 10, 1949. are 25% reserves required by law to be maintained against deposits. Now let us assume that the bank in question and the banking system as to a whole had no when called upon reserves excess this $100,000 two make alternatives would bank could be "available. case The loan.* In certain per¬ of eral Reserve banks could support required $25,000 from Federal Reserve Bank which, the except generally refrain sell all from of some Let elects to ities.; doing; its investments, sell member that the assume if we you are re¬ at once How on the basis of $1 billion gold certificates bank deposits can be expanded to $16 billion 4 .• ' , we hear , ' j comments phone people and For our that nothing is gained if the securities are sold see ' on we are • to some in that part, we the courtesy * the supply at all. made of a its new deposit would like to use While the bank has holdings to Your say a 9. co-operation is always a big help in main¬ taining good telephone service and to know how much BILL word about the telephone. , is loan it has shifted $100,000 government r of tele¬ mighty glad to have them. of those who other bank depositor, for event ' ' the courtesy * merely substituted for the exist¬ ing deposit which is used to pay on the basis of member bank refor the bonds, thus releasing the se.rve, requirements r averaging reserves against that deposit to 25%, would, support $16 billion of support the newly-created deposit. commercial bank demand depos¬ There is no addition to the money of ». Often banking system as a whole you will make the road of it." dealing with $4 billion of member bank de¬ posits or, reserves which, in turn, its. - secur¬ will Smile" small, sweet courtesies of life, for smooth do ye se¬ the bank government Hail ye a in government us Again; inclined to or it could are "probability, curities. " periods, for * temporary banks with e voice Banks1 borrow the their de¬ posit liabilities, which ; consist mainly. of member bank deposits or reserves, and their note liabil¬ ities. Thus, on the basis of $1 bil¬ lion of gold certificates the Fed¬ to reserves the reserves Reserve equal are as excess reserves required as The banks, in turn, required to hold" gold certifi¬ cates which of to that centage of their demand and time deposits, the requirements at the present time ranging from 16% to 26% on demand deposits and -be¬ Federal contrast deposits. required only iin part of coins and currency. In fact,j coins and currency con¬ ing-7^ %•" on time deposits. stitute; in the deposits. support to $100,000 are Reserve a $25,000 additional we • In when with creased . generally are although supply is increased the money when the loan money addition of loans. loans maturity that I corresponding a of banking the to the by the granting mercial increasing,) Is completed. By lending $100,000 justify an inquiry the bank has added $100,000 to the money of • The bank adds $100,000 to its as¬ into the processes involved in in-: money our . Hapjpens When Bank Makes 1 loan investment an While the extension by banks either through or * was to seem 61-; ened the value of our money. This, the in turn,-necessitates a considera¬ manufactured products component was 70.3 in 1932 and 156.3 in Jan¬ uary. bank;1 deposits would 48.2 was * / Reserve was creasing was 1 • . What $25,000 the extent to which the increased the food component or deposits and only about $20V2" bil¬ lion by an increase 'in currency. compo¬ and; 172.5 in January of this year; in this prices, .year 160.6; the farm products nent- of as reverse—i.e., when paid The (fact that the dollar transactions, but to prove my point, value throughout this period when and to be more specific let me' the supply of money was increas¬ cite a few .illustrations. In 1932 ing, and especially the volume1 of and you our purchases or and the greater than its general the dollar will buy less today' than ; prewar and a great We .know Today billion;; with the1: increase*: since know that.: 1932 accounted for by an increase nonerof in deal our about $41/2 dollar—has former Supply much so over book - as medium of Money was little eco¬ nomical.:^ system, a is : 1932, when the value of the dollar quicker more ■the In sorts become if 14,000 banks not 14,000 individual banks but as as 1 Our use transactions of will think of understood loan or in the fact that by better please, and consider with me what happens when a bank makes a greatest lies money expansion be traction and therefore the part of that the value of to _ will paid off. loans to support the $100,000 of deposits need only sell $25,- 000 the money supply which said be may than 90% of all business more susceptible Thus it sorts. : and exchange transactions but it is the part of the money supply most transac¬ of credit bank supply- loans and/or investments have to Reserve is contract* the t for eral Reserve Bank to obtain these standard unit for measuring value a sized, for not only does it account ity of tnat unit greatly facili¬ tions in ancient times, but with somewhat 1 ' ■ : To demand a equally to the money supply, the new today. • In the absence of of exchanging goods and services would be <S>— exchangeabil¬ gold—and be individual The —i.e., entirely Federal situation pur¬ reserves to human (life yardstick or measure of value the process 'difficult, slow and cumbersome. The establishment of and the ready the are money supply the essential re¬ quirements are the necessary base credit. reserves. and services :is basic some tates as improved technique. The' exchange of goods ;i payment is same today securities 15 needing only $25,000 of additional money supply as excessive and permanent unless production and exchange, transactions increase, and expresses belief money will be cheap for many years. Holds devaluation the different. present increased ' by Bank, causes of lowered value of money as indicated by higher prices, ex¬ by which "check money" is created through bank loans and government bor¬ processes the if chased .banker, analyzing plains banking rowing. Sees, created any new deposits. nor Tulsa, other hank depositor, so on the banking system has some Why Value of Money Has Fallen (2383) we want you appreciate it. TELEPHONE SYSTEM . li Must We Control Bigness in Court Rules Labor? By DONALD R. RICHBERG* Charlottesville, Va. Thursday, June 2, 1949 CHRONICLE FINANCIAL & COMMERCIAL THE (2384) Against SEC in Otis & Co. Case - ' Attorney and former NRA chief, asserting bigness in labor and in government U. S. Circuit Court of inevitable products are tion unanimous decision on June r'""-' support Securities and Commission Exchange charges of collusion against Otis & Co., invest¬ bankers/in connection with its stock-selling contract with the Kaiser-Fraser Corp. The Court decided, unless new evidence of collusion with Bigness in Labor and in Government are inevitable products of Bigness in Business. big business employer of thousands of workers could only deal with employees as a of feudal overlord, until they were organized to deal with him on an equal level of sort ment James Masterson, Philadelphia lawyer, is pro¬ SEC capnot proceed further on that ground to take away the broker-dealer registra¬ economic^ only power. the bigness reduce L i k ewise, ernment State govern- of the persons t m e n s erned. re- , it geography by and constitu¬ tions, found of supremacy common over great corpora¬ tions. Their vast Richberg revenues enforced by a of was .Great big over¬ of the govern¬ 1 The expansion of enterprises is natural process as communities a and markets grow. The pressures Of competition and the ambitions Of strong men are vital forces that drive institutions as they drive humans with the command: "Grow stronger and live, or grow weaker and die." Big business is, to quote the immortal Alice, "as large as life and twice as natural." But,- should our future be de¬ termined by a everlasting struggle between • big business, big labor of i ® bigness of business enter prises' s.° as *°. av°ki, if possible. American that health the Business would proved, and could ments, of be im¬ fixed: either lives? to benefits that the individual receives from these massive activities compensate for the losses of individual liberty, individual competition vidual satisfactions? It must be struggle for evident that, in a between labor- and users, on a gigantic scale, the controt of government will always be decisive. Government force must always be stronger than vate force or there will pri¬ any be anar¬ chy. Thus the end of a struggle for domination between big busi¬ ness and bigiabor must be. as that eminent economist Dr. Edwin the as an agency of Neither my assignment, nor will permit me to expand justify my proposition. But time, to I will states that gram for ness bill a workable pro¬ limiting bigness in busi¬ written was which into drafted I Federal a which and workers whom George W, Perkins. will that see these neither half-baked ish in So you ideas nor origin. are New-Deal' • , gains could replace. .//// _.'// ;./■,./ /• (6) Despite this dreadful record of failure leaders and of selMnjury, the organized 0labor unitedly denounce every effort to create an improved and enforce¬ able machinery of collective bar¬ The Limiting Bigness in " Labor many, for reasons its opposition to any amendment . of the one-sided Wagner Act,: in its intimidating attacks the Taft-Hartley Act, and two-thirds, of the; Congress upon of the United States,; organized thorough 1 y demon¬ labor in its brief time: (1) With the rapid growth bf v dangerously ;, self-esteem of big labor my . Poi n g For .the reasons briefly indi¬ power in national figures raise the question of we are doing enough to convert purchasing power into purchases." He pointed to ratio are 12.4% and con¬ and sumers than: Don in were Francisco now there 1940," and that fam- ily units have -v increased over asserted with "this is potential such a never that 15%, Mr. Francisco known , which has market a as before" we and have one "vastly greater poten¬ tialities than the one we knew in 1940." a decline in the of advertising expenditures income, between 3% 4% in the 1890-1934 period to 'national more "In spite some of only 1.8% in 1948. "The important fact is that ad¬ vertising today is reaching a greatly expanded market with more potential buying power, at almost the identical cost per per¬ son, as "This ing ten is years promotion must once nest, the and more task said. sell¬ advertising ago," fortunate, for < he now take of up, in ear¬ maintaining a rapid turnover of goods ana ex¬ panding our markets." * / few lay-offs and a relatively low increases in unemploymment headlined," quarter that have been said, "the year showed first he this ployment at all-time peak for an recently >r swollen dra¬ was 204,000 employed than in more the James I. Brennan has become associated with J. G. White & Co., pur¬ After and adjusting for higher taxes living costs, he continued, the American people still have plus income spending —almost the Supreme Court: by our major labor unions which t were, asking the Court to hold unconstitutional With J. G. White 8 Co. same period a year ago. About 14 million more civilians are em¬ written in James I. Breitaan Is this time of year with an average of presented" lto exhibited arguments k; em¬ pre-war or a sur¬ discretionary saving of $103 billion times the highest four level. \ '"This," he amount for , explained, "is the of money available over officers, result¬ the States laws which outlaw the and above what would be re¬ cated, I take the position that, if ing from increasing numbers and closed shop, and tthiis limit labors quired to maintain a 1940 standard of organization, the "control" >of bigness means un¬ complexity monopoly control,: of business. of living for the broad basic items limited acceptance and political democracy of local lodge control . these whether, I t i n out that there inherent are big organizations.; and only be summarized in into purchases. irresponsible, ill-in¬ ployed in non-agricultural incompetence te exercise suits now than in 1940." formed limiting bigness in labor organiza¬ matically cam p u r c strated.'its paterhalism and ^bureaucratic control y : . ; the end-of unionism tions ting h asing n v e r „ gaining, conciliation and arbitra¬ tion that might help-to eliminate costly and destructive strikes. : In :(7) The, many of one o power they made idle the great powers that ■ is c t upon and . a dishonest and presented to Congress in 1914, the approval of such prac¬ tical1 men as Theodore Roosevelt "the trading of independence and //..r the beginning of totali¬ tarianism."^ war,; market, despite talk of deflation and "dis-inflation," were alleged no with Reasons for complete 1946, there The present potentially greater than that of 1940 or of any other year, Don Francisco, Vice-President, J. Walter Thompson Company, told the 45th annual convention of the Advertising Federation of America at Houston,<S>— / "' / / ■ iii:11: Texas o n been he said. "Some filled," June 1/ people are resisting current prices, ■> The prob¬ or anticipating lower ones. Some lem, he said, feel uncertain of the future. But involved in was f''! '• ^enterprise \ for mo¬ a G. Ilourse has pointed out— private, operation of nopolistic business public service. or domination management-owners indi¬ and insure .SY/'/ After ' the which ■,//.■ -:V'y;'■< is huge loss to the strikers/and to all the other disintegration our prevent or shorten tional income and or, . Enough Done to Increase Buying/ days, leaving 250 reg¬ days, this means that, on the average, one-third of union labor was wilfully idle one-tenth of the working year. This meant a vast loss of na¬ control. in collusion with the bankers. Francisco, Vice-President of J. Walter Thompson Company, present market for goods and services is potentially greater ever before, but the problem of converting purchasing power into actual purchases is being neglected. ular work There might be alternative penal¬ ties for exceeding the legal size thus Don non-work manage¬ lawfully to against the national in- in one 4,600,000 strikes, with an average idleness of 25 days per man. If you deduct normal which enterprises under one man¬ interlocking concessions to slackers year, a or Holds Not the war about twe was (c) men great deal of gov¬ ernment regulation avoided, by a simple limitation of the percent¬ age of production or distribution agement, the terest. ■ was of the government." an agency says strikes •• complete misunderstanding of my position. For over 35 years I believed against 15 about officials fiad to work night and day and to make out¬ a have of that public |lriefly what 1 ™an. by limiting the .. than order affecting claimed , . in of clause / Mr. Cyrus S. Eaton, of Otis & Co., on hearing of. the Court's ruling issued the following statement: . "It is naturally gratifying to have another demonstration that under our system of government a citizen can obtain redress even involved, with an men rageous one a Kaiser-Frazer Corporation. Philadelphia had filed a suit against the proposed stock issue which the SEC Cyrus S. Eaton idleness of about eight days per man. This was not £ record for labor to be proud of. particularly in view of the fact or¬ to explain big government to dominate the suit average discussing the need for me idleness average million was James Masterson of strikes in Co. The contract Included permitting the underwriters to back out if there was pending at the time of issue any important million one Otis by Kaiser-Frazer. (1935-1939), with an During yearly disinte¬ to necessary about proceedings by the SEC against Otis & the collapse of a $10,000,000 stock the underwriters.: Second involved year (b) the; government and ' each if that appeared to be contrary to the public interest, government regulation to the extent necessary Do issue v; '%Mi \ example: For the to War were ganizations permit good' the decisive question is: When do the evils overbalance the*benefits which human beings receive? World men limiting the bigness of labor great From the common (a) Prior re¬ panies by the SEC. In the end there should be less government regulation and greater freedom of private enterprise. < also and organizations. comparatively the size Before evils flow from bigness. Viewpoint ble grate public utility holding com¬ big labor. benefits Vs* transit local workers, The Co. grew out of days per man.. YV\'. /;/'•/v*-- small thrown by kings and commoners. ment and "be can comparatively small quired—and The growth of a modern industrial feudalism was checked by the rise of tion of the "investment firm. workers, average operation and coordination maritime of telephone expanding NRA would have big, meeting the challenge feudalism unions the own big business. Medieval . inexpensive exercise of au¬ thority. Let me contrast, to my embarrassment, the enormous government operation which an tures, and their mighty powers to bless or curse communities, over¬ rode the fumbling opposition of political dwarfs. So government grew * other localities, Many unions have the abil¬ ity and willingness to. paralyze an essential industry. These include several of the railway unions, and (4) arid expendi¬ limitations done once and R. and in many ; hordes of officials and workers, and teamsters. ; /Y (5) The irresponsibility and de¬ spending huge appropriations, to structiveness of organised labor regulate the conduct of great en¬ terprises. But, to limit the size has been steadily increasing, not of enterprises under one control only in new communistic unions, is a smaller task, and when it is but also in old and once responsi¬ the welfare duced, ploying helpless to the children, but takes a brawny man to handle family of grown-up athletes. It takes a big government, em¬ a them selves assert, by reducing the bigness who must be gov¬ A small parent may be able to handle small str icted Owmld of gov¬ York metropolitan area, the New to Circuit Court of Appeals in Washington ruled in.a 1, that there is not enough evidence to S. The U. / (5) increasing irresponsibility and destructiveness of organized labor; (6) labor's opposition to improving bargaining machinery; and (7) labor's theory that unions are private governments. The Appeals holds evidence of SEC insufficient charges against Cleveland bankers in Kaiser-Frazer Corpora¬ stock-selling contract. Cyrus S. Eaton of Otis & Co. comments. sustain of bigness in business, sees need of limiting all three. Gives reasons for limiting labor as: (1) con¬ centration of power in national labor unions; (2) existence of selLperpetuating labor autocracy; (3) domination of local business by labor monopoly; (4) ability of unions to paralyze essential industry; -H . regulation of big business and big labor, we should not attempt such "control." But, I do believe that, of union policies The and contracts has largely disappeared. (2) self A - perpetuating in behalf of the freedom of labor, autocracy, with the freedom of business and the freedom of the citizen, we should trol limit bigness in all three. We in the of dominate the a a monopoly labor ' national labor con¬ supply, industry, can as coal industry where the Lewis machine, commanding 600,*An address by Mr. 000 miners, rules the Richberg at industry. 37th Annual Meeting of the (3) A local labor Chamber of Commerce United States, of can the Washington, D. C., May 5, 1949. monopoly can, and often local line of does, dominate a business, as the Elec¬ trical Workers Union dominates in unions not only lost their case, but also lost any right to claim that .they are democratic in their methods, their principles or their objectives^ naked ly? for a They argued .labor union dic¬ tatorship. The brief of the Amer¬ ican " Federation: of: Labor defi¬ nitely and repeatedly that labor unions private government they had on were food, clothing and shelter." Distinguishing between the people's ability to buy and their desire to buy, Mr Francisco pointed to the fact that during the first quarter, of 1949 savings were at the rate of $21 billion a year, almost double the $11-billion rate asserted a for the form of savings whose laws legal right to impose all workers, whether members a* (Continued of .on page 38) , Y\ same in period of 1948, while 1940 billion. ."This were only $3.7 / be due in part to the fact that many of the unsatisfied may wants of- the war years have now James I. Brennan Inc.,- 37. Wall Street, New York City, as Manager of the trading department, it was announced to¬ day. Mr. Brennan, a specialist in public / utilities most Marx Hoit, Co. and mers. securities, was with & Co. and prior to that with Rose' & Co.,"J. F. Reilly & recently associated Troster, Currie & Sum¬ .1 .■ 169 Volume Number 4808 THE COMMERCIAL NASD Plans to Expand "Information" Program and Clarify and Interpret 5% Policy The full text of a release issued press "The Board of Governors of clarify and inter¬ Association of Dealers, Inc. at their spring meeting on May 16-JL7 voted expand the Association's information program and to send to members statement a which would clarify risk were present to report on the situation in their Districts. It was the overwhelming consensus that the Association mark-up policy was widely misunder¬ new capital in part to sees interpret the 5% comprising the District Chairmen big business leads to monopoly or makes monopoly possible, Sen. Fland¬ Department, fortified by Supreme Court decisions, are ample to deal with government controls as "bedeviling" small business*, and attributes scarcity of holds powers of Justice new restrictions of government on business, as well as to inequitable taxes. Fore¬ kind of industrial society, should size of business develop beyond limits of public interest. new and Members of* the advisory council and representing 13 of the 14 districts policy. Big Business? must be admitted problems. Scores Se¬ curities to Bigness is problem. It a was a problem a good many millions of years ago When the though the big fellows themselves may not have realized it. It find that simple bigness, whether in business, labor or govern¬ dinosaurs roamed the earth, is problem a when now we retention of the ment, gives to policy. The Board authorized issuance of a statement clearly defining the policy to District Chairmen and for publication in the the routine ing policy tion between bigness and monop¬ NASD 'News.' sions but that the membership stood generally favored a 5% It voted to increase internal information was through publication in the official publication NASD Chairmen reporting on the situation in their re¬ spective districts emphasized tha'c the Association work is receiving increasing appreciation among members and there is growing sup¬ District Chairmen 'News.' and District d i- e c of busi¬ ness, govern¬ ment a m d e n u present examination system. Full proceedings of the meeting are to be published in the 'News' which will appear in the next fortnight." beyond to over present- pects of the t n r there is the government able to that danger again be never may the get its financial house in order. "Burdensome taxes and public debt of cern are Main Street. as touch of as all kinds grams pocketTaxes passed on to the are he eats and the clothes he wears, in fact through all the necessities of life well as be as obvious, more luxuries. It should therefore, the toll that government individual ing to his own to spend accord¬ discretion. "The Federal budget, as has ernment reservoir inexhaustible an funds of drawn upon for that be can and all pur¬ But the cold facts are that poses. any the government has at its only - taxes those funds disposal obtained from from borrowing. There or is other source". no "Since the of money collected from the people in the form of taxes constitutes such large portion of their income, it be wisely spent and ac¬ should curately accounted for. But what do we and find? The objective tion this on authentic most of informa¬ source subject is the non¬ partisan Hoover Commission. The findings of this Commission a shocking revelation of the were waste, inefficiency of the mul¬ titudinous and as agencies government commissions. If business had carried in duplication, overlapping, and gross slip-shod a private any its affairs on manner it would have gone broke and been to prosecution for juggling subject figures in its system of accounting. "When a business the people's on government maintain dollar in swollen and a The civilian Federal while firm under¬ order a to sprawling number of employees in this two million exceeds country the total number of gov¬ ernment workers, including those in state and local governments aggregates This is than six million more equivalent about to tion taxes for spending a large propor¬ person's income but each of also it now takes about 75% of al collected, leaving only 25% the ments state local and govern compared with 66% as situation the Federal Government grants-in-aid, which provides funds, according to the Hoover Report, now represent 40% of al money spent by the states. These grants, cover such items as high public welfare, schools health, and the like. The Federa ways, administrators money the how is to be spent, and specify standards have dictate to be met. So here 'merry-go-round' fashion, istration, cost for states the the and would much prefer to according Senator to Federal Government, these simple take a toll of 15%. Many opposed to this system finance their own activities according to practical their requirements but feel com given the ignored In to the outlay case considertions or ultimate the annual of are often lightly brushed aside. The usual procedure is to ask for a relatively small amount of money to launch the project, and then because of pressure for ex¬ Byrd, are pelled to dip into the 'grab bag in order to get back part of the money contributed by their own citizens. The the in vassals- of "The social planners tell us that out been legislated Federal Govern¬ It is possible, for instance, ment. for have by " the against the big company to get quo¬ its suppliers for the tations from delivery of goods at lower terms than is justified by in crease the the simple in¬ of size the order. at the expense of smaller cus¬ up The Robinson-Patman directed against this par¬ unfair competi¬ tomers. is Act ticular example of tion but still going own personal experience it clear probably to it is from there that me of some though on, my seems is very much less of it than there used to be. is not state and the local ment, thereby its Govern threatening existence of self-government." the is narrowed have responsi¬ hundreds or even immediate Besides these losses good management there are open to it certain efficiencies which the small company effective thousands of employees, and more of thousands or even hundreds millions of dollars in assets. experience young is in on a number a of ways for as, of the The as man he goes out into active business instance, by monpolizing admin is-, fife from his period of education trative and engineering talent, filling the product and sales field is directed into a narrower, even though deeper, channel. He isn't with such coverage that there are obvious no small opportunities standards cetera, for the firm, new to as which setting .labor wages, hours, et workable are for the all-round problem growing for the and new It effect of root business the is frequently showed number of cases large which the little on small firms in in be if they back to were is further of the great ways. business that his pred¬ generations be successful. larly big man the of him had to and in many other Evidence of the throttling one, in ecessors the big firm but constitute a seri¬ ous those branches all their small plants or the country, up¬ officials and represen¬ tatives from shift charged that many corporations, particu¬ with them over community life. They from appointment to bought appointment as they gain added up by the great, usually it must experience and develop new abil¬ be confessed, to the satisfaction of ities. They do not become respon¬ are sible both. citizens of the' communities in which they live. They are way¬ evidently dealing here with the much discussed question farers stopping over a few days on their journey, bounds they as to whether we are living in a not whither. Citizenship mature or a young and dynamic know finds no soil in which to spread its economy. The point made by roots. many critics of business is that if In a similar way the individual we are mature, it is not for lack of ideas and opportunities but man,* whether wage earner or in the results from the deadening hand management group, Tinds of large corporations on these new himself with less personal respon¬ ideas and opportunities. sibility and has to rely for guid¬ Then there is the contention ance on company policies often We are that big ity. business is social liabil¬ a The late Justice Brandeis was of the most persistent propa¬ gandists for this idea. As com¬ pared with the small young fiTtfi the large old one restricts the area expressed in writing With meticu¬ lous detail. a Even the manager of large branch plant is less of responsible manager than may (Continued on page a be 26) PUBLIC SERVICE ELECTRIC AND GAS COMPANY INVITATION FOR BIDS FOR PURCHASE OF BONDS Bids for the of First and staffs and scale and with or¬ an which the small firm cannot hope to obtain. coverage purchase as a whole of an issue of $75,000,000 principal amount Refunding Mortgage Bonds, Service Electric and Gas will be received by the cannot practice. It research have great business. advantages has which are lawful, natural and inherent. With ganizations the of small on by which the big firm can effect even may more practices illegal certain are the is raising the price higher, either in the territory concerned or over a national field of operations. there the bilities for otherwise the big company re¬ coups % Series due 1979, of Public Company (herein referred to as the "Company") Company at its office, 80 Park Place, Newark 1, N. J., up to 11 A.M., Eastern Daylight Saving Time, on Tuesday, June 7, 1949, or on such later date as may be fixed by the Company ment of Terms and Conditions as provided in its State¬ Relating to Bids. employ the best legal talent Copies of the Prospectus relating to such Bonds, of such Statement of Terms and, finally, it can accumulate a patent coverage which in many and Conditions and of other relevant documents referred to in such State¬ It can is lines nesses considerable of busi¬ for possible only size. ment may be examined, and copies of certain of such documents may be obtained, at the Company's office, 80 Park Place, Newark 1, N. J. Bids for the Bonds will be considered Supreme Court's Attitude such Prospectus The .Supreme Court has recog¬ the monopolistic elements only from persons who have received a copy of and only if made in accordance with and subject to the terms and conditions of such Statement. r nized inherent in bigness in recent court It has held decisions. such to as make competition the restraint of natural and easy, though restraint is not even ticed. While p e whether a many there is prac¬ doubt in minds as to court is justified in go¬ o p INFORMATION MEETING companies if their size is for retraint liable 1 e's Public Service Electric and Gas Company hereby invites prospective bidders for the purchase of its $75,000,000 principal amount of First and Refunding Mortgage Botlds, % Series due 1979, to attend a meeting to be held at the Company's office, at 11 A.M., Eastern Daylight Saving Time, on Thursday, June 2, 1949, for the purpose of reviewing the information contained in the Registration Statement and Prospectus. only governments Federal or is development of a small business, the bright young men of our time are in danger of becoming specialists. In the big though they one The classical monopolistic prac¬ *An address the Third of by Sen. Flanders at General Session 37th Annual ber the grandiose welfare plans are a system demoralizing but also it is making panding coverage and more liberal Payments the appropriations grow snowball fashion. carried been have and past we system whereby the money is collected from the peole of the states, part of which is returned to the states, with strings attached But as this money circulates a overhead costs of Federal admin and makes attempts have been known for many years for these units in 1928. To relieve the granted that careful consideration has been operations: monop¬ tice, of course, is selling in a re¬ government worker for every six stricted territory at a price way families in this country. The esti¬ below cost for the purpose of driv¬ mated governmental payroll is in ing out a smaller competitor. the neighborhood of $14 billion When the small competitor has "Not only is the Federal Gov¬ been driven out by bankruptcy spending of it is taken for at least It endeavor one takes any project or plan for the money, encourages monopoly possible. Some of the ways in which this unlawful spends it collects money, every ernment amount now a "When oly. or Such low terms have to be made bureaucracy. heavy debt and the large well as stagger¬ ing amounts spent during the war, have created the impression among many people that the gov¬ . lieving that the government has some magic means of providing something for nothing. Instead, as everyone should know, the bene¬ ficiaries will pay the freight. less there will be for the each food presented with sugar- are coated slogans and in such a way as to hypnotize the public into be¬ the takes in the taxes, the the Federal under whose Wall the through consumer by leads to This re¬ the fits y. at spearheaded con¬ books of all. None escapes. of but Security Agency jurisdiction this project would be handled. Furthermore, these pro¬ huge much the Street They a it from charged that they slow up the growth of hopeful young out¬ Therefore, social medicine, for instance, was not initiated at the 'grass roots' experience which would sult firm their field It pressure grave and corollary to the connection bigness and restraint of organizations when asked to for expenditures increasing while revenues Ralph E. Flanders discuss the ara declining, Federal finances enter a crucial stage," says The First question, National Bank of Boston in its current New England Letter. Continu¬ of business bigness, I gladly ing, the Bank says, "The day of reckoning is near at hand unless the agreed to appear before you this Budget is balanced through a re-f morning. duction in non-essential expendi¬ mandate from the people and that Various charges have been made tures. If the Budget cannot be bal¬ their wishes must be respected. as to the evils of business bigness. anced when national income is But this contention rests on Of these, the most obvious is that running in excess of $200 billion spurious premise. The demand for "With restraint. growth and Bigness trade pros¬ u court made certain point is subject a Federal A future o the that been in which the individual initiative Of its employees can be exercised. Instead Of an all-round between citizens of this Dangers of Government Spending fact a have effective law of the land. day lives and the is connec¬ that the decisions stand. s port for NASD policies and activities. Various standing committees made reports at the meeting and it was determined to retain the it decisions treo far in making the so oly, labor and power Warns of 17 U. S. Senator from Vermont Asserting it ers National (2385) By HON. RALPH E. FLANDERS* May 24 by the National on program and the CHRONICLE Must We Control Association of Securities Dealers, Inc. pertaining to the Association's proposal to expand its "information" pret its 5% policy follows: FINANCIAL & Commerce of the United States, Washington, D. C., May 5, 1949. PUBLIC SERVICE ELECTRIC AND GAS COMPANY, of the Meeting of the Cham¬ Newark, N. J. May 27, 1949. By George H. Blake, President. 18 COMMERCIAL THE (2386) FINANCIAL & Thursday, June 2, 1949 CHRONICLE Capital Company, Inc. Opens in Florida. Treasury Aide Cites Debt Management Policy Our Reporter Foley, Jr., Under Secretary of the Treasury, tells Ala¬ bama Bankers principal objectives jare: (1) maintenance of confirfence in U. S. credit; (2) reduction of national debt;.and (3) Edward H. Governments on . By JOHN T. CHIPPENDALE, JK. J The leaders in the bank group they have been, the 2s of 1952/54, the 2V4S due | of the government bond market. the are same as 1956/59 and to \As . , 15, 1967/72. lesser extent the 2V2S due Sept. a |aforementioned issues, if . . . State Bankers Association in Mont¬ H. Foley, Jr., Under Secretary of objectives of the present Adminis¬ management policy. Commenting on this the, Alabama gomery, Ala. on May 14, Edward the Treasury, described the main national tration's debt is in need of income. ... The partially- topic, Secre¬ Foley exempts have been slightly on the defensive probably due in some tary - |measure ury one to softness in the municipal market which seems to have a ^temporary case of indigestion. However, very few of the Treas¬ ... tax-protected bonds come into the market when quotations re- f cpde, indicating these obligations are well held. buyers who .many ; . . Also there are still very much interested in acquiring the are ... * ■ i - be well bought by savings banks and other institutional investors, other than life insurance companies. . . I tions may v reversing this process. fai bring about quite a . i-. in sizable amounts from the < * ♦ . . stable when we have a fiscal You longest eligible taxable into the tap * bonds, with the 1959/62, the 1962/67, and the 1963/68 getting most of this reinvestment. The "Vies" nonetheless are going out of the market in good volume with income accounting for most of these takings. . . are of the aware < The technical position of the government market seems to be v j-about good as 'y Treasury, by now as war it has been in long time. /. a Although the . loan calls, is keeping money conditions tight, there ! WiU no doubt be a reduction in f tantf future and this will mean requirements in the not dis- reserve Edward H. Foley, Jr. Federal debt billion—over The stands at $251.5 funds that will he put to work new •largely in Treasury obligations. . The demand side will be fur¬ . . ther Strengthened, with the supply factor as a whole unchanged and the ahiount of high coupon eligibles being further limited. There sufficient funds /market buoyant, despite swaps i | come very are to around the keep out of these . . . well eliminated way one or Mire has 4 There is . . the sistent tool of debt management, policies have been kept flex¬ so that the Treasury may act our ible, quickly to situation. instance, . tion at . this time is being paid to the longest eligible taxable bond is by . 1952/54s and the 1956/59s, the being neglected.' means no . . . going into . . . by non-bank holders and-selling' by the monetary authoritics, quotations would be reflecting the good buying that is being done in the 2Hs due Sept. 15, 1967/72. r. On any minor price adjustment there are plenty of buyers ready to . since keep on STABLE MARKET AHEAD •. W ith an < , , increasing demand for the intermediate and be longer eligi- done in many cases because of loan the technical repayments, condition of the market should continue to he favorable. •/the reopening of .the F and G bonds should not have temporary passing influence and buying V- opportunity, especially obligations if there should < * If there should he would most in be any the likely be longer-term . securities offered . . than more an Even a excellent income commercial banks in the current drive, then there will most deposit institutions that will do their own likely be many refunding in the mar¬ ket, with the completion of the July operation. a very important effect upon the, market higher mcome Treasury obligations. . . . , . This could . have NOTES action of the . f . This design planning of govern¬ supply future needs of the several investor classes. "The short-term government is¬ in particular are designed for flexibility. At its peak on Dec. 31, 1945, the short-term marketable debt amounted to $70V2 billion. The wartime increase in these is¬ made to meet the invest¬ needs of the commercial banking system and" of business corporations which were holding short-term funds for postwar ex¬ penditures. Since the end of 1945, the short-term debt has been re¬ duced by $18 billion. * ' seems to be undergoing a change with more . . and more traders and investors of the opinion that prices of the longer-term Treasuries could break out of the trading range on the up side at any time. Despite past action of the monetary authorities in giving the market only what is considered good for the Treasury, tions, there is considerable inveiling opera¬ debt management has been to duce the Since the total amount de¬ million, and of in¬ companies 'nearly/ $2V2 has $28 billion. This by the ances of been was application the debt. reduced by effected first of cash bal¬ that remained after the Vic¬ tory Loan and later, when those balances had the a certificate will surpluses. of- in the Lynch Build¬ ing. Officers o principal means of accomplishing a rise in the hold¬ ings of government securities by investors nonbank has been the campaign to increase holdings of individuals. In the past year this increase amounted to $1% billion. Most of this was in savings bonds. been used, through application of Federal budget The large Si- W. G. are n J s, r., Pres i d e n t; Sal- Zoltan kay, VicePresident; and R. Eugene Secre¬ Treas¬ Orr, tary - Mr.: Sal- kay was formerly with Kinnard in New York City. Zollan & Gearhart, savings bond drive this has two themes: Opportunity year buildi —to for the future; and confidence in what the future will bring. These two themes charac¬ terize the history of Nation. The United States has always been land our J. Stewart & Lee Co., New York, is offering a new issue of 800,000 shares of U. S. Oil & Gas Corp. common stock (par 10c) at 371/2 cents per share. The pro-, ceeds will be used for drilling and equipping oil wells and for work¬ ing capital. ( The the company formed was for of exploring for oil development of likely oilprospects and more particularly purpose and the to drilLup to five offset wells a certain Caddo oil The tract consists less. or located 1 in on the field, Caddo Parish, La. tract more of 361 acres Drilling operations the first well on the lease were started April 20, 1949, for U. S. Oil & Gas Corp. and the driller, re¬ ported coring 130 feet of saturated Annona 1,500 Chalk feet. at approximately is being The well drilled to a depth of approximate¬ ly 2,700 to 3,000 feet for the pur¬ pose of testing the deeper forma¬ tions. The lease all covers a feet surface the from for¬ depth of 3,000 the of grbund, reserving all other forma¬ tions. Afte* completion or' aban¬ donment of the first well, the com¬ is obligated to begin drilling operations for a second well with¬ pany in 60 days. unrivaled of Inc., Offers 0. S. Oil Stk. mations down to "Our Salkay Otis, Stewart J. Lee i Co, on j "One of the se¬ opportunity; The officers and directors are our opportunity is greater today Joseph A. South, President, Treas¬ than in any period in history. urer and Director; Frank L. "Confidence foundation is of the dence in the future—in to make use of our with Confi¬ , our ability this Nation. . confidence Macwatty, Vice-President, Secre¬ tary and Director; Joe C. Trahan, Director. " / " ' ; ' , and resources opportunities—built Bankers bedrock banking., Texas played indispensable part in that building. Today our economy is evidencing the basic strength to Stewart J. an meet the current readjustment to normal peacetime demands of will the result markets in and markets. American The people expansion of these 000 . Oil Stock Lee & shares of Sold All Co., May 25, that the issue announced of 800,- Union Texas Oil Corp., offered by them at 37V2C, has been over-subscribed. W. W., Long, President of Texas Union Oil Corp., has his stated company producing wells in Caddo Parish, Louisiana, one in Runnels County, Texas, with an¬ other well drilling in Louisiana, and has acquired an option on now widening of our great productive capacity. We have an era of continuing and stable prosperity in prospect. Only confidence is necessary in order to exploit our opportunity to the fullest; we must have the a Union about seven 6,100 in acres Chaves County, New Mexico. V,, 4 confidence to seize this matchless opportunity. have American shown that bankers confidence in the past; I know they will not be found lacking in confidence in Shelby Cullom Davis to Admit K. G. Ebbitt days that lie ahead." Kenneth Sarles With Firm re¬ February 1946 peak, the debt and December higher-coupon bonds. have banks of "Our second major objective of buying of the September maturities with the belief that something other than e o fered to holders of the savings se¬ The holdings billion. the • .1 World Bank bonds are again in demand, with many institutions adding to their positions in these securities. .The longer maturity seems to be getting most of the institutional buying although the 2YiS have been moving out in good-sized blocks. Market psy- chology de¬ . . j. ment issues to . the to was the debt structure is the result ment no debt operations flexible our private mortgages. security sues , higher . Gov¬ Tieasury has been able to sues was price weakness, But this 1949 of past year, $500 surance a beginning of continuous bles because of the. need to at least maintain income, which cannot > bonds. government the signed for flexibility. . . chased because the debt structure takp advantage of conditions. resulting sharp decline in prices of government securities, we pur¬ a "The . . sold government securities. To prevent by the Federal Reserve System in order to keep Treasury bond prices from rising too sharply. out of it 'r institutions, for large amounts ;of ernment securities have been sold the 2M»s due Sept. 15, 1967/72. The amounts of this.bond that are being taken home are sizable and were it not for switches ' In the last half of ,1948, private financial in and mutual stabilize' the financial situation has been reversed. The hanks that cannot make ends meet with the income from and intermediate maturities are quietly short to invest the funds in of shook business confidence. a yielding, Treasuries will gain in piomentum and get bolder if the monetary authorities continue to refund the maturing higher coupon obligations with 1%% certificates. While the bulk of the atten¬ _ program accomplished stabilization moving away froin the lowest income obligations, because of the, n^edMo maintain earnings. This swing into the higher- ^ our through prices in the government bond market. Again we see a sharp contrast to - the experience after World War I when market declines in Liberty steady and per¬ a for lead¬ us This aim of been the . going into the 214s due 1959/62. This ^ | that f the clined "As while of Government; which look to the however, have decreased their holdings.' Both insurance com¬ panies and mutual savings banks liquidated a portion of their gov¬ ernment security holdings in order government waiting for things to clarify, it is noted interim, credit country many banks are moving into! the 2s due 1952/54 from shorter maturities, while others that have been in the 2s of 1952/54 the : maintain to In ers, curities Bonds In financial ...; world BANKS EXTENDING MATURITIES t ■ ■& • their holdings by $2 billion. Cer-* tain large classes of these hold¬ been States spreading of the debt individuals and other non- investors. * busi¬ c e s the among nonbank investors have increased entire the been important objective of management has bank managing the debt, with the objective of stabilization, our ership. f i debt pub¬ our "In aim,- has "A third Treasury fiscal 25%. r confidence, in ! the in 1950. and but is of great im¬ portance in those countries of the . ... deficits 1949 years felt through¬ are structure. own into the larger in- jk. purchase of these securities, due to uncertainties that overhang 11- the picture such as the reopening of the F and G's during the |present drive, or making taps eligible. . Most of these condibe pretty Nation's than less was lic debt decisions first se¬ tunately, due to a reduction in tax rateS effected 'by Congress last year the present budget forecast confidence is not only vital to our . Mioning forces should £ other after mid-year. apparent to all that United • short-term issues. The longer-term obligations have not shown much yet because bank buyers have been cautious in their . the ratio It is the proceeds of nonmarketable sale indicates achieving stability in economy. out the receipts over expenditures is the only source of further reductions In the total public debt. Unfor¬ has war f from curities. An excess of government 50% of all private and public debt in the United States. Before the [TECHNICAL POSITION STRONG Even budget a Chronicle) en¬ a from ness urer. management during * the postwar pe- now had not issues ketable anyone how the the and maturity buyers . as riod toward 1948. year surnlusr however, we have been able to retire portions of the mar¬ situ¬ public debt . ... • fiscal directed its change in the investment policies of some of Switches are still being made the life insurance companies. • the Treasury Mid-summer or early fall might . . possible from surpluses been since else on balance, although some of these institunot be far away from the time when they will be in curities m debt in the total reduction "No has con¬ than The latter concerns are . . ditions depend better - |still sellers of bonds | "Sound business upon reductions in the total. bankers I11 the restricted bonds, the 1952 eligible issues continue to •r to make appropriate us stated: ation. 'higher income partials. formed to investors. gage Addressing Financial JACKSONVILLE, FLA. — The Capital Company, Inc., has been . matter of fact there isn't very much of a choice aside from the a * to The (Special - and other non-bank spreading of debt ownership among individuals A firm tone with selective buying seems to be the current state . volume of short-term debt has also enabled Merritt & La Morte Kenneth to mitted Admit, Change Name Bernard admitted ritt & New jE. to La Smith, York York 15. Stock Henry Exchange C. retire from the firm be be Mer¬ City, members of the New on will Morte, 14 Wall Street, Junq and Jr. partnership in Merritt on June 15 the firm 14, will changed to La Morte & Co. June with the 15. The Mr. firm Municipal will be ad¬ as Bond association Ebbitt has been Manager of the Department. of Kenneth D. Sarles with the firm is announced as June name Ebbitt partnership of the New York Stock Exchange, on on will C. in Shelby Cullom Davis & Co., 110 William Street, New York City, members to of June was 1. Mr. manager office of of Otis & Sarles formerly the New York Co., specializing in municipal and corporate bonds. n #rn rrrnn r * mr%t ft r a ht/^t a i 1~ AUTrnr n 'iSP 169 Volume Number 4808 THE St. Louis COMMERCIAL & FINANCIAL 19 (2387) CHRONICLE Municipal Dealers Hold Outing •:ry Golf Outing at Norwood Hills Country Club of the St. Louis Municipal Dealers Group W. Hammond, Braun, Bosworth H. & Co., Chicago; John S. McMillan, Dempsey- Tegeler & Co., St. Louis; Edward S. Lewis, Jr., Lewis & Co., Jackson, Roald A. Morton, Blue List Publishing Co., New York City Hammond, Fitzgerald, Jr., Blunt Ellis & Simmons, Chicago; Frederick F. Johnson, Barcus, Kindred & Co., Chicago (Front row): Richard Morey, Jr., A. G. Edwards & Sons, St. Louis; W. H. James F. Quigg, Paine, Webber, Jackson & Curtis, Chicago; Edwin A. Stephenson, Chicago Representative of the Chase National Bank; Lewis Miller, First National Bank of M. R. Nolen, University of Illinois economist, to $1 says Writing in the May issue of the "Illinois Business Review," pub¬ Research of the Uni¬ lished by the Bureau of Economic and Business versity of Illinois, Dr. R. M. Nolen, Associate Professor of Economics, predicts there will be considerable easing of the money market in the current y e a r $>• accompanied new business firms into the field. by reduced de¬ mand for in- Purchases vestment inventories funds sizable by pri¬ plants, cline the article: "Government estimates indicate that business lay for this have and working constituted of new total firms means a de¬ investment outlays from source. lower new struction shows indications of be¬ second of 1949 will be nearly 15% under 1948. porate be in for and at lower prices. Loans modernization and mainte¬ nance should also be under 1948. Building costs have turned down¬ ward, and the lenders in the mort¬ posed last September were parti¬ ally relaxed May 2, 1949, freeing more than one billion dollars in reserves. year. again in April of this The effects of these relaxa¬ tions may some time. quirementsare not extended beyond June 30, 1949, the banks will be in a position to extend another billion or more in credit able not be measurable for With the sale of dur¬ declining, the rate of increased consumer credit prob¬ ably will be much slower, goods "The Board of Governors of the Federal Reserve System on of reported April 13 that 12 straight weeks decline had brought commer¬ industrial, loans with and. agricultural members at down banks than $1 billion, as a compared drop of $648 million in the first five months of 1948. 1948 directed toward reducing in¬ term Interest rates ber on in short- government securities were banks were raised. the Although the effectiveness of these measures re¬ emergency after that date. while demand funds "Thus, vestment by in¬ for private busi¬ to be at least several billion dollars less in 1949, is ness expected of funds seeking in¬ probably will be larger. Personal savings, if continued at the supply vestment the rate would of be the last half several 1949 than the $15 "Governmental policies were If 1948. 1948, more in billion saved in , "This supply ment lars billion of analysis indicates that the of may funds seeking invest¬ be several billion dol¬ by To the greater than the demand private extent business in 1948. that local, state, and Fed¬ govermental units use these was somewhat reduced by the funds, they will partly offset the Federal Reserve policy of pur¬ decline on private account. To chasing government bonds, inter¬ the extent that the accumulated est rates were firmer in 1948 than funds are not used for new pri¬ in 1947. The average rates' charged vate or public investment, they on short-term loans to business by will seek outlets and may tend to Stein Bros. & Boyce Sponsor Inv. Course BALTIMORE, MD.—A new ap¬ of ac¬ quainting the public in the knowhow of investing was advanced by Stein Bros. & Boyce, members of proach the to New problem the Stock York Exchange, who announced inauguration of a series of public lectures in Balion more vest The held the subject "How to In¬ Your Money." lectures, in the will be Hotel which Emerson on evenings during June, will be free to the public. The first lecture, scheduled for June 7, will be given by William K. Barclay, Jr., President of the Philadelphia-Baltimore Stock Ex¬ change and former Chairman of Tuesday the National Association of Secur¬ ities Dealers. The lectures one eral hour, starting at 8 run for p.m. Joins Jamieson Staff (Special to The Financial MINNEAPOLIS, vin E. Butler has Chronicle) MINN.—Melbecome asso¬ the push interest rates lower on new ciated with Jamieson & Co., First 1949. National Soo Line Bldg., members Corporations were able to Total urban real estate mortgage United States increased from 2.1% securities, or to bid up the price finance a $26.5 billion expansion credit may be $1.5 to $2 billion in 1947 to 2.5% in 1948. Corporate of the New York Stock Exchange. of existing stocks and bonds on in 1948 with only $6.6 billion ot (25-35%) less in 1949 than in 1948. bond prices averaged lower for Mr. Butler was formerly with "A leveling of consumer pur¬ the year 1948 and yields rose from the market. This easing of the in¬ outside money. With a drop of some $3 billion in capital expendi¬ chases of durable goods was the an average of 2.9% in 1947 to terest rate is not likely to cause Merrill Lynch, Pierce, Fenner & tures, even less outside funds may major factor checking the ad¬ 3.1% in 1948, but in the first two a business recession; on the con¬ Beane and Piper, Jaffray & Hopbe needed in 1949. vance of consumer credit. In months of 1949 the average drop¬ wood. Prior thereto he was with trary, it should encourage greater "For the past three years a sig¬ January, 1949, consumer credit ped back to 3%. Bache & Co. for a number of investment in both the private and nificant feature in business ex¬ outstanding turned down slightly; "The Federal Reserve emergency years. the public fields." pansion has been the entry of in February the decline amounted bank reserve requirements im¬ down . At this rate cor¬ needs for funds would less, on in and ing less than in 1948; the number equipment in of old houses sold will likely be half re¬ mortgages may be much raised, along,with rediscount rates; 1949. The rate of con¬ and reserve requirements of mem¬ out¬ plant the authorities credit control March 7 and flation. "The demand for funds for real estate Reserve consumer more investment The falling off in the part in laxed by these new firms of cial, equipment, vate business. spending. According to number of billion, partly seasonal. The Federal demand for financing reached peak in 1948, and in current year there will be substantial reductions in corporate capital issues and real estate mortgages as well as in consumer credit. R. M. Nolen Braun, Bosworth & Co., Chicago; Walter J. Chicago; Robert E. Simond, Halsey, Stuart & Co., Chicago Foresees Reduced Investment in 1949 Miss.; some $3 billion or more gage field have tightened credit. banks in selected cities in THE (2388) IP Thursday, June 2, 1949 CHRONICLE FINANCIAL & COMMERCIAL How Save^ Ourselves? Ltd., at 67 Wall Street, New York, announcechon-May 26 receipt of - a cablegram "The tendency on the part of the Government to employee under the guise of security offers is the greatest and most pressing threat to his future happiness. ; "Our problem and our responsibility as employers is to make that fact abundantly clear, not alone by exhortation, nor by institutional advertising. It's not that simple. If we succeed in this task we shall only do so by force of example and demonstration of the fact that our American competitive business Statistics and the of of doing passenger business. The plight of predominantly passenger carriers has been well illustrated by the history of the Long, Island and the long fight over the Old Colony lines of the New Haven. Less attention has been paid to the drain imposed on every segment of the industry bv consistent losses on the passenger business. Except for the war years, the Class I railroads have consistently reported net railway operating deficits in passenger service. In the expense 1936-1941, inclusive, the operating deficits in passen¬ ger service fluctuated between $226 million and $262 million. The passenger service reverted to deficits immediately following the war. Last year a peak net operating deficit of close to $560 million was reached. This cut very heavily into peak net operating income from freight service of $1,561 million last year. The passenger service deficit absorbed practically 36% of the profit from the freight self. i. _ July been able well-conceived and - distribution of 20% for year ended March 31, 1949 *to appropriate at- of nature in than the of case balance of vestments s*c through mechanization, speeding up of schedules, installation of heavier >ower, etc. The Bureau's release points out that gross revenues from reight and allied services reached an all time peak last year, up 13.1% from the previous peak established the year before., Operating expenses applicable to such services were up only 9.6% from 1947. Gross from passenger and allied services rose only 2.5% from 1947 to 1948, but expenses applicaole thereto were up 11.1%. As in every phase of railroading the individual carriers show wide variations in their vulnerability to passenger service losses. ♦The ism. . Bulletin the shows These railroads. steam freight results in roads last year accounted for about 77% of only one of the roads covered in the Bulletin had a passen¬ ger service operating ratio of less than 100%. That was New Haven. Even that carrier, with a passenger operating ratio of 92.7%, had a net operating deficit of $5,568,000 in passenger service. Passenger operating ratios for the other roads covered ranged from 113.1% for Pennsylvania to a high of 210.3% for Chesapeake & Ohio, i The operating ratios themselves are not the most important con¬ sideration. The dollar deficit in relation to the dollar profit from freight service is the prime consideration. It is obvious that a 200% passenger service operating ratio is less of a drag on a road getting only 5%-6% of its gross from stich services as would be a 125% ratio for a road getting as much as a third of its revenues from passenger and allied services. Yes, this is deficits last year abosrbed more than half of the net operating income realized from freight and allied services. The hardest hit was Atlantic Coast Line. Its $9,663,000 passenger loss amounted to 65.3% of its $14,790,000 net operating income from freight service. Next in line was Chi¬ cago & North Western with passenger losses cutting 63.8% from freight net operating income of $27,627,000. The other two whose freight profits were cut sharply by passenger losses were Chicago, Milwaukee, St. Paul & Pacific and New York Central, with 57.0% each. One of the highest passenger operating ratios was the 205.7% of New York, Chicago & St. Louis. However, passenger business as a whole is unimportant for this carrier, so the loss absorbed only 18.8% we How to be saved from these entitled to subscribe , of . one share new on Dividends each .of business May 24, 1949. dencing *. 3 such Trans¬ Wertheim Lynch, which & Lawrence C. Marshall, President of the Bank of the Man¬ hattan Company of New York, an¬ nounced on May 31 that Mortimer J. Palmer > Pierce, has and to tion, the shares . to underwriters of the expiration new of of securities - pectus licit the in as dealers from struction. The pros¬ the hoard of quarterly basis as conditions prior (Special to The Financial man¬ group will LOS Mortimer J. Palmer of ter S. costing Morgan is forming Walter in partnership with Barber. Offices will the be maintained in the Russ Build¬ re¬ ing, San Francisco, the During the the company culties Gorey presently 210 West Seventh next plans three new $52,800,000 well as at Street, Los An¬ geles. " | Mr. Gorey fa¬ ; Coast of as Unc. Manager for Geyer & Co., These June 15, on :v; Bank Indies, \ h e bank's employ a Howard Vice-President B. Smith, in charge of the department, retires on May 31." ; . . •' - •• # ■' Si sis , * He page. clerkship a 43rd Street Office. In 1929 he was appointed Secretary to the Chair-r and in 1946 he At special a June 1 the of York the was appointed Secretary of the bank. meeting held stockholders Manhattan approved capital stock the Company, increase an of of on the Bank from 2,000,000 to 2,500,000 shares. The stockholders will be entitled to subscribe for one additional £ N. Baxter for each four held. # Arthur S. Kleeman, President of Trust Company of New the Chemical Bank & Trust Com¬ pany May of New York 26, announced on that George M. Erhart, formerly a Trust Officer, has been appointed Corporate Trust Officer in charge of operations of the Cor¬ porate man, was and Trust Department. At the meeting, Russell H. Sher¬ formerly Assistant Secretary, appointed a Trust Officer, Everett O. Stoothofl' was ap¬ pointed Assistant Secretary in the of Libya S.A., the Banco and * * Appointment Childers * merce, New York the newly Domestic Mr. office created Business Zimmer, who has been ciated with asso¬ tion the since its foundation in 1940. William H. Bassett will ceed Mr. dent in Zimmer charge Street Office. ciated with of He suc¬ Vice-Presi¬ as the has Colonial William been asso¬ Trust Com¬ since pany of the Street Bay and Fifth Ridge James H. Bassett * Avenue section of Shaw will in the Brooklyn. Mr. Vice-President as succeed in charge of the Kingsboro Office. Previously associated with the Manufacturers Trust Company, Bankers Trust Company and Mor¬ 31 by Bank Com¬ of announced was Walter Kolb, E. President. in charge of Development. May on G. Elwood Director of Personnel as York, announced on May 31 the appointment of Frederick H. Zimto at May 30. of Industrial Vice-President de- located •" the mer be 37 Wall Street after of of York New Nacfonal will Colonial Mr. Childers, Lieutenant Com¬ a mander in the Naval Reserve and former a Trust officer Company of of Union the Washington,' has been Assistant Comptroller of the Industrial Bank of Commerce. * From the :i! the Office May of 1 , of bulletin 23 the Comptroller of Currency it is learned that the the Hudson County National Bank of Jersey City, N. J. increased, its preferred stock effective May 10, from $784,000 to $1,372,000. *. . * After * years' activity in the business, Samuel Mcjwill retire July 15 as Cracken President Bank of of Miners National Board McClintock Wilkes-Barre, Pa. Chairman will ) * * 56 banking Gilbert serve as until President a is chosen. successor ris Plan Bank, Mr. Shaw came to Colonial Trust Company in * ❖ s!: March, 1945, as Assistant to the President, and since 1947 has been Assis¬ an tant Vice-President in the Kings¬ * « Manufacturers $ Trust announces Company, that Francis S. Bancroft, President of the Ex¬ Savings Bank and Charles R. Henschel, President of M. celsior Knoedler & Co., have been ap¬ pointed to the Advisory Board of the office Cleveland, bers Harvey D. Gibson, President of New York President John K. Thompson of the Union Bank of Commerce, Ohio of the Manufacturers Trust at 741 Fifth Avenue. $ * the bank's New Standard York Bank of F. Leo staff. while Norman M. is Hausser ad¬ vanced from Assistant Auditor Auditor. with and Both the merce men Union Com¬ of Bank both are 1938, of members to been have since its formation in Cleveland the Na¬ tional Association of Bank Audi¬ tors . of oil mem¬ Batts, Auditor of the bank since 1944, becomes Assistant Cashier, and Conference of the Comptrollers. # $ The announced May 26 promotions of two boro Office. !j: Jackson, Chairman of offices Mexico, Kingsboro Office, at 69th man overseas * of ■ departments promoted to and served in various Assistant Eritrea, Agency department. at the Main Office and later at the was same was formerly Pacific payable are standard Africa, East Africa, West Africa, Egypt and the Sudari, Mediterranean, Palestine, British 1946, and since 1947 has been Vice-President in charge soon Chronicle) of sale $4,000,000 of shortincurred for new con¬ years C. C. Gorey) Co. Palmer r. as share of stock ANGELES, CALIF.—Wal¬ so¬ bank school in 1918. of Own Investment Go. has the retirement age after serving M Bank Gorey Forms the pound. in South banking institu¬ 1929, for; has been Vice-President in charge 4 4 years. of its William Street Office, at Upon gradua¬ William and Cedar Streets, since tion from high on chiefly to the • term notes 1949. that states Walter G. sell of stock will be used tire $3,000,000 of outstanding in Has- who the New subscription dealer which exercise Proceeds far warrant. subscription warrants by the original holders. , per August,* 1949 and thereafter a In addi- will nationwide a thus ding N. lett .. offer and will act agers cents Beane common the 85 a divi¬ dend of 85 cents per share payable underwrite the unsubscribed shares. • of been Merrill & Fenner agreed have in stock at the don, maintains branches was company reached pfe tv since directors intend to declare on Co. Dividends ters rights (EDT) p.m. quarterly in 1949. West entered stock dividends alluring self- divi¬ the A stock shares, less income case 9/- # com¬ paid quarterly during 1948 and for Jhe two quar¬ will expire June 9, 1949. The First Boston Corp. heads an investment banking group composed of Lehman Brothers, at common of' the 1947. ferable subscription warrants evi¬ • paid share 12 shares held of record at the close : * reclassification the basis for been the each of The Mr. will have outstand¬ on in tax B interim on Somalia. tive preferred stock; 34,125 shares of 4.50% : cumulative preferred have the on CAPITALIZATIONS ing $58,887,000 of funded debt; 150,000 Shares of 3.75% cumula-j tional shares of common " stock, '$25 par value, at a price of $44.50 i per share. Stockholders are and REVISED 154,000 kw. stock, and 953,333 shares of mon stock, $25 par value. recommended dends of 4% actual NEW OFFICERS, ETC. Giving effect to this financing, .Corp. May 25 offered to holders .of its 880,000 common shares the .right to subscribe for 73,333 addi¬ the board of directors of the bank CONSOLIDATIONS nearly half is for power plant additions with an estimated New York State Electric & Gas * received York have NEW BRANCHES which Priced at $44.50 per Sh. * Bank i John , £ 500,00 Account for by the Agency of Barclays (Dominion, Colonial and Overseas), New York, state that New News About Banks freight profits. company Director (Dominion, Colonial and Overseas), which is affiliated to Barclays Bank Limited, 54 Lombard Street, Lon¬ succe e the * advices Barclays the Gas Stock On Market The Contingencies Cable deceptions? losses amounted to less than 25% peak capacity of inclusive. Fund." rate are we neces¬ the benefit of the Officers Pension drift toward our less have decided to transfer threat to future welfare than communist greater appointed Secretary of N.Y. State Electric & dates / armies.' on of the sur¬ one freight operatings. Illinois Central, Norfolk & Western and Wabash were the only three others whose passenger of the profit realized all shocked and are of the tragedies of history—this fallacies centuries ago exposed. It is a reversion to four roads whose passenger service operating were at at March 31 provisions have been made). Register of shareholders will be closed from July 6 to 19, both authority of public dpinion. To me it is doubly tragic to watch people injuring themselves under the illusion that they have found a new and better way."—Hughston M. McBain, Chairman, Marshall Field & Co. Last year There certain am "Perhaps the saddest part of and 84% of passenger revenues of all Class I carriers. revenues books as sary socialism is that it is done under the 1947 for 27 individual large 1948 and in than market value from , . But I prised to know the distance already traveled/ I . carrying forward £192,832. Bank's in¬ stand s-s "Every thinking American is conscious of some milestone we have passed down the road to social-' has been more effect economies to bank last and all other usual and business, including the fact business freight down Fund, happened. Let's ask ourselves why and spend some time in the pursuit of the answer. that much of it is short haul and commuter traffic, it difficult writing to Pension / passenger 150,000 premises and £ 300,000 to Officers ' the Meeting to be held the payment of a tempts to accomplish this—and yet, so far it hasn't „ s Because of next ject to income tax at Nine Shil¬ lings in the Pound, making total £ have 27 Four Shillings per share, both pay¬ able in British Currency „and sub¬ . "There General nal final dividend, Nine Shillings per share together with a bonus of system offers the greatest possible individual free¬ dom—the greatest happiness to the employee him¬ prewar years services. ''Directors of Standard Bank of South Africa Ltd., have resolved to recommend to shareholders at An- . . That is the major problems facing the railroad industry. of the one year , by the Bureau of Transport Economics Interstate Commerce Commission highlights A ^ecent bulletin released from "the in London, regarding operations of the bank for the ended March 31, 1949: ; the the coerce follows as office head Agency of Sotath the Africa, The Du Du * Quoin Quoin, 111. i National was issued a Bank, char- ■ 169 Volume ter effective Number 4808 THE May 16, according to Nat'l Banks' May 23 "Bulletin', of the Office of the Comptroller of the the ABA Currency. The bank has a capital $100,000 of Victor H. Ritter. " -r , Cashier ; * ' is He 16 in died of a heart attack on of age, \ and.served death. his until In. 1946 was House Association; through 1947 and later continued as a director. leans Clearing that held post from w! W. "With the National ception Bank of East¬ States & Geo. Myers. Co., Papa William 15 Wallace B. terest Street, New thus a volume the w' by 4.6% to CamPbe11 funds compared as item—incqme taxes, one 3.6% were debt lower expenses with salaries and wages. 3.39% in 1947. This amount- from current to $566,000,000—an operations ihcreased 10.2% to $1,-110.6%. • 1 : , Total because transfers of earnings The operating totaled $1,361,000,000, reserves.. with the heaviest expenditure for . increase of earnings . Some of the more spectacular adjustments include such varied as food, non-ferrous metals,: textiles, appliances and certain Others that have made small price changes with more indicated later are automobiles and building materials. Even steel, : . . . . . which critical at the time of the so was Columbia University economist down says, conditions create to as problem which ^ prices will continue the trends of the past several months. While is likely to be individual exceptions, the general trend is be-; lieved downward with further adjustments indicated. there these Under circumstances industrial companies? than better had a in Myers • Dr. Leo - and York a City, is the proud father of born on Monday, May 23/ son in Lynch, Seattle Sponsors Inv. Course ture SEATTLE, attle WASH. office of Pierce, Fenner Fourth Avenue handling of vest it. of. 2:30 28th. afternoon through how an investment is; the make to the one and Tuesday, will give instruction on and will ; course between which Metropolitan The¬ continue June on will he held in the will The Ex¬ the and how to in-* course, the at at mem¬ Stock special course, Seattle, money The week atre Future," 1411 budget; what a relationship intelligent standard of investment how living; invested money works to earn in¬ terest and dividends; different kinds of investments; how to evaluate an investment; the func¬ tions of a Stock Exchange and a brokerage firm; the difference be¬ tween corporate and governmen¬ financing; .and how invested money helps America's security. Experts in the fields of invest¬ tal will money instruct lions.* and There is habits answer banking and ment, ques-;; charge for the no G. Edward resident partner of the firm, says, that as of May 26, 650 had signed for the. Ledbetter, ^ course. Limited Partner ex- belief that, the s, make compared with sible. u i s n e s earlier m o v e m since general, begun already be to contingency. As it Leo Wolman Prof. nationwide These to think that the decline has ' 7 Dr. activities its run 7 ""Such indications continued which there are," as Wolman, "suggest that it will go still further. The turned down early show no signs of quick re¬ covery. The industries, such as steel and automobiles^ which still to be resisting the general business or to reflect it slightly, are themselves subject to the forces of contrac¬ tion and, judged from what can be seen today, are unlikely to escape their influence. In its broad dutlines, the turn in busi¬ ness which got under way in the Fall of 1948 has beep proceeding only Those who saw in form. purchasing power or na¬ and 1948 Of income the before an effective safe¬ guard against probable economic deterioration were clearly misin¬ years the understand the States, the: economic and political policies of a powerful little course? in unknown hitherto United and 'there is reason scale a terpreting the data and failing to . has lem, it must take into account, on tent and more tional level earning of profits pos¬ Much of American busi¬ faced with this persis¬ to reasonable a is war, the vast to undertakes to deal with this prob¬ more of very the ness ents of the trend hear end the appear may soon and to create the conditions which ward trend in b We down costs present down¬ true course. Inc., little of excessive profits, as more the to for earnings of However, there were variations by indus¬ More important possibly than comparison with seem > » v. ,'. to indicate that the 1 earnings of most industrial; comparisons with this does will to be favorable. operations and why cease insurance is it While the reduced level of business activity and lower important? the profit position of most other prices may hurt trends a year ago influence businesses, such potentially profitable to fire insurance operations. are As the prices of commodities and real estate decline it becomes possible for insurance companies to adjust claims at lower costs. As potential losses are reduced. Thus, providing there are no catastrophies such as a major conflagration, and more firms find their profits the cost of settling claims this year should be considerably below declining " or * disappearing. The last year. Already there is considerable evidence to support this problem then will be how to bring ;view outside of industrial price changes and business activity. ■ * spective. pressed the Se¬ Research. S>- -5 May 31, designed for last five weeks, a York "Eco¬ Guide Posts Lynch, Beane, Building, announce a which began the women The' & bers of the New change, — Merrill Economic of luncheon talk at the Insurance Conference of the American Man a nomic - Bureau outlook companies will reflect the trend of business and prices and that fu¬ agement Association in New York City on May 27, in which he di®cussed Merrill National the of the increasing cutbacks-in production and sharp declines' This would Wolman, Professor of Economics at Columbia Universi/, director a is expected and in general compared favorably been commodity prices. How E. what First quarter earnings of many concerns were year ago. there have been make fuel to deflation. . an year ago was the fact that most- companies showed a decline in earnings from the fourth quarter of last year. Also, since that time- is to bring costs now to be in a profits possible. Sees increased government spending and deficit financing adding so seems and tries and* companies. Signs of Quick Recovery: Wolffian election, supply and demand relationship as evidenced by price changes in certain lines of products and the reduced rate of steel making operations over the past two months. There is considerable reason for believing that business activity with those of No • ; easier to aggregate an ■ items of the larger $5,671,000,000. Cash dividends paid amounted to 3.42% of total and the FRB prospect for the month of May chemicals. which in- in ago. $23,818,- to year is ;■ This downtrend in business activity has been accompanied by price adjustments. At the present time there are few products that are not readily obtainable at prices below what they were six months steadily on decline in all but of capital discount seems Index of Industrial;Production the decline has been high of 195 to the latest reported figure for April of 179. A a 513,000, the highest total ever rec¬ orded. In current operating ex¬ penses there was also an increase ac¬ been and uncertainties increasing, it are index will likely be below 175. shown in in¬ was the surrounding general business advisable once again to review some of the fundamental factors affecting fire insurance stocks. , The decline in business which began last November has pro¬ gressed steadily up to the present time. In terms of the Federal conditions further United on time when a Reserve Board Government throughout have creased Elmer E. JOHNSON This Week—Insurance Stocks At from ex¬ one of loans which expanded report, counts the interest was increase, 26.1%, the Division. capital The ooligations, which decreased 6.7%. The largest Arkansas, Forrest, City, Arkansas,-who is president of bell's states. letter higher than in 1947. According to Camp¬ Elmer the exception, the earnings type of operation were one from each f o Mr. Proud one- — 900,000,000," ern he elected President of the New Or^ He <8>-^—— members s President its President as to letter a i t Campbell, \ > early in National Bank Hibernia 1933 : elected President of the was By H. than more half of their 1948 net earnings in their capital structure, after trans¬ ferring a substantial amount to reserves for bad debts, the National Bank Division of the American Bankers Association reported May 31 May 21, 1949, at his residence, in New Orleans, Louisiana. He was 53 years Bank and Insurance Stocks were ap¬ $5,671,000,000. Bank Orleans, La. for the past years, 21 (2389) Jan. 1 aggregated on ,The national.banks of the United States retained ,i National Hibernia the New Retained Earnings on than one-half of 1948 earnings jnore CHRONICLE FINANCIAL & • i Albert Peter Imahorn, President of Gapilal Up Survey shows plied to increase of capital accounts, which President is the / Guerrettaz; J. A. its and COMMERCIAL at forces work. movement. labor policies, if they are adherea to, will constitute a formidable obstacle in the way of what seem to be necessary and urgent adjust¬ ments in costs and prices. In fact, trade-union policy as it is cur¬ rently enunciated seems to recog¬ nize no connection between union the value of inventories decline Since January of this year fire losses have been declining. For; the first four months of the current period fire losses totaled $242,-/ 858,000 and compared with $272,518,000 for This represents sidered unlikely end of ftye similar,period^of J948., decline of 10.9%./ For the full year it is not con¬ that fire losses 10% compared with 1948. around the a will show an overall decline of; If there is a decline it would mark 13-year period of increasing fire losses. a be any important overall change in further increases in unearned premium necessary. If these assumptions are correct, very, favorable statutory underwriting operations are assured. While the tax liability will increase because of larger statutory underwriting earnings, final results should be favorable in comparison with those, of last year. In certain individual cases substantially larger under¬ writing earnings this year are almost a certainty. /,■ there As is not likely to premium volume for 1949, will reserves no be . regard to investment income for 1949 the prospects are that it will be maintained near the level of 1948. Because of a larger vol-: In of funds ume demands and the state of business. available for investment and higher yields in certain moderate improvement over last year is possible. cases, some of > holdings amounted to"The government on its part approximately 40% of the average insurance portfolio and are made seems to have no tricks up its up of high-quality issues. The dividends on such holdings are likelyr sleeve except increased spending. to be maintained even though the adjustment in business continues If expenditures rise and taxes are further. For the past several years the pressure to maintain capital not raised, an already stupendous has necessitated the investment of a large part, of new funds in high deficit will become still bigger. grade bonds so that no large or extended positions in common equi-/ This means in the not very distant ties are present. Even though some industrial companies may find' future, raising the tax rates on in¬ it necessary to reduce payments, investment income of insurance dividuals and business which are companies should be maintained. Thus with investment income near already suffering from the exces¬ the level of last year, present dividends absorb only about -30% of sive weight of taxation. The net such earnings. With the pressure on capital funds eased it becomes consequence of this combination apparent that a number of companies will be in a position to make of policies may very well be more a larger payment to stockholders. ♦ > strongly deflationary than infla¬ It is against this background that insurance stocks should be tionary. If, however, taxes are considered. For over a year now they have been acting considerably currently raised in order to avoid better oh a market basis than other industrial groups. With the a deficit,, it is hard to see how fundamental factors once again favorable for several years of profit¬ that will, do any more than in¬ able underwriting operations, it is believed insurance stocks will tensify and prolong the depres¬ continue to be favored by investors.. the At end last year stock common . \ • Paul B. Ware, general partner in Ware & Keelips, 2 Wall Street, New York City; members'of the New York Stock Exchange; limited partner June 1. • came a on be¬ in the firm A. Kalb & Co. Opens N. J.—A. at 325 a Market Street to ; business from offices North Seventh Street. at fact the in nor turn occurred . „ ' ; remedies in this is business most the and visible the confidence in the strong forces can into can inherent in the Ameri¬ They are likely, by policies, to hinder and not these forces. By this be¬ outlook seen havior they may easily make thing worse than they need be." public the background, where be of they in their proper per- Opens in Brooklyn ; Trophies At Bond Club Outing- BROOKLYN, White N. securities business from offices at 1475 Street. count strokes will stead of bonds on June 3 be in¬ when the tournament—feature event marking the silver anniversary of the Bond Club of New York's An¬ nual Field Day—gets under way "Hollow Country golf courses at the Club will be available to accom¬ Sleepy the Club. Two modate 54th players. John the ' W. large ■' Dayton, number that Committee* some of Wall outstanding players will! hand to compete for threb Street's golf at Y.—Wallace is engaging in a men Golf Day announces Approximately 250 Wall Street bond Field the Three Golf system./ their employment, the and has any recovery for pressing issues are those of private matter seems the government the labor movement assist "If the 17 "The , The policies best adapted to deal with this James W. Pattee Co. changed business situation. Al¬ FT. SMITH, ARK.—James W. ready questions which were the Pattee is forming the James W. subject.of angry debate not so Pattee Co. to engage in a securi¬ many months ago are receding ties ... to be that neither & engage securities business. be happen. could conceivably have somewhat earlier or situation, Dr. Wolman said/ Kalb Co. has been formed with offices in not sion. foretold is when it would Discussing TRENTON, could What ticipated. sorne\vhat later." . to be an¬ What is happening was . of on trophies, net and low Ex-President's Cup the Candee Cup for the Christie Cup for handicap match play against par.. The tournament will be divided into three handicap classes: Class A, 0-12; Class B, 13-24; Class'C* 25-30. In phies, - addition more to than the a three tro¬ dozen prizes gift certificates will awarded to the players in the in the form of be Chairman of the for low gross, various classes. 4 THE (2390) Z2t COMMERCIAL CHRONICLE FINANCIAL & that like Selling Mutual Investment Funds (Continued from page 4) prospector never has enough time to see all of his pros¬ A good You cannot succeed in the selling profession if your sales cost you too much time to locate. If you haven't a prospect listpects. start at one of names know tual Write down the once. 25 people and can, Funds whom should, shaares. you Mu¬ this own Build prospect list up to 300 names and keep it alive by weeding out the dead wood. add the Don't names be of afraid doctor, your dentist, lawyer, club your to chant Farmers trip as that is ways sell, fon the and the of names law you and friends acquaintances. Tell everyone about your business; be sure that all your friends and everyone you in contact with knows what come business words, ness! you to In yourself expose Try in. are address always are speakers. The following is looking Army group by "Good zine our man¬ many You concerns. will that they may have from 3<to 50 salesmen, or more, work¬ ing, for them. These sales man¬ agreeable and easy to and generally they are are making money. Therefore, they are perfect prospects, and if you have the oppor¬ tunity at some time of addressing ah, of the salesmen working under thq manager, or of seeing them individually. sales town, so There isV no doubt, managers' club in your that you can secure the without much effort. The classified telephone directory will, at; least, furnish you with the names of firms represented in names city. your Army You and have a Navy Naval Personnel base in — your city. The officers are already provided for through the retire¬ ment plan set up by the Navy. But in the majority of to, augment they have retirement pay cases, their with other income. Put their sur¬ plus money to work in Mutual Funds at this time, and sell them on the idea of stores. control women of mutual the privately-owned corporations. all privately-owned stock in 60% of beneficiaries of all life in¬ 70% beneficiaries of all estates. Who said he wanted to be Massachusetts man? a innumerable in the regular investment. quarterly . of investment. generally carries her Storekeepers by the thou¬ are making money. Offer Mutual Funds to local your butcher, grocer or druggist. You will be surprised to find in many instances how much idle money they have in the bank. You will find some of them interested in investing or saving regularly. Junior Executives have ous; a seri¬ problem not only in providing Merchant know of retirement. Marine one Officers in — I New York City who has been doing a very good t job selling Mutual Funds to Merchant Marine offi¬ cers. There are a number of coming week. ships in to your harbor The officers of these is points, not words, that make a sale. Speak in a language that is simple and understandable. Be sure that yon sell of prospect's particularly through and senses his eyes. The following approach may be of assistance to you— "Mr. Prospect, I represent XYZ Company. We offering are Investment Mu¬ that Fund a has through the worst depression country has ever had; a this world-wide war; and a reconver¬ sion period—and has paid over 75 consecutive quarterly dividend distributions. "This Fund's ' provide objectives reasonable a ;■ are annual turn, to increase the value of shares in advancing to re¬ your markets without undue speculation, and to conserve the value of your invest¬ ment. Due to high taxes, the in¬ creased cost of aren't pect?" (I want they, Mr. Pros¬ affirmative re¬ an telephone book—select good neighborhoods — send these wid¬ sent prospectus and ture and make I have the you just a few of Practically every¬ given the in one personal call. a prospects. should middle income Mutual own litera¬ some group Funds and premiums. ance Some salesmen centrating that after today are con¬ and finding groups on few a calls they their and group needs. For example financial — businessmen don't realize that they have two very important financial problems: first, the need vantages, personal money in¬ telligently; and second, setting up a definite segregated reserve fund their business to take obsolescence purchase of larly by the care equipment. of The Funds regu¬ small business enables a to fund serve of Mutual owners the historical (if haven't you portfolio, record of and the set such up a re¬ you are offering for sale. example, the piece of litera¬ For complete presentation based a $10,000 investment. your as Be you emphasize each point. If copy of the necessary, give him a piece of literature you to you is know, you get Use a pen and a pad to certain points. Keep in at all times what the Fund across mind will do for the prospect, not what the sale will do for you. This the literature of piece send necessary give, in or per¬ son, a prospectus of that particular in which you attempt to interest There are pieces of many are going to your prospect. supplementary literature which going to go over their litera¬ ture, and you will find certain pieces which will appeal to you than others. Those pieces dividend distributions have been made for 20 years. All of these principles should be covered carefully. Be to slowly the of one to understand vested in prospect. the how this that For diversi¬ first prin¬ I want you $10,000 Fund protected through Note and you make your sure in¬ would be diversification. this from the preferred note that portfolio stocks and this bonds, been each mer¬ too much The percentages for these types of securities are changed by the management as the outlook for business and market changes. The people who are managing this have been I think you time when you personally contact these prospects. My advice is not to send any more letters than you can personally follow two weeks', times. cannot be sold by up within Mutual Funds mail or tele¬ agree that they have gained experience during that period and as should well be able to do at least they have in the past. It is their only job, and they de¬ vote as their entire time to the agement of this Fund. man¬ You will be interested in management, families have knowing that the directors, and their over you at¬ income net of last shares at your would year XX—showing "You will consistent, assets you note, Mr. haven't this of XX to have very a Prospect, grown since this of its Fund by people in all walks well as Total have dollars Shares owned of life they? Fund million inception. are as institutional in¬ It is advisable prospect 5-year each has had for a the him you you can with you on get that have finished during which you have you XXX dollars invested in shares of this Fund. I Objections are sometimes caused by statements of yours with which the prospect some he is point does Some does not as don't agree or up consider barrier to a agree, which understand. fully salesmen tions not brought objec¬ the sale. number would shares of like he all. I don't believe objections or questions would be asked by the prospect unless he was interested. Many times objection makes it an possible for you to tell the prog¬ ress you are making. Objections should be never magnified and they should be answered immedi¬ ately—not postponed. Don't make the mistake of telling the prospect coming to that point that you are If you do he will always feeling that you cannot the that particular question That idea will stick objection. or in his mind and he will be only you half-hearted In order clearly so forestall objections, to must you giving attention. present ideas your that they will be under¬ order." your buy, there must be reason—either objection, haven't answered all of his questions, or some part of your an you sales talk has been not clear. It is well, therefore, at this time to the important sales so that you will again bring to your prospect's mind the rea¬ summarize points why he should buy. sons If your summary fails in ing the order, then say secur¬ something like the following: "Mr. am vinced this Fund will mind, to tell tion con¬ that >•' I if you, me so answer your problem ask to what don't you your am objec¬ is to it, or what is not clear If he gives you the ob¬ you." jection the or Mutual objections, common question and you Funds certain you may I run objections—such will think it over." want as, into "I "Mr. Prospect, to think it over, but will want all the facts while you you you deciding, are can give while facts the you I think I questions and and all your answer here with you I am today." Quite frequently you will run into prospects who are interested but they want to take the matter The only answer to that is to agree with the prospect that his wife should know all the facts pertaining to the in¬ vestment because they will both benefit. Be sure that you make with" their up a I Prospect, Anticipate by most of your prospects, in your sales presentation. In the sale of today and I take to doesn't some wives. definite date to and his wife see the prospect early as possible. time—such as, "how as You suggest a about my dropping evening at say, around this 7:30?" If you pro¬ long the making of a date you are going to lose the interest you have created in the mind of your prospect. it, then assume this the only barrier to the sale. answer was Don't forget that a good way to learn a prospect's frame of mind to the He certain questions' following indications to be his mind—that says but should needs he it at this have sure make you are smaller he doesn't investment, anxious to have him buying these shares, can so that begin with any amount he desires. It is very an If you order don't has some times. Prospect, done poor every business has investments at have The lesson which you learned through making poor in¬ will cause you to ex¬ vestments amine and in consider more care¬ Prospect: "I will keep my money the bank. It is safe there." Answer: secure an order on "Your money is safe in the bank, but I feel that if you have a certain amount of money in a savings bank to take care of emergencies, and you have bought sufficient tect Mutual they (1) life to pro¬ Funds because of what do for you; namely, provide regularity of income will greater than savings bank, the insurance family if you die, you consider the purchase of your should important for you to regardless of the size. Many times a small buyer has become a large buyer through additional purchases. secure "Mr. who going to purchase. That is pre¬ cisely what I would like to have you do in this case." > ' he understands that a money time—he been and lost fully the security which you are talking to prospect regarding the $10,- can Answer: man sale. a have he think certain amount of persua¬ If properly , handled, you buy, be start a doesn't investment 000 time to decision. If proposition sounds start you your is the a sion. If making ready to make "I times through the purchase securities." made part of the prospect: seems good, Prospect: many of him ask Look for the have I with that thought at questions all answered "Mr. Prospect, $10,000 will buy he sales made are which you have found are raised objections, don't have a stage or a lull, but aid your pros¬ pect to make up his mind by say¬ ing something like the following: can Few time wait on consequence your and is presentation. any stood. After to your of answer offering something without objections being raised or questions asked by the prospect. a In appreciate are and agree presentation, or of satisfactory record very period to and just away. tions which may be brought up by the prospect during the course your Fund. will he Fund the the of literature spend a few minutes with you on objections and ques¬ have show 10-year record a record instance that to giving are later. vestors." but waste that that this Fund has paid dividends for 19 years, and they have been he don't value end- of common stocks. Fund, Mr. Prospect, doing it for 20 years. in can rather ordinary your its you satisfactory profit. will you both he also $10,000 ago, received in in cus¬ security profits, and the liq¬ uidating in that have aid him will years illustration up has a of I want to the tractive dividend distributions If you are campaigns, first select prospects geographically so this by would advantage mail 15 in "You of with invested you vested in Fund securities piece than value more you audited by certified public the up prospect that you will return to pick it up, he will feel that it has are pro¬ is deposited Fund see Short up his definite date, a answer any further questions. Sell him the value of this piece of literature. When you tell the paid bank. "Had only $350 would be in¬ chemicals, $167 invested building construction, etc., etc. pick income are make Also make and pur¬ is resources. Fund year are todian you can use to the best use a Fund year are furnished by most of the sponsor¬ ing companies of Mutual Funds. It is well for you to study not only the prospectus of the Fund or Funds which you are more twice of accountants. All going how Net securities The investment and the margin trading hibited. covers advantages, shows how $10,diverisifed, illustrates a 15record, Fund. 150 to 5% or 000 is ciples of investment. is using. are Yob must have his undivided at¬ tention. fication is ' sure prospect follows you as you each salient principle and example—"Mr. Prospect, As limited If a this over selling X on through etc., to prospect mind. a if you can, for your return call to handling in¬ proxies and "The individual investments ture which I have in my hand has been prepared to aid you in mak¬ points clear conveniently. Use of Literature for the Fund which to invest their for prospectus of changes, fact. already done so), and a piece of literature which illustrates the ad¬ are plumbing contractors, electrical contractors, building contractors, printers, etc. —are all making money. Some small get at quarterly dividend checks, greatly simpli¬ fying your income tax return. this point it is well to pre¬ a cover learning the lingo of that particu¬ lar At can Fund the leaving your shareholders in four to ing should be buying them regularly, the same as they pay life insur¬ relieved of from and your a be your all to ply to this question if I it.) going to salesman it piece of literature which will aid into turned vestment because you like them. program own that husband's name, for instance, Mrs. Jones. Pick out a list from sell, but also for their children's education, but in setting up a definite for their mind John ows will same program, safety widow Mutual own Fund ? Small sands that living, and low interest returns, these objectives are necessary in any investment should who investing regular of money quarterly. They have the dividend check in¬ cluded the . sums can act are way. Plan in advance your open¬ ing remarks. Entertain a feeling of equality with your prospect. Express yourself with ease. Keep Government bonds. 80% will prospect your gone the accounts in savings banks. 50% pleasant, and the chances tual economy— of opening the interview be brief and specific, don't have a long introduction. Be sincere and is you, time for cash liquidation. You any chase Your Approach In maga¬ that be can the first call, be sure to pave the way for a later call by don't part or deposits, survey Housekeeping" The pros¬ all cause Mr. guaranteed be¬ of your shares idea, Prospect? "Liquidity very reasonable hundreds of firms represented by sales managers, both local and a occu¬ A shows 65% A you many can Funds shares because these shargs provide regularity of income and Women. them, career mind—buyers my department widows * Take, for instance, sales There are in your city sell to comes for of Personnel. agers. agers of in are You have in the Commonwealth Farmers. contact, thousands They the telephone, over easily terminate a conversation over the telephone. in surance. Small Storekeepers. out-of-town to cause pations, hold responsible positions, and are making good salaries. One for Merchant Marine Officers. find city your list of good a Junior Executives. Career them to times make at can but this requires skill. pect >. Sales Managers and Salesmen. and on last, but not least, don't the ladies. You have in women. of prospects generally not seen by people in the security business: Naval All little education a Funds And people about Mutual Funds—they make a very interesting subject. Organizations and clubs of all kinds trip your investors. busi¬ to On their business has been good. forget You the supply cpmpany and other mer¬ chants, and you will discover that other groups find paid for generally money. they need is phone. equipment country, stop in at the farm Mutual keep thinking and right thoughts will come. The of average will not fail you if see enough people. Be sure ask each client that you are He will tell you that he making to the will You lot of fine a been by cash. want to find the has you the city, take a country. It will act tonic. a farmer has be power; buying Any time in the to mem¬ customers, study all and means in your be appointments — getting stale If you bers, church members, etc. should vessels Mutual Funds. Thursday, June 2, 1949 value of you and your get in a (2) increase shares when can Volume 169 Number 4808 THE COMMERCIAL security markets are rising — ing to aid the prospect to place aids you in offsetting the and order at that time. The close increased cost of living, and con¬ really starts from the beginning serves your principal by spread¬ of your sales presentation. If you which ing your money over many ferent securities." Prospect: "I securities." pick can dif¬ own my be an exception to the rule,, Mr. Prospect, but you have this Fund which devotes its time en¬ to supervising should do a better job than an individual who can devote only a part o. time, and generally does not his have the experience or the facili¬ ties necessary for successfully managing investments." By reierring to the record of the Fund you are selling, many times you can convince the pros¬ pect that he is much better off by buying your Fund than he is by trying to invest his own money. This point can very easily be proven by showing him a record of 20 or 25 of the leading stocks for the past 10 years. The vari¬ ance in performance is so start¬ ling that the prospect will realize he has a very difficult job to pick his own. you reasons, your close should not be to admit that the management of tire why buy and are good reasons prospect should are satisfied they your Answer: "No doubt you can, and you t may have covered all the . Occasionally you may encoun¬ an objection to the sales load. ter difficult. However, I don't mean by that that you can Sell every¬ one, because the best of salesmen only sell fraction of their pros¬ Don't make the mistake of pects. a talking yourself in and out of order. you have covered all your points and answered all close; your don't be afraid to ask for the der. If you first close have close ready. This is brought about by saying some¬ thing like the following: "Mr. Prospect, made another Then you are second close. I should have point clear to you." on your way to your which is h a u m a n be must over¬ come by the salesman. Some people always want to put off un¬ til tomorrow. Frequently pect when he wants to a pros¬ postpone buying has a question in his mind unanswered, or he thinks it is the wrong time to buy. You can gen¬ erally find out what is causing This can be covered without mag¬ nifying'it. Some salesmen handle the the* sales load by incorporating it questions. If he happens to tell you that he thinks the time is not right into their sales presentation by convincing the prospect that for services rendered fair. very Mutual A the who person Funds is making term investment. cost is a buys long- While he pays sales load going into the Fund, a there is in most Funds charge going out. The difference be¬ tween the asked and the bid price is Very easily explained; and it is well to carry e newspaper with you showing where the Fund which you are selling is listed in no the local paper. The prospect who objects to the load on Mutual Funds forgets what he for life insurance, if he knows; or, what the mark¬ up is on anything else that he buys. He thinks nothing of pay¬ ing the retail automobile dealer a sales to commission 26%. eats pays of from 22% The very bread that he carries 40%. If he thinks that the money he puts in a savings bank carries no profit to the bank, all he has to is do to between the bank a mark-up consider what can he the of difference gets and make on what his de¬ posited dollar. As a matter of fact, if you handle the sales load properly it will not be an objec¬ tion; the services rendered are worth all that the prospect pays. If your prospect attempted to secure diversification by pur¬ chasing 50 or more stocks with $5,000 or $10,000, he would find the cost of going in and out as much or more as Mutual Funds. the sales load It is on delay in placing the order by asking the prospect if he has any right, prove that the Fund is a buy at any time because of the it is managed. Show the per¬ centages of bonds, preferred and common stocks, cash and govern¬ way ments and that these changed inform him the prospect percentages are according conditions. that You no to times and also prove to knows whether can one the market is going to go up to¬ day, tomorrow or a year from now. You must convince him that today is the day to start putting his money to work—where he will get all the advantages, objectives and conveniences which you have previously explained. \ The Close I want to take up the matter of closing the sale because you will agree that this is a very important Part of your sales presentation. Too many salesmen tell a good story, then fail to follow through With a close by relaxing and fail¬ dividends. The of people 65 years of age and over are financially dependent because they have never regu¬ today average person to look at his can¬ celed checks for the last three or four months, he will be surprised to find he hasn't one in there for himself. The average person does not make enough to save enough at a financially independent reasonable age with a com¬ pounding factor of from 1 to 2lk%. I am is the average American interested in having his sure not his on you—such part which will aid government support him after he reaches the retirement age. If he is, he won't be supported anyway. Therefore, the problem is how to Set up this retirement plan. Again, I repeat, the regular purchase of a good Mutual Fund, reinvesting all dividends, will accomplish what the average person is seek¬ ing — financial independence—fi¬ nancial peace of mind at a rea¬ sonable age. The amount of money necessary for investment is more or less based upon the age of the individual. The younger he is the longer period he has to invest and the less money he needs to invest each year; vice versa, the older he is, the less time he has and the more money he needs. You will find a great deal of profession must of believe use on your part. very good idea to articles from newspapers and a magazines pertaining will aid you in After to unbiased Such Funds. securing business. secured your dollars of the Fund as your prospect can afford to buy at that time, then convince him of the need for buying the same Fund on a quarterly basis. This is to establish a living fund you order for as have many for his retirement. Sell the idea of investing regu¬ larly. you Do you realize that when have 100 to 150 accounts buy¬ ing from you periodically you will have a steady income? The radia¬ tion from these old accounts will aid you to increase the number he makes you r The for my prefacing the little story I going to tell you this week, is that all of us have a right to be a bit cynical today. We have heard a good many pep talks during the last few years. But what we need in the securities business is something more than talk. We need a rebirth of confidence among the investing public. We need tangible evidence from our government that they actually believe in the future of American industry. We need a good bull market. I know those things as well as anyone else in this business, but I still believe that business can be done today if we will only believe in our¬ selves and the securities that we are selling. As a friend of mine said' to me last week (he is a dealer in Rochester, N. Y.), "You've got to be an optimist, you've got to sell people the idea that NOW is the time to invest in good securities—NOW WHEN THEY ARE LOW, NOT LATER WHEN THEY ARE HIGH. I keep hammering away at this. I teli them, it is a good investment, it will pay you well. I don't know whether or not this stock will go lower, but if it does it will go up again some da#; If it does go lower I am going to ask you to buy more. Get your dividends. Make your money work, The time to buy is in times like these. Only 10% of the people buy in these times. They sell when the other 90% are buying. It is a sure way to finan¬ cial success. You must make money that way in the long run. It is reason slower but These surer. the times to cash in are am on common sensb; and judgment—now is the time when your money will work twice hard for you!" Is that a sales talk—or is it? as Now 1 he pep talk: York no you other investment that you can To Hold I wonder if Charles Cabrera, who represents .the Security Ad¬ justment Corporation of 16 Court Street, Brooklyn, N. Y., has time feel or not business is you sell; can for himself—to sorry than dent do can business, from his can build he spends in telephone that a Bond Club own When a man home, over some ING FOR? ■ , of the rest of • V us who 13 indepen¬ the telephone, and calls, in these days and times, it fo/ ever^ seems to should say—WHAT ARE WE, WAIT¬ • N. J. Bond Club Plans will hold its so. clientele that pays him back twenty-four dollars MILWAUKEE, WIS.—The Mil¬ waukee about the market—or whether I don't think blind and 70, and who was broke, but is now successful and me Outing worry good or bad? one confidence Mutual Annual Field Day and Picnic at articles direction—HF. GETS PAID FOR IT. It is alright for some fellow a column like this once in a while and also try to pep me up— a business of that little racket, too." That is, of course, if are a bit of a cynic, you are going* to feel this way about it. to write to salesmanship you Milwaukee Bond Club is fellow to ?tand up in a pulpit on a Sunday morning and tell me to have faith, to give up my pessimism, to believe in the guiding spirit Of my religion, or to dispense a collective dose of psychoanalysis in ment program through the pur¬ chase of Mutual Funds shares. nod, twinkle in his sell with more eye, or slight hesitation. These Mutual Funds. actions on the part of your pros¬ pect will convey to you whether or not he is ready to buy or whether it is necessary for fur¬ It By JOHN DUTTON Maybe you are tired hearing pep talks—or reading them? Maybe you are saying to yourself, "All right, so what? It's OK for some I have in iront of me a reprint from a New Telephone Company bulletin. It tells the stcry of a man who was nearing 70, and who was blind. He didn't know what to do. He had tried to publish a weekly newspaper, in his little town of Nyack, N. Y. He tried teaching Spanish but he couldn't find enough stu¬ dents. He had been in the securities business for many years and finally he went back to the business again. He advertised for business in the paper and wrote letters to his best prospects. Again there was failure, until he hit upoh the idea of following up by calling pros¬ pects on the telephone. The results" were startling. Scon he was on his way to success and independence. His wife reads to him every interest when you show your morning and brings him up to date on the financial news. She also helps write his letters and looks up the telephone numbers for him. prospect how he can intelligently invest his surplus money and at He says, "On the actual dollars invested In telephone service,, my the same time set up, an invest¬ earnings have averaged 24 to 1." ] • ^ ,0, u, u, as, a ther persuasion Securities Salesman9sCorner my majority great are your prospect, must have confidence in that will find certain indica¬ which you are selling. I know of likely that he would buy less numbers for him or an educational fund for of stocks and thereby lose the his children, or for any other pur¬ benefit of proper diversification which is afforded through Mutual pose that he might need money in the future. You can very easily Funds. My suggestion is to elimi¬ nate any fear of the sales load, if arrange to have him buy so many hundred dollars worth of the Fund you have it. you are selling each quarter, One of the most important thereby securing the principle of things in making a sale is for you dollar averaging. At the same to believe that you can sell the time, arrange to have all the divi¬ prospect. For years I thought dends reinvested. While you can¬ hunches worked for me. Then I not always invest equal dollars, discovered they weren't hunches, you can invest very close to equal they were beliefs that I could sell dollars each quarter, and the best certain prospects, and I generally time to do it is at the time the did. Start off each day with the dividends are received from the thought that it is going to be a shares which he holds. He simply good day for you, and if you be¬ lieve it. it will be a good day. Get augments the dividend check with the feeling and belief as you con¬ more dollars to buy additional tact the prospect that you can sell shares. Many salesmen are finding him and you will be surprised this very productive business. It is a perfect way for your client to with the results. create a living investment fund more buy a good Mutual Fund regu¬ larly and be sure and reinvest all carefully and you tions an In order to be successful in the Don't forget to summarize your important sales points at the close Watch investment pro¬ interest most people. will gram who 23 you regu¬ They know the need for periodic saving or investment. Future fi¬ nancial independence is the goal of most prudent people. I, frankly, know of no other way to create a living fund for myself than to the (2391) j Tne idea of to become Procrastination weakness buying from CHRONICLE larly paid themselves out of what fails, then they have earned. If you ask the second a or¬ are FINANCIAL larly, an When questions, then make who & Scheduled for Outing ■ .■ Saffin, Boland, Saffin & Co., New York City; Andrew C. Spring; Outwater & Wells, Jersey City, N. J.; Glenn D. State Bank tional Thompson, Na¬ of Newark; Hise, Parker & Weissenborn, Newark; J. Albert events for its annual field day to day, June 17. The Oconomowoc be held June 17 at the Rock Williams, Nugent & Igoe, East Country Club is about 30 miles Orange, N. J. Spring Club, West Orange, N. J. west of Milwaukee and has a very A golf tournament will be fea¬ sporty golf course. Baseball and tured with prizes for low gross, other athletic events will be held first and second low net in each at the Country Club. Oconomowoc Lake Club is class, and there will also be play for the Bond Club Trophy and about one mile south of the Coun¬ BALTIMORE, MD.—The Bond prize for 36-hole handicap medal try Club on Lake Oconomowoc Club of Baltimore will hold its and has ample dining and bever¬ play. annual Spring outing on Friday, For non-golfers there will be age facilities, and proposed aqu¬ June 10, at the Elkridge Club, horseshoe pitching, tennis and atic events. according to Sewell S. Watts, swimming. ' Luncheon jyill be in the grill Baker, Watts & Co., President. Italian 30-Year Dollar There will be the usual kickers and on the terrace from '11:30 until 2:30. Dinner will be at handicap golf tournament, tennis Bonds to Be Exchanged matches, horseshoe pitching, a 8 p.ra. J. P. Morgan & Co. Tnc., Fiscal Members of the Field Day special event and dinner. *<2ent. fnr the Italian Republic and The Club is anticipating a large Committee are: Harry D. Miller, the Italian Credit Consortium for attendance not only from its & Igoe, East Orange Public Works, and the Chase Na¬ Nugent membership but guests from Bal¬ tional Bank of the City of New Chairman; Norton P. Rogers, Jr., timore, Washington, Philadelphia Rogers, Gordon & Co., New York York, Fiscal Agent for the Italian and New York banking institu-. Public Utility Credit Institute, an¬ City,-Vice-Chairman; William H. tions have made reservations. < & Co., nounce that definitive 30-Year Boland, Boland. Saffin This year's affair is being ar¬ Dollar Bonds due Jan. 1, 1977, of New York City; Wilbert H. Camp¬ ranged by a Committee headed by Campbell & Co.* Newark; the Republic, the Consortium and bell, Lloyd Fisher as Chairman. the Institute are now available Walton R. Dunn, Mackey, Dunn & for exchange for temporary Bonds Co., New York City; William E. B. J, Welch Co. Opens of those issues. Definitive Bonds Hooker, Herbert A. Hoehn. Greg¬ ONEIDA, N. Y. — Bernard J. will also be issued upon further ory & Son, Inc., New York Citv; S. Johnson, Bramhall, Welch has formed B. J. Welch exchanges of pre-War dollar James Co. with offices at 527 Main Street bonds, pursuant to the pending Barbour & Co., New York City; to engage in the securities busi¬ Exchange Offers. Approximately Edwin F. Kezer, B. J. Van Inge 1 ness. Mr. Welch has recently 78% of the Republic Bonds, 75% & Co., New York City; Richard H. been with Philipson & Co. of of the Consortium Bonds and 60% Marshall; Fov W. Porter, EstaUtica and in the past conducted of the Institute Bonds have al¬ brook & Co., New York City; Paris his own investment business in ready been issued pursuant to Scott Russell. Glore, Forgan & that city. Co., New York City; Richard F. such Exchange Offers, Oconomowoc Country Oconomowoc Lake Club Club on and Fri¬ The Bond has Club of New Jersey announced the program of Warren K. Van Baltimore Bond Club Annual Spring Outing 24 (2392) THE Favor Mid-Western Exchange COMMERCIAL when the $16 V2 Merger million cut Homer P. Hargrave, Chicago Stock Exchange Chairman, reveals Cleveland, St. Louis and Chicago Exchanges have overwhelmingly for plan. Minneapolis, Cincinnati,^ New Orleans and Pittsburgh yet to act. members voted It ICC charges if Even This & in was in¬ income bonds. 1947, when Chicago on & Illinois Southern Norfolk 5s and 5s, .both noncumula- May 26 by Homer P. Hargrave, Chairman of the Chicago Stock Exchange and head of the Chicago branch of Merrill Lynch, Pierce, Fenner & Beane, that members of the Cleve¬ on favor of for- mation of Middle ern Mr. Hargrave stated it probably and William be to in the Chicago. Min¬ neapolis and Cin c have i n n a t 30 to 60 days to ex¬ options to buy seats on the exchange for $2,500 and would receive $1,000 from the liquidation of the old exchange. ercise the new proposition, and the matter Homer P. Hargrave has not Perry, Secretary of Exchange, said of his organization members yet on J. Cleveland would have i not voted ment at The chief objective of the mer¬ yet ger been taken up is the creation of sufficiently large exchange furnish a an to by the exchanges in New Orleans and Pittsburgh. The Detroit Stock Exchange has already rejected the plan. As the approval vote of merger three exchanges can put the plan into operation, the matter now ladelphia Stock Exchanges already taken place. broad market for the securities of companies situated in the intended is to A serve. area it similar of the Baltimore and Phi¬ has Evaluating Railroad railroad only with respect to income bonds 1 have some Southern fixed Pacific. tinker all but 1939 want to you item equal to 3% an here charges were 14% of Today they are 3%. nues. can In well. as figures of solve don't you financial problem eliminate it on the reve¬ You with revenues much of if even a you entirely. Importance of Operating Efficiency gross of $195 million over a period the North Western could earn $2.4 million but could not earn $6 mil¬ lion. In other words, it could earn a balance for charges equal to 1V4% of its gross but not 3%. That is likq saying the temperature brings me to the impor¬ over a 10-year period will be be¬ tance of operating efficiency. Kail- tween 60 and 70 all the time. roads, their credit and their bonds North Western, as in the past, will used to be judged importantly on probably earn substantially over the basis of how $6 million over a long period of many bonds they had outstanding in relation to their years, or it will not earn its first earnings and revenues. Such re¬ mortgage interest. Railroad earn¬ This lationships longer the important»matter they once were". It is the operating ratios, transpor¬ tation ratios, that tell the story today and will in the future. For instance, if there should develop are no a financial problem for a railroad like Southern Pacific and some income account item must be cut, fixed charges get to be as little as 3% of revenues, no im¬ portant financial problem can be when solved even by their complete Certainly not much elimination. of a problem could dealing harshly part of the may cost can't solve of the solved the by junior interest which with debt 1% be revenues. railroad You problem any more by reducing charges. Cutting them wouldn't make a sufficient difference. They have become too small in relation to other cost and expense items. No future financial problem could be solved by doing something to fixed charges as low as 3% of revenues. It follows, 4 think, that junior bonds are much closer in quality to issues senior thereto than ever in our history and that the junior bonds of low-cost companies may prove better investments than the senior bonds of high-cost com¬ Getting back would like to to discussed income bonds, develop the idea and feature point of railroad that I think is wrong Western has bonds some bond 3s bonds. The first first sell at 91 prices mortgage some in¬ mortgage and the income 4Y2S Fixed charges last year $2.4 million, and contingent sell at 51. were one today. North outstanding and come to not apt to get down to extremely there. and It narrow are the 4%s too or may take some either too high low, although this time to prove. thermore, I am not sure period, not just a year that Fur¬ over a or two but extended period, $910 in $1,000 3% bond is any safer than over a stay never that the 3s say range and an has been that way will. I should never probably an $510 in the junior mortgage from a dollar point of view.- I know this is investment heresy, but I doubt that North Western's close think for man¬ was be done. Don't had ganizations that effected were est Probably would where it pay their considerable a income inter¬ pay is un¬ it to for cumulative, out railroads of not and are structures as As a offset an to result, in the that will have we date to would bond in be interest In of .- income.,, J • Appraisal appraisal any of ture provides lows: The somewhat balance items: road income and is used for the in a ing they Here The is which varies from 1 to 2% In about are are the of some trend gross, reduced of the the tonnage Go few are active capital funds, the money must be aside in a special fund for for equipment The or balance is sinking usually purposes, fund fixed is then bonds. normally payment of may be After interest used to that, a for income on sinking fund bonds. The sometimes with mortgage, provision bonds, and then for for income available for first pay remainder, dividends,: restrictions. In a be useful to apply charges. back 25 and years situation looked what see like the on guide. Apply past earnings to present charges. Check on what happened in depressions. Study the margin of safety. Find out what the cash resources are, what the^probable capital needs will Has the maintenance or light, etc., been be. heavy etc. . too is high the one bdnd or another too low. That margin of safety, which is the relationship of the pre-tax balance after charges to,the gross. On the fixed charges the margin safety last year was 7.8%, and the margin of safety for fixed and contingent charges was 6.0%. You of won't get any tell you that 1.8% in used to retire betterments. bad of safety between a bond. Yet and one the inability to charges, as smail as something entirely dif¬ its fixed ferent from the past cutting debt and fixed charges is going to happen. A future finan¬ cial difficulty solved as they wanted assurance that a large part of any net income would not be stockholders Western needs another reorganization because of prolonged are, interest maturity and substi¬ income bonds for fixed bonds. In return to ever they tution of paid of these bonds sells at 91 other at 51. If the North earn extension of railroad analyst to the difference of difference a bankruptcy. The bondholders waived certain rights, margin the the and from the reorganization under the Mahaffie Act which is sort of quick form ol' pattern cannot in the '30s and again of be early '40s Where sinking funds are two debt ; but or rather capital ings: One, gardless of how it is to be used; tw o, net income after funds. Both have significance; neither fect alone. . is per¬ 1 Since the end of the war earn¬ ings of many railroad companies been satisfactory, but you wouldn't know that by railroad share prices or prices of in¬ come bonds. Earnings have have been so satisfactory that relation there to where large maintenance in relation that if it so came stress, there would maintenance I and gross there outlined to a to to a the net period of be much reduce. 10% charges I more think reduction maintenance in North Western an is reltively low margin of safety are involved, there of reporting earn¬ real net income re¬ There are they have where not the of eve gaining advantages. These things important to know about. / The age of the equipment ought be looked at', too. This indi^ c&tes on hand one for the other, rolling stock ,and.011 new the . extent further economies one quately take . because year, goes mainte¬ forever on whether maintained maintenance and road a you is ade¬ unless 20-year look. a which charges ought'. to too, and not for considered, can't tell ■ to result from can equipment. Maintenance be much needed to is going to be money pay new hqw you matter The and whether. it been adequate is one of the that is uppermost iri railroad analysts' minds these days: "There have been somany questions in and wages of-materials old the in and yardsticks' longer be used. the supplies can no .1 think the best to study maintenance is to corhpare the maintenance of one way railroad with that of another that has about-the acteristics, and traffic same density, and which has. also char¬ forth, so been in financial position along. The chances are that strong a right': - a road financial prob¬ lems has maintained well. In other which has had words, if you are Southern take no look a wondering about Pacific at which had a along and is maintenance; :. Union lot of Pacific; right money probably in/good ' shape. I to want point, and bring that inflation. Go up has back more one do to three with years,- when the wage rate spiral started, companies, A B, one with a relatively low of operation (by that I mean and consider dnd cost two transportation, expense) maintenance, not and the other high cost of operation. with is It a an. rates and railroad and that manent ment five low result unless of which harmed this wage I doubt: years the first helped wages and the will there is second be per¬ retrace- and rate increases, The railroad that had ago relatively, a transportation ratio has been the net is small in a but are on a permanently benefited, while the high margin of safety are stronger one that started with a relatively than others having low margins; Yet figures by themselves may high ratio has been permanently suggest, if the margin is low, a harmed, unless the latter is able degree of weakness that may not through greater mechanization and really be there—for instance, in other improvements to raise itself a situation where for ways territory. ST&enerM rule, securities with and pay a" bad outstanding job arithmetical fact that" inflation of peaking of margins of safety and times charges earned, I would $200 million gross is for a long few cases there are really substanT likq ,to; say that none of these period going to produce more than tial capital funds that must be de/ gadgets by themselves tells a Very $2.4 million and less than $6 mil- ducted before arriving at a bal/ Horn More than I may now aplikely its gross ance available for income bonds /Q^plete story. "btuV'lto; be arguing against that will produce more or less interest. These include the Sea-^ than memorandum I put out April 11, either. board Air Line, Chicago Great the due dealing with the margin There is another aspect that Western, Baltimore & Ohio. The tft; safety lor bonds and also pre¬ more or less suggests that the Baltimore & Ohio set-up resulted ferred and common dividends. As price spread is too wide, of or be-* ef¬ to The past isn't necessarily going to indicate the future but it may be a general pay other additions. for interest there to It is basis of current charges. set various is better to It growing area than in one that growing, as in any other the where there in which the rail¬ past earnings to current by way of deprecia¬ tion charges in most cases. In the cases area operates. investment. ol to are , developed. on are that not of) of the follow¬ capital fund A and price fixed charges, with one or two adjust¬ ments, is called the available nef purposes: in an are increases fol** -and revenues, which by and large, reflect growth (or absence there¬ as after Also irm- those are features certain cases stoftk. payments,; The ordinary income bond indent/ improving dieselized and have not done very work on centralized traffic railroad a «hcmld';tl^^i!^tod;-c'arefully. most- in covered. ' Features - income its instance, Boston & exceptionally well an cases nance income bonds, there are; no same items that are examined large deductions for capital fuhfk when judging preferred stock or before arriving at the balance -first mortgage bonds or common for is'.< niques just most available still railroad run in economies been effected have For Maine interest downward; but ( M Is'it whether they fected. in most 1949 happens r»»*. . suefe; case whether has came funds. a paid in 1950. Excep¬ likely to be few. That most cases will (except rails, ties and ballast) .faarr mandatory, the Commis§if8J reorganization plans changed its capital funds provisions and permitted depreciation "of way ans$ found transportation1-ra¬ trends. operation of unless in its be going the other way? or pronounced trend structoys to and portant is outlook, however, could change if the economy generally had a very When charges for de¬ way say be and be tion^ provide for depreciation in its accounts until the way to period before that evidence income cases The ICC is and percentage of strength of the the operating and should have But would be earned the yet depreciat¬ ing road and structures. test a cerned, suggest bankruptcy, not were would surplus. have I cases. is proved one way or another. As far as the current year is con¬ Chicago Great Western. When cartie there -earned of the provided is in most that BankrupLcar capital funds without any offset for deprecia¬ tion of way. One of the first to be reorganized under Article 7T Law situation tios small a that much not pretty good Working capital posi¬ tion, cash, and an unappropriated der Article 77 impor¬ operating ' figures contingent charges ar<j such other income bonds would reor¬ the of ' the and one we income bonds. earliest tance Fixed bad year of earnings and no income bond interest was earned that all interest. The fig", dieselizaticin and centralized traf¬ fic control, but there i;s not much left to do unless some new tech¬ minute if a of Would it to good The Price Spread just are makes panies. I ings Neverthe¬ can set It has done if not earned tem¬ even porarily? That one before maintenance Capital funds and sinking funds, too, are factors having to do with early '40s. ket says that the 3s are a much stronger investment than the 4V2S. The market says that on a cumulative in' Sinking Funds and Income Bonds preciation of charges $3.6 million. At 91 the 3s yield 3.42%; the income 4V2S yield 8.82% currently. The mar¬ by control/of number of (Continued from page 2) situation. the income in¬ cover agement pay interest where it would woe pay expenses, let us say. fashioned way. did Income Bonds terest less, nationalization would be the result, as I see it, because you can't solve the problem in the old- was but other railroad bonds the income by the' govern¬ that could " happen,; you have to have considerable the sufficient to 100. That isn't quite so as it may sound. Before bullish earn any stressed gross not and bonds be taken in out the details necessary to make the new organization effective. Stock Ex¬ located mortgage will take several months to work a West¬ change first I now year there important railroad having outstanding income bonds that did no on ures. was problem is solved. going to happen is that if North Western ever gets into no contingent in¬ terest. a position where it can't meet its Probably one reason (and many) $2.4 million fixed charges, there there are why income land and St. Louis Stock Exchanges along with those of the Chicago will be a subsidy for railroads or bonds sell low and yield high is Stock Ex-3> government ownership, nationali¬ that they h3fve not been tested in change have awaits only formal action by the zation in some form or another. a period of'tCw earnings. Inves¬ If and when that happens, all fair¬ tors wonder Whether management voted overorganizations involved to become ness would suggest, that both the would make every effort-to earn whelmingly in a reality. announced was much too 4iv^di4-no^^a^Last fixed the payments Eastern again, for fixed eliminate you charges, What, is terest only $2.4 million. are now Thursday, June 2, 1949 have been only two lapses in take to charges and $2.4 million. to You can't do that of able was fixed down them CHRONICLE FINANCIAL & amount equal to fixed and in as age to save an charges. amount equal No of one position. geographic location traffic—factors (In each case; type of cannot be and which changed—must be taken into count.) not are ac¬ These effects of inflation generally appreciated but they "are important and partially, explain the tremendous differ¬ con¬ tingent charges. Another company with a larger margin of safety might have to cut maintenance charges a much greater percent¬ fixed out of that to these single devices will tell the whole story by any means. Don't rely ences in earning power recently demonstrated by the various roads, with ,some of the railJ old line formerly well regarded companies not doing well so known tionally well. well, with other less names v doing excep¬ THE Number 4808 169 Volume COMMERCIAL CHRONICLE FINANCIAL & (2393) wishes to capture it, I sometimes Market Plight of the panded (Continued from first page) , until 1936-1937, the return years from stocks remained less. In other words, the investment market's judgment favored equi¬ ties, in the belief that, over a pe¬ riod of time, the country would common on absence option value, which was a real value even in the midst' of great uncertainties and the most depressed conditions. Since then, the trend has changed. Sometimes the spread narrows, but always the yield on common long-term a been has stocks stemming of from the durable consumer substantially higher, until today corporate bonds whereas — common stocks of investment quality may attack capital, as I said, began in earnest around 1936, and has continued apace. Its weapon—a formidable I situation relentless attack from unsheltered a less be at expects capital exposed vagaries of fortune. There one explanation for a dif¬ to the is why investor the than times should return riskless the risk capital. I on understand readily can is ; only ference wide so to range up to as tax causing our creeping a that is sion, State, paralysis in has alarming productiveness, expan¬ resil¬ and venture capital, the life blood of progressive economy. There are Perhaps concrete example will make my point clearer. Re-, icently a large public utility corporation offered additional common a stock. , stantially for money than 6%. more financial concerned new price to yield sub¬ purposes at a tire The The ties. at en¬ community * the over same was of the success issue and its effect on other sell equi¬ company's bonds price yield around 2.75%. In 1926, the stock, then paying the game dividend as at present, was selling at a price to a to yield less than 6% and its bonds sold about on all, there dred 5% a basis. After only perhaps a'hun- are companies giant in United States similar to the , the one I talking about/. Smaller com¬ panies have to compete in raising am capital with the simply cannot of result that they afford additional with All fortunate individual on taxation the It we to finance ownership funds. be acquainted with local companies in this posi¬ tion. Perhaps I have dealt too must you gains these to income, and provisions. tax strategic that areas directing attention. It is believe, that reforms are here, income; the double of dividend capital is un¬ result. They are the progressive surtax rates steeply we should made be in interest the as soon as of our pos¬ pres¬ concentrating fire, I do my not wish to seem unaware of other defects of the tax structure. let me tribute pay to Here two your able to Senators, which I am happy do because of their conspicuous ability in of taxation realm the and because I can avoid being ac¬ of cused favoring one political party against the other. One of the most hopeful signs indeed is this of obliteration very party lines in recent months in the fight return to part in the improve¬ ment effected by the Revenue Act important of 1948 Johnson has Senator and work to been hard at accomplish the op¬ pressive excise levies that were increased during the war. I am extremely happy for another reason, that both your Senators have become known nationally as the of repeal many They the power that sure will be Capital Not a Field for Banks Venture for capital commercial not banks field a other or lending institutions. New com¬ panies cannot have the record or earnings to power tensive loans. goose This is support ex¬ Small and medium- pluck the feathers of the to years, without having it cry out. philosophy, until recent applied to the double taxa¬ dividends. of tion It income. was size companies do not have the huge working capital resources of strong companies to carry them along, and loans have to be re¬ Act of 1936 that paid. tax. What such enterprises need is permanent funds, date, tions. criticism due must • and focal finance, center for both the and ■ a the shopping doubtless from greater manufacturing activ¬ ities. You could thus achieve a more balanced entire area shareholders Your variety of economy. is rich in a resources., Development of these resources, introduction of new in¬ dustries, expansion of local manu¬ facturing enterprises all call for risk-taking, for the use of capital the Double In 1913, when the cor¬ poration tax was the same as the normal individual rates, namely, pediency. from business alysis in David of his entitled, recent forms of It is time to recog- p!ze that the postwar expansion in. large degree was launched on a flood of government debt cre¬ war years, during the an ex¬ mounted be¬ McCord Wright stimulating book "Democracy and Prog¬ He1 states, and I quote, "Liberals, limited has yond any point orginally contem¬ plated or visualized. Progressive taxation has been abused beyond recognition. I have been impressed by the an¬ ress." sted taxation system purely as an ex¬ tax obligations risk-taking. the sur¬ crept into to the normal as well as without the protective features of or were by individual made subject risen, and particularly since 1936, the burden on a dollar's income center point for trade, distri¬ and plains,. would corporation divi¬ received dends the Revenue adjacent great benefit Your bution Rockies in Colorado policy commercial great a been 1%, the corporation tax "was re¬ garded mainly as a device for collecting dividends at the source. I need not tell you that as the tax rates on corporate earnings and on individual income have their depositors. protect and no institutions financial of holders city, no restric¬ Nothing I have said implies sinking funds, no that with has It superimposed upon the practice of permitting interest to be deducted in the computation of taxable net particularly country, have in this advocated high pro¬ gressive income taxes with the largely unconscious, or unex¬ pressed, mental that is the way assumption that to get a nation of of money being at all our reciprocal reciprocal, or pro¬ benefits Capital Gains Taxation On am feet time cause a of The interest. capital gains, tax rate on evidenced by the as provisions would increase the of tending to freeze it. One premise in the many changes made in the taxation of capital gains has been that it is wise social policy to mobility of capital instead dampen speculative ardor. Wittuout discussing the merits of this theory unsuccessful the and at¬ tempts to define logically where speculation begins and is trans¬ "investor" in the sense—would be unpop¬ that of lead revision in a ownership to might And stability an for excuse for reasons would only fur¬ sure, am the inter¬ capital instability. itself, I urge liberal off¬ be¬ of the economy we have moving toward, it would be been of more revisions, overhauling, at that rate, will never arise, for in the event of stability, which I contend is the nish Lower rates and seeking lifting new taxes. The to increase taxes is a sick¬ from which recovery appears ness always in the distant future. to be The wartime excises were tempo¬ the tax on electric energy; so were the sales taxes adopted in a number of munici¬ palities, ostensibly levied for the benefit of the unemployed, but a so rary; was fixture when there later were no My patience is worn thin with who those will not let facts the with their pet interests. interfere in and $42.8 billion in the last quarter to $37.8 let more, istence when - not were capital obtained tion Further¬ set out the powerful me which controls ex¬ gains taxa¬ foothold a in in the tax structure: regulation financing under of the (1) SEC public new 1933 Securities Act. (2) SEC regulation under Sec¬ tion 16 of the Securities Exchange of 1934; I refer now to the so-called "insider" trading regu¬ Act which ally, as a regard, incident¬ I harmful profoundly in its punitive provisions and sale of equity securities by company officials and large stockholders. (3) Regulation of margins by the purchase the Federal Reserve Board. In a This sweeping nature. study of selective credit con¬ authority is of Security Loans of the Federal Re¬ stated: "The re¬ strictive potency of the .instru¬ ment was tested more decisively Board, raised the level 75% to a lion; and in personal income from $219.6 to $216.6 billion. Com¬ pensation of employees also de¬ clined. Only savings increased to unprecedented rate, excluding the war years, to, $21.2 billion from $18.4 billion in the final quarter of 1948 and from $15 bil¬ lion for all of 1948. I cannot wax gain in risk-taking time these savings investment business interest 2,700,000 to more 3,000,000, and now is larger. a 50% with an excellent record, growing rapidly, and operating in an unusually stable industry. Let us look at the new issue figures company far this year. Common stock offerings for new capital through the end of April have been at the $50 million a month, utterly inadequate trickle if want to keep 60,000,000 per¬ rate of only an we gainfully employed, and the volume of trading on the Stock sons by Exchange in relation to the num¬ ber of shares listed is at a rate period up of only any in from in¬ year are the equivalent of million weekly, yet there was trepidation about the place¬ ment of approximately $25 mil¬ lion of a high quality equity in a prac¬ are sources doomed to failure if the ment—the not private invest¬ people—are of American encouraged to invest. Let us building up sacrifice of not think in terms of consumption industrial sion and the at investment for products, new expan¬ of sacri¬ or ficing consumption to capital in¬ vestment. They can and must move forward together. Once it is State control and industry is to be avoided, the adoption of the alter¬ native of making risk-taking more agreed that operation of attractive is inescapable. An electric operating barely utility « company South America in can increased de¬ A 20,000-k.w. being built at Ameri¬ the meet mands for service. addition is in the State of Sao Paulo in cana A thousand miles of pipe¬ Brazil. line the wastelands of the across Arabian and which, completed, will carry 300,daily, will when peninsula, 000 barrels of crude oil constructed be than $200 at cost of a more million. It is estimated that the develop¬ of ment the iron deposits in ore Quebec and Labrador to the stage of bringing properties the into production will require some $200 million. These examples give merely one inkling an of what is in store, assuming stabil¬ capital is at hand. All of these projects can get beyond the blue¬ print state only if capital is obtainable. The world is eager to know the United States has supply greater quantities of sities and how learned to neces¬ goods making life eas¬ ier and happier for greater num¬ bers of our people. This spring, the staff of our Embassy Library in Belgrade was astonished be¬ cause lines of people were form¬ ing around the block, waiting for a chance to enter. American a a The attraction story of the growth of not a was political institutions or textbook on economics, or even lusty historical novel. The at¬ traction a the accumulation the and that could Jugoslavia business people of growth of excite establishment the into went and ordeF cata¬ mail a was The daring and vision that logue. funds of through the years could hardly be duplicated policies. At existing under tax « home, new products of a be¬ variety are being wildering A revolution industrial is new in planned and introduced. the dash the hopes of peoples everywhere to attain more closely our own liv¬ ing standards, and to arrest our progress at home, is to continue They way to making. ital. Given a cap¬ change in policy, by revisions that respect the in¬ tax vestor in ownership, not next year thereafter, or risk discouragement- of the troubled tainty vision and but of more now, more the uncer¬ unemployment be banished. can Again I look to the mountains the great plains where pull¬ and ing down and envy have no place, opportunity for of resources and the guiding stars of the and where greater development men are pioneers of yesterday, today and tomorrow. that spirit I ask your help cooperation. Our task is as worthy as its objective — more In and jobs and greater opportunities for all. New of New The world Capital country and the whole need new capital. That part of savings need to be devoted to new owner¬ means a ship nies securities or the added a . ____ With Dayton & (Special larger investment, in new compa¬ and in existing enterprises. it is fantastic to think the standard of living can be im- I and contingent liability if one is for¬ tunate enough to have a gain and about one-seventh of that in 1926. speculative wave getting out of hand. When I contemplate the taxes on income from in the first quar¬ 7,356 this year, or $400 under penalty of sus¬ of de¬ secured loans likelihood State Savings at the rate of $21 bil¬ lion pension of all rediscount privi¬ leges at Federal Reserve banks. Surely, with these regulatory and supervisory powers, there is little York Unemployment 17%. creased than far as to direct any mem¬ bank to refrain from further for 1948 to of some so such collateral new New At the same accumulated, corporations clined from 8,859 ter capital and surplus which may be represented by loans secured by stock or bond collateral and may to one year in formed percentage of individual bank its of number the so of its saving reflects uncertainty and no (Feb. 5, 1945), then to a level (July 5, 1945), and fi¬ increase of movement, the present volume of (4) The Federal Reserve Board under certain conditions can fix ber direction the Considering figure. this about enthusiastic 1947." go into only an nally to a 100% level that applied from Jan. 21, 1946 to Feb. 1, the do¬ gross from billion to $176.6 bil¬ of $181 rate level at which they 1937 of billion; and in personal consump¬ expenditures from an annual requirements margin since stood had rate investment tion in 1947 and 1946, when the Board from the 40% annual the mestic a trols, Dr. Carl E. Parry, who was then director of the Division of serve address My conviction is that these The tendency has been to seek greater security. putting the President's inaugural ity in international relations and unemployed—and so it goes. government's national income figures for the first quarter of this figured to investment, I point out year were published earlier this They point to a decline that, in recent years, the whole month. greater have I structure. worthy objective in Point Four of The exact moment to do the ular. relatively low revenues received by the Treasury in recent years .rising values for all kinds of capital assets, keeps individuals from accepting profits and accen¬ tuates the advance in prices. make to use broadest est be inflationary an contraction sets is raised that this isn't fair deal for the investor— I said that may comments ef- to When in the cry and unwise be in changes the where few would period. to the remarks I have made else¬ a it phase capital gains, I wish to add almost non-existent. how flow forthcoming to the indi¬ on Venture i vidual." cynical statesman who declared that the tax problem is a but de¬ government bonds, and hence of the State, is directly any measure was The portionately of the East. It by the on corporations and increased without ogy. are few a may whose into government lations Xhe real importance of these facts is that venture capital is nation a clerks slaying the myth that sound finance is exclusively a possession exclusively in financial terminol¬ quote: "We or controlled by the State, population not of independ¬ employees. of advocates of sound finance. by or fiscal soundness and to Senator Millikin had an equity. I instead pendent set ent and future welfare. In get economic life is carried actually implications for the future a middle-class owners, well Paralysis structure economy sible 100%. I of ent of the matter. believe that the present Fed¬ eral the . weapon consideration responsible for primarily responsible for this anomalous not afraid cause of rest to ways of plans to Speak Out Time I a The tax heard serious study is being, given tice. quotation really goes to the root —has been the tax structure, A Creeping itself." present his and venture on purchased to return well over three particular features of the tax structure that are 6%. To my mind, the overshadow¬ existing this investment has not completely killed. owned The be ing spirit of been interest kind, but that using strong language. This is a time to speak out. The way to strike at injus¬ tice is to strike now. Capital is timid. When inflationary tenden¬ cies predominate, we are told that tax revision must be delayed be¬ fulfill ience of business issues the independent businesses and many middle-class independent people. But this assumption does not automatically enterprise. It is yield slightly over 3% on the aver¬ age—which is not true of govern¬ having this effect primarily by ments, and many top grade corpo¬ impeding the creation and flow of rate little the at not in ownership of any middle-sized many goods. dnd ownership of the strong¬ American corporations would have resulting financing and saving of war individuals grow est supply money wonder 25 say proved here and abroad with the to The Financial Gernon Chronicle) MINNEAPOLIS, MINN. —Nor¬ A. McClure has become asso¬ man ciated Rand Dayton Mr. formerly Co. & Gernon, McClure was with Tower. with Central Republ" 26 THE (2394) COMMERCIAL & FINANCIAL CHRONICLE Thursday, June 2, 1949 the United States, seems to have no importance to these As We See It easy of any his . (Continued from first page) The Truth of the Matter ment. The truth of the that is matter of the small field results which to Mr. Jones refers, and many ndications of underlying , do in choke we business clear helping country. ~ , Thus all, of them go into the obligations of the Federal Govern¬ funds biiild up the reasoners. for > growth leave the and the to ' " the great corpo¬ rations. of the conditions so cited as As to other evils, the restraints This whole situation by which the FDIC finds itself i strength of the current-situation, on personal development, ; 1 the' confronted—and which confronts the public at various lave been growing impersonality, of am in¬ reached-by the simple process of coining public; dustrial debt into ; points—is in some of its aspects well worth much better; society—these, to the ex¬ money-—or what amounts to that; The process tent .that; they exist, ' are ;;outside understanding than it-is currently receiving; Mr; Jones,-T 3y which this was; accomplished places in -.the- hands of the area of government : iir discussing some of the aspects of this more control:., or banksr—and others-r-^securities which for general all'practical pur¬ remedy and lie rather within the situation, lists certain developments which he believes area of personnnel' and poses can by fiat be converted into legal tender virtually corpora¬ to have been responsible for the tion* policy. It has been catastrophic epidemic - on notice. - How,; in these circumstances, could a banknot; perience that in the v my ex¬ of bank failures which led to the creation of the FDIC.: last -few oe able under virtually all conditions to pay" oyer to: its years there has been very 'much Most careful students will, we believe, find his analysis depositors on demand all the | currency they demand?more thoughtgiven-; by country¬ ; this situation less than satisfying at some points, His wide corpbratBons-fhan formerly 7 have we really foundTthe universal cure in a to the social y Remarks having at times to do more with symptoms or nrgsponsibilities which variant of the old fiat currency bqUoji? So far as we are r superficial conditions than with fundamentals, but his they bearjlandto.the acceptance of those social concerned, the question answers itself* i responsibilities remarks are ,r . , ,v -. . weakest, when he asserts that the conditions speaks have now been made impossible, at > ciof which he by, management. ' Self-restraint self-jdiscipline in this area' local and or in the future, by various public measures and by controls exercised by government or its agencies. present Mnsi^We '•» nowhere are were near so generation a , rare as they ;" ago. .<r..*Y' Agriculture — (Continued from page? 17) Then and Now; , ■ ■, ,; ;he foreman of !Mr. ,Jones* who quite correctly lays the blame for the the size: farmers to enable to withhold their products if does not conform price them to their, ideas.; whai%the.*rgentleman said- do reference to the other Press the of accounts not indicate that he made any largesse tillers of the soil receive now Regularly 1 rom their fatherly • governlmentVin: Washington, but one can bearing the likelihood of upon thus upon The "BankS; suffered(in the on bonds that had Jbe4n'lft£de on banks. coinmercial So there is loans on/real hazard no be can date an no assessed are little point in were there/Another, question that the situation length. it stands as There as of this suggests small likelihood of anything in the nature epidemic of bank failures. economc em¬ Something is involved more than politically socially, radical. bitious and that sure great social, our am¬ We changes economic and political life if these units in*- the rate at which at decrease and surely i possible to predict that great social and political changes would result from a much further crease by the FDIC, there would be discussing these questions size is will result in closed because of,depos-V itors withdrawing or trying to withdraw their balances. Deposit insurance prevents this." ; ' v If all that is involved in all this face impossible to predict just what would take place, it is be 0 and much very to come greater in more overshadow size even a area of our economic' life■ They do, as they grow,' develop a corresponding flowering of,, big , labor and big government to big business. That at least match we can see. What more there is in prospect it would take more of a prophet than I am to predict. How true are these various charges and, to the they are true, what extent that be can done about them? . to ieve small the at diffi¬ new business has in that period, I bewill find that it is gov¬ tation has been responsible.for the problems of the small and that man they have not arisen much from intentional repres¬ or incidental and unpremedi¬ so But is this the whole Story story? Have underlying ills which resulted in bank failures in the past is all this, which at times seems of basic leaving maladies, really but be all? us These to have the answer, very serious can what greater —and the are We which must some to be of the most be we the adversity and the field banking. a common liquid" in time such as this. (notwithstand the approach 0 taken to protect to do with credit money, and a degree Government. of years to cash at a and current concep¬ completely liquid if all its assets such obligations of the Federal That many of the latter have run coun¬ heretofore known obligations. Under before a number maturity; and that the remainder days) could be met by the borrower only if someone else is willing or can be obliged to buy other securities of the of them (even if due within 30 have to admit that big and apply sanctions which to be appears overt no willing to in even cases attack free on competition has been made. what shall be is answer done As to about it, clear. The in the Federal Court's decisions have put within the hands Justice of the Department of to weapons abate practi cally every economic ill resulting from the tion. We repression are monopolistic of competi¬ well armed against practices. While other devices have been such as Federal suggested, there is vices incorporation, no are evidence that needed. The new de¬ present laws and the court decisions pro¬ ample restraints and sanc¬ vide against the suppression Government of Something more probably needs to be done to foster the growth of small business in a society which big business tends to shadow it. Here we ing about illegal are or in over¬ morally not talk¬ rep¬ rehensible practices but simply of the natural outlined over and advantages which small. big already business has It should be observed remembered 1929 depression Problems ofr'Small Business and Government In the last 20 has ness years'small: busi¬ increasingly deviled. No been\J>£- who has not tried one that since the have had from which em¬ our use revolution" I in¬ the am much of the invi¬ such a change pre¬ sents to radical individuals, groups parties. > T am thinking of and something deeper and I ines¬ more thinking of the am fact human society ^will have to adjust itself, by means not easy to predict, to a new kind of indus¬ trial society. Those who hope for the further.; development of this type of society as being the one which offers the greatest oppor¬ tunity for the well-being of its citizens, will be deeply concerned ' , to with it cope realize can what problem reports to the govern¬ ment and controls by the govern¬ ment pose to the small business¬ a man. The big company organizes special; departments and assigns special officers to take care of governmental clude relations, which in¬ everything materials from allocated to' income «and unem¬ ployment. taxation. The little has to do it all himself, man at least or with the uncertainties which tend the further nomic growth of empires: at¬ eco¬ ^ v'' %; y Those: responsible for their de/ veloprnent have t.to an extraordi¬ y degree ;kept;:that develop-, within., the* tihiits .of,. public interest, 'of whibh^key are* keenly conscious andthey are nary menti immediately responsive.. But that will not save our ;society from changes should the proc¬ ess proceed more rapidly and minishes his prospects for profit more drastically than it now seems and growth. to be doing. The scarcity of risk capital Emphasizing this possibility, we must, I believe, be largely at¬ are forced to raise the question tributed to new relations between as to whether voluntary limits business and government which should not be put on the ultimate have developed in the last 20 hire outsider some :td/ do it for him at a years. I would be the last to sup¬ seriously di¬ port the idea that those relations ideal in the years which led to 1929, for if ever there was a business debacle for which busi¬ up and ness bear the not government responsibility, it must the was depression which followed the se¬ curity market break in 1929. From that point on, however, it is gov¬ ernment which must bear the re- sponsbility for attitudes and poli¬ cies which have made the accumu¬ lation and investment of risk cap¬ ital unattractive or impossible. The largest single element in dimming the prospects of the de¬ velopment and growth of new and small business policy. has to way from fect put tax our re¬ de- one yet found that taxation prevent bearing with those on and wars We have not presson. a been Terrific taxation has sulted from two funds There who into is deterrent would ef¬ like to investments. new not merely the prob¬ lem of plowing profits back, which is the only satisfactory way in which business the the can small return part on of equity the and a satisfactory capital on medium-sized larger investor. A with pencil and paper to him convince medium There is also grow. impossibility of { radical . cost which the and little figuring that is enough it is more profitable for him to stick to the low interest rates of tax-free gov we so capable. of competition. "liquidity" is "proved" by citing banks plus their holdings of United bank would be consisted of not fact tions assertion that the banks of the This the reserves of the States Government a nothing , It is are of shoulc we hear it said that now another or determined more important of these has in measures day of the questions should the oftener one adversity) since steps have been one tions, a cure an happen to the economy appears various try to many as exposec lqng-term hazards asking ourselves. ing to appear Or elimination of symptoms us, if not in danger of bank failures, then to serious plague really been cured? do business leads to monopoly or at least makes it possible. As stated, the Supreme Court recognizes that of that The unrestricted society. When, I "seeds tated restraints 'on the part of big business. " , final a thinking not sion . in the end product of dustrial which we ernment lie as term were We Not the Whole revolution bad the - by to the considera¬ us seeds:'of pires however, to the as which y ^ trend toward great economic . can the ' which the simple fact that great business firms have become shining marks and invite attack from the * brings of Industrial .\ actual record disturbed in the number of corporations by which the majority of the/ busi-! riess of this nation is transacted. it This tion Kind" of Society culties being growth of the big cor¬ porations. It is impossible to pre¬ dict just what would be the result, should it take place, of a further While '* ' final and,more gen¬ about the in New ■ for a reason increase ■ sions of support of small business. When we look, ;hese and paramount factor that contributed to bank failures was fear. Thousands of banks insured banks There is eral Foresees administrative and legislative sources an-uftending stream of ex¬ J pressions .Ql^c'oncern and profes¬ "Big Business"? tere Con-* estate .O . ife. estate mortgage, inflated basis. an gress^hq^ yery\%lsely restricted r What About Future Size of pires which have become such an important part of cur business loans" 1929 crash and there- loans"a&dclired by real lk>' growth, of the great danger. other similar, suggestions, let Mr. Jones speak for after) losses ' ; collapse of the securities markets (Mr... Jones only as referring to loans dm stocks) is cited himself. . " ; the comment that regulation of "brokers' the Federal Reserve has now eliminated this As to ; a going bankrupt and with by • farmer a the risk of failure of rural; banks. is quoted ; scarcely doubt that these payments have v~ • failure'of many rural banks upon adverse conditions in the early 'Thirties in agriculture, is now apparently certain that all is well in this segment of the economy since the Federal Government now "supports" prices and lends funds to plant one-fourth a ernment bonds rather than to risk expansion of these great aggre¬ gates of capital. Many years ago the Supreme Court broke'up the Standard whole Oil Company. On the the separate parts became really separate to the extent that they have actively competed with each other. That breaking up ap¬ parently did vestors and no public In fact it may, I purchasers. as harm to the in¬ harm to the no believe, be fairly argued that nothing but good results have fol¬ lowed from it. In view the of experience of Standard Oil and of the consider¬ ations which we have just been discussing, is it too much to sug¬ gest that both business consider¬ ations and the public interest re¬ quire that voluntary limits be set on the largest of these economic empires? One thing is sure. The business decisions of these great corpora¬ tions, and of the great groups 01 organized labor as well, are no longer private matters. They are public matters and the public in¬ terest in decisions these is get¬ ting to the point where it over¬ shadows any private interest. In¬ deed, the private interests of the participants, whether stockhold¬ ers, wage earners, or what not, tends more shadowed and by more their to be over¬ interests as citizens. It zens is on our that -all the intricate interests civilization be decided. as citi¬ problems of our must finally THE Number 4808 169 Volume COMMERCIAL FINANCIAL & be Fair Profits («») v kind / or another in many states—in fact, sales of its prod¬ normally made in every State of the Union. United States Steel's rated steel-making capac¬ ucts, >are 1, 1949—31,277,500 tons —comprised 32.5% of .- the total steel :• capacity 1 of > the rcountry. These figures - are mentioned to indicate the national character of thei £teel Corporation. Stockhold¬ ers and employees are not neces¬ sarily the only ones affected by decisions of the corporation. The interests of customers^ and the general public are also involved. The management of United States Steel must have a broad perspec¬ tive in the direction of its affairs __a - point • often overlooked by those whose own personal situa¬ tion seems to them to be para¬ ity; at Jan. mount. .' At - < the or other bene¬ granted to them. fits one V Financial Suicide or substantial welfare (Continued from first page) Any such general allegation profits neither is The rate. of excessive- fair nor of each income should be appraised pany Last had is 1 . United year on States profit of $129,627,845. a a ' , lot of money. But the ber of dollars tells whether com¬ the particular basis of the facts in the situation. accu¬ Steel That high of or In steel products too low. by this meet • In II. accumulated - tionship materials tial cooperative rela¬ between employer and the absence of a and to March 31, increase to its double revenue tax upon the corporation approximately $748 this program. To date, 1949, on United States Steel has been able to finance the cost of the various were a few years ago and accomplished by the utiliza¬ been belongs largely to labor,, and that therefore wage rates or employee benefits should substantially be de¬ out of current increased. to amortization for Some, customers would others allege and higher that depletion and reserves — amounts regularly and properly set aside operating revenues the of taking purpose very of the constant wear and tear care dollar of facilities—and also by of plication of earnings, in excess of profits are clear evidence excessively high steel prices that and When some long-deferred should be cut. stockholders, would be of the opinion that prices it to comes the management is dividend declarations which have been reinvested The amounts so over the years. set aside for wear at and of proper working But the only continu¬ est steel shipments for any peace¬ that their investments made pos¬ States Steel believes that equity ing source of money .with which time year in its history—20,655,- sible these current earnings and financing is a sound way to fi¬ United States Steel had that they are the ones entitled to United States Steel can pay em¬ 000 tons. nance new capital expenditures. ployment and other costs is what the highest dollar sales for any share therein by receiving larger Should the time ever come when the corporation receives from year in its entire existence—$2,- dividends. Members of this latter United States Steel might desire sales of its products and services. 481,500,000. The profit of the group would argue that they need to raise money through an issue Many individuals assume that corporation on that vast amount cash today to pay present high of its common stock, conditions United States Steel,, or perhaps of business was naturally larger living costs and that it is of would then have to be propitious any other large industrial com¬ in dollars than in. earlier years of no particular concern to them to make such equity financing a lesser business activity, but nev¬ whether or not earnings are re¬ pany, is able to absorb any in¬ success. The climate for equity ertheless it was equivalent to a invested in the business so a$ to crease in its operating costs, with¬ financing is presently not too fa¬ return of only 5.2% on sales. To equip the corporation to help vorable.; out increasing its own prices. ;/ • conditions. ■ people take the trouble find out what items comprise Too few t to enable that vast amount of to ness busi¬ be conducted in a single United year, 10 some States Steel, as of Dec. 31, 1948, had a net invest¬ ment of approximately $2 billion its costs for 1948. United States in assets of one kind and another, Steel must buy from others many including steel mills, mines, fab¬ ricating plants,: transportation fa¬ products and services in order to carry on its operations. The cost cilities, and the like. The profit of the corporation, before interest, of such purchased goods and ser¬ in this record-breaking year of vices in 1948 amounted to 43% ..employer's costs. > Last year employment costs of United States Steel represented 44% of all of an the steel needs of the nation serve or 25 years It hence. and tried American heritage. seems nation to me Phila, Bond Club Field Day Club Bond the of President of Philadelphia, has announced com¬ mittees for the Annual Field Day Club the of at the 3, They include: Committee General & Crouter Bodine, M. Lawrence — Gordon & Townsend, DeHaven Crouter, « Chairman; Graham, Stevens, & Co., Vice-Chairman; Loring Dam, Eastman, Dillon Parsons and June Friday, on Philadelphia Country Club, Bala, Pa. Co., Ex-officio. & Brooke & Co., Chairman; Acuff, Chaun- Merrill Lynch, Arrangements—John K. Colwell, P. cey Pierce, Fenner & Beane; Samuel Phillips, Samuel K. Phillips & K. Co. . , . . • . Entertainment—Samuel Evans, C. C. Collings & Co., Inc.; Chairman; W. Lippincott Colket, Penington, Colket & Co.; John E. Jr., Fricke, Thayer, Baker & Co.; Sid¬ ney S, Blake, H. M. Byllesby & Co., Inc. > Publicity — R. Conover Miller, Miller & Co., L, 'Newburger, Jr., Newburger & Co.; Carl Necker, Moncure Biddle & Co.; Raymond H. Gage, Jr., Paine, Webber, E. & W. R. C. Chairman; Frank that the elimi¬ of. unsound Committees PHILADELPHIA, PA.—Loring Dam, of Eastman, Dillon & Co., the ap¬ fault be¬ and exhaustion of facilities during cause the profit of the corporation the four years 1945 to 1948, in¬ ations impossible. has not been higher in these re¬ clusive, aggregated approxi¬ What was the outcome? United cent days of a sellers' market. mate $452 million. States Steel in 1948 had the larg¬ Other stockholders would say The management of United fair wages are spent tion of depreciation, maintenance made such full oper¬ employees. No one will question that our workers are deserving of corporations whose securi¬ so well known to you. I many ties earnings. Some labor projects included within this pro¬ point to the fact gram without resort to borrowing that dollar profits are higher than or to sales of securities. This has about costs and profits. close to maximum capacity, ex¬ Everyone will agree, I believe, that our business cannot continue cept in those periods of the year when strikes, shortages of essen¬ to be conducted successfully in speak earnings contend that the increased income steel from witb advocates would mand, the various mills of United States steel were operated at outset; I should like to current unfair an they effort an pace these same pent-up demand "for steel of all kinds, largely as a consequence of War its million 1948, there was an abnormal World of ernment too are keep the had amount does not establish whether prices to period would be taken dends, and thus enable the gov¬ The dollar investment. on modified and time to stockholders in the form of divi¬ nothing about or •return base more num¬ not the profit is-ade¬ or enlarged time 27 growth of the population, am not, advancing a campaign of has a technological advances, and the propaganda — that word somewhat unsavory sound—but I away to a considerable extent various developments which are ever taking place throughout the am urging a broad program of through additional taxes, regard¬ public education of the virtues of less of whatever current earnings United States and the world. our competitive free enterprise are adequate or inadequate on the Construction Program system. For the public good, all basis of a return on sales or a of us should be ready and willing Our return on investment, Others present construction and to be participants in such a pro¬ would penalize the corporation improvement program embraces financially if it does not regu¬ the expenditure by United States gram and thus do our part toward larly distribute two - thirds or Steel of nearly $1 billion. Up to preserving for posterity a great fied inadequate on the basis of either a return on sales, or a quate (2395) CHRONICLE obstances conflicting points standing in the way of desirable of view cannot possibly be fully equity financing by American Jackson & Curtis. met. On the contrary, the Di¬ corporations is a matter of deep rectors, in the exercise of their importance to everyone in this Tennis—Joseph C. Morris, Jr., composite best judgment, have to country, unless the American Hornblower & Weeks, Chairman; decide what course of action is people are prepared to accept the Winthrop H. Battles, Battles & best for the corporation, all things nationalization of industry along Co., Inc. considered. They have to bear in British Registration—L a w r e n c e M. lines, which I very much of All these mind that the corporation is not equivalent to a return a creature merely of the moment, question. This country has grown, Stevens, Graham, Parsons & Co., developed, prospered and become Chairman; Frederick W. Morris, 6.5% on i investment, that is, but rather is a continuing enter¬ that year. powerful under an economic sys¬ 3rd, Smith, Barney & Coi, Lewis total assets less^- liabilities other prise of large potential impor¬ tem in which competition, the C. Dick, Lewis C. Dick Co. ployment costs and.^tjie cpst of < than long-term debt,, as of < Dec.1 tance to the nation. These deter¬ voluntary assumption of financial purchased goods., and .servicesSpecial—Russell M. Er^ood, Jr., minations are a«n essential part of together accounted for 87% of the 31, 1948.,: risks, and the opportunity of reap¬ Stroud & Co., Inc., Chairman; total costs ol United "States Steel | The dollar amount of the profit of the Directors' functions and ing a suitable reward, if success¬ William Z. Suplee, Suplee, Yeatin 1948. : And I should like to add, of United States Steel for the year cannot be avoided simply because ful, have been cardinal parts. man & Co., Inc.; Freeman G. that the corporation has little con¬ 1948, and also for'the first quar¬ some particular decision may not The present high standard of liv¬ Grant, Dolphin & Co.; R. Victor trol over costs in either of these ter of 1949, simply reflect the be welcome to one or more of the ing in the United States has been Mosley, Stroud & Co., Inc.; and vast volume of steel business con¬ groups I have mentioned. two categories. ; attained in no small degree Harold F. Carter, Hornblower & ducted by the corporation. Such Approximately 60% of United through the willingness of thou¬ Weeks. profits are not unduly high or States Steel's profits for 1948 sands of individuals to risk their A. , JProfits Essential Attendance—Harry B. Snyder, unreasonable on the basis of were declared out in the form of savings in the creation or devel¬ Yarnall & Co., Chairman; John C. ; Equally important for the con¬ either a return on sales, or a. re¬ dividends to its stockholders. tinued existence of any industrial opment of various industrial en¬ Bogan, Jr., Sheridan, Bogan, Paul turn on investment. This means Few large American » industrial enterprise is its ability to meet all terprises with the hope of gaining j & Co., Inc.; John H. Derickson, that its prices for steel products corporations gave their stockhold¬ costs of operation and have a bal¬ a profit thereby. This country : are not out of line with presenters as large a share of 1948 earn¬ ance left over to provide a reasoncannot afford to reverse that Jr., E. H. Rollins & Sons, Inc. and In days of great indus¬ ings. In the 47-year period from trend by ill-advised tax or other ?able return for the owners of the day costs. ; Samuel K. Phillips, Jr., Samuel K. Concern. If such - a return to trial activity, there should be no Jan. 1, 1902 to Dec. 31, 1948, total legislation ' which will prevent Phillips & Co. legitimate criticism of a price dividend declarations by United savings from being freely avail¬ stockholders is denied, there if Golf — Walter A. Schmidt, structure which enables a manu¬ States Steel amounted to ap¬ able for investment purposes. The little prospect of additional funds facturer to cover all of his costs, proximately 68% of its total taxation of corporate profits and Schmidt, Poole & Co., Chairman; being obtained for future develop¬ with a reasonable, balance left profits for that period. During a second taxation of those same Wallace M. McCurdy, Thayer, ment. The stockholders • risked over for the payment of dividends the 20-year period from Jan. 1, (heir money to make the enter¬ profits when paid out in dividends Baker & Co.; Frederick T. Seving, and something additional to pro¬ 1929 to Dec. 31, 1948, approxi¬ is wrong in principle and highly Butcher & Sherrerd. prise possible, and they certainly vide for the future needs of his mately 86% of the total income are entitled to a fair share of the inequitable. Unduly high rates of Transportation — George C. of United States Steel for that pe¬ Federal income taxes upon cor¬ business.*," ''""f »,f'\ * benefits resulting from their in¬ THe customers ; of the Stock riod was declared out in divi¬ porations and individuals in days Thayer, Merrill Lynch, Pierce, vestment, either through the pay¬ The stockholders of of Fenner & Beane, Chairman; and ment of dividends, or through an Exchange firms represented here dends. peace are bound to cause cap¬ enhancement or protection of tonight have a real interest in the United States Steel over the years ital funds to remain idle. A tax Robert L. Whittaker, Robert L. their equity by re-investments of security and future of their in¬ have enjoyed a large share in the policy, or any governmental pro¬ Whittaker & Co. surplus profits. When the de¬ vestments. Naturally, the annual earnings of the corporation. gram of regulation and direction, for These two items—em¬ of all costs of the corporation 1948 was of , . . ; ' leaders become and unreasonable to the detriment of stockholders; or when the profit motive is held VP to ridicule and contempt; or when unjustified taxes on corpo¬ rate profits and dividends are mands labor of pver-reaching ■ is a a forgotten class. In real¬ however, the interests of stockholders are rarely forgotten ity, by the directors and officers of large American corporations. .It is easy for critics to charge that this company or that is mak¬ matter on of considerable im¬ Since V-J Day United Steel has carried on an of both stockholders proposed, there may be a basis for stockholders to feel that they con¬ stitute their investments States which discourages incentive, or extensive unjustifiably retards investment Cohu & Co. Adds portance to them. Future secure program lorf additions to and im¬ and the development and expan¬ J. D. Ferrisi has become as¬ The sion of industry to meet the grow¬ ity and the prospect of dividends provements of its facilities. sociated with Cohu & Co., 1 Wall, influence almost,, everyone who management of the corporation is ing and changing needs of the na¬ buys common stock of the Steel firmly of the opinion that it is tion, is certain in the long run to Street, New York City, member of very much in the best interests result in serious permanent dam¬ the New York Stock Exchange, in Corporation in the market.^ cash return Disposition of Earnings In the determination disposition should be current earnings in days ees, as of what made of the for and employ¬ corporation to possess well-located, modern and efficient of large plants, capable of producing at possible cost the kinds the Directors of the Steel Corporation must .decide what is Wise and advisable in the light of the lowest everything which has a true bear¬ and sales, and be age to our economy. the well as the public at large, quantities of steel which may needed in this country today tomorrow. This is not, a Dangers of Economic Financial Suicide The aware before and Greene & Brock public should be made of these we eventful (Special to The Financial potential dangers march too far toward economic and financial Mutual retail distribution of Funds. . W. to the Greene & Brock, Third Building, members of the DAYTON, Lowrey staff of Add Chronicle) has OHIO— Albert been added money—that its ing on the subject. If some mem-^ single -program with, a definite suicide, The public should know National and should bers of Congress had their way. terminal date. Rather, it is a the true story of American busi¬ any dollar profifcjn-excess of that New York Stock Exchange. come down, or that higher wages ness, and the achievements of the continuing endeavor, which must should be paid to employees, or earned in some arbitrary speci¬ ing too prices much are too high 28 THE (2396) COMMERCIAL Observations this is a foremost champion. Ably highlighting the appraisal versus the technical-market-study and timing approaches is this statement: "In the long run, securities tend to reach and sell at a price level not disproportionate to their indicated value, This statement is indefinite as to time; in some cases the day of vindication has actually been But the investor should base his policy on average experience rather than on the exceptions." (p. 41). He esti¬ mates that the interval required for a substantial undervaluation to correct itself averages approximately two years. The market's tempo¬ if uncomfortably long, intervals of contradiction of his appraisal to test the real investor's fortitude. serve investor has in this no "Surely the intelligent berate the perversity of the stock market; to cause perversity lie very both nis opportunity and ultimate his profits," adds the author. Adequate space is devoted to workable techniques of identifying bargain securities, within the general framework of testing imderover-valuation or on the basis of comparing the price of the stock With the value of the business as a whole to a private owner or owners. Trade Week," to explore its lim¬ its, and the progress we are mak¬ ing toward the removal of internal . of his service stockholder-management relations Mr. Graham experience contributes much in citing the many that exist himself and to for his the intelligent fellows. sequent volume he will elaborate it But on the citizen, beyond sell surplus products. In that view, the desirable extent of our exports is that amount which will absorb all that of the produce in can we ability of our domes¬ tic market for them, and its limit would be to purchase and pay reached when the demand for ex¬ scarcity prices in market. I shareholder is to in hoped that this field render a sub¬ sists of selling goods For abroad for the sky realized profit. is limit. the But you unfortunately, of This should cover not only their general incidence on the capitalist, but the several individual effects on the government bondholder, the corporate bondholder, and the equity• investor as genus share owner—and the possibilities of self-protection by the inves¬ on tors versus other groups in the community. ■:'/ One very relevant manifestation of the increasingly predominant political effects on the investor lies in taxation.' This is not to advo¬ cate the centering of attention on detailed evils, such as "double taxation" of income received through dividends, capital gains taxa¬ tion, etc. (harmful as they are); but rather on the continuing political expediency contained in tax-penalizing those community groups with lesser number of votes. This motivation must determine deci¬ sions not only regarding soak-the-rich gradations in the individual income levy, but in all instances of tax policy and legislation. the Only slightly less directly affecting the investor's status are other manifestations of the political self-interest of the executive and administrative branches, as the Council of Economic Advisers, whose "findings" and policies, if and when adopted, can influence the future of individual industries (as steel), as well as the market as a whole. evidence the extreme complexities of of the. difficulties that investment our currently obstruct world, and the all managers of capital. to his steering a evidently somewhat perplexing to Mr, Graham as well co-inhabitants in the investment community, is that of clear course by either the rudder of market-timing or of value-analysis, and of avoiding confused simultaneous use of both. example, champion as he is of the value-approach (as quoted above), Mr. Graham nevertheless feels constrained to make somewhat 'For self-contradictory statements the following: "As indicated above, we are sympathetic to efforts on the part of the enterprising investor to take advantage of the cyclical swings of the general market, by limiting his buying to historically low or neutral levels and by beginning his sales as soon as the market passes into historically high levels"; and then continuing: "On the whole, however, we be¬ lieve that the principle of buy-low-sell-high can be applied more satisfactorily with primary reference to individual stocks and with as comparatively little regard for the level of the general market." And similarly indecisive are the two clauses in the following observation (p. 46): "On the whole it may be better for the investor to do his stock buying whenever he has money to put in stocks, except when the general market level is higher than can be justified by well-established standards of value." (Italics mine.) Likewise do various caveats offered by Mr. Graham, sound as they may appear, nevertheless indicate subconscious contradiction of his professed pursuit of business-value tests without regard to market timing. For example, the adjuration to avoid their offering ing securities probably can p. 85); and a high-yielding issues prices ("it is at around mere common sense to abstain from 100 if be bought at 70 at buy¬ long experience indicates that they or less in the next weak market"— general caveat to be particularly wary of new issues because of their timing and salesmanship factors, do give recognition to nonappraisal elements. The author's evidences of ing on of elements of the business-value-appraisal of individual securities hand, and of criteria pertaining to the timing or historical position of the market on the other, may accentuate a general im¬ of intangibility about the book on the i?tl7eiT/iTlin^eduand the la^ rea(?er. that Mr. Graham s extent arise from a measure of is a difficulty in SuUSe;-- v5rei!*s J1® s^^le The field of choice is may to a specu- be suspected considerable "glandularly"-induced judgment along with his expressed scientific precepts. policy for the aggressive there part of the Perhaps, too, it practical investing successes good (Speaking of portfolio investor, Mr. Graham candidly admits: discussing this topic in orderly fashion, beor ideal pattern for aggressive operations. wide; the selection should depend not only individual's competence and equipment but perhaps equally well upon his interests and upon the preferences.") "'0y.ds' anJ s*emin& shortcomings contribution reflect the fact that to investment is an art rather than a science. Foreign Trade Con¬ is "to bring benefit trade, rather than the play of the forces of supply and demand, will deter¬ mine whether our second best ex¬ is have to required merly for passports on to the partici¬ is an achieve¬ which the European Co¬ operation Administration is to be credited. Even helpful more is Congress in lifting to $400 the exemption from duty on goods brought in by re¬ our own turned travelers. That these long¬ standing irritants have been les¬ sening gives one hope that prog¬ ress be made toward may no Dollar Should Not Be Because Devalued fixed exchange rate, with an elaboration of together a exchange and import controls, is " woven tightly into the struc¬ ture of a centrally-planned econ¬ omy, it would save some political often faces abroad if the United States the pressure ease a in this altogether great extent successful their on remov¬ by devaluing the dollar do I drawn into not propose to discussion of a be free a market for gold, as is sought to accomplished by bills in the hopper in Washington. For my purpose it will suffice to say that be the main function of the price of gold is not to invoke any given rate of ing production, but of provid¬ international means of a base for security and an payment, trust in currencies paper and promises to pay, and a com¬ denominator for comparisons paper mon ing the rigidities of the customs of international administrative procedure and re¬ lated laws, by which action, Mr. Henry S. Radcliffe, Executive Sec¬ retary of the National Council of spread price levels. Wide¬ disequilibria in the foreign exchange markets are symptoms of paper money is cure inflation, and the inflation, re¬ halt to the Importers, estimates place government deficits by sur¬ imports might be in¬ pluses, and restore or strengthen creased at least $1 billion a year. the government; credit. As these useful goods and services." The steps are taken, legal restrictions purpose of foreign trade between Increasing Productivity of Rest of on transactions in gold within through an increased production, interchange and consumption of the United tions and Associated tical language in Section 7 of the Master Lease-Lend Agreement:— "The expansion by appropriate in¬ ternational and domestic measures of production, employment, exchange policy United the State to States, as Department which prospectus economic postwar the of in stated and consumption of and The have I re¬ Point IV of his Inaugural Ad¬ dress, is to establish the economic foundation of a durable peace, and providing high and ex¬ panding levels of income here and to assist in This statement of the case for world trade is in terms which at are beneficial once to us ward work with end common a World of to¬ us ex¬ an Another is increasing the productivity of The exist¬ ing product of foreign markets is in many instances insufficient to meet national needs leaving consume, importation duction. veloping for excess market our in own excess pro¬ our Doubtless will detect ability to or no into exchange for of some in this foreign you of de¬ process production, a need fewer of have will our sell to more markets. not only goods, but will in competitive the Marshall Actually, Plan, and current plans for ing serv¬ industry in Germany and are accelerating that prog¬ Japan, It we may are up our If you feel that your business our paradoxical, future seem building own is affected by this present record exports is that they do not fit any of these prescrip¬ program, you will have to console yourselves with the thought that tions. your the work for others and ceive in continual a we are the return gap doing we equivalent goods from abroad. services re¬ and Our thoughts during World Trade Week, therefore, should be di¬ rected toward trend. I would attention to which of the are use reversing like to barriers, our own your of some making, to of foreign goods and Our tariff policy at ices. that call serv¬ once of sacrifice is fellow your for the citizens, pursuit by the program is intent the stability of the I I ask do not subscribe cerned. areas con¬ People without hope, in¬ you devaluation are of the of plenty currencies dollar. There in the world that will need adjustments in value relatively the dollar. $35 ratio to gold To tamper with between gold and Secretary of dollar would only be to make the incredibly harder. sterling is a "soft" currency, and that is why we hear pound all these rumors. Some even claim that because of that circumstance much trade be widened accomplished offi¬ the exchange of goods and services between can that could not take place at cial rates. But the way to to be found in nations is commodity, surplus and prohibit its or to any product set of change control dikes. Danger of Bureaucratic Controls There is another danger sort of operation in taken in the have under¬ we planning to increase the will United Nations and of its subsidi¬ view of aries, including the proposed In¬ ternational Trade Organization, is need to take too your own desire situation, the of bleak world you a because for the goods is The problem is terms of trade on almost insatiable. ment of order confidence in and which economic integration which affects which subject. us the of Europe* defect It is all. a organization of the It consists in a tendency to rely upon bureaucratic plan¬ ning and directives rather than the releasing of the natural regenerative im¬ pulses,. everywhere latent in the world, which, given reasonable on and powerful enterprise can thrive.' As this plan is achieved, living stand¬ freedom to operate, alone can will the for Such or a not only bars the commodity from import, but com¬ pels the European Cooperation Administration to fulfill its re¬ quirements from domestic By the sources. of this power, the im¬ portation of flax and linseed oil already have been barred, and two of our important export mar¬ use will rise, prospect open up, economic, an for almost unlim¬ healthy and our trade program collaboration will have justified itself. The end of sellers' thereof, quotas importation. determination of agricultural over-priced goods has brought foreign exchange policies under have been which all yearn. Like many in this audience, I am a native of the Middle-West, and a of we you who formed Northwest progress have made father, and of met possible devaluation of pound sterling and associated the cur¬ at one the of the pioneers its states out of the Territory. could careful review in many countries. There has been lively discussion a and bring about the recovery for descendant of markets for rapid How the State of Ohio great-grand¬ yours, on arrival, been point of entry of the had Cumberland my Trail, by a sentative of the Northwest repre¬ Terri¬ rencies against gold and the dol¬ lar. If you have it in mind to ask tory Natural Resources Develop¬ my opinion of the future course of sterling, I would like to antici¬ would have told them where they pate it by borrowing a reply from deprived of the, t^e brilliant Governor of the Bank dollars they once received. More o£ Canada. Asked whether he kets not the byways and special deals, hasty ar¬ rangements, or breaks in the ex¬ lanes However, I do not think for Agriculture the the to Another formidable internal ited barrier to the expansion of our will foreign trade is the use by the, power to declare and secure and hungry, are not reli¬ able defenders of free institutions. The desirable peace comes first. But riers. to, warmly to resist, the suggestion that the key to the restoration of convertibility is a securing on our ment program is making progress in the reduction of our tariff bar¬ be benefit because to establish the energetic which people can exchange their Department of State of the reciprocal trade work, and to maintain an environ¬ agree¬ leaps to mind. it. want and The The is can gold can be made available, at a stated price or par¬ ity, wherever holders of currency whole problem countries competition. There countries until foreign Disturbing Factor in Exports between between eased threat to your own interests. As we stimulate foreign production but disturbing factor about which the rest of the world. ress. panding world volume. and possibility being diligently explored is that of a as nation and to the other nations of good will who „ our Na¬ stated in almost inden- was goods." American that ; where it is." again. us. visitors the action of cause customers countries, ment for Mr. ours, embarrassment whatever. confidently predict," he said," "that it will rise, fall, or remain should dollars for purchases from pay to ards uncertainty about the relative weight¬ one pression It people of the United States abroad. One task as vention. to the in difficulties and contradictions indicated authority as Mr. Graham, is that they extent 32nd National ferred, and by President Truman Difficulties One of the virtues in any in the thinking of so able an but simply pointing out that a department that is not concerned with world customer relation replied that would "I not passing judg¬ of the pro¬ gram, port him wisdom the decision of American a am the with Towers requirements, on pating con¬ its ment of exporters, whose business Canada procuring Cana¬ for I cease. providing by The elimination of the visa, for¬ that endeavor, perhaps although banner exports are good the most important confronting the 10-15 million stockholding com¬ for special groups in the short run, munity today. For example, the various impacts of non-stock-owning they are of no lasting utility to directorates could be explored, and the Berle-and-Means and TNEC our people unless we eventually demonstrations of the segregation of ownership from control get back equivalent goods and brought up to date. services from foreign markets. The secular trend of politics with the various impacts of cynicallyThe national value of our for¬ ©vowed political techniques on today's investor, in almost all his eign trade was accurately stated activities,.. also should get more attention from this and other ob¬ in the Final Declaration of the servers. wheat domes¬ our conscious am been dollars to ports tended to produce scarcities and has will our excess declared be dian place a borders, in which to our matures crop will tion States foreign market is a dollar as forecast, surplus, ana thus the process by which the Eu¬ ropean Cooperation Administra¬ it with United average could, without embarrassment predict the course of the Canadian this audience is composed mainly of own opportunities Omissions , ,, In the field out To Trade Expansion wheat barriers to its desirable expansion. tic . ^ Thursday, June 2, 1949 important than that is the possi¬ bility that if our forthcoming meeting of foreign traders, gathered in recognition of "World deferred for many years. should CHRONICLE (Continued from first page) tion of the very important and basic value methodology, of which he rary, FINANCIAL Internal Barriers to Foreign (Continued from page 5) ; , & ment could and Planning locate, how Board, many who trees they could cut down, how they should plow the prairie, and with what Volume 169 J Number acreage sow it. The between theory and the facts of life, let me remind you that your great-grand-daddy did' not find the magnificent stands of timber an asset. I call lution has occurred last the attention to Daniel Webster's 60 United 6) page during the in the economy oi States. The present years economy is quite different from free private enterprise and is based Free on different a principle. enterprise operated principle that ability and private gratulating the dwellers upon the on the banks of the Ohio and the Missis¬ willingness to • buy determined sippi on becoming full citizens what was produced and who got and neighbors of those who culti¬ it. The new economy operates on hills of New England, the principle that fundamental referred as one of their achieve¬ decisions on who has what in¬ ments to the fact that "the great comes, what is produced, and at forests of the West were pros¬ what prices it is sold are deter¬ trated beneath the arm of success¬ mined by public policies. ful industry." ; . (4) Tne uevelopment ol the wel¬ . the The development of the fare state. growth occurred under, and has been stimulated by, our sys¬ . CHRONICLE (2397) Our welfare that Changing American Economy (Continued from speech at the laying of the corner¬ stone at the Bunker Hill monu¬ ment in 1825. Mr. Webster in con¬ vated FINANCIAL & members of what crops they should To give you some icfea oi the difference your COMMERCIAL THE 4808 is state closely linked lars), would you regard me as making a fantastic and irrespon¬ prediction? This would mean that the average family of four 2% would have prived 1947, for example, hourly earnings in manufacturing increased 11.9% and between 1947 and 1948, 8.7%. about annual income of an This is approxi¬ mately 66% above the present level of income. Possibly $9,540 a $9,540. family of four im¬ high. Nevertheless, this rate of growth is only slightly for year a presses you as greater than the economy has been accomplishing in the past— namely, 2% increase a year. is that output will faster in the future even the in than capita per The prospect The past. principal for this belief is the rapid reason growth of industrial research. This is one of the most rapidly booming activities in the community. Ex¬ put a 1946 Between year. It does union members little good to push it? ■ ; ,, releasing toward, geared the : ■ • abundant energies of free produces no food or tribute the to peoples who clothing, and great needs but have not able to hold full-time are losing the opportu¬ jobs without nity There are production. others who assert themselves to arrest ideas that ex¬ haust the springs of profit. I have before suggested, and I here repeat, that my slogan for a successful regeneration of the world consists in a paraphrase of the motor builders phrase—"When better worlds are built, people to other pursue important activities, Such as getting an edu¬ cation. - During the last 15 or 20 years has been an important there flict setting increase in price is neces¬ sary. To the extent that prices ad¬ vance, unions are defeated in ing fundamentally dustry raise however, that this bargaining power be used by some unions to fight other unions. Furthermore, with unions existing in so many plants, there is great danger that one party or the other will at¬ tempt to force neutrals to help it impose economic pressure upon the other party to the dispute. Hence, effective ways must be that in¬ productivity of demands the in dis¬ income on the basis of need than it was willing to go in 1929. Since that time the United bursing States old instituted has three out system of which pensions age about a of covers workers five of unemployment compensation which covers about two out of three employees. It and Pennsylvania, will be an all-day golf tournament. There will be special Kicker's Prizes awarded. For non-golfing members, quoits, badminton, cro¬ quet, volley ball and cards have been arranged. Dinner will be at Square, system a also taken has important steps to greatly the opportunities for free public education. In 1929 payments based on need were about $1.2 billion and represented about 1.2% of all personal in¬ increase followed by a payments-based special program of entertainment. on need were over $12 billion and represented about 6.2% of all per¬ W. A. Lacock, E. W. Clark & sonal incomes. Such payments Co., is General Chairman of the were 75% greater than all divi¬ arrangements committee and is dend disbursements of American In comes. 1947, , Payments based on rela¬ tion to need. For example, the Reception—Franklin L. Ford, average pension under old age Jr., E. W. Clark & Co., Chairman; and survivors insurance is about Robert S., Detweiler, Yarnall & $26 a month in the case of per¬ Co.; Melvin Thomson, Kidder, sons without dependents and $39 Peabody • & sub¬ corporations. following need ' ' Paul F. Co.; with Carstairs & Co. still quite small in in month a Miller, are the of case persons For the better; dependents. employees, unemployment Golf—Harold J. Williams. Boen- compensation benefits are less ning & Co., Chairman; Orrin V. than half their., earnings after taxes. Disability payments are Boop, Schmidt, Poole & Co.; S. Oscar > — based on favorably they compare other countries. W. Llewellyn Although payments need are inadequate, meager. very & •' •; ; y - Entertainment with They may be ex¬ increase substantially during the next few years. Within Co., - Chairman; Thomas J. Mc- a decade they will probably be Cann, Gerstley,, Sunstein & Co.; running close to $20 billion a year. pected i.to Fisher; Sheridan, Bogan, Paul & Edmund L. C. Swan, & Homblower ! 5pecial—Russell M. Ergood, Jr., C.; Crowell; Raymond E. chairman; William Girard < Co.; Trust Groff, Brown Bros. Harriman & Co.; William Z. Su- plee, Suplee, Yeatman & Co. * - rapid changes which have < in; the' economy and also outside-of the economy The occurring been created have important for of production;; (2) the problem more of working out a relations; W. Jay Israel lo Open Own Investment Firm many problems. I have selected four discussion: (1) the problem of mores in the relations of field of industrial (3) the problem of the between industry and the community, lem basic code or set greater and (4) the prob¬ participation business leaders in the by making of will shortly open offices to (1) The problem of If I engage in the investment business. Mr. Israel The demands on for more goods was - formerly Vice- President of Dunne-Israel Co. - were put per economy $2,385 to production. predict that the out¬ capita of the American by 1980 would be about (in terms of we are greater than ever and are grow¬ ing faster than ever. Consider the consumption of goods by the gov¬ ernment. In 1929 the local, state, Federal and governments con¬ sumed 8.2% of the gross output in of of 14.5%; and 1948, 14.1%. Fortunately, much the consumption of goods by the country; in 1939, government helps to increase production. This is true of most of the research expenditures of the the government .and the outlay on highways. Other large expendi¬ tures of the government, however, required for national defense or for goods which are "in the nature of public consumers goods are 'monumental buildings) for productive plant and equipment or for the increase of knowledge. In addition, as I have pointed out, the government is spending rapidly increasing (such as than rather amounts in help people who are who are unable to to and need stated, grow be expected to rapidly. Some social I expenditures, These produce. have may - people do not regard security payments, relief payments, and other government disbursements as a net increase in the demand for goods. These payments are financed, out of the fact that the gov¬ taxes. Hence to spend that members of the com¬ ernment* has means more money less to • spend.- The who have'to pay higher munity have people taxes in order to finance disburse¬ the government; how¬ by are led by their tax pay¬ ments to press for offsetting in¬ ever, creases quently, in their income,. Conse¬ it ^ would By far the most mand upon important de¬ industry for more out¬ put comes from the organization of labor. Never before in the his¬ tory of so the world The per year rapid increase sarily of 2.5% has a year could be attained. have people highly organized for the of bargaining for higher incomes. It is difficult to believe that unions will be willing to push up wages no faster than express purpose present dol- the engineers and managers in the and capital. labor of develops structure influ¬ both em¬ ^Unless criteria to guide the setting of wages are developed, collective bargaining will merely develop the kind of prevent in the price level rise gradual kind the in which ployees and capital. Hence the community must make up its mind concerning what incentives for movement it desires to give probably not be the wage demands of unions from forcing a struc¬ criteria to the movement of ences an this would to interest structure because the wage increase an an wage unneces¬ seems Perhaps low. wage the bargainers in fixing Undoubtedly the country wages. the of technology, progress the increases the need for guide seems and that country is how set in the main by collective bargaining dangerously low." Further¬ of the large scale research fact ture of the wage structure which reflects the Nevertheless, a relative bargaining power of per manhour unions on the one hand, and em¬ would permit a large diversion of ployers on the other hand. There product for national defense, is no reason to expect that such social security, and relief and still a wage structure will conform allow a fairly rapid rise in the very closely to the interest of the standard of living of the rest of community. For example, exces¬ the community. Incidentally, it sive quantities of capital would the long run. over rise 3% in output - would cause enormous an drain upon cause it would be attracted intb industries where the country's resources be¬ mean the bargaining power of labor is relatively weak and insufficient that the total physical output of the nation dur¬ next 30 years would be substantially larger than during quantities ing the of labor is the last 150 years. creates ogists, and - administrators--by physicists,; < chemists, engineers, and business managers. Never¬ policies changes in public indicated. It is impor¬ government remove the impediments which some pletely dependent upon the abil¬ of small groups of men to reach agreement. It is plain that the community cannot concede to any groups the right to imperil the public health or public safety simply in order to determine which of two groups is going to are ity tant that the of some policies impose upon the ex¬ pansion of industry, and that, in particular, it help to improve the quality of business births and to reduce the infant mortality rate its impose its desires upon the other. The code or system of mores business concerns and that the special penalties which it now imposes on people among it remove needed to govern attempt from the will tions derive income ownership of stock in who capital into indus¬ bargaining power relatively strong. Finally, the rise of trade unions the. problem of protecting the community from shutdowns which jeopardize the public health and public safety. Never before in the history of western civilization has the community been so com¬ Increasing the output of Amer¬ ican industry must be achieved in the main by scientists, technol¬ ; theless, of tries where the to industrial rela¬ partly consist of ac¬ new ideas of what is right or wrong or fair or unfair and partly of legislation and public policies To the extent that employers and unions are willing to let their conduct be governed in large measure by an ethical code, it will not be necessary to control indus¬ trial relations by law. So strong is the individualistic tradition So long as among cepted corporations. (2) The problem of working out basic code or set of mores in the field of industrial relations a The rapid rise of trade unions in the last 15 confronts .years the community overnight with many problems of social control. most unions were small and weak, they, could be treated in the main as private clubs. Fur¬ thermore,, the failure of unions to unions agreements with employers as a rule result in serious reach did not much' matter, y v "[ * 1 <• 1 ' '• The rapid rise 1 v 1 • ' i ■ , both employers and trade in the United States that voluntary submission to an ethi¬ cal code is riot an effective regu¬ be unrealistic injury to the community and the terms of their agreements did not regard the social security pay¬ ments, the relief payments, and other • payments by the govern¬ ment as having no net effect uport the demand on industry for goods. to been WICHITA, KANS.—W. Jay Is¬ public policy. rael is enough?". economy "Can produce the economy ments in .Weeks.,;',... Stroud & Co- great increase in production, a question confronting the paid Boughner, E. H. Rollins Sons, Inc. Despite the bright prospects for crucial 2.5% industrial sufficient a flicts. in view more, of Even pared to go much farther Davids Road, New¬ the be of week. rate* the community today is pre¬ delphia., Securities Association to be held May 27 at the Aronimink by easily grow by 3% a year. In that event, per capita output by 1980 will be about $3,229 (in terms of 1948 dollars) or about $12,900 for a family of four. Perhaps oneone-fourth should be sub¬ protecting neutrals from being drawn into industrial con¬ In view of the huge demands being made on industry by the military program, the welfare state, and the trade unions, an to or found of year. increase bargaining power in deal¬ with employers. It was not of the community, intention the Consequently, the wage demands unions must be regarded as search, output per manhour could fifth con¬ concern. tional of low for the shortening of the work have eventually anyway, but it was probably occurred PHILADELPHIA, PA.—A fea¬ ture of the outing of the Phila¬ committees: rapid growth of re¬ public it believes that they needed addi¬ their purpose of raising the stand¬ ard of living of their members. of 3.5% would Association Outing assisted of the view of courage tracted from these amounts to al¬ greatly accelerated by the great depression of the thirties. At any and will be knowledge that has applications. In industrial wide a community has sought to en¬ men to organize because able to raise output per manhour. If the price of labor rises faster than output, an off¬ munity toward needs. This change Phila. Securities 7 p.m. will produce becomes The managers are change in the attitude of the com¬ will build them." town great have who needs but who are unable to con¬ fundamental economic laws Golf Club, St. community . planning which is not Allover of allowable industrial scope or no the price of labor the engineers and • industry. Much of the military re¬ search of the national government in manufacturing, four-fifths in construction, four-^fifths in min¬ ing, and four-fifths in transporta¬ tion belonging to trade unions, the competitive enterprise. with the disappearance of the labor.' ; ' penditures on industrial research Our principal economic decisions economy of free private enter¬ I suggest that the community increased nine-fold between 1920 were made in the market place, prise. The essential principle of and 1940, and they are now more plan for an increase in output of with free choice as to the objects the welfare state is that incomes than double 1940. The research ex¬ not less than 3% per manhour per of our consumption and the direc¬ should not be too completely and The Economic Advisory penditures by government have year. tion and magnitude of our produc¬ exclusively dependent upon con¬ Council has suggested that the grown even faster and now sub¬ tion and investment. If we have tributions to production. There plan on increasing stantially exceed those made by community a lesson for the world, isn't that are many millions of people in output by 2.5% per manhour per. tem of free arbitrarily de¬ membership in and up than faster his With two-thirds of the workers manhour—namely, about per of union. past have been able to raise out¬ sible reasonable terms and on member is no 29 ? • expect in. this of trade unions community with a problems. Today there are many millions of Jobs which may only be held by men who are in good standing in trade unions. Consequently, the admis¬ that conducted of 1 Consequently I*" industrial relations country will have to be lator' of conduct. within the framework fairly comprehensive set a laws.' of ' ■> confronts the multitude of new requirements of unions and of discipline by unions has become affected with sion the administration a public interest. for either the ment that or all the It is necessary trade union move¬ government to assure unions are open to new Whether control is achieved by accepted ethical ideas or by law, the foundation must be laid by discussion and argument. The stage of discussion and argument is where the country finds itself- is frequently claims for the today. The argument heated and the fit regard¬ to others This is riot a right to do as one sees less of the consequences are new often extreme. experience. The country saw (Continued on page 30) 30 THE (2398) The COMMERCIAL FINANCIAL & CHRONICLE- Thursday, June 2, 1949 Changing American Economy How of (Continued from page 29) moderate Hence means. dustry cor¬ to Avert doing such a remark¬ able job of increasing production? was Socialism (Continued from page 8) happen before when proposals porations should be prepared to interest them most. Are you pro-i This question gives us the op¬ made to impose new obliga¬ offer securities particularly ap¬ What did business do or fail to do viding your own employees with portunity to explain to the em-! ;hat permitted the environment to tions on the railroads, the bankers, propriate for persons of moderate answers to these questions? ployee that business is done means—such as a form of pre¬ Decome hostile? Why did business the municipal utilities, and even in a : What are the company's plans free, competitive market in In some instances fight a bitter war against unions upon any corporation which pro¬ ferred stock. which for the future? How will this af¬ the customer, buys the best when it was plain that the people posed to sell a security issue to the preferred stocks with special fea¬ prod-! fect me? What is; the company uct he can,, get for the public. The extreme claims of tures, such as conversion privi¬ wished to have unions? Why did lowest doing for the benefit of the em¬ price; that it is to business fight social security when the. employee's special interests do not usually leges, may be desirable. The cost ployees? How will: the pension interest to build into the t was stand up well in face of a demand of marketing securities in small plain that millions of product plan, the life insurance, the acci¬ the highest possible ots is an impediment to gaining that more consideration be given people needed it and wished it dent and quality at the! health, the hospitaliza¬ lowest possible wide distribution of ownership. and when many concerns were to the interests of the cost; that it is also general tion plan affect me? to his interest to produce as much; public. History will undoubtedly Consequently, changes in market¬ providing pensions for their ex¬ How is business going — is it as he can because ecutives? Why did business fail to the more repeat itself in the field of indus¬ ing methods are needed. The pro- ' good or bad? What is causing it ift a little finger to reform capital trial relations. Before another 10 company interested in obtaining duction, the less, the cost,, the less ; to go that way? Who is being the markets during the twenties when price to-the consumer, the: years will have passed, the com¬ more stockholders will undoubt¬ promoted? What did they do to greater the share of the Holding companies were being earn their munity will undoubtedly have de¬ edly have to bear a substantial market,: promotion? What are and. the veloped a considerable body of ac¬ part of the cost of distributing its 'ormed right and left to exploit we larger, the .company's in¬ doing to improve our prod¬ come for the gullibility of the public? fair distribution cepted ideas of what is fair and securities. to all; ucts? What are we doing to de¬ unfair and of laws and public pol¬ Business cannot concerned; -and that, by (4) The problem of greater parescape much velop new products? contrast, icies which will more or less sat¬ people in a welfare state 1 icipation by business leaders in responsibility for its environment. What are the company's must; guiding endure a lower standard of isfactorily regulate the conduct of 'he making of public policies. The Business managers have the re¬ principles? Who are the men that living • industrial relations. because the interest of the average:, man community and sponsibility of keeping the com¬ run the company? What are they will, have less desire to work (3) The problem of the relation Dusiness alike would be promoted munity friendly toward business. like as people? What did they do effici- between business and the commu¬ if This means that they ently if his basic needs have been business leaders were to recover must so to get where they are? nity. One of the most serious '• ; part of the influence Which they understand the community, must : What happens to the things I guaranteed.),. *. problems of business is created by once had* be so interested in its problems Information of this kind will upon policies. Under inhelp make? How are they used? the small number of stockholders crease most circumstances, business lead¬ and so sympathetic to efforts to employee How do they compare with the understanding ; in American corporations and the find solutions to its ers are the most effective cham¬ problems, that products of other companies in and appreciation of the American reluctance of most people to be¬ economic system. enterprises never have to operate this pions in the country of the com¬ V H industry? How does my de¬ come owners of corporate securi¬ in a hostile environment. If this munity's interest in more produc¬ partment's work fit into the whole Our ties. More than half of the indus¬ duty to tell story of freedom 3e true, business concerns,^ as I business? '' tion. 1 ■ trial capital of the community is have said, need to have some .It.is our privilege —it is ( top Who really owns the company? our How can business increase its held by corporations. The number executives who are more than What kinds of people have their dqty—.to i tell bur employees this influence upon the .thinking of the of corporate stockholders is un¬ good administrators. Ai limited money invested in it? What hap¬ story of. freedom— v;;7\ :;V;:: community? The ideas of the com¬ certain. The T.N.E.C. put the at number of their Ithe manufacturer. is free ' to executives, in ad¬ pens to the money- the company 8 million to 9 million. More recent munity are guided in large meas¬ dition to being good administra¬ make what he thinks he can sell— takes in? How much do I get com¬ ure by a few important thinkers* studies by the Board of Gover¬ tors, need to be students of con¬ pared with what the stockholders ,• i Uhe customer is free to buy what Many people from all walks of ditions and nors of the Federal Reserve Sys¬ he ideas, capable of pro¬ get? " "" life are attempting to influence pleases—> V; -J'jT"V'1 tem indicate that the number tecting business from the kind of may : jbe stockholder is free ( What does it to invest mean to my com¬ he thinking of the community. be between 5 million and 6 mil¬ blunders which created the as he sees fit— pres¬ The competition among ideas is munity to* have this ' company ent hostile environment for busi¬ lion. Perhaps the correct figure .the individual5 is free to pros¬ here?".' S.1 y ; • stiff, and under modern condi¬ it were , * • • . . . • ■ . . is somewhere between these out¬ side to estimates—possibly 6 million 7 million. however, out one stock ■ the T.N.E.C. wholesome a figure, only Even • in indicates adults of ten American that owns corporations. ness, able to; hold their own in intellectual competition with the tions of communications probably Is stiffer than ever before. That is las very Dusiness. of state It that means influence policy can The people of the United States have never been particularly at¬ affairs. best It thinkers qualified practical implications for to of this assure and business contributes its proper share of the important ideas that determine the course of business by develop¬ well as skill¬ history. * ing great thinkers as ful administrators. It also means securities. that business can have little influ¬ of Peru During the 20 years 1909 to 1929, ence uP°n policy unless its spokes¬ Bonds To Be the largest jingle source of cor¬ men are able to win acceptance Holders of Republic of Peru ex¬ porate funds was retained earn¬ for a fair share of their ideas in ternal sinking fund dollar ings—about $37.3 billion. In the bonds the stiff intellectual competition of 1947 due Jan. same period, public issues of of the 1, 1997, in tem¬ present. The spokesmen of bonds and notes were $27.1 billion porary form, are being advised business will not get very far in that on and after June and public issues of stock were 1, 1949, simply opposing the ideas of other definitive bonds of such issue will $21.3 billion. During recent years, persons on the ground that these be available for however, the willingness of indi¬ ideas are exchange at Cen¬ impractical. The com¬ tral Hanover Bank and Trust viduals to buy corporate securi¬ Co. munity has important problems tracted ties by has corporate been weaker The estimates and Exchange cate that1, in 16 of dividuals in than the ever. Securities Commission ten the years, Rep. of out investments corporate indi¬ the last in¬ of securities, both stocks and bonds, diminished. During 1947 and 1948 individuals made ' a small increase in about 10% of personal savings and about three-fourths of it con¬ sisted of bonds rather than stocks. Corporate have to no managements their concern over raise sufficient expansion of b funds u s i need ability for the n e s s—even though the thriftiness of the com¬ munity is likely to diminish. Con¬ siderably more than half of the investment during the last cen¬ tury has been required to supply the rapidly growing labor force with plant and equipment. With the rate of population growth de¬ clining, a fairly low rate of sav¬ ing will make possible an ade¬ quate increase in in holders ing a proposals the in a business? of proposing mind I number of corporations stock is likely difficult than obtain sufficient amount of invest corporations to In order for take that I am task. Bear in grant stiff a that I do not administrator every assert must that be an important thinker in the field of public policy. I simply assert that business needs fair share of to contribute able and men field. The are-doing that I must do. critics of the the kind suggest economy of thinking executives some Business has the choice of letting public policy be made pretty exclusively by critics of the economy or of developing execu¬ tives who ing are capable of compet¬ successfully with other thinkers and for winning acceptance in root community and to become a the rea Let quoting G. IV ; A. Price, Western President Electric and of the Manufac¬ turing Company. He describes as "the most alarming symptom and the most dangerous condition, the fact that American business is come able to obtain its capital require¬ ments from the investing public." * rations. This 30 million shares in corpo would mean about stockholders. increase could only persuading Such an now This observation of Mr. Price persons of moderate means to be¬ come » raises very basic questions' for American business. Why did the climate become so hostile to en¬ terprise by be stockholders. accomplished millions of The stocks of most companies a suitable investment for common are not 1 '*Wall persons p. 3. — of old securities new dollar bonds of of ap¬ face for the 1947. Through operation of the sinking fund for the new bonds, over $7,000,000 have been retired, leaving approx¬ imately $27,000,000 still outstand¬ ing. S ,y. ... ' r'.'-;.. PHILADELPHIA, . PA. particularly when in- Street Journal,** April 15, 1949 The — 24 new members at its annual dinner and meeting. Total mem¬ bership is now 255. William M. David was elected Presidents Spe¬ awards for 40 presented to Gordon, i yearsV service: Wilha^wyiie, H. O. Frey '■ and "; ^r -5 • v'fc.) t,*v jfc. • k ' WagenseHer & Durst 'Adds (Special LOS to The Financial' Chronicle) WagenseHer—& .Inc., 626 Street, members geles according searches, the possesses. Stock South of the Spring Los An¬ Exchange. , With Frank D. Newman Co. to The wants Financial Chronicle) output every 2Q livinqg; standard in- the to leading re¬ average employee These How • basic to get world.-) ** information across wants Management has everything to Functional; techniques, gain and nothing to 'lose in -an¬ swering, questions such as these; Moreover, the Answers the information across." supervisory meetings, special training courses, employee publications, : bulletin boards, films, booklets, public ad¬ dress systems, open* houses and give to get .V:,.. •. the company. ■ 'V.V/; ; . "> plant tours, advertising cities, and the like, ■ This question offers the oppor¬ tunity for us to explain that the stockholder provides the a em¬ ested ployee works; that he risks his savings in hope of receiving a fair return the his on tools able and thinking. It he thereby earn more; priate a lower standard Let's of right the employee's money a company takes in. This question f igives explain that chance to ms the em¬ ployee gets a large share of each dollar the company receives; that his share is many times larger than that of the both the amount of profit paid to stockholders in the form of dividends and the amount the employee for a * while closely for the at we are can we are wrong on If fundamentals, if we are to get our story across that it will be believed we must so these use niques: - (1) are fundamental tech- ^ Remember that employees people. They are six ,'.v not are clock not machines* numbers. They They are human beings. :They eatf and 5sle#; love and hate, sin and sometimes sound pray, even kept in basis of and security; that profit incentive in our economic enables ' America worth in¬ ; for growth offer the hope advancement, greater income, which taste." Six fundamental techniques ; the good more em¬ all functional excellence will fail. the > is to be limits "of fundamentals, on our "Every appro¬ for building and learn to handle the functional. we what happens to and look from summarizes believed - consider question to us amount of risk capital neces¬ sary to progress. is inter¬ relations fundamental techniques. If of living because heavy taxes reduce the It :. by contrast, people under socialism suffer public within' the telligence be sentence reads: medium ployed people; and that, must might one maintaining good will that greater output also makes possible more of the good things of life for other You this company's policy which provides "en¬ employee to* produce the more in our investment;, that which plant know that you do not expect detailed discussion .of these sub¬ jects here.5 money tools with which the in I . for the you ■ will wish we ' as know,, relate to communication channels • such ; as ■: examle, let's take the em¬ ployee's question about who owns to the enjoy better -(Special basic its Now pomesjthe question of how are*"(I) job we can get the information across. security; (2) opportunity to ad¬ ; "There are two kinds of tech¬ vance; (3) to be treated as a hu¬ man being; (4) a belief that his niques to be considered. The first: functional techniques. work is important. ~ The sec¬ ond: fundamental techniques.* ' 1 ANGELES, CALIF.—An¬ the business na-Still Pritchard has been added to the staff of Durst, which, the four stockholder; that ' _ of more doubled years', and has brought-the people of v America^ the highest this Quarter Century Club of the Pennsylvania Banking Company for Banking and Trusts inducted cial or has typical .questions; pertains directly to one are one < : Penn. Co. % Century Club Inducts New Members Mabel V. Robinson. : close thesd remarks by a recent statement by Mr. me operating in a climate so hostile to enterprise that it is un¬ of amount John part of it, about one out of every three adults should probably be owners $34,000,000 out of a total proximately $86,000,000 were fair share of their ideas. a expires its willing do important thinking in this to great in more ment-seeking funds. with dealing for which Dec. 31, 1949, holders of six issues of bonds of dollar and ster¬ ling loans have exchanged over to Am I not asking the impossible V.M>. " The achievement of to be offer be prepared capital per worker. crease business must Each For offer an on spokesmen the the problems which most concern the community. their investment in corporate securities, but this increase represented only Under Consequently, for Temporary Exchanged' New York. about which it expects something to be done. i These age, that in accord with his ability—, (This -system of. a free; market per Questions Pertain to Basic Wants clothing, better cars, b the system peoplebetter better e is t to r in food, homes, schools —better Let's • as you review basic and I. :' once .more their Wants. Job security. Oppor¬ tunity to advance. To be treated . as a human being. To feel that their; work is ."important'. v , Think of those wants nection With yourself* in , con¬ Don't you living in every respect; want .security? Don't you want to that, by contrast, people in a get ahead? Don't you want to be P. welfare state must live on a lower treated as a human being—to feel scale because crushing taxation that what you are" D. and . MIAMI, Thurston, Jr. FLA. —William is with Frank Newman & Co., Ingraham Build¬ ing. < ' O* kills individual initiative. / ' ; Let's take the question about product. ; doing 4s im¬ portant? Then remember that ^employees are people. * 169 Volume Number 4808 THE (2) Give facts in terms of the employee's interests.. / , . You vvilf:recall, that;' when we r,, what considered However, the threat is such that . information to to to limit its tell give we approached; it from the angle of what the employee no its of socialism test story of to first base by talking get to what we want unless we terest.. ■_ 7 v ; • As we Moreover,, if we remember the important fact that the employee niques will is ( human? We will heart as well as to in appeal to his stir the emotions than intelligence. Desire is man's: most powerful motive.;. .i., A (3) Tell if truthfully.. .: the we about-' say of them. Objective on extend and to we ex¬ fare a people are pealed policies, - V" AThinking hard. It is comes honestly said." will There /"AA1, >.;■ be 1 WAF* temptation ucts essential are to good; the basis A lso,v products are legitimate and A impdrt&hL' to fight fire .with fire. - Management must;' stick 7 religiously to * the Public truth. \We other way. no build can confidence ?\A must be business¬ reason if they talk; at all, like! to talk, in generalities. Maybe that is because they are:too lazy to dig men, up the specific facts.. , '\A\; Whatever the cause, the effect is the same./ Generalities/ are boresome.7 Specffic lnformation .is in¬ teresting.' For. example, our oWn 'employees*/ would have little ]inr in terest statement by me; ffiat free enterprise was a great thing. I believe they would be interested a statement that under the sys¬ tem of free enterprise our com¬ in a had been able to create 26,i 000 new jobs in the last 10 ye^rs. (5) Tell it simply; */ / 1 '"L'U .7 A foreign-born plumber in New York City wrote 'to the National pany „ Bureau of Standards however, has field of prod¬ that he had found hydrochloric acid did a good job in cleaning out clogged drains. 7 The Bureau replied as follows: "The efficacy of hydrochloric acid the things, we make but, more important, in the things we stand for. Such confidence is vital to the and suggest .you K ternate procedure.'/ The that plumber the idea. hydrochloric - al- ! happy again with his w7as Bureau an A/ ;. r / use ,, agreed Finally the Bureau wrote: "Don't use hydrochloric acid./ It eats hell-out of the pipes." Ladies -and gentlemen, it is not plumbing—all business is technical, all business is fairly complex. If we are to tell our story so that it can be understood by large numbers of people whether they be employees ! or not—we must present it simply. only Ladies and gentlemen, vlet .me sound this warning-. As we rally to the support of our economic system, let us not give the impres¬ . sion that against all social are we progress!,7. A AV jA-/*1 / Too many people already think is management made individuals whose a famous professor "The human mind has once an hear / We must tell story our invested billions of dollars in the confront the In particular, we powerful Russian em¬ pire that asserts the dominance of the state in individual the over of life. held down to socialism turns into satisfaction it. in For once the employee learns what makes his own company "tick," he wil realize that his interest, ■ the War II has hastened the growth of political and economic conscious¬ among great masses of the world's population in colonial and "backward" areas. There is a ris¬ ness He willsupport his company and the business system during work¬ ing hours as a loyal employee, and after working hours as an intelli¬ gent citizen. ' ' ' ' . What is the next step for a com¬ pany beyond keeping its own em¬ ployees well informed? / A If every Company and large—will do — an about how ism."' ■' '"v ■ to ' ;, ' communication in have portation air and trans¬ the increased ated a tremendous demand for the a fore If measures now be¬ are enacted, it is the bill would jump to year. Congress estimated $7 billion a year by 1950. Recently one of our interviewed' over heard I Congressmen television. in favor asked if he was of the President's wel¬ He was and, if so, where the money coming from? fare program "I am inHavor of and will sup¬ port every single proposal," clared. "As for the hioney? We considering are he de¬ When better hous¬ ing, better education, better health for our children, I am not con¬ cerned with how much it costs or where the money I hope we will still be concerned the next time we go tc are. the polls. a - Both Political Parties Towards ; . Marching Socialism going to the polls, I am not thinking of politics in the ordinary sense. One of the In most speaking of alarming features in our ap¬ proach towards socialism is that both major political parties are marching almost side by side. It is true that one party has rights and They have gener¬ raise living standards, develbp new national econ¬ resources to and to At the same time there are foreign "imperialism" and misunderstanding of fears of there is wide the conditions true of economic progress. Stripped bf nonessentials, these are the strategic factors that must of was history clearly reveals European invest* ments hastened the economic de¬ velopment of this country by at least 50 years. It is true that British merchants, shippers exacted large bankers and Their returns had to be high to justify the large risks that were taken/ British foreign in¬ vestments did not always pay off, and many heavy losses were suf¬ We fered. of the of or Confederate the Railway Grand in Trunk Canada States Pacific illustrate to the point. But Americans, Argen¬ Australians, and Indians tinians, could well afford to British well for imports "of pay The funds. services that they fi¬ enormously increased the productivity of human hands in the debtor countries. Rising pro¬ duction ultimately provided the means for repaying loans and re¬ purchasing • investments, and for permanently raising the living goods and While The events of recent years are so familiar that it is unnecessary to recount them here. The Postwar Period of Relief function of international investor during the 19th century, Britain was also the defender enterprise, trade, and of private markets, free open past four postwar years fairly be described as a period can of relief and reconstruction. the reconstruction of a free world. Considering the immensity of the problems and the obstacles in our path—and despite the mistakes have that far is has encour¬ advanced been the bulk of it to Britain and West¬ The initial flow of Europe. ern donations our went forth under postwar Lend-Lease and UNRRA. Following this was the British of $3% billion. The final step in the program of relief and reconstrutcion was taken with Marshall the motion the Plan, which set in European Recovery It will be recalled that Program. vide bf terms made—what so More than $16 billion have to other nations, aging. ish in been achieved been this sterling Dur¬ ing this period the United States has taken decisive steps toward stable currency. She maintained the value of the Brit¬ pound At Reconstruction and The Loan performing this valuable the completed of transferring economic and political leadership of the free world to the United States, just as it marked the emergence of Rus¬ sia as the great totalitarian power. nanced standards of those countries. II War World process need only recall 'the large losses of British investors in bonds Germany, ; and other important trading nations during the 1930s. involves a commit¬ program ment by the United States to pro¬ assistance in the form of policy. How gold, and made it the international have they influenced oar foreign standard of value. The existence policy since the recent war, and of this dependable currency re¬ duced the risks of international how are they likely to affect it trade and greatly facilitated its in the future? goods or dollars to the 19 Euro¬ growth. Meanwhile the gradual' growth of industry in other lands, combined with declining net in¬ vestments by Britain, turned der and to put forth a strong pro¬ shape our in Britain foreign 19th the Century and the United States in the 20th will come from." Well, I am Concerned. I imagine you human of awareness omies. other party . cation,- and the startling advances lion both smal social¬ The ment. opportunities. all-out job avert r.~ gallop.7 consistently held the lead and is still managing to stay in front by a donkey's nose. Nevertheless, the to explain itself to its employees we will pot have to worry very much a to self-govern¬ global spread of edu¬ rights their ing this nation's bill for social security is close to $2 bil¬ com¬ pany interest, and the public interest are all wrapped up together AAA 7: At present , find minimum. a government takes the lead in developing human aid, a nation's walk down the road to When the Economic : the then the United States of America. that British and precarious basis. This country therefore, accept part of responsibility for the increase trade restrictionism in Britain, must, Africa and British capitalists expanding nation that young, returns. A third basic fact is that World the need for portection certain perjls - has in¬ creased. y People need protection by the United States against products of debtor countries, operated to 7 restrict interna¬ tional trade and to place it upon it Latin America, colonies. to depression the cumstances, is not the point under here. The pertinent point is that the gap between "the Americanway of life" and the politico-economic orders of most discussion the contributed up a ions, of Ameri¬ flow the abroad funds in foreign countries. Taken in conjunction with the rising tariff barriers put factories in India and the domin¬ of against in reduction (Continued from page 13) clink living has become more com¬ was Although the job of employee communication is endless, you wil like goalsyrather than toward them. Whether they have acted wisely or unwisely, in their particular cir¬ ether nations has widened rather plicated, over anc the reap must, Impact of American Foreign :AAAA/A!:A'::'.:''-^oKcy on Business than contracted. the As oyer. Only repetition will make it sink in. Repetition is also essen¬ tial to reach new employees. ' to freedom porting it." at¬ ;/ People Need Some Protection capacity to resist the introduction of knowledge." of consistent. I, which continued through most of the '20s. Thereafter, our longterm foreign investments fell pre¬ cipitously with the oncoming of the Great Depression in 1929. They continued at a very low ebb during the Thirties. The sudden of Thomas Paine, expect as eign investment after World War with the economic every aspect infinite on undergo the fatigue of sup¬ men, Men of management must help icy, are that they are unable to heartbeats*; of humanity. money said, who blessings so of up ears metallic the tuned rto (6) Tell it again and again. A to get you In the words against :i:old age, unemployment indisputable, but the corrosive and disability. But this protection, residue is incompatible with4me¬ ing demand for a larger measure should come first of all from the of political independence and ecotallic. performance;" --A;.. thrift of the individual—from his cnomi6: opportunity. The plumber wrote another-let¬ India and own savings and insurance—and Burma have gained their indepen¬ ter saying he was glad the Bureau second from voluntary group in¬ dence. ...Malaya and the colonial agreed:- Again the Bureau Wfdte: Government benefits dependencies of the French, Brit¬ "We cannot assume responsibility surance./1 should come last and should be ish und. Dutch empires are assert¬ for " the production of toxic and acid urge "Those America think before it is too late. preservation of business freedom and, - with it, all our liberties. A A is noxious residue with I States in fact, an erratic and un- was can plete confidence of thepeoplet/im our. business system—not only in • • United the stabilizing behavior, both for our own economy and for other na¬ tions. There was a burst of for¬ truthfully, specifically, job. a for It in¬ given are of world creditor nation during the interwar years was not own objective? It our is to gain and maintain the com*, specific to be jef- fective. -For some than a publicity. / Again, what is A,A (4) Tell it specifically. We uct relations, government., handout behavior simply, and again and again. pick and shovel. gone far beyond the in of * they if formation ap¬ and are emotionally — vested treated are beings; if they to interests; more Ailt-is much easier to reach for people logically—in terms of their , governments and corporations. During the 1920s Americans in¬ heavily abroad. - But the can turn from socialism. away funds purchase immediate necessities, stabilize currencies, and to make public and private capital improvements. American investors became acquainted with the pub¬ licly-offered securities of foreign to democracy. It nation built up in this country. After to opinion is the strongest a human as think¬ pleasant to close our eyes, shut products/ performance—must be the truth. tivity merely as a sales adjunct— off our brain, and drift along in as a means of getting free pUb-/ the Utopian belief that the gov¬ Whatever we say about the Amer¬ ican economic; system "must be licity for its products. Good prOd- ernment owes everyone a living. companYj^our own World War I Europe needed And it will—if thinking. America—a his freedoms. Public However, I do not believe that wideawake of end management must help people see the wel¬ for what it really is— state this most of these the at of farewell state—a farewell to all our go to the past, business has often looked on its public relations ac¬ Men the American • In our to a wide public for government securities campaigns, was is shirt sleeve. ing America—will never scrap its the public with bur. system of free enterprise for any tory, ,we: must keep bur eye on other system. An unthinking our objective. / "1 America may. As loan find « 31 Through the Liberty and Victory the that market make it up. . Eye realize greatest helping hand he will ever from away force in A is easier to Whatever all Must Keep individual They may not favor it by name, but they like the things that go to head.! It his the social security, that is a strong indication that millions of people are in favor of socialism. equally effective A prove would pand will be well to keep in mind that the foregoing fundamental tech¬ '.: they took it (2399) Men of management must make give away neither me. offering into these areas, it move could what Now, if both parties have found to the public at as who of CHRONICLE it necessary to go after voters by an large. express A. .. as groups, as well about the employee's in¬ |t in terms of itself FINANCIAL & see and you business, still example, to wanted to. know —not what we stockholders, suppliers, plant wanted to tell. Management won't communities, and otner specialized using most have until program It will wish to the company will want information employees. the COMMERCIAL Century ' A ' r * •' ' * ; . '. Britain into parallelism between contemporary position of the the world and The United States in the that of Great Britain at the close Napoleonic Wars is striking, although there are many points of difference. In the early part of of the the long 19th lead century, over Britain had other nations a a mature creditor na¬ Britain maintained a comparatively high living stand¬ ard, while operating with a deficit in her merchandise trade. The first World War marked She had a liquidated tional income. As a consequence, and of the United States. a Britain of for¬ eign investments and incurred large war debts to this country. The United States was suddenly huge transformed creditor amounts from a they may world. The best indicates that available the Mar¬ shall Plan is achieving its objec¬ on Western Europe is getting its "feet economically. The ris-» ing tide of Communism has been checked and turned back. American Postwar foreign economic policy has not been con¬ sharp change in the international economic position of Great Britain has loudly trumpeted Britain became the leading invest¬ its own promises to extend social, ing, fiation of the past century. security and other benefits: //;' AT Her investments, accompanied by At times the last Presidential exports of British goods, built race appeared to be merely a con¬ railroads, textile mills, mines, and the of tives. countries. that so balance in joint account with the rest their foreign investments in the form of merchandise imports from debtor low-tariff island position, to¬ gether her powerful navy, insulated her from foreign attack. laissez-faire, capitalistic economy.* She had a developing surplus of savings out of her na¬ effort evidence Her in Her with duction achieve by mid-1952 a policy en¬ abled her to accept returns on her tion. industrial technology and produc¬ tivity. nations cooperating in a project of self-help and mutual aid, and pledging themselves to place their own economies in or¬ pean debtor to a nation, through its vast loans to Britain, France and the other allied powers and its claims for reparations from Germany. fined to gifts and loans for relief This country and reconstruction. has taken and a lead in erecting legal financial machinery for cur¬ stabilization, economic de¬ velopment, and a revival of trade. It was the largest subscriber to the International Monetary Fund, de¬ rency signed to aid countries in stabil¬ izing their currencies, in prevent¬ ing competitive currency devalua¬ for temporary trade advan- tion (Continued on page 32) THE COMMERCIAL & FINANCIAL CHRONICLE good a Impact of American Touign Policy continued from page 31) tages, and in removing obstacle to tr-ade. It struction and has Development, which function of providing the for ernments its of the lay international formulated. ever down and to agreement Its purpose is to rules to trade, govern provide for the creation of the ITO, within the framework of the United Nations, to interpret and administer the provisions of the Charter and to settle that arise under would operate ternational same disputes The ITO in roughly Monetary whether ter. does here. spite I not permit believe questionable many provi¬ international economic during the past four policy years makes it apparent that the United States has embarked upon a definite and consistent course, from now in good cannot which faith, good-1 judgment turn. it in or What - appropriation for the Federal 1 ; .. programs, influence are being approached, Western Europe is gradually moving toward a bal¬ ancing of its international ac¬ counts with the rest of the world. United States is in process of transition to what might be called the investor-creditor The tions. period economic Increasingly, European markets for the the rela¬ Western will be powers seeking increasing sup¬ plies of goods that their reviving economies ; "dollar are producing. Their must be brought shortage^' to an or even end by rising exports ac¬ companied by less rapidly rising, falling, imports. British, French, Italian, and German fac¬ tories wiil be competing in¬ more tensely with American producers in world markets as time goes Profound changes in the vol¬ and composition of our mer¬ chandise trade are - occurring. With the. revival of foreign agri¬ culture and industry, exports of and products, food, raw cotton textiles are falling off rap¬ idly. Exports of such commodities as mining machinery, agricultural, factory, and office equipment, industrial chemicals ing at are and continu¬ high level with ECA fi¬ nancing. They will comprise a larger fraction of oar a exports from merchandise American here on. imprts of such foreign products as coffee, cacao beans, crude rubber, furs, petroleum, newsprint, paper base stocks and apparel are high ana increasing. The American ex¬ port surplus—the balance of ports ex¬ over imports—has declined drastically during the past year It > *hav be expected to fall further, in the absence of a material rise in American exports to other areas than Britain and Western There large can be export Europe. no doubt that the surplus amounted to $9 billion calendar year — which during the 1947—played taking smaller sharp a coun¬ private for goods. and questionable. With these considerations valuation : an im- of the economic An indus¬ - trially-strengthened Latin Amer¬ ica would be a much more effec¬ tive component of Western Hemi¬ sphere defense in the event of Rising production ing standards in areas Asia, in would against popular with the liv¬ and 'backward" Africa regions be and other bulwark a dissatisfaction existing order and spread of Communism. is successful in If the ECA putting Britain and Western Europe on its feet, American investment in other areas would itself as logical business a addition, to appear commend In successor. recession and growth of unemployment in the United States may appear to make such a program to offset attractive shrinkages markets. No * when, he in his called gram . . for and growth areas." It is as an domestic President these matters inaugural for ""a . in doubt Truman considered bold the of probable message, new pro¬ improvement under-developed that American investments abroad will greatly increase during coming years. At the same time the development of such investments on will take more time a large scale and greater difficulties than erally realized. We are here of involve are gen¬ speaking "investments" rather than gifts. This implies careful calculation of the economic values of projects, and plans of financing that are likely to "pay out." It would be easy enough, of course, to give away American goods and services without limit. But the American public is not likely to support an international WPA, with respect their that American from civil disturb¬ The difficulties of provid¬ these assurances will be in¬ cumstances, probably prefer WPA. this a deal f i because when more their their economic To independence. conclude. American period of a argue that there is a chronic ten- be economic preponderantly agricultural and extractive industries. The produc¬ tivity of their labor is brutally low. There is "full employment" nearly all must work to sustain life. development of The process of eco¬ Foreign Currency policy v ~ problem V. ,'v j "" / foreign of looming on the is devaluation of foreign currencies, and the establishment of official new rates of exchange between these currencies and the American dollar. The British pound Sterling, the French franc, Argentine peso, the Brazilian the cruziero /other and currencies appear to be over-valued in terms of dollars at present official rates. This over-valuation seems likely increase rather than to dimin¬ ish during the next few years. to The dollar is now quoted unoffi¬ .start conditions. cially at higher than official prices keystone is to raise the pro¬ ductivity of labor in agriculture. shortage" in most parts of the world, reflecting an with these must concrete Its This and will augment the quantity quality of food and clothing, and at the in many countries. to be a "dollar There is said imbalance in current international payments. (This might better be called a "production time release workers for industrial pursuits. It a matter of soil and water con- the servaion, insect and disease con¬ trol, fertilizers, and .equipment for producing and transporting der same is products of the development fore land. Realistic programs will there¬ initially stimulate American exports of rail, water and highway transportation equipment, tractors and part One may predict with assurance that the pattern of American in¬ vestment after World War II will differ markedly from that which followed World War I. Large public offerings in the United are un¬ imports. For the time being, ECA assistance is preventing the "dol¬ shortage" from appearing to lar be acute. As it tapers off, the support it is giving to foreign currencies will vanish. Most of when exports of auto¬ mobiles, television sets, or auto¬ matic 'washing machines. shortage" on foreign coun¬ great pressure' to increase their exports and to reduce their boomed our many The EC A countries and will continue to be, now, much affect of tries.) farm implements, electrical apparatus, excavating machinery and fertilizers. They will not the; Latin American republics during the war years, their goods found markets in the world. are eager Now, they finding it difficult to export enough to pay for the high level imports to which their econo¬ of mies have become geared. The problem is becoming difficult because prices are present more falling in the United States, and probably continue downward States of the bonds of foreign gov¬ will ernments and for as witnessed were Twenties, Most be of the done bonds corporations, such during the will be infrequent. debt financing will through the of the guaranteed Bank for Interna¬ tional Reconstruction and Devel¬ opment. A much larger proportion investment will take the form equity capital, representing some countries could take several actions to reduce imports, expand their and their aries of domestic corporations, or in direct construction of branch plants. Moreover, it is likely that exports and thus protect remaining reserves of gold dollars. They -might raise tariffs against imports in or at least against im¬ ports that had to be paid for with dollars. This would be an unfor¬ general, tunate - time. Foreign run of stock by American enterprises in foreign corporations, in foreign subsidi¬ . active horizon . nomic suppose an ■, .* Another production technology, continental mass markets, and high living standards. But the "backward" are to be soon Unite ward areas... We think in terms of this country, with its advanced because mistake it'- will a But it would years. serious a Devaluation not development of back¬ the . countries have conceive the nature of the process to u factor to domestic business over security have not qualified.' It is easy for Americans to mis¬ economies - invest¬ ment in other lands will assuredly become an important expansive poor oriented coun¬ nationals own participants in American- borrow, and those with of economic effectively d enterprises, will be learning to operate complex un¬ dertakings, and will be winning business do¬ they because collateral are n an c e purchases Foreign observers point good to American in¬ properties their will be of if a serious business reces¬ sion occurs. It will in those cir¬ mestic their due help economic tributaries to this ex¬ damage employed, will respective govern¬ ments. It should also allay the fears of foreigners that they are ances. with foreign because the foreign part¬ can or of even overlook that try, wanted to American interest It stimulant. likely to be strong the development of substan¬ war. bond assurance to ly and years. of dates. vestors de¬ are during coming many evils It will avoid of use provide that Investments iri Under- political fixed on national Bank has not been wide¬ currencies Brazil, and irresponsible cumulation they are the objects of "Yankee imperialism." So far the Intet^ Developed Areas Both by un¬ foreign exempli¬ see governments. It will circumvent the frictions arising from the ac¬ the fact that many foreign peoples against the dollar; third, reduction of American tariffs against for¬ eign commodities. 1 ; American we old pattern. funds foreign governments in pattern of foreign in¬ uncontrolled propriation, confiscatory taxation, ing ca¬ Arabia, will be free of ners obligations, and properties will be safe from many for fied today in Mexico, secure,, will of engineering. new second, r areas; of and in first, American investment der-developed our vestment, which long periods of time. Ameri¬ investors properly demand as¬ citizens talents and women, and graduates university schools of busi¬ over that the opportunities This mind,; we may now examine three entertain suspicions—fanned in¬ impending problems, the solutions dustriously by the Kremlin—that materially affect the economy. They are: men of creased by the fact that many for¬ eign governments are vigorously pursuing collectivist policies. They will be further increased by to which will for ness investors, both foreign, to direct is de¬ services . on. ume farm much residences in other can and be tial American investments abroad As the goals of ECA international nearly $9 billion in the to reer electric generating plants, the re ¬ turns from which must be spread surances for Period of to It will ; Coming Creditor-Investor during the current and next fiscal years. The surplus of cash receipts over cash pay¬ pressures The likely appear entail technically-trained outlets to and will of capable develop¬ ment requires large outlays on permanent or durable capital im¬ provements, such as drainage canals, railroads, highways and to operate as a counter-deflation¬ ary further steps in the path:we traveling?. domestic This the parts of the world. It will provide their capital into needed projects. Much of the economic At¬ arms incentive with of foreign Americans recently and public administration promises sufficient security and new are are for lantic Pact nations and other i . law defense budget, added to the $1.5 domestic -; of American was government must ;an environment1 of create that tirely the decline in provisions regarding international investment, the Charter should be brief review re¬ national income is underway. It is true that the $16 billion national mand to promote the realization of our national goals than would its re¬ jection. With the exception of its -.This general a first production, prices, and ter-deflationary turn. Whether or not they will serve to offset en¬ sions, ; acceptance of the Charter by Congress would be more likely ratified. moderately and cession in ernment are de¬ areas by the Joint Brazil-United States Technical Commission. The fall¬ are the operations of the Federal Gov¬ full that, in and may disappear entirely or be replaced by a deficit in fiscal 1950. Thus ratify the Char¬ Time made talent man-power migration ECA in the current fiscal year, analysis of this complicated doc¬ ument earlier come As developed such production countries. exploration of the problem financing investment in under¬ tionary. before Congress not to or An fiscal 1948, and was highly defla¬ Fund now „ amounted the operates with respect to currency matters. The issue is have ments of the Federal Government with respect to in¬ trade in which the Interna¬ way tional it. would toward under-employment United States, which may the of aggregate de¬ cushion a decline to absence. ing Trade hensive and when domestic demands Organization negotiated at early last year. This is undoubtedly the most compre¬ in tapers off, Commission points out that the this sustaining factor will be undeveloped country must itself gradually withdrawn. This with¬ finance a large part of its develop¬ drawal is occurring at a time ment. Its own International Havana overall sustain to was that the their Charter capital and It Finally, it was American lead¬ ership and ingenuity that led to the and surplus production to other lands. The effect of mand, gov¬ purpose of im¬ capital equipment and increasing their production. proving be overcome only by donating our ECA, which first took effect in 1948, was not to add to inflationary demands for goods. supporter of the World for International Recon¬ long-term loans to national eco¬ States. nomic heaviest Bank dency United also the was of vestment will represent role in creating and sus¬ taining the postwar boom in the iportant serious a deal foreign in¬ Vpartnership capitalism"—the joining in common enterprises of American private capital and engineering Bnaness on Thursday, June 2, 1949 an - action—and in the long ineffective one—because retaliation and start the world off on the road to it would invite economic autarchy that it traveled during the interwar years. A sec¬ ond possibility would be for dol- Volume 169 THE Number 4808 mechanical equipment industries, which the United States posses¬ ses a comparative advantage in should quence But the Dealers be painless. But they be accepted as a conse¬ of the role of leadership not will have we lishing5 in assumed peoples/ records five Impact The /Future of Foreign the American Economy on reviewed4 the have We \- v v elements economic of major American foreign i policy. We have noted some of the next few steps that follow logically from our present international position. If our an¬ alysis is correct, the total impact of foreign transactions on the United States during the next two or three years will not move in an inflationary direction. It will in move Our a export further, as deflationary direction. surplus will decline a result of tariff re¬ We currency devalu¬ revival of British and European industry. American in¬ a vestment in "backward" gradually take sions,/! But on its areas large will dimen¬ near-term influ¬ will not offset the other fac¬ ence tors in the other equation. Barring the probabilities war, an¬ are have not and error disrupting or United come States great a nation. is the be¬ to capital-exporting investment absorb American op¬ erate to lift domestic employment and production. Our eyes should be fixed on for is that this distant prospect, the responsibility of leadership. With Floyd A. Allen Co. (Special to The Financial Chronicle) LOS ANGELES, CALIF.— Francis J. McKeadney has become associated with Floyd A. Allen & Co., Inc., 650 South Grand Ave¬ nue. Mr. McKeadney was for- organization, asking for trite things and our member? If Laws and am I merly with John B. Dunbar & Co. and C. E. Abbett & Co. SEC a duplicate bureau. In Michigan, Michigan Corp. & Securities Commission. If good job, the industry has plenty of regulation. ; and a have in favor of 10% spread yardstick.* a ever anything violation of the Sherman Anti-Trust was a States, this vicious NASD and SEC is. We predict that the securities markets will entirely dry up unless something is done about abolishing these two vicious agencies and everybody will have to go to the government to borrow money. Maybe that's what the New Deal wants. If they can control the finances of the country, everything else is easy.* chicago, ill. • ^ ^ Don't like snoopers. They come in our office once every so often and take up my time and our cashier's for one or two days. It's hard enough to pay you succeed in without losing this time for your plan.* expenses Chicago, ill. We don't the need cratic barnacle from NASD and ' remove this bureau¬ tion entered into business that the NASD places a tax on every transac¬ means by which every member. It is in effect, a hidden tax is already overtaxed.—P. S. Keep work on this campaign in the interest of all dealers eventually smoke them out.* our up on the good and can we ■ / Am coerced into being a member otherwise we could not handle investment trust shares with dealers' concession. chicago, ill. ' •:' ,* ■ "Do NASD is extremely biased and unfair. The NASD should be abolished. It's should to be eliminated the at earliest a opportunity. What can we do help end the NASD? * chicago, ill. In opinion the average securitie's dealer has been "coerced into joining the NASD, because of the punitive restrictions re¬ straining him from trading wih a non-member. The organization is nothing more than a dual set-up of the SEC and parrots that govern¬ my mental agency in every respect. The Dealer member of the NASD is forced to pay dues to that organization, so that he may be harassed and bothered by continual snooping. If there is a need for an organization to represent the Securities Industry, then that organization should like other industry organizations to build good will with the public rather than to publicize that some dealer-member has been chastised. v;'::VL ■■■■ ■;/•/ '".i-Z'Vr //'■ //>■/ ' function answer. You have given your own answer when you pose the question as you do.) My protest may be more effective, if I am not immediately branded in your mind as a "New Dealer." I am a Republican. I never voted for Mr. Roosevelt or the New Deal, and you get a good slant on my general attitude when I say that I was one of the men in to the query Minnesota who worked hardest, and among the top in the organiza¬ tion, to reelect Joe Ball to the Senate last Fall. I might also add that, while I have answered "No" to your 6th question: "Do you believe Maloney Act which made possible the creation of the NASD abolished?", I was one of the five or six members of the Board of Governors America in the year most strongly that of Challenge Cushman the Coyle— to Harper & Brothers, 49 East 33rd Street, New York 16, N. Y.—cloth, -$3.00. mittee, A would better be Commodity Year Book— Features several original research studies in addition to the annual statisticaland chart compilations for each of the basic commodities of agriculture cluding a and study on industry, understanding of the working methods of the NASD 5% Beaver Street, New York 5; N. Y. -$10.00. ; / New York Laws Affecting Busi¬ Corporations—Annotated and journed amendments session March 30, of which the ad¬ 1949—United States Corporation Company, 160 Broadway, New York 7, N. Y.— 600 pages, paper cover—$2.50 c°Py postpaid. / " the at supervision of the books, but also of the dealers, of whom we like are and have no effort. see by the NASD. Even before the 5% rule as small indiana town / , v I like to make money as seemed to that me as an The run value to the dealers or the feel the investing ■/■ bangor, maine of the mill security dealer may answer no to your first questions on the reverse side of this paper but for the long run good of the business, I feel that the NASD is doing a good job and have helped the industry clean house. It is better for the NASD to do this rather than the U. S. Government—and we are better off.* three grand We further phone and gets New York, is "big stuff," and the penses, than 5% / nor excuse a rapids, mich. us * redunant regulatory body. There is neither a find that the income of Investment most government. If the for Steel Cor¬ Bankers compares very irritating, and many of the costs of realistic, however, I think we must admit that we are "times" are better than in the days of un¬ regulated profit and competition, and despite the cries of most of us Republicans in ihe middle 1930s, the world hasn't gone to pot because average of old age man, pensions and unemployment insurance. We think the entire "Gestapo" should be buried with Mr. Hitler and his gang. This NASD has been the worst curse that has ever come on business. I would personally like to try a few of the running this thing. We have never been criticized or censored so we must live up to their dictates. The writer was elected a governor of the local group for 3 years but resigned at the end of a one-year term because it was so rotten. so-called our judges who are st. paul, minn.. Why should the investment business be limited to a 5% mark-up, any more than the clothing business, grocery business, or any other business? Since this 5% mark-up rule has been in effect, we have had increases in the cost of rent, telephone, office help, stationery, printing and office supplies, including postage, but the 5% mark-up rule is the same, and our volume of business is substantially less, now. This unfair, un-American rule has to be repealed, or there will not be an investment business. I immensely pleased to see this questionnaire and it will be interesting to note the final tabulation on the questions. #As a past member of the NASD Board of this district, I earnestly and sincerely hope that the Maloney Act will some day be abolished and with it am . .. minneapolis, minn. One rotten apple our spoils the barrel. The NASD in business get rid of rotten apples.* st. logic for it. It fills no need. For personal reasons, I cannot sign. Commented Anonymously. States wondering if our philosophy in this business isn't entirely We deal in substantial amounts. We associate with Ayealthy privately. As result, we always want to make more money than we are, and yet helped per United We live beyond our incomes, both in business and • are the wrong. the NASD.* yellow like me, afraid to stick our necks out, and friendship also interfere. Our books are inspected by SEC and State Commission. What more inspection is required? The Revenue Dept. has a book too. Thanks for your exertions, don't quit.* Most of of ; am detroit, mich. The NASD is San Francisco, like the President to act poration. the NASD overlaps those of the State Securities Commissions and the SEC. It is just another bureau which should be abolished. or same minneapolis, minn. organization in vogue. grand the next man, but it has always would do Very muchbetteFif we or St. Paul immediately. thing applies to entertainment, ex¬ travel, telegraph, and other things. It takes a good deal more It rapids, mich. seriously object to paying our portion of the money collected to keep this as north woods is that the average Trader in New York and Chicago, with even 5 shares of stock to buy or sell, promptly grabs the tele¬ public and is merely an instrument to harass dealers who are trying to do an honest business.* well industry, we bellyached less about the 5% limitations, and spent our time eliminating the extravagances which are the curse of the business. Take the trading houses for example. My impression up here in the down but, unfortunately, we were compelled to join since alternative would have been to force us to go out of business. We no our average st. paul, minn. y ganized practically instituted, years, on favorably with other lines. Naturally, regulation is /.' We fell you are doing great work in your efforts to abolish the NASD. We resisted joining this organization when it was first or¬ that the NASD has was unlisted equity transactions which were the bulk of our business, was less than 5%. I think before and since the rule was put into effect, 3% average is about right with us. I practically practices, whether wilfully, or through ignor¬ as to profit margins. They have to be no way in which it can be done as effectively conscience no profit through the criticize which takes revised to April 30, 1949, and con¬ fining the legislative ./ Com¬ Obviously there are many one, who do not need that supervision. We attempt in a high-grade manner, and take reasonable profits. Unfortunately, however, there are those in the business who do not we The functions assumed by ness of our spread. to think men., "How^ Com¬ — Association or in¬ modity Prices Move"' Com¬ modity Research Bureau, Inc., 82 Bankers been given any job of any kind by the NASD. as a member of the NASD, watched its work, and I think it has been good. (My only criticism would be that it has too high an overhead, and is mighty expensive to small Dealers like great boon to the entire industry,. This can be obtained only at some expenditure of effort—it is therefore sq much easier to a . 1949 Investment However, I have, I ■•/-- . The in which the Maloney Act was passed, who felt the Association, and all Investment Bankers, should fight the enactment of that then Bill, to the fimit. I might also add that I have never been a member of any vy,;/:^y-t::',y//y/;.yy; chicago, ill. louisville, ky. David deciding to write 4, which it is impossible to controlled, and I Frankenstein monster that '■ — (Before this letter, I had written those very words in long hand after question ance, I'm in full agreement with Herbert D. Seibert.* Economic '• , you approve the more, because as a consistent and careful reader of the "Chronicle" each week, I have come to the conclusion that your attitude to the fort wayne, ind. West ■ your return and of the trial system wherein the NASD acts in all of the following capacities: investigator, prosecutor, judge and jury?" impells mq to amplification by letter. I do this follow sound business The least government is the best government. ■•//■■We don't believe in too many restrictions in any business. How¬ ever the sharp practices in this business in the period of 1920 to 1930 brought the present restrictions with the SEC and NASD. If we must be regulated we don't believe the present set-up is too bad. We have nothing to hide and our operation has always been an open book.* Day of Judgment—The Political queries posed in to do business :y-;y:/;-/"^.r and the to ourselves.) You are always hammering NASD, not only in the examination of chicago, ill. ■ "No" or 1949, concerning the NASD, "•/• ■; ..../ '■, ■■■ " should be formality by merely resign¬ ing in large numbers apd thereafter do business with non-members. What some people forget is that the dues of the NASD are based on volume which .. "Yes" of April 4, Your 4th query: that the business without our herewith. . could we good. Hope no answered questionnaire . the Constitution of the United will savings and .(2401). 33 . st. paul minn. chicago, ill. view, destined Foreign the I six years old. American industries. longer V; , detroit, mich. //■"•• How long, Oh Lord/are we going to pay to be regimented and what in the hell is a man going to do if he cannot buy or sell securities with other brokers unless he is a change and produce important repercussions on particular a have we to you rently has. Equally important, the composition of our trade will Taking _ I, personally, consider the NASD .. signed that many years will pass before the ' United States builds up, through foreign investment, as large; an export surplus as it cur¬ ■,,// Say Otherwise our name to this questionnaire and the is obvious. The Gestapo of both the NASD and SEC would be into our place within 48 hours looking for some technical duction, foreign ation, and , chicago, ill. reason Policy ■t reestab¬ interdepen¬ dent world economy in the twen¬ tieth' century. They will help create higher living standards for Americans as. well as other / CHRONICLE the latter two do (Continued from page 3) and free a FINANCIAL detroit, mich. These .shifts costs.. & i's OK Says the NASD- in production COMMERCIAL my opinion has louis, mo. NASD has raised the ethical standards hundreds of small dealers through education and association. Membership. in st. louis, mo. The Investment Dealers are of " . "starving" due to small volume and inability to increase commissions to help meet higher costs of doing . - . (Continued on page 34) >• 34 (2402) THE be to followed which Tomorrow's were by rallies quite profitable. & FINANCIAL CHRONICLE sible exception of Anaconda. But stocks like Reasons for this ably and Whyte resistance are psychological. * levels Says— publicized so State dealers, get an'accurate picture of just how the dealers feel about getting out of the NASD. "The cost would be very: little,; and heavily results in I have overlooked The current the Underwood the market We the past was have NASD. it<= will So stop been 4 the tremendous benefit ; not • the to unlisted V v 4 - / . maine * / over-the- V " •' 'x.44,^4$ handicapped in our business by the SEC or bookkeeping methods, annual reports, In some ways such as an above break-through of bangor, they have helped us. We think 5% is too great.a profit on the averunlisted security. We are much more concerned with the courts which allow a, 25% minority group to be forced out of a just and valid agreement or promise to pay by a 75% is as ! seasoned age - on be Dresser few weeks. This oversight. What with them avidly. Market = experi¬ one By WALTER WHYTE= thing and another I ence has shown that whatever Intra day break - through is accepted by the public as frankly forgot about it. (J. S.: Please take note.) We bought may lead to "surprise" re¬ almost axiomatic is almost Dresser at 21*4 with a stop at versal. Coppers show strong certaiply to work out differ¬ 18. All during the indifferent tendencies. ently than generally expected. tharkets of the past few weeks ❖ * * As this is being knocked out the stock has managed to stay that the rank and file follow would , counter dealer.* have selling' ' new issues. I suggest you ask the dealers to subscribe a nominal amount to finance the expense of one man to cover New York * , • been * issues, otherwise they would find plenty of difficulty in new better than good possibilities. prob¬ Support Thursday, June 2, 1949 their American Smelters and Kennecott show Markets Walter COMMERCIAL happening in promise to pay the is courts! majority, railroad longer no 'T !'•■"■. • . utility preferred picture. A obligation to- be "upheld by the ' . small such and an "■ •'< y:/ maryland v ' -y-" town } \s far I as concerned, my books are always open for examinwhich will reflect my business conduct. I do believe in the theoret- am still lnno- nf it probably be another case iVnllv we are StUf lopg OI it. hecessity of some law to; curb those of unscrupulous tendencies, ically such as, the SEC and since we do have the in point. It will SEC, it appears to me Stock is now about 21 A. probably re¬ Stop, that the NASD is a duplication That could be done away with.* sult in an immediate reaction sume its bear trend. however, should be raised to ' rostov mass followed by an equally 20. sharp Newport at 10, stop at ^ boston. mass., We live up to the rules of the NASD and have not been hurt rally. With a large short posi¬ 8V2, still applies. V"-' ; Last week the averages con¬ by it—but We think the whole tion now present, such a thing; is wrong in principle. ' rally tinued their brooding pattern, More next Thursday. can go further than strict 4.st. paul, minn. holding up above the 171.10 technical signs indicate. —Walter Whyte. J have not had occasion to write!you and 46.34 in the industrials has still to prove if the bot¬ tom will hold or if it will re¬ WA ore , • before, but I and One day last week they looked as if they would slip through, but a half-hearted rally came along and saved them. The rails sneaked through on the downside by a fraction but the penetration was too small to be decisive. Right now the steels are getting a beating around the head. Some of the steel stocks coming out in comparative volume at lower prices and according to the last reading are famed the 171.10 has been broken. This to * rails, respectively. break-through brings mind a popular belief that * * f the stocks which participate in such a rally can are broken the market liefs I think this one challenged successfully. If will examine your be can you markets for the past five-six years you will find that many rises have - occurred after previous sec -1 bottom has been ondary broken. The a Common cry, fed > tested before any move can with those of the They are presented as those of the author only.] few years many so-called bottoms have been tested, or at least they've past immediate On the significance. contrary, there have don't "bate" you rity." transactions. unsuccessful, only ' Orders Executed on . Pacific Goast. Exchanges Members New York Stock Exchange (Associotc) Exchange Chicago Board of Trade 14WalLStr»*t T., New York 5,N. Y. New York Curb Exchange San Francisco Stock A OOrtlandt 7-4160 * . Teletype NY 1-928 Private Wires to Principal Offices Sm Francisco——Santa Barbara Monterey—^Onkiand—Sacramento. Fresno—Santa Rosa . ■ -v- ■ ; -I;4 - - - • • r ' •„ • - . 4 were doing many things that were not contrary to lav/ but manifestly, unethical and how to control them from unconscionable mere fact that commissions to was ■ me one had plagued I our would fees or for the NASD on be formed to was not have to industry for a good many years. much interested in result of your questionnaire proves to be. theory of the-government or associations created under Congress having power to regulate profit is in my opinion against public policy. If tne rule limiting projit is just in one business it is just in all businesses and profession?, If a "5% spread" yardstick is good in the bond business why isn't it good in other businesses and why should not the government regulate in a similar manner the charges and fees of doctors, lawyers and en¬ gineers. In other words extend this theory of government regulation of profit to its logical conclusion, i.e. let it,apply to all alike and you get a police state with half the citizens being paid to check up on and regulate the other half—then perhaps the public would see the'un¬ wisdom of this theory of profit regulation.* / -r r: doing business." The permit the indus¬ go through the courts to do it, I of the most satisfactory solutions to a situation that later try to regulate itself and very knowing, just what the , unsound and st. Keep one x^otosfc-:»iqsr-/"i We agree believe dealer to - wholeheartedly with that it would be for and y. • - willingness to show 13?' small 4:' 4;4. However, yQur :,v believe the rules should.be changed,-so as financing of small companies, also to simplify the ; " to of small p.,;, , y * of , approve. - . primary ■ T: : -v'. - purpose *> . minnesota" town ' • of I think such questionnaires the average spreads • , in are. useful in various types of your inquiry. informing securities. spreads meraTo on be vari¬ r. i. Isn't it that-we cannot see contributions, is to be hqw, this by- our own beneficiaries qf the keopTfeim alive- -and" healthy! W.e wish you all the luck in. your most cmnmendable fight When it got? to the ppint where a little fellow iijte ourselves can join in^he baftfe ^thout danger of: being put. out of nuwess, we'll join you. Till Tbeni our kids have tp; eat; aud; we,^ frankly., cah't. afford to .be martyrs to,' the cause1.* : y'?' "• destroyed. vCerta^i^^ beast will do all in .their over-the-counter firms;Whp:are , , . J- we , , providence, Exchange. Underwriters of securities would be such. non-NASD. members for participation in Commented Anonymously. • does not: strange that the Banking industry which is so quick to cqndermy vested bureaucracies.of a| political nature^ should have created, for itself, a vested bureaucracy • like Dm confer 44; Every unlisted dealer we have .discussed the" NASD with,'are 100% in fayor of resigning from the NASD, why not send a question¬ naire to every over-the-counter house, with one question:T'are you in favor of resigning from the NASD,?' make it clear their answer-to that question will be held in strict confidence, to get the true picture, request that the questionnaire- be signed. I believe you will find least 90% will be in favQ.r of getting out. An organization .sfibnW then be formed consisting of ONLY *• 4:* : it more , buffalo, n. y. ' * saying 5;%- average is foolish—as 5% on some things is excessive while 5% on others will destroy the market for the issue. I am interested in such question¬ naires as a matter of information and standards rather tha.n a means of policing. Let's let the SEC and the State Commissions do. the. policing, - and make the decision of! where profit. ends and fraud begins, so that their decisions can be judged in some Court of Appeal. : I think tliat an organization: of Securities Dealers should be one in which it is an fionor to belong and a Thatter. of prestige for members. It should not be a closed shop! union to which everyone in the business must belong. I think" the NASD should be abolished along with the Union between simplify the records , be O.K., but useful such averages must be broken; down to show ous types of j. transact ions and issues., Sfmply ;tv'- ■ non-members of any forced to recognize being helpful to the dealer, bers y. may I have long felt the Maloney Act shouldTbe repealed.- ! am not | ! against the idea of qju organization of dealers which looks out for.Ti¬ the welfare of our business and its clients, works to - protect the business from; unwise legislation and! Bureaucratic interference. If the NASD were legally abolished in its ,present form. it. would be i necessary for us to' form some sort Of organization -for our own ) protection My answers to yoiir inquiry about questionnaires may i seem the opposite of answers to other sections hand is highly com¬ mendable. The little fellow is helpless.—(Signed) A member NASD.* rochester, n. mark-up doing a lot of extra work in a special security/ The he, is entitled to. If the: rule were more: flexible, it help our industry.* 1 v'.:;-."• sentiments.* Syracuse,; n. Your work 5% Re: Question-^ examination is, made with the ; of individual an or the , your efforts in this cause. But we views same cases dealer duluthvbiinn. of the "Big Bad Wolf."* extremely unwise many a minneapolis,'minn. commission could small new jersey town openly express the In allow up your courageous work—both for the dealers and: every¬ concerned.—(Signed) Still suspicious also > vt;:;'\-44tu; / Schwabacher & Go. >•;'!' bers of the Association who buffalo, n. y. " Your editorials on the SEC and; the NASD are appreciated. I think that the "Fraud Clause" that is demanded to be orl all pros¬ pectuses is a disgrace to all dealers and I still flinch when I read it. One physician was frightened out of purchase of investment trust shares because he read it. I think firms who are registered by the SRC and members of NASD should be allowed more leaway- ha ads and offerings should be allowed to be made without the prospectus. Let thqm get the prospectus when bonds or shares are delivered, not before unless they demand it. Please excuse length of this.* 3?^? Securities ' know that for many-years when I was .active in The IBA. op. their various committees, and for four years a member of the Board of Governors, one of the burning questions was how to control mem¬ The whole dealers.* Pacific Coast y • - I I were perfect'.v well, and you know, that there have teen many houses that have always charged all the traffic would bear, where it came to charging "a | commission to. somebody who nothing at all about what they were buying or selling many times the commissions have, .been unconscionable. We have. never had any-trouble in our company in making commissions on our small missouri town the act of commissions, that any knew 4; ' guide, and that know and • dping so, he told his victim, "I because I hate you, but because I have the author- been many cases where these tests 1 There is nothing democratic nor in the interest of free enterprise in such a set-up. It is an individual police system. It reminds pne of the story of the Irish policeman who, arrested and beat up a fellow. As if it was sufficient excuse for been hit and broken without any ' understood never a many busi¬ The low volume is another reason, but even if the volume should be able to charge higher commissions and thus make greater profits regardless of volume just as other lines. ; city, mo. have that 5 %r was a) final limitation hut commissions beyond, .5% on a transaction would have to be explained and justified. In my years, of experience large, the dealer still should 44 >4 the I rather ness. kansas want to state over 35 years of the NASD. business—as all other businesses have done. This is one reason why so many dealers and salesmen are getting out of the Investment be business; now for and- to a great extent I disagree with moat oI your comments and criticisms Having been a member of the old group formed under the National Recovery Act and later on a member of the NASD, I have always looked upon our present Association as a. voluntary policing organization where things could be corrected, without havV ing to go through the courts, as one would have to do under the SEC. Specifically, as to the 5% limitationon profits.or any coincide develop. Over necessarily at (Continued from page 33) averages, that bottoms have to be was r. not this Chronicle. the coppers, with the pos¬ by interpreters of t in expressed Eveiythug's OK Says the NASDBnt the Dealers Say Otherwise is through. Like all popular be¬ time do that I have been in the now views article Among if the so-called double bottom is [The i '■-"•■""'■■'We; ^'SMAI>L are power to CAROLINATIOWN: members nf NASD because .we are forced to be, I have v i / : : 16$ Volume yet received not as 40 over Number 4808 to treat I consirue NASD had never I have same. COMMERCIAL been in business law suit with a customer, and buyer and seller justly, and have done so, both I do not feel I need hence as benefit from any I have years, endeavor THE a hammer a hanging over head,) such my being. as trasted TEXAS Think NASD and Maloney Act are waste of time and money. / and a with CHRONICLE theorizing—that it and not communism provides greater benefits for the many. In the demonstration of the benefits for the many, what v FINANCIAL however, DALLAS, , & Is unfair and unconstitutional, " must have we the American the facts. are working man vastly better off than the inhabi¬ tant of SALT LAKE CITY, UTAH , Keep / :i VIRGINIA SEC laws should be revised ] '' ! , and . the TOWN courts , / more y WISCONSIN that Russia refuses to TOWN constantly tightened, and by and large I think the change has been for the better. / *' ' " -*» « MILWAUKEE, WIS. ... , " f • ' . • ' r* MILWAUKEE, Gentlemen, No.. 2, 3, 4, is ' • , .. • , ; . - ' .. . • and indicates clearly her economy Must Be Ready to Face Facts If I were to damental in lay down fun¬ one future program for a the American people it would this we must at all times be be joke. Last year an auditor of the copipd a list of transactions from my books on one of these questionnaires. After about two months I receive a telephone call 1 from one. of my competitors to drop in and see him. I believe I turned white in anger when hands and his 'in about two in actions the ' the "Nasty" said: "It m,y competitor held that is my duty, questionnaire etc.; etc., to question Mind 40 you 50 you of my trans¬ protested and ripped into loud that I have not heard a word from them after hands so of a competitor! Wonderland. We cannot We must or I that.* truth is but it is plan. to on British people at the time the Germans were threatening in¬ vasion, he did not voice one pleas¬ ant sentiment. He offered as Way oi Life business. I or rule upon not of that school, am I know what toil and One truth which should be told and worry 1 which marks the limits governmental assistance sacrifice goes into the; building of a successful business. It is hard i > j; problems, the need to define the line This, line is draw and times at there or of action, difficult to occasions are American the when joint action , < the upon 1 with statute books dealing unfair trade monopoly and which practices .represent considered judgment i and reflect the overwhelm¬ gress sentiment ing 1 the . of the Con¬ of the Americap people. These laws should be rigidly and impartially enforced. J Business however, should economic or social guinea pigs. They have troubles enough as it is! The government, men, not be used official as who what has might be .nation certain. ideas of good for the business should opportunity personally to direct and participate in a pro¬ personal or practical try can rightfully be proud of the part it has played. • Business human activities; country and at In no other no other time; de;sire of business men to however, profit will operate to in¬ capacity 'where that in¬ amount of our industrial produc-j tion been approached. It ;is the over any rea¬ sonable ;produce a what of the steel men economy to de¬ mands, I would be willing to ad¬ ancl support drastic meas¬ vocate to ures prevent that unfortunate .result. I .see no reason at " this time to feel that such an occasion • dreams of year has produced far estimates any or even economist or the sta¬ tistician two years ago. During the early weeks of this year you -were yond By producing continuously be¬ 100% of theoretical capacity. reason of lessened demand that amazing production is down at this time. I believe, however, <that when the demand returns your ingenuity and energy w ill be equal to'it. j. We , cussion of our must be other parts of the world, reduction must take place. to There is little in giving temporary aid to other countries if in the the point process we bring about permanent weakening of our ity the is to seems That fanatical motivate zeal has before, its which followers. in basis, as I feeling that a other the communist or against as zeal its real theory glorifies the the common who man man enjoys special* privileges. We feel that capitalism is vastly superior to communism. Saying does not make it that sure is kept however, so, We must be so. system is better and our better. We have the quality or our talked about preserv¬ way serve? We tion are on living is, today the greatest earth. or Our na¬ standard could be, the envy ent to that conclusion should we guard; we of the you of business. We on the human and- support ing communist of all the answers. New ideas on. continually presented. It is take those for who business or are mis¬ a men represent it to attack every proposal for social betterment cess if it man slogan is benefits tinguished" from economic and social itself the Factor defend few a the itself as many. and not suggesting that business abandon men arguments against inno¬ vations which they feel will wreck the Treasury, or will in the long produce want and misery in¬ run stead of wealth and happiness. Those arguments are legitimate, and if honestly held, those beliefs should be presented. We must, change on however, not oppose theory that we are so well off now that we cannot improve. Fur¬ thermore, your decision to sup¬ the refuse at any time, under any cir¬ cumstances, to undertake to im¬ prove the common lot on the the¬ that ory by demonstrating—as con¬ factor. was the greatest single is having itself. prove Our economy is very strong, American business is in a most healthy con¬ dition, economic activity is at a high level and can remain so. We should not, of course, change or we transition, avoid can expect no hope that or occasional an hard knock. Our people, however—and particular our business men- in should keep their heads, and as once said, "Never great banker a On the other hand, properly business can ask that government refrain from do¬ ing those things which business itself, or which would have do can depressing and a the harmful activities individual initiative, very effect which business stone is trying maintain. to in turn, should realize left prevent unturned in repetition a order of the to un¬ fortunate experiences of the early '20s. or Today, in spite of a slight let¬ down in activity, America is strong and most Americans are happy. We have been blessed be¬ yond other nation in history. men may complain any Business about taxes but fancy every able to are for indulge pleasant living that modern invention and discov¬ have provided. ery uries and rich of living use invention a as sat¬ the on land of every modern part of their daily happy it does, but the entire world to only change. we If suffer. Today to Our the We do not want this condition will many lands. only enjoy but have the lives. than other not isfaction ease comforts in men farmers not Our workingand lux¬ enjoy greater men the for us we whole looks for help. That help giving and want to give are us within the limits of Once world strength and assistance —cries to our resources. strength is sapped, how¬ it will never return. If we our ever, this present capitalist system collapse, the imagination of man is not vivid enough to picture the let result. I ; am that not foolish enough to feel exhortation any will take the bounty of God, or plain luck, the minds would daily problems and minor dis¬ agreements and concentrate them eventually produce good a result. So far lies within as business officials men must and man power, we public endeavor two serious problems. do with the natural every our and to solve One has to yearning of woman for some security in times of trouble and in old age. Our capitalist system has already done much along that The other flation and one deflation. deals The with Presi¬ in dent, his State of the Union Message, said: "This objective cannot be attained by government alone. Indeed, the greater part of the task must be performed by individual efforts under our sys¬ tem of keep free enterprise. We can present prosperity, and increase it, only if free enterprise and our free government work to¬ economy, which according to their doctrine is inevitable. I am sure can that any planning which be done to prevent this result in the freedom to exercise individual p'fbmote initiative system to or government help designed to pro¬ mote the general welfare. I am Progress is highly desirable. Whether .our technical skill, our There are limits to what either inventive genius, our business you or we can do. At the moment efficiency, or ;the bounty of na¬ we have come from a high in¬ dis- ture produced this amazing re¬ flationary peak to what might sult is difficult to say. Certainly, properly be described as a normal It that the important man in our world of today. Capi¬ talism cannot attain lasting suc¬ common chance that neither the American people nor the government wish any provide line. Greatest American its will Time marches power Initiative in what is called a "buy¬ market," when the competi¬ now tive Business, you agree Individual illWe theory that rugged individualism or avoiding the twin dangers of in¬ You of business must rec¬ effort. ognize the appeal of the underly¬ citizens generally from considered, frightened action. upon relax of strengthen ber now employed in producing legitimate business that electric power. a maintenance neglect to face the problems which confront us on the not of our the sell America short." 4 We may believe that our pres¬ you We must undertake to must tend we er's of IV2 billion gether to that end." As you all men working eight hours per day know, communist propagandists of the government must root out —■more than ten times our entire have predicted, and await with disloyalty in our Federal service] population] 6,000 times the num¬ anticipation, a collapse of our we dis¬ continually face,, in Ja If currency. the world. We produce better goods and services for our people America—o£ our capitalist than any other economy in his¬ system. You business men carry! tory. We have but 7% of the a major portion of the responsi-4 world's population. We operate bility for seeing that this charac-i 30% of the world's railroads, own teristic of a free iAmerica con¬ more than 50% of its radios, 60% tributes at all times to the mainn of it's telephones, and drive 80% tenance of a system under which of its automobiles. The produc¬ all men enjoy a better way of life. tion of electrical power in the If our system is to be preserved; United States today is equal to yvill arise.* The steel industry dur¬ government, ing this last beyond the its free stubborn and unrea¬ refusal has outstanding characteristic of sonable period of time our indus¬ trial machine is grinding to a halt .because of debauch financial system requires a reduc tion in the bounty which we ex¬ ing normal If ago of life—our Ameri¬ it carries. Other countries have can economy—our capitalist sys¬ surpassed us in art and architec¬ tem. What is this thing which ture and have matched us in other we propose to safeguard and pre¬ and crease is needed. said to years own. make crease Lenin was however, that~ business must ap¬ preciate the responsibility-which Profit" Beneficial You have heard occasionally of a destruction. way that { ities in this country should be left business. I wish to point out, regarding goals of pro¬ possible capacity for Incjustry, {including pie; steel in¬ dustry. My own belief is that the , to it av¬ that the certain to destroy the capitalist state to theories duction Be Business J have indicated clearly my opinion that most business activ¬ ' \ Should \ je anism Desire Tor Activities Left to tinker ,with the delicate, mech¬ of American business. ] or , maintain ■ ■ con¬ tact, and should not lightly and nonchalantly undertake to control to to sound economy if we do what can to prevent business men a are change, our attitudes change. The most amazing phenomenon of communist activ¬ maintaining our financial integ¬ port or oppose any new program rity requires extra taxes, we must should be based on the theory that face the music and pay them. provisions of what is known as If business men as well as others are the Voluntary Agreements Pror it requires, rigid economy in civil gram. The need of these agree¬ or military expenditures by gov¬ supporting the concept of the gen¬ eral public welfare and the benfit ments is subsiding, and I have ernment officials, we should of any program to the common, curtailed1 the government activ¬ tighten our belts and practice it. "or the average, man. ities as promptly as the changing If it requires a recognition by We hear much these days of a circumstances; would permit. the farmer that there are limits While the problems have been to government subsidy, by the "planned economy." I am against difficult and our viewpoints have worker that he must exercise re¬ the thing which that phrase some¬ times describes. not always been the I, however, am same, good straint in his demands, the farmer sense and good faith on both sides and the worker should face up to against a completely "planless have made this program an out¬ the facts and share the common economy." It would be the height standing success. iThe steel indus^ burden. If maintaining a sound of folly for our government to humility with reference to his own ability-to solve problems with which he has no Failure gram of cooperation in connection with the steel industry under the and, for cultivate a certain had an financial The integ¬ is absolutely the quickest and surest many had nomic,views upon any part of our business activity. ' We have" laws our currency essential. opens and repeatedly sound a which is imperative. rity of hesitate to force his personal-eco- and has stressed is that system ; to create .it; it is easy to destroy (it. The government official should by government industry is desirable. I have people President enue >/ are British. the the (Continued from page 7) ernrpental regulation people capable of listening to the truth as ■ them only blood, sweat, toil, and tears. Their reaction was magnificent. I believe the American Business and U. S. which to of problems The In Churchill's great speech the No happy living was produced by rugged individualism. While that must may be partially true, having unpleasant, safe basis world. however, each make contribution must come sometimes a be dynamic We live in truth. men, in particular, willing to tell the truth. be - three transactions." or in Public NASD ; ready to face the facts. is, "We have limit." quarter. We can, and stated willing to tell ourselves the • " WIS., a moving, a somehow government answer our 35 substantially below the preceding group, including business, can re¬ main static. Times change, our its live good work. your up The not reached be known about the — t limit?" let the truth fear that the facts cannot be faced. I have read the-^Chronicle" for upwards of 25 years. I had tre¬ mendous respect for Mr. Jacob Seibert. -1 have been disappointed in the attitude, of the "Chronicle." In the years that I have been in the business, the rules have been Keep In the face of this incredible performance, well may we ask ourselves, "Have we reached our workings of Justice Depart¬ or . fact very its SMALL Does he have liberty? Is he happier? The ques¬ tion is, what are the facts? The SMALL WEST ment receive power to act.* more crea¬ ture comforts? the good work!* up controlled country? Does he have • communist a (2403) plateau. this the In year first income above that of a year quarter of slightly ago, although was " wholly social of Americans off their on or great question any economic ideology, must expect contests own of We ranks, within our arguments between workers and employers, battles between political parties. In all cases, however, we should keep in mind the fact that whatever shortcomings the other side may have, however imperfect our sys¬ tem may be, it is so much better than any other system which the world has ever tried that should let nothing destroy it. We are all in the same boat. that boat sinks, we we If all go down together. If j recognize that our Amer-f system has imperfections which we will try to remedy ancl shortcomings which we will en-j deavor to overcome; if we real^ ize that no sacrifice is too great in order to preserve it; if we set no easy limit for the goals which we have not yet but sometime hope to attain, we can perchancej in the far off years of the future we lean produce a society here and throughout the world whose char¬ acteristics will not be intolerance and war, but benevolence and peace; where all men and women! can live happily and free; a world which H. G. Wells prophesie^ when he said that upon this earth as on a footstool and laugh and stretch out his hands among the many years ago "man stars." will stand 1 36 COMMERCIAL THE (2404) & FINANCIAL CHRONICLE Thursday, June 2, 1949 Indications of Current Business Activity The following statistical tabulations shown in first column production and other figures for the latest week cover either for the week are month ended or on Latest capacity)- (percent of operations steel Indicated Previous Month Week Week Ago STEEL INSTITUTE: AMERICAN IRON AND Equivalent to— Bteel ingots and castings (net tons)___ 91.8 June 5 Year in or, > Latest 97.3 BUILDING 96.0 „ CONSTRUCTION—U. | 1,692,300 June 5 1,734,700 Total 1,730,400 1,793,700 Private Gasoline output (bbls.)——— Kerosene output (bbls.)—-— May 21 —-May 21 —May 21 —— (bbls, Gas oil and distillate fuel oil output .J 18,230,000 -May 21 : — 4,903,900 6,177,000 4,899.350 5,216,000 17,506.000 —— (bbls.)— May Stocks at refineries, at bulk terminals, in transit and in pipe lines — Finished and unfinished gasoline (bbls.) at——. May Kerosene (bbls.) at —May Gas oil and distillate fuel oil (bbls.) at— May Residual fuel oil (bbls?) at May Residual fuel oil output , 17,595,000 5,188,000 1,706,000 - 1,915,000- 5,821.000 1,776,000 , 5,439,200 §5,587,000 §17,248.000 §2,129,000 4,915,950 Tf5.307.000 6,087,000 8,354,000 21 21 21 120,469,000 20,664,000 19,750,000 54,282,000 52,476,000 63,080,000 61,993,000 21 CONSTRUCTION ENGINEERING — 608,993 618,763 700,560 Public NEWS- ——————May26 —.—„i-May 26 ;$193,679 ——-———;—————May 26 97,839 98,750.000' 72,728 25,111 83,724,000 v 59,023.000 municipal and State Federal : ; ————• : May. 26 .—-1——.—'——2—___ May 26 —_——— - - ; $189,903,000 *' '59,077,000 , , '. '/•' 99,513.000 86,859900 • ___— and - l9,754,00p .! '- f 1 1 *11,065,000 {■ 1,050 000 133 ,700 —— 4 , 11,355,000 ■' 997,000 ' " 13,712,000 802,000 *149,000 All other •; 147,200 v '• *27 57 176 BUILDING 161 *320 279 13 *10 135 *122 DEPARTMENT STORE SALES INDEX—FEDERAL TEM—1935-39 AVERAGE=100—— — ; — -'V ■;;v 280 SYS-May 21 RESERVE *285' •);; -it, I ;■ 266 ' 70 b ELECTRIC INSTITUTE:' FAILURES (COMMERCIAL STREET, INC. Ir-X' — ' ... . & '■* May 24 1 —_ 204 112 73.705c 3.708c SSllc ? $45.91 $45.91. $22.08 $46.57 $40.51 $22.7p . $22.92 $40.66 // — 17.325c May 25 ;J May 25 _ >v ■' 1 17.700c v 18.000c ."■ < 103.000c ^ 1—May. 25, 13.000c Lead (St. Louis): at_— _J (East St. Louis) 1 May 25 -—-May 25' M.OOOc ''V ";i ' • MOODY'S f;', ' 7 at-_-_— ''■ /■" '■ ' '; ' >'Jt „• f ' : *''*• • DAILY AVERAGES: PRICES BOND ■ '< ' ? 14.000c i 12.850c (' 13.850c :■ : 94.000c 15.000c ? 17.500c * 14.800c - .13.000c . Commercial 17;300C 12.000c . Public Utilities *v i : : 101;59 101.65 101.61 .May 31 .May 31 .May 31 — 113.12 113.31 Group Government Bonds Average 118.60 118.80 117.40 117.40 31 112.56 31 .May -May May May May corporate Baa May May May .May - Railroad Public Group Utilities Group Industrials Group MOODY'S COMMODITY NATIONAL ASSOCIATION—WHOLESALE FERTILIZER - Commercial Total 113.31 oils— Farm products ——— Grains "117.80 116.02 DUN 112.19 112.56 — — - 105.00 105.17 105.00 31 108.34 108.52 108.34 108.70 31 114.27 114.27 114.08 114.27 31 117.20 117.40 117.40 117.00 31 2.38 2.38 2.99 2.38 2.39 31 3.00 31 2.72 2.71 2.70 2.78 2.78 2.79 2.85 3.03 3.05 3.03 31 31 3.45 3.44 3.451 3.33 3.26 3.25 3.26 3.24 31 2.94 2.94 2.95 COTTON 3.03 . 2.79 343.1 344.8 3.00 2.78 Metals Building Fertilizer + : — materials Fertilizers —: machinery -— : All groups combined NATIONAL PAPERBOARD Orders 2.99 2,94 2.78 342.2 f'b-'V 2.80 427.2 (tons) (tons) SPINNING 28 28 234.8 28 31 :;;,b 215.1 142.9 28 ... 146.5 ? 215.2 238.0 149.1 v," 279.2 : < ERAL PAINT AND DRUG AVERAGE=100 REPORTER PRICE ———,— — PRICES NEW 1926=100: SERIES -U. S. DEPT. OF All OF adjusted goods '„— goods All of as 225.0 265.9 Durable 310.1 358.5 257.1 165.2 177.2 186.8 188.0 214.2 All Estimated 171.1 171.8 179.7 165.2 212.7 213.5 232.9 28 137.6 137.6 137.6 158.6 28 142.8 Durable 142.9 142.9 136.1 of 150.5 150.5 143.8 153.1 139.4 203.4 223.3 21 140,189 f; 147,537 •> 161,307; 21 166.639 77 21 156,946 ■ 159,884-y 79 248,992 170,701 189,359 77 turing All 268,820 363,959 130.8 133.0 146.9 . —_J • Textile products Fuel and ♦ » 156.1 192.6 Metals 169.4 162.9 177.7 146.8 147.9 May 24 149.0 136.1 138.8 139.3 149.1 28 Net 130.6 130.6 131.5 May 28 132.7 Building 168.0 170.5 157.2 I materials —IIIIMay 28 193.4 193.6 196.5 197.1 129.3 Special indexes— of 129.5 129.8 135.6 ' May 24 mSS°! H Hides and skins *Revised figure, 459,000 barrels of foreign viufiRhAH rfP°,rting in California. Principal changes exclude was revised for the finished steel composite ^nv^js.1940 inciu8iw and 1946 years crude runs. are 919 7 138.4 *357.8 353.4 f ' 402.0 *314.0 315.7 *15,774,000 *7,895.000 *7,879,000 16,269,000 8,258.000 8,011.000 *$53.63 $51.63 - • • ;*' , .r ' ' n-' . HOURS—WEEKLY S. DEPT. OF April: ..... • „ $52.62 — ■' goods *57.37 54.82 *49.72 < 56.75 48.39 ——— 38.3 goods 48.26 39.0 , 40.0 *39.0 40.4 *39.4 37.6 : . *38.6 39.6 $1,374 goods *$1,375 $1,291 ! 1.356 1.288 1.219 3,366*305 $33,244,479 18,296,255 51.540,734 3,623,935 41,187.483 — goods *1.456 $29,754,215 ; 1.455 1.287 goods —Month of February: 47,916,799 $39,425,294 20,055,667 59,480,961 3,441,779 56,039,182 21,397,631 with and based on 2195 nthpi' residual the income Total 14,799,573 income Miscellaneous Income _ deductions available after fixed fuel oil!I Net for from income fixed charges charges--— iThP u Federal w^hfJ weighted ^ On .'On Ratio income 7,695.564 taxes 15,087,607 3,203,638 11,883>969 4,635,088 32,767.951 1,368,167 32.667^270 1,380,527 18,653,423 ; .< 3,151,397 18,246,234 30,178,996 1,685,277 no 18,752,995 An eno appropriations: common preferred of 44,553,788 3,060,476 deductions income Dividend ^ wimM ? • railway operating income Depreciation (way & structures & equip.) Amortization of defense projects 184'8 18ii 5 comnarabip The-weights used 16"> 6 gf | 190.0 §Not cracking stock from distillate 1941 to date. to iMa taciusi'a- 161.8 gjj May 24 illncludes 160.3 188.1 n34.0 V SELECTED INCOME TERMS OF U. S. CLASS I RYS. (Interstate Commerce Commission) Other 164.1 • ! *177.8 ; *402.7 7,815,000 manufacturing Income " "■ ■ ---— 6,340,000 ■: ' *153.3 7,782.000 . t Grains b' 15,597,000 —< manufacturing J. Other 167.5 IIII May II 151.3 309.5 . .Nondurable 163.4 I 6,791,000 Hours— 172.0 lighting materials metal products 13,131.000 *6,420,000 *6,140,000 390.1 manufacturing Nondurable 146.2 and *12,560.000 349.3 — ESTIMATE—U. p-' 'V Durable goods foodsll—IIIIIII—IIIIIlMay 24 ; *245 164.5 174.5 24 156.0 232 174.9 - — . . All !";•? — goods goods •».' " ' Nondurable 156.5 *252 132.7 manufacturing AVERAGE All LABOR- *256 238 industries— Durable 130.3 ' *238 209 12,393,000 6,314,000 6,079,000 — FACTORY EARNINGS AND 100 271,323 *243 221 220 employees in manufac¬ Nondurable 153.1 475 230 30— — number 212.5 203.3 10,667,000 ' DEPT. — 28 155.8 21,694.000 8,922,000 Vr;.' 393 327 ; manufacturing ———; goods goods 28 150.5 20,425.000 'V: 237 ——4 . Nondurable 186.1 205.0 19,801,000 7,442,000 295.0 ; 23,807,000 237 — Durable 164.6 28 23,787.000 242 — goods Payroll indexes— 163.7 28 S. goods 228.6 28 April — Nondurable 201.6 ! 23.783.000 • - i.T__ manufacturing 223.1 28 *287.1 Employment indexes- 218.2 III—May and 1,472.000 . FED¬ 1—1 manufacturing Durable than farm 65,048.000 .$97,444,600$15,236,000 FEDERAL April: PAYROLLS—U. OF LABOR—Month of March: 221.3 May 24 other •1,662.000 Y. —1935-39 of AND 311.2 263.4 N. 100—Month seasonally EMPLOYMENT 165.6 commodities 2,629.000 y: 2,476.000 ; Stocks r Farm products v . .3,018,000,. 242 203.6 200.9 COMMERCE) monthly), unadjusted— daily), unadjusted— Sales (average daily), seasonally adjusted Stocks, unadjusted as of April 30 ! 224.3 21 50 :'V 404 ; $7,057,000 .7.269,000; < 1 •v • 5,774,000 (average 218.5 All commodities j $17,075,000' 5,034.000 .• 303.3 OF Hourly earnings— WHOLESALE 849 • ' (average Sales 309.2 —May 27 - .1,519.000; 30 . 89 (15)35-1939= DISTRICT, BANK = Sales INDEX —1926-86 —— 77 ' 6.139.000 i V- SALES—SECOND RESERVE RESERVE AVERAGE 229.1 , INC. (DEPT. LABOR—Month at 68 -3,975,000 —— <50 175 : PURCHASES OF COMMODITIES- 233.3 May ——May —May May - -,-76 $31,945,000 BRADSTREET, of April 28 — •• - $14,538;000 • T; DEPARTMENT STORE All ■ML. —14——'" _i—i Jll—_!4__ Earnings— ; —U-—— Percentage of activity Unfilled orders 219.2 ASSOCIATION: received, (tons) Production '• 99 102 366 •W — All May May May May —May May '■—May May » Spinning spindles in place on April 30 Spinning spindles active on April 30. !!— • Active spindle hours (000's omitted), April-- ' Active spindle hours per spindle in place, Apr. 2.76 31 31 & May 28 Textiles H liabilities /""J '. — "215 107.09 CONSUMER —May 28 ■— —; materials Chemicals and drugs ' 406 100)—Month 31 May May May May May May ——— Miscellaneous commodities Farm • 112.56 Durable —— $325,790,104 $364,428,311 • 38;089,095 •- -34,559,6?6 ,287,701,009 * 329,858,635' - ."!__ liabilities Nondurable and 11,303,521 78.773.714 " COMMOD- — Fats 230 98 — 117.20 V ITY INDEX BY GROUPS—1935-89=100: Foods —L.' ; liabilitiesservice'' liabilities— 119.00 May 31 INDEX 22,797,913 78.042,514 ! bradstreet & j— Manufacturing " 101.54 *113.12 .May .May .May .May .May — 49,025,673 , * ■ - service: number————i— Construction MOODY'S BOND YIELD DAILY AVERAGES: S. A-nrii-r- number Retail' liabilities » Industrials Group U. of - : 309,244,355 " .May 31 Group 38,753,201! 'City i? Wholesale inabilities . Railroad 64,935,015 V, 'Total .number,; »•' r Corporate!—!— Average" 20,739,274 6,929,708 $347j997,556 ; York number. 21.925c > 103.000c V * \l2,000c 21.200c - •19.925c ' ." U. S. Government Bonds ■ 19.700c ,'v 17.800c 103.000c 1_ May 25 ' Zinc ; ■ 44.758,058 ! 12,723,982 -I-lil! States City. Construction' number ■ (New York) atj2_— Lead 61,213,937 Wholesale number; '■!fj Domestic refinery at;j-^;i'4-w^'r.i-!^-T'— •, Export refinery at———-——lT-————'Straits tin (New York) jat_2-4^1-'— - ~ v, 839,410 64,982,146 45,750,375 72.955,559 26,727,236 18,660,959 , !" $18 68,956,623 > 83,446,186 "" '■r .<■ United of'New Manufacturing Retail 12 ' -47,565,461... —!—l___—_ INC,—Month - - , ;w 33 • ]*,b 'b-~'t' 35,885,670 Business failures—dun - 9 ■ '>.<• *46 : *13 65,937,616 —, - '"-•OUtside METAL PRICES (E. & M. J. QUOTATIONS): V -!'—!—, '• Pacific .• f ; Electrolytic copper— 89 33 'CIT 7 - & —-——__i_—IL—„i_—_ .."i— Mountain Total —May 24 :-i-—' *63' v ;:,$18,842„667:„. $16,422,754 Central ..New.York Pig iron (per gross ton)—!—rBcrap steel (per gross ton)———.Ji.— lb.j- D U N r— CITIES—Month -4____ Central. West" . bVf f3.705c (per 5,076,025 h— r; Maj? 24 steel i' VALUATION ■; Atlantic Atlantic South 5,303,841 172 y:u: 206 ' —_L. Finished ' 5,255;272' \ *.'13 *42 1 --East'-Central'' 1 ■■■9 •- 53 • • 13 2i • '.r.. >./ 3- ' 39 .'*3'i," 9 ,10'D • 64 *73 rm *27 , . -4——May 26 .'.'r.';...'."bb f 5,270,161" I BRAD- ——— ■RON AGE COMPOSITE PRICES: t i———— May28: INDUSTRIAL)—-DUN AND *•; 'i '>•. *.,%.>• I ;-b:■ '.}I - kwbL)!-——U Electric output' (in 000 : Service enterprises! development INC.—215 ■;*..■• 7 ; • Si';, w'i !'r t England Middle South EDISON ••• 46 •' ■New ' 4^ 30.- of .'April.: •t>7v 295 ' 35 institutional-—--*1-^—.' PERMIT 25 63 *164 water.—-— BRADSTREET; 249 381 J and 9 37 *248 - ^ 1,183,000 "143,200 . 18 27 'public——— ' 9 *13 62 All Conservation '' 11,135 600 — — 13 11 265 Miscellaneous' public v May 21 lignite (tons) —*— — Pennsylvania anthracite (tons):.—___——-r—t*—•> —„—May 21 Beehive coke (tons)-—May 21 -i-vcoal "and 16 *19 . - or and 13 *20 _ — 60 !• *24 13 construction Sewer v- Bituminous 61 87 30 1 ' COAL OUTPUT <U, S. BUREAU OF MINES): 87 23 *54 - . 12 other; nonresidential-!—_-L—— ..Military and naval facilities-— Highways' ; 70,636,000 » 19 Institutional types- and - 19 , recreational and utilities Hospital V " ' 15,394,000 - *: 90,390,000 71.465,000 15,026,000 116 *79 24 naval facilities). .Educational —T._—^;; " " * $145,936,000, $157.773,000, 95,840 ! *25 ^ 87 • construction Vtiry Public construction 263 96 53 garages™' Residential building _j__ Nonre'sidential building (other than miii- ■ RECORD: Private construction 553 *262 - 23 buildings Railroad ; Telephone ana telegraph——^ Other public utilities— , 609,454 buildings — Remaining Farm . Total U. S. construction restaurants and Hospital 879,177 (number of cars)——May 21 252 76 nonresidential Social §37,333,000 769,336 ENGINEERING (nonfarm) Religious Public CIVIL building ' §54,452,000 771,736 400 ' 89 Stores, Other §14,885,000 773,911 SI,373 1,093 *923 '; ' §106,934,000 -May 21 freight loaded (number of cars) Revenue freight received from connections Revenue Ag3 *$1,248 •987 440 Warehouses, office and loft RAILROADS: ASSOCIATION OF AMERICAN $1,363 -—a,—. (nonfarm) Educational • Year millions): , Commercial. §9,284,000 124,749;000 18,361,000 49,775,000 60,207,000 *121,268,000 (in Month OF Industrial §7,106,000 8,246,000 8,519,000 21 i DEPT. n_v building Nonresidential May 21 output—daily average (bbls. of 42 gallons each) Crude runs to stills—daily average (bbls.) —— Crude oil April 1 construction Residential i of construction,— new S. Previous Month* Ago INSTITUTE: AMERICAN PETROLEUM month available (dates are as of that date) : or of quotations, cases LABOR—Month ' . that date, stock 18.607,788 !;* Revised figure. fixed — charges, / ! , 6,401,595 8,792,165 „* stock. income1 to 4,667,659 26,503,653 4,268.196 1.23 1.46 i.62 : 169 Volume - COMMERCIAL THE Number 4808 for (Continued from page 5) in the early part of Demand for cash lard was slow. Prices were easy during most of the period despite a sharp rise in hog prices to the highest levels in over a month. Strength in hogs reflected small receipts together with advances in prices of have not been able to get down to current prices on the material they are using because their high-priced stocks were so which could not readly avail themselves of the lower-priced scrap. A fev£ large steel firms will still be operating on high-priced scrap for many months, "The Iron Age" concludes. big, operating rate of Cattle 94% of the steel-making capacity of the industry will be 91.8% of capacity for the week beginning May 30. 1949, as against 94.1% in the preceding week, , or a 1,692,300 tons of There CARLOADINGS REFLECT A MILD RISE IN LATEST WEEK BUT OF revenue cars, 13.1% below the similar period in 1947. cars, or ; ; V ' :;v ■ ' V-i v :vv . 1 i Production of cars in the United States and Canada week, touching an estimated 115,001 units, the fifth week in was dropped since a a row LATEST The total , compares goods.:. The BUSINESS FAILURES RISE SHARPLY IN PAST WEEK the May 26 from 172 in the preceding week, Dun & Brad- street, Inc. reports. This in were April; casualties was the highest level since the first week of 303 in the similar week of 1939. Failures 163 from involving liabilities of $5,000 or more last week and compared with 91 a Small casualties with '? Of 1948. the ago. a oi year , in foods frozen which large volume There was a offered were at ^ and household goods were ap¬ of a moderately chairs, Small tables, upholstered in large demand. There ago. year bedding " , week , was ; •- ^ A MIXED TREND IN PAST WEEK . V \ . f r-. \ : during the past daily wholesale commodity .price index,. compiled by Inc., moved within a narrow range duripg. the period, closing' 249.13 on May 24. This compared with 248.92 on April 17 and with 285.30 on the corresponding date a year ago. There was aided closing sessions, by, light country i markets. . 1 favorable country-wide basis, as taken Board's index for the week ended May 21, V „ . i from 1949, 5% from the like period of last year and compared decrease of 3% in the preceding week. For the four weeks ; • .• > 3% from the to date a like • ... York the past week was subject to -pre-holiday influences which resulted in some lines being benefited and others retarded, thereby. As for department store volume, estimates reveal that it ran well below that of a year ago < with the decline placed at about 14%. i According the Federal Reserve Board's index, department York City for the weekly period to May 21, 1949, to store sales in New grains developed a firmer tone offerings and strength in cash wheat range.' although damage parts of Texas and Oklahoma. was reported due to heavy rains . under volume decreased that of last year and for the y'ear to date billion $35 the $114 6%. Paine, Webber Co. Adds ' LOS Denys to The Financial Chronicle) ANGELES, D. "Shelley is CALIF.— now Paine, Webber, Jackson & 626 South 1932, bank and today they are billion. Therein liea for the increase in our reason money supply—the bank credit. Of the in increase increase in roughly $7^ credit bank about $55 for by an billion can be accounted increase in government securities holdings and the bal¬ ance by an increase in loans and discounts other and investments. While the figures cited do not ac¬ count in full for the addition to our money* supply, as there are other factors which enter into the but can hardly do so in the allotted, I think they suffice show that in major part the to increase in our money supply has brought about by an increase bank holdings of government been securities. To a my most way of thinking this i» important factor in ouof consideration the of value bf Two paints are involved. In the first place, new money was created —manufactured, so to money. speak—without creation of addi¬ goods or services. In the this new money re¬ tional second place, mains until part of our money supply United States Govern¬ a the retires ment bonds the ; bonds the until or acquired J'from the are by '.n°n"bank investor^ These two points require elabora¬ tion. War During the war our government financed its expenditures by three methods—by taxation, by sale securities by to non-bank of investors securities to the sale of The purchasing power from the bond buyers in lieu of a ferred it to the government. second with Curtis, With King Merritt (SoecJal LOS Clifton to The Financial & Co. Chronicle) CALIF.— R. Hubbard is now with ANGELES, King Merritt & Co., Chamber of Building. He was for¬ Commerce bpring Street. He was formerly with J. A. Hogle & Co. merly with Mason Earl and Buckley Brothers. Kight took promise to return that purchasing power at some later1 date ana transferred it to the government. But what about the third method? purchasing power was cre¬ None was given up. The government merely acquired goods and services without taking New ated. from anyone else the where¬ withal to acquire those goods and away services. the Fortunately, financing of requirements of World War II through the banks was used only as a last, resort. Every effort wai made to finance through taxation and the sale of bonds to non-bank the investors. The to fill the gap. as a banker, which one and fill .. Trading in the domestic flour market continued to mark time as buyers held off in anticipation of expanding offers of last week reported 'SD(ci?l corn was only moderate with prices holding The outlook for the winter wheat crop continued some was most Trading in cash ln a narrow wholesale markets rose moderately below that of the the Chi¬ declined by 10% from the same period last year. In the preceding featured by evening-up. week'a decrease of 9% was registered below the similar week oi •1948. For the four weeks ended May 21;; 1949, a decrease of 8% in May deliveries which boosted sales for the week to 169,107,000 bushels* or a daily average of 28,200,000 bushels, as against 25,500,000 the week before. operations In : buyers attending many Retail trade here in New - In from taxpayers and trans¬ considerable uncertainty in grain future on cago Board of Trade last week with trading billion... loans and investments were about power slightly below that of the by decline of 3%. ; Trends-in basic commodity, prices were mixed $110^ wholesale dollar volume remained practi¬ in others, total May 21, 1949, sales registered a decrease of corresponding period a> year ago, and for the year v re¬ The first took purchasing ended '1 I money supply was about $20 bil¬ lion and that today it is about and Department store sales on a a remarks my banks. the Federal Reserve with in Earlier ferred to the fact that in 1932 our in the buyer interest in some lines were offset by The number of 1 ;. from the present level. Means of Financing slightly the past week, but was very comparable week in 1948. : of the sum total of the price per pound $17 billion increase devaluation, but I think if unnecessary to go into this. Suf¬ fice it to say that the enormous increase in our gold stocks, on the basis of our system of fractional reserves, has been enough to sup¬ port the increase in our money supply which has taken place during the same period and would support at least an equal increase nearly since \ , . Regional decreased Today it exceeds $24 Many factors account for banks -'J period ended on Wednesday estimated to be from 1 to 5% below that of a cally unchanged in the week, but it was similar week a year ago. t : week lifted week. The Huh & Bradstreet,; in level and increases COMMODITY PRICE INDEX DEVELOPED / r interest a in many areas. Such staples as coffee, sugar and steadily purchased with demand for ice cream and As declines Aiding in this week's rise were higher prices for wheat, corn, ; oats, hams, bellies, cheese, coffee, eggs, potatoes, steers, hogs lambs. Only cottonseed oil, beans and peas showed declines. ~ The index! represents 31 foods in general use. • a year ago. estimates varied from the corresponding levels of a year ago by the following percentages: New England and South¬ west up 1 to down 3, East unchanged to down 4, South down 3 to down 7, Midwest down 1 to down 4, Northwest and Pacific Coast • 24 to $5.74. This was the widest advance since mid-February and represented a rise of 1.4% above the year's low of $5.66 recorded on Feb. 8 and duplicated last week. Compared with last year's index of $6.94, the current figure shows a drop of 17.3%. ? the no down 1 to down 5. trend in many farm and food items last the Dun & Bradstreet wholesale food price index for May ji slightly as increased in¬ suits and in sportcoats prices year ago. SHARPLY IN LATEST WEEK \ worsted The practically unchanged last week with appreciable variation from that oi was showing the in were last FOOD PRICE INDEX REBOUNDS An upward an billion. in volume food the A month arbitrarily valued at ounce, it amounted to $7,* picture which I should like to dis¬ Retail volume for the country in the week. i tropical attention. favorable increased apparel in lamps dipped slightly. and Slight increases occurred in construction and commercial serv¬ ice; failures in wholesale trade dropped to 19 from 32 in the prior and sections many proximately even with those of the preceding week, and ago. rys, in ; rise below ' ^ attracted Total retail purchases of furniture week this line men's of displayed candy up slightly. ^ ualties climbed to 62 from 48 and exceeded the 38 in be prevalent to Housewives bought inexpensive meat cuts, poultry and dairy foods. reduced ' w Retailing had the sharpest increase in failures with 94 as against in the previous week and 45 last year. In manufacturing, cas¬ 69 beachwear of comparable week spices liabilities under $5,000 rose moderately to .i.1'•' continued remained was a slight rise in the interest in cutlery, kitchenware and other items suitable as wedding gifts. The retail volume of floor coverings increased year 35; they were twice as numerous as in the same 43 from sales volume unit total curtains 137 on stock ounce, time volume was an cuss, slacks. and about twice as numerous as in the com¬ parable weeks of 1948 and 1947 when 112 and 102 occurred respec¬ tively. Despite this rise, they remained well below the prewar total to ended Promotions small sharply to 206 in rise BELOW shoppers continuing to seek good quality in inexpensive •• ■. y" : / ; demand for apparel increased moderately as many shop¬ Retail failures IN LEVEL sought clothing for the summer season with a slight rise in the interest in women's cotton dresses, lightweight suits, blouses terest with 92,772 units a year ago and 106,395 in industrial HIGH pers of and many retail \('- output consisted of 91,954 cars and 16,892 trucks built in the United States and 3,640 cars and 2,515 trucks in Canada. Commercial TO MODERATELY securi- our when billion ; week's week ended VERY WAS As summer-like weather the period the like week of 1941. Last TRADE HELD BUT WEEK COMPARABLE WEEK IN 1918 in January, 1934, gold, value at $20.67 $4 billion. about ' " ■ . and skirts. The Ford strike has been almost entirely 23. - WHOLESALE AND RETAIL that output is reported to have responsible.- '• * postwar high of 141,227 units was reached in the week ended April during during the same period dropped sharply to 32,589 102,698 the week before. Trading volume in cotton was at a low ebb and prices were again soft in most from goods constructions. gray compared to 116,878 (revised) units in the preceding week, due to the Ford strike, "Ward's Automotive Reports" states. It activity Repossessions of 1948 loan cotton in the week ended ago. entries with trucks and mill during the month, as reported by the Bureau consumed Promotional DUE TO FORD DISPUTE continued to fall the past cotton in continued in many parts of the nation Wednesday of last week, consumers bought slightly more than in the previous week, but aggregate retail dollar " volume was slightly below that of the similar week in 1948, Dun & Bradstreet, Inc., reports in its current summary of trade. WEEK AGAIN LOWER OUTPUT LAST decline sharp a textile markets distributed by the electric light and power industry for the week ended May 28, was estimated at 5,270,161,000 kwh., according to the Edison Electric Institute. This represented art increase of 14,889,000 kwh. below output in the pre¬ ceding week, 194,136,000 kwh. or 3.8% higher than the figure re¬ ported for the week ended May 29, 1948, and 841,052,000 kwh. in excess of the output reported for the corresponding period two years ! was May 12 fell to 67,074 bales, against 79,359 the previous week, while bales, The amount of electrical energy AUTO year In 15) page of government 438 million. Census, totaled only 597,000 bales, the smallest for any month in the past nine years. On a daily rate basis, April consumption averaged 28,900 bales, against 31,300 in March, and 38,300 in April a ties. of $35 Sheep and lamb of the loan ELECTRIC OUTPUT REFLECTS MILD ADVANCE FOLLOWING 16 CONSECUTIVE WEEKS OF DECLINE ; ; ag0* (Continued from purchases later prices April. Cotton 773,911 roads. This and ago 1948-1947 freight for the week ended May 21, 1949, according to the Association of American Rail¬ was an increase of 2,175 cars, or 0.3% above the pre¬ ceding week. It, however, represented a decrease of 105,266 cars, or 12% below the corresponding week in 1948 and a decrease of 116,694 Loadings of total week a in domestic cotton markets rose slightly in the past week while prices continued to show irregular and indefinite trends. Spot quotations at New York displayed a net drop of 26 points during the week. Export sales, covering a wide range of qualities, was quite active but buying by domestic mills was rather slow and mostly for nearby requirements. Sales reported in the ten spot markets rose to 135,600 bales in the latest week, from 13CT,100 the week before and 58,300 in the same week a year ago. £teel ingots and castings for the entire industry, compared to 1,734,700 tons a week ago, 1,793,700 tons, or 97.3% a month ago, and! 1,730,400 tons, or 96% of the old capacity one year ago and 1,744,800 tons for the average week in 1940, highest prewar year. CONTINUE UNDER LIKE PERIODS than smaller were Activity decline of 2.4%. This week's operating rate is equivalent to ; receipts stronger, particularly for the lighter weights. prices remained steady. - companies having steel Has Fallen: Broach amounted to pork items. some The American Iron and Steel Institute announced this week the Why Value of Money the week at firm prices. their inventories fast have benefited most, while larger steel firms 'that belief that manufacturers will shortly enter the market strength in prices in principal producing countries. a continued With demand heavy, coffee trading was active Smaller plants which have been able to reduce firms. actuals, and 37 (2405) new crop bakery flours in the near future. The cocoa market was steady to firm most of the week, reflecting improvement in demand The State of Trade and Industry good of steel CHRONICLE FINANCIAL & we used banks were Let me sa^'hef€k that our rble—and were expected to which I think we filled tbf sold In thifc admirably—was to take up securities which could not be to non-bank investors. given the necessary reserves by the Federal Reserve Banks to do our job, as evidenced role we were by their purchase securities in such of government amount as to (Continued on page 38) 38 annual undergone a considerable decrease in purchasing power, but that of recent months a small portion of (Continued from page 37) ;, do Please blame volume lessened Our not job this purchasing power has been regained. In terms of farm prod¬ ucts, the dollar has gained sub¬ stantially in purchasing power; in terms of certain metals, the gain likewise has been substantial; in the dollar. your to manufacture pur¬ was chasing of for us to power the prosecute and to the extent you and I war, through the payment of taxes an.d purchase of bonds did not sup¬ this ply of terms the building materials the gain has been very little. power the called upon to create purchasing I men¬ groups—farm it. Obviously, in doing so without products, metals and building ma¬ terials—to emphasize that the adding to the supply of goods and value of our money, or, in other services available, the end result words, its'purchasing power, has was to lessen, at least temporarily banks were think —and I value of permanently—the dollar. the Of necessary. Prices rationing and creased in¬ became increased course we production, but production of goods and services could hardly our with the manufacture of wherewithal to buy those keep up tion these three have will continue to and ferent dif¬ a different things. value for dollar, although having a fixed value in gold, is unlike any other measurement, though like Our unit other any measurement of of of the functions one our dollar rental, interest, i.e., hut was $500 toward lower prices but there remain obstacle the to be will over¬ • possibly less. Today we or . have Victory-2%s selling at After WorldWar I we the from by that fact of the value had hard been addition to the Admittedly there <• are lender. the on the borrower factors other than the mere quan¬ for less which enter into the value of money but as with unfortunate tity of any obtains in the tains less for the without a corresponding increase in demand gen¬ erally produces a lower price. As the lender not u an astute the ones change and coins new in a two, to use pay for one-for-one the' * use ; ex¬ remaining coins to pay off the national debt. In the intervening 2,300 central While have a money only a outstanding the ;value in cut the old banks and followed greater the policy to degree with : improved technique finesse em¬ but regardless of the ob¬ ployed' the mained the years governments same lesser or somewhat of his money use obtain u<5, call in all half of it, will buy less, but the other commodity an increase money his was to coins, enormous an supply. does good way to pay off the national welcomed by the borrower it has money he >v About 2,300 years ago debt Fourth Liberty 4J/4S have we our little 101.. king of Syracuse decided that selling in the come of the enormous increase in low eighties. This change in the our money supply. rental value of money is, I am In terms of this or that com¬ sure, something in the nature of modity or service our money will a permanent change as nearly as continue to have a varying value one can say. that any change of but I, for one, cannot get away this kind is permanent; While lessened what buys less.v produced not many years ago by Why Value of Money keep the banking system well for¬ tified with excess reserves. Thursday, June 2, 1949 CHRONICLE FINANCIAL & COMMERCIAL THE (2406) end ' result' has same. A A - ; re¬ 1 , A supply Must We Control supply nf goods and, services is increased the value of the dol¬ lar but may be expected to increase, in increasing the supply of in , A goods and services we run into (Continued from page 16) bushel of certain cost factors which tend to or non-members. goods and services. The money They contended the amount of property power supply was being added to faster what is measured; the same is true limit the extent to which the sup- that union laws must be obeyed that can be legally controlled by than the supply of goods and ser¬ of a gallon, or a yard, or a watt. ply can be increased.-A even when they destroy the con¬ one business management,The value vices available to meet the de¬ But not so the dollar. stitutional liberties of Americans, «Our productive capacity It is the right and duty of a has mand with a resultant price in¬ of the dollar changes from day to been which our national government is government, in increased enormously since self-preservatipn, day and as between units being crease held down only in part by To assure to prevent any privately organized prewar, but I need hardly tell forbidden to abridge. measured. Thus the problem of rationing, allocation, etc. you at what cost. A given industry you that I am not exaggerating 1 power from growing to such size measuring the value of the dollar it may be able to operate and pro¬ will read the exact language of that dominates government. Where Do We Go from Here? must be narrowed down to terms several arguments duce goods at 100% that are re¬ There is only one time when gov¬ capacity at So much for the war period. of some commodity or service or one price level but a somewhat peated over and over again by the ernment can reduce a swollen pri¬ we must the * Where do the first - our from there? go we place, as unit of measurement. is a bushel regardless a agree In have added to we is supply an enormous amount of dollars and the supply money over¬ some upon all group of commodities or ser¬ vices and accept the value of this the group as a measurement of value of the dollar. Probably the generally accepted measure¬ of the debt to non-bank investors. ments of the value of the dollar Neither is at all likely in large are the BLS indexes to which ref¬ amount over a reasonable period erences already have been made. can be reduced only by retirement of bank-held debt of time. Thus or by & shifting have we an excess most / index BLS The of wholesale stantially duction. ply pro¬ tends place to will be weeded organization, but * of been made in this respect and it may our has progress be that we will grow up to position with respect to new The evidence is that the money.. supply of goods and services is being 'brought into line with the demand with a resultant ( off and leveling- decline in prices. even a I do not mean to imply that the enormous increase in our money supply has alone been responsible for big,her prices. It has been a most important factor, but by no index is an overage commodities products, foods, other commodities, raw materials and manufactured products. The farm farm products component of the index is based on prices of grains, live¬ stock and poultry, and other farm ' was acquired tends limit probable price declines. In brief, frozen into mous believe I our ; to our money • 1 of ; money. ' should regain some products. The food index uses value as. we return to a more ; prices of dairy products, cereal normal economy as we seem to be products, fruits and vegetables, doing. Over the long run we may r meats and other foods. The other commodities component of the in¬ dex hides and leather prod¬ uses Brief, The ■ to safe it has be able to grow up to our money supply, in which event our money supply will not be excessive, but 1890; and it has been it common government workers. of It has a fore thatl maintain in a government." (A. < ernment authority society of F. reach the sense and responsibilities of powers ' of A col- rule Long be¬ the -struggle time constitutional our to gov¬ . union is the i it will not have 60 years in which bargaining carries with legal doctrine; that the the or (A. F; of L; to, succeed in this job. common lective - > Our national government began reduce the excessive power of big business in 47.) p. "The Our money of its former our calling. or which it governs." sup- ply which has served to lessen the value to before - working at the job;'ever association. It is essential to since, with more or less success. the nature of this organisation Our government has only recently that it include every individual and gently-begun - to reduce the who is a member of the society excessive power of big labor; and i economy an enor¬ addition to craft a union is the organization of qrovernment of this society formed \ by the exercise of the right of have we in or meantime the high cost at which some of our increased productive prices uses 1926 as 100. The all- capacity power size—and "that -is of an economic society when grown so great that it does dom¬ he takes employment.; --It inate the government, After that lis the society of his fellow there, is: no. escape from' tyranny i porkers in a mine, mill or shop, except by revolt and civil war. the in vately- organized t 7 ■ out, undergo/re-, etc., ; a mem- j ber floor a " v ["The worker: becomes prices.: Over a period v of least efficient producers demands. ' . This, in turn, limits sup¬ and under profitable lower time the supply of money unless produc¬ tion can be brought up to meet the Great unions in their brief: lower price level may mean sub-i of a become of; a free people enslaved to bigger a bigger L. will decision. / We shall have government or ive and shall ucts, textile products, fuel and once more have shown the world until we do I can visualize no re¬ •; Brief, p. 57.) ' lighting materials, metal and turn to the prewar value of our "We can summarize the-na- how a people who set themselves ; means the only factor working for metal products, building materials, ture of union membership as a money;, While price adjustments free can keep themselves free. * and allied products, higher prices. During the war chemical i common are desirable an condition of employ * early return to certain goods and services were housefurnishing goods and mis¬ prewar price levels would be most -.'! ment in an industrial society by I not available at all or if available cellaneous, with each of these ! dangerous, We have a debt;' of again comparing it to citizenship White, • Noble Co. Adds ; they were rationed or were avajl- groupings broken down into sub¬ * in some a political society. $250 billion and until we (Special' to. The Financial- Chronicle) > Both are : able in nominal amount only and groups. I mention the composition i grow up to such a debt I think compulsory upon individuals." at prices fixed by decree. DETROIT, MICH. — Donald J. Under of this index for the twofold pur¬ we must face the fact, disagree¬ (A. F. of L. Brief, p. 58.) < ■ • - these conditions when more and pose of stressing the value of the Hetu has been added to the staff able as it may he, that we have "The liberty of the individual more money was being manufac¬ index as a measurement of over¬ and of White, Noble & Co., Buhl will continue to have a de¬ is not the right to license, bu' tured, so to speak, and pumped all wholesale price changes and to valued dollar as measured A; A, f : participation in a social organi¬ Building. A.A'; by stress the impossibility of measur¬ ^ into our economy and, incident¬ former standards. Most wars have zation founded upon equality ally, diffused throughout all seg- ing the value of the dollar except been financed in I justice part through and law. The union if > ments1 of the economy with the in terms of some commodity or i that organization for employees. money devaluation of one sort or exception of those on fixed in¬ service. As a ease in point, the another and World War II cer¬ It is the product of the exer¬ wholesale price ; index stood at comes, it is not surprising that a tainly was no exception to this cise of their right of assembly large backlog of unfilled wants 1,60.6 in January of this year general rule. While we have had and it is essential to the exer¬ should have been created/ Thus based on 1926 prices as 100, yet no previous experience with cold cise of their right to secure an industry reconverted after the the price index for rayon was 41.8: wars I have an idea that we may ; equality of bargaining power war an unprecedented demand and for lumber 299.1 with both find that the monetary history of with employers, that member-, I was found to exist. The impact of the rayon and lumber figures en¬ fighting wars may apply likewise ship in the union be a common .■{jthis demand on an inadequate tering into the 160.6 over-all but in a lesser degree to a cold condition for all who are in fact supply produced a rise in prices. figure. As measured by over-all war. : members of the group governed In 1941, the BLS wholesale price wholesale prices, the dollar had Rental Value of Money by the union." r (A. F, of F * index averaged 87.3 and in 1946 about 62% of its 1926 purchasing / > Brief, p. 59.) £ There is one other 121.1. The average was 152.1 for power in January but nearly 240% * ; r ♦ „ . , ' • ' . . 1947 in and August of last year the index stood at a peak of 169.5. The postwar rise reflects : J,; i, jthe removal of price controls and ,., rationing and s. nearly .normal a return to a more operation of the laws of supply and demand, with demand swollen out of all normal proportions as a result of the in- . .. , creased , accumulation of wants unsatisfied , . during the war. I think, that to able , supply of money and the extent mands built the up The evidence is, a „have been satisfied M : (i i consider- very backlogs of de¬ during the .war and that we rapidly are returning to a buy¬ er's, rather than a seller's, market. The price declines of recent months indicate that this is the case> The question sume that you of dollar. are the with which I most future We know of and one-third about is the 1926 not referred and than the money is ply of mere increase in our sup¬ have been at work money aspect of the to which I have money of money rental itself value. In cheap dex reflected in its its rental value as measured by all former standards and in my opin¬ rayon price in¬ ion will remain so for many years hardly be at 41.8 and to come. Our government can rent would the lumber index at 299.1. In the money today for a year for only ad¬ $12,50 per $1,000 and for long time vances have served to lower use for only $25 per $1,000. Other prices. In the case of lumber the risk-free or nearly risk-free of case rayon technological unprecedented demand has users of money likewise have to brought about a nearly three-fold pay exceedingly low rates, as increase in prices since 1926. In measured by all lormer standards, the future ual be but as in affected on goods our the past individ¬ commodities by balance and by money advances, capacity, or services different the factors prices of all services the will large will be increase af¬ in for the rent borrower money value, i.e., a the use of it took two to increased lender the etc., will all work In money. other words, interest rates are exceed¬ ingly low. Thus, in terms of the supply. Technological productive of command. $1,000 now has gained in dollar will command what or Delusions . of Grandeur A that is the value as for otherwise the as¬ dollar has its of value of purchasing value in terms of lumber. Obviously, factors .other fected concerned value the of its 1926 value in terms of rayon not so long ago maybe three dollars In reverse terms is of true. the What produces in terms of i , little ^ use trying to regulate good conduct into organi¬ i There is zations of from 100,000 to 1,000,000. and women when, their lead¬ men ers are possessed by such delu¬ sions of grandeur, when they lack reject sensible guidance, when or they persistently absorb and propagate economic and political nonsense, when ,,;they imperil the the common defense against vio¬ lence, in times of and when recklessly general welfare and peace or war, they frequently become the pliant tools of domestic crim¬ inals of or advance the fifth columns foreign enemies. The only sure defense against this evil bigness is to liniit the man power which can be legally controlled by management, lust as one labor you can limit Volume -169 THE Number 4808 - FINANCIAL CHRONICLE .COMMERCIAL & tion -.V . !•; 4 States as of future aid source a in the development of their econ¬ . omies. the taken Western Europe has the,* United to would it I and the used have In ' my judgment, it is highly improbY able' that • the ... European countries . uJd,-hpTeassimilated<, American any more rapldjy^than they have. As a matter oUf§c|yt .speaks co ; • aid well Jor.;\the trading as contrasted with institutions of highly- In regulated trade. • - working these ■ Let S. .Trade us first objectives.' Objectives clear be There to as to v. our certain a of Communists, what is wrong with the Soviet Union. It is more diffi¬ cult, however, to In have recog- ing the weaknesses of the gold hies, opportunities for all, not world . men . . sible - proved so good: v been • - them- have-,made -t. have of improvement rates selves apparent in the tremendous ; in increase of rate productivity throughout western Europe. r Em¬ of the member cies v; grain that their estimates of pos- - Trading on world a Scale has developed in order to increase the standard of living of^tije. psopjes of the world.- The diverse produc¬ tion of different creates a to take the excit¬ Hence perfect. It is however, strong enough that we are not afraid to talk about its imperfections. By problems and some of our weak¬ nesses, the Communists may make differences have established we for the as Recon¬ Bank struction Development. Cer¬ tain standard play a large part in creating world depression, and no one who can and capital movements particularly those which call for public initiative rather than pri¬ vate, can be carried out by inter¬ national governmentaL lending rather than by private lending. This means that private indivi-, duals in .one part of the world types of » « " comparative national gold standard, it seems efficiency, the chance for wealth reasonably clear that nations will > was to be equalized not by grading the choose, the security of lower year well-to-do down but by grading standards of living rather than in¬ harvests it is too early to say. the poverty stricken up. ■ security and depression. They will Perhaps it will just be normal. to The European countries which revert nationalistic policies, The "trade between the nations have become strong have done, so and alter; radically our inter¬ of Europe and with the rest of only because of world shipping national trading system. Y the world has grown along with which gave them broad markets. .v the recovery of production. DurThe International Trade Their domestic trade and; their " ing the past few years we have intra-European trade by itself did Organization ;had little competition, but letters not provide the breadth of market aU)There is a second institution in are now coming to my desk which which made their mechanized the new system of international V tell me that the Belgians and the the International Trade techniques usuable. It was only trade -f-..British are Shipping steel products as they were part of a wide world Organization. Its provisions are into'parts-of the world where re¬ trading system, where they could tied closely with those of the cently we havelDeerr spiling withbuy their food and their raw ma¬ International Monetary Fund, be¬ out difficulty. Other manufac¬ terials abroad, process them at cause the two must be closely re¬ tured commodities are also ap¬ lated in administration. Briefly, home, and sell them in more valu¬ pearing in competition with our able forms that they, have become the International Trade Organiza¬ V 4 own goods. You have noticed that tion calls for the prohibition of take advantage The following year, nature good. Whether the present will, give us good or bad time. ; of invest their funds must save and institutions government through which have outlets abroad as as well International The home. at Bank for Reconstruction and De¬ velopment provides an institution through which this can take place. However, it can function only in a which in climate ments are clearly reasonably such invest¬ recognized secure. The as argument but only with those do not understand. This an who it incumbent on us to makes that sure understand how and why we No freedom. are strong maintain our we can part of our system viciously has been attacked more than be understand; that we we system of international our trade and investment. It has been "imperialistic." labelled it convinced adds the to peoples We are which well-being of other is well as system a as our own. must continue to prove we These And it. • ultimate defenses: are our belief that we can stand on our own feet, that we will refuse to be panicked by* those who say that any use of faith in ourselves, our our that have nothing to fear, we government power is in itself We have seen by the use of our own government that many wrong. good things can be done. We have which steps attention to some of our calling institution known another ing and healthy ways of rich liv¬ lived through the period of the ing. Even in the days of the first :'30s :and the struggle of country production has grown in- every navigator-businessmen who came, after country to Overcome depresr country, in some of them, by leaps to /the Western Hemisphere,; the sion and unemployment will I and bounds. During the period of traders were concerned wit.b. tak¬ knowingly permit such a' condi¬ this recovery we have had both ing back to Europe a variety,,of tion to develop again. Can we bad luck qnd good luck. Nature things to be found in this part of learn to use this new monetary ; 'first frowned on us and created the w o r 1 d. Furthermore, the instrument in carrying on trade, YY the problem of short/supplies of broadening of markets made pos¬ or do we have to explore still f . foodstuffs on the European conti¬ sible mass production, the lower¬ -further?.If we cannot find an ade¬ nent. Fortunately,: she was good ing of costs, the opportunity to quate substitute for the inter¬ •( to the western world at thafc same have been the seen guarding for necessity ■ • , , , , to¬ strong against excessive use of power, of trading world have not been feeble steps. In the beginning, there was considerable groping but we are beginning to feel the strength of recovery flowing strongly. We are walking more firmly. We are beginning to ap¬ praise our problems more ac¬ curately. We are beginning to understand these problems, and to thority, but we must know that, if our world trade is going tp con¬ tinue to contribute to the hap¬ taken in ward the last the few rebuilding years of a centralization excessive of au¬ - • • > . — • • j even been so bold as have to appear on American market; the ' British motorcars little the : they have been: welcomed. As the recovery increases, the competition of western Europe will make itself felt even more powerfully. One of our major tests is going to be the way in which we face it. .Will we, as ; ' ' great. '\ in the We ... United States some¬ the great advantage continental area for a forget times the which market has given to us. We for¬ wisdom of the Constitu¬ politicians when they pro¬ get the tional Constitution the barriers to trade between the states. We forget their insight when they estab¬ hibited in- our establishment of V foreign traders, like it as ; thing constructive and healthy— lished the one-currency area of something to be faced and fairly the United States and lodged the fought? Or will we try to restrict money-coining power in the Fed¬ it? Will we fall back on the de¬ eral Government. We forget their vices which we have learned to . Y is some- to prevent competition? This of the major issues which use one before further detail shall -have to face, but we ; discussing it in any ; I want to how re¬ have been from remind markably free we you competition. 1947, we reached an all-time high in the dollar volume *. In May, which we sold abroad. At the' same time, our imports from "abroad did not expand to of goods anything Since like that the peak, same volume. the rate of ex¬ off v i in the continue We v continental system in trading. The world trading system have said on Nineteenth Century secured some of economic activity, high the throughout world, and minimum restric¬ tions trade. on be less than frank if I I would did not say to you in lem our that the prob¬ international trade today is not whether we will have direct we of it? kind United cut we can quantitative regulations on one How or States another? We in the have been fortu¬ large nate dom of productive capacity, to minimize regulation. Yet even we have use cies advantages of free¬ movement, because of the of freely convertible curren¬ based on; gold. It even defense when we established rights of property through a system of international achieved a common police power, represented by national navies and armies, the be by a high degree of se¬ Freedom calls tor opporopporfunities for a limited few. It calls for access by mbwcomers of panied curity. work. It must recent lower¬ of these same several . in result can levels of employment down out during the coming year would probably be<. about what it was which of combina¬ use ing production and the levels of trade. It sets as its goals high „,, of the years. occasions that the level of exports - tions of our few another the agreement, levels accom¬ enough, because of our forced ourselves found to use both monetary controls and quan¬ titative such as those imports and have been the unfor¬ controls, having to I exports. do administer to trols. with bureaucrat tunate I know a had has who of these some con¬ little about their difficulties, their problems and, I hope, how to get rid of them. But we can rigid both of our national I have mentioned only in pass¬ remain customers, good much make can of 'our and those of our cus¬ abroad, who, if they are sell to us will which 1 lives happier. our Holds ITO Charier Leaves Much to Be Desired The June issue of the "Monthly Review of Credit and Business Conditions," published by the Federal Reserve Bank of New York, in analyzing the Havana Charter for an International Trade Organ¬ ization says it is "a complex document of 66 closely printed pages," and an ineffectual instrument fo <S>— ~ - • —— removing trade barriers. Accprd- measures currently in force can¬ not be suddenly swept away with¬ ing to the article in the "Monthly out Review": causing painful "transitional "As an instrument of inter¬ effects and quite possibly retard¬ national supervision of the use of ing, rather than advancing, pro¬ trade restrictions, the ITO blue¬ gress toward trade equilibrium. , printed by the Havana Charter ob¬ viously leaves much to be desired. widespread encountered has Charter The c r i ti c i sm on the a overall an balanced effort pattern of * trade, however, re¬ duction of trade barriers can con¬ tribute tory trade. limiting factor in the recovery of Western Europe. Action to secure a closer integration of national economies will require careful "In so criticism the th&t world far rests such as on current the assumption primary solution to the problem lies in a trade thoroughgoing elimination of ex¬ change and trade restrictions, and that our immediate need is for an international agency endowed with sufficient authority to com¬ pel the removal of such trade bar¬ riers, it oversimplifies the prob¬ lem. In recent years, it has be¬ come increasingly clear that the significantly to ful solution. Thus, rather markers output a success¬ lack of foreign inadequate than appear soon may as" a however, and, inevi¬ tably, protracted consultation and negotiation among the various na¬ planning, tions concerned. that our immediate need seem for . general, therefore, it would "In an is international instrument of planning and negotiating reduc¬ tions of trade barriers rather than for instrument an compelling serious attributable in large part to other productivity policies that emerged during the drafting of the Charter would in¬ evitably have dominated the fu¬ ture trade negotiations of most States, countries, implicitly if not openly. inter¬ phase of international policy which has relationships and its handling by the Interna¬ tional Monetary Fund. I must mention as of equal importance to do with monetary disequilibrium and deeper the losses of causes such as war¬ of invisible earnings, lag of European behind that of the United discrepancies in international cost and price levels, and other basic difficulties. "So long as these root causes of remain uncor¬ capital funds, both because of the rected, many foreign countries may well find themselves unable significance in the monetary field and because of their significance to dispense with quantitative movement of sound strange to disequilibrium and in the investment field. may of part restore international grounds that it is so riddled with exceptions as to render it almost valueless as a means of restoring multilateral and nondiscrimina¬ time international "As to wise an I have mentioned that It tomers to problems common country financial only by the controls national. • the to their more policies, the to contribute with mind and heart world trade, particularly the dollar scarcity, is remain free of these administration our piness of our lives, we will have to be patient and we will have have deal with them. quantitative restric¬ limits, by international It tions free of use tions. establishing a common regulation or not. We will have defense for the 13 independent regulation. The problem is what colonies. These are the founda¬ will be its character and how can last year, for the wisdom in until it leveled and and our im¬ the agreements which are face¬ ports have been steadily - though tiously called international law. not spectacularly climbing. The Today we do not have all the great spurt in exports was, of advantages that went with these course, due to the intense need institutions. We have as yet not abroad, so intense that, in addition succeeded in replacing them with to American grants and loans, the a system which makestrading countries were impelled to draw easy and which enables us to on their dollar reserves and buy make full use of the great ad¬ in the United States almost with¬ vantages of international speciali¬ out counting the cost. That period zation. While we keep the old has passed. The steady flow of exgoals in mapping our. trading port trade has been and is main¬ world, we are building new ways tained by the government grants of doing business. We are saying, and loans made available through moreover, that freedom must the ECA machinery. This can mean more than freedom to be ports has declined ; our International ployment has remained high and ■ people than can the system dominated by the Communists. We all know our system is not , international our arise. things of life for of the good more In the field of investment some of system. We have learned that dur monetary system parts of the world multitude of new, governments place of the automatic working of the old international gold of trading system. demonstrated more Foreign Investment well as those in. .the as maintenance the to tial in stimulating. If they were trade by building a new institu¬ essary. for business purpasO^'^je United States Government^^vho would probably invent thei&Ja^f tion known as the International have' been responsible for the so- for Monetary Fund. This calls for an fun. But they are more deeply' integration of the monetary poli¬ called European Recovery Prorboted even than that'/ ■; unusually v YjY Europe has flow of investment funds so essen¬ dieval times'up to today in theirr «stoda£d of the past, we have also form 'of fairs -and commodity ex¬ recognized its great advantages and we have endeavored to retain changes are exciting, colorful and those advantages in international talk about our Our own system it can provide problems. own chinery for the establishment of property rights, their recognition of the place which private in¬ vestment has in the world today, there cannot be the international past, control essential. found been the in extent purposely. It is easy to talk what is wrong with the about until the governments of western Europe again have their sinews of power, their ma¬ concepts of freedom newer limited a various-forms "Markets" from hrie^ sake. own - trading"just^fbnk^' amount of fun- iiV its is * Communist thinking. I have done this nized that, toward way western security for the movement of in¬ vestment funds. It has been recog¬ security which we have had and U. our the police power and world of greater Various Forms of Controls the present ''unlimited" word using it advisedly. am institutions the in establishment a 39 ing in this all-to-brief sketch our relationships with that part of the world which' is dominated by Atlantic Pact is the re- from the year, rebuild to of free re- almost in '. States swhether have been made available unlimited amounts..! sources . had to turn And American not. or past imports might be At¬ of the funda¬ mental advantages to be derived and that to the established business sys¬ little higher. tem. It calls for a dispersion of But this is the period s during^ wealth rather than a concentra¬ which constructive action must be¬ tion of opportunity and power. during (Continued from page 11) the connection this in lantic Pact, but one MChe Foundations of World Trade , (2407) men¬ their restriction of trade. Restrictive discriminatory foreign divergencies By The elimination. of clarifying Charter has national these trade issues,, the contributed substan¬ tially to mutual understanding of the obstacles future to be overcome in negotiations. The Interna¬ tional Trade could provide Organization the machinery for such itself international* negotiations." 40 • Allied Western Oil Corp., New York May 17 (letter of notification) 1,200,000 shares of com¬ mon stock (par lc). Underwriter—Atlantic Securities Co., 699 Madison Ave., New York. Price—25c per Drilling of wells, acquisition of oil leases, etc. share. ADDITIONS INDICATES common.. SINCE PREVIOUS ISSUE debentures and 10 shares of stock at & Co., To build and operate Rice Proceeds — Statement' effective May 24. $150 per unit. Un¬ - : • • Central Arizona Light & Power Co., Phoenix, Cyanamid Co.* New York 1 ^ Arizona ($100) par cumulative ,3V2% [ May 26 filed 80,000 shares ($50 par) cumulative pre¬ preferred stock series A, Offering—To key employees of ferred.- Underwriters—The First Boston Corp, and Blyth company and subsidiary and affiliated"1 companies. /Un- ^ & Co., ; Inc. Proceeds—To pay $1,000,000 outstanding denvriter— None. Proceeds—For general corporate pur¬ poses, construction loans and lor ■ Fork Consolidated American Mines, Salt Lake new use Brokerage Co., Salt Lake City. For American mining development. May 6 (letter of notification) 3,000 shares of non-voting; common ($5 par). Price, $22 per share. Underwriter— Bosworth, Sullivan & Co., Denver, Colo. Proceeds to selling stockholders. May 15 filed 634,667 shares of common stock (par $25), Offering—United Light & Railways Co., (parent) plans to offer to its stockholders of record June l„the right, to subscribe for the 634,667 shares of American at $12 per share on a l-for-5 ratio. Rights will expire about July h Underwriter—None. The proposed sale is to conform with SEC order under the Holding Company Act which calls for United's sale of American Light stock holdings. American Telephone & Telegraph Co. April 21 filed between $393,000,000 and $400,000,000 tenyear 3% % convertible debentures, due June 20, 1959. Offering—Offered for subscription by stockholders of ceeds—For Underwriting—None. Proceeds—For Chace Industries, March 7 (letter of notification) 68,000 shares of cumulative preferred stock (par $4) and 68,000 subsidiary and associated companies; for the pur¬ chase of stock offered for subscription by such com¬ panies; for extensions, additions and improvements to its own telephone plant f and for general corporate pur¬ poses. / ; Anemostat Corp. of v.';'" " America, New York May 2Q (letter of notification) $300,000 2-year 6% in¬ notes, due in 12 equal. monthly instalments, commencing Aug. 1, 1950, and ending July 1, 1951. To be offered for subscription by stockholders of record' May 27 at 95, in ratio of $2 of notes for each share of stock held. Rights expire June 27. Underwriting— None. To' replenish treasury for expenses in moving to newly leased factory premises, etc. Office, 10 East 39th Street, New York, N. Y. ;, -V,', / • ■ <//.■' " , • VW Inc., Pittsburgh, Pa. ■■ June 25 filed 5,000 shares of class B common stock (par $100). Price—$100 per share. Underwriter—None. Pro¬ ceeds—$600,000 to be Used for spectator grandstand and < •/: Horwood Lake ;//. / / - ■ , V"' , . t 1 Clarostat Mfg. Co., Inc., Brooklyn, N. Y. Aug. 26 (letter of notification) 37,400 shares of 50# cumulative convertible preferred stock. Underwriter— Cantor, Fitzgerald & Co., Inc., New York. Price—$8 per share. Working capital, etc. Clinton Industries, Inc., St. Louis, Mo. (6/6) May 20 filed 150,000 shares ($1 par) capital stock. Un¬ derwriters—Merrill Lynch, Pierce, Fenner & Beane, New York, and Newhard, Cook & Co., St. Louis. Proceeds— To be added to working capital for general corporate purposes, including construction of miscellaneous im¬ provements, replacements and additions to plant. \ ..•" Houston Lighting & Power Co. ; May 31 filed an. alternative to issue $15,360,450 2%% convertible debentures, due June 30, 1964 or 307,209 shares (no par) common. Offering—Common stockhold¬ ers of either record, June 22 share of one four shares held or will be entitled to subscribe to common to at $40 per share for each $50 principal amount of deben¬ tures for cash at 100 of principal amount for each four Underwriter—Kidder, Peabody & Co. Pro¬ repay short-term bank loans of about $4,000,- shares held. ceeds—To 000 made or to be made from The National Bank of Commerce of Houston and to finance construction. Idaho-Montana Pulp & Paper Co., / stock.v The >■' (letter of notification) -100,000 shares of capital Price—$1 per share.J Underwriter—Charles W. Warshoff & Co., Newark, N. J. 1 For development o! mining properties. stock.; con¬ /,>• r Mines Corp. Gold Dec. 27 Rights expire stalment Avco Manufacturing Corp.,. New York common. new Heidelberg Sports Enterprises, ' struction program. the balahce for related purposes. Underwriting—None. Proceeds—To finance June 3. r\y Proceeds—To $5. Co., Detroit. Cincinnati Gas & Electric Co. May 12 in ratio of l-to-9 at $22 per share. to ^ Jacksonville; Harwill, Inc., St. Charles, Mich. > May 9 (letter of notification). 3,000 shares of common (par $1). Price, par. Underwriter—Charles E. Bailey & construction. April 15 filed 249,334 common shares (par $8.50). Offer¬ ing—Offered for subscription by stockholders of record advances additional working capital, Transportation Co., Offering price of complete. an ocean ferry, to finance dock .and terminal facilities, to pay current obligations, and to provide working capital. A class Inc., West Chester, Pa. 6% nonshares of common stock (par 10b). Underwriter—De Witt Invest¬ ment Co., 910 West St., Wilmington, Del. To be offered in units of one share of each. Building of factory, installing machinery, working capital. 1 /. ,' ,./.. v■-./ shares of scribed Service Co. May 23 filed 446,000 shares ($10 par) common stock. Offering—To be offered to stockholders on a one-forfive basis. Underwriter—The First Boston Corp. Pro¬ . record May 6 at the rate of $100 debenture for each six shares of capital stock held at par.(flat). Rights expire June 20. Illinois Public Central Light & Traction. Co. Gulf Atlantic Florida ' Inc. ( May 31 filed 620,000 shares of class A participating ($l! par) stock and 270,000 shares (25c par) common stock Offering—135,000 shares of common will be offered for subscription by holders on the basis of one-for-tWo at 25 cents per share. Underwriter^--(Names* by amend¬ ment) will buy the remaining 135,000 shares plus Unsub¬ construction. Central Fibre Products Co., its proceeds for • ' Cily» Utah Mav 9 (letter of notification) 400,000. shares of capital stock. Price 25 cents per share. Underwriter—Cromer work- ■, ... 19, filed 10,666 shares of capital stock, of which I,381 shares will be sold in behalf of the company and 9,285 shares will be sold by Norgreen Associates Inc. and others. Underwriting — None. Proceeds — Company will filed 20,000 shares 1 ./ . Jan. , American • June ing capital.. Gauley Mountain Coal Co., New York Inc., Denver, Colo. a horse-racing track. - Additional $26.51 per share. between $24.18 and $100 mf Offering—To be offered in units of derwriter— Brereton, Thursday, June 2, 1949 FINANCIAL CHRONICLE & COMMERCIAL THE (2408) Poison^ Mont Coleraine Asbestos Co. Ltd,, Montreal, Canada : Nov: 23 (by amehdment) 180,000 shares ($10 par) comAug. 16 filed 200,000 shares of capital stock. April 22 filed 387,041 shares ($3 par) common Price— • ; mon stock to be offered at $10 per * share and 20,020 stock is reserved for issuance to officers and supervisory : 50 cents per share in Canadian,Currency. Underwriter shares to be issued in exchange for $170,200 first mort¬ Executives under the company's "stock option plan" or —P. E. Frechette. Proceeds—For drilling operations. gage bonds. Underwriter—Tom G. Taylor & Co., Mis¬ options assumed by the company upon acquisition of • Colorado Central Power* Co., Englewood, Colo. soula, Mont.; Proceeds—To erect and operate a bleached the assets of its former subsidiary, American Central May 26 filed 21,429 shares ($10 par) common. Offering— sulphate pulp mill with a 200-ton per day capacity. Manufacturing Corp. on Nov. 20, 1946, To be offered to stockholders of record June 10, 1949, Kaman Aircraft Corp., Windsor, Locks, Conn. at .rate of 1 -for-21/2v Underwriters—rThe First Boston BradshawMining Co., Tonopah, Nov. May 23 filed 170,456 shares of class A non-voting com¬ Oct. 8 (letter of notification) 1,500,000 shares (5c par) Corp., Dean Witter & Co.,..Bosworth, - Sullivan & Co.; mon stock (10c per share non-cuipulative dividend) and common stock. Price—20 cents per share. Boettcher & Co. and Woodcock, Hess & Co., Inc. Pro¬ Underwriter II,362 shares of class B voting common stock. Price, —Batkin & Co., New York. To repair and renovate mine ceeds—For construction. ; $5.50 per share. Underwriter—None; Purpose—To ac¬ of company and to exercise option to purchase processing Consolidated Caribou Silver Mines, Inc. quire machinery, tools and equipment; to buy land and mill and move and erect such mill on the company's March 30 filed 376,250 shares (no par) common stock. buildings; to produce 30 helicopters apd accessories; to property and for working capital. . : » Price—$2.50 per share. An additional 50,000 shares will complete engineering; changes;! to; setup sales and serv¬ Bridgeport (Conn.) Hydraulic Co. (6/6) be sold to the underwriter at $1 per share for invest¬ ice departments; and, to train., service personnels April 26 filed 36,000 shares of, common stock (par $20). ment. Underwriter—William L. Burton & Co., New Kansas Gas Electric Co. Underwriters—Smith, Ramsey & Co., Gaynor, Clemence York". Proceeds—To develop mining properties. Offer¬ May 16 filed 550,000 shares of: common stock (no par) of & Co., Chas. W. Scranton & Co., Hincks Bros. & Co., T. ing expected early in June. which American Power Sr. Light Co. (parent) will sell W. Watson & Co. Offering—To be offered initially to Consolidated Gas Electric Light & Power Co. stockholders of record June 6 on a 1-for-lQ basis, with 450,000 shares. Underwriter—Exemption from competi¬ - r „ - ... - rights expiring term bank of Baltimore June loans. 30. Proceeds—To / reduce ■ short- ' ; • Brush (Colo.) Racing Association, Inc. May 23 (letter of notification) 300 shares common stock (par $100). Price par. Ko underwriter. For purses for race meet, permanent improvements and working cap¬ ital. Office: 511 Emerson Street, Brush, Colo. Carnegie Mines Ltd., Montreal, Canada April 27 filed 500,000 shares of common. Price—60 cents per share. Underwriters — Name by amendment. Pro¬ ceeds For working capital, exploration, development — and other purposes. May 18 filed 238,000 shares of common stock (no par). Offering—To be offered for subscription,by stockholders of record June 2 in by 13 banks. • ' Centennial Turf Club, Inc., Denver, Colo. May 5 filed $1,600,000 of 6%, sinking fund debentures, /due Jan. 1, 1965, and 160,000 shares of Class A ($5 par) l-for-6 ratio. Underwriters—The First Boston Corp.; Alex. Brown & Sons; John C. Legg & Co. Price—Expected about $60 a share. Proceeds— To finance company's construction program. • Cornucopia Gold Mines, Spokane, Wash. May 20 (letter of notification) 191,500 shares (5c par) common. To be offered holders of record June 30, 1949, at the rate ol! one-for-five. No underwriter. Working capital for maintenance purposes. Office: 824 Old Na¬ tional Bank Caterpillar Tractor Co. (6/7) May 17 filed 250,000 shares ($100 par) cumulative pre¬ ferred stock. Underwriter—Blyth & Co., Inc. Proceeds —To pay a total of $21,000,000 of promissory notes held a Building, Spokane, Wash. > Fenimore Mines Ltd., Toronto, Canada May 24 filed 2,000,000 shares ($1 par) capital stock. Underwriter—Tellier & Co., New York. Price, 25 cents per share (U. S. funds). Proceeds—To.explore for iron ore deposits.- ' for construction and other corporate purposes, • Foote Mineral Co., Philadelphia (6/13-20) May 26 (letter of notification) 7,798 shares of common stock (par $2.50). To be offered for subscription by com¬ stockholders of record June 7 on a lrfor-6 basis. Rights expire June 20. Underwriter—Estabrook &. Co. Price, estimated at between $26 and $28.50 per share. Plant expansion and working capital. , New York Boston Philadelphia Private Wires Pittsburgh San Francisco to all , office's Chicago Cleveland • Securities Corp.; Blyth & Co., Inc. and the First Foote Mineral Co.. Philadelphia May 26 (letter of notification) 2,500 shares of common stock (par $2.50). To oe offered to employees only at Boston Corp., (jointly); Merrill Lynch, Pierce, Fenner & Beane and Kidder Peabody & Co. (jointly); White, Weld & Co. Proceeds Kansas Gas will - use proceeds of 100,000 shares to pay for part of its construction program and to repay short-term bank loans from Guaranty Trust Co. of New York and eight Kansas banks. • 4 — 4 Keller Motors Corp., Huntsville, Ala. May 10 filed 5,000,000 shares (3# par) common. Under¬ writer—Greenfield, Lax & Co., Inc., New York. Price— $1 per share. Proceeds—For plant facilities, equipment and working capital to manufacture a low-priced, medium-sized station wagon. • Lafayette (Ind.) Foods, Inc. (letter of notification) 3,000 shares of 6% cu¬ preferred stock (par $100). Price, par. No undei writer. To purchase the common stock of Conti¬ nental Freezers, Inc. May 23 mulative Florida Power & Light Co. May 20 filed $10,000,000 first mortgage bonds, due June 1, 1979. Underwriters—Names to be determined through competitive bidding. Probable bidders: Harriman Ripley & Co.; Halsey, Stuart & Co. Inc.; White, Weld & Co.; Glore, Forgan & Co.; Lehman Bros.; The First Boston Corp.; Carl M. Loeb; Rhoades & Co. and Bear,, Stearns & Co. (jointyl); Drexel & Co. and Central Republic Co. (jointly). Proceeds—To pay off $3,200,000 of short-term borrowings from Central Hanover Bank & Trust Co. and mon tive bidding is sought in connection with this offering. If competitive bidding probable bidders include: Union 2, 000,000 1949 June 3, June ^ ____Bonds 1949 units of Bonds $25,625 will June 7, 1949 Caterpillar Tractor Co Pennsylvania & Southern Gas Co. June - Reading Co., 8, -—Bonds Bonds 1949 1949 Chicago Rock Island & Pacific RR. ;- „• Noon (CDT)-JEquip. Trust Ctfs. Clinton Industries Inc._^_____________Capital Stock ., June r 10, 1949 Baltimore & Ohio RR._______ , - 13, To repay a • ;> ■ June , June Chicago Burlington & Quincy RR Eqp. Tr. Ctfs. Scott Paper Co._______———-Preferred •:/< State n Island Edison Corp., noon July 7, —Preferred penses. tive —Equip. Trust Ctfs. (Nev.) Thoroughbred Racing Assn. 500,000 shares 6% cumulative preferred stock (par $5) and 500,000 shares common stock (no par). Underwriting—None. Offering—To be sold in units of one share of each at $5 per unit. Proceeds—To purchase 25 filed land and construct racing plant and for working capital. Liberty Loan Corp., Chicago, III. May 9 (letter of notification) 3,600 shares ($10 par) 75% cumulative convertible; preferred. Price, $15 per share. Underwriter—Sills, Fairman and Harris, Inc., Chicago., Working capital. Lorain April 11 common. (Ohio) Telephone Co. (letter of notification) 7,500 shares (no par) Price—$20 each. No underwriter. To reim¬ burse treasury for outlays for property Maumee Oil Corp., Toledo, Ohio May 12 filed 8,000 shares (no^ p^r) additions. stock common common, of which • Michigan Consolidated Gas Co. June 1 filed $25,000,000 sinking fund debentures, due July 1, 1967. Underwriters — Names to be determined through competitive bidding. Probable bidders: White, Co. and Lehman Brothers (jointly);, Halsey, Stuart & Co. Inc.; Harriman Ripley & Co., Inc.; Smith, Proceeds—For payment of $3,500,000 of Barney & Co. promissory notes, payment of the redemption .price of 40,000 shares of outstanding 4%% cumulative preferred, payment of principal and premium of about $7,300,000 of promissory notes of its subsidiary (Austin Field, Pipe Line Co.) and for construction. • Missouri Utilities Co., Cape May 26 filed 51,184 shares ($1 par) To be offered to stockholders Girardeau, common. Mo. Offering— one-for-four basis. on Un¬ derwriter—Edward D. Jones & Co., St. Louis, Mo. ceeds—For construction. • Motion Picture Financial T J. stock, . of New Pro¬ 'f'■J' ! ■ warrants Price, par. Capital im¬ preemptive common shares in the excess of their ratable allotment; company's preferred will stock bank en¬ offered sa be Underwriters—Names by competitive bidding, Probable bidders: Kidder, Peabody & Co.; Blyth & Co., Inc.; Harriman Ripley & Co. Public borrowings. Service Co. of New Hampshire May 18 filed $4,000,000 first mortgage bonds, series E, due 1979. Underwriters — Names to (jointly); Shiith, Barney & Co. and Harriman Ripley & Co. (jointly). Proceeds—For con¬ Co. and Blyth & Co. struction, including repayment of short-term borrowings Public ■ Service ,. • & Co. Gas (6/7) May 6 filed $75,000,000 first and refunding mortgage bonds, due June 1, 1979. Underwriters—Names to be determined by competitive bidding.' Probable bidders: & Co.; Halsey Stuart & Co. Inc.; The First Boston Corp.; Kuhn, Loeb & Co. and Lehman Brothers (jointly). Proceeds—To reimburse, in part, the Morgan Stanley for past construction expenditures; and to pay maturity $9,475,300 of Hudson County Gas Co. first company Bids—Bids 1949. mortgage 5% gold bonds, due Nov. 1, latter the company will Service receive one termined through competitive bidding. Probable bidders include: Blyth & Co., Inc., and Stone & Webster Securi¬ ties Corp. (jointly); Lehman Brothers; Halsey, Stuart & Co. Inc. (bonds); White, Weld & Co.; Harriman Ripley & W. Co.; The First Boston Corp.; Glore, Forgan & Co/and C. Langley & Co. (jointly); Merrill Lynch, Pierce, & Beane. Proceeds—For $2 million of bank notes. Staten Island construction and Expected June 13.: to (N. Y.) Edison Corp. (6/15) shares ($100 par) cumulative pre¬ 40,000 Underwriters — Names to be determined (EDT) June 15 at Room 2601; 61 Broadway, New noon York. J.u-;vii' Suburban Gas Service,<Inc.^Ontario, Calif. (letter of notification) 4,000 shares ($25 par) series B preferred and 20,000 shares ($1 par) common— issuable upon conversion of preferred. Price—Preferred $25 per share. Underwriters—Wagenseller & Durst, Inc., • March 31 and Lester & Co. To buy Antelope Liquid Gas Co. Tennessee Gas Transmission Co. May 24 filed $50,000,000 first mortgage pipeline bonds, due Underwriters 1969. Names — through competitive bidding. Weld Co. & and (jointly); Halsey, Stone Stuart & & to be determined Probable bidders: Webster Co. Inc. White, Securities Corp. Proceeds—To be used from time to time, for . . Electric of Southwestern Gas & Electric Co. (6/13) May 20 filed $4,500,000 first mortgage bonds, series C, due June 1, 1979, and 25,000 shares ($100 par) cumula¬ tive preferred stock. Underwriters—Names to be de¬ determined be through competitive bidding. Probable bidders: Halsey, Stuart &. Co. Inc. (bonds only); The First Boston Corp. and Coffin & Burr Inc. (jointly); Kidder, Peabody & for such purposes. '• Bids for the purchase of the stock will be received up to sub¬ opportunity to subcribe to the new, unsubscribed shares. Proceeds—For construction and repayment of short-term common purchase to new common Common stockholders will be entitled to stock. additional subsidiary, Alabama Gas and holders right of the Underwriter—None. through competitive bidding. Probable bidders: W. C. Langley & Co.; Kidder, Peabody & Co.; Stone & Web¬ ster Securities Corp. and White, Weld & Co. (jointly); Lehman Brothers; The First Boston Corp. Proceeds—To pay off short-term notes and for construction. Bids- cancellation stock to which it is titled and will not subscribe to any for being registered 18,378 shares will be used by Southern Union to pay for expenses of merger. Under¬ writer—E. H. Rollins & Sons, Inc. , Fenner Hampshire surrender for evidencing its and ence stock. the current plant and share of preference for each share of Texas Public Service common. Of the prefer¬ ferred scribe for the additional to Gas $12 of debentures and filed will company's proposal to merge with Texas Public a May 9 Service to additions 1 Union Stockholders eight basis. New England Public Service Co. (parent), holder of 58.88% of the outstanding common of Public part and Co., Dallas Texas May 9 filed $3,679,464 of sinking fund debentures, due July 1, 1964, and 306,622 shares ($1 par) preference stock prepay stock \ •• & Rights expire June 28. May 9 filed 104,804 shares of common stock (par $10). Offering—To be offered to stockholders on a one-for- at Corp., New York share. Co. Power Petroleum Ltd., Toronto Canada April 25 filed 1,150,000 shares ($1 par) common of which 1,000,000 on behalf of company and 150,000 by New York Co., Ltd. Price—50 cents per share. Underwriters^To be named by amendment. Proceeds—For adminis¬ tration expenses and drilling. » Public Service Co. (6/15) L. .Southern Natural Gas Co., Birmingham, Ala.' May 13 filed 141,853 shares ($7.50 par) common stock. Offering—Stockholders of record June 6 will have the right to subscribe for the stock on a l-for-10 basis at $26 under ', ... (par $100). Co., Philadelphia. in improvements Southern Westfield, series B & John cumulative and purposes of Corp.- (6/7-8) preferred 45,000 stock investment in Southern's similar ' stop order should be issued suspending the effective¬ of the registration statement. & agreement to , , Proceeds—For construction shares of Tide Water and for development ... . filed of Working capital, etc. , Southern Indiana Gas & Electric Co^ (6/3) April 29 filed $3,000,000 first mortgage bonds, due June 1, 1979. Underwriters—Issue awarded to Kidder, Pea¬ body & Co., June 1 on bid of 101.14 for a 2%% coupon. Proceeds To finance a continuation of the company's construction program. Offering—To be priced at 101.51 to yield 2.80%, : per • ness Weld credit provements, etc. of only about 2,614 shares will be offered publicly at $100 per share. No underwriter. For general working cap¬ ital. SEC will hold hearing June 6 to determine whether a Co. Underwriter—Bioren Las Vegas . Jan. . May 18 (letter of notification) 250 shares 6Vz% cumula¬ 1949 \ Atlantic Coast Line RR a Pennsylvania & Southern Gas Co., 'June 27, 1949 Wisconsin Electric Power Co.— ;-s*< ^ < Underwriter—Office — be.. Royalties, Inc. For the repurchase of stock of the cor¬ poration under offer of rescission and for operating ex-. (EDT)_ .Preferred 50,000 shares class A stock, nonconvertible (par $4). equipment. , N. - „ (6/14) ... notification) share. per corporate Fay Rock Oil, Inc., Tulsa, Okla. May 3 (letter of notification) 900,000 shares of common stock. Price, 30 cents per share. Underwriter—Security 1949 of Underwriters—Drexel program . Labouchere & Co. purposes. .--Debentures IS, .' Building, preferred shares (no Co.; Smith, Barney & Co. and Merrill Lynch, Pierce, Fenner & Beane." Offer¬ ing price and dividend rate by amendment. Proceeds— To pay off outstanding bank loans and to augment com¬ pany's funds which are to be applied in part to general (CDT) June 6 at 231 So. La Oil Corp. 26 par). $10,500,000 note held by Guaranty Trust Co. Guaranty Trust Co, balance due Oil Associated 14," 1949 Pacific Western Oil Corp purchase of bonds will certain advances made under acquire from -Common Southwestern Gas & Electric Co..-Bonds and Pref. V; <>A May of New York, to repay 1949 : (letter Scott Paper Co., Chester, Pa. May 20 filed $15,000,000 15-year debentures, due June 1, 1964. Underwriter—Eastman, Dillon & Co. Proceeds— Equip. Trust Ctfs. Foote Mineral Co lor a.m., Western Pacific on June Bids—Bids Bank Y. 18 Price—$5 revised. loans. bank National , Nolan, Inc., Glen Falls, N. Y. stock (par 25p). received up to 10:30 Salle St., Chicago. r - per be First * participating preferred Corp.; Halsey, Stuart & Co. Inc.; Har¬ Corp. (jointly); Lehman Brothers and Blvth & Co., Inc. Proceeds—For construction and payment of $3,500,000 of short-term (EDT)—____^Equip. Trust Ctfs. Southern Ry—-----J-i—_iEquip. Trust Ctfs. 9, May riman Ripley & Co. and Union Securities noon June one 204 41 Sandy Hill Iron & Brass Works, Hudson Falls, N. construction. new The First Boston (EDT)-Bonds p.m. for Office: made. % Gas & Electric Co. (6/6) • May 5 filed $10,000,000 first mortgage bonds, due June 1, 1979. Underwriters—Names to be determined through competitive bidding. Probable bidders: Merrill Lynch, Pierce, Fenner & Beane and White, Weld & Co. (jointly); -Preferred aim, (EDT)_^_:_r_-AiA~— V 11 ; Utilities Equipment Co._— \ Virginia Electric & Power Co., 1 and dies Oklahoma Preferred Public Service Electric & Gas Co. • notes (2409) Appleton, Wis. Underwriter—Charles Co., New York. Offering—To be offered in preferred share and 2lk common shares at unit. Capital requirements. Present plans common H. Drew & Common L;,; • short-term of shares of 6, CHRONICLE , Nielsen Television Corp., New York Feb. 24 (letter of notification) 4,000 share of 6% cumulative non-convertible preferred stock (par $25) and 10,000 1949 Bridgeport Hydraulic Co._l Oklahoma Gas & Electric Co FINANCIAL Expected June 14. Seaboard Air Line RR., noon (EDT)__Eqp. Tr. Ctfs. I Southern Indiana Gas & Electric Co & through competitive bidding. Probable bidders: W. C. Langley & Co.; Lehman Brothers and Glore, • Forgan & Co. (jointly); Harriman Ripley & Co.* Proceeds—To be applied to the discharge of presently outstanding $4,- NEW ISSUE CALENDAR June COMMERCIAL THE Number 4808 Volume 169 along with other cash resources, expansion of company's natural gas pipeline system. • ' Tower Bay Development Corp., Lake Wales, Florida May 24 (letter of notification) 2,400 shares of preferred and 12,000 shares of common. To be offered in 300 units consisting of eight shares of preferred ($100 par) issued at $100 per share, and 40 shares ($1 par) common, issued at $5 per share—$1,000 per unit. No underwriter. To develop, advertise and promote the vacant land owned by the issuer. • Trans Caribbean Air Cargo Lines, Inc. (letter of notification) $150,000 7% convertible 3VIay 23 (letter of notification) 2,700 shares 5% cumula¬ tive preferred stock (par $100) and 2,700 shares class A lor purchase of bonds will be received at company's office, 80 Park Place, Newark, N. J., up to 11 a.m. (EDT) May 25 common June 7. equipment trust certificates, series C, due Sept. 1, 1952. Underwriter—Gearhart, Kinnard & Otis, Inc., New York. share of stock each (par $1). at $101 Working capital. Office To be offered in units of per unit. Underwriting, one Renaissance Films none. 295 Madison Ave., New York 17, N. Y. (par $25) 5% cumulative stock and 10,000 shares of C stock (no par). Underwriting—None. Offering—Class B preferred will be offered at $25 per share with one share of class C given as a bonus with each 4 shares of class B purchased. Proceeds—To pay balance of current Oct. • National Forum, Inc. ^lay 23 (letter of notification) 1,509 shares ($100 par) preferred and 21,575 shares ($1 par) common. Price, Par. No underwriter., For development and of certain educational medium—like charts. completion Office: 407 South Dearborn Street, Chicago. 29 filed 40,000 shares liabilities and working capital. Rickel May 18 vertible Wm. (H. W.) & Co., Detroit, Mich. (letter of notification) $300,000 of 5V2%# con¬ debentures, due June 1, 1961. Underwriter— Co. Proceeds—For general corporate C. Roney & purposes. '. . . . . * .*• v Inc., Appleton, Wis. New York State Electric & Gas Corp. (6/14) May 23 (letter of notification) 750 shares of common May 16 filed 40,000 shares ($100 par) cumulative pre¬ stock (par $100). Price, par. No underwriter. To manu¬ ferred stock Underwriter Names to be determined facture automatic record changers and to have tools and — Price, • Ristaucrat, par. Tc pay unpaid balance of $44,474 owing chattel mortgages covering two aircraft, on and $90,000 to complete conversion, etc., on another aircraft, etc. Transitcast Inc., Allentown, Pa. convertible class B preferred • National Industrial Loan Corp., New York May 25 (letter of notification) 40,353 shares of capital stock (par $3). To be offered for sale in one parcel at Public auction, at auction rooms of Adrian H. Muller & Sons, New York, in behalf of General Phoenix Corp.. 59 John St., New York. Distribution, Inc., Montreal, Que. May 19 (letter of notification) 1,000 shares 5% cumula¬ tive preferred stock (par $50) and 5,000 common shares To be offered in units of one preferred and $55 per unit. Underwriter—C. y. (no par). five common shares at Converse & Co., Allentown, Pa. Working capital, etc.. Detroit, Mich. March 30 filed 131,841 shares 6% cumulative convertible class B preference ($2 par). Underwriters—Straus & Blosser, Chicago; Carr & Co., Detroit, and Lester & Co., Trenton Chemical Co., Angeles. Proceeds—To build chemical plant and to replace working capital used for capital additions. [Un¬ der a previous registration statement (No. 7637), which became effective Sept. 24, 1948, company sold 43,159 Los (Continued on page 42) 42 (2410) THE (Continued from page 41) shares of 6% $97,108 (par $10). cumulative preferred stock for and removed 1949.J 131,841 shares from a on total of Mrs. Tucker's registration Foods, Inc., Sherman, Texas $2.50) the company and 120,000 Underwriter—Rauscher, Co., Inc., Dallas, Texas. Proceeds—For general Stock will be offered initially to stockholders on a l-to-4 basis. Underwriter—The vote Pierce & debtedness. corporate purposes. in ; the Sale future to Upper Peninsula Power Co. Sept. 28 filed 200,000 shares of common stock (par $9), Underwriters Names to be determined through com¬ petitive bidding. Probable bidders include Kidder, Peabody & Co., Merrill Lynch, Pierce, Fenner & Beane And Paine, Webber, Jackson & Curtis (jointly). Proceeds- the 'a Will go to selling stockholders. Consolidated Electric & Gas Co. and Middle West Corp. will Sell 120,000 Shares b ■!> and 34,000 shares, respectively; Copper Range Co., 34,000 owners 11,200 shares. shares and several individual Utilities Equipment Co., Inc. (6/7-8) May 20 (letter of notification) $30,000 6% secured bonds. Underwriter—Bioren & Co., Philadelphia. Prepayment ol advances made for purchase of equip¬ Price, par. ft ment. Virginia Electric & Power Co. (6/7) May 4 filed $20,000,000 first & refunding mortgage bonds, due June 1, 1979. Underwriters—Names to be deter¬ mined through competitive bidding. Probable bidders: White, Weld & Co.; Union Securities Corp.; Stone & Webster Securities Corp.; Halsey, Stuart & Co. Inc.; Glore, Forgan & Co. and W. C. Langley & Co. (jointly). "xi k< M V? i Proceeds—For construction. *} *' I-! Bids—Bids for the purchase of the bonds will be received by the company at office of J. C. Leighton, Room 503, 30 Broad St., New York, 1 up to p.m. (EDT) June 7. ^ ■'.i) • Webb's City, Inc., St. Peterburg, Fla. May 23 (letter of notification) $300,000 10-year 4V2% de¬ bentures. No underwriter. For retirement, by exchange call, Of $200,000 outstanding 7% Cumulative preferred stock and exchange for, payment of, or call of $100,000 of presently outstanding $2(10,000 6% debentures. Of¬ fice: 128 Ninth Street South, St. Petersburg, Fla. k of will enable the which company bidders for i4M' II V, unsecured amount necessary * of indebtedness capital freedom more in New Jersey Power & Light Co. :v ' May 19 company asked SEC authority to sell competi¬ tively $3,500,000 first mortgage bonds and 20,000 • to and surplus borrowing. shares stock: Blyth & Co., Inc. and The First Boston Corp. (jointly); Harriman Ripley & Co.; Merrill Lynch, Pierce, Fenner & Beane. Carolina Power , & Light Co. to need $27,000,000 in new money over the next three years to finance its expansion and construction program through 1952. Presently it has no definite plans as to how and when this capital will be raised. Company expects to spend $53,500,000 on its construction program in the period 1949-1952, including $5,500,000 which has been spent in the first four months of 1949. Currently it has approximately $8,000,000 of cash available for its construction needs. Another $13,000,000 is scheduled to be raised from its depreciation accruals, current earnings and other internal sources. In May 20 order to stock and maintain new unofficial an surplus of amount expects company total to stock common ratio of 20% capitalization, only would part of the $27,OO0,00G program of as have new of preferred stock (par $100): Probable bidders for bonds/ Halsey; Stuart & Co. Inc.; Equitable Securities Corp.Union Securities Corp.; Carl- Mr Loeb, Rhoades & Co. For ;preferred: Salomon Bros. & Hutzler; Kidder, Pea¬ body & Ccr.; Drexel & Co.; Smith, Barney & Co.; Glore Forgan & Co. and W. C. Langley & Co. (jointly). ; - *' New York New Haven A Hartford RR. April 13 stockholders authorized issuance of hot exceed¬ ing $3,500,000 of-equipment obligations. Probable bid¬ ders: Harris, Hall & Co. (Inc.); Halsey, Stuart & Co. Inc.; Bros-& Hutzler, Lehman Brothers and Bear! Stearns & Co. (jointly); Lee Higginson Corp. Salomon Pacific Gas A May 26 be to Lehman Brothers. Expected about June Chicago Rock Island A Pacific RR. Company will receive bids at 15. the able Western Oil Fields, Inc., Denver, Colo. of , Columbia May 19 (letter of notification) 800,000 shares of common capital. Price. 25# per share. Underwriter—John^G. •Perry & Co., Denver, Colo. For working capital and drilling of wells. v Wichman Jan. 5 Philippine Mindanao Development Co., Cebu City, Philippine Islands filed 2,000,000 shares of voting capital stock, one centavo par value. Brothers each be Gas Commonwealth Edison seven government were Boston Corp.; • preferred ferred to of 200,000 shares (no par) common Underwriter—Hemphill, Noyes & Co., New York. by amendment. ers. stock. Price, Proceeds—Will go to selling stockhold¬ Offering postponed. Young ^ (Thomas) Orchids, Inc., Bound Brook, Now Jersey April 20 (letter of notification) 2,000 shares of common stock (par $1). Price—$30 per share. Underwriter— Smith, Barney & Co. selling stockholder. will act as agents. Proceeds to made as it is as now too early to decide. the to & : ... ;\ - (jointly); Lazard Co. American Gas & Electric $80,000,000 and $90,000,000 from ing in the next three new program, scheduled 1949-1951 period. in connection with its expan¬ to cost $251,000,000 over the year, do and Illinois May 20 vicinity. an Power Illinois share are 4 bond Baltimore & Ohio RR. (6/10) May 18 reported company is expected to be in the oy Co. by North American interests in Illinois. filed with the Of common the stock North American ket about June 10 for the sale of about $4,500,000 equip¬ ment trust certificates. Probable bidders: Halsey Stuart & Co* Inc.; Salomon Bros. & Hutzler; The First Boston and Lehman Brothers * Bank of the Manhattan Co. June 1 stockholders voted to increase the capital stork to $25,000,000 irom $20,000,000 by sale of 500,000 shares by the r stock to be and sold, 170,000 Co. and , Lee Power & Light Co. / ,; — 12 reported company may be in the market this year with $7,500,000 first mortgage bonds and , $3,000,000 stock, the latter to be sold to United Light & (parent). Bidders for bonds \ may include Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler* Kidder, Peabody & Co ; Lehman Brothers; Blyth & Co.! Inc.; W. C. Langley & Co., and Union Securities Corp (jointly); The First Boston Corp.; Glore, Forgan & Co.' and A. G. Becker & Co. (jointly); Harriman Ripley & * . , ' ■ Power Co. ■■■ The First Boston*Corp.; Hal¬ Stuart & Co. tnc.; Harriman Ripley & Co.; Blyth Co., Inc.; W. C. Langley & Co. and Carl M. Loeb, & Southern .• •- ('(y' .yy'.-y Railway .(6/8) IV f'Vy invitation for bids to be re¬ June 8 for the purchase from it of $7,500,000 in equipment trust certificates, to mature in 30 equal semi¬ annual installments. Probable bidders: Halsey, Stuart & Co. Inc.; Salomon Bros. &. Hutzler; The First Boston Corp.;' Harriman Ripley & Co. and Lehman Brothers (jointly); Harris, Hall & > Iowa May Co. . (6/2) ceived Paine, Webber, Jackson & Curtis (jointly); The First Boston Corp. and Merrill Lynch, Pierce, Fenner & Beane (jointly); Blyth & Co. Inc.; Smith; Barney: & Co.; Leh¬ man Brothers and Harriman Ripley & Co. (jointly). Co. RR. Corp.' Carolina The: company, has' issued and Rys. cer¬ $3,435,000 equipment trust cer¬ F, dated June 1, 1949, due in 15 equal instalments, will be received at office of Willkie Rhoades & Co. Probable bidders:. Kidder, Peabody & common J series South < (no The sale will complete divestand Light & Power of their , mar¬ SEC White, Weld & Higginson Corp. (jointly); Goldman, Sachs & Co.; Hornblower & Weeks Co.; ' sey, Power held ' Probable bidders include: was outstanding of ' equipment'trust May 17 reported plan? to sell $4,000,000 of bonds-this year to finance part of its 1949 construction program. Co. North American Light & Power Co. and North American requesting permission to sell competitively 242,785 shares (12.67%) of the par) V'-it. (6 8) Seaboard Air Line Bids for the purchase of First Boston Reported Cruttenden & Co. will application Barney & Co.< (jointly); Glore, Forgan Langley &-Co. • (jointly);* Eastman, C. Corp.; Harriman Ripley (jointly). ' / -; • -Co. ment some but amount not yet determined. Cwp^Harriman Ripley & Co. S. shares by Light & Power. Atlantic Coast Line RR. (7/7) May 24 reported company plans the sale July 7 of $8,685,000 equipment trust certificates. Probable bid¬ ders: Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutz¬ ler; The First Boston Corp.; Harriman Ripley & Co. and Lehman Brothers (jointly); Harris, Hall & Co. (Inc.). Chicago 72,785 Appalachian Electric Power Co. May 18 reported company expected to financing later this bond financ¬ years sion U. finance be underwriters. Co. May 18 Philip Sporn, President, stated that company probably will come to the new money market for equity capital this year. The System expects to require be¬ tween with under way for a public offering of operations. Company has contract Post Office for helieooter mail service for W. 250,000 shares. - If any pre¬ include! Blyth & Co., bidders Owen Farr Gallagher & Walton, 15 Broad. Street, -New York, up to noon (EDT) June 2.-Probable bidders: Hal¬ sey, Stuart & Co. Inc.; Salomon Bros. & Hutzler; Harri¬ man Ripley & Co. and Lehman Brothers (jointly); The Helicopter Air Service, Inc. to from Freeman & Co.; The First Boston & Co. and Lehman Brothers annual Corp. securities -•*--• > June 15, 1949, and will mature $185,000 semi¬ annually Dec. 15, 1949-June 15, 1959. Probable bidders: Halsey,' Stuart & Co.* Inc:; Salomon Bros. & Hutzler; tificates Akron Union • y/ terms The First dated Additional financing may be necessary later this year to complete the program, it is understood. Probable bidders: Halsey, Stuart & Co. Inc. (bonds); ' The First Boston Corp. and Blyth & Co., Inc. (jointly); May 27 negotiation other and tificates) series Q, - will be received at ot'iice of R. W: Brown, President, Room 423, Reading Terminal, Phila¬ delphia, up to noon (EDT) June 8. Certificates will be ' Morgan Stanlev & Co.; Otis & Co. Passenger Depot Co. May 27 reported company plans sale of $2,000,000 bonds. bidders: Halsey, Stuart & Co. Inc.; Kidder, Peabody & Co.; Drexel & Co.; Otis & Co.; Salomon Bros. & Hutzler; R. W. Pressprich & Co.; W. C. Langley Price Bids for the purchase of $3,700,000 year. & Co. and Reading Co. Delaware Power & Light Co. May 25 company plans to sell $10,000,000 of bonds and 50,000 shares of additional preferred stock;; both at com¬ petitive bidding. Proceeds will be used to finance part of the $17,000,000 construction program' scheduled for this Co. desir¬ or common (stock); W. C. Langley & Co. (stock); Union Securities Probable & stock Shields & Co. and White, Weld Freres &: Co. (stock); Prospective Offerings • been -v Co. of Colorado probable ing, exploration and repayment of loans. has The Traditional underwriters: 375,000 sold, Dillon & Co. decision common stock...for offering will May 23 stockholders voted to increase authorized com¬ to 1,875,000 from 1,250,000 shares and authorized Freeman, Chairman, stated that to complete company's construction program an estimated $100,000,000 must be raised before the end No ;' offer to common Drexel & Co. additional 1952. preferred: mon Co. ability of issuing mortgage bonds, debentures authorization, Public Service Inc. and Smith, Co., Pittsburgh for Light announced not disclosed. May 24 Charles Y. (Edwin L.) Power & an Price—25 cents per share (U» S. cur¬ rency). Underwriter—F. T. Andrews & Co* Proceeds— To provide funds for plant construction, diamond drill¬ Wiegand Sept. 28 filed bidders subject to existence of favorable market conditions and System, Inc. May 23 company announced that it plans to sell $11,500,000 debentures later this year to complete the financing required for this year's construction. Probable bidders: Morgan Stanley & Co.; Halsey, Stuart & Co. Inc.; Merrill Lynch, Pierce, Fenner & Beane; Salomon Bros. & Hutz¬ ler; Lehman Brothers. Probable plans additional share of shares held on June 27. shareholders i ' (jointly). indebtedness. ® bidders: Co. and Lehman its Pennsylvania May 28 company 1, 1950-July 1, 1961. Prob-• Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler; Harris, Hall & Co. (Inc.); Harriman Ripley & com¬ Kuhn, Loeb & Co.; Kidder, Peabody & Co.; Smith, Bar¬ ney & Co.; White, Weld & Co.;; W. C. Langley & Co. For bonds: Halsey, Stuart & Co. Inc.; Harriman Ripley & Co.; The First Boston Corp.; Equitable Securities Corp. annual instalments from Jan. Underwriter—To be named by amend¬ ment. Proceeds—To qualify the company to sell life in¬ surance in any state. carrying on the . purchase Price—$40 each. and financing Pennsylvania Electric Co. ! * May 9 reported company is expected to be in the market $5,000,000 of bonds and $5,000,000 of preferred stock, when its parent, Associated Electric Co., has retired all • Station, Chicago, up to noon of $3,120,000 equipment trust certifi¬ cates, series E, dated July 1, 1949, due in 24 equal semi¬ for Western American Lite Insurance Co., Reno March 30 filed 12,500 shares ($10 par) common stock. the for its office, Room Salle Street apply to authority to offer for bidding this month $80,000,000 first pany's large expansion program.; ; Probable bidders: Halsey, Stuart & Co. Inc.; Blyth & Co., Inc*; The First Boston Corp.' '.-'wi. y: y (6/9) 1136, La (CDT) June 9 plans; to for will provide! additionaLfunds for sold y financing. 'yy; Chicago Burlington & Quincy RR., (6/15) 24 company asked ICC for authority to issue $2,060,000 equipment trust certificates. Probable bid¬ ders: Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutz¬ ler; The First Boston Corp.; Harriman Ripley & Co. and it U^Commission mortgage bonds. The interest rate maturity date will be determined later. The small a P. Electric Co.":";- announced sale at competitive and refunding • common , company California May or k be sound limits aggregate the assure Probable region of western South Dakota. Montana-Dakota Utilities Co. will lease and operate the facilities. Probable under¬ writers: Biyth & Co.,'Inc.f Merrill Lyncli, Pieree, Fen¬ ner & Beane.' yV..\Ay:.y ; • '<: </,"•>'; ;■ unsecured in¬ on will a restriction 10% additional stock beii}S served by Montana-Dakota Utilities Co. in eastern Mon¬ tana, western North Dakota and the. Black Hills growth of the business properly balanced capital structure, ac¬ to A. S. Cummins, President. Elimination of cording — of Thursday, June 2, 1949 Montana-Wyoming Gas Pipe Line Co. May 23 this company is being organized and will be publicly financed, to build a pipe line costing $3,000,000 to bring gas from the Worland (Wyo.) Unit Area, b'eiiw developed by Pine. Oil Co., into markets. now ' the elimination of restrictions on and to assure I CHRONICLE California Oregon Power Co. May 24 stockholders will vote, on increasing authorized common stock ($20 par) to 2,500,000 shares from 750,000 (550,000 shares outstanding). Stockholders also will Nov. 26 filed 200,000 shares of common stock (par .k FINANCIAL about June 7 or of which 80,000 will be sold by shares by certain stockholders. rs1 & First Boston Corp. March 21, V'1' COMMERCIAL Co. (Inc.), Wisconsin Electric*Power Co. (6/27) :: •'*, May 31 North American Co;'fold the SEC ot plans to sell competitively 13,494 shares of its holdings, of Wis¬ consin Electric Power Co, ($100 par).'6% preferred capi¬ tal stock. Bids expected Tune 27. %:;* a • . Worcester, County Electric Co« 4 The company has petitioned ment of Public Utilities for of first the — y *$'ir? Massachusetts Depart¬ authority to issue ,j$3j500>000 mortgage bonds, to mature in nott exceedifig 30 years, and bear interest not over 3V4 %t Proceeds, wo.ald be used to pay indebtedness to banks, incurred to finance temporarily '■* a portion of program; Probable bidders: Merrill ('Lynch, the company's construction Halsey* Stuart & Co., Inc.; Pierce, Fenner & Beane and Salomon Bros. & Hutzler (jointly): Kidder, Peabody & Co.; The First Boston Corp.; Otis & Co. ; - COMMERCIAL THE Number 4808 169 Volume that industrials have defi¬ now penetrated nitely vital a sup¬ due- March The Naturally, those who apply the Theory to their market ations would oper¬ inclined to look be for something of a real shakeout. others But known if wonder theory well- that be readily can ap¬ current situation which is hamstrung with regula¬ plied With.only tions which did single large offer¬ a it scheduled for market this week, and that one of the increasingly rare variety of negotiated accepted was ing J the to Others not not as a if ask discounting prevail when real guide. market the of disap¬ run a is trying tasks involved ill pointing quarterly earnings re¬ competitive bidding, the under¬ writing community was able to direct the major part of its efforts toward working off the bits and tainly did little to discount last deals which eliminated the expensive and L These inventories are at and burdensome, the not, provide their dealer the of week when affiliates : ceeds provide, the will Pro¬ reception. favorable a company of bank loans and additional working cap- with funds for discharge ital. public offer-; out for due ing today, among them Gas Indiana also issues smaller Several were Southern: Co.'s1 Electric & first mortgage bonds and 50,000 shares of $100 cumulative series " a Bonds vs. market, lesser grades appeared to suffer from something in the way sympathetic liquidation. of Without the trying obvious J j minimize of the to influence current tapering off in business at Gas dormant for which has been fortnight. The same day is slated to bring out bidding for $20,000,000 bonds of Virginia Electric & Power which will make it a busy period. Later this month Michigan Con¬ solidated Gas Co.'s $25,000,000 agricultural, mainly territory has the A banking headed group ' First Boston number of indus¬ a Halsey, Stuart & Co. Inc. won the $6,450,000 North¬ Pacific Ry. equipment trust for 2V2% a bid a The certifi¬ coupon. be to dated will 15, June $430,000 mature each June 15, 1950-1964, inclusive. Reoffering of the issue is being made at prices to yield from 1.40 to 2.675%, according to maturity. New of Board ($3.) share per York, Directors ton 1949. 1, this day -de¬ of Three Dollars Stook of at record July on the 1949, 1, of close stockholders to business MATTHEW T. June offering the in Corp. 25 N. 4, The Board 8, May 26, 1949 has declared a dividend ($.75) per share on its capital stock of the par value of $50 per share, payable June 29, 1949, to holders of sufch shares of record at the close of business at 3 O'clock P. M., on June 7, 1949. C. EARLE MORAN, Secretary & Treasurer ' Group has declared of I. C. on payable CORPORATION, FINANCIAL July 1, 1949, to stockholders FRED W. interim notes due Dec. 6%% Co. 15, which are convertible info preferred hnd'"common stock 1951, the after June 15, 1950. Issued in denominations of $45 and authorized multiples up to $99,000/the notes are priced at $47 per $45 principal amount of the company on or Board of dividend a Directors of Two close close on D. a Trustees dividend 6f have declared Broadway, i May 26, 1949. ord at the close N. the notes, the-company is selling of business June 15, 1949. 24 Federal Street, Boston of National Association of Purchasing , Agents, headed by Robert C Swanton, reports bookings HaVe sagged, inventories are still being reduced and there is no sign of ; .general price stabilization, ^ ^ ^ Survey Committee of the National Association of Purchasing Agents, of which Robert C. Swanton, Director of/Pur¬ chases of the Winchester Repeating Arms Corporation is Chairman, reports that the basis of majority we are still^ on AMERICAN LOCOMOTIVE New York 8, N. purchasing Dividends of one dollar The Board of Directors has de¬ seventy five cents Preferred Stock and of thirty five cents (35tf) per share on the Common Stock of this Company have been declared payable July 1, 1949 to holders of rtcofd at the close of business on June 9, 1949. Transfer books will not bookings Order schedules. inventor¬ " those dividend of 15tf per the outstanding Com¬ mon Stock, payable Jnne 20, 1949, to stockholders of record on June 10, 1949. The transfer books will not that the with amounted stabilized Electric having increases in April to 23% previous • the tq| 47%, be closed. be closed. PREFERRED DIVIDENDS Secretary ~ Oscar SoLberc, Treasurer The Board of Electric Pefln May 25, 1949 Directors of The West has declared Company regular quarterly dividends on the pre¬ ferred stocks of the Company as follows: American Bank Note Irving Trust Company Company per share (1)4%) on the 7% stock and $1.50 Preferred (1 Vi°/o) on the 6% Cumula¬ tive Preferred Stock, for the quarter ending August 15, 1949, payable on August 15, 1949, to stockholders of record at the dose of business on July 18, 1949. Common Dividend No. quarterly (1JA%) on quarter ending books will remain open. Jr. share on the capi¬ tal stock of this Company, par $10., payable July 1, 1949, to stockholders of record at the of business June 6, 1949. quarter ending June 30, holders of record at the COMMON DIVIDEND The Board of Directors a dividend on Company in the amount of thirty-seven and one-half cents (37%tf) per share, payable ers on on June 30, 1949. to stockhold¬ at the close of business record of June 13, 1949. ,, H. D. McDowell, STEPHEN G. KENT, Secretary J > A : ■;.-<• i 'i 1 7 i > <■ f- 4" . f i Secretary Secretary 7*3 * d of The West has also declared the Common Stock of the Penn Electric Company number since November. been reached. close of business June 17, 1949. has this day declared a quarterly dividend of 20 cents per close W. F. Colclough, May 25, 1949 The Board of Directors the payable on on dividend of 75tf per share the Preferred Stock for the June 30, 1949, and a dividend of 40^ per share on the Common Stock have been declared. Both dividends are payable July 1, 1949, to holders of record June 6, 1949. The stock transfer A New York May 26, 1949 162 A Stock June 30, 1949, 1949, to stock¬ $1.75 per share on the Class for One Wall Street, Preferred Dividend No. 173 month, highest Company (INCORPORATED) Cumulative fol¬ trend 16% in May. Others, holding even from dropping no evidence a on per share , production the lowed still yet clared share CARL A. SUNDBERG May 26, 1949 - THE 164 ($1.75) per share oh the production adjusted previously closely; a price level has Secretary May 27, 1949 $1.75 while there is Robert C. Swanton dividend of twenty-five cents a share on the Common Stock Corporation, payable July 1, per the Y.J Common Dividend No. 96 of indus¬ executives find being reduced substantially as (25(f) COMPANY opinions of purchasing agents, trial have sagged are The Board of Directors has this date declared 1949, to stockholders of record at the 1949. COMPANY Preferred Dividend No. , general business was slightly off ward business from April. Production has sagged, cycle. Accord¬ and the number reporting in¬ 19% in ing to the siii> creases dropped from vey, order April to 9% in May, 54%, how¬ bookings in ever, report they are maintaining ies • .iff Dividend Notice close of business on June 10, Y. present down¬ and 'i • •. of The reports for May only half way through the May again • " DUBUQUE, IOWA Business Survey Committee Business • • ' ' J. H. Miracle, Purchasing Agents Report May Business Off The LOUISIANA BHREVEPDRT, The Trustees have declared a dividend of ten cents ($.10) a share, -payable June 25, 1949, to shareholders of rec¬ ^ Assistant Treasurer, 5. CORPORATION STOCK FUND , GAS UNITED +- EATON & HOWARD this day de¬ Dollars and Fifty York Secretary cents twenty AND has New DUNNING Vice-President and Executive ($.20) a share, payable June 25, 1949, to shareholders of record at the close of business June WILSON, C. business June 10, F. The the 120 earnings, payable July 1, stockholders of record at the 1949. * • past to of IHLAVCIII FUND INTERSTATE POWER Concurrently with the s&lfe of place more the moment, on the of 1949, per business of May 26, 1949, a dividend No. 241 twenty-five cents (25c) per share declared by the Board of Directors out books of the Company at the 30, 1949. Dividend checks will be mailed to holders of Preferred Capital Stock who have filed suitable orders therefor at this office. registered Treasurer. YALE was EATOIV & HOWARD share, being Dividend No. 101 on the Preferred Capital Stock of this Com¬ pany, payable August 1, 1949, out of undivided net profits for the year ending June 30, 1949, to holders of Said Preferred Capital Stock ($2.50) J. B. McGEE The Yale & Towne Mfg. Co. Notice of Dividend * Broadway New York 6, N. Y. May 20, 1949. of COMPANY New York, N. Y„ The clared Cents JO Church Street I. of HAUtAU, Treasurer. , quarterly dividend No. 113 ($1.50) FE RAILWAY stockholders of to the close of business June at 15, 1949. 61 June 15, 1949. 24 Federal Street, Boston SANTA CORPORATION If he transfer books will not close. Checks will W. C. KING, Secretary public today new issue of $3,150,000 SOHALL, Treasurer. 1949. . - share on the Common Stock of the Company, payable June 20, 1949, to common stockholders of record at the close of business Jufie 10, 1949. TOPEKA 1949. thirty (30£) cents share has been declared, payable per be mailed. per the Power M. CONPOIWTtOMl record share in per record at the close of business June 10, & Dye Corporation ATCHISON, 31, quarterly June 30, 1949, Common Stock dividend of 75 cents T. of One Dollar and Fifty Cents THE COMPANY this Tennessee On Dye Corporation Broadway, New York Allied Chemical Missouri a F. May 26, 1949. 61 has cash has been declared on the Common Stodk per Mining Company of Seventy-five Cents Allied Chemical & SUGAR 1949. 164 of the Anaconda Cop¬ Directors of A quarterly Y., NO. DIVIDEND banking group which - RICO Directors A dividend of The First Boston Corp. heads an (June 2) a of MUftRAY, Secretary. CO. MINING dividend day de¬ dividend of 50c per share cn the $25.00 par value 8% Preferred Stock outstanding,• and a dividend of One Dollar per share cn the outstanding Common Stock; all payable on July 1, 1949 to stockholders of record at the close of business on June 16. 1949. are: Broadway York New 6 Vi% Interim Notes Arkansas PORTO Board HNC33U Dividend COPPER deolared 87a 01 No. fifty cents ($.50) per share of $12.50 par value Capital Stock, payable June 17, 1949 to stockholders of record 3:00 o'clock P. M., June 7, 1949, Checks will be mailed by Irving Trust Com¬ pany, Dividend Disbursing Agent. JOHN W. HAMILTON, Secretary. May 17, 1949 1 of DIVIDEND NOTICES ANACONDA 872 has 1949, Company for the quarter ending June 30, payable COMPANY No. Directors this C.I.T. FINANCIAL CORPORATION Offers Ark-Missouri to Board of May Capital the on June has dividend quarterly a MINING DIVIDEND The The GUARANTY TRUST COMPANY OF NEW YORK The L. County DIVIDEND NOTICES HOMESTAKE SOUTH DIVIDEND NOTICES clared John South ' 99.1299 of with 268 Road. ern on is Jr. Co., by with The First Bos¬ Associated ~ offering & award June 1 of certificates Chronicle) Financial BEACH, FLA.—John P. tries. the better part of a to disposed stress, next miles with a population in more than 83,000, an in¬ of 30% since 1940. Al¬ and accrued interest. activity, stock market observers are & $75,000,000 of new mort¬ bonds will be up for bids Tuesday to liven up the mar¬ gage equity the in slump Electric Service Public Corp.'s is by the latest gradual but persistent of 1949 though investment bonds fluenced Northern Pac. Equips. covering square E. Helm Building. to The Cochrane, Ahbe May 31, 1949 Although investment quality were not seriously in¬ ' Looking Ahead ket Missouri, the territory served approximately 5,600 Emory L. Raymond With John L. Ahbe Co. clared ern | | , Halsey, Stuart Offers northern Arkansas and southeast¬ crease ferred sometime next month. ofj $45 principal amount,' are on the market today in a somewhat un¬ usual financing deal. Stocks ing. is the distribu¬ transmission, Chronicle) — with Hall & Sons, (Special and Business of the company is Chaddock PALM 1949, tion program. to The Financial (Special California. and towards completion current construc¬ purposes of the company's Raymond E. FRESNO, CALIF. Co.; Crowell, Weedon & Co.; First California Co., and Pacific Co, of are Light Co. is rounding out plans market some $10,000,000 of bonds and 50,000 shares of pre¬ $3,150,000 interim notes, convert¬ ible June 15 into one preferred and two common shares for each . Co.; Sills, Fairman & Inc.; Straus & Blosser; Peltason, Tenenbaum Co.; Stix & Harris, With 43 Hall & Sons & Arkansas-Missouri Power Co.'s ( previously incurred for & man cates to preferred Stock of Public Ser¬ vice Co. of Oklahoma, which attracted industry is nearing the pected to be sold competitively. Meanwhile, other utilities are indicating their disposition to seek new money and Delaware Power year likewise larger seg¬ Sinking fund debentures are ex¬ $3,000,000 of 30-year first mort-, gage bonds, center of lively bid¬ ding yesterday, $2,750,000 of Staten Island Edison Corp. 30-i bids. of of the one substantial piece of new financ¬ a . of funds current at the mo¬ are that ments Sperry Corp.'s offering - large distillery been in the consummation of negotiations for of $20,f 000,000 of new 20-year sinking fund debentures constitutes this .week's only important undertake ing ' in the corporate field. Th& issue, out today, appears assured , financing retire temporary to Jones & Co.; E. H. Rollins & Sons Inc.; A. C. Allyn and Co., Inc.; Metropolitan St. Louis Co.; Bar¬ row, Leary & Co.; Farwell, Chap¬ tion and sale of electric energy in ment 1 way/ . used purchase, Reports market next' number of sub- a the from loans. bankers stantial operations will be under: . $45 principal amount. They payable at maturity in cash or, if the company so elects by delivery of one share of the 6% preferred and two shares of com¬ mon stock for each $45 principal amount, The notes are subject to redemption at any time on 30 days' notice, in whole or in part, at $47.50 plus accrued interest per $45 principal amount. through the issuance of new se¬ curities or directly negotiated issue new for stock common (2411) Eastman, Dillon & Co.; EdwaTd D. construction, for general corporate have additional for market mo-j the of recently of are bank loans Several 1950, 15, each will be Distiller May Seek Funds on into one preferred stock and Proceeds earnings. firms and, with, something to do pending revival ment < June shares convertible are of 6% share two 1979. 1, notes after or year's tremendous expansion in recent pieces left Over from some corporate undertakings. . But then the market cer¬ ports. investors, an aggregate of $5,500,000 of first mortgage bonds, series D, 3y2%, port level. Dow institutional two to technical position of the market CHRONICLE FINANCIAL & ) < i i J- •'•JUt - L.? {'% 44 COMMERCIAL THE (2412) Thursday, June 2, 1949 CHRONICLE FINANCIAL & granted this year to Alaska since that territory as a state could have been expected to return two BUSINESS BUZZ Democrats OTh • from the Nation's A^gM JtM.1wlm/ Capital '' JL Senate, to give ' better push next a On the other hand, the Ad¬ ministration, it is said, wanted fwesTfieiur co. yy\|| the to Deal year. pooDces Behind-lhe-Scene Interpretations Fair the • • vlv Hawaiian statehood shelved be¬ cause it looked like a certainty that that territory would send two GOP Senators. C.—There is big news behind the tentative wind up the busi¬ WASHINGTON, D. J Republicans decision of the Congressional Democratic leaders to of this session as close to July 31 as possible. n ■ southern ness i ' ■ Short run, the news is t tive < virtually I 1 main most and issues political ft the end next of month, together with "other re¬ cent political and legislative de¬ • velopments, makes it possible to see the rough outlines of the big That issue 1950. issue of will be spending, and all the present signs point to it being one real grand fight. economy versus .< decision The t- be considered . kdjourn as to July 31 as possible must near . to tentative, how- as ; )' advised and gave was V *,»' > J ' con- still felt - « but f more *'!■ feels . Congress will water, turn around, and :the * new '1 - «{(. *{<' $ , .v.' professionals say that the early adjournment date makes good sense from all points of view. In the that tt ;X'- first place, they know Congress will stick not around throughout the hot sum¬ months just to say mer "no" to Mr. Truman's easy prescription to Utopia. There is a further factor that the roofs of the two Houses will be under repair, and the boys will have to sound off in the acoustic-poor Caucus of rooms the Office without benefit of audience. Buildings, stimulating So it is better to say bye good a gracefully to than have your Congress walkout on ed. Such Second, if the Truman Adminis¬ gressional elections of Congress to the fail¬ the magic upon wave legislative wand and end this revive would be year's time, a legislating of or "—Now I'm waid omy So all subcommittee bills for tangible outsigns of the interest in econ¬ was the sudden adoption by advocate economy a achieve this has act to sends it. reform. It House bill The Senate the House what on cannot split up the supply, on which the on initiative of the House is constitu¬ tionally supreme. The theory behind the appropriation is that it is coordination by which the Ap¬ 01 propriations committees will keep their eye budgetary picture. the total on Then reached. Finally, the theory of this also committee would have to take as a whole definite more amounts. or »!* * It is suggested that it is a always good idea to beware of reliance promoting economy, efficiency, better government. This new or ap¬ propriations scheme is probably capable of itself in bring¬ about economy, unless the held until up the fix the that grave ill, then it is much bet¬ ter to make the issue in 1950 than in 1949. The closer to election committee Congress refuses to adopt Mr. Tru¬ man's ideas, the better it is, for then the issue sticks in the public though to resist communistic en¬ and Sumatra the- nation¬ are no native communists killing off the 1 total this kind of genesis, the single appropriations idea looks good for the short pull of 1951, whatever its perma¬ nent value may prove to be. And Senator Byrd told the "Chronicle" minded,"'than a if adopted under economy- whole Hoover commission economy are an flock" of recommenda¬ would promote Administration disposed to spend. or Appropriations an either indifferent to committee economy or way to * the Rich¬ the Economic Advisers cratic Rogers & Co* S. Owq^icLe) Financial Anderson CALIF.—How¬ has been Ridded was approval of the Ad¬ or to The (Special LOS ANGELES, a Council or of the Demo¬ to the Co., staff of Gross, Spring South 458 Rogers & Street* members of the Los Angeles Stock Exchange. leadership, decided to make public their Expansion program of lending and controls. The servatives may be wrong, happy the thing early business to be was shot Trading Markets: con¬ but they Ralston Steel Car put out at, * before might recede enough to stimulate wide interest in * Business' * Oregon Portland Cement Riverside Cement A & B pana¬ Spokane Portland Cement ceas. * ♦Latest Figures Available interest in this state¬ higher appropriations than the old hood for Alaska scheme. according On the other hand, the atmos¬ with Hill now With Gross, sji into this at¬ growing worry over spending that the left-wing boys, logroll is & Witter & Co. ard Incidentally, it mosphere of single appropriations easier Beck or * so DIEGO, CALIF.—Raymon Co., Bank of America Building. Mr. Beck was formerly with Buckley Brothers and Dean it has his enthusiastic backing. are matter of fact, a Congress a to The Financial Chronicle) (Special SAN outlay limita¬ Under ministration As Beck With Hill Richards ards without committee members re¬ it W. ing an be the no more scheme bills will of upon mere mechanisms as ways of new through, bring out a bill, sub¬ ject to approval by the full com¬ mittee, and get it passed, all to of living to solid front a even economy. 1950 pieces, disposed to spend, would probably gets to flect the "behind the scene" inter¬ pretation from the nation's Capita3 and may or may hot coincide with the "Chronicle's" own views.) tion and stand up and vote for unrelated find the it as economy, new committee fast for responsibility for the final result, than in passing supply bills in having each Appropriations sub¬ as need trade imported commies. that it has got to face the prob¬ is that the and can has got to present the is out. tions form total figure of appro¬ 1950 the battle of the year will be economy, that the committee lem single a standard and the British are cannot achieve it this year, and of the House committee will in effect is committee supply bill will be etched total whom there is none more consist¬ ent, Senator Harry F7 Byrd of Virginia. By deciding to put all supply measures into a single ap¬ propriation bill, beginning in 1950, or agency, of agencies will be held until Appropriations adopting this scheme is that in . department, group most '' V , each up priations committee of the single appropriation bill idea. This is a project which has been agitated constantly for two years by the and are there; going to lock you two in the closet-—and STOP looking so pleased, Fatso!". ■ benefit by the higher appropria¬ tion. * the majority of the House Appro¬ different. common a (This column is intended to priations the be Europe, where violently anti-commu¬ whether they are in any other ways good or not. In Malay ■ of in nistic; wouldn't pan out in fact. One like the In Java alist which * country, stopping com¬ to said istic nationalists may do the trick. appropriation probably an recision Asiatic of Thus, in Indo-China, a combina¬ tion of French with non-commun¬ the or non-commu¬ croachment. the year's taxes in six months " instead of or stop invigorate both the will and the An/ like something reported to economy power into direction in scheme to force corporations to pay a boost equivocal decision an is exists there back time remaining. op¬ pro¬ military before each It is not go Under this scheme instead of tration plans to make its bid for electoral support in the 1950 Con¬ ure to able is problem munism cut. equivocal decision, to be polite, is about all that can be expect¬ i you. a consistent The be economy short so ' he won't. sure * With deficit the at aid hands the unlikely * that . is is going to the Chinese commies, either through gross ineptitude or bribery. sign that Con¬ a groping China, only temporarily in nist the growth opposition to the public hous¬ ing bill, for instance. Only a week ago the defeat of this bill in the, House was regarded only as a dim possibility. Now some of the pro¬ ponents of the project are worried , a economic of is $ Department With gram. Outward signs were a * State posed to any "Asiatic ECA" snowballing. It was evi¬ a few outward signs in private conversations. / deprecated as one "for the record'\ to maintain the President's posture of consistency and avoid¬ ing reneging on any campaign promises, the decision is still sub¬ ject to change. The decision makes good sense to the seasoned political leaders, but it has been a long time since Mr. Truman ac¬ cepted advice from the graduate school of parliamentary politics. He may at any time decide to stage another grand stand show for his pristine program. He may go again for the screwball idea of another special session. No one ! The or by It is *1 y denced problem. Even if Mr. Truman's statement > week since the report of last in this column, the senti¬ gress ' V. * <: a Hawaiian put through. figured that on were southerners strong for "civil rights." even has been also kill Alas¬ party from that territory would be cross¬ ment of conservatives lor economy bill increasing tax burdens by : $4 billion; »!« matter of a This is just despite the President's conference statement that Congress should hang around until it finished its business^ and that it should stay and enact ~ only week press a are you with to unless the basis of the racial composition of Hawaii, any Senators of any car- the on which turned out not to be be to meaning Mr. Truman's business, t T is so, true,' • F \ <l!'< This ment. ?: A the sent of silence to this arrange¬ •;.( i, girders might be defeated. The i professionals do not laugh at the "ECA c u t" in appropriations Truman Presumably Mr. ever. railroad for fear it ' M'. the dis¬ see the bridge >;< In the decision to quit session 'at the ( statehood The ing. post¬ are can window and the poned until 1950, or dropped. Long run, you between tance journment decision sticks, that very little else of the Truman program will be enacted this year, 1 I when out predict,-provided the ad¬ can one that the collapse of the Fair Deal legisla¬ for 1949 becomes^ official. From now on program combined Democrats statehood kan to LERNER & CO. question is that, key Investment Congressmen, 10 Post Office Securities Square, Boston 9, Mass. vision thereof to suit the cloth. mind—if you assume that the Tru¬ man able merchandise as ever. is still as sal¬ overall be is ready to appropriations total Third, and this is what par¬ ticularly hits the legislative Thus, for example, under the bill, as the thing has been operating since the beginning ol time, Congress might appropriate Interior trol phere under which the in February, and the ^thing leaders, maybe when 1950 rolls around the thinking will be; quite different. Maybe the coun¬ try may be worried about the looked like deficit, HAnover 2-0050 ried about the statehood it to $800 better depression and not Congress ought to hold million, then practical¬ ly speaking, it would be too late, In to any stick case the it is neck involve a fight with the the districts which Telephone HCbbard 2-1990 Teletype BS 69 be Teletype—NY 1-971 FOREIGN SECURITIES All Issues Hill, Thompson & Co., Inc. NEW YORK S would Executive & Underwriting Offices 70 WALL STREET Tel. WHitehall 4-4540 <-.ABI MARKS & P.O. INC. FOREIGN SECURITIES Trading Department SPECIALISTS White House and the Congressmen from all legis¬ must ' a deficit. much wor¬ that his Firm Trading Markets for to get the money back would maybe it will be lators . told con¬ would be approved by the Presi¬ dent. If by the middle of April it or House Truman approved, and cuts each di¬ $1 billion for dams and flood . to President 50 Broad Street 120 - • - New York 4, N. Y. AFFILIATE: CARL MARKS & CO. Inc. 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