Full text of Commercial and Financial Chronicle : June 23, 1949, Vol. 169, No. 4814

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BUS. A»NU

JUH 2-4

UtRAKV

Oil and Natural Gas Outlook Issue

Beg. U. S. Pat. Office

Volume 169

Number 4814

New

a

Oiland

We
It

A$

i.-? Cloudy, bat Not Murky

Natural Gaslndnstries

Remarks of Walter Reuther and ex-New Dealer James

By MALCOLM P. McNAIR*

current state of nation's

Comments of executives of leading oil and gas concerns
and related industries indicate, though profits

State of trend towards "statism" merit careful atten¬

from operations may fall below 1948 level and accumulation of inventories may bring some price reduc-

Byrnes epitomize divergent philosophies concerning
economy. With business on
downgrade, warnings sounded by former Secretary of

'

Harvard Graduate School of Business Administration
*

Price 30 Cents

EDITORIAL

The Economic Horizon:

Professor of Marketing

York, N. Y., Thursday, June 23, 1949

-

Asserting during last nine months we have been having definite business recession, Prof. McNair ascribes
1 development .to adequate inventory replacement and
lower capital expansion. Foresees little change in
■I money, banking and credit
conditions, hut continued
reduction in business spending and decline in residential building. Says unwillingness to spend may
deepen
;
recession, but may be offset by government outlays.
i
■

tion of entire nation.

Said Walter P. Reuther

*

on

ferring to the Ford proposal of

Saturday last, re¬
a period of stabil¬

:

tions, current position is soqnd and Satisfactory \
results, both from earnings and production standpoint, ;
may be anticipated. Expect record natural gas output. ♦
FRANK W. ABRAMS

ized wages:

'

.

'

The topic which

;

noon

you have assigned to me this
is "The Economic Horizon," and that implies,

sume,

some

outlook.

"Ford is proposing the same kind

kind of forecast of the economic weather
answer in a couple of words, the

"The Ford workers, along with the rest of the

To put the

American

economic horizon to day is "cloudy,

but not murky."

figures
has

which

just given

road

On the basis of the

Professor. Burnham
you

1946

as

of

one

"Workers

not too much.

of the three best
years of all time from the stand¬
point of dollar earnings. Neverthe¬
less, all of you by now are fully
aware. that the situation in depart¬
ment stores
Prof. M. P. McNair

as one

as

"Failure

end of the second

were

quarter of, 1949 is
substantially
more
difficult
than
which was foreshadowed in the 1948 annual
anything

starting point of any business downturn can be
perceived only in retrospect. There were some of us
as early
as November of last year who were strongly
page

because the American people
purchasing power to meet their
thereby create markets for industrial

was

needs and

true

production.
"Unemployment is growing today for the

32)

same

reason.

,

*An address

r "
^1
1932, millions were unemployed, people
losing their homes, their jobs and their

"That

(Continued

by Prof. McNair before the Comptrollers'

Congress Convention, Detroit,

Standard Oil Company

Last

record

f

v

r

(N. J.)

I

the history of our
were emerging
from a winter during which doubts were expressed as
to whether the oil industry could supply consumer needs.
year was

We

a

At this time

company.

in

year

ago

year

a

shared those doubts.

never

we

The

;

amply con¬
firmed our confidence. Today We are
again in a position where the overall
available

supply somewhat exceeds

the needs.

<

For their part

in this expasion this
company and its affiliates have had
to spend very large sums of money*
Our capital outlays during the last'

two years have been far greater than
in any previous

increase

did not have the

The

on

,

to

farms.

results.

Continued

today-—

unemployment situation,

"In

draw toward the

we

wages

purchasing power arid
security will only intensifyf not relieve,

workers'

the

getting too little

are

Chairman of the Board of Directors,

results since then have

economy.

the

three best years in the last 10 from
from the standpoint of percentage

earnings and

prepared to travel that

money to. spend for goods and services to sustain
the purchasing power needed for full employment

store business, you will
perceive only! some faint traces of
cloudiness.
The year 1948 ranked
and

are not

American

partment

1947

people,
again.

"Unemployment is growing today because the
people as a whole do hot Have enough

from the Harvard
Report, of 1948 conditions in the de¬

with

of economic

patent medicine administered by the men who
steered our economy into the catastrophic de¬
pression of1929.
\

after¬
I pre¬

;

~~~~

on

period in the history

of the company. We have felt it es¬
sential to .the. sound progress of our
business that these expenditures be

made.
Our

'

'•

'f

•

••"•

J

heavy need for funds

was not*
Frank W. Abrams
only because' of the required expan¬
sion in capacity to supply oil and its
products. During this period, also, prices of all materials

and services we had to

buy were rising sharply, so that
depreciation and depletion reserves were not sufficient
to pay for the normal replacement of worn out facilities.
The result

that although

was

earnings were at an

our

all-time high, we found it advisable to limit cash divi¬
dends and had to draw upon our working capital.
I realize that the concern now is not so much about
'

page 34)

(Continued

on page

6)

~

See pages 23 to 26, inclusive, for pictures taken at the Bond
Club of New Jersey Annual Spring Field Day held at

Mich., June 16,1949.

Rock Spring Club, West Orange, N. J.

Public Service

Stale and

Company of
New Hampshire

i

Franklin Custodian

Common Stock

'

•

Funds,

A Mutual Fund

Prospectus availabU on request.

COMMON STOCK FUND

UHLITIES FUND

40

Wall Street, New Ydrk 5
London

1

Amsterdam

64 Wall Street, New

OF NEW YORK

OF COMMERCE

Bond

Dept. Teletype: NY 1-708

York 5

OF

New York Agency :

THE CITY OF NEW YORK

20 Exchange PL

SECURITIES"

Municipal

&

bonds & stocks

Underwriters and
Distributors of

NATIONAL BANK

CANADIAN

COAST

London, E. C.

THE CHASE

Wisconsin Power

PACIFIC

Bankers to the Government in

OffiH#§S26, Bishopsgate,

Bond Department

Seattle Portland, Ore. San Francisco Los Angeles

of INDIA. LIMITED
Kenya Colony and Uganda

Bonds

CANADIAN BANK
Head Office: Toronto

.FRANKLIN DISTRIBUTORS,Jnc.

NATIONAL BANE

Head

Canada

THE NATIONAL CITY BANK

(BALANCED) FUND

Prospectut on request

Chicago Philadelphia Providence

Municipal

:

THE

CO

Boston

'

upon request

BOND FUND

INCOME

■

Monthly Commercial Letter

PREFERRED STOCK FUND

Members New York Stock Exchange

•

across

inc

Offering Price:
$22.50 per share

White,Weld&Co.

550 Branches

Light Co.
COMMON

Prospectus available upon request

•

and

in India, Burma, Ceylon, Kenya
Colony, Kericho, Kenya, and Aden '
and Zanzibar

Branches
*

•;

Subscribed Capital

Paid-Up Capital-!

i Bescjr^^ | Fund

,

The

.

•

„

..£2,000*000

OTIS & CO.
Established 1899

£2,500,000

conducts every description
banking and exchange business

Bank

Trusteeships and Executorship*
-

Corporate Securities

also undertaken„j




Dean Witter

&

Co.,

Members New York Stock Exchange

£4,000,000

(Incorporated)

of

New York ! v Chicago
Denver
v Columbus
Toledo Buffalo
,

Cincinnati

Stock

Exchange
Los Angeles Stock Exchange

YORK

Seattle

Direct

BA 7-4300
Los Angeles
Honolulu

San Francisco

Wires

IRA HAUPT & CO.

6rporatio7i :

Exchange (
Principal Exchanges ^

Members New York Stock

and other;

-

Francisco Stock Exchange

Honolulu

14 WALL ST., NEW

CLEVELAND
r

San

Dominion Securities

Broadway,!HI Y- 6

XXX

WOrth 4-6000

40 Exchange Place,

New York 5, N. Y.

Bell System Teletype NY 1-702-3

Tekijnpe

Boston Telephone:
r

-

-

^

N.Y l-27e§
EntprprUe 1820. <

Private Wire to:

■

Hendricks A Eastwood, Inc.,

• <

«.

ii

Phila.

¥:fv;

t&f

2

S£t

K-

COMMERCIAL

THE

(2698)

The Coming

Cities Service 3/77

*

■

v"

"

'

'

CHRONICLE

Alabama &

By JACQUES COE
'

Jacques Coe & Co.

Associated Electric 5/61
for
ket
BOUGHT—SOLD—QUOTED

In my opinion the stock market during the remainder of June and all of July should
making a substantial base for higher prices in the Fall—and for reasons spelled out in
the following. The daily and weekly odd lot figures, both as to buying and selling and

New York Hanseatic

be

Corporation

selling,

short

York 5

^

,

demonstrate

■buy

the

Since

in

May

the

public

has

the

Rights & Scrip

than

1

Exchange

Of

trader was

STREET

"right" for

brief pe¬

a

sugar

market

in

was

downward trend

a

In

Air Filter Co.

had slich

|

quite good, and

You can't fix a man

Kentucky Stone Co.

(From "I'm

BANKERS BOND

Gonna Wash That

Right Out of My Hair," from

the current

play, "South Pacific"),

You can't boost the market

Incorporated

with

past,

Or with speeches

that perfUmfe

the air;

,

one

-

what

or

on

Corporation
shares at 9 '/z,
Ass'n

mem¬

of Se¬

once

stability to develop,
few minor

sensitive barometer

price

averages

index
a

the upside and there is a will

three

plus

a

confidence

of

or more

times what it

index, which

given

was a

PITTSBURGH

DETROIT

Royal Bank of Scotland
Incorporated by Royal Charter 1727
HEAD

OFFICE—Edinburgh

Branches throughout Scotland

LONDON OFFICES:
3

their

Bishopsgate, E. C. 2

8 West
49

Smithfield, E. C. 1

Charing Cross, S. W. 1

Burlington Gardens, W. 1
64 New Bond

usual

Street, W. 1

by supporting the belief that the

TOTAL ASSETS

minor, tran¬

£155,175,898

stability

no

upturn, neverthe¬

or

a

low

-Associated

Glyn Mills
Williams

Banks:J

& Co.

Deacon's.

Bank,

Ltd.

area

is

It

with

courage and
-now

expose

criticism

in

a

certain

amount

of

foolhardiness that we
ourselves to possible
months

to

temporary

encouragement tinue to wear dark glasses.
them away!

$35

by

come

INVESTED in

a

full year's

Human

subscription to the Monday
and

Thursday issues of the

"Chronicle"
ideas

will

galore and

pay

INVESTMENT

Building

SECURITIES

1

liberal

j

Throw

dividends.";

.

* 7/* T.w I

behavior being what

it

(Continued

on page

5®9f91S15®3S15l5@@l51513J51BI5JSIS0133

5)

Public Utility
.

;

.

Firm

Industrial
*

*

»

•

,

1

•'

r'1

j
'

sost

I

All

;

,

Members St. Louis Stock




10-Year Performance of

Issues

35 Industrial Stocks

1

.

Ill

St.Louis1.Mos

INDUSTRIAL STOCK INDEX

BOLIVIA

t

j

ouvei*street'*1

OVER-THE-COUNTER

COLOMBIA

i

Municipal
1'

N. Q. B.

Trading Markets

*'

Railroad

Stix: & Co,
INVESTMENT SECURITIES

!

Exchange

J'

you

give

isfc there is practically no differ¬
ence
between the psychology of Commercial & Financial Chronicld
New York 8, N. Y.
the little storekeeper and that of 25 Park Place
REctor 2-9570
the purchasing agent of any of our
^...

CLEVELAND

»

J

The Common Psychology

Cleveland Stock Exchange

Union Commerce

in

YORK

GENEVA, SWITZERLAND

a

of

New York

:

are

This

was

'

Incorporated
Member

there

ratio of low-priced

industries.

tical

turn about

get a

4, N. Y.

CHICAGO

that bond averages

declined

Inc.

Trade

proportion to security prices there¬

WM. J. MERICKA & CO.
150 Broadway

not

*

Exchange Bldg.

that this period of stability
which we expect is not far away.
have

of

NEW

gest

One factop is

Board

N. Y. Cotton

indications which sug¬

making the assertion that when
speculative stocks to high-priced the turning point in the market is
investment issues, covering iden¬ in the
process of taking place we

Inc.

Dealers,

a

consisting of

^

we

Chicago

period of

new

combined
hope to sense it, identify it through
inestimable the composite index and so state
to buy again, then the 50% margin value to us in the spring and sum¬
at the time.
Neither the price
requirement will ereate a poten¬ mer of 1946 in flashing all sorts level or the actual time element
tial buying power from two to of danger signals, has since then
is so far away that one should con¬

But,

the Natl

call

calculated

.

The Bi

of

a

Exchange

Exchange,

Commodity

worthiness in the which has been seen before only
over a period of- in 1937 and 1932.

manufactured, so to speak,
we

bond

of

the want isn't

~

there!

have

we

years

~

should buy"

When the will

curities

we

waiting for

Exchange

Cotton

York

New

And other Exchanges

There has appeared
constructive
development in

are

Exchange

Curb

New Orleans Cotton Exchange

tell the right story.

no

Stock

York

intervals

rare

business recession is

their

proven

It's useless to cry "this is when

bers

If

substantial upswing in the

people to hang our hat on some

margin cut,

a

Bell Tele. LS 186

to

certain

at

>

York

New

suddenly has
turned cloudy, swinging around
the other way some time before

been

members

/
New

this | outlook

pretty good formulas which have less has reached into

Floor, Kentucky Home Life Bldg.
LOUISVILLE 2, KENTUCKY

concession,

rise.

1856

H. Hentz & Co.

Realizing-our inability to divine sitory and eventually constructive.
business improvement or deterio¬ The second straw is the fact that
ration before the next man, and this ratio of speculative to invest¬
endeavoring like so many other ment stocks, while as yet showing

wrong."

Preferred

Man

75c

a

take form.

when he is

*

less

study of long-term cycles

our

.

Common

offer 3,000

when

What now?

„

do not get
stock
"You can't light a fire when the
market during the last six months
wood's all wet;
!
of 1949, it will be one of the rare
You can't make a butterfly strong;
instances in cyclical history where
You can't fix an egg when it ain't
a
recurrent pattern has failed to

Black Star Coal Corp.

We

background for

pected to be in a decided upswing
securitywise. We are finishing the
first six months without having
a

Long Distance 238-9

excellent
guide
to
market
swings, sensing the mood of capi¬
an

going back a matter of 50 years, this composite index since the last
the year 1949, or at least a sub¬ week in April when it resumed its
stantial portion thereof, was ex¬ deterioration. However, while we

.

Common

Established

creation

a

bring

succeeding upward cycle!

the

of

DIgby 4-2727

1st

which

conditions

the fabric and the

would not stop

m

naturally led to

adjust themselves to changed con¬ when for two or three successive
ditions, create by this over-ad¬ weeks this combined index would
justment many vital constructive plot contrary to the direction of
forces which form the texture and the market itself and invariably

readjustment, a 50% margin
the decline. This
is
exactly what has happened.
Even today a further reduction of
margins would have no lasting ef¬
fect, so long as there is not the
will to buy!
/

Exports—Imports—Futures

5%

We are now

have declined.

stock market which tend to over-

margin (which was an attempt to
stop rising prices) by saying that
when
speculation was "in "the
blood," 100% margin would not
stop it and that if and-when the-

branch offices

our

of the composite index. It has been

about security price deterioration set in
the end of bear markets and ac¬ again,
;

Back in 1945 we
criticized the imposition of 100%

Raw—Refined—Liquid

Direct wires to

a

of

the will to buy.

NEW YORK 5, N. Y.

American

consecutive

cumulation periods. It is a set of
This spring,
riod, but they are exceptions.
for instance. - je
We are quite aware that a, re¬ conditions exactly opposite to that
thought we saw some encouraging
duction in margin requirements which signified the end of a bull straws in the
wind, but almost im¬
such as took place recently cannot market in -1946.
The pity is most mediately | thereafter the signals
be of any help in brqadening the
people do not realize that the very turned from green to red. Its most
market until and unless there is forces both in business and the valuable' forecasting
ability has

LAMBORN & CO., Inc.
WALL

which

ing powers prevail. It is such a set

little

the

where

instances

NYl-in»?

Orleans, La. - Birmingham, Ala.
Mobile, Ala.

reliably than the. ratio index and,
in other instances, • vice versa—

Selling

confusion, uncertainty, fright and
complete disintegration of reason¬

Coe

in the past there have

course

Tel. REctor 2-7815

99

Jacques

St, New York 4, N. Y.

Nfcwvar 2-0700

New

period of business, industry-, tal in appraising, the future, mak¬
merchandising and security ap¬ ing cautious steps in the direction
of higher markets to come, and
praisal where an atmosphere of
in

been far

been

becomes.

Bull

months
loans in the metropolitan

business

above normal.

NEW YORK 5

BROADWAY,

120

there¬

have

Stock Exchange
Curb

four

area

with, the short
selling figures

Members

York

coinci¬

dent

New

before

and,

frffC PONNELL & CO.

buyer

Propitious

For

side

selling

Since 1917

potential

The

-

the

25 Broad

psychologically

much
on

forward.

go

We had found that in forecast¬
theoretical be¬
the lower ing certain security price .swings
the bond index performed more
price level the more reluctant

the

more

occasions, only to fall
back again with the warning that
the security market was not yet

argument is purely
cause

been

several

on

lower price level and
margin privileges.
moment, of course, this ready to

a

the

For

little

the first week

Specialists in

York

at

with ./greater

pessimism

trader.

One is able to

months ago.

few

of

Steiner, Rouse & Co!
Members New York Stock Exchange

aphically

g r

Teletype NY 1-583

the

New

B o ught—Sold—Q uoted

..

.

BArclay 7-5660

Louisiana Securities

atmosphere of confusion, uncertainty and fright signify propitious time
long-pull accumulation of equities. Asserts this prediction substantiated by behavior of bond mar¬
and of ratio of speculative to investment stocks. Holds after market upturn once starts, reduced
margin requirement will prove important stimulant.
;

Market expert maintains current

Amer. Tel. & Tel. 3!/8/59

120 Broadway, New

#, 1949

Thursday, June

Market Upturn

'

—

FINANCIAL

&

,

AC.AIXYN«®COMPANY

III"
NEW YORK

: CHICAGO

BOSTON

MINNEAPOLIS

PORTLAND, ME.

OMAHA

KANSAS

PHILADELPHIA
CITY

(

New study (qi» request

5

.

i

(,

ZIPPIN & COMPANY

Incorporated

' !"M"

,

WATERLOO

MILWAUKEE
FLINT

208

South La Salle

Tele.

RAndoIph 6-4696

St., Chicago 4
Tel. CG 451

it.
,

; ' '

*

_

BOOKLET ON REQUEST

National Nuotation Bureau
Incorporated

46 Front Street

New York 4, N. Y.

Volume

169

COMMERCIAL

THE

Number 4814

INDEX
Articles and News
Outlook

for

Oil

Economic

(Statements

Natural Gas Industries

and

Leading Executives)
The

Page

Horizon:

The Coming Market Upturn—Jacques

Restoring Price-Wage Balance,
—Q. Forrest Walker.

___

"

Today's Investor and Security Analysis—J. M. Galanis—
Trust

Function

operations.

4
;

Responsibility in Preservation of Capitalism

The Omnipotent

What's Needed for Currency Stabilization?
—Thomas

details of which

McKittrick______'

H.

1

13

ICLE of

International Treaties for Women's Rights—Mabel Raef Putnam 17

Recession?—Paul W. McCracken__

19

—Elizabeth A. Burnham
Role of New York Banks in Deflation Fight—Preston Delano.
"What

This

Needs Is Millions More

Country

21

Stockholders"
22

—Heinz H. Biel......

Dealers Relative to NASD and Its
.1

Concluding Comments by
Policies

3

—-

and Commerce

of Finance

School

Wharton

University of

of

Finance

International

!__.'

_

to

Now Let's Hear from the Others (Boxed)

'

'

•'

'

•'

J

WALL STREET, NEW YORK

Telephone: WHitehall 4-6551

on

ACTIVE MARKETS!

cover page

Petroleum Ht. & Pr.

Southern Production

SIEGEL & CO.
89

Broadway, N. Y. 6

mark-up rule has not worked, in

our

opinion,

as

DIgby 4-2870

protec¬

best interests of the investor.
If anything, it is against
interests of investors, and in" favor of dealers.
Probably

best

the

28

hundreds

29

...

_

'

99

tion to the

Angeles Area

San Francisco Exchange Members Tour Los

us

for those obsolete*,

Teletype NY 1-1942

The 5%

28

....

Says Edward Cheyfitz..

Labor Is in Politics to Stay,

a

friend, of

a

TACOMA, WASHINGTON

27

...

Companies.

to Investment

Flow

:

Redemption Proceeds

Arthur Weisenberger Expects War Bond

finance

to

of the CHRON¬
May 19, an overwhelming majority of the securities

Institute of

1-

'

included in the editorial "Mandate tq

the

like

quiet jag (for

herewith:

Pennsylvania to .Survey Over^the-Counter Markets.19
Review of Foreign Dollar Bond Situation N. Y. U.

industry towards the National

industry feel that the NASD constitutes an unnecessary bur¬
den and expense and that, in consequence of its policies,
including the "5% mark-up philosophy," the securities busi¬
ness
is-severely handicapped in its efforts to perform the
functions which are so essential to the nation's economy. The
vast majority of the hundreds of comments submitted to this
paper in connection with the poll provide documentary evi¬
dence of the complete dissatisfaction within the industry
towards this so-called "voluntary" Association.
As previa
ously stated, the remaining unpublished comments are given

17

+

Receding Department Store Profit Margins

were

Congress" which appeared

Monetary Stability and Convertibility—Sir Jeremy Raisman__ 13

Can Business Cushion the

you'd

course), get the cash from

-

Association of Securities Dealers and its methods of opera¬
tion and conduct. As indicated in the results of the poll.,

11

'

If

by the CHRONICLE incident to- its poll relative tc

the attitude of the securities

11

State and Private Lending

—Clyde William Phelps..

SOUSE

We present today the last of the unpublished comments

•

received

7

—Benjamin Strong
Price War in Alcohol Industry Ends—John C. Loeser__.._

AND COMPANY

nice

4

—

....

3

PACIFIC

dissatisfaction of majority in. the industry toward
National Association of Securities Dealers and its

2

Coe_____

Readjustment Problem

a

(2699)

Study of current expressions and those previously
published provides sufficient evidence of marked

Cover

,

CHRONICLE

Concluding Comments by Dealezs

Cloudy, But Not Murky

—Malcolm P. McNair

FINANCIAL

Relative to NASD and Its Policies

by

Cover

...—

&

living"

transactions

of

on

are

in

consummated

order

to

"make

the part of dealers and salesmen, that might be to

NEW ENGLAND

a

TEXTILES

the

best interests of the investor not be made.

29

a«4

No

Tyre

Slump,

.,

Philip
^'

Likelihood

Little

Predicts

Taylor

Formed

Newly

League

Standard

Gold

——

New Coupon

Sheets Issued

29

—---

,.

Heads

McKenna

M.

47

—

job for the investor.
v'!
No recognition is made of those

47

Greek Government Bonds

on

recognition is made of dealers' overhead. A man can open an
office, rent one room, not subscribe to. a sipgle service, give no outside
service to clients, and charge the same profit as an organization
spending thousands of dollars in a year in services to do a better

Major Business

of

Regular Features
As

(Editorial)-.——.-—!——.-—

It

See

We

—

concerns

like

ours,

that do

many

things for investors other than sgll them Securities: such as income
tax service, safe-keeping service, collection of income, assistance
in working out wills, insurance problems* consultation on real estate
investments, trips to banks when ipvcstors are unable to drive

48

Canada Is Now Oil Frontier, Says George Weiss——

--Cover

etc.

cars,

.

*

,

' "

BOSTON & MAINE R. R.

Walter J.

Connolly & Co.

INCORPORATED

30 FEDERAL STREET,
HUbbard 2-3790

'

1923

BOSTON 10

Teletype-BS 128

'

Bank

and

Business Man's

Bookshelf..—J—„—

Securities

Canadian

Coming Events in Investment Field—

47
9

—

7

!

Wilfred

Observations—A.
Our

Reporter-

31

46

Public

Securities

Utility

Securities

Railroad

—-

Offerings.

Security

Prospective

——

Salesman's Corner

Securities

Now

29

...

—

—

...

39

——-

Registration—

44

——

5

State of Trade and Industry.....

The

(Walter Whyte Says)...—

Tomorrow's Market

bother, or the actual fout-ofpocket expense. But, why should we run the risk of having to prove
our right to take more than
5% in some instances—why shouldn't
that be up to our good judgment?
We think that a further sign cf NASD willingness to stick its
nose into
matters which are none of its concern is the insurance

15

—

Securities

in

lor

46

Governments

oil

biggest fault is that it is meddlesome. We wouldn't
say that 5% isn't an ample average profit to take, for instance.
As
a
matter of fact, it is no doubt away too much to take on some
transactions.
Yet, on other trades, 5% isn't nearly enough profit
The NASD's

5

Reporter's Report

Our

Washington and You

analysis

on

request

amount of work done, or the

which it has arranged for member firms.

Edward l. burton
& Company
Established 1899
Bell

Teletype SU 464

160 S. Main St.

Salt Lake City 1

Once again, this

be a good thing for some members—but it just simply is not a
project for which NASD was created.
Certainly it ties the member
firms a little tighter to the NASD organization, and perhaps that is
may

48

———

the

program

38

—...

New

CLEVELAND, OHIO

30

...i

May......

that brings to investors'

Supply

to enter the

.9

—

—

News About Banks and Bankers..—------——

Mountain Fuel

Practically eliminates interesting young men and new blood
business—particularly during periods of dull or declining
markets.*
v
"
1

20

—

be for a period of a year or so.
No recognition of extensive research

attention securities that do better than the market.

40

Funds

NSTA Notes l——

may

15

Trade Pact"

of the News—Carlisle Bargeron—

From Washington Ahead

Indications of Business Activity
Mutual

27
—__

Recommendations

of British-Argentine

Einzig—"Implications

recognition of giving investors acjvice "not. to buy" when
markets are in a down-trend, which results in substantial savings
to investors.
Such periods fas 1937-1938, 1946-47.
One reason for
many dismal investor results come from dealers not being able to
set up enough "fat" during good markets to carry through bad
markets when investor accounts should be liquidated and cash held

3

—-

.-

——

Dealer-Broker—Investment

No

33

Stocks——

Insurance

It seems to us to be a
indispensable to member firms—
to give the NASD an artificial excuse for continuing to live.
The NASD "News" is a typical of the whole organization. It is
nothing but a propaganda sheet which tells only that side of the news
which is favorable to the organization.
In the last issue there was
not one word about the injunction which Otis obtained against
NASD—also there were gorgeous bouquets tossed to the management
for the insurance program—and an orebfd for,Wally Fulton under his
or.e

reason

why the plan was

advocated.

device for making the NASD more

INDUSTRIES

OUTLOOK FOR OIL AND NATURAL GAS

Starting

the

on

submitted

statements

sent

of today's issue

cover page

we pre¬

by

CHRONICLE

the

to

oil and natural gas companies
and related industries regarding the outlook in their
Executives of leading

respective fields.

NATIONAL READERSHIP
where it

,

counts most

(Continued on page 36)
Readers ofThe New York Times
*

I

Twice Weekly

Published

Drapers'

and,

and

COMMERCIAL

The

Gardens,

Edwards

c/o

Copyright
Reentered

'•

Park Place. New York 8, N.

25
*

2-9570

REctor

WILLIAM
WILLIAM

SEIBJERT,

DANA
D.

RIGGS,

Every

Issue)

statistical

ecords,
tate

Other

and
issue

corporation

and

bicago

23,

Thursday, (general

ertisine

city

news,

Offices:

3,

HI.

8,

bank clearings,
etc.).
\

135

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S.

Salle
St.,
8tat« 06131:

La




.

B.

Dana

office

post
the

Act

Febru¬

at

of

in

Dominion

Canada,

Other

of

Countries, $42.00

Bank

$25.00

U.

S.

Members

in

because The Times is

..

11,000

all the

communities in

48 states and the District

of

per

$38.00
per

read

year:

per

in

year.

year.

financial

directly

advertising
to

message

per

Note—On

wide audience.

Quotation Record—Monthly,
(Foreign postage extra.)
Earnings Record — Monthly,

year.

year.

(Foreign

postage

©Ire

jjJork Sirnejs

extra.)
"All

accbunt 'of the fluctuations in

rate

of

exchange, remittances for for¬
eign subscription* and advertisements must
be

?

Publications

the News That's

Fit to Print"

'

the

talks

this important, nation¬

and
per

Monthly
$25.00

$35.00

truly national audience

a

of Columbia. In The Times, your

States,

and

form

New

March

Rates

United

Territories

Commented anonymously:

for you.

1879.

Other

and ad-

the

under

Union

news,-

^Telephone:

at

Pan-American

,

Monday (commarket quotation

Eng-

Smith-

by William

Subscription

every
—

Y.,

Possessions,

Publisher

1949

C.,

second-class matter

Subscriptions

President

news

as

1942,

N.

Y.

Business Manager

June

Thursday,

25,

York,

9576

to

[ERBERT D. SEIBERT, Editor &

lete

ary

DANA COMPANY, Publishers

B.

WILLIAM

E.

Company

Patent Office

U. S.

Reg.

&

1949

CHRONICLE

FINANCIAL

London,

made, in Newt York

funds.*",;

.

<

'

i

-

P

y

.

'

.

1 « '

4

THE

(2700)

COMMERCIAL

CHRONICLE

FINANCIAL

&

Thursday, June 23, 1949

Today's Investor and
Restoring Price-Wage Balance,
A Readjustment Problem
Security Analysis
By J. M. GALANIS*

By Q. FORREST WALKER*

President N. Y. Society of Security Analysts

Economist, R. H. Macy & Co., Inc.

Associated with Research Dept. of Shields &

Co.

Mr. Galanis cites unpopularity of

unit-!abor costs. Looks for further price decline and con¬

price-value balance along with redaction of

with revival "perhaps in next 12 months."

tinued downward trend of retail sales,

invariably followed by replacement booms that create new and additional
the economy. Our recent replacement boom pushed our annual physical
goods to near¬

ly

the

twice

1935-39 levels,

somewhat

are

They

produce profound economic and social dislocations.

Great modern wars

.

4

Wall Street and the Stock Ex¬
change* despite nation's large and growing number of shareholders.
Lists functions, techniques and opportunities of security analyst,
with favorable and unfavorable aspects. Weighs relative importance
of forecasting mairket as a whole vs. appraisal of individual issues.

distortions in
production of

The

and

latest

individual

most

of

stockholders

reliable
the

estimate

nation in

places

the

number

of

the

neighborhood of eight
millions. Though far short of the 18-20 million total heard frequently
in the past, it is still substantial. No one knows for sure. American
Telephone
<£unduly magnified by comparison ly two-thirds of estimated Fed¬
that rcity's greatest tabloid prac¬
with recent peaks. The "beat yes¬ eral expenditures for 1949-50 are Telegraph is
credited with
tically ignores the world of fi¬
terday" philosophy is deeply im¬ classified by competent authorities
nance.
•
•; ■'
800,000 share-,
J
bedded in our thinking.
We ac¬ as variable expenses. Most intel-i
holders and
While people
seem
afraid of
cept a 50% increase in business ligent citizens believe it is possible
holds
undis¬
to reduce this vast expense with-'
over a short period with compara¬
stocks, it does not hold that they
are atraid
to lose money.
tive equanimity, but we become out any real impairment of vital puted top po¬
More
sition
as
the
alarmed when a modest contrac¬ objectives.
The business world
money is wagered daily on horse
most
widely..
races than
is represented by the
tion looms ahead.
We regard the awaits convincing evidence that
owned of our
value of shares traded daily on the
high costs we accepted in the ex¬ our political servants will grasp
the urgency of a program of sen¬ corporate enNew York Stock Exchange. More¬
pansion as barriers that cannot be
terp rises.
t
reduced to restore our economic sible retrenchment.
over, people rushed to buy post¬
Other com¬
war
1 ealth.
cars
and houses at inflated
The cost and price prob¬
In 1948, Federal, State and local
panies with
and gray market prices, and are
lems are difficult, of course, but taxes
represented
nearly
onen
i m p o s i ng
still willing enough to risk their
they are common to all readjust¬ fourth of the net national outputs
stock
owner¬
ment periods. They differ mainly Many believe that a truly dynamic
money in new businesses.
Some
ship
aggre¬
critics have in the past posed the
in degree.
economy cannot long continue a
gates
include
Joseph M. Galanis
question "Where
are
the cus¬
As the shadows of this readjust¬ burden of this proportion. We will
-

than

more

doubled
wholesale
*

prices, almost
'tripled
the
"disposable in¬

come of

-

our

^people

and

brought

-

f

a cor-

responding in¬
the

in

crease

dollar

annual

Walker

Q. Forrest

volume of de¬

partment store
sales. It lasted

v

Mo¬

General

longer than we ex¬ ment deepen, it becomes more and make progress in reducing gov¬
tors with 433,000, U. S. Steel 228,pected, due in part to a fortuitous more apparent that no single fac¬ ernmental appropriations of the
000, Standard Oil of New Jersey,
combination of circumstances and tor in domestic affairs is more dis¬ people's earnings if we find new
Pennsylvania Railroad, and Radio
under-estimation of its potential. turbing than the persistent effort and better ways to tell the eco¬
Corporation, each with 200,000 or
to maintain and extend the Fed¬ nomic facts of life to the public.
It has long been obvious that
more
and General Electric with
eral power over the economic life There is imperative need to ex¬
I such high rates of business expan¬
250,000 individual owners. In most
of our people.
pose the economic fallacies of the
Social experimen¬
sion could not be maintained and
instances, the number of stock¬
that corrections would be needed tation must go on, but the States alluring vote-catching proposals holders exceeds by a goodly mar¬
that constitute a continuing threat
are the ideal laboratories for such
to secure a safe basis for future
gin the number of employees—
to the confidence of big and little
progress.
These corrections have purposes. There the experiments
but stockholders are
a
notably
Government has no
may be carefully controlled, per¬ businessmen.
now been under way
for several
shy, unorganized and inarticulate
fected, or abandoned with the magic formula that will give us
months; they are spreading over a
lot—rather easy to push around.
Only a something for nothing—a cold fact
wider area; and the end is not yet least economic danger.
The
average
holding frequently
part of total population is in the of; such importance that even the
in sight.
works out surprisingly low, at say,
political and social laboratory. Our astute Mr. Cripps feels impelled
50 shares or so per holder.
j Uneven Expansion During Boom Federal Government,
with some to warn the British people that
somewhat

mystery exceptions, is apparently not con¬
about these readjustments.
Post- tent to leave the solution of these
war
replacement demands vary problems wholly to the sovereign
There is really no great

v.

i

widely in urgency and magnitude.

immediate satisfac¬
tion; others can be postponed.
Some can be met quickly; and
SOme require

^others require long periods before
they are satisfied. §ome are met
by increased factory production;
others depend upon the bounty of
nature.
During this
period
of
seemingly unlimited demand, each
economic group " tries to get its
share of the spoils.
Prices and
costs rise unevenly and the inter¬
relationships become gravely dis¬
torted, aided and abetted by gov¬
"

intervention

ernmental

to

favor

certain groups.

When the

urgent demands

more

have been met, people decide to
curtail their buying because they
satisfied

not

with

values, or
are unable to buy at the prevail¬
ing prices.
For a time, business
activity is well maintained by
backlog
orders,
but
production
soon begins to flow faster than it
can
be
sold at the
old
prices.
Stocks begin to accumulate and
are

eat it too.

ity/ the political expenditure of
people's money on an ever¬
growing
scale
will not create
own trade to retain the retail ex¬
security. We cannot transfer re¬
emption in the Fair Labor Stand¬ sponsibility for individual eco¬
ards Act is a conspicuous example nomic
security
to
government
of the dangers in the growth of because the
government of a free
the Federal power.
Our constitu¬ people cannot give what it does
tional theory of a government of not have, or provide what is not
divided powers is being continu¬ created by private enterprise. Un¬
true
American
ously undermined.
■' der the
theory,
:
There is also increasing fear that the prime function of government
is to widen the opportunities of
our Federal Government will not
act wisely to speed the return of private enterprise and individuals
more
stable
conditions; that it to earn more security through a
and
expanding econ¬
promises far more than the world's vigorous
greatest free enterprise system can omy.* That is the simple principle
deliver; and that it may interfere which has given us the standard
living we
now
enjoy
and
at
the wrong time and in the of
which excites the envy and ad¬
wrong way with the corrective
miration of less fortunate peoples
process now gathering momentum.
but

There
more

is

little

faith

among

the

careful students of the Amer¬

ican economy in most

forts to control

our

political ef¬

economic life

the

that

orders

dras¬

fore

we

tically.

Price weakness develops

that

now

vainly

sought
benefi¬

cent

state.
No "Free

Lunch"

It cannot be too often

repeated

full exercise of the imagination, in¬

Buyers wait for better prices and

itiative and energy of our people.

money. There is no "inexhaustible

values.

Both reasonable and

reasonable

prices

Production

drifts

.

un¬

?

public purse," 2
Retrenchment to Restore

affected.

are

the restraints

severely shackle the

so

the

Confidence

downward.

part of this larger problem,
it is very plain that a substantial

ices in

reduction

current

volume of

demand;

and

the

income eases

consumer

;off slowly to lower levels.

As

a

the

\

Psychology of Economic
"Hang-Over"

Naturally,

teannot

such

never

be wholly painless.

jnomic "hang-overs"

They create

broad sweep of

history,

expenditures have
provided'a sound remedy

economic ills'

The

most

be¬

Eco- nevolent paternalism tends always
to become malevolent paternalism.

are always ac¬
companied by varying degrees of

distress.

for

Federal

present

primary requisite to

public

yast

readjustments

a

returyi of business confidence.

Over the

!

;

of

spending is

It

has

never

been

demonstrated

fear, and, that government can take everbften,a "defeatist" psychology. Un¬ increasing proportions of the peoder such

condition?,

a

every

inverse change is

i*An

address^ fey

a
r

minor, ple'9 incppie4and make two dollars
'
is £row'Whe^e' only one grew before.

®very ^°^ar °Ipublic expenditure
is one
Associa-'more, dollar.to ease..us over this

walker

^•WMiQOojwwWoo
feral-RetajL Dry Goods

at

ion^Ne w>York Gity^ Ju»e*2$f4949/--del ay ed'business* transition.' Near-




end

"free

Smaller numbers of workers are
needed to produce goods and serv¬

*

the

fortunes

rate

of

no

the

lunch"

pot of gold at

rainbow, and
in

the

no

or
an

American

of

corpo¬

enterprises via the huge in¬
of such companies in

vestments

interest

dividend income from

or

we

put

are

the

an¬
cus¬

tomers?"

As

one

member of the financial

community recently remarked, "a
considerable portion of the Wall
Street

ing

community is slowly drown¬
itself in its own tears.": It

has been
had

has

so

long since the Street

any

new

doesn't know what

blood

that

it

to do with it.

Some 60% of the ex-GI's

carefully
picked for training after the war
are

said to have left for other and

presumably

greener

pastures.

?

The

Security Analyst

This vale of tears is the habitat
of the

the

unique specimen known as
security analyst—-one who

analyzes securities. A member of
what

is

called

one

of the

newest

of the

the

security analyst works more
directly'Tor the benefit of the in¬
vestor ihan
any
other class of

corporaton profits.

Not only is the average stock¬
holding small, but an important worker

of

segment
falls into

investor

group

relatively modest income

brackets.
tion's

the

For

example,

largest

the

na¬

brokerage

stock

house, Merrill Lynch, Pierce, Fen& Beane ("We the People")

ner

credited with 10% of all New York

in

the

financial

com-

munty.
He

is mostly

found in the na¬

tion's largest cities, with the great
bulk in New York City. Security

analysis
geneous

is

an

unusually hetero¬
Most ana¬

field of work.

lysts are specialists, with activities
business, has re¬
confined exclusively to bonds, or
172,000 active ac¬
to stocks.
Stock analysts, in turn
in 1948, 41% belonged to
may break down into specialists

Stock Exchange

ported

that of

earning less than $5,000

in railroad or utility securities or
Perhaps
there
is to a
few specific industries like
something to the recently widely
oil, steel, building, food, retail
quoted remark of a prominent oil
trade, banks and insurance com¬
company
executive, that "those
who have the facts lack the money panies, etc. It is a mental and
physical impossibility to become
to buy common stocks
[he may
well versed in all the many thou¬
have had security analysts in mind
sands of securities of thousands of
here] and those who have the
corporate enterprises.
Some are
money, lack the facts."
affiliated with buyers of securi¬
ties. probably a great many more
Wall Street and the Public
per

annum.

with the sellers. Some analysts are

economic

world. The special burdens

"Where

professions, the analyst is
corporate bonds and stocks. These
an important connecting link be¬
institutions would find it difficult,
tween
the
corporation and
its
if not impossible, to exist without
stockholders. It has been said that

counts

have

here and there, and soon spreads.

can remove

insurance

What many Wall

today would like the
is

to

swer

80

of

important, albeit indirect, stake in

persons

past,

economic salvation in the

that government is not something
apart from the people from which
it
derives
its
powers
and
its

are

other

possibly

life, fire
policies have

for

holders

yachts?"

Streeters

entire

the

tell

not

however,

million

long

It is also widely recognized
long struggle is ahead be¬

a

does

of the earth who now, and in the

without endangering personal lib¬

erty.

This

story,
of economic real¬

In the world

time

the place to debate this issue,
the continuing fight of our

nor

forward

slashed

is neither the

This

States.

they cannot have their cake and

tomers'

Despite

the

widespread

and

market

technicians

solely, others

are
investment
counselors.
A
corporations are largely shifted growing list of stockholders in our
corporate enterprises, Wall Street number
mostly
in one
help
securities
way
or
another to the
and the New York Stock Exchange salesmen.
Still others may con¬
buyers of their products and to
are apparently not overwhelming¬
centrate chiefly on contact work
their stockholders who
furnish
ly popular institutions. Wall Street with corporate managements. Ana¬
the tools of production. In
the
is still regarded by more than a lysts are constantly consulted by
prosperous year 1948, the over¬

on

stated

profits

before

of all

taxes'

were

corporations

substantially

less than Federal expenditures for
that year: It may be conserva¬

tively

estimated

income
sons

:

before

earning

1 Cf.

Griffin.

that

the

taxes

all

$10,000

over
C.

of

entire
per¬
per

Enterprise in a
Free Society, Eicbard D.
Irwin, Inc., Chi¬
cago,
111., 1949',' pp. 514-515.
i2 Holden, Thomas S., The Great
Illusionr,

National Association

(Continued

on

of
Manufac¬
Series
No
8
' • '-A

page

4'i)'

as a woman

with

not

a

past. When fund managers of all institutions,
including our own Harvard.

actually hostile, the bulk of
the public w at best indifferent—

Status Formerly Low

if-the poor coverage of financial
affairs by -

e

nation's newspapers

It

not too long ago that
Even in New financial
research
departments
City of the evening news¬ were termed "statistical" and ana¬
papers onlv one has a reasonably lysts
were
called "statisticians."
complete
financial
section
and with a professional
rating and fi¬
u
)
nancial
reward
comparableto
*A spec"11 ny Mr, fealantsv be- third Class; librarians! and clerks

affords

ary

was

guide.

York

E.,

turers,
Economic Policy
New York, April 1949.'*

few

.

union,

Ifarwic 'port,

2i:11949.

'

—possibly deservedly// so.
They
Mass., June were, in effect, mainly .custodians
(Continued on page 37)

Volume 169

Number 4814

THE

The

Coming
Market Upturn
firm and

are

the

their
tories

and

mouth.
on

use

buy

crawl

from

hand

This cycle has been

to

going

for centuries and will continue

until the end of time.

though

this

is

the

eternal

sequence, few people realize

inventories

are

that

running down and

will have to be replenished. Hand
to

moutn

operations

economical

neither
efficient—nor are

or

human

behavior

being

what it has been and history re¬

peating itself, the
curity prices, will

trend

of

se¬

be
changing
from bear to bull several months

before

the

change in business is
apparent to the naked eye.
From a timing standpoint, pos¬
sibly when Congress adjourns, the
.

ground work will have been

pleted.

The consultant to

largest

our

com¬

of

one

international

trade

organizations has just completed
sixteen city tour of the United
States, having access to the most

a

important and largest industries
throughout the country. He thinks
our economy is
getting itself into
such
a
very strong position by
getting rid of dead wood, frozen
inventories, unsaleable goods and
what not, that he foresees a tre¬
mendous revival of confidence in

business

and

this

out

industry through¬
during the last

country

six months of this year.
4

r-

•

4

,V

*

In this article I do not refer to

European

politics

business

and

trends—or their effect

on

do¬

our

Increased output of some goods the past week was sufficient to
neutralize in part declines in others and thus Worked to sustain
overall

industrial production at
responding period of last year.

reaction

market

from

pessimism.
factor

dominating in

excessive

Europe

should

1950

as

be

a

the

initial

week

same

in

point moderately under the

a

-

claims

declined

7%, representing the fourth
*

.

.

"Monthly Letter" of the National City Bank of New York for
June, states that if the foregoing segments of our economy-"together
can increase man-hour
output and reduce unit labor costs to bring
down prices to lower levels which
buyers now demand, break-even
points can be reduced."
the

foregoing," the bank letter observes, "that
the most harmful influence which could
possibly be injected into
the situation would be another round of wage
advances, which would
raise industrial costs and make the ^necessary adjustments in indus¬
trial prices impossible. Advances in wage rates heretofore have had
an
inflationary effect. They came at a time when people and pipe¬
lines were short of goods, when incomes of farmers were steadily
increasing, and when higher costs and prices could be readily passed
on.
Now the daily reports of business show
that.the markets for
both goods and labor have
changed, and farm incomes are declining.
Increases in wages, costs and prices under current conditions would
curtail sales of goods, and h^nce production and
real interest of factory workers is in maximum

employment.

The

production of the

things they use and maximum employment for themselves, not in
higher money wage rates which lead to disruption of the exchange
of goods between them and other
groups of the population, and thus
to idleness.

|

"Many people have lived under illusions during the inflationary
period, and now have realities to face. The volume of business was
abnormal for

time, because demand

a

scarcities and empty .pipelines.

swollen to fill accumulated

was

Now that is

over.
The job of busi¬
price levels and more competitive con¬
ditions, with greater attention to turning out goods better and cheaper
Industrial workers generally and farmers as well have not
only the
highest money wages, but the highest real standards of living that

is

ness

to

been

ever

preserved

by

known

under" the

in

this

in

to go

the

or

conditions

higher productivity,

structure
are

adjust to lower

balance

that

other country.

any

that

themselves, but
costs and keep the price

reduce

to
is

necessary

on."

investment

if trade and

•

4

-

(

They can be

present

now

*

*

'

•

...

Leonard

Jarvis

of

£5 t o c K

orx

Exchange,
elected
dent

the

York

sity

ver

Men

Fi¬

in

Club at

nance

annual

meeting.

H

has

ac¬

been

e

.

Negotiations between the United
eral

steel

producing
got under

programs

steelmakers

will

companies
last

way

await

the

for

many

is

and

Past President

~

for

-

increases

wage

week.

outcome

■,

Indications
of

United

and

are

States

listed securities.

greatest fillip

,

Such conviction has received its

from the

in

success

well-re¬

the

munerated distribution of open-end mutual funds
(in contrast with the continued apathy toward

A. Wilfred May

the

unmerchandised

better-value closed-end trusts).
Wall Street's
there with the old "Fuller Brush technique" is finally con¬

success

vincing it that the American public must be sold in the American
way.

■

Whether

it be

not

or

agreed that brokers' products should be
displayed, and possibly delivered by parcel service, we believe that
the following communication from Mr. Biesel is worth reading.
?
Dear Mr. May:
How about starting a few retail stores throughout the country
to offer sales and bargains in common stocks? The financial com¬

munity has been singing the blues because folks aren't interested
in stocks, so a fresh approach might just as well be tried
J;; It
can't do worse than flop.
*'^7
All the textbooks tell us that the uninformed public does
buying near the top and its selling near the bottom. There
must, therefore, be a lot of people who have lost money in the
market and who, by their tales of woe,
influence friends and rela¬

its

tives.

Is

it

wonder that

any

prices—with

its

stories

takes

it

a

lengthy period of rising

of

easy
money—to
number of the uninformed to buy stocks?
If the

public

can

the

encourage

•

the

New

York -'Society
of S p c u ri t y

Analysts and the Association of
Customers' Brokers., He is'also
Secretary of the National Associa¬

consumers

lower

prices, two things will happen: first, there will be better
support for stocks at reasonable levels; second, there will be fewer
people to pay the exorbitant prices prevailing at the tops of
some
past built markets. Perhaps this will cut down the profits
of lucky or smart few, but the investing public would be better
off, the market have a better reputation and the brokerage com¬
munity cease to feast one year and starve the next.
Retail stores selling stocks and 'using the same language and
merchandising methods that apparel and other stores do to get
business, could help carry the "bargain sale" idea to the public.
A

stock

could

he

offered

at

$13.75—"down from

fusion of signs could offer stocks at 20%,
Stock

certificates

sample)
the

could

extent

customers

be

of

important

displayed,
was

available, the

like

room

often

to

"feel

(marked

companies

could

as

the

$29.50." A

30%, 50% off and

to increase their
was

and

sev¬

insurance

tangible

when

(they're

better

they

than

independent

make

the

specimen

products themselves.
goods"

or

receive

98-cent

purchase,

a

expensive

first

a

purchases last week.

(Continued

on page

The dollar volume

ones

ball-point

S. C.

• anderson

ha*sv)ue

•athen

Q

,

ATLANTA

the

preceding week. The aggregate dollar volume of wholesale orders
was moderately below the
high level of the comparable week a year

aGRANGE

Buyer interest in Fall merchandise continued to rise and col¬

lections,

generally,

improved

as

compared

with

those

of

• «*C0N

'COLUMBUS

recent

months.

tion of Investors' Brokers.
STEEL

With
,j

,,

a7M.

(Special to Tee Financial Chronicle)

ST.

PETERSBURG, FLA.—Le¬

muel Scarbrough has become affil¬
with

iated
400

A.

M.

Kidder

&

Co.,

Drive.

Beach

(Special

;

SAN

Oke

to The Financial Chronicle)

FRANCISCO,

CALIF.

Lindstrom has become

—

asso¬

ciated liWi.th Waldron & Co.y Russ
Building.i, He was'formerly with
John

M.
.

•

america

Vl

Co.

4in




v'< y

■

CURRENT

WEEK

SCHEDULED

AT

Business is generally on
a
very few steel
products. The only orders on the bocks in most products are those
that must be there for production
planning, states"The Iron Age,"
national metalworking weekly, in its current review of the steel
a

current,

hand-to-mouth

or

I

-•

purposes.

basis

in

all- but

lack*; of

:iiotes,~-stems
'

:

concern

•y

11 ,*•

"

Backlogs still exist in some products such as plate, oil and gas
line pipe, rails and structural shapes. Most of these
products are in¬
volved in long-range planning and are
capital, rather than out-ofpocket, expenses. On the latter type products, which depend almost
entirely on consumer goods sales, caution still prevails. Except for
tinplate which has already been made on customer orders and is
being stocked at the mills, there is no: evident of,,' buyer concern
about possible interruption of steel shipments due to labor trouble.
This

Wilmaris Co. arid Bank-

FOR

CAPACITY, THE LOWEST RATE IN 9 YEARS ;
of this month steel company order backlogs will

disappeared for all practical

trade.

Lindstrom With Waldron

OF

the end

By
have

y

OPERATIONS

84.4%

Kidder & Co.:

about

from "relatively high

future
raw

deliveries,

the* magairfne

material inventories and from

J

"(Continued

on

page

35)

"rj

Since

-

INVESTMENT
Members New York Stock

BANKERS

Exchange and Other Leading Exchanges

underwriters!,and
,

r

/.

distributors of
investment securities,,

BROKERS OF BONDS; STOCKS,

Private Wires

•

■if

ihi

CO^ODITIESbh;

Home Office: AtIdnta

*

pens

could

were)

38)

greenville

moderately below that of the correspond¬
wide variety of goods featured in promo¬

tions for Father's Day.
Wholesalers booKed commitments for slightly less goods than in

ago.

or

something

Steel

very

ing week in 1948 with

pro¬

more.

pictures of products or, to

promotions coupled with favorable weather induced

of all retail sales

;

stocks' at

common

*

v

vast
"

be persuaded to purchase

Corp.
before signing new agreements.
In view of this, the
possibility of a steel strike this summer cannot be ignored, the
steel magazine points out, even though the
continuing business reces¬
sion places the union in a decidedly weak
bargaining position.
Attractive

most

our

•

.

Steelworkers Union

of

negotiations

circles

years

of

,

concern

a

in-Wall

"Street

N. Leonard Jarvis

.

by John L.i Lewis,
end at the close of last

week.

*

tive

„

ordered

Fresident, came to an
week with most of the country's 450,000 hard and soft coal miners
back in the pits on Monday of this week. The present bituminous
wage
agreement, governing close to 400,000 miners, expires on
June 30, and negotiations for a successive contract will begin this

Presi¬

New

the

was

of

U ni

stabilization walkout

United Mine Workers'

Hayden,
Stone & Co., members of the New
Y

so-called

the active

Following

a

.

the

"It follows from

arouse

Congressional resolution,
depressed stock market in the face of
high business profits is soon to get a full-dress
airing under the aegis of the SEC, the Commerce
Department, the Federal Reserve Board, the
Bureau of the Budget and the Census, members
of the Joint Committee on the Economic Report;
and—of course—Mr. Keyserling.
'
1
Since a remedy suggested by one of our cor¬
respondents presumably will not receive close
consideration by the above-named group, and
would otherwise escape our readers' attention,
we are reproducing it below.
\
The
suggestion
for
"department-storeing"
.equities seems particularly interesting to us as
portraying the growing public belief in the need
for more merchandising of listed as well as un¬

Stressing the necessity for teamrwork on the part of labor and
management in bringing prices within easier reach of the consumer,

The

N.

sufficient to

*

is

.

Notwithstanding the above admonition, labor unions are pressing
demands for wage increases and other advantages such as
pensions and social insurance programs. These demands, however,
are being strongly resisted by
employers.

Univ. Finance Men

pass

the "anomalous" situation of

cor¬

new

Jarvis Named Pres. of

a

government officials.

>

initial claims.
*

more

1951.

and

to

available

consecutive drop

only

upward

come

figures with respect to total claims for
unemployment insurance covering the week ended June 4, show that
from the postwar peak of the preceding week,
but continued to exceed
noticeably the low level of a year ago. In

in security prices will be an

domestic

Apathy toward the stock market and equity financing has finally

these claims fell 5%

have

vance

Common Stocks in Store Fronts—?

Business Failures

august

mestic economy—because it is my
belief that the forthcoming ad¬
,

By A. WILFRED MAY

J

latest

5

Auto Production

Industry

are

they normal practice.

i Again,

Commodity ftrice Index
Food Price Index

and

The

The strange part about it all is

;

that,

Retail Trade

into

their inven¬

up

(2701)

Observations

Carloadings

When prices

little fellows

CHRONICLE

Electric Output

State of Trade

rising, everybody is

shells,

FINANCIAL

Steel Production

The

scrambling;
conversely, when
prices turn down, the big fellows
and

&

r

(Continued.from page 2)

largest corporations.

COMMERCIAL

Phone LD*! 59

be

6

COMMERCIAL

THE

(2702)

Thursday, June 23, 1949

FINANCIAL CHRONICLE

&

Outlook for Oil and Natural Gas Industries

l'

that the tasks business is called upon to per¬
day of mass production, mass distribution
and mass communications cannot be achieved without
both large and small units. The -facilities, both human
and material, of this company are an [enormously valu¬
able asset to our country from the standpoints both of

Our efforts are now being exerted
strongly in the direction of curtailment of capital ex¬
did

we

year ago.

a

penditures. For several reasons these cannot be reduced
precipitately. To begin with, many expenditures now
being made are part of projects which will require sev¬
eral years for completion. Moreover, we must continue
to

into finding oil in • order to

put money

maintain a

in world affairs and

make

new

position in such fields and to participate properly
in development of outlets for the crude produced.

believe

Imperial Oil, our affiliate in Canada,
now faces the need for substantial new capital invest¬
ment. This comes as a result of the major oil discoveries
in the Alberta Province, which have been made during
the last two years. Oil production there is now more
than adequate to meet local needs of the province and
there is heavy pressure to widen the outlet for crude
from that area.
For this purpose new transportation
facilities must be

from

the Canadian

Again, European refining capacity must be enlarged
use greater amounts of Middle East crude,
which is becoming the principal source 'of supply for the v
growing oil needs of Western Europe.
needs, not all capital expen¬

While I cite these current

ditures

tures this year
While

are

we

pressing

always

costs, we naturally
efforts to do so now.

making

are

reduce

to

even

expensive

to be amortized
,<

totally new

•
.,

con¬

facilities

new

during

are

•

reasonable

a

|

periodJ of -time and "become assets
earning ,* capacities consistent
their cost. -In many plants to¬

with

was

day, the depreciation cost per barrel
refined is greater than the

increment in

Robert O. Anderson

of crude
total
crude

The needs for capital are of course of great interest to
capital expenditures and net income
are
the major, factors in determining what dividends
.the company can pay. Cash dividends paid over the last
30-yeac period in the history>pf the company have aver¬
aged about 45% of Jersey's portion of the consolidated
net income.
The policy of the company has been to
maintain in so far as. possible a reasonably steady divi¬
dend rate. This has meant that in years of low earnings
dividends have been high in relation to income.
In
years' of high earnings, for the same reason, the per¬
centage of income paid as diviends has been relatively
lower. Last year, of course, and for the first half of this
year, in addition to cash dividends we paid stock divi¬
dends having a substantially greater market value than :

,

stockholders since

cost

oil

10

barrel of
V
Other costs have followed the

refining

of

years

a

ago.

economic trends and, adding
in fixed costs, makes it all
must have a wider

ties

these to the great increase
loo obvious that refining
margin if the costs of these new facili¬

be recovered.

to

are

v

,

.

-

:

Whether crude is too high or products are-too low
a

is

question'. The basic fact remains that it costs far

moot

*

dividends.

can

begin to

now

example,

-

greater market.

ap¬

has

!

;

#.

•••

the margin of refiners

reduced

to

one

cubic

build

ter of the year.

California

The amount

estimated

so

domestic

oil

and

will be increased somewhat

;As I stated

all,

•

has been

to

thought is to

board

thinks

strengthen

this

do

by

that

this

new

of

money

ily both in -gross assets and in

Indicated
v

much

industry. Actually, while

by 4he figures

larger than it

was

represents less than 15%

quirements for

oil

on
a

our-balance sheet, is

of the

products.




very

few years ago, our business

It

nation's
must

be

domestic
apparent

re¬

to

already has granted

per day

and necessity for
application for in¬

and

take

delivery

out-of-state

this

of

cisco Bay. The 34-inch diameter of this line will
it the largest natural gas transmission line ever

ficially maintained

production have

year,.

Initial

.

,

California and thd

above

this

level,

it

of this

i

Two

increasing importations of crude oil.

cbntent. In

recent

West Texas

discrepancy

months,

years

for

between

decline

crude

and

ago

Texas-New

desirable

To

Mexico

district

have

more of all kinds of petroleum products.
shortage of! oil existed. To meet this swollen
demand, the oil industry had to rush

homes,

A drastic

a

'

That job is now

types of crude with much

a

oil

is

facing

a

period
more

of

on-

reserves

record

23

have

crude
climbing to
barrels
1948

been

billion

than

year

barrels, the greatest oneincrease
in
the
industry's

history.

and

Yet, ;in spite of this huge proven
E.

F.

Bullard

the

general economic

conditions than those now facing it within the

,

two billion

better market ac¬

readjustment

largely

.

alone. The industry added more

more

speculation. However, it is all too evident that the in¬
dustry

.

,

prediction at this time would be sheer

severity will depend

Sup¬

At the same time, our proven

than the older sour crude fields.

venture

accomplished.

plies today can meet all normal do¬
mestic needs for oil and, indeed, ex¬
ceed it. '
"* "
'•
V

product

of

[huge expansion of its producing

and increase its recovery
efficiency from wells already drilled.
capacity,

in

been

•

the nation was demanding more gaso¬
and trucks,* more fuel oil to heat

by

refined

•

-

automobiles

company

accentuated

the sharp

crude has been

- -

E. F. BULLARD

their

our

electric

President, Stanolind Oil and Gas Company

stimulates the

Mexico, where

purpose

to provide adequately for the gas and

company

line

ceptance j
^

make

to be
delivery of gas is planned for late
in 1950.
■
'; ■ '
v
■
: ,
• 7)
The building of this line,' estimated to cost approxi¬
mately $63,300,000, is but one evidence of our faith in
the growth of population, commerce and industry in

constructed.

value of its products less the costs- of refining
and
marketing that are necessary, to change the.crude into
a
marketable state. If domestic crude levels are arti¬

West
j

gas,

requirements of this area.

oil

the

to

has commenced con¬
struction of a 506-mile-line extending from Topock on
the California-Arizona border to Milpitas on San Fran¬

prices. -Fortunately most of the recent discoveries in the

grown stead¬

our size today, as

fields

Pacific Gas and Electric Company

profitable item; nevertheless, in the long run,
can be worth
no more
than the competitive

one

crude

the

yfars, together with the parallel, growth of a! rapidly

expanding

feet

their

demand for

long-term

gross sales value over the

other

convenience

Northern and Central

phur

....

^Standard Oil Company (New Jersey) has

The El Paso Company

and

Commission

public

a

borrowing.

Texas

delivery of 400 million
option to increase the

million scubic feet is pending.

to

operates, we are generally the first to feel any weakness
in the'demand for crude as most of.the oil in these
areas
less desirable for refining due to the high sul¬

position. " Our

means

order

In

substantially .all, of their income from their pro¬

or

In West Texas and New

company

Our

oil

crude

own

400

to

crease

the

Basically-we are returning to the historical position
of the oil industry where the supply has generally ex¬
ceeded ;the demand and competition has been keen.

demands

provided

their

of

cubic

with the rapid

runs

heavy

reduced.

be

present

recent

in

with

j

Power

million

effect of foreign competition. Today this is all too evident

the year progresses.

the

more

Federal

of

250

reality and

border.

certificate

a

from

line

a

ducing properties, .it is only , natural to expect a great
deal of reluctance to reduce the price of crude which/is

We believe,

expenditures, working capital of the

for capital

should

with

above,

as

and

more

a

natural: gas

.

our

products.

The

real¬

;

With the oil companies and refiners generally making

producing and
refining operations. These lower operating rates are due
to reduced demands, principally for fuel oil, and to in¬
of crude

be felt

shown, the best earnings so far this

.

however, that both production rates and refinery

on a more

.7

one.

stantially all,

The lower earnings as compared to last year are due
principally to two factors. The first is that with supply *
and demand again coming into balance, competitive con¬
ditions are being intensified within the industry. \ One '

creased stocks

V

■

!

...

ings is the lower current rate of both

*

today, the oil industry is earning practically all
of its income from the production of crude oil and it
is for that reason that the refiners with all,- or sub¬

would.be about 30%
below the same period of last year.
Our official esti¬
mate of earnings for the first six months of 1949 will be

effect of this has been to reduce the average prices obr
tained for our products. A second factor affecting earn-

refining operations

As of

year

published about Aug. 10.

_

price of domestic crude and refined product
will reflect the international picture rather than a purely

quarter earnings is that they will be slightly lower than
for the first quarter. It now looks as though our earn¬

ings in the first half of this

i'

effect will

economic

its

$75,000,-

was

'

.future. The

make of second

one we can now

future to place

Competition with foreign oil has become

This year for the first time the management published
estimate of consolidated earnings for the first quar¬

of

feet

will

istic basis;

an

000. The most reasonable

'

.

ing demand is greatest.
1
; }
No new gas fields of major importance have been dis¬
covered in California for some years. In consequence we
long ago began studies of possible out-of-state sources.
The utilities serving Southern California currently are

amount to 500 million cubic feet.

of the

points in the history of the industry. It is obvious
this time that some adjustment must be made in the

near

-

,

-

.

El Paso Natural Gas Company for

ucts

payment of stock
"!

19%

were

result, the problem has become one of meeting

a

lowest

declaration of the dividend for the first half of 1949 that

.

feet

Black

purchasing a daily supply of 300 million cubic feet of
gas produced in Texas and New Mexican fields.
' f.
A further large supply from the southwestern fields
has now been assured.
We have contracted with the

a

Dislocation of market and weakening of refined prod- "

a more normal relationship to earnings, as was
the situation in the prewar period. It was for this reason
that our board of directors announced at the time of the

dividends.

B.

J.

In

our
aggregate
163 billion cubic

than

more

service

gas

customers.

products.

proach

it is their intention to discontinue the

was

most

barrel of crude oil to market¬
able form |than it has ever cost before—this is a fact of
extreme importance and one that will have a consider¬
able effect cm the price of both crude and refined
today to convert

more

.

We believe that cash dividends

lor

of

classes

at

the cash

the

developing
if
Concurrently, costs of gas purchased in the field from
producers and nearly all other costs of operation have
-climbed steadily higher, • Faced with. still further in-j
creases in
the field prices of gas the company for the
first time in 28 years recently applied to the California
Public Utilities Commission for authority to increase its
gas rates.
No decision has yet been announced.
I '
V Natural'gas in this part of California has been used
in increasing quantities by the expanding industries of
the area.-Many industrial customers have been supplied
under so-called "interruptible" contracts at rates less
than those calling for firm service and with a provision
for suspension of service during periods of peak demand.
It is not improbable, if domestic and firm uses of natu¬
ral gas continue to grow, that industrial users may be
required to turn to fuel oil to a greater extent than in
the past, especially in the winter season when the heat¬
a

with

justified in order to provide a needed
supply. Now, however, we are in a position
to look much more carefully at such expenditures.

expenditure

a

,

who do not

are many

realize that

if these

intens^ that in many cases we felt that any reasonable

so

to

of

As

cept of refiner's 'margin is necessary,

intensive

more

*

,

yfet, there

seem

operating

These efforts should be more effec¬
tive now than in the years immediately past. During the
war and postwar periods, the demand for products was

As

,

become

demand for natural gas sefvice rather than

greatly increased costs in the end

products.

example, estimates that their expendiwill be over 30% less than last year.

sible. Creole, for

;

greater than the total in 1947: About 800 miles of main
were added last year to the company's distribution system.

ing increase in depreciation charges
which together with the more costly
in

continue to be reviewed to reduce these wherever pos¬

has

demand

for

sales

manufacturing processes has resulted

Budgets are and will

increasing, of course.

are

all

1948,

correspond¬

a

it

in

from

,

construction costs with

have

we

since natural gas

years

growth

Refining today, as we know it, is a far cry from the
relatively simple processes of prewar. Capital in¬
vestments per barrel of capacity have risen as much as
500%
from
prewar
along with
rapid
technological
change's. A good deal of the increase
in capital investment is due to higher

the

in order to

Company

product, manufactured gas was used
in the majority of cooking and water
heating installations. !
In the past ten years California's
population has increased approxi¬
mately 50%.
It continues .to grow
although at a slightly slower rate.
There
has
been
a
corresponding

ROBERT O. ANDERSON

Government.

:

before the introduction of the natural

President, Malco Refineries, Inc.

Imperial also needs to drill a number of new wells each
year in accordance with the terms of leases obtained

is one

by Pacific

purposes, for commercial space heat¬
ing and for industrial Iheating. Even

tinuing efforts to achieve wider understanding of the
company and its aims wherever it does busines or whereever its influence may be felt.

provided and are already under study.

industry

gas

generally used fuel for all domestic

pendent upon public confidence. We intend to continue
confidence, and to extend it through con¬

example,

20

introduced

of this enterprise is de¬

success

natural

low rate structure—so low that in

the

to earn that

For

continued

the

Electric

and

Gas
a

♦our

our

the

for

somewhat contradictory factors.

In the northern section of California served

agement and policies. We have tried earnestly to report
policies and actions thoroughly and completely. We

investments in order to maintain

point of view of utility company manage¬

outlook

the

based upon

worthy example of business man¬

a

the

From
ment

peactime economic functions and of their avail¬
ability for the nation's defense.
Our desire and our intention is that this company's
activities be conducted so as to be a constructive force

relationship between crude oil reserves and pro¬
duction. Still further, where discoveries have been made,
must

President, Pacific Gas and Electric Company

their

sound

we

in this

form

JAMES B. BLACK

,

everyone

(Continued from first page)
■
what has gone before but what prospects are. for the
future. We face a totally different situation today than

industry.

reserve, the industry
oil more intensively

is exploring for
than ever. For

we* know that demand will
to

rise

in

continue

the next decades,< and we must prepare now

(Continued

on

page

8)

,

Voluirs

169

Number 4814

From

COMMERCIAL

THE

of the News

perplexed Washington political observers for
a long time is just why Mr. Truman is so soft on the
Communists,
or
perhaps, more appropriate, why, instead of joining iii the hue
and cry against them just now, which would certainly- be the popular
thing to do, he insists upon pooh-poohing any¬
thing said or done about them.
Only a few days ago Tie dismissed the cur^
rent
hullabaloo
as
"hysteria"
and -"headline
hunting."
This strikes one as amazing when
Activities

Committee

House

that

is

monopolizing the headlines with "loose charges"
and "ruining the reputations of perfectly inno.cent persons."
'<"■
' '
Instead,
it
is
a
three-ring circus being
staged by Mr. Truman's own Department of
..

Justice.

In

New

York

...

is

it

,

^

prosecuting

Alger

Hiss for perjury; also in that city it is prosecut¬
ing 11 avowed leaders of the Communist-Party.
Here

Carlisle

in

Washington the department is prosecut¬
ing one of its own employees, a young woman,
who is charged with having pilfered confiden-

Bargeron

'

tial files from the - department, with the intent

4

of passing

them to

Russian agent.

I don't mind saying that these
activities on the part of the department are quite surprising to most
of the political observers. It is the first time in some 16
years that
it has shown any

sion

that it

is

a

concern

in this field.

it is

The rather general impres¬

trust responsibilities in investment of funds and holds
keeping nation away from "stateism." Says investment management
hand-tailored, as no formula can possibly meet needs of more than one trust. Urges bankers
officials take leadership in solving complicated financial
problems. Scores excessive taxation

and trust

speak to

who are predominantly commercial bankers, from
point of view of the trust company—the simon pure variety that, of course, does some
banking business but devotes itself primarily to the exercise of its trust powers. The
"straight"
g

<S>

trust company

and

—

I

the

that

adjective
advisedly —
become

ias

tear

I

is

en¬

dowed

in

the

)ublic

mind

)f view of that
Benjamin Strong

legend-

ao w

.

1907

For

several

before

years

been

there had

an

......

At this time,

system of loyalty boards were set up, and the A good many plungers and" stock
military establishment were given author¬ market operators had got into the
ity to dismiss without explanation anybody they considered a poor management of some of these trusr
security risk. Since this time the Communists have been dribbling companies, whose funds could be
out, much too slow, however, for the majority of members of invested in enterprises more ad¬
Congress.' '
\-'.V. ;
venturous—and more risky—than
j.'■
a

Department

and

v

.

•

In fact, the

antagonism that has existed
the legislative and the executive branches
the New

Deal

in,

came

not to have lessened

seems

Truman.

/j

.Now,

this question between
ever since shortly after

on

th part of another

.

a

:

•

bit under Mr.

'

..

on

engage;

man,

Mr. Truman, has. shown

But

campaign last
ance

and

policies

as

„

"lobbyists" and "selfish, ruthless men," is of the pattern
of thinking and of doing things.

way

to

as

why he is soft

Communists have

The
ticket
the

against him last

election.

He

the Commies

the Commie ques¬
It is what has Washington observers puzzled,
on

not supported him.

year.

They!

them

owes

or

no

They had their own
near to costing him
allegiance as did Roosevelt;
very

came

such

And he

despises them personally. He despises the rats in the figura¬
tive alleys; he despises the intelligentsia among them, the latter if
for no other reason than that they look down upon him.
When he

was

in the Senate he used to fret about the Commies

fellow

Senators,

gotten out of

the gov¬
Stalin-in June 1941,
quoted in the New York "Times" to the effect that he hoped

ernment.

he

that they should be

along with his

was

agree

Indeed,-at the time Hitler turned

headed for the rocks?"

:1

sometime

For

Washington,

a

there

has

been

impossible

story

of

Mr. Truman's intention to wipe the slate clean in the
matter of Roosevelt's coddling of Communists, and run them out of
dent, it
the

was

government.

'that

The story is that he took steps to this

end.

But, according to the story, his political advisers convinced him
no such breaking with the past was the thing to do.
He had to

hold together the political conglomeration moulded by his predecessor,

He didn't hold the Communists in the 1948 campaign, of course.

v;

But

it

seems

that

continue

"Liberal"

alienate the

he will

must

one

to be

soft towards

them

else

support.

t

!
„

T» Dombrowski Opens
BUFFALO,

N.

Y.

—

422

f

business from

Goodyear:Avenue,
!

!

v

offices

.

K'jrt

i

j




.

been

at Pine

of

the rocks, but it should
be added that the majority, espe¬

cially the older established ones:
survived the storm and carried on
—in most cases,

formed

Street,
a

however, with in¬

creasing emphasis on commercia]

j

;

ri<

•.

-

.

>.

•"

business went

trust
a

elsewhere

of the '20s

excesses

hand, and the extreme caution of
'30s

the

Now

'40s,

■

—

in

ourselves

find

we

the

all the aftermaths of
including a depression

with

two

other.

the

on

wars,

squeezed j in
between them, a
vastly changed national economy,
taxation that would seem to

and

threaten

the' very foundations of
the banking business
are'now discussing,! As

that part of
that

we

investors' and
let

not lose

us

lenders

of

money

sight of the under¬

lying
factor" that is
now
jus
emerging as the inevitable result
of the financial excesses brought

and must

non-essentials

seeds

of

long-

financial

prosperity
$250 bil¬

a

the

and

peacetime taxes in
the

to

and

debt

live

must

means

our

its

high¬
history;
de¬

own

struction.
The

as

the one

on

In other cate¬
we

Otherwise, a
based on

carries

der

Trust

of

Future

What should

result of these two influences—

the

strengthening of

cur

as ours,
Federal

lion

national

our

Services

policies be

our

enactment

the

lowed

of

much

emphasis should commer¬
management put on
trust
matters
in
the
years
to
come?
Should not the personal
cial

bank

trust

department

fade

into

the

be allowed to
background —£

evil, fraught with great
dangers,
involving
surcharges,
possible loss of good will, and
perhaps constantly recurring op¬
erating losses? Let me add parr
enthetically that such a point of

necessary

view has at- times seemed to pre¬

vail in many

of our banks, to the

detriment of all of us.

1

■

question actually is bigger
than just the personal trust de¬
on by war, depression and a vast
expansion of the Federal budget partment and its appointment as
I refer to the'creeping paralysis of executor, trustee, guardian, etc. It
the' equity capital * markets; • cur^ involves the fundamental philos¬
The

tailing growth of business enter¬

ophy of banking itself. f
> •
prise in good times/ and threat¬
As I understand banking, it con¬
ening solvency during times of tains two primary functions—the
price adjustments and stabiliza¬ lending of money, and the invest¬
tion.
Since the end of the war
ing of money. Historically both
our economy has been borrowing
have had almost parallel impor¬
when it should have been raising
tance, and actually I believe that
equity or risk capital. High taxes emphasis should now be more
in
peacetimes'' inevitably freeze equally divided between them.
risk

taking away the Both require the same technical
penalizing the in¬ training in credit, the same knowl¬

capital .by

rewards and.by

to

wards

do

a

point where

not

risks.

only the

However, high taxes are

by-product and the inevitable re¬
sult

government expenditures,

of

and

high

itures

can

expend¬

government
only

be

financial
Both

give

the

commodities,

and

economics.

same

fascinating

trends

opportunities to learn about and
appraise
nesses

a

and

great variety of busi¬
managements, and to

(Continued on page 42)

by

reduced

industry,

of

the re¬ edge

the

justify

i

sounc

banking legislation in New Yprk
State; ,and, since then, intelligent
administration
tendents
the

over

our

by

Banks

of

years

system that

may

Superin¬

has

given

Here's

NATURAL!

a

us

State banking
well bring pride

a

,

We maintain a

market for dealers in

and satisfaction to all of us.
In

Republic Natural fia§

the trust func¬
banking institution, I

considering
of

tions

a

the

one

as

COMMON STOCK

so-called

trust companies alon?
with the trust departments of all
state and national banks.
Their
"straight"

functions and
the

responsibilities are

legal

their

same,

status

say refers to both groups with
equal emphasis.

to

moment ago, a quick
panic of 1907.
Fol¬
lowing that disaster, as I men¬
tioned, emphasis tended toward
Commercial
banking, and away
We had, a

look

at

17, 1949.
.

■■

*""<

as

well

as

surprising

a

number

of

other

unlisted

If

you'd

like

current report on this issue

a

an

.

information on operations,
earnings, dividends
.
production, reserves and outlook,
we'll be glad to send a copy without charge. Just ask for
up-to-date

analysis of essential
,

our

latest

.

Stock Appraisal.

the

*An address

June

...

securities.

is

identical, and their problems are
no different.
So what I am about

i-

'

un¬

how

and

conditions

these

banking, and declining interest in
fiduciary functions.
There fol¬

»

securities business."

such

est

the

economic

health.

fiduciary responsibilities
the < pendulum
had
swung too far the other way.
In
any case we,acquired the not al¬
ways justified reputation of seek¬
ing our own protection first and
foremost. Much valuable personal
doubt

vestor

.

them

on

i

'ty.! 1

.r.'J.

.

some

by Mr. Strong be¬
fore the 53rd Annual Convention
with offices
at 70
of the New York State Bankers
New York City, to Association, Spring Lake, N. J.,

Enterprise Corporation has

conduct

>,v.i

'

know

Enterprise Corporation
The

Thaddeus

Dombrowski is engaging in a se¬
curities;

all

we

group

going around in semi-official
confirmation but seemingly of

It is to the effect that when he became Presi¬

considerable substance.

As

upon

the two bandits would kill each other off.

these new¬
institutions be

of

some

fangled .banking

His did land

was

tion is another matter.
i

attributes.

certainly intended to appeal to the ignor¬
of people.
It has not an intelligent dis¬
His denunciations of those who oppose his quack

year

of issues..

But

of these

mob-mindedness

cussion

of his

neither

.

then closes this pas¬

with the following question:

"Might

„

v.

in."

Allen

Mr.
sage

Mr. Truman's characterization
of present goings-on as "hysteria" , might be attributed
to highmindedness, or the determination of a strong man not to be moved
by momentary passions.
'
•
;

ordinary banks were permitted to

and

sacrifice

do with

the' pre¬
historic
point

include

however,

term

out

safety is to be protected

within

more

Cer¬

do—if

must

friends abroad.

our

would

we

c^rn't afford.

we

these

No

with

things that

things

gories,

the-years after 1929, these ex¬
periences brought an excess of
caution? into- bank
policies and
particularly into those having to

some-

„imes

tain

defense

In.

the

and

doing

like to do but

and

to

iodo,

not

national

akin

in¬

-

State

I say, a re¬
overpowering

almost

bird

rare

epidemic
of
setting up trust" companies,
which were permitted by law to
engage in banking operations al¬
IIn 1947, Mr. Truman made a seemingly inept statement about
most • as
if
they were national
Communists.
In effect, he said: "There are no Communists in the
banks, but without being subject
government." -Then within the brief space of a few months he .was
to the strict regulations with which
.asking Congress for funds with which to run them out." V. ? national banks were surrounded
v

may
almost

deed,

bank.

...

with,

and

Then came

curity affiliates, etc., with results
chat Were frequently unfortunate
to the trust end of ther business.

a

.

Mr. Truman's • comment came on the heels
of his Attorney General's statement that the Communists were
being
put on the run.
-

functions.

interest in investment"matters, se¬

.

man.

trust

'20s

newed

,

Strangely enough,

:

:
from

use

trial,

by Mr. Truman's

you,

the

.Woman

")

■

reducing risk capital.

as

I have been asked to

took

.

Capitalism

official stresses modern

company

Congressional prodding to bring the Hiss case irv bird.
»
;
but in. the case; of the 11 Communists and of the young
-You should know, however, that
employee, the Department-moved on its own steam.
this small and select group did not
t
Now, is this the headline hunting to which Mr. Truman refers?
always have this doubtful reputa¬
It is his own Attorney General for whom he shows a personal as
tion for conservatism, and that at
.well..as an official affection..
:
1
one time, just over 40 years ago,
;
The "infamous" House Un-American Activities Committee has it represented the "bad boys" of
shown very little activity since; Mr. i Truman's reelection and the
the New York banking fraternity.
Democrats came again into control of Congress.
One of the first
Listen
to
this
quotation
from
things the new Congress did, in fact, was to seek to pull- the teeth
Frederick L. Allen's description of
of the committee and tie it up in a legalistic strait-jacket.
The
the 1907 panic in his recent biog¬
one thing the Committee has done, asking the universities for copies
of textbooks they are using, has brought down the usual wave of raphy of J. P. Morgan, Sr.:.
i "People began to question the
Communist-Liberal indignation.
But this has been only one story
in
the newspapers.,> The other three headlines are being caused reliability of a certain type* of
to

Responsibility

of major elements in

one

should be

.

.

*

.

7

President, United States Trust Company of New York

Leading trust

it is realized that it is not the "infamous"

(2703)

By BENJAMIN STRONG*

has

Un-American

CHRONICLE

In Preservation of

By CARLISLE BARGERON
A matter that

FINANCIAL

Trust Function

Washington

Ahead

&

Trading Department

Merrill Lynch, Pierce,
70 PINE

Fenner & Beane

STREET, NEW YORK 5, N. Y.

,

Offices in 96 Cities

'

•J!

8

THE

(2704)

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, June 23,

1949

Outlook lor Oil and Natural Gas Industries
is that of the power of the Federal Courts, but never¬
theless a legitimate sphere to control within certain

(Continued from page 6)
to meet it. In the last 10 years, the nation's rate of oil
use has jumped an average of almost 7% a year. Not only
are people using more oil per capita, but our population
curve continues upward— perhaps, to 165,000,000 people
by 1975. Within 2a years, we may expect that national
consumption will shoot up from its present figure of
6,100,000 barrels of petroleum a day, to more than

and

it. Then

refused

were

is leading in many directions:
deeper into the earth and into unexplored
areas.
Already, one company has probed deeper than
20,000 feet to find new producing sands. Other com¬
panies are at last seeing their expensive years of geo¬
physical work in Canada begin to bear fruit. The inten¬
sive search in many areas is being made, not only to
insure continued Qil self-sufficiency in the western hemi¬
sphere in normal times, but, more important, self-suffi¬
ciency also in whatever crises may arise.

I

state

can

panies

to

distribute

from

America

the

the

pipeline

When

no

gas

of

C.

P.

western
steel

Conrad

Kansas

situation

of

gas

not

o^lv

of

course

from

blew

off

oil

ment if

more

wells.

I

country

to

has

of

the

an

next

of

on.

and

the

loss

is

goo,! /citizens to

^fect

on

their

of

more

that

in

and

the

are

dollars

for

the

of

the

crude

from

The

operated

excess
seek

a

All

„

policy

b^d citizens and had the

merce,
"

Nothing like

as

important

iq ■<>+} byfju;.!'■(i)




"

over

or

as

Interstate Com¬
widelv used
J

of

-

«
'

their

to

full

on

would

oil

as

be

and

purpose

the

for

the

by reduced

profits and

...

•

.

.

would

create

'•

y

contravention

r

,,

as
,

of

the

,

.

,.

1
,

producing capacity

over and

storage,

ary

a

-

,

the first five months of the

in

jobbers, distributors and

year
con¬

immediate requirements.

The

as

well

that prices

as

in consumers' tanks. Since it

are

dragging bottom, and since

now

purr

chases for the. fall and winter months cannot be delayed

much

longer, a. quickened demand may reasonably be

anticipated during the third quarter, increasing in veloc¬
ity

as

crude

ment in

profits.

production, and corresponding
j.

.

Other factors have

*

re¬

improve¬

...

played

production and earnings.

an

This

in product purchases will be reflected in in¬

creased

•

closer to the winter months.

we-move

surgence

a

decisive part in reducing

Increasing imports of crude oil,

which reached record proportions in the first five months

to
"

:

declared

,

excess

is good
during
corresponding rise

to reduce inventories to rock bottom and to make

appears

.

More important than the welfare of the oil producers
and refiners of the United States is the
question of na¬
tional security., We should build up in the United
States
an

steadily

effect of this policy has been to reduce stocks in second¬

Franklin

...

,

,

oils

purchases only to meet
Wirt

Near

i

heating

sumers

capacity it

,

have been
production,
declining price

The precipitate decline in prices of kerosene and fuel

re¬

enunciated by the National Petroleum

.

a

third and four quarters with
production and profit levels.

in

Council and could, and very likely would, result in a
serious deterioration in the domestic oil
industry in all
its branches.
'

~

oil

the

country.
in

,

;

structure for all products except gasoline, there
reason to anticipate a sharp increase in demand

many

of refined products which would also have
this

stable and profit¬

first six months of the year
marked by substantial cut-backs in crude oil

Europe and Africa, which would force the 1

market in this

a

,

While

of

mestic market of the United States; and if the refineries
to be constructed in
Italy, France and England were to
„

More

modern

both the immediate and long-term
industry is much brighter than firstearning statements and production records would

half

oil from South America and the Near East into
the do¬

be

with

expect a steady increase for

come.

outlook

future

'

.

seek¬

the

accounts.

tune

Company and
Chairman, The National Petroleum Council

to

for that oil in

production in the community
important has turned them from

certain -degree; of control

we

in

W. S. HALLANAN

Europe and Africa.
supply these plants

to

obtained

be

are

President, Plymouth Oil

■

their

most deleterious
children and .their wives. Also there have

crude

of

established

getting

level, they will build for themselves

•

a

are

and

demand

markets

conclusion, we believe that if supply manufacturers
will gear their production and service to an international

allocation from the Economic
of

somewhat

are

where

areas

In

weeks

governments

old

our

operators

time to

some

This would mean undoubtedly that the American
companies with developed production of crude oil in
South America and the Near East would have! ho market

community.

numberless instances

Power Commission

'Outside

from

demand
more

tools and methods, and

succeeding

recent

activities

in

able business for the future.

con-

.

earned, which

a

which

stant

little, if any,
supply these refineries would be pur¬
chased from American nationals
owning and developingoil properties in the Near East.
-

who have preferred to avoid employment and live'
two-thirds of what they could have

has been

the

line

had the effect of causing

of

men
on

new

East from English and French con¬
trolled concessions which would not require the use of
dollars in the purchase of the crude and

with hideous
taxes to support this and other expenditures which have

effect

Should

constructing additional refineries
enlarging the capacities of other

would

burdening the people of the United States

hear i

and

France

The

country which

demoralizing

in

ket

has caused loss of countless billions of
dollars; the hiring
of great numbers of good workmen to be idle and

has not

fields.

are granted,
capacity of these refineries would
be very much in excess of the mar¬

restored to the States. This is part of too
great central¬
isation: of power in Washington in this

us

under¬

ceived, if these requests

The whole control of the retail
price of gas ought to be

of

to avoid serious

1949

refineries. From the information I

typified by the New Deal in the last 20 years, is
tbe giving the Federal Power Commission the power
to prescribe prices at which
gas should be sold at retail.

distinctly

Texas

to

supply

reaching saturation and where pipe¬
line construction and transportation
is lagging behind production; par¬
ticularly in old fields where maxi¬
mum
exploitation has been accom¬
plished, or in new fields, in remote
J. E. Hall, Jr.
areas. In some
foreign countries, ac¬
tivity is definitely on the upward
trend and tends to offset any reduction in other areas.
Our particular products are relatively new and involve
new techniques resulting in more economical and
effi¬
cient drilling and well completing. We continue to enjoy
a
good business by virtue of new accounts plus a con¬

company

is possible that their

industry in
potential from

its

drilling

and

ism

Which

We

order

the

been

The

an

millions

thing that I think is most important and that can readily
be remedied, is the divide! control of
gas sale prices.
Not the least important part or the surge toward Social¬

a

northern

it

Cooperative Administration of

Many oil
gas

day.

every

the

we feel that we must treat
industry as a world-wide or

a

down

in these communities for several years

are

in

learned

ing

improvement in this re¬
gard, still billions of cubic feet of
gas are blown off from oil wells in
thi~

supply.
pipeline

present

that

Italy, France and England

enormous

Lt. Godfrey L. Cabot

existing

new

indicate.

While

than the oil.

there

present

the

oil

manufacturer's position. We find that

years.

the open air,

their

we

sequences

air where if the gas had been
duly cared for, it would have been
At

in

some¬

realize

new

phase thereof which I believe: merits study and consid¬
eration by executives of the oil
industry and govern¬

open

worth much

both

production

international

President, Franklin Petroleum Corporation

oil

all

Thus,
the

discussing the current outlook for the oil and
natural gas industry I will confine
my statement to one

wells, but from
gas wells and from public torches,
for instance in the
City of Pitts¬
burgh and in many other cities and

wells

in

for

gas

that oil

apparent

In

the

blown to

from

firm

an

where in the world is going ahead at

WIRT FRANKLIN

enormously great amounts

were

and

is

there

full speed.

after that date.

,

blowing of
air, either from sheer fool¬

1882

and

ease,

of growth

care

ishness as was the rule when I first
became interested in the industry in
1882, until the present moment.
In

industry,

be

Gas

gladly take this opportunity to say that in the 66
interest in gas and oil began the greatest
open

will

ing its available gas over 10% per year and has prac¬
tically completed arrangements with the Trunk Line
Supply Company to obtain an increment of prac¬
tically 50% of its present capacity to be made available
by the end of October, 1951. This will, of course, take

,

foreign, natural

prevent

there

in science

ever-increasing demand for
petroleum and its many by-products. Therefore, while
it is true that marketing problems exist from time to
time, and in various places, it is also

Iowa, from the Northern Na¬
Company's pipeline. This company is increas-

tural Gas

years since my

to

and

could be completed before 1956.
We serve Fort Dodge,

is the fact that

President, Godfrey L. Cabot, Inc.

care

that

today,* with constant advances

In the world

We

is
actively considering the construction
of a pipeline from the Gulf Coast
fields
to
supplement the supplies
they are now drawing from the

GODFREY L. CABOT

more

us

load,

and

stand

products at reasonable cost—regardless of whether the

into the

com¬

gas.

plants. The de¬
for gas for both of the fore¬
going uses is substantially in excess

industry is planning not alone for 1955 but for 1975
as well. As they did
during the war and the immediate
postwar era, the petroleum producers are assuming their
full responsibility for supplying the nation with oil

been

of

plants

the

gas

our

the restrictions on the
gas
for new house-heating

industrial

industry which we hope will soon be resolved.
Stable, reasonable prices, coupled with steady produc¬
tion, will stimulate industry to pay the heavy costs of
exploring for new oil and drilling deeper wells. Indeed,
many an. economist believes that the oil industry will
soon reach a period of postwar stability.

has

J. E. HALL, JR.

mand

the oil

need

We

afford to gamble with our national security.

further increase in the supply of
until 1956. We are therefore

installations

The industry's change-over from a seller's to a buyer's
market has been accompanied by unsettled conditions in

natural

We must not become dependent upon foreign oil.
cannot

Gas. Pipeline

informed

use

ment, will frequently cost more than $20,000.

I

We had

continuing

graph crew, using delicate geophysical mapping equip¬

,

Natural

has

increasingly today's

synthetic.

submarines.

from Texas to the Atlantic Seaboard.

Company of
in the cities of Davenport, Cedar
Rapids, Iowa City and Ottumwa,
Iowa, and Rock Island, Moline, and
East Moline, Illinois. This company

trend, with those of shallow
wells. A 3,000-foot well of average difficulty, may cost
about $30,000 to drill, but a 10,000-foot well will require
about $200,000. Similarly, a month's work of a seismo¬

or

by the

gas within the State boundaries.

briefly the situation of
availability of natural

you

regarding

Exploration and drilling on, land and under water is
expensive business, and is combined with heavy capital
risks. Compare the costs of drilling deep wells, which

or

made

obtain

we

America because of the German
to resort to the Big Inch pipe lines

South

President, Weatherford Oil Tool Co., Inc.

these areas are at last settled,
expect development there to accelerate. And,
likewise, production from the undersea reserves will
then rapidly augment our supplies.

for tomorrow will be domestic

be

the Gulf Coast to the Atlantic Coast, nor could

C. P. CONRAD

titles and rights to

source

should

and other effective

President, Iowa-Illinois Gas and Electric Company

may

paramount importance, however,

in¬

volved in'war with a major power which has submarines

supplies from

lating the retail price of

produced from "tight" reservoir formation. This and
other developments will add to the nation's oil reserves.

Of

depend upon foreign oil if we become

cannot

we

oil and gas industry to have the law changed and restore
to the State authorities the exclusive privilege of regu¬

producing oil. Research is attacking the problem
increasing recovery from all types of reservoirs. For
example, one new development, the hydrafrac process,
is expected to increase the amount of oil which can be

are

]

.

Any other course of action means risking our national
safety. Two world wars have shown conclusively that

this unaccountable policy.
I think a determined effort

of

the

industry maintained

virile, going industry at all times.

a.

war-making ability to intercept and
destroy the tankers transporting the oil. In the last war
we could not even transport our own oil by tanker from

and

we

as

a

capital. The Hope only asked 3%. However,
they have rendered very good service and while millions
of people suffered during the two years of
delay, the
community as a whole was not very much affected by

companies are spending large sums to improve
efficiency and perfect less costly techniques in finding

is development lagging.

States and Canada and the domestic

their

on

Oil

areas

supply and development of those already discovered

of

should continue without abatement in continental United

privilege which he sold to the Field interests and they
were allowed to function on an estimated return of 5%

The industry's search

under the sea,

daily and have

surplus available to meet any national emergency
which may arise. To that end exploration for new sources

gentleman, who is the exthe late President Roosevelt, was. given the

son-in-law of

3 million barrels

of 2'to

this

For years, the Hope Gas Company, anticipating the
crying need of transportation of gas from the west to
the east, tried to obtain permission to lay lines from
West of the Mississippi to the Atlantic Seaboard States

8,000,000.

Only in offshore

tive demands

limits.

above consump-(l

of

1949j had

tic

a

industry.

serious and adverse effect
Strict

upon

the domes¬

compliance with the National Oil

Policy report of the National Petroleum Council would
cure

this situation and bring imports into balance with

domestic supply and demand.

try has
own

I have felt that the indus¬

most serious obligation to keep faith with its

a

'declaration of

policy, which recognized that imports
supplement domestic production.

should be used only to
'

ni

'•

4

-

m.\v/ (Continued

on

page.

10)

<

>

Volume

THE

Number 4814

169

COMMERCIAL

&

FINANCIAL

cular—Smith, Barney

&

CHRONICLE

Co.,

14

Wall Street, New York 5, N. Y
Also available' are circulars

on

Liggett & Myers Tobacco Co. and

NSTA Notes

report and

liam

Merrill Lynch,

,

Paper.

up-to-date analysis—
Pierce, Fenrier &
Beane, 70 Pine Street, New York
5, N. Y.
,,

Also

available

reports

are

The Bond Club of Louisville will hold its annual outing

Friday
Sleepy Hollow Club. At the meet-

afternoon and night July 8 at the

Company—Study—J. M. Dain
Company,- Rand Tower, Min¬
neapolis 2, Minn.
ance

&

sis—William

A. Fuller &

Colombia-Bolivia—New study—
Zippin & Company, 208 South La

Co., 231 South La Salle

Street, Chicago 4, 111.

Corp.
1

Wall

Report — Cohu & Co.,
Street, New York 5, N. Y.

—

—Study in current issue of "Busi¬
ness

&
J.

Wm.

Henry Christman, Jr.

Clarence

Coniiffe

L.

Digest"—Loewi
Co., 225 E. Mason Street, Mil¬

Jones

Mountain

;

Henry Christman, Jr., O'Neal, Alden & Co.

President:

Vice-President: William Coniiffe,

Merrill Lynch, Pierce, Fenner
& Beane.
"
Secretary: Clarence L. Jones, Almstedt Bros.
■
'

Edward Molter, Smart &

Treasurer:

Wagner.

Merrill Lynch,

Pierce, Fenner & Beane and Thomas Graham, The Bankers Bond Co.
Alternates: Berwyn T. Moore, Berwyn T. Moore & Co. and Ches¬
ter Lucas,

Stein Bros. & Boyce.

—

New

Burton

&

stock

&

Co.,

65

York 6, N. Y;

Broadway, New
-

"

-

-

-

Henry Christman, Jr., Chairman; Mrs. Ora M. Ferguson; Rus¬
Ebinger, Smart & Wagner; Charles C. King, Bankers Bond Co.;

Joseph W. Parks, Berwyn T. Moore & Co.; Wesley J. Rutledge, Jr.,
Stein Bros. & Boyce; William T. Watkins, Jr., Merrill Lynch, Pierce,
Fenner & Beane; and Robert H. Johnston, Jr., Bankers Bond Co.
The Bond Club reports that Urban J. Alexander, W. L. Lyons &

Distillers

Tax and Expenditure Policy for

Co., the President, is now home from the hospital where he was con¬
over a month following a heart attack suffered at his office.

Co.,

15

Broad

SECURITY TRADERS

Security Traders Asso¬

with the Bond Club of Denver acting as host for a day
in Denver on Tuesday, Oct. 4.
Special trains will leave New York Sunday afternoon, Oct. 2,
and Chicago, Monday, Oct. 3, arriving in Denver Tuesday morning,
Oct. 4.
The cost will be approximately $250 from New York and
Oct. 5 to 9,

$140 from Chicago per person on the

Also available is

This will include round-trip rail and Pullman,

but will not include hotel rooms

reservations

July i.

for

hotel

all meals

night while in Denver,
at Colorado Springs.
rooms
must be made individually

Further

Association.

the

;

■

the

"Public

—G.

A.

Utility Stock Guide"
& Co., Inc., 70

details will be* released

:

35p each.

Saxton

Pine Street, New York 5, N. Y.

•

send interested parties

Monthly commercial
Canadian Bank of

—

The

—

1949.II.B.1

an

With Davis, Skaggs

analysis of

(Special to The Financial Chroniol*)J1

•

FRANCISCO,

Robert

Rippel & Co.,
18 Clinton Street, Newark 2, N. J.

P.

to

S.

staff

the

Mann

has

CALIPJ;

Davis, Skagg8#&
Co., Ill Sutter Street, membersiof*
the San Francisco Stock

Northwest Airlines—Analysis—
Auchincloss, Parker & Redpath,
52 Wall Street, New York 5,' N. Y.

Does

Life

Security

Insurance

Your

for

Family?

—

Co., 10 Post Office
Square, Boston 9, Mass.
Republic Natural Gas—Current

ance

Two With Brereton Ricce

A

(Special to The Financial Chronicle)

—

nomic

International

Baxter

Eco¬

Research Bureau, 76

COLO.

DENVER,

by the nation's life insur¬

&

Wil¬

ing. "

Co., First National Bank Builds
!\

■
,

This advertisement is neither

r

•

.

■

an offer to sell nor a solicitation of an offer to buy any of these securities. The offering
only by the Prospectus. This is published on behalf of only such of the undersigned
'
as are registered dealers in securities in the respective States.

New Issue

$50,000,000

about

,

First

Company

Mortgage Pipe Line Bonds, 3% Series due 1969
due

June 1, 1969

the following literature:

son

&

Price 100%%

52 Wall Street, New

Co.,

York 5,

and interest accrued from

N. Y."

June 1, 1949 to date of delivery

Commerce, Toronto, Oht., Canada.
Canada: A New Frontier in

—Study—Bache & Co., 36
Street, New York 5, N. Y.
available

Also

Oil

Wall

Glasses—Analysis of market out¬

for Depressed Stocks.

Atchison, Topeka & Santa Fe—
H. Walker & Co.,

1 Wall

change of Sentiment

Toronto

Street,

Ont.,

1,

Canada.
Pictures

&

Stock

-

25

Co.,

New York

Over

Also

available

are

circulars

on

Chicago & Northwestern Railway,
Cincinnati

Gas

Electric

&

White, Weld & Co.

Stone & Webster Securities Corporation

Street, New York 5, N. Y.

Co.,

Blyth & Co., Inc.

Glore, Forgan & Co.

The First Boston Corporation

Cleveland Graphite Bronze, East¬

Motion
Hirsch

Copies of the Prospectus may be obtainedfrom any of the under¬
signed who are qualified to act as dealers in the respective States.

Circular—G.

—Study—Milner, Ross & Co., 330
Bay

39

*

*

*

on

Tin Control and Long Prospective

'Golds—A

Co.,

&

Coe

look—Jacques

Broadway, New York 6, N. Y.

bulletins

are

Dark

Those

Away

Throw
*

—

Circular

Broad

man

4, N. Y.

the

Index

—

Industrial

Booklet recording

10-year performance of 35 indus¬
trial stocks—National Quotation
Bureau, Inc., 46 Front Street, New

Steel

Making
—

Corporation,

Corp.,

General

Transportation,
Ford
sum,

Corp.,

Glass,

in

United

71

America —
Steel

States

Broadway,

York 6, N. Y;

Stockholder

New
*

Democracy on the

March—E. C. Patter, Jr.—George-




American

H. L. *Green
Libbey

United

States

Bank

of

Harriman
Harriman

Goldman, Sachs & Co.

Ripley & Co.

Kidder, Peabody & Co.

Incorporated

Co.,

Merrill Lynch, Pierce,

Lehman Brothers

Owens

Fenner & Beane

Gyp¬

and Variety Chains.

Smith, Barney & Co.

Union Securities Corporation

Manhattan—Leaflet—

Goodbody

& Co.,

New York

York 4, N. Y.

Brochure

Light

Greyhound

Counter

-

Kodak Co., Electric Power &

—

Street,

Central Republic Company

Harris, Hall & Company

Clark, Dodge & Co.

6, N. Y.

115 Broadway,

(Incorporated)

(Incorporated)

Hemphill, Noyes & Co.
Bendix

Aviation

Hornblower & Weeks

W. C. Langley

& Co.

Corporation—

Special review—John H. Lewis &

Lee

Higginson Corporation

June

21,1949

Co., 63 Wall Street, New York 5,
N. Y.

Brooklyn Union Gas Co.—Cir¬

"4;

—

%

is made

'W-

"

Arthur & Harris and Edward L. Reilly ha#e
companies—William J. Bax¬
joined the staff of Brereton, Ritse

mended

ter

Exchdtfgte'!

1

Guarantee

study of the estate plans recom¬
Portland Cement—Late

—

been added

of

firms mentioned will he pleased

It is understood that the

Ec0»

University Press,.
Morningside Heights, New York,
N. Y.—Paper—$2.50.

National State Bank of Newark

—Analysis—J.

Recommendations and Literature

Canada

Nations

for

Expanded!

—Columbia

Tennessee Gas Transmission

letter

Assistance

Technical

nomic Development: An

Dealer-Broker Investment

to

York

SAN

basis of tv/o occupying a com¬

the train and occupancy of Pullmans over
All

New

Pennroad Corporation.

Hotel, Colorado Springs, Colo.,

ciation will be held at the Broadmoor

through

444 Madison Avenufe,
22, N. Y.—PapersSingle copies available without'
charge, additional copies at cost—

velopment,
Wisconsin Power & Light Co.—
Memorandum in current issue of

Street,

data—Lerner &

ASSOCIATION

The Annual Convention of the National

on

National Pol-1

on

icy—Committee for Economic De¬

-

New York 5, N. Y.

Oregon

partment.

1949—Statement

Corporation—Analysis— Eastman,
&

Economy—
Brothers,

&

Street, New, York 16,

New York.

Products

fined for

NATIONAL

New York 6, N. Y.

Mixed

the

Ross—Harper

49 East 33rd

Data—Ira Haupt & Co., 11 Broad¬
way,

of

Plan—United

National

the

on

Strategy for Liberals—The Pol¬
Irwin

in charge of the out¬

are

sell

L.

—

*

Members of the Entertainment Committee

ing

Supply

Company, 160 South Main Street,
Salt Lake City 1, Utah

Dillon

Mrs. Ora M. Ferguson,

National Committeemen:

Fuel

The following slate analysis—Edward

ing the election of officers for 1950 will be held.
has been presented:

America

N. Y.

and Financial

waukee 2, Wis.

in

Co., 52 Wall Street, New
5, N. Y.—paper.

York

Wisconsin Vower & Light Co.—

James Manufacturing Company

,

&

son

tories—Circular—White, < Weld &
Co., 40 Wall Street, New York 5,

itics

Airplane

&

Making

Stockholder Democracy

Sperry Corp.—Circular—FahneEngine

Ad¬

March—E. C. Potter, Jr.—George-

Smith, Kline & French Labora¬

Street, Chicago 4, 111.

Fairchild

Govern¬

Buck—Public

Douglas A. Fisher—United States
Steel Corporation, 71 Broadway,
New York 6, N. Y.—-Paper.

Co., 209

Souj|h La Salle Street, Chicago

Salle

&

Canadian

E.

■

Steel

stock

City-

Service, 1313 East
60th Street, Chicago, III.—Cloth—
$5.00.
■ :
r

Seattle Gas Co.—Circular—Com-

Central Soya Company—Analy¬

York

ministration

Si, Paul Fire and Marine Insur¬

on

Corp.

New

:

ment—A.

Middle South Utilities and United

BOND CLUB OF LOUISVILLE

Street,

Financing

Public Service Co. of Indiana.
Brown Company — Report — H.
Hentz & Co., 60 Beaver Street,
New York 4, N. Y.

9;'

(2705)

F. S. Moseley & Co.

Paine, Webber, Jackson & Curtis

'%l
■■■)!

10

COMMERCIAL

THE

(2706)

&

FINANCIAL

CHRONICLE

Thursday, June 23,

1949

Outlook lor Oil and Natural Gas Industries
integrated companies that the small independent is
verely handicapped, especially in large cities.

(Continued from page 8)
In recent months

they have actually supplanted our own

output.

Gradual acquisition of

comparing first half profits of 1949 with those of

In

last year,

profits during this period cannot be regarded

in any other light than as most
be pointed out that they were

unusual, although it may
insufficient to meet the
expenditures for plant expansion.
compare even the reduced earnings

capital

industry's

However, when

we

for the first six months of 1949 with the average

of

arbitrary in their dealings.

they

war,

While
world

we

currently

are

production

of

and

any

in an era of an expanding
contracting markets for our

are now

At the

of

toward
of the
feel

jobbers

or

There

the

of

the

should

Though

the

distributors of gasoline and fuel oils in the

..

-

.

As

a

chandised to retailers and individual

has been

industrial

Though relatively small
individually, we are operating on our
own money, and this has an influence

level
We

result the general level

compared

as

that

to

prewar

the

period

strains

inevitable

would

highly

destructive,

active, competitive

market. General economic conditions
not

that

confidence

The

•

fuel

oil

for

last

winter's

relatively
warm season, and consequently the
price structure broke, and there has been no material
strengthening as yet.
A resultant slow-down of

refining has been noticeable,
crowding of tankage, but current fill-up of stor¬

due to
age

in frozen-in

resume

normal

areas

should

soon

it possible to

make

manufacture.

summer

I

Gasoline, though firm in price, is in a fairly comfort¬
position industry-wide. Consumption is not
increasing at an excessive rate, and with the anticipated
resumption of normal refining activity at an early date,
able stock

there should

With

soon

be sufficient gasoline.

v

•

these

supply conditions pretty generallly ac¬
cepted, an observer in 1939 would have expected increas¬
ing pressure for sales.
What has brought about the entirely different atmos¬

phere of today, where there are rumors of fuel oil price
and continual tensions in the gasoline
picture?
:

strengthening

Two trends have developed
materially since 1939 which
are. not characteristic of our free
enterprise system.

First, let's look at the crude supply picture.

Of

course

good conservation practice won't countenance domestic
crude production faster than the maximum efficient rate.

Furthermore, the impossibility of importing crude from
most foreign countries in time of
us.

to

avoid

undue

reliance

war

makes it vital for

these

on

sources

for

our

peacetime

supplies. On the other hand, how can free
enterprise rationalize crude prices -at their present tenyear peak (except for special grades), with severe cur¬
tailment of production by the Texas Railroad
sion and voluntary reduction of

by

some

Commis¬

imports of foreign crude
of the major importers?

This may all be in the interest of John
Q. Public, hut
consumer should at least have the
benefit of a clear

the

explanation that he is paying the lowest prices for his
fuel oil and gasoline consistent with
adequate supplies
for the future. This explanation
would profit both con¬
sumer and producer*
.

Obviously competition

industry, the States, the

is

in

suspense.

Federal

Whether

Government^

or

the

some

combination of these

three, dominate the solution of this
problem, together with development of Tidelands and
synthetic manufacture, will be the most important
lution of the

industry for the

future.

Second, gasoline marketing, like
of the

-

some

come

so

much

under the




evo¬

-

have

long-term upward

control

not

so

of

the

effects

of

recent

Eugene

trial

Hoi man

fuel

oil
sales
have
stopped
Sales of heavy fuel oil in

climbing.
..

.

-

,

•

in the corresponding period a year
making allowances for warpier weather

far this year than

so

Even after

aeo.

this year, a

decline from the peak levels of last year is

apparent.

'

/ j.

\

*

•

'

Heating product sales to date have been off substan¬
tially this year. Kerosene, for example, is off some 14%
from last year and domestic heating oils off about 6%.
This

decline, however, can be attributed to the unseason¬
warm weather we have just) passed through.
There
no marked change in the basic and growing
demand for heating oil products.
ably

has been

In

other products,.

gasoline, which has
been running 9% above last year, and in railroad diesel
oils, there Is no evidence yet of a leveling off in the upwa'rd trend in consumption. We expect some! leveling off
to occur, however, and it would be unrealistic not to be
prepared for this.
some

such

as

.

On

an overall basis, total industry petroleum sales this
will probably show a moderate increase over last
year in spite of the reduced outlet for fuel oil heating
products during* the past winter. The increase will prob¬
ably be small in comparison to the large increases expe¬

rienced in recent years, but more in line with long-term
trends. It may seem surprising that petroleum demands
will be higher than last year in view of the I current re¬
duced production and refining operations.
A word of

explanation may be helpful.
Last year more than 5% of the industry's production of
crude oil and finished products went into
building up

.

12%

under

famil¬

large

The big problem confronting the natural gas
industry,
today is that of building transmission capacity and se¬
curing natural gas reserves well in advance of the

growth of the load.

the

all-time peak

level reached in

range, to secure

for

petroleum

in

industry operations

seems

Some increase

inevitable, therefore,

if demand does not exceed the most
Mr. Abrams reflected this

year.

level

even

pessimistic estimates.

in his remarks when he said

that Jersey 'expected somewhat higher rates in produc¬
tion and refining operations

as

the year progresses.

to

and

large amounts of

our

own

Earnings, however,

pacity to supply petroleum products, it should be kept in

panding
dering

one.

the

industry.

We will have to keep at it to continue
service

characteristically

expected

of

ren¬

the

money

continues up-,

and refining

growing demand.

in

long-

capital must continue;

be invested in oil exploration, recovery,

investing

with*

up

the

However,

new

to keep capacity equal to the

support

We

cut

oil

back

.1947.

production
the

to

in

levels

Current

daily

capital investment prob-.

of

the

States

has

corresponding
production

average

1947-48

month

is

other

scarce

of

between?

1948.

accompanied by

was

great increase in demand for petroleum products
for many

been

compared with nearly'

5.7 million barrels in the last quarter of

The business boom of

)

•

United

the

4.8 million and 4.9 million barrels

as

%

likely to be substantially lower

are

than in previous years, and new

Crude

are

this opinion.

of

ably will be less than in 1948.

minerals.

Prices

rose

a,

well,

as

substan¬

tially and encouraged exploration and drilling for new 1

supplies in the United States and in foreign countries,
For the years
than

one

1944-1948 the oil industry invested not less

billion

ment facilities.

billion

dollars

The

in

crease

oil

crude

per

in

year

1947 investment

dollars. 'This

resulted

in

a

fields

already

and replace¬

well

,

States and.:

Some of the foreign

production

other

and

advanced.
.

two ;

over

substantial in-

potential in the United

in

are

new
was

very

important discoveries abroad.

very

are

well

•"

/

••.

This expansion of petroleum production in other coun-:

tries,

a

substantial amount of which has been made

pos¬

sible by United States capital and technical skills, prob¬

ably will supply most needs outside of the United States.

-

Imports of crude petroleum into the United States have

«

than doubled in the 12 months ended in January,

more

1949.

.•

The

.

* '

" •

••

rapid increase in supply of crude oil has been phe¬

nomenal.

The U. S. Tariff

Congress in 1946

on

war

Commission, reporting to the

changes in industry, observed

that
rels

in

•

"average daily production of nearly 4.9 million bar¬
July,

1948,

was

the

1945, marked
a

a

million

Production in December,

nearly 5.7 million barrels daily and only with¬
been

back

to

4.9-

considerably in advance

consumption, Jto allow for most economical with¬

drawal

and

utilization.

Facilities

in

tions have not been over-expanded;

must be
years

cut

barrels.

Crude oil must be discovered
of its

high which may not

new

long time."

past few months has this

company,

While the industry has available, at
present, ample ca¬

products.

term trend of demand for refined products
ward

in

expected in the'second half of this

supplies of this fuel.

Supply of crude oil temporarily has caught
demand

ing

below the demand

limit to the

no

GORDON R. KAY

be exceeded for

what estimate is used)

be

to

seems

President, Bay Petroleum Corporation

December of last year, and imports are down about 20%,
it seems probable that this reduced rate of
supply is tem¬
porary. This present supply rate is 6% to 10% (depend¬
on

There

growth in the demand in the cities already served, andin the requests from those cities within transmission

expert substantially all of the

industry's production to reach final consumers; with little,:
if any, being devoted to
increasing stocks."
j
.
'
ff
Moreover, while domestic petroleum' production today
is about

the

■

year

inventories.' This year we

This

competitive situation has, of course,
price of gas in the field. This increased
price influence has been augmented in Oklahoma and
Kansas by State Commissions attempting to fix a price

the United States have been 5% less

mind that the overall picture for the
industry is an ex¬

other functions

industry with which the marketer is

iar, has

We

changes in
the nation's economic picture are ap¬
parent .in our own business. Indus¬

there

Producing, refining, and transpor¬
tation developed an over-supply of
Harper

war.

trend of the American economy;

would be any doubt of
increased consumption of petroleum
products throughout 1949.

John

in the

and

a'long

"

too

encouraging, but reces¬
sion should not be of such severity

are

after

line builders to secure the
required to justify their projects

reserves

Commission.

years.

diately ahead of us is one of the final
stages in relieving the stresses and

an

gas

and procure the necessary authorization for a certificate
of convenience and necessity from the Federal Power

imme¬

opinions.
The outlook today, if judged from
the
experience of ten years ago,
our

be for

natural

slight, though, and present
activity is still at a high

believe

greatly increased the demand for gas at
of supply, and has resulted in a mad scramble

part of various pipe

floor under the field price to producers.

economic activity has
droppedmoderately from its peak level of a
few months ago. The reduction so far

consumers.

case.

projected pipe

new

has

source

the

on

■

(N. J.)

of

-

U. S. A., who handle, deliver and sell almost half of the
total volume of these products mer¬

on

sumption
the

.increased

peak. Ability to sup¬
ply consumer needs has forged ahead of demand. Sellers'
markets are a thing of the past. Timely and in most cases
anticipated adjustments in operating levels have been
made.

an

fuels, such is not the

;

The postwar boom has passed its

about 12,000 independent

that

dollars has

The volume requirements of these

hands

f

EUGENE HOLMAN

stated

billion

lines serving markets of almost unlimited potential con¬

fault lies in integration, we do feel that
be restraint—either voluntary, or legal, if

President, Standard Oil Company

been

cost levels. This factor alone
might be expected to retard
the natural growth, but due to the
comparative cheapness
of natural gas with other

do not

we

has

gas transmission pipe lines.
This, together with field
development costs, presents a. rather sizable financial
outlay. Most of this construction will be made at high

trend

present

excessive economic concentration in

undreamed of.

are

correction

be

necessary—in the acquisition of control of markets.

restricted section of the marketing end

a

also

large petroleum corporations.

that

there

outset, it should be stressed that this point of

.the oil industry.

must

gives promise
This will

expenditure program of
already been planned by
pipe line companies for 1949 and the immediately ensu¬
ing years; representing some 23,500 miles of new natural

.

President, Harper Oil Co., Inc.

view is from

It

bring it about there must be a solution of the crude
supply picture which would give confidence to all ele¬
ments of the industry and undue advantage to none.
There

gas business

the next few years.

over

largely influenced by construction of new transpor-pipe lines to new territories, and the expansion
existing lines.
*

almost one

To

JOHN HARPER

*

as

To sum up in a general way, the outlook for; the inde¬
pendent jobber and distributor today is for a free, active,
competitive petroleum market. We hope it is not wishful
thinking.
j

it

to new levels that

be

of

such

industry, the natural

tation

,

of other industries too,

an

of increased growth

independent, otherwise the absence of competition will
breed government regulation.

cannot be overlooked . that there
have been many other periods when the outlook in this
respect was much darker than it is today. At the time
of Spindletop, East Texas and other sensational dis¬
coveries, there were few who thought the greater pro¬
duction could be absorbed.
On every such occasion,
a
dynamic domestic economy has taken up this slack
and caused the industry to strain its productive facili¬
ties to the utmost in order to meet new peaks of demand.
It is my conviction that history will repeat itself, and
that as America goes forward to greater heights of
industrial achievement and higher living standards, the
oil industry will be called upon to raise its production

output,

is true

As

.

druggists, but on the other hand,; the trend
has been arbitrarily arrested in the cases of meat pack¬
ers, brewers and movie producers. Some thought should
be given to creating conditions more healthy for the

alarm.

domestic

situation

This

nature to cause any great

not of a

are

President, Cities Service Gas Company

grocers and

comparable period before, during or immediately after
the

S. B. IRELAN

service station fees and lease¬

holds, particularly in areas where zoning is a factor, has
given the large companies such a back-log of frozen
business that they are becoming more and more inde¬
pendent of competitive conditions and more and more

it should not be overlooked that 1948 repre¬
postwar inflationary spiral. Pro¬

sented the peak of the

duction and

se¬

are

sure

expanding
of

a

our

our

We,

drilling

area

as an

of

opera¬

integrated

program,

as

we

dependable supply of crude for some

ahead.

The current unwillingness of consumers to spend their

incomes for many things, including petroleum products,
has

resulted

in

price

declines for

(Continued

on page

many

12)

commodities.
___j

Volume

Number 48l4

169

THE

Price War in Alcohol
Mr. Loeser, reporting price advances

higher inventory values, and

says
'

•

renewal of price

is unLkely.

war

i

and lists

as steps in this direction:.
(1) hampering: of. private enterprise until it fails to function satisvfaciorily; (2) publicizing such failure; and? (3) proclaiming need for government operation.

prices

good to
me

level that will

the

enable

supply

to

them

the

of

in

operate
black

for

i

s

likely
peat

n

-

to

|

re-

to

up

than

because

C.

John

securing

on

70

that

time

the

Loeseri

bilizing

in-

w

time since

first

the

for

the

But what started as a down-:

price readjustment- soon be¬
a
price war. By February

ward
came

had fallen to 21 cents,
market dragged-along
21-cent level during the

the price

the

at

^

*

the price war, but they
in agreement that they had

starting
were

too far and prices ought to
raised. All were willing to go

gone
be

with

along

price rise

a

-of

one

as

long

so

lead.

,

"

Within

the

.

the

fortnight,

past

industry's largest producer, Pub¬
licker Industries, Inc., decided the
time had come to act and it an¬
nounced
would

it

July

Al¬

1.

been reported in
that prices would be

had

trade

the

that

effeet

take

though

increases

price

cents at a
apparently had

raised gradually a few

Publicker

time,

that half measures didn't

decided
the

fit

situation.,

in¬

price

Its

from 8J/2 to 11
according to the
formula type. Pure ethyl alcohol,
which
is
bought
chiefly!,,, for
creases

ranged

cents

gallon,

a

pharmaceutical
21

32

to

The 2-B

cents.

from

went

uses,

formula

for example, which is the
seller
and,
goes - into
plastics and photographic films
among
other items,, was moved
type,

biggest

,

from 22 to 31 cents. The second
biggest seller, proprietary alcohol
fpr toilet goods* hair tonics and
the like, was raised from 25 to
33 y2 cents. These advances-were
needed;
Publicker ' stated, • "to
up

the

bring

price

commensurate

to a level, more
with .* the cost of

production."
,

Its

list .brought

price

new

to the same level

its

quotations

as

Publicker's. Then Shell Chem¬

icals

Corp.,

up

Shell Oil Co.

a

inventories
to

'

time

to

and

come

not

likely to
very quickly.

war

.for

touch

off

and

placate

of

control

like

it

does

are

the

another

because

the

New

,

1

The

-

makers

lacquers,

giving

them: fair
prices

low




,

1

are

Social

or

as

happy

trations

Welfare

dens

Jersey Bond M

Courtlandt

B.

Parker

one

the

as

this problem of the
surrendering of th©>
functions of private enterprise and
of

-

of individuals to the Federal Gov¬

ernment; the
is

adhered

loan field

consumer

to

throughout

as

the

powerful

and

all-pervasi.ve

gov,,

'

,

and. free individuals surrender the

"

*

ernment: That problem is- this: To

.

\r>

^

'

i

Danger of Controls Spreading
The

disturbing- truth is

tjhat the

of government abfcption
otherjbur-/ functions- they perform to their of the functions of private enter¬
off our shoulders, too, like government, the* reasons)- for perprise and of individuals is irre¬
functions ' of
determining milting, the existence.of. private sistibly creeping ahead in many

,

of

upon,

safe

of

maturities

where

;

we

Other

year.

C.

Barney

officers

Wallace

&

Smith

process

Smith,

not

The rale

the

Co.,

New York City,
Harry D. Miller
Nugent & Igoe, East' Orange,
N. J., Secretary; and J. Wm. Roos
of MacBride, Miller &
Co., New¬
ark, N. J., Treasurer. New Gover¬

Vice-President;

of

the

Club

Weissenborn

of

are

Stanton

Parker -&

-

Bond

Club, of: New

been

classical

bedding
practice
ment

Jersey

held its outing at the Rock Spring

in
in

example

its

takes

not

of

Federal

in

the

dollars in taxes from

Pictures

taken

at

the

outing appear elsewhere in to¬
day's issue of the "Chronicle."
4
,—————■*

ALBION,
Luttenton

N.

is

Y.—.Homer. W.

billions

again engaging in

a

Main Street. rt*-'

' \

of

the pockets

of the American people for squan¬
dering on duplicating the work of
private enterprise, on doing no
work

at all, and on simply mak¬
ing motions which have 110 per¬
ceptible effect- upon the practical
course

r

of

events

which

they
-

■■■■•

are
•

In the second place, the history

of

Regulation-

clearly

W

demonstrates

alarmingly how far
the Planners will go in their noquarter struggle to create in good
time the Omnipotent: State.: The
point here is that Regulation W
was

securities business from offices at

a

Govern¬

aggregate,

millions but

Country Club, West Orange, N. J.
supposed to influence.
Harry D. Miller was Field Day
Chairman.

feather

form

purest

the

which,

M.

Weis-

senborn, Inc., Newark; Richard F.
Saffin of Bolarid, Saffin
& Co.,
New
York
City; and Norton P.
Rogers, Jr., of Rogers, Gordon &
Co. Inc., New York City.
The

and

a

and

peewee

practical

matter:

stabilizing

as

far

results

proved conclusively by
historical1 record throughout

the entire

sufficiently isolated and
emphasized.
In, the first place,
Regulation W furnishes a perfect

of

nors

This matter of function

sectors

of the economy, and that*
the private enterprisers and other

individuals

in

about

care

sector

one

what

is

do

other sectors than their

of

career

men

and their

institutions is this: When any in¬
stitution

(whether it is the in¬
private enterprise, or

stitution
a

of

bank,

finance
kind of in¬

consumer

a

or

company, or any other

begins

stitution)

fail

to

form its functions, or

to

some

per¬

of its

in serving the public,
or when
it begins to fail to per¬
form, its functions satisfactorily ill
functions,

example,

far

as

as

own.

;

;

the readers of this article are con¬

cerned,

specific pin-point con-?
Regulation W does not:

a

like

trol

directly restrict OUR personal lib-,
erty a whit; our incomes are high'

enough

that

so

even

think

money

on

loan

never

we

about

buying goods

or

need ta.

borrowing

instalment'

consumer

a

on

the in¬

stalment plan. So what oi it if a
few million poor Joes, who are

then that institution begins to de¬

compelled by the size of their in¬
comes to rely on consumer credit
to meet family emergencies and

cline and to pass out of

to

serving the needs of the

Note

that

such

would shrivel and

.an.

people;

existence,
institution

ultimately dis¬

becornd of minor im¬
portance in the economy, even if
appear,

or

the. Planners

were,

not

to

eager

hamper the 'functioning of the
institution and to'take from it
more

and

more

little bit at

stitutions

or

of its

functions,

a

time. ' But when in¬

a

individuals

credit

(like the

who
actually want, the government .to
consumer

take

over

from

granters

them

secure

ences

few

a

of

the

conveni¬

which make life worth liv¬

ing, do have THEIR personal lib-,
erty restricted and their decisions
made

them

for

bureau?

We

by a government

are

so

immersed

are

Commonwealth

■

-Oil and Natural Gas

own

these

controls

other
our

merely
restrict
freedom and not
are so occupied with

people's

own;

we

(Continued

their func-

on page

Southern

41)

Production

Southern

Gas.

Danctger Oil. & Refining

Union

Gas

Southwest Gas Producing

Oill

Southwest Natural Gas

Mountain Fuel Supply

Tennessee Gas & Trans.
Texas Eastern Trans.

Republic Natural Gas

Texas

Gas Transmission

Gas

Securities
Bought

Sold

—

i

,

—

.

Quoted
*

-

SCHERCK, RICHTER COMPANY

cos¬

EDWARD W. ACKLEY & CO.
30 STATE STREET

►

BOSTON 9, MASS.

Landreth Building
Bell

Teletype

"

*

Telephone Richmond 2-1520

-SL 456

St.

in

•

private individual selfconcern that we are quite undis- r
turbed over the proliferation of-,
government controls so long as
our

as

concerned, and this was admitted
by the Federal Reserve authori-

Specializing In

For

the writer and

Petroleum Heat & Power

v:

noL

happening in*

'

Regulation W has been subject¬
ed to many criticisms, but I be¬
lieve that the basic problems have

elected

of

exist.

a lot of things* performed is really the core of the
used to have to exercise, whole problem, and it merits our
extended discussion.

Criticisms of Regulation W

elected President of the Bond
Club of New Jersey for the ensu¬

ing

to

individual initiative and

own

personal responsibility."

Pressprich & Co., New York City,

were

andnndi^idualism:cease

enterprise

contracts, and just
our

W.

R.

down payments and of de-

was

-

too

a

State

continuous

Western Natural

warning

a

State,

headed is

will be as free
day is long.!
However, numerous other fields
could be treated as perfect illus¬

save
..

we

every

and

the Regulation W affairs suggests the most

And

us.

dyes,

were

individuals, and that,
clincher, the Omnipotent

toward which

the

_

V.VV.v Enterprise

..

plastics,

of

In the third place,

;<

photographic film,

current

.

_

Fed-:

is of no real importance to.
private enterprise and the liberty,

Mississippi River Fuel

afcohcl, had all been conditioned
for the price rise. Producers- had
that

n

Delhi

metics, proprietary goods and sol¬
vents and other users of industrial

been

r

the

of

field

states

going to

are

we

Corp.,,

,

of

totalitarian

or

all

this

exag¬

managerial and
decisions in such a small

consumer

government, the extent that private enterprise

collecting for

our

ciding

Elects G. B« Parker

and
United Distillers of America, Inc.,
would all announce similar price
.

of

after

control

person:

all
is

,

prices. Indications were that
leading producers, such as
Carbide, & Chemicals Corp., Comr

increases.

that

eral

that

functions

government takes

other

.

characteristic

are

Surrender of Function of Private

instability,

granters who favor such controls
as
Regulation W chime in,; "We

the

new

Solvents

controls

suavely

gerated,

will,not be apy specific, pin-point

it

the Planners

,

mercial

as

object

inflation, namely^ their own* serjous problem which private en\ one
example simply to secure con-fantastic^spending programs."; I - terprise and: free men confront
sistency in treatment and to avoid;
And' the few consumer credit
vis-a-vis their increasingly all- undue
length.
A
'

sound

47-A North

sub¬

,

Omnipotent State.
broad-minded

over

of

some

that -they

long

from the Planners'" unwillingness to control the real sources

by Publicker seems to
that"
they ' have
had

enough of the price

"As

away

announced

indicate

Congressman,

and diverts attention and criticism

prices

new

d

r. a n

something, to

of

willingness

Phelps

growing de- ' collectivist
mands
for
power
and! control?;!from which
And, moreover, it probably makes „you." .! •
the people
think we are doing

$4,750,000 because of the fall in
producers to match the

Wm.

C.

Dr.

the

concern

are simply for the purpose
establishing a favorable en¬
vironment for private enterprise
and individual freedom.
There

in their ceaseless and

molasses

market price of both items.
All
in all, the

will

the

to^ set up broad, general controls

'pri¬

matten

of

extent

But

that

road

_

the

that. produces synthetic
alcohol from petroleum gases, an¬
nounced it too was meeting the
sidiary

of

the

the

is futile and doesn't do any harm, controls which hit individuals and
do-good
why not give in on this minor, restrict their liberty, for such,
where

Chemicals, Inc.
For the fiscal year ended!last Dec.
31, that company had to, write
its

of

of

prise

Industrial

alcohol

sition to the

which

his

il¬

was

experience

Homer W. Luttenton,

the first to follow Publicker's

lead.

companies
the

I

,.

U. S. Industrial Chemicals, Inc.,

was

in

ing, then they facilitate the tran¬

in

Omnipotent State
w.ith the honeyed promise: "Have
no fear.
Now, we are just going

say

vate enter¬

the

took

others

the

S.

and

the producers
had plenty of time to realize that
it's easier to cut prices than it is
to
raise
them.
None
of
them
would assume responsibility
for

months,

past

U.

down

the

As

.-

individual

lustrated

been, understandable.

stretch

to

minded

then prevailing for ethyl j the increased prices will, autoout of line and was, matically raise inventory values
bound to decline with the drop in or, at any rate, will help to reduce
the need for further write-downs
the cost of molasses as the supply
of
inventories out of earnings.
ef tha; alcohol material was again
How important that can become
becoming, available in large quan¬
war.

leads

the broad-

was

tities for

!

so on) run to an eagetf
determined
Administration

and

to
keep and ask it to relieve them of part
the* books' of the functions they are perform¬

on

Planners

tractive

collecting,, determining

ities, and

Planners

legislation

the

1

the

h at?"

the

of

sound down payments and matur¬

Washington
j had enticed us into that first at-

economy.
*"B u t
so

the price

alcohol,

For

jective of sta¬

Second,

bearing

ob¬

tions

an

would have

its

professed

ventory values, they, will be rewas generally
fleeted also in the balance sheets.
recognized rat*..Since inventories are*usually carcents a: gallon,1 ried at lower of: cost or market,

-

,

of

control

toward

gree,

ting priceSi It

t

battle

or

'

will be evident

their

of

im¬

an

If it had

been a big matter
important and* de¬
termining-factor in economic/sta¬
bility, the all-out and relentless

imaginary de¬

in the income statement.

it started cut-

'

ties.

concerning

more

perceptible

the

a two-way effect! oft produeers' year-end financial reports,

when

any

com¬

under

<S>-

•

never,

contribute,

in

The higher price schedules will

•

and

can

old

'

it'
No-',First, their effect

made last

step
in

get

ed;

have

mistake

vember

to

has contribut-

not likely to

are

customers

mitments

at: the

ot ' wire.

the

soon

customers

loan field is as good an
example as any to illustrate the process whereby
gradually establishes the! Omnipotent State by slowly undermining private
To begin with, the case of: Regulation W is instructive. This Regulation never

enterprise.

requirements

normal

prices, but they

indus-

The

•

try

the

their

allow

change.

a

last.

new

-

consumer

government

Until July. 1, when
prices become effective,
companies will continue to

to a

up

_;The

——

their

moved-

!

economy

<

Beginning July 1, the industrial alcohol producers-will be back
price schedules that will permit them to operate at a profit .once
more.
After selling alcohol for the first six months of this year at
prices that barely covered costs, if they did. that, industry; members
now

of Southern California

Asserting attempt to control7 consumer ban fieMy es indicated by Regulation W, furnishes
example of
feather bedding that is slowly
undermining private enterprise, Prof. Phelps contends it can lead to an
Omnipotent Slate. Sees danger of governmental controls extending to other sectors of the

move

^

11

'

By CLYDE WILLIAM PIIELPS

on

nave

(2707)

Professor of Economics, University

by Lading industrial akoliol

J

CHRONICLE

Omnipotent State and Private Lending

;

looks for increased profits in industry. Foresees in

pro due srs,

FINANCIAL

*■

.

Consulting Economist

.

&

The

Industry Ends

By JOHN C. LOESER

;

COMMERCIAL

Louis 2,

Garfield 0225

Mo.

L. D. 123

FINANCIAL

&

COMMERCIAL

THE

(2708)

12

CHRONICLE

Thursday, June 23,

•

1949

Outlook for Oil and Natural Gas Industries

products as a fuel for all forms of transportation, from
airplanes and automobiles to railroad locomotives and
steamships. The increasing mechanization of agriculture
and industry, as weil as the increase of population in the
United States of well over one million persons per year

addition to oil supplies.
It is my opinion that the current slump in demand
for petroleum products has reached bottom, and that the
normal increase in demand will begin to be felt, at prices
that will remain
about" as at present—substantially
lower than in the last half of 1948 when demand was
greatest. In support of that opinion, we have continued
to spend our own money in development of new sources
of petroleum and in improvement and expansion of re¬
requires a large annual

fining facilities.
no slump in the demand for natural
and development of natural gas have
dependable source of energy. The transmission of this gas to the large centers of population and
industry, for distribution through established gas sys¬
tems, has required the expenditure of billions of dollars.
New projects for the transmission and sale of natural
gas are under construction or planned for several years
ahead. The market for this fuel seems limited only by
the cost of the capital equipment necessary to deliver it
•in the form, at the place, and at the time required by
consumers.
The trend to natural gas as an urban fuel
should continue as it has for some years past. Natural
gas also is a valuable raw material from which gasoline
and other products are recovered. It can also be substi¬
tuted for petroleum as a source of many products, thus
adding to the life of petroleum reserves in the United

There has been

Discovery

gas.

made this

,

"

Earnings on capital invested in petroleum and natural
properties are likely to be much less than in 1948 and
1947, now that the urgency for additional supplies of
liquid fuel has passed. Normally, earnings on capital
irivested in oil companies have been less than for indus¬
try generally. This reduction in the rate of earnings will
make new investment in the oil business less attractive
gas

will be available for additional facilities.

and less money

WILLIAM C. KINSOLVING

,.President, Mid-Valley Pipeline Company
ift.

).

'

,

.Pipeline transportation facilities are expanding both
it seems reasonable to/assumq that

here and abroad and

this trend will continue for
As long as

places,
the

oil fields

pipelines will

time.

some

.

discovered in out-of-th^-way

are

needed

be

economic

most

method

as

feasible

and

Take,

Field

in 1947 and the Redin

the

area

same

last

year.

Dr.

Joseph E. Pogue, prominent
petroleum economist, recently point¬
ed out that the local market for the
from

these

represents

fields

about 60,000 barrels a day.

Produc¬

tion has already reached 40,000 bar¬

rels

a

per

will

lines

follow

may

industry

a

pattern

developed

in

railroad

the

period of years.
Possibilities for the use of pipelines for the movement
of finished products to the market seem limitless. The
product pipeline was not used by the oil industry until
many years after the introduction of the
crude line.
During the recent period of steel shortage emphasis was
placed upon the building of crude lines.
But today,
with

over a

the

shov/ing

situation

steel

easing,

many

companies *are:

interest in product lines.

new

day and that is only the begin¬

President, Pacific Lighting Corporation

population centers—Los Angeles
as the major portion of the
more heavily populated areas in the rest of the state, are
today supplied with natural gas. Indeed, other fuels be¬
ing costly or unavailable for other
reasons, natural gas is the principal
and San Francisco—as well

fuel

used

tories.

in

The

both

homes

and

fac¬

two

major distributing
systems in the state are (1) Pacific
Lighting Corporation in Southern
California, and (2) the Pacific Gas
&
Electric
Company in Northern
California.
In recent years, the big
problem of both these companies is
the one of supply.

%

local

exceed

more

this

production

demand

and

distant markets.

At the present time,

known

reserves

million

barrels

of

according to Dr. Pogue, indicated

Western

Canada

close

are

to

600

Before the war,

distributed

all the natural gas
from

came

California

sources,
which were
meet normal
domestic,

adequate to
commercial
and- industrial requirements.
How¬
ever, the tremendous growth of Los
Robert
W.
Miller
Angeles and San Francisco and, in
fact, the entire state, in both population and industries, increased the demands for natural
gas many fold. Despite the fact that the California re¬
serves were then the largest they had ever been, the rate
of discovery had not been sufficient to keep up with
the greatly increasing demands.
Thus it was necessary
to go outside of the state for gas, and negotiations were
to

that

a

ness

in

California.

The

elements

in

the

problem

are

these:

extension to the Great Lakes.

tics of service to these two classes of customers

the

ultimate

area's

billion

potential

barrels.

no

^! In the Middle East pipelines

at all times and to whose

service the systems are dedi¬

cated; and (2) the "interruptible" customer who is re¬
quired to have an alternate fuel as a condition of service
and who is subject to curtailment when the available
supply is needed for the firm customer. The characteris¬

similar.

are

The firm customer demands and receives

dis¬
con¬

are being constructed
to move crude oil from desert oil fields to water trans¬

tinuous service, and his requirements fluctuate sharply
Maximum

portation outlets in the Persian Gulf and the Mediter¬

from hour to hour and from

ranean Sea.

These "big inch"' construction jobs are so
require five years for completion.
Similarly, numerous domestic projects held up during
the war period and later by a postwar shortage of steel

winter demands of firm service will be as much

vast they will

seven

are now
being pressed forward as greater supplies of
steel become available.
Every indication is that pipeline

mandSj the seasonal requirements remain relatively uni¬
form. The inconvenience of using substitute fuels and

times that of the

demands will show
there is

an

season

summer

to

season.

as

six

or

demands and the hourly

almost equal variation.

Although

week-end falling off in the industrial de-

some

the need to maintain standby

expansion will continue for some time on momentum
supplied by the release of long pent-up demand for

the lower rates charged in the

this form of transportation..

is

Recently published surveys indicate that pipeline con¬
struction programs in the United States now under way

volumes has

materially helped this situation, but Texas
brings another equating problem due to the fact
that the companies are required to maintain a 91% load
gas

factor so as to make

facilities are recognized in
contracts under which gas

supplied to such industrial customers.

Of

well

or

oil

or

"on

the

books"

for

the

future

total

more

than

i

Lit appears that only a tightening of the money market
or a maior depression would curtail this
building pro¬

gram.

Pipelines

are

expensive to build.




For example,

equating peak loads is an under¬
project developed by Pacific Lighting
at La Goleta, just west of Santa Barbara.

storage

Corporation

Here the company secured control of a sealed structure
already containing a very large reservoir of natural gas
in
a
"dry" state.
By installing suitable compressor
equipment and drilling, additional wells, the company
has followed

a

program of

injecting residue

gas

into the

structure during the summer months, and then reversing
the flow during peak periods in the winter season. A

large diameter, high pressure transmission line from the
field to the Los Angeles metropolitan area was installed

The supply problem is largely one of

oil, and (2) dry gas from gas wells where little or nc
is present. The rate of production of oil well gas,
naturally, is related to the production or demand inr
crude oil rather than to the gas market, and therefore it
is not readily susceptible to change to meet the varying
demands of natural gas users. The rate of production of
dry gas, however, can be controlled to fit the gas

Currently,
sources

65%

comes

market.

of the gas available from California
oil wells and the remaining 35%

from

engineering. But,
facility problem is approached, one moves into

when the

the

realm

of

finance

and

economics.

The

distribution

systems of the supplying companies must be designed to
meet the maximum peak requirements of firm customers.
Such maximum peak requirements may occur only once
during a period of several years, which means that the
companies must operate under an unfavorable load fac¬
the firm customer is concerned.

as

the

ties.

Up to this

growth of the state and consequent in¬

year,

in business has enabled the companies to maintain

crease

rate levels despite the general rise in prices in

prewar

practically
materials

every other commodity. However, the cost of
and wage boosts have been steadily cutting

into the margin of profits for all utilities, with the result
that every gas company in the state has had recently to

apply
the

the Public

to

form

of

is

creases

a

now

Utilities

lem, and if

Commission

increase.

rate

for

relief

in

The

question of rate in¬
pending with the Commission.

Broadly speaking. Texas
consumer

of* customers

gas

rates

can

has met the supply prob¬
be adjusted to the satis¬

and

companies alike, the industry
along as they have heretofore in
supplying the growing demands on their systems.
should be able to

move

WILEY L. MOORE

>' nv

Chairman of the Board, Wofford Oil Company
It

to

seems

wholly

due

controlled

me

to

that

but

economy,

the part of

a

headaches

our

hangover from

a

the

induced

are

of

today are not
of wartime

spree

by

an

few calculating hangers-on to

effort on
indulge in

"bit of the hair of the dog that bit
them." Although admitting a period

a

postwar

off

was

sent

party

was

of

the

tapering

or

they should have
home long ago for the
over, even before the end

80th

Our's

is

with

wars

adjustment

necessary,

been

Congress.
a

nation

able

that

assists

won •

from

a

two
re¬

sourceful free industry; a prosperous
nation that boasts, and rightfully so,

the

highest standards of freedom and
living.
Why should such a
nation
tolerate" among
its public
servants those who would destroy,
by punitive legislation and confis¬
catory taxes, our individual and in¬
dustry standards of freedom under
which
we
have" emerged
as
the
good

Wiley

L.

Moore

Punitive legislation, such
Bill, the Divorcement Bill, the Natural

strongest nation in the world.
the Tidelands

as

Gas Bill and confiscatory taxes for socialistic handouts.

The

latter a bamboozlement, for one receives without
paying for what they receive, plus the additional cost
for collecting and dispensing the gilded gratuity.
If industry is not hamstrung by punitive class legis¬
lation (and I still believe that good sense prevails among
the majority of our lawmakers) I see no reason why

business, judged by peacetime standards, should not con¬
tinue good.
In some lines totals may fall or have fallen
peaks, but eventually and normally those peaks
topped.
From first quarter figures some new
peaks for this year are apparent.

will

of

and

45,000 miles.

value in

enormous

ground

below

California natural gas comes from two sources: (1) oil
or residue gas which is produced as a by-produ^

j

recently contracted total approximately 7,300 miles,
those in foreign countries total more than
3,200
miles.
If natural gas pipelines are
included, pipeline
construction projects recently
completed, now under way

operation of the line economically

sound.

supply problem which is inherent in the gas busi¬

alternate fuel to whom it is essential to maintain service

requires

ten

from oil wells.
It will be seen that the problem
equating the load is more acute in Southern California
than it is in the north. Presence of Texas gas in
large

of

day into the state.

The gas from

great stretch of the imagination to
picture new pipelines reaching eastward to the Great
Lakes, westward to Vancouver, and even southward to
Wyoming to tie in with existing American lines. Al¬
ready plans have been announced by Imperial Oil, Ltd.,
for a large pipeline from Edmonton to Regina with later

;;: It

and

30%

faction

There are two classes of customers supplied by the gas
companies: (1) so-called "firm" customers who have no

five to

from oil
from dry gas fields, while Northern
70% of its gas from dry gas fields and

A growing
gas for industrial purposes has en¬
companies to partially offset this. Both the
Pacific Lighting system and the Pacific Gas & Electric
Company, as has been previously indicated, offer inter¬
ruptible natural gas service at attractive rates to indus¬
tries, subject to shut-off when peak loads occur. The
industrial load, thus created, has enabled the companies
to improve the load factor for their pipelines and facili¬

may

be from

regionally,

gas

of

abled

cult

far

long

its

demand for natural

reach

will

Before

secures

tor insofar

Jong-distance transportation facilities will be needed to

ning.

down

of

part of the original project, and an additional line is
planned for this year. The additional line together with
present facilities will give the project a delivery capac¬
ity of around 300 million cubic feet a day.

these two pipelines, together with sub¬
stantial California reserves, will give the California com¬
panies a comfortable margin of supply for all normal
requirements. Nevertheless, there still remains a diffi¬

Kinsolving

95%

wells and only 5%
California

California's two main

additional 400 million cubic feet
C.

Wm.

Broken

as

ROBERT W. MILLER

system was completed in 1947,
connecting Southern California with the prolific natural
gas reserves in southeastern New Mexico and West Texas
and the Texas Panhandle. At present, the 1200-mile line
built jointly by El Paso Natural Gas and the Pacific
Lighting system is bringing natural gas into the state
at a daily rate of 305 million cubic feet. Preparations are
being made this summer to step-up that delivery rate to
405 million cubic feet. In the meantime, the Pacific Gas
& Electric Company, also in collaboration with the El
Paso Company, has begun construction of a second pipe¬
line which will ultimately be capable of transporting an

example, the discovery

for

ince, Canada,

oil

com¬

barrel mile. As a result, the next few years
probably see the construction of a new series of
large diameter pipelines which will have connections
with innumerable "feeder" lines.
In this way the pipe¬

cost

The first unit in

of the Lecluc Field in Alberta Prov¬

Water

smaller diameter lines

abandonment of

bring gas to the California border.

centers.
;

the

peting in the same area. Obviously the line making the
longest hauls and having the largest throughput will
be the more efficient and will have the lowest operating

entered into with the El Paso Natural gas Company

of

moving crude oil overstand to refineries or to transportation
•

force

dry gas fields.
California receives

Southern

the

by

from

comes

1,000-mile

built

a

States.

A

crude line from Texas to Ohio to be
Mid-Valley Pipeline Company, recently
organized by Sun Oil Company and The Standard Oil
Company (Ohio), will cost approximately $56 million. *
Currently the trend is toward longer and larger diam¬
eter crude oil pipelines, and as these are built they
the

(Continued from page 10)
adjustment of petroleum prices was required for
the good of the industry. However, the trend of demand
for petroleum as a source of energy, and as a raw ma¬
terial for other industries, continues upward. The United
States and most other countries depend upon petroleum
Some

be

In 1947-48 the oil industry lierally pulled itself up by
its
or

own

bootstraps

to meet

petroleum products.

naking quick shifts in
^f transportation, spot
~

:tual

an

unprecedented

demand

By increasing refinery runs and
sources of supply and methods
shortages were alleviated and

distress

avoided.
A replacement and expansion
financed by profits and surplus finds the in¬
dustry in 1949 with the supply situation well in hand.
r~ogram

(Continued

on

page

14)

Volume

169

COMMERCIAL

THE

Number 4814

&

FINANCIAL

CHRONICLE

(2709)

13

What's Needed for Cnnency Stabilization?

Monetary Stability

'"r

By THOMAS H. McKITTRICK*

c

Vice-President, The Chase National Bank of the City of New York
Mr.

By SIR JEREMY RAISMAN, G.C.I.E., K.C.S.I.*

High ranking British bank official reports
is

feasible until Sterling Area

not

eliminated and Western

in overcoming

progress

dislocations, but contends restoration of

war

currency

deficit

Sir Jeremy Raisman has
given us a most illuminating review of the endeavors made
by Great Britain to overcome the ravages of war which found expression in the field of
finance.
Unfortunately for us all setbacks in the process of recovery have occurred, as

convertibility

current account is

on

ceases to convert into dollars their
Sterling Area nations. Maintains Sterling
situation on capital account has improved greatly in last year, and
concludes creditor nations, particularly U. S., should establish
more
liberal commercial policies in order to, restore non-discrim¬
inatory, multilateral trading.

Europe

during

export surpluses going to

,

of orderly

confer¬

1944

The

arrangements.

exchange

at Bretton Woods resulted in

ence

the formation of two

new

institu¬

tions of great significance

for the
Interna¬

postwar economy; the
tional
Monetary Fund
International

for

Bank

the

and

Recon¬

struction.
It is true that

pound

selves
envisaged
a
transition
period of possibly five years before
some
features of the new code,
such as insistence on the removal

period

war

with

the

immediate

the

is

being
of the

help

post¬

overcome,

Marshall

Plan and other

far-sighted meas¬
cooperation,
is
approaching when
be expected to play a

ures

of international

the

time

they

may

much

prominent role.

more

For¬

tunately, the basic principles on
which they are to operate were
soundly conceived. By establishing these new international
bodies, and by pledging them¬
selves to observe the rules of
duct

formulated

Woods

in

the

con¬

Bretton

unheaval

than

was

between

West.

and

East

wreak havoc. Prices rose at wide¬

ly varying paces in the different

countries, rendering the old ex-t
change relationships between cur¬
rencies largely a

relic of the past.

spite
of this unfavorable
background, the American and

has been called both

gold" and

philosophy
"dethrone¬

a

modernized

a

us

—

full

and

ish

of

how

be

can

to how

as

strengthened
which

economies

have

become financially unwell can be

con¬

vertibility
spite

accumulated

currencies

insistance

on

has

ence

was

our

however, substantial experi¬

war,

not for¬

get that it

have

cured. When such

in

it

place,

Brit¬

controls

objections
lay

T. H. McKittrick

which

must be overcome by Great

Brit¬

ain before payments with the dol¬
lar area can be
balanced, that is,

has taken

a cure

evident

becomes

restrictions

and

that

are

no

needed.
By summarizing
certain points of this experience

hard and slow task to get wages

a

down; where the political power
of organized labor is great enough,
it may be impossible, though it
has: been accomplished in certain
instances
even
under
Socialist
governments—in Sweden, for in¬
stance, in the great strike of the
building trades in the early '30s.
„

Take

longer
I

would

like

somewhat the
emy

to
area

extend

to

try

which Sir Jer¬

has so ably covered.

Sir

Jeremy referred to the in¬

flation left by the war in all the
countries involved Tp.correct this
condition

a

contraction

well

of

pur¬

increasec
supplies of goods and services for
peaceful purposes are necessary;
chasing power

as

as

Reduction of demand and expan¬

the

other

alternative. „It

be far easier to devalue a
national currency. That involves
at most the passage of a law pr
possibly only an official declara¬
may

tion in the form of a decree or a

ruling. On the surface it looks
simple but it involves grave risks
and uncertainties. The most evi¬
dent defect of this device is that

nothing. If prices
concerned continue
devaluation affords

it really corrects

in the country
to

advance,

a

Between
inevitably mean only temporary relief.
production ano the two wars, the French franc
fell by successive steps to - oneemployment are to be kept up.
seventh of its 1914 dollar value,
goods and services, as we are now
one-twelfth cf its 1914 gold value.
finding out, must be marketed
Surely no statesman of any na¬
more cheaply, and this is particlarly so when they are sold inter¬ tionality would, ever dare an¬
nounce
he feared that the gtirnationally.- But a
reduction, in
prices to foreign buyers can be rency of his country would,, be
private enterprise will remain in brought about in two ways—either worth only cne-seventh of its.
shackles over much of the world by lowering domestic prices or by current value in 25 years.. If he
and we shall not enjoy its benefits devaluing the national monetary did, who would buy. life insur¬
unit, in terms of gold and of cur¬ ance? -Who would buy the public
-^Statement by Mr. McKittrick rencies exchangeable for gold. Let debt in tfriy of its many forms?
at the Second Plenary Session of us consider these two alternatives
I am trying to point out that de¬
the Quebec Congress of the Inter¬ for a moment. ' A reduction : ir
valuation yshakes
public confinational Chamber of Commerce, I selling prices cannot go far unless
I costs are brought down, and as
(Continued on page 43)
Quebec, Canada, June 14, 1949.
sion

lower

of

supply

prices.

If

k

Canadian loans to Britain seemed
make

to

Woods

Americans

the

over

Since the close of the first world

be

to

pen

the

In

Standard"

of

been

has

war

Meanwhile, the inflationary forces
released by the war continued to

"Modernized Version of Gold

ment

the

formidable

more

trade

century.

Bretton

—

who hap-

before the pound sterling will rest
virtual cessation of again, stable and fully convertible,
production for export, the war upon a firm foundation. It is ob¬
damage to the economies of Eu¬ vious that the restoration of the
rope with the resulting need for
pound to its position of being
large abnormal imports of capital everywhere acceptable and freely
goods if reconstruction was not to convertible is a
prerequisite to the
drag on for decades or be frus¬ restoration of worldwide free and
trated entirely—all these things
prosperous trading and to the sup¬
inevitably left Europewith
a
pression of existing controls and
huge deficit which was further restrictions not
only in the ster¬
aggravated by the poor 1947 har¬
ling countries but elsewhere as
vest and the political barrier .to
well. Until that point is reached

seeking to lay the
foundations of a new regime of
exchange stability on a basis ap¬
propriate to the conditions of the

The

of

anticipated. The loss of overseas
investments
and
exchange ; re¬

were

twentieth

us

us

control over current back of that
transactions, could become prac¬ overconfident enterprise. Sir Jer¬
tical politics. In the event, the
emy has gone further to elucidate
monetary dislocation due to the the principal
difficulties which

agreements, the signatory

nations

of

but
those

of exchange

serves,

of

of

orderly exchanges, and indeed the
agreements them¬

location

their

.was

let

Bretton Woods

even

various

regime

new

best part of a the largest factor in costs, gen¬
outrun, when it erally speaking, is wages, we are
comes to producing and distribut¬
face to face with the most intract¬
ing wealth, those yielded by other able and inflexible component of
types of organization in human what economists call the costsociety.
price structure. In all cases it is

con¬

let

this

of

ment

yet, owing to
circumstances
beyond
control, these new institu¬
tions have played a comparatively
minor part in post-war monetary
developments. Now that the dis¬
as

century

freely
vertible,

basis for future international traded
form

which

1947 when the

I was, as it happens, attending an international
conference at a place not very far from here, Bretton Woods.
The
war was
not yet ended, but we were already trying to . provide a
the

the

brief period in

Five years ago

in

McKittrick, holding Sterling convertibility is prerequisite to return of world-wide trading, along
of exchange restrictions and controls, urges all Marshall Plan countries to follow
example of Italy and adopt practical program of domestic monetary and fiscal stabilization, j

with suppression

Vice-Chairman, Lloyds Bank, Ltd., London

version

possible1 the
as July,

attempt,
1947, to
take the first major step towards
general freedom of the exchanges
even

with

early

as

the

restoration

of the gold standard. It
departs from the traditional gold

bility to sterling. As

standard

of

converti¬

the

which

"rules

served

of

the

the

world

game."
well

so

we

$12,480,000

all know

attempt proved a grievous
failure. Basically, the experiment

during the nineteenth century,
only to the extent demanded by

broke down because

the

Southern Pacific

Company

to

fact

that

the

rise

of

trade

sterling earned by current trad¬
ing. Although an elaborate net¬
work of monetary agreements had
been drawn up in anticipation of

unions destroyed the fundamental
conditions
in
which
the
gold
standard

convertibility

could not in practice be confined

operate beneficially;
for when wages and prices are no

the return to

longer flexible, the contraction of
credit

failed

Equipment Trust, Series BB

administrative arrangements

which

from
a

can

time

may

time

to

be
ih

necessary

defense

than create

ment.
the

Hence

the

seek is

Woods

whenever "fundamental
ria"

manifest

ther,
exchange
capital account

possibly
the

system.

regretted

Fur¬

restrictions

as

feature

of

down

factors

of

six

weeks

and

working
only

struck

To be

mature

$832,000 annually from July 1, 1950 to July 1,1964,

to greater
ex¬
change; for there can be no ques¬
tion that sterling, side by side
with
the
dollar,
must
be
the
lynchpin of any multilateral ex¬
change regime, and the break¬
down of convertibility forced the
United

guaranteed unconditionally as to payment of principal and dividends by endorsement
by Southern Pacific Company.

Priced

to

yield 1.40% to 2.70%, according to maturity

of these Certificates are subject to authorization by the Interstate Commerce Commission.
Offering Circular may be obtained in any State in which this announcemerdjs circulated from only
such of the undersigned and other dealers as may lawfully offer these setwities in such State.

Issuance and sale
The

bilateral agreements as the frame¬

re¬

Kingdom

to

to

resort

member the unrestricted freedom

work

of gold standard days, it has been
rendered necessary by the possi¬

tably involved much of the sterling

ble

recurrence

of

the

war

massive

stability during the

period.

.

."

who

us

ton

world
mit

were

Woods
was

of

the

in

What

the

condition to per¬
immediate establish-

speech

by

Sir

Jeremy Raisman at Second Plen¬

than

Session of the Quebec Con¬
gress, International
Chamber of
Commerce, Quebec, Can., June 14,
ary

1949.

are:

the

prospects




-

of

EQUITABLE SECURITIES CORPORATION

any

the

level

of

500

INCORPORATED

MERRILL LYNCH,

PIERCE, FENNER & BEANE

L. F. ROTHSCHILD A CO.

HAYDEN, MILLER & CO.
SWISS AMERICAN
FREEMAN

million

working minimum. If allow(Continued

on page

43)

'

June 23,1949.

OTIS &. CO.

CORPORATION

&. COMPANY

.

(INCORPORATED) •

V

THE ILLINOIS COMPANY

MULLANEY, WELLS & COMPANY

pounds, which is regarded as the
safe

HORNBLOWER & WEEKS

GREGORY A SON

a

rendering sterl¬

•

—

BLAIR A CO., INC.

BEAR, STEARNS A CO.

&, CO.

once

viously,

no

*Introductory

halsey, stuart &. co. inc.
R. W. PRESSPRICH

again convertible? Ob¬
such possibility is
conditioned by the low level of
the United Kingdom's gold and
dollar
reserves,
which
are,
of
course, the
ultimate reserves of
the whole sterling area. For some
time past, the reserves actually in
hand have been running at less

ing

foreseen,

inevi¬

Sterling Be Made

second attempt at

present at Bret¬

had

trade, which

Convertible

At the end of the war, as many

of

its

Can

inter-

<

for

area.

flights of "hot money" which had
so
disruptive an effect on cur¬
rency

inclusive

re¬

who

those

To

severe

a

early
freedom of

turn

(Philadelphia Plan)

as

this will

While

by

on

envisaged

are

permanent

a

new

be

disequilib-

themselves.

running

such

blow to the hopes of an

agreements

subject to periodic ad¬
of
exchange
parities

one

justments

through

Equipment Trust Certificates

with¬

massive

balances. Collapse came after

unemploy¬
stability which

mass

the

Bretton

prevent

drawals

of

rigid external parity does little

more

to

2%%

convertibility, these

PHELPS, FENN &. CO.

GRAHAM, PARSONS &. CO.

WM. E. POLLOCK & CO., INC.

CLAYTON SECURITIES

CORPORATION

McMASTER HUTCHINSON A CO.
f;s. yantis&co.
INCORPORATED

COMMERCIAL

THE

(2710)

14

1949

Thursday, June 23,

CHRONICLE

FINANCIAL

&

v*

-

in

(Continued from page 12)
oil

through

industry

its own

resources

Manufacturing

that

At

100

time,

Horses, mules and

nearly 80% and the rest was done by wind,
In 1859 the v/orld's first commercially

did

coal and water.

successful

well

oil

drilling

was

Pennsylvania and

in

•petroleum began to unleash its powerful forces. In 1900
coal and water power were doing 38% of the work,
but 60% was still being done by the straining muscles
of men and animals.
Petroleum at that time had been

"

principally for lighting and lubrication—not

used
;

else.

men

energy

fact

to

alone

of

standard

natural

resurces, and 6%
how to use other

learned

supplement

our

of

sources

In ronseauence,

own.

result,
dustry.

population,

of the

duce five times

much in

as

hour of labor

one

j

'

,

....

uwier our* system of free; enterprise.
That is why our standard of living is'the envy of the
rest of the world.
Let's keep it that way.
d
That is America

FRED F. MURRAY
President, Oil Well Supply Company
The

petroleum

wholly
for

..

.

the world.

equipment

dependent

and gas

,

industry.

and
supply business is
inseparable from the oil
Obviously, the vicissitudes in demand

These

petroleu^n products in relation to their supply

currently below

are

The

a year ago.

besetting the oil industry are
simply too- much of too many com¬

demand.

ponents

and the

ills

in

a/complicated

of

state

A

pattern

starting with domestic crude oil production, with its corrective pattern

variety of strong

a

ments; and so on down to the crux
which is the market for end products,

F.

„

F.

Murray

first

1949

1V2 %
of

quarter

off

was

something
compared with the

,

substantial

increase

was

more

15%v*rt. kerosene demand,

y

a

gate

of all

oil

versus

in net

in

1948 for the aggre¬

petroleum

cry

during the

of ''shortage" and deficiencies
winter

severe

factois in oil and gas.
gave tremendous

forth herculean

effort

markably short time.

to

erase

the

of

shortages in

a

re¬

period of uncomfortable indigestion. The
equipment
supply industry made a substantial contribution
in
nishing
items

of

to

the

oil

capital

operations

and

during

experiencing

the

and

gas

industry "the

/consumable/goods for

the

period

same




of

the

indigestion

big

which

plant

push

The great

oils

is

is

of

distillate

in

the

apparent

with

the

fuels in the. heating

Pacific

Northwest,' and

popularity

greater

of homCs,

particularly

rapid^ conversion of

the

In order to supply the large volumes of lighter grade

must be

is

mainly

now

demanded, great'quantities

refined.

much of the

fuel oil has £>een

quirements.
Additional

of

crude

oil

Each barrel of crude will yield only so

lighter products.

As

accumulating in
,

a

consequence,

excess

A

heavy

of market re¬
.

refinery facilities designed specifically to

look

the

at

begin-f

in

had

they

program

the

mind

year.

-

\

■

the

of

number

The aggre¬

It is potential production of crude oil
in <the natural reservoirs, mainly under State
orders, partly through "pipeline proration" by the pur¬

kept

'J S

of crude oil.

chasers

not going at this time to belabor the statistics
of the matter.
It does seem to the independent producer

/

I

am

that there is

tion

of

definite relationship between his restric¬

a

for" crude

market

oil and ~tlie fact

that

600,000

daily of foreign oil are coming into the United.
States/
It is of significance .also that prices of crude
oil have thus far chiefly;: affected- the>heavy grades/'
directly competitive with the fuel oil and heavy crude
barrels

oil from abroad.

outlook

The

dependent to
to

happy

months,

coming

a

the

take

that

oil

care

went

prospects

crude oil he does

bring
is

There

to

full

rapidly

to

Europe.

displace
Canada is

self-sufficiency in the
in the United States
his natural market. Unless

for

i

'

- '

not "wildcat" for nety fields,

created

those -already 'found.

oil

surplus of crude

a

the "United States great enough to

the stagnation

dustry.

lem.

is

me,

of Europe and

development

being

production outside

The

to

The independent producer

hopes to be able to rely on

cause

seems

very

area

over

future.

nor

it

great extent upon what happens
The export, market in petroleum is fading.

imports.

Caribbean

'

,

for

The Middle East is to

he sells

rise in consumption of Diesel and light fuel

able

different." At this time there

are

artificial nature which are

an

natural decline.

-

i

frequently

blocks of

road

gate for all States/at this writing, is about 800,000 bar¬
rels under the December daily average.
This is not a

from 3,400,000 in 1940 to 4,500,000

,

All military

war.

of the reductions have been made in Texas.

.

•railroad motive power from steam to Diesel equipment.

products

and

rose

connection

and

and

,

last

oil-producing States have applied
their legal remedy against wasteful overproduction and
have reduced the allowable production. The greater part

Oregon, Washington, Ari¬

increased farm activity.

fur¬

innumerable

!

burning gasoline and Diesel fuel, a fact Reflecting continued mechanization of agriculture as well as generally

The

industry, which has sought
praise for that noteworthy,
accomplishment, is .left
with a momentum which now
involves cutback's and a
no

'

of

use

the

entered

we

volume is from South America.

much

n?arked gain has also taken place iri farm tractors

1947-48, all

impetus and put

and Nevada

when

The reason is both a restriction
of market outlet and reduction of prices.
Both are in¬
fluenced, we contend, by imports of oil from South
America and the Middle East. The greatest part of the

matter

1948, and trucks and buses from 500,000 to 900,000.

companies

During the hue and

Meanwhile, the

are

comment has urged the reestablishment of such position. We do not have it yet, but
we
have brought domestic supply up to domestic con-'
sumption, despite the enormous gain in the latter since
the end cf the war.
We have also nearly silenced all
those who doubted the existence of reserves yet to be

For example, privately owned passenger automobiles in

the five states of California,

*

i

a

.

other government

beginning of this

demand-is the growth in the number of motor vehicles.

reporting the three months'''
period ending March 31, J949.
in

at

been, discovered

.not

It is the national interest,

ning to affect exploraiorv activities in the oil industry
of the United States.
Independent producers am taking

:

a

nave

Knowing the desirable road to follow and being

Contributing to the large expansion in motor gasoline

zona,

reduction

;

which

an emergency.

believe, to find and develop much more petro-.
A productive capacity far in excess of consumer
is the desirable condition; ;it is the one which

had

are

-

a

petroleum located

Reserves

value in

no

another

'

heavy fuel oil has lagged behind

heavyTuel oiLincreased only 38%.

decline

and lesser but sig¬

ply sales to oil companies is the 20%

}

additional

to follow it

I

Consequently, it would be entirely

•distillate oils increased byr137%.

nificant declines in both distillate and
residual fuel oils.
Another obvious factor
influencing equipment and sup¬

earnings for first quarter 1949

interference, with market for its production sufficient
to supply the incentive to justify large capital invest¬
ments/''. '■
"
;
;■■■
' •• ■

found; facts have finally overwhelmed them.

This trend has been particularly evident in the West.
There, motor gasoline demand in 1948 Was '83% higher
than in 1940, and the consumption of Diesel and light

•

1948.

than offset by

,

are

..

slower rate of growth.

Particularly
significant is the-domestic demand
fuel which was ahead
by 5Vk%; however, this

tor motor

0.

of

than

It

1948.

year

_

we

variety of products flow from the refineries,
markets for each are as different as the products

for

mand

picture shows that

total demand fonall oils for the first'

quarter

the

and

being the case in the present situa¬
Instead, the markets for gasoline and most other
products have increased substantially, while de¬

light

less

W. Shield

Fred

has been a
striking demonstration of the respon■
/
siveness of the producing industry to the national needs ,
when it was operating in freedom from bureaucratic
in

demand

wide

tion.

statistical

of

petroleum within -continental United
States since the war and especially

leum;.

Such is far "from

com¬

The

the- magnificent

proved - reserves

/the

I -firmly

of chance if any-extensive changes in demand in these
markets were to retain the former relative balance.

proration, spearheaded by

(

in for

to

dition.

another

1

themselves.

.

Texas; crude oik imports, which have
come

:

facts

Meanwhile

quickiy
reflected
in
the
related
equipment and supply sales,which
are

We have made our

us.

contribution to

addition

of

plainly evident.
problem, not so
T. S. Petersen
apparent to the public, has devel¬
oped—that of maintaining the re¬
quired balance among products manufactured from pe¬
troleum, in the face of a pronounced shift in consumer

and

upon

thousands of
due

last year was ap¬
proximately twice the amount produced—a healthy con¬

,

he could

as

organization composed of indepen¬
dent
producers.
There are some

The

inherent characteristics of the petroleum in¬
Some of these situations are matters of general
knowledge; others are not so well
understood by the public.
J';-'
Only a year ago the industry was
still
striving
to
develop
enough
crude
oil
production to meet the
product requirements .of: a rapidly
expanding market.
Today, the de¬
mand is not only being met but the
industry is in a position of being po¬
tentially .able to supply more than
the current needs. This is especially
true
from a worldwide' standpoint,
and .is causing adjustments in
the
output of crude oil in many parts of

radios, half of the \ telephones, more than
half of the refrigerators and three-quarters of the auto¬
mobiles. The average American worker today can pro¬
with affehour of labor in 1850.

j

Standard Oil Company of California

are

energy

have half

we

„

and the

world's

the

<:

Constantly changing conditions of supply and demand,
necessity of surmounting the many problems that

enjoy here in America.
Here in the United
where we have only 7% of'the world's land

have

doing.

speak, therefore, as an indepen¬
dent producer of oil and gas and as
the President of the one national
-1

..

T. S. PETERSEN

supplied almost

high

magazines of:, what

trade

and

pers

„

President,

the

lor

accounts

the future of the-whole industry f
undoubtedly should know more about the

: survey

us

the rest of the industry is

opportunity to function in bringing grbwth ."factors *
into proper ascendancy for improved business in a rela-tively short time.
Many of those new in business and
weaned on easy selling during the war and subsequently,
may consider the outlook dismal; but not the seasoned 1
hand who knows best how to operate when > the -going is tough and business hard to get.
j
\
.
'

requirements.

energy

the petroleum industry

particular job and have only a gen¬
eral acquaintance through newspa¬

■

have their

will

as

developments in branches other than

pattern of hard work

economic forces

that

to

of

complex

as

professional economists are so ras'x as to

our own, but in oil we seem to keep
well occupied with the details of our

full

we

and

area

our

confidence

merits

as

in recent years oil and natural gas have
half of all

we

Each

their
recently developed ills of oversupply while their
customers are experiencing a like situation. The future
for
petroleum and its corollary , equipmentbusiness :

they did 100 years ago. Only
about 6% of that energy is provided by men and ani¬
mals.
Coal, petroleum and natural gas provide about
87%, water power around 5%.
It is petroleum and
natural gas that have made most of this growth in the
use of energy possible.
In the last 30 years they have
accounted for 95% of the increase in energy used. And
work

States,

/.,

industry

an

.attempt

efficient operation for the suppliers to correct

and

much

learned to sup¬
plement their own feeble muscle-power and the povver
of their animals by using the energy of fuels to drive
machines.. Today Americans use nearly 29 times as
next was that

happened

That

■

.

Outlook and prospects indicate a

<•

living

In

few except the

to

short duration.

,

President, The Independent Petroleum Ass'n of America
President,- Shield Petroleum Company ~
\

own

What

much

and

inventories, availability of credit and : absence
of speculative excesses, are reported to be well in hand
so that the correction points more
to a return to levels
regarded as normal than to a decline of severe propor¬
tions.
A particularly sustaining force for petroleum is
its ascending growth curve which, in spite of dislocations
here and there, indicates that the present lull,will be oi

overcoming.

FRED W. SHIELD

importance in the outlook for petroleum and
equipment and supply business is the trend
in the country's backbone or primary industries.
As of
the end of May, the general level of primary business
activity is reported as something more than 4'% below
activity at the same time a year ago. While this decline
is expected to continue, conditions generally, with re¬
spect

They consti¬

problems which the industry is ac¬

another of the

tute

customed to facing—and

Of major

performed

manpower

ago;

years

15% of the work in America.

about
oxen

-

its corollary

until 1850. They heated their homes
with fireplaces and stoves, lighted them with candles
and wore clothing laboriously made by hand.
The elec¬
tric light, the telephone, the automobile, the typewriter
-and the thousands of mechanical servants we now use
and enjoy were still to come in those days.
almost primitively

shifting pattern of demand are be¬

ing felt nationwide, and even worldwide.

production is catching up rapidly.

lived

large

The effects of the

period
Con¬
sequently, all categories of equipment are in; easy supply
with possibly two .important exceptions—line pipe for
large pipe line projects and oil well tubing.
Deliveries

helped to work

Judged by our standards of today, men

miracles.

of

lines

in'these two ■ categories are causing no real concern

truly American oil industry has

This

practically all

in

schedules

light products and less heavy fuel oil in¬
capital investments.. This is a path which
following in recent years.
...
;

more

volve

the industry has been

petroleum equipment are being cut back and a
of absorption of these excesses is now running.

to debt.
.

yield

inventories ,of equipment and sup¬

moderately high

plies in relation to lesser sales.

has
licked what seemed to be an impending shortage and
supplies will be ample for years to come.
Yet there
aTe those who preach that profits should be nil or taxed
away and replacements and expansion financed by long¬
time loans.
To my simple way of thinking, the first
method is the path to prosperity; the latter is the road
the

Thus

•' i

&

Outlook for Oil and Natural Gas Industries

in¬

of the independent producing
"

.

outlook, therefore, consists in large part of

-

r

.

.

.

V

prob¬

a

How that should be resolved is another and much

longer story.

We independents have solutions in mind1
^.

and

are

actively urging them.

We

are

hopeful of getting

acceptance of our not immodest idea that domestic

in¬

dustry should be encouraged to survive.

(Continued

on

page

16)

,

j

-

'

Volume 169

THE

Number 4814

Public

COMMERCIAL

Idaho Power
Idaho Power sells

on

approximated 24-44.
5.6%.

figures

currently paying $1.80, making the yield

based

go in

a

of 42%.

Both

based on 700,000 shares, the present outstanding amount;

are

the

55G,000 shares outstanding in the previous year, share
earnings would have been $2.92.
V
on

The

remarkable

increase

in

net

earnings

reflected

LONDON, ENGLAND.—The United States Government is understood to have ex¬
pressed in London its disapproval of the impending Anglo-Argentine trade agreement,
the broad
principles of which have just bean agreed upon after difficult and lengthy
negotiations.

Full details of

gentine

fixed, but it is
und erstood

in depreciation.

«

During the calendar year 1948 the company's customers increased
.7%, kilowatt-hour use gained 11% and revenues increased 15%. To
take care of its power demands the company added 736 miles of
service lines, 94 miles of transmission lines, 5 new sub-stations and
substantially increased the capacity of 28 existing subvstations.; Two
/ new power plants provided 22,000 kw. generating capacity, in addition to the 16,500 kw. completed in 1947. Thus the company was able
to retire some 12,000 kw. older plants. The company, is now coristructing two big additional plants—65,000 kw. capacity to; be1 completed
this year and 75,000 in .1950—which will provide a reasonable margin
„

.

.

•

-

of

surplus capacity above peak load requirements^/ These plants

flect

the

latest

that

re¬

engineering ideas with semi-outdoor design used to

-

mestic meat consumption; or she
TV-'

sub¬

in

■

stance
be

A

'/ki

m

rgentine

so

goods,

that

whole

■

gentine

f.

In

exporters

meat
•
,
and other products, would be paid
.

for

by British exports. In the past
Argentinausually
had
a
very

.

was

are

tempting

very

such

to

that

it

resort to
a
British

The Reclamation Bureau has been actively opening new areas

work.
to

irrigation, and there

ects" with

farm

a

population of

brought into
("Electrical

population of 35,000 and 34 tributary towns with a
In the near future large new areas may be
as described in the story "Garden in the Desert"

105,000.
use,

World," Jan.
•\

Power).

9,000 farms on three big "proj-r

are now over

15,

1949;

reprints obtainable
,

.

^

..

•;/•

>

from

Idaho

riw,.

Idaho appears to be one utility which is relatively safe from the
inroads of government ownership or government competition. Bonne¬
i

ville—the

plant/furnishing

big, government

wholesale

for

power

"Washington and Oregon—could perhaps expand its transmission grit
into the Snake Valley. But with 98% of the farms in southern Idaho
electrified and receiving excellent service at an average kwh. rate

States to Great Britain.

and

because

It is pre¬

the

continued

import

.to

Argentine

meat, without worrying how the
foreign exchange would be forth¬

With her inadequate and

coming.

declining gold /reserve
she

can

ill

now

afford

feels

she
to

do

so.

Argentina
would not have considered it nec¬
Under

been

the

loss of the

multilateralism

to

very

pay

in dollars even for quantities

much smaller than those absorbed

adequate
of Great
And it would be equally

indicating lack of
gratitude on the part
as

Britain.

deplorable if British opinion were
to resent the American effort to

the

that

war

In

have

a

are

to blame..

"

that

order

Britain

should

chance

of recovering her

equilibrium the conclusion of bi¬
lateral trade agreements is and will
remain for some time inevitable.
From

the

an.

American point of view

United

States

Government is

concluded
between
As it is, she had agreements
thinking in order 1945 and 1948. A premature rigid
of
those
principles
to find means for increasing her application
would result, however, in a grave
purchases of British goods.
The American point of view is deterioration of the British bal¬
viewed with much sympathy in ance of payments or a Deduction
London. It is realized that it must of the British standard of living,

British market.
to do

ain

some

hard

markets

for

the

benefit

of

which wopld be detrimental to
economic, political and social sta¬

bility.

.

Bache & Co. Adds
(Special

on

to The

RALEIGH,

Financial

N. C.

—

Chronicle)

Howard L.

United States Government should

Brooks has been added to the staff

feel

impelled to register its pro¬

of Bache

test

against the proposed arrange-

of

&

Co., 126 South Salis¬

bury Street.

1.75c, it is hard to see how local coops buying power from the
•government could do as well (the average coop rate /nationally in
1947 was 3.41c)., Municipal ownership could not be effected witnout

•

changing the state constitution, which forbids the sale of

„

revenue
Idaho Power's residential rate is about 40% below the national

bonds.

/.

"average.
•v

-is

This advertisement is neither an offer to self nor a
,

••

....

.

solicitation oj an offer to buy any of these securities.

The offering is made only by the Prospectus.

The company does not have a very big industrial lead but this
expanding. The largest industrial load center is at Pocatello,

;

now

; which has

of the three largest railroad terminals on the Union
and also a Navy gun-relining plant, in addition to
; numerous
other industries. The company has recently contracted
y with Food Machinery and Chemical Corp. (Westyaco Chemical Divi¬
sion)/to, supply power for electric furnace production of metallic
phosphorous at a multimillion-dollar plant, the first unit of which is
scheduled for operation early in 1949. This plant, together with an
established producer, of phosphate fertilizer in Pocatello, will utilize
/the extensive phosphate rock deposits in eastern Idaho, and play an
important part in supplying phosphorous and phosphate products for
'agricultural fertilizers, detergents and other industrial uses. Large
/deposits of antimony, cobalt, mercury and tungsten in the StibnitePacific

40,000 Shares

/

one

system,

Staten Island Edison Corporation
Series Cumulative Preferred Stock

•

(Par Value $100 Per

area in north-central Idaho—in addition to the production of
gold, lead, silver and zinc—are providing an increase in largescale mining 'activity, and related smelting and processing of ores.
Idaho Power thus should qualify as one of the "growth" utilities.
-The postwar expansion program when completed, will give the com-

Share)

'Salmon
•

Price $103.25 per

copper,

about V-k times its prewar capacity; the estimated cost is around
Sev^

-pany

$55 million or about 125% increase over the prewar investmenteral new power sites are being explored for further growth.

David A.
(S0cc!r.l
•

ILL.

CHICAGO,
has

Graham

David

with

South
of

the

New

—

Noyes

William

York

and

to The

Mecke

has

Financiai

of the undersigned

be obtained in any State only from such
registered dealers in securities in such State.

may

as are

L.

Co., 208

South

Euclid

W.C.Langley&Co.

Chron.xle)

CALIF.
become

with Geo. R. Miller &

associated
&

Street,

Stock Exchanges. Mr.

H.

Chronicle)

become

A.

Salle

La

(Spec.'r:!

PASADENA;

Noyes&Go.

to The Financial

Copies of the Prospectus

Share and accrued dividend

With Geo. R. Miller & Co.

W. L Graham With

—

George

affiliated

Co., Inc., 81

Avenue.

He

was

A. C. Allyn and

Company

Equitable Securities Corporation

-

W. E. Hutton & Co.

' -

-

The Milwaukee Company

R. W. Pressprich & Co.

Stroud & Company

G.H. Walker & Co.

members
Chicago

Graham

was

King Merritt Co./Adds
(Speoir.l

to

The

Financial

Chronicle)

v
>

L. F. Rothschild & Co.

'

formerly

with

Clement Curtis

&

Co. and Mitchell Hutchinson & Co.
In the past
ager

he was Chicago

man¬

for Fuller, Rodney & Co.




Estabrook & Co.

...Incorporated

previously with William R, Staats
Co.

LOS ANGELES, CALIF.—W. P.
Morris is with King Merritt & Co.,

Inc., Chamber of Commerce Build¬
ing.

June 17,1949

,

go

a. very generous scale.
It
it would have
is considered only natural that the
difficult, if not impos¬

sible. to find other buyers able to

regarded in the United States

were

British market, and
been

Argentine

out of her way to right in registering its protest, if
increase her imports of British only in order to uphold the basic
goods, for the sake of receiving principle of multilateralism em¬
bodied in the various international
payment, for her exports to the
essary

tine

have

the

of

agreement and all that it implies

ish goods should be sold to the
their British rivals, at a time when
Argentine.
From an • Argentine
the United States are engaged in
point'of - view> the
alternative
granting assistance to Great Brit¬
would

conclusion

the

/

thousand pities if

a

an

latter is un¬
able->to
pay
for the Argentine
be hard for American, interests to
meat in dollars that it is noV con¬
lose some of their valued Argen¬
sidered necessary that more Brit¬
cisely

It would be

prevent
the
conclusion
of
an
both from
agreement on which the main¬
Argentine point -of view.
tenance of the present very meager
Indeed the situation provides a
meat ration depends. There is no
striking illustration .to the bilatervillain in this piece.
It is the
alist argument.
Under multila¬
teralism Great Britain would have general conditions inherited from
bilateralism

-

,

is really a tragedy.

United

new

Circumstances

Einzig

The company serves a rapidly

r

the

have been any
will be under
Anglo-Argentine Agree¬
ment. The Argentine would have
imported 4ess British goods, but
could
not
have
imported more
American goods.

large export surplus on her trade
with Great Britain, part of which
growing territory, but it has mainwas covered by the remittance of
tained an ample supply of electricity. As the company states, /"Nodividends on British-owned Ar¬
;j customer
is being required to curtail service, but ori the contrary,
railway
stocks.; These
Snake River Valley welcomes new homes; farms, commercial estab¬ gentine
stocks were sold,
however, last
lishments, and'industries, with dhe assurance of an ample supply of
year to Argentina, so that on this
iow-ccst electric power,"
//'/"/
; .;/
/, ;>
ground alone it was necessary for
The company is one of the few hydro-electric companies which
Great Britain to pay for a larger
has no need for steam standby plants, since the supply of water from
percentage of her imports of Ar¬
melting snow in the mountains provides an unfailing source of power
gentine goods - with the aid of
f in the Snake River.
The river waters also irrigate the agricultural British goods exports.
i
lands along its borders, with electricity used to pump water' into
It would be idle to deny that to
I the irrigation ditches- Tnis area has a ricn volcanic soil,with a superb
some extent the Anglo-Argentine
growing climate. Since rainfall averages only 8 to 12 inches yearly
Agreement will be detrimental to
irrigation is absolutely necessary and there has. been an ienorrpous
ihe
interests
of
American
ex¬
amount of litigation since 1864 over, water rights.' .However, the Val¬
porters. For in many instances the
ley is noted for the high degree of cooperation among water users..
The U. S. Reclamation Bureau, as well as the local irrigation districts, Argentine will have to divert pur¬
chases and orders from the United
.cooperatives and similar organizations, do much of the organization
reduce construction costs.

Britain.

would

better off than they

Dr. Paul

Ar¬

Great

case

the

the

on

than

SK*

£150,000,000
to be spent by
Britain

other

>¥' £&/

:

'

right. The conflict is
right and wrong—

to

States

■/

are

between

she would have to export which would simplify matters—
soft-currency countries but between right and right, which

or

neither

>

the

of

not

ing,

:

purchases of'

volved

would have'to curtail cattle breed¬

more

J/S

on

increase of

British

>

d

\

will

it

based

an

i.

-

the British market. The Ar- merit which would produce such a
would have to increase result. Indeed, this is one of those
further her already excessive do¬ situations in which all parties in-*
by

this agreement
have yet to be

in

a,

gain

currencies to balance payments.

$1,524,000, against v/hich there was an increase of only
$127,C00 in operating expenses.
A substantial credit for interest
charged to construction ($369,000) was helpful. But the increase in
net was accomplished despite a $417,000 increase in taxes and $172,000

of

revenues

,

By DR. PAUL EINZIG

,

on

32,

In the 12 months ending March 31 share earnings were $3.22

/ compared with $2.28 in the previous period,

15

(2711)

U. S. disapproval of the Anglo-Argentine Trade Agreements, Dr. Einzig, though ad¬
mitting it is detrimental to interests of American exporters, contends it is essential to Britain's interests
in that it enables purchase of
Argentine food stuTs without resort to use of dollars or other foreign

Company

the New York Stock Exchange around

It is

CHRONICLE

•

,

,

Commenting

this year's range being 31%-35. The stock was sold co the public by
Electric Power & Light in 1943, and the range since that year has
>

FINANCIAL

Implications of British-Argentine Trade Pact

Utility Securities
By OWEN ELY

v

&

Incorporated

•

.

;

16

(2712)

THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

1949

Thursday, June 23,

Outlook for Oil and Natural Gas Industries
But this achievement will remain only a

(Continued from page 14)

for

F. J. SPANG

nomical

President, Spang & Company
In
^our

related

as

taken into

be

must

demand

to

^account.

The

established demand

crude

for

the needs of

life

of

mode

that

our

to meet

fre¬
inadequate by
are

reserves

proven

considered

quently

national wel¬

with

concerned

those
fare

necessary

present day complex
is of such magnitude

our

security. Thus, it does not
likely that producing com¬

and

seem

panies could consider themselves to
be on safe ground in their industry
by adopting seriously curtailed ex¬
ploration
and
development
pro¬
grams.
It is apparent that we must
continue
the

While

in

{follows

reserves-to-demand
the factor which

be

ratio

controls

the long range program,

the monthto-month operation of the industry
more

a

assure

soundly

should
J. Spang

to

reserves

functioning continuity
this important industry.

of

F.

seek

to

less general way the pattern set

or

activity of the country except
^n periods of marked over or under production.
At the present time there is some over-production of
sby the overall commercial

Eastern Crude, and there is a new

development in West¬

Canada, both of which have some effect on the do¬
mestic activities.
ern

Most

states have regulatory conservation
through the Interstate Oil Com¬
prevent the wasteful production of

producing

flaws which, operating

Commission,

pact

<crude in excess of current demand.

The object of such

iflaws is to conserve the reservoir pressures by prohibi¬
ting production from naturally energized pools at rates
igreater than the existing need for it.
It is

well proven fact that the

preservation of reser¬
voir pressures, which are the motive power for the
movement of petroleum through the formation to the
owell bore, is of paramount importance in recovering the
maximum ultimate yield from any given pool.

'

a

In view of these circumstances, it seems quite unfttkely that domestic production of petroleum will ap¬
proach an excessive production rate or even be permitted
tto increase to the degree that this factor alone would
Iforce crude prices into a minus value status.
This" well established conservation procedure results
in preserving reservoir conditions which are such as jlo
permit the orderly withdrawal of crude as needed; thus
«an adequate supply may generally be had during periods
®f heavy demand.
This situation assures to the con¬
sumer the protection
of an equitable but conservative
price structure in that volatile price mavements are not
weeded to stimulate development programs.
In view of these stabilizing forces, one must conclude
{that the activity of the Petroleum Industry will not vary
^widely from the economic activity of the nation.
It is apparent that businessmen and the population in
general lack complete confidence in the integrity and
ability of a considerable portion of our elective and ap¬
pointive political personnel and this has created a "Wait *
*and See" complex of alarming proportions.
Unless the
{business

leadership which has been largely responsible
making America a great nation can rise to the situathon and fully inform our citizenship of the dangers in¬
tfor

volved in the continued political muddling of our eco¬
nomic machine, we can look forward to a continuation

*szf, the downward trend, and the Petroleum Industry will
move with it. On the other
hand, if our business leaders
twill

rise to

the

occasion

and

encourage

prevail upon their representatives to
tfeheir misguided efforts to build a

our

cease

Utopia,

-{forward

should

to

an

be

now

(cycle.

orderly

Should

the

this

upward

bottom

mature,

-well situated to contribute

of

the

people to

and desist in
we

movement

can

from

look
what

the present economic
Petroleum Industry is

liberally to economic

progress.

President, Imperial

Oil

ifoerta,

result

m

?seareh

than

Limited

for

of

the

r'iscovery of crude

brought
oil

iLedue has

in

the

at

Leduc, Al-

last two

history.
followed by major

been

Reserves
recent

Stettler, not to

of

crude

a

men¬

together
which are

a

producing potential of
{barrels daily.
This is equivalent to

very

some

development drilling
pace.
There are today

is

continuing at a very rapid
100 drilling rigs in the field, about half of them
exploration work and the other half on development
known fields.
This situation promises to continue,

some
on

of

the

with

result

that

can

we

look

forward

to

an

ever-

widening gap betweep potential and actual production.
The solution planned for this problem is a
which has already been mapped out in detail

pipe line,
as far as
Regina, Saskatchewan, a distance of 450 miles from the
City of Edmonton, Alberta, the capital of the oil-pro¬
ducing province.
It

is

anticipated that this line will be completed by
It is being built by the Interprovincial
Pipe Line Co. Ltd., a newly incorporated subsidiary
of Imperial Oil Ltd.
the end of 1950.

The line to

Regina

only be

can

a

first step in solving
studying the

the problem of markets, so Imperial Oil is
extension of this line to the Great Lakes.
It will be
tremendous

section

of

from

seen

demands

this that the industry
the capital market.

is placing
The

on

first

the

pipe line to Regina alone is estimated
to cost in the neighborhood of $40 million. The extension
would probably cost somewhere in the neighborhood of
$75 million. On top of these large sums, there are the
steady demands for capital for exploratory and develop¬
ment drilling.
And it must be remembered that these
investments must be made before the oil that is being
discovered can be carried economically to large markets
in the East.
' .

•

it looks ahead, the oil industry in Canada can be
of continued activity and responsibility.
It is

As

certain

quite clear that the private enterprise system which has
achieved great things in the discovery of oil in Canada
still has tremendous tasks ahead.

some

curtailed

in

recent

months.

two

sharp

improvement

financial results

over

the

near

years

ago,

when




tirely to residual fuel oil, asphalt, and heavy crudes.
curtailment

Production

is

making every effort to increase gasoline yields at the
of residual fuels, but material improvement in
can only come from longer term planning
and construction.
The Union Oil Company, as well as
expense

this direction

companies, is actively studying and planning the
of capacity for cracking and coking excess
residual fuel and heavy crude.
other

installation

The population

growth

period of temporary surplus, the industry will be
in a better position to concentrate on capital investments
toward achieving greater flexibility of refinery produc¬
tion.

Despite the current lower prices for some products, the
petroleum industry is expected to make a satisfactory
earnings showing in 1949. Profits will be below the
record-high level of 1948, but comparisons with all pre¬
vious years will be favorable.
For the industry as a
whole, capital investments this year will be lower than
in
1948, and demands on earnings for this purpose

should, therefore, be less than in 1948.
L. G. VALDES
Manager, Petroleum Industry Sales, Le Roi Company

Essentially it is

discomfort

to

These,

have been mostly
heavy crudes.
We,

however,
the

will

additional price
do not believe

see

may

but

we

such

of

be

An

will

Coast, but they were sufficient
to cause widespread political reper¬
cussions.
Social planners seized the

lowing

the

that

their

into

three months of 1949

Billions of dollars

tinent, Rocky Mountain and Califor¬
regions have shown gains. The

nia

eastern

region of Pennsylvania, New
Virginia is the prin¬

were

poured

In less than 12

ductive

of

controls

and

the

shortage of steel, has
been
rebuilt, and nation-wide petroleum inventories
were increased
by 107,000,000 barrels, or 21%.
this year have continued to rise, and in the
the heavier oils have become burdensome. De¬
for fuel oils is not keeping pace with that for

of

order to avoid

of

the

to register

area

this. time,, the statistical: posi¬
in coming

months.

current

curbed

have

are,

the

1,
consensus

of opinion that, although

cautiously,

of the industry will be fol¬

stated

As

this

above, these programs could largely
breakdown of the crude price structure,

heavy oils.
also

must

remain

to

seems

on

producing
day

-

firm, with the exception of
•
'* ■

keep in mind the government's desire

additional two million barrels of oil per

an

and above normal daily consumption, without
and detrimental production of any field

over

undue

strain

affect ultimate recovery.

which would

This, of

course,

for national security in case of emergency.

During
of

the

1948,

the

industry

capable

was

to approximately 900 000
day over and above the unprecedented
reserve

barrels of oil per
demand that

of

year

this

building

prevailed.

up

Obviously, exploration and de¬

of new fields toward the creation of
additional million barrels needed will go forward.
velopment
Because

the

of

above

facts,

manufacturers

most

the
ex¬

puzzlement as to why the buying of oil-field equip¬
ment is down, because it is down on many items.
The
press

reason

for

this

situation

lies

in

the

fact

the

that

oil

companies are "living off the fat" accumulated when
future, supplies of equipment were uncertain.
In other

words, most of the. oil companies find themselves with
tremendous inventories which they are trying to reduce
to

a

conservative

basis.

To

this

should

be

added

the

important consideration that many oil men think
there will be a decrease'in the^price of steel and they
prefer to take their chanfees of- getting: what they will
need at

the Pacific Coast have been, and

in the main about the

same

as

a

later date.at lower pricesr- vr-

One, company-had,vat the first

mately

houses,
This

conditions

Valdes

very

considerably-below the i 1948 level,

on

G.

in drilling. Crude oil
incentive to drill in this

decrease

a

-•

further

industry should be strengthened

Accomplishments

L.

York and West

We

months, the spare pro¬
capacity depleted during the war under the in¬
war

com¬

for the creation of available ground reserves capable of

our

facilities.

well

saw

pletions totaling 8,666 as compared
8,048 in 1948—an increase of
7.7%; Most areas in the Mid-Con¬

Reese H. Taylor

was

matter of record.

a

new

industry is fol¬
The first

programs.;

with

but

opportunity and
industry left to its
incapable of continuing to supply the
rapidly growing petroleum needs.
devices

to

as

analysis of overall operations
show

the cuts

tried to convince the nation that the
own

nature

the industry.

the development programs

custo¬

East

personal belief that the petroleum

our

industry in the overall presents a healthy condition and
only a complete breakdown of the crude oil price struc¬
ture may affect the programs of the oil companies mate¬
rially. There have been crude oil
price
adjustments
and
cutbacks.

be affected by a

and

cur¬

rent

It is the

The shortages were not severe]
confined
largely to the

During the

petroleum products for years to come.

cuts
territory.

were

the Pacific Coast, the devel¬

on

opment of new super highways, and increasing indus¬
trialization point to continued expansion of demand for

venience
and

crudes which yield the

largest proportions of residual fuel. The heavy crude and
oil problems still exist, however, and the industry

fuel

lowed.

mers.

the Pacific Coast has been

on

limited to fields producing heavy

price

term

the Pacific Coast have not

on

large as in other areas and have been limited en¬

as

During the winter of 1947-48 local
shortages caused considerable incon¬

tion

Canada normally had to import 90% of her
crude and
ixroducts.

been

at least.

which appears unlikely _at
George L. Stewart

Price declines

mal levels.

cipal

Nevertheless, the outlook is for re¬
latively satisfactory operations and

natural

importation of

increased, and plans are under way for eventually
bringing natural gas into the Pacific Northwest from the
newly developed fields in Alberta, Canada. On the other
hand, partly because of the strikes prevailing in the fall
of 1948, gasoline inventories have been relatively low,
although they are gradually being restored to more nor¬

create chaos within

been

by

by pipeline from Texas. Moreover, these imports will

these

President, Union Oil Company of California

accentuated

be

In

Unless demand falls

approximately

gas

perhaps,

surpluses and waster U. S.
production has been cut back approximately 840,000 bar¬
rels daily, largely in-Texas, since the firfet of the
year,
and currently is below, the level: of? estimated demand.

100,000

somewhat

been

adjustments

sharp contrast to the all-out effort of a year ago to
expand productive capacity and facilities to satisfy the
unprecedented postwar demand gro.wth, the petroleum
industry in 1949 has been faced with surplus production
and inventories, together with de¬
clining prices. This change has been
brought about largely by the lower
demand for heavy oils and the in¬
dustry's own phenomenal achieve¬
ments.
As a result, production of
crude
oil
and refinery runs have

The surplus fuel oil situation has

elsewhere in the U. S.

confined to

REESE H. TAYLOR

In

*©ne-third of Canada's total require¬
over

In the meantime, exploration and

the East last winter resulted in excessive stocks.," •

estimated, in¬

dicate that by the end of 1943 the
western Canadian fields should have,

a

Already, prorationing is in effect on a voluntary,
industry-wide basis. Current production from the fields
has been running in the neighborhood of 48,000 barrels
daily, although potential output is already in the vicinity
of 65,000 barrels.

mand

stage of develop¬

ment to be accurately

ments,

comparatively small quantities may
be shipped beyond these provinces.
In other words, the
market for these large reserves of crude is restricted
to a range from between 50,000 and 70,000 barrels daily.

lighter products because of several factors, including the
decline in general business activity, the
rapid, conversion
of railroads to the use of diesel engines, and
smaller/mil-:
itary requirements. Demand for heating oils iis still in a
basic growth trend, but abnormally warm Weather in

oil,

discoveries

atill in too early

s

of Canada, although

case

tion other smaller discoveries.
with

for practical pur¬

Stocks

greatest

Canada's

^discoveries at Woodbend,
Redwater,

iSchoepp and

100 000 barrels

restricted in their markets to the Prairie Provinces

poses

now

industry in Canada was
and perhaps never more

today,

February, 1947. the

have

vears

one
eco¬

no

fluence

brighter
ceonplex.

wever

a

are

is

industry met this challenge under the'
powerful stimuli ever present in our free economy is

The outlook for the
petroleum

As

The western oil fields

How well

G. L. STEWART

:

like

of bringing anything

way

to market.

considering the outlook for the Petroleum Industry,
reserves

potential

time because at the moment there

some

$10 .million

when

company,

protect itself

along

on a

$3

•.

year,

inventory

in

million; should

be

worth

about

of the

with

of

many

others,

in

approxi¬

its

ware¬

adequate.
order

to

sellers' market, laid in supplies against

(Continued

on page

18)

Volume

169

Number 4814

THE

COMMERCIAL

International Treaties

&

FINANCIAL

School of Business Administration, University

Asserting nation

of international treaties relating to women's
rights from Fifth Conference of American Republics held in San-

completely recovered from besetting suspicion that postwar boom

never

"What will
more or

happen to next week's gross national income?" "Will consumers spend
"Is the Federal Reserve's index of industrial production headed for another

less?"

decline?"

for last 109 years.

These

phrases

seem

honor.

the rights of women signed

much

by the United States—The Inter-American Convention on Granting
Rights to Women—is now before the Foreign Relations
President Truman

tional

The second

international treaty

on

Committee of the United States Senate for action.

data

ansmitted<$>

r

treaty

elected

be

to

national office

ate

Putnam

or

occurrence

by

reason

of sex."

This

treaty

adopted by the plenary ses¬
of the Ninth International

was

sion

American States, in
which the United States, the coun¬
tries of Central and South America
and the Islands of the Caribbean
Conference of

participated, at Bogota, Colombia,
on
April 29, 1948. It was then
signed by the United States and

referred to the
the
Ninth
Pan-

Gillette

Senator

abridged
Raef

122

by

be

denied
Mabel

and in the
Representatives

members

35

by

House

not

shall

of

at

held

Conference

American

argument

Bogota as a "clinching

of the adoption at the
possible moment of the

in support
earliest

Equal Rights Amendment to our
Federal Constitution."
Let us review the history of
these treaties.
At

Republics, held in 1923
Chile, the represen¬
tatives of Guatemala and Costa
Rica offered a resolution request¬
American

at Santiago de

we

be¬

almost

of

diets

a

mod¬

vitamins

as

and

the

reason,

course,

not

activity

has

is

difficult

to find.*
McCracken

Since

the latter part
of 1948 busi¬

been

softening
persistently. This sobering changeof-pace continues to .pause con¬
siderable

apprehension

in

the

business community. Nor has the
character of the "spring upturn"

provided much

ing

that

the

so

reason

to

think¬

for

economic

would respond
peratures.

it

found

so

difficult

the postwar inflation to
pursue policies of restraint.
And
currently more to the point, it has
made us extremely jittery
over
any omen that seems to suggest
that business activity is turning

situation

tem¬

warmer

1

Perhaps the reason this has been
upsetting is the simple fact that
so
long the seller was king

for

and the buyer was the

supplicant;

relative to the last

explosive
postwar adjustment. By the time
the last postwar depression was
nine months old (February, 1921)*
the wholesale price index had de¬
clined 37.2%—four times the 8.4%
currently.
Why this
has

One

Buyers Continue Reluctant

evidence

continues

to pile up that the much-discussed
settling down of business activity
is continuing. With the exception
of
a
slight
end-of-May
rise,
wholesale prices have continued

The Department

down.

wholesale

of Labor's
index was 155.5
This was 8.4%

price

at the end of May.

more

difference?

speaking, there

downward.

Impressive

The
of

W.

of the major

during

aver¬

ages.

Paul

was one

Dow-

Jones

of

Conference

Fifth

the

reasons

have

-

——

This

na¬

ern

ness

the way to taking their place in serialdom's role of

edness.

income

part

13,

on

this

much

as

1949 civil rights to women has been be¬
for ratifica¬ fore the Congress of the United
tion. It reads States since 1923, which amend¬
as
follows: ment, according to Senator Guy
"The high M. Gillette, its chief sponsor in the
con tracting
Senate, in an address on April 1
parties agree 1949, has been endorsed by both
parties
and
at
this
that the right political
to vote and to moment is sponsored in the Sen¬
Jan.

is

come

to securing to women full civil rights.
the Senate on Yet an amendment granting full
this

well

S

that

so

of Political

t

was

interlude in the Great Depression, Professor McCracken says real job now facing business is

tiago, Chile, in 1923 through the Inter-American Convention for
Granting Political Rights to Women signed at the Ninth International
Conference of American States, at Bogota, Colombia, on May 2,
1948. This treaty, according to Mrs. Putnam, is final accomplish¬
ment of equal rights for which women of America have striven

,

.

of Michigan

merely
"to make
consumer more
unhappy about holding dollars." This, he contends, can be done by: (1) more effec¬
tive selling; (2) price
reductions; (3) keeping adequate inventories; and (4) more capital investment.
Urges business avoid cost increases by seeking greater labor productivity.

Writer reviews history

*

17

By PAUL W. McCRACKEN*
Associate Professor of Business Conditions,

By MABEL RAEF PUTNAM

-

(2713)

Can Business Cushion the Recession?

For Women's Rights
4

CHRONICLE

attention.
The economy is funda¬
mentally stronger and sounder ih
a great many respects.
Debts are
low; deficiencies of consumer and
commercial

capital
or
durable
still large; exports are
pretty well supported;
incomes
are
more
broadly
distributed.
goods

are

These have received considerable

attention, and little more need be
said here.
Unquestionably these"

below the August peak, 3.1% be¬
low the turn of the year, and 0.4%

have

below

what less explosively to

April 30.

the

declined

have

loans

Bank

most

al¬

persistently since the turn of
trade

continues

be

to

sluggish, particularly in certain
lines, and is running below a year
ago in most areas.
continue

Consumers
luctant

enabled

us

to

react

some¬

economic

shocks and reversals.
There

is, however, more to the
There have been during
the last two years at least two
counterbalancing or "compensa¬
tory" actions which have in a
story.

year.

Retail

Broadly

two reasons.
considerable

are

received

to

spend

to

their

be

re¬

incomes.

substantial

way
neutralized or
might have been de¬
flationary forces of some magni¬

offset what

tude.

a
sudden
reversal
of
roles
is In the first
Guatemala,
quarter of 1949, the
(1) In May, 1947 our exports
ing the inclusion in programs of therefore
Chile, Uruguay, Cuba, the Domin¬
understandably bewil¬ latest period for which data are reached their
postwar peak, of
future Conferences of the question
ican Republic, Peru, Panama, Costa
dering.
The buyer has finally available,
10.7% of "disposable $1.5 billion.
Thereafter they be¬
of the rights of women and rec¬
found it possible to exercise his
Rica, Ecuador, Brazil, Venezuela,
personal
income"
(essentially gan a fairly sharp and persistent
ommended that the Governments
the Argentine Republic and Co¬
prerogative of shopping around, consumers' incomes after taxes)
decline—by September, *J947 to
include women in the delegations
or
lombia. It was signed with reser¬
postponing
purchasing alto¬ was saved. * This proportion has $1.2 billidn, roughly a 20% de¬
so that they might participate
in gether. For his, part thef seller
vations by the delegations of Hon¬
been rising steadily since the low cline.
Wfyile
exports
fluctuate

countries:

other

13

.

the work of future Conferences.

Mexico.

duras and

As

this document
has received little mention by the
press considering its historic im¬
portance to the Western Hemi¬
sphere, probably because it deals
with what is considered an old
story in the United States, "the
right of women to vote," which
American women obtained on Aug.
18,1920 when the Federal Suffrage
Amendment,
the
19th Amend¬
ment to the United States Consti¬
tution, was adopted.
But it is, in
fact, as revolutionary as the 19th
Amendment which enfranchised
one half of the population of the
United States. This treaty will en¬
franchise approximately 75 million
women citizens of Latin America.
.The

signing

of

But

of

the

real significance to

people of the United States is an¬
other treaty adopted by the Ninth
Conference on the same day, the
third international treaty on the

has

approached of the

date

the

Sixth International Conference of
American

held

be

to

States

at

16, 1928, American
learned that the subject of

Havana on Jan.
women

women's

rights was on the agenda.

But they

learned, too, that not one

appointed a woman

country had

delegate, that no reports had been
prepared for presentation to the
Governments
and that no plan
been made for the

whatever had

question which

discussion of this
concerned

one

half of the people

been
called
upon
for
an
about-face'—not only of his prac¬

tices, which is relatively
also of his
so

easy, but
thinking, which is not

easy.

cannot avoid the feeling,
however, that this is not the whole
story. The plain truth of the mat¬
One

ter

is

that

we

have

never

com¬

pletely recovered from our be¬
setting suspicion that the postwar
boom

was

an

interlude

Great Depression.
been

a

in

the

The result has

legacy of depression-mind-

since

been

had

Conferences

meeting

and. for

1899

"'Address

the Cracken,

first time the status of women was

Business

What were they Marquette,
1949.
going to do about it?
Interested
on

the agenda.

women

had

no

no

given by
Dr.
Mc¬
at
Upper
Peninsula
Leaders'
Conference,

Michigan,

June

21,

of women,
granting to

which

the

United

Republics

did not

States

did

This

sign.

ently escaped the attention of

the

of the United States.

These

two

this

is

Orderly

said, how¬

fundamental feature of
current business picture stands

the

The rate of decline has been

out.

relatively mild
there

has

tion.

been

and
as

orderly, and

yet little evi¬

of any

cumulative contrac¬
comparison of the move¬
of
wholesale
prices
in

A

ment

and

comparatively gentle and
character of the decline

orderly

1948-49

reveals

1920-21
thus far

the

While not the Marshall Plan's ma¬

jor objective, it did help to avert
what might have been a precipi¬
tate decline, if not collapse, in our
export market.
Perhaps domes¬
tic demands were then so pressing
that even a substantial drop of
exports

would have had no im¬

portant effect on business activity.
Continued

on

page

.39)

that

which would en¬

move

danger the rights that the women
of the United States had obtained

This

announcement is not an

The

offer to sell

or a

solicitation of

an

offer to buy these securities.

offering is made only by the Prospectus.

a

monumental piece of news appar¬

press

of

women

sign but which all the other Amer¬
ican

all

one

ever,

companion during the last century and to use
equal this opportunity to extend these
rights under the law — a treaty rights. The National Woman's
treaty

rights

Continues

Decline

When

ing short of dollars.
At this point the Marshall Plan
(preceded by a series of interim
loans) stepped into the picture as
a supplementary source of dollars,

alternative but to

attend this Conference to see
it made

erally.

dence

of the earth.

These

figure of 6.2%' in
the
second from montjh to month, and the
quarter of 1948. - This increasing reasons for this decline are in¬
reluctance to spend has
clearly evitably complex, one of the more
been one of the major dampers on important reasons was simply that
trade and business activity gen¬ the rest of the world was run-

treaties

American

women

vast

and

was

leading

the movement for full equality in
the

United

important
of

are

$4,000,000

Party, which was finally respon¬
sible for the enfranchisement of

States,

vitally

it

felt

that American

Public Service Company of NewHampshire

women

First Mortgage

present to the Conference a prac¬

Bonds, Series E 3% due 1979.

tical program

importance because they secure to
the women of the countries of the
whole of the Western Hemisphere

covering the whole
subject of equal rights.
So Na¬
tional Woman's Party representa¬

rights

tives went to Havana and laid be¬

both their civil and political
—"a

lever

long enough

the world."
was

of

to move

Yet this emancipation

accomplished without

blood being shed or a

a drop
penny's

worth of damage to property.
The Ninth
ence

of

International Confer¬

American

Republics

adopted these two treaties without
a dissenting voice.
Yet the United
States alone did not sign the one

fore the Conference a
an

equal rights treaty.

of the

proposal for

Price

A number

jurists called this proposed treaty
revolutionary, declaring that the
rights of women belonged under
private law and therefore could
not be made the

But

these

June 1, 1949

Due June 1, 1979

*

and accrued interest
100.59%

delegates and international

the
women

plenary

subject of

Conference
a

session

a

Copies of the Prospectus may be obtainedfrom the

undersigned.

treaty.

granted

hearing before a
which was the

granting civil rights to women be¬
first time in the history of inter¬
cause,, according to our delegation,
national conferences that women
an amendment to the United States
presented their claims to equality
Constitution would be necessary
with men before the law.
The
before our delegation could com¬
(Continued on page 34)
mit the United States to a treaty




Dated

HALSEY, STUART & CO. Inc.

M,

2 i .n

'

Hi I-

June 22, 1949.

18

COMMERCIAL

THE

(2714)

FINANCIAL

&

CHRONICLE

Thursday, June 23, 1949

Outlook for Oil and Natural Gas Industries
the

It

will

several

be

months

before

above

surplus

as

the items

of

most

needs

regular

will

used up.

period

the

once

•

be
,

through which the idustry is now going and the reduc¬
tion

inventories

of

normal

down

normal,

to

sion

/

,

requirements

and

through

not

With
tic

us

have

during the

production, improve their

the turn of
1
3 to 5% increase in domes¬

steadily

a

since

product and implement their sales efforts
market.

since

natural

1939.

the

In

case

as

tion
and

116%

gas,

since

L. S. WESCOAT

i'

President, The Pure Oil Company

/.During

past nine months,

the

for -petroleum

tion

industry

In that brief

rfeversal.

has

has

shown

We

both

apparent deficit to one of
supply
with inventories
increased to
a
point which would
seem to insure against any
shortage
such

,

„

1947/and: 1948

went

the

current

eable

pro&ms,

are

line.

for

year

to

case

heating oils which

of these products in the late spring.
in

try.

operation.

This

has

in the demand.

greater

industries,

sion

case

agree

~

tion from the

1948

anticipate

profits, .which

a

U5 ryV

ing sales volume.
did not realize

a

However, for
reasonable

ifig over-supply which had

a

'
a

good

the

largest in

"

many years

the industry

prices,
oil

necessitates the mainten¬
to

assure

to equity

earn

a

rea¬

These /companies have -the
responsibility

i^>

carry forward their program of building back
in all Ibranches of ,the_bjisingsat_We must..at
the- prrwafr' resets

an

products

should

national emergency.




been

1947

and

as

1948

from

were

/

'.

.

any reces¬

-

shortages

lush years with

This

result

the

/

1

battle

in

put forth
meet

These demands
the

the

are,

by

not

period

a

Every effort has

the

industry

tremendous

in

demands

only

.

this
put

'

•

normal

of

marked' increases; in

very

the

natural gas industry in a •
competitive position.--

As

a

result of these

factors, it has

been generally necessary for the
"i

dustry to ^ ^ restrictions
^
^
impose

„u
on

_

sale of

...

in-;
_
the

J

additional gas for space heat-

ing and industrial purposes. - Colum-:
bia Gas System has been no excep-l
tion.
Before Columbia-could relax "

volume and '

the

to

development.

prices of other fuels which have 5

put

_

is

being

of

.

of

most favorable

during the time the oil'

was

fighting their

it.

Operations,

growth inrequirements which developed dur-,'
ing the war, and to a large extent?
went unsatisfied, but are alsofthe

,

*

indicating that

is

period

the result

to the immediate outlook for busi¬
were

and

pe¬

postwar

of

industry is in the midst

of enormous growth and

indefinite period.

these restrictions, two things had to
be done.
First and foremost, addi-/

transition

to abundant supply.

George S.

Young

tional
supplies of gas had to be;
obtained by the construction of large supply lines from
.

In recent

years,,the oil industry has fought a constant z
battle, successfully, against countless obstacles to produce / the. Southwest; Then,
too, it has been necessary for the
enough oil to meet the nation's demands and :to find the
System itself to construct substantial-additions to its
steel to store the oil and
transport it during the interval*
,

facilities

between production, and^ consumption,

from the Southwest suppliers to market.

won

Now that it has

jts. battle—rfpund the oil, met -all
-demand requirea position to
get all the steel it needs—the

on

ments and in

.-amou.nt.°f crude and refined cil products Known
Whittling

in-

as

-

enable

it

to

has

programs

transport the

already

■Now

as

to future

prospects.

been
;;

./: /

The

additional

gas

Great progress

made, but there
'

.

.

progress

,

i

<_';[>/•

of the con¬

struction program referred to has been such that relaxa-

this ^

away of

these

to

remains much to be done/ *" '

excess has been ^tartqd by the Texas Railroad Coramis-

tion of restrictions

.

sion and self-imposed proration."

suit in
V

a

cut in the

crude oil which will probably

price of petroleum.

Domestically, this'situation

the oil production

reserves

/

j

great!significance

is of

equipment industry.

on

whose slogan

to wait

a

was

we

again

as a

the part oif dil producers

few

months

and

see

what

would

happen. Now that the "waiting" period is
over,
jnqst producers Have concluded that the bloom is off the
rose

and the time has

industrial

to zz but

The slide began

early last winter \jrheji backlogs began toi
disappear,

waiting

rq-

i7 •;

,v

on

the,sale of gas for space heating

it

season.

gas, some

appears

With respect to

the'.sale,:of

reduction in activity has beerringtfced,

that

additional sales

'' will substantially offset

this

to

customers

new

tendency.1"

/ '/jThe rrial, expansion for the natural gas
industry -in
-

the, ftuure, however, lies iri another, direction. To

ation, there is

a

cpn-

tremendous demand from manufactured

gas areas for natural gas

service.

This condition creates

_

........

be

a

siderable extent, because of the competitive price situ-

"

"Iff'fHexounfry may~haw—competitive battfe/whiie therirwill

a

The natural gas

and foreign

Charge

Columbia Gas System, Inc.

;

of the fall heating

the capital markets practically closed

confronted with

GEORGE S. YOUNG
Vice-President in

natural gas

J*

,

result of watchful

of

we are looking forward to removing part of our
on the sales at an
early date. With present
prices of competitive fuels, the market is available for
any gas we will be able to release. •

restriction

importation of'foreign

on

operating margin for the refining section

supply

now

depressing effect

securities it is essential that the companies

adequate

ap-

return, because of continu-

of the industry.

an

It

has been possible within the past few months arid the
result;will be materially increased sales with the advent

ance of present level of gasoline prices in order

sonable profit.

from

supplies

demand.

the

Further reduction; of '
the excess -is becoming increasingly difficult due to the

prices; this condition in turn

/With

meet

sup¬

obtain

pears that this condition is about to
With the development of our
storage fields
in operation, and the
receipt of additional Texas

upon

"

as

ventory has become excessive.

1

continually increas-

Thi$ is currently exemplified by the ^present low fuel

a^reasonable

in the United States

'

apprehension

ness.

current

reasonably

additional

to

our

inability to

gas,

sets out the long range picture of the oil

some

statements

substantial reduc-

were

the history of the oil companies.'
-The petroleum industry has had

and

-f™* th,e P°mt °f V16Wf °f manufacturers and distrib-

Jn addition to the foregoing, domestic crude oil produc¬

can

Texas

the

,?••/'

econ¬

utojr Bqpply companies of Oil field equipment,,thej-e

r

industry

Whiting

two-thirds of

to

correct itself.

in production

pro-V

yeaf.

the

Leading

that the general trend in demand for

companies

While

R.

of petroleum and natural gas in this coun¬

prices at all time highs.

?

and

sufficient
Justin

quan-

tion, has been cut back by state authorities, and this step
in turn Jaas Had an adverse effect on
company profits.

the

by Consumers
Company have been restricted

received

ply,

operations will be temporary since
continued growth in facilities will be
necessary to keep
pace with the requirements of consumers.
!
'

barrel of crude oil. -The effect of these

earnings for the year, there will be

we

a general business recession in this counThe decline from the 1929 peak to the 1932 and 1933

produced from

covering operations of the first quarter of the

)
in

gas

This was due to the rapid
depletion of the gas fields in Michi¬
gan/from which only four years ago

in

f««This favorable situation in regard to consumption is

slight decrease■■

company

natural

served

last year.

of these

declines

of

area

and additional sales
almost entirely suspended during the'

.

was a

oil

small

necessary

for three
years,

!

countries, will continue upward for

The combination of these circumstances

price reductions is reflected in

for

*

resulted in drastic reductions in the price of this
product,
which represents approximately" 20% of the
products
a

except

stressed by these economists

developed

addition, there

II

troleum products, both

supply the demand for gasoline. This
increased supply exceeded the requirements of normal
In

War

50 to 75% in other comparable industries.

J

of

cessed in order to

users.

World

sales

Power

1939 but this number will increase

omists, both within and outside the oil

This over-supply

titles, resulting from the larger amounts of crude oil

industrial

of

the

excel-;

an

The

■

well under way.

are

The

try, was less than 10% which compares with decreases of

; .Heavy residual fuel, used largely for industrial pur¬
poses, is necessarily manufactured as part of the normal
refinery

suring
service

in

low, in the

prevailing

..."

price reductions.

severe

1,000

factor.

on past
experience, the consumption of the prin¬
cipal petroleum products will show little or no decline

distressed market situation and resulted

a

than

from

at

company

load

taking

our

amount

Based

history.

accumulated in anticipation

less

were

area

acquisitions of the storage fields are
made, and construction and repres-

of oil

close

nprmal demand resulted in unusually high inventories
'brought about

the

on

greater than that of gaso¬

even

residual fuel oil."

*

winter, the large stocks of light

were

lent

should there be

estimated to exceed $2,000,000,000.

1948-1949

vehicles

this

transmission

burners, there will be approximately 4,400,000
operation the coming winter which compares
with 1,750,000 in 1939.
All of the major products of
petroleum have shown substantial increases since the

<

during the

motor

service

our

This will permit

twice

over

approximately 10,000 at the end of this year/In the

units

..

such siz¬

result of the unusually warm weather

There

power.

diesel locomotives in

; The petroleum industry has again demonstrated the re¬
sults which can be obtained in an uncontrolled economy.
a

15 billion cubic feet of
gas.

One of the large new demands for petroleum comes
the railroads which have been
rapidly converting

diesel

to-

Similar expenditures during

-The results obtained have created industrial

As

of

in

pipe line to Texas, storage fields
adequate, when fully developed, to store annually some

and

and distillates have been

from

*

;

number

J

V

.

a

was 40,622,000 which
compares
the close of 1939 and 26,503,000 at the
close of the boom year of 1929.
The percentage gains in the'consumption of kerosene

over

third straight

the

year,

of

with 30,615,QD0 at

$4,000,000,000
into capital expenditures by the industry for ex¬

pansion and modernization.

end

States at the.close of 1948

World War II, the
industry had exhausted its reserves
of immediately producible crude oil.
The industry's refining and trans¬
portation facilities were inadequate
to do the twin job of efficiently and
economically handling the products
required by the consuming public.
During the war and subsequent two
years, shortages of steel and other
required materials, and manpower,
made impossible the building back
of reserves during that period.
In

L. s. Wescoat

the

buses, which are the largest consumers of
motor fuels, has been larger than that of passenger cars.
The total registration of all motor vehicles in the United

of last year.
At the close of

*

increased

an

trucks

threatened in the early part

as

white,' Jr.

to

fortunate to have located

are

at

highways and streets and also because the requirements
per unit are much greater than they were 10 and 20
years ago.
The percentage gain in the registration of

an

adequate

and

the
"money product" of the petroleum
industry, continues to expand due

sharp

a

period, the industry's supply posi¬

from

changed

products

Carl

*

President, Consumer^ Power Company

than they have in this countfy.
The consumption of gasoline,

the economic outlook

•

..

gains
far exceed those of any other major
industry. Outside the United States
percentage gains in petroleum
consumption have been even greater

!

„

question but that those who have properly

JUSTIN R. WHITING

These

1939.

the

•

no

and have taken the
necessary steps
outlined above may look to the future with
confidence.

of

where top quality, advance in design, coupled with com¬

service facilities, will prevail.

buyer's

the

facturers will be faced with a highly competitive fieldadequate

a

anticipated this trend

marketed produc¬
has increased 179% since 1929

plete and

in

~

There is

consumption in 1949, the growth

increase

and manu¬

re¬

mainder of this year and first quarter of
next; those who
have failed to reduce costs of

been

in petroleum demands over the past
20 years has been 110%, with a 64%

a

long-range program as has been the case in past years.

Obviously, the sellers' market is not with

that

markets

Those who,

to now, have failed to keep inventory in balance arid
in line with the reduced volume to come

up

the century.'

purchasing requirements will again be

immediate

actual

in

growing

the

however, purchases will be made on the basis

with us;
of

of

flow

brought

are

*

.

wisdom to face

or

against it.

Both
oil and natural gas have greatly strengthened their de¬
mand positions due to new uses and to the large expan-

readjustment

of

have not had the. necessary experience
recession and protect themselves

The outlook for the oil and natural gas industries after

present readjustments are completed is favorable.

'• •'

>.

Unquestionably,

President, Franks Manufacturing Corporation

and suppliers.
However, there will be
since the beginning of World War II who

born,

some

possibility that it might not get desired deliveries.

considered

manufacturers

CARL WHITE, JR.

(Continued from page 16)

be

none

the sales volume and profits comparable to the lush
just past, there will be reasonably good business for

of

.,

expansion

,

wHich has

_

,

already taken

years

looks forward confidently to

some

in the future.

even

„

e

of the

ipface;iftHe'!Tndustry

greater development

Volume

To

Number 4814

169

THE

COMMERCIAL

Survey Over-the-Counler Securities Markets

nection with

a

announces

Harvard Graduate School of Business Administration

Merrill

vancement

Foundation

for

Knowl¬

Financial

of

Ad-1 regulatory

bodies,

investors,

and

financial writers.

"From these discussions, certain
edge, Inc., New York City. Winthrop H. Smith, managing partner questions have been formulated
of Merrill Lynch, Pierce, Fenner which the research program will
& Beane, of New York City, is endeavor
to
answer.
A few of
President of the Merrill Founda¬ these questions drawn from the

tion.

By way of illustrating the
purpose and scope of the project¬
ed survey, the Wharton School of
Finance
issued
the
following

statement:
"The

investment

in¬
opportunity
independent analysis
activities
and
problems

dustry is provided
to obtain

of

its

banking

an

an

through

the
research
program
outlined by the Wharton School of
Finance
and
Commerce
of
the

University of

Pennsylvania. The
largely
dependent upon the degree of co¬
operation obtained from the in¬
dustry itself.
of this endeavor is

success

*

expense

all

along the line, but

rise occurred

most pronounced in wages.

was

Department store dollar sales for the tenth consecutive year rose in 1948, this time
point typically three times the level of the volume 10 years earlier. As compared with
1947, the level was roughly 5% higher. Simultaneously dollar gross margins rose by pro¬

to

a

portionately the

same

amount

soS*-

that percentage margins were ap¬

creased. There

proximately the

in the percentage

1948.

in 1947 and

same

Dollar

was a

resultant rise

outlay for

pay¬

the present business
is completed.

Profits Off

ever,
or

readjustment

roll for both types of store,

expenditures, how¬
from
increased at a greater rate, 16.9% to 1^.3% for department
8Y2%, so that total stores, and 16.7% to 17.0% for
"(1) What important changes operating
expense
including specialty stores. Despite a rise of
are taking place in the fundamen¬
charges for interest on selected roughly 70% in the average size
tal
character
of
the
over-the- assets
climbed from slightly more of sale between 1941 and 1948, the
counter securities market?
than 30% of net sales in 1947 to payroll expense percentage was
"(2) To what extent do present 31% in 1948.
As a consequence the same for both 1941 and 1948,
laws and regulations of the secu¬
the percentages of net profit and indicating a pronounced change in
rities markets provide a satisfac¬
net gain
before Federal income the payroll cost per transaction.
tory framework for the pricing taxes fell
substantially, both per¬
Other items for which expense
and merchandising of securities?
centage results being the lowest incurred by department and spe¬
"(3) What are the features of since
1940.
cialty stores rose both in dollars
the over - the - counter securities
For a group of specialty stores and percentages from 1947 to 1948
market necessary to define its es¬
reporting for both 1947 and 1948 included real estate costs, interest,
sential field of operation?
dollar sales and gross margins for supplies,
and service purchased.
"(4) To what extent do price
the latter year were 2%% above Advertising
outlays
in
dollars
spreads and gross profit margins
the levels for the earlier year. were higher in 1948 for both types
measure differences in:
list include:

(a)

19

Professor Burnham reveals department store expenses in 1948 jumped up 1% of sales to
squeeze tax¬
able profits to lowest percentage since 1940, despite rise of 5% in sales.
Says

University
that plans have been completed in con¬

markets. The project will be financed from a $100,000 gift received
by the school last December from^
the

(2715)

By ELIZABETH A. BURNHAM*

to be made of the over-the-counter securities

survey

CHRONICLE

Assistant Professor of Business Administration

The Wharton School of Finance and Commerce of the

Pennsylvania

FINANCIAL

Receding Department Store Profit Margins

Independent analysis to be made by Wharton School of Finance
and Commerce. Project financed by gift from Merrill Foundation
for Advancement of Financial Knowledge. Cooperation of dealers
deemed essential for success of the undertaking.
of

&

by about

Earnings figures show that net,
operating profit and net gain be¬
fore income taxes fell to the low¬
est

percentage
4.5%

or

1940,
sales, re¬
Earnings after income

spectively.
taxes

levels since

6.7%

and

averaged

about

the

of

4.2%

of

sales,

percentage as in
1941, and greater than the levels
for 1942 through 1945 when war¬
time income and
excess
profits
same

taxes claimed
1948

a

earnings

heavy share. The
also greater

were

than those in 1939 and 1940 when
dollar sales
age

costs

char¬

low and

were

percent¬

high. All this es¬
comes
down to saying

were

Aggregate dollar expenditures for of store, and were higher in per¬ sentially
that it is only in particularly good
1948, however, exceeded those for centages for department stores.
business years
that department
1947 by 5%, so that the net oper¬
"Seldom does the opportunity issuers?
Thus we see that the growth in
(d)
stores can expect to make final
ating profit in dollars fell 13%, the total expense percentage from
arise for an industry to be exam¬ size and
type of house specializing
gains after taxes of as much as 4
and final dollar net gain before 1947 to 1948 has occurred all
ined by a disinterested group on a in selected issues?
along
(f) promotional
cents out of the consumer's dollar.
Federal' income
taxes
declined the
confidential
basis
in
which
the work involved?
line, and was not confined to
(g) other factors?
8%.
:
the payroll account, although al¬
purpose
is solely to provide a
Financial Position
"(5) What is the magnitude of
body of information basic to the different
Thus for both types of retail most half the difference in the
market
segments
as
It is logical to turn from a dis¬
analysis of many problems con¬ measured
total
expense
between the two cussion
by the number of cus¬ enterprise the sales increases over
of earnings to the finan¬
fronting the business. Without any tomers?
1947 were moderate, gross margin years was in that important item.
cial condition of department and
special case to plead or defend,
percentages
were
stable,
and
"(6) What proportion of the
specialty stores. Data for 35 large
the finding of such a study should
Stock-Turn Down; Returns Up
business is inter-dealer trading? earnings dropped notably because
firms were tabulated for the last
be
valuable
from
an
industry
of climbing expenses. The ascend¬
What
It can be noted from the data four years and for 1939.
proportion with financial
standpoint in stating the position
ing expense rate has been char¬ that the rate of stock-turn has de¬
institutions? with others?
The 35 firms realized a net gain
which
the industry occupies in
acteristic
of
department
stores clined
steadily since its peak in after taxes of 3.8% of sales in
"(7) What is the composition of since
our present-day financial and in¬
1944.
While the expense
1945, and in 1948, at 4.6, was at a 1948. or slightly less than the 4.2%
How is this
dustrial life, in the development inventory holdings?
percentage is still well below pre¬ level
only slightly above that for shown for all firms. Similarly the
and
modification
of
legislative related to the capital of firms?
war
levels, the upward movement the years 1939-1941. Returns and
1939 earnings of the 35 firms was
enactments, and in the analysis
"(8) To what extent do houses is a highly significant and serious
allowances continued the
climb about 0.4%
of problems arising within the in¬ differ in the purchase and sale of
below that for all
trend when it is realized that the
begun in
1945 and by
1948 firms. The differences between the
securities on any agency basis vs.
dustry itself.
increases have come in a period
amounted to roughly 10% of net
"The public should profit, too, on a principal basis?
two
groups
in the four recent
of
continually expanding dollar sales,
This upward trend in the years Wfere
in obtaining a better picture of
fairly consistent. For
"(9) What is the extent of po¬ sales.
returns and allowance item prob¬
•a..
••
the organization and operation of
the 35 firms roughly 1 Vz % of sales
sitioning? its relation to volume
ably reflected in part the increase was paid' out in dividends in the
one of the large segments of this
of trading.
Expenses Higher AH Along the in the
proportion of ready-to-wear years 1945 through 1948, leaving
country's capital market. In turn
Line
"(10)
How important
is the
sales and continued heavy sales in
every firm in the industry will be
a
contribution to surplus of be¬
over-the-counter business in openable to evaluate its own opera¬
Since the upward motion of the home furnishings. ••
•
tween 2% and 4% of sales.
I

*

-

•

.

•

of issues?

acter

.

Unique Opportunity

size and dis¬
(c) location of
trading interest? (e)
(b)

tribution of issues?

1

„

,

issues?

industrial

in

funds?

end

tions against

the experience of all
in utilities? in bank and insurance
volume and
shares?
type of business.
Moreover the
"(11) What proportion of overindividual firm will obtain infor¬
trading is done in
mation useful in educational pro¬ the-counter

firms doing a similar

grams, advertising and sales pro¬
motion.
This opportunity for a
neutral endeavor of this

type rests

the support the University
Pennsylvania receives from the

upon

of

industry itself.

Operation

of

Method
.

"A Securities Research Unit has

established

been

Wharton

the

at

The
Irwin

School to conduct this study.
G.

Friend.

of

consists

staff

senior

Hoffman

Wright

and

program the
staff has conferred with numerous

planning

broad

as

business

the

within

interests

obtain

its

a

to

background as

both problems of
business operation and policy and
possible

upon

technical

on

been

Advice has

matters.

obtained

firms

from

of

all

types:
large and small, under¬
writing and trading, those who
are
members of
exchanges and
those who
non

-

registered

an

five

dealers,

with the

♦Working
be

not, registered and

are

various

research staff will

advisory committee of 10 members,
from the security field and

drawn

ranks.
Serving on
the committee will be:
James
Coggeshall,
President of the
First
Boston
Corporation,
New
York
five

academic

from

in

expense

both in dollars and
Gross

percentages was the most im¬

portant element in the operating

In

picture, it will be well to inquire

As

Margin Stable

the

with

connection

gross margin rate it is in¬
teresting to note that the initial

stable

lurther into the detailed expenses.
Dollar outlays

result, net worth in dollars
steadily. During the
last four years, however, it has
amounted to roughly one-third of
the net sales, a ratio far below the
56% for 1939. In other words, net
a

climbed fairly

fairly

for payroll jumped
mark-on has levelled off at a point
"(12) How important is the new 8% for department stores and
worth has not increased to the de¬
somewhat below its prewar level.
business compared to the 4 V2 % for specialty
stores, or by a
gree that sales expanded.
resale markets?
greater proportion than sales in- Markdowns, though being fairly
Net working capital, or the dif¬
"(13) What are the operational
similar in 1947 and 1948, were at
ference between current assets and
costs of the over-the-counter se¬
*From an address by Professor
a level that is relatively high his¬
current liabilities, has mounted in
Burnham before the Controllers'
curities business?
issues

"(14) To what extent do the va¬ Congress Convention,
segments of the securities Mich., June 16, 1949.
markets complement one another
and to what extent do they con¬

torically,

Detroit,

and

show

they

every

dollars and relative to total assets.

(Continued

of rising further before

prospect

rious

on

page

28)

flict?

How does the trading in

"(15)

Willis Winn.*
"In

listed securities?

total

over

pare

the

-

-

counter

markets

com¬

$2,060,000

with exchange markets?

"(16) What is the extent of the
over-the-counter markets?
"To

provide
these

for

swers

quantitative an¬
questions addi¬

Chicago, Burlington & Quincy Railroad

tional information will have to be

obtained

the

from

The

selves.

tionnaire

up

a

Equipment Trust No. 2 of 1949

them¬

firms

Securities

Unit has drawn

Research

small

ques¬

2% Equipment

designed to sample the

operations of firms during the
period Aug. 1-Oct. 31, 1949. The
questionnaire will be mailed by
mid-July. It has been designed to

To

v

mature

$103,000 semi-annually December 1, 1949 to June 1, 1959, inclusive

•

'

...

minimize

the

time

and

effort

<

•

-

1

^

re¬

'To be

to furnish the requested
The information can be tab¬

quired
data.

Trust Certificates

(Philadelphia Plan)

guaranteed unconditionally as to payment oj principal and dividends by
endorsement by Chicago, Burlington & Quincy Railroad Company.

,

H. Dewar, of Dewar, Robertson
&
Pancoast, San Antonio, Texas; John
Fennelly, of Glore, Forgan & Co., Chi¬
cago,
111.; Wallace Fulton, Director of
the
National
Association
of Securities
Dealers,
Inc.;
Washington, D. C.; W.
Yost Fulton,
of Maynard H. Murch &
Co., Cleveland, Ohio; Norman Buchanan,
of the Rockefeller Foundation, New York
City;

H.

City; Simon Kuznets, National Bureau of
Economic Research and Wharton School,

Philadelphia,
Pa.;
Harry J.
Lowman,
Wharton School, Philadelphia. Pa.; R. J.

National Bureau of Economic
Columbia University, New
York City; and C./Rif (Whittfdsey, Whar¬
ton School, Philadelphia, Pa.
.
Saulnier/
Research

i

and

'

'

'

Lt




'

*

»

ulated

basis
on

currently

with

little

a day-to-day
additional effort

on

the

firm.

part of the staff of any
The results will be assem¬

bled and tabulated by the

ties Research Unit.
tion

furnished

the

identification

Securi¬

The informa¬

:

Priced

any

of

yield 1.20%

Issuance and sale oj these Certificates are

will
be regarded as confidential and in
no way will any data be published
to disclose the identity or permit
by

to

to 2.325%,

according to maturity

-

subject to authorization by the Interstate Commerce Commission,

firm

any

firm.

The

published results will, how¬
represent the behavior of
the industry."

HALSEY, STUART & CO. Inc.
V,

June 16, 1949

>

•

•

*a.
• a

*
a

-

-

r ,
^
L±±1L

1

.

'
..

».<i

H .a.u

.-o

i

"■

u

-

.

'lO'O

La-UXX

ever,

.

J

TTTT

v

FINANCIAL .CHRONICLE

&

THE-COMMERCIAL

(2716)

20-

company

from

"There is

Prospectus- upon request from
four investment dealer, or from

HATI0NA1

of

RESEARCH

120 BROADWAY, NEW YORK 5, N.

interest

and

up,

we mean

stated

these costs are

■I

which is

25

available
your

•

on

investment dealer or

CALVIN BULLOCK
Established 1894

New York

One Wall Street

more

Sv/ift

Premiums

76.60

21.9

20.8

20.5

320

Stand.

277

267

Ford Motor

Oil

Harvester

Other

&

2.4

2.6

2.6

2.7

100.0

100.0

100.0

44.8

41.8

40.4

40.5

39.4

37.2

39.6

41.2

39.1

Agency

4.0

2;2

3.5

83.7

84.0

83.9

82.0

American

215

Inter.

206

Anaconda

Cop-

660

198

Shell Union Oil

641

182

Allied

—

Other

8.5

8.5

8.7}

8.9

10.0

2.5

2.4*

2.3

2.7

2.6

2.5

2.5

3.0

13.6

13.7

15.7

17.0

1.7

2.0

1.8

,4

:

Sources:

HUGH W. LONG & CO.

to

Institute

of

Life

Insurance

2.0

.4

..4*

100.0

Stockholders—

/

2.0
'

100.0

100.0

and

Year

Spectator

life companies was

1947, Accident and Health business of

100.0

V,AU

STREET

NEW

YORK

"The

public doe3 not seem to be concerned
purchasing" life insurance, nor does the
pear to be a handicap either to the business or to
this is as it should be. The insurance industry is

volved in

Before

:

y

;

included.

not

with the costs in¬
operating cost ap¬
its salesmen. And
rendering a great

eystone

..

.

.

In

,

States, made up of 135 million policies of an average
Life insurance premiums paid by the public in 1947
$6V2 billion, more than four times all the assets of all the

§550

paid to insurance companies exceeds

million.

Certificates of Participation in

Surely all components Of the mutual fund industry can learn a great
deal from the insurance business."—Hugh W. Long & Co.--

"There

IN

against.

BONDS

be

(Series B1-B2-B3-B4)

new

are

some

risks

can

be

reduced and

can

so

be

far

of

1949

In 1939 the stock earned $2.50 a share: in the
alone the stock earned $7.13. In 1939 the

had $15 million in cash; This year it has over $56 million.!
owned $60,000 worth of government bonds; today it has:

it

1939

million. -Ten

$46

ago

years

the

company

compared with the current $5 a share.

is one among many others which appear to be
selling well below their true value. Their stocks may, of course, sell
still lower. „But sooner or later the tremendous additions to their,
nized-by

■

.

as

some

eliminated, and it is

it is possible to do so.

♦

Distributors Group

postwar /scarcity ,
continued during
the month of May.
While the developments which received the
preponderance of publicity were on the unfavorable side, some favor-,
able turning points occurred.
In consumers'' soft goods, which were,
the first to feel the

buying in

response

recession, there was a slight uplift in consumer
to price reductions and special sales promotions.*

Inventories at the retail level are so low that
seasonal basis, can

in that
these

few

a

may

Boston 9, Massachusetts
Inn

'

*.yf,

j

help

necessary

1% of capital.

Supervision—Since each clay's developments
company and hurt another, continuous supervision is

Continuous
one

to maintain the

despite changing conditions.
l H a H 'J I *




character
>:

oL the investment account—
of-.!

.»•" on.;

(4) Multiple-Source Income—If income is derived from less than
10(5 sobrdes,! ah dtie^pedtM
welcome development in a single

(but

stock

the

follow

too

long

expected)

stocks

their

postwar

stock

prices

business

are

news

again

(for

will

reflect

the

to

slowing

the

i

unfavorable

down

of

heavy

As measured by the usual

fourth time)

When, and to

the

etc., at

-

responsive

continued

of

trading range.

■L*:r

should bottom out within

_

more

was

'

In the usual course",

of textiles, foods,

trend

months, and they

market

normal

and capital goods, whose cycles follow

5% to 10% below current levels.
"The

on a

'

order, have still to make their trough.

businesses should

intervals of

If

reordering,

hardly be deferred.

"Consumers durable goods

accomplished for most investments
,

Comments

"The quiet readjustment of business from its
boom' to a normal balance of supply and demand

indexes

"(3)

will be recog¬
Corporation

Parker

The

public."—From

investing

the

"Letter."

less than

Congress Street

—

obligated for,

was

"This company

industry than to the evidences of revival.

Diversification

his assets well

to have

;

less than 100 selected securities are
owned, an unexpected and unfavorable development in any dne
company can cause serious los8.
If investments are diversified over
more
than 100 selected companies, sdeh a development can affect

of Boston

4 u

riskless investment and in these
difficult to appraise and guard

any way- to eliminate all risks.
Today many
unanswered—and when they are answered there will
questions and new risks to face.
!

"(2)

fke Keystone Company

a'

a

more

Selection—Securities must be the proper type for the in¬
vestor's purpose, and should be selected after careful analysis and
comparison with all other usable" securities' of the'class.

Prospectus from

i;')

.

"(1)

local investment dealer or

JMwU

as

are

through the following logical steps:

(Series S1-S2-S3-S4)

i-'-r-vA

thing

risks

"This reduction of risk

COMMON STOCKS

50

such

the

prudent to reduce the total risk

(Series K.1-K2)

i

no

■

Logical Reduction of Risk

Nor is there

"But

.

is

times

questions

PREFERRED STOCKS

gpour

i

.

troubled

the past 29.

_

,

'

as

the investor

strength which have taken place in the last 10 years

Funds

A

.

The next 29 years will probably illus-.

emphatically

Chicago.

of

present writing.

its common, as

"Obviously, herq is a successful business whose members have
learned—in presenting their "wares" to the public—to emphasize the
benefits offered rather than, the cost of enjoying these benefits.

INVESTMENT FUNDS

But this table

factor of change in a»

$3,739,602 in ..interest charges and $825,000 for dividends on the pre-,
ferred stock; today interest charges are only $894,272.and the pre-,
ferred stock has been entirely redeemed.
The savings on these two
items alone amount to $2 a share, or 40% of last year's dividends.
Which reminds us that in 1939 the company paid no dividends On

mutual investment companies. As compared with recent
gross sales of mutual funds averaging less than $30 million a month
during the past year or so, the average monthly total of premiums

Custodian

as

important for

Co.

quarter

over

open-end

investing tfieir capital

at

company

of $1,030.

exceeded

how important is the

"Youngstown Sheet and Tube is a very different company today
what it was 10 years ago. About the only similarity is that its
common stock
sold at one point in 1939 for about the same price

in the United

size

Total——————$29,179,

:

from

$191 billion of insurance in force

was

575

541

A Peculiar Evaluation

first

"At the end of 1947 there

Chrysler Corp. _____;

—~

so-

Investments

5. N Y.

financial service to the public.

579

Phillips Petroleum

that a deteriorating situation may be offset by an'
one.
It will be well for him to have his investments,
watched
by experienced people, so that holdings of weakening
character can be promptly weeded out in favor °of those that are*
improving as the years go by.—From "Selections" issued by Selected

as
3

597

—-

100.0

Book.

be

diversified,
improving

"

13.6

-.7

100.0

Dividends

.3

Chem

criterion of investment success.

economy.

principle just

wixl

It

a

to illustrate

serve

1.8

.5

,

"

_-1—

672

Kennecott Cop.

________$9,5S3

dynamic, growing

3.7

1

687

Harvester

174

(Calif.)

694

___

------

171

Oil

Size alone is not

does

3.0

2.8

v

Tobacco

176

Goodrich

F.

Electric

greatly the list has changed in 29 years! The size of all
the companies has changed greatly.
But the relative change was-also
very
different between companies.
And several companies
dropped out of the list, and several ether companies grew into it.
?

10.3

2.6

—

Taxes

—

_______

How

80.8

Salaries.

710

218

4.2

4.7

—

——

Office

Home

Oil

Westinghouse

trate the

7.5

Operating Expenses:

723

Un. Carbide & Car
Sinclair

—

Total

35.8

13.9

&

serves

786

___.

Transcont. Oil

Policy

*—

992

^Western Electric

American Tobacco

to

Special ReSurp. Funds-

1,029

(1948)1,026

241

■■;

84.1

-

1,177
(Calif.)—— 1,075

Am. Smelt. & ReL

40.8

i

to

Reserves

Additions'

1,191

______

247

Gulf Oil

100.0

Funds:

Additions

Net

261,
254

_________

duPont

I.

E.

1.2

ioo.o

—

Cop.

Corp.__

Oil

Cities Service

265

Phelps Dodge

'

Payments

Oil

Company

Anaconda

Additions to Policy Reserves

Benefit

(N. Y.)_____

Sinclair Con.

Used:

How

Ll -1,277

Bethlehem Steel

Inter.

v——__

General Electric

280

General Else.

18.7

19.5

31.8

r

'

Socon.y-Vac: Oil
Texas Company

80.1(

2.1

Income—
•

e-

357

333

_________

Magnolia Petrol.

100.0

Other

1,443

2,535

~

75.7£

*

1,500

2,953

S. Steel

300

1947

1946

77.80

76.90

22.3

Investment, Earnings—r—a,

1,585

Stand. Oil Co. (Ind.)______

Pullman

1945

1944

75.60

——

E. I. duPont

Rubber Co.__

Standard

u. s. COMPANIES
1943

$3,526

U.

Midvale Steel

U. S.

Insurance Income Dollar
1942

(N. J.)

General Motors

447

_

Motor Co_

Standard

......

'

•

•

Gulf Oil

B.

Income:

on

490

___

Eethlehem Steel

f

'

491

General Motors

Ford

years.

853

(N. J.)

Armour

than double the similar ratio In the mutual fund business.

Life

American

of Years

Standard Oil

_$2,363

Standard Oil

over

York'

1949

Steel

S.

U.

companies (new capital
raised) in 1947 were acquired at a cost to insurance buyers of 12.7%
in agency expenses (sales charges). This may be compared with our
8%% sales cost. Note from the table that the sales expenses of the
insurance business have been going up consistently since 1943. Note
also that expenses exclusive of agency (sales) expenses in 1947 were
close to 36% of investment income of the insurance industry. This is

request jrom

the. largest

how

(In millions of dollars)

"Premiums received by all life insuranc

Inc.

showing

Largest American Manufacturing Companies, Based

Texas

Dividend Shares,

table

interesting

an

1920

Here is what we find in the table:

this monthly pay¬
ment security
purchase plan
and the offering prospectus of

V\-

1920

vs.

Reported Total Assets at Beginning

"Recently, in looking over the T948 Life Insurance Fact Book'
(published by the Life Insurance. Institute) we came upon a table
(see accompanying tabulation) which*will giveymu a picture of the
over-all average cost that the public incurs in buying insurance.
Details of

-

manufacturing companies have changed during the past 29

again in their prospectuses does not mean that
higher; mutual fund costs are just better advertised.

and

over

"

.

The June business letter of the National City Bank of New

contains

well

The fact that the costs of mutual investment funds are

services.

ance

.

1949
U

liability, -will be interested in comparative costs of

sales

:

;

a definite
another fi¬
nancial service industry—the insurance business. May we say at the
outset that we strongly believe and always recommend that the in¬
dividual investor should set up a well-planned insurance program,
as well as maintain a cash reserve in a savings bank, before he or she
acquires mutual funds. Both of these are tested, proven and desir¬
able components in any financial plan for an individual.
"Not much is heard these days about the cost of buying insur¬

'Those who have suffered from this malady,

Y.

each dollar of income.

retailers

both in conversation with ourselves as
with prospects and clients.

comes
as

kind of self-consciousness displayed by some

a

on

of Boston.

pany

Mutual Funds

vs.

than lc

If income is derived
can affect an aver¬

development

gained."—From "Keynotes" issued by The Keystone Com¬

be

may

funds—particularly those who have only recently begun
themselves in funds—when the subject- of sales charge

mutual

to

&
CORPORATION
SECURITIES

Company "Load"

serious loss of income.

a

than 100 sources, such a

1949

"Through these logical steps the investor may (1) maintain in¬
come with reduced risk to capital, or
(2) increase income without
increase in risk to capital.
And in many instances both, objectives

By HENKY HUNT

The insurance

cause

may

more

age of less

Mutual Funds

Thursday, June 23,

inevitable

at

the bottom of

how great an extent,

turn

upward

in

general,

activity, it is not possible to foresee. On the other hand
i i >.,•<<-.
iT<
i JO
't
i

the

values at-present

decline

seems

prices

improbable."

are

so

great^

fufthqi; ^eriou^. price
,/i

:uub

Volume

169

COMMERCIAL

THE

Number 4814

&

CHRONICLE

FINANCIAL

cqld
It is no small and unimpor¬
border foray. It is a clash of

war.

tant

Deflation

Fight

tremendous forces.

By HON. PRESTON DELANO*

Banks

Of

been some
concern
regarding the recession
in" prices which' is. taking place

in

such

this convention and to discuss with
that

sensible

.State"

for

so

the

To Bo NYSE MoMbort

ordi¬

that

in

nary

use

that

and

'has

to

New

York

more

$420

come

than

a

the

when

draw

we

their

jumped from $340 million to $780
million; at the same time holdings
of all
other reporting member
banks remained fixed at a little

realize

afresh

Preston Delano-

significance
truth. This state actually is
imperial magnitude; it exceeds
4n numerous ways many of the
independent countries which play
important roles in world affairs.
and

"of

based

not

tration

nation

only

of

is

upon

wealth

traditional,
the concen¬

and

the

of

world-wide breadth of its markets
but also because through the great

; Port of
flows
a

New York City there
heavy measure of the
of the Seven Seas.

commerce

To

in the

us

.however,

York's

New

banking fraternity,
other

no

teresting

of

feature

is

greatness

in¬

as

its place in the world

as

yof finance.

Even .before

the

Na¬

tional Banking System was estab¬
lished

during

"New York

attracted

country

and

United

in

nated

the

"Bank

Act

; serve

city.

as

Reserve

the

as

Right to carry their own burdens.

sole

System

with

it,

things,

institutions

•

carries
cor¬

a

respondingly heavy responsibility.
Of late, there has been some talk
about the drying up of loanable
funds

banks

commercial

in

and

the resultant driving of borrowers

the

into

of

hands

Federal

the

agencies. There has been a ten¬
dency, as is usual, to blame bank
examiners for some of this, and

$1 billion. In other words,'
some of it is laid at the door of
flexibility and slack in this the banker
who, it is said, wishes
highly sensitive sector of govern¬ to take in too much sail when the
ment finance are furnished by the
barometer is falling.
Now I do
the

banks of New York.
As

is

well

cities

international banking

an

as

American

among

been questioned.

center has

never

Indicative

of this is the fact

in

1949

that

York City
banks held 1,200 millions of de¬
mand deposits of foreign banks,
and the reporting member banks
April,

of

remainder

the

of

New

held only 200

posits.

.

the

,

The

Bul¬

Reserve

them¬

loanable
nor do I
think there is such lack of imag¬
ination in the banking world and

supervisory

the
bank
to cause

among

agencies

such

any

as

happy result.

un¬

v •

Trend of Bank Loans
,

national

The

loans

Federal

the?, bank

bankers

are

country

■

,

the

or

banks

discounts

and

-

of

reported
$22,941,-

of April 11, 1949. This
is less than the Dec. 31, 1948 total
026,000

as

$877,487,000, a reduction
While substantial, this

by

result

collection of finan¬
statistics, presents no other
tabulation of open-market money

of

of

the

national

York

City. These New York City
are basic not only for prime

loans

of New

York, • but today the banks of
York City hold almost one-

re¬

as

readjustments
for

banks

the

.level

of

is still high.

discounts

and

The current total of

loans in

na¬

bankers
acceptances, and stock exchange
call loan renewals, but also for
the bills, certificates of indebted¬
ness,
and notes of the Federal

tional banks exceeds the loans

Government.

the

commercial paper, prime

a

now

being made by the borrowers of

except those current in New

diminish

construed

be

must

rates

rates

OF CONSECVTIVE DIVIDENDS

drying up
funds at this juncture,

millions of such de¬

Open-market money rates are
quoted only in terms of New
York.

examiners
selves

either

that

think

not

known, New York's

preeminence

desig¬
National

would

partners.

important

I said before,

as

cial

re-

men

in the field of
preponderance of

York's

New

of

most

a

the

duction

central

and,

play and

to

banking

this

importance

scheme

have

3.7%.

'

.

this

In

bankers

most adequate

such

that

Milk

membership,
acquiring it from
Joseph M. Wineman. Other part¬
ners will
be Edward F. Hormel;
and Samuel E. Homsey and Victorine du Pont Homsey, limited

fine

leaders must

responsibility to conduct their
in the general

firm,

Street, will be Anton E. Homsey,
who will hold the firm's exchange

responsibilities. It is a
an
anomalous fact
must struggle for the

meet their

affairs wisely and

letin, which furnishes perhaps the

was

original

the

.

financial

But

partners of the new
which will have offices at 31

interest.

cen¬

was thought for a time that
establishment of the Federal

It

the

discrimination.

the

War,

States..For

New York City

reason,

\

Civil

deposits from banks all

the

over

the

the financial

was

the

of

ter

decisions, how¬

Exchange-

The

requires

It

Pont,

over

Its dominance in the financial af¬

this

April, 1949

holdings Of bills

New York banks'

at those words

fairs of

on

first and last weeks of

;back and look

do

money

bank holdings of
U. S. Treasury bills—our short¬
est-term obligations. Between the

Only

we

these

inflatioh.

of

against

confidence and courage and a

du

of the New York Stock

the
present forces of readjustment is
more
difficult than against the
influence

curious

part

position as the na¬
center is indicated

York's

figures

by

it¬

state

's elf.

tion's

of

name

million

New

for

synonym

the

a* national

out of
total of $580 million.

nvenient

o

of

mahy ways the exerting of

forces

MASS.

BOSTON,

commercial life of the nation

carrying

no

In

banking

imposes upon all leaders in

ever,

other
securities;
banks supplied over

^designation
.be

of

Homsej t Go. :

Homsey & Co. will be formed as
of June 30 and will be members

of Deflation

Fighting Forces

Swings

freedom

is

Du Pont,

determination.

may have upon
ideologies. Certain
of the
business
cycle are a normal function of our
system which permits the market
place to make decisions vitally
affecting the economy. The Very

clash

economy

are

the

The Relationship
was almost as impressive in con¬
nection with loans for purchasing
York City banks.

years

many

of

June

30,

as

$637,984,000

by

1948

and exceeds that of Dec. 31,

1947

by $1,460,569,000.
Moreover, it is significant that
decline

in

loans

in

national

banks

deposits of

pressed with this background. It
imposes upon him the necessity of

taking place between Dec.
31, 1948 and April 11, 1949 has
occurred almost wholly in the 246

all member banks in the country.
New York
has an even higher

tempering his discussion accord¬

banks located

New

fourth

of the demand

•percentage of interbank deposits;
almost $4 billion out of a little
than

more

$10 billion—well

over

35%. In contrast, New York City
banks have less than $50 million

deposit

on

These

with

other

banks.

figures bring out in quite

Any speaker here must be im¬

large portion of

other

banking and financial affairs

there

are

still,

is

ingly. The
the

this

of
fee

very

the

correspondent

tem of the

banking

sys¬

United States.

Cities

the

significant

that

fact

loans

is

which

of

62. But, more

in

a

fret

•

■

-

•

•.

dignity.

and

power

system

95.08%

of

which con¬
national

all

us

the

ordinary times in

live.

There

necessity

of

falls

upon

disregarding

lay

ate

pertinent
old ghost and to reiter¬
in our supervision and

an

that

New York and the Securities

v

t

;

r

The

City

Market

--

dominance

in

the

New

serious

v:;

the stock exchanges and
securities markets, are con¬

far

as

other

but

cerned.

also

with

respect

to

: bank

financing of those markets.
In April 1949, reporting member
banks had outstanding loans to
brokers
pose

U.

of

i S.

•

totaling

and

dealers

for

purchasing

or

little

was

furnished

$750

over

$700

by

New

seen

throughout

East.

bids

China

gulfed

with

difficult

Europe

to

fair

an

im¬

tide

In

is

western

for the moment

if

we

But

we

of

the1

Mediter¬

would be insincere

did not admit the stern

flict of

ideologies which

fronts

the

world.

capital to deposits, or
of capital to so-called risk assets.
Our concern is with the quality
of assets and the competence of

con¬

now con¬

America

re¬

ratios

Delano

vention

address
at

of

the

the

by

53rd

Comptroller

to ratios

-

Anuual

New

Bankers

York

State

Association, Spring Lake,
N. J., June 17, 1949.




among

those

Con¬

free1

best

competitive
method

of

one

hour free parking just
transacting

your

across

from

business

at

our

'The

by Mail' forms.
Over

of

the

American

Bankers

Asso¬

THE

ciation, Mr. Joseph M. Dodge, the
bankers

of

this

country

contribution

Half a Billion in Deposits!

forces

of

made

DIME

a

OF

BANK

STREET

DE

AND

••

"

,'ft

j

AVENUE

u

KALB

0

FLATBUSH: Avenue J and Coney Island Avenue

fuiibno'j iauiSi

0

•!

]> j

.

of the vol¬

untary controls which were then

BROOKLYN

BENSONHURST: 86th Street and 19th Avenue

inflation which, at

threatened to get out of

SAVINGS

FULTON

in controlling

hand. The importance

a

the

'Bank

.

.

vidual

as

f

final determinant in

that time,

and

Mondays

Dime.'Or, if you prefer, send for our free convenient

subservience

peoples who believe in* the indi¬

economy

open

leadership of the then President

the

faith

as a

no

Enjoy

Main Office while

In the spring of 1948 under the

fender

the

hold

bank supervision.

great

of

.

only for preliminary

purposes.

assets.. We

Savings Account

$7500. We're

Thursdays until 7 P.M.

There is no
subsitute
for
good management
and no subsitute for high quality
screening

mains the chief exponent and de¬
*An

is

to

through Fridays from 9 A.M. to 3 P.M., and ort

management. Such use as is made

flags of
freedom still fly in England and
France and Italy on down to the
shores

today with $5

the ratio of

of

it

of vigilance, experience,

We invite you to open your

rigid rule in regard to

no

en¬

be

to be arrested. The

seems

-

we

Far

the

to

consequences

estimate.

the

eastern

than

•

communism

ranean.

less

us.

recently

pressive increase in the spread of

carrying

million; of this amount,
million

pur¬

have

We

obligations

Government
a

the

and

,,

which confront

York

securities market is
This is true not only

well known.
as

,

of

hold to

thought to those
important ~ events

our

birthday

our

safety, integrity and service to the community.

..,

And here it might be
to

examination of national banks

i

celebrating

this month—90 years

<
...

not

small matters and of devoting our

•*

We're

banks.

such

national

stitute

energies and

Y

•

in¬

shown

by the
4,750 so-called "country banks" of
crease

with

we

of

obliga¬

you

which

apex

an

in

repre¬

the

on

York

the

you

in the Central and

Reserve

to, approach your
problems upon a plane consistent

tion

are

banks at

held

are

sent, likewise imposes

These

City

which

nation

by the institutions

startling fashion the place of New

'

of
we

capacity

recession

minor

a

has

there

late,

a

this

privilege for the Comptroller of the Currency to attend
you our mutual concerns.
I am
in this forum one meets the representatives of a great
.banking system. The State of New York has been called the "Empire
It is

4

.

that

here in America and the influence

keeping country economically strong so as to resist spread of
communistic ideologies. Denies any drying-up in commercial bank
loanable funds and points out, despite recent decline in bank loans,
amount outstanding still exceeds that of year ago.

*c

Now

an

to
meet
the
ensuing
problem with the same, skill and

...

Comptroller Delano stresses dominant position of New York banks
in nation's finances, and points oat their resulting responsibilities

*

President

States.

of

experiencing an arresting of that
inflationary spiral I trust that all
of us will have the courage and

;

...

-the

by

United

Responsibilities of New York

i

Comptroller of the Currency

*

character

and

"

•

.

This is the price

by the Secretary of the Treasury

this

underestimate

not

us

of freedom and
in which individual
developed. It is one
of the ramparts we watch.

placed by bankers on the infla¬
tion spiral has been acknowledged

developing that individual. But let

Role of New Yoik Banks In

21

(2717)

Member .^gpERAI

.

DEPOSIT

INSURANCE
ft'

F

J

t

CORPORATION

THE

(2718)

22

"What This

COMMERCIAL

equity capital is not surprising.
Corporations treating their stock¬
holders fairly and generously have
little
trouble
in raising needed

Country Needs Is

Millions More Stockholders"

funds.

Federal Deposit insurance

BONDS

Under

for the democratization of

d

m e n

the

More

that the pres¬
double

ent

*

taxation

of

dividend in¬

NATIONAL STATE BANK
St., Newark

810 Broad

Tele. NK 348

Tel. MArket 2-7988

budget to make

Open-end phone to New York City

are

slim,

can

for the loss in
substitute other

up

tax

taxes to raise the necessary

economic

revenues,

un¬

trim the

who

believe
the

measure

lawmakers

our

that

Those

1, N. J.

less

ished.

1812

FOUNDED

this drastic

be abol¬

come

or

funds.

system of free

Neither step seems likely. A more
realistic approach is necessary to

enterprise

make

i

in the busi¬
give them the option to

and

subscribe

additional

to

stock?

Electric utilities are doing it suc¬

Why not others?

cessfully.

Investors, are antagonized
by
corporations which pay small divi¬
dends when business is good and
taxation.
He
would simply ex¬
clude all dividends from taxable cut or omit payments when times
income. But chances of passage of get a little rough. Unfortunately,

tion

a

divi¬

to invest more money
ness

challenging heading, "What This Country Needs Is
Stockholders," an editorial in a recent issue of the
"Saturday Evening Post" analyzed some of the reasons for the scar¬
city of "venture capital." The article concluded with the recomMillions

stock

Why not come out openly and ask
stockholders whether they want

capitalistic system.

our

of

dends, a common practice in re¬
cent
years,
is only the use of
retained
profits for involuntary
subscription to additional stock.

government

responsibility for investors' apathy toward furnishing
capital. Contends dividend policies have in many
instances been grossly unfair to the shareholders. Cites in detail
the impact of double taxation of dividends, declaring its abolition

Corporation

STATE and MUNICIPAL

*

as

share

is necessary

★

well

needed venture

Federal Reserve System

distribution

The

Laird, Bissell & Meeds

s

the

idea

the

palatable for

But let us

All this ties in with the
of double taxation.

Dr. Biel maintains company managements as

business

the

up

profits.

give the facts.

and

be frank

Dividend Abuse

Stock

must

build

to

out of retained

The Tie-in With Double Taxation

By HEINZ H. BIEL

MEMBER

policy

1949

June 23,

Thursday,

CHRONICLE

FINANCIAL

&

should

revised

be

that

so

should

get

stockholder

question

The tax laws

the

fairer
share
of
corporate profits, and
corporations should raise capital
for
new
investments
directly,
rather than surreptitiously by in¬
a

subscription from the
mass of stockholders.
The portion of corporate earnings
paid out in dividends should be
taxed at a very much lower rate
or not at all, while retained prof¬
voluntary

amorphous

its should be taxed at regular cor¬

porate income tax rates.
the

From

United

States

Treas¬

ury's point of view it is doubtful
whether

relief

this

from

double

the stockholder

taxation would result in substan¬

usually is the goat.
He or she
feels, sometimes with justification,
that the management is more in¬

tial loss of revenue, because many

in

such

terested

instances

in high salaries, bonuses

pension plans than in the in¬
vestment made by owners of the

and

stockholders'

When

business.

in¬

equity

recipients of those increased divi¬
dends

higher

corporate in¬

38%.

of

brackets

is

rate

tax

maximum

tax

come

Corporations,

other hand, would

the

on

the

the

than

income

in

are

wherein

not be
Yet, it

superior to
State Capital¬

Treasury Department, which must
guard against any loss in revenues

terests

capital will be inclined to turn its

would

ism, Socialism

DArclay 7-5928

unless it is assured of

back.

management to justify a miserly

C

or

o m m u-

nism, agree

tory increase from other sources.

on

The

MUNICIPAL

short¬

sightedness
laws
is

AND

of

our

under which an

present tax
income tax

the corporate
again on the
dividend income paid out of the
first

imposed

income

REVENUE BONDS

fight against double taxa¬
tion has thus far been sponsored

Heinz H. Biel

the Unfairness
and

on

then

and

(already taxed) corporate income.

primarily by corporations which
complain bitterly about the scar¬
city of venture capital. It must be
admitted, however, that some cor¬
porations themselves have been
pursuing policies that create apa¬
thy on the part of investors to¬
wards

—

★

The

—

This

Campbell & Co.

may

24 Commerce Street, Newark 2, N. J.

ent

Phone

MArket 3-4700

New York Phone WHitehall 3-1081

Penalty Imposed
Double Taxation

so-called

by

taxation

double

be a major cause of the pres¬
low evaluation of corporate

Indirectly

markets.

it

may

be

responsible, to a large degree,
for the apparent dearth of equity
capital which has barred many
corporations from selling addi¬
tional stock to the public. After

New

Jersey

Dow-Jones

age

Securities

Industrial

only

means

investor

an

Aver¬

about

4.2%

an

for

income

with

and

3.4%

for those

souls

with

an

$25,000,
viable

★

dividend return on

all, the 6.3%
the

stocks.

common

The

man¬

agements of some publicly-owned
corporations have abused
their

of
en¬

income

of

Stockholders

powers.

the penalty.

have

paid

A good many exam¬

ples can be cited.

earnings and assets in the securi¬
ties

a compensa¬

a

Phone MArket

3-0190

Open End Phone to New York City
DIgby 9-0767

handle

increased

the

business)

volume

of

for plant expansion.

or

In many

instances these reasons
valid only in part. If the

Tax-free dividends, • or were
tax-free dividends, would need for working capital is tem¬
undoubtedly make the investment porary, bank loans may be had.
in corporate stocks far more ap¬ If a permanently larger volume
pealing to many investors. It might of business is to be expected, at¬
even
produce the millions more tendant capital expenditure re¬
stockholders all supporters of our quirements
should not be met
free enterprise system would like
primarily by the involuntary con¬
to see.

tribution of the stockholder.

Congressman Fred Crawford of

introduced a bill
designed to eliminate this double
Michigan

has

common

stockholders.

their

responsibilities

tions.

They
and

realize
obliga¬

They regard themselves as
business owned by

managers of a

thousands

individual

of

investors

company

share

per

dividends

earns
year

in

more

If

a

than $12

a

and pays only $2

the

cash,

of

lack

there is little doubt that he would

hold

If dividend income up

$3,000

or

either

of

ence

fail

all

from

common

road

indiffer¬

of

who

managements

some

to

give adequate accounting
stewardship. Some important
corporations still hold their an¬
nual meetings in cities not con¬
of

in such

yers

vidual

that the indi¬

a way

stockholder hardly knows

Such

what it is all about.
affairs

of

makes

a

possible

state
some

fancy employment contracts and
pension plans that stockholders
would normally not countenance.

of

managements

Enlightened

many corporations realize that our
free enterprise system will perish

unless it is
of

have confidence in corporate

(2) are treated
with respect.
No intelligent in¬
vestor will insist on a 100% divi¬
management

dend

if the management

payout,

states

towards the democratization

result
from

would

political

a

frankly that it will be its

attractive

to

management.

Direct Wire

logical result. This, in turn,
permit the raising of new

would

equity capital by soundly man¬
aged
corporations
whenever
a
legitimate need arose. The entire
nation would be the beneficiary
of the

•

Tel. MArket 2-5800

Teletype NK 170

,

57

WILLIAM

New Jersey

We

NEW JERSEY

capital.

.

Kidder, Peabody & Co.
To

Sponsor Talks on
Investing

Mutual Fund

development arising out

fund

public interest in mu¬
is the ar¬

investing

members

New

MUNICIPAL BONDS

Jersey State &

lic,

be

to

at 4

held
p.m.

I. S.

Mitchell

2-7660




The

mutual

fund

speakers will discuss
investing principles

.-(•

:

'

i

5

Chicago 3, III.

Fla.

.

★

ing to the Manager, Mutual Funds
Department, Kidder, Peabody &

Co., 10 E. 45th Street, New York
17, N. Y.

U. S. Govt. Securities

PHILADELPHIA

Municipal

5 Cottihierbe St., Newark 2, N.

J.

Tel. Mitchell 3-8350. N. Y. Tel. WOrth 4-2489

MArket 3-3430

!
,

Bell

System

Teletype

NK

277

9

.

«.

Municipal Bonds
Active

★

Ryan, Moss & Co.

1891 ,v'

!| N.;y. Phone-KEcL^'2-4383

be

by writ¬

DOLPHIN & CO.

New

*

Rippel&Co.
Established

jl8 Clinton
|

NEW YORK

Tickets for each lecture may

Bonds

\
★

Phone

after¬

Thursday

in the firm's up¬

building at 10 E. 45th

obtained without charge

135 So. La Salle St.

State &

Municipal Bonds

Public Service Issues

11

inc.

Dealer

Specialize In

Bank & Insurance

24 Commerce Street

New York

of the

Exchange, for a series of
talks, open to the pub¬

informal

Fidelity-Philadelphia Trust Building

Securities

■

STREET.

Du Pont Building

Miami 32,

j

Chicago and Miami

MUNICIPAL BONDS

SH3EZHE5

jjNdWark 2;WTcr$e^TWf:

of our free en¬

resurgence

terprise system which is founded
on
an
adequate flow of venture

Co.,

NEWARK, NEW JERSEY

Mitchell 2-2800

MUELLER & CURRIER

to

B. J. Van I ngen & Co.

Municipal Bond Department

New York Telephone: REctor 2-9289

;

A healthier market

and benefits.

& COMPANY
744 Broad St., Newark 2, N. J.

-

savings

the

Street.

Municipal

business

in

corporate securities would be

noons

Newark Telephone:

invest

for

Stock

Municipal Bonds

Fidelity Union Trust Company

socio¬

banks, if they were assured of a
fair participation in business prof¬
its and considerate treatment by

town office

Mac BRIDE, MILLER

as

rangement by Kidder, Peabody &

New Jersey

bonds

well

as

than in savings bonds and

tual

state & municipal

most

be

logical point of view. Millions of
persons
would find it far more

Latest

Municipal Bonds

system.
This
desirable

capitalistic

our

of increased

Funds

or

and

New Jersey

Mutual Investment

fully tax-exempt
we would make
progress
along the

partly

supported by millions

loyal owners and investors who

(1)

to $1,000
could be made

year

a

individuals,

the

for

market

suffers

stocks in far greater

common

esteem.

tremendous

the

for

The investor in

policy.

formed and the right to be heard.
stocks

difficult

more

stocks would benefit and

for

But

way.

any

far

who have the right to be kept in¬

partly

31 Clinton St., Newark 2, N. J.

dividend

their

in

be

corporations are making
sincere effort to deal fairly with

veniently located with the object
discouraging
attendance
of
When business was booming and of
stockholders. The power of these
earnings were at unprecedented
heights, some of our leading cor¬ managements is based on, and per¬
porations
paid
absurdly
small petuated by, proxy voting. And
cash dividends. Stockholders were proxies often are phrased by law¬

simply told, and not always con¬
vincingly, that earnings had to be
retained for working capital (to

penalized

The managements of most of our

leading

Dividends

Too Small

$50,000.

Koellner & Gunther

overlooked,

are

Markets

in

Jersey & Pennsylvania Issues

City of Philadelphia Loans

PAUL J. MAH0NEY,

INC.

115 Broadway, New York 6
Telephone BEekman 3-8440

>

Telephones
Phila.: PEnnypacker
New

York:

?i

'

5-4646

HAnover 2-9369

:

Bell System

Teletype
PH 299

Volume 169

Number 4814

THE

COMMERCIAL

&

FINANCIAL

Bond Club of New

Harry D. Miller, Nugent & Igoe, East Orange, N. J., Secretary of the Bond Club;
B. Parker, R. W. Pressprich & Co., New York City
President of the
Club; C. Wallace Smith, Smith, Barney & Co., New York City, Vice-President

(2719)

23

Jersey

Charles G. Colyer; Julius A. Rippel, Julius A. Rippel, Inc., Newark, N. J.; C. J.
Waldmann, Kean, Taylor & Co., New York City

Courtlandt
Bond

of the Bond

'

CHRONICLE

*

,

»

.

Club; J. Wm. Roos, MacBride, Miller & Co., Newark,
Treasurer of the Club

James Ransom, Harris Trust & Savings Bank, New York
City; Raymond F. Vanderhoff, Fidelity Union Trust Co.,

Chester
York

Newark

T.

City;

Bardsley, Salomon Bros. & Hutzler,
Paul J. Mahoney, P. J. Mahoney,
New

Charles E. Clifton, Trust Co. of New Jersey, Jersey City; Ed. Wright, Goodbody & Co.,
Jersey City; Paul Bestor, Trust Co. of New Jersey, Jersey City; George B. Underwood, Irvington Trust Co., Irvington, N. J.

Monroe

V. Poole,

Geo. B. Gibbons &

Co., Inc., New York City; John F. Dolan,

Spencer Trask & Co., New York City; Banks E. Moyer,




Washington, N. J.

York

.

City

New
Inc.,

O. D. Griffin, Louis H. Whitehead Company, New York
City; Harold B. Smith, Pershing & Co., New York City
,

'

A. P. Luscombe, Peoples National Bank & Trust Co., Belleville, N. J.; Henry L.
Peoples Bank & Tru§t Co., Westfield, N. J.; Ned Byrne, Byrne & Phelps,
New York City; Ted Winpenny, The Paterson Savings & Trust Co., Paterson,

Robert

Rost,
Inc.,
N. J.

M. Pyle, Hornblower & Weeks, New York City; Charles E. Reed, Kean,
Taylor & Co., Newark; Cyrus R. Currier, Mueller & Currier, Newark

24

THE

(2720)

COMMERCIAL

Holds Annual

Robert

& Co.,

P. Bennett, E.

A. Clark & Co., New York City; Joseph F.

East Orange, N. J.; William M. Mezger, Graham, Parsons &
City; George W. Philco, Upper Montclair, N. J.

Hal E.

cial
L.

Murphy, The Commercial &.FinanChronicle, New York City; Edwin
Beck, The Commercial & Financial
Chronicle, New York City

&

Rush, Reynolds

Co., New York




Walter Perry,
Hutton &

Jr., American Insurance Co.,

Newark, N. J.; Hunt Marckwald, W. E.
Hayden, Stone & Co., New York City

Co., New York City; H. C. Ballou,

j0hn Ryan, Ryan, Moss & Co., Newark; Joseph G. Kress, Homer
Walter F. Coss, B. J. Van Ingen & Co.; Bill Roos, MacBride,

Donald

E.

Lane,

Fenner

O'Connell & Co.;
Miller & Co.

&

Beane,

Kenneth
■

Lynch, Pierce,
Newark, N. J.; H. P.

Merrill

Schaub, Jr., Harry P. Schaub, Inc., Newark,
N.

-

1949

Spring Field Day

Ray Wilson, Union Securities Corp, New York City; Scott Russell, Glore, Forgan & Co.,
New York City; Allan Church, Courts & Co., New York City; Jack Nagle,
C. J. Devine & Co., New York City

Anthony Rizzo, entertainer; Harold R.
Clark, Franklin Trust Co., Paterson, N. J.

Thursday, June 23,

CHRONICLE

FINANCIAL

J.—at

the

clam

bar

C. McLaren, The Corporation Trust Co., New York City; C. W. Smith, Smith,
Barney & Co., New York City; Charles S. Morley, New York City; John F. Dolan,
Spencer Trask & Co., New York City
K.

H. C. Brewster, Allen & Co., New York

Spear, Julius A. Rippel, Inc., Newark;

Arthur R. Robinson,
Fidelity Union Trust Co. of Newark
,

'

J,

~.

City; Russell M. Ergood, Jr., Stroud & Co.,
Inc., Philadelphia.

Volume

169

THE

Number 4814

At Rock

COMMERCIAL

&

Ryan, Ryan, Moss & Co., Newark (center), singing the blues, surrounded
by the Club's entertainers: Russell Law, Bill Griffin, Charles Oliver and Emil Szela

W.

Newark;

Carroll,

Lee

W.

Carroll

&

Co.,

B. Thomas Aitken, Peoples Na-

tional Bank &

Harry Zimmer,

Trust Co., Belleville, N. J.

K

Van Hise, Parker

City

Co.,

*

Sanders & Co.; A. A. Johnson, Federal Trust Co.
& Weissenborn, Newark; Edwin F. Kezer, B. J.
& Co., New York City




25

Farrar, Schwabacher & Co., New York City; Bill Rommel, J. S. Rippel & Co.,
Newark; T. G. Kenyon, Cartaret Bank & Trust Co., Cartaret, N. J.

State Bank of Newark; Jack Clark, Chase National Bank
,
k
t

Commercial Trust Co., Jersey City; Thomas H. Benton, Benton &

Herbert I. Shaw, Vance,
W

William

Corp., New York City; Glenn D. Thompson, National
of New York City

A1 Milloy, The First Boston

Nicholas, New York City; Charles B. Schubert, Emanuel, Deetjen &
New York

(2721)

CHRONICLE

Spring Club, West Orange

John J.

Lee

FINANCIAL

of Newark;
Van lngen
.

Thomas H. Benton, Benton & Nicholas,
New York City; Charles B. Schiibert,
•* Emanuel, Deetjen & J?o., New York City-

Jay A. Richardson, Halsey, Stuart & Co., New York City; James Currie, Troster,
Currie & Summers, New York City; Chick Spring, Outwater & Wells, Jersey City,
N. J.; Ed. Purcell, Commercial Trust Co., Jersey City, N. J.

Harry D. Miller, Nugent &
&

Igoe, East Orange, N. J.; Norton P. Rogers, Rogers, Gordon

Co., New York City; Daniel E. Fitzpatrick, Phelps, Fenn & Co., New
Ed. M. McLaughlin, Paine, Webber, Jackson & Curtis, New York

York City;
City

26

THE

(2722)

COMMERCIAL

Gathering

&

a

G. Joyce, Craigmyle, Pinney & Co., New York City; S. R. Soverel, Montclair
Savings Bank, Montclair, N. J.; William L. Maude, Howard Savings Institute, Newark,
N. J.; J. P. Rutter, American Insurance
Company, Newark, N. J.

A.

Stewart R. Terrill, Jt D.

Topping & Co., New York City;
Inc., New York! City

Portland Merrill, Blyth & Co.,

Donald K. Mackenzie, Bank of America, N. T. & S. A., New York
City; William H.
Boland, Boland, Saffin & Co., New York City; Herbert A. Hoehn, Gregory & Son, Inc.,
New York City




CHRONICLE

Thursday, June 23, 1949

Huge Success

Richard D. Nelson, Equitable Securities Corp., New York City; Richard H. Marshall,
Laurence M. Marks & Co., New York City; Tristam B. Johnson, Bankers Trust
Co.,
New York City

Charles H. Henninger, Nugent & Igoe, East Orange, N. J.;
Edgar Weis, guest

Horace C. Sylvester, Coffin & Burr, Inc., New York
City; J. Kirk Hopper, Equitable
Securities Corp., New York City; Taber J.
Chadwick, Chadwick & Slaight,
New York City

•

FINANCIAL

F. R. Cole. F. R. Cole & Co., Newark; W. H. Campbell,
Campbell & Co., Newark

Walter F.
&

Coss, B. J. Van Ingen & Co., New York City; Joseph W. Cantlie, Campbell
Co., Newark, N. J.; Bill Roos, MacBride, Miller & Co., Newark; Joe Kress,
Homer O'Connell &

John P.

Co., New York City

Ryan, Goldman, Sachs & Co., New York City; John H. Duerk, Howard.
Savings Institute, Newark; John O. Sachau, Blyth & Co., Inc.

Volume 169

THE

Number 4814

Reviews

The

A statistical analysis of publicly offered foreign dollar bonds by
Dean G. Rowland Collins and Marcus Nadler of the Institute of
in proportion

of these obligations

"Statistical Analysis of Publicly Offered Foreign Dollar Bonds" issued
<$-

York

of New

University.
increase

The

in

proportion

of

bonds

serviced

in

full

from

51.77%

in*"fl947

was

due

main¬

ly

the

to

debt

fact

that

service

the

Italian

resumption

plan
23,
1947, became op¬
erative and, by the end of 1948,
59% of .the outstanding bonds had
been exchanged for new bonds.
Furthermore, the percentage of
-

Dec.

of

out

of

By WILLIAM J. McKAY

countries

the

and

International

Bank for Reconstruction and De¬

velopment) having dollar bonds
outstanding in the United States.
At

the

On the

and

Development
total of 36 obligors (35

a

end

of

1948

these

21

Canadian

of the

eve

administration

defies

s e r

i

o u

criticism, and that

as everything
economic horizon is rosy,

the

on

Germany and Ja¬

the fact that the economic decline

in complete de¬
fault of debt service, account for
30.68% to 34 35%, and $19,457,500 62.31% of total
principal amount
principal
amount
of
Peruvian of bonds repatriated.
These two

that is obvious elsewhere has not

Brazilian bonds

bonds

assented

to Plan

contract.

loan

which

pan,

have

been

exchanged for

are

countries

have

repurchased
36.74% and 70.0%, respectively, of
Data on the status of all pub¬ their dollar issues
publicly of¬
June 20 by Dean G. Rowland Col¬
licly offered foreign dollar bonds fered in the United States.
In
lins, Director and Marcus Nadler, as of Dec. 31, 1947 and 1948 are
contrast, however, to the German
Research Director of the Institute summarized in the following table:
repatriation, which was carried

Ceo. Rowland Collins

Marcus

Or.

Nadler

bonds.

new

•/'

mainly during the period the

—-Dec. 31,1948—

out

(000,000)

€!o

(000,0p0)

%

country was

$2,334.4

51.77

$2,388.8

54.46

-Dec. 31,1947-

Debt Service Paid in Full-—
In Default

to Interest—

as

In Default

as

46.60

2,101.3

—_

43.84

1,923.1

to Sinking Fund or
73.4

Principal

Total

1.63

$4,509.1

On Dec. 31, 1948 European and

74.7

100.00

1.70

$4,386.6

100.00

slight

the total Latin-American bonds in

decrease from Dec. 31,
Europe's
percentage
de¬
creased from 54.5% at the end of
1947 to 53.6% on Dec. 31, 1948.

default, Mexco and Chile account

The

Latin-American
for

85%

a

1947.

obligors account

of defaulted bonds.

Of

for

38.56% and 18.65%, respec¬
tively, while German issues repre¬

Latin-America

31.4%

of

defaulted

total

of

East

1948

accounted

for

14.9%

the

at

total

of

defaulted bonds.

The

geographical

distribution

of foreign dollar bonds in default
as to interest on Dec. 31, 1948, is

for

accounted

Far

end

sent 64.37% of total European de¬
faulted bonds.
At the end of 1948

bonds,

shown in the

following table:
Percent of

Amount

Amount

in

Total

Outstanding

Default

Defaulted

-

.

(000,000)

(000,000)

Bonds

$1,028.0

$603.8

31.4

—1,346.3

1,030,6

53.6

512.5

286.8

14.9

1,249.8

1.9

0.1

Latin America

Europe
Far East

—

-

North America

—

—

250.0

Internat'l Bank for Reconst. and Devel.

default

in

partial

interest

on

and

or

total

sinking-

fund

payments, the repatriation
by Japan took place while service
of the bonds was fully maintained.
Under the heading "Recent De¬

velopments" the bulletin presents
information
of
importance
to
holders of foreign bonds, includ¬
ing the proposed plan for the re¬
sumption of debt service by the
Republic of Bolivia.
An

analysis

Brazilian

the

of

the

results

of

debt

Government

—,

—-

Plan

A; 57.41% have been ex¬
changed into Plan B bonds, while
7.42%
of the bonds have not
elected either plan.
These unoptioned
(original) bonds out¬
standing In the fact amount of

$21,116,045, which are now con¬
sidered by the Brazilian Govern¬
ment to be Plan A bonds, receive
no

unless they

interest

pre¬

are

for stamping to evidence
change into Plan A bonds.
Interest on these bonds is payable

At the end of 1948,

European,
American

Eastern

58.7%

as

Far

of the

55.9%

and

bonds

in default

76.5% of the
of the Latin-

outstanding were
interest, while de¬

to

faulted Canadian bonds amounted
to

less

than

total

of

0.2%

bonds.

interest defaults by type of

8.3%.
The actual

in

turn

rate

of interest re¬

based

1948,

amount of cash

upon

the

interest received

the nominal
publicly offered for¬

for 1948 coupons on

amount

of

eign dollar bonds outstanding at
the end of the year, was 2.13% as
compared - with the average coiitractualrate Of 4.79%. In 1947, the
amount of cash interest received
constituted 2.02% as against the
contractual-rate of 4.87%.
The
increase in the actual amount of

the rate of
return) as compared with the cor¬
responding figures for 1947 is due
interest; paid and in

fact

$1,923.1

that

been

exchanged

with

lower

bonds have

for

the

Outstanding
(000)

For

1948,
of

turn

re¬

received

on

1.31%

was

Latin-American

bonds

Ear East

rate

of

instead of 5.69%

0.90%

rate.

contractual

In

the

Int'l

Bank, for

const,

interest.

The

Eastern issues

return

on

the

Far

was

due

and

the

amount

ceived for 1948 coupons of

outstanding
shown

in

Contractual

bonds

Dec. 31, 1948 are

on

the

following table:
Actual

Average

Amount'

Amount of Contractual Received
in Cash

Percent,of
.'Average
Rate of

Int. Due

Rate of

(COO)

Int. Due

(000)

Return

$13,465
12,102
9,138
,,.51,796*

1.31

512,528

;

the

semiannual interest dates

specified in the original bonds and
accrues
from the interest dates
next

26,348

5.14

51,909

.4.15,

6,750

2.70

Sinking

impact

Despite,
however, the apparent lack of
anxiety on the part of the Liberal
Administration
concerning
eco¬
nomic prospects, the early elec¬
tion call is probably more indica¬
tive

its

of

actual

state

In any event, up to

it has not been

mind.

of

this late stage

difficult

to

con¬

vince the electorate that the Con¬
servatives'

fund

dire

$97,741,700 to $81,481,200.
Thus,
owing to the reduction in prin¬
cipal in connection with the ac¬
ceptance of Plan B and to the
sinking-fund purchases, the total
Brazilian bonded dollar debt (ex¬
clusive
of the
State of Ceara

than

campaign oratory.

Of

been

total

the

border

polls

thus
tions

gains.

0.90
1.78

.6,750;.,

Toronto Slock Exch.
'

t

>

Toronto Stodk Exchange,

Roadhcfuse'^c' Co.,< Vibe*;

President;
George* L. Jenni?on,
Wills* Bickle
Co., Secretary;
J. C. L.

Allen, Cr A Fields & £0.,

Dominion is

confronted

now

as

a

result of the recent abrupt change

for the

in world economic

worse

conditions.

During the week the external
section

of

the

bond market

was

steady and there was less evidence
of pressure to liquidate. The in¬
Dominions

ternal

firmer

with

likewise

were

the

sation

of

recent

temporary ces¬
heavy selling of

weeks.

the

Free

funds

also

stronger

as

a

cial

demand

in

connection

Alberta oil

result of

were

spe¬

with

financing; the strength

of the free Canadian dollar in the
face of the

contradicts

earlier

indica¬

of

probable Conservative
However the only factual

of the popular vote
declined in comparison with the
previous election results, whereas
the Conservatives showed a slight
percentage

gain,
In British Columbia the
predominant feature of the recent
provincial election was the de¬
cisive defeat of the CCF by a co¬
alition of Liberals and Conserva¬
tives.

The coalition, which had 21
15 Conservatives at

Liberals and

prorogation, is now composed of 23
Liberals, 14 Conservatives and 3
straight Coalitionists.

made by

the Canadian electorate

Monday next.

on

Notwithstand¬

the current prognostications
of sweeping Liberal gains there
is
one
aspect of the situation
which has perhaps received in¬
ing

consideration.

adequate

Since

1921, when Mackenzie King first
led the Liberals to political su¬

In

the

present

circumstances

provincial

election.

This

party is not represented directly
in the Federal elections but the

elections the

the

unofficial market might be more

kets

situation

responsive to the influence of fac¬
The stock mar¬

extremely dull with the
golds once more providing the
only firm feature.
The basewere

metals

and

displayed
the

Western

oils

first

of

further

and

Western

announcement*

price-cuts

at

rallying tendency but

a

in

zinc

crude subsequently exerted
pressing effect.

a

de¬

N. Y. Dealers Dintr

Dale

Ckaaged te Dec. 9

The New York Security Dealers
Association announces that
the
date

of

their

24th

annual dinner

to be held at the Hotel Pierre has

been

changed

from

Dec.

2

to

9.

Dec.

Thomas Kenney to Be
Hulsebosch Partner
E.

Thomas

Kenney

has

been,

admitted to partnership with Ger¬
ard F. Hulsebosch in G. F. Hulse¬
&

140 Cedar Street*
Mr. Kenney has
been with the firm for some time
bosch

Co.,

New York City.
as

manager

of the. collateral loan

department.

CANADIAN BONDS

GOVERNMENT
PROVINCIAL
MUNICIPAL
CORPORATION

CANADIAN STOCKS

political machine
supporting * the Pro¬
gressive Conservative candidates
in the numerous constituencies of
Quebec. In view of the fact that
the other key province of On¬
tario is traditionally a Conserva¬
tive stronghold it is clearly un¬

A. E. AMES & CO.

^chances of
tjie official opposition* party be-

NEW YORK Sr N* Y.
iLuH/i J J J) / Li.LK***.

Union Nationale
is

actively

TORONTO, ONT., CANADA—
the annual C meeting. of the
A. L. A.
Richardson,
Dickson, Jolliffe &
Co., was elected President to suc¬
ceed
R.
J. Breckenridge.
Also wise to write off the
elected were D'Arcy D. Doherty,
At

Doherty,
2.70,

:

government,
atmosphere that has
enveloped the Canadian situation
in the past few months will be
Then it will
rapidly dissipated.
be possible to eschew politics and
deal constructively with the
many
pressing problems with which the

tors of this kind.

the

Nova Scotia stronghold, but their

last

Officers Elected by

new

from north of the
impression that

fairly well in hand and are gen¬
erally expected to maintain at
least their present slight parlia¬
mentary majority. This opinion

$1,-

of

of the

unreal

the

have

leave the

Liberals

the

reduced

amount

————

■

election

sible that after

Late reports and results of un¬

official

premacy, only in 1930, when R. B.
Bennett gained 24 seats in Quebec,
from did the Liberals lose the solid sup¬
$284,560,645 on Nov. 1, 1943, to
port of that key province and also
$181,989,775 at the end of 1948.
an election.

has

atmosphere

increasing pressure on
warnings of eco¬ Sterling still provides cause/for
are no more
some bewilderment, but it is pos¬

confident prediction con¬
operations have cerning the decision that will be

by $28,624,070 from $108,016,600 to $79,392,530, while Plan
A bonds have been reduced from

bonds)

the

nomic troubles ahead

ture any

B bonds

$4,386,586 -22Q9.999"-?^4,79--f^$9325I-^-**2»13"'?*4Treasurcr




full

Thus it is still premaure to ven¬

preceding Jan. 1, 1944.

in¬
re¬

Re-"*

-------:

its

Dominion.

1.78%

The contractual amount of
terest

5.69

;250^01

the

contractual rate of 5.14%.

4.70

Vi

within

against 980,000 of State of Ceara 8% bond3 there appears to be a possibility of
The of 1922 in the amount of $1,724,000
history)
repeating
itself.
The
amount received in cash in re¬ have
been
surrendered against French-speaking province is now
spect of 1948 coupons was 44,41% payment of 12% of the principal dominated
by the Union Nationale
of, the contractual amount due, amount.
party of Premier Duplessis, which
as against 41.41% in 1947.
gained a landslide victory in the
a

1,249,770

aijd De^el.

Total

preced¬

ing year Europe paid 0.86% in¬
stead of 6.06%. The North Ameri¬
can issues in both years paid al¬
most the full contractual rate of

76,662

——

com¬

In 1948, Europe paid at the

$48,330

North America

as

pared to a contractual rate of
4.70%, while for 1947 the rates
were 1.28% and 4.90%, respective¬

ly.

on

reduced the total amount of Plan

actual rate of

an

$1,028,017

——

Europe

debt-

service resumption plans.

1,346,271

Latin America

bonds
in ac¬

new

rates
several

Percent of

Nominal

; Amount

100,0

substantial

a

coupon

with

cordance

~

defaulted

of

amount

out¬

An analysis of
oblig¬
ors shows that, of the total amount
of bonds in default, bonds of na¬
tional governments accounts for
41.6%; corporate bonds for 42.6%;
states, provinces, and departments
for 7.5%; and municipalities for
standing

the

to

their

$4,386.6

-

registered

yet

adjustment plan of Nov. 23, 1943 evidence of the current political
shows that, as of Dec. 31, 1948, trend is provided by the provin¬
bonds constituting 34.35% of the cial
election
results
in
Nova
principal amount of dollar bonds Scotia and British Columbia. As
outstanding on the day the plan was to be expected the Liberals
became effective have
accepted maintained their grip in their

sented
Total

General Elections

is still curiously devoid of any particular excitement. To some extent
this is due to the Liberal political strategy which is based on the
contention that: "there are no issues," that the record of the present

there is no call for any change.
obligors had outstanding $2,318,As far as the electorate is con¬
718,728 principal amount of dollar
cerned
this
conception of
the
bonds, of which bonds with a face
value of $707,194,135 or 30.5% of situation appears to be generally
well accepted.
Although the Con¬
the outstanding amount were held
abroad.
Of the total repatriated servative opposition leader, Mr.
amount only $68,487,800 or 9.7% Drew, has raised a series of issues
he has so far failed to disturb the
represent bonds of countries that
were
paying in 1948 interest on public apathy. This generally com¬
all issues in accordance with the placent attitude is largely due to

A has increased during 1948 from

27

Canadian Securities

and of the International Bank for

In 1948 debt service has been paid in full on $2,388,769,881 or on
,54.46% of the total $4,386,586,652 of publicly offered foreign dollar
bonds outstanding on Dec. 31, 1948, according to a bulletin entitled

Finance

in¬

on

Reconstruction

of International

(2723)

of

obtained

has

CHRONICLE

foreign dollar bonds
repatriated or purchased by for¬
eigners of issues of 20 countries

increase

an

Institute

formation

which debt service is being met

on

FINANCIAL

In
discussing repatriation
bonds, the bulletin states:

Foreign Dollar Bond Situation

International Finance of New York University reveals

&

COMMERCIAL

INCORPORATED

TWO WALL STREET

fore the
mte choice.
.

What^s perhaps.,more obvious,
i§ the

cenaint^ihat following the

••

.

.1

28

THE

(2724)

COMMERCIAL

Expects War Bond Redemption Proceeds to
Flow to Investment Companies
Wiesenberger predicts 10% of $24 billion of early matur¬
ing Savings Bonds will be reinvested in mutual funds.

1949

Thursday, June 23,

CHRONICLE

Receding Department Store Profit Margins
established upward course in costs

(Continued from page 19)
In

Arthur

FINANCIAL

&

it

1939

equivalent to only

was

end of 1948 it was

equal to 41.4%

of total assets.

review of the individual

A

the

33.1% of total assets, while by

ownership

of

bers

com-i

groups

lower percentage ex¬
than did the independent1
for total payroll, advertis¬

monly had

transaction.

per

ex¬

penses

stores

items shows increased costs
ing, supplies, and insurance. As a
per transaction in nine of the 15
natural
divisions
from
1947
to result, the total expense advantage
was
0.4% of sales for member
1948.
and
in all the functional
pense

War Savings Bonds maturing within the
This change in the net working
10% will probably be reinvested in the shares
of
investment companies, Arthur
stores with sales of $10-$20 mii- >
Wiesenberger, investment fund capital position reflected a growth divisions. In functions where
pay¬
authority, told a luncheon meeting at the Bankers Club on June 16. in the importance of current assets roll constitutes an
lion and 2.0% of sales for member
important pari
yduring the war period.
Whereas
This sum will
stores with sales of $20-$5O mil-;'*
such as selling and delivery, there
time savings into investment com¬ in 1939 total current assets were
be the greatest
lion.
Examination of the
Of

the

$24 billion of

next five years, some

the

of all assets, by 1945
relationship had changed to
the investment company technique 62.7%, and has stayed above 60%
of saving as you invest—investing in each of the last four years. The

public and

its

potential

as

economic

for

by

d uating
m

n

30% of all new equity
capital raised during those years.
And, for the first quarter of 1949
investment
companies are 50%
ahead of one year ago.
One rea¬

school for sav¬

ing

well

may

Arthur Wiesenberger

decide the na-

tion's

eco¬

son

nomic destiny for years to come.
luncheon

The

nounce

held

was

publication
edition

annual

panies."

to

What

dend.

an

passed

a

divi¬

unusual argument

this is against the normal hazards
of investment. Dealers all over the

Wiesen-

Mr.

for this record is that no mu¬

tual fund has ever

an¬

ninth

the

of

of

to

book, "Investment Com¬

berger's

accompanying sharp decline in the
fixed assets ratio presumably rep¬
resented
not
only
depreciation

find

nation

'

to this fact

"Doubtless, a large part of this
money will be reinvested in new

who

Wiesenberger,

Mr.

pointing

themselves

again and again."
is

somewhat

a

payroll

sharp

more

in

movement

total

tively

unimportant,

such

payroll,

functions, however, there

been

increase from
1944 on. reflecting the general rise
in almost all types of expense.
In the face of these general ad¬
steady

a

data at the foot

associated

an

ume

dollar vol¬
for members

of groups.

be

In

addition

rising price levels

! '.
bfe.*;

-

A tentative conclusion

a

to

Supplementary

of the table show

greater

employee

per

question naturally may
that
posed as to what can be done.

vances,

the dollar amounts began to climb

by functions.

pense

In all

fact which is also re!-;,
figures for total ex¬

a

llected in the

cupancy. \

has

functions shows that'>

the greatest saving was in selling

oc¬

as

by

expense

ex¬

than where payroll is rela¬

pense

increase of public

equal

t

n

e

been

upward

investment

in

from the govr

has

the

investment being undertaken, but partly also
companies during in some instances sale and lease¬
1947 and 1948 was $325 million— back transactions.
After the war

net

investors

e

com¬

only 43.1%

combines all that is sound
and
progressive in present day during a period when practically
merchandising and finance. The no expansion or rehabilitation was

said. The wis¬

g r a

investment

modern

pany

he

dom shown

you save.

"The

good is epoch-

making,

We propose to
them of the advantages of

inform

of

hands

securities.

pany

placed in

ever

the

member

stores

might

enjoyed

thje

of current exchanges

advantages

of statistical data,
and also may have had more sys¬
hours
tematic expense control.
—
1
less from 1945 on the items re¬
levels
flecting changes in the country's in all types of business enterprise.
No Advance.in Employee J
general monetary situation, in¬ The wage and hour trends obvi¬
Productivity
I
cluding cash and equivalents, re¬ ously affect store payrolls directly,
The higher dollar sales per em'-r
and other items such as advertis¬
ceivables and inventories, in the
ployee of these firms leads to the"
aggregate bulked larger than in ing, supplies, service purchased,
general question of what happened
and repairs, indirectly. Were any
the prewar period.
in general to employee productiv-.'
groups of firms able to keep ex¬
While the net working capital
ity in 1948.
Data on dollar sales*
pense
percentages
from
rising
rose as a percentage of total assets,
and transactions per employee and

again

struction

a

it

rehabilitation

as

was

and

con¬

for various

Neverthe¬

resumed.

lower in relation to dollar

was

goods, there have been

ideas

of

and

notable pressures to shorten
of work and to raise wage

from

1947 to

1948?

man-hour

per

are

available from

limited number of stores in the
securities," said Mr. partner in the New York Stock sales in the postwar years than it
Large and Small Firms Compared
Wiesenberger. "This will be nec¬ Exchange firm of Arthur Wiesen¬ was in 1939, being less than 20%
size groups having sales over $2„A comparison of the 1948 figures
in comparison to 25.1% for the
essary to finance the government berger & Company at 61 Broad¬
000,000. These figures indicated
security and other programs. But way, also announced that his firm earlier year. To be sure there has classified by volume groups with in general slightly higher dol¬
is about to institute a national been some recovery since the ex¬
corresponding data published - in lar sales
many holders of present war bonds
per total employee and
campaign of advertising.
At the treme low point of 17.8% at the the 1947 bulletin seems to indicate per selling employee in 1948 than
are going to seek higher rates of
income and greater opportunities same time correspondent invest¬ end of 1946, but it still is worthy that on the average stores of all in 1947. When the matter was con¬
sizes experienced ^increased total
for gain in value.
Most of the 80 ment brokers throughout the na¬ of attention, particularly since in¬
sidered in terms of transactions,
million persons who still hold gov¬ tion will link local advertising creasing proportions of the net expense rates.
Tjiere is some in¬ however, declines in the physical
dication. however, that the two
ernment savings bonds today con¬ with this national campaign, in¬ working capital are in notes and
volume handled per employee be¬
newspapers
and
radio accounts receivable. (And here it groups of stores with sales of over came common.
stitute an entirely new class of cluding
J
This campaign will be the is interesting to note that the Fed¬ $20,000,000 were somewhat more
investors.
Many of them will be time.
To throw further light on the
ready to take the next step of first of its kind in the financial eral Reserve Board data show in¬ effective in controlling expense
trends
in productivity, data for
creases
in the amounts of instal¬ than were the smaller stores. They
converting some of their war- field.

government

ment accounts

slowing

Sees Labor in Politics to

Stay

President of Motion Picture Associa¬
aim will be increasing pressure toward a

Edward Cheyfitz, Assistant to
of

tion

America,

says

welfare state.
In

a

talk at

a

Associa¬

June 9, Edward Cheyfitz, Assistant to the

official, declared that "labor is in politics to stay."
this

of

on

Management,
he
added,
would

felt

be

two levels:

on

(1) on the
plant level,
where there
will

pres¬

for

sure

in¬

be

creasing

par¬

ticipation

in

the

function;
on

national

the

pressure

mum

level

where

come,

the

will

(2)

be

toward

welfare
Mr.

this

Edward Cheyfitz
The

next

said,

state.

will

decade"

"showdown

standards

everyone.

a

Cheyfitz

The impact

or a part of the
national
income, to provide certain mini¬

manage¬

ment

on

decade,

be

the

manage¬

ment

prerogatives,
and results
mainly on what man¬
agement does in its own plants.
The management function, he be¬
lieves, will remain unimpaired
only if management finds ways
and means of giving employees
a
greater sense of participation
in the enterprise.

of

living
for
Part of the impetus to

movement

toward

political

action, he added, was supplied
by the Taft-Hartley Act — espe¬
cially in the case of the AFL—
but

"if

you

were

to

repeal

the

Taft-Hartley Act tomorrow, labor
wouldn't get out of politics."

The
Mr.

drive

Cheyfitz

essence

a

for

a

welfare

pointed

drive

out,

state,
is in

for

security on
part of large numbers of
people. "Every time you say you

the

can't have security and still have
-

freedom," he added, "they'll take
security, because freedom is some¬
thing you don't think about until
you lose it, and security is a con¬
stant problem." He

urged manage¬

ment to

ui

dn politics is nothing newp

Cheyfitz contended, but

firms

liabilities

for

the

large

firms

available

for

the

had decreased

ex¬

percentage^ ijj two divisions,

unclassified

and

Repairs, and un¬

estate

losses from

rseven

accounts,

costs,|-taxes, supplies,
bad
drifts, travel, com¬

The

data

show

the

course

of

net

sales, average gross sale, and total
transactions over the period for
firms.

these

13

cated

that

These

dollar

indi¬

data

sales

over

the

climbed
by
150%,
with
transactions climbing only about

years

35

also

were

Advances in Costs Per Transaction
As

noted

earlier

the

percentages were the most
significant elements in the 1948
position. To throw additional light
on the upward movement of costs,

expense

data

for

large firms

tabu¬

were

lated both in terms of percentages
and in terms of cents per transac¬
tion.

In

this

tabulation

presented for the
for

and

the

figures

prewar year

last

five

years.

increases

in

Hutchins & Parkinson

exceeded increases in the number

dollar

sales

always

of

transactions, a result of the
progressive upward trend in the
member of the Boston Stock Ex¬
average gross sale.
change, will become a partner in
Total expense amounted to 67
Hutchins & Parkinson, 50 Con¬
cents per transaction in 1939. This
gress Street, members of the New
outlay typically climbed to 124.5
York
and

BOSTON, MASS.—Harry Besse,

Boston

Stock

Ex

changes, on July 1. Mr. Besse was
formerly a partner in Draper,
Sears & £o.

cents in

1948, or almost double the
amount for the earlier year.
Be¬
cause

the

advanced

With Rockwell-Gould Co.

average

gross

sale had

from

$2.10 in 1939 to
$4.35 in 1948, the percentage cost
in

1948

was

still far below

since

1924,

and

George R. Mathers, who has also

nificant fact is the rise in the fig¬
ure

from 27.1%

in

1944

held five accounts

to 31.2%

since

the ascent in

1945

the total

payroll costs per transaction has
chased at the 1947 level, and sus¬ been sharp.From a level of 52
tained advancing rates
in eight cents per transaction in 1945 it
had run to 80 cents in 1948, partly
accounts.
because of climbing wage rates
Study of all the data revealed
and partly, because of declining
that in no volume group was ad¬
productivity. It cannot be stressed
vertising held down to the 1947
too urgently that diminishing pro¬
level, in only one group each were
ductivity is a serious matter, and
payroll, interest, supplies, or de¬
one
which executives cannot af¬
preciation held down or actually
pur¬

decreased; in two groups real es¬
tate costs and professional serv¬
ices

were

held

at

however,

groups,

maintain

below

or

Three

percentage levels.

able

were

reduce the

or

1947

or more

repairs,
These

they

costs

1947 per¬

for

travel,
and
insurance
accounts, although

latter

represent

relatively

small

percentage outlays, are neverthe¬
less worthy of careful control.
Ownership

Groups

ford to overlook.

V. C. Weber t Co.

to

service pur¬
chased, taxes, losses
from bad
debts, unclassified, communication,
centage

1939,

ELMIRA, N. Y.—Millis F. Ford- 31.2% in contrast, to 35.2%. While
ham, who has been in the invest¬ this contrast is marked, the sig¬
business

sional services,

climbing including payroll and service

show that year-to-year

of years,

devising

Current

1939

wayss of




pense

or more

real

The data

ment

Mr.

000,000

plans, but also to the general liq¬
uidity of their working capital.

Besse to Be Partner in

give thought to the kind
of security that is compatible with
a
free market
economy, and to
take- the leadership in

providing dt. oVI

not

particularly

credit risks,

to

Firms with sales of $50,-

of sales.

changed rates in

are

will depend

,

well to give careful attention

only

13

10-year period, 1939 through 1948,
sales, while in all other
have been tabulated and analyzed.
groups the increase was over 1%

at 0.8% of

munication, and Insurance.
Thus 25%, while the size of sale jumped
there were six accounts only in nearly 100%.
proportionately
We find that dollar sales per
which expense rose, payroll, ad¬
<S>
—
greater
in
1945
and
following
present
movement is different years than in 1939. Thus, although vertising, interest, service pur¬ total employee and per selling
from those of the past: All dur¬
chased, depreciation, and profes¬ employee with the "exception of
current
assets
climbed substan^
sional services.
It is notable that the year 1947 advanced each year,
ing the 19th century and the early tially as
noted, the current ratio
decades of the 20th, labor entered
the greatest increases for these reaching the highest level in-' 1948.
declined.
Chiefly because of in¬
The number of transactions han¬
politics only to secure its right come tax
obligations and tax notes large stores were in payroll and
to organize and to use its eco¬
dled; per
employee, however,
treated as current assets, the ratio advertising.
nomic power, and the movements
reached the highest point in 1945,
A
similar comparison
was at 2.4 to 1 in 1945.
This had
for the
subsided
when these
from which level they have been
objectives climbed to 3.2 to 1
by the end of firms with sales of $20 to $50 mil¬
were attained. This time the ob¬
dropping in recent years.
1948, still below the 4.3 character¬ lion discloses that they experi¬
jective is fundamentally a re¬ istic for
Meanwhile hourly wage rates
enced lowered percentages in two
1939.
distribution of the national in¬
items,
unclassified
and
profes¬ have been mounting steadily, and

President of the Motion Picture Association of America and a former
CIO

rate
on
term
accounts.)
Firms
seeking to stimulate sales by ex¬
pansion of credit business will do

held the increase in total expense

those involved in revealing credit

Conference of the American Management

tion in New York City on

outstanding, and a
in the collection

down

.

Formed is St. Leeis

:

ST.

LOUIS, MO.—V. C. Weber
& Co. effective July 1 will take
over
the investment business of
J.

W.

Brady

Seventh
new

&

Street.

firm

will

Co.,

411

Officer^
be

North
of

Vihcent

the

C.

President and Treasurer;
P. S. Weber, Vice-President; and
Adele M. Goeddel, Secretary.
Weber,

vs.

Independent Stores
A further
stores

analysis
sales

with

lion and $20-$50

of

made of
$10-$20 mil¬

was

million classified

Gerstley, Sunstein & Co.
PHILADELPHIA, PA.—Charles
C. Sunstein,

G. Sunstein, and Leon

or not the Jr., will be admitted to partner¬
ambers of ownership ship in Gerstley, Suqgtein & Co.,
groups,, a classification basis not
RockwellrGou-kf) Co;,Tina,3 Robin- in the expense percentage are to
used since 1930.
From the data
Hit
be< expected in view of the well obtained it is apparent that mem¬ Stock' Ekehahge$.
sonKBuildibgiilufmyjot, boin-b
i

been in the business for

a

number

in 1948.

have joined the staff of in

:

1949 <

If the average gross sale

according to whether

scores

declines1, sharp increases

\yere

•s
I

Number 4814—-

Volume 169

*

.

THE

FINANCIAL CHRONICLE

COMMERCIAL &

San Francisco Stock

Kansas City Southern

;

(2725)

2J>

Exchange Tonrs Los Angeles Ana

J

Corporation had,aequired a substantial block of the preferred stock of Kansas :Gity
Southern.
This block had been overhanging the market ~ for.; some
time and-^Was presumably responsible for failure of the preferred
to perform so well marketwise as the company's common stock and
its bonds.
Now that it has been, absorbed many rail analysts look
It

announced last week that Alleghany

was

fpr greater reflection in its market price of the strong credit stand¬
ing of the road..;*While the stock has voting po\ver it is not believed
that inhere will be any effort on the part of Alleghany to get any

yoke in the management.
Kansas City Southern has

..

.

,

of the outstanding records in
the industry and in the past year or so this has become more and
more generally recognized by investors as well as analysts.
Prob¬
ably the most important favorable aspect of the picture is the highly
effjcient nature of the operation. Even before the war the company
had one of the widest margins of profit in the industry. Moreover,
year-iii and year out this margin of > profit remained more stable
than that of virtually any other major Class I carrier. It is notable
that

one

the readjustment

£ven in

1946 the profit margin (the

year

percent of gross carried to net operating income

before Federal in¬

taxes) was-24.1%, the same as it had been in the prewar year
1941" and on the "average for the five years 1941-1947.
;

come

Since

194s6

profit margin has continued to expand further.-

this

LasCyear it amounted to 37.4%, the highest for any year in the
company's history and the highest for any major Class I carrier.
This record is particularly impressive in the light of the upward
spiral of wages in recent years and the enormous increase in fuel
and material
costs in the postwar period.
This wide margin of

of material

traffic from the boom
There

is

a

are

levels of recent years.

number

has had such

all

practically

branch and

a

fundamental reasons why Kansas

of

City

favorable operating record and why this

feeder

main

line

so

that .it has little low density
Its freight is predominately

mileage to support.

Freight movement is well balanced as to direction, thus

min¬

imizing expensive empty car mileage.
....
The property is in excellent physical condition and the company
1

-

in extensively for diesel power. This latter move has re¬
sulted in significant operating economies and has gone far toward
offsetting the influence of constantly mounting wages and unit fuel
and material costs.
Only slightly less important than the proven
has

gone

operating efficiency of the properties has been the favorable trend
of traffic and revenues. Both Kansas City Southern and its wholly
subsidiary, Louisiana & Arkansas, operate in territories

owned

with

strong industrial growth characteristics. This growth has continued
even since the end of the war and augurs well for better-than-aver-

resistance to present recessionary trends.
Last year Kansas City Southern, by itself, reported earnings of

age
i

the

in

June 9 and

on

Banks

through traffic which makes for a relatively long haul. Long haul
traffic is far more profitable than short haul unless the short haul
is on such bulk items as coal or iron ore which move in full train
loads.

tour

a

Ex¬

Stock

Francisco

sponsored

dustry
Area

performance may be expected to continue. It does little passenger
business, and passenger business is one of the most expensive phases
of railroading.
Few, if any, railroads make any profit;on it. The
road

San

two-day in¬
Los Angeles

$15.51 a share on its common stock. Including... operations of the
wholly owned Louisiana & Arkansas the results Wbuld have worked
out to better than $21.00 a share.
For the first .-four months of the
current year both of the roads reported modest
From here on year-to-year comparisons will

Ronald
the

by
Kaehler, President of

E.

Press, headed

Francisco

San

Ex¬

Stock

change, arrived in Los Angeles at
10:30

a.m.

Visited

the Goodyear

Tire
& Rubber Company
and Byron
Jackson Co., makers of pumps and
were

oil well tools.

This
the

trip

local

out of
is in keeping

the fifth

was

and

area

with the

cisco

policy of the San Fran¬
Stock Exchange to better

educate

evening

Thursday

dinner

joint

a

held with members of

was

the Los

Angeles Stock Exchange.
There were no speeches, however.
W. G. Paul, President of the Los
Stock
Exchange
ably
meeting and a spirit
cooperation and good-fellow¬
ship was evident. This is the first
time in the history of the two
Western Exchanges
that such a
meeting has been held.

Angeles

the

emceed

of

On

Friday

Lockheed

Aircraft

Corporation, Menasco Manufactur¬

ing

Company,

General

Division

Chevrolet

Motors-

and

Fisher

Inc.

Financial Edi¬
Oakland
Post-Enquirer;
Lindsay Arthur, Financial Editor,
San Francisco Call-Bulletin;

the press

tor,

Financial Editor,
Charles St.
Peter, Financial Editor, San Fran¬
cisco
Examiner; Donald White,
S.

John

world

and

Piper,

concerning corporations
are

in the hands

of the public.

San

Francisco

San

financial

the

whose securities

I

Douglass, Van der Naillen & Co.,
C. N. Alexander,

toured.

Francisco Chronicle.

Ronald

Participants in the Los Angeles

Carl Schick, Manager,

&

Francisco

Co.; Albert A. de Martini, ShuAgnew & Co.; Stanley R.
Dickover, Mark C. Elworthy &

lations

is difficult to conceive of direct earn¬
$11.00-$12.00 a share and
should be upped
by at least $3.00 in consolidated results.
This would be quite a
showing in an industry which is considered "finished."

The

Brannan

or program

proposal is "a farm price support

which

as we

understand it involves

other things (a) a determination by the Gov¬
ernment of the price which farmers should receive
for their products, and (b) the sale of such products
by the farmers in a free market for whatever they
will bring, and (c) subsidy payments by the Gov¬
ernment to the farmer to make up the difference

Co.; John Hooker, Hooker & Fay;
Harry E. Jonas, Irving Lundborg
&

American Trust Company;

Co.; G. E. Lambert, Akin-Lam¬
Co.; Richard Lawson, Law-

bert

Levy & Williams; Floyd W.
Mosiman, Mark C. Elworthy &

son,

Co.

Paul

A.

Pflueger, Chairman,
Committee, Pflueger &
Baerwald; D. Poston, Needham &
Company; Earle Richards, Dean
Witter
&
Co.; R. H.
Scanlon,
Stewart, Scanlon & Co.; Thomas
J.
Tasso, Walston,
Hoffman &
Goodwin; Ralph Van der Naillen,
Listing

Paul

B.

between

Grocers, tells members of his organization healthy factor in situa¬
tion is accumulated savings of public and huge order back-log.

market

❖

Speaking at the Golden Jubilee Convention of the National Asso¬
Chicago, on June 15, Tyre Taylor, Gen¬
organization, reports it is the widespread opinion
in Washington that, though the great postwar boom is over and the
problem of
deflation now
pression-proof than almost any
other major industry.
faces the gov¬

ciation of Retail Grocers, in
eral Counsel of the

and

"No

d," Mr.
Taylor stated,
this

"that

many

retail

now

and forceful
other

we

can

grocers

in the

it

—

u

1 is, of course, a
guesswork and

not

an

exact

science.

or

you

there

Tyre Taylor

call

you

ployed

would

be

8,000,000

unem¬

during the period of in¬

dustrial reconversion from war to

confined

to

this

country.

peace.

Indeed, that fantastic mis¬

Indeed, Socialist Britain seems to

calculation contributed more than

be

any other one factor to the
sequent inflation.

experiencing more severe re-

adjustment pains than is the Cap¬
italist U. S. A.
In

the

food

"Now there

industry,

adjustment has been
for several months.

change

this

re¬

under way

However, the

has been gradual

and in

April—the latest month for which

country

figures

,

—

pure

will recall that three
years
ago the
government was
predicating its wage and other
policies upon the assumption that
Thus

is by no

means

sales

statenierijts: from the almost Countless !




to

want

have equally clear-headed

small!"businessmen!

re¬

read¬

inflation

and each of them has a vote.
If only

trends—is

justment, dis¬
whatever

unemploy¬

past few years it is that eco¬
nomics—in the sense of predicting

note

production as would speedily bankrupt the Government, and * * * the supposed benefits of any
such program to farmers, consumers and distrib¬
utors would be wholly illusory since all segments
of the population would, directly or indirectly, and
considering the enormous cost of administering such
program, pay more in taxes than the amount of
fany possible over-all benefit."—National Associa¬
tion of Retail Grocers. '
are

much

prospect between now

speculation. If anything has been
conclusively established
in the

be

also

of

matter

"It should

such plan can be put into effect without

There

a

major slump.

rigid government control of acreage, crops and
farming methods, (and without) inviting such over¬
.

how

and say January

little

is

*

*

to

there

cession,
,

"As

ment is in

likelihood of

proceeds of such sales in the open
and the predetermined parity price.

u

George

Jr., Assistant Vice-Presi¬
dent, Wells Fargo Bank & Union
Trust Co.; Philip Markwart^In¬
vestment
Analysis
Department,
Crocker First National Bank of

I. Long,

San Francisco;

Henry McMicking,

Wells Fargo Bank & Union Trust

Co.; H. Taylor Peery, Vice-Presi¬
dent, Bank of America, NT&SA;
Arthur
W.
Schiefer,
Assistant

Cali¬

of

Bank

Vice-President,
fornia, NA.

than

Major Slump

industry,

the

Kelly,

billion.
If people are
it is not because
they do not have the wherewithal.
$21

not buying now

Tyre Taylor, General Counsel of National Association of Retail

ernment

among

Depts.,

Stock Exchange.

Anglo-California

there

"Then

mand for

of

are

were

last

available—food

only 1%. under April
Furthermore, food

year.

distribution

store

is

more

nearly

are

sub¬

such
and

automobiles, houses, and
roads, streets, bridges,
Business spending for

on.

plants and equipment, while
probably will not be as large
as in
1948, will nevertheless far
exceed similar outlays during any
it

other past year in our

entire his¬

tory.
"I do not have the detailed

fig¬

but people are not in debt
now as they were in 1920 or 1929.
I have mentioned the unprece¬
dented accumulation of personal
ures,

There is

savings.
banks

are

And

as

so

greater

credit.

The

in sound condition and
market

stock

the

in 1949

an even

available

of

amount

it

was

is

as

deflated

inflated in 1929.

One

on.

can

believe—as

do believe—that a severe
depression is all but inevitable
within the next two to four years.
many,

if

But

have

we

anything

ap¬

major depression this
year or next, it will be under the
strangest circumstances ever
proaching

a

known."

people in high

000,000 unemployed by January
and, of course, they may be right.
On the other hand, there are cer¬
tain factors which would seem to

permit of a much more encourag¬
ing lOUtlook. pmf. »{. '7f.fi <:
t t"For example, >

the
de¬

new

places who are firmly convinced
that there will
be 5,000,000-6,-

.

remains

consumer

of public improvements,

as new
so

still

unfilled

enormous

all sorts

plan

Public Re¬
San

Statistical

&

Vice-President,
National Bank
of San Francisco; Frank S. Litch¬
field, Investment Department,

Predicts Little Likelihood of

ings in 1949 as low as

Others

Kaehler, President,
Stock Exchange;

E.

Francisco

San

sonal savings amounting to more

increases in earnings.
^presumably be less

Now Let's

News;

trip were:
Douglas G. Atkinson, Chairman,
Board of Governors, Dean Witter
man,

On

Nevertheless, it

favorable.

the

and

Body Plant in Van Nuys and
Gladding, McBean & Co. were

10.

cushion against
in the 40-hour ; The group of 27 representatives
It will also be of the San Francisco Stock Ex¬
help in softening the impact of the inevitable decline in change Member Firms, Bay Area

profit naturally affords the company a substantial
any further cost increases, such as those implicit
week for! non-operating employees to start Sept. 1.

Southern

The

change

there lis 1 the

de-: precedented accumulation of jpef-

William Bagnall
William

E.

Dead

Bagnall

Roosevelt Hospital June
age

of 61.

merly
firms

had-

died

in

18 at the

Mr. Bagnall was for¬

connected with brokerage
in New York; and since J929

beehhan

brokeh

l<"!

independent

:

COMMERCIAL

THE

(2726)

30

are

The

CHRONICLE

profits $11,802,capital funds

bank's

in

now

excess
*

of $131,000,000.

*

New

NEW BRANCHES

June

Bankers

received

York,
15

from

the

Frank

approval

State

on

Banking

J.

Thursday, June 23,

Ryan, Vice-President

of the Rhode Island Hospital

on

He

June 17.

age.

of

Among

58 years

was

the

Mr.

which

groups

Na¬

of Providence, R. I.,

Bank

tional

died

%

The Rye Trust Company of Rye,

CONSOLIDATIONS

and

FINANCIAL

undivided

and

345.96.

News About Banks

&

civic

many

Ryan

Harvey D. Gibson, President

of

of
that the fol¬

New York announces

lowing officers, formerly Assistant
Vice-Presidents, have been ap¬
pointed Vice-Presidents: Roger D.
Elton of the 57th Street Office;
Emanuel M. Reeves of the 39th
Street Office. William O. Walter
Securities

the

of

Mr.

Office.

Head

Department,
Elton came to

in charge of operations for that
activity;
William
H.
McCoach,
who has been engaged in Irving's

corporate trust work, and for the
past three years has been a Senior
Administrator
in
that
division;

and

division, currently
devotes full time to the company's

Vice-President

Assistant
Mr.

with

Trust' since

Manufacturers
when

the

in

been

1929

has

Reeves

absorbed

bank

the

Capitol National Bank which lat¬
had

he

ter

since

served

1922.

He

appointed Assistant Secretary

was

in 1929 and Assistant Vice-Presi¬
dent

his

in

banking

State
in

1944.

and

He

Trust

Company

made

was

began
the old

with

career

Bank

1910.

Walter

Mr.

Assistant

Secretary in 1929 when the State
with Manufacturers

Bank merged

Trust. He

was appointed Assistant
Vice-President in 1942.

a

June 18 marked the opening of
new
office
of
Manufacturers

New

York—at
at

nue

1605

Nelson

Ave¬

Featherbed

announced

President.

Lane, it was
by Harvey D. Gibson,

It will be known

as

the

bank's Featherbed Lane office and
will offer complete
ities including safe

banking facil¬
deposit boxes

made available through the bank's

affiliate, Manufacturers Safe De¬
posit Company. William Sharman,
Assistant

Secretary, formerly

cated

the

at

bank's

La

lo¬

Guardia

Airport office, is in charge of the
new office.
Assisting him is Sam¬
uel Armo.

K

^

..

the death

Knawa,

Assistant

of

at the bank's

Empire State Build¬
Mr. Knawa began his

Union

Exchange

1921

with

National

the

Bank.

This bank later was merged with
the
Chatham
Phenix
National
Bank and Trust

Company, and the

latter institution

was

merged with

Manufacturers Trust Company in
1932.
Mr. Knawa was a member
of the Esquire Credit Club.
*

Incident to
10 of the

*

opening on June
building of

branch

the

Greenwich Savings Bmk of
New York at 3 West 57th Street,
we

advised

are

counts

that

savings ac¬
that day as

opened

were

fast as the bank's staff could han¬
dle the transactions.

At the end of

the day,

it is stated, the new ac¬
3,858—a new record
for a savings bank branch occu¬
pying new quarters in an area
which it has already been serving
counts totaled

for

a

number

of years.

As noted

in

these columns June 16, page
2599, the bank's 57th Street branch
had

previously

been
Street,

2 West 57th

*

located

at

on

appointment* of

"This

1949.

members
the

of

the

16

the

following

bank's

staff

to

office

of Assistant Secretary:
Cataletto, who will as¬
sume, on July 1, direct charge of
the company's headquarters build¬
ing at One Wall Street; William
F. Graff, who is now assigned to
the foreign division and will assist
in handling company business in
Great Britain, Ireland, the Scan¬

John

L.

dinavian

Paul
the

countries

and

Finland;

W;> Howe, who started with

Irving

as a messenger,

has had




$215,000, consisting
8,600 shares of common stock
the par value of $25 each.

of

of

*

*

*

The

York

New

was

N.

Y., in furtherance of its plans

capital from $200,shares of $100 each to

in

000

$250,000 in shares of $50 each.

on June 30,
that more than

*

Thomas

J.

heretofore

«

«

Coghlan,

been

who

had

Vice-

Assistant

President of the Erie County Sav¬

period,"

ings Bank of Buffalo, N. Y., has

next dividend

at the

ers

Bruere, President, stated.
"Never, in all the 115 years of
The Bowery's history has so large
an amount of money been earned

Henry

paid to them at
a single dividend date."
Recently
total assets of The Bowery passed
the $900,000,000 mark. Bowery de¬
positors exceed 500,000.
for depositors and

National

The

announced on June 15

New York,

following promotions by the
board of directors: John G. Ben-

the

formerly with the CreditCorporation, and Kirke

ken,

America

FLollmer, formerly Vice-Presi¬
of the Trust Co. of North

F.

dent

America, to be Assistant VicePi esident; Herbert N. Fehling, in
the banking field for 30 years;
Harold F. Fuller, formerly Assist¬
ant Secretary of the Manufactur¬
ers
Trust Co., and Anthony Le

be

all to

National Bank,
Assistant Cashiers.
>£

at the

Manager

formerly

Page,

#

#

Vice-President

a

The

same

Lee

ana

L.

Norton,

cancies

the

on

"Mr.
bank

served

posts currently held by L. M.
Giannini are the following: Presi¬

Gen¬

Chairman,

Committee of the

America; mem¬
ber of the President's Committee

board of Bank of

foreign
trade;
director, Transamerica Corpora¬
tion;
director,
Merchants
Na¬
tional Realty Corp.; director and
financing

board

of

Chairman

Fire Insurance

dental

Occi¬

of

board

dental Life Insurance Co.;
and

director
Occi¬

of

Co.; direc¬

Capital Co.; director, Pacific

tor,

National
addition

Fire
he

California

the

of

State

United States.

The
over

New

*

*

trustees

Central

of

Han¬

Bank and Trust Company
York

voted

increase

the

transfer

of

June

on

bank's

21,

of

to

surplus by a

from

$10,000,000

un¬

divided profits. After the transfer,
Central
Hanover
shows capital,

unchanged, of $21,000,000; surplus
$90,000,000; undivided profits over
$20,000,000. The last time that
similar

18,

action

1945,

was

when

taken

surplus

on

was

Dec.

in¬

sistant

of

Central

capital

Hanover

consisting

were
^

He

Estate

Officer and
before

Vice-President.

a

As¬
be¬

He

is

of the New York State Association
of Real Estate Boards."

,

Mr.
Coghlan, the new VicePresident, who has been with the
Erie County Savings since 1942,
had previously been with the Na¬
tional City Bank of New York,

Greenwich

the

had

Bank

also

Bank

for

of

12

that

years

Examiner

for

funds
$92;-

of ccapital

tl§vijp]usui$60»000,000,

also

z

*

as

Governmental

Re¬

which

from

Bureau

the

was

elected Pres¬

ident of the New York State Bank¬

Association at its 53rd annual

convention

June

on

at

17.

Spring Lake, N. J.,

He succeeds Burr P.

Cleveland, President of the First
National Bank of Cortland, N. Y.
Herbert J. Kneip, President of the
National Commercial
Bank
and
Trust

Company of Albany, was
elected Vice-President, and Wil¬
liam T. Taylor, Vice-Chairman of
the board, Commercial National
Bank and Trust' Company, New
York City, was named Treasurer.
The Association, founded in 1894,
includes

95%

in

its

membership

over

of all the commercial banks

in New York State.
*

*

of Boston has been merged
with The National Shawmut Bank
of Boston, it is announced by Wal¬
ter S. Bucklin, President of the

of the Rhode Island Bankers' As¬

sociation

Chairman

and

American

the

of

ciation.

He

Robert

its

of

Bankers'

Morris

served

was

Asso¬

member of the

a

and

Associates,

the Executive Commit¬

on

Providence

the

Clearing
House.
For many years he was
a
director and Executive Viceof

tee

National

the

of

President

Bank

of Commerce in Providence. When

merged v/ith the Rhode

Hospital National Bank and
Co., he became a Vice-

Island
Trust

President of the
*

latter.

bank.

"Herald" of June

13

The Boston
in reporting

new

trustees

>

associated with the

office,

which will

under the management

Vincent

Vice

the

Trust

Trust

of

of Bank

1942

served

he

While

as

Jersey

Auditors

in

made

was

In

Treasurer.

New

dent

Presi¬

Confer¬
Con¬

and

Connolly

President of

that they

June

16

reported

Hans

C.

Christensen, Vice-Pres¬

ident

and

are:

Treasurer

Assistant

*

*

*

ficial

staff of the

of Mont-

Bank

clair, at Montclair, N. J., are an¬

nounced, viz.:
John M. Schlegel
having been promoted from the
post of Assistant Cashier to As¬
sistant Vice-President, and Walter
Officer

Assistant

Trust

Officer.

from

McLaren

J.

The

Trust

to

Newark "News" of June 16 states

that Mr. Schlegel joined the bank
staff in

1929, became Auditor two

since

and

later

years

had

1936

Cashier.

Assistant

McLaren

is

He

of

Seibert

bank; Edmund B. Boatner,
Superintendent of the American
School
for
che
Deaf; John R.

President

and

pub¬

Herbert

and

Co., financial publish¬

in

New

of New

Co.

Trust

Co.

Trust
&

all

ers,

a

Mr.

joined the Bank of Mont¬
1934 after serving with
Trust
Co., City
Bank

in

York, and the
Jersey, Jersey

City.
'Robert

*

*

«

the

Reitemeyer,

ago

Recent advancements in the of¬

Farmers

"Courant" of

Hartford

weeks

the Federal

Trust.

Bankers

The

few

a

succeeded Frank C. Mindnich, the
veteran

oc¬

ing.

also observes that

"News"

The

Mr.

Conn.,

Hartford,

of

Savings

F: McCammon,

Auditor

of the Girard Trust Co. of

delphia,

Phila¬

elected President of

was

lisher of the Hartford "Courant";

Philadelphia Conference, National

Donald L.

Sammis, Vice-President
Manager of the Un¬
derwood Corporation, and Morgan

Association of Bank Auditors andl

W.

Co.

General

and

Taylor, President of the EdWard Taylor Lumber Company.
its

In

further

"The

advices,

the

Comptrollers, to succeed Garland
F.

of

the

of

Potts

Trust

Delaware

Wilmington. The Phildel-

phia "Inquirer" of June 16, from
which

the

foregoing

taken,

is

said:

likewise

reelected

trustees

beard

Charles J. Lyon to

and

be

President, and their associate of¬
ficers: Andrew N. Webster, As¬
sistant Treasurer, and Edwin H.
Burkle, Assistant Secretary, were

-

B.

of Mr.

Vitolo,

President

and

Treasurer of the Stabile Bank."

officers

"Other

Robert

Glazier to be Chairman of the

C.

Thomas

elected

.were:

F.

Toohill, Philadelphia
Savings Fund Society, First VicePresident; A. H. Schultheis, Land
Title Bank & Trust Co., Second
Vice-President; John W. Mullikin,
Philadelphia National Bank,
Treasurer, and Norman G.

elected tc be Vice-Presidents."

Dash,

Federal Reserve Bank of Philadel¬

The plans

for the merger of the

phia, Secretary."
W.

Merchants & Newark Trust Com¬
pany

of

Newark,

J.

N.

(capital

$2,500,000) with the National State
Bank of that

000)

city (capital $1,000,approved by the stock¬

were

holders
June

both

of

appeared in
page
137

2289.

years

Potts

elected

were

to

Board

of

Governors.
*

*

#

on

effec¬

Bank

Julius

S.

Chairman

Rippel,
of

the

Merchants, will, ac¬
cording to the Newark "News" of
June 16, maintain a close interest
in affairs of the consolidated bank,
as

Fitz¬

ed Vice-President of the National

the

board of the

likely

F.

Nelson J. Foster has been elect¬

to

The National State,
old, took over the 7820.

R.

Anderson,

issue of May 26,

our

and

H.

gerald, C. A. Seaman, R. J. Lyons,
H. G. Ruemeli, Carl B. Baldt and

plans

Merchants

June

President

institutions

Reference

15.

Chairman

Committee,

of
but

Savings & Trust Co. of Washing¬
ton,

$3,000,000

it

C.,

announced

was

on

President Bruce Baird.
in
the Washington "Post" of June 14,
from which this is learned, stated,
Advices by S. Oliver Goodman,

that Mr. Foster became associated

institution in May,

with the
was

in

January,

he

in

December, 1941.

A

1941,

Secretary

";V

Industrial

the

Washington, D.
for

and

•

special meeting of stockhold¬
of

ers

1932,

Assistant1 Secretary

elected

the

cash
and $3,000,000 in stock, with Mer¬
chants stockholders getting $30 a
share plus l/20th of a share of
National State stock, or the equiv¬
alent of $52.50 a share.
In the
new" set-up there will be 15,000
fehares of capital stock at $100 par.
are

D.

June 13 by

yields actual direction of the bank
to W. Paul Stillman, President of

"Involved

"The staff of the former Stabile

and1

1934.

appointed

was

curred at the recent annual meet¬

National State Bank.
the "News,"
t' "The quarters of the Stabile
amounts to a $6,000,000 deal ar¬
Bank at 107 Salem Street, corner
ranged by Mr. Stillman to acquire
of Parmenter Street, will become
Mr. Rippel's holdings in Merchants.
the Stabile office of the Shawmut,
The "News" added:1
bringing the bank's offices to a

Stabile'

Federal

in

with Federal he

clair

the

of

The transaction, says

previously

by

Certified Public Accountant.

the enlarged

this, also said in part:

Shawmut

Federal

Auditor and

an

for

Executive

new

the

joined

as

Society

very

will be

with

Controller

been

*

*

board

the

to

formerly Chairman and President

total of 28.

1927

Legislative Committee as well as
of the State Legislative Council

latter bank, and Harry J. Stabile,

Stabile

announced

was

trollers."

circles, the "Journal"
noted,
Mr.
Ryan
was
equally
prominent. He was Past President

tive

pany

the

J.,

Company, the Newark "News" of

In banking

year-old
*

The Stabile Bank & Trust Com¬

of

N.

o

Harry W. Davies, President of
Syracuse Trust Company of

ers

ark,

David-J..

ence

Expenditures

evolved.

Council

"Courant" said:

the

Syracuse, N. Y.,

$9,000,-

The; appointment of Leonard P..
Groves.a Vice-President of the
Federal Trust Company of New¬

"He

served

Providence

the

Rhode Island Public

the New York State Banking De¬

partment, the "News" reports.

be

*

June 17 said:

Chamber of Commerce and of the

Comptroller

as

Vice-President

coming

be

the

1942.

a

Chairman of the Owners Division

June

1939,

since

the

been

Norton, Past President of

Real

was

Bank

000,000

of

The election of five

"Mr.

from $60,000,000 to $80,by a transfer from un¬
divided profits. Ten years ago, on
creased

30,

has

Bar

is licensed to
the
Supreme

Association, and
practice
before

with

been

the Buffalo Real Estate Board, has
been with the bank since 1939 and

San Francisco

Bar Association of
and

the

of

member

a

In

Co.

Insurance

is

paper

a

and Assistant Treasurer.

Trust and Savings

the

The

and

previously

Senior

Association of
San
Francisco
was
elected
a
director to succeed his father, the
late
A.
P.
Giannini, who died
June
3.
Among
the important

has

Vice-President

been

of

board.

1925

held on
June 21, L. M. Giannini, President
of the Bank of America National
City Bank of New York

Chairman

Vice-

the

of

Board,

Chapter, Amer¬

had

Ryan

Treasurer

that bank

Austin

since

and

for

both

Presidents of the institution, have
been elected trustees, filling va¬

city,

Executive

in its June 15 is¬

paper

reported that Maurice Austin

sue

and

Director,

the

institution, according to the Buf¬
falo "Evening News" of June 16.

regular meeting of the
Board of Directors of The National
the

At

of

indicated said:

L. Schwamm, President
Bronx Bank of

Harvey
of

*

#

*

become

rationing

tire

member

a

Review

Knight Street USO."

Mr.

search

to increase the

*

nections

the

on

and

Appeals

ican Red Cross, and was Treasurer

Banking

Riverhead,

*

of the Providence

also

board
War

Providence

of

capital funds will

000."

member of the board of managers

"At the same time he was serv¬

ing

Department on June 15 announced
that approval had been given to
the Long Island State Bank and
Company

tal

Connolly, President, on
June 17. Mr. Groves was formerly
identified with the Federal Trust,
leaving during the war to join the
war
bond staff of the Treasury
Department. As to his earlier con¬

of the

State

$7,500,000 will go to Bowery sav¬

in personal;trust
802»345.96ii;
wdrk,; hn& * currently' is $21,000,000,

brbad expedience
division

of New York.

means

Court of the

June

the

of $25 each, to

accounts

depositors'

Irving Trust Company of Newannounced

a

June 13 by

*

*

stock of the par value

common

will be credited to

dividend

The

*

York

on

Savings Bank

ery

dent,

>>t

tne

declared

the board of trustees of The Bow¬

eral

new

2%

A dividend at the rate of
year was

William A.

Vice-President

ing .office.
banking career in

*

Public

President Gibson/of the Manu¬
facturers
Trust
Company,
an¬
nounces

*

*

Trust Company—its 14th office in
The Bronx and its 77th in Greater

of

"Journal" also said:

The

Trust

building loan activity.

in 1934. He was
Assistant Secretary in 1941

1945.

II.

re¬

mortgage

bank's

the

with

tified

War

certificate of

a

of its capital stock from
$272,500, consisting of 500 shares
preferred stock "A" of the par
value of $25 each, 900 shares of
preferred stock "B" of the par
value of $50 each, and 8,600 shares

and real estate

the trust company
made

iden¬

Alton D. Piatt, who has been

probably taxed his
strength and time the most was
the draft board throughout World

Department to

CAPITALIZATIONS

Manufacturers Trust Company

which

duction

REVISED

one

$6,500,000 and

undivided profits and reserves not
less than $1,000,000. Minimum to¬

served,

said the Providence "Journal," the

of

ETC.

NEW OFFICERS,

The surplus will be

1949

Banjt

of

has .been

C.,

set

July 7 to vote on a proposal
capital stock td $150,-

to increase

000 from

$100,000, President Jesse

H. Mitchell announced ott JUne

13,

item appearirig in
Washington
"Post"*; by; S.

according to
the

an

Oliver Goodman.
*

*

Wayles
of

the

and

R.

American

Trust

*

Harrison,

'

If

■

Bank

of Danville,

W. Va., died on May, 29.
.

President

National

Company

,4'

Volume

169

Number 4814

'With the celebration
of its 100
for

June 22

on

anniversary, the Society

Savings

of

the

announces

Cleveland,
recent

V

Ohio,

opening of

school savings
d e p a r tment,
r e

t

p o r

e

dly

unmatched by
any

financial

institution

the

in

country.

The

new

chil¬

dren's depart¬
ment
in
the
bank

will

be

headquarters
for

more

than

60,000 young¬
sters who cur¬

rently
B.

France

have

Society
School

;

ings accounts in the
throughout
greater

-

and

final

result in

COMMERCIAL

disbursement.

It

will

total recovery of 60.2%

a

for

depositors and creditors who
proved their claims."

special

a

'Mervin

THE

Sav¬

133

schools

Cleveland.

Few adult banks, it is noted, have
the features included in the new

A

the

bill

giving banks in Illinois

right to operate on a five-day
was
signed on June 9 by

week

Governor Stevenson.
the

Chicago

merce"

of

According to

"Journal

June

10

of

the

Com¬

action

of

to

close

Satur¬

on

days, beginning Aug. 6.
The signing of the bill, said the
same
advices, came at a time
when outlying banks in
Chicago
and the suburbs were

in midst of

holding meetings to consider what
action to take under the law.

Chicago paper from
quote also stated:
"North

.

Side

The

which

we

generally

America
This

and

these

voted

change.

Northwest

their intention to close

10

Earlier,

Bank,
against a

majority

a

Side

of

West

banks

of

and

indicated
Satur¬

on

days.
sive

inches

rectors

"The

legislation is permis¬

new

in

nature.

The

of

Giannini

-

bers

of the
with

bank

hind

the

sters

face

cages,

that

so

tellers

at

young¬

level.
Counters for making out deposit
and withdrawal- slips are also at
level.

youngster

eye

Television

mine
ate

policy

on

board

of

which he
of

use

have not

week

closing."

*

the

closing

tem.

St.

,

The

•

;■

>

-

School

Savings set-up is
part of program inaugurated some
years ago by the Society in line
! with its general policy of giving
.

special

attention

CQunts.

The

to

small

ac-

now

has

Society

.

203,702 depositors with total de¬
posits" of $209^006,000. Mervin B.
France,

who,

President
at

of

the age

of

one

he

became

Society in
was

1947

said to

in

importance

America, stresses
of regularity in

dividend

July 1, also an extra
more than $500,000 as
special
Centennial
Birthday
present to pavings, depositors. The
Centennial;Extra; is the largest
amount of money the institution
has ever .paid. as an extra divi¬
dend in its 100-year history.
dividend of
a'

^Incident to the completion of its
nundred years of banking,
the Society on June 21 held an

first

house and reception to per¬
"public inspection of the mod¬

open

ernization

of

its

The
bank was incorporated by special
act of the
Ohio Legislature on
March 22, 1849, and its organiza¬
tion occurred on June 18, its first
quarters.;

President

being J. W. Allen. In
the > Cleveland; "Plain Dealer" of
June V12, Guy T. Rockwell,
its
Financial Editor, said in part.

session

the

of

the

Minnesota

on

June 9 in

Paul, Minm, N. A. Welle, Vice-

Bemidji, Minn.,; was elected Presi¬
dent

of

the

State

Others

elected,

apolis

"Star,"

Putnam of

Association.

said

Willis

addition,

Treasurer.

was

named

Robert S. Pye, Minne¬
reelected Secretary.

was

*

The

*

research

medicine

and

human

National

Bank

at

(capital $200,000),
placed in voluntary liquida¬
tion on June 14, its business hav¬
ing been taken over by the Cali¬
fornia Bank of Los Angeles effec¬
tive June ll;'<-The offices of the

of

Chairman

the

seat

of the

of

Bank

is

America

first

the

!.

.

*
.

of'.A.

P.

Giannini,

founder of The Bank of America
National Trust k Savings Associ¬
San

Francisco, CalM who
died on June 3, was filed for pro¬
bate on June 4, Despite his genius
in creating institutions with re¬
of many billions of dol¬
lars, he was revealed as a man of
only modest personal wealth. His

the

to

Mrs.

seat

a

di¬

woman

the board

on

in our issue of June 9, page 2490,
*

*

*

Frank

L.

King,

President

of

that the

announced

would

National's

Brand
be

S.

Brand

operated

California
sonnel

branch offices

as

with

their

of

per¬

\

also

has

that

announced

Mr.

been

appointed Chair¬
man of the Major Commerce and
Industry Division of the Los An¬

geles Area, 1949 Community Chest
Campaign.
if

if

special

a

President of Bank of

America, and

9, the holders of 55,327
shares, or 927c of the outstanding
60,000 shares of $100 par value
capital stock voted to amend the
articles of association to
4-for-l

split the

basis.

Under

approved

plan there will be
shares of $25 par value

the

outstanding.

bank

will

The capital of

remain

unchanged
at $6,000,000. Following the stock¬
holders meeting, the directors de¬
clared

represents

increase

an

from

share per annum to

CJV;

(ptis, Who is popularly known

"Mr.

as

zen

Cleveland," the first citi¬
appelations denot¬

and other

executors of the
all

but

There

will, which leaves
the estate for
beneficent purposes.

$9,000. ,qf

charitable

or

nine

are

each

quests,

individual

of '$1,000,

be¬

made

as

ing h;s popularity, succeeded Mr.
Bingham and remained President

tokens

until; 18$5 when he was succeeded

employee of long service. Among
the charitable bequests, San Fran¬
cisco Protestant f Orphanage ? So¬
ciety is to receive $5,000.' A simH
lar sum goes to the Pacific Hebrew
Orphan Asylfim. and Home Society,
and anpther $5,000 to the benefit

by

SHerloick J. Andrews, lawyer

and,'one, of, the first trustees."
"•<

t

to

Distribution of a 6.7% payment
qiipctytors and depositors of the

Calumet

Rational

of Chi¬
cago,
which suspended business
Oct. 1, 1931, was announced on
June 14 by J. T. Connolly, Receiv¬
er.
The Chicago "Tribune" in in'

Bank

<JiVa)m§, %swentupn to .spyj^,
''He

will

said:- that: 5,592, clainjants

participate

ment which will

The payment

in the disburse¬
total ^>125,818.33.

will be the seventh




near

of

remembrance

relatives

and

one

of Saints Peter and Paul

Church

in

San

Salesian

to

some

personal

Catholic

Francisco, in the

parish where he

was

reared.

The

Boyg Club; of San, Fran¬

cisco receives, $l$00." An amount
of $25,000 is to be expended under
the

direction

of

scious

$25

pgr-value stock
basis.

per annum

per

on

a

$4

The dividend is

payable July 1 to stockholders of
record June 25.
if

L.

M.

if

June

ii

*

'

held

.

.

In accordance with

an

intention

far

no

these

First

National

W.

of the

in.

W.

Institution,

pre¬

Mr. Hiatt"

Manager of the Tax Depart¬
Mr.

Pult

Department;

is

Mr.

in

the

Hepburn

Trust

is

in

the ' iegistered
mail department
and Mr. Veltman is in the Foreign

Department.
roster

The

25-year

Club

stands at 116 members

now

doubt the money

no

of

ager

Boyer, General Man¬

The

Canada,

Provincial

Montreal,

has

Bank

of

become

President of the Canadian Bank¬
ers'

Association, said the "Finan¬

cial Post"

il

issue.-

of, Toronto,
Mr.

Provincial' at

became

1935.

managers

are

desire

to

increase

institutions would

be

the

rate

coupon

offered

The

.

that

very

cost-con¬

in

on

obligations that

obtaining funds to

carry

...

.

.

an

its Juhe
joined the

19, served in Morf-

General

Manager in

.

.

.

.

.

.

seems

to be growing that

a

note

or

intermediate-tc^rm issue will be offered to holders of the Sep¬
the

same

Treasury.

time

through

the

will also be raised

new money

sale

of

securities

these

by

the

...

STABILIZING INFLUENCE
It is being pointed out that a note or middle-term Treasury obli¬
gation in the September operation should have a sobering and sta¬

bilizing influence on the market.
Some of the demand for the
longer eligibles could be taken care of through the issuance of obli¬
gations of this kind, which the deposit banksJiave needed and, have
.,.

...

been expecting for some time. . . , -The overall cost would probably
be increased enough to be of importance, since higher-coupon
and tax-protected issues are being eliminated in the refundings that
not

will be done during the balance of the year.

Likewise

a very

be needed to take

sizable amount of the

care

.

.

.

new money

that might

of the deficit will most likely be obtained

from the sale of Treasury bills and certificates.

.

.

.

MARKET BRIEFS

Rolling over of the July certificates with lV4s was expected and
a change the money markets got what had been expected.
Nonetheless, bank holders of one-year maturities continue to swap
these securities for higher-income obligations with the institutions
that will benefit from lower reserve requirements in the near future
for

.

ones now

in this

operation.

.

...

.

,

The partially-exempts continue in demand, especially the last
four maturities, with fairly sizable orders reported to be around

for the

2%% due 1955/60 and the 2%% due 1960/65. ... The
Jonger tap bonds appear to be under quiet accumulation by both
investors and traders who feel that the spread between these
securities and the eligibles has now reached

the point where

an

upward trend in the restricted issues seems to be in the cards....

Although the 2s due 1952/54 are going out of the market, some
of the demand has subsided because of the need for income, which
has pushed bank buying out into

the 2Vzs due 9/15/67/72.
The
big play )?ut..herein again is a
case where income is paramount, and a part of the funds that was
earmarked for this issue is. being put into the longest eligible obliga¬
tion.
More non-bank investors are now disposing of the longer
eligibles because of the price rise in order to acquire the higher2V4s due

.

.

1956/59

are

...

still getting a

.

income taps.

be

Ball, Burge & Kraus

Sponsors Inv. Talk

repeated tonights (Thursday).
Following Mrs. Blair a panel
will answer questions,
Members
of the panel will include Sidney

B. Congdon, President of the Na¬
CLEVELAND,
OHIO — Ball, tional City Bank of Cleveland; El¬
Burge & Kraus, members of the mer L. Lindseth. President of the
New York Stock Exchange, will
Cleveland
Electric
Illuminating
sponsor a talk on "What Women
Co,;. Russell
Weisman u of i the
Shpuld iKjpo^,
Fauancs" iat
i

Boyer

treal, Hull, Ottawa and Windsor.
He

.

as

whbse banking service totgls 3,619
years of service." ;t:

v;:
/ j. Ubald

mean an

However, on the other hand, there is the trend of prices of gov¬
obligations that must be considered in the whole picture,
and the powers that be have
definitely indicated a stable, government
market is the keystone of the policy of debt
management.
Stabil¬
ity is not going to be achieved by the continued issuance of one-year
obligations for higher-coupon maturing securities.
Unless there
are unforeseen
changes in economic conditions, it is believed that
quotations of Treasury obligations will be higher than they are now,
when the late summer financing comes along.
o

of

appreciation of their 25 .years

is the

should

money,

ernment

Crocker,

of service to the bank.

ment;

new

FINANCING BY NOTES INDICATED

,

President

leader

.

governmental operations.

on

of

Bank

main

the

Francisco,

the

.

have

on

lobby

ceremony

in

8

Crocker

San

a

Giannini

for the benefit of public charities
and for public playgrounds.

as

the most active

During

as

.

servicing the government debt is concerned, which
means
the cheapest way of financing the deficit will be used.
Also they are not concerned about bank earnings and
they

$14

$16

share per annum, thus placing the
new

though the 2y2s

1956/59

"

...

There is

,

quarterly dividend of $4
per share on the old stock, which
per

'

something is done to increase the amount of larger-income
eligible governments, the market for these obligations will go through
roof with easier money market conditions.

a

Hiatt, Henry J. Pult, George E.
Hepburn and Albert W. Veltmen

Both of them, together with
Bank of America, are named as

.

tember 2s, with the likelihood that

240,000

con¬

assume

at

a

due

as

the

June

on

seems

unless

of »the

meeting

tate

Bingham, Mayor of the City
when
the : Society was formed,
succeeded Mr. Allen as President,
William ; A.* Otis, grandfather of

will

Accordingly, the feeling

W.

of

2Vis
"

tional Bank of San Francisco held

stock

It

.

...

stockholders of Crocker First Na¬
on

.

.

if

sented gold watches to William C..

personnel

replaced the

.

intensification of the demand for higher-income Treasuries.
supply of these securities is limited and the authorities know

N.

continuing in their present

is

King

336

mar¬

.

.

Boulevard, will

Bank

duties.
It

office,

year.

easier because of the need to raise

come

Boulevard, and its branch

1265

a*,;

head

moving

now

greater importance in the
will probably make more likely
Treasury of securities other than certificates in
the September
refunding.
Easy credit conditions that could be¬

Both the First

daughter,, .Claire
Giannini
Hoffman, do, not' share in the es¬

in

have

Deficit financing, which

acquire, about June 11, the

Glendale, Cal.

are

money markets as the year goes on,
the issuance by the

bank

his

change

9/15/67/72

California Bank, Los Angeles, re¬

cently

expense

.

SEPTEMBER REFUNDING

.

the bank was in 1850 when Flavel

."First

due

highs for the

new

of the bank issues.

world's largest bank. The
Mr. Giannini was noted

entire estate

intention of dying a millionaire."
Although described as his only
legal heirs, his son L. TVIyGiannini,

.

longer

eligibles to

of

sources

amounted to less than
$480,000—thus confirming his oftrepeated statement:
"I have no

.

.

rector to take
of

stock

,

issues, eligible in 1952, apparently at the

into the Vies because
they believe these bonds are behind the
ket and should do better in the future.
Commercial banks
tinue to push out maturities and this buying has carried the

board

Giannini

the board left vacant

on

Hoffman

the

ation of

other

operators

better¬

by the death of her father.

An earlier reference to the plans
appeared in" our- May 26 issue,

will,

fields

Hoffman, his daugter, has been
appointed by the board of direc¬

Glendale bank will be operated as
branches of thq California Bank.

>

.

restricted

the

*

Glendale,' Cal.

The

the

of the institution. Claire

was

page 2289.

in

.

the

ineligible bonds.
Although the 2Vis due 1956/59,
the 2V2S due 1962/67 and the 2^s due
1963/68, are the leaders of the
restricted group, some of the shrewder

Giannini, who besides being
founder of the bank, was also at

At

First

.

of

of

the

Mr.

A.

Vice-President, and Guy S. Bacon
of Cottonwood, who was elected
apolis,

but
provide it

.

.

.

.

the ; Minne¬

were:

Duluth, who

be

savings rather than the money
deposited.
J,
;The Society for Savings is pay¬
ing its 200th regular semi- annual

mit

of.

hoping quotations will recede moder-"
ately in order to rebuild positions.
It seems as though buyers
of most of the longer
Treasury obligations have eyes only for the
issues that are bank-eligible or will be
eligible within the next few
years.
This type of demand has resulted in sizable
acquisitions

business of the First National Bank

President of the First National of

youngest top banking

executives
the

when
the

of 45,

the

Convention

...

be that the sold-out bulls are

con¬

ment.

at

Bankers Association

(

for

*

bring .special; programs
during
banking hours. Music is brought
the youngsters over a special sys¬

'

selected

.v
*

will

At

be

can

Any day

eligible and eligibility-conscious government market
stays
constructive side, despite the feeling that
prices of some of
longer bank obligations have gone ahead a little fast.
It could

the

is to furnish financial

di¬

whether to oper¬

on

An

capacity to

to

In

Governments

on

the

on

training

the means

for

means

of

Reporter

By JOHN T. CHIPPENDALE, JR.

associ¬

was

a

such

themselves.

foundation

deter¬

may

five-day we£k.

a

the

of

each

Our

mem¬

other

and

demonstrate

as

make

for

bank

"

higher than the floor be¬

on

Foundation.

tural education of such staff

death

positors who begin at kindergart^n.. The floor has been built four

31

the

corporation was
by him to provide funds
for the higher practical and cul¬

the

National

(2727)

non-profit

tors

Uptown

of

created

decided yesterday to make no im¬
mediate change in banking hours.
Officers of 11 institutions met in

headquarters of the bank, which
was two years in
remodeling and
enlarging. Among other things,

Mr., Giannini

CHRONICLE

estate,
amounting approximately to $430,000, is bequeathed to the Bank of

his death

banks

by

remainder

ated

decided

bars, streamlined tellers' desks are
low, designed for youthful de¬
-

the

cerns

anticipated
Chicago Loop banks already

FINANCIAL

his 75th birthday, May 6,
1945, all

and

instead of old-fashioned cages and

4

announced

the Governor had been

have

&

the Mid^Day

Blaii*'
tor

Cluhthy Ldfcraih£(L.

ChMago,u fettffder1f $nd SW&?- 'attorned'of

the

Women's

Finance

Forum of America. The talk which
was

i>

JdreWs'jlThdmpsbn,'
"Cleveland

Hine & Ftore,
Seltzer,

Press";

Chester

A.

Thompson, Universal Wire Spring

Co.; and several partners of Ball,
given Tuesday afternoon will Burge & Kraus.

■y"

THE

(2728)

32

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, June 23,

that the size of the housing short¬

The Economic! Horizon:
acterized

(Continued from first page)
persuaded that business was be¬
ginning to turn a corner; but in
of

view
two

the

1948

and

the

of

periods in
were
rather

spring

1947,

in

cautious

alarms

false

preceding

we

From

comments.

our

vantage point of the present
time it is now unmistakable that
the

business recession

a

began some¬

where around the end of the sec¬

of 1948. The general
wholesale price index reached its

ond quarter

peak of 169.7 as of the end of
August, though sensitive prices
turned
down
considerably
earlier.
From the standpoint of

Jhad

industrial production as measured

by the Federal Reserve Index the
turning point was registered in
November
of
1948.
From
that
production has declined ap¬

date

proximately 10%, or from 195 on
the index to the present figure
presumably about 175. The de¬

of

wholesale
price index has not been quite so
great, down to 156, a drop of a
in

cline

the

general

little less than
of nine

8%

over

a

period

the meantime

months. In

unemployment stands at a little
over three million, continuing de¬
clines
in
factory
employment,
down
330,000
from
March
to
-

offset
normal
seasonal pickup; and don't forget
that, even if business were hold¬
ing its own, unemployment by the
end of the year would increase by
the total number of new employ¬
April,

having

ables

picture,
Short
work weeks in many industries
probably conceal the true size of
present unemployment. The steel
production rate has fallen off in
into
750,000 a

coming

roughly

weeks

8

to

89%

year.

of

capacity,

as

slightly in excess
capacity which was maintained

against
of

the

for

rate

a

time.

some

than

Car

for

loadings

have been regis¬
tering
decreases.
Turning
to
another
important
indicator
of

more

a

year

business

the

situation,

note

we

that total business loans have
been

now

declining for 20 consecutive

weeks.

Also,

measured

income

consumer

on

rate

annual

an

as

was

down

as
of the end of April by
something over $7. billion from
the peak reached in December; it
dropped $1 billion between March
and April. Nevertheless the rate

of

consumer

income for the first

quarter of 1949

ahead of the

was

production,
in

8%

Out of

have

their income

been

saving

For the first

quarter of this year
the

annual

against

rate

somewhat

a

greater proportion.
at

consumers

savings

of

ran

$20 billion

figure of only $11.4
billion
in
the
first
quarter of
1948. In the light of this total
as

of

ness

economic

the

not yet so

much

horizon

matter of

a

is

eco¬

nomic magnitudes as it is of direc¬
tion

of

weeks

recession

the

has

deepening and accelerating.
The

of this

causes

cession
There

not

are

re¬

a

mystery.

reasons

why the

are

headed down.

The

typical business cycle situa¬

tion

is

in

one

which

the

of

rate

business

activity gets going at a
clip than can be maintained.
Why should such a situation de¬
velop?
Fundamentally the dis¬
equilibrium
arises
from
two
faster

inventory
replacement
capital expansion.
Particu¬
larly after the war years of the
sources:

and

1940s and the attendant disruption
of normal
production and pur¬

chase

of

again,

up

it

goods

inventories

ventories
tories.

but

It

after the

only

not

inevitable

was

had

be

to

built

business

in¬

inven¬

consumer

also inevitable that

was
wear

and tear

capital
period,
and
after
the
years
of
capital
starvation in the 1930s, much re-*
placement of plant and equipment
would have to be made, to say
nothing of the expansion neces¬

equipment during the

sary to take care of the enlarging
population with its war-enhanced

purchasing
ing

power..This build¬
inventories
and
new

up

plant and equipment gave us a
great postwar business boom; and,
as

is

almost

inevitable,

the

ball

got rolling at a faster pace than
could be maintained. The business

pipelines got pretty well filled
at

about the

time

same

inventories became

up,

con¬

reason¬

ably well replenished. Therefore
the pressure to buy
slackened, and
consumers

particularly
began
looking critically at price tickets.
Although economists, notably my
colleague
Professor
Joseph
L.
Snider

at

the

Now, following
which

talk

NRDGA in

I

made

Harvard

Business

to

the

York last Janu¬

New

should
like
to
review
of the basic sectors
of the economy and try to ap¬
praise the outlook in each of them.
These
basic
sectors
comprise
I
briefly

ary,

some

banking,
business
residential
building,
consumer
spending, exports, and
government expenditure and tax¬
ation. In addition, I want to com¬
ment briefly on the labor situa¬
and

money

spending,

tion and

the behavior of prices,

on

other

and

prices

agricultural

particularly

basic material prices.

Money and banking—In money,

banking, and credit conditions no
be looked for

great change is to

during the remainder of this year.
Bank

loans

below

now

are

their

about

December

10.5%

peak

and

will

probably continue to decline.
no
very serious ef¬
fect is to be anticipated on the
total money supply as a result of
the decline in banK loans, because
Nevertheless

the

supply has
largely by means of

present

money

been built up
wartime

the

financing

through
in con¬
trast to the situation in 1920, when
the money supply had been built
sale of government bonds,

especially through the
expansion of bank loans.
It is
probable that Regulation W will
be out of the picture after the
middle of the year; but it is un¬
likely that this change will have
any marked effect.
The long-run
money and credit situation as a
result of present government pol¬
icies undoubtedly remains infla¬
tionary in its implications.
But
for the shorter period mild defla¬
tionary conditions will continue
to affect the money supply.
up

more

Consumer

Spending Crucial

spending the fact that

consumer

unit

sales

is

well

have

thus

far

held

up

for

congratulation
and evidence that the pricing and
promotional
policies
of
retail
cause

have

stores

aimed

been

in

the

direction.
The underlying
factor undoubtedly is the state of

right

inventories.

consumer

These

have probably reached a position
which might be described as being
still below

desired level though

a

that consumers
be pretty choosy about quality
prices. For some months past

high

enough

so

autmobile

business

has

perhaps the sole exception
to
this
generalization (automo¬
bile dealers' sales were reported
in April), but that pic¬
changing quite rapidly;
all doubtless noted Mr.

10%

up

is

and

you

Sloan's frank statement the other

day

that

buyers'

a

market

in

Publications, Inc., reports

among

60 %

wage

have

held

families

earner

off

deepens, there
danger not only that buying
psychology will be affected by
greater apprehension about job
security but also that increased
unemployment and shorter work
hours

the

will

cut

flow

heavily into
personal
income.

more

of

Some

further

decline

tural

income

appears

and

if

a

rializes
the

considerable drop mate¬
in
business spending in

third

fourth

and

income

consumer

fall

edly

agricul¬
inevitable;

quarters,

will

undoubt¬

off appreciably.
spending is such

Since

large
pic¬
(approximately $178 billion
for personal consumption of goods
and services in 1948), even a small
percentage decline can have seri¬
ous repercussions.
consumer

in

total

entire

the

a

economic

ture

'

came

picture there

substantial
motive

quarter
and

seem

15%

up

and

hardware

rently

of course,

in the first

building
down

department

to be

the

are,

differences, with auto¬

sales

store

simply
sonal
more

we were

witnessing

return (1) to normal

a

buying habits and
normal

(2)

was
sea¬

several

to

facturing

a

relationship between

Cur¬

consumer income and retail sales.
As recently as four or five months

sales

ago

materials
11%.

opinion

running about 8% be¬

corresponding weeks of

last year.

economists

many

taking

that

view.

were

There

still
was,

however, one serious weakness in
that interpretation.It failed to

In
view
of
declining
retail
prices there is every probability
that
department store sales in
physical volume, as measured by

take

number of

transactions, are prob¬
ably running at least even with

quently

last

that

year

,

or

ahead. Inasmuch

business

perhaps
as

downturn

slightly

this particular

began with

a

into

account

dynamic

sufficiently the

character

movements.

The

logical minded

of

business

mistake

which

people not infre¬

make is to forget
that
economic changes are
dynamic,

they have momentum. When
particular business or consumer
behavior

slacking off of retail buying, the
department store sales perform¬
ance up to the
present time can¬

trend

not be considered

departs from

a

line

bad

showing.

Aficfinite Business Recession

Thps, at the present
a

definite business

time

»

-we

recession,

which
is
about
eight or * nine
months old, which has been char-




mentum

has

be

con¬

acquires

mo¬

come

normal

which

it

to

carries

it

farther

initiating forces logically
justify. In the same way, when
this behavior begins to move back
toward themormal relationship, it
doesn't stop there but swings over
on

the

trate

opposite

side.

*

specifically, when

To

illus¬

consumer

dollars

in

manu¬

Expenditures
for business plant and equipment,
which have been a very signif¬
output.

icant factor in the last three boom
years, are

tapering off.

The

new

likely

seem

changes in the net balance of
exports will have any large effects
in

The

1949.

expectation

in the year was
in exports, but

for

earlier

increase
factors may

some

two

limit the amount of such increase:

First, the present let down of busi¬
of

be

than

declining.

We

third

and

year.

ducers'

As

fourth

durable

penditures

quarters of this

compared

with

equipment

pro¬
ex¬

of

approximately $20
billion in 1948, the outlook is for
a drop of
perhaps $4 or $5 billion
this year.

of

building starts has been
declining for nearly a year. Total
construction

statistics look good
only because of the greatly en¬
larged government expenditure in

this

area.

Private construction of

housing amounted to $440 million
April against $550 million in

in

April,

whom

we

purchases

from

1948.
As is not unusual
in these situations, it is probable

demands

Labor

culties

diffi¬

Labor

—

threatening than

more

are

be the case a few
Both strikes and
fourth-round wage
increases at
appeared

months

to

ago.

the

present

will

have

economic
juncture
deflationary effect.

a

will reduce purchasing
without having sufficient
on total output seriously to
alter supply and demand relation¬
Strides

power

wage
increases will
total
purchasing

and

also

reduce

power

ultimately (even though
seem to benefit the im¬
recipients)
because
in

they may
mediate

will

people

price

Serious

the

expected for European

was

rearmament

(in this we
probably
playing
Russia's
game, because to induce such an
attitude on the part of Congress
doubt

behind

was

the

of the purposes

one

recent

conciliatory

gestures).
spending and tax¬

Government

state

larger

by

this

and

this

expenditures,

Federal,

several

year

ally

will

billion

than last

year.

expenditure,

be
dollars

Natur¬

whatever

else you may think about it, is a

supporting element in the current
.business

this,

situation.

Other

than

very large' economic ef¬
apparently
will
emerge
activities during

no

fects

the year.

It

likely that

now seems
any new

imposed, and it
likely that any
taxes

fect

which

on

have

un¬

taxes will be

is

equally un¬
the present

of
a

rather

deterring ef¬

business, such

as

the

war¬

time

excises, will be repealed.
As already remarked, now that
the cold War is getting somewhat
V'The

No.

3,

Wage

June

jobs.
during

of

therefore

1949

ac¬

celerating the recession. It is too
hazard any opinion

to

soon

as

to

whether labor leaders when they
sit

table

will

is

than

the

around

down

show

bargaining
restraint

more

indicated

by

their

pub¬

lished utterances.

Prices—Agricultural

prices led
decline, and after the recent
period of hesitation they may be
expected to drop somewhat fur¬
ther. Crop prospects are excellent,
and a larger wheat crop than can
be handled is already coming into
the market. It is probable that the
present 90% level of agricultural
price support will be continued
the

instead

of

to

posed

the

have

we

the

in

level

pro¬

legislation sup¬
effect
in
1950.

take

that

seen

lower

the

under

vided

already

absence

of

ade¬

facilities govern¬
supports do not nec¬

storage

quate
ment

price

essarily constitute effective floors.
It
is
significant that for com¬
modities

bought and sold

fu¬

on

tures markets futures

generally
prices.

with

be

to

cession of

prices tend
lower than spot

join the downward pro¬
prices were the metals,

recent

sharp

drops

the

of

nonferrous
cents

metals, copper 23 yj
172/2 cents, lead from

to

21 y2

cents

from

17y2

even

greater

spread

12

to

cents

over

cents, and zinc
9y2 cents. Of

to

magnitude, though
a
longer period of

time, is the drop in the price of iron
steel

and

since

down

scrap,

50%

some

last November. The Bureau

of Labor Statistics

Government
—

of

remainder

are

no

out

difficulties

labor

Last to

to
us;

from government

Residential building—The num¬

ber

affecting most
with

therefore will tend

their

and

both

are

countries

trade, and

trial

goods

to

seems

the

ing

may look for a considerable drop
in this kind of spending in the

inflationary in its implications.

that

orders of manufacturers of indus¬

of

than the

a

that

sidered

billion

and for the long run, of
the government spending
and taxing program is definitely
billion;

course,

Nevertheless

Exports—It does not

aid

over

increase

1950 it is evident
that the budget will be unbal¬
anced by anywhere from $3 to $6
year

in

ference is carried back to the pro¬
duction stage, it means a drop of

was

no

fiscal

the

pri¬
For

sectors of the economy.

vate

could well have the effect of

it

as

is

and, second, Congress shows a
disposition
to
appropriate
less

boom

is

balance the decline in the

to

continues and

taking place in inventories.
On
the contrary, inventories are be¬
ing drawn down. When this dif¬

the

there

government spending activ¬
ities in 1949 will not be sufficient

the present state of business they

that

1949

the safest prediction is

that

buying some
major item of durable equipment
because they feel that prices are
too high
and will come down.1
Willingness to spend thus is still
the crux of the consumer spend¬
ing picture; but as the recession

curtail

in

time being,

ships;

that

that

to

pump-priming, and
bluntly that the

experience of the 1930s does not
indicate that pump-priming is a
good way to restore equilibrium
in a business depression.
For the

fadaen

date, the first general intimation

respect

nature of

effect

income

with

relief

on

to 4 or 4Vz million. Such do¬
expenditures would be in

automobiles would be in full sway
this fall. A recent survey by Mac?

savings, retail sales have thus

most

funds

expenditures if
and when unemployment reaches

con¬

stituted

ture

these

it must be stated

Consumer spending—In the area

of

of

make-work

mestic

ness

Business

use

the

the

pattern of

the

the

up

by at least 15% below 1948.

and

Conditions

of

Review

A

is a disposition for
being to cut down on
European aid and rearmament,
partly, no doubt, with an eye to
time

to be revised

downward, probably

there

the

and

can

on

war

that what

haye

by the events.

the

business

exactly

basic

are

business indexes

that

probably halt
infrequently confounded

not

colder

expected, and therefore estimates
private residential construction
for the remainder of the year have
of

spending — Probably
significant factor in the
outlook for business spending is

retail

-

business booms will
are

been

ment store sales. Within the total

--

the

sumer

but it is un¬
mistakable that for the past three

with the drop in department store
sales last November. At the time
there
was
considerable

>

in

movement;

last year for the first five months,
and the same is true of depart¬

-w

income, it was natural

consumer

the

far held up fairly well. Total re¬
tail sales are about 3%'behind

low

buying during the war years fell
below a normal relationship to

School, had correctly interpreted
the signs, particularly the
price
indications, at a somewhat earlier

situation
and

a

a

the

Murky

has been overestimated. Re¬
sistance to high prices continues,
there was less spring pickup than
age

postwar period that con¬
buying should swing sub¬
in retail sales of about 3%. At the stantially above the normal line
same
time,
consumer
income, of relationship to consumer in¬
though declining, is still running come; and it was equally inevit¬
above the same period in 1948; able that when the opposite swing
and at least one other important took place consumer buying would
index, namely, the electric power not merely return to the line of
relationship
but would
output, is likewise still ahead of normal
1948. Also it is a fair statement drop below it. That is what began
that the present volume of un¬ to happen last November.
Inci¬
employment, slightly more than dentally these factors help to ex¬
three million, is probably not far plain
why economists who set
highly convincing reasons
from what must be considered a forth
based
on
iogical
analysis
of
normal rate of unemployment in
causes with respect to the points
an economy of the size and scope
where
business
depressions
or
of ours today. Thus the cloudi¬

sumer

Greater Consumer Savings

a

price level, a drop in the cost of
living of about 2.7%, and a drop

and

corresponding figure for 1948.

Cloudy,

drop of 10% in
drop of not quite
general
wholesale

by

but Not

1949

1,

Earner

1949,

p.

Forum,"
1.

Vol.

6,

industrial
both

price index of
commodities, including

metals

and

other

raw

ma¬

terials, has dropped 25% since the
first of January. It does not re¬
quire any great prognostic ability
to point out that such declines in
basic material prices mean that

a

further drop in

the general com¬
modity price index is in prospect.

Obviously

high

labor

costs

will

prevent the price decline of
materials from

into

finished

anything

product

like

Nevertheless
in

the

being carried
the

prices

and

that

at

same t

ratio.

further

some

drop

price of finished

certain,

raw

over

is

a

goods is
factor

to

keep in mind in the management
of inventories.

h

$ rA

.

,

p.fjp,

Business, Forecast.

This quick survey of the

important

segments

of

'

i|?;-

several'

the

eco-

Volume

169

THE

Number 4814

nomic horizon

leads

make

to

COMMERCIAL

&

perhaps somewhere

struggling with the high break¬
points which many of us
began to foresee three or four
years ago. The need of maintain¬

between one-third to one-half the

ing and even increasing unit sales

wcndered

volume, which is

cent

average

per

selling

me

the following estimate of the gen¬

business

eral

(1) We

outlook:

are

of business

way down the slope
readjustment.

(2) The business trend will not
around this year, first be¬
too

cause

many

occured

reversal,

to

and

basic
permit

changes
quick

a

it

because

second

will take time for business to

light of the total economic
situation, does not of course make
the problem of expense reduction
any
easier. On the contrary, it
makes

adjust its costs, particularly be¬
cause of the rigid character which

these

(3) Production as measured by
the Federal Reserve Index, now

presumably around 175, is likely
to go down to the area of 150 to
155 before the bottom is reached.

commodity
price index, now about 156, is
likely to go down to the area of
general

decline to
these

itself.

lesser extent.

a

are

should turn out to
accurately the magni¬

only guesses,
encompass

tude of this business recession, it
would

be

not

too

a

one.

severe

de¬

dollars and cents per sales trans¬

imately

75

1944 and

the

circumstances

these

which

developed

we

the NRDGA

at

meeting in Janu¬
still good. Let me reiterate

ary are

50-cent

those

for

creased

quite

each

of

offer

In

represented

one

have

ac¬

undoubtedly
legitimate.
It

was

and

things

such

as

res¬

of

the

cur¬

period

war

and

in

pushing

is

this

mer¬

the

in

seen

Without
the pricing and promotional poli¬
cies that have been followed by
a majority of stores, the outcome
could

be

toration of services after the

wages

line

with

year.

much

been

worse.

labor

the

de¬

nearly into

more

conditions

eral

bring

to

necessary

partment stores

not

far

so

not

and

reductions in hours and increases

The importance of
results

an

cents

"fight

of comment.

values

this

terms,

two additional words

or

fig¬

was

16

could

amount

This Week—Bank Stocks

applied

and

objectives. On
however, let me

them,

we

by the element of
Part of this in¬

proper

By H. E. JOHNSON

cost

between

there

between

change.

Bank and Insurance Stocks

50-

general

stocks,"

still your

are

Wes

that

attributable to

was

that

cents

"watch

those

of

Therefore

of

tailments

expense."

ap-{

advance in the

increase

amount

them: "Push merchandise values,"

that

much

to

1948.

various price indexes to the
ures and
discovered that in

price

watchwords

1944

in

transaction

1948

counted

merely the laying off of per¬

$1.25

how

price rises.

not

sonnel.

in

cents

proximately

18

chandise

and they

guesses,

for

calls

n

(2729)

CHRONICLE

action had increased from approx¬

velopment of real efficiencies and

living, of course, will

The cost of

in

the

gen¬

of another quarter nears,

As the end

bank stock investors loOk
of condition and

with unusual interest to the forthcoming statements

operating earnings.
During the past few
which

have influenced

months there have been several factors
significantly. Of particular

bank operations

importance has been the sharp run-off of loans. In sympathy wiih
the decline in the level of general business, loan volume has experi¬
enced

one

The

sharpest declines in history.

of the

reflected in re¬
Borrowings for such purposes*
loans for capital expansion have

cautious attitude of businessmen has been

inventories and commitments.

duced

liquidated. In some cases
or paid off.
This trend, however, is believed to be largely completed. Inven¬
tories are low in relation to the percent level of business and retsSl

have been

reduced

been

trade should

dise for sale

merchan¬

begin building up stocks and commitments of
during the fall and Christmas seasons.
factor, and one which has favored

Another

this

was

In

part

assets

this increase also represented fail¬

the volume of earning'

during the quarter, has been the

ments

by the Federal Reserve Board.

to

ure

market.

whole

step

But

story.

productivity

up

to

match the increases in wages and

reduction
pense

in

hours, laxity in ex¬
control, and just plain ac¬
of fat during recent
When I happened to men¬

cumulation
years.

lowering of reserve require¬
As the decline in business has
continued, the Federal has attempted to cushion the trend by supply¬
ing the banks with additional loanable funds. Because of the trend fftf
loan volume, these funds have been invested primarily in govern¬
ment securities. As the pressure of funds has been rather insisted,
the Federal Reserve has had to supply the market with suitable
securities in order to prevent the decline in yields from moving

tion
this
comparison
to
Dean materially lower.
objective it is
Thus the above factors should show up in the statements of con¬
David, who as you know is one of
mated are on the order of 15% to
now
necessary
for retailers to
the directors of Macy's, he re¬ dition in the form of a lower volume of loans outstanding as compared
20%, a less severe setback than work closely with manufacturers
marked "Yes, that is some of the with the end of the first quarter and a larger amount of government
that experienced in 1021 or again in
getting production costs down.
fluff that came in during the days securities.
in 1937, and of course far less
(Incidentally, here is a kind of
Even though this may result in some decreaSe in yields because
when stores didn't have to sell
severe than
the great depression endeavor in which t'ne big chains
and
merchandisers
and
buyers of the lower return on securities as compared to loans, earnings for
of the early 1930s. The reasons
and mail-oreler
companies do a
didn't have to buy."
the quarter are not expected to be materially below those of a year
for anticipating a no more severe much better job than does the
decline are the support factors average department
/
In any economy moves you ago. The upward adjustment in yields on government securities and
store.) It is
loans which began over a year ago is beginning to be fully reflected
should
which have often been enumer¬
distinguish
sharply
be¬
essential, of course in a business
in earnings and should help to offset the lower volume of loans. Th«i
ated: lack of vulnerability in the readjustment period to clean out tween expenses and capital out¬
too, the lower reserve requirements should provide additional earn¬
debt structure; absence of large- inventories, particularly
in the lays. If you have projected cer¬
tain improvements or expansions ing assets.
scale speculation during the rise; situations where
they have be¬
Although all New York City banks do not report operating earn¬
of facilities you have presumably
the larger role played by govern¬ come top-heavy, and this
applies
ings on a quarterly basis, those that do, provide a good indication <«f
done so on a long-run basis. They
ment in the total expenditure of
equally to retailers', wholesalers',
the economy; the extent to which and manufacturers' inventories of were
planned for
the
general the trend. As a means of providing a comparison and to give a basis
income
has
been
"socialized" finished goods. But if
growth and improvement of your for estimating the results for the current quarter, a tabulation of ttae
your push¬
results for the first three months of 1949 and 1948 is shown below.
through Social Security measures ing of merchandise values stops business and not undertaken sim¬
The consolidated figures are for the 11 New York City banks thfci
and other devices calculated to at this
point, it does not go far ply in response to cyclical fluctu¬
ations.
Therefore I say to you publish quarterly operating earnings.
make income less responsive to
enough to do any real good in
fluctuations in production; gov¬ restoring economic balance. New most
emphatically
that
under
CONSOLIDATED EARNINGS REPORT
circumstances you should
ernment price support policies;
values must be developed, better those
not at the present time refrain
(000s Omitted)
soundness of the banking struc¬ goods at lower
costs; and it is up
First Quarter
Change
ture; and perhaps most important, to retailers to work as closely as from making these scheduled cap¬
ital improvements.
If, taking an
the still unsatisfied long-run de¬
possible with their manufacturer
Operating Income:*
1949 *
mand both for consumer durable
resources
in the development of adequately long-run view, these
Interest on Loans
$37,720
$30,769
$6,951
22.6 improvements
and
expansion
goods and for capital goods, and such new values.
Interest, Divs. on Securities.29,454
34,030 —4,576 —13.5
'"
plans were sound in 1948, they
the
substantial accumulation of
are
"Wateh Those Stocks"
equally
sound
today.
The
3.7
savings applicable to the purchase
$2,375
$64,799
Total Interest & Dividends
$-37,174
So
of such goods.
2.1
The
414
admonition
to
"watch country is not going to hell.
19,840
Other Operating Income
20,254
don't pull your neck in on any
those stocks" has probably been
Department Store Situations
weli-conceivcd
expansion
pro¬
superfluous
for
a
number
of
Total
———
$87,428
$84:639
$2,789
3.3
:
Now to come down specifically months so far as
top managment gram.

which

declines

The

*

circumstances

In

140 to 145 before reversing

difficult, because
the expense, rate under
more

lower

to

years.

If

it

re¬

those costs have assumed in recent

(4) The

real need

a very

in the

turn

have

even

FINANCIAL

have

I

esti¬

this

Toward

same

,

1948

'

*

t>

"

■

Amount Percent

—

department store situation,
dollar sales for the spring season
are apparently going to be below
1948 by about 4% or 5%. Unit
volume, as measured by number
of transactions,
is likely to be
.approximately even or possibly a
to the

of last year.

little ahead

is

concerned.

is still

It

weather forecast,

and file of the

merchandising and

cannot refrain from

buying

have

you

staffs

learned

how

to

fully

yet

as

operate

in

a

buyers' market, that being a new
experience for many of them. Not
infrequently in such a situation
people once they get an idea may
carry it too far. You are in busi¬

population and the increasing size

customers.

for

,

be

it

workforce

the

of

may

is

necessary

the

country to produce
distribute
a
substantially

and
in¬

sell

to

ness

goods. You have got
there for your

to have those goods

stocks,

how

out

You

but

stocks

to

smaller

want

have got to find

you

make

those

complete

smaller

Blind

stocks.

creased volume of goods and serv¬

slashing of stock limits and

ices each year.) For

to-buys won't get

of

1949

as

the fall season

prices continue to de¬

cline dollar sales may well be off
from

8%

with

1948.

10%

to

compared

as

larger declines,
indicating a falling off in physical
volume, if long continued will in¬
dicate

that

Any

the

business

tion is becoming

more

disloca¬

severe.

able

to

keep

the

gross

margin

percentage reasonably well under
control. Markdowns will probably
but the market offers
opportunities to improve initial
markup while still giving good
values to customers. In the light

increase,

of the

historical trends of recent

years, as Professor Burnham
delineated
them
for
you,

has
the

present gross margin rate is cer¬
tainly not high; and with present
expense
tendencies
this
gross
margin certainly is not going to

yield

much

than

an

To

be

sure,

falling, and
for

uncomfort¬

ably thin layer of profits for quite

months; but
better

to

cut

it




So

to

meet

don't

too fine. If you

try

do,

you

won't help the healthy read¬
of the wholesale mar¬

you

kets.

When

it
comes
to
"fighting
expense," as Professor Burnalready indicated to you,

that

ham has

it

is

unwise

to

make

blind

and

panicky expense cuts. You must
distinguish sharply between the
weeds and underbrush

on

the

the

other.

weeds

There

and

what

sure

When

we

noted

group

are

plenty

underbrush,
your

were

store
that

of stores

axe

is

but

for

a

total

that these problems of busi¬
readjustment
with
which

immediately con¬
my
opinion not
the
most
important
problems
which you have. More serious, I
believe, are those problems con¬

of
be

year

substantial
expense

Operating Expenses:

cerned

are

$892
1,996

14.3

17,710

624

3.5

$59,508

$3,512

5.9

$24,408

$25,131

—$723

—2.9

Other expenses
Total

—

m

Earnings

,Net Operating

in

3.2'

$27,788
14,010

$63,020

Assessments—L__

$28,680
16,006

18,334

Salaries and Wages—
Taxes and

are now so

you

and assessments"
nected
with
the long-run
com¬
was the primary reason that operating earnings did not make a metre
petitive position of department favorable comparison with a year ago in the first quarter. This same
stores in the distribution of con¬
factor could by being lower help to maintain earnings in the second
goods. You had it pretty
during
the
war-inflated
years, and you had it pretty good.
Today competition is back again,
the consumer is watching his dol¬
lar more closely, and you aren't
sumer

r-

The substantial

increase in the item of 'taxes

quarter.

bad-debt reserves o«t
this on a tax-free basis
and in many cases the tax saving has been added to the reserves.
As the loan volume has declined, there would seem to be less imme¬
diate reason for adding aggressively to these reserves. This could i*c
the only people who are in the
an
important factor in maintaining the level of earnings.
running for the consumer's dol¬
Nevertheless, the trends indicate that banks will have to act
lar.
You have some tough com¬
petitors outside the department aggressively to maximize and maintain the present level of earnings.
store field, competitors who were The proportion of current earnings being paid out . as dividends as
gaining on you rapidly in the conservative. In practically all instances, present rates are secure
and should be maintained under presently foreseeable conditions.
1930s, competitors who have in¬

easy

into your
their price
lines, their quality, and their as¬
sortments, competitors who are in
many instances bigger than you
are, competitors who have lower
costs
than
you
do, competitors
creasingly traded up
field with their items,

who

are

just

competitors
bound by

as

smart as you are,

who

are

less

hide¬

tradition than you are,

competitors who are in many in¬
stances

hitting.

this

but in closing I
remarking to

alert

more

than

you

are

Most of the

banks have been building up

They have been allowed to do

of earnings.

Investment Securities Co.

to the industrial revolution

L. H. Whitaker

urer;

Amelia

President;

D.

and

Mattocks ViceL. Gunn,

Anna

Sumlinski in Kenmore
KENMORE, N.

Secretary.

linski

that is

ment
row

in

really beginning to take hold

the

field

tribution.

story.
of

it

1948.

of

But

merchandise

dis¬

all that is another

You will find a few hints
in

the

Harvard

Report for

Opens

D. C. — Leew¬
ard H. Whitaker has opened Of¬
ment
Securities
Company
has fices in the Hill Building to embeen formed with offices at 427 gage in the securities business. He
was formerly with Herrick, WartiW. 30th Streets Officers are C. Q.
dell & Reed and in the past wM*
Mattocks, President and Treas¬ Johnston, Lemon & Co.
WASHINGTON,

INDIANAPOLIS, IND.—Invest¬

on

preparing the de¬
report

ness

one

hand and the roots of the tree

we

are

stocks

justment

The expense

Stores

the

demands.

won't do yourselves any good and

*

paramount.

of

you

have

partment

be

markdowns

number

had better recon¬
cile yourself to that, and you had

number of stores.

to

going to have

take

to

open-

anywhere.
price level is

you

considerable

a

a

problem continues

the

you are

continue

to

customer

Well-managed stores should be

economic

the

question¬
able, however, whether the rank

(Paren¬
remarked
that just keeping even on physi¬
cal volume is not enough, since
to
keep pace
with the rising
thetically, it

concludes

This

Richard E. Griffin Opens
LOS ANGELES,
ard

E.

Griffin

is

CALIF.—Rich¬
engaging

Stillwell Avenue.

Edwin

Bulkley Dead

Bulkley, partner "in
offices at Spencer Trask & Company sinwe
1887, died at the age of 86.
South Vermont Avenue.

securities business from
5314

in a

Y.—Joseph Sum¬

engaging in the invest¬
business from offices at
is

Edwin

M.

'J

34

COMMERCIAL

THE

(2730)

probably,

As We See II

of

On the

net of the

out

same day, James F. Byrnes, former New Deal
Capitol Hill and Secretary of State in the Cabi¬

on

who

man

heads the

now

even

more

FINANCIAL

of

a

accounting

Thursday, June 23, 1949

made—and build

were

stance,
ous

A

But

the

miracle that the

was a

women

ac¬

complished their victory. Finally,
on April
23, the Fifth Commission

Changed Situation

situation

But

the civil

higher wages—well, they had their higher wages

drastic Fair

committees.

later, when
uprising took place in the
city, the work was rushed and it

demanding higher wages with¬
When higher prices inevitably fol¬

anyhow.

Deal drive, had this to say:

in the orienta¬

spent

was

tion of the real work of the vari¬

up

for

sort

higher prices.

lowed

CHRONICLE

when allowances for the shortcomings

even

conventional
case

a

(Continued from first page)

engineer

&

approved two treaties

has

markedly changed. Profits are of women and
lines and in some heretofore quite plenary session

on

the

April

on

rights

29

the

of the Conference
going down the road to statism. Where we will fading. Indeed in some
added its approval.
wind up no one can tell. But if some of the new programs profitable companies they have faded altogether. Sales have
The first treaty reads: "The high
seriously proposed should he adopted, there is danger that declined and are now declining at an accelerated rate. contracting
parties agree that the
the individual
whether farmer, worker, manufacturer, Workmen can not in nearly the same degree count on con¬
right to vote and to hold national'
lawyer, or doctor—will soon he an economic slave pulling an tinuous employment. The economy begins to look pale. office shall not be denied or re¬
oar in the
Higher taxes can scarcely be imposed without giving thought stricted on account of sex." The
galley of the state. ...
second
reads:
"The
American
"Too many people are trying to transfer power to the to the immediate effect upon the day-to-day operations of
States agree to grant to women
all types of business. Most of the old arguments in support
government.
We are not only transferring too much
the same civil rights which men
of higher and ever higher wages, shorter working hours, enjoy."
power from the individual to the government, hut we are
In the beginning the
delegation
transferring too many powers of state governments to the profligate expenditures upon all sorts of strange programs

"We

are

—

...

"We should not have the Federal Government

ing

our

lives from the cradle to the

grave

regiment¬

is to reduce

expenditures and live within

income."
two

speakers

were

addressing

part of the folkways and
of the times) by Franklin Roosevelt and his en¬
a

tourage of malcontents and revolutionaries; the other
surprisingly well based on centuries of experience

is

and

a

for

wealth

of

who for

one

common
so

sense—surprisingly, that is,
long appeared to be rather closely

identified with the New Deal.

'
.

rather

$

'

Administration

in

*

7

'

ir

feel

itself

uncomfortably caught between these two .conflicting
Both
politically and by reason of repeated exposi¬

views.

has

country, and it

can

scarcely share the

that Mr. Reuther either feels
can be averted
by the absurd

assurance

feigns that depression
prescriptions of the Muror

the Reuthers and the Lewises. There is a fearful
political hazard in placing the weight of its influence
rays,

behind such nostrums at this time.
the political pitfalls and

Such, of

course, are

difficulties inherent in

ophy which injects
has no place.

government into

areas

a

philos¬

in which it

Basic Issues

But whatever the
political aspects of the
basic issues thus

situation, the
posed are probably destined to be more
sharply focused for the American people in the months to

come

effort

even

has

than

they

are

now.

For

been

some

years

past the

repeatedly made to have higher wages,
shorter hours of
work, more subsidies for the farmer,
greater
social
security" for all—policies and
programs that some¬
how appear
peculiarly suitable for times of great business
activity and production. We could afford
them, so the argu¬
ment ran. We had to
find a
way of being certain that the
benefits of
prosperity were widely diffused. We could not

afford to

permit

of

America

the

is

United

extremely
of

the general principle that women
and men should enjoy equal
po¬
litical and civil rights, especially
this principle has been so bril¬

tal

Republic of Uruguay. My Gov¬

1

Rights

made considerable progress in the

promotion

k

Montevideo

has, particularly within
comparatively recent past,

the

For Women's
at

the

ernment

(Continued from page 17)
Conference did not recommend the

outlined by

eminent delegate from the Orien¬

rights.
laid

were

of

such

equality

However,-under

of

our con¬

stitutional

before

system, the rights of
adoption of their proposal but, | the League of Nations at every the
national
government : are
their suggestion, it did pass session beginning with that of strictly separate from that of the
48 States. A constitutional amend¬
unanimously a resolution creating
j 1930, and finally in 1936 these

upon

the

Inter-American

of Women

having

Commission

subjects

it

on

It

a

woman

put

were

the agenda.

ment was

required in order to

work

on

incessant

this

was

tend

Women

by

a

of each of the 21 Republics, and it
empowered this Commission to re¬

all

port recommendations to improve

plished the victory at Montevideo.

status

of

women

American

in

1933,

to

the

Conference

next
to

be

that the Seventh

so

Conference would be able to take

the consideration of the civil
political equality of women.
Again, this was the first time in
up

and

as

that

women

authorities

their

on

welcomed

were

own

status.

At the Seventh Conference held

group

of

from

women

the world

over

This group, Equal

equal

ex¬

political

rights with respect to -voting, and

countries

which

to

that amendment

accom¬

is limited to the
subject of voting * This action was
required because under our con-

Rights Interna¬

tional, organized at Geneva for the stitutional system voting qualifi¬
sole purpose of

Rights,

cations had been controlled previ¬

working for Equal
World

ously by the separate States. With

merged with the
Woman's Party in 1941.

regard

This brings us. up to the present
time and
the Ninth Conference
held

at

the

Treaty

same

the

Bogota

form

in
as

which

ing
of

did

adopt
substantially th£

it

was

to

this term
a

rights,

insofar

be regarded

precise meaning,

them,

with

civil
can

the

as

as

hav¬

almost all:

including those dealing
right to .hold property,
.

domicile, inheritance, guardianship
and the like, are controlled in the
20

proposed by

National

Woman's Party
United States by State
before, in 1928, in Havana,
#rather than
Because'of this sit¬
the only difference being that it Federal law.
uation the United States can at
recommended the adoption of two was divided into two
parts.
this time support an inter-Ameri¬
treaties:
(1) That the American
in Montevideo

in

1933

the

Inter-

American

Republics

would

years

Commission of Women

.

taken

responsibility — very direct and
immediate responsibility—for the state of business in
this

delegation
of

happy to declare its affirmation

International Treaties

scarcely be regarded as other than on the side of Mr. Reuther
we
might say Mr. Murray, and all the rest who rea¬
son in the same manner.
Indeed, only with some political
difficulty could it avoid at least passive and indirect support
it

."The

liantly and ably

the history of international proce+

Yet

amendment that

as

dure

of these labor leaders.

an

Its wording was:
t

SO USEFUL A PURPOSE AT THIS MOMENT.

tions of its politico-economic
creed, it could at this moment
—and

covering

Equal Rights Treaty be lim¬
ited to political rights of women.

IT IS FOR THAT REASON THAT THE EMINENTLY

held

Washington /must

treaty

one

women

the

States

Pan

The

gation-offered

SENSIBLE WORDS OF MR. BYRNES OUGHT TO SERVE

the

Uncomfortable

rights of

both
political
and
civil
rights.
Whereupon the United States dele¬

different

definitely saturated with basic economic fallacies
long familiar among the economic crackpots but made

the

on

is

mores

from Uruguay proposed

rapidly becoming quite obviously
,

appear.

our

audiences at different places, and were concerned im¬
mediately and directly with different aspects or seg¬
ments of the present
situation, but their remarks may
be taken as fairly
representative of two divergent
philosophies about the current state of affairs. The one

popular (we had almost said

are

day are to be successfuly defended in thesd! conditions, they must be
made to appear appropriate for stimulating business.
Such a transformation of current political argument is,
accordingly, to be expected. Indeed, it is beginning to

:

-

These

or

If the New Deal-like notions of the

"

Adding that many elements in society are demanding
privileges — the farmer wants higher prices, the
wage earner wants increased wages, pensions and hospital¬
ization—and that too many people want more pay for less
work, Mr. Byrnes insisted that "our first line of defense
is a sound, solvent American
economy," and that "the only
course

have

untenable.

special

wise

whims

and

Federal Government.

"purchasing power"

and

in

women

When

accord
their

to

the

women

men

respective

interested

raising the status of

women

in

can

ex¬

amined the roster of delegates to
the Bogota Conference and

jurisdictions equal civil and politi¬
they
cal
rights
(the
same
proposal
learned that only four Govern¬
made at Havana).
(2) That the
ments, had sent women delegates.
Republics of the Western World

convention

which

includes

only the right to vote and to hold
national office.
pose

We therefore pro¬

the following amendment to

the Uruguayan project:

"Article I. The high contracting■
parties agree that the right to'vote
Republic, < Mexico,
law and practice in the matter of
and to be elected to national office
Uruguay and the Argentine. The
nationality.
shall not be denied or abridged
women
of Colombia had sent a
abolish

would

This

time

inequality in their

the

women

achieved

These

four

countries

were

the

Dominican

because of

sex.
\
; 1'
making this proposal for
was
their gifted member of the Inter- amendment, however, the United
The Conference adopted the Na¬
American Commission of Women, States delegation is mindful of thef
tionality Treaty without a nega¬ Senaro de Aye, as a delegate. But fact that im numerous countries
tive vote on the part of any Re¬ he
of this hemisphere the
equal right
refused their request, pointing
public.
And
four
Republics— out that the United States had no to vote has not yet been gained
and we believe that the realiza¬
Uruguay, Paraguay, Ecuador and woman delegate.
Cuba
tion in
signed the Equal Rights
many
countries of * this
The four women delegates were:
basic
and
Treaty. Thus the Seventh of the
essential
a

great

victory. The
accomplished!

impossible

manifesto

to

President

Perez

of

Colombia, asking him to appoint

.

•.

"In

—

Conferences
made

of

its place

it freed

women

American

States

in history because
from the shackles

Senorita
Chairman

Minerva
of

the

first

Bernardino,

Inter-American

Commission of the Dominican Re¬

would mark
toward

the

a

step

significant advance

achievement

of

the

equality of civil and other political
Senora Amalia
Castello rights between men and women.
of
precedent,
an
action
which public;
Ledon, of Mexico; Senora de Ivan- We realize
marked the beginning of the end
further, as a practical
of inequality
between men and isevich, of Argentine, and Senora matter, the achievement of other
Blanca Mieres de Botto, a noted
women in international law.
and more far-reaching rights for
lawyer of Uruguay, who was made women
The Nationality Treaty was not
depends\upon their gain¬
Chairman of the Fifth Commission
ing the right of
only the first great step toward
suffrage. Our pur¬
which would direct the fate of the

pose is to place primary objectives
equality by the whole of the West¬
Equal Rights Treaty. These women first. Once
ern World; it was the first
the right of women to
treaty were four valiant
spirits; their vote and hold office has been
were in the habit of
in all history to raise the position
constant vigilance kept the
of women. This treaty was ratified
ejqual gained, however, vast strides can
and much more of the same
rights campaign on an upward be made
order of
forward further significant
argument became fa¬ by the United States in May, 1934.
miliar bywords
swing until they achieved triurhph
throughout the length and breadth of the
improvement in the status of
At the Eighth Conference held on the last
day of the Conferen
land.
women in our countries." (Official
in Lima, Peru in 1938, no further
Supported by the World Woman's
text, given out by the U. S. State
unions, with their members all well
extension
of
"equal rights took Party they accomplished a great
occupied
Dept.)
:
at high
place, although the women pres¬ victory for women, particularly
.wages, could afford to "take a chance"
on strik¬
The Fifth Commission accepted
ent worked indefatigably for the
those who had
battled for this
ing if necessary for still more.
They had little in sight
the proposal of the United States.
adoption of the equal rights treaty. treaty for 20 years.
to worry about. The time
to "get theirs"
The Uruguayan
was at hand.
delegation then
In
the
meantime
the
In the beginning of the Confer¬
Equal
They could point to very large
proposed an additional treaty deal¬
profits being enjoyed
Rights Treaty proposed at Havana ence the pace was leisurely and
quite generally throughout
ing with the civil rights of women.
industry and trade—large,
and the Nationality Treaty adopted
festive; the first week, for in¬ The Fifth Commission accepted

to decline by allowing
large profits (as though businessmen
burying their profits in the backyard^,

businessmen to make




(

Volume 169

this also.
on

thcf.

the

Number 4814

THE

on

and

remain

signature
did

not

the

tiVif^rights 6f
adopted at tne^ast

indefinitely

open

by

the

sign

countries

the

at

the

American
lished

CHRONICLE

time

Last

for
that

summers

the

of

decline.

Republics
of

the

of

have

rights

estab¬

the

for

users

buyers

steel

scarce

Industiy

kepL their

\

/

;

summer

receiving

week

a

wheat

of

open

unfavorable

noticeable seasonal

y

still pdring down their steel inventories and with
business in.tnia field off/somewhat from a
year ago except for auto¬
mobiles, it is estimated that actual orders for things made from steel
are

Other

and

harvest

on

This compared

35

with 24252

a year ago.

Trading

prices moved higher, aided by reports
weather in the Southwest and the an¬

the government

for wheat stored

14.,

the like date

on

generally firm during the week.

were

brisk

was

nouncement that

during this

any

June

on

previous, and with 288.82

Grain markets

vacations.

departments

shipments,; but not desiring
show

a

in

will shut down for

shutdowns,-July shipments will

Steel users

Conferences

equality

in

lot of steel
steel

summer

take

to

a

(2731)

downward to close at 242.50

(Continued from page 5)*
the fact that

Conference.

tfhus

FINANCIAL

State of

politiealnTjgh^fa^:w.omenj';

plenary session of the Conference,
were signed on
May 2. Both treat¬
ies

&

These two treaties, one

other

women,

COMMERCIAL

wculd grant loans to farmers

the ground.

grains moved

Fiorur prices

upward, influenced by the rise in wheat.
slightly and domestic bookings increased moder¬

rose

ately but most

users

continued :to

only for nearby require¬

cover

ments.

Cocoa values tended to sag, reflecting continued cautious buying
.today would support less than the current
operating rate.
Some
by manufacturers and reports of slow candy sales. Demand for coffee
firms, however, have cut back inventories to a point less than
opera¬
was active
at the week-end with prices buoyed by the continued
tions—but this is not. the general -rule this
week, "The Iron Age"
of equal rights treaties at
Bogota
favorable statistical.position.
points out.
have given 10 women all the fights
A question that
Following a six-week period of rising prices, all classes of
keeps popping up often these days in steel circles
for, which they have .Striven for
is the difference between the
livestock receded sharply, as the result of a lower trend in whole¬
operating rates of large and small steel
thedast 100 years.
sale meat prices.
companies. To these who have been in the business since 1937 this
The
program
of equal rights isn't new. There
are
at least three reasons
Although activity in domestic cotton markets slackened ,during
why smaller firms are
which our pioneer women drew
running at much lower rates than their big
competitors, and the the past week, prices developed considerable strength during the
up • bn - July :Id,
1848 at -Seneca order of their
importance Ts:< (1) ^Product mix; (2) location, and (3) period.
New York spot prices snowed a net advance of 35 points
Falls, New York, has been adopted customer
relationships. L
during the week.
1
by the Conferences; of American
;v
jrIf a big steel company madev ncthing but bars, wire, alloy and
The firmness in the market was attributed to the relative
Republics. Within a few weeks stainless steel
it might notToday.
Le.ahlb^q push its operations above
strength shown in the nearby July delivery, some price-fixing
less
than* 100
years
after
the the 50% mark. But
products can be offset
against export sales and the fact that distant contracts are sellingDeclaration - of
Sentiments
was
by Hat-rolled and ; byr-"pipe
below the prospective 1949 loan level.
:^hd tubingf business, that company can
•adopted at Seneca Falls, the pro¬ operate at a much
AigherTeveL And no matter what the product,
gram has been carried through to if a mill is
Inquiries for cotton were limited and mills continued to cover
too far from a good
part of its market and can't absorb
its completion except for the rafif U
Export sales in the South¬
freight its production is suffering: The Pittsburgh-Youngstown ingot only for their immediate requirements.
west were reported fairly active.
cation stage, which must be com¬
Total sales in the ten spot markets
operating rates compared with that at'Chicago, concludes this trade
fell to 55,500 bales last week, from 66,300 the week before.
pleted withfn the countries them¬
v
authority, prove this point.
"T^*'V.
selves and for the adherence'to
Repayments on 1948 loan crop cotton rose to 96,800 bales during
We American Iron and Steel Institute announced this week
thh treat ies which must-' be given
the week ended June 2.
This was the largest weekly volume so
•L that the operating rate of steel
companies having 94% of the
by \ the countries * which: did not;
far this season and compares with a weekly average during May
steeLmaking capacity of the industry will be 84.4% of capacity
sign dt Bogota. '''
'* •'>> '
Vf
of 85,000 bales.
for the week beginning June
20, 1949, as against 86.7% in the
American women,' working in
Nonferrous metal markets were featured by renewed weakness
preceding week, or a decline of 2.7%.
the World Woman's Party, now go
*
in copper and zinc.
- '
'
This week's operating rate is equivalent to
forward
to
raise
the
status
of
1,550,900 tons of
The latter was marked down another 1*4 cent per pound to
women
throughout the world by / i steel ingots and castings for .the entire industry, compared to
9% cents, or a total drop of 8 cents from its postwar peak of
1,598,300 tons a week ago, 1,734,700. tons, or 94.1% a month ago,
laying before the United Nations
women

of

sphere.

Hemi¬

Western

the

-

The final accomplishment

.

•

^

.

-

,

.

-

.

and 1,734,700 tons, or 96.2% of the old
capacity one
.1,281,210 Ions for the average week in 1940, highest

the

equal rights treaties adopted
by the Conferences of the Ameri¬

Republics.

can

.

total

Halsey, Stuarf Group
Hampshire Bonds Stuart

&

resented

publicly June 22 $4,000,000

due June

and

accrued

was

awarded

petitive sale

DUE

1, 1979 at 100.59%

the

deposited

trustee

bonds

thereof

of

sum
-

will

•

the
and

withdrawn

time

from

the

to

to

provisions

certification

upon

,

with

of additional

'»trustee

com¬

indenture

the

pursuant

at

$1,800 000 will

initially

under

be

time

accarding to^the Association of American Railroads.

decrease of 98,507 cars, or 10.9%

to

-reduce

the

applied

be

decrease of 87.136 cars, or 9.7% below the similar
>•

a

A

FURTHER

TO INCREASE

IN

IN

PAST

WEEK

'

•

'

■

■

..

will

Production
the

of

cars

and

past week advanced to

137,013 (revised)
Reports" states.

.

the

United

.'

SINCE 1937

6,000

an

be

other

for

used

corporate

anticipated

is

that

-the $1,800,000 to be deposited ini'

tially

with

will

.

•

31,

were

lost

this week

at

Chrysler's Plymouth division because of the truck

Packard
drivers'

strike at Briggs ManufacturingCo., "Ward's" estimated.,
The total compares with 109,259 units a year ago and
units in the like week of 1941.

applied

be

to

re-

new

bonds will be redeem-

able at general prices

1103:59%J
fund

Last week's output consisted of 114,174 cars and 23,584 trucks
built in the United States and 4,676 cars and 2,539 trucks in Canada.

scaled from

BUSINESS FAILURES HIGHER

LATEST WEEK

16

June

from

reports.

174

in

Almost twice

the
as

rose

prices .ranging

to 100%.

/

total of 249

liabilities of $5,000

or more

rose

from 143 and exceeded the 77 of this size which occurred

Small failures, those

ago.

41

approx-

'

as

with

liabilities

Retail

company

•

of

in

engages

electric

the genera¬
its

energy - and

transmission, distribution and sale
to

about

mercial,
and

117,100

-industrial,

municipal

Com¬

domestic,

agricultural
in

customers

the

cities of .Manchester, Nashua, Ber¬

lin, ' Dover,
chester.
worth
New

Keene,

Franklin

and

in

153

Hampshire

Laconia,
and

towns,

and

Ro¬

Somers-

all

having

'aggregate population based

on

in

"1940

census

of

about

360,000.

It

.also-

serves

a

small

number

of

jcustomers in Vermont. Maine and
•the

Province

of

Quebec, Canada.




failures climbed to 90 from 78, reaching a total more than
twice that of a year ago when 37 were reported.
In manufacturing,
casualties remained at 49, while construction and commercial service
increased moderately to 19 and 18 respectively.
The only decline
appeared in wholesaling where casualties dipped to 20 from 23.
FOOD PRICE INDEX CLOSE TO YEAR'S LOW IN LATEST WEEK

index, compiled by Dun & Bradstreet,
Inc., continued lower this week. A drop of 0.9% brought the June 14
figure to $5.68, from $5.73 a week previous. The current index is
only slightly above the year's low of $5.66 recorded on Feb. 8 and
May 17, and compares with $7.18 on the corresponding date a year
ago, or a decline of 20.9%.
Index represents the sum total.of the

in

general

use.

evoked

price

per

IN

After

modity

LATEST WEEK

holding steady most of the week, the daily wholesale com¬
price index, compiled by Dun & Bradstreet, Inc., turned

temperatures

cotton and

dresses,

rayon

moderate

bought

response.

slightly

less

food

than

in

the

preceding

corresponding week in 1948,

The interest in cold
The

retail

sizable.

some

volume

of

sections, the demand for meat

cuts, poultry and dairy foods remained large.
and frozen vegetables continued to be

fresh

The demand for candy and

ice

cream rose

slightly.

-

•

buying of furniture and housewares increased moder¬

ately last week. The retail volume of incidental pieces, bedding and
decorating materials rose moderately.
There was a moderate rise
in the demand for linens, cutlery, china and kitchenware. The in¬
terest in television remained high.
Phonograph records at substan¬
tially reduced prices attracted favorable attention.
Sporting goods
suitable as gifts were in increased demand.
Retail volume for the

Wednes¬

country in the period ended on

day -of last week was estimated to be from 2 to 6% under
a

that of

ago.

year

corresponding levels of
New England and East
unchanged to down 4, South, Southwest and Pacific Coast down
3 to down 7, Midwest down 2 to down 6 and Northwest down
Regional estimates varied from the

a

year ago

by the following percentages:

4 to down 8.

There

was

a

slight dip in the total dollar volume of wholesale
the corresponding period in 1948.

orders both for the past week and

The number of buyers attending many

wholesale markets rose mod¬

erately and slightly surpassed the level of the similar week last year.
Many buyers at market exhibitions were cautious and were hesitant
in placing commitments.
1
Department store sales on a country-wide basis, as taken from
June 11, 1949,

the Federal Reserve Board's index for the week ended
decreased

v/ith

a

by 5%

decrease

from the like period of last year and
8% (revised), in the preceding week.

compared

of

For ..the

11, 1949, sales registered a decrease of 6%
from the corresponding period a year ago, and for the year to date

a

ended June

like decline of 4%.
Retail

trade

volume

in

New

York

last

week

continued to decline

promotions.
in the period slumped by 41%.

notwithstanding

Father's

Day

Department store

According to the Federal Reserve Board's index, department
in New York City for the weekly .period to June 11,

sales

declined
COMMODITY PRICE MOVEMENTS SHOW IRREGULAR CHANGES

lightweight

as

:

dipped slightly.

pound of 31 foods

.

slightly
"

Following price rises in

fcur weeks

The wholesale food price

an

the

of the

year

$5,000, totaled
against 31 in the previous week and 23 in the corresponding

rose

week, resulting in total dollar volume being fractionally below that

to 155
a

under

strong^

areas.

women's

of

Housewives

in the

week of 1948.

imately 91% of total revenues, the

tion

motions

similar week of 1939.

Ip carrying on its electric busi¬

which accounts for

prewar

very

apparel

The demand
for cotton lingeries and Summer millinery rose slightly.
Haber¬
dashery was in increased demand for Father's Day gifts. The interest
in men's slacks remained substantial.
Reduced-price jewelery pro¬

parable week pf 1948 and .-nearly three times as many as in 1947
when they numbered 100 and 66 respectively.
Despite'this increase,
•'/,
Casualties involving

Summer

in

Promotions

to 196 in the week ended

preceding week, Dun & Bradstreet, Inc.
many casualties occurred as in the com¬

to 100 % and at sinking- ^failures remained ncticeably^below the

redemption

from 100.59%

ness,

IN

✓Commercial and industrial failures

Most shoppqrs con¬
discerning, but the consumer demand for moder¬

many

Consumer

133,565

level
Inc.,

Promotional efforts for Father's Day

sportswear and beachwear attracted increased attention.

,

be

and

1949,

duce short-term bank borrowings;

The
'

by Oct.

similarly

will

trustee

the

withdrawn

climbed in

estimated

units

1948

widespread than in previous years.

more

Canada

States and

SHOWS
CORRESPOND¬

WEEK

PAST

BELOW

DECLINE

It was, however, very moderately below the high
of the similar week a year ago, according to Dun & Bradstreet,

•

,

IN

TRADE

of last week.

144,973 units compared to
units in the preceding week, "Ward's Automotive

Approximately
and

trucks in

PERIOD IN

^

AUTO OUTPUT LAST WEEK HITS BEST LEVEL

company's short-term

purchases.1 It

.

ING

MODERATE

Aggressive promotional sales by many retailers gave a slight
impetus to retail dollar volume in the period ended on Wednesday

Interest

•'

.

WHOLESALE

ately priced goods remained

ported for the week ended June 19, 1948, and 695,700,000 kv/h. in
of 1he output reported for the
corresponding period two years
■.

AND

FURTHER

were

excess
..

23.

remained

highest points since October, 1947.

tinued to be very

distributed by the electric light
and power industry for the week ended June
18, was estimated at
5,372.600,000 kv/h., according to the Edison Electric Institute.
This
represented an increase of 72,509,000 kwh. above output in the pre¬
ceding week, 213,345,000 kwh. or 4.1% higher, than the figure re¬

ago.

for

in its current review of trade.

AIR-CONDITIONING,

■

.

RETAIL

The amount of electrical
enegry

to

bank.borrowings and the balance

OUTPUT ADVANCES
MAINLY

TAIN AND PACIFIC COAST AREAS,

the

property.

$2,200,000 of the proceeds

immediately

below the corresponding

REFRIGERATION AND PUMPING OPERATIONS OCCA¬
SIONED BY HOT WEATHER IN THE ROCKY MOUN-

v

firm

The

bid of 100.155.

on a

Df the proceeds,

will

a

ELECTRIC

bonds,1 Series

interest.

to the

increase

1948, and
period in 1947.

7

shire first' mortgage

be

an

zinc

slow; shipments during the month
of May fell to the lowest level since May, 1938, while smelters stock
rose

Inc.: of¬

Co.

cents in effect until March

Demand

of 109,332 cars, or 15.6% above the preceding
vyeek which included -the Decoration Day holiday.
It, however, rep¬
was

Public Service Co. of New Hamp¬

E 3%

cars,

17

and

.

freight,for the week ended June 11, 1949

revenue

.week in

Halsey,

fered

808,156

This

Offers Public Service of

■

ago

prewar year.

CARLO ADINGS IN LATEST WEEK RISE 15.6%

.

Loadings of

New

year

■

week

a

week of

of

10%

store
1949,
by 7% from the same period last year.
In the preceding
decrease of 16% (revised) was registered below the similar
1948.
was

For the four weeks ended June

11, 1949, a decrease

reported under that of last year for the year

volume decreased 6%.

to date

>

36

(2732)

THE

current

contribution

added

efforts

to

intensive

salesmanship will be sponsored
this fall by the Investment Asso¬
ciation of New York, it was an¬
nounced
by Stanley A. Russell,
Jr., of Blyth & Co., Inc., President
of the Association.

(The

will

course

be

the

under

direction of Kelso Sutton, a grad¬
uate of Harvard and the Harvard
'

School of Business Administration
and

specialist in sales training.

a

<Mr, Sutton, who has been retained
on

sales training assignments by a
of our leading corpora¬

number

tions,

is the author of the book,
Technique of Selling," just

*'The

published by McGraw-Hill.
The

first

half

of

20-week

the

will consist of 10 two-hour

course

Sutton
dealing with the principles
and technique of salesmanship and
their proper application to the se¬
curities business. The second part
of the course will comprise
10
one-hour lectures by top sales ex¬
ecutives

from

which

various

these

industries
will

executives

outline how they and their sales¬

get business.

men

In

mailed widely throughout the se¬

industry Mr. Russell de¬
scribed the course as a productive
effort to improve day to day sell¬
ing methods in Wall Street. "This
course," he said, "will concentrate
on
the basic principles of good
salesmanship as applied to invest¬
sales.

ment

It

will be

concerned

with

selling, rather than with the
technical aspects of the security
business.
It will be pointed to¬
ward instructing all of us how to
use our investment knowledge to
build a greater business volume.

•

'

..

"We invite the salesmen of

vestigated

to

read

the

NASD

right after having signed

once

a

frauds

only friend

or investor
vital to the investment business in

are

is

asked

about

the

no answer.

It is

tion

secret

no

in

the

discuss

of

cost

this

labor

beyond

the

the

puzzle

or

of

who

available

a steady reduc¬
capital.
The cause

underwriting

not allow the seven or
eight
left in this business an
opportunity to earn
bare living to say

are

than

more

a

nothing, about killing off

young

Take

a

by wealthy parents.

hell of

a

After

a

condition for

of

years

York

Isn't

industry to be in?

an

experience

in

this

business

the

and

afford for

newer

men,

in

started

of

many

them

of

sons

Instead, you should be studying the
Securities & Exchange Law, pointing out to your readers and to
Congress, where that law has strangled the industry. As the leading
financial paper in the country, it is
your duty to do this, rather than
to embark

a

broad

dealers,

underwrite the cost of the

ing offered for $45 per individual.
Meetings will be held in the Board
of

Governors

York

Curb

Exchange

days from 4 to 6
half
to

of

5:30

the

of

room

p.m.

course

the

New

and

from

the second
opens Sept. 15.

4:30

part.

The Investment Association

Junior

1947

the Wall Street houses.

Marcus Bros, to Be

Formed in Chicago
CHICAGO, ILL. —Sol Marcus
and Irving E. Marcus will form
West

Bros,

with

Jackson

offices

Boulevard

at
as

141

of

July 1. The firm will be members
of the Chicago
Stock Exchange
and

New

York

Stock

Exchange.
Irving Marcus holds membership
on the Chicago
Exchange, and Sol
Marcus will acquire the New York
Stock Exchange
membership of
Arthur F. Lindley.

Craigmyle, Pinney Admit
Robert W. White will be admit¬
ted
to
limited

partnership

in

Craigmyle, Pinney & Co., 1 Wall
Street, New York City, members
of the New York Stock
Exchange,
on

more

from

man

New

June 30.




York

Stock

Exchange

poll

on the results.
In my opinion, the manner in which
taken, and your interpretation of the results, combine
distorted picture of the attitude of the industry toward

was

the NASD.

;

■
,

We did not fill

'

■

original questionnaire because we felt
loaded and that we could not, by "Yes" or "No" answers
to your questions,
adequately state our position. Apparently, many
others shared our feelings, as only 1,001 out of
2,700 NASD members,
approximately one-third, replied. To present the attitude of this group
as representative of the entire
membership, would be justifiable only
if it were established that they constitute a
typical cross-section,
which you have made no effort to do.
Under the circumstances, I
feel justified in stating my opinion that you
have, by your previous
that it

our

your

was

attitude toward the NASD and the

manner

in which your questions

phrased, succeeded in eliciting replies from a disgruntled
minority and discouraging answers from those who believe in dealer
self-regulation. On this basis, I challenge the validity of your inter¬
pretations of the answers you have received and of the nfandate you
were

members

a

comments

to present a

have

should

be

non-member dealer

strongly than the NASD rule which prohibits the NASD
allowing a discount to non-members of that body.

In general I wish to
congratulate Mr. Seibert for his fearless
campaign to unchain the securities business.

claim to have discovered.
•

For

the

record, I would like to state our position briefly.
WTe
without reservation, the desirability of regulation of our
in the public interest, and believe it is here to
stay. We
prefer that this regulation be entrusted to a self-governing organiza¬

accept,

CINCINNATI, OHIO
I have followed with much

its

policies, and I do not

agree

drawn from this so-called
poll,
members returned it to you.

I

,

the

Bankers
&
Brokers Association and currently
has
about
175
members
from

Marcus

even

was

as

Investment

among

the

allowed to give a part of their commission to

Thurs¬
for the first

originally formed in

believe

■

just finished reading the final results of your poll of
dealers regarding their attitudes toward the NASD and

your

the

on

during

The course

I

only be destructive and harmful.

have

your

ORLEANS. LA.

course

can

MINNEAPOLIS, MINN.I

securities

fundamental

for members of their staff, partic¬
ularly
where
trainee
salesmen
wish to enroll. The course is be¬

campaign that

a

■

investment business and to my
knowledge only one
presentation of
or two are left.
Also several other sons of dealers were
discouraged
principles
from
from entering the business because
which they can pattern a success¬
they knew what the "old man" was
up against.
ful
selling
technique
of
their
May I take this opportunity to express my grateful appreciation
own," the letter concludes.
to the "Chronicle" for presenting a condition which
is greatly in
The Investment Association in
need of reparation.* sponsoring the course is suggest¬
ing and urging that employers
NEW
salesmen

on

■

-

well-established

5%

of

tion.

average small investment, dealer.A few facts about our

been

the

on

tremendous amount of trouble.

are

young

men

1,

security industry is sick and almost dying, but the fault is
Securities & Exchange Law and the regular
the Commission.
You might be successful in
convincing
Congress that the Maloney Act should be repealed, but you will not
help the security industry by that action—in fact you will cause a

prohibited from doing so by the
answer to the
puzzling $64 ques¬
Incidentally, the 5% profit might be sufficient if it could be
obtained on the majority of
transactions, but that is impossible with
across

have

would

No.

tions

5% rule, then I believe that is the

enced

We

course.

opposed to the so-called "trial system" by

Committees, and according to

The

advertising, millions of words are presented and paid for by our
industry about preserving the system of free enterprise, the profit
system, etc., but when a group of seven thousand trained and
experienced men, plus proper advertising and new young men who

the

been

not the NASD, but the

Stock

put all these ideas

also

you

entirely different.
For example—on Ques¬
yardstick, the question should have been,
"Are you opposed to the 5%
yardstick, or would you rather have
the SEC determine a fair profit for
you?"
On Nc. 2, "Would you
rather report on spreads to the
NASD, or would you rather report
to
the SEC?"
And
so
on
through your whole questionnaire—
because do not forget any time, that if the NASD is
abolished, the
SEC will step in.
tion

Exchange" (they should have said "some of the
best"); millions of dollars are spent by this industry in tombstone

can

have

say that when you start a
should first get all the facts to¬
really are opposing, and I do not

you

855

result

following is a
puzzle to me:
The President of the New York Stock
Exchange is
traveling around the United States and Canada extolling the virtues
of the New York Stock
Exchange; heads of various large firms are
quoted as saying, "the best securities in the world are listed on the
New

that

yours,

your question¬
of the members stated that they were opposed to the
Would they rather be tried by the SEC—facing a
battery
of government attorneys?
I do not think so.
But if the NASD i3
abolished, that is what will happen.
Do you not realize that if the NASD is
abolished, it will be
replaced immediately by greater investigation and regulation
by the
SEC?
Is that what the members really want?
I doubt it.
Had you
framed your questionnaire on the basis of
alternatives, I believe the

naire,

to why there has been

as

as

system.

blood which is sadly lacking and so very essential.
look at any gathering of brokers or dealers of
about one
hundred or more and I warrant you will not find
3% under 30 years
of age.
Why?—because there is absolutely no present or future for
the young rookie unless he is subsidized
new

philosophy other than to

the Business Conduct

,

amount

men

something

this

You

5%

industry. In covering the whole
field
of
salesmanship,
it
will
sharpen the sales work of experi¬

industry to take this

think that it will be of great'value

a

gether, and find cut what
believe you have done this.

simply that the powers-that-be will

thousand

that it is your
the part of a relative
few,

on

apparently it is your policy to prevent these
coming to light.
attacking the so-called 5% philosophy—or yard¬
long time, and 1 believe that it has been based on com¬

campaign such

territory—It takes a fairly good man
(above average) to gross $5,000 profits for himself annually. Deduct
from
this two items alone, i.e., annual automobile
depreciation
and traveling expenses of $2,000, and he has left
$3,000, or a weekly
wage of $57.69.
He can make more niohey than that driving a truck.
During the 'past two or three years
about
twenty-five
new

to anyone in the sales end of our

from

stick—for

Recently the chief statistician of one* of the Federal Reserve Banks
of Boston, speaking to the Maine
Investment Dealers, emphasized
that we were missing the boat
by not approaching and educating
millions of potential investors such as
farmers, laborers, etc., bur
he had

do not believe

plete misinformation. You claim that it makes it impossible for
small
companies to finance, but this is an absolute misstatement.
The
5% philosophy certainly has nothing whatever to-do with
operations
of this kind; neither does it have
anything to do with market
operations alter an issue is distributed. I do not intend here to

this country.

was

I

You have been

publicize his views which

he

on

questionnaire covering
spreads, and yet this is
system of regulation. Do not forget that some
the general public were
unearthed by these in¬

vestigation and questionnaires.

letter of protest regarding

know that the "Commercial & Financial
Chronicle" is the
we have in the
publishing field where the small dealer

when

a

any

intention to condone fraudulent actions
but on the other hand,

PORTLAND, MAINE
Although we have signed our name to the enclosure we would
appreciate, at least for the time being, that you treat this confiden¬
tially.
Like many of the small dealers in the United States we

can

to

in

atrocious frauds

*

our

'

'

You object

fundamental

think

this organization."*

that

curities

recognized now, that any business concern entrusted with the
public's
should be subject to examination for the
protection of the
public.
'

"News' that every broker in the United States was
tickled vo death
with the organization, but all of us in the business
know that there
are at least ten
against it for every one who likes it. "We were in¬

letter

announcement

an

You'd

York and other states did the

some
of your correspondents
might be
the fact of the matter is that it is
rather generally

But

money

(Continued from page 3)

picture^ "elected eleventh year."

sessions conducted by Mr.

and

■in

Possibly if the State of New

different.

Relative to NASD and Its Policies

investment

Thursday, June 23, 1949

thing, the attitude of

same

Concluding Comments by Dealers

industry, an

in

course

to

busi¬

improve

in the securities

ness

CHRONICLE

^

Sponsor Sales Coarse
an

FINANCIAL

&

portant.

H. Y. In*. Ass'n Will
As

COMMERCIAL

did not file

interest,

your poll on the NASD and
with the conclusions that you have

for after all, only

a

minority of the

poll

a

believe the matter

business

was

with you, for the reason that I did not
properly presented.
It is only natural that

large number of houses

a

are opposed to
any regulation; if you sent
questionnaire asking whether or not the houses were in favor
of abolishing the SEC,
you would likewise receive a very much
larger vote, and unquestionably it would be
preponderantly in favor
of eliminating the SEC.
So I believe that you have
just as much
right to insist that Congress abolish the
SEC, as to abolish the NASD.
Without attempting to defend the NASD or
to

out

a

discuss the various
points involved, I want to call your attention
$o the fact that your
statement that the rule of the NASD
forbidding granting a discount
to nonmembers is
un-American, is not in accord with the facts.
Before the NASD came into
existence, the only organized security
markets that we had in this
country were the various stock ex¬
changes, and you certainly know that the New York Stock
—which after all
drastic

rule

is

only

forbidding

a

private club—has had

splitting

commissions

a

very

Exchange
firm and

with

non-members,
exchanges.
As the
New York Stock
Exchange is almost as old as the country itself, and
this rule has existed
certainly through several generations, how can
you say that it is all right for the stock
exchanges to have this rule,
but it
immediately becomes un-American and disastrous for the
and

the

NASD

same

to

rule

have

exists

the

same

with

rule?

all

other

Ancl

stock

this

is

especially true when

tion of

security dealers, rather than to a government bureau; there¬
favor retention of the Maloney Act.
We do not agree with
all of the policies of the NASD, but we believe that its boards and
officers are democratically chosen and representative of the indus¬
try, and feel that reforms should be worked for within the frame¬
work, rather than by destruction of the organization.
fore,

we

I

but

do

not

contend

dispute
that,

your

right to hold and voice contrary opinions

avowed opponent of

the NASD, you have
disqualified yourself from conducting an impartial poll on the atti¬
tude of the industry toward this organization.
as

an

"NEW

the

\ Re:

lengthy

ENGLAND DEALER"

diatribe

in

the

April

14,

.

1949,

"Commercial & Financial Chronicle" emanating from
dealer and his attempt to

issue

of

.

the

Boston, Mass.,
belittle the facts and poll of the NASD by
a

the "Chronicle."

Practically all dealers in this district recognize this same old
speech and its author.
You as a publisher know that

moth-eaten
you

have hurt him with truths and facts, and

that the "Chronicle" is about all

the

rotten

ments

and

of

we

as

dealers know

have left to present to the public

facts that

are slowly but surely ruining the
Investment
Each week's issue of the "Chronicle" is eagerly

(Capital) business.
received

we

the

read

by

practically

above-mentioned

all of

dealer),

us

(contrary to the state¬
by the carping critic

even

and his NASD friends.

you remember that any
the SEC, has the

fire?"

only that he has

the NASD would prove whose chestnuts he is interested in and the

dealer, properly licensed and registered with
right to become a member of the NASD, providing

*

a

good reputation.

You take

exception to examinations. In Ohio, we
by the State-Division, and those examinations are on
bank
examination, but, in your state, the state does
dealers.
*

Whether

or

not

the NASD examines

Commented anonymously.

us

in

aie
a

examined

par

not

with

examine

Ohio, is unim-

>.

He

same

asks,

"whose chestnuts

A disclosure

goes

you

were

trying to pull out of the

of bis annual salary and

for Wallace Fulton.

expense

account from

According to the NASD's 5% rule

with dealers, these men should not be receiving any more remunera¬
tion than they did ten years ago—that is if they are consistent.

Any secret vote has always disclosed that a large majority
(probably 80%) of the NASD members have no good will toward
and the principal sales resistance to the over-the-

the Association

.

Volume

has

NASD

is

the

had

a

securities

counter

THE

Number 4814

169

never

5%

profit

gross

secret vote

on

limit.
Incidentally, the
matter and apparently

any

does not dare to take one.

P.S.—Our

Mass., dealer

of the

above-mentioned

members

are

NYSE

their

NASD

because

join

lose commission

or

is not needed

of

is

and

regulation which

Boston,

"W.K.".*

are

SMALL WEST VIRGINIA
We

-

•

initials

the

is

guess

COMMERCIAL

a

by choice and members
authority which compels us

over-lord

O.C. trades.

on

TOWN

NYCE

&

It is

my

sign

FINANCIAL

good purpose.

up

with

based

own

firm but democratic

a

BALTIMORE, MD.

feel

all

the

restrictive

ruining free
enterprise in this country and before too long, if it continues, we will
be out of business.
has

a

bother

and

expense.

k

business like investments.

BOSTON, MASS.

fought,

as

will

you

perhaps

remember,

the

NASD

single-

handed to clear the interpretation of what is a reasonable profit. Pats
on
the back from fellow members—"but don't use my name" was
not

enough to win.

cannot get

anywhere.

selves

present

for

Until you have real unity and cooperation you
The industry has no one to blame but them¬

conditions, and it will get

movements do.

worse

as

all fascist

•*

■

.

BOSTON, MASS.
I not

only do "not approve" but I disapprove of the NASD in

most

the

positive

manner.

I

submit to regulation

fore, consider the NASD only as a carbuncle on
certainly can claim none of the virtues asserted and accepted for
the others.
What are so many people afraid of?
They claim they

it, don't believe in it but don't dare exercise their rights

Americans!

free

A

fine

howdy-do!

Just

stop

and

think

a

Here I am, properly

minute.

registered, audited, and so far as I am
aware, qualified to do business but because I refuse to pay tribute
to a bunch of busy-bodies I cannot be allowed the usual trade con¬
cessions.
We think of union members being dupes to pay tribute
to racketeers in order to work;
and investment dealers?

Or

are

well, how about these big bankers

they

so

The

should

SEC

be

abolished.

There

this organization

many

ago,

being thoroughly disgusted with it.*

The writer has

in this city for over 20 years.

ness

been in

the

OPA.

old

their liking.

Many,

thing.

When

other

philosophy is akin to the operations

lines

i

:

;

of my customers and my business

deal in securities that my study

I

am

going to trade in and

and experience teach me are good;

get a modest and fair profit.
My customers expect that
and keep on coming back for more advice and securities.

1 expect to
To

me

me

them

philosophy does not apply thereto, and showing lack
of interest in making the secondary markets in the securities of
smaller corporations.
There are many factors in the economic
picture that adversely affect the securities business but we do know
that fundamental to the conduct of any business that is to endure
knowledge that mark-ups may be taken in keeping
expenses without fear of being put out of business.*
the

of doing business, I am sure they would quickly go else¬
humble opinion, FREE COMPETITION—NOT CON¬
TROLS will provide the best solution of our problems.
SMALL UPSTATE NEW YORK TOWN
The idea of
and

based

matter

are

self-regulation is good if directed in proper channels,

is good for all.
Your efforts to clear up the
commendable, and should bear fruit.*
on

what

restraint of trade which the
Act and the NASD inflict on the business.
The alleged protection
of the investing public does not need to exclude honest dealers from
legitimate business just because they refuse to be forced into an
unnecessary association.
J commend the "Chronicle" for its good
efforts on behalf of the investment business and constitutional free
disapprove of the monopoly and

ANGELES, CALIF.

LOS

Investment

dealers

are

inclined

deplore the attitude of the

to

leaders who crack the whip over their members, force
their unions, and collect dues from them, which many
are unjustified.
But those same investment dealers
are compelled to join an autocratic ruling body, pay whatever dues
are demanded,
knowing that the penalty for non-compliance is to
be put out of business.
Any protest against the abitrary action of
the NASD must be made secretly for fear of direct reprisals.
Never
big labor
into

men

feel

members

in

history have we had one single

our

this dominating agency
of the

constructive suggestion from
punitive action in case
declared rules.*

Commented anonymously.

bonds.

-

He-

present and

given security issue;

summarize#

Influence Widespread

,

The

lysts

influence
as

of

on

group

a

L.

security ana¬

buying

the

and

selling of securities is out of
proportion to the handful engaged
Estimates show that

in this work.

than

more

stock

50%

purchases

all

of

common

made

are

on

the-

cial community-^and usually back
of this advise is the analyst. The

impact of such advices to¬
be1 very great indeed.. If

mass

day
a

can

goodly number of top analyst#
to

were

thumbs down

turn

a

on

certain company or industry,

that
company or industry might find
it difficult, if not impossible, to,

raise

capital.

new-

■

-

•

.

.

-

i5

,

-Methods and Techniques Used,

ing—which

Today's Investor and
Security Analysis
of

Moody's (or Standard & Poor's)

financial manuals.

knowledge of account¬
is nearly as Old #s

itself—is

a

must for the

analyst. While a relatively few
simple tests usually suffice to
ascertain the quality and safety of
a
bond or preferred
stock, the
analysis of common stocks is byno means scr simple.
In fact, the

scarcity
of
dependable
guides
makes the task complicated and
writing and verbally, etc., would,
extremely difficult, although some
if expended in other fields, result
uniformity
in
procedures
has
in far greater financial rewards.
been worked out by public utility
Few
enjoy real security of job
analysts on valuations of utilitytenure (especially in brokerage).
stocks.
4
r ■ ; ) '
There are no pension plans, as a
The common stock analyst must
rule. The feast-or-famine nature
first arrive at a forecast of general
of Wall Street and the require¬
that seats on the Exchange

ment

be held only by partnerships
account in major part for this in¬

may

mally exerts

a

fatal lure on the

Favorable Aspects

top level analyst and many com¬
bine analytical

offsetting
decidedly favorable

there

But

work and commis¬

important money—many times
$10,000 figure above noted.

are

many

the

is on a first name basis.
analysts are well educated,

everyone

Most

This tendency to shift into sell¬ personable and gregarious guys.
ing, where the big money lies, is Similarly, business officials and
entirely
understandable.
Some clients contacted are also, on the
observers state that it takes 15-20 whole, of a very high type. In the
years

to make a really good secu¬

rity analyst—but only 30-60 days
train a good salesman of, say,
mutual funds (i.e. open-end
in¬
vestment trust).
Given a good

the

year,

income

salesman

can

of an
that

dwarf

average
of the

is not
producing com¬

best

security analyst who

also

engaged
cr

in

fee business.

Some Unfavorable Aspects

NEW YORK TOWN

UPSTATE

different

many

and

the past,

describes the business;
its operating results;

but rather threats of

slightest infraction of their own

mission

enterprise.*
SMALL

stocks

advice of members of the finan¬

to

SYRACUSE, N. Y.
I

with

a

In my

1

of

deals with

to

sion getting activities to very luc¬ factors of a
whether I have been treating rative advantage. Some formerly character—of the non-monetary
number of them have continued the pleasant full-time security analysts have kind. Associations are pleasant.
relationship for from 15 to 20 years.
If they did not like made and are today making very Most firms are small and usually

Quite

ways

where.

latter

that is adequate answer as to

right.

business
my

had the

friends and there is nothing I am brokerage fields, the production or
I don't need the NASD to selling end of Wall Street nor¬ stability.

going to do to jeopardize that record;
me what do to or what not to do.

kinds

of

(Continued from page 4)
the investment busi¬

I did not joint the NRA and did

tell

attractiveness

because the 5%

join the NASD, for the simple reason that I do not believe in the
Conditions have changed some¬
scheme of controls or the application of CIO practices and philosophy
what since those days. Salaries run
to the investment dealer-broker business.
I do not feel that busi¬ from
$4,000 to possibly $10,000 a
ness ethics or business morality can be taught by the NASD or any
year, with or without bonuses. A
basic control system.
You either have such ethics or business few
top men in charge of research
morality in your business practices or you do not have them. If you staffs
higher. Some become
go
do. not have them, the NASD is not going to stop the things which
partners or open their own firms.
should not be done.
I am proud of my record in this community,
In
the investment banking and

from

of-business

Today we find dealers in securities doing the same
for instance, are turning to mutual funds shares

not

,

ex¬

an

pert opinion as to the safety and

and high¬
lights the Strong and weak points,
contend with the tendency was for manufacturers to discontinue the possibilities and risks. Finally,
making those items on which the profit was uninviting or non¬ he tries to estimate or guess it#
existent and concentrate on others where the profit was rhore to future earning power.
of

OMAHA, NEBRASKA
CONFIDENTIAL:

:

of various issues in the same

sons

line of business and form

commerce

years

?

security analyst may work
up detailed or short studies of se¬
curities, develop careful compari¬

future of any

were,

(NASD)

it does to

as

The

A sound

BOSTON, MASS.

resigned from

security,

the "value" analysis approach.

big?

*

We

enterprise in the U. S. A.

MASSACHUSETTS TOWN

before this board
created, enough laws if enforced, to prosecute wrong doing.

was

has

him except

.

The effect of the NASD's 5%

*

SMALL

dealer,

It has contributed nothing and only added

is succeeding.

by the various

SEC; there¬
the business.
It

as

value at all to

It is all part of the scheme to kill free

States and Commonwealth of Massachusetts arid by the

don't want

security

average
no

to his woes.

is
'

the

to

been of

NEW YORK CITY

The NASD is not the type of organization that in any way "fits"
the investment business.
It is too easy to join and the capital struc-

I

are

,

detrimental

BALTIMORE, MD.

a

imposed

measures

have been sound in your position all along that the

been

constricted his business and

and

interested.

individual

NEW YORK CITY
I

NASD

join the NASD at its inception as we felt and still
feel that it is detrimental to the security business, honestly conducted,
and are and always have been in favor of the Exchange method
where all trades are published and a record available to anyone

37

of

movement

a

on

I think you

requirements couldn't hope to suffice

(2733)

establishing an organization of science. That is, definite and.deprinciple of self-govern-* penda ble conclusions do not Nec¬
ment, fair practice, and ethics becoming a group of intelligent essarily follow from given facts—
people. I want to congratulate you, Mr. Seibert, for the wonderful and this applies equally to sostand you have taken in this whole mess from the beginning, and I called
mechanical
or
technical
would be pleased to cooperate with you on anything that would methods of forecasting the trends
of the general market or of an
improve this NASD situation.*
their

to

We refused to

ture

CHRONICLE

Of

opinion that NASD

lot of unnecessary expense and overlapping

serves no

and

&

Wall

Street

area

task 6'f itself—
the' probabld' levels of
operations in individual indus¬
tries, and next select outstanding
companies in the best situated in¬
business—no easy
then gauge

dustries.

From

tries to

he

company

^

.

Corporate information is the life
blood of the analyst, who develops
wide sources from contacts with
company

officials, directors, trade

publications, government agencies
and publications and other ana¬
lysts.
'
" c :
.

there are many

Society of Security

New York

private lunch clubs in
foregather—if possible
the firm's expense.
A senior

pleasant
which

there

earnings and div¬
idends; as a final step he relates
these to prevailing market prices.
He must be a prophet.

project

'

Analysts

to

The New York Society of Ser
curity Analysts, founded 12 years
tends to be
ago,
now comprises about 1,300
pretty much of a free lance in his
members affiliated with virtually
comings and goings (out-of-town
every type of financial institution.
trips, etc.) in search of winning
It has a constitution, a code of
ideas. As a representative of the
ethics and a quarterly journal de¬
owners of a business, the analyst
voted to articles of interest to
generally finds the doors of the
analysts and the financial work!
mighty in business and finance
generally.
'
open to him quite readily.
at

analyst,

moreover,

,.

The NASD should be wiped

out of existence.

It's undemocratic,

dictatorial, and definitely against the best interests of its members
and the trade in general.
It is unconstitutional in practice, and

principle of the Anti-Trust Laws, and should be out¬
and put out of business.
I was a charter member of the

violates every
lawed

original organization that started out to set up a self-governing
body to improve the standards of the over-the-counter business, and
establish the proper conduct and ethics of the business in general,
and I am still in favor of such an organization, but this NASD does
not

serve

that purpose,* and has

tolerated by any self-respecting citizen.
national organization formed that would offer

methods that should not be
I would like to see

a

established itself by high-handed

Peculiarly enough, there are no
formal requirements

analyst.
now

for being an

Evgn a customer's man,
a "registered represen¬

called

Actually, the bulk of lished principles and sound logic."
good analysts are college trained The ultimate objective is to reach
—usually in economics—and there a conclusion as to whether a given
are

those who claim that as much

judgment,
drive, ability to present reports in
same




leading textbooks on

Exchange.

its members who would conform to the study and effort must be expended
to make the grade as is required
proper conduct of the business and establish the highest standards
for a lawyer or doctor.
and ethics of the trade, but as long as the NASD is in existence such
Most of us feel that the profes¬
an
organization would be very difficult unless every over-thesion is badly underpaid—that the
counter broker-dealer would withdraw their membership in a body,
Commented anonymously.

One of the

tative," is required to pass an ex¬ security analysis defines it as "a
amination (not too difficult), meet careful study of available facts,
character tests, etc., before being with the attempt to draw conclu¬
registered by the New York Stock sions therefrom based on estab¬

guidance and protection to

*

Security Analysis—What Is It?

brains,

study,

is
overvalued, under¬
fairly priced. The main
obstacles are three: (1) inadequate
security
valued

or

(2) uncertainties of the fu¬
ture. and
(3) the irrational be¬
havior of f the market.
The last

data,

named is, to me,

This

is

far

the chief bogey.
from
an
exact

Possibly the most important—
and certainly the most publicized
of its activities—is the luncheon
forum meetings held
5

times weekly.

eons

not so

lunch¬

top^officials of the
corporations, great and
the

come

nation's

3 to 4 or even

To these

great, rails, industrials,

util¬

ities, banking, government offi¬
cials, even ambassadors from for-,
eign lands. So well established and
successful
have
these meetings
been

Magazine" *
weeka
that "An invitation is a mark

ago,

"Forbes

that

wrote

in

an

article

of distinction."

Societies

or

(Continued

some

,

clubs

.

similar

on page

38)

.

to,
„

;

THE

(2734)

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, June 23, 1949

When

anybody buys or sells they may well first rally to high a price and, conversely, a
stocks, he does it either be¬ about 165, before attractive sufficiently low price for a stock

Tomorrow's

them

Markets
Walter

for

seen

prices.

to

technical

I

When

last

wrote

week's

looking forward
giving you a list of stocks
the following week's col¬

to

in

was

umn—this

one.

But whatever

hopes I had must be post¬
poned to a later date. Reason?
The market.
.

*

3jC

worse

*

:<:

I still feel that

that from

can see

angle

sound

a

rally is indi¬

a

resistance

in

the

as

summer

market,
up

When

market) that will be the time

[The
#

*

views

article

likely the aver¬
ages will go down to some¬
where
around
150, though

time

not

do

this

with

They

those

those of the author

of

as

As to when things will

pick
sufficiently to start a real
move
is something that has
yet to be answered. The

ma¬

jor business picture on which
all price movements are pred¬
icated, is still one of those

is

just

nancial centers

as

ter.

Philadelphia,

Los

Most of them,

together with New York, are now
joined in a loose National Federa¬
tion of Financial

Analysts Socie¬

ties.

*

un-Americanism

view business

to

winding

with

up

a

unfavorably.
*

Securities

buying

in

the

the

"outlook

black."

good

well
ness

free

gazer,

and

affair.

easy

You

for

business

is

the outlook is

black, grey or
But I do know

ness

operator.

To

a

operations in that it is usually

eased

great

advice from others. The

on

bulk

amateurs.

of

of

investors

They rely

still

are

after

drop.

This

and

is

to

the

exact

ples.

ing,

only a few. The
widespread
the
following,

counselor.

As

a

matter

much bad advice is

ket is in the
pay

be viewed best as either

* v

*

of the reds.

.

Every

or

In

all

the

watched
never

the

been

I've

years
market

aware

I've

that it

was

concerned with

political ide¬
The best opinion —

ologies.
and

the

market

is

a

cross-

claim

a

always

coldly

realistic.

of

a

Orders Executed

on

Pacifie Coast Exchanges

•"

Members
New

York

Stock

Exchange
New York Curb Exchange (Associate)
San Francisco Stock Exchange
Chicago Board of Trade
14 Wall Street
OOrtlandt 7-4150

New York 5, N. Y.

Teletype NY 1-928

Private Wires to Principal Offices

Sam Francisco—Santa

Barbara

may

an owner¬

interest in,

stock is

a

given

basically the
business

en¬

the
in¬

vestment is foresight in anticipat¬
ing new economic developments.

June

.

Fresno—Santa

Rosa




in the

than 20%

sive" |

the

this

While
and

values,

little

the

the

current

on

Common

(1) To speculate usually

means

to lose in the end.

(2) Buy when most people are
pessimistic—sell when most peo¬
ple are optimistic.
(3) Investigate—then invest.
(4) Cut losses short—you can't
(5)

taking profits.

Don't

put all your eggs in

phase,
are

two-thirds

virtually

able.

On

would
Of

ket

sure

the

be

a

prices

results

reverse

•

wide changes in

can

ploited

as

sharply

from

be

mar¬

profitably, ex¬
diverge

quotations
real

or,

intrinsic

one

values.
basket—diversify.
Undervalued issues may
(6) Never buy stock after a sub¬ then
be
bought, and sold later
stantial rise, or sell one immedi¬
when
they become overvalued.
ately after a substantial drop.
(7) A "bull" may make money The trouble is that an undervalued
at times, so will a
"bear," but
"hog" is bound to lose.

a

issue

may

remain

comfortably

long

so

for

time

an

and

un¬

an

Nobody Can Forecast the Market overvalued situation may continue

Nearly
common

everyone

interested

stocks, wants

to

be

in

told

to go much

security

can

higher in price.
be

a

bad

Any

buy at too

H.

BIESEL.

\

V

■

'•/",

["Company Managements on the Defen
issue is,
unfortunately, too true. And we take*

seems

We

is

to have

become

without

owners

rights

have
to

as

protect

un¬

of

his

than

more

our

Let's

take

of

care

itself

and

the!

are

fully capable of exacting their cut.;
unorganized, mute and impotent to protect'

are

from

management,

labor

and

col-:

tax

real good.

Unfortunately, human
presidents or labor leaders or pol¬
always in an enlightened manner.that only by force can certain
"managements" becorporation

selfish

seen

Man-:
fifth estate concerned
only with'
to that of anyone else.
Laborr

a

regard

they have

they

the

see

strong,

a

the

used

welfare

made

with

reproduce in the above-mentioned column.
*•/
the same arguments in discussions
of exactly!
problem with corporate executives hereabouts.

iticians—are

t

:

head,

and

not

light in

too

many

What

cases.

we

need

owners

militant UNION with legal
talent, lobbyists, etc.
interests in this specialized struggle for
existence.

organize

to

now.

Very truly yours,
'

SOL
Rothbern & Co.,
Investment Securities,
15

ROTHBERN.

'

•

a

-

!,.

.

.

a

....

Westminster Street,

:

»

...

..

j

Providence, R. I.
June 18,

.!!

1949.

;

^

unfavor¬

upside, the

true.

course,

be

;;

you

have

beings—be

declining

the

of

to

Main

on

'

Writing letters will do little

the general movement of stock
prices. If one is fully invested in

in

displayed

president

own

such

ably stable earnings and dividends
—are
subject over the years to sur¬
by few.
prisingly wide price
common stocks must
gyrations.
try for safety
The price trends of
and a scattering of risk via di¬
reasonably
well selected stocks are
versification
probably
by
industries
and
controlled at least two-thirds
by
companies.

stocks

at bridge,

100,000' different'

to express our hearty agreement
stockholder whose cogent letter to the

Only the

highest grade and with not¬

common

women

a

friends,

:

is

share
of

coffee,

to

now
strong enough to
various taxing authorities

quality is possessed
The ordinary investor in

Some Basic Rules to Follow

column

its

have

stocks—even

apt
shoe

a

May:

same

earnings

may

not

■

agement

dividends

earnings

bearing

prices.

of*

lectors.

current

current

talk

people

in the June 9

We

of is—that

and

the

1949.

company

of the time.

dividends

their

over

opportunity

named

direction less

same

17,

Your

the market will fluctuate. During
the past 10 years the trends of
business and stock prices
have
moved

talk —! the

Dear Mr.

more

about

the

for

LETTER FROM MR. ROTHBERN

rare

Mwrterey—-Oakland—Sacramento

k

and
sure

men

WILLIAM

the

The only thing
only thing we are

make

It might readily seem that
chief requisite for successful

go broke

Schwabacher & Co.
'

security

(lien)

common

analysis of
tity.

Pacific Coast

Securities

fact,

against a spe¬
cific business enterprise. Analysis

section of the best
opinion- But this

is

corporate

ship (common stock)

#

of

fears

a brokerage office is
cheap. Bat if he passes

are

Allegheny Avenue,
Coudersport, Pa.,

a

given free.

hopes and

merchandising methods

—

good. If that is a "lefty" ob¬
servation, I'm afraid the mar¬

stocks

304

a

friend, more self-defeating—as a little
a
heliotrope.
relative, a local banker, a brok¬ thought will reveal. If
everyone
that the future—the immedi¬ erage or banking house, a finan¬
gets the signal to buy, who is left
cial
ate business future
service,
or
an
investment to sell? And vice versa.
is not
on

is

encourages
modern

princi¬

to

the

stores—or at least "new store fronts"
on
brokerage offices—to getthe public interested in the
shares of American business?

Moreover, maiket forecast¬
to be successful, must be

known

but

and swapping,/information in
because brokers' products
are
not

which

opposite

of fundamental investment

moment

acquaintances, relatives—buy stocks at high prices. Why not
to get people to talk about
the bargains in stocks when
prices are low? Why not use retail

as

after

only

the

citizen walking by

average

—

It

-r-

sell,

at

Street.

despite
followings—are not yet

rise

a

is

talking

ways

Technical

.

studies

it

as

business—people talking,
folks

any

supply.

mechanical

or

their wide

in¬

company

When

see

use

their

the

sale, he is immediately advised of that fact.
he buys any shoes or
not, he is likely to tell his wife
friends about the sale if the
prices looked good to him.
The
brokerage fraternity is without one of the
oiggest stimulators of

the abundance and readi¬

as

of

Whether

analyst's aim is
given time

at

:

—

product

and

fortune-teller, a star- reliable enough for conservative
bootblack, barber or use. Most signals to buy emerge

a

your

elevator

says

Now, I don't know if

determine

5)

page

inexpensive

public

any signs that
store that is
having a

au¬

the effective demand for stocks

an

company

the

The

to

can

old days—called by some the "Era
of Wonderful Nonsense"—used to

consulted

*

columnist

profits- and dividends

to

Hazards of the Stock Market

a

in a
securities business from offices at
1425
Broadway, New York City.

thusiasm when the public is
becoming over-extended.

cor¬

and usually are far more
thoritative and accurate.
A stock market

degree,
that
things are still unchanged, because
"the lefties" are responsible
the investment of
money in secu¬
for spreading the report that rities is still
unique among busi¬

One

porate

of

even

;

engaging

Brokerage firms have the important duty of
encouraging
our
citizens to buy when stocks are
"down, not up," and the
equally important obligation to attempt to brake
speculative en¬

bet¬

be

and

and

is

would

in

situation

is more closely
voting machine than a

conditions

Blum

future.

coin

market

a

a

Or

to the stock market.

the other hand, forecasts of busi¬
ness

be

Gustav

they experience or anticipate declining
business, they tend to become more cautious and conserve
cash;
They expect stocks to decline and think
generally it is a bad time
to
invest.
They may not know or forget that the market dis¬
counts everything
known, and that prices reflect not

weighing machine, and is swayed
by human emotions and psychol¬
ogy—unpredictable elements. On

prominence speak.

thinking at this point. From
what I read it is becoming a

to

a

even

good, maybe

as

The

akin

The national group nolds an
snnual convention
featuring many

dinner at which guests of national
*

*

Boston, Chicago,
Angeles
and

other major cities.

A Hip of

that

solicited.

purchases of stocks at relatively low
prices;
be less capital risk and the
stores would obviously
public interest.
The
press
and
radio. usually treat
sympathetically newsworthy projects when of benefit to the
public.
Most citizens are closer to business
conditions than they are
there

else what the market

someone

going to do.

I should stop and do some

of

by
is

forums

dismal affairs.

sign

the

group have for some
time existed in such important fi¬

up

*

than,

York

or

would invite

only.]

(Continued from page 37)
smaller

res¬

memento, might be tossed in.
;
~
Whatever the actual sales of stocks
through such stores, and
stores might
easily run at a loss, the advertising and
pub¬
licity values could very well be
significant.
Since such stores

be

much

be

the

the

presented

are

buyers.

volved,

necessarily dt any

coincide

Chronicle.

in

expressed

Goldsmith,

announces

Giistav Blum Opens.

be¬

money

Eric M.

partner,

give-up orders will

(Continued from
given

*

New

real

some

Sara-

Obseivations

Today's Investor and
Security Analysis

*

ident

day the lightning will
the
goddess
of
fortune
and that he will finally

onto

office at the

new

rondacks.

ulcers.

a

*

be bouyed
by the hope

some

fore he succumbs
inevitably to his

the

It is quite

sharp rally
can occur almost any day, to
start
not
far
from present
levels. I also feel, that by the
time you get this the rally
may
have come and gone
leaving nothing but a record
to point to.
though,
*

still

may

years pass)

a

Inn, Upper Saranac
Lake,
N. Y., for vacationers to
the Adinac

if

lower.

are

he

(as the

that

everybody feels
strike,
bottom has dropped out of
smile,
business picture (and the
clamp

the

City,

opened

dangers and pitfalls of the stock

The time, however,
buy stocks is when news

gresses.

the

The New York Stock
Exchange
Bendix, Luitweiler & Co!,
52
Wall Street, New York

firm of

Although the seasoned security
analyst is familiar with all the

pro¬

to

is bad.

Rendix, Luitweiler & Co.
Opens- Adirondack Branch'

a

■Conclusion

basic issues, I to step in.
That time isn't
anything of more here yet. So patience is sug¬
than a few days importance gested.
will occur. So instead of giv¬
More next Thursday.
ing you a list of stocks to buy
—Walter Whyte.
now, I'll hold off until prices
of

some

doubt

column I

*

sustained

ter

don't

quality can make it
investment opportunity.

he

But until there is bet¬

cated.

I

occur.

of mediocre

paid think, for example, that news
or
they have al¬ will improve.
On the con¬
their best prices. trary I look for news to get

them,

market, I

point to in¬
Some signs
subsequent

rally.

lower

sell opportunities

can

Disregarding the name call¬
ing and getting back to the

Technical signs

point

he

than

more

#

By WALTER WHYTE i

also

thinks

for

ready

Whyte

Says—
termediate

he

cause

■,

St

!>.

.

38

',

•

-

-•.-•*

-

■

DIPLOMACY ITEM—
"i

Lady Director Materia!

Sidetracked to
Luxembourg
\
'[
WASHINGTON, June 21,—President Truman today appointedMrs. Perle Mesta, widely known
Washington hostess, as Minister to.
Luxembourg
Mrs. Mesta already has closed her leased house
,

scene

of many parties, for the
of the recognition added to
affairs by the appointment.

.

interested

here,

season.

.

women
.

.

She

She

.

.

in

was

deeply appreciative,

national

said

.

.

.

and

she

was

international,
much

more

in

Luxembourg steel plants and other industries than in.
the social affairs of diplomacy.—From The
New York "Times."
:
May we offer the following twin, suggestions in the event
that!
.

the

Senate

this
et.

in

its

wisdom

should

refuse

to

confirm

the joining of.
personality-split lady to Lewis Douglas, Laurence
Stemhardt.
on our diplomatic
ccrps: To Mr. Truman- that he then

al.

the

nomination

Women
next

of

Elsa

Shareholders:

year's

company

submit!

Maxwell to
that

because

meetings it

directorate of the U. S. Steel

the
of

urge

Company.

post.
her

Mrs.

.

To

the Federation. of

expertness

in

steel

Mesta's election

to
*

at

the*
^
.

Volume

169

Number 4814

THE

COMMERCIAL

&

FINANCIAL CHRONICLE
built.

Can Bnsiness Cushion the Recession?

Here

dustry
prices

(2735)
apparently is

where

lowered

an

costs

in¬
and

could

These
the

issues

sense

are

not

.

raised

39.
in

that appropriate adjust¬
realistic policies by

tap
substantially
spending in 1949 will just about sumer sales are particularly seri¬ broader markets, yet reports from private business alone can do the
offset the prospective decline in ous if
persuading consumers to many areas indicate that current whole job of cushioning the re¬
capital
outlays
(new buy more is basically a large part agreements between the building cession. The outcome will depend
bering that the collapse of exports private
trades and the construction indus¬ in
a
commercial buildings, of our present problem.
from $8.1 billion in 1920 to $4.4 houses,
very
substantial way on
If businesses are afraid to do try provide for substantial wage public policies and action. Never¬
additions to inven¬
billion in 1921 was no small part machinery,
increases. It is to be hoped that theless
of the sharp
appropriate policies
by
recession of that tory). Therefore, the real task is business in a period such as this,
to
persuade consumers to pur¬ it obviously follows that there rising productivity will qven so private business can do a-, great
time;: And the export collapse
chase about 4% more than last will not be much business.
permit the badly needed decline deal—more perhaps than is gen¬
occurred in part because then, as
in unit labor costs. The extent to erally realized. The more the
this time, world reserves of dol¬ year — in 1948 prices about $10
pri¬
(4) Product design — This ap¬
billion.
In short, the real job
which prices can decline is, how¬ vate sector of the economy can ac¬
lars, were running,low.
plies particularly to "hard" or
facing private business is to make durable
(2) The rapidly changing re¬
goods.
Qne of the major ever, inevitably restricted. And complish, the. less will be the need
the consumer more unhappy about
tasks facing business now is to the result will be less construc¬ for
lationships : between government
government action.
holding his dollars than he appar¬ make the consumer dissatisfied
receipts and expenditures has ex¬
And this is desirable—not be¬
tion, less housing, lower employ¬
ercised a major balancing effect ently now is.
with his current paraphernalia—
How can this be done?
The or with the lack of it. New prod¬ ment and incomes, and possibly a cause government action is neces¬
©ii:
business -activity in
recent
months.
In the first half of 1948 answers will not come easy. They uct designs can play an important demand for compensatory public sarily bad, but because it is apt to
the governmental (Federal, state will come all (he; harder because role.
They;will, of course, vary housing and public works as a be somewhat less effective than
and local) cash surplus of $12.8 for virtually a decade we have all
the
way
from mere "new means of
bailing out the situation. many now suppose.
billion was one of the principal had this problem upside down. In looks"
to genuine technological
ments

and

(Continued from page 17)

It is, nevertheless, worth remem¬

,.

brakes On the inflation.

It meant

diverse

a

privatejbusiness ^econ¬

that

omy

lion

more, no such thing as an answer.
While no comprehensive analysis

government was removing
from the income stream $12.8 biU

(annual

rate)

than it

more

yas putting back in through-cash
expenditures.
Private spending
was

thereby somewhat restricted.

is,

like

our

therefore,

there

possible,

it;"

neverthelss be desirable
the problem can be

The tax reductions of last year
and increased expenditures at all

Businessmen

to

may

see

pointed

up

if
a

bit.

levels of government have virtu¬

advances.

is, Ttiither-

(1) More

effective
sellingprobably getting
a bit tired of being at the receiv¬
ing end of continuous lectures on

It is furthermore probable that
many
postwar designs
fundamentally aimed at the
luxe* "carriage trade."
The
active programs to explore the
markets
for
"stripped
down"
models can presumably help to
broaden demand considerably.

groat

a

were

de

are

The

role which

over-designing
ally eliminated this surplus. In
of products plays in pinching off
the second half of 1948 this cash
demand at the peak has not yet
surplus had dropped to $2.8 bil¬ the need for more effective sell¬
received adequate attention.
The
lion (annual rate) and the first ing. The fact remains that anemic
"problem is more acute if a quick
half of 1949 will, in all .probability,
selling is an important part of shift to
stripped-down models is
show a slight deficit, after allow¬ the current problem. Vice-Presi¬
not feasible.
ing for the fact that tax collec¬ dents in Charge of Sales Preven¬
(5) Capital outlays — U n'l i k e
tions are seasonally higJi early in tion are understandably, finding
the year.
Within a year's time it hard to drop (mentally) the last many recessions, the decline in
capital outlays in prospect for
We have witnessed, therefore, an word from their title.
In many
this year is to a considerable ex¬
enormous
shift
in
government cases the whole selling apparatus
tent an echo effect of the decline
fiscal operations from exercising is either
rusty or unseasoned.
in consumer demand.
With de¬
teal restraint on business activity
Sermons on the subject are not
fa exerting some sustaining in¬
clining demand prudent manage¬
needed. The lessons of experi¬
ment may require that some capi¬
fluence through a cash deficit. It
ence which come from long grap¬
tal
expansion
projects be
re¬
has been a: performance in com¬
pling with the problem of getting stricted or
postponed. There is,
pensatory fiscal policy of consid¬ the buyer to give up his dollar
ar£
erable
magnitude.
And it has the essential things. The major however, good reason to think
that a substantial amount of pri¬
played a substantial role in keep¬
problem is to accelerate the proGr vate investment will
still be re¬
ing the current recession thus far ess of
learning those lessons.
''
quired to restore traditional ratios
a
comparatively modest and or¬
of capital invested per worker. If
derly one.11
(2) Prices — A major question
currently is whether price reduc¬ so, many long-term investment
What to Do?
tions of any magnitude are^os- projects may still be wise even
This
is
of
some
importance sible, and if so whether they though short-run considerations
it

comes

'fWhat to do?"

to

the

question:

Current proposals

again center heavily on some form
of compensatory fiscal policy re¬
flecting presumably the prewar
feeling that.therein lay the .key to
the riddle pi economic stability.
The proposed Employment Expan¬
sion. Act of ;1949„ for example, acv
cording to a recent report would
proyidez for
pumping
Federal
money either direct to industry or
through a public works program
,

based

a

on

which

projects

$15- billion.2
Since

shelf

reserve^

might

of

aggregate

*

the

taxing-spending ac¬
tivities of government will inevi¬
tably influence business activity,
it makes

sense

to have the effects

work in the

direction of smooth¬
ing1 out business ups and downs'.
Therefore an. appraisal of what
fiscal policy can further do to
cushion

the

recession

current

all to the

good.

the 'fact

is

that

appraisal
must; however, take into account
Such

an

substantial changes
government's
taxingspending activities' have already
occurred — thus correspondingly
limiting the extent to which we
in

the

realistically rely on it further.
This, together with the proba-,
bility that a governmental com¬
pensatory fiscal: policy
though
useful
has
many
more
serious
limitations than usually realized,
suggests an important conclusion.
can

If the current recession is to be
confined to an. orderly- and prob¬
ably not altogether undersirable
adjustment, we
must think less
exclusively about fiscal and, other
public policies, and think much
more about what might be called
private policies—possible adjust-*
ments in the

private sector, of the

"

economy.

According to Professor Slichter.
of Harvard, increased government
1 Since

Marshall

important
the

shift

sense

the

ernment

through
-

P.

item
to

2 New

a

in

Plan

the

really

be

very

effective.
this is¬

measures

of
and.

action

'.spending.„ directly,
supporting. e&t>orts..
York "Times," June

17.




2,

in

a

gov¬

also

1949,

Have
noticed that most of them have no hesitancy in letting you know
what they are doing, so that when you next need insurance, realestate service, legal
advice, etc., that you naturally think of them.
you

On the other hand, how many of your friends are actually acquainted
with the work that you are doing? Do they know much else besides
the fact that you are in some way connected with the, sale of securi¬
ties?

"

It

to

me at least, that for many years most of us have
waited for our friends to call upon us when they wanted to buy or
sell some securities. Often we have been reticent to sell our friends

seems

attitude that there is something high and

mighty about the invest¬

ment

business, and for that reason we shouldn't lower ourselves by
direct solicitation along the lines that some of our friends in other
endeavors might think was entirely proper.
.
Think it over, we go to our clubs, we see our friends in. church and
at their homes, we join in civic activities and of course this is right.
It is also a fact that no one should make friends and join in civic
activities for

only personal and selfish motives. But after we have
friends, then what? Only too often We have waited for them
us up when they had some money to invest 6r some securi¬

made

to look

somewhat bearish.

Avoiding

are

,

investments because of the possibilities of market depreciation and
the embarrassment that we would feel if such were the case.
At
other times we have tried to maintain a superficial and unrealistic

PROSPECTIVE CLIENTS.

business is the

Cost

Increases

one

business THAT MUST BE BROUGHT TO OUR

Ask some of your friends some day how
working, and how much he spends playing,
and then how much time does he give to KEEPING THE MONEY
prices are too high. There is obvi¬
THAT HE HAS SAVED. You know the answer will be a laugh, and
ously no single answer to the
an admission to the effect that he hardly gives any time at all to the
question. Some price cuts seem to tMny things—bad decisions, leth¬
induce buyers to hold off further argic management, unnecessarily job of keeping what he has earned. And what an important job that
is. Just think a minute* and go over in your-own mind what would,
in anticipation of further^ cuts. bj9£V,y overhead costs, ihadequate
There is some reason for thipkfhg, pmduc|iyity, higher labor costs. happen, if you could put everyone of your friends into the position,
These will no longer be bailed out of not having to worry about his financial affairs. Would not that
however, that more can be accomfact alone be the most compelling reason for you to go to them and
pbsbed by price adjustment^tjhan. by a sqllgrs' market.
to

the

belief that only the other fellows'

many

(6) Business bears a heavy so¬
cial responsibility at this time to
avoid cost increases. This means

businessmen and economists, tv;One
More attention

think.

needs^b he:

of

the

critical

problems

here is the matter of wage rates

given to the role of price malad*jfind labor costs.
There are, of
justments in the current recession course, ^always particular wages
We

think,

talked too.
much in terms of general f>ric&
reductions.
The real questions'*
have, therefore, been obscured or
have,

I

pnd incomes which need upward
adjustments, and they should not
be overlooked regardless of the
merit of general changes.

A'

overlooked. In what specific areas *1
of

the

prices tofthigh?' What procedures can be
devised to effect an orderly pricer
decline where such seems desire
economy

what

able?

On

make

sure

are

can

that

we

the

excessive

prices do come down? On governs
More effective compete
tfoh? V

ment?

~

"(3) Inventories — Business ex¬
perts have been repeatedly warn¬

ing about the problem of exces J
sive inventories in a recession?
Many in the business community
painful experiences from
previous recessions to serve as~a
guide. Within limits the cautichrr
inventory policies currently being
followed are, therefore*
under¬
standably all to the good. We may,
thereby, escape the more painful
aspects of inventory liquidation
which often only make a reces¬
sion snowball.
have

A

cautious

inventory

policy

carried to the extreme, however,
may help to induce the very re¬
cession the results of which it is

designed

to

avoid.

short

inventories

With some¬
excessively

can

mean

lost

unrealistically
low esti¬
mates of potential demand, and
lower activity all the way along
sales,

the line.

There is some evidence

of this currently.

more

whether>the

important
results of

issue

is

increased

productivity - should be distrib¬
uted through increased wages or
lowered rprices.
The practicable
rely t#r answer is probably to be found

what less eager buyers
outlays are an
Federal budget;

cash deficit

compensatory

would

At present agreement on
sue seems to be
limited

By JOHN DUTTON
We all have quite a few friends in other lines of business.

ties which they desired to sell. But things don't work out thht way.
The plain facts are that most people are too. busy to give SUFFI¬
CIENT TIME AND THOUGHT TO THEIR INVESTMENTS.
Our

-

When

Securities Salesman's Corner

And lost con¬

time

much

he spends

tell them about

Today, if

a

sound investment

program?"

could go to your friends and show them a real
sound program for maintaining their principal and enjoying a safe
you

their investments, you would definitely find, them

return on

very

much interested.

Nearly everyone is worried today about his future.
Despite the fact that people are lazy and even neglect to clip the
coupons on their bonds, they are nonetheless interested in their
own financial welfare. If a friend came along with a definite pro¬

posal that would help them put their own house in order you can be
sure

he would be welcome.

Among your friends there are some who are almost 100% 'in¬
vested in common slocks. On such, a basis their financial position in

of a substantial market decline from present levels would fee
seriously impaired. Possibly among their present holdings there are
between * these
two
extremes. a number of very speculative issues that, should be sold despite pres¬
There is at this juncture of the ent losses. Probably they are over concentrated in one or two indus¬
business situation a great deal to tries, a most unsound position which could cause them considerable
say for lowered prices as a means iinancial loss. Only an analysis of their list will show these things.
of tapping broader markets. Em¬ Probably they have too much in high-grade fepnds, governments, etc.
ployment and output can thereby A reinvestment in certain high grade stocks that fit in with, their
be somewhat better maintained. own portfolio requirements could be in order. And then there are
Increases in unit labor costs, the mutual funds. If you find that you do not have the facilities to
growing out of wage increases too do a job of constant watchfulness for your friends and clients AFTER
large to be offset by rising pro¬ YOU HAVE PUT THEIR HOUSE IN ORDER, let the funds do it
It seems to me that if we are to get results in the years that lie
ductivity, ought generally to be
avoided at this: time.
Costs are ahead that we must go to our friends with a SOUND IDEA such as,
thereby pushed up, possible price I have outlined here. We must sell diversification, safety of principal,1
reductions are eliminated or re¬ fair returns AND PEACE OF MIND. We must go to our friends and *
duced, the market is correspond¬ tell them HOW THEY CAN OBTAIN THESE THINGS WITHOUT
ingly restricted, and the result is TROUBLE AND WORRY TO THEM. Our job is to help those with
lower employment and activity. whom we come in contact in our lives to achieve financial health.
Since wage increases are never This can be done but only through the medium of sound investment,
made
uniformly or instantane¬ and the application of time-tested principles. Good" securities, well
case

4

'

.

ously, it is not realistic to expect
the higher costs to be- offset by
more demand because
of higher
wages. The cost effect is concen¬
trated; the demand effect gets dif¬
fused over the economy.

problem is well-illustrated
the
construction
industry.
Construction
activity has been
softening at a time when there is
general agreement that the coun¬
The

by

try is not over-housed

diversified, with a backlog of
through the
funds

years

doing it and they
comebacks.

are

of any

at. all times,, will take anyone
The mutual
be sold to your friends without fear

reserves

of declining and advancing markets.
can

Barrett Hernck & Co., Inc.

Frank Securities Co.

Securities Co. has been
being formed with offices at 35 formed at 75 West 45th Street,
Wall Street, New York City. Mr. New York City, to engage in a
Herrick was formerly President of securities business,
partners are
Ira Frank and Martha Frank.
or over¬ Herrick, Waddell & Reed, Inc.
Barrett Herrick &

Co., Inc., is

Frank

•

49

THE

(2736)

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, June 23, 1949

Indications of Current Business

Activity

The following statistical tabulations cover production and other figures for the latest week or month available
(dates
shown in first column are either for the week or month ended on that date, or, in cases of quotations, are as of that

date)

Latest

AMERICAN

IKON

Indicated

steel

capacity)—

(percent of

operations

June 26

Equivalent to—
Steel ingots and castings (net tons)

,

AMERICAN

Preylous
Week

Ago

1,734,700

1,598,300

1,555,900

Total

June 11

4,875,650

June 11

1)5,153,000

5,341.000

5,216.000

17,641,000

18,244,000

17,500.000

517,928,000

1,617,000

1,722,000

1,706,000

52,270,000

I Gasoline output (bbls.)
Kerosene

:

(bbls.)

output

—June 11

Gas oil and distillate fuel oil output

.

5.711.0001

5,959,000

5,821,000
8,519,000

119,106,000

121,268,000

(bbls.) at
and distillate fuel

22,006,000

21,853,000

19,750,000

Gas oil

Residual

fuel

oil

(bbls.)

oil

(bbls.)

at

60,402,000

58,597,000

52,476,000

at

_

AMERICAN

64,063,000

61,993,000

stainless

557,481,000

AMERICAN

of
of

Volume

(net

tons)—Month

ENGINEERING

CONSTRUCTION

—

June 11

808,156

693,624

771,736

609,435.

564,192

608,993

703,383

DOLLAR

NEW

!

Private construction
State

and

municipal

$150,842,000

June 16

;

71,415,000
79,427,000

June 16

__

June 16

:

Federal

$226,161,000
137,222,000

$157,773,000
59.023,000

67,953,000

98,750,000

83,724,000

24,484,000

15,026,000

56,560,000
2,370,000

and

lignite

STORE

(tons)

June 11

12,960,000

June 11

(tons)

SALES

INDEX—FEDERAL

*9,990,000

11,065,000

1,326,000

964,000

997,000

120,500

*104,200

149,000

13,321,000
1,210,000
145,000

'

9,989,000
1,766,000

17,224,000

20,812,000

$203,626,000

$255,635,000

47,470,000

46,703,000
3,722,000

56,583,000

4,410,000
592,900

__

9,141,000

2,389,000

$194,585,000

and

shipped

*636,000

578,200

259

289

(BUREAU OF MINES)—Month

coke

CONSUMER

304

285

(net

tons)

PRICE

INCOME

All

INDEX

FAMILIES
100—As

=

FOR

IN

of

All

4,867,000

MODERATE

LARGE

April

CITIES

15:

items

169.7

foods

Meats

201.6

170.3

-v

169.5

202.8

_

Cerjeals and bakery products.!

INSTITUTE:

2,976,000

between

May:

1935-11)39

.June11

'

6,380,000

12,381,000

stored

__________

Beehive

SYS¬

RESERVE

TEM—1935-39 AVERAGE=100.

BISON ELECTRIC

$155,056,000
57,315,000
10,335,000

10,516,000

credits.

coal and lignite (net tons)_____
Pennsylvania anthracite (net tons)—.

.

MPARTMENT

$118,640,000
46,013,000
9,994,000

-

Bituminous

June 11

Pennsylvania anthracite
Beehive coke (tons)

$118,469,000
44,450,000

'

BANK

countries

COAL OUTPUT
of

333

3,255,798

___l

goods

Total

58,930,000

64,455,000

*333

'3,344,052

v—•

exchange
on

foreign

COAL OUTPUT (U. S. BUREAU OF MINES):
coal

5,096,161

31:

May

_____

warehouse

$126,883,000

88,939,000

52,029,000
17,398,000

June 16

-■Bituminous

7,580,642

6,305,681

OUT¬

RESERVE

of

shipments

Dollar

June 16

Public construction

*7,785,276
,

333

:

ACCEPTANCES

YORK—As

Domestic

Based

construction

5,596,786

3,159,297

Exports
'

RECORD:
Total U. S.

7,683,428
April

Imports

906,663

June n

NEWS-

ENGINEERING

138,967

April:

Domestic

CIVIL

125,428

alloy

of

motor carriers reporting—
freight transported (tons).

of

BANKERS
OF

(number of cars)

105,735

TRUCKING ASSOCIATION-

Menth
Number

RAILROADS:

Revenue freight loaded (number of cars)
Revenue freight received from connections

pounds)

of May„_
J
products, including

STANDING—FEDERAL

ASSOCIATION OF

of

tons)—Month

and

516,897,000
542,288,000

65,901,000

(net

5105,849,000

June 11
June 11

Kerosene

(thousands

Shipments of steel

§8,967,000

117,484,000

shipments

57,143,000

7,827,000

,

.

'•

5,479,600

June 11

_

—.

-

4,899,350

8,305,000

(bbls
June 11
Residual fuel oil output (bbls.)
—June 11
Stocks at refineries, at bulk terminals, in transit and in pipe lines —
Finished and unfinished gasoline (bbls.) at
June 11

.

4,889,150

■

castings produced

55,592,000

June 11

average (bbls. of 42 gallons each)
stills—daily average (bbls.)

to

runs

Ago

AMERICAN IRON AND STEEL INSTITUTE:
Steel ingots and steel for

*

Crude oil output—daily

Year

Month

WROUGHT

PRODUCTS
(DEPT.
OF COMMERCE)—Month of April:

1,734,000

Crude

,

Previous

Month
ALUMINUM

96.2%

INSTITUTE:

PETROLEUM

:

Latest

Ago

94.1%

86.7%

84.4%

June 26

Year

Month

Week

INSTITUTE:

STEEL

AND

170.1

171.0
233.8

169.3
207.9

*

FAILURES

(in 000 kwh.)

(COMMERCIAL

.June 18

INDUSTRIAL)—DUN

AND

&

5,372,600

5,300,091

5,255,272

5,159,255

BRAD-

STREET, INC.

174

196

172

229.6

184.9

190.3

183.8

180.1

184.7

214.5

217.4

208.5

204.4

155.1

191.4

*175.6

173.G

_______

Fruits

v

June 16

234.4

Dairy products
Eggs

Electric output

100

June 14

*3.705c

J3.705C

3.705c

June 14

$45.91

$45.91

$45.91

$45.91

June 14

$20.92

$21.67

$22.75

$40.66

electricity

copper—

(East

Louis)

St. Louis)

at

21.200c

17.925c

103.000c

103.000c

103.000c

103.000c

12.000c

12.000c

14.000c

17.500c

DUN

11.850c

11.850c

13.850c

17.300c

BOND

PRICES

9.000c

10.000c

12.000c

-

*

Aa

June 21

L

...

ilihe

Baa

.

Group

I

Refined

v'l 13.12

113.31

113.12

Deliveries

118.80

118.80

117.80

117.40

117.40

112.37
<

112.37

112.56

104.66

105.17

116.02

Government

107.80

107.80

108.52

109.06

114.46

114.27

114.27

117.40

117.20

117.40

117.00

.June 21

of

(tons
to

S.

■

.

:

A.

.June 21

jkr,

Baa

COTTON

Linters—Consumed

2.38

2.42

3.00

2.99

3.00

In consuming

2.71

2.71

2.76

In

2.78

2.78

2.85

3.04

3.03

;

ASSOCIATION—WHOLESALE

3.47

3.44

3.34

DEPARTMENT STORE

3.29

3.29

3.25

3.22

SERVE

2.94

2.94

2.97

Month

2.79

2.73

2.80

340.4

338.8

344.7

438.5

RESERVE

.June 18

214.2

215.1

242.0

Sales

137.2

135.6

146.5

287.3

Sales

(average

228.8

233.0

229.1

276.2

313.2

312.9

311.2

351.9

196.7

199.1

225.1

231.2

213.1

213.1

June 18

218.0

160.9

201.6

231.4

160.3

164.6

185.5

186.8
171.8

211.0

212.8

212.7

230.1

Chemicals

June 18

Fertilizer

June 18

137.5

mac

137.6

137.6

141.1

141.1

142.9

150.5

150.5

•KV, PAINT

June 18

155.8

June 11

153,108

•

183,749

June 11

165,729

137,521

June 11

79

..June 11

i

LIFE

(000's

S.

DEPT.

OF

:

INSURANCE

272,243

283,585

271,323

128.3

128.5

130.8

OF

WROUGHT

For

(in

June 14

145.2

145.3

146.8

135.3

138.8

149.5

131.0

130.5

130.6

(short

166.1

167.2

168.0

158.0

June 14

191.9

191.6

193.6

196.7

June 14

127.5

127.6

129.5

135.9

METAL

June 14

157.2

154.8

161.8

213.1

222.3

204.8

231.5

243.9

221.9

of

189.6

190.5

188.5

210.5

The




."

month,

sale

22,204

42,261

102,379

199,578

(BUREAU

OF

MINES)—

\
of

recoverable

metals

in

United States:

(in

short tons)

fine

(in

short

(in

72,836

tons)

*39,822

156,556
35,111

3,388,198
59,091

ounces)

74,344

*152,917

37,316

:

*77,873

161,669

ounces)

fine

RECT

composite

under

the

old method this

week

would

have

i'

.»

a

*

t

*"

'.i*

#1

«.•* n

ii

S.

U.

GUARANTEED

A.—Month

of

IN

*3,450,237

3,434,747

*60,980

53,425

SECURITIES

purchases

'Revised

DI¬

May:

sales

Net

been
tvv nt

AND

OF

Net

■-

•>

of

TREASURY MARKET TRANSACTIONS

barrels of foreign crude runs.
§Not comparable with other periods which are on new
Principal changes exclude cracking stock from distillate-and residual fuel oils.
*The weighted
the years 1941 to date.
The weights used are based on the average product shipments for

%

for

46,034

sale

Zinc (in short tons)

430,000

*

for

April:

(in

Silver

revised for

'

80,602
34,568

270.2

June 14

..

72,052
33,143

33,909

24,307

OUTPUT

Copper

254.7

June 14

B.TC330C per pound.
,

cancellation,

end

production

the

209.6

June 14

Wtp 7 years 1937 to 1940 inclusive and 1946 to 1948 Inclusive.

tons)

94,958

orders,

Month
Mine

*

Hides and skins

(short

61,329

31,728

29,601

.

use

tons)

Gold

Grains

*

tons)
own

less

Lead

Livestock

tons)

(short

tons)

(short

133.1

June 14

(DEPT.
April:

149.4

135.3

June 14

166,000

IRON

booked,

Unfilled

180.8

June 14

of

pounds)

producers'

(short

165.5

was

May

CASTINGS
(DEPT.
COMMERCE)—Month of April:

193.0

filncludes

of

PRODUCTS

COMMERCE)—Month

Shipments

147.4

156.0

figure,

Month

omitted)—

MAGNESIUM

380,421

163.4

Meats

130.0

516,000

101

193,156

172.0

2

*121.0

INSTITUTE

672,000

171,337

79

156.1

reporting in California.

—

—

of

537,000

147,537
166,639

65^

173.9

of

PURCHASES

middle

$1,780,000

166.9

All other

♦244

$1,852,000

154.8

foods

230

—

$1,861,000

163.8

'Revised

30

418,000

170.7

Mntshed steel composite

April

$1,196,000

Special indexes—

-

of

as

COMMISSION

414,000
182,000

June 14

other than farm and

224

252

$1,256,000

June 14

lighting materials
Metals and metal products
Building materials

*248

185,000

June 14

products

237

431,000

Orders

Fuel and

262

227

$1,245,000

Farm products

Textile

242

Gxoup

Foods

;

247

237

239

May:

Industrial

LABOR—

All) commodities

242

230

FEDERAL

Y. —1935-39

of

139.4

1926=100:

All commodities

N.

OF

FED¬

Ordinary

For sale

SERIES—U.

300

*121.7

DISTRICT,

adjusted

INSURANCE

Shipments
NEW

*305

295

226.6

INDEX —1926-36
June 17

PRICES

294

225

SALES—SECOND

COMMERCE

MALLEABLE

AVERAGE=100

WHOLESALE

75,816
21,723,000

296

.

Total

PRICE

19,801,000

153.1

202.6

__u

REPORTER

250,819

112,586

291

variation..

Railway Employment at
(1935-39 average = 100)

OF

158.0

ASSOCIATION:

DRUG

98,910

335,166

19,862,000

May 31-

119,985

289,901
96,601

May 31

203.3

155.8

200.4

(tons)

AND

LIFE

142.9

_June 18

(tons)-

785,516
2,006,769
2,232,911

126,420
of

as

of

May

134.6

150.5

Percentage of activity
Unfilled orders (tons) at

597,031

1,448,450
5,871,447

165.9

June 18

received

May

monthly), unadjusted
daily), unadjusted

seasonally

Index

209.4

169.6

r

Production

Stocks

INTERSTATE

176.9

185.6
167.2

Fertilizers

Olrders

580,078

1,277,423

274.7

221.3

June 18

PAPERBOARD

72,791

5,079,999

(average daily), seasonally adjusted
Stocks, unadjusted as of April 30

261.6

224.3

-

_June 18

Metals

BRTIONAL

113,389

76,494

COM¬

OF

Sales

June 18

Farm

om

100—Month

(average

_June18

fuels

*76,134

SALES) (FEDERAL RI)i

BANK
=

June 18

Building

32,566
128,441

_

adjustment

STORE

RESERVE
AVERAGE

oils

as

seasonal

June 18

and

104,524

SYSTEM)—(1935-39 Average=lOO)
May:

DEPARTMENT

»COMMOD

i.

Fats

91,819

*93,873

of

Adjusted for

GROUPS—1935-30=^100:

Foods

*91,589

(tons

of May 31

as

Cotton spindles active

ERAL

FERTILIZER

ITY INDEX BY

of

establishments

Without seasonal

*

300.4

3.04

2.78

2.78

RATIONAL

*303.8;

98,139

;

DEPT.

—

month

public storage

2.93

.June 21

J

81,553

.

MERCE—RUNNING BALES—
Lint—Consumed month of May
In consuming establishments as of
May 31
In public storage as of
May 31

.June 21

INDEX

..

May:

„

LINTERS

2.38

3.48

MOODY'S COMMODITY

\

A.—

2,000 lbs.)_
2,000 lbs.)

of

lbs.)

AND

_June 21

-

of

stocks at end of period

copper

2,000

2.38

3.04

Railroad Group

month

•

=

297.7

(tons of 2,000 lbs.)^

2.71

...

(1935-1939

147.8
'..

customers—

3.00

!

corporate

Aa«.<

of

,

Bonds

U.

Refined

113.70

June 21

Group

MOODY'S BOND YIELD DAILY AVERAGES:

194.7

•

106.92

June 21
-

In

112.37

104.48

June 21

;

Utilities Group

Average

101.16

117.40

21

...June 21

.

101.65

118.80

June 21

...

A

(tons

101.66

113.12

-

_j___June 21

;

BRADSTREET, INC.
of May

INSTITUTE —For

Crude

i_

193.8
154.4

PURCHASES OF COMMODITIES-

&

101.66

June 21

4

176.1
133.2

191.9

._

Copper production in U. S.

*.

,

;

U; S.

93.9

192.5

140.4

12.000c

CONSUMER

D^ILY AVERAGES:

corporate

Industrials

96.1

196.4

154.6

;

100)—Month

Miscellaneous

COPPER
-

'01 S. Government Bonds__-i

Public

130.7

21.600c

June 15

*

17.700c

17.250c

June 15

—

17.325c

16.425c

June 15

at-

16.200c

June 15

at

-d-

Railroad

116.3

138.9

187.8

Housefurnishings
June 15
June 15

Straits tin (New York)
Lead (New York) at

Aaa

electricity

120.1

137.4

refrigerators

193.9

96.8

and

fuels

^

refinery at
Export refinery at

'Average

and

Other

Domestic

MOODY'S

'»

192.5

140.5

'Electrolytic

Zinc

176.2

120.3

Fuel,

METAL PRICES (E. & M. J. QUOTATIONS):

(8t.

-

149.8

__

sweets

i.

Rent
Gas

Lead

oils

and

Clothing

3.211c

Pig iron (per gross ton)
Scrap steel (per gross ton)

218.6
208.2

and

Sugar

-

-

Finished steel (per lb.)

-

!

Beverages
Fats

KON AGE COMPOSITE PRICES:

205.8

*'

and vegetables:

$54,65^950
figure.

$30,404,500

$1,505,250

{Preliminary figure.

j

1

It!

tjyJjUK ifr^j -rttlAf WUiKfWHH

m^i'nrv

Volume

wmrwwdJcrrwi.wiuTB

manAmuumn rmneaunmtt

THE

considerations

there to

that

we

a

relatively tri¬
fling number of the four million
business enterprisers in this coun¬
try are engaged in making con¬
So who

about

cares

whether, under a
control like
Regulation W, the government
in to absorb

moves

functions
the

to

or

of their

some

in

them

hamper

performance of
their functions in serving the peo¬
satisfactory

ple? The railroad enterpriser may
say that he doesn't care (although
he is extremely disturbed over the
attempt of the government to col¬

that this govern¬

priser

may

ment

control

credit

say

thing,

business

and

that

for

consumer

that

and

railroad
is

matter,

ab¬

solutely no concern to him, and
why ask him to bother think¬
ing
about
it
anyway?
(He

possibly opine to himself,
''Might be a good idea at that; the
government might haul my steel
cheaper." But this would be only
a passing fancy, because what he
is quite concerned about is the pre¬
liminary feint already made by
the Planners in his direction, i.e.,
the proposal to construct a gov¬
ernment-owned steel plant which,
he
realizes, is the logical and
necessary
first step toward an
may

substitution

eventual

of

govern¬

ownership in place of pri¬
vate enterprise in the steel indus¬
ment

try.)

"

'

"

enterprise

rather

represented

Planners

of

the

American

type

enterpriser

sion

inevitably leads to the cre¬
ation
of
the Omnipotent State

regardless

the

of

that

fact

principle is this: "Pick 'em off one
at a time."
Or, in more scholarly

"Gain control in one
at a time, and accomplish

language,
sector

this

r.

little at
control

little

time." Gaining
in one sector at
a

a
-a

time

(like a Regulation W, or
only one government steel plant
as
a
starter) is easier because
there will be but little opposition,
and

little

this

solidated

as

gain

a

can

basis

be

con¬

further

for

government control
in the same sector and for en¬
trance in other sectors.
It is con¬
extension

of

sistent with this principle to offer

great number of programs in¬
volving a large number of con¬
trols so that Congress, in an at¬

a

placate the Planners,
will grant at least some new ad¬
ditional government control. This
now
leads us to a consideration
of the three fundamental steps in

tempt

to

technique of transition to the
ultimate goal of the Omnipotent
the

State.

'

The Technique of Transition

various

the

Of

be

may

ly

heavy
out

carry

Second,
that

publicize
"Private

then
enter¬

prise has failed." Third, proclaim
that
the government, therefore,
must logically take over.
These
steps do not occur for
economy at the
same

the entire
time,

but

programs

other effective method is the pas¬

terprises to fail in the sense of
closing down or going bankrupt

State.

of
restrictive
laws,
like
Regulation W, or the failure to
pass legislation enabling private
enterprise to function satisfactor¬
sage

time

between

may
steps,

be

depending

permits

which

lation

on

carry

specifies

loan business but
of

charge

so

a

rate

low that the banks
satisfactorily in

function

cannot

serving

fully

instalment

consumer

a

failure to pass

their clientele, or
legislation increas¬

ing the maximum loan limit of
consumer
finance
companies

the
to

condi¬

correspond to the changed

represented
by- doubled
wage-earner incomes and the 70%
increase in the cost of living.

tions

Often

Federal

or

state

legisla¬

tion hampering

is enacted against

view

ercised

over

the

of

them

control ex¬

greedy

by

Finally, private
enterprisers themselves are im¬
portant helpmates of the Planners
groups.

pressure

in

the

effort to

well-intentioned

b,y degrees the Omnipo¬
State.
Sometimes, as men¬

institute
tent

previously in connection
Regulation W, some private
enterprisers may ask the govern¬
ment to take over part of their
functions. More often the case is
tioned

with

one

in which

one

group

of private

exercises
pressure
upon
government either (1) to
get a law passed for the purpose
of hampering another group
of
enterprisers from functioning ef¬
fectively in serving the public, or
(2) to prevent the other group
from securing legislation impera¬
tively needed to enable it to con¬
enterprisers

tinue to

ple

with

people

"Private

claim

the

enterprise

that

failed."

had

under

example, Regulation W was
restored, not on the ground that
our private institutions were fail¬
ing to fully serve the needs of
consumer-borrowers
but

terprise

would

his risks for

buyers,

not

contribute

system;

.

spectacle!

It

makes the

accom¬

plishment of their dream so much
easier.
The
unfortunate
thing
about this whole matter is that the
fears which lead one group

of

en¬

banks and
companies ex¬

full functioning of both
consumer

finance

in California,

aiW of

competition between the

steps, making reference here and

twd types of institutions~does not

the actual

protest (and let
the

attempts of Planners to force him
to surrender functions to the gov¬

He

ernment.

in

refuse to engage

can

personally

practice of trying to get
the government to enact legisla¬
tion for the purpose of preventing
other
private enterprisers from
functioning satisfactorily in serv¬
ing the American people. He can
support the efforts of other pri¬
vate

he
principle

a

in

as

communities

of

hundreds

throughout the country the retail
credit managers of all types amA
sizes of firms selling at retail en¬
gage

in meetings to discuss prob¬
are common to all).
word, the private enterprise*

lems which
In

a

determine

can

his

place devotion to
above
the
short¬

to

wit*

compete

competitors and to cooperate

can

devotion

sighted

of tlw

managers

ing institutions in his area, and to
participate in periodic meetings d
all these private enterprisers (just

his

including

enterprisers,

the

-

different types of consumer feint¬

the

with them

against the Great Com¬

petitor.

expediency

to

Restoring Price-Wage Balance,
A Readjustment Problem
(Continued from page 4)

which
the

relative

are

field

of

newcomers

in

instalment

consumer

in this kind

of

business

in

jjview of the pronounced postwar
in

rise

labor costs

and

other

ex¬

And if such studies reveal
for higher legal rates,
these should be granted by gov¬
penses.

the

need

ernment

to

enable

the

banks

to

function

satisfactorily in serving
society.
The main need of the
cousumer
finance
companies,
which are the second most impor¬
tant institutions in the field, is
higher maximum loan limits in
view of the fact that their patrons,
because of the higher cost of liv¬
ing, need to borrow $500 to obtain
much purchasing and payiftg

as

they got out of $300 be¬

power as

fore

the

ments

war.

And

state

govern¬

proving that they are
of the desirability of grant¬
are

aware

than six months.

more

The

mental

the

that

truth

is

part

simple

preponderant

of

costs

govern¬
neither
be

can

generally follow great wars, is In
recognize the necessity for eco¬

corporations nor to the
fellow."
They fall upon

shifted to
"other

the

alone

unity and to do something

about

people. We pay them
in high taxes but in

whole

not

nomic

it.

These broad considerations have

prices for everything we much to do with the making of
drink, wear or use. We pay confidence. In a free enterprise
even
more
when
they throttle system, private money and credit
eat,

loans, is scientific study of their
costs

precious national resource. Pearhaps the best hope of weathering
this
current
readjustment
and
more severe economic storms that

would not foot this bill for

year

higher

fact, the banks,
consumer
finance companies and
other private institutions are do¬
ing a first-class job in serving the
needs of
their respective clien¬
teles. The main need of the banks,

ing the higher legal limits so that
these private enterprisers may be
able to continue functioning ef¬
fectively in serving their bor¬
rowers.

business

cannot be forced to venture. More¬

expansion.
this

need

We

long

range

over,

ex¬

base

tax

are

that

can

we

iness

inevitable

the

cannot

We

of

this

secure

feasible political

political and eco¬

a

The current read¬

growth.

justment

economic heritage of great modern
wars.

need

we

no

It has been often said

nomic "climate" favorable to bus¬

governmental

high

which

costs

which

over

the

spread

there is

substitute.

pansion to create a much broader

is essentially

"Take-Over"

With

regard

to the third

step,

various degrees in which

are

"takes over."

It
may,
as
a
starter, merely take
over part of the managerial func¬
tions
of
the
private enterprise
group in question, as exemplified
by Regulation W. A higher degree
of taking over follows when the
government introduces its own
subsidized
agencies to compete
with a particular grotip of private
enterprisers.
Here, there occurs
a
very obvious shrinkage in the
proportion of the economy repre¬
sented by the private enterprise
system, and a growth absolutely
and
relatively
of
government
ownership and operation.
Fi¬
government

the

nally,
reached
where
after

in

tions

degree

is

Omnipotent State

gradually in one industry
another
the
government

achieves

ership

deciding
Ihe

or

preponderance in own¬
control of the institu¬

concerned.

-»i-i

conclusion,
the
question
arises as to just what, if anything,
In

a

private enterpriser can go spe¬

process®

a

restoring economic balance

greatly a necessary prelude to that growl*.
Government may help or'gravely
prise. Without it, we cannot pro¬ impede this process.
Causes of Economic Distortion®
vide
additional
production and
The causes of the economic dis¬
more and better jobs for a grow¬
increased

dimmed

the

taxing

tortions that

outlook

the

But

because

the

of

abuse

a

supply of private enter¬

population.

ing
is

without

base

broader

power,

now

confront

have

us

been aptly

political

described by our most
distinguished authority on price
behavior in this way:4

par¬

ticularly the progressive principle
of income taxation, has severely

"The customary

accounting and
of eco¬
nomic activity and of productive
of sound taxation. Intelligent re¬
accomplishment have been swelled
form is an urgent but also a slow
by the factitious gains of inflation.
and tedious task.
Such inflationary differences
The
psychology
of
our
job which are manifest in the unequal
makers in great and' small enter¬ movements of prices, wages and
prise is a dominating factor in profits, affect producing and con¬
making business good or bad. suming grouns unequally.
From
Members of the press have often these inequalities stem the major
private

damaged

incentive.

We

monetary

measurements

economic

difficulties

have violated nearly every canon

called

been
but

for

"fourth

the

nearly

estate,"

decades

two

inflation

of

out

our

that

grow

in the re¬
job makers have been regarded as verse situation, out of deflation).
the "fifth estate." 3 Yet this group Trading relations among economic
of » able,
adventurous and far- groups
are
altered
These
sighted men bring together capi¬ changes affect individuals; they
tal, labor and managerial skill. also modify the conditions under
They are the "spark plugs" that which broad economic groups co¬

(and

.

.

Various Degrees of Government

the

Thus, various groups of private
enterprisers are continuously com¬

other functions

He can

from him.

stability in the future.

a

there

Committing Treason Against
Private Enterprise

assume

over

take

or

matter of

toward

As

and

the claim that private en-

on

'

changed

conditions.

him

For

exi3t and serve the peo¬

satisfactorily

ists, as




the

to

banks

the sturdiness of the private
enterprise involved. Let us spell
out
the
meaning of the three
upon

the, government

for the Planners to seek to arouse

ily in meeting the needs of the
public under changed conditions.
Examples of the latter would be
a
revision of state banking legi-

aginary. For example, in the con¬
sumer loan field where free and

there

step,

it is not necessary for private en¬

Welfare

Social

a

in rapid
a long

sequence;

With regard to the second

An¬

into

terprisers to use government as a
means of throttling or hampering
anbther group are at bottom im¬

steps do not take place

resist the im¬

can

to

run

In short,

permitting the continuance of
privale enterprise vanishes.

.

place at different times for
different industries and in dif¬
ferent
communities.
Also,
the
take

to

soft

so

for

taxation required to
the diverse laudable
necessitated to make us

competitive
private
enterprise
it is difficult to under¬
stand
how they'can
expect to
"save capitalism" when they are
so busy undermining it.. How the
Planners must chuckle over this

charge

He

State.

pulse

compete freely and fairly in serv¬
ing the people, then the reason

undoubtedly

hampered,

mitting treason against their own

the

tent

competitors, to secure conditions
under which they can continue to
satisfactorily perform their func¬
tions in serving the public on the
basis of free and fair competition.

that they are afraid and unwilling
to stand on their own feet and

the most effective is the extreme¬

the follow¬

people.:

which undermines the system ©f
private enterprise.
He can, if he is the consumer
loan officer of a bank, realize that
the banks occupy the position ©t
outstanding
leadership
in
ttie
consumer loan field, and must ac¬
cept the* responsibility to ratty
the forces of all the private en¬
terprisers in that field.
He can
decide, therefore, to get to know

the

But

serving the public.

when enterprisers become

ways

First, hamper private enter¬
prise in various ways so that it
begins to fail to perform its func¬
tions satisfactorily in serving the

The three steps are

ing.

object, "there is
competition, and
we
may

10%

selves in

is the only one for saving private

in

due

State. The

banks

much, namely 100% competi¬
tion, as between the banks them¬

the

wise

establishment in

certain

the

as

Planners think that their method

ever,

time of the Omnipotent

while

might be able to take this business
if
we
get
the
government
to
hamper the other fellow in the
right way."
Yes, there is such
competition, and there is 10 times

ment

but

banks;

desirable

still

to guarantee the gradual

appears

considered

ally for ever-increasing extension
of government control and gov¬
ernment ownership. Such exten¬

private enterprise
the better judg¬
of legislators who feel, how¬
that they cannot do other¬

summarize from the

us

not

although they do strive continu¬

foregoing paragraphs a principle
of outstanding importance which

tions, let

bank-grade

compete among themselves for the
great public represented by ac¬
ceptable risks. "But," a private

out to "save capitalism,"

are

is

the

by

try to prevent depressions because

they

than

more

risks, at least 80% of which busi¬

by

depression and unemployment." It
should be understood, here, that

illustra¬

further

without

But

•

com¬

ness

for

government

in which
the functions of private enterprise

from

This is because the

vate

of

enterprise

enterprise and individual liberty.

refunds

prefers

he

case

his customers know about it)

private

the

fantastic

than 10% of the bor¬

more

rowers.

railroads, which would hamstring
them in satisfactorily performing
their functions and thereby ac¬
complish another important step
down the planned road to the ul¬
timate government ownership of
the railroads).
The steel enter¬

lect

in

system of private enterprise and
individual liberty to the Omnipo¬

represent

substitution

a

cover

41

(2737)

than
"the dramatic breakdown of pri¬

en¬

whole.

loans.

CHRONICLE

and ask it to

1

private

of

system

Moreover, only

sumer

FINANCIAL

panies compete among themselves
lor the very small borrowers and
for those larger borrowers who

run

terprise and individual liberty as

con-

What is referred to by Step No.
is the gradual, long-continued

long

in dhe

effects

example of the

our

loan field.

sumer

the

do not look ahead to perceive

the

&

Omnipotent State and Private Lending

(Continued from page 11)

upon

COMMERCIAL

cifically

The
indirect

imnwrni■,,,,,„»

Number 4814

169

short-run

una iMn.tewm

make our

.

system work. Their ac¬ operate in the productive process."

have been
stu¬
Perhaps we can better undexpendous; their mistakes compara¬ stand this term "economic bal¬
tively insignificant. Without our ance" if we view it from our own
private job makers, our working
doorsteps. As merchants we are
millions would have no means of
always weighing relative value®
earning a high standard of living; and
prices. More concretely, we
there
would
be
no
individual
are now saying that basic cotton
liberty, and there would be no
goods are generally cheap relative
security.
to worsteds, that good shoes are
dear relative to good hosiery, or
Playing the Ends Against the
that rayon dresses are cheap rela¬
Middle
:
tive to furniture. That is the way
complishments

„

As

some

enlightened^ ,labor
;

have

leaders

occasionally said,
problems by

cannot solve our

we

playing

holders against

the

nor

the job
job-makers,

one

social

or

by playing

economic

group

against another* When we foster
such antagonisms and penalize or
belittle economic motivation, we
devitalize

the

spirit,

make

it

of .enter¬

difficult

to

prise.

We

secure

much-needed unity on/the

economic
"know
3

front.

how"

Griffin, Op. Cit.

waste

We

which

is

our

our

most

.

our customers
an£j

We

volume.
factors
we

regard our offering®

resp0ncj
relate

|0

our

our

are

other

and

relationship,
in our ability

in proper

have confidence

to sell

promotions.
and

costs to price

When- these

more

and to earn a reason¬

able profit.

One
in

rough measure

the whole economy
{>!))i.i

i.

of balance
is the xe-

it .n.

/.<*

■

>•«..

•

Frederic (X, Hhe Structure\ef
Postwar Prices, Occasional Paper No. 27,
National' Bureau4 -of. Economic Research,
New York, July X94S, p. 2,
*
„
- ,t
,'4 Mills,

(Continued oh page 42)

we

Tins! Function

Responsibility
Preseivation of Capitalism

In

(Continued from page 7)
get that intangible feel of
or
weakness involved in
loan

a

buying

or

strength
making

investment.

an

Investment Function

well as to lend, money,

as

Management

Should

responsibilities and
in these troubled
times and in the years to come?
I believe that our responsibilities
are
very
great
indeed — never
greater — and
that, if accepted,
they cannot fail to bring oppor¬
Committee man¬
tunities for growth and profit, as of committees.
well as public recognition of the agement, in all departments, is the
what

our

are

opportunities

curse

highest order.

it

that never again will

To say

and

the

of

give

must

of

sponsibility

for anyone to accumu¬
or to save sufficient
to leave an estate of more

funds

proportions

nominal

than

to

is

our free enterprise sys¬
dead, or nearly so, and that
liberty is in a fair way to follow

that

say

tem is

the dodo into extinction.
talistic

A capi¬

without

survive
capital, and capital can¬

not exist

without savings, and sav¬

system

cannot

ings cannot be put to useful pur¬

without

pose

administra¬

proper

tion and investment

management.

In this way, the banking system, if
it wishes to do so, is.well fitted

banking
way

business,

type

that

to

individual

be possible
late

property

judgment and re¬
that has in the past

a

for the trust functions of a bank.

view

of

than

public good rather

I urge you particu¬

private gain.

differences

main

are

still

out

of

modities

line with
with

and

other

com¬

which

rents

The

have been artificially depressed.

only in size and in

be

of

Restoration

stream

of

business— be
spent this year to hold up the

the

can

out

duties

these

and

out needless harassment and frus¬

age?
'

In

the

first

place I believe

in

the value of diversification in the

type of business handled.

only

Service

615 000 MCF of natural gas to

retire

executor and trustee can

as

to

without previous contact with the

cial

and

with

investment

leading

dence and

period of
mutual confi¬

understanding under all

circumstances
There is

to

no

and

better

In

relationship

the family over a

years,

Leadership

conditions.

method of in¬

addition, I hope

tinue,
spect

Essential

to

and

confidence

rious communities.

in

Our

at

ural gas per

ciencies
not

of

reductions

cost

prices,

expansion

great

corrected

be

in

our

it must be constructive

pro¬

or

banking institutions than by
:

.

h

investment
K

(■■■:.

advisory ' 6r
,

-«• 'if.

:

,<;

influence,

general

it

soon

at all. Too

means

ceases

several

to

be anything

frequently in past

years

level

a

seems

the

degree

before

of

we

seen-contingencies," the

price

production- and $73,000,000.

greater

lower

costs

quences

With

of

a

normal

the

are

se¬

readjustment period.

other

event,

when

factors

appears

are

monetary

In

and

•.

-•

?

;\-f:

r-

.;'

;

riod

could

short¬
largely
make it. Like freedom, it

The

ened.

be

measurably
is

future

involve
of the

ural




in

sylvania
State.

adapt

quickly

to

We have

and

New York

western

Such

extensions

are

ex¬

In addition, the company

000,000.

has taken

tain

preliminary steps to ob¬

certificate

a

veniencc*

and

of

public ,con-

necessity

to

con¬

struct additional facilities to

serve

New York

eastern

land

areas

ural

gas

-

and

New Eng¬

receiving nat¬

not now

service.

.

Principal customers of the com¬
pany

Columbia

the

are

and

Gas

Consolidated Natural Gas Systems
which

together sell at

of the gas

Operating

area.

60%

least

sold in the Appalachian
of the

revenues

Tennessee Gas Transmission

Sys.1

tern for the 12 months ended

30,

totaled

1949,

Aprty

$34,313,679

net income amounted to

Capitalization. of

and

$7,792,892.

the

company

after

the sale

*

to

be

of

bonds

of

long-term debt; 200.000 shares

of

cumulative preferred stock,

outstanding
consists

of

$160,155^000

stock.-

*

more

Walter W.

conditions.
We

Grupp Opens
N.

BUFFALO,

,

can

Grupp is engaging in a securities
offices

from

business

With Paul R.
to

,

W.

Y.—Walter
at

*

Depew Avenue.

(Specir.l

in

series, and 3,333,333 shares of

But few

themselves

it before.

Ohio, Penn¬

eastern

pected to cost approximately $90,-

the past eight

changing

done

nat¬

direct deliveries of

gas

common

trades

extension

the

company's pipeline system

make

to

two

in

principally

very

relearn the merchandising arts we

The

■

Flynn
Chronicle)

Harvey Haiper Opens

BROOKLYN, ,N. Y. —Harvey
Haiper is opening offices r at 990
E. 31st Street to engage in a se¬
curities business.
^
"
'

Keller has been added to the staff

Co.,

411

West
V

rib

/

*

.

..

t,

'KR
t

310

CALIF.—Paul

Financial

ANGELES,

of Paul R. Flynn
the Seventh "Street.'

y, t

seek¬

government,

■L
.r

Commission

labor and ing authority to increase daily de-management, this readjustment pe¬ livery capacity to 1,030,000 MCF
by

weighed, there

to be little basis for

'

Federal. Power

the right sort of coopera¬

tion

LOS
any

company

Applications pending befote the

attain

balance

ca-

day by the end of 1949 and 831,000

can¬

likely do
it again.

broad economic front.

its

expects to reach 710,000 MCF per

It may well be six to

months

right

leadership, and along

leadership,

price

to continue.

a

business

with

viding

va¬

mediate

ship
"V

our

the downward drift of

has

company

increased

MCF per day by - the winter of
substantial
effected.
Lower 1950-51; at a cost Of approximately

of easy expansion,

But

ap¬

and

neglected

re¬

day, the

progressively

problem.- It is difficult to be¬
lieve that the wastes and ineffi¬

years

twelve

banks. This

lodged

con¬

1963:

proximately 200,000 MCF of nat¬

able

safer relative

in that case, goes beyond the im¬

creasing the number of executor¬
appointments

will

we

bankers, to warrant

as

and after June 1,

par cn

Initially designed to deliver

by no means an insuper¬

is

have

levels. However, a
large part of the broad re¬
adjustment in prices of consumer
goods has already taken place.

103.75 in

from

range

than
pacity to the present figure of
period,
lower ' unit 615,000 MCF. Subject to unfore¬

very

try.

institution's officers and staff. How
much better it is to have a finan¬

prices

the 12 months ended May 31, 1950

real difficulties in at¬

undergo downward adjustment to

issue

redemption

at

in 1968.. General redemp¬

par

tion

..

help, especially

of ' the

maturity

to

prices ranging from 100.73 in 1950

a very

nancial advice and

sinking fund will

$48,200,000

prior

investment

aggregate of trust and
agency assets over the whole coun¬

a

the
of

caoacity

day.

per

Operation of

basis.
taining economic equilibrium economic appraisal, historical ob¬
narrowing influence on
In handling investment funds,
when important segments of the servation, understanding of indi¬
policy.
Adding the as in handling loans, each case is
vidual and mass motivation, judg¬
economy
are
under control and
management
of
living
funds— completely
different
from
the
and
pure
"hunch"
are
others are subject to natural cor¬ ment
—whether individual, charitable, next. No formula can
possibly
rective forces. Nevertheless, prog¬ strangely mixed. Perhaps a good
or corporate—broadens the think¬
meet the needs of more than one
ress
toward
the
restoration
of guess now is that the sales trend
ing of investment and trust de¬
trusty estate, or advisory account. sound
"Will continue downward, possibly
price relationships is being
partments
and
necessitates
fa¬ A rather widespread
attempt to
made.
The general situation is a with minor interruptions, for the
miliarity with and knowledge of do so has led to an excess of cau¬
Possibly
little better than one year ago. remainder of the year.
a
much wider range of security
tion, and, as we all know, the loss
Prices of agricultural products are a six or seven percent decline
markets. Furthermore, a smaller of much valuable
business that
from 1948 is a good expectation
institution, by giving complete in¬ has gone to individual appoint¬ bumping along the support levels.
While historical com¬
There have been drastic reduc¬ lor 1949.
vestment service, has much greater ments.
These are days of com¬
opportunities for profitable oper¬ plicated financial and economic tions in prices of basic cotton parisons have restricted value, it
goods and rayons and a wide va¬ is worthy of note that the decline
ation in t'*is way, than if it con¬
problems. It is particularly im¬
riety of products manufactured in department store sales between
fined itself strictly to fiduciary
portant that, with our whole way
from these materials.
Under the 1920 and 1921 was about 7%; and
appointments.
of life threatened, the adminis¬
between
1937
and
1938,
about
of
inventory
reduction,
Somewhat along the same line tration of investment funds be stress
of thought is the question of fam¬
prices of some types of consumer 71/2%. There seems to be no good
dynamic and courageous.
After
goods may have fallen to lower reason now to expect a more radi¬
ily relationships. Too often a bank all, no small part of the
working
levels
than
can
be maintained. cal change.
or
trust company has seemed a
Much will depend,
capital of industry and commerce
Other types
formidable and impersonal place
of consumer goods of
is entrusted to our care,
course, upon how quickly we
if we remain
for a bereaved family to see}: fi¬ look
relatively high and must
at the

be

authorized

831,000 MCF

political,
problem.
that they

are

of the pipeline
daily capacity of

current

these controls is

There

will

expansion of der

capacity

livery

a highly complex
personal indebtedness and great
economic
and
social liquid resources, good leadership
But the fact remains should make possible the begin¬
are important factors in nings of a revival within a com¬
the continued high cost of living. paratively short period,
perhaps
They are reflected in the wage within the next twelve months.
folio
without risk; and I need
The sales outlook for our own
structure, in the costs of all goods
hardly tell you how long, or rather
ajid services, and also in rising trade is of paramount interest to
how short, would be the career of
this group. Good forecasting, how¬
public assistance costs.
any bank that operated on that
ever, is a difficult art in which

trating fear of error. Remember
that to be always right in invest¬
nitely in the public mind our abil¬ ing money can only come from the
ity to discharge these obligations same stultifying kind of policy
with wisdom, foresight and cour¬ that would
produce a loan port¬
do to establish defi¬

we

pro-

bonds

for the

used

from the present

then, that we where they truly belong. Further¬
"parity" prices of farm products, what we
will continue to have responsibili¬
more, let them assume responsi¬ including
everybody's
business.
With
raw
cotton, wool and is
ties of an investment and trust
bility for their departments, with¬ tobacco. Intelligent retreat from broad
unsatisfied
markets,
low
carry

sale of

earlier

prevailed in the
more
production
costs

and

major portion of the

ceeds from the

greater rigidity in wage rates

assume,

best

Co.

*

of various groups of extreme fears that often charac¬
prices to the general terize our current thinking on
average of all prices.
When eco¬ price trends.
of banks differ with their size and
nomic conditions are healthy, com¬
Needed Reduction of Unit
type, and that what I am saying
modity prices tend to move in a
Labor Costs
may appear too general for this
comparatively narrow range above
reason. However, there is no doubt
and
below the general average.
Eight years of rising business
in my mind as to the need for
During the war and postwar pe¬ volume have been accompanied by
banking services of an investment
riod, the normal balance in the sharp advances in costs, particu¬
character in all kinds of communi¬
price structure was greatly dis¬ larly unit labor costs. Somehow
ties, and I believe the responsi¬ turbed. From 1942 to
1949, prices we must find ways to get these
bility rests on the local institu¬ of farm
products and foods have and other costs down in proper
tions to do the job.
been relatively high and prices of relation to lower prices.
Output
Banks are nothing more nor less other commodities
relatively low. per man hour rose sharply be¬
than the people in them and they
Analysis of the consumer price in¬ tween 1920 and 1922 and there was
nave no patented product to
sell. dexes shows similar disparities. considerable reduction in unit la¬
We all operate with the same le¬ Prices of foods and
apparel are bor costs. While there is now much

'

what

Transmission

as

(Continued from page 41)

prefer the thesis that the people, or to put it another way,
Balance
time in degree and in quality. Do your
pass through this most unsatisfac¬ utmost, then, to staff your trust
The problem of securing reason¬
tory period of readjustment and departments with the best you able balance in the general price
reorientation. Perhaps it is need¬ have and can find; and above all,
structure is complicated by gov¬
less to add that sound, courageous
give them opportunities within ernment controls. It is our national
policies in our banking system can and beyond their immediate de¬
policy to maintain supports for
well turn out to be one of the
partments. Consider them bank¬ agricultural prices by means of
major elements in keeping our ers, not specialists, and take meas¬ the so-called
"parity" formula, but
country away from some form of ures and pains to see that they now these
support levels are being
/'state-ism"—whether it be com¬ are not kept i,n a side alley, but
severely tested. As much as two
munism, socialism, or "welfare- that they are brought into the billions of the
people's money may

character to perform. How can we

Gas

Tennessee

ing,

United States in world

Restoring Piice-Wage Balance,
A Readjustment Problem

Controls

us

Oronp

Transmission Bonds

American people will in due

Let

Stone & Webster

Offers Tennessee Gas

I much

ism."

We must ex¬

derstanding of them.

leadership and have hesitated to plain to them how important it is
say what we think and to fight to maintain the free flow of capi¬
for what we believe.
Regardless tal and how this flow is being
of the cause for this attitude, we stifled by policies that discourage
must now take every opportunity investment in risk and growth en¬
to point out what is at stake in terprises. Also, we all realize that
Additional
financing
for
the
present-day
financial
trends, one important phase of our main¬
continuing expansion program of
speaking always from the point of taining our high standard of liv¬

justified banking's place as one of
lationship
the most respected professions.
wholesale
I realize that the trust problems

predominant part in
preserving this important phase of
our way of life.
I, for one, am not prepared to gal powers, can offer the same fa¬
go on the theory that there will cilities, and are susceptible to the
no
longer be a significant place same errors of judgment.
Our
take

to

this

exercise

to

1949

well as of establishing the
was
undertaken with the public
leadership,
offering June 21 of a new issue of
Be Hand-Tailored
larly to speak with knowledge, is the investment of dollars abroad.
To do this, in addition to provid¬ $50,000,000 of 3% first mortgage
The management of investments, authority, and conviction on the
ruinous effects on our free enter¬ ing for our own capital needs, will pipe line bonds, due June 1, 1969,
whether
as
executor,
trustee,
Stone & Webster Securities Corp»
prise system of excessive govern¬ require sound thinking in all quar¬
agent, or adviser, should be a
and
White, Weld & Co. jointly
mental costs and resultant high ters, and sound leadership in the
nand-tailored and not a mass-pro¬
headed a nationwide group of 56
taxes and government borrowings. financial community, of which we
duction operation. Too many banks
investment banking firms which
These are complicated financial of the New York State Bankers
have tried to avoid liability, loss,
Association are a very important won the issue at competitive bid¬
and
other troubles by reducing questions and the general public
ding June 20 on its bid of 100.3399.
their personal trust business to has, of necessity, little real un¬ part.
The bonds are being reoffered at
formulas, approved lists and per¬
100.75 and accrued interest, yield¬
centages, administered by a series
ing 2.95% to maturity.
•
'•
Investment

Admitting then that we, in the
nature of things, are equipped to
invest,

management facilities for indi¬
during their lifetime.

viduals

failed

have

Thursday, June 23,

CHRONICLE

FINANCIAL

&

COMMERCIAL

THE

(2738)

42

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y.

1

i ?:\r

'

J

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\

1

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.

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Volume

169

Number 4814

4

THE

COMMERCIAL

&

FINANCIAL

is made,

ance-

Hemisphere."

for dol¬
appropria¬

however,

lars from Marshall Aid

but not yet received
total
reserve
is * still

the

point.

somewhat above the danger

It is

Marshall

Aid

stiil

deficit

It has

net drain

halted.

reduced,
the

on

Even

exchange
fortable

level

the

at

been

in

has been

is far from corrw.

and

provides little mar¬
gin for the taking of risks. With
the

"of

reserve

a

with

consistent

mum

freedom

action

of

mini¬

absolute

safety, our
necessarily

is

limited; that is part of the price
still have to pay for the deba¬

we

1947.

cle of

•

.

An

ity,

early return to convertibil¬
then, is only feasible if we

can

be .reasonably

there will be

confident that
repetition of the

no

gold drain of 1947. Such

enormous

losses might be

occasioned either
dollar deficit on the current

by a

balance of payments or

transactions. We

by capital

therefore lay

can

the

down

following Conditions of
convertibility:
.<
-

First, the dollar deficit of the
sterling area on current account
must either be eliminated,. or if
a deficit persists then it must be
covered

than

by

some

drafts

gold reserve.
have, seen, the

At present, as we
deficit is being bridged

Shall Aid., As

other

means,

the

on

all

we

by Mar-

know, how¬

ever, Marshall Aid itself is to come
to an end in

1952-53, and it is the

intention

the

of

Govern-,

off its Successive

mentjto taper
nual

British

demands at the rate of

an¬

one-

quarter of the Original allocation,
to be

so as

entirely independent by

1952. It follows that if

to be confronted with a

the

of

dollar

drain

new

the

on

exchange

sterling

the
Aid

•Marshall

Actually,

Western

to

the

also

Europe
dollar

must

one

country

difficult

also

for

be

to

coun¬

exporters, while the exact re¬
is true r of many European

rates

are

unless

adjusted

equilibrium vis-a-vis
The object of such a

the
new

dollar.
align¬

ment*

would; of course, be to re¬

move

the present wide disparities

in

price levels which give rise to

the

distinction

and

"soft"

between

"hard"

currencies, and to

re¬

store once again something like a
world

unified
of

priee -level.
It is,
conceivable that this

course,

result- might
the

for

need

about without

come

of

devaluation

a

currencies in terms of
dollar, given sufficiently fa¬

European
the

in

movements

vorable

tors as the

such

fac¬

trend of relative prices

relative productivity. What
is surely incontestable is that at
the present moment the domestic
price level inside many Euro¬
pean countries
is definitely too
high to justify the exchange rates
at present in force.
and of

Gap"

Conversions

on

Capital Account

So much for the

account.

rent

restored
Western

ous

more

maintenance

the

to

position

Far

on cur¬

danger¬

of

vertibility, as we /learnt to
cost in 1947, would be heavy

rid of the

in their balance of
make alternative ar¬
rangements for the financing of
jany remaining deficit. In other
words, given • the low level of
Britain's

exchange

than was the case

would

an

con¬

our
con¬

nitely

gap

payments

be

Europe

capital account.-- Ill
this respect, the situation is defi¬

early

an

improved, for Sterling is
far less abundant sup¬
ply in many parts of the world

it

system

them

nostalgic
to the

finance

has

deficit

dollar

a

ances

analysis,

by

That

this

problem appear to have been
reasonably successful. Useful in¬
roads
into
the capital
liability

United

the

invisible earn¬
ings on overseas assets which have
been used to pay for the war. A
Kingdom's

large

structural
closer

approach

the

and

words

operation

by

the

In

area.

recent

the

Europe

report

Economic

to

Co¬

Administration, "West¬

Europe

ern

Western

sterling

of, the

Congress

been

involving
a
to bilateral bal¬

can

self-sustaining

if

counts by

earning

neighbors

pects

to

der
•

rate

greater

than

at

one

time

in¬
deed, which has been criticized
within Britain as imposing on that

seemed possible

—

at

a

pace,

ments

have

These arrange¬

made

it possible

for
holders of Ster¬

various

overseas

ling to

utilize their balances for

it

into

then

dollars




ex¬

to

their

more

ments,

ing

urgent import require¬

correspondingly

theirJ desire

remainder.

pillars of

debtor

wishful

On

thinking.

the

contrary, such hopes are encour¬
aged by a combination of favor¬
able trends, such as Sir Stafford
the consequent

tance of dollar balance.
?

Duty

-

Nations

Creditor

of

Up to this point I have been
discussing measures which must
be taken by deficit countries if
we
are
to* return to a world of
free and' stable exchanges.
Let

emphasizing that

conclude by

their

also

nations

creditor

the

responsibilities.

have

As long ago

1943, the U. S. Department of
stressed that we can¬

as

Commerce
not

restric¬

hope to sweep away

practices
unless the supply of dollars made
available to the outside world is
both
moreregular
and
more

tions and discriminatory

tha'n in the past. To ensure
regularity in the dollar supply de¬
mands
"the attainment by
the

ample

fully and

United States of a more
more

smoothly operating

economy"; to amplify the
to

look

must
crease

domestic
flow we

progressive in¬
purchases of

a

American

in

goods and services from the out¬
side world. In short, the solution
of
the
world's long-run dollar

calls for action by our
vigorous
and magnanimous than the suc¬
cessive steps — from Lend Lease
problem

American friends no less

—

by which they

made dollars

available dur¬

to Marshall

have

Aid

ing the war and the critical post¬
war transition.
I do not say that

responsibility

whole

the

rests

the United States. Far from
it. The deficit countries, as I have
stressed earlier, also have their

upon

part
to
play.
But it is only
through the combination of their
efforts
with liberal commercial

policies on the part of the United
States that we can hope to bring
into being

the non-discriminatory,

multilateral trading

world that we

all desire.

■

increas¬

to conserve*the

Moreover, the reduc¬

to The Financial

ILL.

CHICAGO,

Chronicle)

Joseph C.

—

associated with
Co., 135 South La

Hyatt has become
&

Fahnestock
Salle

with
many
p

Street.

years

partner

Co.

H.

Paul

in

He

formerly

was

Davis

&

Co.

field

New
the

Warner &

most

a

astonishing

is

oc¬

let

us

take

question

look at how

a

exchange fates
was dealt with curing this period.
The device adopted was a combi¬
nation of
free

of

fixed official rate and

a

fluctuating rate.

Exporters
they
still are—required to deliver a
part of their receipts in foreign
currency—I think it was 50%—

a

for

were—and

subject

all

know

I

at the official rate and

free

to

best

price

the

sell

they

balance

could

they

were

the

at

get.

the

enabled

mechanism

in most others.

as

a

field of international finance.

theoretical

a

the

well

as

This
to

rate

itself to the needs of the
economy.
In spite of its being

adjust
Case of Italy

Having spent
the

on

culties
and
us

minute

a

choice between
of

the

two

or

the diffi¬

falling domestic prices
devaluation,

of

ease

turn

now

attention

our

let

to

a

country where great changes foi
the

better

and

Changes
have

in

will

by

observed

been

have

what brought thest
about.
The country 3
mind is Italy and yoi

try to

see

understand

of

way

that this

example.

conclusions

The

onl>

not take
which
has proved successful in practice,
serious issue with

of

of

value

it

adverse trade balance anc

from

were

going

worse.

The

danger

that

real

inflation

bad

seemed

tc

very

might get be

yond control and lead to a situa
such as those we have seer

tion

in Greece

of hostilities

close
in

and Hungary

of

who

Ther

Presides
Republic
Minister of th<

Italian

the
then

was

1945.

is

lira

can

in

now

it is giving

to E.C.A.

point please let me make
that

clear

have

I

what

been

There

tries.

still

is

substantial

a

deficit with the dollar area, that

Hemisphere.

Western*

the

is

The

change which hqs taken place has,
however, also reduced the dollar

and tp that
day nearer
when Italy can maintain her econ¬
omy at its current level without
deficit

substantially
brought

extent

the

assistance.

brings

That

since the

1947,

September,

Einaudi

in

Italian

The

the Marshall Plan group of coun¬

not yet founc
the means to stop wartime infla¬
tion.
With all other countries, )
think
without
exception,
Ital}
things

currency

a

saying about Italy and her credi¬
tor position applies only within

Italy had

an

which

at

maintain itself in relation to oth¬

At this

in the summei

ago

years

1947

answering the extremely diffi¬
question of the

cult and important

concern

illustrate.
Two

can

a means,

such short supply that

elsewhere, but Italy
is at present the most recent an:
striking instance of what I wan
to

I

Fund,

Monetary

ers.

sarrn
fron

drawn

be

can

is

contrary to the doctrine of fixed
rates, which is supported, I un¬
derstand,
by
the
International

observations

to

me

the

point

which this brief talk is meant to
illustrate.
in world

today

The need for dollars
conditions as they exist

aggravated by inflation

is

alleviated by checking infla¬
tion.
This broad principle has

and Vice-Premier, per¬
suaded his colleagues in the gov¬

and

ernment

been embodied in the

Budget

to

credit

adopt a policy of se¬
restriction
couplec

'Interim Re¬

the European Recovery;
with a program to balance the
Program issued by O.E.E.C., the
budget over a period of two years
Organization for European Eco¬
This
checked
the
inflationary nomic Cooperation. To my mind
boom and
led in the following this line of action is the one which
spring to rather serious unem¬ should take priority over all oth¬
ers.
There are a number of ways
ployment.
I have not seen de¬
in which inflation can be brought
tailed statistics but the figure o
two million people out of work is about
and
probably
an. equal
generally accepted. Although this number of ways in which it can
is always a bitter experience for be checked. No two countries are
those directly affected, there were wholly alike and each will re¬
other developments which must quire its own program
of sta¬
be borne in mind if the situation bilization. Bearing these facts in
as
a
whole is to be accurately mind I hope you will agree with
judged. With the period of un¬ me that, while I do not believe
naturally high domestic purchas¬ that the objectives of the Marshall
ing power at an end, producers Plan will be attained in toto by
had to export if they were to get 1952, the most important step to
rid of their goods and the result be taken right now is to draw up
has been astonishing. When trade and
put
into operation sound,
between the Marshall Plan coun¬ practical
programs of domestic
tries was being studied and ana¬ monetary and fiscal stabilization.
lyzed during the
summer
last An important part of this pro¬
year it became evident that Italy, gram will deal with the adjust¬
during the period of 12 months ment of exchange rates and I
vere

port

on

„

which

end

will

just

in

over

s

fortnight; would be a creditor of
all Marshall Plan countries with

only two exceptions.
Italy was
expected to have an adverse bal¬
of

ance

with

payments

London

bloc, but this has not turned out
Italy is today ac¬

hope I have argued
the

neither

price

through

a

gradual adaptation

second, by

have

ures

not

seen

any

in balance.
recent fig¬

bearing on this. With all the
Marshall
Plan
countries

other

of

a

creditor,

Belgium.
_

transformation

within

a

and,

suitable credit policy.

Italy and Austria was ex¬

pected to be roughly
I

of exchange

existing conditions

cumulating sterling; she is a cred¬
itor of London. The situation be¬

to

ex¬

nor

domestic monetary sta¬
accompanied, first, by

rates

tween

reduction

reduction alone, but

change rate

bilization

cogently that
is through

stability

to

road

to be the case.

for Italy is

and in the past was
Addison

said

on

a

of which I know in the

currences

by reason of buying raw materi¬
als from members of the sterling

Joseph C. Hyatt Joins
Fahnestock Staff in Chicago
(8pecial

just

to

everywhere, all within
the

of

one

of re¬
ducing
international
prices.
I
hope now to show that theory
and practice differ widely in this

had

"

me

have

statement

of being
that of

one

sides

period of less than two years,

The

same

I

all

on

creditor

is

economy

our

countries from

of

and

arrangements

mere

country too heavy a burden of un¬

requited exports.

become

surplus with

At the

trative

by current releases, un¬
short-term agreements, at a

country

a

and

reduced

each

which

convert

such transac¬

the sale of annuities and

never

plans to balance its external ac¬

its

as

surplus war stores to India, while
the sum owing has been further

changes

between

ance

thus

tions

demands .certain

which

created

have been made by

.

has

situation

new

the piecemeal
dealing with

hand,

methods adopted for

system was only made possible, in
the ,last

other

the

export surplus in

an

attempted of the prob¬
Sterling bal¬
built up during the war. On

been

lem of the abnormal

enabled

trade with the sterling area.

18 months ago.

It is true that no radical solution

return

which

prewar

by running

in

on

today in

illusion for Western

indulge

to

hopes- oi
to

versions

or

reserves,

weakened if not demolished.

tolerable

more

exchange- which together have brought the
their new sterling area within striking dis¬

to

money

of the foun¬

Monetary Fymd was in my view
time, the adminis¬ organized in the hope of main¬
governing taining the value in purchasing
transfers of sterling
have been power of the world's currencies
improved; In place of the unre¬ as well as their stability in terms
stricted
and
unsupervised con¬ of each
other, and on this point 1
vertibility -of>«August 1947 there regret I must disagree with Sir
has grown up a system of "ad¬
Jeremy's words about "stability
ministrative convertibility" which
subject to periodic adjustments'
in practice permits
considerable for that seems to me a contradic¬
freedom in-the use of sterling for
tion in terms. I might call what

low price level; and

a

channels

at

be

get

tend

new

a

of

to

countries

in

more

occurs one

dation

a

Cripps' austere budget policy and
halting of inflation
Hence-it; can be laid within the United Kingdom, the
down as* our second condition for success'of Britain's export drive
a restoration of convertibility that1 ancT the
reduction in the dollar
trade "cannot flow smoothly in its
imports of the whole sterling area,

Europe Must Also

of sterling is

then

it

when that

countries.

What may not be sufficiently
realized is that if the convertibil¬

ity

external

(Continued from page 13)
in the national

dence

tractable situation.

verse

the British four-

"Dollar

Currency Stabilization?

progress

produces-'

competitive mar¬
kets'offering no great attraction'

be

Remove

the

countries, and this redistribution

therefore highly

submitted
to
envisage that
entirely elim¬
inated by 1952, but it is perhaps
reasonable to hope that the resi¬
dual deficit will be bridged in
some other fashion: for example,
by an influx of privately owned
American capital.
"

inflation

tries- with

does -not

deficit will

the

achieve

to

makes

countries

program

year

O.E.E.C.

of

measure

equilibrium/
In
1948
the
United
Kingdom
came very near to achieving over¬
all balance, a large deficit in trade
multilateral settlements.
A mere
with the dollar countries being extension and-liberalization of this
offset by a substantial export sur¬
system, should circumstances per¬
plus to ether areas.
In part, this mit, would imperceptibly usher in
export surplus was the result of a new era of convertibility unher¬
deliberate
policies, such as the alded by any formal decision like
grants extended to some Western that of July 1947. Better still, of
European countries under the in- course, would be a revival of con¬
tra-European payments
scheme. fidence in sterling on a scale suf¬
But
in
part
such export
sur¬
ficient to render these administra¬
pluses were involuntary, the ob¬ tive arrangements altogether un¬
verse. of the failure, to. direct a
necessary and to permit free con¬
sufficient proportion of our ex¬ vertibility, at any rate of new
ports to the dollar area.. The dif¬ balances, on capital as well as
ficulty was that, at the prevailing current account. To look forward
rates
of
exchange,.' the' dollar to such a ' revival is surely not

is reduced.

even

recognized

others to achieve real

at which

rate

same

well

inflationary will find

are

that

also

re¬

increase

must

area

roughly

is

It

difficult

is

widening

involving

inflation

balance. What needs to be stressed

the dollar earnings of the

serves,

-

deficit

,

it

not

are

we

of

country whose internal fi¬

a

nances

the level of the

reserve

throes

to

order.

that

the

that

so

reserve

so,,

the

balance their budgets
and generally, put their finances

dol¬
which

to

in

manage

about sufficient to cover our

lar

owing is not

sum

further condtions are im¬
made; for this decline in the net
Continental Europe cannot debt results from a larger gross
hope to achieve dollar balance un¬ repayment to some creditors offset
less, first,
countries which are by fresh acquisitions by other

just

appears

the full

net

plied.

encouraging in the extreme

that

tion in the

Two

tions granted

then

its deficit with the Western

cover

43

What's Needed foi

MonetarySiabilityand Conveztibility
(Continued from page 13)

(2739)

CHRONICLE

the

To
of

With Bache & Co.
(Special to The Financial

CHICAGO,

ILL.

--

Chronicle),

Norman

,

C.

connected.
creditor even
mind the with Bache & Co., 135 South La
Italy's position Salle Street. He was formerly with
Kalmar

a

has

become

my

Marshall

Plan

group

Daniel F. Rice & Co.

44

THE

(2740)

COMMERCIAL

Securities
•

INDICATES ADDITIONS

Alps Mining & Milling Co., Missoula, Mont.
(letter of notification) 100,000 shares (50 par)
common.
Price—500 per share.
Underwriter—Hachez
& Brown, Spokane, Wash.
To complete mill, purchase
equipment and carry on development work. Office, P. O.
Box 745, Missoula, Mont.
"

Fork

American

Consolidated

Washington, D. C. For general business purposes.
fice: Woodward Building, Washington, D. C.

City, Utah

American

Light & Traction Do.
May 13 filed 634,667 shares of common stock (par $25).
Offering—United Light & Railways Co. (parent), is of¬
fering to its stockholders of record June 1 the right to
"Subscribe for the 634,667 shares of American at $12 per
share on a l-for-5 ratio.
Rights will expire July 1.
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

June

13

Loan

&

Finance

Co., Hamilton, Ohio
765 shares of 6% non-

(letter of notification)

participating, non-accumulative preferred and 281 shares
of 5%
participating, non-accumulative preferred and
$34,100 of 4% 5-year subordinated notes, $65,900 of 4%
5-year subordinated notes; and 954 shares of 5% partici¬
pating, non-accumulative preferred. No underwriter. For
operation of business and future expansion. Office 210
So. Third St., Hamilton, Ohio.
Petroleum Co. of Colorado, Inc.
Delta, Colo.
June 13 (letter of notification) 100,000 shares of common
stock, of which 50,000 shares would be issued for cash
at $1 per share and 50,000 to be issued for the purchase

»*■

^of oil and gas interests and drilling and operating equip¬
ment at $1 per share. No underwriter.
For a drilling
and development program.
Anker-Holtb

Manufacturing Co.,

Port Huron,

26

•

borrowings from Central Hanover Bank & Trust Co. and
Expected

(letter of

for construction and other corporate purposes.

about June 29.
•

June

ment.

•

Consolidated
30

Price—$2.50
sold

Caribou

filed 376,250

to

per

the

share.

underwriter

at

York.

Proceeds—To

per

others.

Burton

Gulf

Tem¬

Real

Gas

Corp., Houston, Texas

7

Price—$1 per share. No underwriter. For pay¬
ment of current and long term liabilities, for purchase
Of tools and inventories and for working cash capital.

Oil &

&

•

Atlantic Coast Fisheries

Co., Boston, Mass. *
June 14 (letter of notification) 92,744 shares ($1 par)
.common.
Price—$1.80 per share. No underwriter. Of¬
fering—Offered for subscription by stockholders of rec¬
ord June 17 in one-for-four ratio. Rights expire July 6.
For additional working capital and for general corpor¬
ate purposes.
.

#

Beryllium Mining Co., Inc., Seattle, Wash.
14 (letter of notification) 60,000 shares (100 par)
common.
Price—30 cents per share.
No underwriter.
To purchase equipment to process crude mica.
Office,
915 American Building, Seattle 4, Wash.
June

•

Billings (Mont.) Oil & .Development Co.
10 (letter of notification) 4,000 shares of capital
stock (par $25).- Price, par. No underwriter. To finance
the corporation in its initial stages.
.
June

•

Bingham Her brand Cor p<

<

;

14 (letter of notification)
10,000 common shares
(par $1)., Price—$9.50 per share; Underwriter—Wm. J.
Mericka & Co., Cleveland. Proceeds to
selling stock¬

Bradshaw

Mining Co., Tonopah, Nev.

(letter of notification)
stock.

•common

<—Batkin &

1,500,000 shares (5c par)

Price—20 cents per share.

Underwriter
To repair and renovate mine

Co., New York.

of company and to exercise option to
purchase processing
and move and erect such mill on the

mill

company's

property and for working capital.

Carnegie Mines Ltd., Montreal, Canada
April 27 filed 500,000 shares of common. Price—60 cents
share.

ceeds

—

Underwriters

For

—

Name by amendment.

Central

Pro¬

working capital, exploration, development

and other purposes.

Fibre

•

Products

Central

Ohio

Light & Power Co., Findiay. Ohio

June 17 filed 25,240 shares
($10 par) common. Offering
—To be offered to common stockholders of record
July 1
at

pay

•

•

Dayton

•

Underwriters

common

at

Proceeds—To repay the company's outstanding
$5,000,000 bank loans and to finance a portion of its con¬
struction program in the remainder of 1949.

trust

bonds,

($100
be

par)

Light Co.

$10,000,000

first

*

of

common

Meyercord.

'

underwriter.

No

.

Hawaiian Electric Co.,

.

.X

the

rate

of

one-for-five.

Underwriter—The

Boston Corn., for unsubscribed shares.

Proceeds
■1T '

construction.

•

.

•..

Ltd., Honolulu

l-for-3 rate and

common

will

be offered to

common

Underwriters—Dillon, Read
Witter & Co. will buy unsubscribed

off short-term promissory notes and to

due 1979, and 50,000 shares of preferred
cumulative stock. Underwriters—Names to

carry merchan¬
replenish treasury
The balance would be used for other corporate

dise inventories and receivables
funds.

determined

through competitive bidding. Probable
Halsey, Stuart & Co. Inc. (bonds); The First
Boston Corp. and Blyth & Co., Inc.
(jointly); Shields &
Co. and White, Weld & Co. (jointly); Morgan Stanley
& Co.; Otis & Co. (stock); W. C. Langley &
Co.; Union
Securities Corp.
(bonds); Lehman Brothers; Salomon
Bros. & Hutzler (bonds); Merrill Lynch,
Pierce, Fenner
& Beane, and Union Securities Corp.
(jointly on stock).
Proceeds—For construction for company and its two
subsidiaries.
Expected July 6.
'

Dow Chemical Co.

June

purposes

or

or

to

construction.

15

Heidelberg Sports
Pittsburgh, Pa.

*

First

—

•

For
; .

resent

killed
•

in

an

To

stock

defray the cost of acquiring operating equipment,
landing site installations and to provide working capital.

(par $15).

Horwood

Lake Gold Mines Corp.
(letter of notification) 100,000 shares of capital
stock. ' Price—$1 per share.
Underwriter—Charles W.
Warshoff & Co., Newark, N. J.
For development of
mining properties.
Dec. 27

on

March 31,

1949.

;

Electronic Computer

Corp., Washington, D. X.
June 13 (letter of notification) 18,000 shares of Class A
common ($1 par) and 72,000 shares of Class B common
($1 par). To be offered in units of one share Class A
and four shares of Class B

at

$15 per unit. Underwriter
Hecht, 1420 New York Ave., Washingtoh, D. C.
For tools; equipment and
supplies, for expenses of issue;

—O.

H.

and for

working capital.

*/

per

Helicopter Air Service, Inc., Chicago (6/27)!
;June 9 filed 80,000 shares of convertible class A stock
(par $4). Underwriter—Cruttenden & Co. Proceeds—•

the late Martha L. Dow who were

airplane accident

Price—$100

balance for related purposes.

Proceeds—Company
no part of the proceeds as these shares
rep¬
portion of the holdings of the estate of the late

Willard S. Dow and

Inc.,

(par
share. Underwriter—None/Pro¬
ceeds—$600,000 to be used for spectator grandstand and

(6/28)

filed 75,000 shares of common

a

Enterprises,

June 25 filed 5,000 shares of class B common stock

$100).

Underwriter—Smith, Barney & Co.

Emerson Raijio &

<

/»:

,

Phonograph Corp.

Idaho-Montana Pulp & Paper Co., Poison,

Mont*
(by amendment) 180,000 shares ($10 par) com¬
to be offered at $10 per' share and 20,020
shares to be issued in exchange for $170,200 first mortgage bonds.
Underwriter—Tom G. Taylor & Co., Mis¬
Nov. 23
mon

.

*

stock

soula, Mont.

Proceeds—To erect and operate

sulphate pulp mill with

a

a

bleached

200-ton per day capacity.

.

;
Underwriter

—:F.

Eb'erstadt & Co., Inc. The terms and price of the
offering have not yet been determined, but the stock

will not be sold below the market price on the New York
Stock Exchange at fhe'tirtie of the

offering/ Proceeds—

The shares to be sold

from holdings of Mrs. Benjamin
Abrams, Mrs. Max Abrams and Mrs. Louis Abrams, wives
of principal officers and directors of the
are

company/and
new
financing by the company. Following
shares, the Abrams family will own approxi¬
mately 25% of the company's 800,000 shares of common
do not involve

sale of the

J^pr^jow nvfoir.r;;i»ri

stock.

•>:;( vr.

''.WRpSR'SiitniP^W.asi&PSBWSH.
ri*q fellADSXl?HM)0,l-SANr.FRAfcCtSCO(■AiOuiWj
.

($20

preferred; unsubscribed common will be sold either at
public auction or to the underwriters. Proceeds—To pay
collateral

and

June 7 filed 235,000 shares of capital stock.

■■v

To

sub¬

stockholders at l-for-9 rate.
& Co. Inc. and Dean

(7/6)

mortgage

of

par) preferred and 50,000 shares of ($20 par) common.
Offering—Preferred will be offered to preferred holders

—

shares.

filed

Haskelite

June 21 filed 150,000 shares of series E cumulative

Morgan
Stanley & Co. and W. E. Hutton & Co. for unsubscribed

8

ferry, to finance dock and terminal facilities,
obligations, and to provide working

sidiary.

Power & Light Co. i-.y.

Delaware Power &

Transportation Co., Jacksonville,

operate Meyercord Compound as a wholly owned

Offering—To be offered at rate of one-for-six to

Pro¬

additional

current

shares

June 17 filed 283,333 additional shares ($1 par) common.

stockholders of record July 7.

for

Manufacturing Corp., Grand Rapids,
Michigan
June 13 (letter of notification) 9,382 shares of common
to be issued to 16 stockholders of Meyercord Compound
Lumber Co. in exchange for their < holdings of 10,422

Building, Lovelock, Nev.

(Ohio)

proceeds

capital.

Cripple Creek Mining & Milling Co.,
Lovelock, Nev.
June 17 (letter of notification) 800,000 shares (250 par)
common.
Price—25 cents per share.
No underwriter,
for erection of mill and purchase of other mining prop¬
erty, equipment and for working capital. Office, Love¬

will receive

Co.,

Inc.
(May 6 (letter of notification) 3,000 shares of non-vdting
Common ($5 par).
Price, $22 per share. Underwriter—
Bosworth, Sullivan & Co., Denver, Colo. Proceeds to
selling stockholders.
•

ocean

to

lock Mercantile

Underwriting—None.

its

use

bidders:

holder.

per

an

Co., New York. For drilling and equipping six
wells, for worxing capital and organizational expense.

June

June

Oct. 8

(letter of notification) 600,000 shares (lc par)
common.
Price, 50 cents per share. Underwriter—N. R.

\

market.

will

Atlantic

•

Office 2723 Connors St.* Port Huron, Mich.

at

May 31 filed 620,000 shares of class A participating ($1
par) stock and 270,000 shares (25c par) common stock.
Offering—135,000 shares of common will be offered for
subscription by holders en the basis of one-for-two at
25 cents per share. Underwriters—Names by
amendment,
and may include John J. Bergen & Co. and A. M. Kidder
& Co.
Underwriters will buy the remaining 135,000
shares plus unsubscribed shares of the new common.
Offering price of class A $5. Proceeds—To complete

Inc., Reno, Nev.
June 15 (letter of notification) 30,000 shares of common
stock. Price—$10 per share. No underwriter. To engage
in business of loaning money.
Office, 319-329 Gazette
Building, Reno, Nev.
Cornell

$1,000,000 promissory note
sole stockholder, Glenn E.

a

to its

Florida

Consolidated Loan,

June

Price

ceeds—Company
working capital.

porarily postponed.
•

on

Gauley Mountain Coal Co., New York
19, filed 10,666 shares of capital stock, of which
1,381 shares will be sold in behalf of the company and
9,285 shares will be sold by Norgreen Associates Inc. and

Inc.

develop mining properties.

$250,000

Jan.

share for invest¬
& Co., New

$1
L.

off

by corporation

Nielsen of Cody, Wyo.

shares (no par) common stock.
An additional 50,000 shares will

Underwriter—William

ment.

Mines,

first

pay

owed

Electric Co.

Silver

Works, Inc., Omaha, Neb.

notification) 2,500 shares of 6% cumu¬
preferred.
Price—$100 per share.
Under¬
writer—The First Trust Co. of Lincoln, Neb. Proceeds—•
lative

improvements, etc.

be

Gate City Steel

June 16 (letter of

filed 75,000 shares ($25 par) cumulative pre¬
stock, series B. Underwriter—Name by amend¬
Proceeds—To pay bank loans, if any, additions,

March

Fund, Inc.

(par $1).
Underwriter—White, Weld & Co. Proceeds—Company
will operate as a specialty fund investing in securities
of companies identified with the gas industry.

17

ferred *

Industries

Gas

June 22 filed 660,000 shares of common stock

To

Coast Counties Gas &

(letter of notification 275,000 shares of Class A

.common.

*

Co.; Halsey, Stuart & Co. Inc.; White, Weld & Co.;
Bros.; The First Boston Corp.; Carl M. Loeb;
Rhoades & Co. and Bear, Stearns & Co. (jointly); Shields
& Co.
Prqceeds—To pay off $3,200,000 of short-term

poses.

Michigan
June 13

&

Lehman

Of¬

Clary Multiplier Corp., Los Angeles, Calif.
June 9 (letter of notification) 60,000 shares 5%% cumu¬
lative convertible preferred stock (par $5).
Offering—
Offered for subscription by stockholders on a l-for-5
basis at $4% per share.
Rights expire June 30. Under¬
writer—Walston, Hoffman & Goodwin, Los Angeles. To
repay current bank loans and for general corporate pur¬

American

•

1, 1979. Underwriters—Names to be determined through
competitive bidding. Probable bidders: Harriman Ripley

Co., Inc., Brooklyn, N. Y.
notification) 37,400 shares of 500
cumulative convertible preferred stock. Underwriter—
Cantor, Fitzgerald & Co., Inc., New York. Price—$8 per
share. Working capital, etc.
Aug.

Price 25

(6/29)

Light Co.

May 20 filed $10,000,000 first mortgage bonds, due June

Clarostat Mfg.

(letter of notification) 400,0G0 shares of capital
cents per share. Underwriter—Cromer
brokerage Co., Salt Lake City. For mining development.
May 9

stock.

Florida Power &

D. C.

Washington,

Corp.,

ISSUE

PREVIOUS

June 16 (letter of notification)

Salt Lake

Mines,

Credit

SINCE

2,000 shares ($12.50 par)
class A common and 1,500 shares of (25c par) class B
common.
Price, class A, $15 per share and class B 50e
per
share.
Underwriter—Emory S. Warren & Co.,

June ^

Thursday, June 23, 1949

Registration

in

Now

Citizens

CHRONICLE

FINANCIAL

&

VjT* 1

.

^L^ijfl2..00U,O2 <
!
Private tViresLp all offices

t'(

i

'!

CHICAGO

CLEVELAND
Xt

t).,

1

*>
,

1
,

,

,

;




'M

'

'!#»',

•.

Ltd., Toronto, Canada

May 24 filed 2,000,000 shares ($1 par) capital stbek.
Underwriter—Tellier & Co., New York.
Price, 25 cents
per share (U. S. funds).
Proceeds—To explore for iron
ore

J

11

Fenimore Mines;

deposits.''*,:,

•'

■

•'

"

*:r.

l

"A

/nnM

y

;

i

Volume 169

Number 4814

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Maumee Oil Corp., Toledo, Ohio
:Mayxl2 151ed- 8;000 shares (no par^comiboiv of Which

i

„

NEWBSUECALENMR
June

27, 1949

•

"

Helicopter Air Service Inc.—

'only about 2;614 shares will be offered publicly at $100
Lper share/ No underwriter/ For general working cap¬
ital.
SEC held bearing June -6 to determine whether
a stop order should be issued
suspending the effective¬
ness of the registration statement.

"7

-

Class A Stock

Pennsylvania Power & Light Co
Sky Harbor—
—:

Common
Common

11:30

a.m.

...

(EDT)—

..i

.

June

—

.Preferred

—

28, 1949

writers—The First. Trust Co. of Lincoln, Neb., and Crut-

'-

Dow Chemical

4enden & Co., Chicago.

^.Common

Michigan. Consolidated Gas Co.——Debentures^
Pacific Gas & Electric Co., 8:30 a.m. <PST)_.BondsJune.

Seagram (Joseph E.) & Sons, Inc
July

1,

Bonds

—

1949

.

.

*

Messenger €orp,_
Mutual Telephone Co.__

Preferred

______

;

__________ _. __ _

July 5,

Line CO.) and for construction.

1949

San Jose Water Works—

\

-

July 6,

.

Preferred

-

1949

Chicago & North Western Ry.
f
■
■
' + '
Noon (CDT)j-——-J.i—-Equip. Trust Ctfs.
Delaware Power & Light Co.Bonds and Preferred
New York Central RR

Bids-rBids for purchase
of bonds will be received by company at 415 Clifford
"Street, Detroit 26, Mich., up to 10. o.m. (EST) June 28.
Missouri Utilities Co., Cape Girardeau, Mo.
May 26 filed-51,184 shares ($1-par) common. Offering—
.

—Equip. Trust Ctfs.

—————Bonds

1949

St. Joseph Light & Power Co.——

Bonds

July 26, 1949
Columbia Gas System Inc.———Debentures

National Memorial

Park Cemetery Association,
Inc., Falls Church, Va.
June 7 (letter of notification) $300,000'5% debentures.
No underwriter. To pay off a portion of bank indebted¬
ness and to buy cemetery land.
•

National Tank Co., Tulsa,

Okla.
2,000 shares ($1 par)
No underwriter
For
the benefit of Ralph G. Galloway. Office, Box 1710 Tulsa,
June

(letter of notification)
Price—$17 per share.

14

common.

Independent Plow, Inc., Neodesha, Kan..
May 31 (letter of notification) 1,000 shares of preferred
(par $1Q0) and 23,360 shares ($1 par) common. Under¬
writer—McDonald, Evans & Co., Kansas City, Mo. For
working capital.
Corp., New York

June 17 filed 145,300 shares (no par) common. Offering
—To offer to certain officers and employees of the
company

and its subsidiaries, under an Employees' Stock

Purchase Plan.

*

Underwriting—None.

Proceeds—For

ex¬

tensions, additions, improvement and maintenance of
properties, for the carrying of inventories and for gen¬
eral corporate purposes.

Kaman Aircraft Corp., Windsor, Locks, Conn.
May 23 filed 170,456 shares of class A non-voting comfmbn stock (10c per share non-cumulative dividend) and
11,362 shares of class B voting common stock. Price,
$5.50 per share. Underwriter—None. Purpose—To ac¬
quire machinery, tools and equipment; to buy land and
buildings; to produce 30 helicopters and accessories; to
complete engineering changes; to setup sales and serv¬
ice departments; and to train service personnel.
Kansas Gas & Electric Co.

Proceeds—Kansas Gas will

.Oklahoma.
New

England Power Co., Boston (7/13)
$5,000,000 of series C bonds due July 1, 1979.

June 3 filed

Underwriters—Names

to

be

determined through

com¬

petitive bidding.
Probable bidders: Halsey, Stuart &
Kidder, Peabody & Co. and White, Weld & Co.
(jointly); Equitable Securities Corp.; Otfs & Co.; Union
Securities Corp. and Salomon Bros. & Hutzler (jointly);
Coffin & Burr; Carl M. Loeb, Rhoades & Co.; Merrill
Lynch, Pierce, Fenner & Beane and Lee Higginson Corp.
(jointly) and Harriman Ripley & Co.
Company also
plans to sell 160,000 shares of common ($20 par) to its
parent, New England Electric System, at $25 per share.
Co. Inc.;

Proceeds—Proceeds of the bond and stock sale will be
used

to

pay

off $5,324,700 of bank loans obtained for

construction and to provide money for construction ex¬

penditures
July 13.

expected

to

be

made.

Bidding

use

pro¬

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.
ceeds of

Keller Motors Corp., Huntsville, Ala.
May 10 filed 5,000,000: shares (30 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,

Jersey Power & Light Co. (7/12)
$3,500,000 of first mortgage bonds, series due
1979, and 20,000 shares ($100 par) cumulative preferred
stock.
Underwriters—To be determined through com¬
New

June 9 filed

Probable bidders for bonds: Haisey,
Union Se¬
curities Corp.; Carl M. Loeb, Rhoades & Co.; Otis & Co,;
Kidder Peabody & Co.; Salomon Bros. & Hutzler.
For
nreferred; Kidder, Peabody & Co.; Smith, Barney & Co.;
W. C. Langley & Co.; Lehman Brothers.
ProceedsWill be applied to the payment of the cost of, or in
reimbursement of payments made for, construction of
additions, and betterments subsequent to April 30, 1949.
Stuart & Co. Inc.: Equitable Securities Corp.;

Expected July 12.
•

New York & Cuba Mail

Steamship, New York

of 5.6% cumulative preferred
($25 par) stock, which Atlantic Gulf and West Indies

June 17 filed

190,125 shares

•

Steamship Lines is-offering in exchange for its own
preferred, (5% non-cumulative $100 par) at the rate of
one Atlantic share for three shares of Cuba Mail pre¬

June 14

ferred

medium-sized station wagon.
Knox (Earl E.) Co., Erie, Pa.
(letter of notification) $150,000 first mortgage
convertible sinking fund 6% bonds, due May 1, 1969".
Underwriter—Reitzell, Read & Co., Inc., Erie, Pa. Price,
par

and - interest.

Retire $55,396 first mortgage bonds,

^working capital.
«.

..

1

Logan (Ohio) Home Telephone Co.
(letter of notification) $150,000 20-year 3%%
first mortgage bonds, series A, due May 1, 1969. Under¬
writer—The Ohio Co., Columbus, O. For installation of
automatic equipment and to provide working capital.
i

June 9

M Bar Oil

Co., Newcastle, Wyo.
June 14 (letter of notification) 1,250 shares of common.
Price—$100 per share. No underwriter. To apply on in¬
debtedness, to erect small refinery and to drill additional

X Ma^hattan*Mjjning Corp.,'lFleno^Wev.:/^^f^.^.t-v
June 14

(par $1).

(letter of notification) 80,000 shares of common

Price,

mining claims.

plus $25 in- cash.

No underwriting.

Nielsen Television Corp., New

York

Feb. 24 (letter of notification) 4,000 share
tive non-convertible preferred stock (par

of 6% cumula¬
$25) and 10,000

Underwriter—Charles
York.' Offering—To be Offered in
units of one preferred share and 2Vz common shares at
$25,625 per unit.
Capital requirements. Preset plan*

shares of common stock (par 25^),

liquid Carbonic Corp., Chicago.

Juncj 2 (letter of notification) 2,000 shares of common
stock. { Price—$15
per share.
Underwriter—Walston,
Hoffman & Goodwin. Proceeds to selling stockholder. »

•

No unaefWritet-. To explore further
Office, Cheney Bldg., Reno, Nev.
par.




27,

stock not otherwise acquired by stockholders or
ployees. Proceeds—For construction.
7/

H. Drew &■ Co., New

.

will- be

revjsed.

:

/Oil,.Inc., Salt La^e City, Utah
May 19 (letter of notification)

7,-:
s

,,

172.690; common shares

(pai? $1). Price, par. Underwriter—Waldron & Co,, San
To drill and equip five wells, working
capital, etc.
Pacific. Gas & Electric Co. (6/28)
Francisco, Calif.

May 31 filed $80,000,000 first and refunding mortgage
bonds, series S, due June 1, 1983. Underwriters—Names
to be determined through competitive. bidding, 5 (Provable

bidders: Halsey,, Stuart ,& Co/.Inc.; The First Boston
Corp.; Blyth, & Co.,' Inp.
proceeds—For construction.
Bids-rrBias for purchase of bonds ./will be; received by
company at office of Treasurer, 245 Market Street, Sap
Francisco, up to 8:30 a.m. (PST) June 23.

em¬

:

,

•

Philadelphia Electric Co.
:
u
June 22 filed
972,624; additional shares5 (no par)common,
Offering—To be offered initially to stockholder*?
on.^ a l-for-10 basis held July -11.
-Then unsub¬
,

-

-

scribed

shares would be

available for subscription to
fjullTtime employees of the company rand its
subsidiaries—up to $150 per person. Underwriter^^-'
Drexel & Co. and/Morgan Stanley & Co. wiH pmrdhase

regular
,

unsubscribed; shares.

Proceeds—For construction... vt

Power Petroleum

'■

Ltd., Toronto Canada

-

.

/•->

April 25 filed 1,150,000 shares ($1 par) common of whidi
1,000,000 on behalf of company and 150,000 by New York
Co,, Ltd.. Price—:50 cents per, share; »Underwrltera-«.

;To be named by amendment.
tration expenses and drilling.

Proceeds—For adminis-

7

-

•

Principal Theatres Corp. of America, Culver
.-..City, Calif. - /
a:,;.
/ . ,v.t75 ■.
June 15 (letter of notification) 12,446 shares of cbmmon
stock. Price—$15 per share, No underwriters. ■ For addi¬
tional working capital.
Office, 9336 West - Washington
Boulevard, Cjulyer City^ Calif.;
/
•

•

Radiation Co., Inc;, West Newton, Mass.
(letter of notification) 365,000 shares of com¬

June 18

(par 250). Price, par. No underwriter.
corporate purposes.,
...

mon

For general
>

.

Renaissance Films Distribution,

Montreal, Quo.
Oct. 29 filed 40,000 shares

inc.,

(par $25)

5%

-

-

,

cumulative

convertible class B preferred stock and 10,000 shares of
C stock (no par).
B preferred will

Underwriting—None. Offering—Class
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
liabilities and working capital.
'
St.

Joseph

(Mo.j

Light & Power Co.

(7/19)

June 10 filed $4,750,000 of first mortgage bonds/series
due
1979.
Underwriters — Names
to
be
determined

through competitive bidding: Probable bidders: Halsey,
Stuart & Co. Inc.; The First Boston Corp.; Otis & Co.;
Equitable Securities Corp.; Kidder, Peabody & Co.;
White, Weld & Co.; Salomon Bros, & Hutzler; Carl M.
Loeb, Rhoades & Co.; Union Securities Corp. Proceeds
—For property additions.
Expected about July 19.
San Jose

(Calif.) .Water Works (7/S)
/
39,000 shares ($25 par) cumulative" con¬
vertible preferred stock series B.
Underwriter—Dean
Witter r& Co.; Blyth & Co., Inc.;'Elworthy & Co., and
Schwabacher & Co., San Francisco. Proceeds—To restore
working capital used for property additions and im¬
provements and of defraying a portion of the cost
of future expenditures for such purpose.
June

7

filed

(Joseph E.) & Sons, Inc. (B/29)
7
$50,000,000 25-year debentures, due June/1,
1974. Underwriter—Harriman Ripley & Co., Inc.
Pro¬
ceeds—Company will use proceeds with other funds'to
prepay outstanding bank: notei" '* v
J:
Seagram

June 13 filed

Sky Harbor, CarEstadt, N. J.

expected

petitive bidding.

May 16 filed 550,000 shares of common stock (no par) of
which American Power & Light Co. (parent) will sell
450,000 shares. Underwriters—Blyth & Co.; Inc./ and The
First Boston Corp. were named as underwriters but
withdrew June 21.

Underwriter

Proceeds — Proceeds will be
used, for construction and expansion which in 1949 will
involve expenditure of about $4,340,500. Expected July 1,

—Kidder, Peabody & Co.

t

Johns-Manville

l-for-4

7 filed.

ferred share for each five of common held.

;

July 13, 1949

•

on

Telephone Co. (Hawaii) (7/1)
150,000 shares ($10 par) convertible pre¬
ferred Stock, series B. Offering—To be offered, initially
to holders of the common stock, in the ratio of one pre¬

New Jersey Power & Light Co.—Bonds & Preferred

19,

17

Rights expire June 29. Underwriter—Edward D.
Jones & Co., St. Louis, Mo.
Proceeds—For construction.
June

July 12, 1949

July

June

record

basis.

Mutual

July 7, 1949
Atlantic Coast Line RR.——Equip. Trust Ctfs.

New England Power Co

to-stockholders of

-Offered

(6/27)

one for seven shares held.
Employees will
be allowed ..to buy unsubscribed shares, up to not more
than 150 shares each. Underwriters — Drexel & Co. and
The First Boston. Corp. head a group who will
purchase

.

paymerit" of principal. and premium of ;about $7,300*0001 of
/promissory notes of ; its subsidiary (Austin Field-Pipe

Preferred

Pennsylvania Power & Light Co.

at the rate of

.

June

.

--Debentures

.

MichiganConsolidatedGasCo.(6/28)
;•*
1 * filed $25,060,000 sinking fund' debentures,1 due
July 1, 1967; Underwriters — Names to be determined
through competitive bidding: Probable bidders: White,
Weld: & Co. and Lehman Brothers (jointly)/ Halsey,
Stuart & Co. inc.; Harriman Ripley & Co., Inc.; Smith,
Barney & Co. Proceeds—For payment of $3,500,000 of
promissory notes, payment; of the; redemption price of
40,000 shares of outs landing 4% % cumulativepreferred,

-

29, 1949

Florida Power-& Light Co

•

,

:

June 7/filed 415,983 shares (ho par) common.
-Offering—
To be offered to common stockholders of record June

Messenger Corp., Auburn, Ind. (7/1)
May 25 (letter of notification) 6,000, shares of $%„ cumu¬
lative convertible preferred (par $25). Price, par. Con¬
vertible into' common stock, at $10 per share.
Under-

Wisconsin Eleetric Fower Co.

45

(2741)

(6/27),''

.

June 10 (letter of notification) 299,000 shares of common
stock (par 10<J).
Price—$1 per share.
Underwriteiw
G. F. Hulsebosch & Co., New York.
Pay expense Of
financing, pay accounts payable and balance of mort¬
gage/purchase of planes, land, etc. 1'
•

Southern Fire & Casualty Co., Knoxville, Tenh.
13 (letter of notification) 10,000 shares (no par)

June

capital stock, Price-—$8.50 per share. No underwriter.
growth and expansion. Office, 4277 Lyons View
Pike, Knoxville, Tenn.
'
;
For

Southern Natural Gas Co., Birmingham, Ala.
May 13 filed 141,853 shaies ($7.50 par) common stock.
Offering—Stockholders of record June 6 are given the
right to subscribe for the stock on a l-for-10 basis at $26
per share. Rights expire June 28, Underwriter—None.
Proceeds—For construction and for additional common
stock investment in Southern's subsidiary, Alabama Gas

Corp.
Southern

New

England Telephone Co.
shares of capital stock. Offering—
To be offered for subscription by stockholders of record
June 21 at rate of l-for-6 held at $25 per share. Under¬
writing—None. Proceeds—To repay about $4,500,000 ,in
June 2 filed 400,000

advance? from American Telephone

& Telegraph Co.
funds for con¬

with the balance to be added to general

struction.
Southwest Lumber Mills, Inc., McNary, Ariz.
May 31 (letter of notification) $300,000 of 5% convertible
subordinated 10-year notes.

Underwriter—E. W. Thomas

&

Co., 135 S. La Salle Street, Chicago, has agreed to
purchase at a discount of 3%% all securities not taken
by the stockholders or this group (directors and stock¬
holders) up to a:maximum of $100,000 of the securities
to be issued.
Proceeds—To restore working capital,
j

Westerly, R. I.
[
notification) 20,000 shares of cumulaf
preferred (par $4) and 40,000 shares (25c par>
common.
Price
Preferred par, common 50 cents pe r
•

Standard Cable Corp.,

June 15 (letter of

tive

—

share.

No underwriter.

'

For additional

working capita.

Service,

lnc./ Ontar16, !Cafif.
March-31 (letter of notification>- 4,000 'shares ($25 par/
Suburban

series B

Gas

preferred and 20,000 shares(,($1 par) commonPrice—Preferrgs

issuable upon conversion(of breferjred.

(Continued

on page

46)

-

46

Inc.,

Sudore Gold Mines Ltd., Toronto, Canada

share (U. S. funds).

—Funds will be apolied

Price—$1

of common stock.

June 7 filed 375,00C shares

Underwriting—None. Proceeds
to the purchase of equipment,

road construction,

exploration and development.

•

Inc.,

Travelfares,

notification) 120,000 shares of common
No underwriter. To acquire a copy¬
righted advertising medium and solicit national adver¬
tisers and transportation companies. Office, 855 Central
Bldg., Seattle, Wash.
Trenton Chemical Co., 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.,
Los Angeles. Proceeds—To build chemical plant and to
replace .working capital used for capital additions.
Mrs. Tucker's Foods, Inc., Sherman, Texas
Nov. 20 filed 200,000 shares of common stock (par $2.50)
ot which 80,000 will be sold by the company and 120,000
shares by certain stockholders. Underwriter—Hauscher,
Pierce & Co., Inc., Dallas, Texas. Proceeds—For general

June

500,000 shares of stock
shares then held,

tana, western North Dakota and the Black Hills region
Montana-Dakota Utilities Cq.

of western South Dakota.

will

stalments.

Chairman of the board, told the
stockholders at company's annual meeting that company
expects to offer additional common to stockholders, prob¬
ably on a l-for-10 basis. Financing is to, take place this
year to provide $5,000,000 for the company's operating
natural gas subsidiary.

Salomon

j
\

(7/7)

Co.

and

Lehman

t

For

Virginia Dare Stores Corp., New York
June 7 (letter of notification) 20,000 shares of common
stock, class A.
Price—55 per share.
Underwriter—
None. Working capital and general corporate purposes.

•

it

announced

was

shares ($10 par) common stock.
Underwriter—To be named by amend¬
Proceeds—To qualify the company to sell life in¬
12,500

March 30 filed

April 1, 1948.

ment

construction

Inc., Denver, Colo.

May 19 (letter of notification) 800,000 shares of common
capital.
Price, 250 per share.
Underwriter—John G.
Perry 8c> Co., Denver, Colo.
For working capital and
drilling of wells.
Wlehman Philippine; Mindanao

May

and

cumula¬

Rights expire 5

Subscriptions

and A.

(Mass.)

&

June

p.m.

15

reported

stockholders

pay¬

the

capital stock in ratio of
for each

County Electric Co.

South

at

something of
with

top bids

re¬

was

one

set

record for close¬
difference

overall

the big issue.

for

a 3% coupon while the next
highest of the three bids sub¬

the humidity, if
at any rate
things were
not
altogether
as
some
people in the investment
banking world would have liked
them this week.

It

buy

developed

that

deal easily

a

you

could

enough,

but

the job of selling it after you got

it

was

another matter.

several
came

of

the

to market

In short

offerings
were

which

hardly of

the "out-the-window" type.

100.33

was

or

only

One

at

100.59

to

yield

tion

9.9

of

with

the

the

projected
be

The

$150,000,000
of

and

Ex¬

group

reoffered

buyer 2.95%.

v.

of

new

would

course,

yield
fairly close to what the insti¬
buyers have seemingly

tutional
more

or

less set

attractive

apparently
interest on
Much
peared

a
a

the
to

to

as

minimum that

them,

lack

of

there

was

immediate

broad scale.
same

situation

prevail in

Th$ largest single undertaking, Public Service Co.

This

on

a

negotiated..

financing

is designed to
big company's working
capital which has been depleted
by extensive outlays for improve¬
ments and expansion.
The board
chairman, it was recalled, at the
annual meeting had hinted rather
broadly that a substantial financ¬
ing operation was in the offing.

the

case

ap¬

of

of New Hamp¬

The projected big stock deal for

Gas

&

Electric

common

Co.,

in¬

an

connection

Electric &

exemption from

with

the

proposed

com¬

sale

stock

the

companies

that

requested

the

issuance

of

a

final

approving the transactions be delayed because Of
adverse, conditions affecting Upper Peninsula. The SEC
has

scheduled

sale

this

of

hearing for July G

a

stock

and

the

request

competitive bidding.

upon the proposed
for exemption from

•"

'

Wisconsin Electric Power Co.

'

;

(6/27)

»

June 2 the SEC approved North American
Co.'s plan to
sell competitively 13,494 shares of its
holdings of Wis¬
consin Electric Power Co. ($100
par) 6%

preferred capi¬

tal stock.

Probable bidders:

Union Securities

Corp.; The
Corp.; Lehman Brothers and Robert W.
Baird & Co. (jointly). Bids—The North American Co.
is inviting bids for the purchase as a whole of
13,494
First

Boston

shares of 6% preferred stock ($100 par) of this
company.
Such bids will be received
by North American Co. at
Room 1901, 60 Broadway, New York
4, N. Y., up to
11:30

for

(EDT)

a.m.

stock

this

on

originally
has

week

been

June 27.

basis

by American Telephone &
Telegraph Co., will turn out to

have been the most successful.

t

had been the subject of a meet¬

"Rights'' on the 8394,3.72,900 of¬
fering to stockholders expire qn
Monday, and preliminary figures

ing

show

on

by

SEC for

the

sale

negotiated basis, the issue

a

between bankers slated to
the operation and com¬
officials early in the week.

pany

After

the

meeting

that

nounced

itlie

it

was

sale

though neithe&side

off,

clear

outcome of

meeting.

Bankers

merely noted that ne¬
gotiations had, been "broken off"
while

company

officials, confirm¬

ing this, would not comment fur¬
ther than to say that
know when the new
be

or

tiated

whether it
or

they did not
would

date

would

be

.

that

above

nego¬

sold by competitive bid¬

ding.

Indications

am

undertaking

that the

biggest

debenture offer¬

on"

a

."rights"

will

run

approxi¬
mately 98% of the amount offered.
Busy Day
Next

busy

Ahead

Tuesday promises to be

a

for the investment bank¬

one

ing
world
unless
there'
are
changes made in the interim. Two
sizable issues will be up for bids
on
that day involving a total of

$105,000,000.
Largest by far is Pacific Gas &
Electric Co.'s $80,000,000 of first
and refunding bonds. Three bank¬
ing groups are expected to be in
the

for this

race

Next

of all convertible

subscriptions
$385,000,000, or

an¬

was

gave a

explanation for the

marketing of $50,000,000 of first shire's $4,000,000 of 30-year bonds, volving sale of 550,000 shares of
ings




their

Whopping Success for A. T. & T.

Deal Is Called Off

Kansas

16 Middle West Corp. and Consolidated

order

common

the

restore the

Even though the indicated

is

handled

&

Halsey, Stuart

(jointly); Union Securities Corp.; Drexel & Co.
Hemphill, Noyes & Co. (jointly); Lehman Brothers;

handle

basis.

successful

the bonds at 100.75 to yield the

of

panies proposed to sell the stock at competitive bidding.
Subsequent to the issuance of the Commission's order of
Oct. J, 1948, giving,notige of the
filing of sucn proposal,

Cleared

industrial

Securities

which,

Probable bidders for bonds:

called off indefinitely.

(N. J.)

biggest

Standard Oil Co. (N. J.) was
reported planning to file for its
bonds

new

slated

undertakings in recent years ap¬
peared likely to go into registra¬

cents per $1,000 under the best.

was

of

Bank

share of capital stock

change Commission-this week.

The winning*bid was 100.3399

mitted

out

$7,000,000

holdings in the company con¬
sisting of 34,000 shares (17%) and 120,000 shares (60%),
respectively.
In their original application for authorization to sell the stock, filed last
September, the com¬

Inc.

Standard Oil Co.

this

for

a

an

on

of

3 reported Electric Bond & Share Co.
plans sale
competitive bidding of 803,230 shares of common stock

of only $4,950 separating the two

But

National

2.97%.

Co.

sell

Inc.; The First Boston Corp.; Blyth & Co., Inc.;

petitive bidding in

June

brought

Transmission

Competition

was

Old

of

new

Utilities,

to

Upper Peninsula Power Co.

(jointly); Harriman Ripley &

one

plans

company

Gas Co. applied to the SEC for

given

'

Middle

Gas

ness

be

Funds will be used by the
company for oil development and possible acquisition of
additional leases.
1

$5,500,000 of first mortgage bonds, series

heat.

will

eight shares held.

ported decidedly slow.

the

30

corporation is planning to offer its
right to subscribe to 49,500 shares of

mortgage bonds of the Tennessee

Maybe it

June

Maracaibo Oil Exploration Corp.

A, due July 1, 1979. Underwriters—Names to be deter¬
mined through competitive bidding. Probable bidders:

not

Co.

i

-

.

Light Co.

expected to be opened

Light Co.

G. Becker &

reported

Js
as

Sons

Co.

capital.
10 filed

Power

capital

Salomon Bros. & Hutzler.

Inc.; W. C. Langiey & Co., and Union Securities Corp.
(jointly); The First Boston Corp.; Glore, Forgan & Co.,

able to Central Hanover Bank & Trust Co., 70 Broadway,
New York.
To .pay
bank loans ($250,000), working

Worcester

&

May 12 reported company may be in the" market this
year with $7,500,000 first mortgage bonds and $3,000,000
common stock, the latter to be
sold to United Light &
Rys. Co.
(parent).
Bidders for bonds may include
Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler;
Kidder, Peabody & Co ; Lehman Brothers; Blyth & Co.,

record June 28 at $50 per share in ratio of one preferred
shares held.

Co.

and
"

.

Iowa

tive convertible preferred stockj series B (par $50). To
be offered for subscription by common stockholders of
common

office

at

bonds.

new

working

and Smith, Barney
Cq.
(jointly); W. C. Langiey & Co. and Glore, Forgan & Co.
(jointly); Carl M. Loeb, Rheades & Co. and E. H. Rollins

i

Spokane.

Willcox & Gibbs Sewing Machine Co., New York.

(EDT) July 15. Underwriting—None.

exercisable

are

restore

Kidder, Pe:(body & Co.

■j.

right to subscribe for an aggregate of 191,500 addi¬
tional shares (par 50) in a l-for-5 ration at approxi¬
mately 27 V2 cents per share.
Rights will expire Sept. 13

Wlegand (Edwin L.) Co., Pittsburgh
Sept. 28 filed 200,000 shares (no par) common stock.
Underwriter—Hemphill, Noyes & Co., New York.
Price,
by amendment. Proceeds—Will go to selling stockhold¬
ers.
Offering postponed.

June

&

•

record

will

sale

Power &

Light Co.1

the

Cebu City, Philippine Islands
Jan. 5 filed 2,000,000 shares of voting capital stock, one
centavo par value. Price—25 cents per share (U. S. cur¬
rency). Underwriter—F. T. Andrews & Co. Proceeds—
To provide funds for plant construction, diamond drill¬
ing*; exploration and repayment of loans.

for each 25

11

June

of

the

j 000 of common stock to its parent, American Power

sell

to

Cornucopia Gold Mines, Spokane, Wash.
stockholders

from,

bonds to the public in order to finance its
construction
and expansion program.
In

•

Common

j

addition, it will sell $3,000.-

Inc. (7/26)
that company plans

Bids

j

v

■

covering approximately $150,000,000 in

Proceeds

Texas

Morgan Stanley & Co.; Halsey, Stuart
Merrill Lynch. Pierce, Fenner & Beane;
& Hutzler.

}

.

(New Jersey)

the principal underwriter.

It is expected that the sale will represent
program for financing company's
and
underground
gas
storage
program.

Bros.

....

■'

July 26.

Development

June 6 (letter of notification) 6,000 shares of 5%

Inc.;

Salomon

Co.,

.

Co.

&

Corp.

Standard Oil Co.

depleted by recent heavy capital expenditures.
It
! expected that Morgan Stanley & Co. will be named

Probable bidders:

Western Oil Fields,

<

corr>-

petitive bidding, possibly by early August, of $15,000,000
in new bonds.
Probable bidders: Halsey* Stuart &
Cq.
Inc.; The First Boston Corp.; Harriman Ripley &'Cd.,
Inc.; Lehman Brothers; Blyth & Co., Inc.; Equitable Se¬

ment
t

the final phase of the

in any state.

surance

Halsey, Stuart & Co. Inc.;
Hutzler; Harriman Ripley & Co. and
(jointly).

June 21 reported company will file shortly with thie
j Securities and Exchange Commission a registration state¬

additional $13,000,000 debentures in July. The deben¬
tures are to be issued under the indenture dated as of

Price—$40 each.

&

j

an

Western American Life Insurance Co., Reno

j

"

.

,

Columbia Gas System,

j

:

(7/6)

Northern States Power Co. of Minnesota
June 11 reported company planning the S3le at

•

(Inc.).

July 21

*■

Probable bidders:

Brothers

curities

Chicago & North Western Ry. (7/6)
Company will receive bids up to July 6 at Room 1400
Daily News Building, Chicago, up to noon (CDT), for
the purchase of $6,600,000 equipment trust certificates
to be dated Aug. 1, 1949,
Bidders at the sale are in¬
vited to submit alternate proposals for certificates ma¬
turing in 1 to 10 years and. for the same certificates ma¬
turing in from 1 to 15 years. Probable bidders: Halsey,
Stuart & Co. Inc.; Salomon Bros. & Hutzler; Harriman
Ripley & Co. and Lehman Brothers; Harris, Hall & Co.

development of leaseholds, acquiring new leases, lease
rentals and operating expenses.

'

....

t

Brothers

•

par)

.

Bros.

Lehman

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¬
&

New York Central RR.

; The company has issued invitations for bids to be conlsidered July C on $11,400,000 equipment trust
certificates.
Certificates will mature serially in 15 equal annual
inj-

Gas Co.

Ripley

& Beane.

•

William G. Woolfolk,

ler; Harriman
(jointly).

and operate the facilities.
Probable under¬
Blyth & Co., Inc.; Merrill Lynch, Pierce, Fenj-

ner

improvements and for additional working capital.
American Natural

lease

writers:

The net proceeds are to be used to pay

•

Chadron, Neb.

(letter of notification) 80,000 shares ($1
Price—$1.25 per share. No underwriter.

.

exact

Atlantic Coast Line RR.

bring gas from the Worland (Wyo.) Unit Area, being
by Pine Oil Co., into markets now being
Montana-Dakota Utilities Co. in eastern Mon¬

developed
served by

for

and 34,000 shares, respectively; Copper Range Co., 34,000
shares and several individual owners 11,200 shares.

common.

to

scription price to be determined at a later aate.
It is
likely that a second offering of common stock will
be made some time in the latter part of 1950 on a
l-for<T2 basis.

*

.

.

Montana-Wyoming Gas Pipe Line Co.
•
May 23 this company is being organized and will be
publicly financed, to build a pipe line costing $8,000,000,

also

petitive bidding, Probable bidders include Kidder, Peabody & Co., Merrill Lynch, Pierce, Fenner & Beane and
Paine, Webber, Jackson & Curtis (jointly). Proceeds—
Will go to selling stockholders. Consolidated Electric &
Gas Co. and Middle West Corp. will sell 120,000 sharer

13

the

dissolution of Elec¬

upon

&

,

basis of one share for each
terms including sub¬

or. a

Power

1949

Light Corp. Probable bidders:
Merrill
Lynch, Pierce, Fenner & Beane and Kidder, Peabody &
Co. (jointly); Blyth & Co., Inc.; Dillon, Read & Co. Inc.

company

nine

Upper Peninsula Power Co.
Sept. 28 filed 200,000 shares ot common stock (par $8).
Underwriters — Names to be determined through com¬

Valentine Oil Co.,

(no par) which it will receive

announced it proposes to offer its
stockholders on or about Oct. 1, 1949, about

22

common

corporate purposes.

•

American Gas & Electric Co.

•

(par $1). Price, par.

Thursday, June 23,

tric

Prospective Offerinjs

Seattle, Wash.

June 10 (letter of

June

CHRONICLE

FINANCIAL

&

Halsey, Stuart & Co. Inc.; Merrill Lynch, Pierce, Fenner
& Beane, and Salomon Bros. & Hutzler (jointly); Kid¬
der, Peabody & Co.; The First Boston Corp.; Otis & Co.
Proceeds—To be applied to payment of bank borrow¬
ings ($4,950,000) and for construction or to reimburse
company for previous construction outlays.

(Continued from page 45)
$25 per share. Underwriters—Wagenseller & Durst,
and Lester & Co.
To buy Antelope Liquid Gas Co.

per

COMMERCIAL

THE

(2742)

in

solidated

line

Gas

one.

is

_

Michigan

Con¬
Co.'s:. $25,000,000 of

sinking fund debentures, and
judging by its size competition
should be
stance.

even
.

keener in this in¬
j.

V

With Towns*nd, Dabney

Formed to Inform Public Halsey, Stuart Group Halsey, Stuart Offers :
Offers So. Pac. Equips. C. B. & Q. Equip. Issue!
Need for Stable Money

Gold Standard League
on

menace.

---

Formation
bi the
per

need

of the gold coin system at $35

at Latrobe,

Pennsylvania, under National
President of Kennametal, Inc.,

started

was

ounce

inform the public

for the restoration

Chairmanship of Philip M. McKenna,
Latrobe, Penn-<S>

—

sylvania.
is

He

•

i d

a

be

to

COMING

b y

d

e

for

Chairmen

EVENTS

allStatesdn

ac¬

cepted

are:

David R. Dun-

(Canada)
Investment Dealers Associatior
of Canada 33rd annual meeting ai

June 21-24, 1949

v

W.

James
Philip M. McKenna

Hart¬

Knox,

ford. Conn.; R.

Miami,

Walker,

Fla.-;

Dean

Palisade, Nebr; Philip
LeBoutillier, New York, N. Y.; J.
H. Frost, San Antonio, Tex., and
Krotter,

E. B.

Tilton, Milwaukee, Wis,. Dr.
Walter E.Spahr, Executive ViceEconomists' Na¬

of the

President

Committee

tional

Monetary

on

Policy, has agreed to serve, exofficio, as Economics Counsellor to
the

George F. Bauer, a

League.

Export Manager of the
Automobile Manufacturers' Asso¬
ciation
and
International Viceformer

Chairman,

of

Board

York

New

Security for the certificates will to provide for not exceeding 80%
new
standard-gauge railroad of the cost, estimated at $2,597,000,
equipment estimated to cost not of 300 refrigerator cars.
less than $18,720,000. This equip¬
ment consists of sixteen 6,000-hp.
Konselman Opens
Diesel electric freight locomotives;
two

6,000-hp. Diesel electric pas¬
lop, Mobile,
senger locomotives; two 1,500-hp.
Diesel electric road switching lo¬
Ala.; John B. June 24, 1949 (Kansas City, Mo.)
Knox,
Oak¬
Bond Traders Club of Kansas comotives; 440 gondola cars; and
land, Calif.; City
Summer
Outing at Lake 802 steel flat cars.
Minaki Lodge,

B.

and

Co. Inc.

Trade, will act on group activities
and coordination.

1949

24-26,

(Los

Angeles,

1949 (New York City)
Investment Association of New

June 24,

annual outing at the West¬

Club, Rye, N. Y.

chester County
June 24,

Bond
nual

Associated in the offering were
R.
W.
Pressprich & Co.; Bear,
Stearns

Calif.)

Security Traders Association of
Los Angeles annual spring party
at the Arrowhead Springs Hotel.

York

1949 (Toledo, Ohio)
of Toledo 15th an¬

Club

outing at Inverness Country

&

25, 1949 (Chicago, 111.)
Bond Traders Club of Chicago
annual summer outing at the Nor¬

Co.;

Mullaney,

Wells

&

"A sound money system,'' Mr.
McKenna says,."is needed urgently
now
to stop further discourage¬
ment of private enterprise, to give
back to
vate

people control of pri¬

our

enterprise,

to

give

back

to

people control over their pub¬
lic purse and to halt the menace
of printing press money."
"The-League, through its Na¬

.our

•

tional,

and local
familiarize the

District

State,

plans

leaders,

to

general public by means of gather¬
ings, .forums,
radio,
television,
.press articles, addresses and other

.with the full significance
sound money system and with

.means,

.of

a

;the needed corrective measures"
"The League will provide a way

.

;by which
.who desire

a

responsible people

all

at

the

fine

rate

gold

redeemable currency
of

may

$35

per

ounce

cooperate and

of
as¬

sist, each other in study and wide¬
spread information

this matter.
Members of the League will work
together in support of the efforts
of the Economists'

mittee

on

on

National Com¬

Monetary Policy which

will continue to operate, as

it has
technical level
independently of all other

.for 16 years; at the

and

^organizations. The League hopes
tto have the benefits of the advice
I and counsel of members of that
.Committee.
t

"Both

*

*

..

7

-

Organizations

«

together

should provide--a nationwide sound
i

currency

movement

like that of

'the Reform Club Sound Currency

1891-1901, which
tsucceeded in making plain to the

June

1949

28.

will

Bankers.

and their representatives
jthe facts which led to the enact¬
ment of the Gold Standard Act of
11900.

The central purpose of

(Pittsburgh, Pa.)
of Pittsburgh Fall
Chartiers Country Club.

Sept. 9, 1949
Bond Club

Outing at
Oct

the

5-9, 1949

(Colorado Springs

Colo.)

.Gold Standard League, like that of

National

Security Traders

,the Economists' National Commit¬

sociation

tee on-Monetary Policy is to point

The Broadmoor

out the circumstances

which make

Annual

Convention

Hotel.

As¬
at

ROBERT

H.R.

3262,




,

-

at

record

,

(15c) per share
the capital stock
July 15,
1949 to

the

S.

close

STOUT,

of

business

Secretary.

DIVIDEND NO. 31

The Board

BROWN, Treasurer.

of

Directors has declared

terly dividend of 20 cents
mon

AMERICAN OAS

-

be

w

per

share

a

quar¬

the

on

com¬

stock, payable July 1, 1949 to stockholders

of record June 23, 1949.

Transfer books will not

closed.
SYLVAN COLE,

COMPANY

Chairman of the Board.

Dividend

A

on

of

Market
shares

40 000

UNITED STATES SMELTINO

Edison

Corp.

was

with

325,000

issued and outstanding in the hands
public has been declared out of the
of the Company,-pay¬
able September 15,1949, to the holders of
such stock of record on the books of the
Company at the close bf business August

of the

16, 1949.

FRANCIS FISKE,
H. D.

Jime 16, J949

ANDERSON, Secretary.

acr.

PACIFIC GAS AND ELECTRIC CO.

of
American Car and

Foundry
DIVIDEND NOTICE

Company
30 Church

Street

Common Stock

t,

and three-quarters per

1949* declared

(1J4%)

second-quarter of the

■

■

■EMP—'

.

common

of

stockholders of record
business

on

June

at

30,

the

1949.

The Transfer Books will not be closed.

closed. Checks will

of

by Guaranty Trust Company
Howard C.

E.
San

Wick, Secretary

J.

Beckett,

Treasurer

Francisco, California

June 16, 1949

Boston, Mass., June 16,1949
a

meeting of the

quarterly dividend of $1.25
share has been declared by

A

Board of Directors of

Boston

per

Corporation held on
June 16, 1949, a dividend of $1.00
per share on the outstanding Capi¬

the

The

tal Stock and

a

First

Board of Directors

dividend likewise of

per

1, 1949. *

~

as

June 24, 1949.
Edward

"■v

■—-—;

the

MORRIS H. WRIGHT

olders
record
of
Eavable ofJuly 7, 1949 the close of
to stock-

business

on

outstanding Preferred Stock of
the Company, payable July 15,
1949, to stockholders of record
at the close of business on July

share on the outstanding
Class A Capi tal Stock were declared
$1.00

population of 204,000.
1

mon

New York.

At

by the company has an es¬

timated

.year of 50 cents
share upon the Company's Com¬
Capital-Stock, Thia-dividend will
be paid by check on July 15, 1949, to
per

close

Transfer books will not be

Staten Island Edison Corp. was

served

the

on

June 28, 1949.

case.

operating utility engaged in the
production, purchase, distribution
and sale of electricity.
The area

cent

-ta

•

of Directors on June 1?,
a cash dividend for the

dividend of one

preferred stock of this Company outstanding,
payable July 6, 1949, to the holders of
record of said stock at the close of business

an

Board

The

-

Dividend No. 134

New York 8, N. Y.

mailed

.

r

Vice President

May 24, 1949

J. Costello,

"•

Cleveland, Ohio

Treasurer

New

As
for

Coupon Sheets Issued

Greek Gov.

On

Bonds

paying agent in New York

bonds

of

Greek

BANK OF THE CITY OF NEW YO«C

THE CHASE NATIONAL

Government

5% Loan of 1914, J. P. Morgan &
The Chase National Bank of the City of New York
a

dividend of 40»S per share on

stock of the Bank,
at

,

Treasurer,

f

June 22, 1949.

be

COMPANY

twenty-five rente (25/) Tier share on the
Common Capitol Stock, Both payable on July
15, <H)4fl to «lnck holder* of record at the cloat
of business June 27, 1949.

There has been declared a

dividends in each

MINING

AND

of

surplus net earnings

made

shares

REFINING

The -Directors
have
declared a quarterly
dividend of \%% (87U cents per uiare) on
the Preferred Capital Stock, and a dividend

pany>

of

urgent the enactment

Bill

B.

regular quarterly dividend of Seventy-five Cents (75c) per share
for the quarter ending September 30,1949,
on the Common capital stock of the Com-

Dec. 4-9, 1949 (Hollywood, Fla.)
Co.
Incorporated
are
advising
of the Reed
Investment Bankers Association bondholders
that
new
coupon
designed to give Annual Convention at the Holly¬
sheets may now be obtained upon
,the United States a redeemable
wood Beach Hotel.
application at their office, 23 Waif
.currency
defining the dollar as
Dec. 9, 1949 (New York City)
Street, New York 8, N. Y. Bond¬
l/35th of an ounce of gold."
New York Security Dealers As¬ holders who have not already ob¬
sociation 24th Annual Dinner at tained such new coupon sheets
Joins Continental Securs.
the Hotel Pierre Grand Ballroom. should present their bonds to¬
gether with talons promptly inas¬
(Special to The Financial Chronicle)
much as the Greek Government
GRAND -'RAPIDS,' MICH. —
With David G. Means
has announced that no partial pay¬
^Special to The Financial Chronicle)
!
Gilbert
C.
Klinkner
has
been
BANGOR, MAINE.—Charles F. ments may be made after Dec. 31,
added lo the staff of Continental
1949 on coupons due March 1 and
Securities Cn., Inc., People's Na¬ Brooks has become affiliated with
Sept. 1, 1940 and March 1, 1941.
David G. Means, Pearl Building.
tional Bank Building.

<

v

on

payable

DELAWARE, INC.

open.

Common Stock

Mill

Association
1949
meeting
at
the Gearhart
Hotel, Gearhart, Oregon.
Investment

remain

_

Grove, incorporated in February 1923 and
in
July of the same year
it
North Park.
acquired the electric properties
Sept. 9-11, 1949 (Oregon)
and franchises of Richmond Light
J Pacific Northwest Group of the and Railroad Co. The company is
Picnic 'at

this day

1949,

OF

1,

presently outstanding stocks con¬
sisting of 2,725 no par preferred

Club of Pittsburgh

Summer

16,

per

July

shares and

•Association..of

people

Offering

together

Pa.)
Mid-

declared

Corporation

NATIONAL SHIRT SHOPS

the American Man¬
declared a dividend c.
share on the Common Stock, payabh
1949 to Stockholders of Record at th'
close of business June 22, 1949.
Transfer book:

25c

AND ELECTRIC

260,000 no par common
Club Golf Tourna¬
shares. Upon completion of the fi¬
ment at Siwanoy Country Club,
nancing, the company's outstand¬
Bronxville, N. Y.
ing capitalization will consist of
July 1, 1949 (Philadelphia, Pa.)
$2,750,000 first mortgage bonds
Investment Traders Association
$4,000,000
preferred
stock
and
of Philadelphia Annual Summer
$6,500,000 common stock.
Outing at the Whitemarsh Valley
The new preferred stock will be
Country Club.
redeemable at the option of the
July 8, 1949 (Louisville, Ky.)
company
at
$106.25
per
share
Bond Club of Louisville Annual prior to May
1, 1952, and at $105.25
Outing at the Sleepy Hollow Club. per share thereafter, plus accrued
July 27, 1949 (Pittsburgh,

Corporation

cents

Brooklyn 22, New York
The Board of Directors of

ufacturing Company has

Co.,

new $20
(Pittsburgh, Pa.)
par common stock, will
Bond Club of Pittsburgh Spring be delivered to General Public
Outing and Golf Tournament at Utilities Corp. in exchange for all
St. Clair Country Club.
of the
Staten
Island company's

Bond

June

AMERICAN MANUFACTURING COMPANY
Noble and West Streets

Co., Inc.

June 28, 1949

Twenty

been

the

fifteen

JOSEPH

4.90%

Island

1949 (New York City)
New York Curb Exchange Five

Shares

of

stockholders of
June 30, 1949.

DIVIDEND NOTICES

(Omaha, Neb.)
June 17 by an underwriting group
Nebraska
Investment
Dealers beaded by W. C. Langley & Co
Bond
Club spring frolic at thfe The stock was priced at $103.25
Omaha Country Club, to be pre¬
per share and accrued dividend.
ceded by a cocktail party June 27
Proceeds from the sale of this
at the Omaha
Athletic Club in
stock, to the extent of $4,000,000,

June 28,

dividend

has
of

June 28, 1949

honor of out-of-town guests.

DODGE, Treasurer.

14 WaU Street, New York

J,

A

ing.

series, $100 par value cuparty at the Lochmoor Club;
fmulative preferred stock of Staten
Grosse Pointe Woods, Mich.
mer

v

National
,

Stafen Island Edison
Preferred

Detroit and Michigan annual sum¬

the close

securities business from

a

/"Y

(Detroit, Mich.)

at

August 12, 1949.

E.

//

Securities Traders Association of

and

in

.COLO.

on

H.

offices in the Independence Build¬

.

;

payable September 12, 1949,

shareholders of record

is~engag-

S. Konselman

Albert

ing

SPRINGS,

one dollar
($1.00)
share has been de¬
Capital Stock of this

per

the

on

Company,
to

Co.; McMaster Hutchinson

June

Country Club.

COLORADO

Securities

and F. S. Yantis &

Dividend of

A

(Canadian)
clared

Chronicle)

to The Financial

Bay Mining

Smelting Co., Limited

of business

Co.; Blair & Co., Inc.;
Corp.; Gre¬
gory & Son, Inc.; Hornblower &
Weeks;
Merrill
Lynch,
Pierce,
Fenner
&
Beane; Otis & Co.;
Phelps, Fenn & Co.; L. F. Roths¬
child & Co.; Graham, Parsons &
Co.; Hayden, Miller & Co.; The
Illinois Co.; Wm. E. Pollock &
Co., Inc.; Swiss American Corp.;
Clayton Securities Corp.; Free¬
man

and

&

Equitable

&

Club.

dic Hills

(Special

Ontario.

Quivira Country Club.
June

Hudson

be

al-

have

ready

Edwin

—

DIVIDEND NO. 39

Field

those

Among
who

Investment

In

Union.

t.he

>

to The Financial Chronicle)

-

.w

Standard League to

Gold

the

of

now

(Special

PORTLAND. MAINE.

Boynton has become associated
Halsey, Stuart & Co. Inc. won with Townsend, Dabney & Tyson,!
He was for-'
associated underwriters won the the award June 15 of $2,060,000 184 Middle Street.
award
June
22
of
$12,480,000 Chicago Burlington & Qunicy RR. merly with Timberlake & Co.
Southern Pacific Co. equipment 2% equipment trust certificates,
trust series BB, 2%% equipment due $103,000 semi-annually from
With Titus-Miller
trust certificates, due $832,000 an¬ Dec. 1, 1949 to June 1, 1959, in¬
(Special to The Financial Chronicle)
clusive.
Issued under the Phila¬
nually
July
1,
1950-1964,
in¬
ANN ARBOR, MICH. — Wayne
clusive.
The certificates, issued delphia plan, the certificates were
G. Cowell has been added to the
under the Philadelphia plan, were reoffered, subject to authorization
staff of Titus-Miller & Co., State
reoffered, subject to authorization by the Interstate Commerce Com¬ Savings Bank
Building.
*
by the Interstate Commerce Com¬ mission, at prices to yield from
mission, at prices to yield from 1.20% to 2.325%, according to ma¬
DIVIDEND NOTICES
1.40% to 2.70%, according to ma¬ turity.
turity.
The certificates will be issued
Stuart &

Halsey,

Pennsylvania business leader heads group aided by State Chairmen.
Sound dollar sought to encourage enterprise and stpp fiat money

*

; 47

(2743)

CHRONICLE

FINANCIAL

&

COMMERCIAL

THE

Number 4814

169

Volume

has dedared

the 7,400,000 shares of the capital

payable August 1, 1949 to holders of

record

the close of business July 1, 1949.
The transfer books will not be closed

payment

of this dividend.

"■«»

in connection with the

ribinf

1

1

•

u

I' { '5

rv

THE CHASE

NATIONAL BANK

OF THE CITY Of NEW
'

'•

'

a.Hggcr

'if.--

YORK

=•

'

Vice President and Cashier

'mr?

48

COMMERCIAL

THE

(2744)

FINANCIAL

&

CHRONICLE

Thursday, June 23, 1949

Canada Described
New Oil Frontier

BUSINESS BUZZ
on.
from the Nation's

Ultimate

A y* gM
XM.ll/U

Beluml-the-Scene Interpretations

Capital

as

recovery there held
likely to exceed that from

m

JL C'it

West Texas.
The discovery of major oil fields
in Canada "is one of the most ex¬

WASHINGTON, D. C.

—

There is

entirely

an

citing developments

look to the

new

American

•question of foreign military aid.

It will involve preponder¬
antly new equipment rather than
onere transfer of military surplus.
Only several months ago the
^discussions of foreign aid in arms
indicated a relatively minor role
to the latest equivalent to lend-'

the

Furthermore,

this

may

will

sum

possibilities
Russia by

defense

of

Exchange:
firm's research

do

department.

The

comments

Western Europe will

defended, it will be

1 o gued a
special study
entitled,

p r o

as¬

serted.

Western Europe, so went the

*

thinking at that time, was be¬
ginning to fidget under its mili¬
tary helplessness to stop
the
Reds, when, as, and if the Reds
were to move. The job of outfit¬

Even if

little use.
goods

war

to

'

a

ern

for

model

Truman

did for

what

the

Roosevelt.

make

may

in West¬

Europe, the stated objective

Now

see

here

be

]

which

wants

to

own

economic recovery, or trying

Hence, the foreign military aid
program was

in fact subsidiary to

was an

extra contribution

keep the Europeans
Happy over accepting U. S. recov¬
ery money and willing to use it to
go to work.
to morale to

With
came

which
understand¬

outlook,

that

to have

some

ing in this capital, the foreign
military aid was not taken very
seriously. Numerous reports

during the worry
era) emphasized
that a greater part of at least
the first year of foreign arms
(particularly

-over

aid
i out
f in

inflation

would

consist

of

shipping

surplus military igoods
the

hands

the

of

now

services.

! Hence the foreign military

aid
would have neither an
i inflationary
effect upon the
U. S. economy (or later) result
in actually very heavy expenses,
since much of the money would
program

■

:

*

*

;

of goods which they let

sure,

scheme

result
been

of
in

zero.

reorganization,, the
accomplishment has

cine, biology, mathematics, phys¬
ics

Four years after V-J

Day there still is no overall
fresh

a

attempt

to

scare

in

of the past reorganiza¬
demanded by
President
Truman, the reorganization of
one

the Army, Navy, and Air Forces
the National Military Es¬

into

tablishment.

ize

the

natural

sciences.

pecularities of the

Con¬

oil

mainly in universities, by con¬ covered fields in the central part
Some contracts might be of the Province into Northwest
to private industrial labora¬ Territories, in a formation similar
to
the
Permian Basin in West
tories.
let

the economy for the war it

A group of 24 carefully selected
top grade scientists would guide
the management of the National
Within a short time the National
Science Foundation, according to
Science Foundation bill, after al¬
the theory of the bill.
However,
most
a
four-year argument, is
the outfit would be run by a Di-.
likely to become law.
Although
ger.

*

«

West Texas.

"The future area of Alberta

tracts.

plan to mobil¬

*

ultimate recovery of

on

Truman Administra¬

ij:

Canada

contain five to ten billion
barrels
of
oil,
compared with
seven
billion
barrels estimated

may

production," the study states, "is
research "in education," currently viewed by certain lead¬
whatever that may mean.
ing oil officials as a broad circle
The research would be carried extending from the recently-dis¬

foreign military aid appropria¬
a

other
of

meanwhile,

Western

basic

will say is an ever-present dan¬

created

industry,
that

stated

has

bill is that it would also subsidize

gress about war, in order to get

tions, the

and

One

war

Board.

Texas."

of

The three Prairie Provinces

Alberta, Sas¬
katchewan and Manitoba—consti¬
Western

tute

Canada

—

ecnomic unit with respect

an

consumption, the study add¬

to oil

rector who would hold office at
ed,
and
"it is
expected that
this bill sets forth into another
the nleasure of the President of Prairie
reorganization
refinery capacity will be
potentially large area of Federal
it, the National Se¬
the U. S.
increased to around 70,000 barrels
curity Resources Board was sup¬ activity, it is now being passed
daily by the end of 1951" com¬
with very little attention, partic¬
Industry' is said to have sup¬
posed to plan the mobilization of
pared with current production of
ported the bill with misgivings.
ularly on the assurances of the
the nation's
economy for another
some
60,000 barrels. Production
Administration that it is, from a
If NSF were limited in its func¬
war.
In particular it was
supposed
will be allowed to increase very
tions to the area outlined in the
to blue-print and define
definitely monetary standpoint, just small
substantially as soon as pipeline
bill, it might promote research
the jurisdictions of the civilian
potatoes. The committee which
facilities can be completed.
in areas where industry and en¬
agencies which would administer
reported out the bill in the House
dowed universities are not oper¬

Under

the

new

which created

the

vast

controls of another

war.

This NSRB did. However, be¬
fore NSRB had a chance to sub¬
mit its planning to the White

House,

all

the

government

left

out

slipped
door

of

in

of

other

civilian

the

that

the

cost

would

per

year.

/; / •

Basic

job

of

V-

the

planning,

war

back
and

the application to industry, the

White

House

arts,

or

of the basic scien-

war

United States.
NSF

they
;

submitted his plan. The Presi¬
dent listened to
complaints
against the unsubmitted NSRB
plan, and acted upon those com¬

Congress has been in no mood
of excited anticipation over the
prospective
Truman lend - lease

:

plaints.

NSF

would

it

promote

basic

is

say.

is

will

tific knowledge.

Arthur

Hill, NSRB chairman,
to "resign" before he
formally

On the other

subsidize

students

Ralston Steel Car

not
be

a

*

f

.

Oregon Portland Cement

Riverside Cement A & B

only a small thing—so
If 10 years from now
10 times as large, that
precedent in terms of

Spokane Portland Cement
.;

•Latest

•

Figures

\

'.K

1

•

>

'

,

■

Available

the last 17 years.
re¬

(This column is intended to re¬
flect the "behind the scene" inter¬
pretation from the nation's Capita
scientists. It would award con¬ and
may or may not coincide wit}
tracts for basic research in medi¬ the "Chronicle's" own views.)

search in various ways.

Trading Markets:

trial and scientific research in the

as
promoting "basic research."
This is to be distinguished from

the

'

ating..'.,

hand, if NSF were
"
; /;•. ever to be given large sums, it
could probably dominate indus¬
National

Science Foundation is described

through

the

estimated

"level out" at around $25 million

were

agencies that

successfully knifed the NSRB
planning. Mr. Truman allowed

go.;

program. In fact, unless the White

Wilbur, you're just looking at the
market reports"

quite

tion is without

was

almost entirely in Alberta,
one billion barrels. A

around

petroleum
"Are you

note the experience of the Na¬
tional
Securities
Resources

This board

important Canadian oil of-

recognized U. S. authority on the

mobilizatftm plan. On the eve of

Those who are far from san¬
guine about the great and boun¬
tiful benefits of
reorganization,
as retailed
by Herbert Hoover,

go for nominal reimbursement
of the Armed Services for stocks

;

at

spend,

tions

to make ECA work.

ECA. It

*

program.

•

cial, according to the study, esti¬
mates crude oil reserve discovered
to date,

re¬

Nevertheless,' Western Europe and (2) can promote good busi¬
dtill fidgeted over its impotence to ness management in a government
put up a good fight against the which has at least its share of
Reds. Sa after a long study, it was mediocrities
for
administrative
decided to go forward with a heads.

George Weiss

two

past

An

fm

organization all by itself (1) can
promote economy in an Admin¬
istration

This limited
program would not equip Europe
to stop the Reds, but it would re¬
lieve the countries concerned of a
little
of
their jitters.
It was
necessary to get them over their
Adgets
to get
them knuckled
down to work promoting
their

606(fr

watching

whether governmental

in

there, to learn at first hand cur¬
rent thinking and planning."

argu¬

if

will

four

has evoked
such wide¬
spread interest, Mr. Weiss stated,
that "we sent our oil specialists

Congress has finally
reorganization
bill,

a

observers

i>

fields

years

any

.

that

approved
to

lively

a

•

of

new

1942

In

discov¬

The
ery

if the Administration should

if

_

\

Bache & Co.

the

,

of ECA.

"small"

in
Oil," just
completed by

the

little

ment.

achievement;

economic recovery

of

be

Alberta during

home, it

years

cally preclude the

to

insist upon all this while Congress
is
irritated
and
anxious to
go

make

stopping of Russia a
hence, the diversion
of U. S. productive capacity to
arms, plus the parallel diversion
of
industry to war goods in
Western Europe, would practi¬
possible

dew

expected

approach, with the deterio¬
rating European and U. S. eco¬
nomic situation, who will assert
that maybe the
1949 design of
lend-lease is expected to
do a

case,

the United States could produce

nufficient

is

new

yond the capacity of the United,
States to handle. An inadequate
of

what

nect

A

—

Frontier

New

Congress there may be a
cynical soul or two who will con¬

atop Russia militarily, was be¬

was

Canada

if

In

ting Western Europe adequately
wth arms to be in a position to

job

if

Weiss''

Mr.

against

be emphasized. Western Europe

be

recent

Stock

the

say.

the job—for the first year.

the North

of Bache & Co. and director of

ner

surplus stocks,

Administration

can

lease.

from

come

can

on
in

years" and its effect on the Domin¬
ion's economy "will be profound,"
according to George Weiss, part¬

seriously. It insists that
the full amount $1,450 million, to be increased by $150 million later,
«
the minimum necessary.
The^
only 10% of the $1,450 million
program must be approved this
The Administration takes the thing very

year.

continent

LERNER & CO.

It would

'

aspiring to be

Investment

10 Post Office

Securities

Square, Boston 9, Mass.

Telephone HUbbard 2-1990

Teletype BS 69

4

Such will happen
often, now
JHfpuse brings aterrific pressure that. the President can initiate
to bear, it may be doubted that governmental reorganizations. The
,.

Congress will hang around long
•enough to give it more than per¬

functory

consideration

after

Atlantic Pact is out of the
And

unless

the
way.

the amount is

pared
something like $400 mil¬
lion, its approval is or at least has
down to

*

looked doubtful.
Now it

,

develops

ministration

that the Ad-

!§ likely to sell for-

eign military aid

.s&oprRassta

v

as

vital to the

program.

It■■

j will

NOT be a case of shipping out
surplus military stocks. In fact,




more

cies

with

HAnover 2-0050

ambitious bureaus and agen¬
the

empire

building
chieftans, will be at work trying
to swipe business from other bu¬

reaucracies,
with

less

,

the

to

those

dercover

bitter

even

<

70

Offices

STREET

Tel. WHitehall 4-4540

'

FOREIGN SECURITIES
oprpr 1T TCTC

^

Trading Department

+

.

' Tf vi")'*

.•

'

50 Broad Street

New York 4. N. Y.

AFFILIATE: CARL MARKS & CO. Inc. CHICAGO

'

120

i

Incidentally; under President
Truman's first and most urgent

WALL

r.ARL MARKS & CO- INC.

warfare,
though little of it gets
,

Executive <ft Underwriting

All Issues

bureaucratic

aired in public.

NEW YORK S

FOREIGN SECURITIES

White

House^. The new reorganization
act, with a President who is naive,
is, a trumpet to widespread, un¬

Hill, Thompsons Co., Inc.

Firm Trading Markets

-

particularly
access

Teletype—NY 1-971

h

r

BROADWAY

Tel. REctor 2-2020

,fnU'