Full text of Commercial and Financial Chronicle : June 2, 1949, Vol. 169, No. 4808

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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,

;•

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per

per

Quotation

*'

'

;

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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

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All Issues

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NEW YORK S

would

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70

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STREET

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&
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.

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