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The 0111intral Volume 136 financial • 1 iirortude New York, Saturday, June 3 1933. Number 3545 The Financial Situation HE Administration bill providing for the elimi- chosen path, with ultimate good as its object, but nation of gold as a medium for meeting the unmindful of the fact that resort to the expedient payment of all obligations—past, present and future of repudiation and dishonor must surely in the end —passed the House of Representatives on Monday bring the penalties which it invites by its mereof the present week by the decisive vote of 283 to 57, tricious conduct. For the moment all this is lost sight of, and only to the satisfaction of all those who would debase of a wholesale the presence of multiplying signs of trade revival, the American unit of value as part scheme for inflating values—a proposal so popular which is concurrently taking place, and is misat the moment—and to the chagrin and mortifica- takenly attributed to the program of inflation tion of those who believe in the sanctity of contracts mapped out,though there are numerous independent and desire to see the American unit of value kept causes to explain this revival, and, indeed, actual unimpaired and the credit of the Government pre- inflation has not yet occurred;—at present only this served at the high standard which every Administra- attracts attention. When, however, prosperity gets tion of the Government, of whatever political faith, under full swing it will, we may be sure, be recoghas deemed it its bounden duty to defend and protect nized that the undermining of the country's standever since resumption of specie payments on Jan. 1 ard of values constitutes a bar upon the permanence 1879, following the long period of greenback infla- of trade recovery, and then will arise a demand that tion that marked the period after the close of the the hindrances to enduring trade activity shall be Civil War on July 1 1865. In the United States removed by eliminating the shackles which are now Senate an effort is to be made to change the meas- being forged with such frenzied fury. It is to be ure, so far at least as the retroactive feature of the hoped that the popular awakening will not be degold provision is concerned, so that it may not layed until incalculable damage shall have been done be said that the country, through its legislative and an actual setback has developed. This menace body, has deliberately engaged in the violation of can only be avoided by enlightening the public mind, contracts and of pledged faith, but it is known that and every effort must be made to that end. In that view the greatest encouragement must the effort will prove futile. during the last be given to movements like those now being inauguOf all the numerous steps taken three months to debase and to depreciate the intrin- rated by some of the prominent mercantile and sic value of the American unit of value, the gold trade organizations throughout the country. On dollar, this last stab is most to be deplored. It Thursday a resolution was adopted by the Chamber cannot fail to lower the United States in the estima- of Commerce of the State of New York urging Presition of the world, and, in fact, has already done so dent Roosevelt to refrain from any act under present if we may judge by European comment, and it will or future emergency which will tend to impair the surely lower the country in the estimation of our gold standard. This is as it should be, and it should own people with the lapse of time when its character be followed by similar protests from other mercanand significance shall have been driven home and tile and financial bodies throughout the length and its meaning made plain. Now in a momentary ebul- breadth of the land. The resolution was contained lition of frenzied enthusiasm quite common when in a report submitted by Edward P.Maynard,Chairemotion carries the crowd off its feet, the act man of the Chamber's Committee on Finance and is finding wide support. The lure now is the infla- Currency. Mr. Maynard well said that the Chamber tion of values, which is the aim of all the recent should express its opinion that a sound and persimilar moves, on the idea that prosperity can manent recovery in industry and business can be thereby be restored. What captures the unthinking accomplished only by avoiding currency inflation. masses is that there is to be credit and currency He pointed out that any decrease in the gold basis inflation on a scale never before attempted by any of the dollar or any other form of currency debasesolvent nation. The experience of Germany in the ment would prevent permanent recovery and in the years following the war, when billions and trillions end work an injury to the nation's business. The of paper marks were put out, is not exactly in point, resolution was adopted by the Chamber by an overas this represented not a deliberate attempt to de- whelming vote. The action of the New York Chamber should be base and depreciate the mark, as in our case, but aimless floundering about of a country under duplicated in mercantile and financial quarters the going the process of financial dissolution. The everywhere. For the reasons already stated, there United States, on the other hand,is pursuing its own is more or less reluctance about antagonizing the T 3764 Financial Chronicle June 3 1933 policy of the Administration. But the situation is its purport is plain enough. The intention is to as urgent as during the Bryan campaigns of 1896 abolish the distinction between gold and other forms and 1900, and sound money organizations should be of money and to permit payment "in any coin or formed everywhere to combat the threatening evils currency which is legal tender for public and private involved in persistence in the present unfortunate debts." What are the different forms of coin and course. As on those earlier occasions, the sober currency which may thus be tendered in payment of sense of the community should assert itself in vigi- public and private debts, even though there may be a lant opposition to the mistaken policies that are specific declaration for payment in gold? The being so sedulously pursued. Business men with- monthly Treasury statement, which indicates the out regard to party affiliations should unite, sound amounts of money in circulation mentions all of the money Democrats joining with Republicans in form- following: Gold coin, gold certificates, standard ing committees and organizations with a view to silver dollars, silver certificates, Treasury notes of making common cause against the efforts to upset 1890, subsidiary silver, minor coin, United States the country's whole monetary system. The eco- notes, Federal Reserve notes, Federal Reserve bank nomic welfare Of the United States is more seriously notes, National bank notes. threatened than in any of the previous periods when Among all these the only tokens of real value are political campaigns had to be conducted to deal with gold and silver; all the others are paper representathe matter. Not a moment should be lost in engag- tives. As gold is to be no longer available, does not ing in a wholesale crusade against the monetary that at once reduce the country to the silver basis? hallucinations that have taken possession of the And this being so, does not this necessarily defeat party in power. all efforts at genuine stabilization? Remember that Apart entirely from the ethical considerations the interchangeability of the different forms of curwhich count so strongly against this latest move to rency and money as provided under the gold standeliminate gold as the unit of value, a most serious ard Act of March 4 1900 is expressly abolished. feature is that it leaves, and must continue to leave, And if silver is thus to be the ultimate determining the true value of the American dollar always an factor, will not the dollar thereafter be dependent indeterminate quantity. The purpose of Mr. Roose- upon the fluctuations in silver? Suppose the Presivelt is to bring about a standardization of values, dent succeeds in bringing about an international but how is this to be effected, or can it be effected, arrangement for the stabilization of the dollar, in if gold in foreign transactions is to be completely terms of gold, will not the price of silver in the eliminated as a factor? Suppose the gold content markets of the world be the governing factor in fixof the dollar be reduced to the extent of 25% or 40%, ing the value of the dollar? is the new dollar to be merely something to look at. This appears the more likely inasmuch as the since it is not to be used in current transactions? Thomas amendment provides in express terms for Is it to be merely something for contemplation by the unlimited coinage of silver. It is true that the the outside world in the hope that this outside world President, by this same amendment, is empowered will recognize it as symbolic of what we would like to fix the relation between gold and silver, and by to have it regarded? the utilization of that power it is expected to estabSecretary Woodin last week, in undertaking to lish a permanent relationship between the two explain the purpose of the joint resolution by which metals. That relation, thus determined, may not be the statutory departure from the gold standard is 16 to 1, as the silverites would have it; it may be to the taken, observed that gold was not now being 20 to 1 or 25 to 1, but that does not alter the fact paid out, nor was it available for payment upon that with huge masses of silver constantly injected public or private debts, and went on to say that into the country's monetary system, silver will rerecently the Thomas amendment to the Farm Relief main the governing factor in any event, especially Act had made all coins and currencies of the United as the production of silver is certain to be enorStates legal tender for the payment of every debt, mously increased under the plan for the rehabilitaboth public and private. Th;e, however, to the lan- tion of the white metal which lies at the bottom of guage used in the amendment, doubt had arisen the whole scheme. The Thomas amendment deserves whether obligations expressed as payable in a par- to be carefully studied in the light of that circumticular kind of money, such as gold coin, might be stance. satisfied by payment in other forms of legal tender. It may be deemed an exaggeration to say One of the purposes of the joint resolution, he ob- that the Thomas amendment provides for the unserved, is to remove any doubt and to avoid confu- limited coinage of silver, but the language is clear sion, so that debtors and creditors may have a clear and unmistakable on that point. We published the definition of their legal position. Another purpose full text of the Farm Relief Act containing the of the joint resolution, he declared, is to make clear Thomas amendment, or inflation rider, in our issue that future obligations, public and private, shall not of May 20, pages 3415-3420, and by reference to page contain the gold clause. The Thomas amendment 3420 it will be found that under Title III, Section (or inflationary rider) did not contain specific pro- 43, Subdivision (2), the President is empowered "by vision to this effect. "Such a provision is contained proclamation to fix the weight of the gold dollar in in the resolution. The resolution makes it clear that grains nine-tenths fine and also to fix the weight all obligations, past and future, will be upon the of the silver dollar in grains nine-tenths fine at a same footing." definite fixed ratio in relation to the gold dollar at This makes it important to examine anew more such amounts as he finds necessary from his investiclosely and more minutely the provisions referred gation to stabilize domestic prices or to protect the to as set out in the Thomas amendment. As was foreign commerce against the adverse effect of depointed out by us last week in our comment upon preciated foreign currencies, and to provide for the the joint resolution, while it is not altogether clear unlimited coinage of such gold and silver at the , what interpretation is to be given to the resolution, ratio so fixed." Volume 136 Financial Chronicle 3765 There is no limit of time asto the application of this Civil War. Evidently it is time for the whole 'citiprovision, and therefore it continues indefinitely, zenry to bestir itself so as to guard against the danuntil the amendment is altered or once more removed gers that threaten if the Administration persists from the statute book. There is a further provision in its present course and thereby invites such serious relating to silver—Sec. 45(a)—by which the Presi- ill consequences. dent is authorized to accept silver in payment of UST now the country is being confronted with all the whole or any part of the principal or interest j sorts of anomalies, and not the least of these any foreign govnow due, or to become due, from account of any indebted- is the congestion of unemployed funds at the moneernment or governments on ness to the United States, such silver to be accepted tary centers of the country, at the very time when at not to exceed the price of 50c. an ounce in United the country is being prepared for a new era of credit States currency. This provision is limited to a and bank inflation with the view to carrying out period of six months from the date of the passage of the schemes of the new school of theorists for the the Act, and the aggregate of the silver accepted may social and economic regeneration of the country. not exceed $200,000,000, but there is absolutely no A striking instance of the kind has been witnessed termination prescribed for the coinage of silver, and, the present week. The New York Clearing House as a matter of fact, as is evident from the excerpt Association, after having repeatedly reduced the quoted, the language itself says "unlimited" coinage rate of interest allowed on deposits, has felt itself of both gold and silver at the ratio determined upon. impelled to make a new cut in the rate. In the case Evidently there is to be silver galore, and in such a of deposits payable within 90 days, the reduction state of things, can the country escape dropping to a amounts to a full 50%,the rate having been reduced of 1% per annum, the new / from 1 2 of 1% to silver basis? It will be a marvel if it does not. effective yesterday, June 2. A further portion of the Thomas amendment, or rate having become inflationary rider, provides that "in case the Gov- This is the lowest rate ever fixed by the Clearing l ernment of the United States enters into an agree- House, and at the extraordinarily low figure of y of 1% is obviously close to nothing. The banks, of ment with any government or governments under the terms of which the ratio between the value of course, have no alternative, since they are so overgold and other currency issued by the United States loaded with idle funds that money is virtually unand by any such government or governments is lendable. Evidence to that effect is seen in a conestablished, the President may fix the weight of the current further reduction the present week in the gold dollar in accordance with the ratio so agreed open market rate for bankers' acceptances. A reduc/ upon, and such gold dollar, the weight of which is tion of 18 of 1% in the discounts for bills of all so fixed, shall be the standard unit of value, and all maturities was made on Thursday, bringing the disforms of money issued or coined by the United States count for bills running from one to 90 days down 2 shall be maintained at a parity with this standard to only V of 1% bid and % of 1% asked. Let the and it shall be the duty of the Secretary of the reader ponder well the degree of congestion involved Treasury to maintain such parity." This direction in rates down to such abnormally low figures. In other forms of borrowing, rates are quoted on to maintain other forms of money on a parity with the gold dollar has served to obscure the presence the same diminutive basis. Call loans on the Stock of the provision for the unlimited coinage of silver Exchange command only 1% per annum, while outand to disarm criticism, on the supposition that it side the Stock Exchange loans on demand are freely / meant the continuance in force of the similar pro- obtainable at only 1 2 of 1% per year. The United vision under the Gold Standard Act of March 14 States Treasury is now selling 91-day Treasury bills 1900, but the declaration, it would seem, is now ren- on a discount basis of only 0.32% per annum, that dered entirely nugatory and non-existent by the having been the rate realized at a sale of $100,352,000 joint resolution which undertakes to pull the coun- of 91-day bills on Friday of last week. Yet the Fedtry's monetary system off the gold basis by statutory eral Reserve banks, by direction of the United States enactment, and which, among other things, provides Treasury, have just resumed the purchase of United that "Every provision contained in or made with States Government securities, $25,114,000 having respect to any obligation which purports to give the been acquired last week and $27,866,000 the present obligee a right to require payment in gold or a par- week on the assumption that what is needed is more ticular kind of coin or currency, or in an amount bank credit, while the exact reverse is the case, as in money of the,United States measured thereby, is money market conditions so palpably demonstrate. declared to be against public policy; and no such The incidental harm is completely overlooked. provision shall be contained in or made with respect One phase of this is the inability of the banks to to any obligation hereafter incurred"; further, that make an adequate return on their capital and re"every obligation heretofore or hereafter incurred, sources, a circumstance which is being completely whether or not any such provision is contained overlooked. The banks have had most serious therein or made with respect thereto, shall be dis- troubles to contend with during recent years, as is charged upon payment, dollar for dollar,in any coin evident from the crop of bank failures which has or currency which at the time of payment is legal overwhelmed all parts of the country. The time has certainly arrived when the banks ought to be tender for public and private debts." It is thus made evident that other grave dangers allowed to earn a decent rate Of return, which means beset the country by reason of the new monetary that they ought to be relieved from the constant and economic program projected, entirely apart injection of new credit through open market purfrom the fact that the Federal Reserve banks are to chases of United States Government securities, the put afloat $3,000,000,000 of new credit, and that the proceeds of which find their way into the banks. It President also has authority to put out another is safe to say that at the present low levels of return $3,000,000,000 of greenbacks under an Act put on the banks are close to a starvation point. And their the statute book back in 1862 at the time of the future will not be assured until they once more 3766 Financial Chronicle June 3 1933 can find more remunerative rates of return. They and other Treasury currencies. Upon making the ought to be allowed to operate under normal con- substitution the Treasury deposited gold certificates ditions, when proper correction would soon ensue, with the Federal Reserve banks. instead of being overwhelmed with new supplies Federal Reserve notes in circulation further deof funds at a time when they are obliged to struggle creased during the week from $3,221,429,000 to so fiercely to put to profitable use the vast masses $3,203,102,000, but the greater part of this reduction of idle funds that now clog the market. Purchases was offset by an increase in the amount of Federal of United States Government securities through the Reserve bank notes in circulation, against which no open market operations of the Reserve banks merely cash reserves are required. This is becoming a growadd to their difficulties, since the proceeds of such ing item, and it increased during the week from $84,sales, as already stated, ultimately lodge in the 211,000 to $96,280,000. The deposit liabilities are banks, thereby deferring the coming of the brighter also a little larger this week at $2,393,773,000 day of which they stand so sadly in need. against $2,392,817,000, but this is entirely due to the increase in Government deposits from $37,668,000 HE Federal Reserve condition statements the to $72,328,000, member bank reserves (the principal present week bear witness to the fact that the item in the deposits of the Reserve banks) having policy of adding to the acquisitions of United States fallen off from $2,194,390,000 to $2,166,721,000. As Government securities is continuing actively under a result of the decrease in Reserve note liabilities way. After purchases of $25,114,000 of such securi- and the increase in the gold holdings, the ratio of ties last week, there have been further purchases of total gold reserves and other cash to deposit and $27,866,000 the present week. As it happens, how- Federal Reserve note liabilities combined has moved ever, the experience this week has been the same as up somewhat further, rising from 67.8% to 68.0%. that of last week, namely, that there has been no As previously noted,the Federal Reserve Board now expansion in the volume of Reserve credit afloat, includes an item previously designated as non-Renotwithstanding the taking over of the large extra serve cash with "other cash" in computing the Reamounts of United States securities. As the pro- serve ratios. The amount of United States Governceeds of the purchases of Government securities find ment securities pledged as part collateral for Fedtheir way into the banks, the effect is to diminish eral Reserve notes increased during the week from the borrowings of the member banks. It is not $471,900,000 to $480,900,000. The holdings of acstrange, therefore, that the discount holdings of the ceptances for account of foreign central banks keeps 12 Reserve institutions, which reflect member bank slowly diminishing, and the present week the amount borrowing, have further decreased during the week declined from $36,770,000 to $35,731,000. At the from $312,165,000 to $301,974,000. At the same same time foreign bank deposits have dropped this time, the holdings of acceptances purchased in the week from $15,867,000 to $7,848,000. open market have further dropped from $42,662,000 to $19,862,000, this being due presumably to the ma- ri"HE appearance this week of the annual report turity of bills at a time when there is no occasion of the New York Central RR. for the calendar for the banks to go to the Reserve banks with new year 1932 attracts attention chiefly as showing how supplies of bills. even a railroad property of the superb strength of this The result altogether is that the volume of Reserve great railroad system is bound to suffer in a period credit afloat, as measured by the total of the bill of such unparalleled depression as the country has and security holdings, has fallen during the week experienced during the last four years. The Central from $2,221,925,000 tt• $2,216,237,000, notwithstand- failed to earn its fixed charges in 1932 by the sum ing that the Reserve banks have enlarged their hold- of $18,326,550—something that would have been ings of Government securities from $1,861,712,000 deemed unbelievable only a few years back. A mere to $1,889,578,000. This again illustrates the point cursory examination of the figures shows that the we made last week that itis easier to decree inflation unfavorable outcome has been due entirely to a through the employment of Reserve credit than to shrinkage in the volume of traffic and revenues in bring it about. However, future purchases of Gov- a degree and to an extent that has no parallel in ernment securities ought to make a deeper impres- railroad history, the experience in this respect of sion and give effect to the inflation program, since the New York Central System having been like that the acceptance holdings are close to the vanishing of all other railroads without any exception. In the point and the discount holdings are down to low previous calendar year railway operating revenues levels. It should be noted, furthermore, that money fell from $478,918,347 in 1930 to $382,190,182 in in actual circulation did increase $17,000,000 the 1931; in 1932 there was a further drop to $293,present week, while last week it showed a decrease 636,140, showing a decrease for the two years comof $57,000,000. bined in the prodigious sum of $185,282,207. DrasGold holdings of the 12 Reserve banks further tic reductions reduced the operating expenses during increased during the week from $3,499,234,000 to the two years in the huge sum of $149,552,797, but $3,519,898,000, and as explaining these increases this, nevertheless, left a loss in the net revenue for from week to week, although there are now no im- the two years in the sum of $35,729,409, these net ports of the metal ,of any great consequence and revenues from railway operations having first been the hoarded gold would appear to have been nearly reduced from $102,188,929 in 1930 to $75,124,502 in all dislodged,the New York "Times,"in its financial 1931, and now to $66,459,520 in 1932. column, had an item saying that it has developed Fortunately, the indications now are for greatly that under the Thomas amendment to the Farm Re- improved results in the near future. Train loadings lief Act, which makes all coin and currency legal for current weeks demonstrate that the volume of tender, it is possible for the Treasury to substitute tonnage is now exceeding that for the corresponding other forms of currency for some of the gold that it weeks in 1932. This, if maintained, as seems likely, has held as reserves against National bank notes affords the promise of larger gross revenues, and T Volume 136 Financial Chronicle 3767 that,in turn, means improved net results—probably eral upward course,of stock prices. The bond marin much greater proportion than in the case of the ket continued to display strength throughout the gains in the gross revenues, since running costs have week, though Chicago Rock Island & Pacific sufbeen greatly reduced as a result of wage reductions fered a sharp decline on the news that the Railroad and various economies in the operation and admin- Credit Corporation had refused to grant any further istration of the property. As a matter of fact, the loans to the company. On the other hand, the return for the month of April, made public the pres- Southern Railway bond issues speeded up with ent week,shows an increase in the net revenues from great rapidity on the favorable statement of earnrailroad operations, in face of a large loss in the ings which the company submitted for the month of gross revenues. For the first quarter of 1933 there April. was a further large shrinkage in gross and net revOn Thursday the course of prices still continued enues alike—$19,144,304 in gross and $4,916,169 in upward, aided by the fact that all the commodity net. For the month of May, on the other hand, with markets yielded to the general influence of buoyancy $4,433,992 loss in gross operating revenues, there and again came under the spell of the speculative is a gain in the net revenues of $714,671. With gross fever, establishing further violent advances. The earnings now running equal to or above those for copper shares were whirled up on a rise in the price 1932, continued gains in net appear to be assured, of copper to 8c. a pound, and the oil stocks attracted opening a correspondingly brighter vista for the buying by reason of the marking up of gasoline future. prices in New Jersey. The fact that so many business indications pointed to increasing trade activity HE New York stock market this week has shown proved a further stimulating agency. Electric unalloyed buoyancy, with further very striking power production for the week ending May 27, advances in prices. New manifestations of the deter- it appeared, made the best comparison of the year, mination to carry out the Administration policy showing total production of 1,493,923,000 kilowatt of inflation have been the main factors in this re- hours, or 4.8% above the corresponding figure in newed exuberance, while the multiplying signs of 1932. It seemed certain also that the carloadings activity in all branches of trade and business have for the same week, when compiled, were likewise contributed to the same end. On Saturday last the to show another increase over the corresponding news which came in the afternoon of the day before week of 1932, the same as they had for the week that a joint resolution had been introduced in Con- ending May 20. The "Iron Age" reported the steel gress, at the instance of President Roosevelt, pro- mills of the country now engaged to 41% of capacity, viding for the elimination of the gold clause by statu- which compares with 38% the previous week, 35% tory enactment, thus reinforcing the President's the preceding week, 31% the week before, and only own action to that end, had an exhilarating effect, 15% at the beginning of April. The foreign exand led to sensational advances in all sections of the changes continued to run strongly against New Stock Exchange list, while the concurrent rise in York, and reports came of proposed increases in the commodity markets still further heightened the wages from many different quarters. Thus, the feeling of enthusiasm, making the day one of the General Motors Corp. decided on a 5% increase •most noteworthy in Stock Exchange history. The in wages as a matter of corporate policy, leaving sales reached 4,311,340 shares, or the second largest it up to the individual units comprising the company on record for a Saturday half-day session. The fact to decide as to when the increase shall become that all the foreign exchanges again turned strongly effective. Friday saw a repetition of the experience against New York, involving further depreciation of the preceding days of the week, bullish enthusiof the American dollar, accentuated the upward asm indeed running wild, making the day the most swing of prices and added new zest to the specula- sensational of the whole week. The railroad list tive boom. On Monday the buoyancy remained un- manifested strength because many different roads abated, even though some commodities, like grain, were able to show in their weekly reports for May displayed a soberer tone. Profit-taking was on a larger carloadings than in the same week last year, large scale, prompted by the great rise in prices that and also because quite a number of roads (though had occurred, and influenced also by the fact that by no means all) were able to report improved net Tuesday was Memorial Day, when the Stock Ex- earnings in their returns for the month of April— change would be closed and many holders were dis- the Southern Railway being a conspicuous instance inclined to carry any large blocks of-stock over the of the kind. As showing the general upward course holiday. The foreign exchanges kept turning of commodity values, copper sold here in New York against the United States, and showed further de- yesterday at 8c., against 7/ on Friday of last 14c. preciation of the dollar, which appealed to the fancy week; crude rubber for spot delivery sold at 6.50c. of the crowd, on the theory that the lower the Amer- against 5.17c.; spot cotton at New York sold at ican dollar went the greater would be ,the rise in 9.25c. against 9.00c., and the July option for wheat prices, both of securities and commodities, in this in Chicago closed at 733 4c. against 721 8c. Silver / country. On Tuesday, the only American market ruled very steady, being quoted yesterday at of consequence open in the United States was the 19 1 16c. against 18Y on Friday of last week. Of / 2c. New Orleans Cotton Exchange, and this showed a the stocks dealt in on the New York Stock Exchange further active speculation in cotton at another ad- 776 established new high records for 1933 during vance in prices. The European markets recorded the week, while only one stock dropped to a new low the tendency of commodities still upward, and the level. On the Curb Exchange 347 stocks advanced American dollar suffered further depreciation. As a to high levels and three stocks recorded new low consequence, there was a renewed upward spurt on levels. The call loan rate on the Stock Exchange the Stock Exchange, though some realizing sales again ruled unchanged as 1%. gave the Stock Exchange list a somewhat ragged Some further reductions and suspensions of diviappearance at times, but without affecting the gen- dends by corporate undertakings marked the course T 3768 Financial Chronicle of the week, but these attracted little attention, being taken as reflecting past conditions and not what the future may have in store for the properties. The Pure Oil Co. suspended the payment of / the quarterly dividends due July 1 on the 514%,6% and 8% cumul. pref. stocks, and the Holland Furnace Co. omitted the semi-annual dividend due July 1 on its 7% cumul. pref. stock. The South Penn Oil Co. reduced the quarterly dividend on its capital stock from 25c. a share to 20c. a share, and Affiliated Products, Inc., reduced the monthly distribution on its capital stock from 10c. a share to Sc. a share. The Coca-Cola Co. reduced the quarterly dividend on the no-par common from $1.75 a share , to $1.50 a share, and the Coca-Cola International Corp. also reduced the quarterly dividend on its no-par common stock from $3.50 a share to $3 a share. The Wisconsin Power & Light Co. declared dividends of 75c. a share on the 6% cumul. pref. / stock, and 8712c. a share on the 7% cumul. pref. stock; three months ago, the quarterly payment on the 6% pref. stock was reduced from $1.50 a share to $1 a share, and the quarterly payment on the 7% pref. stock from $1.75 a share to $1.16 2/3 a share. Trading has been of large proportions all through the week. On the New York Stock Exchange the sales at the half-day session on Saturday last were 4,311,340 shares; on Monday they were 6,953,640 shares; Tuesday (being Memorial Day and a holiday) the Stock Exchange was closed; on Wednesday the sales were 6,076,350 shares; on Thursday, 4,753,570 shares, and on Friday, 6,877,860 shares. On the New York Curb Exchange the sales last Saturday were 597,721 shares; on Monday, 888,136 shares; on Wednesday,949,610 shares; on Thursday, 671,339 shares, and on Friday, 1,240,250 shares. As compared with Friday of last week, prices are quite generally higher, the gains in most instances being quite large. General Electric closed yester/ / day at 2314 against 211 8 on Friday of last. week; / / North American at 2914 against 2612; Standard Gas Elec. at 14% against 12; Consolidated Gas of & / N. Y.at 58 against 54½;Pacific Gas & Elec. at 2712 / against 24; Columbia Gas & Elec. at 2014 against / 17%; Electric Power & Light at 1038 against 8; / 1 4 / Public Service of New Jersey at 5212 against 49 ; International Harvester at 39% against 36%; J. I. Case Threshing Machine at 76% against 70%; Sears, Roebuck & Co. at 323 against 28½; Montgomery / 4 / 1 2 Ward & Co.at 24 against 22½;Woolworth at 39 / 1 2 Stores at 51 against 51; Westagainst 39; Safeway / ern Union Telegraph at 4934 against 43; American Tel. & Tel. at 1221 8 against 113%; International / Tel. & Tel. at 1714 against 12%; Brooklyn Union / / 4 Gas at 7814 against 773 ; United States Industrial / / 1 4 Alcohol at 47 against 47 ; American Can at 93 8 against 88; Commercial Solvents at 19% ex-div. /, against 18%; Shattuck & Co. at 11 against 978 and Corn Products at 74 against 74. / 1 2 / Allied Chemical & Dye closed yesterday at 11278 against 10414 on Friday of last week; Associated / Dry Goods at 14 against 123 ; E. I. du Pont de / 4 / 1 4 Nemours at 83 against 71%; National Cash Regis/ 1 4 ter "A" at 191 8 against 19%; International Nickel / / 1 4 at 153 against 1418;Timken Roller Bearing at 26 4 / against 25 ; Johns-Manville at 393 against 35; / 1 4 4 Gillette Safety Razor at 16 against 13½; National / Dairy Products at 21 against 1912; Texas Gulf / 1 4 / Sulphur at 2978 against 27½; American & Foreign / 1 4 / Power at 14 against 1078; Freeport-Texas at 40 June 3 1933 against 35; United Gas Improvement at 20 against / 1 4 19 ; National Biscuit at 5478 against 541%; Coca/ 1 4 / Cola at 8878 against 89 ; Continental Can at 58% / 1 2 / against 57; Eastman Kodak at 8278 against 75½; / Gold Dust Corp. at 23 against 21%; Standard Brands at 21 against 20%;Paramount Publix Corp. / certificates at 1% against 78; Westinghouse Elec. & Mfg. at 4534 against 41 ; Drug, Inc., at 58 against / 1 4 / 511 ; Columbian Carbon at 59 against 55½; Rey% /s nolds Tobacco class B at 435 against 4112; Loril/ lard at 214 against 20; Liggett & Myers class B at / 1 92 against 873 , and Yellow Truck & Coach at 6% / 4 against 578 /. The steel stocks have continued to share in the upward movement. United States Steel closed / yesterday at 54 against 511 4 on Friday of last week; United States Steel preferred at 953 against 90½; 4 / Bethlehem Steel at 29 against 2778, and Vanadium at 22 against 20%. In the auto group, Auburn / 1 2 / 1 2 Auto closed yesterday at 67 against 53 on Fri/ 1 2 day of last week; General Motors at 26% against 25; / 4 Chrysler at 245/s against 223 ; Nash Motors at 20 / 1 4 against 18; Packard Motors at 5 against 412; Hupp / / 1 2 Motors at 53 against 4 , and Hudson Motor Car 4 / 4 at 978 against 73 . In the rubber group, Goodyear / Tire & Rubber closed yesterday at 3718 against 32% / on Friday of last week; B. F. Goodrich at 15 / 1 2 / 4 against 123 , and United States Rubber at 1438 / against 9 . / 1 2 The railroad shares have some of them been conspicuous features of strength. Pennsylvania RR. / closed yesterday at 28 against 2578 on Friday of last week; Atchison Topeka & Santa Fe at 692 against / 1 / 1 2 68; Atlantic Coast Line at 47 against 45%; Chicago Rock Island & Pacific at 678 against 8%; / / New York Central at 3638 against 305s; Baltimore & / / 1 2 / 1 2 Ohio at 22 against 17 ; New Haven at 261 4 / / against 2378; Union Pacific at 11212 against 101½; / / 1 2 Missouri Pacific at 3 against 3 ; Southern Pa/ 1 4 /s; cific at 27 against 245 Missouri-Kansas-Texas at 4; 16 against 123 Southern Railway at 2514 against / 167s; Chesapeake & Ohio at 3818 against 361 ; / / 4 4 Northern Pacific at 241 against 24, and Great 4. Northern at 23% against 221 The oil stocks have shared in the general rise. Standard Oil of N. J. closed yesterday at 371 8 / / against 3438 on Friday of last week; Standard Oil / of Calif. at 33% against 3118; Atlantic Refining /, at 26% against 2214 and Texas Gulf Sulphur at / 1 2 2978 against 27 . In the copper group, Anaconda / Copper closed yesterday at 18 against 13% on Friday of last week; Kennecott Copper at 213 against 4 17%; American Smelting & Refining at 3518 against / 31½; Phelps-Dodge at 15% against 12; Cerro de 4 Pasco Copper at 233 against 21%, and Columet & 4. Hecla at 878 against 51 / INCREASE in activity was reported this week on stock exchanges in all the leading European financial markets, with the undertone good in every case despite some irregularity. The generally favorable trends at London, Paris and Berlin were influenced to no small degree by the persistent upswing at New York, dispatches stated, but some of the European developments also were interpreted favorably. The London Stock Exchange was stimulated in some measure by improvement in important British trades and industries. The Paris Bourse hailed the end of a long budget fight in the French Parliament by a sharp advance in quota. N Volume 136 Financial Chronicle 3769 4 lions, even though the budget which was finally the month-end carryover was 1 to 114%,against 3/% / -adopted, Thursday, carries a deficit of $145,000,000. formerly. The upswing continued Thursday, as The Berlin Boerse advanced substantially when the there was general satisfaction over the settlement Hitler Government finally published its program, of the budget debate. Rentes improved substanThursday, for aiding German industry and decreas- tially, and common stocks also reflected further ing unemployment. These influences were counter- buying. The tone was again good yesterday, despite acted to a degree by uncertainty regarding the war diminished activity. debt status, and the outcome of the several conferThe Berlin Boerse was dull and uncertain, Monences on disarmament and economic problems: day, as there was much uneasiness regarding the There was general uneasiness over the American impending Berlin conference of foreign creditors measures to eliminate the gold clause in bond con- of Reich borrowers. Prices fell at the start, and a tracts and to disregard such clauses in existing late rally served to cancel only a part of the initial agreements. The concern regarding the gold stand- losses. The irregularity continued in Tuesday's ard occasioned by the American proposals was trading, but the general tone was firm, owing to the heightened by indications of inflationary expedi- good impression created in Berlin by Dr. Schacht's ents in Sweden, and by budgetary difficulties in opening speech at the creditors' conference, and by Switzerland. In a Swiss plebiscite, Sunday, a pro- favorable reports of the trend at New York. Prices gram for reducing Government and Cantonal sala- again slipped downward in Wednesday's dealings. ries was voted down, and the increasing governmen- Theme was little public interest, dispatches said, tal deficits were believed to contain a threat to the while professional operators liquidated. Equities gold standard in that country, as inflation may be dropped from 2 to 6 points in the session, but bonds considered the alternative. showed greater resistance. When the Government's The London Stock Exchange was firm and fairly program for combating unemployment was made active in the initial session of the week, with the available, Thursday, prices moved forward sharply stocks of rubber companies especially in demand, on the Boerse. Gains were largest in the issues of owing to an advance in the commodity. British companies that are likely to gain from the Governfunds were weak at the start, but recovered most of ment program for stimulating employment, but their losses. Good buying appeared in the indus- other securities also advanced. Prices advanced trial stocks, while international issues moved further on the Boerse yesterday. sharply higher on favorable week-end reports from New York. Dealings were on a smaller scale, TuesTTEMPTS to find a practical method for interday, owing partly to the holiday suspension in New national disarmament again occupied the York. British funds lost a little ground, while home delegates of almost all nations in the world at the industrial stocks displayed irregularity. The inter- General Disarmament Conference in Geneva, this national group was generally good, in anticipation week, with results that are anything but encouragof further gains in Anglo-Amerian trading favorites. ipg. The flurry of optimism caused by President The tone Wednesday was decidedly cheerful, the Roosevelt's stirring pronouncement of May 16 has only exception being the South African gold mining died away completely, as the recent debates have group of issues, which dropped as a result of pro- again emphasized the profound differences that posals for heavy taxation. British funds improved, separate the heavily armed States of the world. All while excellent demand was reported for industrial countries render lip-service to the principle of dissecurities. International issues enjoyed a further armament, but agreeittent on a method appears to sharp advance. After an uncertain opening, Thurs- be little. nearer now than it was at the beginning day, prices again moved higher on the London Stock of the tedious conference in Geneva, which started Exchange. South African gold mining issues just 16 months ago. Norman H. Davis, chief Amerdropped sharply at the start, but improvement fol- ican delegate at the gathering, expressed irritation lowed when better reports regarding the taxation at the endless delays, Thursday, when he remarked proposals were circulated. British funds were in that more time is spent discussing the way things good demand, while a number of bright spots ap- should be done than in discussing the things to be peared in the industrial list. Anglo-American issues done. "Let us have more disarmament and less maintained their strength. There was less activity procedure," Mr. Davis declared. Despite the many yesterday at London, as the market will close until urgent appeals for early agreement, adjournment Tuesday for the Whitsuntide holidays. Small fur- of the Conference was voted Thursday, the vacation ther gains were registered. to begin after a preliminary reading of the British The Paris Bourse was firm in the opening session draft disarmament plan, and to end not later than of the week, with international issues showing great- July 3. There were indications at Washington, late est strength owing to the favorable advices from Mit week, of increasing pessimism regarding the New York. French securities were in lesser de- Geneva Conference. President Roosevelt was said mand, but advances were general in this department to hold the view that the meeting might as well end as well. Dealings Tuesday were active on the if no advances can be made against the obstructions Bourse, but the division between French and inter- of one kind or another which inevitably crop up. national issues was even more sharply accentuated. In a recent dispatch from Geneva it was remarked Declines were registered in most of the leading that every day ends with a deadlock of some kind French stocks, but the international group con- at the Conference, with the hope prevalent among tinued its advance on further good reports from the delegations that efforts to bargain have been New York. A general upward movement followed responsible and that none of the obstacles will prove in Wednesday's dealings on the Bourse, with the insurmountable. "Should this sanguine belief prove buoyancy ascribed largely to the reflected optimism true, the Geneva Conference would close its sessions of New York. Equities of all kinds were in good successfully," the correspondent added, laconically. demand, but rentes also showed gains. Money for A debate on aerial armaments, last Saturday, illus- A 3770 Financial Chronicle trates the divergent opinions and the difficulty of making progress. "The United States, supporting the Soviet Union, which has taken the leadership on this issue, demanded complete abolition of aerial bombardments and threw the balance against the British draft text, which would permit bombardment for police purposes in outlying regions," a dispatch to the New York "Herald, Tribune" said. "Simultaneously, France conditioned limitation of air forces upon supervision of civil aviation, instead of its internationalization, and Germany, while conditioning its concession upon complete suppression of air weapons, nevertheless accepted, for the first time, the principle of supervision of civil airplanes. Germany's stand on suppression, however, provided the day's impasse,although the Little Entente States had made trouble with a demand for internationalization of fighting airplanes to precede their reduction." The British draft convention was adopted unanimously, Wednesday, as the basis for a future treaty, but the Conference decided at the same time to close the public hearings and to continue the discussions in private. Only the Bureau of the Conference, composed of representatives from 19 countries, will participate in the private conversations, as the General Commission will not resume until the course of the London conference on monetary and economic matters is charted. The need for further "political understandings" is said to have occasioned the decision to discard public hearings and substitute the private meetings. The vote on adjournment of the General Commission was not taken until Thursday, and it was on that day that Mr. Davis expressed his disappointment and called for more disarmament and less procedure. International control of all armaments was discussed for a time, Thursday, and Mr. Davis accepted such control in principle in behalf of the United States, but only on condition that this country would not in any way be obliged to employ . military sanctions against a country violating a treaty. "Some method must be found which clearly excludes the United States from any obligation of this character," Mr. Davis asserted. Japan entered a general reservation in accepting the proposal for supervision. The new American concession on consultation, as outlined by President Roosevelt and by Mr. Davis, was discussed in the British House of Commons,late last week, by Foreign Secretary Sir John Simon. After quoting a recent address at Geneva by Mr. Davis, Sir John Simon undertook to explain the intent of the new policy. "It is of the utmost importance," he said, "that we should not exaggerate or distort this declaration by a hair's breadth. Let me explain what I understand it to mean: First, the United States insists that it must preserve its own independent judgment as to what is right and what is wrong in connection with any dispute. That is the characteristically British way of looking at it, and we have no ground whatever for complaint. But in agreeing to refrain from any action tending to defeat a collective effort for peace, the United States has abandoned, in favor of this doctrine, the old idea of standing with folded arms, being the spectator from afar of a struggle between two States, one of which has acted wrongly and the other the sufferer. America now says: 'Trust us to face the situation when we have consulted together. If we come to the conclusion, as we very likely may, that June 3 1933 we agree with the rest of you, we give our word that we are not going to stand on the strict letter of the law of neutrality. You shall not only have our good will and our blessing, but our promise that we will withhold from our own citizens, if they are tempted to exercise strict neutral rights, the protection which would otherwise be theirs.'" Sir John Simon warned the House that "it would be foolish to delude ourselves that we are on the eve of some definite final agreement" on disarmament. Much of a piece with the inconclusive disarmament negotiations is the four-Power pact for maintaining peace in Europe, upon the terms of which Great Britain, France, Italy and Germany are reported to have agreed. Acting on a British suggestion, Premier Mussolini resumed discussions in Rome on this proposal last week. In the effort to gain French adherence, however, numerous important concessions were made and the resultant pact is admittedly devitalized. The original proposal by Signor Mussolini opened the way for peaceful revision of the dangerous boundary settlements of the Versailles Treaty, but this is now understood to have been supplanted, at French insistence, by a reference to Article 16 of the League Covenant, which lays clown the principle of sanctions against an aggressor State, and to other Articles which keep revision in the hands of the League. The instrument is innocuous enough to be acceptable to the Little Entente States, a Paris dispatch to the "Herald Tribune" remarks. Initialing of the agreement by diplomatic representatives of the four countries must be followed, moreover, by Parliamentary acceptance, and doubts were expressed in London, Thursday, regarding such approval in all the countries concerned. "The pact in the form which the French amendments have given it is nothing more than an empty gesture," the Berlin correspondent of the New York "Evening Post" reported Thursday. \VAR debt instalments due to the United States Government on June 15 remain a matter of the deepest concern in London and Paris. Although some of the leading European debtor countries made formal requests nearly six months ago for reviews of the debt agreements, no commissions or officials have been appointed to study the problem. It is altogether likely that the debt question entered largely into the conversations at Washington preliminary to the World Monetary and Economic Conference, and there have also been intimations that discussions on debts will be continued while American delegates to the conference are in London. In every formal sense, however, the status of the war debt problem remains unchanged. Whether the London Government will pay the June 15 instalment of $75,950,000 is quite as much a mystery in the British capital as it is on this side of the Atlantic. Chancellor of the Exchequer Neville Chamberlain was asked in the House of Commons, Thursday, if any decision had been reached by the British Government. "It would not be desirable for me to make any statement on the matter at present," Mr. Chamberlain replied. Unless some arrangement is made in Washington to avert difficulties on June 15, default by France is virtually certain, as that country remains in default on the instalment due last December. There is no indication of Italian intentions, while other European debtor States obviously take a waiting attitude. Volume 136 Financial Chronicle It was indicated in Washington, Monday, on "excellent authority," that President Roosevelt will use his treaty-making power to effect a debt settlement with European countries without recourse to Congress, but attempts to obtain verification of the reports at the White House were unsuccessful the next day. "Since the Chief Executive is empowered under the Constitution to negotiate treaties, it is definitely understood he will carry on overtures already in progress between this country and Great Britain and France, with a view to permanent reduction of the debts and probably suspension of the June 15 interest payments," a Washington dispatch of Monday to the New York "Times" said. Congress would thus be confronted with a signed pact for ratification, the report added. In a further dispatch to the same journal on Tuesday, it was remarked that the White House characterized these published statements as speculation, but "well-informed quarters" still insisted that the procedure was in contemplation. The understanding prevailed in Washington, the dispatch added, that President Roosevelt world make a statement to the country in clarification of this situation immediately after Congress adjourns. Such adjournment is expected on June 10. HE World Monetary and Economic Conference will open at London in a little more than a week, with delegates from almost every country in attendance. Preparations have been virtually completed for the start of this gathering on June 12, but as the date approaches forecasts of the possible achievements are becoming steadily more pessimistic. In Great Britain and France there is general concern over the lack of any substantial developments regarding the war debt payments due on June 15,and this matter admittedly is casting a very dark shadow over the forthcoming negotiations in London. Chancellor of the Exchequer Neville Chamberlain explained to the British House of Commons, Thursday, that the London Government will gladly co-operate with the United States or any other Government to raise prices throughout the World. Beyond such general statements, there is little knowledge of the British Government's intentions at the Conference, and London opinion regarding the meeting is distinctly gloomy. "One hears it said all too often that the World Monetary and Economic Conference cannot accomplish much, that if it patches up a mere semblance of an agreement it will have been successful," a London dispatch to the New York "Times" states. French thoughts about the Conference are equally gloomy, owing to the impression in Paris that great difficulty will be encountered in achieving monetary stabilization. It was again made plain in Washington this week that the American delegation will seek most earnestly to obtain general agreement for an advance in prices, and the comments by Mr. Chamberlain in London, Thursday, probably were a reflection of such urgings. Secretary of State Cordell Hull and several other members of the American representation departed for London, Wednesday,on the steamship President Roosevelt. Mr. Hull remarked, before sailing, that there is the strongest reason for an agreement to lower tariff barriers and stabilize exchanges. The American delegation was completed, Tuesday, when Senator Couzens, of Michigan, and Ralph W. Morrison, of Texas, were ap- T 3771 pointed by President Roosevelt. American intentions to press for general reduction of tariff barriers at the Conference were reiterated at London, Tuesday, by United States Ambassador Robert W. Bingham, in a speech before the Pilgrims of Great Britain. Conversations at Washington, preliminary to the World Monetary and Economic Conference, have now been concluded. A special delegation from Brazil, headed by J. F. de Assis-Brasil, finished its discussions with American officials on May 25, and a joint statement was issued by President Roosevelt and Senhor Brasil. "As a result of the conversations," the statement said,"we are gratified to find there is entire identity of purpose between the two Governments respecting the solutions of the economic and financial problems which confront the world. We recognize fully the need for removing the existing barriers to commerce between nations and both countries will lend their efforts to that end at the approaching conference." The paramount need for stabilization of currencies as a basis for a general revival of international trade also was recognized, the statement indicated. In touching on the problems of trade between the two countries a completely cordial interchange of views occurred, and this extended also to the conditions of international payments, it was reported. The last of the series of joint statements was issued last Saturday by President Roosevelt and Viscount Bikujiro Ishii, of Japan, at the conclusion of extensive conversations with the Japanese delegation. Agreement was reported on the practical steps which should be taken toward solving outstanding economic problems. "We concur in the view," the statement said, "that economic stability and political tranquillity are complementary essentials to a sound basis of peace; that neither of these can be achieved without the other; and that both economic and military disarmament are needed for their attainment. We have had, of necessity, to think of the unusual situation which has prevailed in the Far East during the past two years. We hope that the countries of the Far East, along with those of the Occident, will be able to contribute substantially, in a spirit of co-operation, to the laying of solid foundations for a structure of world peace and prosperity." An orderly monetary regime was held necessary in the joint statement, and it was also remarked that unreasonable obstacles to the flotv of trade and capital should be removed. A "reasonable enhancement" of the price of silver was considered highly desirable, as well as stabilization of silver exchange. "With regard to many other measures which need to be adopted in order to establish the conditions of economic and political health throughout the world, we are in close agreement," the statement added. TUDY of the German transfer, or foreign exchange, problem has been started at Berlin by 30 banking representatives of foreign long- and short-term creditors of the Reich on the invitation of Dr. Hjalmar Schacht, President of the Reichsbank. The meeting was opened last Monday by Dr. Schacht, who pointed out that it was not a Government conference, nor ever a conference between German debtors and their foreign creditors, but merely an "informal conversation" between the creditors and the Reichsbank, which has control of all foreign S 3772 Financial Chronicle June 3 1933 exchange dealings in Germany. This gathering, nev- 1929 crisis in America. Since the American crisis, ertheless, may well prove of outstanding importance we have paid out more than 10,000,000,000 marks in to all foreign creditors of German private borrow- capital and interest in foreign currency. I believe ers, as the Reichsbank officials obviously consider that all our creditors must recognize that this not inevitable a downward scaling of the amount of for- only proves in a surpassing manner the good will eign exchange made available for meeting the debt and self-respect of German industry, but that it service. Dr. Schacht indicated in New York last represents an achievement which must have inflicted month that such a meeting is necessary, in his harmful consequences on German economy in its opinion, and the Reichsbank sent out the invita- entirety." tions within a few days. Albert H. Wiggin and The trend of events and their inevitable conseJohn Foster Dulles were named as the American quences were correctly discerned in Germany, Dr. delegates, the former to represent American short- Schacht asserted, but the outside world shut its term creditors of Reich borrowers, and the latter to eyes and refused to be better advised by German exrepresent the long-term creditors. Banking dele- perts, and ignored both the transfer problem and its gates from England, France, Holland, Switzerland underlying causes. Much of the blame for the situaand Sweden also are participating. Foreign loans tion rests on the shoulders of S. Parker Gilbert, the to German borrowers now are estimated at 19,528,- former Agent-General for Reparations Payments in 000,000 marks, of which 10,181,000,000 marks are Germany, Dr. Schacht charged. Mr. Gilbert "conshort-term loans and 9,347,000,000 marks are long- stantly ignored" the importance of the transfer probterm loans. American creditors have a greater in- lem in his reports, the Reichsbank official asserted. terest in this situation than any others, as Amer- The standstill agreements on the short-term Gerican claims are preponderant. Short-term American man external indebtedness have postponed catasloans to German borrowers still outstanding are trophe, he remarkes, but have not provided a fundaestimated at close to $700,000,000, while the long- mental solution of the transfer problem. Withterm loans are only a little less than $1,000,000,000. drawal from Germany in recent years of the sum In a long address to the representatives of the of 10,000,000,000 marks has contributed to the reduccreditors as the meeting began, Dr. Schacht outlined tion of German foreign trade, he declared, and the the position created by the rapidly dwindling gold huge decline in working capital made it impossible and foreign exchange reserves of the Reichsbank, for German industry to operate on a normal basis. and,in effect, asked his hearers to suggest remedies. Another disastrous result of the outflow of funds After the American advance to the Gold Discount was the weakening of the Reichsbank, and impairBank, a subsidiary of the Reichsbank, is repaid on ment of its ability to maintain the value of the. July 1, the gold and exchange reserves will have reichsmark on foreign markets, Dr. Schacht added. dropped to less than 300,000,000 marks, supplying "The reserves in gold and bills of the central bank, a cover of only 8% for the currency issues of the although they may be drawn upon occasionally for Reich, he pointed out. Continuance of present tend- readjusting important payments, are not intended encies involves the danger of complete dissipation to effect payment of the more or less long-term inof reserves, Dr. Schacht declared, and of subsequent debtedness of the country's business enterprises,"• devaluation of the reichsmark, with even more disas- he said. "If such a task is forced on a central bank, trous consequences than those of the German infla- it is deprived of liberty of action. This is precisely tion of 1923. "Such a catastrophe the Reichsbank what has happened to the Reichsbank through exwill not permit," he added. German debtors are cessive transfers, and this is the worst effect of this meeting their obligations promptly, the Reichsbank whole development,for a nation whose central bank President remarked, and the object of the conver- has lost freedom to maneuver is exposed to every sations now initiated is to reach a readjustment of chance!' transfer procedure. Statements made by Dr. Schacht and statistics "The present transfer crisis can be understood supplied by the German officials were studied careonly in the light of political developments 15 years fully by the bankers of the six creditor countries, ago," Dr. Schacht stated. "Naturally, defeat in the and at the conclusion of the meeting yesterday a war inflicted severe financial damages on the Ger- joint announcement was made in which general man economic body, but it also had an immediate agreement was expressed that the free reserves of effect on the transfer problem. This arose, in the gold and foreign currency of the Reichsbank have last analysis, from reparations." The former Allies fallen to such a point that further reductions might demanded reparations, but Germany was refused the impair the exercise of central bank functions by possibility of meeting them in the only way they the Reichsbank. The desirability of gradually incould really be discharged, by export surpluses, Dr. creasing such reserves was admitted. "No concrete Schacht declared. He criticized also the policy of proposals for dealing with the situation were put making large loans to Germany. After stabilization forward by the Reichsbank, and the representatives of the mark, some economic justification existed for of foreign creditors were present simply for the purraising German loans abroad for such purposes as pose of receiving and giving information and not the restoration of the depleted stocks of raw ma- to conduct negotiations," the statement continued. terials, but all borrowing in excess of that was an "Those attending the meeting concurred in the view evil,the Reichsbank official continued. "It is to-day put forward by the Reichsbank that whatever action generally recognized," he said, "that of approxi- the Reichsbank might feel obliged by the circummately 20,000,000,000 marks of foreign credits, stances to take, the Reichsbank will use every effort easily half were employed for nothing else than repa- not only to maintain contact with the various credirations payments. This whole system was entirely tor groups but also to facilitate joint consideration wrong and unsound, and it collapsed in a moment of the situation with the creditors with the intenwhen foreign creditors refused to extend further tion to lead to mutual understanding and agreeloans to Germany, that is, following the October ments." Volume 136 Financial Chronicle 3773 German Fascist movement is sharply nationalistic, with revision of the Versailles Treaty one of its chief aims. Danzig is situated on the Baltic Sea, at the end of the Polish Corridor. In Austria, meanwhile, increasing bitterness has been caused by propagandist activities of German Fascists in Vienna, and by the methods employed within Germany by Chancellor Hitler and his lieutenants. Although the prospect of a union between Germany and Austria seemed bright only a few months ago, any such possibility now is remote, as the antagonism between the Berlin and Vienna regimes is intense. Acting on instructions from Chancellor Engelbert Dollfuss, officials of the Austrian Government last month informed several German Fascists in no uncertain terms that their presence in Vienna was unwelcome, and they were invited to return to Germany in the airplane which brought them to Austria. The Berlin Government countered by imposing a charge of 1,000 marks on the visas of German tourists to Austria. This acASCIST methods of government are at length tion, taken last Saturday, was immediately followed occasioning some open opposition within the by the recall of the Austrian Minister to Berlin, German Reich, while in some of the contiguous coun- while direct measures of reprisal are likely to be tries bitter antagonism to the spread of Fascism taken in addition, Vienna dispatches state. "The has been expressed recently by well-supported na- latest move of the Hitler regime has given a deathtional leaders. There is no apparent likelihood, blow to the Pan-Germanist suggestions of union," however, of any great reaction from Fascism among the Vienna correspondent of the New York "Herald Germans. A parliamentary election was held last Tribune" said, in a report of last Sunday. The question of Fascist anti-Semitism in Germany Sunday in the Free City of Danzig, which is under League of Nations suzerainty but populated almost was discussed delicately, but rather pointedly, by entirely by German-speaking people. The "Nazis," the Council of the League of Nations, Monday, when or Fascists, polled 108,000 of the 215,000 votes cast a protest against the treatment of Jews in Upper in this election, and thus obtained control of the Silesia came up for consideration on the petition Volksrat by a very small majority. The opposition of Franz Bernheim, a refugee from that region. to Fascist edicts within the German Reich was mani- Sean Lester, of the Irish Free State, reported on fested last Saturday by leaders of the established the matter to the Council, and he found that the Lutheran Church, who elected Dr. Friedrich von alleged discriminations conflicted with German Bodelschwingh as their First Evangelical Bishop, treaty obligations in Uppen Silesia. Dr. Friedrich despite the opposition of the Fascists to this ap- von Keller, of Germany, raised the question whether pointment. The Nazis, who desired to "co-ordinate" Herr Bernheim is qualified tb submit a petition, the Protestant Church with the National-Socialist and this matter was submitted by the Council to a State, had put forward Dr. Hermann Mueller as committee of three jurists. Consideration of the their candidate for the post, but they were defeated protest was postponed pending determination of in this test. Fascist leaders promptly challenged this aspect of the problem. Some of the most imthe legality of the election of Dr. Bodelschwingh, portant members of the Council took occasion, howand indicated that they would carry the fight to the ever, to make comments which were clearly designed for German ears. Captain Anthony Eden, of Great church members themselves. The Parliamentary election in Danzig resembled, Britain, remarked that it would be necessary to in many essential respects, the recent conflict within grant the German demand for consideration of the Germany between Republicanism and Fascism. In status of the petitioner, but he emphasized that his capacity as the leader of the Nazis, Chancellor this did not signify that he endorsed the German Adolf Hitler of Germany made a radio address attitude. Joseph Paul-Boncour, of France, pointed to the Danzig voters on the eve of the election. He out that the question brought up by the petitioner urged the election of National-Socialist repre- was only one aspect "of a much wider and more gensentatives to the Volksrat, but carefully avoided eral problem." He expressed the opinion that the all reference to the international status of the League of Nations would not in any way desire to city. Dr. Hermann Rauschning, leader of the ignore the rights of a race which is dispersed in Danzig Nazis and prospective head of the Dan- many countries. Count Raczynsky, of Poland, adzig Government, issued a statement in Berlin, mitted that the Council can deal on the petition only Monday, in which he pledged the observance of all with the Jews of Upper Silesia, but he remarked siginternational treaties, avoidance of the "co-ordina- nificantly that "every member of the Council has tion" methods used by the Nazis in Germany, and the moral right to appeal urgently to the German protection of the rights of Jews. Agreement with Government to insure equal treatment for all the the Polish Government will be sought by his regime Jewr ;xi Germany." . The Fascist Government in Germany made public on all problems that have led to friction between Poland and the Free City in recent years, Dr. Thursday, an extensive plan for reviving industry Rausehning declared. The Nazi victory in Danzig within the Reich and reducing unemployment. The nevertheless has caused anxiety in Poland, as the most important feature of this plan calls for an It was noted in the joint communication that representatives of the long-term creditors have established a small permanent group for maintaining contact with the Reichsbank, similar to the short-term standstill committee. German foreign trade and world trade are fundamental to the problem of transfer, the statement added, and the view was expressed that one of the most urgent objectives of the World Monetary Conference will be to facilitate a prompt and permanent solution of the German transfer problem. Dr. Schacht read this joint statement to press correspondents, and then remarked that the decision for further action rests with the Reichsbank. "Our decision, which is irrevocable,is that we will not permit further shrinkage of our gold and devisen (foreign exchange reserves)," the Reichsbank head declared. Those present assumed, an Associated Press dispatch remarked, that Dr. Schacht's declaration foreshadowed a German transfer moratorium. F 3774 Financial Chronicle issue of 1,000,000,000 marks in five-year serial notes of the German Government, the funds to be utilized in construction schemes, and in income tax exemptions and remissions. Federal loans are to be made to the States an Communes for construction of public buildings and bridges, gas, water and electric light projects, river regulation and other purposes. Home owners will be permitted to borrow for repair • work, in the expectation that this also will contribute to employment of idle persons. The plan also includes a number of novel features, designed to induce employed single women to marry and quit their jobs. Engagement of domestic servants is to be promoted through reductions in income taxes for householders having one or more servants. Complicated provisions also were announced for income tax exemptions for employers who install new machinery in their plants, in replacement of similar machinery already in use, and provided that it will not result in a smaller number of men being employed. The Nazi authorities made no statement regarding the number of men these measures are expected to put back to work,possibly because of the mistake made by the former Chancellor, Franz von Papen,in predicting the employment of 1,750,000 by the far more extensive schemes announced last summer. OSTILITIES between Chinese and Japanese troops in the area of old China south.of the Great Wall and north of the cities of Peiping and Tientsin came to a halt, Wednesday, when an armistice arrangement was concluded at the town of Tangku, after extensive negotiations. The truce is purely a military document, containing harsh terms imposed by the victors upon the vanquished, but no political provisions are mentioned. Under its terms the Chinese troops are to withdraw immediately to the south of a line 250 miles long, extending from Yenking, near the Great Wall, to Lutai, 35 miles north of Tientsin, near the coast. The line passes through Tungchow, which is only 10 miles north of the walls of Peiping. Japanese authorities are to be afforded full facilities for observing the withdrawal, and when they are satisfied that it has been carried out in good faith, they will withdraw their own troops to the Great Wall. In the neutral area thus established Chinese police authorities are to maintain peace and order. These terms, dictated by the Japanese, were accepted by the Nanking Nationalist Government of China, in order to "provide a breathing space for our sorely tried troops and distressed population," a statement issued at Shanghai said. "Any local arrangement with the Japanese regarding the north China military situation will not affect China's territorial integrity or her international position," the statement added. Japanese authorities in north China expressed the hope, Thursday, according to a Tientsin dispatch to the New York "Times," that the invasion will result in the Chinese Government's "realizing the wisdom of negotiating to settle all the unpleasant controversies that have arisen since September 1931." June 3 1933 Danish National Bank and the National Bank of Sweden reduced their -discount rates from 332% to 3%. Present rates at the leading centers are shown in the table which follows: DISCOUNT RATES OF FOREIGN CENTRAL, BANKS CcuntrY. Austria_ ___ Belgium_ Buigazia..... Chile Colombia Czechosloyacht__ Danzig _ .. _ _ Denmark_. England__ Estonia__ Finland__ France _ __ Germany. _ Greece Rate in Effect Date June 2 Rstabitohat. 5 314 814 Oi 5 Mar. 23 1933 Jan. IA 1932 May 17 1932 Aug. 23 1932 Sept. 19 1932 334 4 3 2 534 555 234 4 7 Jan. 25 1933 July 12 1932 June 1 1933 June 30 1932 Jan 29 1932 May 27 1933 Oct. 9 1931 Sept. 31 1932 May 29 1933 Preotous Rate. Country. 6 234 934 534 6 Holland_ _ Hungary_ India Ireland__ _ Italy Japan 434 Lithuania_ 5 Norway_ 334 Poland... 234 Portugal._ tiii Rumania ... 6 South Africa 2 Spain 5 Sweden_ _ •9 Switzerland Rate in kfea Date June 2 Establtehed. P•eeinem Rats. 334 May 11 1933 234 434 Oct. 17 1932 5 334 Feb. 16 1933 4 3 June 30 1932 334 4 Jan. 9 1933 5 4.38 Aug 18 1932 5.11 7 May 5 1932 734 314 May 23 1983 4 6 (let. 20 1932 74 6 Mar. 14 1933 6 Apr, 7 1933 7 4 Feb. 21 1933 5 6 Oct. 22 1932 6% 3 June 1 1933 334 2 Jan. 22 1931 2% 634 In London open market discounts for short bills on Friday were 7-16@3/2%, as against 7-16@3/ on 2 % Friday of last week, and for three months' bills, as against on Friday of last week. Money on call in London yesterday was h%. At Paris the open market rate remains at 23 4% and in Switzerland at 13/2%. HE Bank of England statement for the week ended May 31 shows a further gain in gold holdings amounting this week to £394,090. This brings the total again into new high ground and it now amounts to £187,402,773 in comparison with £129,341,726 a year ago. Since the gain in gold was attended by an expansion of £4,190,000 in circulation, reserves fell off £3,796,000. Public deposits increased £17,540,000 and other deposits decreased £19,447,663. The latter consists of bankers' accounts which decreased £21,732,174 and other accounts which rose £2,284,511. The reserve ratio is now 48.80% in comparison with 50.69% last week and 34.29% a year ago. Loans on government securities increased £2,505,000 while those on other securities fell off £611,774. Of the latter amount, £33,68 3 was from discounts and advances and £288,091 was from securities. The rate of discount is unchanged at 2%.,„Below are the figures with comparisons for five years: T BANK OF ENGLAND'S COMPARATIVE STATEME NT. May 31 1933. June 1 1932. June 3 1931. June 4 1930. June 5 1929. E .5 5 I E Circulation a 374.064,000 355,413,751 356,370.794 359,798,602 Public deposits 33,246,000 18,552,692 6,545,145 8,877.942 361,576,772 Other depoalts 117,009.101 124,106,439 106,129,666 107.990,702 8,511,444 Rankers accounts_ 77,472,660 89,956,577 72,209,262 71,081,853 106,292,485 Other accounts 39,536,441 34,149,862 33,920,404 36,C08,849 70,346,971 35,045,514 Govt. securities 72,505,127 73,914,656 38,495,906 Other securities 22,198,831 37,601,752 35,416.843 58,380,547 43,106,855 Disct. di advances 11,249.948 12,481,965 7,106,070 19,192,897 27,215,003 6,476,057 6,21%102 10,948,883 25,119,787 28,310,773 Securities Reserve notes di coin 73,338,000 48,927,975 56,563,284 12,716,840 20,999,901 Coin and bullion_ _ _ 187.402,773 129,341,726 152,934.078 57,080,483 62,274,358 156,879,085 163.851,130 Proportion of reserve 48.80% 34.29% 50.19% 48.84% 54.25% Bank rate 2% 214% 2.1Z % 3clAt a On Nov. 29 Ins he fiduciary currency was amalgamated note Issues adding at that time £234,199,000 to the amountwith Bank of England of Bank of England notes outstanding. —4 -- HE Bank of France statement for the week ended May 26 shows an increase in gold holdings of 21,452,058 francs. The Bank's gold, which now aggregates 80,950,775,958 francs, compares • with 79,470,235,749 francs a year ago and 55,034,060,503 francs the year before. Increases appear in credit balances abroad of 6,000,000 francs, in French commercial bills discounted of 340,000,000 francs, in advances against securities of 45,000,000 francs and HE Bank of Finland on May 27 reduced its dis- in creditor current accoun ts of 475,000,000 francs. count rate from 6% to 53/2%, the former rate Notes in circulation record a reduction of 100,000,000 having been in effect since Jan. 311933. On Mon- francs, bringin g the total of notes outstanding down day, May 29, the Bank of Greece reduced its rate to 83,268,305,370 francs. Circulation a year ago from 9% to 7%, the 9% rate having been in effect was 81,417,780,030 francs and two years ago, 78,since Dec. 3 1932. On Thursday, June 1, both the 185,340,315 francs. The proportion of gold on hand T T to sight liabilities stands at 77.89%, as compared with 72.92% last year and 55,20% the previous year. Below we furnish a comparison of the various items for three years: BANK OF FRANCE'S COMPARATIVE STATEMENT. Changes for Week. Gold holdings Credit bals. abroad_ a French commercial bills discounted- bBillsboughtabroad Adv. net.seems Note circulation_ _ Cred• curr• accts.-Propor. of gold on hand to sight liab_ 3775 Financial Chronicle Volume 136 May 27 1933. May 27 1932. May 29 1931. Francs. Francs. Francs. Francs. +21,452,058 80,950,775,958 79,470,235,749 55,634,060.503 +6,000,000 2,468,414,601 4,474,215,474 5,430,227,861 +340,000,000 3,449,556,612 4,159,967,414 6,189,596,300 1,418,969,764 4,526,666,034 20,729,695.413 Unchanged +45,000,000 2,674,173,048 2,699,905,394 2,806,102,825 —100,000,000 83,268,305,370 81,417,780,030 78,185,340,315 +475.000,000 20,657,045,309 27,559,956,707 22,609,034,316 —n 2f1 7:. , 77.R9.1, 72.92% 55.20% • a Includes bills purchased in France. b Includes bills discounted abroad. • HE Reichsbank's statement for the fourth quarter of May reveals a decrease in gold and bullion of 19,000 marks. The total of bullion is now 372,329,000 marks, in comparison with 862,721,000 marks a year ago and 2,390,327,000 marks. two years ago. Reserve in foreign,currency,silver and other coin and notes on other German banks record • declines of 9,546,000 marks, 97,243000 marks and 10,726,000 marks respectively. Notes in circulation show a gain of 223,202,000 marks, raising the total of the item to 3,468,796,000 marks. Circulation a year ago aggregated 37960,563,000 marks and the year before 4,299,122,000 marks. An increase appears in bills of exchange and checks of 270,582,000 marks, in advances of 102,176,000 marks, in investments of 249,000 marks, in other assets of 46,485,000 marks, in other daily maturing obligations of 67,442,000 marks and other liabilities of 11,314,000 marks. The proportion of gold and foreign currency to note circulation at 10.1%, compares with 25% last year and 59.9% the previous year. Below we furnish a comparison of the various items for three years: T Wednesday night, according to the usual report of the Federal Reserve Bank of New York. . EALING in detail with call loan rates on the Stock Exchange from day to day, 1% has been the ruling quotation -all through the week for both new,loans and renewals. The market for time money has Shown some improvement this week. There have been transac.tions in 4 months' maturities 3 at 1%. Rates are nominal at 4% for 30 days, Y to 1% for 60 to 120 day periods and 1@)1H% for i five and six months. There has been a light demand for commIrcial paper this week, though the supply 4 of paper has been slightly larger. Rates are 13 % for extra choice names running from 4 to 6 months and 2@23% for names less known. D HE market for prime bankers' acceptances has been inactive this week. The demand has been moderate and the supply of paper has been very small. Rates were.reduced on Thursday, June 1, A of 1% on all maturities in both the bid and asked columns. The quotations of the American Acceptance Council for bills up to and including threeA months' bills are 1 % bid and M% asked; for four months, 4% bid and %% asked; for five and six 3 A months, 1% bid and 7 % asked. The bill buying rate of the New York Reserve Bank is 2% for bills / % running from 1 to 90 days; 21 8 for 91 to 120 days, and 23,% for bills due in 121 to 180 days. The Federal Reserve banks' holdings of acceptances have dropped during the week from $42,662,000 to $19,862,000: Their holdings of acceptances for foreign correspondents also decreased during the week from $3 ,770,000 to $35,731,000. Open market rates for acceptances are as follows: T REICHSBANK'S COMPARATIVE STATEMENT. Prime eligible bills Changes for Week. Assets— Gold and bullion Of which depos. abroad Reserve in foreign curt'. Bills of exch. and checks Silver and other coin— Notes on oth. Ger. bks. Advances Investments Other assets Liabilities— Notes in circulation 0th. daily matur. °Wig. Other liabilities Propor,of gold 4:foreign CUM. to note elrenl'n D May 31 1933. May 31 1932. May 30 1931. Reichstnarks. Reiehsmarks. Reichsmarks. Reichsmarks. —19,000 372,329,000 862,721,000 2,390,327,000 87.667,000 207,638,000 17,285.000 No change. 76,998,000 128,552,000 y186,181,000 —9,546,000 +270,582,000 3.139.842,000 3,008,473,000 1,816,432,000 —97,243,000 235,219,000 224,848,000 174,315,000 3,249,000 2,693.000 5.120,000 —10,726.000 +102,176,000 165,744,000 257,258,000 167,182,000 +249,000 317,338.000 363,472,000 102,697,000 +46,485,000 3.9,129,000 804,796,000 541,489,000 +223,202,000 3,468 796,000 3,960,563,000 4,299,122.000 +67,442,000 438,793.000 430,559,000 353,272,000 +11,314,000 159,108,000 694,260,000 244,018,000 ...-.1 I101 in l 01 9k01 CO 001 ECLINING tendencies again were apparent in the New York money market, owing to the vigorous easy money policy of the authorities, as reflected in additional open market buying of United States Government securities by the Fedekal Reserve Banks. The New York Clearing House Association announced, Wednesday, that interest rates paid on deposits would be cut in half, effective the next day The new rates are N. of 1% on demand deposits, and of 1% on time deposits. Yield rates on bankers' acceptances were adjusted downward Thursday, by N of 1% all Around: The official bill buying rate of the New York Federal Reserve Bank remained unchanged at 2% for obligations due up to 90 days. Call loans against stock and bond collateral were 1% throughout, on the New York Stock Exchange: In the unofficial outside market transactions were reported at lower rates every day, the quotation being 34% Monday, and Wednesday, and M% Thursday and yesterday. Time loan rates were unchanged. Brokers' loans increased $72,000,000 in the week to Prime eligible bills SPOT DELIVERY. —180 Days— —150 Days-- —120 Days— Asked. Bid. Asked. Bid. Asked. Bid. 1 34 1 34 44 H —90Days— —60Days— —30Days— Asked Asked. Bid. Asked. Bid. Bid. 34 34 34 54 34 34 FOR DELIVERY WITHIN THIRTY DAYS. Eligible member banks Eligible non-member banks 1% bid 1% bid OTH the Boston and the San Francisco Federal Reserve banks reduced their rediscount rates this week from 33'% to 3%. In the case of the Boston Reserve Bank the change was put into effect June 1, while the 3% rate was made effective by the San Francisco Bank June 2. The following is the schedule of rates now in effect for the various classes of paper at the different Reserve banks: B DISCOUNT RATES OF FEDERAL RESERVE BANKS. Federal Reservela Boston_ New York Philadelphia Cleveland Richmond Atlanta Chicago At. Louis Minneapolis Kansas City Dallas San Francisco Rate in Wert on June 2. 3 234 334 334 334 314 334 334 334 334 3 Date Established. June 1 1933 May 26 1933 Oct. 22 1931 Oct. 24 1931 Jan..25 1932 Nov. 14 1931. May 27 1933 Oct. 22 1931 Sept. 12 1930 Oct. 23 1931 •Jan. 28 1932 June 2 1933 Previous' Rate. 314 3 3 3 4 3 334 234 4 3 4 334 is firm and in demand in all. STERLING exchangeflowing to London attracted centers. Gold is by the motive of deposit and security from no less than twenty countries, and is moving there also by reason of the high premium offered in the London open market, the only free gold market in the world. The .range for sterling this week has been between 3.96 and 4.02 for bankers' sight bills, compared 3776 Financial Chronicle with a range of from 3.865 to 3.933/i last week. % The range for cable transfers has been between 3.97 % and 4.025 , compared with a range of from 3.868 % to 3.94 a week ago.. The foreign exchanges are more demoralized than ever and more nervous and hesitant since the introduction in'Congress on Friday of last week at the instance of President Roosevelt of the bill to take the country off the gold basis by statutory enactment. The reduction on Thursday of last week of the New York Federal Reserve Bank rediscount rate from 3% to 23/2% has had no effect on dollar exchange in any market as bankers in all foreign centers have been disinclined to place reliance in Reserve Bank action here as authoritative marketwise since the bank holiday in March and the subsequent gold proclanhation of the President. The general view of the foreign exchange market is that the Reserve Bank has lost, all freedom of action with the result that its operations can affect the technical position of banks in their foreign exchange trading only as a part of the general political situation, a picture which affects only speculative traders and dealers in so-called "bootleg" foreign exchange. All markets are bearish with respect to the dollar and bullish on sterling. The dollar is now extremely weak in all centers, but more than a third of the monetary gold stock of the world is still here and business in all lines is showing rapid improvement due in large measure to natural • economic causes entirely unrelated to political factors or inflationary programs. This recovery may be retarded but it cannot be definitely arrested and its progress may yet be a strong factor in altering and perhaps thwarting the unsound views rtnd programs which have for months engaged the world's attention. At last many voices, representing the more sound and responsible business opinion, have been raised .in warning and it is frequently asserted emphatically, even though quietly, that Mr. Roosevelt is far from believing in any form of inflation or from pinning his historical reputation upon the experiment of unsound economic measures. The Chamber of Commerce of the State of New York at its meeting on June 1 drew up a report urging that President Roosevelt restore the gold standard and beseeching him to refrain from any act even under emergency which would delay its return. The report stated that a sound and permanent recovery in industry and business can be accomplished only by avoiding currency inflation. Issues of fiat money, the report stated, a decrease in the gold standard from its present basis of 23.22 grains to the dollar, or other forms of currency debasement will prevent permanent recovery and in the end prove injurious. A considerable body of the most responsible opinion. on this side looks for a recovery in the dollar at no far distant date. Meanwhile markets must continue nervous and demoralized until the outcome of the World Economic Conference which begins in London on June 12 has offered a new terrain upon which foreign exchange and foreign trade relations may be aligned. It will be recalled that on Friday of 'last week sterling exchange became very firm when cable transfers sold as high as 3.94, the high for the week. The firmness at that time was attributed solely to the introduction before Congress of the resolution to repeal the Gold Standard Act. The full force of this demoralizing proposal began to register in the short session of Saturday last, When 8. sterling sold as high as 3.983/ A further advance June 3 1933 to 4.003/i was made on Monday. On Tuesday, May 30, the New York market was closed in observance of Memorial Day, but on Wednesday sterling opened at 4.02%, a new high on the move, which compared with the year's high of 4.05. , At this point there developed considerable selling of sterling and buying of dollars in many markets. Operations are asserted to have originated with London bankers and private interests. It could not be discovered that the British authorities were in any way active in attempting to keep the dollar-sterling rate under 4.00, though a higher rate would at the present juncture be decidedly distasteful to Londoh business interests. Much of the gold coming from the London open market, as during the past several weeks, is taken for Continental account under the influence of gold hoarders. However, very little of these gold takings are shipped abroad, the hoarders preferring to leave the metal in London vaults as the safest place of deposit. It is estimated that during the past four. weeks approximately £35,000,000 was received in London and that during the same' period not much more than £3,000,000 was actually exported. Gold hoarders and speculators in. the metal are of course attracted by the high premium. . For the first time in many weeks the Bank of England has taken some of the open market gold and has otherwise increased its bullion holdings by converting earmarked stock held in other centers. This week the Bank of England withdrew $14,950,000 in gold from its earmarked stock in New York. This accession does not show in the Bank's current statement but doubtless will appear in its statement of June 7. On Saturday last gold bars totaling £140,000 were taken in the open market, the quoted price being 122s. 10d. On Monday £240,000 was taken for Continental account. Bars were quoted at 123s. 3d. On Tuesday a total of $810,000 was available in the open market, of which the Bank of England took £343,171,the balance having gone for Continental account. On Wednesday £70,000 was taken for Continental account. The quotation was 123s. 10d. On Thursday 1120,000 was available in the open market and the quotation was 122s, 11d. on Friday • £230,000 was sold for foreign account; the quotation was 122s: 5d. Because of the great confidence felt as to the fundamental soundness of the British position, funds continue to flow to London from all centers and open market money rates are, consequently excessively low. Call money against bills is in supply at M% down to 4,%. Two-months' bills are easy at 5-16% to 7-16%. Three-months' bills are 7-16% 'to %,four-months' bills.%% to 9-16%, A and six-months' bills are 5 % to %%. This week the Bank of England shows an increase in gold holdings of £394,090, the total standing at the record high of £187,402,773 as of May 31, which compares with £129,341,726 a year ago and with £150,000,000 recommended as the proper minimum by the Cunliffe committee. At the Port of New York the gold movement for the week ended May 31, as reported by the Federal Reserve Bank of New York, con,sisted of imports of $93,000, of which $68,000 came from the Philippines and $25,000 chiefly from Latin American countries. Gold exports totaled $14,950,000, which was shipped to England. In tabular form the gold movement at the, the Port of New York for the week ended May 31, as reported by the Federal Bank of New York, was as follows: Volume 136 Financial Chronicle GOLD MOVEMENT AT NEW YORK, MAY 25=MAY 31 INCL. Exports. • Imports. $68,000 from Philippines. $14,950,000 to England. 25,000 chiefly from Latin American countries. $14,950,000 total. $93,000 total Net Change in Gold Earmarked for Foreign Account. Decrease: $14,950,000. The above figures are for the week ending Wednesday evening. On Thursday and Friday there were no imports or exports of the metal nor change in gold held earmarked for foreign account. •There have been no reports during the week of gold having been received at any of the Pacific ports. Canadian exchange continues at a severe discount, but more favorable to Montreal than in many weeks. On Saturday last Montreal funds were at a discount of 12%, on Monday at 113/%. On Tuesday, 2 Memorial Day, there was no market in New York. 2 On Wednesday Montreal was at a discount of 113/%, on Thursday at 113/%,and on Friday at 11%. 2 Referring to day-to-day rates, sterling exchange on Saturday last was up sharply. Bankers sight was 3.96@3.98; cable transfers,.3.97@3.98%. On Monday sterling was still firmer. The range was 3.96%@ 4.00 for bankers' sight and 3.97@4.00% for cable transfers. On Tuesday, May 30, Memorial Day, there was no market in New York. On Wednesday sterling opened at a new high on the • move but reacted toward the close. The range was 3.98%@ 4.023/2 for bankers' sight and 3.99@4.02% for cable transfers. On Thursday the pound was irregularly firm. The range was 3.98%@3.99% for bankers' sight and 3.993/@4.60 for cable transfers. On 8 Friday sterling was again firmer, the range. was 3.989/@4.003/ for bankers' sight and 3.98%@ 8 2 / 4.005 for cable transfers. Closing quotations on Friday were 4.00% for demand and 4.003/ for cable ; transfers. Commercial sight bills finished at 3.9932 4 60-day bills at 3.983/2; 90-day bills at 3.981 ; documents for payment (60 days) at 3.983/2 and seven-day grain bills at 3.993 . Cotton and grain for payment 4 closed at 3.9932 . XCHANGE on the Continental countries soared this week with respect to the dollar, but rates have been highly irregular and fluctuations wide. All the Continentals are of course greatly demoralized owing to the uncertainty of the general foreign exchange situation not only as it bears upon the dollar . but as it affects the future of sterling, marks, and francs, to say nothing of the minor units which tend to be forced up or down by the influences affecting the major currencies. The general attitude of the Continental centers with respect to the present and future of exchange is indicated in the resume of sterling. However high day-to-day quotations whatetrer their fluctuations may be, the markets are extremely dull, with only the minimum of either supply or demand. Hence the smallest actual transaction has'a most marked influence on quotations. French francs while fluctuating were frequently quoted during the week at close to the year's high. The market to all accounts is doubtful as to the future of the franc and feels that the Paris authorities may be compelled to abandon gold if the standard .is not restored by London and Washington as a consequence of the forthcoming economic conference. However, the most responsible authorities in Paris assert that there can be no abandonment of gold by the Bank of France or any form of monetary inflation. In this E 3777 the bank has • the almost universal support of the French people, who as a result of actual experience, look with horror upon inflation in any form. This week the Bank of France shows an increase in gold holdings of fr. 21,052,058, the total standing at fr. 80,950,775,958, which compares with fr. 79,470,235,749 on May 27 1932 and with fr. 28,935,000,000 in June 1928 following stabilization of the franc. German marks, while quoted excessively high with respect to the dollar, are only nominally so quoted, as practically no market in the German unit exists either here or abroad,'as all foreign exchange transactions of the Reich are blocked by the Reichsbank. Various items of importance relating to standstill agreements and to the blocked mark accounts; as well as to the dangerous position of the Reichsbank will be found on other pages. Finnish exchange is at all times a minor unit in the New York market, but special interest attaches to it at present, owing to the reduction in the rediscount effecrate of.the Bank of Finland from 6% to tive on Saturday last. The reduction in the Finnish rate harmonizes with reductions made this week by the banks of Sweden and Denmark and reflects the general ease in money conditions as well as reduced demands for credit accommodation. Greek exchange is also a minor unit in the New York market, but it is to be noted that the Central Bank of Greece reduced its rediscount rate .on Monday from 9% to 7%. The London check rate on Paris finished yesterday at 85.78, against 85.72 on Friday of last week. In New York sight bills on the French centre finished on Friday at.4.663/2, against 4.58 on Friday of last 4 week; cable transfers at 4.663 , against 4.583, and . commercial sight bills at 4.653/2, against 4.571 4. Antwerp belga,s finished at 16.47 for bankers' sight bills and at 16.48 for cable transfers, against 16.20 and 16.21. Final quotations for Berlin marks were 27.68 for bankers' sight bills and 27.70 foil cable transfers, in comparison with 27.19 and 27.20. 4 Italian lire closed at 6.133 for bankers' sight bills 4 and at 6.14 for cable transfers, against 6.023 and 6.03. Austrian schillings closed at 16.25, against 16.25; exchange on Czechoslovakia at 3.56, against 3.47; on Bucharest at 0.73, against 0.72; on Poland at 13.45, against 13.15, and on Finland at 1.79, against 1.76. Greek exchange closed at 0.663/b for bankers' sight bills and at 0.673/2 for cable transfers, against 0.65 and 0.66. XCHANGE on the countries neutral during the war, while dull and inactive in this market, is generally firmer in sympathy with the upward swings in sterling and French francs. On Thursday the Danish National Bank rate of discount was reduced. /%. The rate had been at 332% to 3%, from 31 since Oct. 12 1932 when it was reduced from 4%. The Swedish National Bank also, reduced its rate, A effective June 1, from 31 % to 3%. The 33/2% rate had been in effect since Sept. 1 1932 when it was reduced from 4%. It will be recalled that the Bank of Norway reduced its rate of rediscount on Thursday of last week from 4% to 4%; and, as noted above, in the comments on the Continental exchanges, the central bank of Finland, another Scandinavian country reduced its rediscount rate this week from The Scandinavian' countries are 6% to strongly inclined to moye in harmony in all financial, monetary and commercial matters. These lower re- E 3778 Financial Chronicle June 3 1933 discount rates indicate in part a• general easing in against 7.95 and 8.00. credit conditions on the Baltic, arising at present, nally quoted 63/8, against 63/8. however, 19.25, against 18.50. more from activity than from of industrial accumulation the at Peru is nominal of funds. low • level active Chilean exchange is nomi- largely as a seasonal influence, and the rediscount E rate reductions may be viewed as a filip to further yen are firm in sympathy with the firmness in sterling the upward trend of business. The Swedish finance and the other major currencies in terms of the dollar: minister has asked the Riksdag for an increase of The Chinese units move almost strictly in harmony However, business is expanding in all these countries, XCHANGE on the Far Eastern countries presents no new features of importance. Japanese 100,000,000 kronor in the legal maximum note cir- with the swings in silver prices. culation in order to meet obligations involved by the is firm in sympathy with sterling to which the rupee increaied prices. The actual note issue is far below present legal limit. The Danish international ac- is attached at a fixed rate. The Indian rupee • India maintains a good export balance in international trade as the heavy counts for 1932 show that there was a net balance gold sales abroad offset commodity.import increases in Denmark s favor of kr. 69,000,000, compared with ' and a sharp decline in commodity exports. a deficit of kr. 52,000,000 in 1931 and of kr. 18,000,- estimated that India has sold abroad approximately 000 in Holland 1930. guilders and Swiss francs fluctuated widely this week, but at their lowest were exceptionally firm with respect to the dollar. They are also firmer in terms of European currencies, so £100,000,000 of gold since Sept. 1931. It is There is as yet no indication of any slackening of these shipments. When they began it was estimated India could easily ship £250,000,000. that The rest of much so that the gold loss of both countries, recently the world, particularly Great Britain, is well pleased In Monday s trading the ' to see this gold coming out of the Indian hoards and conspicuous, has stopped. guilder and the Swiss franc set new high records. The guilder jumped 80 points to 48.40 (par is 40.20). The Swiss unit went to 23.25 (par is 19.30). There made available for monetary uses. closing quotations for yen checks yesterday were 245 8 against 24 3-16 on Friday of last week. / , was an equally great reaction in Wednesday s market, ' Kong closed at 283 with volume of transactions both here and abroad at Shanghai at 25% Hong ® 28%, against 271/i . @ 27 5-16; 253', against 24% 243/2; @ to both the Dutch and Swiss markets is again in Manila at 50%, against 50%; Singapore at 463 %, %; Bombay at 303/8, against 29%, and against 453 evidence. Calcutta at 303', against 29%. minimum amounts. A return flow of foreign funds Bankers sight on Amsterdam finished on Friday ' at 47.60, against 46.65 on Friday of last week; cable transfers at 47.62, against 46.70, and sight bills against 46.55. at 47.50, - commercial Swiss francs clos6d at 22.91 for checks and at 22.92 for. cable against tranbfers, 22.41 22.42. and Copenhagen checks finished at 17.86 and cable transfers at 17.87, agai st 17.49 and 17.50; Checks on Sweden closed ' at 20.54 and cable transfers at 20.55, against 20.11 and 20.12; while checks on Norway finished at 20.29 and cable transfers at 20.30, against 19.87 and 19.88. pesetas closed at 10.11 for bankers sight ' Spanish bills and at 10.12 for cable transfers, against 9.91 and 9.92. E XCHANGE on the South American countries continues quite demoralized as a result of the major economic disturbances affecting all countries. Rates are highly nominal. A recent Buenos Aries dispatch stated that the Argentine Foreign Exchange Control Commission ruled that all dollar drafts on New York must be covered exclusively by dollars obtained through exports to . the United States. Argentinian importers of American goods view the ruling with some concern as a discrimination in favor • of British goods. balances American retained in South American countries in so-called " blocked accounts " are estimated at around $100,000,000. American exporters, it is asserted, in order to obtain payments have frequently to accept discounts on their bills and drafts as high as 15% in what is designated the" " bootleg exchange. The published nomi- nal rates for such part of the blocked accounts as are set free, American importers assert, are .generally misleading. PURSUANT of is Bank to the requirements of Section 522 the Tariff Act of 1922, the Federal Reserve now certifying daily to the Secretary of the Treasury the buying rate for cable transfers in the different countries of the world. We give below a record for the week just passed: FOREIGN EXCHANGE RATES CERTIFIED BY FEDERAL RESERVE BANKS TO TREASURY UNDER TARIFF ACT OF 1922. MAY 27 1933 TO JUNE 2 1933, INCLUSIVE. Country and Monetary _ Noon Riving Rate for Cable Transfers in New York, Value in United States Money. May 27. May 29. May 30. May 31. June 1. June 2. $ $ 5 5 EUROPE$ $ 14.5500* .142916* .148000 .143250 .142750* Austria,schilUng 164200 .165050 .166075 .164858 .164523 Belgium, belga .008033* 5)07886* .007833* .007925* .007875* Bulgaria, ley .035677 .035525 .0315416 Czechoslovakia, krone .035225 .035325 .176850 .176972 .178341 .178063 .177676 Denmark, krone England, pound 3.971583 3.972416 4.001071 3.996083 3.991696 sterling .017625 .017566 .017591 .017566 .017580 Finland, markka , 046564 .046698 .046748 .046676 .046550 France,franc .276983 .276241 .276271 Germany, reichsmark .277408 .277008 .006745 .006722 .006705 006655 .006625 Greece, drachma 476742 .477358 .478927 .476958 .475585 Holland. guilder 201666* .201666* .204166* .201333* .201666* Hungary, pengo 061331 .061531 .061866 .061543 .061325 Italy, lira 201376 .201383 .202541 .202492 .201958 Norway, krone 130875 .132600 .133187 .132625 .133625 Poland, zloty 036183 .036110 .036358 .036390 .036266 Portugal, escudo 007075 .007060 .007180 .007100 .007160 Rumania,leu 101269 .101100 HOLI- .101826 .101210 .101089 Spain. Peseta DAY 203700 .203441 .205166 .204909 .204708 Sweden,krona .229558 .228955 .228435 Switzerland, franc_ .227950 .228707 .016425 .016000 .016116 Yugoslavia, Maar_ _ _ _ .016200 .016060 ASIA• China.251458 .250000 .250000 .247083 .247500 Chefoo dollar .251458 .250000 .250000 Hankow dollar- _ .247083 .247500 .251406 .249687 .250625 Shanghai dollar_ _ •.247187 .247500 • .251458 .250000 .250000 247083 .247500 Tientsin dollar .279531 .279218 .279531 Hong Hong dollar__ .273125 .276562 .301250 .300200 .300000 .298300 .298450 India, rupee .244250 .244500 .245020 242595 .243000 Japan, yen .465000 .464375 463125 Singapore (B.S.) dollar .461250 .461250 NORTH AMER..885260 .884687 .885468 880284 .880208 Canada,.dollar .999212 .999212 .999212 .999212 .999212 Cuba, peso . .282175 .279375 .277975 Mexico, peso (sliver). .279050 .280000 .882750 .882250 .882875 Newfoundland, dollar .878125 .877750 SOUTH AMER..693913* .690007* .691386" Argentina, Peso (gold) .679617 .684343* .076350* .076387* .076387* 076350* .076350* Brazil, mlireis .066250* .066250* '.067500* .075000* .075000" Chile, peso ' .536666* .536666* .543333" 552500 .535000• Uruguay. peso 862100* .862100* .862100* .862100* .862100" Colombia, peso OTHER .3.189166 3.181250 3.181668 3.160000 3.161666 Australia, pound 3.197500 3.189583 3.190000 New Zealand, pound_ 3.168333 3.170000 3.958875 3.950833 3.947187 South Africa, pound 3.925625 3.924375 *Nominal rates, firm rates not available. Argentine paper pesos closed on Friday nominally at 30.00 for bankers' sight bills, against 28% on Friday of last week; cable transfers at 30.50, against 29.50. Brazilian milreis are nominally quoted 7.95 ' for.bankers sight bills and 8.00 for cable transfers, table indicates the amount of gold of THE followingthe principalcomparisonsbanksofasthe • European bullion in as 1 1933, together with Jute corresponding dates in the previous four years: • • Financial Chronicle Volume 136 Baas of— 1933. 1932. 1931. 1930. 1929. £ £ £ England_ _ _ 187,402,773 129,341;728 152,934,078 France a__ 647,606,207 635,761,886 445,072,484 Germany b 17,752,200 38,196,300 109,134,450 96,945,000 90,108,000 Spain 90,374,000 60,895,000' 57,460,000 Italy 70,483,000 37,495,000 Netherlands 78,121,000 69,744,000 41,334.000 72,341,000 Nat. Beig'm 76,458,000 25.713,000 Switzerrnd_ 73.388,000 •76.777,000 13,303,000 Sweden 12,031,000 11,443,000 9,552,000 Denmark 8,032,000 7,397.000 8,133,000 6,561,000 Norway 6,569,000 £ 156,879,085 350,470,939 122,067,350 98,815.000 56,279,000 35,993,000 34,194,000 23,153,000 13,511,000 9,567,000 8,144,000 £ 163,851,130 292,771,460 85,263,600 102,416.000 55,434.000 36,419,000 27,523.000 19,845,000 13,012,000 9,595.000 8,156,000 997,076,012 107'121 909,073,374 MO 072 558 814,286,190 808.449.152 Total week_ 1,259,205,180 1,207,577,912 Prim, ararlr 1 9K0 LAO 07.1 1 105057952 002 a These are the gold holdings of the Bank of France as reported in the new form of statement. b Gold holdings of the Bank of Germany are exclusive of gold held abroad, the amount of which the present year is E864,250. The Four-Power Pact and the Outlook for Peace. The announcement on Tuesday that the French Cabinet had authorized the French Ambassador at Rome to join with the Ambassadors of Great Britain and Germany in initialing the Mussolini four-Power pact, followed by a vote in the Chamber of Deputies which was interpreted as indirectly approving the Cabinet's action, does not necessarily mean that the pact will shortly be ratified and put into effect. Ratification involves the formal action of the Parliaments of the signatory Powers, and while it may probably be assumed that the Italian Parliament and the German Reichstag will assent to whatever Premier Mussolini and Chancellor Hitler respectively approve, favorable action in Great Britain and France is by no means a foregone conclusion. .The initialing of the pact, however, will indicate that the project for which the four Powers have tentatively agreed to stand has been advanced, that the differences of opinion which have developed since the proposal was first broached, more than-two and a half months ago, and which as late as yesterday had not been completely ironed out so as to admit of initialing the document on that day as was expected, have been adjusted, and that the pact may now become a factor of greater importance in discussions of European peace. Precisely wherein the pact as now agreed upon differs from the first Mussolini draft, or from the three or four other drafts that are believed to have been made since the project was first suggested, cannot be known until all the texts are published. It will be recalled that France, while eventually expressing a general approval of the terms in principle as a basis for further discussion, objected strongly from the first to certain provisions which, it was believed, interfered with or curtailed some prerogatives of the League, and that similar objection was shortly urged with outspoken aggressiveness by the States of the Little Entente and Poland. The burden of complaint from all these sources was the encouragement which the pact seemed to offer to a revision of the peace treaties through the action of the four signatory Powers without, apparently, invoking for that purpose the agency of the League. The Little Entente in particular affected to see in the proposal a device for erecting a four-Power alliance which, if it proved effective in practical operation, would tend at important points to supercede or materially limit the League. Paris dispatches report that the pact, in the form in which it is expected to be initialed, has been modified, as a result of French insistance, by incorporating in it some limiting references to the League .Covenant. Onq of these references, it is-understoqd, is to Article X, which pledges the League to *e maintenance of the territorial integrity and political 3779 independence of all the member States—a matter which the Little Entente and Poland regarded as particularly endangered by the proposed pact. Another reference is to Article XVI, which provides for the imposition of sanctions upon a member State which violates its obligations by resorting to war, and requires a State to facilitate the passage through its territory of the forces of another State which joins in common action to enforce respect for the obligations of League membership. A third reference is to Article XIX, under which the Assembly may, from time to time, invite the members of the League to re-examine treaties which have become inapplicable because of changed international conditions, or whose continuance may imperil world peace. If it shall appear that these provisions of the Covenant have been incorporated as essential parts . of the four-Power pact, it will register a victory for France and the Little Entente, but the pact itself will have been robbed of special significance. The satisfaction in German official circles which was reported by the Berlin correspondent of the New York "Times" on Thursday does not seem to rest upon a very solid foundation. Aceording to this correspondent, Germany welcomes the pact because it creates a super-council of fonr great Powers which will be able to dispatch business more promptly and efficiently than the cumbersome Council of the League, provides for the consultation 'of Germany henceforth "in all international affairs on the basis of equality," and explicitly acknowledges her right to treaty revision. It is exactly the creation of a super-council, however, destined, if it worked well at all, to displace somewhat the Council of the League, that the Little Entente has strenuously objected to, and if its objections have now been withdrawn it can be only because the independent action of the four Powers has been carefully restricted. On the other hand, if a revision of the peace treaties, which is the main thing that Germany desires, is to be accomplished only through the machinery of the League, the pact at this point would appear to'amount to little more than an agreement to ask for the use of the machinery whenever the four Powers agree that it should be set in motion. We know from experience that revision, while looked upon at times in Great Britain with benevolent interest, has not yet commended itself seriously to any British Government,and that in France revision is dreaded and strongly opposed. Without the assent of either Great Britain or France, accordingly, Germany and Italy together could not force the revision issue. It is probable that the four-Power pact, if it actually comes into operation, will put an end to the scheme of a Central European bloc made up of Italy and some or all of the former Central Powers._ Beyond this negative effect, the most that can be expected is that it may pave the way eventually to more friendly and harmonious relations between the four Powers and thereby impart some energy to the League. The outlook for ratification, however, is not bright. In spite of the success of Premier Daladier In obtaining the preliminary approval of his Ca'binet for the pact and in forcing forward the budget debate, the position of the French Government appears to be increasingly jeopardized.by the attacks on the pact by M. Herriot and other leaders, and by the widespread revolt of the taxpayers over 3780 Financial Chronicle the Government's financial policy. The four-Power • pact does not, apparently, dispose of any of the • questions which have been at issue between France and Italy, notably the long-standing dispute over naval parity, and it was reported on Wednesday that the British Government had been unofficially informed that the pact would not be ratified until these questions were settled. There is little evidence that Prime Minister MacDonald's enthusiasm for the pact has been shared by the British Cabinet, and British repugnance to.any further political commitments on the Continent has deepened as political complications have multiplied. The greatest single obstacle to ratification, however, is afforded by Germany itself, the country which might fairly be expected to gain the mostfrom the pact. No one who is in close touch with the situation believes that Germany desires war, or would fail to go a long way in concession in order to maintain peace, but there is nevertheless much doubt • of the sincerity of the Hitler Government, and much anxiety regarding the ultimate effect of its irritating policies. The strong objection which it was reported on May 25 the Hitler Government would make to any move intended to place the Jews in Germany under the protection of the League as a racial minority;together with the vigorous protest made on Tuesday to action by the League on a petition of Franz Bernstein, a German refugee from Upper Silesia, against the treatment of Jews in Germany, have, it must be admitted, some substantial basis in the claim that the Jewish question in Germany is a domestic matter and that Bernstein himself has not fallen under the operation of any of the discriminating German decrees, but they have nevertheless brought the Jewish question into controversy before the League and further inflamed resentment against German policy. The anxiety created by the Jewish situation has been intensified by a report, received by the French Government from secret sources and made public in substance on Wednesday, to the effect that the Hitler Government has proposed to support Poland in enlarging its territory in the Soviet Ukraine, in the direction of the Black Sea, in return for a substantial territorial concession to Germany in the Polish Corridor. The proposal, if it turns out to have been made, involves also the Soviet Government, which has recently concluded with Poland a pact of non-aggression as well as a commercial treaty. The special significance of the matter for France is the evidence which it affords of a political rift between France and Poland. Poland, which is not a member of the Little Entente but has been in general sympathetic with its aims, has been even more pronounced than the Little Entente in its opposition to the four-Power pact, and its opposition continues notwithstanding that the pact has apparently 'been modified to meet the objections of the Entente Powers. In spite of reports of extreme hostility in Poland to the Hitler regime and a number of irritating incidents on both sides, there have been rumors for some time that the two Powers were getting together on the Corridor issue, and the tentative bargain reported on Wednesday, while it must be taken with all reserve until confirmed,lends color to the suspicion that a rapprochement is under consideration. We have more than once expressed the opinion that a return to the old system of alliances, re- June 3 1933 peatedly appearing as a tendency during the past two or three years, holds no promise of stable peace for Europe. The reception which has attended the progress of the four-Power pact only confirms that view. It is regretfully to be admitted that the prospect of peace through a general agreement about disarmament is as yet no more'assuring. It was apparently President Roosevelt's hope, when he sent Ambassador Davis to Europe with wide authority to pledge American co-operation in insuring security, that the Disarmament Conference might achieve substantial agreement, sufficient at least to enable it to postpone further debate for a time, before the meeting of the World Economic Conference. There is no likelihood of such an agreement now. The British plan, so-called, has been so overlaid with objections and counter-proposals that it is now, as has been well said, only a confused mass of uncertain or contradictory provisions, and the confusion has been increased by the demand of Japan for a more favorable ratio of naval strength than was accorded to it by the Washington and London naval treaties. The American security proposals, moreover, are unsatisfactory to France because they explicitly do not include a promise to use force. It would have been better for the Disarmament Conference to adjourn aine die, and thereby free the Eco , nomic Conference from the overhanging cloud of another international parley whose deliberations Seem only to magnify international disagreements, than .for it to take a qualified recess as it voted to do on Friday. It is easy to understand why Mr. Roosevelt, with this cloud on the'horizon, should be reported as less disposed than formerly to use the London Conference as an occasion for international bargaining, and as meaning to hold the United States to an independent course unless substantial all-round concessions and agreements can be secured. There is every justification for such a firm national policy where the spirit of international accord is obviously lacking. Storms Have Cleared Economic Atmosphere for International Conference. When, at this. season of the year, persons comfortably seated in their homes witness the 'terrifying display of an evening thunderstorm, with its ominold approach, its increasingly brilliant flashes of lightning at times descending perpendicularly from a sky overcast with black clouds, the observers behold nature's method of purifying the atmosphere. In these sententious days of progress the air is contaminated by inhabitants of the earth to a degree which in an earlier period of the simple life never occurred. Conversion of petroleum, hidden for ages below the surface, into gasoline and utilization of the gas for motive power have tended to defile the atmosphere to an extent never contemplated until ingenuity, science and industry provided the people with automobiles. Every observing person in populous towns and cities has witnessed the air charged with fumes and wondered as to the effect of their inhalation by human beings. They have speculated as to whether the almost constant breathing of the impurities may not undermine mankind physically, mentally and morally, perhaps in a way accounting for the wave of new forms of committing crimes, and almost upiversal discontent. Are we using a natural resource in a manner and to such a great extent that Volume 136 Financial Chronicle 3781 man is in danger Of weakening the powers with tasks with a common understanding, and, let us which the Creator has endowed him? It would seem hope, in mutual accord with a subjugation of selfish in this age as if nature's way of purification is more motives. If the trials and hardships of the past three years essential to man's well-being than at any time since are not sufficient to bring men of the larger nations the Garden of Eden. The spectacle of the thunder storm, its purpose to a better understanding, must even greater distress and beneficial results are not unlike what has been be thrust upon the world to bring about the benewitnessed for three years in the economic world. We ficial results now so sincerely desired? Common have been building our Towers of Babel far higher sense would seem to indicate that the atmosphere than the one of Biblical times, modern towers which must be kept clear. It is for the survivors,in building anew, to profit are known as skyscrapers, towers illuminated by artificial daylight, which are heated and ventilated by sad experience, to avoid what has been demonScientific methods making them impervious to out- strated to have been wrong, and with determination byside natural conditions. The tall structures are and zeal to make this glorious old globe a safer and• made easily and quickly accessible to points high a better home for posterity. The builders are again at work after the storm. above the • Surface of the earth by swiftly-moving They need and are entitled to the help and earnest elevators. From the pace of the pedestrian whose progress co-operation of the rank and file of all workers. It was limited to a few miles per hour, man has pro- is well to put aside grudges, bearing in mind that gressed so that he may now travel from 40 to 60 all have suffered, and that the more one had to lose miles per hour in his private car over hard and the greater was his personal loss. Not the farmer or the producer; not the manusmooth surfaced roads, an alacrity typical of developments in many other respects. From the quill pen facturer or the distributor; not the merchant or and stylus we have advanced to the typewriter with the consumer, nor the debtor of creditor stands its process of manifolding, which is characteristic alone. All interests, individual and international, of advancement in a multitude of mechanical ways, are interwoven. Leaders of some nations are diswhile thoughts are.flashed almost instantaneously posed to erect lightning rods and to wear insulated over land and sea by telegraph, telephone, cable, clothing, overlooking the fact that the storm has wireless and the radio. Every new development is passed and that the purpose of the conference is to quickly seized upon for the advantage of transacting build new .foundations for reconstruction to the mutual advantage of all concerned. business with expedition and accuracy. We have been living and working at such a rapid The Industrial Recovery Bill. pace that the entire economic wcirld has been upset When a military commander faces an opponent of and the economic atmosphere has been defiled and surcharged with evils which only a storm could overwhelming power, discretion prompts a retreat clear away. The thunder storm, which may be until reinforcements may strenghten his first line designated as a depression; burst upon us follow- of defense to a point which will justify the coming the climax of many follies in 1929. Purifying Mander in making a firm stand and to engage the lightning has demolished many of our idols. But enemy with a possibility of achieving victory. Inthe Rosy-Fingered Daughter of Morn again appears dustry in the United States has been gradually upon the horizon and bids men everywhere to be forced into a position very much like that of such inspired with new hope, to inhale a purified air, and a military commander, in respect to enactment of to gird their loins for new and mighty deeds in all the House bill designed, among other things, to "enworthy forms- of effort. courage national industrial recovery." • The darkest clouds have rolled by. Wrecks must When the bill was pending in the House at Washbe cleared away and foundations mist be laid for ington, industrialists evidently realized that it new structures which undoubtedly will surpass would be futile to waste effort and ammunition in the old. • opposition to the passage of the measure by that Man has conquered the earth. He has explored its body. Indications are that the bill may be passed poles. He has invented marvelous machines for the by the Senate also and be signed by the President. cultivation of the soil and learned how to obtain the Industry will then be in a position to profit by the best results from its products. He has delved be- prediction of Senator Reed that the bill will not neath the surface to obtain rich and useful ores at be upheld by the courts, and the'final test of legality a depth where only the heat .of internal fires pre- will come in the Supreme Court of the United vented further progress. He has developed means States. of rapid transportation and communication, and he If such litigation must come it would seem as if has navigated by airship around the mundane it ought to be handled without unnecessary delay, sphere. and even expedited, in order that industrialists May But to what purpose, if the whole world is sud- understand just where they stand after all doubt is denly to be thrown into chaos by war? A new era removed. One basis for this conclusion is the mild may come out of the international economic confer- attitude of manufacturers when the features of the ence. Having conquered the earth it now only re- industrial bill were presented to members of the mains for men of many nations to control them- Philadelphia Chamber of Commerce last week by selves. If their representatives approach the con- Judge James A. Emory, counsel for the National ference in the right spirit the present century may Manufacturers' Association, and David L. Podell, in reality witness "Peace on Earth, Good Will to a New York lawyer, who was largely instrumental in drafting the measure, which was introduced in Men." Such a conference could not have been called at the Senate by Senator Wagner of New York. The a better time, as common suffering tends to make speakers limited themselves to interpretations of the whole world akin and therefore to approach the various features of the important bill, and in this 3782 Financial Chronicle respect, while edifying, they were scarcely emphatic or positive enough on either side to arouse enthusiasm, although each speaker at the conclusion of his address was given applause as a sign of appreciation. Mr. Podell, speaking for the bill, was evidently so sure of his ground that he Was content to rest with a statement of possible benefits if the measure becomes a law, while Judge Emory reservedly talked as if he might unwittingly reveal a line of defense to his aggressive opponents. Thus, if this was a typical discussion, industrialists of the country would seem to he calmly awaiting a bombardment and are reserving defensive ammunition for use before the highest tribunal of the land. Meanwhile, should the bill pass the Senate and be signed by the President, the statute, until finally judiciously construed, will constitute just one more lowering cloud hanging threateningly over American business which is persistently struggling to get once more squarely upon its feet. As explained by Mr. Podell, these specific purposes of the bill are commendable, namely, "to encourage national industrial recovery and to foster fair competition." There are debatable methods and machinery set up to accomplish desired ends, the whole proposition being based upon the declaration that a national emergency exists. The club to be used as an enfoicement agency to drive reluctant manufacturers into organized groups is the licensing power by which, through the withholding of a license to conduct business, a recalcitrant or reluctant mann-. facturer may be driven into such a group in his particular line of business under penalty of being de' prived of the right to continue his business upon an inter-State scope. Largely around this feature of the bill will be built the attack if resort is made to the courts. Justification for drastic methods of enforcement is based upon the necessity for stopping price-cutting, a bane generally recognized among business men, arid the argument is offered that if price-cutting can be abolished a basis of stabilization of prices will be afforded for the protection of all members of the particular group affected. The aim is to effect higher prices, which, in turn, will justify the payment of a fair wage, which will be attempted to be fixed under the bill's provisions. The consumer evidently will be adversely affected in two ways. He will be paid in dollars having depreciated purchasing power, and he will have to pay higher prices for what he buys, to which the theoretical answer is that whatever the consumer loses by reason of higher prices will be offset by his increase in wages and salaries, which would have some potency if all groups were to act in concert, which is not likely to occur, even if an advanced date were fixed for a change. • Another cause for seeming lethargy among business men as to the enactment of the bill is that commercial conditions have sagged into a state where any change will be welcome on the assumption that there is greater possibility of a change_ operating to better conditions rather than to make them worse. Many business men have drifted to an attitude expressed by the saying, "Any port in a storm." Special provisions are made for the protection of labor, including the right to organize and to bargain June 3 1933 collectively. There is a penal clause which pro-. vides for a fine of $500 or iniprisonment for not exceeding six months,or both,for certain violations. There is tacked on to this business and labor bill "Title II—Public Works and Construction Projects." This measure provides for loans to States not exceeding in the aggregate $400,000,000, and it also carries the much debated appropriation of $3,300,000,400. If the bill as it has passed the House becomes a law it would still be possible for such an industry as the Baldwin Locomotive Works to sell locomotives for use within the State of Pennsylvania, where its principal plants are located, and for the Stetson Co. to sell hats within Pennsylvania, while anthracite, which undergoes a process of manufacture before marketing, might be restricted to consumption in the Keystone State, which contains the only fuel deposits of the kind, provided these manufacturers elected not to comply with the provisions of the bill. What chaos would occur if the wearer of a Pennsylvania-made hat should "invade" any one of the surrounding five States may Only be surmised. For three years industry has been suffering from the effects of smoke suppressors and electrical insulators. What is desires is to have handicaps removed, rather than to be bound-hand and foot with endless rolls of red tape. Bankruptcies Among Consumers. Both the Department of Commerce and the Department of Justice have made studies'concerning bankruptcies among consumers, and the conclusions reached as a result of their investigations have been embodied in proposed amendments to the existing bankruptcy law which were submitted by the President to Congress, Feb. 29 1932. The report by the Commerce Department is confined to the economic effects and causes of bankruptcy, while the Departnfent of Justice investigated the legal phases and operations of the law. Although working independently of each other, and differing in methods of approach, the conclusions reached by the two departments are similar. They reveal that the problem of reducing the number of bankruptcies and the subsequent losses can be solved only by the concerted aetion of legislators, credit grantors and debtors. INCREASE IN NUMBERS AND LOSSES. Since 1920 wage-earner bankruptcies, as classified by the Attorney-General, have increased every year, even at a greater rate than bankruptcies among merchants and manufacturers. According to the Census Bureau, the population of the United States .increased from 105,710,620 in 1920 to 122,775,046 in 1930, an increase of 16.1%, whereas bankruptcies among wage earners increased from 5,647 in 1920 to 29,067 in 1930, or 414%, and they now account for nearly 50% of all bankruptcies. Besides the millions of dollars lost through rer • corded bankruptcies, there ai e millions lost to creditors by persons who do not pay their bills and who are not discharged of their debts through bankruptcy. No satisfactory estimate has been made of the total bad-debt losses through consumer credit. Recorded losses through bankruptcies of all types —merchants,farmers, wage earners, and others—in to the 12 years, 1920 . 1931 inclusive, were $7,223,727,656, and the average amount received by creditors during this period was 8.43c. on the dollar. Financial Chronicle Volume 130 • The following table shows the number and percentage of total bankruptcies by types,from 1920 to 1930, inclusive: NUMBER AND PERCENTAGE OF TOTAL BANKRUPTCIES BY TYPES. 1920-1930.a Wage Earners. Total Bankruptcles. 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 15,622 15,200 22,517 34,401 41,649 44,440 47,307 48,269 53,592 57,039 60,548 Merchants and Manufacturers. . Year Professional Persons. Number. Per. Cent of Total. 'Nuinber. Per Cent of Total. 5,647 5,928 7,582 10,261 13,130 14,478 16,852 18,568 21,632 25,576 b29,067 36.1 39.0 33.7 29.8 31.5 32.6 35.6 38.5 40.4 44.8 48.0 510 299 352 497 671 765 1,028 1,221 1,352 1,354 c1,378 3.3 2.0 1.6 1.5 1.6 1.7 2.2 2.5 2.5 2.4 2.3 Farmers. Others. Per Cent Per Centl Per Cent Number. of Total. Number. of Total. Number. of Total 3,906 25.0 6.4 999 1920 4,560 29.2 3,270 21.5 1921 9.0 1,368 4,335 28.5 18.0 14.4 4.060 1922 3,238 7,285 32.9 5,518 16.0 17.3 1923 5,945 12,180 35.4 6,437 15.5 18.7 1924 7,781 13,630 32.7 8,251 18.6 7,874 17.7 1925 • 13,072 29.4 17.6 16.4 8,304 1926 7,777 13,346 28.2 8,626 17.8 13.1 1927 6,314 13,540 28.1 18.1 9,681 10.6 1928 5,081 15,246 28.4 17.0 9,690 1929 8.7 4,946 15,473 27.1 10,665 117.6 7.4 e4,472 1930 24..7 d14,966 a Based on Attorney-Generai's reports. b Increase of 414% from 1920-1930. c Increase of 170% from 1920-1930. d Increase of 228% from 1920-1930. e Increase of 347% from 1920-1930. f Increase of 173% from 1920-1930. 37$3 of all bankruptcies have been traced to extravagance. The unprecedented speculation which preceded the collapse of stocks, bonds, and real estate, and commodity prices in 1929 was also widespread among persons engaged in every conceivable occupation. The vast majority of those speculating in stocks and bonds had little knowledge of stock-market practices or of the technique of financial speculation. This was indicated by the fact that 7% of the bankruptcies studied were definitely caused by speculation. The inability of unwillingness to pay judgment liabilities arising from defaulted notes indorsed for friends or relatives, personal injuries and property damages occurring as a consequence of automobile accidents, slander, libel, and other tort actions is also one of the most prevalent causes of bankruptcy among consumers. In 15.4% of de cases studied the Department of Commerce fund that bankruptcy was resorted to in order to avoid payment of judgment debts; 87.8% of these judgments were obtained against indorsers of notes for others; 7.3% were automobile accident judgments, and 4.9% were obtained by the administrators of the estate of a. dishonest automobile dealer who had secured the signature of the bankrupts to purchase agreements for automobiles which he failed to deliver. There is no question but what the ease with which debts can be discharged through bankruptcy has had THE BANKRUPTCY LAW. a.material influence on the increase in the number of The present bankruptcy law was passed in 1898, consumer))ankruptcies. The bankruptcy court has increasingly become a dumping ground for the refuse and has remained unchanged except Mr a few minor unable to foresee of poorly-managed personal affairs of consumers and amendments. The authors were the tremendous growth of consumer credit and its a sanctuary where debtors obtain cancellation of their debts, regardless of how they have wasted their attendant abuses. The use of the bankruptcy law as property, or how fraudulently, extravagantly, or im- a means of being relieved of automobile-accident judgments was not anticipated. The practice of inprovidently they may have created obligations. There are, of course, some of the third classification dorsing notes for others has increased with the de-who are overburdened with debt and who cannot velopment of certain types of small loan financing. Indorsers frequently resort to bankruptcy in order, pay. to be discharged from-liabilities on defaulted notes. CHIEF UNDERLYING CAUSES. Methods of financing real estate transactions have ' It is estimated that in 1910 the total volume.of retail sales amounted to $20,000,000,000, of which changed considerably since the passage of the present approximately $2,000,000,000, or 10%, was on credit. law. Unsuccessful real estate venturers now secure The national retail credit survey, made in 1927 by freedom from their obligations in the bankruptcy the Department of Commerce, showed that 47% of court. Retail merchants and other creditors in all retail sales were made on credit. In 1929,the Census but a few cases are included in the petitions filed by of Distribution revealed that retail sales through all persons seeking relief from automobile-accident channels exceeded $53,000,000,000. •It is estimated judgments, liability as indorsers on defaulted notes, that 50% of this was on a credit basis. Estimates and real estate obligations. "The mere fact that 98% of the commercial bankalso show that in the year 1929 over six billion dol/ lars' worth of goods was sold on the instalment plan. ruptcies and about 991 2% of the non-commercial Other sources of consumer credit, such as personal bankrupts who seek a discharge are granted disfinance companies, industrial banks, credit unions, charges outright suggests inquiry regarding the conpawn brokers; &c., have developed a business during sideration which is given to applications for disthe last decade which now amounts to approximately charge. The fact is thUt in most cases these applicafour billions annually. In spite of the fact that con- tions receive no consideration at all. No one is under sumer credit is economically sound in principle and any duty to oppose his discharge, however fraudupractice, it remains for those concerned to so admin- lent or extravagant he may have been." One of the ister it that its benefits may be secured and it abuses outstanding defects of the existing bankruptcy law, therefore, appears to be that its leniency actually eneliminated. Since the entire structure of consumer credit is courages many to use the law as a means of dischargbased on the continuity of income received for per- ing legitimate debts. sonal services, the cessation of normal commercial SUGGESTED RELIEF. activities and the resultant unemployment, brought Congress has the power to enact legislation to proabout substantial wage reductions and a huge decline tect the credit of the'nation and to control debtors' in commodity prices. Therefore, a large number of affairs before assets'have been used or squandered. bankruptcies can be traced to instability of consumer A bankruptcy law under which creditors in all types income. Extravagance rather than thrift was an ac- of cases receive on an average less than eight cents on companiment of prosperity. Throughout the last the dollar, and debtors receive discharges indiscrimidecade, particularly during the period 1925-1929, nately, should be amended. Credit grantors can prevent bankruptcies of conwhen business was supposed to be at its best, bankruptcy was at its worst. As a matter of fact, 28% sumers by not permitting them to incur debts which • 3784 Financial Chronicle give rise to subsequent proceedings. Intelligent credit methods bear indirectly on the reduction in the number of bankruptcies and the attendant losses. The avoidance by debtors of the causes of bankruptcy consequently would further materially decrease the number of bankruptcies. Some of the suggested preventives are: • 1. Extravagance may be eliminated in part by: (a) A denial of discharge in bankruptcy to extravagant debtors until at least 50% of the bankrupt's debts have been paid. This can be accomplished by forcing the debtor to amortize his debts out of future eagnings over a period of time. (h) Careful credit extension, which would involve a thorough knowledge of (1) income, (2) cost of living, (3) entire debt position (including amount and itemization of payments previously assumed and contingent liabilities as indorsers), (4) antecedents. (c)'Education of debtors and credit grantors in the standards upon which credit should be based. (d) Credit grantors assisting debtors in budgeting incomes and refraining from overselling. 2. Dishonesty may be partly curtailed by: (a) A thorough investigation of every bankruptcy, with particulai reference to the causes, and a denial of discharges to fraudulent debtors, with appropriate punishment for each case. (b) Co-operation between credit grantors in providing and disseminating information concerning dishonest debtors, especially among loan and finance companies. 3. Speculation.—Among the many ways of curbing speculation, the following are mentioned as worthy of consideration: (a) Real estate development regulated by national, State, or local supervision. Regulation of all projects financed by construction loans when the participation of the public is involved. (b) Speculation in stocks and bonds regulated and controlled to prevent inflation or unwarranted stock and bond issues. (c) The bankrupt who has speculated in real estate, stocks, bonds, or who has gambled, should be refused a total discharge of his debts In bankruptcy. 4. It is stated that evasion of judgments might be dealt with in the following ways: (a) Debtors seeking relief from judgments which they cannot pay should be prevented from including in their petitions for bankruptcy discharge debts owing to trade creditors for necessities of life. (b) Compulsory automobile-accident insurance would prevent many bankruptcies. (c) Credit extension by loan companies based on the credit worthiness of the individual rather than that of his indorsers. A poor credit risk who secures the indorsement of friends and who later defaults frequently causes the bankruptcy of his indorsers. Drop in National Wealth of United States from 362 Billion Dollars in 1929 to 247 Billion in 1932—Peak $488,700,000,000 in 1920. The national wealth of the United States shrank from $362 billion in 1929 to $247 billion in 1932, or from $2,977 per capita to $1,981 per capita, according to estimates announced May 22 by the National Industrial Conference Board in a bulletin entitled "Estimating the National Wealth." According to the Board's estimates, the national wealth reached its peak in 1920 at $488.7 billion, or $4,587 per capita. The next year, 1921, saw it drop to $317.2 billion, or $2,932 per capita. In the following years fluctuations were confined within relatively narrow limits until 1931, when the national wealth dropped to $280.3 billion. In the 20 years from 1912 to 1932, while the total national wealth increased from $186.3 billion to $247 billion, the nation's population also grew, so that per capita wealth increased only from $1,950 to $1,981, or $31 in the two decades. • Commenting upon the drop from $321 billion in 1922, when the Census Bureau last estimated the national wealth, to the figure of $247 billion for 1932, the Conference Board points out that this shrinkage reflects largely the decrease in prices or, in other words, the increase in the purchasing power of the dollar that measures wealth, rather than a June 3 1933 decrease in the quantity of things measured. The Conference Board also says: The determining factor in these striking changes was not a change in the volume of the physical assets of the nation, but rather in the rates at which, accnrdlng to the varying price levels, those assets are valued. As a matter of fact, there is well-grounded belief that despite the figures dted the physical assets of the nation were greater in 1932 than 10 years before. The national wealth is the sum total of physical assets within the country.' To list them, make a complete inventory, and assign to each its value would be, the Conference Board points out, an almost impossible task. Short cuts and estimates characterize any effort to evaluate wealth. These estimates do not include stocks, bonds and other securities, which are merely titles to wealth. The rise or the fall in the value of such securities does not change the physical assets upon which they are based. In all the changes of prices that have taken place, and in all the changes in the value of the nation's assets, those assets have had no corresponding changes in volume. In the years of prosperity that followed 1922 the tangible wealth is believed to have increased gradually in volume until 1930. The marked decline of national income in 1931 and 1932 makes an increase in those years improbable. The Conference Board estimates that no appreciable change in volume of physical assets took place in 1931, but that in 1932 there was some impairment of the physical property of the nation. The following table, made available by the Board, gives the estimated valuation of the physical assets of the nation in terms of actual dollars based upon current prices for 1920, 1925 and the depression years 1929 to 1932: Year. Estimates of National Industrial Conference Board, Total. 1920 1925 1929 1930 1931 1932 Per Capita. $488,700,000,000 382,400,000,000 381,800,000,000 329,700,000,000 280,300,000,000 247,300,000,000 $4,587 3,155 2,977 2,877 2,259 1.981 The Course of the Bond Market. Bond prices made little headway this week, but on the other hand they lost no ground. In fact, the price average for 120 domestic issues stood at 85.35 all week with the exception of Friday, when it rose to 85.87. Railroad issues showed a slight upward trend, while utilities were irregular. On Friday, May 26, the Administration introduced a measure in Congress which divorces the country from gold by statute and repudiates all bond'contracts to pay in gold.. Ordinarily such a step would have precipitated a panic in the bond .market, but under present conditions the result has been merely a furious rise in speculative markets. Government and other high grade bonds have remained firm, which is probably due chiefly to the technical support they are receiving, or are counted on to receive, through Federal Reserve operations and cheap money policy. It is not to be overlooked, furthermore, that there is such a thing as "disguised depreciation"•in bonds, i.e., loss in their purchasing power in terms of commodities, even when their quotations remain stable. Long term government bonds closed the week (up to .Friday night) at an average price of 103.08, compared to 102.97 a week ago, and the years' high of 103.82 on February 2. They are apparently not disturbed over the prospects of a new issue of between $800,000,000 and'$1,000,000,000 on June 15, because of the promise of Federal Reserve support. The Federal Reserve banks continued their purchases of government bonds under the new open market policy, adding $28,000,000 to their holdings this week. Railroad bonds tended 'to be firm or strong. Certain of the speculative and medium grade bonds showed large price advances, but in the highest quality group .the gains were limited to fractions. The Pittsburgh & West Virginia 414s, 1960, advanced from 46% to 60, the New York Central 4s. 1934, from 80 to 83n, the Cleveland Union Terminal 53.s, 1972,from 76% to 85,and the Erie 5s, 1975,from 413 to 51. % Here and there in the low-priced field irregularities were shown because of the thought that possibly, despite the recent traffic improvement, there might yet have to be certain capital readjustments. For example, Chicago, Rock Island & Pacific 4s, 1934, started the.week at 31%, declined i. to 24 and finished at 28W Similarly, Chicago & North 4 % Western 43 s, 1949, ranged from 255 to 203'g, finishing at 22%• Utility bonds in the past week were characterized by considerable irregularity in price but generally speaking a firm tone was displayed. Net changes for the week were small, Financial Chronicle as illustrated by the following: Philadelphia Electric 4s, % 1971, from 935 to 937 , Northern States Power 43/2s, 1961, 4 from 863' to 874, Georgia Power 5s, 1967, from 73 to 75, and New Orleans Public Service 5s, 1955,from 56 to 59. A strong tone continued to prevail in industrial bonds, Setbacks from previous sharp advances were few. Highest grade issues generally gained fractionally. Motion picture issues of the more speculative class displayed considerable strength, Warner Bros. Pictures 6s, 1939,and the Paramount obligations, being features. Heavy industry bonds continued to do well. Petroleum issues were firm and advances late •in the week in Sinclair issues were a feature. Packing bonds held most of their former gains, receding moderately in some cases. Tire and rubber and steel issues were still in good demand. An irregular trend characterized this week's foreign bond. market. Outstanding developments included a, noticeable decline in Argentine bond prices and strength in Bolivian issues. German issues were irregular, Finnish, Danish and Norwegian firm. Moody's computed bond prices and bond yield averages are given in the tables below: MOODY'S BOND YIELD AVERAGES.* (Based on individual Closing Prices.) MOODY'S BOND PRICES.• (Based on Average Yields).. 1933 Daily ANTQ068. RR. P. U. indict. 49.95 858.c 90.41 90.41 90.27 90.27 90.00 89.86 89.45 89.45 89.31 89.17 88.90 88.23 87.83 88.10 87.69 87.17 86.12 85.10 84.72 84.85 84.85 84.22 83.97 83.60 83.60 4CCoiccioce2C.nti a rcoa) co occ-cco to co 39.76 01.57 91.11 90.83 90.27 eMOVNWO...1 .V.WV.ONWCOONWOONaccot.ONOC.00._ , , 70.0.0nt.M..W0.. 0 M CNV5.4.1!CIORWIRCItiON.NMC!PV, NCI . Nt..W.V 01G0 . C! 00C10 , 0,1 ROM .W 55.99 WerN co 52 72 58.32 74.36 55.73 71.38 nge Cio sod. 54.80 71.09 53.28 • 70.62 53.88 71.38 57.24 73.65 58.52 74.57 54.18 69.59 57.98 73.15 60.60 75.50 62.48 77.77 61.34 78.25 62.95 78.25 63.11 75.09 64.31 75.71 61.56 71.96 68.94 85.61 53.16 69.59 67.86 78.99 37.94 47.58 ..-122aioC6Coc000rZtoCcom444.t. c.r.c.conocc...--r-r-nc r-c-c.r_ , mcc coo 74.46 72.16 Excha 73.95 72.65 72.85 75.82 77.33 72.06 76.25 79.45 81.54 80.49 81.18 81.07 81.90 79.34 82.87 71.87 78 55 54.43 • A C I. C , v 82.87 68.94 85.61 82.02 68.49 84.85 82.02 68.40 84.72 Excha age CI esed• 82.02 68.49 84.60 82.14 68.58 84.60 81.78 68.04 84.47 81.78 67.77 84.35 81.42 67.33 83.97 80.95 66.73 83.23 80.72 66.64 83.11 80.84 66.73 83.35 80.72 66.98 83.35 80.60 66.30 82.74 80.49 66.55 82.50 80.03 00.04 81.90 79.91 65.71 81.90 79.91 65.62 82.02 79.34 65.62 81.66 78.99 65.12 81.66 77.88 63.50 79.91 77.11 62.64 78.99 77.00 82.95 78.77 77.00 62.79 78.88 76.67 62.56 78.55 75.61 61.41 77.11 74.88 60.38 76.25 74.88 59.95 75.61 74.88 59.65 75.40 kl,U,Mt.OWWt.W...WWFIC5.9COOONW . WW.W..WW..WWWWWNOZCII.../ t.. 0. 00=1 00 00 t .Ct• ,5 ONC,.W000.00.400, MOsrtMNN.CNO!NN..0 0.=NkOW . , OWICCINWCi 8 MN , , PO.W.COASMV.OAAC... RR 2a 0,==NNOWWNNNet.t..00t..WWWWWWWW WW C,C3=WWWWWW(ICI.C WWW1 03 . , 59.15 NNN 75.61 74.46 74.77 77.8879.11 74.67 78.77 81.30 83.23 82.38 83.11 82.99 83.85 81.66 85.87 74.15 82.62 57.57 ,ic.iC4CCair.4c.4c4c4ci-46c6Co;o6k-44..c6C44 uic4BCCCn:o;.60;goicioceico. ,-; mcmccomocc000l000mococcoccoccoccmc mcmcmcwwww ommommccown n a e 77.11 74.67 120 Domestics by Groups. AU 1933 120 Daily Domes Averages. tic. 120 Domestic, by Ratings• Aaa. Aa. A. 5.97 6.04 6.04 Exch 6.04 6.03 6.06 6.06 6.09 6.13 6.15 6.14 6.15 6.16 6.17 6.21 6.22 6.22 6.27 6.30 6.40 6.47 6.48 6.48 6.51 6.61 6.68 6.68 6.68 1 85.35 85.35 85.10 84.97 84.60 84.10 83.97 84.10 84.10 83.72 83.72 83.23 82.99 83.11 82.74 82.38 80.95 80.26 80.03 79.91 79.68 78.66 77.99 77.55 77.44 <qt.: W.000 MOOnWM . C!....C1C,RPC00 1•• C. WWW 5 Coiviviviviccaivinicicucic.i.coocCCCaic Cr..6.d..,,,,I,;"..4,4,4"„,„,„ MC..; moccocc0000cooaccooco ''' coo c00000006000ocoommomecommo co . 85.87 85.35 85.35 [ June 2 1 May 31 30 29 27 26 25 24 23 22 20 19 18 17 16 .15 13 12 11 10 9 8 6 5 4 3 2 1 Weekly Apr. 28 21 14 13 7 1 Mar,24 17 3 Feb. 24 17 10 3 Jan. 27 20 13 6 High 1933 Low 1933 High 1932 Low 1932 Year Ago-. June 2 1932 Two Years Ago June 3 1931_ _ _ All 120 120 Domestics by Ratings. DomesHe. Baa. Ana. Aa. A. 3785 83.35 81.30 81.90 79.91 80.14 82.14 82.74 78.44 83.11 84.97 86.25 85.48 88.38 86.114 87.56 86.38 91.11 78.44 85.61 62.09 62.69 ROW June 2__ 1._ May 31._ 30__ 29._ 27._ 26_ 24._ 23__ 22__ 20._ , 19__ 18__ 17..1 16._ 15__ 13__ 12._ II__ 10__ 9__ 8__ 6__ 5__ 4__ 3__ 2__ 1__ Weekly Apr. 28._ 21__ 14__ 13__ L._ 1._ Mar.24_ 17._ 3__ Feb. 24_ 17__ 10._ 3_ Jan. 27_ 20-13-6__ Low 1933 High 1933 Low 1932 High 1932 Yr. Ago June 2'32 2 Yrs.Ago T.,.221 .5.73 .5.77 5.77 4.52 4.52 4.52 5.77 5.77 5.79 • 5.80 5.83 5.87 5.88 5.87 5.87 5.90 .5.90 5.94 5.96 5.95 5.98 6.01 6.13 6.19 6.21 6.22 6.24 6.33 6.39 6.43 6.44 4.51 4.51 4.51 4.52 4.52 4.53 4.54 4.54 4.55 4.56 4.58 4.59 4.60 4.59 4.61 4.63 4.70 4.73 4.77 4.77 4.79 4.82 4.82 4.83 4.82 5.14 5.17 .5.18 Sloe k 5.18 5.19 5.19 5.20 5.23 5.26 5.28 5.26 5.26 5.27 5.30 6.34 5.35 5.33 5.38 5.37 5.48 5.53 5.59 5.60 5.62 5.70 5.73 5.79 5.80 6.47 6.70 4.77 4.89 5.77 5.93 6,61 6.72 6.69 6.40 6.29 6.70 6.32 6.10 5.94 6.81 5.95 5.96 6.89 6.07 5.73 6.75 5.99 8.74 4.75 4.76 4.78 4.65 4.61 4.81 4.57 4.48 4.40 4.43 4.42 4.45 4.42 4.48 4.39 4.91 4.51 5.75 5.73 5.79 5.76 5.58 5.48 5.76 5.47 6.36 5.23 5.24 5.25 529 5.26 5.37 5.14 5.96 5.44 7.03 6.72 6.95 Stock 6.77 6.90 6.88 6.59 6.45 6.96 8.55 6.26 0.08 6.17 6.11 6 12 6.05 6.27 5.97 6.98 6.34 9.23 8.51 5.66 6.99 8.98 k 711 4 20 4 07 100 Baa. • 120 Domestics by Groups. RR. • mvc.403.1..cmcocccococcomccVcco occooccoccom.4-474-4741-4-4-4 16666g60.CWW*C6 4 , 0 , 4.—C4,468C8. 6M6:4Co66 . 1.66826' ww-c..cmc cal-. 0 -Doom& 0 c ..co-40cmcc-vcam -.w.ccmoc 0, • 6• •-. op...Icnocoo.ppomo.mo-4744-4m ocoommoomcomomo000c000000%000 O 666;/..WCCCi.a666664CC66gCboackboaCC:4 6irtMistixte.tai46L4Cob,...80. 14 0.-.0-44..mom -c-cgs00 comm0 0 m c moo.com Volume 136 P. U. Indus. ao Icordom. 6.11 6.14 6.09 5.34 6.36 5.40 9.62 9.68 9.68 6.08 6.07 6.14 6.15 6.19 6.23 6.22 6.22 6.20 6.22 6.20 6.22 6.24 6.27 6.29 6.33 6.46 6.50 6.49 6.53. 6.58 6.68 6.76 6.75 6.78 5.39 5.39 5.40 5.40 5.42 5.43 5.46 5.46 5.47 5.48 5.50 5.55 5.58 5.56 5.59 5.63 5.71 5.79 5.82 5.81 5.81 5.86 5.88 5.91 5.91 9.68 9.63 9.66 9.71 9.75 9.81 9.88 10.00 10.08 10.16 10.21 10.33 10.23 10.09 10.07 9.94 9.96 10.02 10.08 9.93 9.89 9.89 9.82 9.89 9.92 6.76 6.96 sed. 6.70 6.84 6.83 6.38 6.17 6.54 6.16 5.89 5.72 5.72 5.60 5.55 548 5.55 5.47 6.97 5.89 7.66 5.93 6.10 10 20 10.50 6.05 6.22 )3.20 6.03 5.98 6.35 5.95 5.80 5.70 5.76 5.69 5.87 5.60 5.69 5.34 6.35 5.75 8.11 10.83 11.0k 10.80 10.76 10.18 11.19 11.05 10.44 10.01 10.20 9.8/ 9.81 9.61 9.91 9.61 11.11 9.81 15.82 7.48 8.04 15.8: 101 R 10 7.1 • Note. -These prices are computed from average yield on the basis of one "Ideal" bond 4ti% coupon, maturing in 31 years) and do not Purport to show either the average level or the average movement of actual price quotations. They merely serve to illustrate In a more comprehensive way the relative levels and the relative movement of yield averages, the latter being the truer picture of the bond market. t The last complete list of bonds used In computing these indexes was published in the -Chronicle" on Jan. 14 1933. page 222. For Moody's Index of bond prices by months back to 1928. refer to the "Chronicle" of Feb.8 1932. page 907. Purposes of New York Guaranteed Mortgage Protection Corporation Explained by President Naumburg. A statement as to the purpose and progress of the New York Guaranteed Mortgage Protection Corporation was issued on May 28 by George W. Naumburg, President of the recently organized corporation. A recent account bearing on its formation appeared as follows in the New York "Herald Tribune" of May 19: Trust companies holding guaranteed mortgage participation certificates will form a committee to co-operate with the New York Guaranteed Mortgage Protection Corp., recently created under a special act of the Legislature at the behest of Governor Herbert H. Lehman, George W. Naumberg, its president, reported to the directors yesterday at a meeting in its new headquarters. 60 East 42d St. The trust companies are said to hold a large share of the $1,000,000,000 in such securities issued by title and guaranty companies on properties all over the State. The New York quaranteed Mortgage Protection Corp., endowed with broad powers by the Legislature, was set up to protect the Interests of holders of the certificates, interest on which, in many cases, is in default. At the offices of the corporation yesterday it was said that letters had been sent to 2.774 certificate holders, apprising them of the functions of the corporation, its powers and personnel, and asking the deposit of certificates.' Letters were sent to holders of only about $9,000,000 worth of certificates, the names being taken from the first lists received from the title companies. Similar letters will be sent out from other lists as rapidly as possible. There are more than 500,000 certificate holders, it was said, sharing in the $1,000.000,000 securities issued by 58 title companies under the jurisdiction of the State Banking and Insurance departments. The holders are located all over the world. About 70,000 properties in New York state are involved, and they are mortgaged for about S2.000,000,000. Savings banks hold some portion of the certificates; the trust companies more, and small investors a great deal. Ender the terms of the law upon which the corporation acts, it may, if necessary- become the greatest landlord in the world, through due process of forclosure and management of the properties involved. All the directors of the corporation, appointed by George S. Van Schaick, Superintendent of Insurance, were present at yesterday's meeting except Edwin L. Miller, of Buffalo.. Besides Mr. Naumberg, President, there were Henry Bruere. Peter P. Smith, Joseph P. Lincoln Cromwell and Harold Stone. The trust company committee is expected to be ready to function soon. At present much of the work of the corporation is the assembling of information from the title companies as to security issues and their holders. Mr. Naumberg's announcement of May 28 follows: While the number and amount of certificates deposited to date have been satisfactory, it is quite evident from questions asked that there are a number of points in connection with the purpose of this organization which are not entirely clear to the participation certificate holders. This corporation, formed under sponsorship of the Insurance Dept. and of Governor Lehman and endowed with broad powers by the Legislature, has been set up to work out in a common-sense,logical way the difficulties of those guaranteed properties which are in trouble. This is first and foremost a non-profit making body, which is Operating under different principles from those employed by so called "protective committees." The corporation is under the supervision of and in constant consultation with the Department of Insurance of New York State both as to its actions and its expenses. It is contemplated and so stated to depositing certificates holder that without further consent of these holders, the expenses of this corporation will not be more than I% of the face amount of the certificates deposited. From this it can be readily seen that the operations of the company will be conducted at the lowest possible expense and undoubtedly at a far less cost than would be possible by any committee or individuals. Further. due to the character of the corporation's board of directors, and the fact that it is receiving the approval of the Banking and Real Estate Fraternities of this State, the best available advice is obtained. Arrangements are now being made for the formation of various advisory committees for different branches of the work to be done. It is not the intention of this corporation, or its advisers, to recommend the release of any of the guarantee companies from their obligations unless it is felt that it is to the advantage of the certificate holders to do so. Our purpose is at all times to protect the interest of the certificate holders, and and at no time to relinquish any just claim that may be of value to them. We believe it to be in the best interest of the holders of certificates to act together. Therefore, deposits with this corporation, Room 443, Lincoln Building, 60 E. 42d St., New York City, are invited. It is our intention from time to time to keep certificate holders fully informed as to all developments affecting their interests. 3786 Financial Chronicle June 3 1933 Text of Federal Securities Act. The following is the text of the Federal Securities Act as passed'by Congress and signed by President Roosevelt on May 27: (1) Any security which, prior to or within sixty•days after the enactment of this title, has been sold or disposed of by the issuer or bona fide offered to the public, but this exemption shall not apply to any new offering of any such security by an issuer or underwriter subsequent to such sixty days; (2) Any security issued or guaranteed by the United States or any Territory thereof, or by the District of Columbia, or by any Stateof the United States, or by any political subdivision of a State or Territory, or by any public instrumentality of one or more States or Territories exercising an essential governmental function, or by any corporation created and controlled or supervised by and acting as an instrumentality, of the Government of the United States pursuant to authority granted' by the Congress of the United States, or by any -national bank, or by any banking institution organized under the laws of any State or Territory, the business of which is substantially confined to banking and is supervised by the State or territorial banking commission or similar official; or any security issued by or representing an interest in or a Definitions. direct obligation of a Federal Reserve bank; Sec. 2. When used in this title, unless the context otherwise requires— (3) Any note, draft, bill of exchange, or bankers acceptance which (1) The term "security" means any note, stock, treasury stock, arises out of a current transaction or the proceeds of which have been bond, debenture, evidence of indebtedness, certificate of interest or or are to be used for current transactions, and which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of participation in any profit-sharing agreement, collateral-trust certificate, pre-organization certificate or subscription, transferable share, investgrace, or any renewal thereof the maturity of which is likewise limited; ment contract, voting-trust certificate, certificate of interest in property, (4) Any security issued by a corporation organized and operated extangible or intangible, or, in general, any instrument commonly known clusively for religious, educational, benevolent, fraternal, charitable, or as a security, or any certificate of interest or participation in, temporary reformatory purposes and not for pecuniary profit and no part of the net earnings of which inures to the benefit of any person, private stockor interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing. holder, or individual; (2) The term "person" means an individual, a corporation, a partner(5) Any security issued by a building and loan association, homestead ship, an association, a joint-stock company, a trust, any unincorporated association, savings and loan association, or similar institution, suborganization, or a government or political subdivision thereof. As used' stantially all the business of which is confined to the making of loans to In this paragraph the term "trust" shall include only a trust where the members (but the foregoing exemption shall not apply with respect to Interest or interests of the beneficiary or beneficiaries are evidenced by any such security where the issuer takes from the total amount paid or a security. deposited by the purchaser, by way of any fee, cash value or other device whatsoever,either upon termination of the investment at maturity (3) The term "sale," "sell," "offer to sell," or "offer for sale" shall include every contract of sale or disposition of, attempt or offer to or before maturity, an aggregate amount in excess of 3 per centum of dispose of, or solicitation of an offer to buy, a security or interest in a the face value of such security), or any security issued by'a farmers' security, for value except that such terms shall not include preliminary co-operative association as defined in paragraphs (12),(13); and (14) of negotiations or agreements between an issuer and any underwriter. Any Section 103 of the Revenue Act of 1932; security given or delivered with, or as a bonus on account of, any pur(6) Any security issued by a common carrier which is subject to the chase of securities or any other thing, shall be conclusively presumed to provisions of Section 20a of the Inter-State Commerce Act,as amended; • constitute a part of the subject of such purchase and to have been sold (7) Certificates issued by a receiver or by a trustee in bankruptcy, for value. The issue or transfer of a right or privilege, when originally with the approval of the court; issued or transferred with a security, giving the holder of such security (8) Any insurance or endowment policy or annuity contract or optional the right to convert such security into another security of the same annuity contract, issued by a corporation subject to the supervision of Issuer or of another person, or giving a right to subscribe to another the insurance commissioner, bank commissioner, or any agency or officer security of the same issuer or of another person, which right'cannot be performing like functions, of any State or Territory of the United States exercised until some future date, shall not be deemed to be a sale of such or the District of Columbia. other security but the issue or transfer of such other security upon the (b) * The Commission may from time to time by its rules and regulaexercise of such right of conversion or subscription shall be deemed a tions, and subject to such terms and conditions as may be prescribed sale of such other security. therein, add any class of securities to the securities exempted as provided (4) The term "issuer" means every person who issues or proposes to' In this section, if it finds that the enforcement of this title with respect issue any security or who guarantees a security either as to principal or to such securities is not necessary in the public interest and for the income except that with respect to certificates of deposit, voting-trust protection of investors by reason of the small amount involved or the certificates, or collateral-trust certificates, or with respect to certificates limited character of the public offering but no issue of securities shall of interest or shares in an unincorporated Investment trust not having be exempted under this subsection where the aggregate amount at which a board of directors (or persons performing similar functions) or of the such issue is offered to the public exceeds $100,000. fixed, restricted management, or unit type, the term "issuer" means the Exempted Transactions. person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement Sec. 4. The provisions of Section 5 shall not apply to any of the or instrument under which such securities are issued and except that following transactions: with respect to equipment-trust certificates or like securities, the term (1) Transactions by any person other than an issuer, underwriter, "issuer" means the person by whom the equipment or property is or is or dealer transactions by an issuer not with or through an underwriter to be used. and not involving any public offering or transactions by a dealer (in(5) The term "Commission" means the Federal Trade Commission. cluding an underwriter no longer acting as an underwriter in respect of (6) The term "Territory" means Alaska, Hawaii, Puerto Rico, the the security involved in such transaction), except transactions within Philippine Islands, Canal Zone, the Virgin Islands, and the insular one year after the last date upon which the security was bona fide offered posssasions of the 'United States. to the public by the issuer or by or through an underwriter (excluding in (7) The term "inter-State commerce" means trade or commerce in the computation of such year any time during which a stop order issued securities or any transportation or communication relating thereto among under Section 8 is in effect as to the security), and except transactions as the several States or between the District of Columbia or any Territory to securities constituting the whole or a part of an unsold allotment to of the United States and any State or other Territory, or between any or subscription by such dealer as a participant in the distribution of such foreign country and any State, Territory, or the District of Columbia, securities by the issuer or by or through an underwriter. or within the District of Columbia. (2) Brokers' transactions, executed upon customers' orders on any (8) The term "registration statement" means the statement provided exchange or in the open or counter market, but not the solicitation of for in Section 6, and includes any amendment thereto and any report, such orders. document,or memorandum accompanying such statement or incorporated (3) The issuance of a security of a person exchanged by it with its therein by reference. existing security holders exclusively, where no commission or other . (9) The term "write" or "written" shall include printed, lithographed, remuneration is paid or given directly or indirectly in connection with or any means of graphic communication. such exchange or the issuance of securities to the existing security holders (10) The term "prospectus" means any prospectus, notice, circular, or other existing creditors of a corporation in the process of a bona fide advertisement, letter, or communication, written or by radio, which reorganization of such corporation under the supervision of any court, offers any security for sale except that (a) a communication shall not either in exchange for the securities of such security holders or claims of be deemed a prospectus if it is proved that prior to such communication such creditors or partly for cash and partly in exchange for the securities a written prospectus meeting the requirements of Section 10 was received, or claims of such security holders or creditors. by the person to whom the communication was made, from the person making such communication or his principal, and (b) a notice, circular, Prohibitions Relating to Inter-State Commerce and the Mails. advertisement, letter, or communication in respect of a security shall Sec. 5. (a) Unless a registration statement is in effect as to a security, not be deemed to be a prospectus if it states from whom a written pros- It shall be unlawful for any person, directly or indirectly— pectus meeting the requirements of Section 10 may be obtained and, in (1) to make use of any means or ihstruments of transportation or addition, does no more than identify the security, state the price thereof, communication in inter-State commerce or of the mails to sell or offer and state by whom orders will be executed. to buy such security through the use or medium of any prospectus or (11) The term "underwriter" means any person who has purchased otherwise or from an issuer with a view to, or sells for an issuer in connection with, (2) to carry or cause to be carried through the mails or In interthe distribution of any security, or participates or has a direct or indirect State commerce, by any means or instruments of transportation, MY participation in any such undertaking, or participates or has a participa- such security for the purpose of sale or for delivery after sale. tion in the direct or indirect underwriting of any such undertaking but (b) It shall be unlawful for any person, directly or indirectly— such term shall not include a person whose interest is limited to a com(1) to make use of any means or instruments of transportation or mission from an underwriter or dealer not in excess of the usual and communication in inter-State commerce or of the mails to carry or transcustomary distributors' or sellers' commission. As used in this paramit any prospectus relating to any security registered under this title, graph the term "issuer" shall include,in addition to an issuer, any person unless such prospectus meets the requirements of Section 10 or directly or indirectly controlling or controlled by the issuer, or any • (2) to carry or to cause to be carried through the mails or in interperson under direct or indirect common control with the issuer. State commerce any such security for the purpose of sale or for delivery (12) The term "dealer" means any person who engages either for all after sale, unless accompanied or Preceded by a prospectus that meets or part of his time, directly or indirectly, as agent, broker, or principal, the requirements of Section 10. In the business of offering, buying, selling, or otherwise dealing or trading (c) The provisions of this section relating to the use of the malls shall in securities issued by another person. not apply to the sale of any security where the issue of which it is a part Is sold only to persons rissident within a single State or Territory, where Exempted Securities. the issuer of such securities is a person resident and doing business withSee 3 (a) Except as hereinafter expressly provided, the provision of in, or. if a corporation, incorporated by and doing business within, such ‘ State or Territory. this title shall not apply to any of the following classes of securities: 111. R. 54801 AN ACT To provide full and fair disclosure of the character of securities sold in Inter-State and foreign commerce and through the mails, and to prevent frauds in the sale thereof, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, TITLE I. Short Title. Section 1. This title may be cited as the "Securities Act of 1933." • • Volume 136 Financial Chronicle Registration of Securities and Signing of Registration Statement. Sec. 6. (a) Any security may be registered with the Commission under the terms and conditions hereinafter provided, by filing a registration statement in triplicate, at least one of which shall be signed by each issuer, its principal executive officer or officers, its principal financial officer, its comptroller or principal accounting officer, and the majority of its board of directors or persons performing similar functions (or, if there is no board of directors or persons performing similar functions, by the majority of the persons or board having the power of management of the issuer), and in case the issuer is a foreign or Territorial person by its duly authorized representative in the United States except that when such registration statement relates to a security issued by a foreign government, or political subdivision thereof, it need be signed only by the underwriter of such security. Signatures of all such persons when written on the said registration statements shall be presumed to have been so written by authority of the person whose signature is so affixed and the burden of proof, in the event such authority shall be denied, shall be upon the party denying the same. The affixing of any signature without the authority of the purported signer shall constitute a violation of this title. A registration statement shall be deemed effective only as to the securities specified therein as proposed to be offered. (b) At the time of filing a registration statement the applicant shall pay to the Commission a fee of one one-hundredth of 1 per centum of the maximum aggregate price at which such securities are proposed to be offered, but in no case shall such fee be less than $25. (c) The filing with the Commission of a registration statement, or of an amendment to a registration statement,shall be deemed to have taken place upon the receipt thereof, but the filing of a registration statement shall not be deemed to have taken place unless it is accompanied by a United States postal money order or a certified bank check or cash for the amount of the fee required under subsection (b). (d) The information contained in or filed with any registration statement shall be made available to the public under such regulations as the Commission may prescribe, and copies thereof, photostatic or otherwise, shall be furnished to every applicant at such reasonable charge as the Commission may prescribe. (e) No registration statement may be filed within the first forty days following the enactment of this Act. 3787 under subsection (d). In making such examination the Commission or any officer or officers designated by it shall have access to and may demand the production of any books and papers of, and may administer oaths and affirmations to and examine, the issuer, underwriter, or any other person, in respect of any matter relevant to the examination, and may, in its discretion, require the production of a balance sheet exhibiting the assets and liabilities of the issuer, or its income statement, or both, to be certified to by a public or certified accountant .7 approved by the Commission. If the issuer or underwriter shall fail to co-operate, or shall obstruct or refuge to permit the making of an examination, such conduct shall be proper ground for the issuance of a atop order. (f) Any notice required under this section shall be sent to or served on the issuer, or, in case of a foreign government or political subdivision thereof, to or on the underwriter, or, in the case of a foreign or Territorial person, to or on its duly authorized representative in the United States named in the registration statement, properly directed in each case of telegraphic notice to the address given in such statement. Court Review of Orders. Sec. 9. (a) Any person aggrieved by an order of the Commission may obtain a view of such order in the Circuit Court of Appeals of the United States, within any circuit wherein such person resides or has his principal place of business, or in the Court of Appeals of the District of Columbia, by filing in such court, within 60 days after the entry of such order, a written petition praying that the order of the Commission be modified or be set aside in whole or in part. A copy of such petition shall be forthwith served upon the Commission, and thereupon the Commission shall certify and file in the court a transcript of the record upon which the order complained of was entered. No objection to the order of the Commission shall be considered by the court unless such objection shall have been urged before the Commission. The finding of the Commission as to the facts, if supported by evidence, shall be conclusive. If either party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for failure to adduce such evidence in the hearing before the Commission, the court may order such additional evidence to be taken before the Commission and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may Information Required in Registration Statement. Sec. 7. The registration statement, when relating to a security other seem proper. The Commission may modify its findings as to the facts, by reason of the additional evidence so taken, and it shall file than a security issued by a foreign government, or political subdivision such modified or new findings, which, if supported by evidence, shall thereof, shall contain the information, and be accompanied by the be conclusive, and its recommendation, if any, for the modification or documents, specified in Schedule A, and when relating to a security issued by a foreign government, or political subdivision thereof, shall setting aside of the original order. The jurisdiction of the court shall be exclusive, and its judgment and decree, affirming, modifying, or contain the information, and be accompanied by the documents, specified in Schedule B except that the Commission may by rules or regulations setting aside, in whole or in part, any order of the Commission, shall be final, subject to review by the Supreme Court of the United States provide that any such information or document heed not be included in upon certiorari or certification as provided in Sections 239 and 240 respect of any class of issuers or securities if it finds that the requirement of the Judicial Code, as amended (U.S.C., title 28, secs. 346 and 347)• of such information or document is inapplicable to such class and that (b) The commencement of proceedings under subsection (a) shall disclosure fully adequate for the protection of investors is otherwise required to be included within the registration statement. • It any" not, unless specifically ordered by the court, operate as a stay of the Commission's order accountant, engineer, or appraiser, or any person whose profession gives Information Required in Prospectus. authority to a statement made by him, is named as having prepared or certified any part of the registration statement, or is named as having Sec. 10. (a) A prospectus— prepared or certified a report or valuation for use in connection with (1) when relating to a security other than a security issued by a the registration statement, the written consent of such person shall be foreign government or political subdivision thereof, shall contain the filed with the registration statement.v* If any such person is named as same statements made in the registration statement, but it need not having prepared or certified a report or valuation (other than a public include the documents referred to in paragraphs (28) to (32), inclusive, official document or statement) which is used in connection with the of Schedule A registration statement, but is not named as having prepared or certified (2) when relating to a security issued by a foreign government or such report or valuation for use in connection with the registration political subdivision thereof shall contain the same statements made in statement, the written consent of such person shall be filed with the the registration statement, but it need not include the documents referred registration statement unless the Commission dispenses with such filing to in paragraphs (13) and (14) of Schedule B. as impracticable or as involving undue hardship on the person filing the (b) Notwithstanding the provisions of subsection (a)— registration statement. Any such registration statement shall contain (1) when a prospectus is used more than 13 months after the effective such other information, and be accompanied by such other documents, date of the registration statement, the information in the statements as the Commission may by rules or regulations require as being necessary contained therein shall be as of a date not more than 12 months prior or appropriate in the public interest or for the protection of investors. to such use. (2) there may be omitted from any prospectus any of the statements Taking Effect of Registration Statements and Amendments Thereto. required under such subsection (a) which the Commission may by rules Sec. 8. (a) The effective date of a registration statement shall be or regulations designate as not being necessary or appropriate in the the twentieth day after the filing thereof, except as hereinafter propublic interest or for the protection of investors. vided, and except that in case of securities of any foreign public authority, (3) any prospectus shall contain such other information as the Comwhich has continued the full service of its obligations in the United mission may by rules or regulations require as being necessary or apStates, the proceeds of which are to be devoted to the refunding of propriate in the public interest or for the protection of investors. obligations payable in the United States, the registration statement (4) in the exercise of its powers under paragraphs (2) and (3) of this shall become effective seven days after the filing thereof. If any amend- subsection, the Commission shall have authority to classify prospectuses ment to any such statement is filed prior to the effective date of such according to the nature and circumstances of their use, and, by rules statement, the registration statement shall be deemed to have been and regulations and subject to such terms and conditions as it shall filed when such amendment was filed; except that an amendment filed specify therein, to prescribe as to each class the form and contents which with the consent of the Commission, prior to the effective date of the it may find appropriate to such use and consistent with the public interest registration statement, or filed pursuant to an order of the Commission, and the protection of investors. shall be treated as a part of the registration statement. (c) The statements or information required to be included in a pros(b) If it appears to the Commission that a registration statement is pectus by or under authority of subsection (a) or (b), when written, on its face incomplete or inaccurate in any material respect, the Comshall be placed in a conspicuous part of the prospectus in type as large mission may, after notice by personal service or the sending of conas that used generally in the body of the prospectus. firmed telegraphic notice not later than 10 days after the filing of the (d) In any case where a prospectus consists of a radio broadcast, registration statement, and opportunity for hearing (at a time fixed copies thereof shall be filed with the Commission under such rules and by the Commission) within 10 days after such notice by personal service regulations as it shall prescribe. The Commission may by rules and or the sending of such telegraphic notice, issue an order prior to the regulations require the filing with it of forms of prospectuses used in effective date of registration refusing to permit such statement to become connection with the sale of securities registered under this title. effective until it has been amended in accordance with such order. Civil Liabilities on Account of False Registration Statement. When such statement has been aniended in accordance with such order Sec. 11. (a) In case any part of the registration statement, when such the Commission shall so declare and the registration shall become efpart became effective, contained an untrue statement of a material fact fective at the time provided in subsection (a) or upon the date of such declaration, whichever date is the later. or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, any person acquiring (c) An amendment filed after the effective date of the registration such security (unless it is proved that at the time of such acquisition he statement, if such amendment, upon its face, appears to the Comknew of such untruth or omission) may, either at law or in equity, in mission not to be incomplete or inaccurate in any material respect, Commission may determine, any court of competent jurisdiction, sue— shall become effective on such date as the (1) every person who signed the registration statement; having due regard to the public interest and the protection of investors. (2) every person who was a director of (or person performing similar (d) If it appears to the Commission at any time that the registration statement includes any untrue statement of a material fact or omits functions) or partner in, the issuer at the time of the filing of the part of the registration statement with respect to which his liability is asserted; to state any material fact required to be stated therein or necessary to (3) every person who, with his consent, is named in the registration make the statements therein not misleading, the Commission may, after notice by personal service or the sending of confirmed telegraphic notice, statement as being or about to become a director, person performing and after opportunity for hearing (at a time fixed by the Commission) similar functions, or partner; (4) every accountant, engineer, or appraiser, or any person whose within 15 days after such notice by personal service or the sending of profession gives authority to a statement made by him, who has with his such telegraphic notice, issue a stop order suspending the effectiveness registration statement. When such statement has been amended consent been named as having prepared or certified any part of the of the registration statement, or as having prepared or certified any report or in accordance with such stop order the Commission shall so declare valuation which is used in connection with the registration statement, and thereupon the stop order shall cease to be effective. Commission is hereby empowered to make an examination with'respect to the statement in such registration statement, report, or (e) The valuation, which purports to have been prepared or certified by him; case in order to determine whether a stop order should issue in any 3788 Financial Chronicle (5) every underwriter with respect to such security. (b) Notwithstanding the provisions of subsection (a) no person, other than the issuer, shall be liable as provided therein who shall sustain the burden of proof— (1) that before the effective date of the part of the registration statement with respect to which his liability is asserted (A) he had resigned from or had taken such steps as are permitted by law to resign from, or ceased or refused to act in, every office, capacity, or relationship in which he was described in the registration statement as acting or agreeBig to act, and (B) he had advised the Commission and the issuer in writing that he had taken such action and that he would not be responsible for such part of the registration statement; or (2) that if such part of the registration statement became effective without his knowledge, upon becoming aware of such fact he forthwith acted and advised the Commission, in accordance with paragraph (1), and, in addition, gave reasonable public notice that such part of the registration statement had become effective without his knowledge; or (3) that (A) as regards any part of the registration statement not purporting to be made on the authority of an expert, and not purporting to be a copy of or extract from a report or valuation of an expert, and not purporting to be made on the authority of a public official document or statement, he had, after reasonable investigation, reasonable ground to believe and did believe, at the time such part of the registration statement became effective, that the statements therein were true and that there was no omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (B) as regards any part of the registration statement purporting to be made upon his authority as an expert or purporting to be a copy of or extract a report or valuation of himself as an expert, (i) he had, after reasonable investigation, reasonable ground to believe and did believe, at the time such part of the registration statement became effective, that the statements therein were true and that there was no omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) such part of the registration statement did not fairly represent his statement as an expert or was not a fair copy of or extract from his report or valuation as an expert and (C) as regards any part of the registration statement purporting to be made on the authority of an expert (other than himself) or purporting to be a copy of or extract from a report or valuation of an expert (other than himself), he had reasonable ground to believe and did believe, at the time such part of the registration statement became effective, that the statements therein were true and that there was no omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and that such part of the registration statement fairly represented the statement of the expert or was a fair copy of or extract from the report or valuation of the expert and (D) as regards any part of the registration statement purporting to be a statement made by an official person or purporting to be a copy of or extract from a public official document, he had reasonable ground to believe and did believe, at the time such part of the registration statement became effective, that the statements therein were true, and that there was no omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and that such part of the registration statement fairly represented the statement made by the official person or was a fair copy of or extract from the public oflicial document. (c) In determining, for the purpose of paragraph (3) of subsection (h) of this section, what constitutes reasonable investigation and reasonable ground for belief, the standard of reasonableness shall be that required of a person occupying a fiduciary relationship. (d) If any person becomes an underwriter with respect to the security after the part of the registration statement with respect to which his liability is asserted has become effective, then for the purposes of paragraph (3) of subsection (b) of this section such part of the registration statement shall be considered as having become effective with respect to such person as of the time when he became an underwriter. (e) The suit authorized under subsection (a) may be either (1) to recover the consideration paid for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or (2) for damages if the person suing no longer owns the security. (f) All or any one or more of the persons specified in subsection (a) shall be jointly and severally liable, and every person who becomes liable to make any payment under this section may recover contribution as in cases of contract from any person who, if sued separately, would • have been liable to make the same payment, unless the person who has becomes liable was, and the other was not, guilty of fraudulent misrepresentation. (g) In no case shall the amount recoverable under this section exceed the price at which the security was offered to the public. Civil Liabilities Arising in Connection with Prospectuses and Communications. Sec. 12 Any person who— (1) sells a security in violation of Section 5, or (2) sells a security (whether or not exempted by the provisions of Section 3, other than paragraph (2) or subsection (a) thereof, by the use of any means or instruments of transportation or communication in inter-State commerce or of the mails, by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading (the purchaser not knowing of such untruth or omission), and who shall not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission, shall be liable to the person purchasing such security from him, who may sue either by law or in equity in any court of competent jurisdiction, to recover the consideration paid for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if he no longer owns the security. Limitation of Actions. Sec. 13. No action shall be maintained to enforce any liability created under Section 11 or Section 12 (2) unless brought within two years after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence, or, if the action is to enforce a liability created under Section 12 (1), unless brought within two years after the violation upon which it is based. In no event shall any such action be brought to enforce a liability created under Section 11 or Section 12 (1) more than 10 years after the security was bona fide offered to the public. Contrary Stipulations Vold. Sec. 14. Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision of this title or of the rules and regulations of the Commission shall be void. June 3 1933 Liability of Controlling Persons. Sec.115 IEvery person who, by or through stock ownership, agency, or otherwise, or who, pursuant to or in connection with an agreement or understanding with one or more other persons by or through stock ownership, agency, or otherwise, controls any person liable under Section 11 or 12, shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable. Additional Remedies. Sec. 16. The rights and remedies provided by this title shall be in addition to any and all other rights and remedies that may exist at law or in equity. Fraudulent Inter-State Transactions. Sec. 17. (a) It shall be unlawful for any person in the sale of any securities by the use of any means or instruments of transportation or communication in inter-State commerce or by the use of the mails, directly or indirectly— (1) to employ any device, scheme, or artifice to defraud, or (2) to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (3) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser. (b) It shall be unlawful for any person, by the use of any means or instruments of transportation or communication in inter-State commerce or by the use of the mails, to publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a security for sale, described such security for a consideration received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without fully disclosing the receipt. whether past or prospective. of such consideration and the amount thereof. (c) The exemptions provided in Section 3 shall not apply to the provisions of this section. State Control of Securities. Sec. 18. Nothing in this title shall affect the jurisdiction of the Securities Commission (or any agency or office performing like functions) of any State or Territory of the United States,or the District of Columbia, over any security or any person. Special Powers of Commission. Sec. 19. (a) The Commission shall have authority from time to time to make, amend, and rescind such rules and regulations as may be necessary to carry out the provisions of this title, including rules and regulations governing registration statements and prospectuses for various classes of securities and issuers, and defining accounting and trade terms used in this title. Among other things, the Commission shall have authority, for the purposes of this title, to prescribe the form or forms in which required information shall be set forth, the items or details to be shown in the balance sheet and earning statetnent, and the methods to be followed in the preparation of accounts, in the appraisal or valuation of assets and liabilities, in the determination of depreciation and depletion, in the differentiation of recurring and nonrecurring income, in the differentiation of investment and operating income, and in the preparation, where the Commission deems it necessary or desirable, of consolidated balance sheets or income accounts of any person directly or indirectly controlling or controlled by the issuer, or any person under direct or indirect common control with the issuer; but insofar as they relate to any common carrier subject to the provisions of Section 20 of the Inter-State Commerce Act, as amended, the rules and regulations of the Commission with respect to accounts shall not be inconsistent with the requirements imposed by the Inter-State Commerce Commission under authority of such Section 20. The rules and regulations of the Commission shall be effective upon publication in the manner which the Commission shall prescribe. (b) For the purpose of all investigations which, in the opinion of the Commission, are necessary and proper for the enforcement of this title, any member of the Commission or any officer or officers designated by it are empowered to administer oaths and affirmations, subpoena witnesses, take evidence, and require the production of any books, papers, or other documents which the Commission deems relevant or material to the inquiry. Such attendance of witnesses and the production of such documentary evidence may be required from any place in the United States or any Territory at any designated place of hearing. Injunctions and Prospectuses of Offenses. Sec. 20. (a) Whenever it shall appear to the Commission, either upon complaint or otherwise, that the provisions of this title, or of any rule or regulation prescribed under authority thereof, have been or are about to be violated, it may, in its discretion, either require or permit such person to file with it a statement in writing, under oath, or otherwise, as to all the facts and circumstances concerning the subject matter which it believes to be in the public interest to investigate, and may investigate such facts. (b) Whenever it shall appear to the Commission that any person is engaged or about to engage in any acts or practices which constitute or will constitute a violation of the provisions of this title, or of any rule or regulation prescribed under authority thereof it may in its discretion bring an action in any District Court of the United States, United States court of any Territory or the Supreme Court of the District of Columbia to enjoin such acts or practices and upon a proper showing a permanent or temporary injunction or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning such acts or practice3 to the AttorneyGeneral who may in his discretion institute the necessary criminal proceedings under this title. Any such criminal proceeding may be brought either in the district wherein the transmittal of the prospectus or security complained of begins, or in the district wherein such prospectus or security is received. (c) Upon application of the Commission the District courts of the United States the United States courts of any Territory, and the Supreme Court of the District Court of Columbia, shall also have jurisdiction to issue writs of mandamus commanding any person tocomply with the provisions of this title or any order of the Commission made in pursuance thereof. Hearings By Commission. Sec. 21. All hearings shall be public and may be held before the Commission or an officer or officers of the Commission designated by it, and appropriate records thereof shall be kept. Volume 136 Financial Chronicle Jurisdiction of Offenses and Suits. Sec. 22. (a) The district courts of the United States, the United States courts .of any Territory, and the Supreme Court of the District of Columbia shall have jurisdiction of offenses and violations under this title and under the rules and regulations promulgated by the Commission in respect thereto, and, concurrent with State and Territorial courts, of all suits in equity and actions at law brought to enforce any liability or duty created by this title. Any such suit or action may be brought in the district wherein the defendant is found or is an inhabitant or transacts business, or in the district where the sale took place, if the defendant participated therein, and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant may be found. Judgments and decrees so rendered shall be subject to review as provided in Sections 128 and 240 of the Judicial Code,as amended (U.S.C., Title 28, Secs. 225 and 347). No case arising under this title and brought in any State court of competent jurisdiction shall be removed to any court of the United States. No costs shall be asses.sed for or against the Commission in any proceeding under this title brought by or against it in the Supreme Court or such other courts. (b) In case of contumacy or refusal to obey a subpoena issued to any person, any of the said United States courts, within the jurisdiction of which said person guilty of contumacy or refusal to obey is found or resides, upon application by the Commission may issue to such person an order requiring such person to appear before the Commission, or one of its examiners designated by it, there to produce documentary evidence if so ordered, or there to give evidence touching the matter in question; and any failure to obey such order of the court may be punished by said court as a contempt thereof. (c) No person shall be excused from attending and testifying or from producing books, papers, contracts, agreements, and other documents before the Commission, or in obedience to the subpoena of the Commission or any member thereof or any officer designated by it, or in any cause or proceeding instituted by the Commission, on the ground that the testimony or evidence, documentary or otherwise, required of him, may tend to incriminate him or subject him to a penalty or forfeiture; but no individual shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he is compelled, after having claimed his privilege against self-incrimination, to testify or produce evidence, documentary or otherwise, except that such individual so testifying shall not be exempt from prosecution and punishment for perjury committed in so testifying. Unlawful Representations. Sec. 23. Neither the fact that the registration statement for a security has been filed or is in effect nor the fact that a stop order is not in effect with respect thereto shall be deemed a finding by the Commission that the registration statement is true and accurate on its face or that it does not contain an untrue statement of fact or omit to state a material fact, or be held to mean that the Commission has in any way passed upon the merits of, or given approval to, such security. It shall be unlawful to make, or cause to be made, to any prospective purchaser any representation contrary to the foregoing provisions of this section. Penalties. Sec. 24. Any person who willfully violates any of the provisions of this title, or the rules and regulations promulgated by the Commission under authority thereof, or any person who willfully, in a registration statement filed under this title, makes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, shall upon conviction be fined not more than $5,000 or imprisoned not more than five years, or both. Jurisdiction of Other Government Agencies Over Securities. Sec. 25. Nothing in this title shall relieve any person from submitting to the respective supervisory units of the Government of the United States information, reports, or other documents that are now or may hereafter be required by any provision of law. Separability of Provisions. Sec. 26. If any provision of this Act, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this Act, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby. Schedule A. (1) The name under which the issuer is doing or intends to do business; (2) the name of the State or other sovereign power under which the Issuer is organized; (3) the location of the issuer's principal business office, and if the Issuer is a foreign or territorial person, the name and address of its agent in the United States authorized to receive notice; (4) the names and addresses of the directors or persons performing similar functions, and the chief executive, financial and accounting officers, chosen or to be chosen if the Issuer be a corporation, association, trust, or other entity; of all partners, if the issuer be a partnership; and of the issuer, if the issuer be an individual; and of the promoters in the case of a business to be formed, or formed within two years prior to the filing of the registration statement; (5) the names and addresses of the underwriters; (6) the names and addresses of all persons, if any, owning of record or beneficially, if known, more than 10 per centum of any class of stock of the issuer, or more than 10 per centum in the aggregate of the outstanding stock of the issuer as of a date within 20 days prior to the filing of the registration statement; (7) the amount of securities of the issuer held by any person specified In paragraphs (4), (5), and (6) of this schedule, as of a date within 20 days prior to the filing of the registration statement, and, if possible, as of one year prior thereto, and the amount of the securities, for which the registration statement is filed, to which such persons have indicated their intention to subscribe; (8) the general character of the business actually transacted or to be transacted by the issuer; (9) a statement of the capitalization of the issuer, including the authorized and outstanding amounts of its capital stock and the proportion thereof paid up, the number and classes of shares in which such capital stock is divided, par value thereof, or if it has no par value, the stated or assigned value thereof, a description of the respective voting rights, preferences, conversion and exchange rights, rights to dividends, profits, or capital of each class, with respect to each other class, including the retirement and liquidation rights or values thereof; (10) a statement of the securities, if any, covered by options outstanding or to be created in connection with the security to be offered, together with the names and addresses of all persons, if any, to be allotted more than 10% in the aggregate of such options; 3789 (11) the amount' of capital stock of each class issued or included In the shares of stock to be offered; (12) the amount of the funded debt Outstanding and to be created by the security to be offered, with a brief description of the date, maturity, and character of such debt, rate of interest, character of amortization provisions, and the security, if any, therefor. If substitution of any security is permissible, a summarized statement of the conditions under which such substitution is permitted. If substitution is permissible without notice, a specific statement to that effect; (13) the specific purposes in detail and the approximate amounts to be devoted to such purposes, so far as determinable, for which the security to be offered is to supply funds, and if the funds are to be raised in part from other sources, the amounts thereof and the sources thereof, shall be stated; (14) the remuneration, paid or estimated to be paid, by the issuer or its predecessor, directly or indirectly, during the past year and ensuing year to (a) the directors or persons performing similar functions, and (b) its officers and other persons, naming them wherever such remuneration exceeded $25,000 during any such year; (15) the estimated net proceeds to be derived from the security to be offered; (16) the price at which it is proposed that the security shall be offered to the public or the method by which such price is computed and any variation therefrom at which any portion of such security is proposed to be offered to any persons or classes of persons, other than the underwriters, naming them or specifying the class. A variation in price may be proposed prior to the date of the public offering of the security, but the Commission shall immediately be notified of such variation; (17) all commissions or discounts paid or to be paid, directly or indirectly, by the issuer to the underwriters in respect of the sale of the security to be offered. Commissions shall include all cash, securities, contracts, or anything else of value, paid, to be set aside, disposed of, or understandings with or for the benefit of any other persons in which any underwriter is interested, made, in connection with the sale of such security. A commission paid or to be paid in connection with the sale of such security by a person in which the issuer has an interest or which is controlled or directed by, or under common control with, the issuer shall be deemed to have been paid by the issuer. Where any such commission is paid the amount of such commission paid to each underwriter shall be stated; (18) the amount or estimated amounts, itemized in reasonable detail, of expenses, other than commissions specified in paragraph (17) of this schedule, incurred or borne by or for the account of the issuer in connection with the sale of the security to be offered or properly chargeable thereto, including legal, engineering, certification, authentication, and other charges; (19) the net proceeds derived from any security sold by the issuer during the two years preceding the filing of the registration statement, the price at which such security was offered to the public, and the names of the principal underwriters of such security; (20) any amount paid within two years preceding the filing of the registration statement or intended to be paid to any promoter and the consideration for any such payment; (21) the names and addresses of the vendors and the purchase price of any property, or good-will, acquired or to be acquired, not in the ordinary course of business, which is to be defrayed in whole or in part from the proceeds of the security to be offered, the amount of any commission payable to any person in connection with such acquisition, and the name or names of such person or persons, together with any expense incurred or to be incurred in connection with such acquiJition, including the cost of borrowing money to finance such acquisition; (22) full particulars of the nature and extent of the interest, if any, of every director, principal executive officer, and of every stockholder holding more than 10% of any clas.3 of stock or more than 10% in the aggregate of the stock of the issuer, in any property acquired, not in the ordinary course of business of the issuer, within two years preceding the filing of the registration statement or proposed to be acquired at such date; (23) the names and addresses of counsel who have passed on the legality of the issue; (2.) dates of and parties to, and the general effect concisely stated of every material contract made, not in the ordinary course of business, which contract is to be executed in whole or in part at or after the filing of the registration statement or which contract has been made not more than two years before such filing. Any management contract or contract providing for special bonuses or profit-sharing arrangements, and every material patent or contract for a material patent right, and every contract by or with a public utility company or an affiliate thereof, providing for the giving or receiving of technical or financial advice or service (if such contract may involve a charge to any party thereto at a rate in excess of $2,500 per year in cash or securities or anything else of value), shall be deemed a material contract; (25) a balance sheet as of a date not more than 90 days prior to the date of the filing of the registration statement showing all of the assets of the issuer, the nature and cost thereof, whenever determinable, in such detail and in such form as the Commission shall prescribe (with intangible items segregated), including any loan in excess of $20,000 to any officer, director, stockholder or person directly or indirectly controlling or controlled by the issuer, or person under direct or indirect common control with the issuer. All the liabilities of the issuer in such detail and such form as the Commission shall prescribe, including surplus of the issuer showing how and from what sources such surplus was created, all as of a date not more than 90 days prior to the filing of the registration statement. If such statement be not certified by an independent public or certified accountant, in addition to the balance sheet required to be submitted under this schedule, a similar detailed balance sheet of the assets and liabilities of the issuer, certified by an independent public or certified accountant, of a date not more than one year prior to the filing of the registration statement, shall be submitted; (26) a profit and loss statement of the issuer showing earnings and income, the nature and source thereof, and the expenses and fixed charges in such detail and such form as the Commission shall prescribe for the latest fiscal year for which such statement is available and for the two preceding fiscal years, year by year, or, if such issuer has been in actual business for less than three years, then for such time as the issuer has been in actual business, year by year. If the date of the filing of the registration statement is more than six months after the close of the last fiscal year, a statement from such closing date to the latest practicable date. Such statement shall show what the practice of the issuer has been during the three years or lesser period as to the character of the charges, dividends or other distributions made against its various surplus accounts, and as to depreciation, depletion, and maintenance charges, in such detail and form as the Commission shall prescribe, and if stock dividends or avails from the sale of rights have been credited to income, they shall 3790 Financial Chronicle be shown separately with a statement of the basis upon which the credit is computed. Such statement shall also differentiate between any recurring and non-recurring income and between any investment and operating income. Such statement shall be certified by an independent public or certified accountant; (27) if the proceeds, or any part of the proceeds, of the security to be issued is to be applied directly or indirectly to the purchase of any business, a profit and loss statement of such business certified by an independent public or certified accountant, meeting the requirements of paragraph (26) of this schedule, for the three preceding fiscal years, together with a balance sheet, similarly certified, of such business, meeting the requirements of paragraph (25) of this schedule of a date not more than 90 days prior to the filing of the registration statement or at the date such business was acquired by the issuer if the business was acquired by the issuer more than 90 days prior to the filing of the registration statement; (28) a copy of any agreement or agreements (or, if identic agreements are used, the forms thereof) made with any underwriter, including all contracts and agreements referred to in paragraph (17) of this schedule; (29) a copy of the opinion or opinions of counsel in respect to the legality of the issue, with a translation of such opinion, when necessary, into the English language; (30) a copy of all material contracts referred to in paragraph (24) of this schedule, but no disclosure shall be required of any portion of any such contract if the Commission determines that disclosure of such portion would impair the value of the contract and would not be necessary for the protection of the investors; (31) unless previously filed and registered under the provisions of this title, and brought up to date, (a) a copy of its articles of incorporation, with all amendments thereof and of its existing by-laws or instrua ments corresponding thereto, whatever the name, if the issuer be corporation;(b) copy of all instruments by which the trust is created or declared, if the issuer is a trust; (c) a copy of its articles of partnership the or association and all other papers pertaining to its organization, if issuer is a partnership, unincorporated association, joint-stock company, or any other form of organization; and (32) a copy of the underlying agreements or indentures affecting any stock, bonds, or debentures offered or to be offered. In case of certificates of deposit, voting trust certificates, collateral trust certificates, certificates of interest or shares in unincorporated Investment trusts, equipment trust certificates, interim or other receipts for certificates, and like securities, the Commission shall establish rules and regulations requiring the submission of information of a like character applicable to such cases, together with such other information as it may deem appropriate and necessary regarding the character, financial or otherwise, of the actual issuer of the securities and/or the person performing the acts and assuming the duties of depositor or manager. Schedule B. (1) Name of borrowing government or subdivision thereof; (2) specific purposes in detail and the approximate amounts to be devoted to such purposes, so far as determinable, for which the security to be offered is to supply funds, and if the funds are to be raised in part from other sources, the amounts thereof and the sources thereof, shall be stated; (3) the amount of the funded debt and the estimated amount of the floating debt outstanding and to be created by the security to be offered, excluding inter-governmental debt, and a brief description of the date, maturity, character of such debt, rate of interest, character of amortization provisions, and the security, if any therefor. If substitution of any security is permissible, a statement of the conditions under which such substitution is permitted. If substitution is permissible without notice, a specific statement to that effect; (4) whether or not the issuer or its predecessor has, within a period of 20 years prior to the filing of the registration statement, defaulted on the principal or interest of any external security, excluding inter-governmental debt, and, if so, the date, amount, and circumstances of such default, and the terms of the succeeding arrangement, if any; (5) the receipts, classified by source, and the expenditures, classified by purpose, in such detail and form as the Commission shall prescribe for the latest fiscal year for which such information is available and the two preceding fiscal years, year by year; (6) the names and addresses of the underwriters; (7) the name and address of its authorized agent, if any, in the United States; (8) the estimated net proceeds to be derived from the sale in the United States of the security to be offered; (9) the price at which it is proposed that the security shall be offered In the United States to the public or the method by which such price is computed. A variation in price may be proposed prior to the date of the public offering of the security, but the Commission shall immediately be notified of such variation; (10) all commissions paid or to be paid, directly or indirectly, by the issuer to the underwriters in respect of the sale of the security to be offered. Commissions shall include all cash, securities, contracts, or anything else of value, paid, to be set aside, disposed of, or understandings with or for the benefit of any other persons in which the underwriter is interested, made, in connection with the sale of such security. Where any such commission is paid, the amount of such commission paid to each underwriter shall be stated; (11) the amount or estimated amounts, itemized in reasonable detail, of expenses, other than the commissions specified in paragraph (10) of this schedule, incurred or borne by or for the account of the issuer in connection with the sale of the security to be offered or properly chargeable thereto, including legal, engineering, certification, and other charges; (12) the names and addresses of counsel who have passed upon the legality of the issue; (13) a copy of any agreement or agreements made with any underwriter governing the sale of the security within the United States; and (14) an agreement of the issuer to furnish a copy of the opinion or opinions of counsel in respect to the legality of the issue, with a translation, where necessary, into the English language. Such opinion shall set out in full all laws, decrees, ordinances, or other acts of Government under which the issue of such security has been authorized. TITLE II. Sec. 201. For the purpose of protecting, conserving, and advancing the interests of the holders of foreign securities in default, there is hereby created a body corporate with the name' Corporation of Foreign Security Holders" (herein called the "Corporation"). The principal office of the Corporation shall be located in the District of Columbia, but there may be established agencies or branch offices in any city or cities of the United States under rules and regulations prescribed by the board of directors. June 3 1933 Sec. 202. The control and management of the Corporation shall be vested in a board of six directors, who shall be appointed and hold office in the following manner: As soon as practicable after the date this Act takes effect the Federal Trade Commission (hereinafter in this title called "Commission") shall appoint six directors, and shall designate a chairman and a vice-chairman from among their number. After the directors designated as chairman and vice-chairman cease to be directors, their successors as chairman and vice-chairman shall be elected by the board of directors itself. Of the directors first appointed, two shall continue in office for a term of two years, two for a term of four years, and two for a term of six years, from the date this Act takes effect, the term of each to be designated by the Commission at the time of appointment. Their successors shall be appointed by the Commission, each for a term of six years from the date of the expiration of the term for which his predecessor was appointed, except that any person appointed to fill a vacancy occuring prior to the expiration of the term for which his predecessor was appointed shall be appointed only for the unexpired term of such predecessor. No person shall be eligible to serve as a director who within the five years preceding has had any interest, direct or indirect, in any corporation, company, partnership, bank or association which has sold, or offered for sale any foreign securities. The office of a director shall be vacated if the board of directors shall at a meeting specially convened for that purpose by resolution passed by a majority of at least two-thirds of the board of directors, remove such member from office, provided that the member whom it is proposed to remove shall have seven days' notice sent to him of such meeting and that he may be heard. Sec. 203. The Corporation shall have power to adopt, alter, and use a corporate seal; to make contracts; to lease such real estate as may be necessary for the transaction of its business; to sue and be sued, to complain and to defend, in any court of competent jurisdiction, State or Federal; to require from trustees, financial agents, or dealers in foreign securities information relative to the original or present holders of foreign securities and such other information as may be required and to issue subpoenas therefor; to take over the functions of any fiscal and paying agents of any foreign securities In default; to borrow money for the purposes of this title, and to pledge as collateral for such loans any securities deposited with the Corporation pursuant to this title; by and with the consent and approval of the Commission to select, employ, and fix the compensation of officers, directors, members of committees, employees, attorneys, and agents of the Corporation. without regard to the provisions of other laws applicable to the employment and compensation of officers or employees of the United States; to define their authority and duties, require bonds of them and fix the penalties thereof, and to dismiss at pleasure such officers, employees, attorneys, and agents; and to prescribe, amend, and repeal by Its board of directors, by-laws, rules, and regulations governing the manner in which its general business may be conducted and the powers granted to it by law may be exercised and enjoyed, togetner with provisions for such committees and the functions thereof as the board of directors may deem necessary for facilitating its business under this title. The board of directors of the Corporation shall determine and prescribe the manner in which its obligations shall be incurred and its expenses allowed and paid. Sec. 204. The board of directors may— (1) Convene meetings of holders of foreign securities. (2) Invite the deposit and undertake the custody of foreign securities which have defaulted in the payment either of principal or interest, and issue receipts or certificates in the place of securities so deposited. (3) Appoint committees from the directors of the Corporation and /or all other persons to represent holders of any class or classes of foreign securities which have defaulted in the payment either of principal or Interest and determine and regulate the functions of such committees. The chairman and vice-chairman of the board of directors shall be exofficio chairman and vice-chairman of each committee. (4) Negotiate and carry out, or assist in negotiating and carrying out, arrangements for the resumption of payments due or in arrears in respect of any foreign securities in defauli or for rearranging the terms on which such securities may in future be held or for converting and exchanging the same for new securities or for any other object in relation thereto; and under this paragraph any plan or agreement made with respect to such securities shall be binding upon depositors, providing that the consent of holders resident in the United States of 60 per centum of the securities deposited with the corporation shall be obtained. (5) Undertake, superintend, or take part in the collection and application of funds derived from foreign securities which come into the possession of or under the control or management of the corporation. (6) Collect, preserve, publish, circulate, and render available in readily accessible form, when deemed essential or necessary, documents, statistics, reports, and information of all kinds in respect of foreign securities, including particularly records of foreign external securities in default and records of the progress made toward the payment of pastdue obligations. (7) Take such steps as it may deem expedient with the view of securing the adoption of clear and simple forms of foreign securities and just and sound principles in the conditions and terms thereof. (8) Generally, act in the name and on behalf of the holders of foreign securities the care or representation of whose interests may be entrusted to the corporation; conserve and protect the rights and interests of holders of foreign securities issued, sold, or owned in the United States; adopt measures for the protection, vindication, and preservation or reservation of the rights and interests of holders of foreign securities either on any default in or on breach or contemplated breach of the conditions on which such foreign securities may have been issued, or otherwise; obtain for such holders such legal and other assistance and advice as the board of directors may deem expedient; and do all such other things as are incident or,conducive to the attainment of the above objects. Sec. 205. The board of directors shall cause accounts to be kept of all matters relating to or connected with the transactions and business of the corporation, and cause a general account and balance sheet of the corporation to be made out in each year, and cause all accounts to be audited by one or more auditors who shall examine the same and report thereon to the board of directors. Sec. 206. The Corporation shall make, print, and make public an annual report of its operations during each year, send a copy thereof, together with a copy of the account and balance sheet and auditor's report, to the Commission and to both Houses of Congress, and provide one copy of such report but not more than one on the application of any person and on receipt of a sum not exceeding $1; Provided, That the board of directors in its discretion may distribute copies gratuitously. Sec. 207. The Corporation may in Its discretion levy charges, assessed on a pro rata basis, on the holders of foreign securities deposited with it: Provided, That any charge levied at the time of depositing securities with the Corporation shall not exceed one-fifth of 1 per centum of the face Financial Chronicle Volume 136 value of such securities: Provided further, That any additional charges shall bear a close relationship to the cost of operations and negotiations including those enumerated in Sections 203 and 204 and shall not exceed 1 per centum of the face value of such securities. Sec. 208. The Corporation may receive subscriptions from any person, foundation with a public purpose,or agency of the United States Government, and such subscriptions may, in the discretion of the board of directors, be treated as loans repayable when and as the board of directors shall determine. Sec. 209. The Reconstruction Finance Corporation is hereby authorized to loan out of its funds not to exceed $75,000 for the use of the Corporation. Sec. 210. Notwithstanding the foregoing provisions of this title, it shall be unlawful for, and nothing in this title shall be taken or construed as permitting or authorizing, the Corporation in this title created, or any committee of said Corporation,or any person or persons acting for or representing or purporting to represent it— (a) to claim or assert or pretend to be acting for or to represent the Department of State or the United States Government: 3791 (b) to make any statements or representations of any kind to any foreign government or its officials or the officials of any political subdivision of any foreign government that said Corporation or any committee thereof or any individual or individuals connected therewith were speaking or acting for the said Department of State or the United States Government; or (c) to do any act directly or indirectly which would interfere with or obstruct or hinder or which might be calculated to obstruct, hinder or interfere with the policy or policies of the said Department of State or the Government of the United States or any pending or contemplated diplomatic negotiations, arrangements, business or exchanges between the Government of the United States or said Department of State and any foreign government or any political subdivision thereof. Sec. 211. This title shall not take effect until the President finds that its taking effect is in the public interest and by proclamation so declares. Sec. 212, This title may be cited as the "Corporation of Foreign LondholderslAct, 1933." Approved May 127 1933. Text of Act Providing for Government Operation of Muscle Shoals and Creation of Tennessee Valley Authority—Law Also Makes Provision for Issuance of $50,000,000 in Bonds to Finance Project. As we indicated in our issue of May 20, page 3462, President Roosevelt's program for the development of the Tennessee Valley, with plans for Government operation of the Musch Shoals power project, received final Congressional approval on May 17, the President affixing his signature to the new legislhtion on May 18. Noting that the enactment of the measure brings to a close the 13-year-old controversy over the disposition of the huge war-time Alabama power and nitrate plant, the Washington correspondent of the New York "Journal of Commerce" on May 18 said: May Name Board. The new Act authorizes the President to appoint a Board of Three as a "Tennessee Valley Authority" to manage industrial and agricultural development of the valley, with offices near Muscle Shoals, Ala. It can acquire real estate and build dams, power houses, reservoirs transmission lines and navigation projects; unite power installation into one or more transmission line systems; contract with commercial producers for fertilizer; manufacture experimental fertilizer, manufacture and sell explosives to the Government at cost; produce, sell and distribute power, lease nitrate plant No. 2 % 2 / for the private manufacture of fertilizer; sell $50,000,000 in 31 50-year bonds to finance the improvements, and with Presidential approval, complete plant No. 2, near Muscle Shoals. dam No. 2 and the steam plant at nitrate In signing the measure the President caused to be issued a warning to "innocent investors" against conscienceless wildcat land speculators. He was represented as being made very happy in carrying to realization the hope of the great principle which he has long maintained for the development of the Muscle Shoals property and the Tennessee Valley. The legislation provides for construction of the Cove Creek Dam across the Clinch River in Tennessee with a transmission power line from Muscle Shoals. Under the law 5% of the gross receipts received by the Board from sale of power generated at Dam No. 2 or any other dam built later in Alabama Is to go to the State of Alabama. Tennessee is to receive 5% of the gross proceeds from the Cove Creek development or any other dam in Tennessee. In putting the vast project into operation the Administration is hopeful early employment may be given to thousands of men. From the Washington "Post" of May 19 we quote the following Associated Press advices: President Roosevelt yesterday made the Muscle Shoals bill law, radiating pleasure but warning innocent investors against land speculators seeking to exploit the new program for developing the Tennessee River Valley. He signed only a few hours after it became known he had initiated a Department of Justice investigation into charges that private utilities which have leased the Muscle Shoals waterpower in recent years misused and damaged the great hydro-electric plant, which has lain virtually dormant since its construction by the Government in World War days. End of Long Struggle. An enthusiastic group from Congress, including Senator Norris, of Nebraska, and Senators and Representatives from the Shoals area, applauded vigorously as the President put his name to the law which for a dozen years they had struggled futilely to enact. Norris said: "The law marks an epoch in the history of our national life. It is a monument to the victorious ending of a 12 years' struggle, waged on behalf of the common people against the combined forces of monopoly and human greed." The President issued no formal statement on land speculation, but made sure that his warning be distributed by the press. The land development program is his own, a dream of model communities, of industry brought to the country, of land utilized for its best purpose, of new forests growing where ancient ones have been wiped out, of streams protected against destructive floods, used to their full capacity for navigation and generation of inexpensive electricity. After experiment here, Mr. Roosevelt hopes to extend the plan to other parts of the country. As signed by President Roosevelt on May 18,the text of the newly-enacted laws follows: [H. R.5081.] AN ACT To improve the navigability and to provide for the flood control of the Tennessee River; to provide for reforestation and the proper use of marginal lands in the Tennessee Valley; to provide for the agricultural and industrial development of said valley; to provide for the national defense by the creation of a corporation for the operation of Government properties at and near Muscle Shoals in the State of Alabama, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That for the purpose of maintaining end operating the properties now owned by the United States in the vicinity of Muscle Shoals, Alabama, in the interest of the national defense and for the agricultural and industrial development, and to improve navigation in the Tennessee River and to control the destructive flood waters in the Tennessee River and Mississippi River Basins, there is hereby created a body corporate by the name of the "Tennessee Valley Authority" (hereinafter referred to as the "Corporation"). The Board of Directors first appointed shall be deemed the incorporators, and the incorporation shall be held to have been effected from the date of the first meeting of the Board. This Act may be cited as the "Tennessee Valley Authority Act of 1933." Sec. 2. (a) The Board of Directors of the Corporation (hereinafter referred to as the "Board") shall be composed of three members, to be appointed by the President, by and with the advice and consent of the Senate. In appointing the members of the Board, the President shall designate the Chairman. All other officials, agents, and employees shall be designated and selected by the Board. (b) The terms of office of the members first taking office after the approval of this Act shall expire as designated by the President at the time of nomination, one at the end of the third year, one at the end of the sixth year, and one at the end of the ninth year, after the date of approval of this Act. A successor to a member of the Board shall be appointed in the same manner as the original members and shall have a term of office expiring nine years from the date of the expiration of the term for which his predecessor was appointed. (c) Any member appointed to fill a vacancy in the Board occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term. (d) Vacancies in the Board, so long as there shall be two members in office, shall not impair the powers of the Board to execute the functions of the Corporation, and two of the members in office shall constitute a quorum for the transaction of the business of the Board. (e) Each of the members of the Board shall be a citizen of the United States, and shall receive a salary at the rate of $10,000 a year, to be paid by the Corporation as current expenses. Each member of the Board, in addition to his salary, shall be permitted to occupy as his residence one of the dwelling houses owned by the Government in the vicinity of Muscle Shoals, Alabama, the same to be designated by the President, of the United States. Members of the Board shall be reimbursed by the Corporation for actual expenses (including traveling and subsistence expenses) incured by them in the performance of the duties vested in the Board by this Act. No member of said Board shall, during his continuance in office, be engaged in any other business, but each member shall devote himself to the work of the Corporation. (f) No director shall have financial interest in any public utility corporation engaged in the business of distributing and selling power to the public nor in any corporation engaged in the manufacture, selling, or distribution of fixed nitrogen or fertilizer, or any ingredients thereof, nor shall any member have any interest in any business that may be adversely affected by the success of the Corporation as a producer of concentrated fertilizers or as a producer of electric power. (g) The Board shall direct the exercise of all the powers of the Corporation. (h) All members of the Board shall be persons who profess a belief in the feasibility and wisdom of this Act. Sec. 3. The Board shall without regard to the provisions of Civil Service laws applicable to officers and employees of the United States, appoint such managers, assistant managers, officers, employees, attorneys, and agents as are necessary for the transaction of its business, fix their compensation, define their duties, require bonds of such of them as the Board may designate, and provide a system of organization to fix responsibility and promote efficiency. Any appointee of the Board may be removed in the discretion of the Board. No regular officer or employee of the Corporation shall receive a salary in excess of that received by the members of the Board. All contracts to which the Corporation is a party and which require the employment of laborers and mechanics in the construction, alteration, maintenance, or repair of buildings, dams, locks, or other projects shall contain a provision that not less than the prevailing rate of wages for work of a similar nature prevailing in the vicinity shall be paid to such laborers or mechanics. In the event any dispute arises as to what are the prevailing rates of wages, the question shall be referred to the Secretary of Labor for determination, and his decision shall be final. In the determination of such prevailing rate or rates, due regard shall be given to those rates which have been secured through collective agreement by representatives of employers and employees. Where such work as is described in the two preceding paragraphs is done directly by the Corporation the prevailing rate of wages shall be paid in the same manner as though such work had been let by contract. Insofar as applicable, the benefits of the Act entitled "An Act to provide compensation for employees of the United States suffering injuries while in the performance of their duties, and for other purposes," approved Sept. 7 1916, as amended, shall extend to persons given employment under the provisions of this Act. 3792 Financial Chronicle Sec. 4. Except as otherwise specifically provided in this Act, the Corporation— (a) Shall have succession in its corporate name. (b) May sue and be sued in its corporate name. (c) May adopt and use a corporate seal, which shall be judicially noticed. (d) May make contracts, as herein authorized. (e) May adopt, amend. and repeal by-laws. (f) May purchase or lease and hold such real and personal property as it deems necessary or convenient in the transaction of its business, and may dispose of any such personal property held by it. The Board shall select a Treasurer and as many Assistant Treasurers as it deems proper, which Treasurer and Assistant Treasurers shall give such bonds for the safe-keeping of the securities and moneys of the said Corporation as the Board may require: Provided, That any member of said Board may be removed from office at any time by a concurrent resolution of the Senate and the House of Representatives. (g) Shall have such powers as may be necessary or appropriate for the exercise of the powers herein specifically conferred upon the Corporation. (h) Shall have power in the name of the United States of America to exercise the right of eminent domain, and in the purchase of any real estate or the acquisition of real estate by condemnation proceedings, the title to such real estate shall be taken in the name of the United States of America, and thereupon all such real estate shall be entrusted to the Corporation as the agent of the United States to accomplish the purposes of this Act. (i) Shall have power to acquire real estate for the construction of dams, reservoirs, transmission lines, power houses. and other structures, and navigation projects at any point along the Tennessee River, or any of its tributaries, and in the event that the owner or owners of such property shall fail and refuse to sell to the Corporation at a price deemed fair and reasonable by the Board, then the Corporation may proceed to exercise the right of eminent domain, and to condemn all property that it deems necessary for carrying out the purposes of this Act, and all such condemnation proceedings shall be had pursuant to the provisions and requirements hereinafter specified, with reference to any and all condemnation proceedings. (j) Shall have power to construct dams, reservoirs, power houses. power structures, transmission lines, navigation projects, and incidental works in the Tennessee River and its tributaries, and to unite the various power installations into one or more systems by transmission lines. Sec. 5. The Board is hereby authorized— (a) To contract with commercial producers for the production of such fertilizers or fertilizer materials as may be needed in the Government's program of development and introduction in excess of that produced by Government plants. Such contracts may provide either for outright purchase of materials by the Board or only for the payment of carrying charges on special materials manufactured at the Board's request for its program. (b) To arrange with farmers and farm organizations for large-scale practical use of the new forms of fertilizers under conditions permitting an accurate measure of the economic return they produce. (c) To co-operate with National, State, district, or county experimental stations or demonstration farms, for the use of new forms of fertilizer or fertilizer practices during the initial or experimental period of their introduction. (d) The Board, in order to improve and cheapen the production of fertilizer, is authorized to manufacture and sell fixed nitrogen, fertilizer, and fertilizer ingredients at Muscle Shoals by the employment of existing facilities, by modernizing existing plants, or by any other process or processes that in its judgment shall appear wise and profitable for the fixation of atmospheric nitrogen or the cheapening of the production of fertilizer. (e) Under the authority of this Act the Board may make donations or sales of the product of the plant or plants operated by it to be fairly and equitably distributed through the agency of country demonstration agents, agricultural colleges, or otherwise as the Board may direct, for experimentation, education, and introduction of the use of such products in co-operation with practical farmers so as to obtain information as to the value, effect, and best methods of their use. (f) The Board is authorized to make alterations, modifications, or improvements in existing plants and facilities, and to construct new plants. (g) In the event it is not used for the fixation of nitrogen for agricultural purposes or leased, then the Board shall maintain in stand-by condition nitrate plant numbered 2, or its equivalent, for the fixation of atmospheric nitrogen, for the production of explosives in the event of war or a national emergency, until the Congress shall by joint resolution release the Board from its obligation, and if any part thereof be used by the Board for the manufacture of phosphoric acid or potash. the balance of nitrate plant numbered 2 shall be kept in stand-by condition. (h) To establish, maintain, and operate laboratories and experimental plants, and to undertake experiments for the purpose of enabling the Corporation to furnish nitrogen products for military purposes, and nitrogen and other fertilizer products for agricultural purposes in the most economical manner and at the highest standard of efficiency. (1) To request the assistance and advice of any officer, agent, or employee of any executive department or of any independent office of the United States, to enable the Corporation the better to carry out its powers successfully, and as far as practicable shall utilize the services of such officers, agents, and employees. and the President shall, if in his opinion, the public interest, service, or economy so require, direct that such assistance, advice, and service be rendered to the Corporation, and any individual that may be by the President directed to render such assistance, advice, and service shall be thereafter subject to the orders, rules, and regulations of the Board; Provided, That any invention or discovery made by virtue of and incidental to such service by an employee of the Government of the United States serving under this section, or by any employee of the Corporation, together with any patents which may be granted thereon, shall be the sole and exclusive property of the Corporation, which is hereby authorized to grant such licenses thereunder as shall be authorized by the Board: Provided further, That the Board may pay to such inventor such sum from the income from sale of licenses as it may deem proper. (j) Upon the requisition of the Secretary of War or the Secretary of the Navy to manufacture for and sell at cost to the United States explosives or their nitrogenous content. (k) Upon the requisition of the Secretary of War the Corporation shall allot and deliver without charge to the War Department so much power as shall be necessary in the judgment of said Department for use in operation of all locks, lifts, or other facilities in aid of navigation. (1) To produce, distribute, and sell electric power, as herein particularly specified. (m) No products of the Corporation shall be sold for use outside of the United States, its Territories and possessions, except to the United States frovernment for the use edits Army and Navy, or to its allies in case of war. June 3 1933 (n) The President is authorized, within 12 months after the passage of this Act, to lease to any responsible farm organization or to any corporation organized by it nitrate plant numbered 2 and Waco Quarry, together with the railroad connecting said quarry with nitrate plant numbered 2, for a term not exceeding 50 years at a rental of not less than $1 per year, but such authority shall be subject to the express condition that the lessee shall use said property during the term of said lease exclusively for the manufacture of fertilizer and fertilizer ingredients to be used only in the manufacture of fertilizer by said lessee and sold for use as fertilizer. The said lessee shall covenant to keep said property in first-class condition, but the lessee shall be authorized to modernize said plant numbered 2 •by the installation of such machinery as may be necessary, and is authorized to amortize the cost of said machinery and improvements over the term of said lease or any part thereof. Said lease shall also provide that the Board shall sell to the lessee power for the operation of said plant at the same schedule of prices that it charges all other customers for power of the same class and quantity. Said lease shall also provide that, if the said lessee does not desire to buy power of the publicly owned plant, it shall have the right to purchase its power for the operation of said plant of the Alabama Power Co. or any other publicly or privately owned corporation engaged in the generation and sale of electric power, and in such case the lease shall provide further that the said lessee shall have a free right of way to build a transmission line over Government property to said plant paying the actual expenses and damages, if any, incurred by the Corporation on account of such line. Said lease shall also provide that the said lessee shall covenant that during the term of said lease the said lessee shall not enter into any illegal monopoly, combination, or trust with any privately owned corporation engaged in the manufacture, production, and sale of fertilizer with the object or effect of increasing the price of fertilizer to the farmer. Sec. 6. In the appointment of officials and the selection of employees for said Corporation. and in the promotion of any such employees or officials, no political test or qualification shall be permitted or given consideration, but all such appointments and promotions shall be given and made on the basis of merit and efficiency. Any member of said Board who is found by the President of the United States to be guilty of a violation of this section shall be removed from office by the President of the United States, and any appointee of said Board who is found by the Board to be guilty of a violation of this section shall be removed from office by said Board. Sec. 7. In order to enable the Corporation to exercise the powers and duties vested in it by this Act— (a) The exclusive use, possession, and control of the United States nitrate plants numbered 1 and 2, including steam plants, located, respectively, at Sheffield, Alabama, and Muscle Shoals Alabama, together with all real estate and buildings connected therewith, all tools and machinery, equipment, accessories, and materials belonging thereto, and all laboratories and plants used as auxiliaries thereto; the fixed-nitrogen research laboratory, the Waco limestone quarry, in Alabama, and Dam Numbered 2 located at -electric and operating appur. Muscle Shoals, its power house, and all hydro tenances (except the locks), and all machinery, lands, and buildings in connection therewith, and all appurtenances thereof, and all other property to be acquired by the Corporation in its own name or in the name of the United States of America, are hereby intrusted to the Corporation for the purposes of this Act. (b) The President of the United States is authorized to provide for the transfer to the Corporation of the use possession, and control of such other real or personal property of the United 'States as he may from time to time deem necessary and proper for the purposes of the Corporation as herein stated. Sec. 8. (a) The Corporation shall maintain its principal office in the immediate vicinity of Muscle Shoals, Alabama. The Corporation shall be held to be an inhabitant and resident of the northern judicial district of Alabama within the meaning of the laws of the United States relating to the venue of civil suits. (b) The Corporation shall at all times maintain complete and accurate books of accounts. (c) Each member of the Board, before entering upon the duties of his office, shall subscribe to an oath (or affirmation) to support the Constitution of the United States and to faithfully and impartially perform the duties imposed upon him by this Act. Sec. 9. (a) The Board shall file with the President and with the Congress, in December of each year, a financial statement and a complete report as to the business of the Corporation covering the preceding governmental fiscal year. This report shall include an itemized statement of the cost of power at each power station, the total number of employees, and the names, salaries, and duties of those receiving compensation at the rate of more than $1,500 a year. (b) The Comptroller-General of the United States shall audit the transactions of the Corporation at such times as he shall determine. but not less frequently than once each governmental fiscal year, with personnel of his selection. In such connection he and his representatives shall have free and open access to all papers, books, records, files, accounts, plants, warehouses, offices, and all other things, property and places belonging to or under the . control of or used or employed by the Corporation and shall be afforded full facilities for counting all cash and verifying transaetiona with and balances in depositaries. He shall make report of each such audit in quadruplicate, one copy for the President of the United States, one for the Chairman of the Board, one for public inspection at the principal office of the Corporation, and the other to be retained by him for the uses of the Congress. The expenses for each such audit may be paid from moneys advanced therefor by the Corporation, or from any appropriation or appropriations for the General Accounting Office, and appropriations so used shall be reimbursed promptly by the Corporation as billed by the Comptroller-General. All such audit expenses shall be charged to operating expenses of the Corporation. The Comptroller-General shall make special report to the President of the United States and to the Congress of any transaction or condition found by him to be in conflict with the powers or duties intrusted by the Corporation by law. See. 10. The Board is hereby empowered and authorized to sell the surplus power not used in its operations, and for operation of locks and other Works generated by it, to States, countries, municipalities, corporations, partnerships, or individuals, according to the policies hereinafter set forth; and to carry out said authority, the Board is authorized to enter into contracts for such ode for a term not exceeding 20 years, and in the sale of such current by the Board it shall give preference to States, counties, municipalities, and co-operative organizations of citizens or farmers, not organized or doing business for profit, but primarily for the purpose of supplying electricity to Its own citizens or members: Provided, That all contracts made with private companies or individuals for the sale of power, which power is to be resold for a profit, shall contain a provision authorizing the Board to cancel said contract upon five years' notice in writing, if the Board needs said power to supply the demands of States, counties, or municipalities. In order Volume 136 Financial Chronicle to promote and encourage the fullest possible use of electric light and power on farms within reasonable distance of any of its transmission lines the Board in its discretion shall have power to construct transmission lines to farms and small villages that are not otherwise supplied with electricity at reasonable rates, and to make such rules and regulations governing such sale and distribution of such electric power as in its judgment may be just and equitable: Provided further, That the Board is hereby authorized and directed to make studies, experiments. and determinations to promote the wider and better use of electric power for agricultural and domestic use, or for small or local industries, and it may co-operate with State governments, or their subdivisions or agencies, with educational or research institutions, and with co-operatives or other organizations, in the application of electric power to the fuller and better balanced development of the resources of the region. Sec. 11. It is hereby declared to be the policy of the Government, so far as practical, to distribute and sell the surplus power generated at Muscle Shoals equitably among the States, counties and municipalities within transmission distance. This policy is further 'declared to be that the projects herein provided for shall be considered primarily as for the benefit of the people of the section as a whole and particularly the domestic and rural consumers to whom the power can economically be made available, and, accordingly, that sale to and use by industry shall be a secondary purpose, to be utilized principally to secure a sufficiently high load factor and revenue returns which will permit domestic and rural use at the lowest possible rates and in such manner as to encourage increased domestic and rural use of electricity. It is further hereby declared to be the policy of the Government to utilize the Muscle Shoals properties so far as may be necessary to improve, increase, and cheapen the production of fertilizer and fertilizer ingredients by carrying out the provisions of this Act. Sec. 12. In order to place the Board upon a fair basis for making such contracts and for receiving bids for the sale of such power, it is hereby expressly authorized, either from appropriations made by Congress or from funds secured from the sale of such power, or from funds secured by the sale of bonds hereafter provided for to construct, lease, purchase, or authorize the construction of transmission lines within transmission distance from the place where generated, and to interconnect with other systems. The Board Is also authorized to lease to any person, persons, or corporation the use of any transmission line owned by the Government and operated by the Board, but no such lease shall be made that in any way interferes with the use of such transmission line by the Board: Provided, That if any State, county, municipality, or other public or co-operative organization of citizens or farmers, not organized or doing business for profit, but primarily for the purpose of supplying electricity to its owe citizens or members, or any two or more of such municipalities or organizations, shall construct or agree to construct and maintain a property designed and built transmission line to the Government reservation upon which is located a Government generating plant, or to a main transmission line owned by the Government or leased by the Board and under the control of the Board, the Board is hereby authorized and directed to contract with such State, county, municipality, or other organization, or two or more of them, for the sale of electricity for a term not exceeding 30 years; and in any such case the Board shall give to such State, county, municipality or other organization ample time to fully comply with any local law nor:' in existence or hereafter enacted providing for the necessary legal authority for such State, county, municipality, or other organization to contract with the Board for such power: Provided further, That all contracts entered into between the Corporation and any municipality or other political subdivision or co-operative organization shall provide that the electric power shall be sold and distributed to the ultimate consumer without discrimination as between consumers of the same class, and such contract shall be voidable at the election of the Board if a discriminatory rate, rebate, or other special concession is made or given to any consumer or user by the municipality or other political subdivision or cooperative organization: And provided further, That as to any surplus power not so sold as above provided to States, counties, municipalities, or other said organizations, before the Board shall sell the same to any person or corporation engaged in the distribution and resale of electricity for profit, It shall require said person or corporation to agree that any resale of such electric power by said person or corporation shall be made to the ultimate consumer of such electric power at prices that shall not exceed a schedule fixed by the Board from time to time as reasonable, just, and fair; and in case Of any such sale, if an amount is charged the ultimate consumer which is in excess of the price so deemed to be just, reasonable, and fair by the Board, the contract for such sale between the Board and such distributor of electricity shall be voidable at the election of the Board: And provided further, That the Board is hereby authorized to enter into contracts with other power systems for the mutual exchange of unused excess power upon suitable terms, for the conservation of stored water, and as an emergency or breakdown relief. Sec. 13. Five per centum of the gross proceeds received by the Board for the sale of power generated at Dam Numbered 2, or from any other hydropower plant hereafter constructed in the State of Alabama, shall be paid to the State of Alabama; and 5 per centum of the gross proceeds from the sale of power generated at Cove Creek Dam, hereinafter provided for, or any other dam located in the State of Tennessee, shall be paid to the State of Tennessee. Upon the completion of said Cove Creek Dam the Board shall ascertain how much additional power is thereby generated at Dam Numbered 2 and at any other dam hereafter constructed by the Government of the United States on the Tennessee River, in the State of Alabama, or in the State of Tennessee, and from the gross proceeds of the sale of such additional power 2% per centurn shall be paid to the States of Alabama and 2% per centum to the State of Tennsseee. These percentages shall apply to any other dam that may hereafter be constructed and controlled and operated by the Board on the Tennessee River or any of its tributaries, the main purpose of which is to control flood waters and where the development of electric power is incidental to the operation of such flood-control dam. In ascertaining the gross proceeds from the sale of such power upon which a percentage is paid to the States of Alabama and Tennessee the Board shall not take into consideration the proceeds of any power sold or delivered to the Government of the United States, or any department or agency of the Government of the United States, used in the operation of any locks on the Tennessee River or for any experimental purpose, or for the manufacture of fertilizer or any of the ingredients thereof, or for any other governmental purpose: Provided, That the percentages to be paid to the States of Alabama and Tennessee, as provided in this section, shall be subject to revision and change by the Board, and any new percentages established by the Board, when approved by the President shall remain in effect until and unless again . changed by the Board win), the approval of the President. No change of said percentages shall be made more often than once in five years, and no made without giving to the States of Alabama and Tennessee change shall be an opportunity to be heard. 3793 present Sec. 14. The Board shall make a thorough investigation as to the 1, value of Dam Numbered 2, and the steam plants at nitrate plant numbered Dam, for and nitrate plant numbered 2, and as to the cost of Cove Creek properthe purpose of ascertaining how much of the value or the cost of said navigation, ties shall be allocated and charged up to (1) flood control, (2) The (3) fertilizer, (4) national defense, and (5) the development of power. the findings thus made by the Board, when approved by the President of thereafter be used in United States, shall be final, and such findings shall of said all allocation of value for the purpose of keeping the book value steam properties. In like manner, the cost and book value of any dams, turned plants, or other similar improvements hereafter constructed and shall be over to said Board for the purpose of control and management ascertained and allocated. plant, or other Sec. 15. In the construction of any future dam, steam transmission facility, to be used in whole or in part for the generation or empowered to issue on of electric power, the Board is hereby authorized and not exceeding $50,the credit of the United States and to sell serial bonds from the date 000,000 in amount, having a maturity not more than 50 years per centam per of issue thereof, and bearing interest not exceeding 3% prices approved annum. Said bonds shall be issued and sold in amounts and as may be so issued and by the Secretary of the Treasury, but all such bonds sold below par, sold shall have equal rank. None of said bonds shall be be paid to any and no fee, commission, or compensation whatever shall or selling the person, firm, or corporation for handling, negotiating the sale, have all the rights said bonds. All of such bonds so issued and sold shall authorized by bonds, and privileges accorded by law to Panama Canal by the Act Section 8 of the Act of June 28 1902, Chapter 1302, as amended 5), as now compiled in Section 743 of Dec. 21 1905 (Ch. 3, Sec. 1, 34 Stat. from the sale of of Title 31 of the United States Code. All funds derived such bonds shall be paid over to the Corporation. advisable, is hereby Sec. 16. The Board, whenever the President deems it Muscle Shoals, empowered and directed to complete Dam Numbered 2 at in the vicinity Alabama, and the stearn plant at nitrate plant numbered 2, the additional power of Muscle Shoals, by installing in Dam Numbered 2 and the additional units according to the plans and specifications of said dam. power unit in the steam plant at nitrate plant numbered 2. is hereby Sec. 17. The Secretary of War, or the Secretary of the Interior, lowest responauthorized to construct, either directly or by contract to the Clinch River in sible bidder, after due advertisement, a dam in and across become known and desigthe State of Tennessee, which has by long custom line from Muscle nated as the Cove Creek Darn, together with a transmission including power Shoals, according to the latest and most approved designs, the generation of house and hydro-electric installations and equipment for be impounded power, in order that the waters of the said Clinch River may regulating the and stored above said dam for the purpose of increasing and that the maxiflow of the Clinch River and the Tennessee River below, so Numbered 2 and mum amount of primary power may be developed at Dam Provided, howat any and all other dams below the said Cove Creek Dam: order to direct ever, That the President is hereby authorized by appropriate of the Interior, the employment by the Secretary of War, or by the Secretary such duties of such engineer or engineers as he may designate, to perform of plans and and obligations as he may deem proper, either in the drawing or specifications for said dam, or to perform any other work in the building the construction of the same. The President may, by such order, place engineer or control of the construction of said dam in the hands of such further, engineers taken from private life as he may desire: And provided That the President is hereby expressly authorized without regard to the assistrestriction or limitation of any other statute, to select attorneys and ants for the purpose of making any investigation he may deem proper to 2, or ascertain whether, in the control and management of Dam Numbered River any other dam or property owned by the Government in the Tennessee therein, there has been Basin, or in the authorization of any improvement partnerships, or any undue or unfair advantage given to private persons, whether in corporations, by any officials or employees of the Government, or of any such matters the Government has been injured or unjustly deprived any of its rights. the SecreSec. 18. In order to enable and empower the Secretary of War, authority hereby contary of the Interior. or the Board to carry out the or it is hereby ferred, in the most economical and efficient manner, he national defense authorized and empowered in the exercise of the powers of the Tennessee in aid of navigation, and in the control of the flood waters of e commerce, to and Mississippi Rivers, constituting channels of inter-Stat Act, and to exercise the right of eminent domain for all purposes of this necessary in condemn all lands, easements, rights of way, and other area rights for order to obtain a site for said Cove Creek Dam, and the flowage conclude conthe reservoir of water above said dam and to negotiate and with tracts with States, counties, municipalities, and all State agencies and comrailroads, railroad corporations, common carriers, and all public utility of missions and any other person, firm, or corporation, for the relocation railroad tracks, highways. highway bridges, mills, ferries, electric-light whose plants, and any and all other properties, enterprises, and projects removal may be necessary in order to carry out the provisions of this Act. power house shall have When said Cove Creek Dam, transmission line, and been completed, the possession, use, and control thereof shall be intrusted to the Corporation for use and operation in connection with the general Tennessee Valley project, and to promote flood control and navigation in the Tennessee River. Sec. 19. The Corporation. as an instrumentality and agency of the Government of the United States for the purpose of executing its constitutional powers, shall have access to the Patent Office of the United States for the purpose of studying, ascertaining, and copying all methods, formulae, and scientific information (not including access to pending applications for patents) necessary to enable the Corporation to use and employ the most efficacious and economical process for the production of fixed nitrogen, or any essential ingredient of fertilizer, or any method of improving and cheapening the production of hydro-electric power, and any owner of a patent whose patent rights may have been thus in any way copied, used, infringed, or employed by the exercise of this authority by the Corporation shall have as the exclusive remedy a cause of action against the Corporation to be instituted and prosecuted on the equity aide of the appropriate district court of the United States, for the recovery of reasonable compensation for such infringement. The Commissioner of Patents shall furnish to the Corporation, at its request and without payment of fees, copies of documents on file in his office: Provided, That the benefits of this section shall not apply to any art, machine, method of manufacture, or composition of matter, discovered or invented by such employee during the time of his employment or service with the Corporation or with the Government of the United States. Sec. 20. The Government of the United States hereby reserves the right. in case of war or national emergency declared by Congress, to take possession of all or any part of the property described or referred to in this Act for the 3794 Financial Chronicle purpose of manufacturing explosives or for other war purposes; but, if this right is exercised by the Government, it shall pay the reasonable and fair damages that may be suffered by any party whose contract for the purchase of electric power or fixed nitrogen or fertilizer ingredients is hereby violated, after the amount of the damages has been fixed by the United States Court of Claims in proceedings instituted and conducted for that purpose under rules prescribed by the court. Sec. 21. (a) All general penal statutes relating to the larceny, embezzlement, conversion, or to the improper handling, retention, use, or disposal of public moneys or property of the United States. shall apply to the moneys and property of the Corporation and to moneys and properties of the United States intrusted to the Corporation. (b) Any person who, with intent to defraud the Corporation, or to deceive any director, officer, or employee of the Corporation or any officer of employee of the United States (1) makes any false entry in any book of the Corporation, or (2) makes any false report or statement for the Corporation, shall, upon conviction thereof, be fined not more than $10,000 or imprisoned not more than five years, or both. (c) Any person who shall receive any compensation. rebate, or reward, or shall enter into any conspiracy, collusion, or agreement, express or implied, with intent to defraud the Corporation or wrongfully and unlawfully to defeat its purposes, shall, on conviction thereof, be dined not more than $5,000 or imprisoned not more than five years, or both. Sec. 22. To aid further the proper use, conservation, and development of the natural resources of the Tennessee River drainage basin and of such adjoining territory as may be related to or materially affected by the development consequent to this Act, and to provide for the general welfare of the citizens of said areas, the President is hereby authorized, by such means or methods as he may deem proper within the limits of appropriations made therefor by Congress, to make such surveys of and general plans for said Tennessee basin and adjoining territory as may be useful to the Congress and to the several States in guiding and controlling the extent, sequence, and nature of development that may be equitably and economically advanced through the expenditure of public funds, or through the guidance or control of public authority, all for the general purpose of fostering an orderly and proper physical, economic, and social development of said areas; and the President is further authorized in making said surveys and plans to cooperate with the States affected thereby, or subdivisions or agencies of such States, or with co-operative or other organizations, and to make such studies, experiments, or demonstrations as may be necessary and suitable to that end. Sec. 23. The President shall, from time to time, as the work provided for in the preceding section progresses, recommend to Congress such legislation as he deems proper to carry out the general purposes stated in said section, and for the especial purpose of bringing about in said Tennessee drainage basin and adjoining territory in conformity with said general purposes (1) the maximum amount of flood control; (2) the maximum development of said Tennessee River for navigation purposes; (3) the maximum generation of electric power consistent with flood control and navigation; (4) the proper use of marginal lands; (5) the proper method of reforestation of all lands in said drainage basin suitable for reforestation; and (6) the economic and social well-being of the people living in said river basin. Sec. 24. For the purpose of securing any rights of flowage, or obtaining title to or possession of any property, real or personal, that may be necessary or may become necessary, in the carrying out of any of the provisions of this Act, the President of the United States for a period of three years from the date of the enactment of this Act, is hereby authorized to acquire title in the name of the United States to such rights or such property, and to provide for the payment for same by directing the Board to contract to deliver power generated at any of the plants now owned or hereafter owned or constructed by the Government or by said Corporation, such future delivery of power to continue for a period not exceeding 30 years. Likewise, for one year after the enactment of this Act, the President is further authorized to sell or lease any parcel or part of any vacant real estate now owned by the Government in said Tennessee River Resin, to persons, firms, or corporations who shall contract to erect thereon factories or manufacturing establishments, and who shall contract to purchase of said Corporation electric power for the operation of any such factory or manufacturing establishment. No contract shall be made by the President for the sale of any such real estate as may be necessary for present or future use on the part of the Government for any of the purposes of this Act. Any such contract made by the President of the United States shall be carried out by the Board: Provided, That no such contract shall be made that will in any way abridge or take away the preference right to purchase power given in this Act to States, counties, municipalities, or farm organizations: Provided further, That no lease shall be for a term to exceed 50 years: Provided further, That any sale shall be on condition that said land shall be used for indratrial purposes only. Sec. 25. The Corporation may cause proceedings to be instituted for the acquisition by condemnation of any lands, easements, or rights of way which, In the opinion of the Corporation, are necessary to carry out the provisions of this Act. The proceedings shall be instituted in the United States district court for the district in which the land, easement, right of way, or other Interest, or any part thereof, is located, and such court shall have full jurisdiction to divest the complete title to the property sought to be acquired out of all persona or claimants and vest the same In the United States in fee simple, and to enter a decree quieting the title thereto in the United States of America. Upon the filing of a petition for condemnation and for the purpose of ascertaining the value of the property to be acquired, and assessing the compensation to be paid, the court shall appoint three commissioners who shall be disinterested persons and who shall take and subscribe an oath that they do not own any lands, or interest or easement in any lands, which it may be desirable for the United States to acquire in the furtherance of said project, and such commissioners shall not be selected from the locality wherein the land sought to be condemned lies. Such commissioners shall receive a per diem of not to exceed $15 for their services, together with an additional amount of $5 per day for subsistence for time actually spent in performing their duties as commissioners. It shall be the duty of such commissioners to examine into the value of the lands sought to be condemned, to conduct hearings and receive evidence, and generally to take such appropriate steps as may be proper for the determination of the value of the said lands sought to be condemned, and for such purpose the commissioners are authorized to administer oaths and subpoena witnesses, which said witnesses shall receive the same fees as are provided for witnesses in the Federal courts. The said commissioners shall thereupon file a report setting forth their conclusions as to the value of the said property sought to be condemned, making a separate award and valuation in the premises with respect to each separate parcel involved. Upon the filing of such award in court the clerk of said court shall give notice of the June 3 1933 filing of such award to the parties to said proceeding, in manner and form as directed by the judge of said court. Either or both parties may file exceptions to the award of said commie. sioners within 20 days from the date of the filing of said award in court. Exceptions filed to such award shall be heard before three Federal district judges unless the parties, in writing, in person, or by their attorneys, stipulate that the exceptions may be beard before a lesser number of judges. On such hearing such judges shall pass de novo upon the proceedings had before the commissioners, may view the property, and may take additional evidence. Upon such hearings the said judges shall file their own award, fixing therein the value of the property sought to be condemned, regardless of the award previously made by the said commissioners. At any time within 30 days from the filing of the decision of the district judges upon the hearing on exceptions to the award made by the commissioners, either party may appeal from such decision of the said judges to the circuit court of appeals, and the said circuit court of appeals shall upon the hearing on said appeal dispose of the same upon the record, without regard to the awards or findings theretofore made by the commissioners or the district judges, and such circuit court of appeals shall thereupon fix the value of the said property sought to be condemned. Upon acceptance of an award by the owner of any property herein provided to be appropriated, and the payment of the money awarded or upon the failure of either party to file exceptions to the award of the commissioners within the time specified, or upon the award of the commissioners, and the payment of the money by the United States pursuant thereto, or the payment of the money awarded into the registry of the court by the Corporation, the title to said property and the right to the possession thereof shall pass to the United States, and the United States shall be entitled to a writ in the same proceeding to dispossess the former owner of said property, and all lessees, agents, and attorneys of such former owner, and to put the United States, by its corporate creature and agent, the Corporation, into possession of said property. In the event of any property owned in whole or in part by minors, or insane persons, or incompetent persons, or estates of deceased persons, then the legal representatives of such minors, insane persons, incompetent persons, or estates shall have power, by and with the consent and approval of the trial judge in whose court said matter Is for determination, to consent to or reject the awards of the commissioners herein provided for, and in the event that there be no legal representatives, or that the legal representatives for such minors, insane persons, or incompetent persons shall fail or decline to act, then such trial judge may, upon motion, appoint a guardian ad litem to act for such minors, insane persons, or incompetent persons, and such guardian ad litem shall act to tlie full extent and to the same purpose and effect as his ward could act, if competent, and such guardian ad litem shall be deemed to have full power and authority to respond, to conduct, or to maintain any proceeding herein provided for affecting his said ward. Sec. 26. the net proceeds derived by the Board from the sale of power and any of the products manufactured by the Corporation, after deducting the cost of operation, maintenance, depreciation, amortization, and an amount deemed by the Board as necessary to withhold as operating capital, or devoted by the Board to new construction, shall be paid into the Treasury of the United States at the end of each calendar year. Sec. 27. All appropriations necessary to carry out the provisions of this Act are hereby authorized. Sec. 28. That all Acts or parts of Acts in conflict herewith are hereby repealed, so far as they affect the operations contemplated by this Act. Sec. 29. The right to alter, amend, or repeal this Act is hereby expressly declared and reserved, but no such amendment or repeal shall operate to impair the obligation of any contract made by said Corporation under any power conferred by this Act. Sec. 30. The sections of this Act are hereby declared to be separable, and in the event any one or more sections of this Act be held to be unconstitutions, the same shall not affect the validity of other sections of this Act. Approved May 18 1933. Silver Shipments from China to United States Expected to Continue. Exports of silver from China to the United States during the period April 24 to May 3, inclusive, totaled 15,251,457 ounces, valued at $4,869,921, according to a cablegram from Consul-General Edwin S. Cunningham, Shanghai, made public by the Commerce Department on May 10, at which time the Department said: Exports of silver from China became commercially profitable after April 22 and it is the opinion in Shanghai that exports will continue so long as the present disparity in the value of silver at New York and Shanghai maintains unless the prevailing Chinese export duty of 2 / ad valorem 1 4% is correspondingly increased or an embargo on silver shipments is imposed, according to the Consul-General. Stocks of silver in Shanghai are estimated at approximately 360,000,000 ounces, according to the cable. India Exported 34,664,500 Standard Ounces of Silver During 1932—Imports Amounted to 8,718,900 Ounces. Under date of May 22, the Department of Commerce at Washington issued the following: India exported 34,664,500 standard ounces of silver during 1932 and imported only 8,718,900 standard ounces, according to preliminary reports re- ceived from India by the Finance Division of the Commerce Department. Practically all the imports were on private account. Of the 34,664,500 ounces of exports, the Government shipped 26,107,100 standard ounces, or slightly more than its silver exports during 1931. During the find two months of 1933 net exports of silver from India totaled 9,208,000 standard ounces. Imports were only about 948,000 ounces and gross exports about 10,156,000 ounces, of which Government exports accounted for 8,727,000. In contrast to the silver trade India's net gold exports of 9,470,000 tine ounces during 1932 were entirely on private account. Gross exports were 9,671,200 fine ounces, and imports 201,000 ounces. During the first two months of 1938 net exports of gold amounted to 1,195,000 fine ounces, all on private account. (One fine ounce of gold equals approximately $20.67 with the dollar at par.) Volume 136 Financial Chronicle 3795 THE OPENING OF THE INTERNATIONAL EXPOSITION AT CHICAGO, ILLINOIS "A Century of Progress" in the Theatre of the World Postmaster-General) Farley, Representing President Roosevelt—Chicago's Century of Progress Typical of CenturyTof Progress of Nation—Says Fate Has Made Us Central Figure in World-Wide Negotiations. Speaking as the representative of President Roosevelt at the opening, on May 27, of Chicago's "Century of Progress," Postmaster-General James A. Farley stated that "President .Roosevelt has delegated to me the honor of representing him at the opening of this great Exposition." Mr. Farley, according to the Chicago "Tribune," went on to say that "Chicago's undertaking this stupendous recognition of a century of progress is no municipal affair, although the city has reason for its pride in the magnificence of the effort. A Century of Progress in Chicago is typical of a century of progress of the nation. "The development of the little settlement around Fort Dearborn into the magnificent metropolis now called Chicago typifies the growth of the nation which 100 years ago consisted of a thin line of States along the Atlantic border, with projections here and there toward the Western wilderness, into the most powerful country in the world." In congratulating Chicago, and welcoming its visitors, Mr. Farley felicitated Chicago "on having as directing head of this enterprise your distinguished townsman, Rufus C. Dawes, under whose masterly leadership the vision of a world exposition has become.a reality more beautiful than the hopes of those who conceived it." Mr. Farley indicated that the real purpose of his presence was to convey the message of President Roosevelt, which we are giving elsewhere. From the Chicago "News" we quote further, as follows, what Postmaster-General Farley had to say,in part: "A hundred years ago we had not long emerged from a war which we did not know whether we had won or not—a war which, though rather slighted In history, was second in importance to America only to the revolution, for It confirmed the promise of the struggle through which we had gained our Independence. "Chicago's motto, 'I Win,' might have been the watchword of the whole United States, for in effect that is the spirit that has made you one of the great cities of the world as it has lifted your country into eminence among the nations. Brings Roosevelt's Regrets. "So it is fitting that our great President should have a part in your celebration. It is with keen regret that he could not be with you in person. Not only did he realize the importance of this occasion, but Chicago stands out In his memory as the greatest triumph of his career thus far. It was here that his party nominated him for thd Presidency. "Moreover, there is the tie of friendship with your martyred Mayor. The most intense moment of our President's career was when he held in his arms the friend who had stopped the deadly bullet aimed at his own heart. So it Is that by sentiment, gratitude and by appreciation of the sturdy part this city has played in the national life that President Roosevelt felt bound to Chicago and was so reluctant to give up this engagement with you." Mr. Farley then explained that President Roosevelt was the busiest man in the world to-day, and the constant pressure to which he is subject involves the welfare of the country and perhaps of the whole world. "These are not engagements which can be postponed," he continued. "Our envoys to the International Economic Conference are about to start for London. They will be in session with the representatives of every other great nation seeking methods by which commercial peace may be restored to a sadly distracted globe, the currencies of which are all at odds, the balance of which is all upset with each nation striving desperately to help its own people regardless of the fate of the others, to the further confusion of the fortunes of all. United States Is Central Figure. "Fate has made us the central figure in world-wide negotiations. We are unique in a disturbed world in our immunity from fears of a military almost kind, and for that reason can enter into these international conversations without anybody suspecting us of hidden purposes or selfish plans. Naturally the world looks to us for leaderships and must not look in vain. "Bitter experience has taught us that complete isolation is no longer possible. Time was when we could look on a war across the seas with as much detachment as we would a tornado in the Indian Ocean. Now a major financial earthquake in mid-Europe closes banks in Chicago; our markets rise and fall with a bumper crop or harvest failure in the Argentine. The shifting values of foreign exchange rock our own security exchanges. "In the final analysis each nation must work out its own destiny, but in the process it must contribute something to the rest. They produce many things we need; we can supply much they require. The resulting interchange should increase the profits on each side." Mr. Farley then traced the history of tariff duties, showing how nations tried, sometimes successfully, to win wealth for. themselves by excluding the products of less resourceful countries or by levying tribute on importations, until in the end one tariff was answered by another "until the customs walls have become insurmountable barriers," and trade was left to languish from the Occident to the Orient. Significant in World Trade. "In the face of this paralysis of trade such a gathering as this memorial to a country's progress is invaluable," said Mr. Farley. "This exposition we begin to-day may well be as significant a factor in an international trade revival as the Economic Conference itself if the latter realizes our fondest hopes. "I do not mean to intimate or suggest that the tariff towers will crumble and the whole world be on a free-trade basis, for a thousand elements preclude this. A certain measure of protection is requisite, for revenue, for encouraging domestic industries, for maintaining wages and a reasonably high standard of living. . . . But there must be a temperance in tariffs. Somewhere between the exorbitant heights and the absolute zero of duties there must be a workable mean. When that is found the tides of trade will flow with reasonable freedom to the end that no nation will be swamped by competition it cannot meet and no nation will be able to profiteer through tariff exactions." Message of President Roosevelt to Fair. Unable to be present at the opening of Chicago's "Century of Progress" on Saturday, May 27, the felicitations of President Franklin D. Roosevelt nevertheless featured the start of the mammoth Exposition. The President's message was delivered at the formal opening ceremony by PostmasterGeneral James A. Farley, the President's representative at the Fair. His conviction that the Exposition will be "one of the historic gatherings" was expressed by President Roosevelt, who also voiced it as his hope that it will mark "the inauguration of a century of even greater progress— progress not only along material lines; progress not only of my own country, but a world uplifting that will culminate in the greater happiness of mankind." The President's message follows: I have already expressed my regrets to President Dawes of the Exposition at my inability to fulfill my engagement to open the Century of Progress celebration, which I am sure will be one of the historic gatherings, and which I hope will be the inauguration of a century of even greater progress— progress not only along material lines; progress not only of my own country, but a world uplifting that will culminate in the greater happiness of mankind, and release all peoples from the outworn processes and policies that have brought about such a commercial and industrial depression as has plagued every country on the globe. Certainly the human intelligence that has accomplished the industrial and cultural results displayed at your Exposition need not fall short of devising methods that will insure against another perilous approach to collapse such as that from which we are now emerging. The long and painful story of the progress of mankind to the development of what we term civilization is divided into chapters each of which marks the overcoming of a curse on humanity. Slavery, private wars, piracy, brigandage and well-nigh universal tyranny have in turn been conquered and done away with. Plagues which in past centuries decimated populations at frequent intervals have been studied and medicine has triumphed over most of them. Here and there appear, perhaps, sporadic vestiges of intolerance and cruel despotism, but what a change from the world conditions in which they were practically universal! Yet all of these have in their time been deemed the inescapable crosses of mankind—beyond human power to ameliorate, much less cure. The advance of science and the evolution of humanity and charity made it known to us that whatever is the result of human agency is capable of correction by human intelligence. Who is there of so little faith as to believe that man Is so limited that he will not find a remedy for the industrial ills that periodically make the world shiver with doubt and terror? Every convention of the peoples of the world brings nearer the time of mutual helpfulness, so I welcome the celebration you are now beginning. It is timely not only because it marks a century of accomplishment, but it comes at a time when the world needs nothing so much as a better mutual understanding of the peoples of the earth. I congratulate Chicago and its guests and wish the exposition unbounded success—success as a show but more success in helping to bring about a binding friendship among the nations of the earth. 3796 Financial Chronicle June 3 1933 Indications of Business Activity THE STATE OF TRADE—COMMERCIAL EPITOME. Friday Night, June 2 1933. The evidence is voluminous and cumulative that this country is distinctly on the mend. Trade, in other words, continues to improve in both wholesale and retail lines. The news is distinctly favorable and trade and prices are moving into new high grounds for the year. Collections are better. Credit has improved. The production of steel is increasing. Even the copper trade, so long in the doldrums, is moving upward. Tin plate production is on a big scale. Trade in lead and zinc for weeks past has been steadily moving upward. Stocks and commodities have been active and rising. To-day there was another outburst of activity and strength in the stock market which is attracting general attention. U.S. Steel touched a new high for the movement. All this merely reflects the rising tide of trade in this country. Production of various commodities is increasing and wages In some cases are being advanced. The chief improvement Is in the output of textiles such as cotton, woolen and worsteds, but there is also steady improvement in the iron and steel business which has always been more or less a barometer of trade in this country. The demand for textiles is notably good. The distrubition of cotton piece goods during May exceeded that of either 1931 or 1932, with prices approximately 10% higher than they were a month ago and there are indications that the advance is going further. The National Cotton Week promotions held during the month of May resulted in the largest sales ever recorded for this period. The demand was not confined to cotton staples, however, or to yard goods but extended to ready-to-wear items. This factor alone received wide publicity and tended to increase the demand for other commodities on the principal that example is contagious. One fact that stands out clear and illuminative of the increasing production in this country is the steadily rising output of electric power. For four weeks in succession, the production of electric power has been larger than in the same weeks last year, the average for the latest week being nearly 6%,a progressive increase. In New England the increase was even more striking, being over 11%. In other words the great organs of production are increasing their output as the demand for goods steadily increases. The trade increase is due partly to the widely disseminated talk about inflation, the universal need of replenishment of commodities and the fear that prices are destined to reach a very much higher level in a hundred lines of industry. Fall buying budgets have already been extended it is said, as much as 30% in textile lines and actual fall orders placed thus far in some divisions are fully 25% ahead of those booked in the same time last year. The wholesale shoe business continues to break all records for shipments for the last 10 or 15 years. The demand is coincident with the increase in employment in the industry. It is estimated that 80% of the shoe workers in this country are now employed. This year retailers appear to be selecting their stocks of footwear judiciously, calling for correct style of good quality. With basic industry improving it is small wonder that the feeling throughout the country is more cheerful week by week. One reason for this is the improvement in collections here and there in this country as a natural result of the quicker turnover. In the steel trade prices are generally firm and some expect an advance in the third quarter. Billets and sheet bars are $25 at Pittsburgh as a minimum while for the third quarter an advance of $2.00 would not be surprising. In fact it is expected in certain quarters of the trade. Wholesalers are being hurried to fill the requests for shipments of summer goods which retailers badly need because of the suddenness and unexpected size of the buying movement in the last two months. The farmers' purchasing capacity is larger after the great rise in their products. Purchases made thus far for June delivery are estimated conservatively to be at least 10% larger than those for the same time last year. Re-orders for summer merchandise have been particularly large for dresses, sporting clothing, shoes, bathing suits, beachwear generally, novelty jewelry and men's straw hats. Orders for fall delivery of house furnishings and furniture are noted with prices rising in both divisions. In some cases merchandise prices are not being quoted beyond the middle of July. There is an old saying to the effect that "success lies at the far end of a corduroy road." Perhaps this may be illustrated in toe case of this country. Absolute success in getting back to the hard firm ground of normal prepanic times has not yet been attained but what heartens the American people is to know that progress to this end is being steadily achieved. In New York trade is increasing, even building showing signs of awakening which has helped steel operations. Other industries here have also improved including leather, textiles and automobiles. It has put new snap into the situation that both stocks and commodities were at times extraordinarily active with the stock ticker nearly half an hour behind the trading. Retail trade was also active. In Chicago the pre-exposition trade was very promising. Wholesale trade was good and hotels were more crowded than usual. Steel output was about 35% and some new lines were opening up. Plates were in better demand from the building industry. It is true that the dollar volume of wholesale trade is below that of last year but in not a few eases there was an increase over that for March. In St. Louis, with lead and zinc prices higher, mining• operations are up to full capacity and this means increased employment. The shoe industry is more active and other industries also show more life so that relief stations report less call upon them. Large department stores are said to be adding to the number of employees as sales increase. In Kansas City trade maintains its recent improvement. In Cleveland retail trade increased sharply. Steel operations were 56% at Cleveland, 80 at Wheeling, 25 at Pittsburgh and 45 at Youngstown. The increase in shoe production in April was at the rate of 40% over April last year with signs of still greater improvement. Employment in most cases has greatly improved since early in the year. Besides, hours of labor have increased and in some instances, wages. In Minneapolis good weather has helped trade greatly and sales have increased even over those of recent favorable weeks. Some large department stores have increased wages and also some of the smaller industries. Flour was dull but the business was still noticeably larger than a year ago and there is a gain in shoes, clothing and paints. In Philadelphia trade increases, though it is true that retail sales are below those of a year ago in most cases. Larger retail sales were made in wearing apparel, groceries and hardware. The business in electrical supplies and drugs was good. In San Francisco store business is better. Lumber and steel are in better shape. Atlanta's trade was reduced by the intense heat. Boston reports most of the textiles at or near capacity. Some of them, indeed, have brgun night work as the demand for both woolen and cotton goods is persistent. Most of the shoe manufacturers have further increased operations and the sale of the product is rapid. Steel trade is better. Department stores are busier. In the stock market, the 27th was one of the most hectic days in the history of the New York Stock Exchange. The turnover was 4,311,340 shares, the largest for a Saturday since May 3 1930 and the second largest half-day's business in the history of the Exchange. The total for the first hour was 2,560,000 shares and quotations continued to be printed 41 minutes after the close on the ticker. Average prices reached the highest levels in over two years and gains of from $2 to $8 a share were common. Wall Street interpreted the Administration's bill to repeal the gold clause in obligations as a new move toward inflation and all markets, for commodities as well as securities, jointed in the bullish demonstration. Trade news provided additional incentive. Steel operations were up to approximately 43% Car loadings were larger than the previous week as well as for the same week in 1932 and an advance in copper prices were only a few of the indications of improved conditions. Bonds followed the lead of stocks although the advance was not as spectacular. Total sales were $9,916,000. U. S. Governments were irregular and the higher grade domestic issues lagged somewhat. Speculative bonds scored some marked advances, particularly some of the railroad group and foreign issues were firm as a rule. On the 29th trading assumed broader proportions than for nearly three years although the net price changes at the end of the session showed only a small average gain. Transactions in stocks amounted to 6,953,640 shares and in bonds $15,720,000. A tremendous amount of profit-taking was absorbed. Favorable trade news accumulating over the week-end was sufficient in itself to have brought more public interest into the market but when the inflationary fever was added to it, speculation assumed proportions reminiscent of 1929's peak bull market days. Railroad stocks were relatively stronger than industrials although the oils were bouyant. Bonds were far less active than stocks, proportionately, and were rather mixed in tone. United States Government's showed little trend either way. Some domestice railways scored substantial advances but foreign bonds did not make so good a showing and some domestic issues were also weak. On the 31st, after the holiday on the 30th, the turnover was again of huge proportions, although nearly a million shares under that of the preceding Monday. Total transactions amounted to 6,076,350 shares. Prices churned around for the most part with little net change in the averages although the tone at the close was rather tired and declines were more numerous than advances. Low-priced stocks were the principal features as far as strength was concerned while the market leaders were reactionary. Foreign markets had been generally strong on the 30th, both for stocks and commodities, and bullish sentiment was still much to the fore when our market reopened on the 31st. Mid-week trade news continued to be favorable. Total bond sales were $16,114,000. Prices were generally firm with domestic rails and some utilities the strongest features. United States Governments were unchanged to fractionally lower. Foreign bonds were steady. On the 1st activity slackened somewhat although still remaining on a very generous scale. Total sales were 4,753,570 shares. After hesitating during the morning, prices firmed up later in the day with the railroad group showing particular strength. Some price increases in raw coffee and gasoline were reflected in the afternoon trading also. Oil companies are counting largely on governmental regulation to straighten out a badly demoralized condition with it appears,some prospect of their hopes being realized. Sales of bonds totaled $14,971,000. The market showed an irregular tendency with the lower grades scoring some substantial gains. Most of the foreign group were soft. U. S. governments were reactionary. Stocks to-day ended 1 to 10 points higher after another day of great activity. The sales aggregated 6,877,860 shares. U. S. Steel made a new high for the year as did a long list of other shares. Such leaders as Allied Chemical and du Pont were in the van. Bonds advanced as much as 8 points in some instances and trading was brisk. Sharp advances were recorded in railroad and secondary utility issues. Sales were estimated at $17,000,000. As to the weather it was warm with showers over Saturday and Sunday. Generally the forepart of the week was rainy and cool. It was clear and cooler here on the 1st inst. To-day it was 51 to 69 degrees here and clear. The forecast was for fair and warmer weather to-morrow. Overnight Boston was 48 to 62 degrees; Baltimore,54 to 70; Pittsburgh, 52 to 70; Portland, Me., 46 to 64; Chifago, 64 to 78; Cincinnati, 56 to 74; Cleveland, 58 to 74; Detroit, 60 to 80; Louisville, 58 to 74; Milwaukee, 64 to 76; Dallas, 68 to 82; Savannah, 60 to 80; Kansas City, 68 to 84; St. Paul, 70 to 90; Oklahoma City, 68 to 86; St. Louis, 64 to 82; Denver, 56 to 86; Salt Lake City, 56 to 84; Los Angeles, 52 to 60; Portland, Ore., 52 to 72; San Francisco, 48 to 58; Seattle, 50 to 64; Montreal,48 to 64; and Winnipeg,60 to 90 degrees. Improvement in Weekly Electric Production Continues. According to the Edison Electric Institute, the production of electricity by the electric light and power industry of the United States for the week ended May 27 1933 was 1,493,923,000 kwh., compared with 1,483,090,000 kwh. in the previous week and 1,425,151,000 kwh. in the corresponding period last year. The current figure is the highest since the week of Jan. 14 1933. The percentage increase for the week ended May 27 1933 was 4.8% over the same week in 1932, as against 3.3% for the preceding week over the week ended May 21 1932. The Institute's statement follows: PER CENT CHANGES. Major Geographic Regions. 3797 Financial Chronicle Volume 136 Week Ended Week Ended Week Ended May 27 1933. May 20 1933. May 13 1933. Week Ended May 6 1933. Atlantic Seaboard- - - New England (alone)_ _ Central Industrial_ ___ Pacific Coast +6.3 +11.2 +5.4 -7.3 +5.0 +7.1 +3.5 -7.2 -4.2 +7.7 +1.4 -7.2 +2.9 +3.8 -0.2 -3.5 Total United States_ +4.8 +3.3 +2.2 +0.5 Arranged in tabular form, the output in kilowatt hours of the light and power companies of recent weeks and by months since and including January 1930 is as follows: Week of- 1933. Week of- 1932. Week of- 1931. Jan. 14 1,495,116.000 Jan. 16 1,602.482,000 Jan. 17 1.716,822,000 Jan. 21 1,484,089.000 Jan. 23 1,598,201,000 Jan. 24 1,712.78.6.000 Jan. 28 1,469,636.000 Jan. 30 1,588,967,000 Jan. 31 1,687.160,000 Feb. 4 1,454.913,000 Feb. 6 1,588.853.000 Feb. 7 1,679.016,000 Feb. 11 1,482.509,000 Feb. 13 1,578,817.000 Feb. 14 1,683,712,000 Feb. 18 1,469.732,000 Feb. 20 1,545,459.000 Feb. 21 1.680.029,000 Feb. 25 1,425,511.000 Feb. 27 1,512,158.000 Feb. 28 1.633,353.000 Mar. 4 1.422.875,000 Mar. 5 1.519,679,000 Mar. 7 1,684,125,000 Mar. 11 1,390.607,000 Mar. 12 1,538,452.000 Mar. 14 1,676,422,000 Mar. 18 1.375,207,000 Mar. 19 1,537.747.000 Mar.21 1,682,437,000 Mar. 25 1,409.655,000 Mar. 26 1,514,553,000 Mar. 28 1,689,407.000 Apr. 1 1.402,142,000 Apr. 2 1.480,208.000 Apr. 4 1,679,764.000 Apr. 8 1,399.367,000 Apr. 9 1,465,076.000 Apr. 11 1,647,078.000 Apr. 15 1.409,603,000 Apr. 16 1,480,738,000 Apr. 18 1,641,253.000 Apr. 22 1,431,095,000 Apr. 23 1,469.810.000 Apr. 25 1,675.570.000 Apr. 29 1,427,960,000 Apr. 30 1,454.505,000 May 2 1,644.437,000 May 6 1.435.707,000 May 7 1,429,032,000 May 9 1,637.296.000 May 13 1,468,035.000 May 14 1,436.928,000 May 16 1,654,303,000 May 20 1.483.090.000 May 21 1,435.731,000 May 23 1,644.783,000 May 27 1,493,923,000 May 28 1,425,151,000 May 30 1,601,833,000 June 4 1,381.452,000 June 6 1,593.662.000 June 3 ei Increase over 1932. DATA FOR RECENT MONTHS. Month of-- 1933. 1932. 1931. 1930. 1933 Under 1932. 6.7% 7.1% 7.5% 8.4% 6.1% 4.9% 5.7% 6.4% 9.6% 10.6% 6.9% 5.3% 4.5% 4.8% 2.6% 1.8% 50.5% a2.2% a3.3% 114.8% 1933 Under 1932. January_ __ _ 6,480,897.000 7,011,736,000 7,435,782,000 8,021,749,000 7.6% February ___ *5,835,263,000 6,494,091,000 6.678,915,000 7,066.788,000 10.1% 6,182,281,000 6,771.684,000 7,370,687,000 7,580,335.000 8.7% March 6.294,302,000 7,184,514,000 7,416,191.000 April 6,219,554,000 7,180,210.000 7.494.807.000 May 6,130,077,000 7,070,729.000 7,239.697,000 June 6,112.175,000 7,286,576,000 7,363,730.000 July 6,310,667,000 7,166,086,000 7,391.196,000 August 6,317,733,000 7.099,421,000 7,337.106,000 September _6,633,865,000 7,331,380,000 7,718,787,000 October 6.507,804,000 6,971.644.000 7.270312,000 November -6,638,424,000 7.288,025.000 7,566,601,000 December77.442112.000 86.063.969.000 89.467.099.000 Tntsti * February 1933 has one less working day than February 1932 (Leap Year). -The monthly figures shown above are based on reports covering approxiNote. mately 92% of the electric light and power Industry and the weekly figures are based on about 70%. Loading of Railroad Revenue Freight Increasing. Loading of revenue freight for the week ended on May 20 totaled 531,618 cars, the car service division of the American Railway Association announced on May 27. This was an increase of 523 cars above the preceding week,and an increase of 15,990 cars above the same week in 1932. It was however, a decrease of 223,120 cars under the same week in 1931. Comparisons showed that all commodities for the week of May 20 showed increases over the corresponding waek last year with the exception of merchandise less than carload lot freight and live stock, which showed reductions. Details follow: 20 totaled 201,693 Miscellaneous freight loading for the week of May cars, an increase of 2,882 cars above the preceding week, and 8.044 cars of above the corresponding week in 1932. It was, however, a decrease 96.476 cars under the same week in 1931. Loading of merchandise less than carload lot freight totaled 165.976 cars cars, an increase of 1,602 cars above the preceding week. but 15,182 the same below the corresponding week last year and 56,280 cars under week two years ago. cars, a Grain and grain products loading for the week totaled 35,247 the decrease of 3,700 cars below the preceding week, but 7,480 cars above corresponding week last year. It was, however, a decrease of 1,348 cars below the same week in 1931. In the Western districts alone, grain and grain products loading for the week ended May 20 totaled 23,828 cars, an increase of 6,365 cars above the same week last year. Forest products loading totaled 21,387 cars, 1,363 cars above the preceding week, and 2.816 cars above the same week in 1932, but12,247 cars below the corresponding week in 1931. Ore loading amounted to 8,198 cars, an increase of 1,474 cars above the week before, and 5.197 cars above the corresponding week in 1932 but 12,532 cars below the same week in 1931. Coal loading amounted to 79,646 cars, a decrease of 1.400 cars below the preceding week, but an increase of 7,915 cars above the corresponding ie 1931.. f n 19 2 It was, however, a decrease of 37,080 cars below the same 3 week Coke loading amounted to 3,897 cars, 169 cars above the preceding week, and 796 cars above the same week last year. Compared with the same week two years ago, it was a decrease of 2,728 cars. Live stock loading amounted to 15,574 cars, a decrease of 1.867 cars below the preceding week, 1,076 cars below the same week last year, and 4,429 cars below the same week two years ago. In the Western districts alone. loading of live stock for the week ended on May 20 totaled 12,019 cars, a decrease of 781 cars compared with the same week last year. All districts reported increases in the total loading of all commodities compared with the same week in 1932 except the Central Western, which showed a reduction. All districts reported reductions compared with the same week in 1931. Loading of revenue freight in 1933 compared with the two previous years follows: 1933. Four weeks In January Four weeks in February Four weeks in March Five weeks In April Week ended May 6 Week ended May 13 Week ended May 20 Total 1932. 1931. 1,910,496 1,957,981 1,841,202 2,504,745 523,819 531,095 531,618 2,266,771 2.243,221 2,280,837 2,774,134 533.951 517,260 515,628 2,873,211 2,834,119 2.936,928 3,757,883 745,740 747,057 754,738 9,800.956 11.131.802 14.649.656 The foregoing, as noted, covers total loadings by the railroads of the United States for the week ended May 20. In the table below we undertake to show also the loadings for 3798 Financial Chronicle the separate roads and systems. It should be understood, however, that in this case the figures are a week behind those of the general totals-that is, are for the week ended May 13. During the latter period a total of 73 roads showed increases over the corresponding week last year, the most June 3 1933 important of which were the Southern Ry. System, the New York Central RR., the Chicago Milwaukee St. Paul & Pacific Ry., the Chesapeake & Ohio Ry., the Illinois Central System, the Louisville & Nashville RR., the Chicago & North Western Ry. and the Norfolk & Western Ry. REVENUE FREIGHT LOADED AND RECEIVED FROM CONNECTIONS (NUMBER OF CARS) -WEEK ENDED MAY 13. Total Revenue Freight Loaded. Railroads. 1933. Total Loads Received from Connections. 1932. 1931. 1933. 1932. 1,995 2,704 7,312 899 2,312 9,714 629 1,892 2.920 7,825 674 2,661 10,487 647 1,827 3,812 10,436 888 3,301 14,032 705 305 4,366 9,222 2,491 2,325 10,497 935 449 4,438 9,207 2,471 2,568 10,501 1,152 25,565 27,088 35,001 30,141 30,786 3,968 7.425 10,120 165 1,160 7,061 1,429 17,543 1,733 345 303 4.963 7,963 10.406 201 1,342 6,442 1,235 16,826 2,143 410 371 6,106 10,401 13,218 244 1.665 9,642 2,114 25,698 2,165 688 492 5,690 4,996 11,964 1.652 882 6,250 37 22.488 1,729 45 146 6,015 5,147 11,226 1,739 931 6,238 31 22,815 2,016 71 236 51,252 52,302 72.433 55,879 56.485 493 1,223 7.349 22 331 250 1,244 2,982 6.466 3,076 4,159 4,381 3,383 998 4,845 2,988 554 1,145 7,132 31 234 164 1,739 2,735 1,882 3,511 3,965 3,883 3,211 570 5,163 1.899 595 1,934 10,028 71 482 323 2,167 5,023 8,464 4,116 5,537 6,172 5,306 1,693 6,271 3,543 821 1,480 8,721 46 87 1,684 716 4,876 6,871 147 7,167 3,528 3,892 647 6,131 2.126 897 1,469 8,038 69 98 1.461 849 5,163 6,804 209 6,996 2,938 3,546 572 6,647 1,726 44,190 41,818 61,725 48,940 47,482 Grand total Eastern District-- 121,007 121,206 169,159 134,980 134,733 Allegheny District Baltimore & Ohio Bessemer it Lake Erie Buffalo Creek & Gauley Central RR.of New Jersey-Cornwall Cumberland & Pennsylvania_ _ _ Ligonier Valley Long Island Pennsylvania System Reading Co Union (Pittsburgh) West Virginia Northern Western Maryland 22,872 1,563 203 4,843 578 174 52 984 51,651 10,632 3,145 35 2,345 23,545 939 146 5,596 41 181 66 1,116 52,580 12,244 3,233 38 2,572 34,176 2,192 134 8,767 2 302 129 1,456 75,150 15,124 8,501 45 3,221 11,487 777 5 8,711 45 12 8 2,422 31,530 13,424 962 1 3,259 10,857 774 3 9,134 48 14 25 2,711 28,599 12,890 703 1 2,917 98.877 102,297 149,199 72,643 68,676 17.310 14,034 785 2,653 15.581 11,257 1,077 2,549 21,981 17,999 1,389 3,287 7,694 3,604 1,002 531 6,487 3.017 1,026 483 34,782 30,464 44,616 12,831 11,013 8,260 808 419 148 49 1,559 544 284 6,990 17,859 149 7,816 835 363 132 58 1,411 453 292 6,664 17,595 181 11,738 1.366 535 156 91 1,799 547 484 9,512 25,045 200 3,946 1,186 862 251 101 876 728 3,741 2,891 10,772 824 3,599 1,066 575 190 56 921 662 3,653 2,676 8,821 622 37,069 35,800 51,471 25.978 22,841 Total Revenue Freight Loaded. Railroads. Eastern District Group .4: Bangor & Aroostook Boston ge Albany Boston & Maine Central Vermont Maine Central New York N. H. & Hartford.. Rutland Total Group B: Delaware & Hudson Delaware Lackawanna & West_ Erie Lehigh & Hudson River Lehigh & New England Lehigh Valley Montour New York Central New York Ontario & Western.. Pittsburgh & Shawmut Pitts. Shawmut& Northern._ Total Group C: Ann Arbor Chicago Ind. dr Louisville Cleve. Cin. Chic. dr St. Louis Central Indiana Detroit dc Mackinac Detroit & Toledo Shore Line-Detroit Toledo & Ironton Grand Trunk Western Michigan Central Monongahela New York Chicago & St. Louis_ Pere Marquette Pittsburgh & Lake Erie Pittsburgh & West Virginia-Wabash Wheeling & Lake Erie Total Total Pocahontas District Chesapeake & Onto Norfolk di Western Norfolk dr Portsmouth Belt Line Virginian Total Southern District Group A: Atlantic Coast Line Cllnchfield Charleston & Western Carolina_ Durham & Southern Gainesville & Midland Norfolk Southern Piedmont & Northern Richmond Frederick. & Potom. Seaboard Air Line Southern System Winston-Salem SouthboundTotal Total Loads Received from Connections. 1933. Group B: Alabama Tenn. & Northern Atlanta Birmington & Coast.. AU.dr W.P. -West.RR.of Ala Central of Georgia Columbus & Greenville Florida East Coast Georgia Georgia dr Florida---Gulf Mobile & Northern Illinois Central System Louisville & Nashville Macon Dublin dc Savannah..._ Mississippi Central Mobile & Ohio Nashville Chatt. & St. Louis.. NewOrleans-Great Northern.. TennesseeCentral 1932. 1931. 1933. .164 719 643 3,599 .166 1,100 820 304 8411 16,177 14,820 112 148 1,851 2.681 502 302 241 622 540 3,188 199 942 871 284 666 16,146 13,132 107 103 1.820 2,805 470 420 226 799 741 4,374 263 2,031 1,168 404 882 22,817 21,486 132 194 2,505 3,499 935 556 160 635 998 2,164 172 473 1,203 287 671 7.971 3,730 368 218 1.358 2,145 336 413 1932. 126 524 717 1,848 131 620 978 253 598 6.971 3,025 291 166 1,092 1,753 256 411 44,949 42,560 63,012 23,302 19,760 Grand total Southern District.. 82.018 78,360 114,483 49,280 42,601 NorthwesternDistrictBelt Ry. of Chicago Chicago & North Western Chicago Great Western Chic. Milw. St. Paul & Pacific_ Chic. St. Paul Minn.& Omaha_ Duluth Missabe .14 Northern.- Duluth South Shore & Atlantic. ElginJoliet & Eastern Ft. Dodge Des M.& Southern-Great Northern Green Bay & Western Minneapolis & St. Louis Minn. St. Paul dr S.S. Marie.. Northern Pacific Spokane Portland dr Seattle-- 809 13,846 2,328 17,114 3.431 3,453 320 3,374 281 7,168 523 1,864 4,297 7,298 957 1,355 12,989 2,266 15,150 3,165 508 301 2,907 281 6,675 544 1,737 3.823 7.261 1,271 1,517 20,969 2,828 22,279 4,334 1,472 1,092 5,306 366 10,463 701 2,535 5,808 10,295 1,399 1.905 7,494 1,918 5,732 3,851 39 289 3,616 131 1,900 278 1,230 1.831 1,800 1,080 1,264 6,856 1,958 1,349 2,734 65 355 2,882 122 1.907 383 1,095 1,797 1,955 812 67,063 60,233 91,384 33,094 29,531 17.617 2,829 163 13,307 11,306 2,187 697 1,794 262 1,028 419 141 12,960 289 306 10,384 253 1,052 18.746 2,935 150 14,076 11,566 1,875 712 1,581 164 1,042 546 153 14,639 282 265 10,704 193 1.389 25,276 3,641 181 19,482 17,142 2,839 1,187 2,638 335 1,181 699 172 20,794 325 307 14,338 282 1,675 4,011 1,540 33 5,171 4,833 1,715 707 1,754 7 817 825 73 2,840 269 851 6,214 9 1.387 3,521 1,573 26 4,798 5,812 1,701 744 1,957 13 647 236 20 3,315 228 623 6,337 7 1,214 77.084 80,958 112,474 32,456 32,772 129 109 116 2,621 145 104 147 2,491 236 189 177 x3.016 2,805 294 122 867 2,506 352 116 1,000 5,440 97 1.506 1,197 183 412 89 4,192 11,806 52 107 7,015 2,539 1,571 117 1.522 1.187 104 467 46 4.066 12,116 35 73 7,194 1.994 5,052 373 2,201 1,795 221 654 146 5,255 17,737 36 89 10,114 3.410 1,722 706 1,218 614 636 195 261 1,830 7,085 17 82 2,882 1,455 1,612 483 1,248 972 396 237 325 2.130 6,512 25 74 2,772 1,290 5,800 4.914 1934, 26 5,448 3,188 1,713 14 7,454 5,241 2,321 45 2.637 3,199 1,947 43 2,494 2,876 1.693 44 50,264 43.742 65,762 30,607 29,157 Total Total Central Western DistrictAtch. Top.& Santa Fe System_ Alton Bingham & Garfield Chicago Burlington & Quincy Chicago Rock Island & Pacific_ Chicago & Eastern Illinois Colorado dr Southern Denver & Rio Grande Western_ Denver & Salt Lake Fort Worth & Denver CitY---Northwestern Pacific Peoria eiC Pekin Union Southern Pacific (Pacific) St. Joseph dr Grand Island. Toledo Peoria & Western Union Pacific System Utah Western Pacific Total Southwestern District Alton & Southern Burlington-Rock Island Fort Smith & Western Gulf Coast Lines YHouston & Brazos Valley International-Great Northern Kansas Oklahoma & Gulf KEMSBA City Southern Louisiana & Arkansas Litchfield & Madison Midland Valley Missouri dr North Arkansas Missouri-Kansas-Texas Linea- Missouri Pacific Natchez & Southern Quanah Acme dr Pacific St. Louis-San Francisco St. Louis Southwestern YSan Antonio Uvalde dr Gulf_ Southern Pacific in Texas & La_ Texas & Pacific Terminal RR.Assn.of St. Louis Weatherford Min. Wells & N.W Total • Figures of preceding week. x Estimated. y Includes in Gulf Coast Lines. Most Impressive Advances in Business Activity and Price Levels Since Depression, Says Guaranty Trust Co. of New York-Fundamental Change in Relation of Government to Business. The last month has witnessed the most impressive advances in business activity and in price levels since the beginning of the depression, says the Guaranty Trust Co. of New York in the current issue of "The Guaranty Survey," its review of business and financial conditions in the United States and abroad, published May 29. "Thus far, the clearest evidences of recovery are largely confined to the heavy industries and the security and basic commodity markets," said the "Survey," which continued: But scattered reports Indicate that constructive influences have also been felt in other branches of business, where comprehensive statistical Information does not become available so promptly as in the lines Just mentioned. Particularly encouraging are the numerous instances of increased employment and higher wage rates that have been reported from all parts of the country. Bases of Current Expansion. Under the circumstances, it is inevitable that the question should arise to what extent the recent improvement is due to norm expansive forces mi and to what extent it Is attributable to commodity hoarding inspired by the fear of currency and credit manipulation. This question-which is, unfortunately, very difficult to answer-is vital in its bearing on the outlook for the future. In so far as the current expansion represents a response to natural recuperative forces, its significance is wholly favorable. The first and most obvious consideration that comes to mind in this connection is the fact that no money or credit expansion has yet taken place. Although the Federal Reserve banks increased their holdings in Government securities by 825,000,000 during the week ended May 24, the advance was more than offset by decreases in other forms of Reserve credit. If inflation has played any part in recent developments, it has done so only by anticipation. That may tend to indicate that the recovery is based on sound and natural grounds, or it may simply show how extremely sensitive the price structure is to any doubts that arise concerning the stability of the currency. To the extent that the latter is the case, it may well be given most careful consideration by those who have assumed that inflation, or "reflation," is a simple and controllable process whereby prices can be raised to a desired level by forcing a limited amount of new currency or credit into circulation. Volume 136 Financial Chronicle Reasons for Optimism. There are, nevertheless, several reasons for believing that the recent signs of improvement reflect, in part, at least, the operation of genuinely constructive factors in the underlying situation. One is the simple historical fact that the recession has already continued well into its fourth year. Seldom, if ever, in the past has a violent and continuous downward reaction extended over such a long period without effecting the necessary readjustments and laying the groundwork for a sound recovery. This view is strengthened by a recollection of the revival that began last summer and attained considerable momentum before it was halted by a combination of factors, prominent among which was the growing distrust of the banking situation. This obstacle now seems to have been removed. It is not unreasonable, therefore, to regard the current expansion as the continuation or the resumption of an upward movement that really began almost a year ago. It may be significant also that the movements of prices in the last few weeks have become increasingly independent of the fluctuations of the dollar in foreign exchange markets. When the price advance began, it seemed to be primarily a function of dollar depreciation. This is no longer clearly the case. The dollar has shown signs of greater firmness in terms of goldstandard currencies, but prices in this country have continued to rise. Furthermore, the aggregate advances in prices of some of the most important domestic and international commodities have considerably exceeded the depreciation of the dollar from its gold parity. In conjunction with these favorable reflections, the fact that a substnatial upturn in business has taken place without any appreciable monetary manipulation appears truly encouraging. President Roosevelt has announced that the extrardinary powers conferred upon him by the "inflation" amendment to the farm bill will be exercised only when,as and if they seem to be required. There is ground, therefore, for the hope that the current improvement may proceed with sufficient momentum to forestall the use of these drastic and dangerous experiments in currency tinkering. Broad Scope of Revival. As time goes on, the scope and magnitude of the advance in business activity become more apparent. Most of the basic industries, including steel, automobiles, bituminous coal, electric power, lumber, and some branches of the textile industry, have already risen above the levels of a year ago. Railway freight loadings have exceeded the total for the corresponding period of the preceding year for almost the first time since the depression began. Department store sales increased in April by much more than the usual seasonal amount. Most significant of all, factory employment and payrolls increased last month, contrary to the usual April trend. The increases over the March figures were moderate, particularly in view of the abnormally depressing influence of the banking holiday. Recent reports from various industries, however, indicate very strongly that the upward tendency has gained momentum in the last few weeks and that the figures for May will show substantial gains. Improvement has also continued in the financial situation. The exchange value of the dollar has shown increasing firmness. The withdrawal of currency from hoarding has proceeded to a point where the sharp increase in circulation immediately prior to the banking holiday has largely disappeared. Gold reserves of the Federal Reserve banks stand at the highest total on record. The rediscount rate of the Federal Reserve banks of New York was reduced on May 25 from 3 to 2M %. The banks open and operating without restrictions are estimated to represent 90% of the banking strength of the country, as measured by deposits; and the 5,000 or more banks that are still under restrictions are being rehabilitated as fast as conditions permit. Sharp Rise in Raw Material Prices. The most striking feature of the rise in commodity prices is the fact that, thus far, it has affected chiefly the prices of basic raw materials. The wholesale price index of the Guaranty Trust Co., which is based on prices of 23 commodities of this class, advanced 32% between Feb. 15 and May 15, while the weekly index of the Bureau of Labor Statistics, which is based on 784 commodities of all classes,rose only 4.5% between March 4 and May 13, the latest date for which an index number is available. This comparison is in line with the usual experience,inasmuch as fluctuations in prices of raw materials almost always occur earlier and are more violent than those in manufactured commodities. Some authorities are of the opinion that the drastic decline in prices of leading raw materials in recent years has been one of the major factors in prolonging and aggravating the depression and that a sustained advance in such prices, unless it arises from artificial currency manipulation, will be among the most definite indications of genuine business recovery. New Relation of Government to Business. Even a cursory examination of the new laws and the bills now pending must impress the observer with two facts of basic importance. The first is that the relation of government to business has, for the time being, at least, undergone a fundamental change. The second is that the Federal Administration has been given an extraordinary degree of latitude in the formulation of policies. Some commentators have gone so far as to regard these changes as constituting a political and economic revolution. The modern economic system is both vast and complex, and its precise workings are beyond the comprehension of any individual or group. The Government, in assuming the responsibility of regulating its operation, is indeed taking a bold step. Not only must there be assurance of protection against the terrific temptations to corruption inherent in the grant of such sweeping powers, but the public service must be kept free from the inefficiency and indifference that always tend to creep into governmental bureaus. The successful administration of such a program will require integrity, intelligence and alertness of the highest order. The laborer and the consumer must be protected against exploitation and the minority against oppression. At the same time, efficiency must be permitted to enjoy its rewards and inefficiency to suffer its penalties; otherwise, the incentive to effort will be removed and industrial progress will cease. Demagogic appeals and selfish group interests must be encountered and combated at every step. To meet these stringent requirements with reasonable adequacy would appear to demand a higher grade of public service than has ever been achieved in the past. And for every error, every miscalculation, every failure of the system to function according to expectations, the blame will fall squarely on the shoulders of the Government. It is not without reason that men of practical experience in economic affairs have consistently demanded that business be kept out of politics. The industrial recovery bill, if enacted, will carry business into politics on a scale unprecedented in this country. Despite these disquieting considerations, the attitude of industrial leaders toward the bill is by no means one of unmitigated hostility. After more than three years of ever-deepening depression, there is a fairly widespread disposition to try the experiment, with its recognized dangers and pitfalls, rather than to risk an indefinite continuation of the almost intolerable conditions of the recent past. Even before the passage of the bill, 3799 leaders in tho electrical equipment industry have signified their intention to avail themselves of its provisions. If the trial is even reasonably successful in achieving its declared aims, it will bring relief to all groups. If It fails, it can be abandoned with less permanent damage than some of the other economic experiments that are about to be tried. April Output of Electricity Off 5% as Compared With a Year Ago. According to the Department of Interior, Geological Survey, production of electricity for public use in the United States during the month of April 1933 totaled 6,450,793,000 kwh., compared with 6,673,357,000 kwh. in the preceding month and 6,790,119,000 kwh. in the same period last year. Of the total for April 1933 there were produced by water power 3,084,230,000 kwh. and by fuel 3,366,563,000 kwh. The Survey's statement follows: PRODUCTION OF ELECTRICITY FOR PUBLIC USE IN THE UNITED STATES (IN KILOWATT HOURS). Total—By Fuels and Water Power. Change in Output front Precious Year. Division. February. March. March. New England 428,017,000 447,829,000 445,010,000 Middle Atlantic__ 1,764,869,000 1,868,978,000 1,706,887,000 East North Central. 1,373,102,000 1,418,691,000 1,423,491,000 West North Central.. 429,826,000 445,376,000 409,656,000 South Atlantic 775,054,000 832,725,000 814.488,000 East South Central. 243,031,000 269,335,000 248,954,000 West South Central_ 307.568,000 311,912,000 312,748,000 Mountain 186,334,000 203,956,000 200,227,000 Pacific 777,905,000 876,555.000 889,332,000 —12% —9% —13% —8% —3% —13% —3% —9% —6% April. —5% —5% —5% —5% —2% —11% —4% —2% —7% Total for U. S 6,285,704.000 6,673,357,000 6,450.793,000 —9% —5% The daily production of electricity for public use in Apr I was 215,000,000 kwh., practically the same as in March (revised figures). The normal change from March to April is a decrease of about 1%. The output in April of this year was 5% less than in April of the previous year, which in turn was 11% less than in April of 1931. These figures indicate an improvement in the demand for electricity for public use. The production of electricity by the use of water power in April was 48% of the total. This is the highest percentage ever reached by water power. The output by the use of fuels was only 282,000,000 kwh.,or about 9% greater than the output by the use of water power. TOTAL MONTHLY PRODUCTION OF ELECTRICITY FOIL PUBLIC USE. 1932.a 1933. Kilowatt Hours Kilowatt Hours January...._ 7,587,081.000 6,932,499.000 February__ 7,023,473,000 8,285,704,000 March 7,323,020,000 6,673,357,000 April 6,790,119,000 6,450,793,000 May 6,659,750,000 June 6,562,547,000 July 6,546,995,000 August 6,764,166,000 September. _ 8,752,091,000 October 7,073,149,000 November _ 6,952,085,000 . December.— 7,148,606.000 Produced by 1i'cifer Power. 1933 Under 1932. 1932 Under 1931. 1932. 1933. 8% 138% 9% 5% 5% b5% 7% 11% 13% 13% 16% 11% 10% 9% 6% 8% 41% 42% 42% 46% 45% 41% 7_ 410 38% 36% 380741%, 3907- 43% 42% 45% 48% ...____ ...-...... -- Total WI ISR fIR2 nen 9.4W. 41, 7,, a Revised. b Based on average daily production. On May 1 the total stocks of coal at electric public utilities stood at 5,594,132 net tons, a decrease of 1.9% in comparison with the amount on hand at the beginning of the previous month. Of the total, 4,445,974 tons was bituminous and 1,148,158 tons was anthracite. Consumption of coal in April, however, was somewhat lower than in the previous month, partly because there was one less day in April than in March and largely because of the increase in the output of hydro-electric plants. Bituminous coal consumed in April amounted to 1,973,085 tons, as against 2,163.248 tons in March. while hard coal consumption dropped from 121,104 tons to 102,142 tons. At the rate of consumption prevailing in April the total stocks of coal at electric utility plants on May 1 were sufficient to last 81 days. This is an Increase over a month ago. when the total stocks were equivalent to 77 days supply. The quantities given in the tables are based on the operation of all power plants producing 10,000 kwh. or more per month, engaged in generating electricity for public use, including central stations, both commercial and municipal, electric railway plants, plants operated by steam railroads generating electricity for traction, Bureau of Reclamation plants, public works plants, and that part of the output of manufacturing plants which is sold. The output of central stations, electric railway and public works plants represents about 98% of the total of all types of plants. The output as published by the Edison Electric Institute and the "Electrical World" includes the output of central stations only. Reports are received from plants representing over 95% of the total capacity. The output of those plants which do not submit reports is estimated; therefore, the figures of output and fuel consumption as reported in the accompanying tables are on a 100% basis. [The Coal Division, Bureau of Mines, Department of Commerce, cooperates in the preparation of these reports.] Moody's Daily Index of Staple Commodity Prices Continues Advance to New High Levels. Prices of the chief raw commodities continued to advance during the week in review, Moody's Daily Index of Staple Commodity Prices advancing to 120.9 from 116.9, for the ninth net gain in the last ten weeks. The closing figure was the highest in nearly two years and was 53.6% above the low point established on Feb. 4. All but 3 of the 15 commodities entering into the Index closed the week at an advance, scrap steel and hogs showing declines and sugar being unchanged. Rubber, with a 25% increase in price, was responsible for the largest single contribution to the advance, followed by hides, copper, and Financial Chronicle 3800 cotton, while lead, silk, wool, silver, wheat, cocoa, coffee and corn added smaller amounts to the Index number. The movement of the Index during the week, with comparisons, is as follows: Fri. May 26 Sat. May 27 Mon. May 29 Tues. May 30 Wed. May 31 Thurs.June 1 Fri. June 2 116.9 118.5 119.5 holiday 120.7 120.3 120.9 114.9 --106.6 81.2 103.9 79.3 120.9 78. 2 wks. ago, May 19 Month ago, May 2-- Year ago. June 4 19321 High Sept. 6 Low Dec. 31 1933 High June 2 Low Feb. 4 Increase Noted in Wholesale Prices During Week Ended May 20 by United States Department of Labor. The Bureau of Labor Statistics of the U. S. Department of Labor announces that its index number of wholesale prices for the week ending May 20 stands at 63.0 as compared with 62.3 for the week ending May 13, showing an increase of approximately 1 and 1-10%. The Bureau further said: June 3 1933 was reported in March. The average rate of collections during April of accounts outstanding at the end of March was nearly as large in 1933 as in 1932. Percentage Change from a Year Ago. P. C. of Accounts Outstanding Net Sales. Stock Var. 31 Collected on Hand in April. Feb. to End of April. April. Month. 1932. 1933. Locality. New York Buffalo Rochester Syracuse Newark Bridgeport Elsewhere Northern New York State Southern New York State Hudson River Valley District Capital District Westchester District All department storm Apparel stores -11.7 +3.2 --13.8 --8.8 --7.2 --7.9 +1.0 --14.8 -3.6 --17.6 --9.9 --5.7 Week Ending-' Apr. 22. Apr. 29. May 6. May 13. Molt 20. All commodities Farm products Foods Hides and leather products Textile products Fuel and lighting Metals and metal products Building materials Chemicals and drugs Housefurnishing goods Miscellaneous 60.4 44.6 56.2 69.1 51.4 62.4 76.8 70.2 71.3 72.2 57.7 61.5 46.4 58.1 71.8 52.4 62.5 77.6 70.5 72.0 72.3 55.6 61.9 47.8 58.2 73.3 53.7 62.1 77.5 70.8 72.4 71.7 58.8 62.3 49.0 59.1 75.8 54.0 61.3 77.9 70.8 72.6 71.8 59.0 63.0 50.9 59.9 77.9 55.3 61.2 77.9 71.1 72.9 71.9 58.9 Decrease of 6% Noted by Federal Reserve Bank of New York in Chain Store Sales During April as Compared with Year Ago. The Federal Reserve Bank of New York in its June 1 "Monthly Review" reported as follows with regard to chain store trade in the Second (New York) District: Total April sales of the reporting chain store systems were 6% below a year ago, the smallest decline since March 1932. This relatively favorable comparison was due in considerable measure to the fact that Easter trade occurred this year in April and last year in March, but the decline for March and April combined was somewhat smaller than in most recent months. Variety chain sales in April were slightly larger than a year ago, the first increase since February 1932; shoe chain sales showed the smallest reduction since June 1931;and ten-cent store sales registered a much smaller decline than in a number of months. Sales of candy chains were the most affected by the late date of Easter, showing a large increase over last year following a large decline in March. The grocery and drug chains seemed little affected by the date of Easter and sales continued to show a large reduction from a year ago. Candy chains during the past year have increased materially the number of stores operated, while drug and shoe chains have reported sizable decreases in the number of units. For all reporting chains the averaeg decline in sales per store between April 1933 and April 1932 was slightly smaller than the decline in total sales. --22.3 --32.1 --23.9 --28.4 -20.0 --15.9 --18.1 43.6 41.3 44.0 24.5 39.1 34.3 29.9 44.0 38.2 40.1 25.6 37.9 29.6 26.0 -17.6 -19.6 -22.5 -25.5 40.4 41.6 39.7 40.0 April sales and stocks in the principal departments are compared with those of a year previous in the following table: These index numbers are derived from price quotations of 784 commodities, weighted according to the importance of each commodity and based on average prices for the year 1926 as 100.0. The accompanying statement shows the index numbers of groups of commodities for the weeks ending April 22, 29 and May 6, 13 and 20 1933 INDEX NUMBERS OF WHOLESALE PRICES FOR WEEKS OF APRIL 22, 29 AND MAY 6, 13 AND 20 1933. (1926=100.0) --16.4 -22.6 -23.3 -10.3 --21.7 --16.3 --18.1 Net Sales Percentage Change April 1933 Compared with April 1932. Stock on Hand Percentage Change April 29 1933 Compared with April 30 1932. +17.6 +7.7 +5.1 -2.8 -3.9 -4.3 -5.9 -10.8 -11.3 -11.7 -13.8 -14.9 -16.0 16.2 -18.6 -19.7 25.4 -26.0 -12.7 -23.5 -24.5 -17.6 -30.9 21.7 -17.6 -19.4 19.2 17.4 -18.5 -34.4 -14.0 -27.6 31.6 --19.5 --26.7 --25.3 --29.6 --27.6 Men's and boys' wear Shoes Woolen goods Luggage and other leather goods Men's furnishings Toys and sporting goods Women's ready-to-wear accessories Linens and handkerchiefs Women's and misses' ready to-wear Toilet articles and drugs Furniture Cotton goods Books and stationery Silverwear and jewelry Home furnishings Hosiery Silks and velvets Musical instruments and radio Miscellaneous Monthly Indexes of Federal Reserve Board-Increase Noted in Industrial Production During April Compared with March. Under date of May 25 the Federal Reserve Board issued as follows its monthly indexes of industrial production, factory employment, Sic.: BUSINESS INDEXES. (Index numbers of the Federal Reserve Board 1923-25=100)• Adjusted for Seasonal Variation. 1933. Apr. Industrial production, total Manufactures Minerals Construction contracts, value z -Total Residential All other Factory employment Factory payrolls Freight-car loadings Department store sales Mar. p67 pea p75 p14 p9 p18 57.7 60 57 81 14 53 p68 18 56.6 so 55 Without Seasonal Adjustment. 1932. Ayr. 63 61 79 27 14 38 64.3 59 79 1933. Mar. p68 p68 p68 p16 pll p21 57.8 38.6 51 p69 Type of Store. No. of Stores. Total Sales. Sales per Store. Grocery Ten cent Drug Shoe Variety Candy -2.0 +0.3 -7.9 --11.6 +2.6 +11.2 15.5 -3.8 26.7 -9.6 +2.7 +61.7 -13.7 Total -1.0 -6.4 -5.5 -20.4 +2.3 +0.1 +45.4 York Federal Reserve Below April 1932. "Total April sales of the reporting department stores in the New York Federal Reserve District were 10% below a year ago, the smallest decrease since December 1931," according to the New York Reserve Bank in its June 1 "Monthly Review." "While the late date of Easter contributed largely to the favorable showing in April," the Bank continued, "total sales for the whole period from the middle of March to the end of April showed a considerably smaller decrease than in previous months." In its "Review" the Bank added: Department Store Sales in New District During April 10% Continued improvement in the first half of May is indicated by reports from department stores in the Metropolitan area of New York, which showed sales only 5% below the corresponding period of 1932. In April the New York City stores bad the smallest decline in sales since December. 1931. and in a number of other localities the stores reported the smallest reductions in over a year. Two groups of stores, those in Syracuse and the Southern New York State district, reported slight increases over a year ago, the first since the spring of 1930. April sales of the leading apparel stores showed the smallest decline since July 1931, following a large decrease in March. Department store and apparel store stocks of merchandise on hand April 29 at retail valuation showed a slightly smaller decline from a year ago than Apr. 61 59 74 14 64 63 72 31 16 43 64.0 48.7 57 74 18 56.7 36.9 48 49 INDUSTRIAL PRODUCTION-INDEX BY GROUPS AND INDUSTRIES.* (Adjusted for seasonal variation.) Manufactures. Percentage Change, April 1933 Compared with April 1932. 1932. Apr. Group and Industry. 1933. Mining. 1932. Industry. 1933. Apr. Mar. Apr. Iron and steel 35 Textiles p85 Food products p105 Paper and printing.-- -Lumber cut 24 Automobiles p44 Leather and shoes__ p93 Cement 35 Petroleum refining __ Rubber tires Tobaccomanufactures 116 21 76 p91 p85 22 27 85 40 135 41 99 32 65 91 93 27 35 89 46 144 70 109 1932. Apr. Mar. Apr. Bituminous coal... _ p55 Anthracite coal p44 Petroleum p116 Zinc 45 Sliver 36 Lead 51 77 122 44 44 45 55 81 112 r43 40 45 FACTORY EMPLOYMENT AND PAYROLLS -INDEXES BY GROUPS AND INDUSTRIES. (Underlying figures are for payroll period ending nearest middle of month.) Group and Industry. Employment. Payrolls. Adjusted for Sea- Without Seasonal Without Seasonal tonal Variations. Adjustment. Adjustment. 1933. 1932. 1933. 1932. 1932. 1933. Apr. Mar. Apr. Apr. Mar. Apr. Apr. Mar. Apr. ironand steel Machinery Textiles, group Fabrics Wearing apparel Food Paper and printing Lumber Transportation equipment.. Automobiles Leather Cement, clay and glass Nonferrous metals Chemicals, group I etroleum Rubber products rnhanen 50.0 42.6 68.5 69.2 66.8 81.2 78.8 33.3 40.1 41.5 76.4 40.2 43.4 77.6 75.9 56.7 57.5 48.3 42.2 65.4 66.9 61.9 78.4 78.5 32.5 41.7 41.9 75.7 38.9 41.0 75.6 76.6 56.6 57.8 59.0 56.4 66.7 66.8 66.4 83.6 85.7 40.2 51.1 55.1 80.2 48.4 52.7 78.5 78.6 66.1 70.1 50.6 43.1 69.7 69.6 69.8 78.2 78.4 32.8 41.4 44.4 75.0 40.5 44.4 82.4 75.9 57.1 56.2 49.1 42.8 67.7 68.1 66.7 76.9 78.7 31.8 42.5 43.9 76.6 38.1 42.3 78.2 75.8 57.0 A7 A 59.8 57.0 67.9 67.3 69.4 80.6 85.3 39.6 53.0 58.9 78.8 48.8 53.0 82.4 78.6 66.6 as & 24.4 24.4 45.2 43.0 49.8 62.6 62.4 15.6 30.6 32.3 45.9 22.0 27.4 00.8 63.8 34.2 aco 22.4 24.0 41.3 40.8 42.4 59.8 63.3 14.3 29.2 27.0 47.1 20.6 25.1 60.4 64.5 31.1 36.0 32.1 39.1 49.4 46.9 54.6 72.8 79.7 23.2 43.9 47.1 55.7 31.7 38.3 68.5 71.2 48.3' 49.3 • indexes of production, car loadings, and department store sa es based on dalli averages. p preliminary. r Revised. z Based on three-month moving averages, centered at 2d month. Financial Chronicle Volume 136 Advance in Commodity Prices Checked During Week Ended May 27 -Index of National Fertilizer Association Still at 1933 High Point. The continued climb of wholesale commodity prices was arrested during the latest week, according to the index of the National Fertilizer Association. This index has steadily advanced for seven weeks, but for the week ended May 27 it showed no change whatever. The trend of the prices for individual commodities was mixed; many important commodities declining while others advanced. The latest index number, 60.1 (the three-year average 1926-1928 equals 100) is 15 points higher than it was a month ago, and is only two points lower than it was at this time last year. Several groups in the index .re higher than they were a year ago. This applies particularly to grains, feeds and livestock, textiles and fats and oils. The Association under date of May 29 continued: During the latest week five of the major groups advanced, three declined, six showed no change. The accumulated gain of the five advancing groups was counteracted by the force of the loss of the three declining groups. The advancing groups were textiles, metals, fuel, fertilizer materials and miscellaneous commodities. The textile group showed the largest gain. The declining groups were foods, fats and oils and grains, feeds and livestock. These are very important groups in the index. Thirty-eight commodities advanced, the smallest number in many weeks, and 30 commodities declined. This is the largest number of declines recorded during any week for several months. Important commodities tht advanced during the latest week included rubber, wool, silk, burlap, cotton yarns, cottonseed oil, beef, dried fruits, pig iron, finished steel. lead, silver bars, petroleum, hides, rosin and tankage. Listed among the declining commodities were wheat, corn, oats, many other grains and feedstuffs, hogs, cattle, lard, butter, eggs, linseed oil, cotton, cottonseed meal. heavy melting steel and gasoline. WEEKLY WHOLESALE PRICE INDEX-BASED ON 476 COMMODITY PRICES (1926-19274=10W Fe? Cent Each Group Fears to the Total Index. 23.2 16.0 12.8 10.1 8.5 6.7 6.6 6.2 4.0 3.8 1.0 .4 .4 .3 100.00 Group. Latest Week Mah 27 1933. Preceling Week. Month Ago. Year Ago. Foods 59.7 61.0 60.3 61.1 Fuel 48.2 48.1 50.8 63.6 Grains, feeds and livestock 50.0 43.7 48.6 41.3 Textiles 46.5 529 42.6 51.4 Miscellaneous commodities 60.9 60.4 59.3 60.0 Automobiles 84.4 84.4 84.9 87.7 Building materials 71.8 71.6 73.0 71.6 Metals 71.5 70.6 69.1 71.2 House-furnishing goods 75.9 75.2 80.0 75.2 Fats and oils 51.0 36.6 52.6 48.7 Chemicals and drugs 87.2 87.2 87.2 87.8 Fertilizer materials 63.7 64.3 67.5 64.0 Mixed fertilizer 65.9 65.9 62.4 71.9 Agricultural implements.... 90.2 92.2 90.2 90.2 --All grouns eninhinPri an 1 an I AR a IRfl a "Annalist" Weekly and Monthly Indices of Wholesale Commodity Prices -Weekly Index at New High for Year During Week Ended May 29 -Monthly Index Sharply Higher. Further sharp advances in a large part of the commodities carried The "Annalist" Weekly Index of Wholesale Commodity Prices 1.6 points upward to 92.7 on May 29, from 91.1 (revised) on May 23. Continuing, the "Annalist" said: The average for May, reflecting the gains In the weekly figures, rose to 90.5 from 83.8 in April. All the group indices advanced during the week, except chemicals, which is on a monthly basis: the sharpest gains were made by the farm products index, which rose to 84.1 from 81.3 (revised) the week before and is now the highest since 1931, and by the textiles index, which rose to 92.1 (provisional) from 87.4 (revised), as prices were lifted sharply by the sustained demand. THE ANNALIST WEEKLY INDEX OF WHOLESALE COMMODITY PRICES. [Unadjusted for seasonal variation (1913=10(0.1 3801 The advance of the weekly index was more than offset, however, by the decline of the dollar, which fell on May 29 to 83.4 cents, in terms of exchange on France, Switzerland, Belgium, and Holland, from 86.2 May 23, a loss of 3.2% for the six days. In terms of gold The "Annalist" weekly Index accordingly declined to 77.3 from 78.5. May 23. In this connection it should be noted that while the index on a gold basis, as now given in the chart and tables, shows a continuation of last year's decline, although at a reduced rate, it is far from certain that had we remained on a gold basis the index would have fallen as much. This is because the prices of commodities which are on a purely domestic basis, without any direct connection with world markets, do not at once advance in proportion to the decline in exchange. Such commodities as eggs, milk (until placed under State supervision), butter, cheese, apples, potatoes, salt, coal and coke, the prices of which have not shared in the general advance of the past three months, continue on the whole to be governed by domestic considerations, advancing with the gradual raising of the general price structure. Because only a part of the commodities included in the index are tied to world prices and have therefore advanced in proportion to the drop in the dollar, the index on a gold dollar basis shows a considerably greater decline than would have taken place had the dollar remained at Dar. The actual course of prices would probably have been somewhere in between that of the index on a domestic dollar basis and that adjusted for dollar depreciation. Survey of Changes in Living Costs by National Industrial Conference Board-Decline of 0.4% Between March and April-Decrease in Year 9.3%. In the first of a series of monthly surveys on changes in the cost of living (issued May 30), the National Industrial Conference Board states that although there were practically no changes between March and April in average food prices and in the cost of sundries, declines in rents and clothprices and seasonal reductions in coal prices lowered total living costs 0.4% between these two months, according to the indexes computed by the Board. The reduction in living costs in April of this year since April 1932 was 9.3% and since April 1929 27.9%, says the Board in its survey, which further reports: The purchasing value of the dollar was 139.9 cents in April 1933 as compared with 100 cents in 1923. The comparative stability of food prices between March and April is in contrast to their behavior during the preceding five months, when they declined substantially from month to month, although it is not the first time during the current depression that only slight changes were noted. Compared with the price levels of April 1932 and April 1929, food prices have dropped 12.8% and 40.4%, respectively. Rents continued their downward trend, declining 0.9% between March and April, which made them 14.2% lower than in April 1932 and 30.5% lower than in April 1929. From 41 cities of the 172 cities from which rent quotations were received, lower rentals were reported in April than in March; from five cities increases were reported, and from the remaining cities no changes. Clothing prices fell 0.8% between March and April, bringing them 11.3% below the level of April 1932 and 38.6% below that of April 1929. Coal prices declined 2.2%, less than seasonally, between March and April. Compared with April of last year and of four years ago, coal prices have been reduced 4.0% and 12.4%, respectively. A slight decline in the prices of housefurnishings made the April sundries index 0.1% lower than that of March, 4.0% lower than in April 1932 and 10.3% lower than in April 1929. Item. Food • Housing Clothing Fuel and light Coal Gas and electricity Sundries Relative Importance in Family Budget. Per Cent. 33 20 12 5 30 % Decrease Index Numbers of the Between Cost of Living. Average Price 1923=100. March 1933 and April 1933. March 1933. April 1933. 61.8 64.0 60.7 84.6 80.1 93.5 89.3 61.94 64.6 61.2 85.8 81.9 93.5 89.4 71.8 71.5 Weighted aver.of all Items 100 •Eased on food price index of the 15. S Bureau of Labor Statistics 0.1 0.9 0.8 1.4 2.2 0.0 0.1 0.4 May 29 1933. May 23 1933. May 31 1932, Farm products Food products Textile products Fuels Metals Building materials Chemicals Miscellaneous All commodities All commodities on gold basis_ x 84.1 97.1 *92.1 94.5 98.3 107.0 95.5 76.6 92.7 77.3 x81.3 96.9 :87.4 94.3 97.1 106.9 95.5 74.6 x91.1 78.5 65.9 90.4 69.2 134.2 95.9 107.4 96.2 82.4 87.8 THE ANNALIST MONTHLY INDEX OF WHOLESALE COMMODITY PRICES. [Unadjusted for seasonal variation-Monthly averages of weekly figures.] (1913.100.1 May 1933. April 1933. May 1932, 68.1 79.7 Farm products 66.8 89.9 95.8 91.8 Food products *84.0 Textile products x68.8 71.2 102.0 98.3 Fuels 135.2 93.4 96.5 Metals 96.0 Building materials 106.6 106.7 107.9 95.5 Chemicals 95.0 96.2 Miscellaneous 74.2 68.0 82.4 :83.8 90.5 88.8 All commodities 77. 0 rn All commodities on gal IlitslA A • I rellininary. x Revised. z Rased on e.cliange quotations for France, Switzerland, Holland and Belgium. Political developments dominated, as usual, the progress toward enactment of the bill abrogating the gold clause of all contacts being the chief stimulant. The fact that the situation for practical purposes is little changed made no difference, the markets generally regarding the bill as merely a further sign of the inflationary intentions of the government. Supporting factors were the continued improvement of business and the announcement of preliminary hearings for acreage reduction under the Farm Relief Bill. Gain of 17%'Notes in Farm Prices During Month Ended May 15 -Largest Increase Recorded for Any One Month Since April 1919. The general Index of farm prices advanced from 53 to 62 during the month ended May 15, according to reports compiled by the Bureau of Agricultural Economics. This9 -point rise amounted to a gain of about 17%, the largest recorded for any one month since April 1919. An announcement issued by the United States Department of Agriculture on May 29 continued: The upturn in farm prices from April 15 to May 15 this year was led by grains, that group gaining 15 points. Meat animal prices were up 8 points, chickens and eggs 6, cotton and cottonseed 6, dairy products 4, fruits and vegetables 2. Wool made the most striking advance for a single commodity, the price advancing 42 points, or 75%, during the month. ' The May 1.5 farm price index at 62 for all commodities was 6 points above a year ago and, the highest since January 1932. The increase in farm prices resulted in a corresponding advance in the ratio of prices received by farmers to prices paid for articles purchased since the latter remained unchanged at 100% of pre-war. Therefore, the exchange value of farm products was 62% of the 1910-1914 average compared with 50% a year ago. Wheat at 59c. per bushel, the average farm price on May 15, reached the highest level recorded since May 1931, and was 39% above a year ago. The average price of corn at nearly 39c. per bushel in mid-May has more than doubled in the last three months. Hog prices advanced during the month in the face of a seasonal increase in supplies, and at $3.88 per 100 pounds the average of prices paid to farmers was about one-fifth higher than a month earlier and nearly one-third 3802 Financial Chronicle above farm prices a year ago. The advance was greater in the corn belt than in other sections of the country. Cotton prices paid to farmers advanced 34% to 8.2e. per pound during the month ended May 15. This price was 58% higher than a year ago and the highest recorded since July 1931. The average price of potatoes advanced only 3%,to 43.7c. per bushel, which was about 7% over a year ago. Butterfat prices advanced about 22% from April 15 to May 15, in contrast to the usual seasonal decline recorded in this period. At 20.2e. per pound, the mid-May farm price of butterfat was approximately 24% higher than a year ago. American Federation of Labor Report Finds Marked Employment Increase in April But Notes Slackening of Rate of Increase in May—Unemployment Dropped by More Than 600,000 in April, Survey States. Employment in April recorded substantial gains over March, but the rate of increase showed signs of slackening in May, according to a survey made public on May 26 by William Green, President of the American Federation of Labor, and based on reports from affiliated organizations. Mr. Green's statement said: Government figures now available show that more than 600,000 persons went back to work in April with the recovery of industry from the bank Crisis. Total unemployment in March was 13,359,000;in April, 12,730,000. The largest number of new jobs were in agriculture, 250,000, where farmers are taking on help for the planting season; retail trade 165,000—increased buying due both to the Easter trade and to fear of inflation has created jobs; manufacturing, 100,000—about half those laid off by the crisis have gone back to work; building,59,000;roads, 20,000;laundries and cleaners, 11,000. Trade union reports for the first part of May show another slight gain in employment, but less than half that of April. Apparently the gain in jobs is tapering off as the summer season approaches. Union reports show that employment in building and manufacturing continued to gain slightly in May; service industries and water transport also report continuing improvement. But in clothing and textiles the spring season is over and unemployment is increasing again. In building, even after alight gains, 69% are out of work and 15% on part time; metal trades —only 29% have full time work; in manufacturing, 49% are unemployed; theaters, 40%;seamen and longshoremen,41%. Relief payments reached an all-time peak In March;total relief was nearly trebled since 1931. and public relief has more than trebled. To get these 12,700,000 back to work is the greatest task before the nation. Up to May 20 1933,70,000 had been sent to the forestry camps. The public works-Industry bill will furnish jobs to start industry going through its $3.300,000,000 public works program; but the millions now depending on relief will for the most part have to depend on the process of business improvement and the fair practice codes to be established under the bill. Decrease Noted in Exports of Farm Products., Continued reduced exports of farm products in April carried the index of exports down to 59 for 44 leading farm products, reports the Bureau of Agricultural Economics, which, according to an announcement issued May 27 by the United States Department of Agriculture, added: Exports of wheat and flour were only 1,754,000 bushels. Exports of wheat and flour during 10 months ended April 30 were 37,982,000 bushels compared with 118,880,000 bushels during the corresponding period the preceding year. Only the exports of fruit and tobacco were above pre-war in the Bureau's index; fruit at 154, and tobacco at 118. All other farm products were below pre-war in export volume. The index numbers were: Grains and grain products, 22; animal products, 56; dairy products and eggs, 84; cotton, 65; wheat and flour, 20; hams and bacon, 31; lard, 98. Further Decline Shown in Farm Real Estate Values as of March 1 1933 When Compared with March 1 1932. The index of the value per acre of farm real estate for the United States as a whole as of March 1 1933 averaged 73, compared with an index of 89 on March 1 1932 and of 106 on March 1 1931, according to estimates by the Bureau of Agricultural Economics of the U. S. Department of Agriculture. This index is based on average values for the years 1912 to 1914. An announcement issued May 22 by the Bureau continued: The declines from a year ago have been widespread and over a considerable part of the country they have been reasonably uniform, reflecting the continued declines in farm income. From 1929 to 1932 gross income from farm production decreased a little more than half. During the same period farm real estate values dropped a little more than one-third. Of the various geographic divisions, the East North Central at 62 and West North Central States at 64 were the lowest values relative to pre-war. For individual States the indexes ranged from 53 for Indiana to 80 for Michigan and Wisconsin, and from 55 for Missouri and South Dakota to 79 for Minnesota. The highest average values relative to pre-war were in the New England States, where the index for the group as a whole was 105. Indexes for individual States in that region ranged from 92 for New Hampshire to 124 for Connecticut. In the three Southern geographic divisions the indexes for individual States ranged from 57 for Georgia and South Carolina to 121 for Florida; from 73 in Mississippi to 88 in Alabama, and from 76 in Oklahoma to 89 in Louisiana. Following the 1920 peak in farm real estate values—when the index mounted to 170—values declined rapidly for a few years and then more slowly. During the years 1928 and 1929 the average declines were small, and there were indications that substantial progress had been made toward readjustment. Subsequent breaks in prices of farm products, however, brought greatly reduced farm incomes, and precipitated a new wave of forced selling and declining real estate values. Indexes for other geographic divisions as of March 1 1933 were as follows: Middle Atlantic, 82; South Atlantic, 90: East South Central, 79; West South Central. 82; Mountain, 69. and Pacific States. 96. June 3 1933 FARM REAL ESTATE( 4)—ESTIMATED VALUE PER ACRE IN TERMS OF PRE-WAR AVERAGE VALUE, BY STATES, MARCH 1 1933, WITH COMPARISONS (STATE AVERAGE VALUE IN 1012-1914=109%). Geographic Division and Slate. Maine New Hampshire Vermont Massachusetts Rhode Island Connecticut New England New York New Jersey Pennsylvania Middle Atlantic Ohio Indiana Illinois Michigan Wisconsin East North Central Minnesota Iowa Missouri North Dakota South Dakota Nebraska Kansas West North Central Delaware Maryland Virginia West Virginia North Carolina South Carolina Georgia Florida South Atlantic Kentucky Tennessee Slabama /41ssissippi East South Central Srkansas r.ouislana Alahoma Vexes West South Central Viontana idaho Wyoming 2olorado few Mexico krizona Rah gevada 1920 1925 1926 1927 1928 1929 1930 1931 1932 1933 % % 142 124 129 111 150 125 140 132 130 128 137 137 % % % % 126 124 124 113 112 112 126 125 123 134 131 131 130 133 134 137 138 139 122 111 123 131 134 139 % % 124 123 111 110 123 121 131 130 134 133 140 140 % % 111 94 102 92 112 101 120 112 126 118 133 124 140 127 128 127 127 126 127 126 116 105 133 111 109 108 106 105 103 96 92 82 130 124 129 128 127 127 125 123 118 110 140 114 114 112 111 110 107 101 96 78 136 114 113 111 110 109 106 101 96 82 159 161 160 154 171 70 60 66 97 91 59 53 54 80 80 87 73 62 133 116 113 98 92 79 95 85 93 83 113 106 113 103 98 80 67 73 67 90 89 79 58 55 66 55 69 70 81 64 110 102 115 133 130 105 99 96 94 90 82 95 87 84 83 80 72 109 99 96 95 91 80 129 127' 125 124 121 115 125 122 120 119 117 104 161 116 111 104 101 100 213 213 167 145 181 179 151 159 136 112 109 115 123 115 155 130 104 105 107 123 113 145 121 99 100 97 119 113 140 117 96 99 96 117 113 138 116 95 98 95 116 113 96 184 126 121 115 113 112 109 114 130 148 116 185 128 112 223 139 166 189 154 223 230 217 178 111 126 138 110 178 113 104 183 111 124 137 109 172 110 102 176 III 123 136 108 165 110 101 174 111 123 134 105 158 104 100 172 97 107 95 80 120 106 90 117 99 88 98 81 74 135 114 86 90 73 57 90 70 57 166 141 121 198 148 149 137 134 132 128 116 200 200 177 218 140 137 154 136 139 134 154 134 134 130 145 126 130 127 145 123 129 125 143 122 127 123 143 122 96 80 115 97 114 96 129 102 112 92 80 79 88 73 199 141 139 133 130 129 128 117 222 198 166 174 160 141 131 148 153 143 130 148 150 /35 128 141 147 132 127 139 145 132 127 138 141 132 127 138 97 79 118 104 121 103 116 94 122 96 80 89 76 83 177 144 144 139 137 136 136 121 126 172 178 141 144 165 167 135 75 123 100 92 108 121 130 102 72 119 95 89 106 125 129 99 70 117 94 82 108 123 128 99 71 116 95 82 108 122 127 99 72 116 96 82 109 123 127 99 72 116 98 83 110 123 126 99 97 82 70 58 114 96 95 77 81 65 109 89 123 104 122 98 97 78 48 76 62 54 75 90 83 65 Mountain 151 105 103 101 101 101 102 100 82 69 140 113 112 111 110 110 110 108 91 74 130 110 107 106 106 106 107 106 88 72 167 164 163 162 161 160 160 158 133 109 Pacific 156 146 144 143 142 142 142 140 118 96 United States 170 127 124 119 117 116 115 106 89 73 All farm lands with improvements. Figures for 1933 preliminary, sub ect to correction. Washington )regon alifornia Level of General Business Activity in Boston Federal Reserve District Increased More Than Usual Seasonal Amount During April as Compared with March. "During April there was an increase from March of more than the usual seasonal amount in the level of general business activity in New England," it is noted by the Federal Reserve Bank of Boston, which, in its "Monthly Review" of June 1, adds: The effects of the acute financial situation in March continued to influence industrial activity in April, but despite this disturbing condition relatively little change other than seasonal was recorded in the aggregate level of business activity during the first four months of 1933. The average daily consumption of raw cotton by New England mills during April was 3,177 bales, as compared with 2,780 bales in March and 1,923 bales in April 1932;a seasonally adjusted index of cotton consumption in this District for April was higher than in any month since September 1931, with the single exception of September 1932. The index Is based upon the average month of 1923-24-25 as 100%, and in April 1933 stood at 52.9%, compared with 32% in April 1932. The amount of raw wool consumed in New England mills during April was considerably larger than In March or in April last year, and an adjusted index for this District in April was 76.1% of the 1923-24-25 average, as compared with 40.9% in April 1932 and 51.9% in March. Between March and April boot and shoe production in New England usually declines; although there was a decrease of about 3.6% this year, the decline was smaller than usual. The volume of production during April slightly exceeded that in the corresponding month last year. Employment and average weekly earnings per person employed increased between March and April in the shoe Industry of this District. In April the total value of new building contracts awarded in New England amounted to approximately $6,273,000. as compared with $12,792,000 in the corresponding month of 1932. In March the total value was $6,239,000. The small increase between March and April was less than usual. Registrations of new automobiles in New England in April were 14.2% smaller than in April a year ago, and during the first four months of the current year registrations were 16.2% less than in the corresponding period last year. The amount of new ordinary life insurance written in this District during April was 13.2% less than in April 1932, while the cumulative total for January-April inclusive was 15.2% less than in 1932. The number of commercial failures in this District during April was 26% less Volume 136 Financial Chronicle than in that month last year, while total liabilities of these failures dropped from $6,383,000 in April 1932 to $5,602,000 during April 1933. April sales of reporting New England retail establishments were about 12% less than in April 1932. Boston department store sales during the first three weeks of May were 11% less than in the corresponding period a year ago. Wage Payments in Chicago Federal Reserve District Increased 6% During April-Payroll Reports Denote General Recovery in Industrial Establishments in District. The Federal Reserve Bank of Chicago in its May 31 "Business Conditions Report" said that "industrial payrolls reported for April denote a general recovery in Seventh (Chicago) District establishments from the curtailed operating schedules put into effect during March. An increase of 6% in the amount of wage payments," continued the Bank, "slightly more than offset the March loss of 5 The Bank added: The manufacturing industries, which contributed mainly to the contraction in March, also were instrumental in bringing about the subsequent recovery. Payrolls in these industries expanded 93. %, more than compensating for the March decline of 8%. Non-manufacturing industries, which maintained their payrolls during March with a fractional increase, registered a 2%% decrease for April. Seven of the ten reporting manufacturing groups and two of the four nonmanufacturing classifications contributed to the April expansion in payrolls. Vehicles. increasing 153. %,reflected mainly expanding operations In the automobile industry. Metal and metal products increased payrolls 6%, which served partially to offset the 10% loss of the preceding month. In the food, stone-clay-glass, and the rubber products groups, gains ranged from 18% to 21%.and were considerably larger than the decreases reported for March. A rise of 13% in the payrolls of the wood products group offset practically all of the loss experienced in the preceding month, while a fractional gain in the chemical industries compensated for about one-third of the March decline. Wholesale and retail trade concerns also reported larger payrolls in April than in March, the increase amounting to 8%,and an expansion in all types of building and construction work resulted in a payroll rise of 20%% for this group. While payrolls were expanding and thus gave indication of a rising trend in industrial activity, there was no corresponding increase in employment. The number of employees on April payrolls of the reporting industries remained at the low level reached in March, manufacturing industries contributing a further decline of nearly 1%, while non-manufacturing industries showed an increase of 2%%. The employment decreases, however, with the important exception of the vehicles group, were limited to those industries which also reduced payrolls and in most of which the downward trend of the month was seasonal in nature. The groups in which both employment and payrolls were reduced covered the textile industries,leather products, paper and printing, coal mining, and public utilities. In the last-named group the downward movement was contrary to the usual seasonal trend. In vehicles, a sharp rise in payrolls was accompanied by a substantial curtailment of working forces. Figures reported for 68 Michigan automobile concerns showed a decrease of over 9,000 in employment, while the per capita earnings increased from $17.00 to $21.16 a week. EMPLOYMENT AND EARNINGS -SEVENTH FEDERAL RESERVE DISTRICT. Industrial Group, Week Ended April 15 1933. Per Cent Changes from March 16. No. of Number of ReportWage ing Firms. Earners. Metals and products.: Vehicles Textiles and eroducts Food and products Stone, clay and glass Wood products Chemical products Leather products Rubber products_y Paper and printing Total mtg., 10 groups Merchandistng_s Public utilities Coal Mining Construction Earnings. 712 147 137 347 139 257 108 77 8 302 103,619 141,670 28,852 56,856 4,405 17,519 12,144 15,728 5,446 38,475 $1,564,000 2,976,000 327,000 1,144,000 72,000 187,000 257,000 213,000 104,000 801,000 2,234 424,414 $7,645,000 -0.7 31,568 73,452 2,350 6,532 576,000 1,991,000 42,000 124,000 +10.7 -1.1 -0.5 +10.7 +7.8 -5.9 -9.1 +20.5 Wage EarnEarners. trigs. +1.5 -5.7 -2.2 +6.9 +11.8 +3.3 +0.5 -5.0 +15.0 +0.2 +6.2 +15.4 -9.3 +19.0 +18.8 +13.0 +0.6 -3.5 +20.9 -1.6 Total non-mfg., 4 groups.. 616 113,902 $2,733,000 +2.6 -2.4 Total. 14 groups 21850 538,316 $10,378,000 -0.0 +6.2 Other than vehicles. y Michigan and Wisconsin. z Illinois and Wisconsin. Sales of Merchandise at Wholesale and Retail in Chicago Federal Reserve District During April Less Than in April Last Year. "April trends in the wholesale distribution of commodities were for the most part favorable, reporting groups with the exception of groceries and electrical supplies recording greater than seasonal increases or smaller than usual declines from March, with dry goods showing an expansion in sales, contrary to trend," reports the Chicago Federal Reserve Bank in its "Business Conditions Report" of May 31,adding: The wholesale hardware trade gained 42% over the preceding month, as compared with an increase in the 1923-32 April average of only 8%. The decline of 2% in both drug and shoe sales compared with recessions of 5 -year average, while the espansion of 9% in the wholesale and 6% in the 10 dry goods trade contrasted with an average decrease of 8% for the month. The declines from March of 4 and 2%,respectively, in the wholesale grocery and electrical supply trades, on the other hand, compared with slight gains in 1923-32 average April sales over the preceding month, although the decrease in the total of electrical supply sales may be attributed to recessions shown by Chicago firms, the dollar volume sold by firms in other cities increasing over March. With the exception of these last two named lines, decreases from the corresponding month a year ago were smaller than in a similar comparison for March. Sales in the first four months of 1933 totaled Per Cent Change From Same Month I ast Year. Ratio of Accts. OutAccts. OutColstanding to Stocks. standing. lections. Net Sales, Groceries -17.5 --19.3 ---2.7 -16.7 133.1 Hardware -25.9 --17.9 --16.4 -28.6 279.6 Dry goods -25.1 --32.1 --25.7 -24.9 332.1 Drugs -27.8 --23.1 --8.6 -29.0 274.0 Shoes -8.8 --30.9 ---19.8 -27.8 257.0 Electrical supplies -26.0 --20.0 --6.5 -38.9 257.7 In department store trade, the 23% expansion in April sales over March compared with a gain in the 1923-32 average of only 8M %,and was greater than in April of any of these years except 1930. Furthermore, sales by reporting stores in the District were only 15% smaller than last year in the same month, which represents the smallest decline in the year-ago comparison since July 1931. Easter coming in April this year partially accounted for the favorable trend shown, but there was one less trading day than in the same month of 1932, so that daily average sales were only 12% smaller than a year ago and 31%% greater than in March this year when there were 1 2-3 more trading days. In the monthly comparison. Detroit showed the greatest increase among the larger cities of the District with a 50% gain in total sales, but recorded the heaviest decline -24% from last April, while Chicago with a gain of only 83 % over the preceding month. experienced a decline of but 13% from April 1932. Little change took place In inventories between March and April -a customary trend for the period but stock turnover was slightly more rapid than a year ago in the same month bringing turnover for the year through April to approximately the same rate as in the corresponding months of 1932. DEPARTMENT STORE TRADE IN APRIL 1933. Commodity. Net Sales. Per Cent Change April 1933 from April 1932. Locality. P.C.Change 4 Months 1933 from Same Per. 1932. Ratio of April Collections to Accounts Outstanding End of March. Net Sales. Chicago Detroit Indianapolis Milwaukee Other cities Stocks End of Month. Net Sales. 1933. 1932. -13.3 -23.8 -4.6 -12.2 -14.0 -13.8 -41.1 -22.8 -19.8 -28.7 -16.8 -34.4 -18.3 -23.0 -21.7 25.0 32.9 37.4 29.1 26.7 25.8 30.0 38.5 33.3 29.6 Seventh District -15.1 -22.6 -22.2 29.2 29.9 The gain of 42% in April over March in the retail shoe trade was heavier than in April of any previous year on this Bank's records, going back to 1926, comparing with an average increase of but 11% in those years and with an expansion of only 1% last April. Furthermore, sales of shoes by reporting dealers and department stores practically equaled those in the same month a year ago, bringing the aggregate for the year to date to within 20% of the corresponding period of 1932, as against a decline of 30% shown for the first quarter of this year. Sales of furniture and house furnishings by dealers and department stores likewise expanded greater than seasonally this April. The total of these sales exceeded that in the preceding month by 26%-the 1927-32 average gain for the month is 21%-and was only 22% less than for last April, which is the smallest decline to be recorded in the year-to-year comparison since February 1932. Installment sales by dealers expanded 54% in the aggregate over March and totaled only 173 % below the dollar volume of last April. Chain store trade followed other lines of merchandising in their upward trend during April. Aggregate sales of 13 chains operating 2,489 stores in the period, were 12% heavier than in the preceding month. Grocery, drug,five-and-ten-cent store, shoe, cigar, and men's clothing chains shared in the expansion, with musical instruments alone of the groups included showing a recession. As compared with April 1932. total sales were 3%% smaller, but average sales per store were only 1% less, since the number of units operated was 2% fewer than a year ago. Most groups shared in the decline recorded in this comparison. +9.6 196 71 16 333 3803 smaller than in the same months of 1932 by 16% in groceries, 19% in shoes. 25% in drugs, 28% each in dry goods and electrical supplies, and 29% in hardware. Stocks of electrical supplies registered a slight expansion on April 29 over March 31, but those in other reporting groups were lighter than a month previous. The majority of lines showed a smaller accounts-tosales ratio at the end of the month than on March 31. WHOLESALE TRADE IN APRIL 1933. Business Conditions in Philadelphia Federal Reserve District-Marked Increases Noted Since Early April in Production and Distribution of Commodities-Large Gains Shown in Output of Factory Products During April and Early May. In reporting business conditions in the Third (Philadelphia) Federal Reserve District, the Federal Reserve Bank of Philadelphia states that "production and distribution of commodities in this district have shown marked increases since early April," which follows "an extremely low level of activity in March when closing of banks greatly disturbed the ordinary course of business." The Bank, in its June 1 "Business Review," continues: Output of factory products showed unusually large gains in April which apparently were well maintained in early May as indicated by plant operations. Production of bituminous coal declined less than was expected, while that of anthracite registered a rather drastic reduction in April. While some improvement has been noted in building trades, the volume of contract awards had been lagging materially behind the usual seasonal pace and has continued over one-third less in the first four months this year than last. A rather exceptional gain is noted in building permits, but the total is exceedingly low as compared with recent years. Both retail and wholesale trade reported extraordinary increases in April, even after an adjustment is made for the spring holiday. Other indicators of distribution such as freight car loadings, automobile and life insurance sales recorded more than seasonal gains in the month, but all of them, except automobiles, are below last year's level. Business liquidations increased sharply from March to April both in number and the amount of liabilities, but as compared with last year, commercial failures have been on the decline. Industrial employment, payrolls and operating time on the whole showed Increases in April and to some extent in early May. The gains as a rule have been more pronounced in working time and payrolls than in the number of 3804 Financial Chronicle additional wage earners. Among the industries and services that reported increases in April were manufacturing, quarrying, building, retail, and dyeing and cleaning establishments, while among those that registered decreases were coal mining, public utilities, wholesale trade and hotels. • Manufacturing. Activity during April and through the first part of May showed a considerable expansion in operation and in demand for factory products. Sales of many important manufactures have increased substantially during this period which ordinarily reflects the beginning of seasonal slackness. In several instances the volume of sales reached the highest level this year and exceeded that of a year ago. Such unusual gains probably reflect in part the delay in seasonal activity during March and to some extent a rather rapid risein prices particularly ofraw materials used in manufacturing. Local reports show that price advances have been rather general; the sharpest increases since about the middle of April have occurred in textiles, certain metal, food, chemical and hide and leather products. Unfilled orders for goods to be manufactured have increased substantially during the month in many leading industries. In a number of cases, too, the present volume is larger than at the same time last year. Stocks of finished goods at factories have been reduced materially during the month and appear to be much smaller than a year ago. While some individual industries have increased their supplies of raw materials, inventories of this class of commodities for the manufacturing industry as a whole seem to be somewhat smaller than at the end of the previous month; they are also less than a year ago. Collections show gains over the preceding month, though not as compared with last year. Factory employment in this district, comprising eastern Pennsylvania, southern New Jersey and Delaware, registered a gain of about 1% and payrolls over 4% between the middle of March and April. The number of hours worked also increased in this period; in Pennsylvania, for example, employee-hours worked in about 75% of all reporting companies rose 7% in April and preliminary reports indicate that there was a further increase both in payrolls and operating time in the second half of April and the first part of May. There was a large increase in the output of factory products during April as compared with a record low level reached in March when productive activity was greatly affected by the bank crisis. Our index of output, which covers about two-thirds of all manufacturing in this district and which makes allowance for the number of working days and seasonal changes, rose from a low level of about 52% of the 1923-25 average in March to 59 in April. The most pronounced increases occurred in some of the most important industries such as metals, textiles, building materials, • leather, tobacco and food products. In normal times, the spring activity In manufacturing usually begins in February and reaches its peak in March; thereafter a seasonal recession takes place, a fact which has not been typical this year. Compared with a year ago, the level of manufacturing production in this district was only about 3% lower. Most of the individual industries reported exceptional increases in the output of their products during April. Increases are especially significant in industries which represent the two most important groups in this district —fabrication of metals and the manufacture of te ctile products. Orders for textile goods have been quite diversified, while demand for iron and steel products has been coming largely from automotive and miscellaneous industries, there having been no pronounced buying by railroads. While the general volume of factory production continues smaller than in other years, there are several individual industries particularly in the textile group that reported higher operations in April than a year ago, and in the case of silk goods, hosiery, underwear, and shoes, the volume of production was greater in the first four months this year than last. Consumption of industrial fuel and power increased noticeably in April so that production of bituminous coal and fuel oil showed improvement. The industrial use of electrical energy, when computed on the basis of working days. rose 8% more than usual from March to April. As a result the decline in the output of electric power was noticeably smaller than is to be seasonally anticipated. Business in San Francisco Federal Reserve District Moved Vigorously Upward During April, According to Isaac B. Newton of San Francisco Federal Reserve Bank. Isaac B. Newton, Chairman of the Board and Federal Reserve Agent of the Federal Reserve Bank of San Francisco, states that "Twelfth (San Francisco) District business moved upward vigorously during April, accompanying the Nation-wide recovery in activity. Increased activity not only made up for the decline of March," Mr. Newton continued, "but carried many seasonally adjusted production and trade indexes to points higher than in February of this year. Many commodities important in this district benefited from the general rise in prices. There was considerable improvement in employment conditions and aggregate wage payments also increased substantially." Under date of May 23 Mr. Newton further said: Low temperatures and less than the normal amount of rainfall retarded the progress of the 1933 agricultural season somewhat during April. Forage on lower livestock ranges was inadequate, necessitating more than the usual amount of supplemental feeding. Cattle remained in fair condition, however, but early lambs matured slowly. Some difficulty in securing credit for fattening these animals in feedlots was reported. Although this bank's index of the value of agricultural products sold decreased further to a new low level during the first quarter of 1933, there was more than the usual increase in marketing activity in April, accompanied by rising prices for farm products. Daily average output of both crude and refined oils increased during April, but changed little during the first half of May. Production remained considerably lower than in the corresponding period of 1932. Lumbering expanded more than seasonally during April, partly as a result of increased demand for building materials in southern California. Awards of contracts totaling $44,000,000 for work on the San Francisco-Oakland Bay Bridge and Metropolitan Water District of Southern California projects greatly increased the total value of engineering construction. Mining activity was stimulated by higher prices for non-ferrous metals. A sharp increase in the value of department store sales during April more than made up for the decline during March, after allowance for the stimulus given to April sales by the occurrence of Easter in that month and for other seasonal factors. Sales were not far below those of April 1932. Wholesale trade which had increased during March, when most other measures of business were declining, expanded considerably further during April. June 3 1933 Seasonally adjusted freight carloadings and automobile sales moved upward from low levels, while intercoastal traffic remained unchanged. Credit conditions in the Twelfth District improved further during the four weeks ending May 17. Banking reserves were increased by a $10,000,000 favorable balance of payments with other parts of the country, and by $13,000,000 of United States Treasury expenditures in this area in excess of collections: Not only was the supply of funds thus increased, but the demand was reduced by a further return of currency amounting to $22,000,000. These changes enabled member banks to pay off $36,000,000 of their borrowings at the Reserve Bank and, in addition, to build up their reserve deposits by $9.000,000. A large part of the inflow of funds from commercial and financial transactions with other districts originated when local banks sold for cash in national markets,substantial amounts of United States securities which they had received by allotment from the Treasury's May 2 financing. Since the 86,000,000 of securities received from the Treasury were paid for with $67,000,000 of deposit credit and $6,000,000 in maturing obligations, only $13,000,000 of cash was required for their purchase. There was little change in time or net demand deposits or reporting member banks during the four weeks reviewed, although loans continued to decline. Lumber Orders Heaviest Since April 1931—Production and Shipments Also Gain. Lumber orders booked at the sawmills during the week ended May 27 1933 slightly exceeded those reported for the previous week and were the heaviest since April 1931; production and shipments were respectively 3% and 5% greater than the week before and exceeded all weeks since November 1931, according to telegraphic reports to the National Lumber Manufacturers Association from regional associations covering the operations of 644 leading softwood and hardwood mills. Orders totalled 238,792,000 feet; shipments were 189,893,000 feet and production, 146,030,000 feet. For the 21 weeks of the year to date, orders were 4% in excess of those received during similar period of 1932; softwoods being 4% greater, and hardwoods, 5% more. The Association also added: Production during the first 21 weeks of 1933 was 93% of last year's output; shipments were 91% of similar 1932 period. All regions showed excess of orders over production the week ended May 27, softwoods totalling 58% above and hardwood orders being 2g times production. Production was 17% greater; shipments 41% heavier, and orders 85% heavier than in the corresponding week of 1932. All regions shared in the excess of orders over last year's and all showed heavier shipments. Unfilled orders at the mills on May 27 1933, were the equivalent of 22 days' average production of the reporting mills, compared with 15 days' a year ago. The 1933 record is the best since May 1930. Forest products carloadings at 21.387 cars during the week ended May 20 were the heaviest since the week ended Nov. 14 1931. They exceeded loadings in the corresponding week of 1932 by 2,816 cars but were 12,247 cars below similar week of 1931. Lumber orders reported for the week ended may 27 1933. by 419 softwood mills totaled 212,192,000 feet, or 58% above the production of the same mills. Shipments as reported for the same week were 164,975,000 feet, or 23% above production. Production was 134,184,000 feet. Reports from 237 hardwood mills give new business as 26,600.000 feet, or 125% above production. Shipments as reported for the same week were 24.918,000 feet, or 110% above production. Production was 11,846,000 ft. Unfilled Orders. Reports from 378 softwood mills give unfilled orders of 587,784,000 feet, on May 27 1933,or the equivalent of 22 days' production. The 533 identical mills (softwood and hardwood) report unfilled orders as 666,397,000 feet on May 27 1933, or the equivalent of 22 days' average production, as compared with 444,342,000 feet, or the equivalent of 15 days' average production on similar date a year ago. Last week's production of 405 identical softwood mills was 129,208,000 feet, and a year ago it was 108,813,000 feet; shipments were respectively 161,407,000 feet and 118,619,000; and orders received 203,931.000 feet and 111,706,000. In the case of hardwoods, 181 identical mills reported production last week and a year ego 9,635,000 feet and 9,692,000; shipments 20,357,000 feet and 10,680,000; and orders 21,653,000 feet and 10,100,000 feet. West Coast Movement. The West Coast Lumbermen's Association wired from Seattle the following new business, shipments and unfilled orders for 180 mills reporting for the week ended May 27 INSHIPPED ORDERS. SHIPMENTS. NEW BUSINESS. Feet. Feet. Feet. Domestic cargo Coastwise and Domestic cargo delivery. __ _ 55,915,000 delivery _ — -207,190,000 intercoastal. 26,939,000 89,273,000 Export 18,657,000 16,445,000 Foreign Export 82,404,000 Rail 28.945,000 Rail 33,675,000 Rail Local 6,824,000 Local 6,824,000 1 378,873,000 Total 81,365,000 112,859,000 Total Total Production for the week was 73,645,000 feet. Southern Pine. The Southern Pine Association reported from New Orleans that for 114 mills reporting, shipments were 43% above production, and orders 71% above production and 19% above shipments. New business taken during the week amounted to 46,056.000 feet. (previous week 38,291,000 at 106 mills); shipments 38,541,000 feet, (previous week 35,053,000); and production 26,863,000 feet. (previous week 25,899,000). Production was 42% and orders 72% of capacity, compared with 41% and 61% for the previous week. Orders on hand at the end of the week at 111 mills wore 93,897.000 feet. The 111 identical mills reported an increase in production of 10%, and in new business an increase of 84%, as compared with the same week a year ago. Western Pine. The Western Pine Association reported from Portland, Ore., that for 106 mills reporting, shipments were 29% above production, and orders 56% above production and 22% above shipments. New business taken during the week amounted to 49,770,000 feet, (previous week 58,547,000 at 116 mills); shipments 40.926,000 feet, (previous week 37,331,000); and production 31,809.000 feet, (previous week 29,923,000). Production was 25% and orders 39% of capacity, compared with 22% and 43% for the previous week. Orders on hand at the end of the week at 105 Mills Financial Chronicle Volume 136 were 149.878,000 feet. The 104 identical mills reported a decrease in production of 5%, and in new business a gain of 55%, as compared with the same week a year ago. Northern Pine. The Northern Pine Manufacturers of Minneapolis, Mimi., reported production from 7 mills as 1,524,000 feet, shipments 3,062,000 feet and new business 2.428.000 feet. The same mills reported production 8% more and new business 53% more than for the same week last year. Northern Hemlock. The Northern Hemlock and Hardwood Manufacturers Association, of Oshkosh, Wis., reported softwood production from 12 mills as 343,000 feet, shipments 1,081.000 and orders 1.079,000 feet. Orders were 18% of capacity compared with 17% the previous week. The 11 identical mills reported a gain of 178% in new business, compared with the same week a year ago. Hardwood Reports. The Hardwood Manufacturers Institute, of Memphis. Tenn., reported production from 225 mills as 11,471,000 feet,shipments 23,290.000 and new business 24,094.000. Production was 25% and orders 53% of capacity, compared with 21% and 45% the previous week. The 170 identical mills reported production 2% less and new business 100% greater than for the same w ek last year. The Northern Hemlock and Hardwood Manufacturers Association, of Oshkosh. Wis., reported hardwood production from 12 mills as 375.000 feet, shipments 1.628.000 and orders 2.506.000 feet. Orders were 62% of capacity, compared with 39% the previous week. The 11 identical mills reported a gain of 68% in production and a gain of635% in orders,compared with the same week last year. Automobile Production April 1933, Compared with Preceding Months. April factory sales of automobiles manufactured in the United States (including foreign assemblies from parts made in the United States and reported as complete units or vehicles), based on data reported to the Bureau of the Census, consisted of 181,029 vehicles, of which 153,330 were passenger cars, 27,308 trucks, and 391 taxicabs, as compared with 118,609 vehicles in March, 148,326 vehicles in April 1932, and 336,939 vehicles in April 1931. The table below is based on figures received from 120 manufacturers in the United States, 33 making passenger cars and 87 making trucks (nine making both passenger cars and trucks). (The total number of manufacturers heretofore reported as 144 has been reduced due to certain establishments going out of business, discontinuing manufacture of automobiles, or being merged with other establishments). Figures for taxicabs include only those built specifically for that purpose; figures for trucks include ambulances,funeral cars,fire apparatus, street sweepers, and buses. Canadian figures are supplied by the Dominion Bureau of Statistics. AUTOMOBILE PRODUCTION (NUMBER OF VEHICLES.) Canada. United States. Year and Month. 1931 January February. March April Total. TartPassenger Trucks. cabs.: Cars. FassenTotal. per Cars Trucks. 33,531 39,521 45,161 50,022 512 529 410 665 6,496 9,871 12,993 17,159 4,552 7,529 10,483 14,043 1.944 2,342 2,510 3,116 834,781 168,235 2,116 46,519 36,607 9.912 45,688 40,244 34,317 31,772 31.338 21,727 19,683 23,644 340 360 180 104 141 651 999 1,144 12,738 6,835 4,220 4,544 2,646 1,440 1,247 2,432 10,621 5,583 3,151 3,426 2,108 761 812 2,024 2,117 1,252 1,069 1,118 538 679 435 408 Total (year). 2,389,738 1,967,055 416,648 6,035 82,621 65,093 17,528 171,848 219,940 276,405 336,939 Total(4 mos.) 1,005,132 May June July August September October November December 1932-January February March April Total(4 mos.) 317,163 250,640 218,490 187,197 140,566 80,142 68,867 121,541 137,805 179,890 230,834 286,252 271,135 210,036 183,993 155,321 109,087 57,764 48,185 96,753 119,344 117,418 118,959 148,326 98,706 s. 94,085 99,325 120,906 20,541 23,308 19,560 27,389 97 25 74 31 3,731 5,477 8,318 6,810 3,112 4,494 6,604 5,660 619 983 1,714 1,150 504,047 413,022 90,798 227 24,336 19,870 4,466 26,539 22,768 14,438 14,418 19,402 13,595 12,025 21,204 73 235 27 9 13 5 239 291 8,221 7,112 7,472 4,067 2,342 2,923 2,204 2,139 Total (year)_ 1,370,678 1,134,372 235,187 1,119 60,816 5 152 660 391 3,358 3,298 6,632 8,255 May June July August September -..._ October November December 1933 January February March April 184,295 183,106 109,143 90,325 84,150 48,702 59,557 107,353 130,044 106,825 *118,609 181,029 157,683 160,103 94,678 75,898 64,735 35,102 47,293 85,858 108,321 21,718 91,340 15,333 99,885 *18,064 153,330 27,308 7,269 6.308 6,773 3,166 1,741 2,361 1,669 1,561 952 804 699 901 601 562 535 578 50,718 10,098 2,921 3,025 5,927 6,957 437 273 705 1,298 452,876 82,423 1,20* 21,543 18,830 2,713 TOW(4 mos.) 536,507 * Revised. a Includes on y factory-built taxicabs, and not private passenger cars converted into vehicles for hire. Divisions of General Motors Corporation Increase Wages of 100,000 Employees 5%. Announcement has been made by Lawrence P. Fisher, Vice-President of the General Motors Corp. and President And General Manager of the Cadillac Motor Car Co. that a 5% pay increase authorized by Alfred P.Sloan,Jr., President of General Motors, will affect 100,000 wage earners employed 3805 in the various divisions of the company. Associated Press advices from Detroit, Mich., June 2, continue: In the majority of plants controlled by the corporation, the wage increases went into effect yesterday, company officials said. Advances in wages were announced to-day for employes of Cadillac Motor Car Co., employing 3,000; Fisher Body Corp., 32.000; Chevrolet Motor Co., 10,000; Pontiac Motor Co., Frigidaire Corp. and Inland Manufacturing Co., all units of the General Motors Corp. No estimate of the total increase in payroll disbursements was available from company officials. The increase is a partial restoration of previous reductions. Tire Prices Increased-Pennsylvania Rubber Co. Announces 5% Advance. Announcement has been made by W. 0. Rutherford, President of the Pennsylvania Co., that effective May 29 tire prices have been advanced 5%. The company, which was one of the few tire concerns to report a net profit for 1932, sells only to the public and not to car manufacturers. The company's factory is working 24 hours daily and seven days a week, according to Mr. Rutherford. The Pharis Tire & Rubber Co. of Newark, Ohio, has announced an increase of 20% in its retail tire prices. Chrysler Corp. Reduces Prices of Its Models. The De Soto Motor Co., a division of the Chrysler Corp., has reduced prices $30 to $100 according to a Detroit dispatch. The new prices range from $665 to $875. All standard models were cut $30 and custom models $40 to $100. Reductions of $50 to $110 have been made on the Chrysler Six and Royal Eight lines. List prices of the Chrysler Six line now range from $745 to $945 and for the Royal Eight from 95 to $1,125. Prices of the Chrysler Imperial line have been cut $80 to $100 the new list prices ranging from $1,295 to $1,495. Mid-West Distribution of Automobiles According to Federal Reserve Bank of Chicago-Gain in Sales by Distributors and Dealers During March Continued During April-Furniture Manufacturers' Shipments Larger. "Sales of automobiles by both distributors and dealers in the Middle West continued to gain in April, despite the heavy increases shown in March," according to the Federal Reserve Bank of Chicago,"and for the second successive month the number of new cars sold at retail was larger than a year ago." In its "Business Conditions Report" of May 31, the Bank continued: The smaller decline from April last year registered in the number of new cars sold at wholesale than in their value and the increase in number of sales at retail as against the decrease shown in their value, are in part a reflection of variations in price ranges of certain makes of cars as between this year and last. Stocks of both new and used cars were somewhat heavier at the end of April than a month previous, whereas decreases are usual for the period, but they remained considerably smaller than a year ago. Data on deferred payment sales for 23 dealers indicate a slight rise in the ratio to total sales, from 48% in March to 49% in April, although the ratio reported by these same dealers for April 1932 amounted to 56%. MIDWEST DISTRIBUTION OF AUTOMOBILES. (Changes in April 1933 from Previous Months.) Per Cent Change From Companies Included. March 1933. April 1932. March 1933 April 1932. New cars: Wholesale Number sold Value Retail Number sold Value On hand April 29 Number Value Used cars: Number sold Salable on hand Number Value +34.8 +34.5 -22.2 -50.0 21 21 13 13 +23.5 +20.6 +3.6 -5.1 59 59 33 33 +13.3 +5.1 -26.5 -48.9 60 60 33 33 +16.9 --22.1 59 33 +4.5 +5.3 --24.8 --53.1 59 59 33 33 With regard to orders booked by furniture manufacturers, the Bank said: Operations of furniture manufacturers reporting to this bank were accelerated during April. shipments expanding 15% over the March volume, -a reflection in despite the decline in orders booked a month previous part of the 29% increase in current orders. These gains were contrary to trend, as were the declines experienced in March. Unfilled orders, however, though increasing during the month approximately 4% in the aggregate, were nevertheless markedly reduced in the comparison with current orders, the ratio of 67% being 17 points under that of a month previous. Operations averaged 30% of capacity, as compared with 33% in March and 41% year ago. International Wheat Conference Opened in London on May 31 Following Geneva Parley Which Ad-Agreement Reported Reached. journed May 17 In London the current week the International Wheat Conference was resumed, in the hope it was stated, of reaching an agreement on restricted production before the opening on June 12 of the World Monetary and Economic Conference. Yesterday (June 2) United Press advices from London said: 3806 Financial Chronicle The four leading wheat-producing Powers definitely agreed to-day to restrict acreage and overcome the problems of surplus crops. The delegates, representing the United States, Canada, Australia and Argentina, however, had not yet reached the stage of deciding the exact percentages for each country. It was generally agreed the restriction should be for two years. The present London parley follows the international Wheat Conference held at Geneva in May. In advices from London on May 28 the New York "Times" stated that useful preliminary work was done early at Geneva, but the meetings there came to a standstill a fortnight ago because none of the delegates was empowered to commit the respective governments to definite decisions. The London Conference, had previously been scheduled for May 29, but the change in the date to May 31 was announced on May 30. Under date of May 31 Associated Press accountsfrom London said: Instructions were received from Sydney to-day by the Australian delegation at the International Wheat Conference that Australia would not participate in an agreement to limit wheat acreage. The stand failed, however, to disturb the hopeful attitude of the American delegation, and the conference set its advisers to wotk on a draft program. Henry Morgenthau, Sr., chief of the American group of experts, and his colleagues expressed the belief that an agreement could still be reached for the control of wheat production by the time the World Economic Con• ference gets under way June 12. Stanley M. Bruce, the Australian High Commissioner, announced at the first formal session of the four-power conference that his government could not participate in a proposed international scheme for limiting production of the cereal. The American delegates are understood to take the view that Australia is bargaining for an arrangement whereby that country would not have to restrict production as drastically as Canada and the United States. At the morning meeting where the spokesman of each country outlined his position, the Canadian delegation said that it must await the arrival at London of Prime Minister Bennett before committing itself. The harmony between Argentine and United :3tates policy on the wheat problem, which developed at Geneva in the earlier discussions, became more apparent here as the Argentine spokesman expressed his willingness to co-operate to the fullest extent with the other great wheat-producing countries for solving the question of world grain surplus. Indicating on May 30 that delegates to the conference are hopeful that some plan can be drawn up agreeable to each of the principal producing nations, Associated Press accounts that day added: Since the harvest in the United States and Canada is imminent, and sowing for next season's crop already has begun in the Southern Hemisphere, it is improbable that any plan could be made effective before 1934. The adjournment of the Geneva Conference on May 17 according to Geneva advices to the "Times," was marked by the publication of a long communique which, said the "Times" message, gave no details of the plan for acreage reduction, which had been reported the previous day, but breathed confidence that this question would be definitely solved &ion. In United Press advices from Geneva May 18 to the "Wall Street Journal" it was stated: Delegates to the wheat conference have agreed on a secret aide memoire covering acreage reduction and creation of an international control board. The agreement was put into the form of a memoire pending approval of the respective governments. The memoire covers four main points: 1. Reduction of acreage as the most feasible way to increase world price. 2. Each government will decide the manner of obtaining reduction. 3. Rejection of the practicability of the export quotas system. 4. Creation of an international control board, probably with headquarters in London, to supervise the reduction agreement. As was noted in our May 13 issue, page 3247, the League of Nations Economic Committee's consultation of experts of the United States, Canada, Australia and Argentina on the wheat exports problem, began at Geneva on May 10, in preparation for the London Economic Conference. As to the concluding session of the Geneva Conference and the adoption of the communique we quote the following from the Geneva advices May 17 to the "Times": After stressing that the wheat problem was the main key to world recovery, the communique says: "The problem can be solved only by international action. The three main measures for this international action, which should be conceived as something provisional, would be: (a) Limitation of production and possibly of exports; (b) liquidation of stocks; (c) maintenance of a reasonable import mzrgin in European importing countries. "The experts thoroughly examined the first two points and will resume conversations in London on May 29 after having consulted their governments. Thanks to the progress already made, it is hoped definite conclusions may then be reached. "Compared with the London wheat conference of May 1931, the present meeting admits of a new element of the greatest importance: on the American side there exist legal possibilities for co-operation." Much of the communique is devoted to an effort to bring European producers into eventful accord and, above all, to persuade big European importers to facilitate a solution by tariff reductions. There would seem to be little point to all this unless the overseas countries anticipated agreement among themselves. The experts point out that wheat acreage in European importing countries increased 9% in 1930 and say this resulted from keeping home prices high, in some instances four times the world price. The experts explain that the four large exporting countries are "quite prepared to take into account the desire of European countries to secure adequate living conditions for agriculturists." They have no intentionof demanding abandonment or modification of protectionist policy that Is deep-rooted in national sentiment, but merely wish to ask Importing countries to apply this policy with necessary moderation. June 3 1933 They proceed to give many arguments as to why Europeans should do this in the general interest. Under protectionism, "in exporting countries a disastrous price level almost entirely wipes out purchasing power of population," say the experts. "Wheat is the foundation of the economic edifice. . . . Consequently, every measure tending to reduce the difficulties of the wheat trade will be a powerful remedy for the agricultural crisis—that is to say, for the crisis In general. . . . To judge from the disastrous price level, it might be thought there was an enormous overproduction, but if the figures for wheat production and consumption are compared and analyzed it will be found the annual surpluses do not represent the difference in quantity which might be expected in view of the remarkable drop in prices. "In these circumstances the difficulties in the way of readjusting production and consumption should not be insurmountable," they continue. "The actual overproduction is comparatively small. But the wheat crisis takes the form of an accumulation of exportable stocks,concentrated mainly in the United States and Canada. The fact that this accumulation has coincided with a number of abundant harvests in big producing countries caused a glut on the market and surplus stocks are seriously affecting world positions." It is an open secret that the ability to dump these stocks on the world market has been one of the best cards in the hands of Henry Morgenthau, Sr., head of the American delegation, in pushing acreage reduction and other American proposals. It is likely to be useful, too, in bringing Europeans Into line. World Has Record Stocks of Wheat. Stocks of wheat available for export of carryover In the principal exporting countries on May 1 totaled 774,000,000 bushels, or about 49,000,000 bushels more than on May 1 1932, and stocks in the principal importing countries of Europe were also larger on May 1 than a year ago, says the Bureau of Agricultural Economics in its report on world wheat prospects for May, according to an announcement issued May 27. The Danube Basin countries and Russia are reported to be the only large wheat producing areas where stocks are relatively small. World shipments have declined rapidly during the last six weeks, and in April were 21,000,000 bushels less than for April 1932, says the Bureau, adding: It seems unlikely that world shipments and consumption will increase sufficiently during the remainder of the crop year to prevent the world carryover of wheat being larger than the record carryover as of July 1 1932. The Bureau says that the recent rise of wheat prices "has been closely associated with rising prices of other commodities," due "primarily to the expectation of inflation and improving business conditions, but only in part to any actual depreciation of the dollar in the foreign exchanges." The Bureau continued: Chicago wheat prices have risen about 50%, while the rise of the dollar value of the French franc (still on the gold standard) has amounted to only about 17%. But wheat prices have also been affected' by the poor outlook for the winter wheat crop in the United States. Plan for Improving Cotton Industry to Be Proposed by Cotton Mill Heads. The cotton textile industry has organized to study the application of the Farm Adjustment Act to its business, and has launched an immediate survey within the industry to submit recommendations to the Agricultural Adjustment Administration, an announcement issued by the United States Department of Agriculture, May 26, said, continuing: Leaders in the industry conferred at length, May 25, with Administrator George Peek and Co-administrator Charles Brand, discussing in a general way the situation of the cotton textile business and its relation to the provisions of the new Farm Act. Those attending the conference represented the majority of cotton mills in New England and the South. George A. Sloan, President of the Cotton Textile Institute, stated, following the conference, that "90% of the textile industry is now educated to the point where it will co-operate in any reasonable plan for improving conditions in the industry." Those conferring with Administrator Peek and Co-administrator Brand, according to the announcement, included: T. M. Merchant, of South Carolina, President of the American Cotton Manufacturers' Association, which represents all Southern mills; Ernest Hood, of Massachusetts, President of the National Association of Cotton Manufacturers, representing New England mills; George Sloan, President of the Cotton Textile Institute, representing mills in both the New England area and the South; Colonel G. Edward Buxton, New England manufacturer; Cason J. Callaway, former President of the American Cotton Manufacturers' Association and President of a large group of Georgia mills, and Robert Stevens, formerly a New York merchant and a representative of mill interests of New England and the South. Petroleum and Its Products—President Roosevelt Decides to Include Oil Control Measure in General Industry Recovery Bill to Facilitate Action—East Texas Wells Closing as Wide Open Flow Exhausts Pressure—Commission Orders Tests Prior to June 12 Hearing—Oklahoma Refuses to Increase Allowable at Present Prices. Important developments in Washington during the week affecting the petroleum industry were featured by Secretary of the Interior Ickes' announcement Thursday before the Volume 136 Financial Chronicle House Ways and Means Committee that President Roosevelt desired that an amendment be made to the Industries Control Bill which would give him supervision over the oil industry, and that the Marland Bill be dropped for the present. This will have the effect of speeding Governmental action, it is believed. The amendment as drafted to meet the wishes of the President was read to the House Committee. It follows: "For the oil industry, in addition to the powers granted the President concerning codes of fair competition, agreements and licenses, he is authorized to prescribe regulations to supplement State conservation legislation regulating the production of petroleum, to allocate equitably the national market demand for petroleum and the products thereof among the oil-producing states and between domestic production and importations and to prohibit the transportation into interstate commerce of petroleum and the products thereof produced or withdrawn from storage in violation of any State or Federal law or the regulations prescribed thereunder." The President's expressed desire served the purpose of causing the immediate suspension of consideration of the Marland bill, which would have given Secretary Ickes the control now transferred directly to the President. Ickes declared that the wide powers as outlined are necessary for the President, adding that "it is necessary that the power be lodged in the Government because the States have not been able to meet the situation." The Secretary declared that many oil producers would undoubtedly express preference for the Marland Bill and its provisions, but added significantly that "the amendment is acceptable to the President." The refusal of a three-judge Federal Court in Texas to issue an injunction restraining the Railroad Commission from enforcing its present East Texas allowable of 791,201 barrels daily has left the Texas situation unchanged, except for the threat of pool exhaustion which is carried in the fact that hundreds of wells have been closed down due to the ceasing of bottom hole pressure, caused by the wide open flow. Belief has been expressed that under present production schedules the wells will be exhausted at the rate of 1,000 per month. Because of the seriousness of this aspect of the situation, the Railroad Commission has ordered that tests be made of wells under wide open flow conditions, and that on June 12 a hearing be held to determine whether or not the present order is creating waste. A cut in East Texas production will have the effect of causing prices to advance immediately, it is believed. The general price is now 25e. throughout the State, the 100. price having been sustained for but a short period following the issue of the large production order which, while theoretically limiting output to less than 800,000 barrels daily, really brought about production averaging 1,000,000 barrels daily. The disruption of the Texas price structure was reflected in other fields throughout the midcontinent area, and in other oducing centers. The Oklahoma Corporation Commission, recognizing the national status of the industry, has refused to permit an increase in the Oklahoma City field output, despite the fact that nominations have been filed for an additional 100,000 barrels daily. The Commission held that the production and sale of crude at 25c, a barrel is wasteful. The Texas situation has had reverberations abroad, as the Rumanian oil producers on Thursday lifted the restriction previously imposed on output and maintained under agreement with world producers. The Rumanian officials hold that the United States had violated the agreement and had thereby jeopardized the possibility of an advance in world prices. The Rumanian production may advance to 22,000 metric tons a day, from the former restricted level of 18,000 daily. There was a slight decline in national production for the week ended May 27, the American Petroleum Institute declares. The daily average output was 2,634,550 barrels, a drop of 70,800 barrels from the daily average of the previous week. No crude price changes were reported this week. Prices of Typical Crudes per Barrel at Wells. (All gravities where A. P. I. degrees are not shown.) Bradford, Pa $1.37 Eldorado, Ark., 40 $ .52 .85 Rusk, Tex., 40 and over .25 Corning, Pa .47 Salt Creek, Wyo., 40 and over -_-- .23 Illinois .42 Dant Creek .23 Western Kentucky .70 Mid-Continent, Okla., 40 and above .25 Midland District, Mich Hutchinson, Tex., 40 and over_ . . Sunburst, Mont .25 1.05 .25 Santa Fe Sprgs., Calif., 40 and over .75 SpindeltoP, Tex., 40 and over .25 Huntington, Calif., 26 .75 Winkler, Tex Smackover, Ark., 24 and over .20 Petrone, Canada 1.75 3807 REFINED PRODUCTS -NEW JERSEY PRICE WAR ENDS AS STANDARD ADVANCES PRICES -NEW INCREASE IN TANK CAR GASOLINE POSTED-BUNKER FUEL OIL STRONGER BETTER TONE IN KEROSENE -NAVY CONTRACTS FOR FUEL OIL ANNOUNCED. The protracted price-war which has kept gasoline prices around 10c. a gallon in Northern New Jersey has come to an end, with the posting yesterday (Friday) of advances by Standard of New Jersey which will return service station prices to 16.5e., less 2c. for cash. Other companies which adopted the low prices during the price-war period will undoubtedly follow Standard's lead and re-establish that territory on a profitable basis. In some circles the action of majors in returning to profitable prices is regarded as a victory for the independent interests of New Jersey, who have steadfastly fought every price cut during this period, and who have instituted legal action against a group of the majors. The Independent Oil Dealers Association of New Jersey has been especially active in this regard. The statement issued by the New Jersey Standard accompanying the posting of the increase pointed out that "prices in New Jersey and certain other areas have been abnormally depressed, and the present move will return prices to normal levels. The adjustment will vary at different points, depending on local conditions." The company also advanced tank car gasoline prices Mc. a gallon to Sc. at Bayonne, and Xe. to 43 c. at Baltimore and Philadelphia. 4 The price adjustment is based on cargo-lot prices at seaboard, this being the new process of determining prices, as adopted by Standard. It is believed here that the settlement of the New Jersey situation will react favorably throughout the Metropolitan area, and that advances may be expected in New York and New England. Fuel oils have shown a stronger tendency this week, with Grade C, bunker, firm at 75c. a barrel, in bulk at refineries, and Diesel steady at $1.65 a barrel, same basis. The Navy oil contracts for about 1,850,000 barrels of fuel oil were allotted this week for the Service's east coast requirements, and for more than 6,000,000 barrels on the west coast. There has been a brisker movement in kerosene, with the price ranging from 4Yic. to Sc. for 41-43 water white in bulk at refineries. Gasoline prices in Nebraska will be reduced throughout the state, following a 2c. cut in Omaha, posted by Sinclair Refining Co. and Phillips Petroleum Co. on June 1. Pennsylvania lubricating oils have been active during the past week, with prices showing a firmer tendency, reflecting the improved tone noted throughout the industry as President Roosevelt's control bill nears passage in Congress. Price changes follow: -Tank car gasoline prices advanced 34 c. to 434c. by smaller May 29: companies, and met by Standard of New Jersey and other majors. June 1: -Standard Oil Co. of Nebraska, Sinclair Refining Co., and Phillips Petroleum Co. reduce Omaha gasoline prices 2c. a gallon. Adjustment of statewide basis expected to follow. -Standard Oil Co. of New Jersey advances tank car gasoline June 1: prices c. to Sc. a gallon at Bayonne; hc. to 434c. at Baltimore and Philadelphia. -Standard Oil Co. of New Jersey advances service station gasoJune 2: line prices in New Jersey, posting advances ranging up to 3.5c. a gallon In territories where "price wars" have been conducted. The new price at Newark, N. J.. will be 14.5c. a gallon, cash, at service stations, including 4c. tax. Gasoline, Service Station, Tax Included, *$.15 New Orleans $.128 New York $.152 Cleveland .12 18 Philadelphia Atlanta .19 Denver .115 San Francisco: Baltimore 16 Detroit 144 .17 Third grade Boston 16 Houston Above 65 octane-- 185 Buffalo .195 .172 Jacksonville 219 Chicago .12 Kansas City .133 Premium Cincinnati .14 15 Minneapolis 125 St. Louts * Less 2 cents cash discount. Kerosene, 41-43 Water White. Tank Car, F.O.B. Ltd. Refinery. N.Y.(Bayonne$.04)j-.05% Chicago $.02%-.03% New Orleans, ex__ _$.03% North Texas .03 Los Ang.,ex_ .04(-.06 Tulsa Fuel Oil, F.O.B. Refinery or Terminal. N.Y.(Bayonne)California 27 plus 13 Gulf Coast C $65 Bunker C $ .75 $.75-1.00 Chicago 18-22 D_42%-.50 Diesel 28-30 D 1.65 New Orleans C .60 Philadelphia C .70 Gas 0 I, F.O.B. Refinery or Terminal. N.Y.(Bayonne)ChicagoTulsa 28 plus 0-L0351,04 32-36 G 0 , $.01% U. S. Gasoline, Motor (Above 65 Octane), Tank Car Lots, F.O.B. Refinery. N.Y.(Bayonne) N. Y.(Bayonne) Chicago $.04-.044 Standard 011, N.J. Shell Eastern Pet-$.043j New Orleans ex_ .04-.04% Motor. U. S__$.05 New York Arkansas .04-.0434 Stand. 011, N. Y_ .0485 Colonial-Beacon.. 05 California .05-.07 Tide Water Oil Co .05 z Texas 0460 Los Angeles, ex. .004-.07 Richfield Oil(Cal.) .053 Gulf 0485 Gull ports .05-.051( Warner-Quin. Co. .05% Republic 01.1 .05 Tulsa 05-.05% Pennsylvania__ .05M Richfield "Golden." z "Fire Chief." $.0485. Sugar Prices Advanced Ten Points. It was announced yesterday (June 2) that the California & Hawaiian Sugar Refining Corp., Ltd., has advanced the price of refined sugar 10 points to 4.60 cents a pound,effective at the close last night. 3808 Financial Chronicle Revised Oil-Control Bill Offered in Senate as Amendment to Industrial Recovery Measure-Bill, Similar to That Introduced on May 19 in Both Houses, Would Create Government Official to Administer Industry and Eliminate Secretary of Interior Senate Finance Committee Concludes Hearings. Revised legislation for the control of the petroleum industry was introduced in the Senate on May 26 by Senator Capper of Kansas. The bill was immediately referred to the Senate Finance Committee, which on the same day began hearings on the petroleum situation. These hearings were concluded on May 29. The new Capper bill closely parallels the provisions of the Capper-Marland bill, introduced in the House and Senate on May 19, and described in our issue of May 27, page 3639. The new measure, however, was introduced as an amendment to the National Industrial Recovery bill, and differs from its predecessor chiefly in providing that the dictatorship over the oil industry need not be placed in the hands of the Secretary of the Interior, but shall be exercised by an administrator who is to be an official of the Government. The revised bill also eliminates natural gas from the regulatory provisions. Among the provisions common to both the original and revised Capper bills are that prohibiting inter-State shipment of petroleum or its products produced in violation of State conservation laws; that authorizing the administrator to investigate and announce domestic and export demand for such products as he may choose; that for regulating imports and limiting them to the daily average for the final half of 1932; that for a tax of 50 cents a barrel on oil produced in excess of demand; and that for a tax of Yj, of 1% a barrel on crude oil produced or imported. Among the witnesses to appear at the hearings before the Senate Finance Committee were Secretary of the Interior Ickes, Representative Marland of Oklahoma, Jack Bialock of Texas, J. B. Elliott of California and. J. E. Jones of New York. Secretary Ickes explained that the proposed measure would prevent transportation of illegally-produced oil, and that under.it the Government would allocate to the oil States their proportion of total market demand. Most of the changes in the oil bill have been made to make it harmonize with the Industrial Recovery measure, he said. Testimony of other witnesses was quoted, in part, as follows, in Washington advices to the New York "Journal of Commerce," May 30: Jack Blalock of Texas, Secretary of the independent association opposed to monopoly, denied that there is over-production in the east Texas fields nor the existence of an emergency that "justifies this drastic legislation." He suggested that the committee follow President Roosevelt, as expressed in his letter to the oil State governors early in April, and provide for divorcement of pipelines from other branches of the industry. "There is the strangle hold is the oil Industry," he said. "That would solve the question for the oil men." The committee was urged by John B. Elliott of California, to sponsor a Congressional investigation of the oil industry. Mr. Elliott is president of the independent association opposed to monopoly. "If you will do this. Congress will learn of the facts already well known to the independents," Mr. Elliott said. Support of the legislation was voiced by I. C. Grimm, representing Gov. George White of Ohio and the oil and gas associations of Ohio. "The small producers have exerted every effort to continue in the oil business, to save their properties and keep their men employed," he said, "but we find it impossible to continue any longer under the present low price for crude oil. Unless some legislation is enacted at this session of Congress to give immediate relief, it will result in a complete shutdown of all small wells." Opposing the Capper bill, J. Edward Jones of New York cited Supreme Court opinions on the subject of Federal control of oil production and gave views of prominent economists. "Federal control of the industry inevitably would result in ultimate failure to a point of disaster," he said. "Blame for such an end would be placed upon the Administration that sponsored it." Complete divorce of the transportation facilities from companies interested directly or indirectly in producing, processing or the marketing of the product transported, Mr.Jones declared, is an effective means of placing all operators upon an equal competitive basis: of enabling prices to result purely front the effect of relationship between supply and demand: of preventing monopoly and thereby bringing stabilization to the industry and providing for the true convervation of oil. "Let us solicit the aid of the Department of Justice in obtaining prosecutions for violations of our Federal anti-trust laws with respect to price fixing tactics," he said, "instead of turning over the industry to a man who admittedly does not know the fundamentals of it and who,therefore, would be Incompetent to dictate to us. We should regulate and curtail the law violators, not the economic elements of petroleum." Crude Oil Output Declined During Week Ended May 27 1933, but Exceeds Same Period Last Year-Inventories Fell Off. The American Petroleum Institute estimates that the daily average gross crude production for the week ended May 27 1933 was 2,634,550 barrels, compared with 2,705,350 barrels per day during the preceding week, a daily average production for the four weeks ended May 27 of 2,680,650 barrels and an average daily output of 2,169,400 barrels for the week ended May 28 1932. June 3 1933 Stocks of fuel at all points decreased 95,000 barrels during the week ended May 27 1933 as against an increase of 443,000 barrels during the previous week. Reports received for the week ended May 27 1933 from refining companies controlling 91.6% of the 3,856,300barrel estimated daily potential refining capacity of the United States indicate that 2,288,000 barrels of crude oil daily were run to the stills operated by these companies, and that they had in storage at refineries at the end of the week 32,743,000 barrels of gasoline and 125,257,000 barrels of gas and fuel oil. Gasoline at bulk terminals, in transit and in pipe lines amounted to 20,809,000 barrels. Cracked gasoline production by companies owning 95.4% of the potential charging capacity of all cracking units averaged 473,000 barrels daily during the week. The report for the week ended May 27 1933 follows in detail: DAILY AVERAGE CRUDE OIL PRODUCTION (FIGURES IN BARRELS). Average Week Ended 1Week Ended 4 Wks. End. Week Ended May 27 '33. May 2033. May 27 '33. May 28 '32. 461,250 383,350 434,000 399,150 Oklahoma 110,400 112,250 105,650 96,900 Kansas 43,100 44,150 51,550 44,500 Texas Panhandle 48,850 47,850 51,550 49,400 North Texas 20,200 25,450 21,000 19,800 West Central Texas 159,750 160,500 183,900 159,800 West Texas 58,350 58.450 58,500 58,900 East CentralTexas 805,050 814,500 334,300 808,700 East Texas 71,400 78,000 69,350 Conroe 52,250 48,500 50,200 54,600 Southwest Texas 26,200 26,400 29,250 27,100 North Louisiana 29,900 29,950 34,300 30,000 Arkansas 115,000 112,900 113,650 114,500 Texas (not incl. Conroe)_ Coastal 41,450 41,450 33.900 41,550 Coastal Louisiana 339,080 89,150 89,400 108,250 Eastern (not incl. Michigan) 16,050 16,100 19,200 16,300 Michigan 29,400 27,400 38,200 29,650 Wyoming 5,750 5,900 8,650 5,900 Montana 2,550 2,550 2,550 3,300 Colorado 36,100 36,100 36,100 36.700 New Mexico 485,200 484,000 479,900 489,700 California 2.634,550 2,705.350 2,680.650 2.169.400 Total Note. -The figures indicated above do not include any estimate of any oil which might have been surreptitiously produced. CRUDE RUNS TO STILLS, MOTOR FUEL STOCKS, GAS AND FUEL OIL STOCKS, WEEK ENDED MAY 27 1933. (Figures in Barreb3 of 42 Gallons.) Daily Refining Capacity of Plants. District. Reporting. Potential Rate. East coast Appalachian Ind., Ill, Ify Okla..Kans..Mo. Inland Texas Texas gulf Louisiana gulf.,. -Ark.. North La. Rocky Mountain California Total. % 644.700 638,700 99.1 144.700 135,000 95.0 434,900 424,000 97.5 459,300 390,000 84.9 315,300 177,700 56.4 555,000 542,000 97.7 146,000 142,000 97.3 79,000 88.5 89,300 152,000 138,000 90.8 915,100 866,100 94.6 Crude Runs to Stills. a Motor Gas and Oil Fuel Fuel % Daily Oper- Stocks. Stocks. Average. Wed. 496,000 77.7 16,919,000 6,670.000 82,000 60.7 2,167,000 800,000 279,000 65.8 8,472,000 3,856,000 220,000 56.4 4,871,000 3,151,000 98,000 55.1 1,717,000 2,213,000 458,000 84.5 5,816,000 6,178,000 113,000 79.6 1,473,000 2,057,000 43,000 54.4 321,000 567,000 36,000 26.1 1,248,000 673,000 463,000 53.5 14,063,000 99,092,000 Totals week: May 27 1933._ 3,856.3003,532.500 91.6 2,288,000 64.8 c57067000 125,257,000 q Sc,. Sons n2590 91.6 2.266.000 64.1 57 162 non 124 Ann Ann 'k,.., on I wet a Below are set out estimates of total motor fuel stocks on U. S. Bureau of Mine basis for week of May 27 compared with certain May 1932 Bureau figures: 58,770,000 barrels A. P. L. estimate of B. he M. basis, week May 27 1933_6 68,811,000 barrels U. S. B. of M. motor fuel stocks. May 1 1932 69,135,000 barrels U. S. B. of M. motor fuel stocks, May 31 1932 b Estimated to permit comparison with A. P. I. Economics report, which is on Bureau of Mines basis. c Includes 32,743,000 barrels at refineries, 20,809,000 bulk termina s, in transit and pipe lines, and 3,515,000 barrels of other motor fuel stocks. Gasoline Prices Raised by Standard Oil Co. of New Jersey. The Standard Oil Co. of New Jersey announced on June 1 that with a view to raising gasoline prices to normal levels it has made increases in its prices, effective June 2. The New York "Times" of June 2, in noting the increases, said: In areas where quotations have been depressed by a price war, particularly in New Jersey, the move will result in an advance of approximately three cents a gallon in the retail price. The adjustment will vary at different points. The new price at Newark will be 16.5 cents a gallon, less two cents for cash, at service stations. This is an advance of approximately 3.5 cents. A year ago the price was 16.2 cents, not including the 1-cent Federal tax, which had not been enacted then. The price of spot gasoline in tank cars has been advanced a quarter cent a gallon to five cents, f.o.b. Bayonne, N. J. Prices at Baltimore and 43% cents a gallon. Philadelphia have been advanced to Marketing areas from Maine to Louisiana are believed to be affected by the company's move. It is regarded in the trade as a contribution toward a firmer price structure, and other large companies are expected to fall in line. For several months the leading companies have been engaged in a price war with independent marketers of East Texas gasoline who have been cutting prices. Standard Oil Co. of New York Advances Gasoline Prices. Effective to-day (June 3) an advance of 0.3 cents a gallon in gasoline prices has been made by Standard Oil Co. of New York, Inc., throughout New York and New England. The new price at service stations in New York City will be Volume 136 Financial Chronicle 14.5 cents a gallon, including 4 cents in taxes, according to the "Wall Street Journal" of last night. The company has also met the advance of 3' -cent in the tank-car price of gasoline made by Standard Oil Co. of New Jersey, its new price being 5.10 cents, Long Island. Wire Prices Increased-Brass Prices Also Higher. The General Cable Corp., following an advance of M and yi cent a pound in wire prices in the morning of June 1, announced a second advance that day of M cent a pound for deliveries in car lots. The new prices are: Bare wire, 10.50 cents a pound, up 0.625 cent; weather proof wire. 12.375 cents, up 0.625 cent, and magnet wire, 12 cents, up 0.75 cent. Phelps Dodge Copper Products Corp., Anaconda Wire & Cable Co. and other copper fabricators have followed the higher postings on copper wire. Revere Copper & Brass Co. announced an advance of M cent a pound in copper and brass products with the exception of phosphor-bronze, which was raised 1 cent. Welding rod prices were unchanged. Monthly Statistics of Tin Exports According to International Tin Committee. The International Tin Committee met at the Bolivian Legation Paris on May 23. A communique issued by the New York office of the International Tin Research & Development Council on May 25 noted the monthly statistics as to exports as follows: CABLED INFORMATION FROM PARTICIPATING COUNTRIES FOR SEPT.-DEC. 1932, JAN. TO MARCH 1933 AND APRIL 1933. Monthly Export Balance at September to January to December March Permissible Sept. 1 1932. 1933. from 1932. SePt.1 1932. April 1933. N. E. 1 Nigeria Bolivia Malaya Siam 1,282 5,068 3,943 1,307 -40 321 949 1,260* 317 -26 3,600 1,224 5,177 1,224 +1,172 6,222 2,671 8,532 2,036 -113 830 2,510 833 3.296 -523 •For November 1932 the figure of export for Nigeria has been cor ected to 370 tons (previously reported 295 tons). The total for export for September-December 1932 has now been corrected. Note. -A plus sign means excess over quota; a minus sign means balance in hand on quota allowance. General Advance in Non-Ferrous Metals-Activity Expands at Higher Quotations. "Metal and Mineral Markets" for June 1 observes that favorable reports on the general business situation and uncertainty as to the ultimate value of the dollar caused prices for non-ferrous metals to move upward sharply in the week that ended yesterday. Demand for metals and metal products seems to be expanding with each fresh advance in quotations. Operators who favor an orderly rise in prices are experiencing great difficulty in checking speculative enthusiasm. Copper during the period scored a net gain of /0.; lead and zinc advanced about Mc.; tin, 4c. per 3 pound, and silver, 13/2c. per ounce. The same publication adds: Copper Advanced to MC. The market for copper scored a net gain of Kc. in the last week, both here and abroad. Demand was fairly active in both markets, though buying interest was more in evidence toward the close of the week than earlier in the period. Shipments of copper into consumption are increasing as the market is moving into higher ground, and, with output likely to show no appreciable change over the summer period, operators believe that the uplift that has taken place is fully warranted. Copper. it is pointed out, has advanced no more on a percentage basis than the other major metals. The undertone late yesterday was strong. Abroad, where inflation of the dollar would have little bearing on prices, the trend of prices also was upward throughout the period. European operators believe that a recovery in business in the United States should stimulate trading in all directions and serve to increase commodity values. On Thursday, May 25, activity in the European centers was restricted because of a holiday. Beginning with Monday, May 29, trading abroad became quite active, and prices realized daily covered a wide spread, owing to the fluctuating exchange rates. Yesterday business was done abroad at prices ranging from 7.625c. to 7.75c., c.i.f. basis. Fabricators experienced good business in copper and brass products and prices were advanced on two occasions. On May 29 leading interests announced a general advance of Xc. in copper and brass products. Yesterday, May 31, phosphor bronze quotations were marked up lc., and all other products .5.6c. The copper statistics for North and South America for 1932 were issued during the week and are about in line with expectations. Lead at 4.10c., New York. Stimulated by the general upward movement in commodity prices and the marked advance of security markets, daily buying of lead increased steadily in volume as the past week progressed, reaching a total of more than 3,000 tons on Monday. Yesterday, following the third rise in prices during the week, activity diminished somewheat, but nevertheless a fair volume of business was booked for the day, and the total of sales for the seven-day period was far above that for an average week, exceeding 10,000 tons. The New York price level of the metal moved up last Thursday to 3.750., the contract settling basis announced by the American Smelting & Refining Co. on that day. On Monday the company advanced this basis to 3.90c., and yesterday an advance to 4.10c. was announced. The price situation in the West was slightly irregular during the period, ranging from 3.60c. to 3.6250., St. Louis, when the 3.750. level was quoted 3809 in the East, but holding uniformly at 3.75c. on Monday and at 3.950. yesterday. Business of the week was well distributed among the various consuming Interests, with corroders placing the heavier share of the orders. Buying by the foil interests was slightly less than in the preceding week, but the purchases by cable, mixed-metal and pipe and sheet manufacturers improved. Sales for the calendar week ended May 27 totaled about 11,000 tons. Metal sold for shipment during May. according to statistics circulating among producers, totaled 24,000 tons; sales for June shipment already total about 22,000 tons, and those for July shipment have reached about 11,000 tons. Zinc Again Higher. The trend of prices in zinc again was upward, sales yesterday going through as high as 4.325c. per pound, St. Louis, for Prime Western, as against 3.850. a week ago. The sales for the calendar week ended May 27 totaled 5,200 tons, an excellent week's business. Demand continued active over the last two trading days. Galvanizers were the principal buyers, and quite a fair tonnage of forward material was booked during the week. The strength in concentrate again was a factor, the Joplin market advancing to $28 per ton. Active Trading in Tin. Demand in the domestic tin market was more brick last week than at any time during the last few years; in fact, late last Saturday morning trading came to a standstill because all metal available for sale had been purchased. Despite the holiday on Tuesday, several importers did a fair day's business, using sterling quotations as a basis for settlement. The bulk of the business of the week was booked on Thursday and Friday. On Monday a period of quiet developed, and this prevailed until just before closing time, when trading picked up markedly for a brief period. Sales yesterday were moderate in total volume. Prices during the sevenday period moved up from 37c. to 41.50c. for Straits, the higher figure applying to some business booked early yesterday. Chinese tin, 99%. prompt shipment, was quoted as follows: May 25. 33.50c.; May 26, 33.625c.; May 27, 34.875c.; May 29, 35.6250.; May 30. holiday; May 31. 37.750. Demand Continues to Gather Momentum as Steel Output Rises to 41% -Pig Iron and Steel Scrap Prices Again Advance. Further gains in production and demand, coupled with growing strength in prices, are rapidly establishing the iron and steel industry on the firm footing of a seller's market, announces the "Iron Age" of June 1. Steel ingot output, which has had an uninterrupted rise since the third week in March, now averages 41% of capacity as compared with 38% a week ago. And expected seasonal influences have not yet come into play to check the forward movement, adds the "Age," further stating: The remarkable upswing in tin plate demand has brought output of that product up to 90% of capacity, with full operations likely to be attained within a week. Continued expansion of specifications indicates sustained production for at least two months. Automotive support of the steel,industry is undiminished. Retail sales of motor cars, which for long had been concentrated in the Northeastern section of the country, particularly New York and the New England States, are now broadening out in the South and other regions. Miscellaneous steel consumers continue to increase their purchases. Electrical sheets are more active and tack plate is moving in good volume. Stamping plants are busier, especially those making kitchenware; electrical refrigerator makers are taking a heavy tonnage of sheets; and oil supply Interests are buying steel for development work in the Southwest. Makers of conductor pipe and eavestrough are manufacturing on a larger scale to build up their stocks. Plate fabricators are booking tank orders from both the oil industry and brewers. A Detroit manufacturer has a backlog of more than 100,000 insulated steel beer barrels and is using 150 to 500 tons of sheet steel a week. Railroad buying continues to lag so far as orders for rails and rolling stock are concerned, but growing interest is being shown in steel for equipment repairs. The Pennsylvania's release of 12,460 tons of rails to the Steel corporation is being rolled at the Pittsburgh district mill, which resumed operations late last week. A Chicago independent is rolling 3,250 tons for the same line. The New York Central will soon place about 8,000 tons, and the Norfolk & Western is inquiring for 10.000 tons, as well as for 6,000 kegs of spikes and a tonnage of tie plates. Federal construction and road work requiring both structural steel and reinforcing cars is in the offing, but current lettings are light. Fabricated structural steel awards, totaling 11,800 tons, compare with 15,500 tons last week and 3,750 tons two weeks ago. New projects of 20,350 tons include 15,000 tons for a New York Central viaduct and 2,200 tons for a brewery stock house in New York City. Despite the relatively small tonnage now coming from the railroads, the construction industry and the oil companies -all three leading consumers of steel in normal times -May steel bookings were the heaviest for any month in nearly two years for many companies. Demand for sheets and strip steel has been stimulated by the recent advances for third quarter. However, not all companies participated in the advance and at least one that did has withdrawn its quotations. Apparently these producers are disposed to defer action on flat-rolled steel, as well as other finished products, pending definite information on wage rates during that period. The manner in which the American Iron and Steel Institute reacted to the industrial recovery bill makes it possible that the first move of the industry to carry out its part of the program will be a general advance in wages. A 10% increase in coal miners' wages in conjunction with price stabilization negotiations in the coal industry is considered significant. awl Notwithstanding their unqualified support of the principles of the Industrial control bill, iron and steel producers, as well as consuming interests, are commencing to voice their dissatisfaction with certain provisions and omissions in the measure, as passed by the House of Representatives. Absence of machinery to regulate foreign competition is regarded as incompatible with increases in domestic wages and costs. The licensing feature, besides being of doubtful constitutionality, is so drastic as to excite universal apprehension. The employment clauses, it is feared would invite labor trouble instead of promoting harmony in employeremployee relations, while the tax proposals would impose too heavy a burden on lower bracket income and discourage investment. The only important price advance on finished material to be announced this week was an increase in bolts, effective immediately. Pig iron continues to show strength, with the recent advances in the Valleys established Financial Chronicle Direct reflexes of gains in freight car loadings are heavier pig iron and steel shipments for railroad repair work; the expected placing of 10.000 tons of rails by Norfolk & Western;and the reopening of the Edgar Thomson rail mill.0 Some farm implement manufacturers who planned to suspend for the summer will continue production. Automobile output for May probably will exceed the original estimate of 200,000 by 25,000, with further evidence that June will be equally as good, and prospects that summer production will be seasonally strong. Structural steel also has joined the procession of improvement, awards for the week going to 17,000 tons, largefy on the strength of 7,400 tons for a New York apartment and 3.500 tons for an open-hearth building at Detroit for the Great Lakes division of the National Steel Corp., which is adding to its steel capacity. A better outlook for Federal projects also has quickened demand for pipe. Chicago sanitary district improvements ordered by the Government will take 10,000 tons of cast pipe. Large inquiries are developing in Eastern cities, and at Pittsburgh some steel pipe mill schedules have been speeded up. Bids are being taken by Los Angeles for 4,150 tons of plates; by the Navy for 1.133 tons of armor plate. May sales of pig iron by lake furnaces exceeded all expectations, rising to1150% over April, with tonnage placed so far this year larger than the entire amount for 1932. Furnaces have accumulated backlogs which probably will carry them,at least at present rate of operations, through the third quarter. Several additional stacks now are slated for early resumption. A Pittsburgh foundry has booked orders for 4,200 cast steel car frames. There has been little abatement in demand for sheets and strip from automotive, refrigerator and washing machine manufacturers; some northern Ohlolmills have increased their output, anticipating present demand will hold through June and July. Tin plate, most active of finished steel products, shows further evidence of expansion, with mills now averaging 80 to 85%. Export orders are heavier; one calls for 15,000 tons of tin plate for pineapple cans. Steel ingot production last week continued to mount in most districts. At Wheeling, W. Va., the rate was 80%; Cleveland, 59; New England, 58; Birmingham, 50; Youngstown. 47; Detroit, 38; Chicago, 37; Buffalo, 33; Pittsburgh, 27; and Eastern Pennsylvania, 1934 %• Further advances in some districts are indicated for this week. This country again increased its favorable balance of foreign trade in iron and steel in April, when exports rose 19,828 tons to 100,395 tons, highest in two years. Seventy-three per cent of the April tonnage was scrap. Imports gained only 5,947 tons to 28,061. Exports for the four months this year, 301,618 tons, are 112,454 greater than last year; imports, 91.815 tons, are down 42,942 tons. In practically all finished steel lines in which advances have not already been announced for third quarter, consumers are pressing for prices, with mills reluctant to name them until further clarification of Federal industrial control and Its effect on costs. Some wire mills expect to limit sales to a, month-to-month basis beginning July 1. ."Steel'."iron and steel price composite this week is unchanged at $28.50: the finished steel composite remains $45.10; while the scrap composite is down 4 cents to $9.37. Steel ingot production in the week ended May 29 is placed at a shade under 42% of capacity, according to the "Wall Street Journal" of May 31. This compares with a fraction over 39% in the preceding seven days and with 34M% two weeks ago. The "Journal" also reports as follows: U. S. Steel is estimated at a little over 35%. against 33;4% in the week before and 2954% two weeks ago. Leading independents are credited with a rate of about 48%, compared with 453.4% in the preceding week and 401i% two weeks ago. The following table gives the percentage of production for the corresponding week of previous years, with the approximate changes from the week immediately preceding: 42 -2% 75 -494 99l'i 8234+1 8735-134 40 -2 67)8-194 92 - H 76 72 -2 Bituminous Coal Output Continues Well Above the Corresponding Period in 1932-Anthracite Production Lower. According to the United States Bureau of Mines, Department of Commerce, production of bituminous coal showed little change in the week ended May 20 1933, continuing, as in the past four weeks, well above the corresponding period of 1932, amounting to 5,050,000 net tons, as compared with 5,080,000 tons in the week ended May 13 1933 and 4,298,000 tons in the week ended May 21 1932. Anthracite output in Pennsylvania during the week ended May 20 1933 is estimated at 664,000 net tons, a decrease of 60,000 tons, or 8.3%,from the production of the preceding week, and compares with 698,000 tons in the corresponding period last year. During the calendar year to May 20 1933 there were produced 112,342,000 net tons of bituminous coal and 17,544,000 tons of anthracite, as against 119,535,000 tons of bituminous coal and 20,371,000 tons of anthracite during the calendar year to May 21 1932. The Bureau's statement follows. ESTIMATED UNITED STATES PRODUCTION OF COAL AND BEEHIVE COKE (NET TONS.) Week Ended May 20 1933.c May 13 1933.c Calendar Year to Dale. May 21 1932. 1933. 1932. 1929. Bltum. coal -a Weekly total 5,050,000 5,080,000 4,298,000 112,342,000 119,535,000 203,957,000 Daily aver_ 945,000 1,006,000 1,714,000 842,000 847,000 716,000 Pa. anthra.-b Weekly total 664,000 724,000 698,000 17,544,000 20,371,000 28,308,000 Daily aver_ _ 110,700 120,700 116,300 149,300 173,400 240,900 Beehive coke 339,000 10,900 11,200 10,400 Weekly total 343,000 2,447,000 1.817 1.867 2,825 1,733 Daily aver_ _ 2,858 20,393 a Includes lignite, coal made in o coke, local sales, colliery fuel. b Includes Sullivan County, washer) coat, dredge coal, local sales, and colliery fuel. c Subklot , to revision. d Revised. ESTIMATED WEEKLY PRODUCTION OF COAL BY STATES(NET TONS) Week Ended Stale. Alabama Arkansas and Oklahoma Colorado Illinois Indiana Iowa Kansas and Missouri Kentucky-Eastern Western Maryland Michigan Montana New Mexico North Dakota Ohio Pennsylvania (bituminous) Tennessee Texas Utah Virginia Washington West Virgins-Southern.b Northern_a Wyoming Other states May 13 1933. MaY 3 1933. May 14 1932. 141,000 143,000 143,000 13,000 13.000 12,000 75,000 63,000 48,000 486,000 402.000 132.000 193,000 168,000 137,000 41.000 41,000 47,000 61,000 61,000 69,000 432,000 387,000 373.000 98,000 89,000 166,000 22,000 19,000 22,000 1,000 1,000 3,000 24,000 27,000 26,000 14,000 19.000 18,000 18,000 18,000 15,000 311,000 274,000 90.000 1,372,000 1,385,000 1,331,000 50,000 49,000 52.000 13,000 14,000 11,000 34,000 31,000 27,000 150,000 147,000 115,000 21,000 16,000 30,000 1,129,000 1,020,000 969,000 319,000 298,000 396,000 61,000 63.000 62,000 1.000 2,000 1,000 May 16 1931. §§§§n§§§§§§§§§§§1§§§§§§§ Accompanying the ninth consecutive weekly increase in steelworks operations, lifting the National average to 43%, is an:encouraging broadening of the entire iron and steel market foundation, stated the magazine "Steel." on May 29. That publication further reported as follows: 41 -2 71 -234 95 79H -I- 35 80 -135 t. Steel Scrag.. May 29 1933, $9.75 a Gross Ton. IBsaed on No. 1 heavy melting steel ago One week $9.67 quotations at Pittsburgh. Philadelphia One month ago 9.42f and Chicago. One year ago 7.33 Low. OIL 1933 36.75 Jan. 3 $9.83 May 9 1932 6.42 July 3 8.50 Jan. 12 1931 11.33 Jan. 6 7.62 Dee. 29 1930 11.25 Dec. 9 15.00 Feb. 18 1929 14.08 Dec. 3 17.58 Jan, 29 1928 16.50 Dec. 31 13.08 July 2 1927 15.25 Jan. 11 13.08 Nov.22 Independents. N.4 Pig Iron. May 29 1933, $15.01 a Gross Ton. Based on average of heal° iron at Valley One week ago 814.56 furnace foundry irons at Chicago. One month ago 14.10 Philadelphia, Buffalo, Valley and SirOne year ago mingham. 14.06 High. Low. 1933 $15.01 May 29 $13.56 Jan. 3 1932 14.81 Jan. 5 13.56 Dec. 6 1931 15.90 Jan. 6 15.79 Dec. 15 1930 18.21 Jan. 7 15.90 Dec. 16 1929 18.71 May 14 18.21 Dec. 17 1928 18.59 Nov.27 17.04 July 24 1927 19.71 Jan. 4 17.54 Nov. 1 U. S. Steel. 0. Finished Steel. May 29 1933, 1.892o. a Lb. Based on steel bars, beams, tank plates. One week ago 1.892o. wire, rails, black pipe and sheets. One month ago 1.8670.1 These products make 85% of the One year ago 1.9700. United States output. High 1933 1.9480. Jan. 3 1.887e. Apr. 18 1932 1.9260. Feb. 2 1.9770. Oct. 4 1931 2.0370. Jan. 13 1.945e. Dec. 29 1930 2.2730. Jan. 7 2.0180. Dec. 9 1929 2 3170. Apr. 2 2.2830. Oct. 29 1928 2.288c. Dec. 11 2.217o. July 17 1927 2.4020. Jan. 4 2.212c. Nov. 1 Industry. 1932* 1931 1930 1929 1928 1927 •Not available. . 00ca 00, 12.00W.W.o...W4 THE "IRON AGE" COMPOSITE PRICES. June 3 1933 b2:4. p.-i-ayroupo!xinaw..wkomeop,o0,,pp.- In sales. The "Iron Age" pig iron composite has risen from $14.56 a week ago to $15-01 a gross ton. Scrap markets continue to show no definite trend, although a corrective movement in the East has raised the "Iron Age" composite slightly from $9.67 to $9.75. The finished steel composite is unchanged at 1.892 cents a pound. 5,080,000 4,810,000 4,295,000 6,854,000 724,000 664.000 765,000 876,000 A SUM non 5.474 ono s nen elm 7 Ign nnn Total a Includes operations on the N.& W ,C.& 0., 1. irginian, K.& M.,and C.cir b Rest of State, including Panhandle. Total bituminous coal Pennsylvania anthracite Appalachian Coals, Inc., Increases Wages 10 to 18% in Four State Region-Approximately 75,000 Miners Affected. More than 75,000 bituminous coal miners in the four-State Appalachian region received wage increases of 10 to 18% on June 1, it was announced by Appalachian Coals, Inc.. according to Associated Press advices from Cincinnati, Ohio, which added: The scaling upward of pay in Eastern Kentucky, Southwestern Virginia. Eastern Tennessee and Southern West Virginia was in accordance with recommendations made by directors of the giant marketing agency May 25. Officials could not give the average scale nor how far the advances would go toward making up for pay cuts. The more than 137 coal mining companies in the selling co-operative are operating at about 50% of their capacity of 30,000,000 tons annually. officials said. The fields in which wage increases became effective to-day include those of Hazard and Harlan, Ky.; Logan County. West Virginia, and the Southern Appalachian, which embraces Southeastern Kentucky and Eastern Kentucky. Increases in other fields are expected later. With regard to the recommendations made by the directors of the Appalachian Coals, on May 25, Associated Press advices from Cincinnati, May 26, said: Volume 136 Financial Chronicle A call for higher prices and a 10% wage increase went out to the coal industry of four States from Appalachian Coals, Inc., huge marketing agency. The wage scales of more than 137 mining companies are involved in Eastern Kentucky, Southern West Virginia, Southwestern Virginia and Eastern Tennessee—the region where Appalachian Coals represents the bituminous coal industry. R. E. Howe, Executive Secretary of the agency, said he could not accurately state the average wage scale for the region or how far a 10% raise would go toward restoring normal wages. Directors representing the major part of the potential 80.000.000 ton annual output of the agency's membership, approved a resolution saying that "the present selling prices of coal, and, as a necessary result, the prices paid for labor, are too low, and that an increase of each resulting in the larger buying power is a necessary prerequisite to a return to prosperity. Wages of 8,000 Miners of Pittsburgh Coal Co. Increased 10%—Other Companies Take Similar Action. Three large coal companies in the Pittsburgh, Pa., district, employing over 10,000 men, announced wage increases on 3811 May 27 of 10%. The Pittsburgh Coal Co. announced that wages of its 8,000 men, employed in 12 mines in Pittsburgh and one in Kentucky, will be increased 10% voluntarily. In announcing the increase, J. D. A, Morrow, President, said that it is the first upward revision in the company's wage scales since 1926. From the Pittsburgh "Post -Gazette" of May 29, we quote as follows regarding the increases: Loaders will receive 3834 to 4934 cents a ton, as compared with the former rate of 35 to 46 cents. Day workers will be paid $3.80. The increase was made possible, Mr. Morrow said, by increased demand for industrial coal in the last two weeks. Present demand now calls for operation of mines at 65% of capacity, he said. About 1,000 miners with the Keystone Coal and Coke Co. will be affected by its 10% pay raise, officials stated. The company operates five mines. The Jamison CoaL and Coke Co.,employing about 1,200 men,announcing a similar pay boost, said "greatly improved conditions in the industrial situation indicate we will go into capacity operations at all plants within a short time." Current Events and Discussions The Week with the Federal Reserve Banks. The daily average volume of Federal Reserve Bank credit outstanding during the week ending May 31, as reported by the Federal Reserve banks, was $2,208,000,000, a decrease of $35,000,000 compared with the preceding week and an increase of $127,000,000, compared with the corresponding week in 1932. After noting these facts, the Federal Reserve Board proceeds as follows: of waiting until the following Monday, before which time the statistics covering the entire body of reporting member banks in the different cities included cannot be got ready. Below is the statement for the New York City member banks and that for the Chicago member banks, for the current weeks, as thus issued in advance of the full statement of the member banks, which latter will not be available until the coming Monday. The New York City statement, of On May 31 total Reserve Bank credit amounted to $2,218,000,000, course, also includes the brokers' loans of reporting member practically unchanged from a week ago. Decreases of S27,000,000 in member banks. The grand aggregate or brokers' loans the present bank reserve balances and $6,000,000 in unexpended capital funds, nonweek shows an increase of $72,000,000, the total of these member deposits, &c., were offset by an increase of $17,000,000 in money in circulation and a decrease of $15,000,000 in Treasury currency, adjusted. loans on May 31 1933 standing at $635,000,000 as compared Bills discounted decreased $7.000,000 at the Federal Reserve Bank of with $331,000,000 on July 27 1932, the low record for all Cleveland. $3,000.000 at San Francisco and 1110.000,000 at all Federal time since these loans have been first compiled in 1917. Reserve banks. The System's holdings of bills bought in open market declined $23,000,000 and of Treasury certificates and bills $9,000,000, while Loans "for own account" increased from $539,000,000 to holdings of United States bonds increased $10,000,000 and of United States $611,000,000, while loans "for account of out-of-town banks" , Treasury notes $27,000,000. Beginning with the statement of May 28 1930, the text ,remain unchanged at $17,000,000, and loans "for account accdmpanying the weekly condition statement of the Federal of others" at $7,000,000. Reserve banks was changed to show the amount of Reserve CONDITION OF WEEKLY REPORTING MEMBER BANKS IN CENTRAL RESERVE CITIES. Bank credit outstanding and certain other items not included New York. in the condition statement,such as monetary gold stocks and May 31 1933. May 24 1933. June 11932. money in circulation. The Federal Reserve Board's explana6 933,000,000 6,786.000,000 6,635,000,000 tion of the changes, together with the definition of the dif- Loans and investments—total ferent items, was published in the May 31 1930 issue of the Loans—total 3 427,000,000 3,287,000,000 3.875,000,000 "Chronicle" on page 3797. On securities 1,733,000,000 1,863,000,000 1,815,000,000 All other 1,694.000,000 1,624,000,000 2,080,000,000 The statement in full for the week ended May 31, in com3,506,000,000 3,499,000,000 2.760.000,000 parison with the preceding week and with the corresponding Investments—total date last year, will be found on subsequent pages, namely, U. S. Government securities 2 429,000,000 2,384,000,000 1,777,000,000 Other securities 1,077,000.000 1,115,000,000 983,000,000 3859 and 3860.* with Beginning with the statement of March 15 1933, new Reserve vault Federal Reserve Bank_ __ _ 868,000,000 913,000.000 781,000,000 Cash in 44,000.000 37,000,000 40,000.000 items were included, as follows: Net demand deposits 5,749,000,000 5,601,000,000 5.065,000,000 1. "Federal Reserve bank notes in actual circulation," representing the amount of such notes issued under the provisions of paragraph 6 of Section 18 of the Federal Reserve Act as amended by the Act of March 9 1933. 2. "Redemption fund—Federal Reserve bank notes," representing the amount deposited with the Treasurer of the United States for the redemption of such notes. 3. "Special deposits—member banks" and "special deposits—nonmember banks," representing the amount of segregated deposits received from member and non-member banks. A new section has also been added to the statement to show the amount of Federal Reserve bank notes outstanding, held by Federal Reserve banks and in actual circulation, and the amount of collateral pledged against outstanding Federal Reserve bank notes. Changes in the amount of Reserve Bank credit outstanding and M related items during the week and the year ending May 311933, were as follows: Time deposits Government deposits 688,000,000 105,000,000 Due from banks Due to banks 685,000,000 105,000,000 767,000.000 90,000,000 77.000.000 75,000,000 75,000,000 1,356,000,000 1,300,000.000 1,100.000.000 Borrowings from Federal Reserve Bank. Loanson secur. to brokers & dealers; 611,000,000 For own account 17,000,000 For account of out-of-town banks 7,000,000 For account of others 539,000,000 17.000,000 7,000.000 369,000,000 34,000,000 6,000,000 635,000,000 563,000,000 409,000,000 Total On demand On time Loans and investments—total 481,000,000 413,000,000 306,000,000 154,000,000 150,000,000 103,000.000 Chicago. 1,180,000,000 1,186,000,000 1,353.000,000 Loans—total 916,000,000 TOTAL RES'VE BANK CREDIT_ _2,218,000,000 —1,000,000 Monetary geld stock 4,315,000,000 +1,000,000 Treasury currency adjusted 1,954.000,000 —15,000.000 5,812,000.000 +17,000,000 Money in circulation 2,167,000.000 —27,000.000 Member bank reserve balances Unexpended capital funds, non-mem508,000,000 —6,000,000 ber depoalta, &c +96,000.000 +208,000,000 +137.000.000 +345,000.000 +42,000,000 +54,000,000 Returns of Member Banks in New York City and Chicago—Brokers' Loans. Beginning with the returns for June 1927, the Federal Reserve Board also commenced to give out the figures of the member banks in New York City, as well as those in Chicago, on Thursday, simultaneously with the figures for the Reserve banks themselves, and for the same week, instead 636,000,000 635,000,000 334,000,000 302,000,000 333,000,000 526,000,000 302,000,000 390,000,000 544,000.000 551,000,000 337,000,000 207,000,000 343,000,000 244,000.000 208,000,000 193.000,000 Reserve with Federal Reserve Bank.,... 187,000,000 Cash in vault 36.000,000 166,000,000 207,000,000 37,000.000 16,000.000 Net demand deposits Time deposits Government deposits 879,000,000 360,000.000 8,000,000 872,000,000 892.000,000 351,000.000 391,000,000 8,000,000 16,000.000 Due from banks Due to banks Bills discounted Bills bought U. S. Government securities Other Reserve bank credit !tweeze (+) or Decrease(—) Since May 31 1933. May 24 1933. June 11932. $ $ $ 302,000,000 —10,000,000 —103,000,000 20,000,000 —23,000,000 —15,000,000 1,890,000,000 +28,000.000 +315.000,000 7,000,000 +4,000.000 —10.000,000 222,000,000 255,000,000 225,000,000 258,000,000 On securities All other Investments—total U. S. Government securities Other securities Borrowings from Federal Reserve Bank_ 437,000,000 155,000,000 277,000,000 3,000,000 Complete Returns of the Member Banks of the Federal Reserve System for the Preceding Week, The Federal Reserve Board resumed on May 15 the publication of its weekly condition statement of reporting member banks in leading cities, which had been discontinued Financial Chronicle Reserve Board respecting the returns of the entire body of reporting member banks of the Federal Reserve System for the week ended with the close of business on May 24: The Federal Reserve Board's condition statement of weekly reporting member banks in 90 leading cities on May 24 shows increases for the week of $44,000,000 in net demand deposits, $7,000,000 in time deposits and $78,000,000 in reserve balances with Federal Reserve banks, and decreases of $17,000,000 in loans and investments and $7,000,000 In borrowings from Federal Reserve banks. Loans on securities declined $74,000,000 at reporting member banks in the New York district and $76,000,000 at all reporting member banks. "All other" loans increased $7,000,000 in the New York district and at all reporting banks. Holdings of United States Government securities increased $31,000,000 In the Chicago district and $29,000,000 at all reporting member banks, and declined $9,000,000 in the St. Louis district. Holdings of other securities increased $11,000,000 in the Chicago district, $9,000,000 in the St. Louis district and $23,000,000 at all reporting banks. Borrowings of weekly reporting member banks from Federal Reserve banks aggregated $78,000,000 on May 24, the principal change for the week being a reduction of $7,000,000 at the Federal Reserve Bank of New York. Licensed member banks formerly included in the condition statement of reporting member banks in 101 leading cities, but not now included in the weekly statement, had total loans and investments of $735,000,000 and net demand, time and government deposits of $678,000,000 on May 24, compared with $712,000,000 and $661,000,000, respectively, on'May 17. A summary of the principal assets and liabilities of the reporting member banks in 90 leading cities, that are included in the statement, together with changes during the week and the year ended May 24 1933, follows: 24 1933. $ Loans and investments-total__ _ _16,329,000,000 May Loans -total On securities All other Increase (+) or Decrease (-) Since May 17 1933. May 25 1932. $ -17,000,000 -533,000.000 8,352,000,000 -69,000,000 -1,700,000,000 3,648,000,000 4,704,000,000 -76,000,000 -691,000,000 +7,000,000 -1,009,000,000 7,977,000,000 +52,000,000 +1,167,000,000 U. S. Government securities_ _ _ _ 4,963,000,000 3,014,000,000 Other securities +29,000,000 +1,141,000,000 +23,000,000 +26,000,000 Investments -total Reserve with F. R. banks Cash in vault Net demand deposits Time deposits Government deposits Due from banks Due to banks Borrowings from F. R. banks 1,635,000,000 198,000,000 +78,000,000 -1,000,000 -14,000,000 +18,000,000 10,725,000,000 4,278,000,000 219,000,000 +44,000,000 +7,000,000 +1,000,000 +314,000,000 -329,000,000 -29,000,000 1,317,000,000 2,754,000,000 -11,000.000 -8,000,000 +203,000,000 +195,000,000 78,000,000 -7,000,000 -49,000,000 Stock of Money in the Country. The Treasury Department at Washington has issued the customary monthly statement showing the stock of money in the country and the amount in circulation after deducting the moneys held in the United States Treasury and by Federal Reserve banks and agents. It is important to note that, beginning with the statement of Dec. 31 1927, several very important changes have been made. They are as follows: (1) The statement is dated for the end of the month instead of for the first of the month;(2) gold held by Federal Reserve banks under earmark for foreign account is now excluded, and gold held abroad for Federal Reserve banks is now included, and (3) minor coin (nickels and cents) has been added. On this basis the figures this time, which are for April 30 1933, show that the money in circulation at that date (including, of course, what is held in bank vaults of member banks of the Federal Reserve System) was $6,003,473,159, as against $6,319,514,854 on March 31 1933 and $5,464,626,961, on April 30 1932, and comparing with $5,698,214,612 on Oct. 31 1920. Just before the outbreak of the World War, that is on June 30 1914, the total was only $3,459,434,174. The following is the full statement: e June 3 1933 3 ,§ 0NvMMN VmNNO0 eimm64m; CVCVM... * hooNh .° C .,? l 0NN N vm00000 V ", C! R ....: NO C.: N N C a 0 t.: " =MOM 00NC ClvcOm vc6Mir.: MWV.1. fa c.. cq 0 er 00vc0c0h CMOMOmw WWWNtoMM , c.000.6cr 1 0v0McwM N..°tom° 4 MN NO Mm M Cv.0Ccv 0 NvNc0 M NmN0Ch ce 0 ccOmhvv vNOvN0c Banks and Agents.e 1 Amount. MONEY OUTSIDE OF THE TREASURY. co ,0 0hON CNC:M .0W N v 000V 0 7 15 6.0-3:4-3:--9 (.1 e, Per Captta. e . .F. e., ... i e §§§§§§ V .6 N "t . ' .... 3 P. 000v 0mV•1 , ChcM hvvh OvcOver e•: ..6 6 . .0.. o h0 v C oo., vmC0 NWVN . .6 0...6 .000N 59M000 ...6:6 O McM0 .4 h RN. ......, .... M co 0 v t i , "'" c 0 N 4 to .4 . vC0hcv cOvcvVW 0.;.6'4 v; 00hON vCcm vh0.0 N0vm V4NM 6 66 6 a- 0vV00Ccv cVVcr-V0 co.vvhh0.r. 6 . ,•:. ,s a ,,..,-:: ,••:. .4 0cV=COC Nvvch0., ,-7 O -- a ..; c;- ..- 0NVMCC NvM0 0 4 ..; 0 N MvON.O. M mhvvoo . 4 a 0 ,.. 00 't0 . !.e7,,s,..i . . t.: . ..,. o 0 0 . ZIOIP VvN.MV.. cOvvhm 00000vh. ald.;..4, 0 v.v.MMO coN0VN NVCC NMWOO C 4 h NOONcv. c hcihmhN h 01. CVvh 00 c; r.: .t;.5 N mmcoCmC .4. OvVINVN 0moocco0 m cr.VMCco v 0 h 0 N N N 0:. ' M M . hoom0Vh 00 0 m v Cm Di a mV0.0hm 0 V 0..1.0 ci 6 6 46 6 0, 4 con,-,.,, o V MONEY HELD IN THE TREASURY. after the report issued on March 6, giving the figures for March 1. The present statement covers banks in 90 leading cities instead of in 101 leading cities as formerly, and shows figures as of Wednesday, May 24, with comparisons for May 17 1933 and May 25 1932. Corresponding data by weeks beginning March 1 will be published, it is stated, in the Federal Reserve Bulletin. Licensed member banks formerly included ix the condition , statement of reporting member banks in 101 leading cities, but not now included in the weekly statement, had total loans and investments of $735,000,000 and net demand, time and Government deposits of $678,000,000 on May 24, compared with $712,000,000 and $661,000,000, respectively, on May 17. As is known, the publication of the returns for the New York and Chicago member banks was never interrupted. These are given out on Thursday, simultaneously with the figures for the Reserve banks themselves and covering the same week,instead of being held until the following Monday, before which time the statistics covering the entire body of reporting member banks in 90 cities cannot be got ready. In the following will be found the comments of the Federal CIRCULATION STATEMENT OF UNITED STATES MONEY—APRIL 30 1933. 3812 vOccON Ccm.N.0 MNMNOC... c..0.,m. ,,-.00cocOM 0.0.0 el v co v v. ,0 o o non 64 co VON. mmm -.. ...-.. 0 § 0E§E§§ .92 0 v' ' ......-... .3.,,..• § .4 .,0 M.M 0 0 - m W0 m ,-, N -7 `4 M 0 00 0 .0 M 00 0 0M V m mmnl, momm. cc; :15 oi m 66 CCC.000 vmmN00 hvhhhv MhM000 0 . oi44.4mei mmt..mr..0 N 00cCvc C h 00vCOON 000r.m..9. .. vN ...d.,;.....v . ft i 4 M chVN0c0 0 N0NNN0 N M ...7 .6 0 .1 M .6 .6 M hoOmgVh V V cc00 . 0, V ,c0 052 .1. .6 , .6 tr : C. .6 c N .4 ...4 g ,..' h 0 m c i .'s . . . 4 m , .m,o cx M le •,.0 A g' g Z 4 4 • . o>, C..) 44 0 .g, d a- OCOmv00 hMCM0OV chm.NCN h0m0CV COC.0 V 0 CO N , . ,7 . .4 Ovvv0V0 N 0 0V cWN00Mm CcOh0 -vvc.,.., 4v 0.0h . 0 h c0 N co .0 g co ao 0 0 po.oN 2Mc...0h00 M. . '0.6 oc7Oci t C ; . =ONVC..hm E.. V v t..... c 0 .6 ...15 -sg s , 'go 4 5,:.t..s. .74diOlf P..79tZi , 0 c ' 4 51r t1 71' 4 2a-- 0 .gb..°;4',2 . 3. siticoraoi.,:g.; ol, , -B 4. -6 ?. - - • <1 ca . u2w9C:4 U ()I'm 8 ,4 2 oi = 0 a -u ' U U CJ a U 82Nr.82 h0c000V a4ez.i.,; vhN0NW CMCC 000 . o6Oce>mt:t. , N0h000 CNVmho e •-• ee..ia-; -, MO E,.) . ...... CO N0hVO ...-; 2R8g5.% Cs 72.2." gAc4c3 75 .10..84. .E-4 . 4t4gj •-• 0 4 .4 OA in., go • Revised figures. a Does not include gold bullion or foreign coin other than that held by the Treasury, Federal Reserve banks, and Federal Reserve agents. Gold held by Federal Reserve banks under earmark for foreign account is excluded, and gold held abroad for Federal Reserve banks Is included. b These amounts are not included in the total since the money held in trust against gold and silver certificates and Treasury notes of 1890 is included under gold coin and bullion and standard silver dollars, respectively. c The amount of money held in trust against gold and silver certificates and Treasury notes of 1890 should be deducted from this total before combining it with total money outside of the Treasury to arrive at the stock of money in the United States. d This total includes $61,919,401 gold deposited for the redemption of Federal Reserve notes ($1,393,555 in process of redemption). $38,150,336 lawful money deposited for the redemption of National bank notes ($17,448,989 in process of redemption. Including notes chargeable to the retirement fund), $3,318,000 lawful money deposited for the redemption of Federal Reserve bank notes ($45,298 In process of redemption, including notes chargeable to the retirement fund), $1,350 lawful money deposited for the retirement of additional circulation (Act of May 30 1908)• and $55,615,842 lawful money deposited as a reserve for postal savings deposits. e Includes money held by the Cuban agency of the Federal Reserve Bank of Atlanta. I' The money In circulation includes any paper currency held outside the continental limits of the United States. Note. -Gold certificates are secured dollar for dollar by gold held in the Treasury for their redemption; silver certificates are secured dollar for dollar by standard silver dollars held in the Treasury for their redemption; United States notes are secured by a gold reserve of $156,039,088 held in the Treasury. This leserve fund may also be used for the redemption of Treasury notes 011890. which are also secured dollar for dollar by standard silver dollars held in the Treasury; them notes are being canceled and retired on receipt. Federal Reserve notes are obligations of the United States and a first lien on all the assets of the issuing Federal Reserve Rank. Federal Reserve notes are secured by the deposit with Federal Reserve agents of a iike amount of gold or of gold and such discounted or purchased paper as is eligible under the terms of the Federal Reserve Act, or, until March 3 1934, of direct obligations of the United States If so authorized by a majority vote of the Federal Reserve Board. Federal Reserve banks must maintain a gold reserve of at least 40%, including the gold redemption-fund which must be deposited with the United States Treasurer, against Federal Reserve notes in actual circulation. Federal Reserve bank notes are secured by direct obligations of the United States or commercial paper, except where lawful money has been deposited with the Treasurer of the United States for their retirement. National bank notes are secured by United States bonds except where lawful money has been deposited with the Treasurer of the United States for their retirement. A 5% fund is also maintained In lawful money with the Treasurer of the United States for the redemption of National bank notes secured by Government bonds. Volume 136 Financial Chronicle Henry L. Stimson to Head Permanent Conciliation Commission Created by Locarno Agreements— Ex-Secretary of State Accepts Joint Offer of France and Germany—Will Not Reside in Europe Unless Dispute Is Referred to Commission by Mutual Agreement. Henry L. Stimson, former Secretary of State, has been offered the Presidency of the Permanent Conciliation Commission created by the Locarno arbitration conventions and has accepted the post, according to an announcement from Paris which was confirmed by Mr. Stimson on May 31. The offer was made by joint agreement of the French and German Governments. The functions of the Commission are to settle outstanding disputes, but it has no fixed headquarters and Mr. Stimson's duties will not necessitate his presence In Europe unless a dispute arises between France and Germany and is referred by mutual agreement to the Commission. A further outline of the work of the Commission follows, as quoted from a Paris dispatch to the New York "Times" on May 31: The Arbitration Commission was designed to take conciliatory action in disputes arising between the signatory Governments, and it was provided that it might be summoned before any arbitral action was taken by the World Court. The duties of the Commission are to elucidate and collect evidence by snaking investigations, if necessary, in any matter in controversy and to endeavor to bring about an amicable settlement. France, Britain, Germany, Italy and Belgium, which signed the Locarno arbitration convention, have the right to appoint one member each to the Commission. Three additional members of other nationalities also serve on the Commission. These include Mr. Stimson. It is provided that the Commissioners themselves should elect their President, but it has already been agreed that Mr. Stimson's acceptance means his election to the Chairmanship. Sir John Simon and Sir Austen Chamberlain Praise U. S. Contributions to Peace—British Foreign Minister Says United States Has Taken Long Step in Renouncing Passive Neutral Tradition. American changes in foreign policy, as indicated in the recent disarmament message of President Roosevelt and the pledges made by Ambassador Norman H. Davis at Geneva, were praised in the House of Commons on May 26 by British Foreign Minister Sir John Simon and Sir Austen Chamberlain. Sir John told the House that the pre-war conception of neutrality is now substantially modified, and added that the reversal of American policy was "historic." In the future, he said, the idea of the impartiality of neutrals would disappear whenever the United States decided as to a wrongdoer. Sir Austen Chamberlain also expressed similar views, and said that he had no more doubt of the good faith of the American people in selecting their course of action than of Great Britain's in fulfilling the strict obligations of the Treaty of Locarno. Important passages from Sir John's address were quoted as follows in London advices to the New York "Times" May 26: Speaking with all the weight of his authority as a lawyer, Sir John said the importance of the United States action was not substantially less because of the limitations put upon it. On the contrary, he defended the reluctance of the United States to bind herself in advance and said it was "very characteristically the British way of looking at it." He suggested, in fact, that it was snore effective than what he called the Continental method, ivhich used "a most precise and elaborate definition in cold blood and cold print" to describe the exact conditions under which action might be taken. Sir John's speech to-day was a remarkable exposition of the security problem as affected by American decisions and by the draft disarmament convention. Recalling Great Britain's incessant difficulties with the United States during the years of the latter's neutrality in the World War, Sir John implied that they were now a thing of the past. "I cannot say how much I think we should appreciate this effort now being made by the American Government and President to co-operate with us in what is a piece of world work," he said, "to abandon a tradition the American people have most jealously guarded, while of course circumscribing strictly and clearly the limits within which they will undertake to act. Sees Fundamental Changes. "At the same time it makes fundamental changes in the prospects of American influence being effectively exerted, if, unhappily, hereafter we are faced with a conflict where one side, in the judgment of the American people and ourselves, is a party which should be discouraged and, as far as possible, put under the pressure which neutrals may exert." Sir John said real progress had been made at Geneva, although disturbing storm signals were still flying. He welcomed the better tone of Chancellor Hitler's Reichstag speech, especially since it mused the withdrawal of the German amendment which had threatened to disrupt the Disarmament Conference. Finally he summed up the British disarmament policy under five heads. First, Great Britain welcomes and responds to President Roosevelt's appeal that the Disarmament Conference press for practical results on the text of the British plan. Secondly, Great Britain cannot proceed further on the lines of singlehanded disarmament on which she has already gone far, but has pointed out, through the British proposals, how much further disarmament by agreement can go. Thirdly, Great Britain recognizes the validity of the concern of other countries for security, a concern which Part 1 of the British plan, coupled with the American declaration, has done much to meet. 3813 Fourthly, Great Britain will not undertake liabilities except those already assumed under the League of Nations Covenant and the Treaty of Locarno but will join in the proposed consultative pact. Fifthly, Great Britain maintains that international disarmament must depend on policy, and therefore, to be permanently effective, must depend upon better relations among European States. Senator Robinson Says President Has Not Obligated Nation to Use Other Than Moral Force in Preserving Peace—Administration Leader, in Address Before Iron and Steel Institute, Declares Davis Plan Contains No Threat of War. President Roosevelt has not obligated the United States to use other than moral force to preserve world peace, according to a declaration made by Senator Joseph T. Robinson, administration leader in the Senate, in an address on May 25 at the annual dinner of the American Iron and Steel Institute in New York City. Senator Robinson said that most European Governments "hail the President's proclamation and appeal as an abandonment by the United States of its policy of isolation," merely because of the expressed willingness of this country to contribute to the security of other nations. Additional remarks by Senator Robinson, as reported in the New York "Herald Tribune" on May 26, follow: Roosevelt "From a study of the language used it is apparent that President of merely announced his willingness to negotiate treaties for the elimination the sovweapons for offensive warfare, for the entry into obligations by the event ereignties not to invade territory of others, and for consultation in of violation of the agreements," he explained. Senate to Pass on Pacts. "The terms of such arrangements as may be found acceptable to the United States must be worked out by the conference. "The President and the Senate will scrutinize with care any consultative pacts which may be negotiated and will be guided only by the determination to maintain those exalted standards of international relations which are consistent with well recognized American traditions of justice and honor." After speaking in stinging terms of Japan's advance in China and the long dispute between Paraguay and Bolivia over the Chaco, Robinson said the "rule" laid down by Norman H. Davis, Ambassador at Large in Europe, on determining an aggressor is "perhaps as near an acceptable single test as can be prescribed." But it is obvious, he added, that this rule is "not applicable to battles on National boundaries or to cases where belligerents simultaneously occupy enemy territory." Mr. Robinson said Japan had "suffered in the esteem of mankind—her claim that in some mysterious way she is merely acting in defense of treaty rights being generally discredited as shallow pretense." Sees Geneva Hopes Revived. He said the League of Nations represented "the most effective organization established during the history of mankind for the preservation of international peace," yet two of its members "are now engaged in a war which may continue until one or both of the belligerents becomes so completely exhausted that the conflict can not longer be carried." Declaring the President had revived hopes for success at Geneva, Mr. Robinson said it the delegates to the Disarmament Conference "realize the weighty consequences which devolve upon their action, they may be able to enter into compromises which will strengthen the ties binding civilized peoples and minimize their fears of one another." Japan Seeks Naval Parity at Geneva Conference— Ambassador Davis Replies That United States Is Willing to Make Further Cuts in Naval Strength— British Oppose Definition of "Aggressor" Nation. The United States is prepared to reduce its naval strength still further, according to a statement made before the Disarmament Conference at Geneva on May 25 by Norman H. Davis of the United States. Mr. Davis was replying to a move by Japan to strike from the draft of the proposed disarmament convention the limitations established by the Washington and London naval treaties. On the same day the British delegation to the Conference offered objections to the definition of the term "aggressor" and contended that greater elasticity was needed in determining responsibility for a breach of the peace than a fixed definition would permit. Proceedings of the Conference, as described, in part, in Geneva advices to the New York "Times" on May 25,follow: Naotake Sato, for Japan, moved to strike out the first article of the naval chapter of the British draft convention, incorporating the Washington and London treaty provisions. Japan, he explained, did not seek to escape her obligations but saw no reason why the rest of the world should thus be made to "recognize these treaties." Norman H. Davis of the United States, replying extemporaneously, agreed that the omission of this article from the disarmament convention would not modify the obligations of its signatories. "For that reason," he said, "I should regret very much to have it suppressed because of the effect this might possibly have on public opinion. The naval treaties have contributed so much to the peace of the world and the solution of the general disarmament problem that I deplore any reference whatever that might give the erroneous impression that we are going to take a step backward." Terms Inclusion Unwise. Mr. Sato thought it useless to mention these treaties in a general convention, which would probably not be ratified much before the 1935 naval conference. Under these conditions, he said, Japan was "convinced it is not In the interests of disarmament to base the future general convention on the tonnages in the said treaties to refer to them." 3814 Financial Chronicle Captain Anthony Eden of Great Britain, who spoke before Mr. Davis, made no reference to Mr. Sato's statement. He answered instead the argument that France raised against the basis proposed for her agreement with Italy and the heavy attack on the naval chapter which Russia and Spain made as discriminating against small navies. Recalling that the United States had not "even attempted to build up to the treaty limit." Mr. Davis reaffirmed that "we are quite prepared to go further in reduction." Mr. Davis argued not only for keeping the two naval treaties in the framework of the world convention's naval chapter, but he said: "If we tie up the naval problem with the land and air problems, we shall help to solve them all." Rene Massigli of France deplored the British abandonment of qualitative disarmament in this naval chapter. He made it clearer what abolition France wanted in compensation for the land weapons she is asked to forego as aggressive when, recalling President Roosevelt's description of tanks as "land battleships," he remarked that there were "ocean-going battleships, too." He thought the period remaining before the 1935 conference too short for the proposed basis of a Franco-Italian agreement. He wanted it arranged, too, on the Hoover principle of relativity, which for him meant relativity of status quo, whereas to Signor di Soragna, who replied for Italy, it means relativity of needs. The attitude taken by the British on defining "aggressor" was that it was necessary to know the background of each case in order to determine responsibility. The definition proposed yesterday by the security committee of the conference stipulated that the term should apply to a nation taking any of the following actions: The declaration of war; the invasion by anrned forces of the territory of another State, with or without a declaration of war; an attack by land, naval or air forces; a naval blockade; support to armed bands formed within a State which have invaded another State, or refusal to deprive such bands of protection. M. Politis, who received warm applause from all the delegates, replied to Captain Eden that elasticity was assured under the text on consultation proposed yesterday by Foreign Minister Sir John Simon of Great Britain. This provides that the world shall not attempt to apply the definition of aggression until all other efforts to restore peace have failed. Governor Harrison of New York Federal Reserve Bank Sails for London to Confer with Heads of Central Banks. Governor George L. Harrison of the New York Federal Reserve Bank sailed for London last night (June 2) aboard the S. S. Olympic to confer with heads of Central Banks. Prof. Sprague Executive Assistant to Secretary of Treasury Woodin Sails to Participate in World Monetary and Economic Conference. Professor 0. M. W. Sprague, Executive Assistant to Secretary of the Treasury Woodin, sailed for London on June 2 to be financial adviser to the American delegation at the World Economic Conference. The appointment of Prof. Sprague to his new Washington post was noted in our issue of May 27, p.3636. James P. Warburg Sails to Participate in World Monetary and Economic Conference in London. James P. Warburg, Vice-Chairman of the Bank of the Manhattan Co. on June 2 sailed on the S. S. Olympic to attend the World Monetary and Economic Conference in London. President Roosevelt appointed him financial advisor to the American Delegation. Soviet Delegation to London Parley Will Be Headed by Litvinoff. The Soviet Government on May 22 formally announced its intention to participate in the World Monetary and Economic Conference at London, and issued a list of its delegates to the conference. Foreign Commissar Maxim Litvinoff was named Chairman of the delegation, while the other members are: V. I. Mezhlauk, Vice-Chairman of the State Planning Commission. Ivan M. Maisky, Soviet Ambassador to Great Britain. Alexander V. Ozersky, Vice-Commissar for Foreign Trade, who recently was recalled as head of the Soviet trade delegation in London. United States and China in Agreement as to Measures Necessary to Effect Economic Stability—Conversations Between President Roosevelt and Chinese Minister of Finance Soong—Disarmament Cuts and Increased Price of Silver Held as Essentials. A joint statement, issued May 19, by President Roosevelt and T. V. Soong, Chinese Minister of Finance, said the two were In agreement on measures to be taken to solve world problems and that it was considered "essential that the price of silver, the great medium of exchange of the East, should be enhanced and stabilized." The statement also bore on developments in the Far East, and said: It is our ardent hope that peace may be assured and that to this end practical measures of disarmament may soon be adopted. The.statement, wihich was issued at the conclusion of conversations between President Roosevelt and Mr. Soong, read as follows: At the conclusion of our conversations, we note with profound gratification that we are in agreement in regard to the practical measures which must be taken for a solution of the major problems which to-day confront the world. We agree that economic stability cannot be achieved without political June 3 1933 tranquillity and that economic disarmament can be attained only in a world in which military disarmament is possible. It is our ardent hope that peace may be assured and that to this end practical measures of disarmament may soon be adopted. In this connection, our thoughts naturally have turned to the serious developments in the Far East, which have disturbed the peace of the world during the past two years. There the military forces of two great nations have been engaged in destructive hostilities. We trust that these hostilities may soon cease in order that the present effort of all the nations of the world to re-establish political and economic peace may succeed. We are in entire agreement that present unreasonable obstacles to international trade must be removed and that the present financial and monetary chaos must be replaced by order. In this connection, we consider it essential that the price of silver, the great medium of exchange of the East, should be enhanced and stabilized. We are in the closest agreement as to many other measures which must be adopted for the rehabilitation of the economic life of China and of the world, and we are both resolved to approach the problems of the World Economic Conference, as well as the problems of the disarmament conference, with the determination necessary. President Roosevelt and Viscount Ishii of Japan Issue Joint Statement at Conclusion of Series of Discusions—Stress Need of Peace in Far East, Stabilization of Monetary Conditions and Rise in Silver Price. An understanding for the return of stable monetary conditions, for an improvement in the price or silver, and a hope of peace in the Far East and throughout the world were expressed in a joint statement issued on May 27 by President Roosevelt and Viscount Kikujiro Ishii of Japan, at the conclusion of their series of conferences in Washington held as a preliminary to the World Monetary and Economic Conference in London. The text of the joint statement follows: At the conclusion of our conversations we are happy to note that our views coincide in regard to practical steps which need to be taken toward solving the outstanding economic problems which are now of common interest and concern to all nations. We concur in the view that economic stability and political tranquility are complementary essentials to a sound basis for peace; that neither of these can be achieved without the other; and that both economic and military disarmament are needed for their attainment. It is our ardent hope that both may be achieved. We have had, of necessity, to think of the unusual situation which has prevailed in the Far East during the last two years. We hope that the countries of the Far East, along with those of the Occident, will be able to contribute substantially, in a spirit of co-operation, to the laying of solid foundations for a structure of world peace and prosperity. We are in complete concurrence in the view that in place of the existing monetary chaos there should be established by international effort an orderly regime and that unreasonable obstacles to the flow of trade and capital, where they now exist, should be removed, and where they do not exist should be adequately safeguarded against. We consider it highly desirable that the price of silver be reasonably enhanced and that silver exchange be stabilized. With regard to many other measures which neod to be adopted in order to establish the conditions of economic and political health throughout the world we are in close agreement. We look toward the convening of the World Economic Conference and we observe the work of the Disarmament Conference resolved to contribute to the maximum of our ability, in a spirit of utmost co-operation, to the end that, through the instrumentality of sincere and determined efforts on the part of all the nations, principles and practices may be agreed upon which will be helpful to each and to all. France Pays Interest on Bonds on Basis of Gold Value of Dollar. It was made known in Paris advices May 31 (to the New York "Times") that interest due June 1 on the French 734 and 7% bonds issued in the United States in 1921 and 1924 would be paid at the Paris branch of Morgan & Co.according to the gold value of the dollar, it was announced by the French Ministry of Finance. The rate of payment was 25.52 francs to the dollar. At the same time it was announced in New York that the French Government would pay the semi-annual interest due to holders of its American dollar issues of 75% bonds due on June 1 1941 and 7% bonds due on Dec. 1 1949 and would adhere strictly to the gold clause in these loans. An announcement made May 31 through J. P. Morgan & Co., paying agents, for the French Government indicated that payment would be made in dollars at a premium or in francs at the gold parity of exchange, which is 25.52 francs a dollar. The announcement was made by J. P. Morgan & Co. as follows: THE GOVERNMENT OF THE FRENCH REPUBLIC. Twenty-Year External Gold Loan 7;i% Bonds. Payable June 11941. and THE GOVERNMENT OF THE FRENCH REPUBLIC. External Loan of 1924 Twenty-Five Year Sinking Fund 7% Gold Bonds Due December 1 1949. To holders of above-described bonds: The French Government requests the undersigned, Paying Agents .for the coupons of the above loans, to announce that coupons maturing June 1 1933 and payable at the office of Messrs. J. P. Morgan & Co., 23 Wall Street, New York City, may until further notice also be paid at the option of the holder: (a) Upon presentation and surrender at the office of Messrs. J.P.Morgan & Co., 23 Wall Street, New York City, in United States currency at the dollar equivalent of French Francs 25.52 per dollar of face value of coupon, Volume 136 upon the basis of their buying rate for exchange on Paris at time of presentation. (b) Upon presentation and surrender at the office of Messrs. Morgan & Cie., 14 Place Vendome, Paris, France, in French Francs at the rate of French Francs 25.52 per dollar of face value of coupon. J. P. MORGAN & Co., Paying Agents. New York City, May 31 1933. It was pointed out in the New York "Times" of June 1 that on the basis of the closing quotation in New York May 31 on the franc at 4.653i cents, a coupon of the 73/2% loan, which would normally be worth $37.50, would be paid June 1 at about $44.51, and a coupon of the 7% loan, normally worth $35, would have a value of about $41.54, oripremiums of $7.01 and $6.54 a coupon, respectively. It was added, however, that the actual amounts to be paid would depend upon the market quotations ruling at the time the coupons were presented. The "Times" further said: This procedure follows the action of the French municipalities of Bordeaux, Lyons and Marseilles on May 1 when their coupons became due. Germany, Italy and certain other European governments with dollar bond issues outstanding, however, have elected to pay only in terms of the face value in depreciated dollars. Payment of the coupons due to-day on the French Government loans will be made here at the offices of J. P. Morgan & Co., or, at the option of the holder, in Paris at the office of Morgan & Cie. France and Gold Clause—No Change Seen in War Debt or Economic Parley Situation. From the "Wall Street Journal" of May 29 we take the following from Paris: French bankers generally interpret the proposed American law abrogating the gold clause as intended mainly to solve the problem of internal gold bonds. From the view of war debts, it is pointed out that should France resume payments, the agreemert already gives her the option of paying in United States Treasury bills, the price of which in francs already has been reduced through depreciation of the dollar in the foreign exchange market. As far as service on French dollar bonds is concerned, it is very unlikely that the French decision to continue payment of coupons in dollars, plus the premium, or in francs at the gold parity, will be modified. a It is also thought that the prospects for the world economic conference have not been affected although th. American action reinforces the French opinion that monetary reconstruction will be the paramount issue. Dutch East Indies Government to Pay July 1 Coupons on Gold Basis. The decision of the Dutch East Indies Government to adhere to the gold basis in paying coupons on its dollar loan, was indicated by the Guaranty Co. of New York on announcing on May 31 the receipt of a cablegram from its European representative stating that the Dutch East Indies Government has issued official notification that it will purchase at the rate of guilders 2.46 per dollar the coupons due July 1, on the Dutch East Indies 6% dollar loan due 1947, which are delivered to the Nederlandsche Handel Maatschappij in Amsterdam, Holland, on or before June 19 1933. Return of Nations of World to Gold Standard Urged at Congress of International Chamber of Commerce. A proposal that the nations of the world return to the gold standard is reported to have been received with enthusiasm from the congress of the International Chamber of Commerce at Vienna on May 31. With regard thereto Associated Press advices from Vienna said: To-day's suggestion in favor of rehabilitation of the yellow metal, which has been a point made by other speakers before the congress, came from Professor T. E. Gregory, British financial expert, who said all attempts to manage paper currency has failed. Individual countries, he asserted, were reluctant to return to gold because each feared that others would employ the opportunity to get special advantages for themselvet The way to overcome this fear, the British representative told the congress, "is the same as overcoming fear of a lonely road—we must all take the road together" From the same accounts we also quote: Other speakers shared his views, but Eliot Wadsworth of Boston, Mass., warned the congress to remember the gold standard really is "99 per cent confidence and 1 per cent gold." Mr. Wadsworth said he would prefer to emphasize balancing budgets and restoring to its pedestal the old maxim, "as good as a government bond." "Real business morality" was accepted as a commercial tenet to-day by financial and industrial delegates to the Congress. President Schacht of Reichsbank Says Germany Can't Meet Credits—Asserts Transfers on Private Debts Are Draining Reserves -30 Bankers,Representatives of Creditors in Six Countries, Hear Appeal. The meeting of foreign bankers convoked by Dr. Hjalmar Schacht, President of the Reichsbank, to discuss the transfer of service payments on Germany's private foreign debts got under way at the Reichsbank on May 29 with a lengthy discussion of the present state of the transfer problem by Dr. Schacht. It was noted in a wireless message from Berlin on that date to the New York "Times" that 30 3815 Financial Chronicle bankers, representing creditors in the United States, England, France, Switzerland, Holland and Sweden participated in the discussions. Dr. Schacht and Vice-President Dreyse of the Reichsbank were the only German participants in the conversations which, it was said, would be occupied wholly with an exploration of the transfer problem. As to Dr. Schacht's statement the Berlin advices to the "Times"continued: Stresses Drain of Gold. In his statement to the foreign bankers Dr. Schacht took pains to explain that the meeting was not a governmental matter nor was it called to discuss the relations between German debtors and foreign creditors. Since the former were promptly meeting their obligations, the immediate object of the conversations, he declared, was to reach a readjustment of present transfer procedure, which was rapidly draining the Reiciisbank's gold reserves. After listening to Dr. Schacht's presentation of the reasons opposed to continuation of the present transfer methods, the meeting adjourned until Tuesday. There was no exchange of opinions between both parties to-day because no concrete proposals were advanced on the German side. Dr. Schacht prefaced his statement with the request that the meeting should not be regarded as a formal conference, but as being in the nature of an informal discussion. He laid down the proposition that if the Reichsbank should continue to endeavor to supply bills of exchange for the German debt service, the inevitable consequence would be a collapse of the mark more calamitous than that of 1923. He added emphatically that the Reichsbank would not assume responsibility for or permit such a catastrophe. Blames Reparations Payments. The cause of Germany's troubles with her debt service he declared to be her excessive borrowing during the years of her reparations payments. "That whole system of borrowing was radically unsound," he said. "It collapsed with the advent of the October 1929 crisis in the United States, from which moment on the stream of foreign credits to Germany ceased." Among the plans up for consideration, according to reports in German financial circles, was one providing for the issuance of mark bonds, which would take the place of foreign currencies for payments on debt service. These would either be guaranteed by the Reich or would have the character of government bonds, which would be recognized abroad and would return 4% interest. Recourse to such an expedient would make the Reich the guarantor or surety for private business and adoption of the scheme would assume that these bonds could be floated abroad in such a manner as to assure Germany's creditors ready access to their service payment, since their issuance would be predicated on the assumption of loosening official exchange restrictions in Germany. Preparatory Step Is Seen. In the absence of concrete proposals from Dr. Schacht, foreign bankers admitted to-night that thus far they had played the part of good listeners only. It appears to be their conviction, however, that the present meeting was conceived on the German side as constituting an essential preparatory step for the World Economic Conference, and that Germany intends to reiterate at London her well-known position that her foreign private indebtedness can be liquidated without disturbance to her own economy or the interests of the creditor States only if she receives opportunities for expansion of her exports. The current conversations at the Reichsbank, therefore, are designed to give renewed and timely emphasis to this thesis, which it.is already plain will constitute the chief point of contention at the London conference in connection with debates on tariffs and import restrictions. The principal points advanced by Dr. Schacht in his statement to the foreign bankers to-day were as follows: "Our discussion is not a governmental matter. The representatives of their respective governments have nothing to do with our meeting. Neither is it a discussion between German debtors and their foreign creditors —for all debtors are paying up. What is in issue is simply the foreign exchange problem, which first of all falls under the competence of the Reichsbank." "Now," Dr. Schacht went on, "the present transfer crisis can be understood only in the light of political developments 15 years ago. Naturally, defeat in the war inflicted severe financial damages on the German economic body, but it had an immediate effect on the transfer problem. This arose, in the last analysis, from war debts—with respect to Germany called 'reparations'." Sound Justification for Loans. After the restabilization of Germany's currency,the Reichsbank President continued, Germany had sound economic justification for raising loans abroad for a few specified purposes, namely the restoration of her completely exhausted stocks of raw materials; for reorganizing her exports, her export industry and shipping, and finally for increasing the Reichsbank's gold and exchange reserves as a support for currency. "But all borrowing in excess of that was an evil," he emphasized. "Today Germany can transfer funds only by means of an export surplus. Then it should follow that foreign loans, in so far as they could not be used abroad, could come into Germany only in the form of goods. "Our excessive use of foreign credits thus was the cause of Germany having had an excess ofimports over exportsfrom 1924 to the middle of 1930. "The politicians who had imposed reparations on Germany had started from the opposite idea that Germany must find money for reparations Payments through exports. But if that was the policy, it should not have been countermanded by concurrently granting huge credits that involved heavy imports into Germany." Dr. Schacht said that industrial opposition to Germany building up an export surplus developed everywhere in the world so that even deliveries In kind on the reparations account met resistance. "Under such circumstances, and with the politicians insisting on reparations being paid there was nothing left but to apply to them the funds coming in from abroad, and of a round 20,000,000 marks that came into Germany a good half was used for nothing but to pay reparations." System Collapsed in 1929. This system, he went on. was false and unsound. It collapsed with the beginning of the depression in the United States in October 1929. The stream of foreign credit stopped, and only with the greatest trouble a few additional loans, such as that from Lee, Higginson & Co.. could be negotiated. The consequences, Dr. Schacht declared, were: "First, we could no longer pay reparations; second, in place of an import surplus we got an export surplus." He insisted that in Germany the trend of events had been correctly discerned ever since 1924, whereas the outside world shut its eyes. and. Financial Chronicle 3816 refusing to be better advised by Germany,ignored both the transfer problem and its underlying causes. Criticizes Reparations Agent. Dr. Schacht criticized S. Parker Gilbert for having, as reparations agent,subordinated the transfer problem, as did the Young Plan conference. When the collapse of the Austrian Creditanstalt in 1931 brought a run of foreign creditors on Germany, precipitating her ultimate financial crisis, this was met, Dr. Schacht said, by instituting control of foreign exchange; but, while this supported German currency, it did nothing to mitigate the crisis, which steadily got worse. So the standstill agreements, he said. were only momentary palliatives, even if concluded "with the best intentions on the part of the foreign creditors." Dr. Schacht said Germany, having repaid more than ten million marks In principal and interest since the American crisis began, had given more than ample evidence of the good faith of German business, but reminded his hearers that giving up such a large amount under such circumstances again had a crippling effect on German trade and industry. Finally, Dr. Schacht asserted, no thought seems to have been given to the fact that this repayment of credits could not be effected without seriously depleting the reserve of the Reichsbank, which was responsible for Germany's currency. "The reserves in gold and bills of the central bank of issue, although they may be drawn on occasionally for readjusting important payments, are not intended to effect payments of the more or less long-term indebtedness of the country's business enterprises," he went on. "If such a task is forced on the central bank, it is deprived of liberty of action. This is precisely what has happened to the Reichsbank through excessive transfers. And this is the worst effect of the series of events, for a country whose central bank has lost freedom to manoeuvre is at the mercy of any accident. Sees Danger of Catastrophe. "From the figures submitted to you, gentlemen, you will see that there is danger now that the Iteichsbank's reserves may shrink to zero. Its present reserves, with the gold discount, stand at 300,000,000 marks. Coverage thus has fallen to 8%. If we let this thing go on, the Reichsbank will run into the danger of being no longer able to prevent the sale of marks. That is, in such case, we should certainly experience an official discount of the mark and subsequent devaluation of it, which, I think it is clear to you all, would precipitate an even greater catastrophe than 1923. Such a catastrophe the Reichsbank will not permit." The leading American delegates at the meeting are Albert H. Wiggin and John Foster Dulles. Oscar Wassermann and Theodor Frank to Retire From Board of Deutsche Bank. Oscar Wassermann and Theodor Frank have notified the governing board of the Deutsche Bank that they will retire from it at the end of this year. We quote from Berlin advices May 29 to the New York "Times" which also said: Herr Wassermann,one of the most prominent bankers in Germany, long has been a leading spirit in the Deutsche Bank, the governing board of which he joined in 1912. His financial authority extended far beyond this institution. Herr Frank joined the Deutsche Bank's governing board after the Disconto Gesellschaft's amalgamation with it. It is reported that the bank hopes to retain the service of the retiring officers in an advisory capacity. • Berlin to Help Shipping—Provides 20,000,000 Marks to Offset Losses in Currency Upsets. The following from Berlin, May 26, is from the New York "Times": The Reich Government to-day approved an appropriation of 20,000,000 marks out of which German shipping is to be reimbursed for losses in freight revenues occasioned by the abandonment of the gold standard by the United States and Great Britain. While the losses are reported to have been heavy, they could not have been foreseen since the altered international currency situation completely upset all advance calculations. Plans for a reorganization of German shipping along regional lines have been completed as to the main points it was reported from Hamburg to-day. The Lloyd-Hamburg-American pools will be made more flexible, but both lines will continue to compete for the North Atlantic Far East business. It is also proposed to dissolve the pools' allied units, restoring them to their former position as independent lines. 1 Coupons of Hamburg-American Line Bonds. Speyer & Co., and J. Henry Schroder Banking Corporation paid, on June 1, the June 1st coupons of the HamburgMarine Equipment American Line First Mortgage 6 Serial Gold Bonds. Payment of June 5% Free State of Bavaria Treasury Notes due June 1 1933—Offer to Exchange. On June 1, RM. 40,000,000.—Free State of Bavaria Treasury Notes, issued in 1928, become due for payment in Reichsmark at 110%. The State of Bavaria has offered to exchange the old 5% treasury notes against 6% Free State of Bavaria Serial Bonds of 1933 at 9234% according to a circular prepared by New York and Hanseatic Corporation. Republic of Finland. The National City Bank of New York, as fiscal agent, external is notifying holders of Republic of Finland 5 loan sinking fund gold bonds, due Feb. 1 1958, that $132,000 principal amount of these bonds have been selected for redemption at par on Aug. 1 1933. Bonds so selected will be paid at the redemption price upon presentation and surrender at the head office of the bank on and after August 1, after which date interest on such drawn bonds will cease. Redemption of Portion of Bonds of June 3 1933 To Pay Young Plan 534% Bonds in Current Money— Bank for International Settlement Interest Payments to U. S. British, Swedish Holders in Paper, Others on Gold Basis. From Paris the "Wall Street Journal" of May 29 reported the following: June 1 coupon of the 5M% Young Plan bonds will be paid in paper dollars, sterling and Swedish crowns without premium for exchange depreciation, while bearers of the French, Swiss and Belgian franc, florin, lira and reichsmark coupons will receive interest as usual.according to a decision taken by the Bank for International Settlements, as trustee for the German government's obligation. The B. I. S. reserves the rights of bondholders in the first category and stands on its request to the Reich to pay a supplement on the basis of the gold clause. There is little or no expectation, however, of inducing the Reich to change its policy, especially since formal American abandonment of the gold clause. It is pointed out there is no provision for arbitration in the contract or general bond, and even if the question were referred to arbitration, the court's decision could not be enforced. It is understood British banking agents offered no opposition to the payment in sterling at current value and that none is likely from the Americans. A plan was considered for distributing the loss due to the difference between the amount receivable on a gold basis and the amount actually received by the trustee over all groups of bondholders uniformly, but this was abandoned as involving complications of litigation all around. Austrian Government Remits Funds for Payment of June 1 Interest on Guaranteed Loan 1923-1943. Announcement was made on May 26 by the trustees of the Austrian Government Guaranteed Loan 1923-1943 that the coupons due June 1 would be paid. The loan was issued under the auspices of the League of Nations and it is stated that approximately $17,000,000 is outstanding here. The trustees announcement follows: Austrian Government Guaranteed Loan 1923-1943. The Trustees of the above loan announce that the coupon maturing June 1 1933, will be duly paid on the due date in the respective foreign currencies. The provision for this coupon was to be constituted under the General Bond by six monthly instalments payable from Nov. 1 1932,to Apr. 1 1933. The Austrian Government has not remitted the instalments payable on Nov. 1 and Dec. 1 1932, but since Jan. 1 1933, has remitted the full monthly Instalments except for the April instalment. As regards the latter instalment the Austrian Government only transferred an amount sufficient to provide for the June, 1933, coupon after exhausting the remainder of that part of the reserve fund applicable to interest which was created under Article 10 of the General Bond. The sinking fund requirements for the tenth fiscal year ending May 31 1933, have also been met in full. They were provided partly by payments from the Austrian Government and partly by drawing on that part of the reserve fund applicable to amortization, which portion has thus been exhausted. The Trustees have renewed their demand to the Austrian Government for the reconstitution of the reserve fund in accordance with the terms of the General Bond. ALBERT E. JANSSEN, N. DEAN JAY, MARCUS WALLENBERG, Trustees. M. MORIZE, Trustees, Secretary to the 14 Place Vendome. l'aris, France. Spanish Exchange of Abolition of Gold Clause by United States On May 27 Associated Press advices from Madrid said. Little Effect on Abolition of the gold clause in all obligations by the United States will have little effect in Spain, according to Julio Carabias, Governor of the Bank of Spain, and Manuel Aleixandre. president of the Bank of Industry and Commerce. They said that few American securities were held here. and they did not look for the Exchange to be greatly affected. Slight Aid to Chile in Reduced Exchange Value of Dollar—Central Bank Report Says Gain in Commerce Will Be Offset by Price Rise Then. The Central•Bank of Chile, in a report on May 27,forsees only slight improvement in trade between Chile and the United States as a result of the reduced exchange value of the dollar according to a cablegram on that date from Santiago to the New York "Times" which added: The repercussion in Chile of the reduced value of the American money unit cannot be considered beneficial. It is true that Chile can now purchase with greater ease the dollars it requires, perhaps lowering the costs of such imported articles as gasoline, lubricating oils and other goods, but on the for other hand a depreciation in the dollar value will signify higher prices nitrate goods manufactured and expo.ted from Chile, principally affecting of soda and some agricultural lines. will We therefore do not believe our foreign trade with the United States adbe benefited in any way by the depreciation of the dollar, since the vantages of the new situation will be offset by disadvantages. that of The position of other countries in this respect will be the same as gold Chile, it being specially difficult for those still on it to maintain the standard. The only real practical stimulus to international trade would be &radical change in customs tariffs policies. currency. The drop in the dollar may benefit debtors in that particular strictly but this advantage, as regards Chile, can only be considered as foreign theoretical,since this country cannot think of resuming service on its debt nor payment of trade debts in arrears until a fundamental improvement. improvements in has taken place in the internal situation, followed by liquidaexport trade, or until special agreements are reached concerning the treaties. tion of private debts on the basis of international compensation Volume 136 Financial Chronicle Argentine and Chile Sign Commercial Treaty, to Be Valid for Three Years After Ratification by Both Congresses. A commercial treaty between Argentina and Chile was signed at Buenos Aires on May 28, on the 31st anniversary of the conclusion of a boundary treaty between the two nations. The trade pact supersedes a modus vivendi which has been in existence for six months, and provides that both signatories co-operate to prevent a repetition of the 1932 closure of the Trans-Andean Railway. The treaty is subject to ratification by Congresses of both countries. It is limited to three years, but a clause permits revision in 1934 if experience shows that changes are necessary. Officials said that the pact will facilitate the interchange of many essential products, without requiring either nation to concede costly tariff reductions to other countries with which it has most favored-nation treaties. Purchase of Argentine Bonds Through Sinking Fund. J. P. Morgan & Co. and The National City Bank of New York, as fiscal agents, are notifying holders of Government of the Argentine Nation external sinking fund 6% gold bonds, issue of June 1 1925, due June 1 1959, that $389,298 in cash is available for the purchase for the sinking fund of so many of these bonds as shall be tendered and accepted for purchase at prices below par. Tenders of these bonds, with coupons due on and after December 1 1933, should be made at a flat price, below par, before 3 p. m. July 3 1933. If tenders so accepted are not sufficient to exhaust the available funds, additional purchases on tender, below par, may be made up to August 30 1933. Tenders Invited for Purchase of Argentine Government Bonds Through Sinking Fund. The Chase National Bank of the City of New York, acting for the fiscal agents of the Government of the Argentine Nation External Sinking Fund 6% gold bonds of 1924 Series "B," due December 1 1958 is inviting tenders at a price below par of a sufficient amount of these bonds to exhaust the sum of approximately $266,309 available in the sinking fund. Proposals will be opened at 3 p. in. on July 3 1933, and should be sent to the Trust Department of the bank at 11 Broad St., New York City. Temporary Offer to Holders of Tucuman (Argentina) 7% Bonds Respecting Interest Payments -60% in U. S. Dollars and 40% in Scrip Certificates. The Municipality of Tucuman (Argentine Republic), through L. Yrrazabal, Mayor, and Julio C. Montini, Secretary, is notifying holders of its external 23-year 7% sinking fund gold bonds due June 1 1951 of a temporary offer of readjustment with respect to interest payments due during the period from Dec. 1 1932 to June 1 1935, inclusive. The offer, it is stated, is being made due to the present difficulty of providing foreign exchange and the fact that the municipality now believes that it can obtain sufficient exchange to make only partial payments in U. S. dollars on account of interest due in that period. The municipality has previously deposited with the Bank of the Nation (Tucuman Branch) Argentine pesos sufficient at the then current rate of exchange to meet interest and sinking fund payment due Dec. 11932. An announcement May 29 regarding the offer says: The offer provides for the payment of 60% of such coupons maturing between Dec. 1 1932 and June 1 1935 in cash in U. S. dollars and 40% ($84 for each S1,000 bond, covering the amount not payable in cash during the entire period) by the delivery of a transferable interest bearing scrip certificate, payable in U. S. dollars and redeemable out of sinking fund moneys after June 1 1935. Cash payments of the Dec. 1 1932 and June 1 1933 coupons will be made when the bond is deposited under the loan readjustment plan and other cash payments made when due. A suspension of the semi-annual sinking fund payments during the period mentioned is also provided under the offer. Holders desiring to accept the offer are invited to deposit their bonds with City Bank Farmers Trust Co., New York City, from whom copies of the loan readjustment plan may be obtained. Temporary Offer of Adjustment of Interest to Holders of Bonds of Province of Mendoza (Argentine). The Province of Mendoza (Argentine Republic) through Guillermo Cano, Minister of Finances, and Ricardo Videla, Governor, is notifying holders of its external 7.50% secured sinking fund gold bonds, dated Dec. 1 1926, and due June 1 1951, of a temporary offer of adjustment with respect to interest payments and the retirement of bonds during the period from Dec. 2 1932 to Dec. 1 1937, inclusive. A statement issued in the matter says: Due to its greatly reduced revenues and the difficulty of providing foreign exchange, the Province finds itself unable for the time being to continue in full the semi-annual payments. 3817 The offer provides for the payment of coupons maturing from June 1 1933 to and including Dec. 1 1937, at the reduced rate of interest of 4% per annum, or $20 for each $37.50 coupon. Under the offer, semi-annual sinking fund payments accruing from Dec. 2 1932 to Dec. 1 1937 will be suspended, but commencing June 1 1934, the Province agrees to make payments to the depositary to be applied to the purchase or redemption of of bonds. The plan further provides for the waiver of the security fund during the period and for the readjustment of the method of depositing pledged revenues. Holders desiring to accept the offer, which is not conditional upon the acceptance of any specified percentage of bonds, are Invited to deposit their bonds with the Manufacturers Trust Company New York, from which copiesoftheloan readjustment plan may be obtained. Argentine Foreign Exchange Control Commission Rules that Dollar Drafts on United States Must Be Covered by Export Receipts. United Press advices from Buenos Aires May 31 to the New York "Herald Tribune" stated that the Foreign Exchange Control Commission ruled on that date that all dollar drafts on the United States must be covered exclusively by the amounts of dollars obtained through the exportation of Argentine products to the Northern Republic. The advices added: The ruling is viewed as threatening a drastic cut in the apportionment of the available foreign exchange to the United States in view of the large favorable trade enjoyed by that country. Last year United States' exports to Argentina were valued at $27,459,868. while her imports from this country aggregated only $11,180.828. A total of 560,000,000 is reported to be tied up here, importing firms and bankers being unable to remit to the United States to meet commercial obligations there because of the shortage of dollar coverage. The Commission's ruling also stipulated that permits for payment on collections or other dollar transferences can be liquidated solely in dollars. Special permits will be necessary to carry out payments in other currencies. Argentina Said to Have Arranged to Cut Gold Bond Rate to 4%. The following (United Press) from Buenos Aires May 31 is from the New York "Herald Tribune': Foreign Minister Alberto Hueyo announced to-day that an arrangement had been made with holders of the 73.6 % external gold bonds, whereby the interest would be reduced to 4%. The loan was contracted in the United States in 1927. Such a reduction in interest implied a saving of 3,750,000 pesos to the government. The present administration, he told the Senate in response to a demand for information by Senator Sanchez Sorondo, has succeeded in scrupulously fulfilling all obligations and has maintained Argentine credit intact abroad. Enumerating the economies effected, he said the United States abandonment of the gold standard had permitted a saving of 7,000,000 pesos on the debt service. Customs receipts have been on the increase since the first of the year and at present total 10,000,000 pesos more than this time last year, Senor Hueyo declared. The new income tax and the business transactions tax, he said, have yielded 12,000,000 pesos, permitting a reduction in the budget deficit to 6,000,000 pesos. This deficit will be wiped out if Congress sanctions the proposed tax on incomes derived from government securities. New Australian Refunding Loan Oversubscribed. A cablegram June 1 from Canberra (Australia) to the New York "Times" said: Subscriptions to the £5,000,000 3,1% internal loan reached £8.100,000. The Council therefore will meet next Tuesday without need to worry about finding money for the unemployed during the Winter. When the next loan is floated to make up £10,000,000 for the unemployed under the Premier's plan, it is expected that the rate will be lower than 314%• Customs revenue in the eleven months ending on May 31 was more than E5,000,000 above the estimates. Allowing for budgetary expenditures, it is expected that the surplus at the end of the year will be more than £2,500,000. Postal revenue also has greatly increased. indicating an improvement in trade and industrial activity. London advices June 1 to the same paper stated: The Commonwealth of Australia 33 % five-year refunding loan amounting to £11,000,001) met with a good reception when the subscription lists opened to-day. The lists for cash applications closed within two hours. Canadian Press accounts from London May 29 had the following to say regarding the loan: Announcement was made by the Treasury to-day that Right Hon. Neville Chamberlain, Chancellor of the Exchequer, had agreed to an immediate Australian bond issue not exceeding five years' maturity for the purpose of refunding certain Australian loans bearing interest at the rate of6 %. The Chancellor made it clear, however, that this exceptional measure in no way implied the withdrawal of his request made in January regarding the conversion of trustee securities. At that time it was explained that the capital market was free to domestic and Empire borrowers, with one exception. The exception applied to the replacement of existing issues by new issues in the case of optional conversions where the new issue ranks as a trustee security, and involves either underwriting or an invitation to the public to subscribe new cash. Additional Rulings on Bonds of Upper and Lower Austria by New York Stock Exchange. The New York Stock Exchange has issued the following announcements through its Secretary, Ashbel Green: NEW YORK STOCK EXCHANGE Committee on Securities. May 26 1933. Referring to the rulings of this Committee dated Dec. 1 1932 and Jan. 26 1933. in the matter of the non-payment of interest on Province of Lower Austria Secured Sinking Fund ni% Gold Bonds, due 1950: The Committee on Securities further rules that beginning with transactions of June 1 1933, the bonds dealt in as "with all unmatured coupons attached" shall be ex the June 1 1933. coupon Financial Chronicle 3818 That beginning June 1 1933, the bonds may be dealt in as follows: (1) "with Dec. 1 1932, and subsequent coupons attached"; (2) "with all unmatured coupons (i.e., coupons, the due dates of which have not been reached) attached"; That bids and offers shall be considered as being for bonds "with Dec. 1 1932, and subsequent coupons attached" unless otherwise specified at the time of transaction; and That all transactions in the bonds shall be "Flat." NEW YORK STOCK EXCHANGE. Committee on Securities. June 1 1933. Referring to the rulings of this Committee dated Dec. 1 1932 and Feb. Province of Upper 24 1933, in the matter of the non-payment of interest on Austria External Secured Sinking Fund 7% Gold Bonds, due 1945: The Committee on Securities further rules that beginning with transactions of June 1 1933, the bonds dealt in as "with all unmatured coupons attached" shall be ex the June 1 1933, coupon; That beginning June 1 1933, the bonds may be dealt in as follows: (1) "with Dec. 1 1932, and subsequent coupons attached"; (2) "with all unmatured coupons (i.e., coupons, the due dates of which have not been reached) attached"; That bids and offers shall be considered as being for bonds "with Dec. 1 1932, and subsequent coupons attached" unless otherwise specified at the time of transaction; and That all transactions in the bonds shall be "Flat." Previous rulings on the bonds were noted in our issues of Dec. 3 1932, page 3788 and Feb. 11 1933, page 934. June 3 1933 J. P. Morgan & Co., New York City, in United States currency at the dollar equivalent of French Francs 25.52 per dollar of face value of coupon. upon the basis of their buying rate for exchange on Paris at time of presentation, or (b) upon presentation and surrender at the office of Messrs. Morgan & Cie., Paris, France, in French Francs at the rate of French Francs 25.52 per dollar of face value of coupon: The Committee on Securities rules that in settlement of contracts in said -payment date and bonds on which delivery was due prior to the interest should have been made with the next due coupon attached, but where -payment date without the coupon delivery is made on or after the interest attached, and in settlement of contracts in said bonds made "Delayed Delivery" between May 25 1933, and May 29 1933, inclusive, the cash settlement made in lieu of the coupons shall be on the basis of United States currency in New York at the dollar equivalent of French Francs at gold parity of exchange, the said dollar equivalent to be computed at the rate at which coupons may be cashed at the office of Messrs. J. P. Morgan & Co. on the date of actual delivery, under option (a) referred to above. The computation of accrued interest is not changed by this ruling. NEW YORK STOCK EXCHANGE. Committee on Securities. June 1 1933. In view of the arrangements made for the payment of the June 1 1933, -Year coupons attached to the Government of the French Republic 20 External Gold Loan 7%% Bonds. due 1941, at the option of the holder surrender at the office of Messrs. J. P. either (a) upon presentation and Morgan & Co., New York City, in United States currency at the dollar equivalent of French Francs 25.52 per dollar of face value of coupon, upon the basis of their buying rate for exchange on Paris at time of presentation, or (b) upon presentation and surrender at the office of Messrs. Morgan dr Cie., Paris, France, in French Francs at the rate of French Francs 25.52 per dollar of face value of coupon: The Committee on Securities rules that in settlement of contracts in the -payment date said bonds on which delivery was due prior to the Interest and should have been made with the next due coupon attached, but where -payment date without the coupon delivery is made on or after the interest attached, and in settlement of contracts in said bonds made "Delayed Delivery" between May 25 1933, and May 29 1933, inclusive, the cash settlement made in lieu of the coupons shall be on the basis of United States currency in New York at the dollar equivalent of French Francs at gold parity of exchange, the said dollar equivalent to be computed at the rate at which coupons may be cashed at the office of Messrs. J. P. Morgan & Co. on the date of actual delivery, under option (a) referred to above. The computation of accrued interest is not changed by this ruling. Supreme Court Orders Inquiry on Bonuses Paid Officers of American Tobacco Company—Suit of Stockholder Results in Ruling for Review of Firm's Distribution of Earnings. The Supreme Court of the United States on May 29 ordered an inquiry to determine whether George W. Hill, President of the American Tobacco Company, has been receiving more than a just share of the company's earnings. In 1930 Mr. Hill was paid more than $1,000,000 in salary and profits. The inquiry ordered by the court would also include the distribution of earnings to Vice Presidents of the firm. The ruling represented a partial victory for Richard R. Rogers of New York, a stockholder of the company, who Allied Chemical & Dye Corporation Defends Its Stand brought suit on the ground that a by-law authorizing large —Declares Data Ordered by New York Stock Exchange Would Aid Competitors—Final Letters bonus payments to officers was invalid, and that even if it Made Public. were held valid the amounts paid were unreasonably large The New York Stock Exchange, which announced on and subject to revision. He contended that the surplus or net profits of the company, after meeting all liabilities, was May 25 that it would remove from the list on Aug. 23 the exclusively within the control of the board of directors, and preferred and common stocks of Allied Chemical & Dye that under the charter of the company it could not be dis- Corp. unless the corporation agreed to issue more detailed tributed by stockholders. Officers of the company, on the reports to its stockholders, made public on May 29 the other hand, replied that stockholders had authority to con- correspondence which passed between the company and the trol the finances, and that officers were not receiving exorbi- Exchange preceding the ultimatum of the Exchange issued tant allowances or unreasonable salaries. The court's May 25. H. F. Atherton, Secretary of Allied Chemical, decision was summarized as follows in Associated Press in a letter to the Governing Committee of the Exchange dated May 24, said it would be against the best interests Washington advices on May 29: In ordering the investigation into the money accruing to Hill and the of the stockholders to make public information which could vice-presidents through the company by-law adopted in 1912, giving them company's competitors. He reminded the a percentage of surplus profits, the court upheld the legality of the by-law be used by the Exchange that its Committee on Stock List had approved itself. Nevertheless, Associate Justice Pierce Butler who delivered the opinion the listing of Allied Chemical stock on several occasions said the "rule prescribed by it cannot, against the protest of a stockholder. under an agreement which did not provide for the furnishing and effect to be used to justify payments of sums so large as in substance of such information as the Exchange was requesting at the amount to spoliation or waste of co-operative property." The facts alleged by the plaintiff, Justice Butler continued."are sufficient present time. to require that the District Court upon a consideration of all the relevant In reply, the Exchange, in a letter sent by its President facts brought forward by the parties, determine whether and to what extent Richard Whitney to Orlando Weber, President of Allied payment to the individual defendants under the by-laws constitutes misuse and waste of the money of the corporation." Chemical, states that it is believed to be "essential in the Under the 1912 by-laws Hill, as President, received 2;i% of profits after public interest that our requirements and practices should all dividends and expenses had been paid. The vice-presidents get 13 %. Hill received $842,507 from the profits clause in 1930. He got cash keep pace with the changes in business customs and concredit of $273,470 and salary of $168,000. ditions which from time to time occur." Charles F. Neiley, a Vice-President, received more than $400,000 under For more than three years the Stock Exchange has been the by-laws, $89,945 in cash credits and $50.000 in salary. Vincent Riggio, a Vice-President, received an almost identical sum. seeking to induce the Allied Chemical management to The decision to-day reversed both the Circuit Court of Appeals and the itemize more fully its balance sheet and income account. Federal District Court for the Southern District of New York. The latter The controversy reached an acute stage about a month was directed to make an inquiry. A dissenting opinion was filed to-day by Associate Justice Harlan F. ago, when the Exchange made public the long correspondence Stone. between Orlando F. Weber, President of Allied Chemical; The stockholders had assailed a stock issue which the directors allotted H.F. Atherton, Secretary of the company; J. M. B. Hoxsey, themselves and other officers. The court did not pass on the merits of the case, but Justice Stone said he felt the court should go to the bottom of Executive Assistant of the Committee on Stock List of the the matter. He recited that there were 56,712 shares of common stock Exchange, and Frank Altschul, Chairman of the Committee being made available to directors and other company officials at a price of $25 a share when the market price of the stock was $112. on Stock List. (See "Chronicle" April 29, p. 2888.) On that basis, he said, Hill's profit from that transaction alone was Information regarding the Allied Chemical recent corre$1,169,280, exclusive of the more than $1,000,000 in profit, salary and cash spondence and resolutions, transmitted by Frank Altschul, credit. Justice Roberts took no part in the consideration of either case. Chairman of the Committee on Stock List to the Governing Committee, is given under five headings, as follows: Chemical dr (1.) Copy of a letter dated May 24 1933, from the Allied Ruling of New York Stock Exchange on Bonds of Dye Corp. to the Governing Committee of the New York Stock Exchange. Republic. Government of French Committee on (2.) Copy of a report and recommendation made by the The following announcements were issued by Ashbel Stock List to the Governing Committee of the New York Stock Exchange on May 24 1933. Green, Secretary of the New York Stock Exchange: the a resolution adopted by the Governing Committee on NEW YORK STOCK EXCHANGE. Committee on Securities. June 1 1933. In view of the arrangements made for the payment of the June 1 1933, coupons attached to the Government of the French Republic External Loan -Year Sinking Fund 7% Gold Bonds, due 1949, at the option of of 1924 25 the holder either (a) upon presentation and surrender at the office of Messrs. (3.) Copy of recommendation of the Committee on Stock List on May 24 1933. Exchange (4.) Copy of a letter from the Secretary of the New York Stock dated May 24 1933. in acknowledgment of the letter of the Allied Chemical & Dye Corp. of May 24 1933. (5.) Copy of a letter from the President of the New York Stock Exchange dated May 26 1933, in reply to the letter of the Allied Chemical & Dye Corp. of May 24 1933. Volume 136 Financial Chronicle (1 ) ALLIED CHEMICAL & DYE CORPORATION 61 Broadway, New York. To the Governing Committee, New York Stock Exchange, New York, N. Y. Mal/ 24 1933. Dear Sirs: We wish to call your attention to the following in connection with the discussions between the Exchange and this company regarding its annual reports to stockholders: In Dec. 1920, when the stock of this company was originally listed, full consideration was given by the Committee on Stock List and by the cornpony to the form of the application and the agreement contained therein. Such application and agreement were the bases upon which the decision of the company to have its stock listed, as well as the decision of the Exchange to list it, were made. No reference was made in the application or the agreement to furnishing the information now being requested. In Dec. 1929, the Exchange listed additional shares of our stock. At an extended conference with the Committee on Stock List on Dec. 23 1929, most of the points which the Stock Exchange has now raised were discussed and the reasons why we did not desire to supply the additional information were stated. In reply to the printed questionnaire, we advised that we proposed to publish our financial statements In the same form as theretofore published. Our application was approved by the Exchange and an agreement executed. In a letter to the company, dated Dec. 31 1929. the Committee on Stock List recognized the mutual obligations arising from the agreement which had been entered into as to the company's stock which had been listed up to that date. In Dec. 1930, the Exchange listed additional shares of our stock. We conferred at length on Dec. 15 and Dec. 16 1930, with representatives of the Stock List Committee. Most of the points which the Exchange has now raised were again discussed and we again stated our reasons for not desiring to disclose further information with reference to the company's affairs. In reply to the printed questionnaire, we advised that we proposed to publish our financial statements in the same form as theretofore published. Our application was approved by the Exchange and the agreement now in effect was executed. We have always considered and now consider that these listing proceedings conitituted an agreement between the Exchange and the company as to what reports the company was required to publish as a condition to the admission and continuance of its stock on the trading list. At the same time we have been willing to consider with the Exchange, and have recently considered with it at length, its suggestions for variations in our regular system of reporting; and we have been entirely ready at all times, as we are at present, to adopt any such changes which do not appear to us to be contrary to the best interests of the company's stockholders. It is in this spirit that we have been reconsidering with the Exchange from time to time during the last year or so the same or similar suggestions regarding our reports as those which were disposed of upon the successive listings of our stock as above indicated. On March 28 1933 the Exchange wrote the company, requesting it to make a statement not later than the date of the annual stockholders' meet-. Mg in order to clear up any misunderstanding as to the value of marketable securities carried in the balance sheet under current assets, and suggesting that further consideration of all other questions which had been under discussion be deferred until later. After preliminary acknowledgment of this letter, we replied on April 21 1933. stating that we would be pleased to make a statement at the annual meeting regarding marketable securities as requested by the Exchange. At the same time we pointed out that our report explicitly stated that marketable securities were shown at cost and that the difference between cost and market value was amply provided for in the general contingency reserves. The Exchange never made any reply to this letter, and we did not doubt that the Exchange found it entirely satisfactory, as it was intended to be. At the annual meeting of stockholders held April 24 1933, among the statements made by the presiding officer with reference to the company's report for 1932. was the following: "U. S. Government and other marketable securities carried under current assets. aggregating $92,400,000 stated at cost, had a market value as of Dec. 31 1932 of approximately $28,000,000 less than cost. The reserves which have been provided are ample to take care of this depreciation." A transcript of the complete statement is attached. We thus fairly complied with the Exchange's request of March 28 1933. There was obviously no occasion to comment on other items of current assets. Accounts and notes receivable have, of course, no market value; uncollectible items are currently written off and probable future losses therein are comparatively small. Cash was cash. As stated in the report itself, the policy of valuing inventories on a basis of cost or market, whichever was lower, was being continued. We hoard nothing further from the Exchange until April 27 1933, when we received the Exchange's letter of the previous day stating that on that day the Committee on Stock List had submitted a special report regarding this company to the Governing Committee. This letter enclosed a copy of such report and advised us that the Governing Committee had deferred action thereon until May 3, at which time an opportunity would be given to us to appear or submit a statement. - The conclusion of the special report was that "the Committee on Stock List is forced to the conclusion that further discussion with the corporation will prove unavailing." As appears in the report, this conclusion was based primarily on "reports appearing in the public press." On the basis of these press statements the Committee on Stock List reported that at the stockholders' meeting: (a) "no statement appears to have been made calling specific attention to the overstatement of current assets resulting from" the balance sheet statement of marketable securities at cost;(b)"No statement appears to have been made as to what part, if any, of the contingency reserve was required to reflect any shrinkage in other current assets"; and (c) that a statement was made to the effect that "there would be no change in the company's method of issuing statements." On this basis the report stated that the Committee on Stock List "reports the matter to the Governing Committee for such action as it may deem appropriate in the circumstances." This report appeared prominently in the evening papers of April 26, the date of the report, as well as in the morning papers of April 27, although, as above stated, we received no word from the Exchange on the subject until we received on April 27 their above mentioned letter of the previous day. We consider that this precipitate and misleading action of the Exchange, based on newspaper reports, and without previous communication with the company on the subject, was altogether improper and unreasonable and obviously injurious to the interests of the company and its stockholders. The occurrences at the annual meeting which are referred to in the special report were in fact largely the contrary of what was stated in the report. As above pointed out, the presiding officers' statement did specifically call attention not only to the fact that the current value of marketable securities 3819 at Dec. 31 1932 was $28,000,000 less than cost, but also the fact that these securities were shown in the balance sheet at cost, and also to the fact that the difference was amply provided for in the reserves. Consistently with the company's letter of April 21, no statement was made with reference to any corresponding shrinkage in the balance sheet values of other current assets—cash, accounts receivable and inventories—because there was no such shrinkage. No one stated at the meeting "that there would be no change in the company's method of issuing statements," or anything to that effect. The Exchange knew as well as the company that consideration between them of various possible changes was then shortly to be resumed in accordance with the Exchange's letter of March 28 and the company's reply of April 21, above referred to. By its sudden publication, without warning, of this unwarranted special report, the Exchange apparently sought to transform what had previously been a reasonable exchange of views between it and the company regarding possible voluntary changes by the company in the form of its annual reports into a campaign by the Exchange to compel the company to make such changes unwillingly by means of hostile and misleading public propaganda. This action by the Exchange raises fundamental questions regarding the relationship between it and the companies whose securities it has admitted to trading; and we will therefore state briefly our views in this connection. The management of the Exchange is responsible to its members. Its primary object is, or should be,to provide a broad,free,fair and active market for the purchase and sale of securities through its members, as brokers, to their profit. The management of the company is responsible to its stockholders. Its primary object is, or should be, to conduct its business so as to yield the maximum of continuous earnings and dividends to the profit of its stockholders. These different primary objects naturally lead to somewhat divergent views on the part of the management of the Exchange and on the part of the management of a company whose securities are admitted to trading on the Exchange in regard to the information which the company should publish concerning its affairs. Hence, the agreements which the Exchange requires of a company in this regard as a condition to the listing of its securities. The management of the Exchange, we presume, would be the better pleased the more frequent and full a company made its reports, and the greater the public interest thus inspired in trading in the company's securities. The management of the company, on the other hand,owes to its stockholders, not only a duty to report to them from time to time regarding its affairs, but also a duty not to publish information regarding its affairs which might be effectively used by the company's business adversaries to its disadvantage in the conduct of its business. The management of the company is neither responsible to the members of the Exchange in respect of the information to be published regarding the company's affairs nor in any position to determine what the best interests of the members are in that regard. The management of the Exchange is neither responsible to the company's stockholders in respect of the information to be published regarding its affairs nor in any position to determine what the best interests of the stockholders are in that regard. In connection with trading in a company's securities on the Exchange it is thus necessary that the management of the Exchange and the management of the company, each representing their respective principals, should be in agreement as to what information the company will publish regarding its affairs. If they agree, the securities can be admitted to trading. If they do not agree, the securities cannot be admitted to trading. But neither the Exchange nor the company can properly undertake to settle the question for both. Regardless of all other considerations, we consider that we are under obligation to our stockholders not to permit publication of information regarding this company's affairs which might be used by Its business adversaries to the company's disadvantage in the conduct of its business, and, further, that we are under like obligation to determine freely whether any particular kind of information is of this character; and so long as the stockholders continue us in the management of the company we propose to continue to discharge these obligations to the best of our ability. At the same time we will continue to give full consideration to the wishes of the management of the Exchange in this regard so long as our stock remains listed on the Exchange, with a view to proper accommodation of the interests of the members of the Exchange and the interests of the company's stockholders. If, however, our considered conclusions at any time prove to be unacceptable to the management of the Exchange, we do not propose for that reason to adopt their different conclusions. We have assured you informally of the baselessness of the unfavorable gossip regarding the company which has recently spread abroad. This has concerned principally the company's marketable securities. We wish now to confirm the facts in this regard as previously stated to the Stock Listing Committee. It has been suggested that by reason of these security holdings the company was more of an investment trust than a chemical manufacturer. The fact is, as the company's published balance sheet shows, that these securities constitute less than a quarter of its assets. It has been rumored that, although the balance sheet describes the item as "U. S. Government and other marketable securities," no substantial amount of U. S. Government securities are included. The fact is that about $20,000,000 of U. S. Government securities are included. It has been rumored that the balance of the item represents a speculative trading account, largely affecting the company's earnings. The fact is that it consists practically entirely of the securities of six companies. Of these holdings, the chief are substantial holdings of the company's preferred and common stock. The others are in the main holdings in other companies which are related to this company's operations, and for this reason we consider that it would be contrary to the best interests of our stockholders to publish the list of these holdings. All these securities have been held for years; there have been no sales of any of them at any time, except that in 1931 the company decreased its holdings in one other company by less than 20% and in another by less than 15%. None of these securities are current assets in the sense that the company contemplates cashing them in the near future, but only in the sense they are in fact readily marketable. The company has never speculated in the security markets and never will under the present management. Since the publication of the Exchange's special report on April 26, we have resumed our discussions with the Stock List Committee in a sincere effort to reach an accord with them upon such changes In our annual reports as would reasonably satisfy both the management of the Exchange, reflecting the interests of its members, and the management of the company, reflecting the interests of its stockholders. In the course of these discussions we have sincerely endeavored to satisfy the members of the Committee as to the sufficiency of the bases for our judgment that it would be contrary to the best interests of our stockholders to publish further particulars of our income. In this respect we believe that this company Is to be distinguished from most whose securities are listed on the Exchange. Of course it is not a public utility. Furthermore, it has never sold a share of its stock or any other capital obligation. It does not seek credit. There are thus absent the usual bases on which companies may properly publish information regarding their affairs in greater detail than the best interests of their stockholders might otherwise warrant. This company's business, moreover, has always been and is at the present time subject to competitive Financial Chronicle 3820 conditions of extraordinarily severe and far reaching character. We are well aware that our principal competitors, particularly those abroad, scrutinize every item of obtainable information regarding our business to use against us. We do the same against them and we know very well how a little information regarding their affairs picked up here and there and put together can assist us in our efforts to defeat their competition. As a result of our discussions with the Stock List Committee we have arrived at the following conclusions regarding their suggestions as a basis for a mutually satisfaCtory accord, viz., that in future annual reports to stockholders we will show in the body of the financial statements or by note at the foot thereof: (a) Property account is carried at cost; (b) Marketable securities are carried at cost; (c) Basis of inventory value; (d) U. S. Government securities separately from other marketable securities; (e) Amount of other marketable securities which are listed on the Exchange or the Curb: (f) Market value of U. S. Government securities; (g) Market value of other marketable securities; (h) Amount of reserve for depreciation of marketable securities; (1) The item of further surplus consists of a specified amount of earnings accrued to the company since its organization and a specified amount of earnings accrued to its constituent companies prior to the company's organization; (j) Amounts of the company's preferred and common stock held in the company's treasury, at cost, and the reserves provided, if any, to cover the difference between cost and market; (k) Any substantial amount of non-recurring items included in income; (1) Dividends paid on the company's stock owned are included in income or not as the case may be. We have stated our views and our attitude about all these matters very frankly because we believe that this course offers the best prospect of a genuine and stable understanding between us in respect to the questions Involved. We do not hope that you will agree with our views in all respects. We do hope that you will understand clearly what they are and will appreciate that they are sincerely entertained; and we earnestly hope that you will find acceptable our conclusions regarding the requested changes in our annual reports. Very truly yours, (Signed) H. F. ATHERTON, Secretary. • . • • ALLIED CHEMICAL & DYE CORPORATION Annual Meeting of Stockholders April 24 1933. Remarks of Chairman of the Meeting. We are pleased to note the interest which you, ladies and gentlemen, have indicated in the affairs of the company by your attendance at this meeting. You are all fully aware of the severity of the depression and of the attendant decline in commodity consumption by the basic industries which we serve, such as steel, agriculture, oil, textiles, glass and building. A decline in commodity consumption is always accompanied by intensification of competition. While costs of production, with the exception of taxes, are largely within the control of the management, selling prices are Invariably determined by competition. The decline in price levels of the company's products during the past year has been accelerated in part by depreciated foreign currencies and by the dumping of foreign commodities Into the domestic market. You have all received copies of the annual report for the year 1932. A very large percentage of our present stockholders have also received copies ofour reports each year since the company was incorporated. It has always been the policy of the company to present to the stockholders in the annual reports the essential information as to the company's financial status and the results of its operation in a simple and consistent form, thus affording a continuity of record. From an examination of the reports since organization you will note that: The company's total assets have increased from $282,000,000 to $408,000,000. Funded debt has been eliminated and current liabilities other than for dividends to stockholders have been substantially reduced. Total reserves have increased from $72,000,000 to $191,000,000. Surplus has increased from $126,000,000 to $159,000,000, notwithstanding the transfer in 1931 of $40.000,000 from surplus to reserve for general contingencies to protect the company's assets and operations against future contingencies. During the period, in addition to two stock dividends of 5% each on the common stock, cash dividends amounting to $163,000,000 have been paid to stockholders. U. S. Government and other marketable securities carried under current assets, aggregating $92,400.000, stated at cost, had a market value as of Dec. 31 1932 of approximately $28,000,000 less than cost. The reserves which have been provided are ample to take care of this depreciation. As to results for this year to date, I may state that while net earnings for the first quarter of 1933 have fallen short of dividend requirements, the company's liquid position remains unimpaired. Cash dividend on the common stock has been declared payable May 1 1933 at $1.50 per share, which is the rate maintained since 1926. (2) Report and Recommendation of the Committee on Stock List to the Governing Committee New York Stock Exchange May 24 1933. Notwithstanding prolonged negotiations with Allied Chemical & Dye Corp.. no agreement has been reached in regard to the information to be furnished presently to stockholders or in regard to the future publication of the balance sheet, surplus and income account of this corporation in a manner which, in the opinion of the Committee on Stock List, would furnish stockholders with information essential to a proper understanding of the condition of the corporation and of its operations. Accordingly, the Committee on Stock List recommends to the Governing Committee that the preferred and common stock of Allied Chemical & Dye Corp. be stricken from the list of the New York Stock Exchange on Aug. 23 1933, unless prior thereto the corporation shall have furnished stockholders with adequate information in regard to the present condition of the company and shall have entered into an agreement with the Exchange, satisfactory to the Committee on Stock List, as to the manner in which the financial reports of the corporation will be published in the future. (3) Resolution Adopted by Governing Committee May 24 1933. Upon motion duly made and seconded. it was unanimously resolved that the preferred and common stock of Allied Chemical & Dye Corp. be stricken from the list of the New York Stock Exchange on Aug. 23 1933. unless prior thereto the corporation shall have furnished stockholders with ade- June 3 1933 quate information in regard to the present condition of the company and shall have entered into an agreement with the Exchange, satisfactory to the Committee on Stock List, as to the manner in which the financial reports of the corporation will be published in the future. (4) Orlando F. Weber. Esq., President, Allied Chemical & Dye Corporation, 61 Broadway, New York, N. Y. May 24 1933. Dear Sir: The letter of May 24, signed by the Secretary of your company and addressed to the Governing Committee of the New York Stock Exchange. was duly received and submitted to the Governing Committee at its meeting this afternoon. I am directed to inform you that, after due consideration, the Governing Committee unanimously adopted a resolution upon the recommendation of the Committee on Stock List. I enclose herewith a copy of such recommendation and resolution for your information. I am further directed to inform you that the President of the Exchange will send you shortly a communication which will answer in detail the various matters referred to in the above mentioned letter of May 24. Very truly yours, (Signed) ASHBEL GREEN, Secretary. (5) Mr.Orlando F. Weber, Esq.,President, Allied Chemical & Dye Corporation. 61 Broadway, New York. N. Y. May26 1933. Dear Mr. Weber: A communication addressed by your corporation to the Governing Committee of the Exchange under date of May 24 1933 was duly received and submitted to the Governing Committee at its meeting held on May 24 1933. After due consideration,and upon the recommendation of the Committee on Stock List, the Governing Committee unanimously adopted the following resolution, which has already been furnished to you: "Resolved, That the preferred and common stock of Allied Chemical & Dye Corp. be stricken from the list of the New York Stock Exchange on Aug. 23 1933, unless prior thereto the corporation shall have furnished stockholders with adequate information in regard to the present condition of the company and shall have entered into an agreement with the Exchange, satisfactory to the Committee on Stock List, as to the manner In which the financial reports of the corporation will be published in the future." A letter from the Secretary of the Exchange enclosing a copy of the resolution was sent to your office immediately after the adjournment of the Governing Committee, meeting Wednesday evening. Unfortunately, your office had already closed, and the messenger, finding it impossible to deliver the letter by hand, thereupon mailed it to you. Before stating the reasons which actuated the Governing Committeain adopting this resolution, I feel I should refer to the history of the negotiations between your company and the Exchange. When we first brought up for discussion, in December 1929, the question of more informative financial statements, we also took up with you the question of certain changes which we thought necessary In the form of your agreements with the Exchange. You confined the lengthy discussion, when you appeared before the Committee,almost entirely to the matter of the proposed changes in the agreements entered into by your company as a condition of listing, and eventually agreed to certain changes, though failing to meet fully the Committee's views. In our letter to you of Dec. 311929, to which your communication refers, we advised you specifically that we believed it to be essential in the public interest that our requirements and practices should keep pace with the changes in business customs and conditions which from time to time occur. We further advised you that the Committee had given favorable consideration to your pending application because it was aware that you might not have been sufficiently advised of the policies of the Stock Exchange to give them due consideration. We denied the contention that the form of any application anti the agreements contained therein fixed the status of future applications and agreements with the company. We expressed our disappointment that our efforts to secure your co-operation had met with so little success. When your application of December 1930, was presented, we took up again with you questions of both agreements and financial statements. On each of these occasions your board of directors had declared a stock dividend payable on Jan. 3 of the succeeding year, or as soon thereafter as the additional stock was granted listing. The applications were presented in the early part of December, and therefore the time for discussion as to changes in your financial reports was strictly limited, unless the Committee on Stock List was willing to force a delay in the payment'of the stock dividends to your stockholders. The listing of the additional stock, under such conditions, I submit, can not be construed as approval of the financial statements to which we were objecting. I deny that the publication of the special report was in any way precipitate or misleading. The exact contrary Is the case. The requests contained in our letter to you of June 23 1932 were specifically denied in your Secretary's letter of Aug. 17 1932. We would have been fully justified in taking then the action which we have taken now. In an effort, however. to avoid just the situation which has now occurred, we wrote advising you of our intention to submit the correspondence to each of your directors. On Aug. 25 1932 you stated that you would yourself have this done, and that we would be advised of the action taken. However, the first definite information which we had as to your final position was when we received a Cony of your printed annual report on March 17 1933, nearly seven months later, containing a sentence in your letter to stockholders reading: "The balance sheet and the income account of the company for 1932 are in the same form in which they have been previously stated." Since this fact was perfectly manifest without the sentence in question, we deemed this a final answer to our request. We were still anxious, however, to avoid the necessity for drsatic action, as to the possibility of which you had been fully advised the previous August. We wrote, therefore, our letter of March 28 1933. No reply was received until April 21, when we were advised of a verbal statement which it was proposed to make at the forthcoming stockholders' meeting. This reply indicated that the only concession which would be made was a statement of the difference between the figure at which "U. S. Gov't and other marketable securities" were carried on your balance sheet, and the market value of these securities. Far from being a satisfactory compliance with our request, this communication indicated that you proposed to make an announcement at the meeting of stockholders substantially similar to the one which you had made at the preceding annual meeting, We had spedfically pointed out in our letter of March 28 that we did not consider such a statement sufficient. Financial Chronicle Volume 136 The proceedings at the stockholders' meeting were convincing evidence that up until that time there was no intention of complying with any of the requests contained in our letter dated ten months earlier. We did not rely upon the press reports of the meeting without having in our possession a stenographic transcript of what had been said which fully confirmed these reports. Under these conditions, the Committee on Stock List had no choice other than to bring the matter to the attention of the Governing Committee, and that Committee, in fixing the date on which it would consider the matter, endeavored to give you ample time to make any statement which you thought relevant to the matters under discussion. This was afterwards extended from May 3 to May 10, and then until May 24. The matter had been under discussion on the last named date for 11 months. Surely this does not indicate any precipitancy upon our part. Your implication that the Exchange is primarily interested in these questions from the standpoint of securing for its members activity in the market is not warranted. No such thought has ever influenced our listing policies. Our interest has been, from the beginning, in the proper protection of stockholders through securing for them reasonable information. In regard to the main question under discussion, the Governing Committee has been advised that on Monday of this week you appeared before the Committee on Stock List to submit certain suggestions looking toward an agreement with the Exchange in regard to your financial statements. and also for the purpose of stating to the Committee the reasons why you felt that a more complete disclosure of the income account of your company would be detrimental to the best interests of your stockholders. Towards the close of that meeting, and after you had fully expressed yourself in regard to the competitive conditions existing in the chemical industry, a question elicited the fact that your company had included under current assets, and as part of the item designated as "U. S. Gov't and other marketable securities" substantial holdings of your own preferred and common stocks. No statement as to the extent of these holdings was made other than that they were substantial, but it appears from your letter to the Governing Committee that holdings of your own stock constitute the most important Item of the so-called "other marketable securities." This disclosure immediately raised serious questions which had not theretofore been under consideration. We can see no justification for this procedure, which you have advised us has been continued since 1929. While custom has, in some instances, sanctioned the inclusion of a corporation's own stock among its assets, this can not be justified unless the facts are fully disclosed. Furthermore, under the existing conditions, there is no justification for including such holdings among current assets. In the financial reports of your company since 1929 there has been no indication, either in the balance sheet or in the income or surplus accounts, which would lead stockholders to believe that your company had purchased either its own preferred or common stocks. On the contrary, the statement of surplus against which you have annually charged the amount of dividends paid has shown a deduction from surplus equal to the current rate of dividend on the entire amount of preferred and common stock which was issued and supposedly outstanding in the hands of the public. This form of statement tended to make stockholders believe that your company had not purchased its own shares. The above described method of reporting the dividends paid by your company necessarily casts doubt upon the validity of the income statement of your company. When this fact was pointed out to you, you stated that the amount of these dividends had not been included in the income account because a corresponding sum had, simultaneously, been credited to an unspecified reserve account. This explanation of the manner in which the dividends on stock held by the company had been included in your financial statements does not solve the problem. If it is improper for a corporation to increase its income by including therein dividends on its own stock (and this, of course, would be particularly true where the dividends paid were not fully earned, as was the case with your company in 1932, according to your published reports for that year). it is equally improper for a corporation to credit such dividends to some reserve account without disclosing the relevant facts to stockholders. In view of this development, the Committee felt that it was bound to Insist upon a more informative income account. While we recognize that the management of a company producing highly competitive products must withhold detailed information in regard to the cost of production and cost of sales, the interests of the stockholders which would be served by a failure to disclose such information must be balanced against the danger inherent in permitting a corporation which enjoys a public market for its securities to submit annual statements which reflect Inaccurately the results of its operations. Since you do not disclose the amount of your annual appropriation for depreciation, or obsolescence. It is possible to increase or decrease these at pleasure. It has also been developed at our hearings that income from securities and the above mentioned dividends upon your own reacquired stock, as well as non-recurrent Items such as a large tax refund, may have been credited more or less directly to reserves. Within wide limits, therefore, the lack of information as to details of your income account makes it possible for the management of your company to vary the reported income up or down, at pleasure, and makes it impossible to compare intelligently the income account of one year with that of another. We do not say that this great power has been abused. We do say that it ought not to exist. After considering these facts, the Governing Committee concluded that the income account of your company, as it has been reported in the past, amounts to nothing more than a statement of an arbitrary amount which the management and directors of your company have elected to call "Income." We have considered, carefully, your statements that to give the information requested in our letter of June 23 1932 would be helpful to your competitors. For this reason we initially omitted any request to show sales or cost of sales, and have since verbally withdrawn the request that general, selling and administrative expenses be shown. In view of the fact that your company produces over 5,000 different products, we find it impossible to believe that the mere statement of your net operating profit would furnish your competitors with any useful information. The arguments which you have presented against disclosing further information in regard to your income account are identical with those advanced by you in support of your former contention, from which you have now receded, that no changes should be made In your balance sheet. As stated above, it seems probable that certain items which should have been reflected in your income or surplus accounts have been charged or credited directly to reserves. This practice is likewise objectionable. Without questioning your sincerity, we are equally sincere in feeling that the requested information is essential if the securities of your company are to remain listed upon an organized stock exchange. In order that the stockholders of Allied Chemical & Dye Corp. may fully understand the reasons for the action taken by the Exchange, we feel it is necessary to publish our recent correspondence. Faithfully yours, (Signed) RICHARD WHITNEY, President. 3821 Milton Hayman, Former Member of Failed Firm of Hayman & Hayman, Reinstated as Member of New York Curb Exchange. On May 25, the Board of Governors of the New York Curb Exchange reinstated to regular membership, Milton Hayman, who was a floor member of the firm of Hayman & Hayman, which was suspended from the Exchange on July 11 1932, for insolvency. 0- Mr. Hayman, who was admitted to membership on the Exchange on April 27 1921, will trade as an individual, the former partnership having been dissolved. Trial of Isidor J. Kresel for Charges Growing Out of Failure of Bank of United States Adjourned to Sept. 15—Supreme Court Justice Taylor Grants Delay at Request of Counsel John W. Davis. Supreme Court Justice George H. Taylor Jr. of Westchester County,in the Criminal Courts Building on May 22, adjourned the trial of Isidor J. Kresel on charges of misuse of the funds of an affiliate of the Bank of United States of which he was a director and counsel, until Sept. 15. We quote the following from the New York"Times" of May 23: The adjournment was requested by John W. Davis, counsel for Mr. Kresel, because of other engagements, and was not opposed by Assistant District Attorney James G. Wallace. Justice Taylor. who Is to preside at the trial at the request of the Appellate Division, granted an application by Mr. Wallace for a special panel\ of Jurors because "an ordinary Jury cannot be obtained without delay and difficulty." The Court signed an order directing that a panel of 150 be drawn at the office of the Commissioner of Jurors on Sept. 15. Mr. Davis opposed the application. New York State Stock Transfer Tax Law—Communication to New York Stock Exchange from F. S. McCaffrey, Deputy Commissioner of Department of Taxation and Finance. The New York Stock Exchange has received the following communication, dated May 25, from Frank S. McCaffrey, • Deputy Commissioner, Department of Taxation and Finance of the State of New York, it was made known on May 26 to members of the Exchange by Ashbel Green, Secretary: Your attention is called to the provisions of Chapter 643 of the Laws of 1933, effective June 1 1933, changing the tax on transfers of stock and other taxable certificates from a par value basis to that of selling price. By this amendment the rate of tax is fixed at Sc. per share on stock selling under $20 per share and 4c, per share on stock selling at $20 and upwards per share. By the terms of the Act the rate of tax on taxable certificates, which are transferred but not sold, is Sc, per share. To aid in the carrying on of business between stock brokers, banking Institutions and transfer agents, it is deemed advisable to permit the following certifications, which may be imprinted on certificates presented for transfer. On certificates presented for transfer, when the sale or transfer of title occurred prior to June 1 1933, tax at the rate imposed prior to that date is permissible. Such transactions must bear a certification as follows: This is to certify that the sale of these shares or the transfer of title thereto was made prior to June 1 1933, Signed Broker, custodian or transfer agent On certificates presented for transfer when no sale has occurred, but under the language of the Act are taxable, certification may be made as follows: The undersigned hereby certifies that the transfer of the within shares does not constitute a sale. Tax is paid at lower rate. Signed Broker or custodian. Transactions on which the selling price is less than $20 per share, the following certification may be imprinted on certificates presented for transfer: This is to certify that the transfer of the within shares represents a sale In which the selling price was less than $20 per share. Signed Broker or custodian. Transfer agents are permitted to accept certificates presented for transfer bearing either of the above certifications, exacting tax on the basis of the certification. Transfer agents are also granted permission, for the period beginning June 1 and ending at the close of business June 10 1933, to accept certificates for transfer without either of the above certifications, that is to say, for that period they are relieved of the responsibility of exacting proof or certification that tax affixed at the rate of 3c. per share is warranted. This relief is granted to clear up incampleted transactions. Chapter 455 of the Laws of 1933 exempts from tax transfers from an owner to a custodian, where the certificates are to be held or disposed of by the custodian for and subject to the instructions of the owner, or from such custodian to the owner, or from such custodian to his nominee, or from one nominee of the custodian to another, or from the nominee back to the custodian, provided the stock continues to be held for the same purpose. On all such transactions certifications must be imprinted on the certificates presented for transfer bearing the following language, depending on the particular transaction: We hereby certify that the transfer of the within shares represents a transfer from the owner thereof to us as custodian or to our nominee, to be held or disposed of subject to the instructions of the owner. Signed Custodian. We hereby certify that the within shares standing in the name of our nominee are being transferred to us or another nominee of ours to be held for the same purpose as they would be held if retained by us as custodian. Signed Custodian. Financial Chronicle 3822 We hereby certify that the transfer of the within shares represents a transfer from us as custodian, or our nominee, to the owner thereof, heretofore held by us as custodian. Signed Custodian. Chapters 454, 455, 472 and 643 of the Laws of 1933 all amend the stock transfer tax law. The Department has ruled that while Chapters 454, 455 and 472 specifically mention only Section 270 of the law, and also that the effective date for each of the three last mentioned Chapters is April 26, and that for Chapter 643 is June 1, all of the Chapters are to be considered as amending both Sections 270 and 270-a of the Act and should be read and construed as a whole when applying the statute. Ruling on Bond Purchases Amended by New York Stock Exchange. Green, Secretary of the New York Stock Exchange, Ashbel notified members of the Exchange on May 27 that the Committee of Arrangements has amended its ruling dated Aug.3 1932, to read as follows: If a member purchases bonds from another member without specifying that his bid is a "next day" bid, and if subsequently a disagreetnent develops as to whether the transaction was mode for "next day" delivery or for "delayed delivery," as provided in Paragraph B of Section 7 of Chapter I of the Rules, and neither party can produce a witness, then the transaction shall be considered to have been made for "delayed delivery." If either member has reported the transaction as having been made for "next day" delivery, such member shall, unless specifically permitted by the Committee of Arrangements to do otherwise, render immediately a corrected report, which shall be binding upon all parties concerned provided that the change is made before 2:15 p. m. of the next business day, or before 11:30 a. m. if such next day is a half holiday observed by the Exchange. If the change is not made prior to such hour, and if such member then clears the transaction at his own expense, he must pay an additional transfer tax (unless the bonds are exempt from transfer taxes) and shall not charge any commission. New York Clearing House Lowers Interest Rates. This week the New York Clearing House reduced the interest rates paid on deposit by Clearing House institutions. This action follows an increase in rates which was put into effect by the Clearing House in April, and to which we referred in our issue of Apr. 15, p.2522. In the case of demand deposits the rate to banks, trust companies and private banks was lowered this week from M% to 3,4%; the rate to mutual savings banks and to others is likewise cut from M% to %. The rate of interest on time deposits payable after 90 days is reduced from 1% to 34%• The change in rates was announced as follows on May 31 by the Clearing House: NEW YORE CLEARING HOUSE, 77-83 Cedar Street. New York, May 31st 1933. Dear Sir: Acting under the provisions of SECTION 2,ARTICLE XI of the Clearing House Constitution, relating to interest on deposits to be paid by Clearing House institutions, we beg to advise you that the following maximum rates have been fixed, effective Friday, June 2nd 1933: YOUR ATTENTION IS CALLED TO THE FACT THAT BY THIS RULING ANYTHING UNDER 90 DAYS CERTIFICATE OF DEPOSIT OR 90 DAYS NOTICE IS A DEMAND DEPOSIT IN FIXING INTEREST RATES. On Certificatesrof Deposit Payable Within 90 Days of Issue or Demand, and on Credit BalancesPayable on Demand or Within 90 Days of Demand To Banks, Trust Companies and Private Bankers. To Mutua Savings Banks. On Certificates of Deposit or Time Deposits, Which by Their Terms are Payable on or After 90 Days, But Not More Than Six Months From the Date of Issue or Demand To Others. 34% Certificates of Deposit or Time Deposits payable more than six months from date of issue or demand are not subject to regulation as to rate of Interest payable, but are subject to other regulations. including ruling No. 15. By order, GEORGE W. DAVISON, Chairman, Clearing House Committee. CLARENCE E. BACON. Manager. Reduction in Rediscount Rates of Boston and San Francisco Federal Reserve Banks. Two of the Federal Reserve Banks—Boston and San Francisco—have this week followed the action taken last week by the New York and Chicago Reserve Banks in lowering their rediscount rates. Mention of the reduced rates adopted in New York and Chicago was made in our issue of May 27, page 3633. On May 31 the Federal Reserve Bank of Boston reduced its discount rate on all classes of paper of all maturities from 334 to 3%,effective June 1. The previous change had been an advance from 234 to 334% on Oct. 17 1932. The Federal Reserve Bank of San Francisco reduced its rediscount rate, effective June 2, from 334 to 3%. The last named rate had been in effect since Oct. 21 1931. June 3 1933 -Day New Offering of $75,000,000 or Thereabouts of 91 Treasury Bills—Will Be Dated June 7 1933. Tenders to a new offering of 91-day Treasury bills to the amount of $75,000,000 or thereabouts were invited on May 31 by William H. Woodin, Secretary of the Treasury. The bills, which will be dated June 7 1933 and mature Sept. 6 1933, will be used to retire an issue of $75,266,000 which matures on June 7. Bids to the offering will be received at the Federal Reserve banks, or their branches, up to 2 p. m., Eastern standard time,Monday,June 51933. Tenders will not be received at the Treasury Department, Washington. The bills will be sold on a discount basis to the highest bidders and on the maturity date the face amount will be payable without interest. Secretary Woodin's announcement continued in part: They will be issued in bearer form only, and in amounts or denominations of $1,000, $10,000, $100,000. $500,000, and $1,000,000 (maturity value). No tender for an amount less than $1,000 will be considered. Each tender must be in multiples of $1,000. The price offered must be expressed on the basis of 100, with not more than three decimal places. e. g., 99.125. Fractions must not be used. Tenders will be accepted without cash deposit from incorporated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by a deposit of 10% of the face amount of Treasury bills applied for, unless the tenders are accompanied by an express guaranty of payment by an incorporated bank or trust company. Immediately after the closing hour for receipt of tenders on June 5 1933. all tenders received at the Federal Reserve banks or branches thereof up to the closing hour will be opened and public announcement of the acceptable prices will follow as soon as possible thereafter, probably on the following morning. The Secretary of the Treasury expressly reserves the right to reject any or all tenders or parts of tenders, and to allot less than the amount applied for, and his action in any such respect shall be final. Those subnutting tenders will be advised of the acceptance or rejection thereof. Payment at the price offered for Treasury bills allotted must be made at the Federal Reserve banks in cash or other immediately available funds on June 7, 1933. The Treasury bills will be exempt, as to principal and interest, and any gain from the sale or other disposition thereof will also be exempt, from all taxation, except estate and inheritance taxes. No loss from the sale or other disposition of the Treasury bills shall be allowed as a deduction, or otherwise recognized, for the purposes of any tax now or hereafter imposed by the United States or any of its possessions. President Roosevelt Authorizes Purchase of $100,000,000 of Government Securities by Postal Sayings System. Announcement that President Roosevelt had authorized the Board of Trustees of the Postal Savings System to buy $100,000,000 additional Government bonds or other securities was made on May 27, a White House statement in the matter (May 27) saying: Request of the Board of Trustees of the Postal Savings System for authority to purchase bonds or other securities of the United States to the amount of $100,000,000 was approved to-day by President Roosevelt. Previously the request had been approved by Postmaster-General Farley, Secretary of the Treasury Woodin and J. Crawford Biggs, Acting AttorneyGeneral, all members of the Postal Savings System Board of Trustees. The $100,000,000 purchase would be in addition to securities already authorized for purchase by the Board of Trustees. Power to grant the authority requested by the Board is conferred upon the President by the Act of May 18 1916, which provides: "When, in the judgment of the President, the general welfare and interests o the United States so require, the Board of Trustees may invest all or any part o the postal-savings funds, except the reserve fund of 5% herein provided for, in bonds or other securities of the United States. (Sec. 2, Act of May 18 1918)." On May 27 the Washington correspondent of the New York "Journal of Commerce" said: At the present time the Postal Savings System has more than $1,157,651,788 of deposits, much the highest on record. Authorization of purchase bonds will make it possible to place these excess deposits in such bonds from time to time. The Secretary of the Treasury will supply the bonds either from old Issues or new issues. The $100,000,000 will not all be purchased at once. . . . The objective under the Postal Savings System is to take the deposits given to the Government and place them back in the banks of the country from which they came. There is a requirement, however, that such postal savings deposits be collateraled by Government bonds up to 100%. Statement by Secretary of Treasury Woodin Concerning Gold Clause Repeal—One Purpose to Make Clear Future Government Obligations Will Not Contain Clause. Following the introduction in Congress on May 26 of the joint resolution relating to the payment of obligations in gold, making all coin or currency issued by the Government legal tender for the payment of public and private debts, Secretary of the Treasury Woodin issued a statement on May 26 in which he said that one purpose of the resolution "is to make clear that future obligations, public and private, shall not contain the gold clause." It was pointed out In a Washington account on that date (May 26) to the New York "Times" that the resolution, being retroactive, would permit the Government and corporations to redeem in any money issued by the United States, current obligations containing the gold clause. The "Times" dispatch continued, In part: It also clarifies the wording of the Inflation amendment to the Agricultural Adjustment Act, which makes all money issued by the United States Volume 136 Financial Chronicle legal tender for the payment of public and private debts. Contracts drawn up hereafter stipulating gold as the medium of payment would be illegal. The provision of the Second Liberty Loan Act requiring that bonds, notes and certificates issued by the Treasury should be payable in gold of the present standard of value would be repealed. Gold Act Held Unaffected. The Act of March 14 1900, which is the gold standard law, would not be affected by the resolution, officials declared. This Act provides that "the dollar, consisting of 25.8 grains of gold nine-tenths fine . . . shall be the standard unit of value, and all forms of money issued or coined by the United States shall be maintained at a parity of the value of this standard, and it shall be the duty of the Secretary of the Treasury to maintain such parity." Secretary Woodin said the resolution had special significance with regard to future issues of United States obligations. He explained that the Government would soon be issuing large amounts of bonds and that if the resolution passed, they would not contain the usual stipulation as to pays, bility in gold, as provided in the Second Liberty Loan Act. Notes and certificates issued since the gold embargo in April have contained the gold clause in conformity with the law, even though payments have been suspended on meeting all maturities. The Thomas Amendment would permit the payment of such maturities and meeting of other obligations, specified as payable in gold, in any type of money issued by the United States. Coins Would Be Legal Tender. One section of the resolution provided that coins and currencies issued by the Government should be legal tender, except gold coin when below the standard weight. This was merely a restatement of the law which provides that when gold is brought to the Treasury for redemption the coins are weighed, and if below the 25.8 grains of gold, nine-tenths fine, the actual value only is paid. Gold coin long in circulation may be worn sufficiently to reduce its value from the amount stated on the face. The gold resolution was drafted in the Treasury Department at President Roosevelt's direction. In effect, it puts into statutory form the currency policy adopted with the advent of the new Administration, under which gold payments were suspended indefinitely and a partial embargo placed on gold exports. It removes confusion which arose. particularly among railroads and other corporations with large volumes of outstanding gold bonds. As the country was definitely off the gold standard under Presidential proclamation, the resolution would make no change in this situation. The provision that gold should be stipulated as the medium of payment for Government securities, repealed by the resolution, was written into the law at a time of currency uncertainty, so that a purchaser of bands could be assured of full payment in terms of a standard fixed dollar at their maturity. No Effect on War Debt Position. The resolution would have no effect on the position of this country with relation to the possible payment of the war debts June 15, when $40,791,840 In principal and $102,813,454 In interest are due. Under the Thomas amendment any lawful money of the United States may be employed for the payment of debts. Therefore, the foreign governments. if they desired to pay, could obtain dollar exchange at a discount In foreign markets with which to make the remittance. This Government could hardly demand payment in gold when it declined to fulfil its own obligations in gold. Treasury experts said that there was no accurate estimate of the volume of outstanding corporate gold bonds. The Government's public debt, normally payable in gold, is about $21,824,000,000. . . . Secretary Woodin said that the National Metal Exchange had not been asked for advice as to a plan for stabilization of gold, nor had any monetary question been taken up with that organization so far as he knew. The statement issued May 26 by Secretary Woodin follows: A joint resolution was introduced to-day in both houses of Congress designed to clarify the effect of recent legislation upon the status of the "gold clause" in public and private obligations. This resolution has the support of the Administration. Since March 6, when the President declared a bank holiday, transactions involving payments in gold have been brought under control in order to protect and maintain the supply which constitutes a reserve for the nation's currency. Gold is not now paid, nor is it available for payment, upon public or private debts. Recently the Thomas amendment to the Agricultural Relief Act has made all coins and currencies of the United States legal tender for the payment of every debt public and private. Due, however, to the language used, doubt has arisen whether obligations expressed to be payable in a particular kind of money, such as gold coin, may be satisfied by payment in other forms of legal tender. While the Supreme Court of New York is reported to have held, in a recent case, that an obligation calling for payment in gold coin could be satisfied by payment of other lawful forms of money, confusion may be created if the existing legislation is differently construed in other jurisdictions. One of the purposes of the resolution is to remove any doubt and to avoid confusion, so that debtors and creditors may have a clear definition of their legal position. Another purpose of the resolution is to make clear that future obligations, public and private, shall not contain the gold clause. The Thomas amendment did not contain specific provision to this effect. Such a provision is contained in the resolution. The resolution makes it clear that all obligations past and future will be upon the same footing. Senator Fletcher's Statement Regarding Purpose of Resolution Placing "Gold Clause" Obligations and New "Legal Tender" Obligations on Same Footing. With the issuance by Senator Fletcher, on May 26, of a statement on the resolution repealing the gold clause in public and private contracts, it was stated that Senator Fletcher's statement was prepared at the Treasury and represents the official view respecting the resolution. The New York "Times," in its advices from Washington, May 26, reporting this, also said: 3823 President Roosevelt regards the legislation as a simple proposal to legalize a de facto situation. A statement made public by Senator Fletcher, who is Chairman of the Senate Committee on Banking and Currency, explains fully the position of the Administration, it was said on behalf of the President. The President holds that the resolution in no wise involves the inflation policies of the Government, nor will it, in his opinion, have any effect on the coming economic conference in London. The view of the President is that the legislation was necessary due to possible complications that might be created by court decisions if the Thomas amendment were permitted to remain in force as written. What the Government is doing, in the opinion of the President, is to inform the people that they cannot retain gold in their possession, and that paying in gold would be merely going through a "rigmarole," since the Government would immediately take possession of the gold. From the same paper we take, as follows, Senator Fletcher's statement: Certain questions of interpretation have arisen with respect to the legialation empowering the President to prevent the withdrawal and hoarding of gold and the provision in the Thomas amendment making all coins and currencies legal tender for all debts. Additional and immediate legislation is necessary to remove the disturbing effects of this uncertainty and to insure the success of the policy by closing possible legal loopholes and removing inconsistency. (1) By the Emergency Banking Act and the existing Executive order gold is not now paid or obtainable for payment on obligations public or private. By the Thomas amendment currency was intended to be made legal tender for all debts. However, due to the language used, doubt has arisen whether it has been made legal tender for payments on gold-clause obligations, public and private. This doubt should be removed. These gold clauses interfere with the power of Congress to regulate the value of the money of the United States and the enforcement of them will be inconsistent with existing legislative policy. The Government should have specific authority to control its gold resources. Furthermore, private debtors with gold-clause obligations are entitled to protection and a prompt and clear definition of their legal position. To End "Uncertainty in Business." (2) Future issues of a Government obligation should be payable in lawful currency of the United States and not in any specific coin. To promise to do otherwise under the present circumstances would open the Government to severe and merited criticism. This, however, requires legislation amending existing statutes relating to Government obligations. It is essential that all obligations of the Government, past and future, be treated alike. (3) In making all Wills and currencies of the United States legal tender the Thomas amendment has created confusion, which was not intended in the provisions of the pre-existing law relating to gold coin when below standard weight, subsidiary coins and minor coins. Philippine coins may also have been made legal tender for payment of debts in the Continental United States contrary to real intent. These uncertainties should be corrected. It is of the utmost importance that legislation along the lines of that suggested in the attached draft be enacted immediately because: (a) It completely regularizes the present de facto situation as to both public and private debts. (b) An offering of Treasury obligations must be announced on June 5 and issued June 15. It is essential that no question as to the good faith of the Government be raised in connection with this issue or future issues . (c) It would greatly facilitate administration of orders against hoarding. (d) It would eliminate existing uncertainty in business. (e) It places old "gold clause" and new "legal tender" obligations on the same footing in respect of payment. (f) It makes certain of accomplishment the declared policy of Congress. The introduction of the resolution repealing the gold clause was referred to in our issue of May 27, page 3635. Representative Steagall Reported as Holding That Resolution Making All Moneys Legal Tender Repeals Gold Standard Act. Incident to the introduction in the House, on May 26, of the gold resolution by Representative Steagall, the New York "Times," in Washington advices that day, said: Steagall Sees Great Advance. Immediately after introducing the measure in the House, Representative Steagall declared it to be a "declaration of the economic independence of the United States." "I give it as my humble judgment," said Mr. Steagall, "that this legislation marks a final, definite and determinate step. the taking of which will bring a revival of business and the restoration of prosperity and happiness to the people of the United States. "This is the President's bill, and its passage will mean that the United States has declared by statute its abandonment of any obligation to maintain the gold standard as a permanent law of this country." Differing with some others, Mr. Steagall held that the new move was a "repeal of the Gold Standard Act." Going on, he said: "With the enactment of this legislation, which of course is certain, no bonds, notes, securities or other obligations, whether public or private, will have to be paid in gold. They will be payable in United States currency. "Furthermore, the bill is retroactive. Also I will say that future obligations of the Treasury will be floated under the provisions of this Act. The bill applies to everything owed by or to the United States or its citizens. The passage of the bill will mark the greatest advance in the interest of the people ever taken by a legislative body of this or any other country." Representative Goldsborough, also a member of the Banking and Currency Committee, said be wished to endorse every word said by the Chairman. On May 29, when the resolution (which we note elsewhere) was passed by the House, the New York "Times" reported the following from Washington: Steagall Eaplains Need of Move. Defending the resolution, Mr. Steagall, the Banking Committee Chairman, declared that the occasion for the declaration that the gold clause was contrary to public policy arose out of the experiences of the present economic emergency. These gold clauses, he said, rendered ineffective the power of the Government "to create a currency and to determine its value," and, that being so, the only alternative was enactment of the resolution. 3824 Financial Chronicle Two developments of the emergency he added, made the legislation . necessary, the first being the tendency to hoard gold, the second the tendency of capital to leave the United States. "There can be no substantial question," said Mr. Steagall, "as to the constitutional power of Congress to make this legislation applicable to all obligations, whether public or private, whether of the past or in the future. The power of Congress in this matter is express and undoubted. "So far as the future is concerned, the power to borrow, both of the Government and of private interests, will be seriously impaired unless outstanding obligations and future obligations are placed on the same footing In respect to the medium of payment." Opposition to Gold Clause Repeal Resolution Voiced by Senators Glass and Reed—Repudiation of Contracts by U. S. Unconstitutional, Says Virginia Senator. Noting that strong opposition was expected to develop to the Fletcher-Steagall resolution which was introduced in both houses on May 26, at the instance of the Administration, and which would repeal the gold clauses in legislation of 1900, the Second Liberty Bond Act, and subsequent legislation, a dispatch on that date from Washington to the New York "Herald Tribune" added: . This was made plain by Senator Carter Glass, Democrat of Virginia, former Secretary of the Treasury, who called the proposal unconstitutional. He objected especially to its retroactive effect. Senator Glass said: "The proposal to repudiate all outstanding gold contracts is unconstitutional and the courts will so hold if there is any integrity left in the courts with regard to the sanctity of contracts. It is utterly useless to enact this legislation with 40% of the gold in the world in this country." The language of the Virginia Democratic veteran, long a champion of the gold standard, was no more pointed than that of Senator David A. Reed, Republican, of Pennsylvania, also a gold standard adherent. Senator Reed, when informed of the resolution and the fact the Administration was back of it, said: "That is terrible. It means plain repudiation and it will hurt the credit of this country for a hundred years." Senator C. L. McNary, Republican leader of the Senate said he had not . made up his mind as to how he would vote, but added: "Because of the retroactive feature of the legislation proposed, there is certain to be considerable opposition." Senator Henry F. Ashurst, Democrat, of Arizona, Chairman of the Judiciary Committee, said: "The proposal is fully in accord with established law. The Government has the right to establish legal tender." How Debts Can Be Paid with U. S. Off Gold Basis. On May 28, Associated Press accounts from Washington said: What going off the gold standard will mean: Government bonds need not be redeemed in gold, but can be paid in any legal money. Private debts, such as mortgages, can be paid in any legal money regardless of whether the original contracts stipulated gold. The war debts owed by foreign countries can be paid in any legal money . gold not being necessary. It will be unlawful to stipulate gold, in contracts made hereafter, as the medium of payment. All coins and currency legally issued will become legal tender for payment of public or private debts. Canada's Interest in Repeal of Gold Clause by United States—Move Here Would Lessen Payments to United States. Canadian Press advices from Ottawa, May 26, stated: The progress in Congress of the new gold measure will be closely watched In Ottawa. Monetary experts here expected that Washington would take some such action in view of the litigation which going off the gold standard and refusal to pay gold bonds in gold appeared to invite. Most Canadian external gold bonds are held in New York or London. A recent court decision in Great Britain held that since gold was not available in the United Kingdom, debtors could satisfy the holders of gold bonds there by paying in sterling. Until the United States went off the gold standard in April, all commitments of Canada in New York had to be paid on the gold basis. Since the United States went off the gold standard the dollar has fallen some 15 to 16% below gold. If the measure is successful, financial authorities here say, it will mean that instead of paying New York debts in terms of gold, which was well above 30% premium to-day over the Canadian dollar the debt could be met . by United States funds, which closed at a premium of 141%. In / 2 the meantime, Canadian gold would go to London, where to-day it brought $27.44 an ounce, whereas par is $20.67. The interest payments clue in New York on Canadian bonds—Dominion, direct and guaranteed, provincial direct and guaranteed, municipal and corporations, for the present calendar year was $156,731,324 and the principal due was $100,392,776. Bill Repudiating Gold Clause by U. S. Assailed by British Press—Roosevelt Plan Repudiation, Says Financial Editor of London "Times." Indicating that strong criticism of the United States was being made in the British press over the Steagall bill to abolish the obligation to pay debts in gold, a London cablegram, May 28, to the New York "Times" went on to say: "Repudiation of the gold clause may be held to be justified, as Walter Lippmann sought to justify it, on the ground of public policy and interest, but it is none the less repudiation," writes the financial editor of the London "Times." "It is true that to determine the value of money is one of the attributes of sovereignty, but to draw a parallel between the losses sustained by America's deliberate stoppage of gold payments and the subsequent repudiation of the gold clause is to confuse the issue." Under the heading "Legalizing the Fraud," the "Financial News" editorially says: June 3 1933 "It does not go to the length of sabotaging the World Economic Conference in advance, but it is bad enough. It is bad enough that a civilized country having 40% of the world's gold should descend to the trick of locking up that gold and declaring to its creditors it has lost the key and cannot pay them. It is bad enough that a civilized country, to quote the New York 'Times,' should by a formal Congressional act repudiate a solemn, explicit engagement of which the Government has long since obtained the fruits. "The capitalist system has survived many shocks and doubtless will survive this one, but a contract is the whole basis of capitalism, and the deliberate shattering of contracts on this scale must leave its marks on the system for generations to come." After expressing the hope that the Supreme Court and the sanctity of the Constitution may prevent this "colossal injustice" from being finally ratified, the "Financial News" concluded: "But history yields no evidence that there is any way of frustrating an embarrassed and unscrupulous sovereign from debasing the currency of his subjects if he really is intent on doing an, And in the face of recent events it would be plainly foolish to count on any juridical obstacles being able to impede Roosevelt from carrying through his modern rendering of the coin clippers' art." U. S. Money Policy Criticized by Charles Boissevain at Congress of International Chamber of Commerce— Move Off Gold Condemned—British Delegate Says Settlement of War Debts Must Be Made to Improve Business In Associated Press advices from Vienna May 20 to the New York "Times" it was stated that the Seventh Congress of the International Chamber of Commerce was enlivened by a denunciation of what was called the "immoral" monetary behavior of the United States. The account continued: In the finance and industry section, Charles Boissevain of Holland was applauded when he declared that the International Chamber of Commerce should defend not only sound business spirit but should also watch over "real business morality." Ile condemned the behavior of those nations which abandon the gold standard "although unquestionably in a position to maintain it." He condemned also what he described as the "repudiation" of the gold clause in contracts by the United States. Earlier to-day the Congress was told settlement of the war debts must be accomplished before it will be possible to improve world economic conditions. This was set forth in a report by NV. II. Coates, British delegate on . "The Maladjustment of Prim and its Influence on International Indebtedness." The council of the International Chamber, Mr. Coates said, feels that it is "voicing the almost unanimous opinion of the members" when it affirms that the world cannot be raised out of the depression until the debt problem has been settled. In restoring the equilibrium of world economy the sanctity of contracts must be preserved, but their literal fulfillment must not be unduly stressed, Mr. Coates told the chamber. This applies particularly, he said, to the contracts of international debts. "Their execution in the literal terms of the bargain is so offending to the conscience of the debtor peoples that an act of default no longer carries in their mind any taint of moral obloquy," the British delegates asserted. "If sanctity of contract is to be preserved, equity in fulfillment cannot be denied. It is therefore urgent that there should be created by international agreement through the League of Nations a new series of Courts for the application of equity to the problem of international debts." Gold Obligations Affected by r $100,000,000,000—Federal Gold Clause Reported at Bonds Total $22,000,000,000. The following is from the New York "Times" of May 27: Obligations outstanding in this country lathe amount of $100,000,000,000 are, it is estimated, affected by the resolution introduced in Congress yesterday abrogating the "gold clause." ; The gold clause, which came into general use in this country following the currency inflation of the Civil War, provides for payment "In gold of the present standard of weight and fineness" as to interest and principal on debts. It was designed to protect creditors from payment in depreciated money. r. The largest item in the total of indebtedness.subJect to the gold clause Is the $22,000,000.000 debt of the United States Government. In addition, upward of $14,000,000,000 of securities issued by States and municipalities is estimated to contain this clause. Nlost railroad and other domestic corporation bonds contain the clause in their Indentures. Following are estimated totals of securities outstanding hero, most of which contain the gold clause: United States Government securities $22.000,000.000 State and municipal 14,000.000,000 Railroads 11,000.000.000 Other domestic corporations 34,000,000.000 Foreign "dollar" bonds 10.000,000,000 15 In addition to the foregoing totals, there are amounts of real estate bonds, farm mortgages, private debts and other contracts which probably call for payment In gold, the volume of which would bring the total above 3100,000,000,000. World Gold Accord Needed, Says Prof. Gustav Cassel— Fears Effect on Property of Abolishing Clause in Our Bonds. Professor Gustav Cassel, international economist and member of the Swedish Monetary Committee,said on May 29 that the Steagall resolution in the United States definitely attacks and endangers the sanctity of all contracts. Associated Press advices from Stockholm, Sweden, May 27, went on to say: The resolution providing for abolition of the gold-payment clause In all obligations intensifies the desirability of a clear definition of American monetary policy, Professor Cassel declared. "The proposal may simplify payment of war debts," he said, "but the possible effect on the security of private property in the world in general must not be overlooked. Volume 136 "An international agreement on this point must be forthcoming immediately. President Roosevelt now has sufficient power and a supporting public opinion to define a monetary policy without difficulty, and it is important that he do so to facilitate international accord." President Roosevelt Urged to Restore Gold Standard in Report Adopted by New York Chamber of Commerce. A report urging President Roosevelt to put forth every effort to restore the gold standard and to refrain from any act, even under emergency, which would delay its return, was presented to the Chamber of Commerce of the State of New York on June 1. According to the report," . . . a sound and permanent recovery in industry and business can only be accomplished by avoiding currency inflation. Issues of fiat money, a decrease in the gold standard from its present basis of 23.22 grains to the dollar, or other forms of currency debasement will prevent permanent recovery and in the end be injurious." The Chamber at its meeting on June 1 reaffirmed its faith in the gold standard after an attempt to postpone such action, made by Ambrose W. Benkert, an investment banker, had been decisively defeated. Mr. Benkert sought to have a report of the Committee on Finance and Currency referred back for further consideration, declaring that "there is a growing conviction that something is basically wrong with the monetary system." The resolution attached to the committee report, which was finally adopted, follows: Resolved, That the Chamber of Commerce of the State of New York herewith reaffirms its faith in the present gold standard, and expresses the hope that the President will put forth every effort to the end that it may be retained. Resolved, That the Chamber repectfully urges the President to refrain from any act under the pressure of existing or future emergency, that would tend to impair such standard under which this country has weathered many storms. James Brown, President of the Chamber, who presided and who is also in the investment banking business, listened as the committee's report was read by Chairman Edwin P. Maynard. After the reading was finished Mr. Brown invited a full discussion and Mr. Benkert rose and offered a substitute resolution. He referred to the monetary policy report unanimously adopted last year by the Council of the London Chamber of Commerce, and said: In the United States a more belated crystallization of opinion, but an opinion none the less studied and aggressive, affirms that the gold standard does not work satisfactorily. Such opinion believes that arrest of deflation, restoration of reasonable property and security values, and reestablishment of a fair price level are more important than retention of any economic tradition. Mr. Benkert urged that the Chamber committee hold public hearings and submit to the Chamber a comprehensive report on the following questions: 1. Whether it is necessary to raise the United States price level in order to restore prosperity. 2. Whether there is logical reason for believing that prices can be raised and maintained at a desirable level without altering the gold content of the dollar. 3. Whether the monetary policies adopted by the present Administration are justified. 4. Whether a managed currency such as prevails in Sweden and Great Britain, or such as is provided in House Resolution No. 5073, generally known as the new Goldsborough bill, or any other type of monetary policy would be preferable to the gold standard as it existed prior to March 41933. In speaking against the substitute resolution, Mr.Maynard said that the present economic situation of the world was not due to fiscal or monetary conditions, but to the crushing load of debt the World War had left as a legacy to those who survived. When President Brown called for a vote Mr. Benkert's resolution received only a few votes and the committee resolution was then adopted. The Committee on Finance and Currency, which sponsored the report, expressed the belief that the Chamber would not wish to take any action which might be construed as hampering the recovery work of the Administration, but felt that it is important nevertheless for the Chamber to reaffirm its faith in the gold standard. The Committee, of which Edwin P. Maynard is Chairman, warned that a study of the history of all nations which have attempted currency inflation shows that it has resulted in financial and commercial disaster. The report continued: At this time credit expansion and higher prices for certain commodities are most desirable. Some call this inflation, but it is quite different in its consequences from currency inflation. When a Government starts its currency printing presses or takes other action to depreciate its money, its people rush to exchange their money for goods, more or less regardless of their consuming needs. But when the quantity of money is stabilized, and confidence is restored, people dispose of at least their surplus holdings of goods for money. During all this proceeding, it is the speculator who profits most. In the final analysis, neither the employer nor employee has gained anything, but has frequently suffered losses from the rapid fluctuation of prices. Our people do not need more currency, but confidence in the stability of our present monetary system. Fully 90% of this country's business is 3825 Financial Chronicle done by checks; and our present system provides for a large expansion of currency as the demands of commerce require. Since this Chamber was reincorporated in 1784 by Act of the Legislature of the State of New York it has taken official action on more than a score of occasions against many Federal measures, proposed or in operation, which involved derangement of the monetary system of this country. A study of these reports and of contemporary financial and commercial history shows how vital to prosperity is sound money and the feeling that our currency circulation will not be tampered with. Mexican Gold Output Steadily Declining, Report Shows. Despite the increased demand for gold, Mexican output of the precious metal has been steadily declining during the past ten years, it is made known in official figures received in the Commerce Department's Mineral Division. The Department on May 23 went on to say: Official statistics show that since 1900 Mexico has produced 23,826.723 fine ounces of gold, with the greatest output occurring about the end of the first decade of the century. Production has been on the decline during the past ten years. In 1927 gold output was recorded at 722.233 fine ounces,from which level it dropped to 670,503 ounces in 1930 and 599,803 ounces in 1932. This decrease in a period when demand for gold generally has been on the increase has been attributed to restricted operations of major mining companies, due in turn to world market conditions. Silver production increased during the first part of the century. reaching its peak to date with an output of 108,873.812 fine ounces in 1929. from which it declined to 69,397,543 fine ounces in 1932. Total production since 1900 is placed at 2,281,005,680 fine ounces. Mexican production of other minerals in the past four years is shown in the following table: 1932. 1931. 1929. 1930. Kilos. Kilos. Kilos. Kilos. 80,559,680 73,370,477 54,120,555 34,938,205 : C3:Per 14 173,978,363 124,106,433 120.291,853 57,100,437 Zinc 254,633 166,221 254,650 84.973 Mercury 247,415,004 231,874,736 226,629,979 132,779,088 Lead 1,737,142 5,442,852 2,881,767 2,925,293 Antimony 2,085,135 3,121,862 5,852.508 7.029,784 Graphite 721,849 270,116 775.076 5.136 Tin 25.582 10,319 Tungsten Manganese 5,222 5,709 Molybdenum Figures for recent years show production of small quantities of platinum. cadmium, vanadium, selenium and diatomite. No manganese has been produced since 1927, and no important quantity since 1920. Gold from Twenty Countries Safety. Going to London for Under date of May 27, advices from London to the New York "Times" said: Large amounts of gold continue to reach London from abroad, chiefly for safe custody. More than 20 countries are now sending gold to England, which in the last three and one-half weeks received over £26,500,000. During that period exports of gold have amounted to only £2,500,000. It is a curious and instructive fact that France, Holland and Switzerland have all sent large quantities, although these countries are still on the gold standard. Owners of this gold are evidently very distrustful of their own currencies and regard London as offering a place of greater safety for deposit than their own countries. America's action in going off gold has greatly increased the desire to hoard gold, and no effective measures can be devised to prevent this movement to London, which, although Great Britain is still off the gold standard, remains a free gold market. No restrictions at all have been placed upon movements of foreign-owned gold. New Treasury Regulations Eliminate Gold Clause from Circular Under Which Treasury Bills are Issued. Under new Treasury regulations the gold clause it is stated has been eliminated from the circular under which Treasury bills are issued. This was indicated in a Washington dispatch June 1 to the New York "Times", from which we also quote as follows: This action, disclosed to-day, was taken in view of the administrationbacked resolution pending in Congress proposing to eliminate the gold clause from all contracts, public and private. Nothing in existing law requires that bills be designated as payable in gold, although there is such a requirement on bonds, notes and certificates. The amendment to the regulations, signed by Acting Secretary Acheson, really does not change the situation, since gold payments had already been suspended under Presidential proclamation. Prior to Oct. 16 1931, no specific stipulation as to the method of payment was made in bill circulars. In Section 2 of the circular on that date it was written: "Treasury bills are payable at maturity in United States gold coin of the present standard of value upon presentation to the Treasurer of the United States in Washington or to any Federal Reserve bank." The sentence has now been rewritten to read: "Treasury bill.are payable at maturity upon presentation to the Treasurer of the United States in Washington or to any Federal Reserve bank," The Secretary of the Treasury is authorized by Section 5 of the Second Liberty Bond Act to issue Treasury bills on a discount basis and payable at maturity without interest, and "to fix the form, terms and conditions thereof, and to offer them for sale on a competitive basis, under such regula tions and upon such terms and conditions as he may prescribe." In 1931 many inquiries had come relative to the payment of bills in gold and about the difference between their status and that of bonds, notes and certificates in that regard. To bring about uniformity the Treasury then decided to write in the gold clause. Bills to the amount of about $1,000,000,000 are outstanding. The first issue to be affected by the new order is one of $75,000,000 on which bids will be received at the Federal Reserve Banks and branches on Monday. The bills. of 91-day maturity, will be used to refinance an issue of 875,216,000 due June 7. Bills were adopted as a pan of government financing by Ogden L. Mills when he was Under-Secretary of the Treasury. In the last two years they 3826 Financial Chronicle have been sold frequently on a level equivalent to less than one-half of 1% interest on an annual basis. The government thus borrows frequently in comparatively small amounts, instead of doing all financing at the quarterly periods and in large amounts, saving on money costs for the Treasury. Announcement by New York Federal Reserve of Amendment to Treasury Department Circular Governing Issuance of Treasury Bills. The following circular was issued on May 31 by the New York Federal Reserve Bank: FEDERAL RESERVE BANK OF NEW YORK. (Circular No. 1237. May 31 1933) UNITED STATES OF AMERICA TREASURY BILLS. To all Banks and Trust Companies in the Second Federal Reserve District and Others Concerned: In a telegram received on May 29 1933,from the Treasury Department, we have been asked to advise banks and other subscribers to Treasury bills in the Second Federal Reserve District that paragraph 2 of Department Circular No. 418 relating to Treasury bills was amended on May 29 1933, as follows: 2. Treasury bills are bearer obligations of the United States, promising to pay a specified amount without interest on a specified date. They are te be issued on a discount basis. Rach Treasury bill, prior to its issue, must be validated by a Federal Reserve Bank as fiscal agent of the United States, and the dates of the original issue . . .and the maturity thereof will be stated thereon. Treasury bills are payable at maturity upon presentation to the Treasurer of the United States in Washington or to any Federal Reserve Bank. George L. Harrison, Governor. House Passes Resolution Repealing Gold Clause in Public and Private Contracts. By a vote of 283 to 57 the House on May 29 passed the resolution repealing the gold clause in public and private contracts. The resolution was introduced in Congress a week ago,as was indicated in our issue of May 27, page 3635. As summarized in a Washington dispatch May 30 to the New York "Journal of Commerce" the resolution accomplishes three purposes: (1) It declares that the clauses in public and private obligations stating that they are payable in gold or a specific coin or currency are contrary to public policy. (2) It provides that obligations, public and private, expressed to be payable in gold or in a specific coin or currency, may be discharged dollar for dollar in legal tender. It also provides that no future obligations, public or private, shall be expressed as payable in any specific coin or currency. (3) It makes certain technical amendments to the Thomas amendment which are necessary to carry out the intention of that legislation regarding what shall be legal tender in the United States. The resolution was reported to the House by its Banking Committee on May 27 by a vote of 12 to 4, Representative Byrns, the Democratic leader, announcing immediately that it would be called up on a special rule when the House convened at noon on Monday May 29. In a Washington dispatch May 27 to the New York "Times" it was stated that developments in both Senate and House indicated that the chief fight would centre about the proposal to make the abandonment of gold payments retroactive. Several Senators, it was said, felt that the Government could with good grace apply the plan to future issues, but not to past obligations. The dispatch from which we quote likewise said: Both committees, however, approved the resolution exactly as it came from the Treasury. The Senate Committee remained behind closed doors for an hour and a half while Dean G. Acheson, Under-Secretary of the Treasury,informed members that about $2.000,000,000 of the Government's $21,000,000,000 debt must be refinanced within the next few months. necessitating prompt action on the resolution. Administration officials say that unless such a law is effective before the next bond issue is offered, probably about June 5, the gold clause must be written into the terms of this issue, as this is dictated under the terms of the Second Liberty Loan Act. Describing the House action on May 29, when that body passed the resolution by a vote of 283 to 57, the "Times" had the following to say in its Washington advices: On the final roll-call 28 Republicans and five Farmer-Laborites joined with 250 Democrats in favor of the resolution, while nine Democrats and 48 Republicans voted in opposition. More than half the Republican membership was absent when the record vote was ordered. All efforts to amend the resolution were defeated by overwhelming majorities, and the arguments of the opposition that passage spelled repudiation of sacred obligations, was an abandonment of American principles of honor and was"a deliberate effort on the part of the Administration to cheat the creditors of the United States," fell on deaf ears, so far as results were concerned. The Administration lines never wavered for a moment. The battle against the resolution was concentrated against the retroactive provisions, which make the proposed law applicable to all obligations "heretofore or hereafter incurred," regardless of any clause stipulating payment in gold. Representative Luce of Massachusetts, senior Republican member of the Committee on Banking and Currency, directed the attack. with Representatives Beedy of Maine, Beck of Pennsylvania and Mapes of Michigan as his principal lieutenants. Amendments Are Badly Beaten. Mr. Luce, as his first move against the resolution, offered an amendment declaring the proposed law to be of an emergency character, and eliminating the retroactive provisions. This was defeated by a storm of noes, the majority being so great that Mr. Luce did not even ask for a count. The next move was a motion to recommit the measure to the Committee on Banking and Currency, with instructions to report it back minus the retroactive provisions. On this there was a roll-call in which the motion was defeated 263 to 78. June 3 1933 The House was in an uproar when Chairman Steagall of the Committee on Banking and Currency demanded a record vote on passage. From all parts of the House came cried of "No, no." Mr. Wags,11 refused to listen, however, and Speaker Rainey ordered the call of the roll. The empty seats on the Republican side disclosed that the Republican exodus was much greater than it was on the motion to recommit. The nine Democrats who voted "no" were Representative Black of New York, Boehne of Indiana, Brown of Michigan, Claiborne of Missouri. Farley of Indiana. Fiesinger of Ohio, Huddleston of Alabama, Pettengill of Indiana and Thom of Ohio. Republicans who refused to follow their leaders and voted for the resolution included Representative Britten of Illinois, Carter of Wyoming, Collins of California, Dirksen of Illinois, Dondero of Michigan. Gilchrist of Iowa, Guyer, Hope, Lambertson and McGugin of Kansas, Wolfenden. Kinzer and Turpin of Pennsylvania. Mott of Oregon, Taylor of Tennessee, Welch of California, Whitley of New York, Wolverton of New Jersey, Woodruff of Michigan, and the progressive group from the Middle West. Luce Sees Repudiation of Faith. Opening fire on the resolution, Mr. Luce said that if properly named it would go down in history as "the Repudiation Act of 1933." The propoeal involved two elements, he said, one the renunciation of the obligations of the United States, and the other prohibition of future obligations of the same sort as those to be repudiated. . . . Representative McFadden of Pennsylvania asserted that the legislation was "foretold by a writer in The Dearborn Independent several years ago when that paper published the so-called Protocols of Zion." He quoted at some length from the "protocols," which among other things, according to the Pennsylvanian, predicted that "when the crash comes the Gentiles will have the paper and the Jews the gold." "Is it not true," asked Mr. McFadden, "that in the United States to-day the Gentiles have the slips of paper while the Jews have the gold and the lawful money? And is not this repudiation bill a bill specifically designed and written by the Jewish international money changers in order to perpetuate their power?" McFadden Refuses to Retract. The remarks of Mr. McFadden were listened to in silence. When he concluded, Representative Black of New York took the floor and denied there was any basis for the insinuations. "The gentleman from Pennsylvania," said Mr. Black, "has seen fit to inject Hitlerism into this House. We don't want it here. I saw the Jewish boys of New York go to war, and I say the remarks reflecting on this great race were entirely uncalled for." Representative Celler of New York called on Mr. McFadden to withdraw his remarks, but Mr. McFadden made no response. Representative McGugin, Republican, of Kansas, speaking for the resolution, warned his colleagues that the Republican party would "never stage a comeback" under its present leadership. He named Representative Snell of New York,the minority leader, Mr. Luce and ex-Secretary Ogden L. Mills as among the party leaders who must be eliminated if the party was to be restored to power. Representative Beck of Pennsylvania, closing the debate,said it was true that the Constitution did not prohibit the impairment of contracts by the Government. A greater constitution did, however, and that constitution VMS written on Mount Sinai, he said. As to the Senate Committee action on May 27 the "Times" said in part: With Senators Glass and Gore, Democrats, and Kean, Republican, voting nay, the Senate committee agreed, 9 to 3, to report the joint resolution. Senator Glass was reported to have voiced vigorous objection, and after the committee meeting he said: If you want my opinion, this whole thing is repudiation and nothing else. You can talk until you are blue in the face and you can't make anything else out of it. Glass Nearly Wins on Change. The resolution escaped substantial change by only a narrow margin when the Senate committee by a vote of 7 to 6 rejected an amendment by Mr. Glass to make the program inapplicable to Government bonds and war debts. The text of this amendment read: Except obligations owing by or to the United States which by their terms are payable in gold. Not all of the twenty members of the Committee were present, but the close division on the Glass amendment was held to presage opposition of some proportions when the resolution reaches the floor, although administration leaders are confident of the ultimate result. From the same account we also quote: The action of the (House] Committee on Rules, which agreed to a rule which permits amendment from the floor, gave indication that support of the resolution on the Democratic side was not quite so solid as leaders might like. The rule permits three hours' general debate, and after that, amendments under a five-minute limitation. There will also be an hour of debate on the rule itself which, not taking into consideration the time to be consumed when consideration is under the five-minute rule, rdearis that it will be 4 p. m.at the earliest before the real battle, which will involve the efforts to amend. . . . The opposition's program in the House is to concentrate the attack on the retroactive phase of the legislation. Representative Luce, ranking Republican member of the Banking Committee, so announced this afternoon following a conference with the minority leaders. Mr. Luce has no delusions as to the strength of the Administration forces and expects the resolution to pass by a substantial majority and without important amendment. The fight will be largely for "record" purposes. Only two Republicans, Representatives Luce and Wolcott of Michigan, attended the House Committee meeting at which the resolution was voted out. Two Democrats, Representatives Brown of Michigan and Reilly of Wisconsin, joined Messrs. Luce and Wolcott in opposing the resolution. An amendment by Representative Luce to prevent cancellation of existing governmental gold contracts was defeated by a vote of 11 to 5. Luce Gives Opposition Views. Following the meeting Mr. Luce was asked to outline the opposition's Position as it would be expressed in general from the floor Monday or Tuesday. . . . He said: "I take the position that so far as this bill impairs the obligation of contracts, it is unfair and undermines our whole business as well as our social structure. The Federal Constitution embodied that belief in forbidding the States to impair the obligation of contracts. Just why the application was not made to apply also to the Federal Government I have never known. However, the principle involved is precisely the same. "There would be no normal objection to providing that future obligations should not go to the extent of requiring specified sorts of performance. Volume 136 Financial Chronicle But to nullify public and private contracts now in existence is an example fraught with the most dangerous significance. "It would be a sad mistake to think that only individuals of wealth are concerned. For many years the treasurers of our universities and colleges, our hospitals and all other philanthropic institutions, have taken into account the gold clause in making their investments. The worst part of this proposal is the breaking of faith with those who hold money in trust for the relief of the unfortunate and the afflicted. Senator Vandenberg Questions Move. "From a practical point of view this action at the present moment has two very serious objections: First, it restricts the freedom of our delegates to the Economic Conference by at least intimating what will be the policy of the United States, and, secondly, it still further discourages merchants, manufacturers and all men of affairsfrom attempts at immediate resumption of activities. "It is hard to reconcile this action with the repeated and most emphatic assertions of the President that he stood for sound currency. It opens the door wide for unrestricted inflation, and all history tells us it's one of the hardest things in the world to stop, once started." Senator Reed, not a member of the Banking Committee, but an expert on the Government's financial policy, held that the resolution was an absolute repudiation of a pledge made with regard to Government obligations. Mr. Reed, who bitterly opposed the Thomas inflation amendment to the Farm Relief Bill some weeks ago, objects to this country's abandoning the traditional gold standard in any way. Stating that he had not entirely made up his mind on the matter, Senator Vandenberg commented: "I am inclined to wonder just how far we can go in reducing the obligations. If the Government can cut 20 to 25% off their value, why can't it cut them down 100%? Where will the line be drawn, and who will draw it? On the other hand, I am inclined to concede that the Government can protect itself. It is a difficult subject and I have not yet studied it all out. I am, however, much more opposed to any arrangement affecting past obligations than I am the future ones." Elsewhere we give the majority report of the House Committee on the resolution and the minority report of Representative Luce. President Roosevelt Signs Bill Providing for Federal Regulation of Securities—Purpose of New Legislation—Creation of Corporation of Foreign Security Holders. Following the completion of Congressional action last week on the bill providing for the Federal regulation of securities, President Roosevelt on May 27 affixed his signature to the newly enacted bill. In approving the new legislation—an Administration measure—President Roosevelt stated that the Act is "intended to correct some of the evils which have been so glaringly revealed in the private exploitation of the public's money." The President's statement issued with the signing of the bill on May 27 follows: "It gives me much satisfaction to sign the Rayburg-Fletcher Securities Bill, and I know I express National feeling in congratulating Congress on its passage. For this measure at last translates some elementary standards of right and wrong into law. Events have made it abundantly clear that the merchandising of securities is really traffic in the economic and social welfare of our people. Such traffic demands the utmost good faith and fair dealing on the part of those engaged in it. If the country is to flourish, capital must be invested in enterprise. But those who seek to draw upon other people's money must be wholly candid regarding the facts on which the investors' judgment is asked. To that end this bill requires the publicity necessary for sound investment. It is, of course, no insurance against errors of judgment. That is a function of no government. It does give assurance, however, that, within the limit of its powers, the Federal Government will insist upon knowledge of the facts on which judgment alone can be based. The new law will also safeguard against the abuses of high pressure salesmanship in security flotations. It will require full disclosure of all the private interests on the part of those who seek to sell securities to the public. The Act is thus intended to correct some of the evils which have been so glaringly revealed in the private exploitation of the public's money. This law and its effective administration are steps in a program to restore some old-fashioned standards of rectitude. Without such an ethical foundation, economic well-being cannot be achieved." 3827 merce. In addition the Act is intended to protect investors against fraud and misrepresentation. Business, it is hoped, will benefit from the Act through the protection which honest enterprise, seeking funds through honest means, will be afforded against dishonest competition, according to a statement issued by the Federal Trade Commission. Public confidence will be restored, and capital which has been hesitant because of fraudulent security deals may again enter the channels of finance and commerce. Nevertheless, it is not intended that the Government shall be placed in the position of passing judgment on the soundness of the security offerings. In brief, the Act provides five ways in which the investor can inform himself or will be protected. They are: (1) Thirty-two differentstatements must be filed with the[Federal Trade] Commission by any group issuing securities when the securities are registered. Copies of any or all of these statements, designed to show the condition of the company and the reasons surrounding the security issue, will be furnished to investors who ask for them at a fee which the Commission may fix. Among other things which the 32 statements will show are the balance sheet of the issuing company, its profit and loss statement, its articles of incorporation and the underlying agreements affecting the issue. Estimates of Proceeds. Other statements will show the estimated net proceeds to be realized from the issue, the specific purposes for which the money is to be used, and the expenses surrounding the issue including commissions and fees paid to underwriters. The price at which the security is to be sold to the public must also be listed. To show the general character of the issuer, one statement must state the business engaged in. In addition, the funded debt, capitalization and higher salaries of the company must be disclosed. In the Act two separate lists ofstatements are laid down,one for domestic issues and another for offerings of foreign governments. In general, however. the two lists follow the same outline. All this information will be on file with the Commission 20 days before the issuance of securities actually begins. During this "cooling off" period the Commission may investigate the proposed issue, the prospective investors are free to inform themselves on it through •xarnination of the statements. Through this dissemination of information it is hoped that the most good may be derived from the Act. (2) Supervision of advertisements is the second method whereby the Act seeks to protect the investor. The Commission may call for the filing of any prospectus issued in connection with any registered security. If the prospectus takes the form of a radio statement, the filing is obligatory. Unless the Commission rules otherwise, each prospectus must contain most of the information required when the security is registered and listed as above. Certain documents, like the articles of incorporation, are specifically exempt. Issuance of Stop Orders. (3) The third device for protection involves Government intervention and evoked much discussion in Congress before agreement was reached. As it now stands, its most important part provides that the Commission may issue a stop order against any security about which untrue statements have been made in the registration statement. This section now reads: "If it appears to the Commission at any time that the registration statement includes any untnue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, the Commission may,after notice by personal service or the sending of confirmed telegraphic notice, and after opportunity for hearing (at a time fixed by the Commission) within 15 days after such notice by personal service or the sending of such telegraphic notice, issue a stop order suspending the effectiveness of the registration statement. "When such statement has been amended in accordance with such stop order the Commission shall so declare and thereupon the stop order shall cease to be effective." Official Liability. (4) The fourth provision seeks to insure accuracy and truthfulness in the registration statements of the issuing company by making its offlcers and participating employees personally responsible for misinformation unless they can prove that they had no knowledge of the misinformation. The aggrieved investors may sue these persons to recover civil damages. (5) The fifth feature of the law outlines remedies which are open to the investor if the issuance of the security involved fraud. They are: (a) The purchaser may rescind the transaction and sue for a return of his money in the district whereof the defendant is an inhabitant or is found, or transacts business. (b) The Government may stop the further or threatened fraud or misrepresentation by injunction in the district courts. (c) The registration of the securities may be revoked or suspended for fraud or misrepresentation on the part of the issuer, but the revocation or suspension does not apply to such parts of an issue of securities which have already been sold and are in the hands of the public. (d) Those guilty of the fraud may be prosecuted criminally by the Attorney-General. According to a Washington dispatch May 27 to the New York "Times" Senators Fletcher and Robinson of Arkansas, Representative Rayburn of Texas, Chairman of the Interstate and Foreign Commerce Committee, and officials of Under the new securities Act provision is made for the the Federal Trade Commission were grouped about the President when he affixed his signature to the bill. The creation of the "Corporation of Foreign Security Holders," "for the purpose of protecting, conserving, and advancing pen he used was presented to Mr. Rayburn. Details of the passage of the bill have already been given the interests of holders of foreign securities in default." The new Act will be found in full on pages 3786 to 3791 in these columns May 13, page 3271, and May 27, page 3639. The bill requires that before any one can sell, or of the current issue of the "Chronicle." offer securities for sale in inter-State commerce, the securities must be registered with the Federal Trade Commission. Federal Securities Act Not Retroactive—Officials Say It Applies only to Issues Floated After the Effective In the "United States News" of May 27 it was pointed out Date—Selling Can Proceed in Meantime as if No that the six main features of the Act are: Protective Legislation Had Been Enacted. Six main features of the Act are: Registration with the Federal Trade Officials of the Department of Justice and the Federal Commission of information about forthcoming security issues. Supervision of the advertisements of securities. Trade Commission made it plain on May 31 that the Power on the part of the Commission to issue stop orders against any Securities Control law was in no way retroactive. A disissue. patch from Washington on that date to the New York Exemption of certain Federal, State and municipal issues. Personal responsibility of officers for misinformation concerning their "Times" went on to say: security offerings, and Four specific remedies in the case of fraud. From the same paper we quote: Telling the Investor. Behind the Act is the basic intention of informing the investor of the facts concerning the securities to be offered for sale in inter-State corn- It would apply, they said, only to transactions initiated after the effective date of the Act, which is not until 60 days after its signing by the President. Reports from New York were to the effect that some believed the protective features of the measure, particularly as set forth in Section 12, might be considered retroactive. While preferring not to be quoted, officials of both government agencies agreed that this was not the case. 3828 Financial Chronicle They pointed out that the bill had been redrafted in several important respects, subsequent to its introduction in the House, with the sole purpose of meeting this objection. Enacted with the signature of President Roosevelt last Saturday(May 27) the measure requires that all new security issues must face public examination by the Federal Trade Commission and by any investor desiring to examine the record underlying the issue. Notice of intention to issue any security must be filed with the Commission, accompanied by a complete financial statement of the issuing company. An interesting comment made during the discussion of the law to-day • was that the provisions governing the filing of intentions for registry with the Commission do not become operative until 60 days from last Sunday. During that time, it was explained, securities might be issued, advertised and sold in inter-State commerce Just as though there were no law governing such transactions. Neither does the law apply to securities already issued, except where only a part of a block of securities has been issued and the remainder withheld for future marketing. Section 12 of the law provides that any person who sells a security in violation of the various provisions relating to registration or on the basis of untrue or misleading information "shall be liable to the person purchasing such security from him, who may sue either at law or in equity in any court of competent jurisdiction, to recover the consideration paid for for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if he no longer owns the security." Federal Trade Commission's Announcement Bearing on Administration of Federal Securities Act. Following the signing of the Federal Securities Act on May 27 by President Roosevelt it was announced that the Federal Trade Commission will be prepared to handle the statements required by the Securities Act to be filed with it when such becomes effective. Before that time the Commission expects to have formulated rules and regulations under the Act and to have worked out forms for the information required in the statement. While the time allowed the Commission for examination of the statements for incompleteness and inaccuracies is very short, only 10 days, it is believed that the Commission can effectively administer the Act if allowed sufficient funds and personnel. The Commission's announcement of May 27 continued: This Act Is probably the most important piece of legislation that has been passed by the present Congress. It is not an emergency measure, but is a permanent addition to our regulatory legislation. It will bring together for the first time accurate and detailed information about the various concerns engaged in inter-State commerce. It will make available to the public for the first time accurate information as to the operation and conduct of many of the business enterprises of the country. From the information required by this bill a great deal may be learned about business trends, and information may be obtained that will enable the prediction of the approach of economic depressions and the taking of steps to prevent them. The publicity of this information will undoubtedly exert a great stabilizing influence. The basic policy of the Act is that of informing investors of the facts concerning securities to be offered for sale in inter-State and foreign commerce and providing protection against fraud and misrepresentation. It will be the aim and purpose of the Federal Trade Commission under the authority of the Act to prevent further exploitation of the public by the sale of fraudulent and worthless securities through misrepresentation, to place adequate and true information before investors, and to protect honest enterprise seeking capital by honest representations against the competition afforded by securities offered through crooked promotion and misrepresentation. Statistics indicate that the sale of worthless securities through misrepresentation and fraud has amounted to the colossal sum of $25,000,000,000 during the last ten years. This means $2.50 for every man, woman and child in the United States. Chairman March says the Commission intends to administer the Act so as to give purchasers of securities full and accurate information and at the same time interfere as little as possible with the legitimate financing of legitimate business. The Commission is fully aware of the magnitude and importance of the responsibility imposed upon it by this Act. The Commission to a large extent is familiar with many of the problems that will be presented as a result of its investigations into blue sky activities. Huston Thompson, a former Chairman of the Federal Trade Commission, was largely responsible for the draft of the bill as presented to Congress and had a large part in presenting the bill to the committees of both Houses. The public should thoroughly understand that the Commtssion is not authorized to pass in any sense upon the value or soundness of any security. Its sole function is to see that full and accurate information as to the security is made available to purchasers and the public, and that no fraud is practiced in connection with the sale of the security. Speculative securities may still be offered and the public is as free to buy them as ever. The Commission's duty is to see that the security is truthfully presented to prospective purchasers. The fact that a description of the security and of the concern issuing the security is filed with the Commission is in no sense and must not be regarded as an endorsement or approval of the security or the concern by the Commission. The Commission believes that a proper and efficient administration of the Act will prevent a large part of the frauds that have heretofore been practiced upon the public through the sale of securities. It will be the Commission's endeavor to so administer the Act. An item noting the signing of the bill by President Roosevelt is given elsewhere in our issue to-day. Study of State "Blue Sky" Laws by Federal Trade Commission to Formulate Rules for Administration of Federal Securities Act. State blue sky laws throughout the country will be combed by,Federal Trade Commission experts to help shape regulations for administering the new National Securities law. Associated Press advicesfrom Washington May 30,indicating this, added: June 3 1933 Orders to obtain this data from all States having statutes protecting the investing public went forth to-day after a conference between Commissioners Ewin Davis and William E. Humphrey. Davis, only Roosevelt appointee on the Commission, is slated for a major part in enforcing the new law intended to shield the public from fraudulent security sales. There is some possibility that President Roosevelt may break a custom of years and designate Davis,former Tennessee Representative, Chairman of the Commission. The present practice is to rotate the Chairmanship each year among the Commissioners. To-morrow the Commission expects to examine in detail its duties under the new securities law and arrange for funds to administer it. Estimates now being prepared for the budget bureau fix $250,000 as the minimum starting sum. Future allowances will be guided by the amount of business done and experiences in administration. Davis said one corporation already has notified the Commission of its desire to file a statement of a new issue. "We told them that such a statement could not be received for 40 days," Davis said, "and the corporation said it would hold up the issue in order to receive whatever benefits might come from filing a public financial report with the Commission." Selling of Securities at Special Rates Covered in Federal Securities Act. Sales of securities below the market price by an issuing house, as revealed in testimony by members of J. P. Morgan & Co., will at least be matters of public record under the provisions of the new securities Act, said a Washington dispatch May 26 to the New York "Times," which likewise said: The bill, advocated by the administration and sent to the White House yesterday, does not penalize this practice, but seeks to combat it, together with other "weaknesses" in the present security-issuing business, through publicity. Penalties for misstatements are as high as five years in prison or a fine of $5,000 or both, in addition to authorization of civil suits by defronded investors. The measure requires filing with the Federal Trade Commission, and for transmission to investors, of the broadest possible information concerning new securities issues, detailing 32 separate requirements for sworn statements, including "all commissions or discounts paid or to be paid, directly or indirectly," by the issue to the underwriters in respect of the sale of the security to be offered. This section was inserted in the bill prior to the revelations in Senate hearings, but the remainder of the bill was based principally on findings from other investigations of stock and bond sales conducted by the Senate Banking and Currency Committee for the past year. In addition to publicity of all factors surrounding the physical issuance of securities, the statements filed with the Trade Commission must show the names of officers and directors of the issuing company, the names of holders of 10% or more of prior securities, a detailed description of the business and financial condition of the company and the salaries of its officers. In its entirety, the bill requires publication of virtually every prior Act by the issuing company, including its public and private management contracts. The bill provides that this information shall be a public record when filed with the Trade Commission, except that the Commission is authorized to hold in confidence records of contracts, publication of which would hurt the welfare of the company. After the company's record is filed, twenty days must elapse before the security at issue may be sold, and during that time it cannot even be promoted or advertised. Even after the Commission shall have approved an application, under the terms of the bill the issuing company is not relieved of liability, for at any time in the future, evidence of untrue statements may be used as the basis for criminal prosecution and for civil suits by investors to obtain reimbursement for their losses. Appeals in all cases from findings by the Commission may be taken to the Federal courts. Virtually parallel conditions are set up for publicity on issues of foreign securities in the United States, except that liability for the truth of the statements rests with the domestic finance agent of the issuing source. House Passes Administration's Industrial Recovery Bill—Increase in Normal Income Tax Rates— Application of Rates to Corporate Dividends— Increase in Gasoline Tax—Sales Tax Defeated. The Administration's Industrial Recovery Bill, combining a detailed plan for Government control of industry with authorization for public works aggregating 83,300,000,000, was passed by the House of Representatives on May 26 by a vote of 323 to 76. As approved by the House the measure specifies an increase in normal income tax rates from 4 and 8% to 6 and 10%, application of these normal rates to corporate dividends, and an increase in the Federal refiners' gasoline tax from the present rate of 1 cent a gallon to 1N, cents. These various taxes were estimated to yield an annual revenue of 8220,000,000 to finance the public works program. In addition, as a means of raising a further $480,000,000, a group of special excise and miscellaneous levies which would have expired on June 30 1934, are extended by the bill for one year. Introduction of the National Industrial Recovery Bill in both Houses of Congress, following President Roosevelt's special message on May 17, was described in our issue of May 20, page 3461. The bill is now under consideration by the Senate Finance Committee, where various substitutes for the proposed tax program have been suggested. Before passing the bill on May 26 the House voted 265 to 137 against a general manufacturers' sales tax as a substitute for the increases in income taxes and gasoline tax. Volume 136 The House wrote into the bill, however, repeal of the section of the 1932 Internal Revenue Act which permits net loss carryovers for one year. This action was considered to have been prompted by recent testimony of J. P. Morgan before a Senate subcommittee. In its passage through the House, the bill had an easy path since debate was limited to seven hours and no opportunity was given for amendment except to the Ways and Means Committee. One of the amendments inserted was a provision transferring the existing 3% electricity tax from the consumer to the producer. The principal tax provisions of President Roosevelt's National Industrial Recovery Bill were decided upon in the House Ways and Means Committee on May 22 when, by a vote of 13 to 9, the committee voted to recommend to the House an increase in the normal rates of income taxes, application of these normal rates to corporate dividends and an increase in the refiners' tax on gasoline, from 1 cent a gallon as at present to 13 cents. These measures are % calculated to raise $220,000,000 annually in new revenues to finance the Administration's $3,300,000,000 public works program. In addition the committee voted to extend for another year the special excises, import taxes, miscellaneous imposts and stamp taxes enacted in the Revenue Bill of 1932, yielding further estimated revenue of $480,000,000. These special taxes would all have expired on June 30 1934. In our issue of May 20, page 3462, there were listed tentative tax programs which Budget Director Douglas had submitted to the House Ways and Means Committee, in connection with the raising of new revenues to furnish sinking fund and interest to finance the public works projects. The program agreed upon by the committee on May 22 is the first of four suggested by Mr. Douglas. A modified general manufacturers' excise or sales tax, which was one of the alternatives proposed, was defeated by the committee by a vote of 18 to 6. The new tax program as recommended, with the yields in new revenue estimated by Mr. Douglas, follows: Increase of normal rates from present level of 4% on first $4,000 of net income and 8% on the remainder to 6 and 10%, respectively, $46,000,000. Application of same rates-6 and 10%—to income from corporate dividends which now are subject only to surtaxes-383,000,000. Increase of present 1-cent gasoline refiners' tax to 15'4 cents-392.000,000. Total, $221,000,000. In approving the above tax plan, the committee wrote into the Recovery Bill the specific provision that the new income and gasoline tax increases should automatically be discontinued as soon as the 18th Amendment should be repealed or at such time as the receipts of the Government exceed its expenditures. The section of the bill in which this provision was incorporated is as follows: Effective as of the first day of the calendar year following: "1. The close of the first fiscal year ending June 30 of any year after the year 1933, during which the total receipts of the United States (excluding public debt receipts) exceed its total expenditures (excluding public debt expenditures other than those chargeable against such receipts), or 2. The date of the repeal of the 18th Amendment to the Constitution: "Whichever is the earlier, as proclaimed by the President, the amendments by subsections, &c., of this section shall cease to be in effect, and the Revenue Act of 1932 shall read as if such amendment had never been made." The special taxes, which the Committee recommended be extended until June 30 1935, were included at the request of the Administration, when Budget Director Douglas told the Committee on May 22 that the credit of the government must be raised above all reproach. These taxes included import duties on coal, copper, lumber and oil; excises on lubricating oil, home brewers' supplies, automobiles, tires, tubes, accessories, trucks, jewelry, radios, phonographs, mechanical refrigerators, firearms, sporting goods, matches, candy, chewing gum, soft drinks and electrical energy; imposts on telephone and telegraph messages, oil pipe line transportation, checks, safe deposit box rentals and the new stamp taxes on stock and bond transfers and conveyances on the produce exchanges. In filing its formal report on the $3,300,000,000 measure on May 23, the House Ways and Means Committee remarked that the added tax burden in the National Industrial Recovery Bill should "be cheerfully borne" because of the increased employment and other benefits to be expected. The public works program, Chairman Doughton said, "should produce an immediate, substantial revival of business." Other passages from the report of the Committee follow: The industrial recovery program should not only add to this stimulation but should Insure the permanence of a return to better, healthier and happier conditions throughout the industries of the nation. By establishing maximum hours of work and minimum wages we may Insure the continued employment of those now employed and furnish 3829 Financial Chronicle work for a substantial percentage of those now idle, and this brings about security of employment for millions of our people at wages sufficient to provide for living in decency and comfort. By raising the standard of labor conditions throughout trade and industry, through voluntary co-operation with the aid of the government, unfair competition, based upon the employment of underpaid and overworked labor, should be generally eliminated. As a result of such a program, we may confidently expect a further stimulation of industrial operations, greater security of capital, greater security of labor and a steady increase in the prosperity of the nation. While the House Ways and Means Committee was settling upon the tax program to be reported with the bill, the Senate Finance Committee on the same day (May 22) held an open hearing at which Senator Wagner explained the measure in detail, while its provisions were sharply attacked by Senators King, Gore, Connally and Clark. Discussion of the bill by these Senators, as reported in part by the Washington correspondent of the New York "Times" included the following remarks: Senator Wagner strongly defended the bill against charges that it "emasculates" the anti-trust laws, remarking that the arguments against it by committee members were very similar to those to which he had listened during hearings in New York State on laws controlling child labor. He was appearing before the committee as a witness for the bill. Senator Wagner's reply was that the proposed organization of business "is the necessary consequence of the growing complexity of our economic machinery, and of the increasing interdependence between one State and all States; between one industry and all industries, and between employment anywhere and employment everywhere. Measure Called "Revolutionary." Senator Gore termed this thesis as "revolutionary as anything that happened In this country in 1776, in France in 1793 or in Russia in 1917." Senator King inquired caustically: "Is this bill drawn from the standpoint of Mussolini or from the German cartel system?" "Neither," retorted Senator Wagner. "We want to substitute efficiency and industrial planning for the present lack of planning." The purpose underlying the measure was described as follows by Senator Wagner: "The National Industry Recovery Bill has as its single objective the widespread and permanent re-employment of workers at wages sufficient to secure comfort and decent living. This desired end is to be reached by a two-fold program, involving, first, co-operative action within Industry, encouraged by law and supervised by the President for the protection of the public, and, secondly, direct government expenditures for public works. "The bill marks a far-reaching departure from the philosophy that the government should remain a silent spectator while the people of the United States, without plan and without organization, vainly attempt to achieve their social and economic ideals. It recognizes that planlessness and disjunctive efforts lead to waste, destruction, exploitation and disaster. and that purposive planning awaits the substitution ofregulated co-operation in place of the unlimited and frequently pernicious competition which_we have heretofore regarded as the sole guardian of the public welfare. Business and Public Interest. "This trend in thought and action is accompanied by a widening concept of business—that all business is affected with a public interest. That is the necessary consequence of the growing complexity of our economic machinery and of the increasing interdependence between one State and all States, between one industry and all industries, between employment anywhere and employment everywhere. "At the same time the bill preserves as the central motivating theme of American industry the voluntary action and individual initiative which have contributed so markedly to our industrial progress. Competition Is not abolished; it is only made rational. In this bill we say that business may not compete by reducing wages below the American standard of living, by sweating labor, or by resorting to unfair practices. Competition Is limited to legitimate and honorable bids for the market and real gains in technical efficiency." Senator Wagner, a noted jurist, contended that the bill is constitutional, particularly in relation to "the compulsion of the economic situation." He also argued that the measure averts the "dangers of monopoly" through planned economy, and does not endanger the anti-trust laws. "But it is revolutionary, Isn't it?" asked Senator Gore. "I do not think so," NM the reply. "But will it not make the constitutional power of the government Vary with economic conditions ?" insisted Senator Gore. "Well, I think that always has been so," said Senator Wagner. Senator Wagner said that the power of Congress, or of all government, always varies with conditions that must be met. When Senator Gore raised the point of possible confiscation of private property under the measure, Senator Wagner replied that relief through the courts would be available, just as appeals may be taken to the courts under present laws. Senator Gore, persistent, asked if the power "isn't too much to vest in a Mussolini or a Stalin or anyone?" "There has been an overstatement of the dictatorial power contained in the bill." Senator Wagner heatedly replied. 1111 Senator Connally challenged the contention that Congress may broaden Its power in emergencies, but Senator Wagner maintained that "we can reach over a wide area in an emergency." Says Prices Will Be Raised, Senator Connally raised the argument that the bill will operate to raise prices. Senator Wagner agreed that it would, but when Senator Connally asked if the measure would not operate to put industrial prices above those received by agriculture, Senator Wagner said: "We want to put both on an equality. The Farm Relief Act and the pending bill really are complementary. It would be absurd to lift agriculture up a way and then lift industry still higher." Senator Barkley asked Senator Wagner what would happen at the end of the two-year period, during which the bill would be operative. Confidence was expressed in reply that many features of the emergency legislation will be incorporated in permanent law. "I am confidence that the Administration of it will be made into Permanent form," Senator Wagner.went on. "If it proves to be the better way to have an organized industry than to have chaos, It will be made permanent by Congress." 3830 Financial Chronicle U. S. Chamber of Commerce Endorses Industrial Recovery Bill, as National Association of Manufacturers Opposes Measure—Chamber to Help Members Formulate Policies—Congress Warned by Manufacturers that Bill in Present Form Means Bureaucracy to Control Business—Harmful Effects of Legislation Cited by James A. Emery. Opposing views regarding the Administration's National Industrial Recovery Bill were expressed in statements by two important business groups issued in Washington on May 28. The Chamber of Commerce of the United States endorsed the measure and offered to render its members all possible assistance in complying with the terms of the bill. The National Association of Manufacturers, on the contrary, urged Congress to "look before it leaps and not make haste to repent at leisure." This latter statement was signed by James A. Emery, counsel for the Association, who declared that if the bill is enacted in its present form it will retard, rather than promote, business recovery. Among the objections listed by Mr. Emery are that the bill transfers control and authority over industry from the managers to a Government bureaucracy, that it provides no protection against imports, and that through the use of collective bargaining the measure will result in the immediate and complete unionization of all labor in all industry and the closed shop. The views of the Chamber of Commerce of the United States were expressed in a letter to members, signed by H. I. Harriman, President, as follows: Because of the magnitude of the task to be undertaken, the application of the Act will necessarily be gradual. Immediate emphasis will be placed upon industries which can afford the largest volume of re-employment. Since re-employment is an immediate objective, it is probable that the first agreements will be expected to cover only minimum wages, maximum hours of labor and hours of operation to eliminate the depressing effects of unfair competition in employment and to promote stabilization and increase of activity. Mr.Emery's statement,opposing the bill, was as follows: Congress owes it to itself and to the country to scrutinize with care and deliberation the control of industry—public works—tax bills now before it and euphemistically entitled the National Industrial Recovery Act. Congress should look before it leaps, and not make haste to repent at leisure. Our examination of the bill forces the conclusion that in its present form, apart from every other consideration, it will, if enacted into law, tend to retard rather than promote business recovery. It will in fact nip In the bud the business recovery already manifesting itself. It will hurt rather than help. It will do this, in our judgment, first because it will transfer with a stroke of the pen all control and authority over every aspect of business operation and management from its private owners and managers to a Government bureaucracy. Nothing is so illusory and ill-founded as the assertion widely disseminated that this legislation primarily gives to business and industry the power and authority to regulate itself. Nothing may be done without Government sanction and approval. Anything may be ordered or may be forbidden by Presidential edict. For weeks and months business and industry is likely to be marking time waiting for Administrative approval. It adds another to the uncertainties that are an obstacle to necessary future commitments,if business is to move forward. In the second place, it will retard business and industrial recovery because with increased prices and without correspondingly import control, the American manufacturers will be under increased competitive handicaps in the home markets and foreign goods will undersell and displace American goods with consequential decline in production at home and added unemployment—less work instead of more, for the American worker. If in actual operation, the partnership between the Government and business does not operate to shorten hours of labor in order to Spread employment and to raise wages in order to increase consumers' purchasing power—and at the same time increase prices in order that business and industry may have the means to sustain the resulting increased production costs, then the primary purpose of the present proposals has failed of realization. But if these results are attained the necessity ofsome additional defense against cheaply produced foreign goods is self-evident. The bill In its present form provides no such defense. In the third place, the industrial recovery bill in its present form will retard recovery and destroy the forward impetus of industry because in the guise of leaving labor free and untrammeled and at the same time insuring to labor the right of collective bargaining the bill in effect— and designedly—means the virtually immediate and complete unionization of all labor in all industry and the closed shop. Not the least important and significant provision of the present proposal is the two-year limitation clause for the partnership between the Government and business and industry. It is said that it is an emergency expedient to be discarded as soon as the emergency is passed. This seems to recognize that unlimited control of industry by Government bureaucracy Is a vice to be rid of as soon as possible. Yet the proponents of the measure eaten its virtues and give assurances that business and industry have nothing to fear and that the "partnership" will be wholly beneficent. If it be beneficent, why should it not be permanent? If it be otherwise, why embark upon it? The remaining aspect of the present bill which ought to have the most serious and painstaking consideration is the revenue section, the increased taxes which it is proposed to impose to contribute to the support of the $3,000,000,000 which it is intended to borrow and spend for public works. Increased taxes under present conditions are an unmitigated evil, at best. The increased levies written into the bill by the House are particularly objectionable and disadvantageous. We submit that a fairer method of raising the required revenue would be to spread a one-point gross manufacturers' sales tax over our industries. The harmful position in which industry will be placed as a result of the enactment of the National Industrial Recovery bill was also pointed out by Mr. Emery in an address delivered by him on May 23 before a large body of June 3 1933 manufacturers who are members of the Phlladelphia Chamber of Commerce. In this address Mr. Emery said: The relation of public policies to the present critical industrial situation cannot be over-exaggerated. The deadly spiral which has suddenly dragged the price level downward has been accompanied by shrinking contraction, and cut-throat competition for survival. The fears produced in the minds of depositors led to hoarding and withdrawals of deposits until, unable to distinguish between the sheep and the goats, the public began to distrust all banking institutions. The President's bold and vigorous step to bluntly separate sound from unsound banks; to drastically reduce Governmental expenditures; and to find a new source of revenue, transforms our public philosophy to a new faith in vigorous leadership. Under this situation the industry of the nation has been aroused by the series of proposals to place it under drastic detailed Federal regulation, which proposes to deny the facilities of inter-State commerce to mining and manufacturing industries in any establishment of which any person was required or permitted to work more than 30 hours in one week of six hours in one day. To this was added, at the suggestion of the Secretary of Labor, the compulsory establishment of what Was termed fair wage rates and the control of production, the whole sanctioned by the most drastic penalties for its violation. Slow to perceive the significance and effect of these proposals, the industries of the country, with few exceptions, gradually but generally concluded that they were unsound in principle and unworkable In practice. Many undoubtedly were deceived by the plausible suggestion of compulsory work spreading applied by the terms of the bill to those forms of employment in which the most practical success had been had in every form of work spreading, while excepting those forms of employment In which the least progress had been made. It should be squarely recognized that a revolution in political authority was proposed,for, if Congress, under the commerce power. may arbitrarily exclude any article which is not produced under the condition which it fixes for inter-commerce between States, then the control of all local • powers passes from local Government to Washington. For, if Congress may prohibit, as it pleases, it may condition the entrance of any commodity into commerce. That means It may determine every circumstance which it wishes to attach to production and distribution as the principles of moving domestic and foreign trade outside the State of manufacture. The enforcement of such a bill underrates the States to mere provinces, operating under a buearocratic domination of the Federal Government. The principal difficulty of successfully substituting the detailed control of local operation by public authority for the expressed judgment of resPonsible management in local operation is too obvious to require amplification. The plan of industrial control now pending before Congress involves the granting to the Executive of unprecedented authority enforced through unparalleled powers and penalties. As an official endeavoring to interpret the industrial viewpoint, I believe they are translated when I say that industry is desirous of co-operating with the President in every practical way to meet this crisis. The evidence of its confidence in the good faith and fairness of the President is found it its willingness to accept control under existing condition, which, under normal circumstances are a shock to our principles and practices. I believe there are certain major circumstances which deserve the attention of Congress in this measure, as follows: 1. Primarily the recognition of the fact that, formulated in practicable terms, its success rests upon the nature of the agencies and the quality of the personnel employed in its administration. 2. If it attains economic effects intended, it is essential to its success that the President shall possess authority to protect our market against competitive production of low wages, especially in depreciated currency countries. If the pill operates as intended, to raise commodity prices, increased wages and shortment of hours, it increases unit cost of production and enlarges the advantages of our foreign competitors. If there is no executive authority to meet this condition as it arises, our imports are likely to be enlarged at the expense of our domestic safety. 3. The bill gives the power to license any industrial trade or business. The condition that license can be revoked if certain conditions are violated, that is the power of commercial exile. Such extraordinary authority seems hardly necessary to the execution of the measure when it is recognized that exclusive of it, the President possesses the power to enforce trade agreements and wage standards by fine; the issuance of cease and desist orders under agencies of his own creation; the power to reorganize an industry that fails to act; and the power to repeal, modify or annul any contract or agreement made. If it be said such power is rarely if ever used. why grant It? "The Constitution," said Jefferson,"represents the measure of our confidence in the beet of men." No provision of the measure is of more dubious validity. The labor provisions of the measure are neither an ample statement of fundamental rights, nor a fair declaration of employment relations. Surely It is not intended to seek a reorganization of mutually satisfactory employment relations in every form in which they exist in the United States and throw them into a single mould. Industrial employers recognize the fundamental right of men to bargain individually or collectively with their employees, without arbitrary duress or coercion and where collective relations exist or are established, they endure in any form mutually agreeable to the parties and operate through representatives a their own choosing. Any attempt to coerce industry of the United States into a single form of employment or organization is equally destructive of the fundamental rights of both employer and employee. It must, moreover. be clear that any form of coercion sought, to be applied in the Administrations' measure to employers, must be equally applicable to employees, or the equation is destroyed. The success of the measure will lie in the capture of its asserted philosophy; the preservation of private initiative, and its self organization in all and its relations of employer and employee subject only to such rational aid and restraint as is essential to the attainment of its objectives. The appalling tax measure suggested in the House measure may break the back of already overburnened industry. To spread the burden over all,rather than a few,is the most outstanding end of an emergency situation. A small gross manufacturers' tax would accomplish this objective not without severe effort and many sacrifices, but it would involve less economic °era than the concentrated burden proposed in the pending House bill. President Roosevelt Would Include Provisions for Petroleum-Control in Industrial Recovery Bill Secretary Ickes Tells Ways and Means Committee Section Covering Oil Would Meet Administration Approval. Hearings on the Marland-Capper oil-control bill were opened by the House Ways and Means Committee on June 1, Volume 136 Financial Chronicle when Secretary of the Interior Harold L. Ickes offered on behalf of President Roosevelt an amendment to include oil regulation and to be attached to the industrial control bill pending in the Senate. Mr.Ickes said that he was authorized to speak for the President in stating that the latter hopes that there will be included in the national industrial recovery bill the following section on petroleum conservation: "Section 10.—For the oil industry, in addition to the powers granted the President concerning codes of fair competition,agreements, and licenses. he is authorized to prescribe regulations to supplement State conservation legislation regulating the production of petroleum, to allocate equitably the national market demand for petroleum and the products thereof, among the oil producing States and between domestic production and importations and to prohibit the transportation in inter-state commerce of petroleum and the products thereof produced or withdrawn from storage in violation of any State or federal law or the regulations prescribed thereunder." This short amendment would be offered as a substitute for a forty-page bill which was drafted by the Department of the Interior and which Senator Capper had intended to introduce as an amendment to the industrial recovery bill. Introduction of legislation providing for control of oil production was noted in our issue of May 27, p. 3639, and it was there indicated that the President had previously expressed the hope that the oil legislation might be attached to the industrial bill, although he had not specified what wording he would favor. House Passes Administration Farm Credit Bill and Sends Measure to Senate Without Amendment— Bill Would Set Up 12 Regional Co-Ordination Agencies, One in Each Federal Land Bank District —Revolving Fund of $120,000,000 Provided for Financing. The administration farm credit bill, providing facilities to make effective President Roosevelt's recent order combining agricultural loan organizations, was passed unanimously by the House of Representatives on May 31. All amendments proposed were voted down by large majorities, and the measure was sent to the Senate in the form drafted by Henry Morgenthau Jr., Governor of the Farm Credit Administration. The new administration bill was introduced on May 25 in the House of Representatives by Representative Jones, Chairman of the Committee on Agriculture, and in the Senate by Senator Byrnes of South Carolina. The measure authorizes a revolving fund of $120,000,000 to establish and finance twelve production credit corporations. Of this amount, $80,000,000 would be obtained from unexpended appropriations and an additional $40,000,000 would be appropriated by Congress. Each of the twelve corporations is authorized by the measure to supervise and finance local credit associations, which would be established to enable farmers to borrow for general agricultural purposes. The twelve production credit associations would not supply direct loans to the farmer, but would provide the capital for the local associations. The bill was drafted under the supervision of Henry Morgenthau Jr., who has been named Governor of the Farm Credit Administration. Representative Jones said on May 25 that enactment of the legislation would mean the saving of approximately $2,000,000 in administration expenses, with the elimination of many duplications, and would put farm credits on a better basis. He added that the bill "will provide a system of credit outside of regular commercial banking channels which is suited to the peculiar needs of agriculture." An abstract of the measure, as contained in Washington advices to the New York "Times" on May 25. follows: Each Production Credit Corporation will have an initial capital of 87,500,000 and will be empowered to finance and supervise the operations of local production associations, these local units to be incorporated under Federal charter for the purpose of enabling farmers to borrow from Intermediate Credit Banks for general agricultural purposes. The Production Credit Corporations are authorized to subscribe for Class A stock in each local unit served by them, and in amounts approximately 20% of the volume of loans made or to be made by the credit administration as estimated by the corporations. At no time can the amount of Class A stock outstanding be less than $5,000, except with the consent of the Credit Administration. Local production credit associations may be organized by ten or more farmer borrowers with credit up to four to eight times their capital. Under the plan, it is asserted, this means that $1 capital will make possible about $5 of sound production credit. No loan can be made by a local unit for less than $50 unless the transaction is approved by the Production Credit Corporation in whose jurisdiction the unit operates. Dividends cannot be more than 7%. For the purpose of creating and maintaining a surplus equal to at least 25% of the paid-in-capital of the corporation, the bill requires to be applied for this purpose the excess of earnings on stock held by it above the amounts necessary to pay operating expenses and to restore losses and impairment of capital. The surplus will be invested by the Governor of the Farm Credit Administration in obligations of the United States, or in Class A stock of production credit associations, or both, as he may see fit. The Governor of the Farm Credit Administration will have power under the bill to establish a corporation to be known as the Central Bank for Co- 3831 operatives, with headquarters in Washington and with regional banks in each of the Federal Land Bank districts. These banks are empowered to make loans on a business basis to local co-operatives under regulations approved by the Governor of the Farm Credit Administration. The Governor also is authorized to buy stock in the banks for co-operatives, using the remainder of the revolving fund of the old Farm Board as loans are liquidated. Each co-operative borrowing from the central bank or from a regional bank must acquire $100 of stock in such bank for each $2,000 loaned. Should additional funds be required, the central bank has the power to issue and sell debentures. Interest rates, depending on the kind of loan, range from 3 to 6%. The bill also carries a number of amendments to the Farm Loan Act. One removes the limitation against the taking of chattel mortgages by Federal Land Banks, while another removes double liability on stock of borrowers in national farm associations on engagement entered into after enactment of the bill. Another amendment broadens the eligibility of borrowers from Federal Lahd Banks to include any person who is engaged or intends soon to engage in farming, or to any person the principal part of whose income is derived from farming. There is also an amendment which prohibits the formation of additional national agricultural credit corporations, and another permits direct loans to co-operatives on other collateral approved by the Governor as well as on warehouse receipts and chattel mortgages on live stock. Another amendment authorizes Federal Land Banks to enter into agreements with local farm loan associations to share losses and gains on foreclosed farms equally between local associations and the land banks. In reporting on the measure to the House on May 31, Representative Jones of Texas, Chairman of the Committee on Agriculture, made the following statement, as quoted by the Washington correspondent of the New York "Times": The bill is intended to take care of the production and marketing problems of agriculture in so far as the, matter of credit is involved, and is supplementary to the Federal Farm Loan Act enacted early in this session of Congress. While direct lending by the Government to farmers to finance their production may be justified in cases of emergency, it is an unsatisfactory system of providing the required credit. At the same time the policy of permitting such lending to be done entirely by private agencies has proven equally unsuccessful. In this bill the purpose is to provide the stimulus in the form of Federal capital and supervision to the establishment of local institutions in which farmers are participants and owners, and through which necessary credit may be provided on a safe business basis and also at a reasonable rate of interest. Former Senator Brookhart Named Special Adviser to Agricultural Adjustment Administration—Will Expand Markets for American Farm Products, Including Those in Processed Form—Report That He Will Deal with Amtorg Trading Corp. in Seeking Russian Barter Arrangements. The appointment of Smith W. Brookhart, former Senator from Iowa, as Special Adviser to the Agricultural Adjustment Administration, was announced on May 27 by George N. Peek, Administrator of the Agricultural Adjustment Act. According to Mr. Peek's announcement Mr. Brookhart "has been designated to make purely factual studies intended to be of service between business men of this country and Eastern European business interests in the expansion of markets for American farm products, including those in processed form." In Associated Press accounts from Washington May 27 it was stated that the development of Soviet Russia as an outlet for the surplus of several agricultural products, including cotton and meat products, emerged that day as one of the objectives of the Agricultural Adjustment Administration. At the same time it was stated by the Associated Press that the Department of Agriculture refused to admit specifically that the main function of Mr. Brookhart would be •to develop trade relations with Soviet Russia. However, the New York "Times" in its advices from Washington May 27 had the following to say in part: With the announcement of his appointment it was revealed that Mr_ Brookhart will seek to expand the market for surplus American farm products by a plan for large-scale bartering of such commodities for Russian articles, which, formerly imported in considerable quantities here, have fallen off with the sharp contraction in the purchasing power of the American urban population. The proposal contemplates that no money need change hands in the expected exchange of commodities and that there will be no direct contact between the two Governments. Mr. Brookhart, it is understood, will act largely as a promoter and will' deal only with the Amtorg Trading Corporation in seeking Russian orders in exchange for an enlarged market here for that country's products. It has been said that the surplus of agricultural commodities in this country was threatening the successful operation of the new Farm Relief Act. Mr. Brookhart said to-day that "substantial progress" had been made in' the direction of increasing farm exports, particularly to Russia. His efforts would not be confined to Russia, he explained, adding that investigation has been made of possible markets in Poland, Rumania, Latvia and other countries of Eastern Europe. But in Russia, Mr. Brookhart sees the greatest possibilities. From the Associated Press advices May 27 as given in the New York "Herald Tribune" we take the following: Has Been Studying Soviet Needs. Since he left the Senate on March 4, in consequence of his defeat in the Republican primary in Iowa last year, Mr. Brookhart has been occupying an office in the Brooking Institution and devoted himself to the study of Soviet Russia's agricultural needs. He referred to himself to-day as "a sort of Secretary of State for Russian affairs during several administrations." He 3832 Financial Chronicle visited Russia in 1923, and since then, he said, has read everything he can find on the subject and has received regular reports on the development of Soviet economy. "Our people don't realize what a tremendous potential demand there is In Russia for American agricultural and industrial products," Mr. Brookhart said this afternoon. "Soviet Russia is building a new civilization for 160,000,000 people. It will take them a generation to do it. There is a tremendous demand there now and it will continue for many years." Mr. Brookhart expressed the belief that Soviet Russia alone could take the equivalent of the entire American agricultural surplus in raw or processed forms. "I believe that if we had had the proper arrangements we could have sold 2,000,000 bales of cotton to Russia last year," he said. "Their machines were running only at 60% of capacity, and they need more machines. I believe they could take our 5% surplus of livestock and our 30% surplus of hog products, and a lot of other things." Says U. S. Could Take Manganese. In return, Mr. Brookhart said, the United States might well take manganese and wood pulp and "lots of other things" of which Soviet Russia produces a sUrplus. The intrusion of Russian woodpulp into the American market created quite a furore in the industry about a year ago and led to the agitation for a ban on its import on the ground it was produced by forced labor. American manganese interests have likewise strongly fought duty-free importation of the more cheaply-produced Russian manganese. The power of the Reconstruction Finance Corporation to finance the exports of agricultural commodities and livestock might well be employed in starting American-Soviet trade into motion, Mr. Brookhart said. By using this virtually unused power, the Reconstruotion Finance Corporation may accept drafts and bills of exchange drawn on it, having maturities up to twelve months and growing out of transactions involving the export of "agricultural or other products." It may also make loans to finance sales of surpluses of agricultural products in the markets of foreign countries. These powers would serve to establish short-term credits in this country for Soviet Russia. "Most of the processors don't want. to pay the processing tax which will have to be levied if our surpluses are not disposed of abroad," said Mr. Brookhart, "so we are going to try to help them to market the surpluses and avoid the processing tax and all the complications that go with IL" The State Department, when questioned, asserted complete ignorance of Mr. Brookhart's appointment. It would have no bearing on the question of recognition of the Soviet Union, it was stated. Through Amtorg and, for a time, two or three other trading corporations, the Soviet Union has maintained trade relations with this country for more than a decade. However, the volume of trade has greatly shrunk in the last three years, partly due to the depression, partly to the failure of this country to provide either credit or a market for Soviet products. June 3 1933 States cannot, acting individually, provide for the interstate placement of workers. The common-sense solution is the establishment of a co-operative system wherein the Federal Government and the States unite in performing together this indispensable service for the American people. "Let no one delude himself that, with the resumption of business, men will universally return to their former shops and work benches and resume where they left off in 1929. "Such a course is quite impossible in view of the many changes that have occurred since that day. We must provide the best machinery we can contrive carefully to bring the right man to the proper job. The bill which has to-day passed the Senate is designed to accomplish that purpose.",s Initial Grants Under Wagner Act Total $21,659,282— Federal Relief Administration Allotment Goes to 31 States and Hawaii. First allotments of Federal funds under the provisions of the Wagner Act were made on May 29 when Vile Federal Emergency Relief Administration announced grants totaling $21,659,282 to thirty-one States and Hawaii, for the purpose of meeting immediate relief needs. The immediate grant to New York State amounted to $6,532,282 and about $2,000,000 additional will be made available by the end of June. Some of the larger States, including Pennsylvania and Ohio, were not on the preliminary list, either because they had not made applications or because supporting data submitted were incomplete. The initial grants were made under the subsection of the act which provides for the automatic distribution during the second quarter of the year of $250,000,000 of the total of $500,000,000 appropriated, on the basis of one-third of the amount expended during the preceding quarter by the States out of public moneys from all sources for relief work. The administrator considered only outlays made in January and February, as satisfactory figures for March were not available, but these will be examined later. President Roosevelt signed the Wagner $500,000,000 direct relief bill on May 12. This was noted, and principal features of the legislation were described, in our issue of May 20, page 3461. Mr. Peek's announcement of May 27 follows: Mr. Brookhart has been designated to make purely factual studies intended to be of service as between business men of this country and Eastern European business interests in the expansion of markets for American farm products, including those in processed form. His assignment to these duties is in accordance with provisions of the Agricultural Adjustment Act which specifically authorizes the Secretary of Agriculture to take steps for expansion of markets and removal of surplus agricultural products. The assignment of these duties to Mr Brookhart was made by the Agricultural Adjustment Administration wholly on its own authority, and the Agricultural Adjustment Administration does not regard this assignment as one which will have any bearing upon the United States' Governmental relations with any foreign country. All such matters are regarded as strictly within the purview of the State Department which would have been consulted if his undertaking these duties had been considered as having the slightest international significance. In his purely factual studies Mr. Brookhart is not to negotiate with any foreign Government. Congress Passes Wagner Bill to Co-ordinate State Employment Services—Bill Appropriates $1,500,000 First Year and $4,000,000 Each Year For 4 Years Thereafter—Measure Ready For President's Signature—Statement by Senator Wagner Explaining Aims of Bill. The Wagner bill, authorizing a Federally-co-ordinated State employment service, was passed by the Senate on May 29 without debate and without a record vote,and similar action was taken by the House on June 1. The bill is identical with that passed by Congress three years ago and vetoed by former President Hoover. It now goes to the President for his signature. The measure provides for establishment of public employment services by States, modeled after the system already operating in New York State, with the Federal Government co-ordinating the activitives of the State services. The bill includes an appropriation of $1,500,000 for the first year and $4,000,000 annually for four years thereafter. Of this money three-fourths would be distributed to the States to aid in maintaining the employment services, on condition that the States appropriated equal amounts, while the balance would be used for administrative purposes. Senator Wagner issued a statement, after passage of the bill by the Senate, in which he said that the measure was designed primarily to adjust employment under the anticipated business revival in keeping with changes that have occurred during the depression and to establish a permanent system that will abolish for all time the haphazard method of bringing together workers and jobs that heretofore existed. "The restoration of the 13.000,000 unemployed men and women to their normal occupations is the most difficult task of the period of reconstruction." Senator Wagner said. "The principal question that must be answered in the organization of a nation-wide employment service is this: What shall be the relation between the Federal Government and the States in the conduct of such a service? "The Federal Government alone cannot perform the entire task. The Loans by Reconstruction Finance Corporation for Self Liquidating Projects Up to May 25 Totaled $201,298,000—Construction Work Authorized Through Loans Will Require Over 1,000,000 Carloads of Material. A total of 1,006,500 carloads of material will be required for the construction work authorized through self-liquidating loans by the Reconstruction Finance Corporation up to and including May 25, the Corporation announced on June 1. The total amount in loans on that date was $201,298,000, the announcement said, scattered over 35 States and territories and these projects, according to engineers' estimates, will provide a total of 291,785,000 man hours of labor. The Corporation's announcement continued: The million carloads of material will provide employment for thousands in the mines, mills and factories, according to Director Harvey Couch, and while the improvements are being made in only 35 States and territories, they will involve indirect employment in practically every State ofthe Union. Self-liquidating projects have begun to show their effect in the increased output of steel. Several bridge loans have been authorized, including the $13,000,000 bridge across the Mississippi River at New Orleans and the $70000000 bridge across the bay at San Francisco. The first huge order for structural steel for the San Francisco span was placed recently. Some bridges also will require much timber piling and concrete materials, thereby aiding other industries. Following, according to the announcement, are the total loans and man hours of labor listed by States: State. Alabama Arizona Arkansas California Colorado Florida Georgia Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maryland_ Michigan Mississippi Missouri Montana Nebraska New Hampshire New Jersey New Mexico New York North Carolina Ohio Oklahoma Oregon Pennsylvania Texas Utah _ Virginia Washington _ Wisconsin Porto Rico_ Total Total Amount Loaned or to be Loaned. Total Direct and Indirect WanHours. $77,000 1.414,000 1,167,000 132,058,000 1,784,000 650,000 41,000 60,000 3,155,000 773,000 10,000 600,000 1,023,000 16,063,000 60,000 634,000 325,000 742.000 27.000 15.000 250,000 80,000 5.396,000 22,953,000 668,000 493.000 300.000 735,000 100,000 2,718,000 709,000 1,854,000 3,026.000 40.000 1.300,000 $298,000 2.816,000 2,083.000 157,994.000 2,402.000 1,004,000 83.000 91.000 2,740,000 1,791.000 39,000 1.014,000 2,811,000 30,251,000 146,000 887.000 970.000 582,000 42,000 26.000 3,250.000 195.000 27,001,000 21,689,000 2,275.000 1,188,000 504,000 1,204.000 143,000 6,783,000 975,000 8,713,000 6.136,000 161.000 3.500,000 $201,300,000 $291,785,000 Financial Chronicle Volume 136 Monthly Report of Railroad Credit Corporation— Loans Made Up to May 31 1933 Totaled $73,691,368— $1,312,340 Repaid. The Railroad Credit Corporation, to May 31 1933, had made loans to railroads, to meet their fixed interest obligations, totaling $73,691,368, with repayments of $1,312,340, net loans outstanding $72,379,028, according to the monthly report of that Corporation filed with the Inter-State Commerce Commission. In a letter addressed to chief executives of participating carriers and accompanying the report, E. G. Buckland, President of the Railroad Credit Corporation, said: At the termination of the lending period, May 31 1933, substantially all of the emergency revenues, whichaccrued to the 432 participating carriers on traffic moved up to and including March 31 1933 had been received and allocated to the purposes of the Plan. The receipts from lap-over Items, which must be paid in June, will be used for general liquidation purposes. The plan was created, primarily, to benefit the credit position of the transportation industry by preventing defaults in the fixed interest obligations of participants. The unexpected and unprecedented conditions, which have existed during the entire life of the Corporation, made this task more difficult than was anticipated when the Plan was first under consideration. A review of the lending period shows that 64 carriers applied for loans aggregating $149,241,868. Of this sum, applications for $75,550,500 were, for various reasons (principally the granting of similar applications by the Reconstruction Finance Corporation), removed from the docket or denied, while loans actually made totaled $73,691.368. A brief summary of the Corporation's resources to May 31 1933 and the application thereof, excluding accrued but uncollected interest, is stated hereunder. RESOURCES. Emergency revenues accruing to participating carriers through March 31 1933 and reported to the Credit Corporation $74,659,100.35 Less amounts reported but unpaid—receivership items,.kc 244,915.14 374,414.185.21 341,975.28 Total emergency revenue payments into the fund Less refund of taxes paid on such revenues Net available for the purposes of the Marshalling and Distributing Plan. 1931 _________________________________________$74,072,209.93 Proceeds from sale of capital stock 1,200.00 _ Interest collected on loans, bank balances, &e.—Net 584,015.73 Total $74,657,425.66 APPLICATION OF RESOURCES. Loans to participating carriers I,as repayments $73,691,368.00 1,312.339.78 Net outstanding ____________________________________________$72,379,028.22 Expense of administration 194,991.88 $72,574,020.10 Net disbursements Balance in general fund 578,844.17 25.00 Balance in petty cash fund Balance in reserve for tax refunds. 4,n 1,504,536.39 Total_____________________________________________________ $74,657,425.66 It will be noted that the fund heretofore reserved for the purpose of making the tax refunds, required by Paragraph 4 of the Plan, has been curtailed. This action was taken on the basis of revised estimates of claims. as furnished by participating carriers. To the extent necessary, the reserve will be replenished from collections properly creditable to the fund. The Board of Directors will review, from time to time, the Corporation's need for funds and any balance over and above its requirements will be distributed in accordance with the provisions of Paragraph 14 of the Plan. The report for the month follows: TIIE RAILROAD CREDIT CORPORATION REPORT TO INTER-STATE COMMERCE COMMISSION AND PARTICIPATING CARRIERS AS OF MAY 311933. Balance Nd Change During Assets-May 31 1933. May 1933. Investments in affiliated companies—Loans made_ _ $10,860,821.02 $72,379,028.22 Cash 578,844.17 *2,701,770.66 Petty cash fund 25.00 Special deposit—Reserved for taxes. .kc 1,504,536.39 *2,839,000.00 Miscellaneous accounts receivable—Due from contributing carriers 244,915.14 *991,196.56 Interest receivable 455,121.88 115,896.46 Unadjusted debits 156,772.96 18,733.81 Expense of administration—Jan. 1 to May 31 1933, inclusive 58,147.16 11,207.52 Total $4,474,691.59 $75,377,390.92 LiabIlitIes— Non-negotiable debt to affiliated companies—Reported rate increases under Ex Parts 103 $4,268,811.24 $74,317,125.07 Unadjusted credits 18,733.81 406,691.53 Income from funded securities—Interest accrued on loans to carriers 167,521.14 586,433.32 from unfunded securities and accounts— Income Interest on bank balances, dm 65,941.00 19,625.40 Capital stock 1,200.00 Total 84,474.691.59 $75.377,390.92 •Denotes decrease. Loans of $199,100,000 to Farmers Through Reconstruction Finance Corporation in Nine Months'Period— Distributed by Regional Agricultural Credit Corporation. More than $199,000,000 was "pumped into the credit stream" of American agriculture by the Regional Agricultural Credit Corporation in the nine-month period ended May 28, during which this agency was a part of the Reconstruction Finance Corporation. The foregoing announcement was made May 28 by the Reconstruction Finance Corporation, which also had the following to say: Figures compiled to-day giving virtually complete returns on the operations of the Regional Agricultural Credit Corporation show that 146,000 applications for loans were authorized to farmers in every State of the Union and Puerto Rico for a total of $199,100,000; of this amount $135,000,000 had been disbursed when the Farm Credit Administration took over the work at the close of business yesterday. Directors of the Reconstruction Finance Corporation feel that the livestock industry has probably 3833 been saved from'complete demoralization by theactivities of the Regional Agricultural Credit Corporation. The character of the borrowers may be judged by the fact that in the Short interval since the Regional Agricultural Credit Corporation began operations on Sept. 1 1932 repayments as of the close of business May 26 totaled $8.127,000. Offices of the Regional Agricultural Credit Corporations were established in each of the 12 Federal Land Bank districts at the time it was made a part of the Reconstruction Finance Corporation, for the purpose of providing credit facilities for farmers who were solvent but unable to obtain credit through the usual financial channels because of closed banks and general economic conditions. The Government has been able to protect thousands of farmers from foreclosure by this method and provide them with funds to make a new crop. Unlike ordinary banking institutions, the Regional Agricultural Credit Corporations advanced money on any article of security the farmer owned, provided such security had been appraised by local inspectors and approved by local loan committees. Money was advanced in large sums.if necessary, to cattlemen or wheat growers, or in small amounts to farmers who operated on a limited scale. The small advances have been known as."barnyard loans," the smallest on record Is $25. The largest loan that has been approved was for $750,000. The Government made direct contact with these farm borrowers, at no expense to them, through field agents of the Corporations, but the overhead expense of this method of farm relief was reduced to a minimum by the patriotic co-operation of the boards of directors and loan committees of the Regional Corporations, who receive only a per diem of $4.25 while they worked for the Government. The Regional Agricultural Credit Corporations have not competed with local banks, and have discouraged applications for loans if these loans could be negotiated elsewhere. The organization was perfected simply to provide credit for farmers, and especially farmers of limited means. whose credit facilities had vanished, if those farmers had something they could offer as security to safeguard the Government's investment. This form of security was often only a cow, some hogs or a truck—anything of value to insure refunding of the loan, which the farmer agreed to repay out of crop returns or the sale of livestock. In many cases, this temporary plan of farm financing made it possible for farmers to continue producing and prevented them from abandoning the farm in disgust and joining the great army of the unemployed. These 12 Regional Agricultural Credit corporations and their 22 branches, cover the United States like a blanket. They protected thesheepmen in the Northwest, the citrus growers in California, Texas and Florida. the cattle ranchers of the far West, wheat, corn and cotton growers and the fruit and potato growers of New England. The inspectors in Maine last winter used snow shoes to call on the potato growers. When the Regional Agricultural Credit Corporation left the Reconstruction Finance Corporation, the approximate total number of loans approved by the corporations was 146.000. showing the broad aspect of this campaign to aid the Nation's farmers. Of this general total, 28,268, or 19.46 %. was for loans of less than $250. The largest number was in the class between $500 and $1,000, a total of 42,328, but there were 37 loans, or .03%. for more than $100,000. Loan have been made in all the States and Puerto Rico. The largest totals were in the wheat-growing, livestock-raising and cotton-growing sections. Minnesota leads in numbers with 17,516; North Dakota second with 17.121, and Texas third with 13,071. In total amount of loans, however, North Dakota is first with $17.086,309 and Nebraska second with $16,838,631. The corporations have a capital structure of $44,500,000, but they have discounted almost twice as much of their paper with the Reconstruction Finance Corporation. They paid out from $5,000,000 to $6,000,000 weekly in farm loans, and repayments are made as fast as crops are sold. The Corporation was organized Sept. 1 1932 and the first loan was approved on Oct. 8 last year. President Roosevelt Initiates Investigation by Department of Justice Into Alleged Misuse by Private Utilities of Government Facilities at Muscle Shoals—Communication to President by Officials of Alabama Power Co. and Tennessee Electric Power Co.—Deny Any Improper Action by Those Companies. In Associated Press advices from Washington, May 18, it was stated that a few hours after the signing of the Muscle Shoals Bill by President Roosevelt it became known that he had initiated a Department of Justice investigation into charges that private utilities which have leased the Muscle Shoals water power in recent years "misused and damaged the great hydro-electric plant which has lain virtually dormant since the construction by the Government in World War days." These Associated Press advices, as given in the Washington "Post" of May 19, added Ickes Makes Charges. The investigation by the Justice Department concerns charges brought to the President by secretary Ickes, of the Interior. After complaints, he sent an investigator to the Shoals. and the latter's report was understood to contend that the Alabama Power Co. and the Tennessee Electric Power Co. had improperly and destructively used the Muscle Shoals substation to interchange power. At Birmingham,Thomas W.Martin, President of the Alabama company, denied anything irregular had taken place. In Washington, Maj.-Gen. Lytle Brown, Chief of Army Engineers, who has had control of the plant. said the same. Nevertheless, a thorough Federal inquiry is in prospect, which, it appeared likely, would be directed by Huston Thompson,former Chairman of the Federal Trade Commission. In answer to inquiries concerning charges made against the Alabama Power Co. and The Tennessee Electric Power Co., executives of these companies made public on May 18, a telegram to President Roosevelt as follows: Birmingham, Ala., May 18 1933. Honorable Franklin D. Roosevelt. President of the United States, Executive Mansions. Washington. D. C. The statement in the afternoon newspapers that the Tennessee Electric Power Co. and the Alabama Power Co., have been guilty of the theft of power or of any improper action in connection with the purchase of power 3834 Financial Chronicle or the use of government facilities at Muscle Shoals is absolutely and unqualifiedly false. We respectfully request you to instruct those who are making the investigation for you to proceed at once and make it public, thorough and complete in order that the officials of the Alabama Power Co. and the Tennessee Electric Power Co. may be able to show at the earliest possible date the recklessly false and untrue nature of the charges quoted in the afternoon newspapers to-day. None of the Government facilities at Muscle Shoals have ever been used by the Tennessee Electric Power Co. or the Alabama Power Co. other than in exact accordance with understandings. THOS. W. MARTIN, President, Alabama Power Co. .10. C. GUILD, Vice-President and General Manager, The Tennessee Electric Power Co. On May 18, Associated Press advices from Chattanooga said: Major Robert N. Neyland, District Army Engineer stationed here, when informed of the investigation started at Washington into alleged misuse of power facilities at Muscle Shoals,said the plant always has been operated in strict accordance with War Department orders and there had been "no misuse at all." Dr. A. E. Morgan, College President and Flood-Control Expert, Named Head of Tennessee Valley Authority —New Director Says Valley Plan May Aid Millions Within Decade. The appointment of Dr. Arthur E. Morgan to direct the Tennessee Valley Authority created under the Muscle Shoals Act was announced by President Roosevelt on May 19. Dr. Morgan has been named for the term of nine years beginning May 18 1933. He is President of Antioch College at Yellow Springs, Ohio, and an authority on flood control; he has had charge of the $60,000,000 flood control project on the Miami River, following floods of 1913. More than 100 other names are said to be under consideration for the other two places on the Authority. In a statement made on May 20, Dr. Morgan said that he believed the Tennessee Valley project might aid "greatly in keeping the proper balance between city and rural population. One million persons have returned to the Valley because they lost work in cities and now have only slender means of livelihood, the director said. He then continued, according to the Associated Press: We have them back in the hills with nothing to occupy them whatsoever. They merely sit there and wait for a job. It seems to me that mass production has gone too far in America. If some industries can be adapted to small communities, you may keep those folks at home instead of having them go to Cleveland and Detroit, where they do nothing except obey orders, press buttons and punch clocks. The nation would be much better off if we could keep these people at home. There are too many in the cities. I believe we can absorb about 2,000,000 in the Valley in the course of 10 or 20 years. RailroadRelief Bill Passed by Senate—Six-Hour Day Amendment Dropped Because of Roosevelt Opposition—Dismissal of Employees to Effect Retrenchment Is Prohibited—New Basis of Rate-Fixing Specified. The administration's bill setting up a Federal co-ordinator to bring about railroad consolidations and economies was passed by the Senate on May 27 without the formality of a roll call, and the measure was sent to the House, where a similar bill is still pending in Committee. The bill, which combines both permanent legislation and emergency projects, was amended by the Senate to prohibit dismissal of employes in effecting retrenchment. The bill was introduced in Congress on May 4 after a special message from President Roosevelt, and a favorable report was agreed upon by the Senate Inter-State Commerce Committee on May 19. A detailed description of hearings on the measure was given in our issue of May 27, page 3649. On June 1 the House Inter-State and Foreign Commerce Committee favorably reported the bill, and at the instance of President Roosevelt agreed in principle to the Senate amendment protecting railroad labor against loss of jobs. Other minor amendments were adopted. Before the bill was passed by the Senate, Senator Black of Alabama withdrew a proposed six-hour-day amendment when Senator Dill, Chairman of the Inter-State Commerce Committee, said that the President "opposed it as unworkable in this emergency and that it would ruin the bill." He added that the President's position had been accepted by the labor unions. An amendment adopted at the request of Senator Norris would require the Inter-State Commerce Commission to fix rates to give a fair return upon either a basis of prudent investment or cost of reproduction now, whichever was the lower. Features of the bill, as passed by the Senate, were described as follows in Washington advices to the New York "Times" on May 27: The measure suspends the Anti-Trust Laws for one year and authorizes a Federal co-ordinator to effect economies in co-operation with three rail- June 3 1933 road regional committees by eliminating unnecessary duplication of services, arranging for joint use of terminals and trackage, taking steps to avoid waste, and promoting financial reorganizations to reduce fixed charges and Improve carrier credit. This section is for a two-year emergency period, but it could be extended another year if the President desired. The bill has two permanent sections, one repealing the recapture clause of the Transportation Act retroactively and the other placing railroad holding companies under Federal control. Although the co-ordinator could not fix rates, the bill sets up a new basis for rate-making by declaring broadly that the Inter-State Commerce Commission shall give consideration, in fixing rates, to their effect on traffic movements, the need of adequate, efficient railway service at the lowest cost consistent with furnishing it and the need of revenues sufficient to enable the roads to provide this service. Senator Borah, Republican, of Idaho, expressed opposition to setting aside the anti-trust laws to permit mergers and consolidations as the roads saw fit, but Senator Dill explained there was nothing in the bill that enlarged the Inter-State Commerce Commission's existing power to authorize consolidations. Ile added, however, that the bill was intended to give the Commission control over consolidations effected through holding company operations which the Commission could not reach now. Joseph B. Eastman, a member of the Commission, has been prominently mentioned as the President's choice for Federal co-ordinator. The regional committees to be set up by the co-ordinator would be comprised of five members each from the Eastern. Southern and Western railroad groups, with special members representing short lines and electric lines when their interests were affected. The co-ordinator would see to it that labor committees were set up for each regional group of carriers. These would be selected from the regular railway labor organizations and be consulted before any order affecting employes was handed down. "Yellow dog" contracts and company unions would not be recognized. The co-ordinator would be required to notify State Commissions or Governors before issuing any order relieving a carrier from operation under any State law or State Commission order. His orders could be appealed to the Inter-State Commerce Commission, where all interested parties would have twenty days to lay their complaints before an order took effect. Railway Unions Plan Plea to President Roosevelt on Behalf of Six-Hour Day—A. F. Whitney Sees Little Hope of Inclusion of Plan in Legislation by Congress. A plea to President Roosevelt to support the six-hour day on American railways may be made by the 21 railroad Brotherhoods, according to statements by A. P. Whitney, President of the Brotherhood of Railway Trainmen and Chairman of the Railway Labor Executives Association. Mr. Whitney added, in a newspaper interview in New York City on May 28, that he entertained little hope for modification by the House of the Emergency Railroad Transportation Act as passed by the Senate on May 27, with the six-hour day section eliminated. Further details of the interview, as given in the New York "Times" on May 29, follow: lie criticized Congress as "reactionary" and declared that the railway brotherhoods, backed by the American Federation of Labor, would now redouble their efforts for a reduction of working hours as essential to economic recovery. As part of their campaign, Mr. Whitney indicated, the railway brotherhoods may now try to enlist the interest and support of President Roosevelt. He denounced as "subterfuge" the elimination of the six -hour-day section from the Railroad Bill on the promise that it would be reintroduced in other form upon the re-assembling of Congress in the Fall. He took occasion also to assail the reorganization of the railroads as proposed under the Transportation Act. He said the brotherhoods were opposed to the consolidation of the roads under a Federal cause it proposes to set aside the anti-trust laws and co-ordinator, bethus strengthen monopoly and because the bill is "a left-handed step toward socialization of the railroads." Railroad Executives Testify Before L-S. C. Commission on Proposal to Reduce Freight Rates—R. H. Aishton Asks Restrictions on Competitive Transportation—Daniel Willard Declares General Rate Cut Would Mean Disaster to Majority of Carriers. Testimony by leading railroad executives was given before the Inter-State Commerce Commission at a series of hearings beginning on May 25 to gather data regarding a proposal to reduce freight rates. These hearings represent the final stages of an investigation by the Commission, which was undertaken on the request of national organizations of so-called basic producers that the railroads be called upon to show cause Why they should not be required to make drastic cuts in prevailing rates. Testimony from shippers supporting the general reduction had been given to the Commission before it opened the sessions at Which the railroads had an opportunity to present their case. Among the witnesses appearing during the recent hearings, R. H. Aishton, Chairman of the Executive Committee of the Association of Railway Executives and Chairman of the Board of the American Railway Association, declared on May 25 that co-ordination of the nation's transportation facilities Into an effective system cannot be achieved without relaxing railroad regulation and imposing similar restrictions on competitive transportation agencies. Daniel Willard, President of the Baltimore & Ohio Railroad, told Volume 136 Financial Chronicle the Commission on the following day (May 26) that he "staked his reputation" on the assertion that a general reduction in freight rates would mean disaster to a majority of the railroads. Testimony of Mr. Aishton and Mr. Willard, as summarized by the WaShington correspondent of the New York "Times," follows: Holding that it is generally conceded that adequate railroad transportation service is essential, Mr. Aishton declared the railroads can only meet this public demand on a basis of equality of opportunity. "The inequitable relationship of to-day cannot continue if railroad service of to-rnorrow is to meet the public's requirements," he said. "Progressive and sound co-ordination of all means of transportation cannot otherwise be achieved." In a statement Mr. Aishton set forth the decline in net railway operating income from $1,251,698,000 in 1929 to $326,364,000 in 1932, and repudiated the contention that a blanket freight rate reduction would increase traffic. "For three years," he said, "the railroads have been advocating the changes required for equality of opportunity with all instrumentalities that serve the public in the field of transportation. "It is essential that a realization of sound and equitable policies should be had at the earliest possible moment." Throughout a cross-examination by former Senator Smith W. Brookhart, of Iowa, Mr. Aishton adhered to his argument that a general reduction in rates would have little, if any, effect on the volume of traffic handled. "Traffic may remain the same after as before a reduction in rates," he said, "or it may increase to some extent, yet unless such increase is sufficient to overcome the loss in net revenue on the whole traffic due to the lower rate, the final effect of the reduction is a decline in net revenue." Statistics of Debt. Answering a series of questions propounded by the Commission at the opening of the investigation, Dr. Julius Parmelee, statistician for the Association of Railway Executives, said that Class I roads had a total outstanding funded debt at the close of 1932 amounting to $10,812,796,385. Deducting from this total $728,777,307 of equipment obligations, with serial maturities and difficult to classify as to interest rate, and deducting also a small amount of receipts outstanding, according to his estimate, $10,084,013,450 of bonds bore an average nominal interest rate of 4.59%. These outstanding bonds were grouped according to their interest rate by Dr. Parmelee as follows: Distribution Interest Rate %— Amount. $571,507,955 17 3 to 3.993,458.755.458 34.3 4 to 4.49 2,102,766.179 4.50 to 4.99 20.8 5 to 5.99 2,900,841,625 28.8 6 to 6.99 9.2 934.625,544 7 1.1 107.359,000 Rate not shown 0.1 8,157,689 Total $10,084,013,450 100.0 Called upon by the Commission for a statement of his opinion, as the head of what it considers "the typical railroad of the East," Mr. Willard said: "I say that any general rate reduction at this time, with the present greatly reduced volume of business, together with the uncertainty of the future, would tend to bring financial distress if not disaster to the majority of the railroad companies of the United States. "I appreciate that this is a very serious statement to make, but I wish to add that it reflects my carefully considered judgment, based not only on the statements which the railroad witnesses have submitted but upon some considerable personal experience of my own." Argument Is Forceful. Mr. Willard's was the most forceful language used by any of the witnesses presented by the railroads to refute the argument advanced by national associations of basic producers that a general reduction in rates would aid business generally and increase the volume of railroad traffic. "I do not believe," he said, "that a general reduction in freight rates at this time would have any appreciable effect on the volume of business now moving. "I ought perhaps to add that railroad rates are constantly being reduced either upon the initiative of management or by order of the Commission. There has been a total reduction of 18% since 1922, including the first 10% reduction ordered in 1922." Taking Commissioner Joseph B. Eastman as his authority, Mr. Willard said that, contrary to the popular impression, railroads are not overcapitalized. "The same thing is true of the Baltimore & Ohio," he went on. "It is not overcapitalized, and yet at the present time over $315,000,000 of its capitalization is receiving no return whatever and the average rate of interest paid upon its outstanding funded indebtedness is less than 5%. "The applicants in this case have repeatedly called attention to the decline in commodity prices and to the fact that railroad rates have not declined in similar amount. "Assuming that there is a relationship between commodity prices and railroad rates, which I do not concede, I venture to call attention to the fact that since this application was filed the Congress of the United States, responsive in part at least to requests from some of the associations which are among the applicants in this case, has enacted a law, which the President has signed, the announced purpose of which is to bring about an increase in commodity prices. "If the law just enacted has the effect which the Congress expects, the alleged maladjustment between railroad rates and commodity prices which the applicants in this case complain of will be largely, if not corrected—not, however, by the destructive method of further completely, reducing or deflating railroad rates but rather by the constructive method of raising the commodity prices themselves." Reconstruction Finance Corporation Ruling Requiring Reduction in "Excessive" Salaries of Executives Before Loans Will Be Made to Corporations— Scale of Cuts Runs from 60% on Highest Salaries to 10% Between $4,800 and $10,000—Rule, Already Applied to Southern Pacific, Expected to Affect Railroads Chiefly. Corporations which in the future wish to obtain loans from the Reconstructive Finance Corporation must reduce exces- 3835 sive salaries paid to executives, according to a ruling announced by Jesse H. Jones, Chairman of the Corporation, on May 28. Under this ruling salaries exceeding $100,000 must be reduced 60%,including previous cuts, while a sliding scale of reductions is specified for salaries in lower brackets. The reductions will remain effective until the loans are liquidated or until the corporations are able to meet fixed charges out of revenues. The procedure mentioned has been applied to the Southern Pacific Co. when its request for a loan of $23,200,000 was approved. The statement issued by Mr. Jones follows: Although Congress has not yet adopted the legislation limiting salaries of officers of corporations borrowing from the Reconstruction Finance Corporation, the Board of Directors of the Reconstruction Finance Corporation made it a condition of the loan to the Southern Pacific Co. that, in the event such a law is passed by Congress, the officers of the Southern Pacific will put whatever limitation Congress imposes into effect from June 1 1933. Regardless of Congressional action, the Corporation made it a condition of the Southern Pacific Co. loan that salaries be reduced according to the following percentages: Any salary that has heretofore been more than $100,000 per year, to be reduced not less than 60%, including previous reductions; salaries that have ranged from $50,000 to $100,000, to be reduced not less than 50%, including previous reductions; those ranging from $25,000 to $50,000, to be reduced not less than 40%, including previous reductions; those ranging from $15,000 to $25,000, to be reduced not less than 25%, including previous reductions; those ranging from $10,000 to $15,000, to be reduced not less than 15%, including previous reductions, and those salaries and wages from $4,800 up to $10,000 to be reduced not less than 10%,including reductions heretofore made. Deductions of approximately 25% have already been taken by the higher salaried officials of this road. Union contracts are not affected by the Corporation's requirements. These are the maximum salaries that can be paid by the borrowing corporation during the continuance of the loan of the Reconstruction Finance Corporation, or until the road is earning all fixed charges. The road is also required to go to hankers and the public for funds to repay the Government as soon as the money market will permit. While the Southern Pacific RR. loan is the first in which these salary reductions have been required, it will be the policy of the Corporation to impose similar conditions in all future loans to railroads or other corporations paying excessive salaries. According to Washington advices to the New York "Times" on May 28, it is the general impression that the ruling will affect chiefly the railroads. Discussing salaries paid railroad executives, the dispatch mentioned states: According to a compilation of salaries made by the Inter-State Commerce Commission in June 1932, the Chairman of the Executive Committee of the Southern Pacific Co. received $150,000 in December 1929, which was cut to $135,000,000 as of March 1 1932 ; the Vice-Chairman, $85,000 in 1929 and $76,500 in 1932, and the President $100,000 in 1929 and $90,000 in 1932. The Chairman and Vice-Chairman held the same office also on the Texas New Orleans. Such additional reductions as have been made have not been tabulated. This report was compiled from questionnaires sent to the railroads at the request of Senator Couzens and transmitted to him by Commissioner Eastman. It listed the following salaries: President— Dec. 1 1929. Mar. 1 '32. tchison $75,000 $67,500 Atlantic Coast Line 30,000 27,000 Baltimore & Ohio 125,000 120.000 (Senior Vice-President) 75,000 76,500 Boston & Maine 50,000 45.000 Chicago & Northwestern 75,000 61.000 Chicago Milwaukee St. Paul & Pacific 75,000 67,500 Delaware & Hudson 100,000 90.000 Denver & Rio Grande Western 60.000 54.000 Erie System 75.000 67,500 Great Northern 90,000 60.000 Illinois Central System 100.000 90,000 Lehigh Valley 80.000 72.000 Missouri Pacific System_ 100,000 73.333 New York Central System 100.000 90.000 New Haven System 75.000 90.000 Pennsylvania System 150,000 135.000 (Vice-President) 65,000 58.500 Southern Railway System 100,000 67,500 Union Pacific System 100,000 90,000 In connection with the salary of the President of the Baltimore & Ohio, the report said that $120,000 as of March 1 1932 was figured after a reduction of 20%, effective May 1 1931, the salary at that time apparently having been increased to $150,000 since the Dec. 1 level. There have been numerous reductions since March 1932, bringing the level of salaries to a somewhat lower range than given in the report, but these have not been made available by the Commission. Joint Stock Land Banks Must Liquidate, Says Webster, Kennedy & Co., as Result of Enactment of Farm Mortgage Relief Bill—Failure to Make Congress Recognize Title "Instrumentalities of the United States Government" Regarded as Adverse Action. As a result of the enactment into law of the new Farm Mortgage Relief bill, the future of the Joint Stock Land Banks has been definitely defined, say Webster, Kennedy & Co., of.New York, specialists in these securities, in a special study of the new legislation. The firm says: It will be learned with disappointment that all Joint Stock Land Banks must liquidate--those that can, in an orderly manner, those that cannot, have the alternative of early receivership or readjusting their obligations in line with their shrunken assets at the expense of bondholders. The hope that Congress would recognize and endeavor to give some meaning to the title "Instrumentalities of the United States Government" has ended in disappointment. The effort, by friendly interests, to have these banks liquidated through the Federal Farm Loan System, on a fair appraisal basis has also failed to get support. In fact, the new legislation has resulted largely from the efforts of the "Farm Bloc" to bring about a reduction in 3836 Financial Chronicle Interest rates to farmer borrowers and to stop foreclosures. Realizing that they could not, legally, force the Joint Stock Land Banks to lower their interest rates on farm loans and stop foreclosures, yet knowing that a majority of the banks could not continue in business without financial assistance, the Farm Bloc leaders arranged the bill so as to make it virtually impossible for these institutions to carry on. Those weaker banks of the system which have been forced to borrow from the Reconstruction Finance Corporation to keep out of receivership now find themselves facing a critical situation, the study continues. Having been authorized to borrow only under provisions of the new law, they are apparently shut off from continuing on the old basis of unrestricted loans from the Reconstruction Finance Corporation. The firm continues: It appears certain that many of the banks will have to borrow or default on bond interest within the next few months. Out of 46, only 18 have earning assets equal to outstanding bonds, and, in many instances, a major percentage of these assets simply represent loans that have not been foreclosed, although they have been definitely in default for some time. Certain of these 18 banks are sound and will work out within their own resources, but some will undoubtedly require reorganization. As to the remaining banks, a number whose earning assets are slightly below their outstanding bonds, yet which still show a good reserve and surplus, will probably be able to get along without borrowing from the liquidation fund (as provided under the new law). But the balance have such a serious deficit between earning assets and bonds, and so many of these assets are in default, that they will be forced to borrow soon or default on interest, which means receivership. The various banks "must offer some kind of compromise proposition to bondholders which will scale down the indebtedness of the bank to a point which will permit continued operation on an interest-paying basis," says the firm, which adds: If they apply for and receive loans from the $75,000,000 fund made available by the Emergency Farm Relief bill they must reduce their interest rates on all mortgage loans outstanding to 5%. They can only hope that the bondholders will see the picture clearly and co-operate in keeping the bank out of receivership. That this can be accomplished is entirely problematical. It will probably take several more receiverships to put force behind any new reorganization plans. Board of Indianw Commissioners is Discontinued— President by Executive Order Abolishes Service as Measure in Interest of Public Economy. The Board of Indian Commissioners is to be abolished and its functions taken over by the Secretary of the Interior. From the "United States News" we quote: Action to this end was taken May 25 by President Roosevelt in the interests of economy, and subsequently the Department of the Interior announced that substitution of Federal day schools and the public school facilities for some of the Government Indian boarding schools is one of the ways in which the Indian Service of the Department will accomplish budgetary changes made necessary by the economy program. The President sent a message to Congress with an executive order abolishing the Board of Indian Commissioners. The message follows: To the Congress: Pursuant to the provisions of Section 1, Title III, of the Act entitled "An Act to maintain the credit of the United States Government," approved March 20 1933, I am transmitting herewith an executive order abolishing the Board of Indian Commissioners. There is no necessity for the continuance of this Board and its abolition will be in the interests of economy. FRANKLIN D. ROOSEVELT. May 25 1933. Arms"Embargo Resolution Reported to Senate With Amendment Providing That Any Ban on Arms Shipments Would be Invoked Against All Parties to a Dispute—Clause Urged by Senator Johnson Said to Assure United States Neutrality. The arms embargo resolution, which was passed several weeks ago by the House of Representatives, was favorably reported to the Senate on May 27 after an amendment had been adopted restricting the President in the use of the proposed embargo authority to prohibiting exports of arms to all parties in international disputes. This compromise measure was agreed to in conferences between Secretary of State Hull and Chairman Pittman of the committee, and was the result of proposals of Senator Johnson that the embargo might not be decreed to affect a single nation. The amendment adopted by the committee and included in the reported resolution reads as follows: Provided, however, that any prohibition of export, or of sale for export, prohibited under this resolution, shall apply impartially to all of the parties in the dispute or conflict to which it refers. Authorship of this amendment was attributed to John Bassett Moore, authority on international law, who had severely criticized the resolution in the form in wLich it passed the House. Senator Johnson said that the amendment "retains the status of neutrality of this nation" and added that "if an aggressor is to be determined, the Congress retains the right to act." The complete text of the resolution, as amended, follows: Joint Resolution to prohibit the exportation of arms or munitions of war from the United States under certain conditions: Resolved by the Senate and the House of Representatives of the United States of America in Congress assembled. That whenever the President finds that in any part of the world conditions are such that the shipment of June 3 1933 arms or munitioneof war from-countries which produce these commodities may promote or encourage the employment of force in the course of a dispute or conflict between nations, and, after securing the co-operation of such governments as the President deems necessary, he makes proclamation thereof, it shall be unlawful to export, or sell for export, except under such limitations and exceptions as the President prescribes, any arms or munitions of war from any place in the United States to such country or countries as he may designate, until otherwise ordered by the President or by Congress. Provided, however, that any prohibition of export, or sale for export, prohibited under this resolution, shall apply impartially to all the parties in the dispute or conflict to which it refers. Sec. 2. Whoever exports any arms or munitions of war in violation of Sec. 1 shall, on conviction, be punished by a fine not exceeding $10,000 or by imprisonment not exceeding two years, or both. Inquiry into Affairs of J. P. Morgan and Other Private Bankers—President Roosevelt Reported as Telling Senate Committee He Desires Inquiry Pushed. In Associated Press advices from Washington May 29, it was stated that President Roosevelt told members of the Senate Banking Committee that day that he wanted their investigation of J. P. Morgan & Co. and other private bankers to be pushed forward "without limit." The Associated Press added: In an official source it was asserted that the President "renewed his expression of desire to have the investigation go through without limit and indicated his complete confidence in the Committee." At the beginning of the investigation into private bankers, President Roosevelt gave the Committee his backing and urged that the inquiry be a thorough one. As a matter of fact, it was said to-day in an informed quarter, the President suggested to the Committee at that time that its activities be turned toward the private bankers. Documents in the hands of Senate investigators show J. P. Morgan & Co. and its affiliate, Drexel & Co., have sold six bond issues during recent years which do not mature until after the year 2,000. This practice was severely criticized at the last session of Congress by Senator Couzens, who was then Chairman of the Senate Inter-State Commerce Committee. Railroad officials defended the procedure,saying many investors want securities which will insure return for many years to come. The list, carried in documents filed with the Committee, by the Morgan company, follows: Issues managed by J. P. Morgan & Co.: Cincinnati Union Terminal Co., issued Nov. 19 1931, first mortgage, 5%,$12,000,000, issue price 97,due July 1 2020; selling profits 359.793. Same company, issued Sept. 25 1930, first mortgage, 43 %,$12,000,000, issue price 102 H,due July 1 2020; profits $64,000. Louisville & NashvIlle RR. first refunding mortgage, 4% 0, issued Feb. 7 1930, $15,000,000, price 95, due April 1 2003; profits $113,360. Morris & Essex RR., issued Oct. 21 1927, first refunding 3%%,$9,871,000, price 85, due Dec. 1 2200; profits $40,869. New York Central RR., issued March 10 1931, refunding and improvement %.$75.000.000. price 100, due Oct. 1 2013; profits $400,403. Issues managed by Drexel & Co.: Lehigh Valley RR. general consolidated mortgage, 4%, issued Dec. 28 1927, $12,686,000, issue price 923, maturity 2003; profits $54,822. Inquiry into Affairs of J. P. Morgan & Co. by Senate Committee Investigating Stock Exchange Trading —Senator Glass Disavows Any Morgan Link. The following (copyright by Nana, Inc.) from Washington May 29, is taken from the New York "Times": Threats and insulting letters by the score have beaten down upon the head of Senator Carter Glass of Virginia because of his persistent opposition to the methods used in the J. P. Morgan & Co. inquiry before the Senate Committee on Banking and Currency. Many in Washington and the country at large are puzzled to know why this frail but doughty Senator, who has fathered most of the bank-reform legislation in Congress in the last quarter century, should seemingly take up the cudgels for the house of Morgan, which fought most of that legislation tooth and nail. All the threats, all the criticism and all but one of the insults directed against Senator Glass as an alleged "tool" of Wall Street have glanced off harmlessly. One single exception sent him into a tower of rage, for it was an uncomplimentary telegram from a man of some standing in the East. The Virginian wrote this reply: "Dear Sir: I am wasting a three-cent stamp to say I always disregard the insults of a blackguard, particularly when they come from a distance?. Pecora Is Criticized. "I haven't the remotest relation to the house of Morgan and I don't give a continental for it," Senator Glass said in an interview. "I do care a great deal for the dignity of the Banking and Currency Committee of the Senate, of which I've long been a member, and for orderly and sensible procedure by the committee. "Our members have been drawn around a long table for nearly a week without one particle of knowledge beforehand about what counsel for the committee proposed to disclose, without being given one particle of information as to what,if anything, J. P. Morgan & Co. has done of an informal, illegal or illicit nature. "Counsel for the committee, with a corps of some 15 or 20 accountants and experts, spent weeks in combing the files and private papers and correspondence of the firm of Morgan & Co. One thing they seemed to have discovered was that the Morgan firm had illegally and irregularly charged off a loss of $21.000,000, thereby escaping, contrary to law, payment of income taxes on that amount. "It seemed to me inevitable that any counsel intent upon making a fair and honest investigation of a banking firm, whether it be that of Morgan or some one else, would have immediately demanded to know the meaning of this apparent illegal evasion of income tax payment. "Yet, Mr. Pecora waited until he had Mr. Morgan on the stand, and without informing the committee as to his purpose, deliberately made the impression on the committee, upon the press and upon the country that this banking firm had been guilty of an irregular if not a criminal evasion of the income tax law. Cites Waste of Time. "The facts are that despite Mr. Morgan's contention that he personally was ignorant of the details of the transaction in question, Mr. Pecora refused until compelled by the committee to call to the stand Leonard Volume 136 Financial Chronicle Keyes. Morgan's office manager, who made out the firm's income tax returns for 16 years. It "When Mr. Keyes did go on the stand his testimony, uncontradicted to this moment, showed that the firm had done nothing of an irregular, immoral or illegal nature so far as its Income tax returns were concerned, but it had complied with every requirement of the law and had freely submitted its income tax figures to the sworn and tested examiners of the Internal Revenue Bureau. "Had these facts been presented to the subcommittee prior to the opening of the hearing, the committee then could have decided whether or not to waste an entire day in police court interrogations of Mr. Morgan and Mr. Keyes upon the groundless assumption that the banking firm had been guilty of some irregular or illegal evasion of its income tax." Senator Glass insisted that he felt no antagonism toward Mr. Pecora and no particular friendliness for Mr. Morgan. Inquiry into Affairs of J. P. Morgan & Co. by Senate Committee Investigating Stock Exchange Trading —Use of Private List by Banking House Defended by George Whitney in Outlining Sale of United Corporation Units Below Market—Senator Kean, Dwight W. Morrow, Edgar Rickard, at One Time Called Hoover Aide, Named at Probe. Vigorous defense of the practice of J. P. Morgan & Co. in offering common stocks of corporations in which it is interested to individual buyers at cost, was offered before the Senate Banking Committee on May 31 by George Whitney, partner of the firm. The Washington correspondent of the New York "Journal of Commerce" in its account of this went on to say: Mr. Whitney's explanation of the practice to distribute risks to the banking house came after a detailed probe into the financial set-up of the United Corp., public utility holding company, organized by the Morgan firm. Ferdinand Pecora, counsel for the stock market investigation committee, developed to-day that the Morgan firm passed on to another "private list" of its customers units of United Corp. stock at a price of about 324 per unit lower than it opened on the exchanges. Option Warrants Cited. The committee counsel further brought out that option warrants on United Corp. stock, acquired by the Morgan firm during the transaction, could have been marketed at a profit of about $68,000,000. Mr. Whitney counteracted this latter development with the statement that the banking firm could have made about $58,000,000 on certain stocks, that it traded for United Corp. securities without taking the trouble of organizing the holding company. Protesting the reference to the list of customers allowed to purchase units of United stock at the same price it cost the Morgan firm, as a "preferred list," Mr. Whitney declared that those taking advantage of the firm's offer assumed a definite business risk. The idea is not new, he contended, and is common practice in England and was in this country long before "boom" times. "We used them to distribute the underwriting of common stocks we did not think it would be secure for the bank to carry," he explained. Mr. Whitney told Mr. Pecora that there were instances where his firm had used the "private lists" before 1927, although there were few instances during that period calling for their use. Not Preference Lists. "We do not consider them preference lists," he said. "They are lists of people we know, have had relations with and are competent financially and mentally to undertake the risk we offer them." Later under cross-examination by committee counsel the witness declared that the transactions were not underwriting the technical legal form, but that they were done to "divide our risk." "They were definite and direct purchases for sale transactions, but had the same results as far as J. P. Morgan & Co. was concerned as underwriting," he emphasized. "While they were straight sales they have in the financial field an element of underwriting." Asked what risk the customers had to take when the stock was offered to them at $20 per share while it was selling on the market at $37, the witness stated that he did not think that had been shown. He stated that the stocks (Alleghany Corp.) were not being quoted on the market when the Morgan house made the offer to sell. Mr. Pecora replied that trading on a "when issued basis" opened on the Alleghany stock Jan. I 1929 at 30 to 32, and asked if the witness could produce letters to the private customers making offerings at 20 before that date. Mr. Whitney stated that most of the offers were made in conversations over the telephone and no records were kept. Harmony on Course. Dissension that has existed in the committee at the manner in which the investigation was being conducted was ironed out at an executive session this morning. Senator Glass, who had objected to "circus" methods and who had asked to be informed as to the course of the proceedings, declared that he was satisfied and had obtained the information he desired. In organizing the United Corp., J. P. Morgan & Co. received 800.000 shares of common stock in the corporation. 600.000 of the $3 preferred stock and 714.000 optional warrants allowing the purchase of common stock at $27.50 per share. Later the firm purchased for $10,000,000 400.000 shares of common stock and 1,000,000 option warrants. An offer similar to the latter transaction was made at the same time by Bonbright & Co. and accepted. In passing the stock in the corporation to customers on ita private lists, the company sold the stock in $75 units consisting of one share of $3 preference stock, at its liquidating value of $5 and one share of common stock at $25. Mr. Whitney explained that this private offering, made at cost to the Morgan firm, was made during Jan. 9 and 14 1929. Mr. Pecora pointed out that George Howard, President of the United corp., had previously testified that on Jan. 21 the first quotation on the counter market priced the units at $99. Denies Bonus Grant. After Mr. Whitney had stated that the stock was sold to the private customers at cost to the firm, Mr.Pecora asked if the option warrants the company received in the transaction were held as a bonus. Mr. Whitney replied in the negative, adding that the warrants were not carried on the company's books because they were not "proper assets." Mr.Pecora introduced evidence showing that the option contracts rose to $47.50 during the climb of the United Corp. stock. Mr. Whitney stated under examination that the company sold 200,000 of the warrants from 3837 July to September, 1929 at an average price of about $40, a total of 38,490.000. The committee counsel then asked if the Morgan partners could not have sold the remaining 1,514,000 warrants at a "very substantial" price for some time after that. Mr. Whitney pointed out that the firm still held the options and that it was a matter of speculation as to at what price they could have been sold. He added that the options are still bringing about $2 on the curb market "because people still think it is a privilege to pay that amount for an option to buy at $27.50 stock that now sells for about $9." In the list of the customers invited to purchase the United Corp. units were the names of Secretary of the Treasury Wood's', Senator McAdoo (Dem., Calif.), John J. Raskob and Norman H. Davis, Ambassador-at Large, all of whom have been named in previous lists. Dwight W. Morrow,former Ambassador to Mexico, was another prominent notable listed, as was Charles G. Dawes, who was Ambassador to England at the time he was indebted to the Morgan company. An attempt to link former President Hoover with the private list through Edgar Pickard. said to have been his financial agent, named on the United Corp. list, was made by Senator Costigan (Dem., Colo.). Mr. Whitney declared that he did not know Mr. Pickard. Senator Kean (Rep., N. J.), whose banking firm of Kean, Taylor & Co., was listed, issued a statement through the committee pointing out that his firm has associated in Morgan issues for a considerable time. He declared that he had no knowledge of the United Corp. transaction. The following is from the Washington dispatch May 31 to the New York "Times": Kean Explains Morgan Offer. The following explanation by Senator Kean of New Jersey for the name of his firm Kean, Taylor & Co., being on the United Corp. list, was read into the record by Senator Fletcher, Chairman of the Committee: "A newspaper reporter came in to see me last Thursday and said the name of my firm, Kean, Taylor & Co., was on the list of Messrs. J. P. Morgan & Co. "I asked Mr. Pecora on Friday if this was so, and he said he would look It up. "When I was a young man, after starting the firm in 1892, I was able to place a considerable number of bonds brought out by Messrs. J. P. Morgan & Co. I asked the present Mr. Morgan's father for an interest in the bond syndicates that they were bringing out, and Mr. Morgan having a kind heart and finding that I was ready to work, gave me a small interest from time to time, on which amounts I made good. "In other words, I sold more bonds than my proportion of the syndicates, and I have taken interests in the Morgan offerings ever since. At about the same time I obtained like interests in bond syndicates originated by Messrs. Kuhn, Loeb & Co.; Dillon, Read & Co. and other issuing houses, because as a distributer I could be useful to them. "Since becoming a member of the Senate I have spent most of my time in Washington, so that I am and have been out of touch with my office and business there." Inquiry into Affairs of J. P. Morgan & Co. by Senate Committee Investigating Stock Exchange Trading —List of Those to Whom Stock of United Corporation, Inc., Was Sold Below Market Price. The following list of those to whom J. P. Morgan & Co. sold stock of the United Corporation, Inc., at $75 a share in January 1929 when it was listed on the market at $99, was placed in the record of the Senate investigation on May 31 by Ferdinand Pecora, counsel for the Banking and Currency Sub-committee, according to the "Times": Name. Shares. Mrs. Helen B. Achelis 300 W. H. Aldridge, President, Texas Gulf Sulphur Co 1,000 A. M. Anderson, partner, J. P. Morgan & Co 2.000 Joseph Andrews, trustee, Bank of New 'York Sr Trust Co 100 Mrs. Irma D. Ashmead 50 I. C. R. Atkin 100 The Atlantic-Merrill Oldham Corporation 1,000 J. Howland Auchincloss 300 C. A. Austin, late President Equitable Trust Co 500 Mrs. Isabel Valle Austin 200 Gaspar G. Bacon and George Whitney 500 Trs. U-13 of trust dated 11-13-14, Mrs. Hope Norman Bacon 1.000 Priscilla T. Bacon, George Whitney and Gaspar G. Bacon, trustees U-D of trust for benefit of Geo. F. Baker 5,000 Donald C. Bakewell, President Duquesne Steel Co 160 Bankers Company of New York, security affiliate Bankers Trust 5.000 Charles H. Barnes, director Medford Trust Co 30 Sosthenes Behn,Chairman International Telephone & Telegraph Co. 1,000 Otto F. Behrend. Treasurer Hammermill Paper Co 100 C. J. Bennett 15 J. J. Bernet, President Ohio RR 500 Stephen Birch. director Kennecott Copper Co 1,000 C. N. Bliss, director Bankers Trust Co 2.000 Birth & Co., investment bankers 1,500 Amy W. Board 25 Bonbright & Co., investment bankers 81,262 Bonbright & Co., investment bankers 121,668 Nicholas F. Brady, late Chairman New York Edison Co 3,000 Charles S. Brewer 1,000 Bradford Brinton, director J. I. Case 300 Brown Brothers & Co., investment bankers 3,000 George F. Brownell, Vice-President Erie RR 200 Matthew Brush, President American International Co 1.000 Roger H. Bullard 50 George Burgess 50 W. E. Burnet, director South Porto Rico Sugar Co 200 Ward M. Canady, President U. S. Advertising Corp 1.000 W. C. Cannon, partner Davis. Polk, Wardwell, Gardner 81, . Reed 300 George W. Carpenter, partner Jesup & Lamont, members New York Stock Exchange 400 Mrs. Kathryn R. Carpenter 5 W. L. Carson 100 Dr. Alfred H. Clark 500 E. H. Clark, director Irving Trust Co 500 Clark. Dodge dr Co., members New York Stock Exchange 5.000 Leon R. Clausen, President J. I. Case 500 E.0. Congdon 160 Continental National Bank & Trust Co 3.000 Clinton H. Crane President St. Joseph Lead Co 500 8,, M. Crocker. Vice-President International General Electric Co.._ 100 Mrs. P. E. Crowley 500 George Dahl 40 Arthur V. Davis, Chairman Aluminum Company of America 1.000 A. B. Davis 10 Henry G. Davis 100 John W. Davis, oounsed J. P. Morgan & Co 500 Norman H. Davis, U. S. Ambassador at Large 250 Donald K. David, trustee Bowery Savings Bank 200 nokakk.& 3838 Financial Chronicle June 3 1933 NameShares. Name. Shares. Lewis C. Dawes Old Colony Corp.,security affiliate First National Bank of Boston_ _ 2,000 300 D. Debevoise John Oldham, director Atlantic National Bank 200 Moreau Delane Robert E. Olds, late Assistant Secretary of State 1,0(8 ) 1 500 Wm. F. Delany General John J. Pershing 20 250 Edward Dibrell Harry Peters 250 500 D. J. Dimock Frank L. Polk, partner Davis, Polk, Wardwell & Reed 50 500 Dominick & Dominick, member New York Stock Exchange W.Julius Polk 5,000 200 Camille Dreyfus, President Celanese Corp Daniel E. Pomeroy, director American Brake Shoe and Foundry.. _ _ 300 250 J. A. M.de Sanquhez, employee J. P. Morgan & Co 25 W. C. Potter, President Guaranty Trust Co 7,000 Drexel & Co., Philadelphia partnership of J. P. Morgan & Co 000 John W. Prentiss, Hornblower & Weeks, member New York Stock Drexel & Co., Philadelphia partnership of J. P. Morgan & Co 8 Exchange 1,000 1,883 W.Echtermeyer Seward Prosser, Chairman Bankers Trust Co 7.000 1,06 3 F. H. Ecker. President Metropolitan Life Insurance Co Phillips Exeter Academy, trustees for the benefit of 500 Mrs. Cornelia Cousins Egan, wife Morgan employee Mrs. D Y. Ranson Jr 2C0 300 Dean Emory John J. Raskob,former Chairman Democratic National Committee; 500 Robert W. Emmons 3d, partner Gammack & Co., members New director General Motors 2,500 York Stock Exchange 100 Lansing P. Reed, partner Davis, Polk, Wardwell & Reed 500 Miss Alwens G. Evans 5 S. W. Reyburn, President Associated Dry Goods 500 Evans, Stillman & Co., members New York Stock Exchange 500 Miss Ester S. Rich 5 William Everdell. director Continental Mortgage Guarantee Co_ _ _ 150 Edgar Rickard 400 George B. Everitt, President Montgomery Ward & Co Mrs. Rose M. Ricketts 10 500 J. V. Ewing estate J. Henry Reraback. director Aetna Casualty Co 1,000 300 Charles S. Ruffner, director A. P. W Pulp & Paper Co., Ltd 1,000 William Ewing, special, partner J. P. Morgan & Co 100 1,000 G. Faccioli 80 Salomon Brothers & Hutzler, investment bankers 50 Eliot Farley, President D. L. & W. Coal Co 1,000 A. H. Sanford 500 200 Herbert L. Satterlee, member Satterlee & Canfield Mildred Farwell 1,000 Dr. E. Ross Faulkner 500 Franz Schneider, Vice-President Newmont Mining William C. Finley 500 Schoellkopf, Hutton & Pomeroy, Inc.. investment bankers 1,500 Mrs. Florence S. Schuette First Chicago Corp., affiliate First National Bank, Chicago 2.000 1,000 First National Corp 2,000 Robert Meridith Serale 1,000 15,000 First Security Co., security affiliate First National Bank of N. Y Charles Seymour 160 2,000 Malcolm D. Simpson 25 Laurence P Fisher President Cadillac Motor Co 1,000 A. P. Sloan, et al., President General Motors Major Max C. Fleischmann, director Standard Brands 3,500 50 Carl Flach Matthew S. Sloan,former President N. Y. Edison 1,000 .500 H. A. Fortington, Financial Secretary Royal Insurance Co., Ltd Harvey H. Smith 40 30 F. S. Smithers & Co., members N. Y. Stock Exchange Albert Foster Jr 1,000 10 N. L. Snow Teresa Fowler 200 10 A. H. Springer 25 Harry Frees 1,000 Mre. Edith T. Stanley 400 P. A. S. Franklin, Chairman International Mercantile Marine 1,000 W. E. Frew, Chairman Corn Exchange Bank Gilbert Stanley 1,200 500 State Street Investment Corp.. investment trust Giovanni Fumml, Morgan employee in Italy 2,000 10 John A. Stephens Jr 250 G. L. Gegen Edward R. Stettinius, Vice-President General Motors 250 100 Mary B. Ganunack ' Spencer Trask & Co., investment bankers 1,000 Thomas H. Gamrnack, partner Gammack & Co., members New 200 George D. Stewart 500 York Stock Exchange 500 1,000 George H. Gardiner, member Davis. Polk, Wardwell & Reed Stockholms Enskilda Bank 100 Cornelius J. Sullivan, partner Eidlitz & Hulse 500 Thomas Garrett Jr.. member Davis, Polk, Wardwell & Reed 20 J. J. Sullivan--------25 Miss Lydia K. Garrison 1;dlic, Wiiidir- --Gardiner -so ell, E. S. S. Sunderland, partner Davis,Mrs. Philip McKim Garrison 100 00 Reed David L. George, member Dubosque, George & Farrington Stock Exchange Sutro Brothers & Co.. members New York 10 1,000 F. Gibbons 1,000 Miss Katharine Taylor 20 Harvey D. Gibson, President Manufacturers Trust Co 250 Myron C. Taylor, Chairman U. S. Steel Corp 5,000 Mrs. S. Parker Gilbert, wife of Morgan partner 1.500 Walter C. Teagle, President Standard Oil Co. of N. J 10 J. Gindorff 100 Eldredge Thomas Rudolph Goepel George H. Townsend, director Fairchild Aviation 300 2.0 101 Philip G. Gossler. Chairman Columbia Gas & Electric Co 500 Mrs. P. M. Trace 10 Guaranty Co. of New York, security affiliate Guaranty Trust Co 250 5,000 Mrs. Elizabeth S. Trippe Guggenheim Brothers, bankers 400 William H. Thurston, director Edward Haynes. Inc 10 T. S. Hallett. employee J. P. Morgan & Co 1,000 Union Trust Co., Cleveland bank 500 Hambleton & Co., Inc., investment bankers 3.000 The Union Trust Co. of Pittsburgh 10 Henry Hammill Jr 0. P. Van Sweringen, President Allegheny Corp 5,000 1,000 C. P. Hamilton, director American European Securities Co 750 Edmund N. Wakelee 1.000 P. T. Hanscom, President United Electric Securities Co 10 Miss Anna Walsh 500 Mrs. Hebe Harris 10 Cornelius J. Walsh 10 Walter P. Haskell 400 Allen Wardwell. Davis, Polk, Wardwell, Gardiner & Reed 5 Chester W. Hawkins 100 Mrs. Marie Watkins 5,000 Charles Hayden, partner Hayden, Stone & Co 1.500 N. A. Weathers, Chairman United Electric Securities Co 250 R. C. Hill, Chairman Consolidated Coal Co 100 F. C. Weems William Hill -Wood 100 10 Hartland West Charles D. Hines, National Committeeman for New York State; John D. Ryan, late Chairman Anaconda Copper 1.000 resident manager Employers' Liability Assurance 1,000 500 Robert White 300 George C. Hitchcock 1.000 J. G. White & Co., Inc., investment bankers 500 Hitt, Farwell & Co., members New York Stock Exchange 2.000 White, Case & Co., Morgan attorneys 10 William E. Holloway Jr 10,000 George Whitney, agent, member .1. P Morgan & Co 50 George Holton, general counsel Socony-Vacuum 100 500 Martha B. Whitney -----------R. G. Hutchings, director N. Y. N. H. & H Trustees for Martha ---- -------------- iicWeri "I:. ifaitin, Ziaiiiii; iir. W. J. Hutchison, director Kansas City Southern Ry 500 400 Bacon and George Whitney 500 Frederic Ewing, director Socony-Vacuum Oil Co 200 Margaret S. 2,000 -,--r -=-----, Arthur Curtis James, Chairman Western Pacific Ry Whitney---- -Richard Whitney & Co., -----New York Stock Exchange. 1,000 P. H. Johnston, President Chemical National Bank 4,200 50 Richard Whitney & Co A. N. Jones 2.000 Richard Whitney & Co 10 W. J. Jones 1,000 Ira Wight 500 Kean, Taylor & Co., member New York Stock Exchange A. H. Wilson-------------------------------------- ---25 200 Dr. John J. Henan Keating laman A. H. wigen. rne aseiiiitinaliiinft00 Daniel Kelleher 300 T R Williams Ichabod T Williams & Sons 1, 383 Cornelius F. Kelley, President Anaconda Copper Co 1.000 Joseph Wilshire, President Standard Brands 50 A. J. Kennedy, trustee Flushing Savings Bank 500 200 Garrard Winston, director Oliver Farm Equipment Leonard A. Keyes, employee J. P. Morgan & Co 1,000 Wood, Low & Co., members New York Stock Exchange 2,000 Kidder, Peabody & Co., investment bankers 1,500 5000 :,0 Wood Struthers dc Co., members New York Stock Exchange Roy Kinnier 1,000 William Woodin Loeb & Co., investment bankers 250 A. H. Woods, President Rockefeller Centre 100 H. R. Kurrie 10 Clarence M. Woolley, Chairman American Radiator & Standard A. C. Lange 1,000 250 Sanitary Co Lapondos Corp.. holding company for T. W. Lamont 50 J M.Young 500 Augustin Legoretta 750 3,000 Percy S. Young Lee. Higginson & Co.,investment bankers 500 L. Edmund Zacher, President Travelers Insurance Co 300 Colonel Charles A. Lindbergh 200 60 William Ziegler Jr., director Standard Brands Dr. Harley P. Lindsay 100 Stoughton B. Lynd Henry E. Machold, former N. Y. State Republican Chairman and 0 3.00 Chairman St. Regis Paper Co 1,000 Inquiry into Affairs of J. P. Morgan & Co. by Senate C. H. Mackay, Chairman Postal Telegraph & Cable Co 25 C. MacVeagh Committe Inquiring into Stock Exchange Trading 500 Mrs. Louis Pugh Macy -Text of Agreement on Morgan-General Electric 1,883 Manufacturers & Traders Peoples Trust Co 1.000 E. H. Manville Deal-Sale of Mohawk Power Holdings at $12,000,1,000 Marine Trust Co 000 Below the Market Detailed. 250 Isabel A. Marsh 100 Dorothy Martin In its Washington advices May 31, the New York "Times" 100 R. C. O. Matheny 250 W. G. McAdoo, Senator and former Secretary of Treasury gave as follows the text of an agreement between the General Jersey 750 T. N. McCarter, President Public Service of New 750 Electric Co. and J. P. Morgan & Co., on the sale of holdings Ural H. McCarter 50 J. J. McCloy, partner Cravath, de Gersdorff Swaine & Wood_ - - in the Mohawk Power Corp. to the Morgan firm at $12,Hall P. McCullough, partner Davis. Polk, Wardwell & Reed 3, 838 R. B. Mellon, President Mellon National Bank, Pittsburgh 000,000 below the market price: 1,000 'F. F. Merseles 100 The General Electric Co. agrees to sell to J. P. Morgan & Co. its holdings Stephen Merselis, late President Johns-Manville Albert C. Milbank, partner Milbank, Tweed, Polk & Webb and the holdings of the General Electric Employees Securities Co., after Edward 0. Miner, Chairman Pfaudler Co the approval by the board, in the Mohawk Power Corp., on the following 1,000 C. H. Miner terms: 1.000 Minsch, Monett & Co., Inc., investment bankers 100 William A. Mitchell (1) The common stock at the price of $40 plus interest at 5% from June 1 500 Daniel J. Moran, President Continental 011 Co 1928 to date of payment therefor; such date to be as J. P. Morgan & Co. 100 Alexander Perry Morgan may elect between Jan. 1 and Jan. 15 1920; 10 D. M. Morgan date (2) The second preferred stock at a price of 107 flat, at the same Morgan Grenfell & Co., London partnership of J. P. Morgan & Co_ 15,000 500 H. S. Morgan, et al, partner J. P. Morgan & Co as provided above; 100 J. J. Morgan similarly to (3) The option warrants at a price of $20 flat, payment d 12,000 Morgan & Cle:N;ii-riititnerifili-- J. ic.------------ ii - O of.f - -- be made as above provided. 1,200 J. P. Morgan No. 2 account In making the purchase as described, J. P. Morgan & Co. recognize 500 J. R. Morron, director B. & 0. Railroad Hon. Dwight'W. Morrow,late Senator from New Jersey and former the importance of preserving the good-will of the Brady and up-State 2,000 partner in J. P. Morgan & Co interests in the general power situation. 1,000 Frederick K. Morrow, President United Cigar Stores J. P. Morgan & Co. plan to handle their holdings of Mohawk Hudson 1,000 Charles Munroe in400 shares in harmony with the interests as described; having no present J. A. Murray nit di-000 tention of divesting themselves of such shares to any so-called foreign cor, The National diiit--------iiitiiiii-------------iiitiiiiiii - ilia- ---- -10,000 Newmont Mining Corp full consulporation or foreign interests; and engaging not to do so without 1,000 Northern Trust Co tation with such interests as described and with officials of the General 50 J. D. Northrup 3,000 Electric Co. Nosivad Corp 10 J. P. Morgan & Co. recognize the services that have been rendered to M. O'Connor 10 Miss Ruth Ogg the Mohawk Hudson Power Corp. by Charles Brewer as Chairman of the. 7,000 C. E. Mitchell, former Chairman National City Bank 1,88g Volume 136 Financial Chronicle board, and are prepared to continue the obligations and present relations of the General Electric Co. to him. (Signed) J. P. M. & Co. G. S. Photostat copy. Inquiry into Affairs of J. P. Morgan & Co. by Senate Committee Investigating Stock Exchange Trading —L. P. Fisher of Cadillac Motor Car Co. Did Not Buy Alleghany Corporation Stock for Speculation, He Says. Lawrence P. Fisher, President of Cadillac Motor Car Co., was reported as stating on May 26 that he purchased stock through J. P. Morgan & Co. at less than the market price "because I was buying for investment and not for speculation." A Detroit dispatch to the New York "Times" indicating this, added: Mr. Fisher's name was included in a list given the Senate Committee of those who were able to buy Allegheny Corp.stock at $20 a share when it was worth 50% more. "As a matter of fact," he said, "at the time the stock was purchased It was not even listed and no one knew exactly what the market price was. "I bought it and paid for it as an investment, and not for manipulation. If it was higher than $20,that was because somebody else was speculating." Senate Inquiry Into Affairs of J. P. Morgan & Co. by Senate Committee Investigating Stock Exchange Trading—Vote in Committee on Publication of Morgan Partnership Agreement—$51,538,000 Taxes Paid by Banking House 1917-1929—George Whitney Explains Figures on Assets. Incident to the action of the Senate Banking and Currency Committee in making public on June 1 the articles of copartnership of J. P. Morgan & Co., the Washington correspondent of the New York "Herald Tribune" on that date said: The articles revealed that Mr. Morgan has reserved to himself important powers over his partners, who now number 19. In case of a difference or dispute among the partners. Mr. Morgan's word is final. Mr. Morgan may dissolve the partnership at any time, provided partners representing a majority interest in profits consent. Mr. Morgan may compel any partner to withdraw and fix the amount due him. Share of Each Partner Not Disclosed. Among other provisions of the articles are these: In case there should be no lineal descendant of Mr. Morgan in the firm, the firm name of J. P. Morgan & Co. shall not be used more than 15 years, unless there should again be a lineal descendant of Mr. Morgan in the partnership. The partners can take only half their profits each year, the rest being kept as "undivided profits." The basic articles were drawn in 1916 and have stood unamended since that time, it was revealed. The supplemental provisions showing the percentage of profit to which each partner is entitled were not made public. These have changed each time that a partner has died or resigned or a new partner has been admitted. Mr. Morgan's older son, Junius S. Morgan, became a partner in 1919, and his younger son, Henry S. Morgan, became a partner in 1928. so that there seems little likelihood that the provision for possible discontinuation of the present name of the firm will be used in the visible future. The Vote in Committee. The publication of the articles, which John W. Davis, counsel to Mr. Morgan, said week before last were so confidential that he never had seen them, was voted by the Senate Banking and Currency Committee in executive session this morning. All the 14 or more member of the committee present voted in favor of it except 3, who wanted the supplemental material about the division of profits also made public. The three were Senator Edward P. Costigan, Democrat, of Colorado; Senator James Couzens, Republican, of Michigan, and Senator Peter Norbeck, Republican, of South Dakota, who sent his vote by Senator Costigan. In announcing the determination of the Committee to newspaper men, Senator Duncan U. Fletcher, Democrat, of Florida, the Chairman, said that the structure of the firm was deemed of public interest. "The question was raised as to whether the powers granted to one partner are such as to prevent the articles being construed as a real partnership agreement," he said. Bearing on Partner's Income Tares. Senator Fletcher added that this point had a bearing on the question of the income tax paid by the partners. As a co-partnership the firm does not pay income taxes, the taxes being paid individually by the partners. As was brought out last week, the profits or losses of the partnership were periodically established by the dissolution of the partnership and the for mation of a new one whenever a partner dropped out or was added. The text of the partnership agreement as made public by the Senate Committee is given elsewhere in our issue to-day. As to what was brought out at the Committee hearing on June 1 we quote the following from the "Herald Tribune's" account of the hearing on that day: From 1917, when the income tax law was first imposed,to 1929,inclusive, the total income tax paid by Mr. Morgan and his partners was $51,538,000. During the three boom years, 1927-29 inclusive, the partners paid in the aggregate $21,675,000. It was brought out at the beginning of the investigation that, because of their capital losses, the partners had paid an aggregate of only slightly less than $48,000 for 1930 and no income tax for 1931 and 1932. In 1929, the United Corporation, the Morgan-Bonbright utility holding company, acquired 800,000 shares of the common stock of Public Service of New Jersey and 53,000 of United Gas Improvement common from the American Superpower Corporation by a transfer through a specially created Mr. Pecora third corporation, the Public Electric Holding Co. persistently sought the reason for the creation of this third corporation. He intimated that it was to evade the payment of taxes which would have been incurred by the American Superpower Corporation if it had revalued the stock on its own books. Mr. Whitney as persistently said he did not know why it was done, but that he assumed it was to suit the "convenience" of American Superpower, a corporation with which he had no connection. J. P. Morgan & Co. and Bonbright & Co. opened a joint stock account 3839 in 1929 to support the $3 preference stock of United Corporation. A total of 99,000 shares was bought and resold through the account. Mr. Whitney called this a "merchandising operation." Mr. Pecora insisting upon the term "stabilizing the market," which he found used in a cablegram concerning the operation taken from the Morgan files. Mr. Whitney did not like the word "stabilize." Two more lists of selected subscribers to Morgan stocks were made public. One was of those who bought United Corporation units through Drexel & Co., the Morgan house in Philadelphia. The other was a short list of purchasers of Niagara Hudson Power Corporation. Among the prominent names which had appeared on previous Morgan lists were Owen J. Robert, now (but not then) Justice of the United States Supreme Court; Owen D. Young, W. W. Atterbury, President of the Pennsylvania RR., and Justice John W. Kephart, of the Pennsylvania Supreme Court, and J. Henry Roraback, Republican National Committeeman for Connecticut. Harvey C. Couch, who later became a director of the Reconstruction Finance Corporation, made a first appearance. On Dec.31 1930, outstanding loans arranged by the Morgan firm for four utility companies in the United Corporation group totaled $91,644,636. in which the house of Morgan participated to the extent of $48,894,636. The Niagara Hudson list of selected subscribers received units consisting of one share of common, one class A warrant and one class C warrant for $25 a unit. The first market quotations, in the summer of 1929 for the common stock and class A warrants totaled $36 or more for the two, thus affording a profit of $11 on a quick turnover without counting the class C warrants. Mr. Pecora revealed that the one person who was on record as refusing to take the opportunity to subscribe to a Morgan stock issue was E.G. Suckland, Chairman of the board of the New York New Haven & Hartford RR, Mr. Buckland turned down the offer of United Corporation units because his railroad was about to negotiate a contract with the Connecticut Light & Power Co., in which one of the United group had an interest. He did subscribe to the Morgan offerings of Allegheny Corporation and Standard Brands. When Mr.Pecora had finished reading Mr.Buckland'sletter to Arthur M. Anderson, a Morgan partner, Mr. Whitney promptly read Mr. Anderson's letter of reply, in which it was said "We wouldn't even have suggested that you do such a thing if we had remembered," the complication of which Mr. Buckland spoke How many other persons may have declined to become subscribers is not known as most of the offers were made orally. Pecora Puzzles Auditors. Mr. Pecora wound in and out during the day in a way which produced continual rehashing of testimony previously given and left the few committee members in attendance and most of his auditors in the dark as to what he was trying to bring out. The sharpest conflicts between him and Mr.Whitney,who was again the principal witness, came late this afternoon. Mr. Whitney's explanation of the Morgan-Bonbright pool to support United Corp. preferred in 1929 as a normal merchandising operation dissatisfied Mr. Pecora. He insisted that it was intended to "stabilize" the market. Mr.Whitney explained that large blocks of the preferred were being sold by persons who evidently wanted to hold only the common (the stock had been distributed in units of one share of preferred and one of common). The result was that the price of the preferred fell, he said, to an attractive investment point. "We wanted to get the shares in the hands of those who wanted them for investment," he finally explained. Mr. Pecora broke the deadlock by going on to the transfer of securities from American Superpower to United Corp. through a specially created third corporation. He relentlessly pushed Mr. Whitney for an explanation. Mr. Whitney insisted he didn't know, but that it was something the lawyers contrived. "Why the lawyers did it this way I don't just know," he said. Mr. Pecora asked if it was not "in order to avoid payment of taxes accruing to either corporation from such a transfer." Mr. Whitney said he couldn't testify as to the motive. "It didn't affect United Corp. one way or the other," he said. Mr. Pecora's curiosity concerning the option warrants issued by United Corp. consumed a considerable part of the morning session. But nothing clear-cut emerged from this line of inquiry. Glass on Capital Gains Law. Senator Carter Glass, of Virginia, questioned Leonard S. Keyes, General Manager of the Morgan firm, on the advantages and disadvantages to the government of the capital gains tax.1 Mr. Keyes said he thought it would be to the advantage of the government to repeal this provision of the income tax law, because the "drop in values on the Exchange has been so great as to wipe out the base for otherwise taxable income." Senator Glass pointed out that this provision has yielded more than one billion dollars in taxes in the seven years it has been in effect. It was in this connection that the income tax payments of the Morgan partners from 1917 through 1929 were made public. Mr. Pecora questioned Mr. Whitney at length on questions of public policy toward utility holding companies. He quoted Owen D. Young's testimony last winter in the I11131111 hearings that a holding company serves a useful purpose but that there should not be more than one imposed over operating companies. Mr. Whitney agreed that the piling up of holding companies as in the Insull pyramid was undesirable. He insisted that this had not been done in the United States Corp. group. He said that while some of the companies In which United Corp. has substantial interests are technically holding companies to some extent, they were primarily operating companies. Senator Fletcher announced to-night that the hearings will be continued to-morrow and probably will extend through Monday or Tuesday of next week. From the Washington advices June 1 to the New York "Journal of Commerce" we quote the following: George Whitney, member of the firm of J. P. Morgan & Co., was again the witness when the Senate Banking and Currency Committee to-day resumed its inquiry into banking, financing and securities sales practices. He was further questioned concerning the affairs of the United Corporation, the public utilities holding company organized in 1929 by J. P. Morgan & Co., Drexel & Co.. and Bonbright & Co. At the outset of the morning session Ferdinand Pecora, counsel for the Committee, endeavored to show that, if the Morgan firm had sold in the open market, at a price several points below the peak high of 1929. the securities which the Morgan firm had received from the United Corporation the firm would have "reaped profits aggregating $122,668,000." Mr. Whitnet admitted that this checked with his own arithmetic, but quickly added that, while this "might have been done," as a matter of fact "it was not done." At yesterday afternoon's hearing Mr. Whitney put into the record figures concerning the value of certain United Corporation holdings at 3840 Financial Chronicle acquisition and at the high market price of 1929. Questioned concerning these figures this morning, Mr. Whitney said they related to the valuation of those securities which were turned over to the United Corporation in January, 1929, in exchange for certain stock and option warrants. "And according to these figures." Mr. Pecora said, "had your firm not transferred those securities, which consisted of securities of the Mohawk Hudson Power Co., United Gas Improvement Co., and Public Service Corporation of New Jersey, to the United Corporation in January 1929. but had held those securities until sometime in July, August and September of 1929, your firm could have sold those securities in the open market at prices representing the highest valuations reached in the open market that year, which would have yielded to J. P. Morgan & Co., a profit equivalent to the difference—well a profit of $57,387,379. Am I correct in that interpretation of this statement?" "That is correct," rejoined Mr. Whitney. "The reason I wanted to get it in the record was because I was being questioned on certain supposititious circumstances, and I had said that we had done some guessing ourselves." Inquiry Into Affairs of J. P. Committee Investigating Morgan & Co. by Senate Stock Exchange Trading —Text of Morgan Partnership Agreement.' On June 1 the Committee inquiring into the operations of J. P. Morgan & Co. incident to the investigation of Stock Exchange trading made public the Morgan partnership agreement,omitting, however, the names of the partners and the percentage of their interest. As given in Associated Press accounts from Washington, the list follows: This agreement made the 31st day of March 1916, between John Pierpont Morgan and others, witnesseth: That the parties hereto have this day formed a partnership for the transaction of a general foreign and domestic banking business in the cities of New York and Philadelphia, upon the following terms and conditions: First.—The business shall be conducted in New York under the firm name of "J. P. Morgan & Co." and in Philadelphia under the firm name of "Drexel & Co." and shall commence on the first day of April 1916. Second. --The capital of the partnership shall be as follows: Third.—The net profits and losses shall be divided and borne as follows: (Second and third sections not given completely in conformity with earlier decision of the Senate Banking Committee.] Fourth.—Interest at the rate of 6% per annum shall be allowed or charged on all partners' accounts, including capital and undivided profits. Fifth.—No transaction shall be made which shall be objected to by any member of the partnership. Sixth.—In case of a difference or dispute between members of the partnership, the same shall be submitted to the decision of Mr. John Pierpont Morgan, which shall be final. Provision For Dissolution. Seventh.—The partnership may be dissolved at any time by Mr. John Pierpont Morgan. subject to the liquidation thereof; provided that partners representing a majority in interest in the profits of the partnership shall consent to such dissolution. Eighth.—Any partner may withdraw from the partnership upon giving three months' written notice of his intention to do so. In that event, the remaining partners may continue the business, and the shares of the profits or losses of the withdrawing partner or partners shall be divided thereafter among the remaining partners, or otherwise disposed of, according to the decision of Mr. John Pierpont Morgan, who shall fix the valuation of the assets, determine what portion of the assets, if any, shall be appropriated as an offset to liabilities, and also be the judge of the amount due such withdrawing partner or partners on account of capital, undivided profits and credit balances. The amount so due may be fixed by Mr. Morgan as of three months after the receipt ()ranch notice or as of the 31st of December next ensuing after the receipt ofsuch notice, and the interest ofsuch withdrawing partner or partners shall continue at the risk of the business until the date as adopted. The determination of Mr. Morgan as to the dates for fixing the amount due such withdrawing partner or partners shall be communicated in writing to him or them within 30 days after receipt ofsuch notice of withdrawal. The amountso fixed shall be paid to such withdrawing partner or partners within three months after the date as of which the value of his or their interest shall have been fixed, except in the event that a liquidation of the partnership shall have been entered upon prior to such date, in which event, and notwithstanding the foregoing provisions, the interest of such withdrawing partner or partners shall abide the results of liquidation and shall be payable only as the liquidation proceeds. When Mr. Morgan shall fix the amount as due any withdrawing partner, a schedule shall be furnished showing the valuations at which the various assets of the partnership were appraised, and what portion of the assets, if any, have been appropriated as an offset to liabilities. Any withdrawing partner; if required, shall take his pro rata share of the assets not so appropriated to an extent covering the amount so due him. Ninth.—It is further agreed that Mr. Morgan may, at any time, Compel any partner at once to withdraw and retire from the partnership, upon giving him written notice to that effect, and in that event, the mount due such retiring partner shall be forthwith fixed by Mr. Morgan, and thenceforth the interest of such partner shall be dealt with in the same manner as above provided for in the case of a voluntary withdrawal by such partner. Tenth—In case of the death of any partner other than Mr. Morgan, if, within 30 days after such partner's death, such of the surviving partners as shall represent a majority in interest in the profits of the partnership (exclusive of the interest of such deceased partner therein) shall give to the persons named in his will as executors, or to his administrators or other legal representatives, written notice that they desire an extension of the partnership for a period specified in such notice, not exceeding three years after the death ofsuch deceased partner, then and in that event the partnership shall continue for the period not exceeding three years so indicated by them, and the capital and interests hereunder of such deceased partner and his estate and his and its responsibility and interests in the business as continued shall continue during such period of extension. The interest of such deceased partner in the partnership shall be ascertained and dealt with in the same manner as is hereinbefore, in Article VIII, provided for in the case of a voluntary withdrawal, and the date of the death of such partner, or in the event that notice of extension of the partnership shall have been given as hereinbefore in this article provided, then the date of expiration of the extended period specified in such notice shall stand in the place of the date adopted for termination of his interest as required by said article VIII in the case of a partner voluntarily withdrawing. June 3 1933 If at any time fixed by the provisions of said Article VIII or of this present article for the doing of any act or the making of any decision by Mr. Morgan with reference to the interest of a withdrawing or deceased partner, Mr. Morgan shall not be living, then such act may be performed by such of the continuing or surviving partners as shall at such time represent a majority in interest in the profits of the partnership (exclusive of the interest of Mr. Morgan therein) with the same force and effect as if performed by Mr. Morgan. ELEVENTH.—In case of the death of Mr. John Pierpont Morgan the partnership shall be dissolved on the 31st day of December next ensuing, unless his death be within a period of six months prior to Dec. 31 in any year. in which event the partnership shall continue until the 31st day of December in the next ensuing calendar year and shall then he dissolved. If, however, within thirty days after Mr. Morgan's death such of the surviving partners as shall represent a majority in interest in the profits of the partnership (exclusive of the interest of Mr. Morgan therein) shall give to the persons named in his will as executors, or to his executors, or to his administrators (or other legal representatives) written notice that they desire an extension of the partnership for a period specified in such notice not exceeding three years after Mr. Morgan's death, and then and in that event the partnership shall continue for the period not exceeding three years so indicated by them and shall then be dissolved: and the capital and interests hereunder of Mr. Morgan and his estate and its responsibility and Interests in the business as continued during such period of extension shall continue. Twelfth—Upon the dissolution of the partnership following the death of Mr. Morgan, the good-will of the business and the right to use the firm names of J. P. Morgan & Co., and Drexel & Co. shall belong to the then surviving partners who shall thereupon decide whether to continue the business and, if continued. upon what terms. In case such surviving partners cannot agree either as to the continuance of the business or the terms and conditions of the new partnership, the surviving partners representing a majority in interest in the profits of the old partnership (exclusive of the interest of Mr. Morgan therein) shall have the right to decide and shall decide what shall be done in respect of continuing the business and the terms and conditions of a new partnership, and their decision shall be conclusive and binding on all the surviving partners. In case such majority in interest shall decide to continue the business, such majority shall determine the amount due Mr. Morgan's estate OD account of his capital, reserved profits and net credit balances, and the interest of Mr. Morgan's estate shall be dealt with in the same manner as hereinbefore in Article 8 provided for in the case of a voluntary withdrawal of a partner, except that the powers vested in Mr. Morgan by Article 8shall in such case be vested in such majority in interest. In case such majority in interest shall decide not to continue the business, the responsibility and interests of Mr. Morgan's estate shall be subject to the results of the liquidation of the partnership. In case such majority in interest shall decide to continue the business, any partner not desiring to remain in the partnership may withdraw therefrom in the same manner and upon the same terms and conditions as provided in Article 8 hereof; and in no event shall such withdrawing partner or partners be entitled to any interest in or allowance for either the good-will of the business or the use of the firm names; but such good-will and firm names shall belong to the remaining partners free from any claim whatever of such partner or partners so withdrawing from the partnership. If the business or any portion thereof be continued under the same firm name of J. P. Morgan & Co. and at any time there should cease to be any lineal male descendant of Mr. J. Pierpont Morgan in the male line bearing the name of Morgan. in the partnership, the right to the use of the firm name of J. P. Morgan & Co. shall cease after 15 years from such time, unless before the expiration of such 15 years there should again be such a lineal descendant of Mr. J. Pierpont Morgan in the partnership, in which case the right to use said firm name shall continue unimpaired until 15 years after such time as there should again be no such lineal descendant of Mr. J. Pierpont Morgan in the partnership. In no event shall the good-will of the business or the right to use the firm name have any cash or money value either as between the existing partners or as between the existing partners and any withdrawing or former partner, or the estate of any deceased partner or any descendant of Mr. J. Pierpont Morgan, whether or not such descendant has ever been a partner in the partnership. And each of the parties hereto hereby covenants with each of the others that he vrill never become or be a partner in any partnership using, and that he will never use,said firm name of J. P. Morgan & Co. in violation of the provisions of this article. Thirteenth. It is further agreed not only with respect to the partnership hereby formed, but also with respect to any successor partnership, that upon the death of any partner and the termination of his interest or that of his estate in the partnership, or upon the voluntary or compulsory withdrawal of any partner or partners, or upon the dissolution of the partnership and the formation of a successor partnership, the good-will of the business and the right to use the firm names shall belong to the surviving or continuing partners, and that in no case shall any estimate ever be put upon the good-will or right to use the firm names in ascertaining the amount due any withdrawing partner, whether such withdrawal be voluntaryor compulsory, or the estate of any deceased partner. The valuations, decisions and determinations made by Mr. Morgan or the majority in interest as hereinbefore provided shall in all cases be final and conclusive against a withdrawing partner or the estate of a deceased partner. Fourteenth.—The books of the partnership shall be settled on the 31st of December in each year. One-half of each partner's proportion of profits shall be placed to his credit. The other half shall be set aside and kept as undivided profits until such time as Mr. John Pierpont Morgan may consent . its division among the various parties in interest as provided in 3 to t Article It is also understood that no partner shall draw from the partnership any money beyond the amount placed to his credit, without the consent of the other parties hereto. Fifteenth.—It is understood and agreed that no partner shall engage in any other business or be a general or special partner in any other firm. Sixteenth.—The firm name shall not be used by any partner except in the partnership business. Seventeenth.—Speculation In stocks or anything else by the individua members of the partnership is prohibited; but this clause shall not be construed so as to prohibit any partner from investing his private means in such way as he may see fit. Eighteenth.—No member of the partnership shall become security or endorse,except in the partnership business, without the consent of the Partied hereto, Nineteenth.—The firms of J. P. Morgan SG Co. and Drexel & Co. being partners in the firms of Morgan, Grenfell & Co. of London, and Morgan, Harjes & Co. of Paris, their proportion of the s pitsl thereof shall be supplied out of the partnership capital mentioned in Article Second here- of, and the profit or loss therein shall:be included in the partnership accounts hereunder. Witness our hands and seals the day and year first above written in the presence of [At this point there was another blank in the document made public, in accordance with the committee vote not to make public the names of the partners. It was said in committee quarters, however, that there are no secret partners and that the names are well known.] Supplementary Notes. There then followed these supplementary notes to the agreement: Dec. 31, 1916. Thomas Cochran has this day become a partner in the firms of J. P. Morgan & Co. and Drexel & Co., subject to all the terms of the foregoing agreement. New York, Dec. 31 1919. Junius Spencer Morgan Jr., Elliot Cowdin Bacon and George Whitney have this day become partners in the firm of J. P. Morgan & Co. and Drexel & Co., subject to all the terms and conditions of the foregoing agreement. New York, Dec. 31 1920. Arthur E. Newbold's interest in the firms of J. P. Morgan & Co. and Drexel & Co. having ceased this day and his contribution to the capital having been repaid him, Thomas S. Gates has this day become a partner In the firms of J. P. Morgan & Co. and Drexel & Co. subject to all the terms of the foregoing agreement. New York, Dec. 31 1921. William Pierson Hamilton withdraws this date from the firms of J. P. Morgan & Co. and Drexel &'Co. and his contribution to capital has been repaid him. New York, Dec. 31 1922. After settlement of the books on the 31st day of December 1922, and each year thereafter as provided in Article 14, the net balances then standing to any partner's credit shall be considered as capital, and such amounts shall not be withdrawn without the consent of Mr. Morgan. New York, Dec. 311922. Henry P. Davison's interest in the firms of J.P. Morgan & Co.and Drexel & Co. having ceased this day, his contribution to the capital has been repaid to his executors. New York, June 30 1923. Russell Cornell Leffingwell has this day become a partner in the firms of J. P. Morgan & Co. and Drexel & Co.. subject to all the terms of the foregoing agreement, New York, Dec. 31 1924. Elliott Cowdin Bacon's interest in the firms of J. P. Morgan & Co. and Drexel & Co. having ceased this day,his contribution to the capital has been repaid to his executors. New York, Dec. 31 1925. Edward It. Stettinlus's interest in the firms of J. P. Morgan & Co. and and Drexel & Co. having ceased this day, his contribution to the capital has been repaid to his executors. New York, Dec. 31 1926. William H. Porter's interest in the firms of J. P. Morgan & Co. and Drexel & Co. having ceased this day, his contribution to the capital has been repaid to his executors. Francis Dwight Bartow, Arthur Marvin Anderson and William Ewing have this day become partners in the firms of J. P. Morgan & Co. and Drexel & Co.,subject to all the terms and conditions of the foregoing agreement. New York, Dec. 311927. Dwight W. Morrow, having retired on Sept. 30 1927, his interest in the firms of J. P. Morgan & Co. and Drexel & Co. ceased on that date and his contribution to the capital has been paid him. Harold Stanley has this day become a partner in the firms of J.P. Morgan & Co. and Drexel & Co., subject to all the terms and conditions of the foregoing agreement. New York, Dec. 31 1928. Henry Sturgis Morgan, Thomas Stilwell Lamont and Henry Pomeroy Davison have this day become partners in the firms of J. P. Morgan & Co. and Drexel & Co., subject to all the terms and conditions of the foregoing agreement. Thomas Newhall and Edward Hopkinson Jr. have this day become partners in the firms of J. P. Morgan & Co. and Drexel & Co., subject to all the terms and conditions of the foregoing agreement. New York, June 30 1930. Thomas S. Gates withdraws this date from the firms of J. P. Morgan & Co. and Drexel & Co. His contribution to capital and his share in full to date of profit and loss have been paid to him. New York, Jan. 2 1931. S. Parker Gilbert has this day become a partner in the firms of J. P. Morgan & Co. and Drexel & Co., subject to all the terms and conditions of the foregoing agreement. New York, Jan. 2 1932. Charles Denston Dickey has this day become a partner in the firms of J. P. Morgan & Co. and Drexel & Co., subject to all the terms and conditions of the foregoing agreement. Inquiry Into Affairs of J. P. Morgan & Co. by Senate Committee Investigating Stock Exchange Trading -List of Those Invited by Drexel & Co. to Subscribe to Stock of United Corporation on Favorable Terms. The following list of those invited by Drexel & Co. to subscribe at favorable terms to stock units of the United Corporation, was put into the Senate record on June 1 before the Senate committee investigating J. P. Morgan k Co., according to the New York "Times": Name. lifester S. Albright Edgar Allegaert .1. Howard Arthur Thomas G. Ashton W. W. Atterbury Charles T. Bach George Barker C. D. Barney & Co Thaddeus R. Beal Charles G. Berwind Anthony J. Drexel Biddle Cordelia Bradley Biddle Eugenia L. Biddle Livingston L. Biddle Thomas A. Biddle & Co Bloren & Co George H. Blake Morris It. Boklus William W. Bodine 3841 Financial Chronicle Volume 136 Units. 100 100 25 300 2,500 50 100 2,500 1,000 200 100 100 100 100 2,000 1,500 50 500 500 Name. Matthew It. Boylan Francis 13. Bracken Henry G. Brengle Sarah H. 0. Bright Clarence C. Brinton Alex Brown & Sons Edward Browning, Jr Robert J. 13runker James It. Calhoun Cassatt & Co E. W. Clark & Co John A. Clark John L. Clawson M. Worthington Clement Morris L. Clothier B. Dawson Coleman Thomas Conway, Jr J. Cooke Albert J. County Units. 100 500 200 100 100 2,000 Units. Name. 100 D. Graham Craig Anne L. Croasdill 30 Samuel M.Curwen 300 300 Agnew T. Dice William C. Diekerman 5,000 Emily P. Dickson 50 400 Anthony J. Drexel Mary Thompson Drinker 50 Sophie H. Drinker 100 25 John C. Dunn Frederick W. Edmondson 50 George D. Edwards 25 Elkins, Morris 8: Co 2,000 Eleanor Mayo Riverson 1,000 Florence L. Ening 25 Julian L. Eysmans 100 Edgar C. Felton 200 Philip H. Gadsden 300 John K. Garrigues 100 Jay Gates 400 Thomas S. Gates 1,000 C.H.Geist Securities Corporation. 2,500 General Coal Securities Corporation, 100 William P. Gest 600 2,100 Robert Glendinning & Co 25 Gertrude C. Grover Herbert W. Doogdall 200 1,500 Graham, Parsons & Co Alfred M. Gray 100 Albert M. Greenfield 1,000 John H. Gross 50 Harry J. Haas 100 T. Truxton Hare 100 Jonas S. Harley 100 Harrison & Co 1,000 Charles V. Henry 100 William M. Hollanbach 200 100 John Hopkins 1,000 Edward Hopkinson, Jr Daniel Houseman 100 Thomas W. Hulme 100 George H. Huston 200 Fred S. Hutchings 100 James T. Hutchings 100 Charles E. Ingersoll 500 250 Albert A. Jackson 1,000 Janney A- Co Archibald T. Johnson 50 25 Arthur Jones Edith Bolling Jones 200 100 Moorhead C. Kennedy Reid Kennedy 50 Florence M. Kephart 100 John NV. Kephart 200 Henry H. King 50 200 Leonard H. Kinnard 100 William T. Kirk 50 William NV. Kitzmiller 200 Charles Z. Klauder 500 Louis J. Kolb Walter D. Larbelere 100 William A. Law 300 Van Antwerp Lea 100 Edward B. Leisenring 100 Francis A. Lewis 200 Charles F. Lineaweaver 200 Horace P. Liversidge 200 Eleanor M. Lloyd 100 George F. Lloyd 50 H. G. Lloyd 1,000 H. G. Lloyd, Jr 250 Stacy B. Lloyd 300 Walter E. Long 100 Edward E. Loomis 500 TJzal H. McCarter 450 50 Edward McDonald 500 George H. McFadden & Bros 100 William J. MeGlinn 25 John W. McGregor Andrew J. Maloney 288 12 Caroline F. Maloney 300 Donalk Markle 1,000 John C. Martin 300 John H. Mason 100 Sidney Mason 200 William Clark Mason 100 Joseph B. Mayer John C. Miller 50 Name. John W. Minds Montgomery, Scott & Co C. Eldridge Morgan E. Corliss Morgan William R. Morgan Marshall S. Morgan Effingham B. Morris Effingham B. Morris, Jr I. Wistar Morris Arthur V. Morton Catherine T. Munson Johnathan C. Neff A. E. Newbold, Jr W. H. Newbold's Sons & Co C. Stevenson Newhall Thomas Newhall William A. Obdyke Charles S. W. Packard Joshua A. Pearson George Wharton Pepper Henry C. Place Charles Raymond Potts Francis X. Quinn Evan Randolph Catherine C. Hanley Mary Thompson Reath Edward B. Robinette Alexander C. Robinson Mary D. Robinson Owen J. Roberta Benjamin Rush Fred J. Rutledge Sylvester B. Sadler Bernard J. Samuel William I. Schaffer Charles H. Schlacks Frank C. Schroeder Garfield Scott Arthur W.Sewall George Siefert, Jr J. Willison Smith Harrison Smith & Co Alfred G. B. Steel Samuel J. Steele, Jr Stone, Webster & Blodgett, Ine__ E. T. Stotesbury Morris W.Stroud Stroud & Co., Inc Jeremiah J. Sullivan, Jr John J. Sullivan Walter Lamar Talbot Clyde C. Taylor Frank H. Taylor William H. Taylor Paul Thompson John B. Townsend Joseph B. Townsend Townsend Whelen & Co Lewis H. Van Dusen T. Wilson V. MIddlesworth Alexander Van Rensselaer Sarah Drexel Van Rensselaer Samuel M. Vauclain Robert Von INfoschzisker C. D. Waddell Edmund W. Wakele Charles C. Walbridge Philip Wallis Clarence A. Warden William G. Warden Samuel D. Warriner Joseph Wayne, Jr Joseph NV. Wear John H. Weaver West & Co John L. Wilkie James M. Willcox Parker S. Williams Asa S. Wing Clement B. Wood Wendell J. Wright Frederick S. Wynn Edward H. York, Jr Percy S. Young Richard R. Young Total Units 100 100 200 200 100 100 500 500 200 200 300 100 500 1,500 100 1,000 500 200 200 200 100 100 200 200 25 50 2,000 50 200 100 300 200 200 25 500 200 25 200 200 25 100 1,500 200 100 2,000 1,000 00 3,000 300 300 100 25 50 200 200 100 100 500 200 50 200 200 600 400 100 200 1,000 25 1,000 1,000 600 1,000 500 300 1,000 1,000 300 300 50 200 50 200 100 200 100 90,061 Inquiry ,Into Affairs of J. P. Morgan & Co. by Senate Committee Investigating Stock Exchange Trading -E. G. Buckland of New York, New Haven & Hartford R.R. Declined to Accept Offer to Subscribe to Stock in United Corporation. E. G. Buckland, Chairman of the board of the New York, New Haven & Hartford Railroad declined, for an ethical reason, declined to accept stock in the United Corporation offered byJ.P.Morgan at prices to a list of its customers below market prices. Mr. Buckland's reason was given in a letter to Arthur M. Anderson, Morgan partner, on Jan. 16 1929. The letter, according to Associated Press advices from Washington June 1 said: Dear Arthur: I appreciate very much your telephone suggestion that I subscribe for and purchase shares of the new corporation organized to acquire a substantial interest in public utility corporations furnishing electrical energy. I understood that one of those corporations is the Connecticut Light and Power Company, with which my company has a contract. We are about to open negotiations for future dealings with this company in regard to power requirements, and I feel that I ought not at this time to consider any investment in its securities or in securities of any corporation which may exercise a directing influence. -excuse the paradox This may seem to you leaning over backwards, but I feel more comfortable in that posture. Just the same, I appreciate your having brought this to my attention. 100 The name of Mr. Buckland, it is stated, was among those who availed themselves of some of the firm's other special offerings. 200 6 2,500 2,000 100 100 WO 1,000 300 300 2,000 100 Inquiry Into Operations of J. P. Morgan & Co. by Senate Committee Investigating Stock Market Trading-Herbert Hoover's Secretary Says Former President Engaged in No Stock Dealings While in Office-Statement by Edgar Rickard. Paul Sexson, Secretary to former President Herbert Hoover, issued the following statement at Palo Alto, Cal., on 3842 Financial Chronicle May 31, incident to the Senate Committee investigation of J. P. Morgan & Co.: During his term, both as Secretary of Commerce and President, he refused at all times to have any ownership or dealing in stock, directly or Indirectly. in any shape or form. Associated Press adviees from Palo Alto, from which we quote, added: Mr. Hoover's name was brought into the investigation by a member of the committee in connection with that of Edgar Rickard, New York mining engineer, named as a Morgan customer. Edgar Rickard issued the following statement at his New York office yesterday: "Information from Washington states that I had a participation in the United Corporation. This is true. My participation was entirely a Personal matter of my own, and it is outrageous to attempt to capitalize my association with Mr. Hoover to drag his name into this matter." Inquiry Into Affairs of J. P. Morgan & Co. by Senate Committee Investigating Stock Market Operations —G. H. Howard of United Corp. Describes Financing by Banking House—Senator Glass Asks Aim of Inquiry. George H. Howard, President of the United Corporation and President of its wfholly-owned subsidiary, the New York United Corporation, was the only witness on May 26 before the Sub-committee Senate Banking and Currency Committee inquiring into the operations of J. P. Morgan & Co. Regarding Mr. Howard's testimony we quote in part as follows from the Washington dispatch (May 26) to the New York "Times": testified The United Corporation, he testified, is a holding company principally and was organized at for securities issued by public utility the instance of J. P. Morgan & Co., Drexel & Co., and Bonbright & Co. "The United Corporation," Mr. Howard said in reply to Ferdinand Pecora, counsel for the Senate Sub-committee, "was incorporated Jan. 7 1929. "About Jan. 11 1929, it acquired from J. P. Morgan & Co. 350,957 shares of common stock of the Mohawk Hudson Power Corporation, 62,360 shares of second preferred stock of the Mohawk Hudson Power Corporation, 124,740 option warrants of the Mohawk Hudson Power Corporation, 130,565 shares of common stock of the United Gas Improvement Company, 59,500 shares of common stock of the Public Service Corporation of New Jersey, and $700,801.10 in cash. "The United Corporation issued in consideration of the receipt of those shares and that cash, 600,000 shares of its $3 cumulative preference stock, and 800,000 shares of its common stock, and 714,200 option warrants. "The securities were turned in at a price of about $12,000,000 less than their market at that time." "Are you a Philadelphia lawyer?" asked Senator Couzens. "No, sir," replied Mr. Howard. "I had particular reference to that financial set-up when I asked if you were a Philadelphia lawyer," said Mr. Couzens. Value Was $55,566,644.63. Mr. Howard testified that the market value of 130,565 shares of United Gas Improvement stock on Jan. 8 1929, was $164 a share, and the total market value for that stock was $21,412,660. On the same date, he said, the market value of all the securities which. the United Corporation received in this initial transaction was $55,566,644.63. "In exchange for those securities what, if anything, did the United Corporation issue or give to J. P. Morgan & Co. in this initial transaction?" Mr. Pecora asked. Mr. Howard answered: "Six hundred thousand shares of its $3 cumulative preference stock, 800,000 shares of its common stock ahd 714,200 option warrants." The original stock plan of the United Corporation, he continued, authorized it to issue 13,000,000 shares, of which 1,000,000 were first preferred, 2,000,000 of "preference stock" and 10,000,000 of common. "No first preferred stock has ever been issued," Mr. Howard said. "The $3 preference stock is entitled to dividends at the rate of $3 a share a year and $50 a share in liquidation if the Company is liquidated. The common stock is ordinary common stock, entitled only to dividends in ease dividends have been paid on the first preferred stock, if issued, and upon the preference stock, which has been issued. Each share of stock has one vote." Morgan Control Brought Out. Mr. Howard said the holders of the option warrants were entitled to buy a corresponding number of common-stock shares at any time in the future at $27.50 a share. Senator C,ouzens asked whether Morgan & Co. would have had control only by the exercise of the 714,200 option warrants. "With respect to the immediate first transaction," said Mr. Howard, "they had 800,000 shares of common that would give them control. If they had converted they would have gotten 714,000 more shares of common stock." "They had control without exercising their right under any of these option warrants?" Mr. Pecora inquired. "That is right." . . • "Of how many corporations does the United Corporation own any stock?" Mr. Pecora asked. Senator Couzens suggested that the witness also give the "percentage of control" in each instance. Lists Unitedis Holdingtr. "As of May 15," Mr. Howard testified, "United Corporation owned Mohawk Hudson second preferred stock. 62,370 shares, 2.8%. "Niagara Hudson common stock, 1,914,417 shares. 21.9%. "Niagara Hudson Power Corporation 'A' warrants, 250,819 2/3. 9%. "Niagara Hudson 'B' warrants, 145,530. 29.3%. "Niagara Hudson Power Corporation 'C' warrants, 300,000. 132%. "Common stock of the Public Service Corporation of New Jersey, 988,271 shares. 17.9%. "6,066,223 shares of the common stock of the United Gas Improvement Company. 26.1%, "2,424,356 shares of the Columbia Gas and Electric Corporation common stock. 20.9%. June 3 1933 "Columbia Oil and Gasoline Corporation Voting Trust Certificates, two items, 49,053 shares and 35,716 shares. 3.6%. "38,183 4856-8000 of Columbia Gas and Electric Corporation $5 convertible preferred. (I haven't that percentage.) "Commonwealth and Southern Corporation, 1,798,270 shares. 5.3%. "1,005,000 Commonwealth and Southern Corporation option warrants. 5.7%. "34,857 505-600 of the stock of Electric Bond and Share Company. 67-100 of 1%. "Societe Lyonnaise, 30,038 shares. 3.2%. "48,705 shares of Lehigh Coal and Navigation Company. 2.5%. "203,900 shares of the Consolidated Gas Company of New York. 1.8%. "63,002 shares of the common stock of American Waterworks. 3.6%. "33,175 shares of the Consolidated Gas Company of Baltimore. 2.8%." Operate in Twelve States, Morgan & Mr. Pecora introduced in evidence a table from the office of whiah United Co., showing that the population served by these companies in Corporation has an interest was 55,272,000, distributed through the following States: New York, New Jersey, Connecticut, Pennsylvania, Delaware, Ohio, Michigan, Illinois, Tennessee, Mississippi, Alabama and Georgia. Mr. Pecora—How much cash did the United Corporation receive from anybody in exchange for its capital stock in January 1929? Mr. Whitney—Up to Jan. 11, $20,700,801.10. Q.—And from whom did it receive that sum of money? A.—Well, I have testified already as to $700,801.10. As to the other, $10,000,000 from J. P. Morgan & Co., and $10,000,000 from Bonbrigth Electric Corporation. Q.—You have already told us what securities issued by the United Corporation were received by J. P. Morgan & Co. for that consideration? A.— No. Only as to the securities. As to the $10,000,000 in cash. J. P. Morgan & CO. received 400,000 shares of the common stock and 1,000,000 option warrants of the United Corporation, and as to the $10,000,000 which Bonbright Electric paid in at that time they received 400,000 shares of common stock and 1,000,000 option warrants of the United Corporation. Explains Option System. "Do you know the reason for the authorization and issuance of these option warrants which entitle the holders thereof at any time in the future to purchase from the company its common stock at $27.50 per share?" Mr. Pecora asked. "Well," replied Mr. Howard, "it has been customary in connection with the creation of the financial structure of companies similar to this to issue various option warrants as a class of security." Q.—Do you mean to say it has been customary to issue option warrants unlimited as to time? A.—Yes. Q.—How many other corporations did that prior to 1929? A.—I don't know. .what consideration were the option warrants issued?" asked Senator kier Bu'Foy "The option warrants—the shares and the cash—were issued in each case here for the $10,000,000 in connection with the other transaction for the shares. The options were carried in at $1 an option." Q.—As part payment for the price of properties acquired? A.—In some cases in part payment for shares of other securities acquired and in these other cases for the value. Senator Adams—On your balance sheet, under liabilities, you are oarrying 14,000,000 shares of common stock at a stated value of $5 a share? A.—Yes. Q.—Some $72,000.000 is the liability? A.—Yes. Senator Adams—You carry these 3,700,000 option warrants at a listed figure of $27.50, and your option warrant really represents a share of common stock, doesn't it? A.—No, they are carried at nothing. Option warrants outstanding entitling holder to purchase at any time without limit three million seven hundred thirty-two— Senator Adams (interposing)—You carry a liability item of 376,000,000 against that? Mr. Howard—No, that is the capital surplus, 360,630,000. Mr. Pecora—Let us assume the United Corporation's common shares at some time subsequent to January 1929, reached a market value of $50 a share. Any one holding any of these option warrants would immediately demand the issuance to him by the company of shares of that comanon stock having a market value of $50 a share for $27.50 a share. A.—That is right. Mr. Pecora—To whom were any of these option warrants issued by the United Corporation? A.—On the first ti insaction Morgan & Co. got 714,200. On another transaction Morgan & Co. go-. a million of these and Bonbright Electric Corporation a million. United Gammon's Rise Detailed. "What did Morgan & Co. pay for those option warrants when it got the block of a million?" asked Mr. Pecora. "Morgan & Co. did not pay for them separately at that time," Mr Howard said. "Morgan & Co. paid to the corporation $10,000,000 in cash and received 400,000 shares of common stock and a million option warrants, and Bonbright Electric had a similar transaction." Q.—How long after the 9th of January 1929, did the common stock of United Corporation reach a market value in excess of $27.50 per share? A.—On the Philadelphia Stock Exchange, on Feb. 2 1929, the common stock was quoted at 58%, 56% and 56%. On May 9 1929, after the stock had been listed on the New York Stock Exchange, the corresponding prices were 67%, 66% and 66%. At this juncture Mr. Pecora said: "That is enough for my purposes now. May I withdraw this witness temporarily and ask George Whitney to resume the stand?" "Just wait a moment 1" exclaimed Mr. Glass. "I am tired of sitting around the table here in absolute ignorance of where we are going or where we are being taken or what is expected to be adduced from the examination of witnesses. "I think members of the Committee are entitled to know some of these things so that they may receive the testimony with some degree of appreciation of its significance, if it has any, and that they themselves may interrogate witnesses with some degree of intelligence. Glass Asks Aim of Inquiry. "I do not know what all this has meant this morning," Senator Glass continued. "I want to ask the witness now if any of the transactions enumerated have been contrary to the law of any of the States in which this company operates, or contrary to any Federal statute." "No, sir," said Mr. Howard. Senator Glass—I would just like to know what it is all about. Senator Couzens—I wonder if we could get an answer to Senator Glass's question as to "what this is all about I" Volume 136 Chairman Fletcher—I do not see how we can anticipate what Mr. Pecora expects to develop. Senator Glass—But we could have anticipated if the Committee had been told by counsel what he wanted to prove. Mr. Pecora—I shall be very glad to comply with the Senator's suggestion and answer as to what it is all about, or at least what, in my humble opinion, it is all about. Mr. Pecora read Senate Resolution 56, which directed the Banking and Currency Committee to conduct the investigation. "That," said Chairman Fletcher, "is the authority under which we are acting and that is the authority under which we are proceeding"— Glass "Expresses Himself." "Hold on!" interposed Mr. Glass. "The Senator from Virginia is going to express himself, and there is no authority in this Committee to prevent him from expressing himself. "I say that, in compliance with this resolution, Mr. Pecora and his numerous investigators went to New York and made this preliminary investigation, having had access to all of the books of this and perhaps other concerns—we do not know how many other concerns; he obtained, apparently, complete information as to those things—and I have said, and I insist now, that it was his duty to have come here to Washington and have appeared before the Sub-committee and to have told us what he found, what significance he attached to what he found, and what he proposed to establish by the investigation before this Committee, and not to have brought the members of the Committee here before a crowded assembly room without knowing one solitary thing about the meaning of all this. "And I say that is so, and other members of the Committee agree with me." Mr. Pecora—May I remind Senator Glass that after the enactment— Senator Glass—So far as that is concerned, I have examined the minutes of the various meetings of the Sub-committee and I do not find that at any meeting of the Sub-committee the employment of Mr. Pecora was authorized. Chairman Fletcher—The minutes have not been written up, then. That is all I can say about that. I know he was employed, and the Sub-committee did it unanimously. Senator Costigan—I agree with what the Chairman says. There can be no question about the employment of Mr. Pecora. Senator Glass—I have within the three last hours examined the minutes in detail. It may have been that the employment was authorized, but there Is no record of it. That is immaterial because I think the Committee is satisfied with Mr. Pecora's employment: . . • Pecora Explains Aims. Senator Glass—"This particular line of examination, into the activities and operations of the issuance of securities of the United Corporation, is being conducted under that clause of the resolution which empowers and directs the Committee to make a thorough and complete investigation, among other things, of the business of banking, financing, and extending of credit, and of the business of issuing, floating or selling securities. "This United Corporation, it has already been shown, to the extent that I have been permitted to proceed up to the present moment, is a corporation that has issued hundreds of millions of dollars of securities to the investing public. "And certainly its size and the area of its operations were deemed to be of sufficient importance to merit the attention of this Committee under this resolution. "It has already further been shown by the evidence presented at this hearing that 1,000,000 option warrants were issued to J. P. Morgan & Co. for an allocated value or consideration of $1 each, and a similar amount for similar valuation to the banking house of Bonbright & Co.; that those option warrants are unlimited as to time, and entitle the holders thereof to purchase for each warrant a share of the common stock of the United Corporation at $27.50. Rise in Stock Is Cited. "It has already been shown at this hearing that, within a few days after the issuance of those option warrants for that consideration of $1, the common stock of this company was traded in on the public Exchange in Philadelphia at prices doubling or more the sum of $27.50. "Now, there was proof—and the proof on that has not yet been completed, gentlemen of the Committee—that the securities of the United Corporation were issued under circumstances and upon terms that enabled a very small number or group of individuals to acquire, at terms certainly against the interests of the corporation, those of its securities that are called option warrants. "Now, r want to pursue the inquiry further, and I think the developments will throw considerable light on a certain phase of the business of issuing and floating and selling securities." Senator Glass—Now, let me ask Mr. Pecora if he did not ascertain all these things by reason of his investigation in New York, and if he could not have made to the Sub-committee, prior to the meeting of the general Committee, just the statement that he has made here, that he expected to develop those facts? Mr. Pecora—Senator Glass, if I had to come to members of the Sub-committee every time I had Washington to consult the any I would have been busy taking every train between development to report New York and Washington. Preliminary Parley Recalled. "I did not ask you about 'every time' you discoverey anything or had any development," Senator Glass said. "What I wanted you to do was to come here at some time after you completed your investigation and give to us some idea of what you proposed to develop here, in order that we might not waste our valuable time sitting around a table here listening to questions propounded and answers given which were of no significance to a man of ordinary intelligence, if I have ordinary intelligence." Mr. Pecora then replied: "Senator Glass will probably recall that in the latter part of March, or shortly after the adoption of Resolution 50 I appeared before a meeting of the Senate Banking and Currency Committee and outlined to the members the general scope, the lines of inquiry, that I was about to undertake as counsel for the Committee. "I specifically read at that meeting the draft of the quesitonnaire, so called, that has been alluded to in the evidence here in the past few days, which I had sent to J. P. Morgan & Co. and other private banking firms doing business in the City of New York. "Now, that questionnaire, to a definite extent, suggested quite fully, I think, the lines and scope of the inquiry that I was undertaking to pursue as counsel for the Committee. Since that time I have received not a single request from any Senator on the Committee for any (further or more specific advices or information concerning what I was doing. 3843 Financial Chronicle Pecora Statement Applauded. "In view of that, I have been, with the exception of one visit to Washington that I made about three weeks ago, spending my time in the City of New York, from early morn until late at night, engaged on this preliminary investigative work. "And I want to add that I did not seek this assignment as counsel to the Committee. I appreciated and I still appreciate the honor, the dignity and opportunity for service in having been asked to serve as Committee counsel. "I have been happy to render whatever service, modestly, I could as counsel to the Committee; and I want to assure Senator Glass that the compensation of $255 a month which I am receiving for these services certainly is no incentive to me to render these services or to continue to render them." Glass Opposed Arrangement. "I want to say to the counsel, to the dommittee," Senator Glass went on, "that the mere sending out of interrogations to bankers did not constitute, for the purpose of the Committee, evidence of data which should have been submitted to the Sub-committee. "As I have said, and as I insist, so far as the compensation of counsel to the Committee is concerned—and I want to say this to the counsel and to the Committee—I was utterly opposed to an arrangement of that sort. I do not think that this counsel or any other counsel ought to be required to come here to Washington, or to go to New York, or anywhere else, and work for the United States Senate without adequate compensation. "And I was in favor of giving whatever-counsel might be employed adequate compensation. And I do not imagine that counsel for the Committee is working just for the $255 a month. Far from it!" "As a member of the Committee," said Senator Costigan, "I wish to express my appreciation of the ability and the efficiency of counsel for the Committee. In my judgment the investigation-thus far conducted has been relevant and material." . . . Glass Maintains Stand. "I move that the Committee adjourn," said Senator Byrnes. "I hope the Senator won't make that motion" Senator Glass declared. "I do not intend to be put in an unreasonable attitude. And I am perfectly indifferent to darner or applause. I want that understood. "I still say it would have facilitated the operations of this hearing, and enabled the members of this Committee to have come in session with some comprehension of what has been discovered by Mr. Pecora, and what he expected to develop, had he come to Washington and laid before the Subcommittee, briefly, the results of his examinations in New York. And member after member of the Committee have agreed that would have been the better course. "Now, I do not care anything about the 'House of Morgan.' The 'House of Morgan' never loaned me a dollar in their lives and very likely never would, in any way, shape or form"— "Unless you were properly introduced," Senator Couzens broke in. "I am not careful of the 'House of Morgan' except that I am careful for the dignity and orderly procedure of this Committee." Mr. Glass continued. "As one member of this Committee I do not intend to see any injustice done to the 'House of Morgan' or any other house, whether it be of large consequence or of little consequence or of no consequence. That is the attitude I intend to maintain to the end of these hearings. No Witnesses Excused. "I am not afraid to do J. P. Morgan & Co. justice. Id they have done anything they ought not to have done, I am not afraid to legislate accordingly. The only solitary sentence of statutory law that would have corrected the things we have here talked about was framed by me and passed under my management on the floor of the Senate." "These are things of the past." Senator Adams said. "I am not a member of the Sub-committee, but if the Sub-committee feels that counsel should make some statement in advance, I am satisfied that in future they would have no difficulty with counsel as to advice in advance as to the prospects." "That does not alter my contention that it ought to have been done in the past," Senator Glass declared. The Sub-committee then adjourned until 10 o'clock next Wednesday morning [May 31]. Inquiry Into Affairs of J. P. Morgan & Co. by Senate Committee Investigating Stock Market Operations —Profits of Banking House in Security Issues— $18,284,908 in Five Years 1927-31, Papers Turned Over to Senators Show. According to Associated Press accounts from Washington May 27 (copyright), figures of profits through security flotations and syndicate operations were disclosed on that date in documents obtained from the files of the banking house by Senate investigators. The Associated Press further said (we quote from the New York "Times"): They showed that the Morgan firm reported to the investigators gross profits of $18,284,908 from the sale of securities alone during the five-year period from 1927 to 1931, inclusive, in addition to untabulated millions on other operations. Bare details of stock pool or syndicate operations in which the Morgan house participated hinted at millions of additional profits, but the total could only be guessed because of the form in which it was reported. Committee investigators have gone back of the figures presented by the Morgan firm and found additional profits which will be totaled and submitted later to the inquiry Committee. The Morgan reports showed them only as shares still held. A joint account in Proctor & Gamble Company common stock from July 1929, to June 1930, in which the Morgan profits were $1,853,959, revealed the size of some of the operators. A total of 180,900 shares were bought and sold for the account. The period covered by the figures included two and a half "boom" years and the same number of "depression" years. Testimony before the Committee has shown that the twenty partners in the firm paid total income taxes of $11,000,000 in 1929; $48,000 in 1930, and none in 1931. But the profits revealed to-day were not divided Into years. Pool Profited in Crash. One of the most interesting documents was a summary of the operations of the so-called bankers' pool which went into the market in 1929 shortly 3844 Financial Chronicle after the collapse. It showed that the pool, listed under the name "special suspense account," made a total profit of $1,067,355 of which Morgan's share was $170,776. The Morgan files gave much additional information also about the socalled selected lists of clients to whom the firm sold stock at bargain prices. Two such lists already have been made public by the investigators, including the names of many famous persons of high position in public life and out. Stock In the Alleghany Corporation and Standard Brands, Incorporated, was sold to them at prices below the market quotations for those stocks. In June 1927, Morgan & Co. acquired 400,000 shares of Johns-Manville Corporation common at 47%. It disposed of 343,750 shares to a selected list at the purchase price of 47%, and 56,250 to another selected list at 57%. Many noted persons are understood to have been on the second selected list and to have responded readily to the price, Which realized a profit of • $562,000 for Morgan & Co. Another special list of favored customers obtained 315,070 units of United Corporation the Morgan holding company, at 75. Each unit included a share of preference stock and a share of common. List for Niagara Hudson. The third list obtained common stock in Niagara Hudson Power Corporation. This company sold 2,000,000 shares of the stock on Aug. 19 1929, each carrying one Class A and one five-year Class C warrant, at $25 a unit. Morgan and Bonbright & Co. purchased 200,000 units, of which the house of Morgan sold 56,500 to a selected list, leaving a balance of 143,500 to be divided between the two companies. The record showed the bankers' pool was one of the biggest syndicate Operations participated in by the Morgan house during the five-year period. Other participants were listed as the First Securities Company, Chase Securities Corporation. Guarantee Company of New York, National City Company, Bankers Company and Daniel, Murry, S. R. Simon Guggenheim. Each participant had a 4-25ths interest, except the Guggenheims, who had 1-25th, the record disclosed, and the pool engaged in operations in some of the better-known stocks with varying results. Altogether, 1,146,609 shares in thirty-seven different stocks were traded. The syndicate bought 60,000 shares of Columbia Gas and Electric Company stock for $4,016,425 and sold them for $4,622,060, realizing a profit of $605,635. It bought 66,600 shares of General Electric for $15,902,050 and sold them for $16,521,000, for a return of $618,960. A profit of $326,484 was made in United States Steel by purchasing 148,400 shares at an average price of $182.45 or a total of $27,075,700, and selling them for an average of $184.65, or 07,402,184. A loss of $608,394 was sustained in Anaconda Copper, in which the syndicate bought 76,200 shares for $6,514,215 and sold them for $5,905,821. Losses of $404,339 and $206,785, respectively, were listed for dealings in Sears, Roebuck and Johns-Manville Corporation stock. The stock of the latter company was bought for 170 and sold for 138. . . . It was impossible for Committee agents to calculate total Morgan profits from the documents furnished them by the firm because in many cases they were listed entirely or partially as blocks of stock. For instance, in one underwriting issue the firm report said: "Profits received by J. P. Morgan At Co., 1,375 shares." Further research will be required to determine what that represents in cash. Inquiry Into Affairs of J. P. Morgan & Co. by Senate Committee Investigating Stock Market Operations —Mr. Morgan's Explanation of Payment of British Income Tax—Capital Gains and Losses Ignored in England. While reference was made in these columns May 27 (pages 3654-3656) to the testimony by J.P. Morgan before the Senate Banking and Currency Committee in which he made an explanation as to the payment by him of a British income tax, we give herewith the following explanation made by Mr. Morgan (according to the New York "Times") to the Senate Committee on May 25 of the fact that he paid an English income tax in 1930, 1931 and 1932, although he did not pay income tax in the United States: "There was a question raised about my having paid income tax to the British Government, yesterday. I was asked yesterday whether I had paid any income taxes to any foreign Government, and replied that I had paid Income tax to the British Government. My memory was not entirely clear about it, so that I thought I would like to explain it a little. "My income tax to the British Government is paid upon the basis of the English income tax law, and it is fixed by the Inland Revenue authorities, as they call them there. I paid an assessment during 1932 of £7,000, and approximately similar amounts for 1931 and 1930. "The English income tax includes a tax on the rental value of property owned which the owner uses and which would have increased his income had he rented it, and does not include any capital gains and losses." When questioned by Mr. Pecora, counsel for the Committee, Mr. Morgan said that if the English system of income tax were adopted in this country he would have had to pay income taxes for the years 1930, 1931 and 1932, and would have had to pay a "lot less" in 1928 and 1929. London ad vices May 25 to the same paper said: The simplest explanation as to how J. P. Morgan paid income tax in Britain in 1931 and 1932, though he was not required to pay in the United States, is that authorities here base their annual assessments on certain classes of Income at the source and ignore altogether the point whether the recipient loses part or all of it afterward. If, say, a man receiving a salary of £1,000 saves £200 which he invests wisely, the income tax authorities take a tax on his salary and then, when the investment matures, they take a tax on that too. But it is no concern of theirs whether another £200 of savings have been lost in the meantime. They regard the ownership of a house as a form of income. Thus, speaking hypothetically, if Mr. Morgan owned property in Britain (which he did largely), he would be forced to declare, under heavy penalties, the exact amount of money he brought over from the United States to Britain. This would be taxed. If he leased estates, the income therefrom would be taxed, too. Moreover, if he received a salary as a partner or a director in the English company it would be taxed, as would his income from British investments. June 3 1933 Inquiry Into Affairs of J. P. Morgan & Co. by Senate Committee Investigating Stock Market Transactions—Letters from John J. Raskob and Charles Francis Adams Accepting Offer of Stock of Allegheny Corp. Below Market Price. During the examination on May 25 of George Whitney by the, Senate Committee inquiring into the affairs of J. P. Morgan & Co., Ferdinand Pecora, counsel for the Committee, introduced letters from John J. Rascob,then Chairman of the Democratic National Committee,and Charles Francis Adams, subsequently Secretary of the Nary, relative to the offering of Alleghany Corporation stock to them in 1929 by the Morgan firm. These letters were publighed as follows in the New York "Times": The letter from Mr. Raskob to Mr. Whitney read: Whitehall, Palm Beach, Dear George: Many thanks for your trouble and for so kindly remembering me. My check for $40,000 is enclosed herewith in payment for the Alleghany stock, which kindly have issued when ready, in the name of John J. Raskob, Wilmington, Del. I appreciate deeply the many courtesies shown me by you and your partners, and sincerely hope the future holds opportunities for me to reciprocate. The weather Is fine and I am thoroughly enjoying golf and sunshine. Best regards and good luck. JOHN. The letter was received by J. P. Morgan & Co. on Feb. 8, 8:10 A. M., 1929 according to a notation. Tlie letter from Mr. Adams read: 15 State Street, Room 102, Boston, Feb. 13 1929. H. S. Morgan, Esq., 23 Wall Street, New York, N. Y. My dear Henry: As you probably know, I have duly signed on. I see no reason why this should interfere with this bit of investment. I accordingly send a check with many thanks to you. Please have the certificate put in my name. Always affectionately yours, C. F. ADAMS. Inquiry Into Affairs of J. P. Morgan 8c Co. by Senate Committee Investigating Stock Market Transactions—Defaulted Bond Issues Floated Prior to 1927 by J. P. Morgan & Co. and Drexel & Co. Incident to the inquiry into the operations of J. P. Morgan & Co. by the Senate Banking and Currency Committee investigating stock market trading, it was stated in Washington advices May 28 to the New York "Times" that the following list shows bond issues made prior to 1927 by J. P. Morgan & Co., and Drexel & Co., which are in default as to interest or principal: J. P. Morgan & Co. Chicago City & Connecting Railways, collateral trust sinking fund gold 5s. issued Jan. 1 1910; due Jan. 3 1927; defaulted Jan. 3 1927. Florida East Coast Railway, first and refunding mortgage 5% gold bonds, issued Sept. 1 1924, Series A, due Sept. 1 1974; defaulted Sept. 1 1931. Interborough Rapid Transit Company, 10-year secured convertible 7% gold notes, issued Sept. 1 1922; due Sept. 1 1932; defaulted Sept. 1 1932. Imperial Russian Government credit of 1916, issued June 1918. Republic of Mexico, 4s, 5s and 6s, of 1899, issued prior to July 1913. Drexel de Co. De Bardeleben Coal Corporation, first mortgage 6% bonds, 1953, issued May 22 1928; defaulted Dec. 1 1931. Franklin County Coal Company, first mortgage 6% bonds, issued Jan. 8 1924; defaulted Jan. 1 1931. Terre Haute, Indianapolis & Eastern Traction Company, first and refunding mortgage 5% bonds, 1946, issued May 23 1910; defaulted Oct. 1 1930. Indianapolis, Crawfordsville & Danville Electric Railway Company, first mortgage 5% bonds, 1952, issued June 1 1912; defaulted Nov. 1 1930. The Baldwin Locomotive Works, 3-year 5%% notes, 1933, issued March 11 1930; defaulted March 1 1933. Lehigh Valley Coal Company, first mortgage 4% bonds, 1933, issued in 1904; defaulted Jan. 1 1933. Red Jacket Consolidated Coal and Coke Company, consolidated mortgage 5% bonds, 1944, issued in 1904; defaulted Jan. 11 1932. Other Defaulted Issues. The following are the names of all issues in which either firm has had any participation and which are now or have been at any time between 1927 and 1931, inclusive, in default: Republic of Peru secured 7% sinking fund gold bonds, due Sept. 1 1959; defaulted Sept. 1 1931. Republic of Peru Peruvian National loan 6% external sinking fund gold bonds, first series, due Dec. 1 1960; defaulted June 1 1931. Republic of Peru Peruvian National loan 6% external sinking fund gold bonds, second series, due Oct. 1 1961; defaulted April 1 1931. Chicago Rapid Transit Company first and refunding mortgage 6%go bonds, Series A, due 1953; defaulted July 1 1932, Chicago Rapid Transit Company first and refunding mortgage 6% bonds, Series B, due 1944; defaulted July 1 1932. h% external sinking fund bonds, due Oct. 15 United States of Brazil 61 1957; defaulted April 15 1932. International Match Corporation 5% twenty-year sinking fund debentures, due Nov. 1 1947 ; defaulted May 1 1932. International Match Corporation 5% ten-year convertible debentures, due Jan. 15 1941; defaulted July 15 1932. Williamsport Wire Rope Company first mortgage sinking fund 6% bonds, due Nov. 1 1947; defaulted Nov. 1 1932. City of Vienna external loan sinking fund 6% bonds, due Nov. 1 1952; defaulted Nov. 1 1932. Republic of Chile external loan sinking fund e% bonds, due Sept. 1 1961; defaulted Sept. 1 1931. Republic of Chile external loan sinking fund 6% bonds, due March 1 1962; defaulted Sept. 1 1931. Volume 136 Republic of Chile external loan sinking fund 6% bonds, due May 1 1963; defaulted Nov. 1 1931. Republic of Chile Railway refunding 6% sinking fund external bonds, due Jan. 1 1901; defaulted Jan. 1 1932. Items bearing on the inquiry into the affairs of J. P. Morgan & Co. appeared in these columns May 27, pages 36513661. Inquiry Into Affairs of J. P. Morgan & Co. by Senate Committee Investigating Stock Market Trading— Samuel Reyburn Tells of Incidents Bearing on Participation in Preferred Stock List—Asserts New York Bankers Saved Little Rock Institution from Red Attack. Samuel W. Reyburn, President of the Associated Dry Goods Corporation, New York City, whose name appeared on J. P. Morgan & Co.'s preferred list of buyers of the stock of the Alleghany Corporation, told the Advertising Club of New York at its luncheon meeting on May 26 how he had "won a place on the list of underwriters." The foregoing is from the New York "Herald Tribune" of May 27, from which we also quote: Mr. Reyburn said that more than thirty years ago, when he was President of a trust company in Little Rock, Ark., he had opened a New York account with the Morgan firm. He told how, after he had built up deposits in his company to about $400,000 on an original capital of $10,000, a "radical group" had sought to undermine confidence in his bank and of how the day had been saved by J. P. Morgan & Co. and others. Chosen for Special Work. Mr. Reyburn said he was asked by the Morgan firm to come to New York for some special work in 1914, the recommendations having come from two bankers, William Porter, a Vice-President of the Chemical National Bank and later a Morgan partner, and Thomas Cochran of the Astor Trust Company, who also became a Morgan partner. Mr. Reyburn said he undertook the special work assigned in July 1914, but in the fall of that year economic conditions were such that it brought the business close to receivership. Again he was indebted to the Morgan firm, which provided half of a $1,000,000 loan, two other banks putting up the remainder, half at the suggestion of the Morgan company. "As confidence returned in January 1915, I received my first invitation to join in the underwriting of some venture that the Morgan firm had agreed to help finance," Mr. Reyburn said, adding that the matter had been presented to him by the late Dwight W. Morrow. "That investment I think I held over a year and then disposed of it at a nice profit." Other investments followed, he added, and "naturally, I was proud of the fact that my dealings with the firm had won me a place on their list of underwriters and I am glad to say that, despite losses on some of the obligations, on the whole it had been a valued and profitable association." IVile Joined in Purchase. He said that when the participation in the Allegheny Corporation was offered to him, he "was rather short of ready funds and only took a small amount." When his wife heard about it, he said she "begged for an interest" and he finally agreed to sell to her, for the price he paid, the 600 shares of the stock he had taken, "explaining that if a loss occurred she would have to stand it." Some time after that, he said, she sold her holdings at a profit of $4,887.50. Mr. Reyburn said he also wanted to explain the $90,000 loan he received from J. P. Morgan & Co. soon after the market break in the fall of 1929. He said he borrowed this money to help out several friends who were "in trouble." Their collateral had depreciated, their loans were due, and their collateral was about to be sold at figures less than the face value of their loans, he said. When they appealed to him for help, he said, he went to the Morgan firm, where he had his "largest personal account," and arranged the loan, which was repaid within six weeks. "I believe in the soundness of a private banking business," he concluded. "My confidence in the firm of J. P. Morgan & Co. is of the highest and in these times when public opinion is so misguided and hostile to private bankers, I do not mind in the least giving my favorable opinion." Inquiry Into Affairs of J. P. Morgan & Co. by Senate Committee Investigating Stock Market Operations —Gov.Pinchot of Pennsylvania Calls for Resignations of Two State Supreme Court Justices on Preferred Stock List. Governor Gifford Pinchot of Pennsylvania, demanded on May 27 the resignation of two State Supreme Court Justices who bought stocks from J. P. Morgan interests at prices below the market. Associated Press accounts from Harrisburg, Pa., on May 27, authority for the foregoing added: Urging Justices John NV. Kephart and William I. Schaffer to step down from the bench, he asserted. "If I had the power I would remove them at once." The justices who were elected for twenty-one-year terms, replied that they have no intention of resigning. They denied the Governor's charge that they had accepted "favors from utility bankers" and "utterly disqualified themselves for further service in the State's highest court." Justice Schaffer, who said he bought Allegheny Corporation stock for Investment and "sold it at a heavy loss," asserted his right to buy securities • as any other citizen would buy them. Justice Kephart declared he holds the stock for which he paid $6,000 and now values it at $600. He added: "Unless a judge must resign because he eats in a restaurant owned by some banker there is no more reason for my resignation over the Allegheny matter than there would be for eating in a banker-owned restaurant." The Governor's request for the resignations came closely in the wake of a similar request from Warren Van Dyke, Pennsylvania Roosevelt leader and Chairman of the Democratic State Committee. Mr. Van Dyke went further, insisting the disclosures by the United States Senate Banking Committee were sufficient to warrant impeachment proceedings. Offerings of stock by J. P. Morgan & Co. below market price were referred to in these columns May 27, pages 3654 • and 3657. 3845 Financial Chronicle Annual Convention of Illinois Bankers Association to Be Held in Chicago June 5 and 6. The 43rd annual convention of the Illinois Bankers Association is to be held in Chicago June 5 and 6. The annual dinner of the Association will take place in the evening of June 5, and on June 6 two business sessions will be held. Francis H. Sisson, President of the American Bankers Association and Vice-President of the Guaranty Trust Co. of New York, will deliver an address at the dinner on "Looking Forward." At the morning session on June 6 addresses will be made by William F. Ploch, President, National City Bank, Long Beach, N. Y.; R. H. Brunkhorst, Comptroller, Harris Trust & Savings Bank, Chicago, and William H. Dietrich, United States Senator from Illinois. At the afternoon session Louis J. Krensky of A. M. Krensky & Bros., Chicago; H. A. Lyon, Advertising Manager, Bankers' Trust Co., New York; N. G. Kraschel, Lieutenant-Governor of Iowa, and Victor A. Olander, Secretary, Illinois State Federation of Labor, will deliver addresses. Following the annual election of officers, the convention will adjourn on June 6. Suspension of Holidays and Opening of Banks for Business. Since the publication in our issue of May 27 (page 3662) with regard to the banking situation in the various States, the following further action is recorded: DISTRICT OF COLUMBIA Referring:further to the new National bank being formed in Washington, D. C., through the union of a number of restricted banks in Washington and which is to be known as the Hamilton National Bank of Washington, announcement was made on May 29 that there had been 8675,000 worth of stock subscribed to date to open the new institution. The announcement followed meetings of the general subscription committee and the subscription committee of the Federal-American,National Bank & Trust Co., one of the restricted banks committed to the plan for the new bank The Washington "Post" of May 30,is authority for the foregoing, from which we also take the following: This was the first announcement of a general total. It was made at the beginning of the second week's campaign to secure $1,250,000 worth of stock to create the new bank and make available 50% of the deposits of the seven participating banks, more than $10,000,000. Members of the general subscription committee hope to have the remaining $575,000 worth of stock subscribed by the close of the week. With more than half of the necessary amount of stock subscribed, however, organizers of the new bank emphasized the importance of every stockholder and depositor in the institutions concerned subscribing to the fullest extent possible. An oversubscription, they said, would add greatly to the prestige of the new institution. . . . Seven restricted banks are now in the plan to create the "Hamilton National Bank of Washington." They are Federal-American National Bank & Trust Co., District National Bank, Potomac Savings Bank, Washington Savings Bank, Northeast Savings Bank, Woodridge-Langdon Savings & Commercial Bank and United States Savings Bank. Entry of the last institution into the merger plan is protested by Col. Wade H. Cooper, its President and majority stockholder, who has submitted a plan to the Treasury Department for reopening the bank independently. (Jul. Cooper said his plan was designed to make available for depositors 75 cents on the dollar instead of 50 cents. He declared last night(May 29) that he was confident that it would be approved in preference to the merger Into the Hamilton. ARKANSAS TheBoard of Directors of the Reconstruction Finance Corporation on May 25 authorized the purchase of $25,000 of preferred stock in a new bank which it is proposed to organize at Conway, Ark., a community now without banking facilities. The preferred stock authorization is contingent on the subscription of an equal amount of common stock by those interested in the organization of the new bank. GEORGIA. On May 29 the directors:of the Reconstruction Corporation authorized the purchase of $50,000 worth of preferred stock in the Gainesville National Bank at Gainesville, Ga., a reorganized institution. The authorization for the purchase of the preferred stock is contingent upon the subscription of an equal amount of common capital stock by those interested in the reorganization of the institution. ILLINOIS. A reorganization program looking towards an early reopening of theMustin State Bank at 5645 West Lake St., Chicago, is being pushed by officials of the institution, according to the Chicago "Tribune" of May 26, from which we quote further as follows: Perley 13. Castle, President of the Austin State,said yesterday (May 25) $200,000 of new money is being raised through the sale of stock to shareholders and business interests in the community. Depositors are being asked to waive claims on 60% of their deposits. The bank, which is forty 3846 Financial Chronicle years old, had deposits of $1,700,000 when the moratorium began March 3. The reorganization plan has been approved by State Auditor Barrett, Castle said. That a new bank is being organized, and will open shortly, as a successor to the Halsted Street State Bank of Chicago, Ill., is indicated in the following taken from the Chicago "Tribune" of May 26: A new bank, the South Town National, is being formed to take over 50% of the deposit liabilities of the Halsted Street State. Half of the $200,000 of new stock has been placed, officials state. Assent of depositors to the 50% waiver is being sought. Assets not acquired by the new bank will be liquidated to satisfy 50% of deposits not assumed. The National Security Bank of Chicago, Ill..—the new institution which replaces the Security Bank—opened on May 27 in the former quarters of the old bank. The new bank is capitalized at $200,000 with surplus and reserves of $50,000. The Chicago "Journal of Commerce" of May 27, in noting the opening, furthermore said: The Security Bank has been in process of voluntary liquidation since the moratorium was lifted March 13. It was organized in 1906 and was the oldest bank on the Northwest Side. The same officers who were chiefly responsible for the policies and management of the old institution will head the new national bank. In commenting on the establishment of the new bank, Norman B. Collins, President, stated the new institution will fill the pressing need for banking facilities on the Northwest Side. We learn from the Chicago "Journal of Commerce" of May 26 that the Iroquois Farmers' State Bank of Iroquois, Ill., and the Bowen State Bank at Bowen, Ill., resumed businega on that day without restrictions. The following day, May 27, six more Illinois State banks were reopened on an unrestricted basis, according to the Chicago "News," namely, the Wheeling State Bank, Wheeling; Golden State Bank at Golden; Martinsville State Bank, Martinsville; Arrowsmith State Bank at Arrowsmith; Brighton State Bank at Brighton, and Pleasant Plains State Bank at Pleasant Plains. According to the Chicago "Journal of Commerce" of May 27, the following Illinois State banks reopened on that date under authority of the State Auditor: The wheeling State Bank at Wheeling; the Golden State Bank at Golden; Brighton State Bank, Brighton; the Martinsville State Bank at Martinsville; the Arrowsmith State Bank at Arrowsmith, and the Pleasant Plains State Bank of Pleasant Plains. The West Thirty-First Street State Bank of Chicago, Ill., reopened for business on May 29 after having been closed since the moratorium, according to the Chicago "News" of that date, which stated that deposits greatly exceeded withdrawals on the opening day. The bank it was stated, has $55,000 new capital and old deposits of $135,000. Deposits at the time of closing, it was said,were $248,000,but $113,000 has been waived by the depositors. Officers of the institution are as follows: Ignatius Chap, President; Edward J. Visk and Frank Chap, Vice-Presidents; Arthur I. Chap, Cashier, and G. V. Chap and Michael A. Dolinyak, Assistant Cashiers. Two Illinois State banks, the Farmers' State Bank of Mount Sterling and the Farmers' State Bank of Lewistown, reopened for business without restrictions on May 31. • June 3 1933 an institution organized to succeed the Gretna Trust & Savings Bank of Gretna. The authorization to purchase the stock is contingent upon an equal amount of common tock being subscribed by those interested in the new organization. The new Hibernia National Bank in New Orleans, New Orleans, La., which opened fo business on May 22 with combined capital and surplus of $3,000,000 and deposits of $14,000,000, on the night of May 24, three days later, showed a gain in deposits of well over a million dollars. Chairman R. S. Hecht and President A. P. Imahorn expressed themselves as well satisfied 'with this concrete evidence of the co-operation and confidence of the community." MAINE. The Reconstruction Finance Corporation on May 29 authorized the purchase of $50,000 of preferred stock in the Calais National Bank of Calais, Me., a new bank. The authorization to purchase the preferred stock is contingent upon the subscription of a like amount of common stock by those interested in the organization of the new institution. Associated Press advices from Augusta, Me., on May 26 reported that Financial Institutions, Inc., a holding company for a chain of Maine banks, and organized and controlled by Walter S. Wyman and Guy P. Gannett, was placed in receivership on May 25 by Chief Justice William R. Pattangall of the Maine Supreme Judiciary. The action was taken on petition of Mrs. Wyman and Mr. Gannett. 0. Beane, an Augusta attorney, was named receiver. The dispatch continued in part: Ten of the banks are now closed and in the hands of conservators or receivers while two banks—the First National Granite, of Augusta, and the National Bank of Gardiner—divorced themselves from the chain. In the case of the Gardiner institution this was accomplished by purchase of $50,000 stock owned by another of the chain's banks, while the details of the Augusta transaction were not disclosed. The closed banks are: Fidelity Trust Co. of Portland (said to be the largest bank in Maine); State Trust and Augusta Trust of Augusta; Maine Trust & Banking Co. and Gardiner Trust of Gardiner; Security Trust and Rockland National of Rockland; Peoples-Ticonic National of Waterville: Thomaston National and York County Trust Co. of York Village. Wyman,who is President of the Central Maine Power Co.,and connected with other corporations, and Gannett, publisher of daily newspapers in Portland, Waterville and Augusta, issued a joint statement which said the receivership appeared "the only proper course" to take to "properly conserve the interest of the creditors and stockholders." The last annual report of the State Banking Department listed time and demand deposits in the seven closed trust companies as totaling $49,536,170, of which $38,991,839 were time and $10,544,331 demand. The Fidelity Trust Co.,had the most,$18,241,980 of time and $7,872,401 of demand. ... Capital stock was listed as 25,000 shares preferred, $100 par value, and 200,000 shares of common no par value. A reorganization plan of the People's Ticonic Bank of Waterville, Me., which has remained closed since the bank moratorium, was approved on May 29 by the Comptroller of the Currency, according to a dispatch from Washington on that date by the Associated Press. MARYLAND. A plan for the reorganization of the Hopkins Place Savings Bank of Baltimore, Md., has about been completed and the management hopes to release it soon, according to the Baltimore "Sun" of May 28. The statement of the bank INDIANA. issued last Dec. 31 showed total deposits of $18,661,282 and The organization of a new National bank in Plymouth, resources of $19,858,233. The savings bank has been hid., to replace the First National Bank of that place, now operating on a 06% withdrawal basis since termination in the hands of Samuel Schlosser, Sr., as conservator, is of the bank holiday, March 14. being undertaken by Mr. Schlosser upon the recommendaWe learn from the same paper that G. Pitts Raleigh has tion of the National Banking Department, according to a succeeded E. Stanley Gary as President of the institution. dispatch from Plymouth on May 29 to the Chicago "Tri- Mr. Gary, who held the office of Chairman of the board as bune." The dispatch continued: well as President,continues as Chairman. Mr. Raleigh, who The conservator will continue the operation of the First National Bank heretofore was a Vice-President of the Maryland Trust Co. until the new organization is completed. Then plans for taking over the of Baltimore, was to assume his new duties on June 1, it assets or liquidation will be perfected. was stated. IOWA. Concerning the affairs of the Union Trust Co. of BaltiRelease of 11 State and savings banks in Iowa from the more, Md., the reorganization plan of the institution was restrictions of S. F. 111, imposed upon the banks during the State Bank Commissioner the National and State banking holiday was announced approved by the directors and complete on May 23 by D. W. Bates, Deputy Superintendent of of Maryland, John J. Ghingher, on May 29 and details of the proposal have now been mailed to the stockBanking for Iowa. The Des Moines "Register" of May 24 holders and depositors. The Baltimore "Sun" of May 30, in reporting the matter, named the banks as follows: from which the above information is obtained, continued: Sanborn Savings Bank, Sanborn; Dallas County Savings . on its acceptance will make immediately available Bank, Minburn; Perry State Bank, Perry; Rowley Savings toThe plan . . in cash. 40% in certificates of deposit and 40% in cerdepositors 20% Bank, Rowley; Farmers' State Bank, Bayard; Fairfax State tificates of beneficial interest. These distributions are contemplated in already available. Savings Bank, Fairfax; Le Mars Savings Bank, Le Mars; addition to the 5% of depositors' funds a parity made general deposits of with The certificates of deposit will be on Tipton Savings Bank, Tipton; Silver City State Bank, the reorganized bank and will be deemed to represent time deposits. They Silver City; Watkins Savings Bank, Watkins and Sioux will be liquidated with all possible speed in various installments or in a lump sum 30 days after so directed by the directors with the approval County Savings Bank, Maurice. of Mr. Ghingher. LOUISIANA. The directors of the Reconstruction Finance Corporation on May 29 authorized the purchase of $100,000 worth of preferred stock in the First National Bank of Gretna La., The certificates of beneficial interest will be issued by a newly formed holding company and will represent slower assets for deferred liquidation and distribution. Stockholders will receive stock in the holding company carrying the same liability, share for share, for their present trust company holdings. Financial Chronicle Volume 136 Plans for the reorganization of the Chestertown Bank of Maryland at Chestertown have been approved by the Maryland State Bank Commissioner, John J. Ghingher, according to Baltimore advices on May 29 to the "Wall Street Journal," which added: They provide for an increase in capital to $50,000 from $27,000, and the issuance of certificates of beneficial interest to depositors. Depositors would be permitted to receive 35% of their deposits in these certificates. The Westminster Deposit & Trust Co. of Westminster, Md. which had been operating on a 10% withdrawal basis since the legal holidays, was to reopen on a 100% basis on May 31, according to an announcement the previous day by John J. Ghingher, State Bank Commissioner for Maryland. In reporting the matter in its issue of May 30 the Baltimore "Sun," continuing, said: The complete reopening of the bank, which had approximately $1,000,000 iedeposits, has been made possible. Mr. Ghingher said, by the voluntary subscription on the part of some depositors and stockholders of $180,000 in new capital. The bank previously had 1,000 shares of $100 Par capital stock outstanding. This capitalization was reduced to $10,000 by cutting the par value down to $10, and 9,000 new $10 par shares were issued at $20 to restore the bank's capitalization to $100,000 and leave $90.000 to be carried to surplus. Charles E. Nicodemus is President of the bank. N. H. Baumgartner is its Treasurer. Announcement was made on May 27 that the new Seat Pleasant Bank at Seat Pleasant, Md., formed from the Southern Maryland Trust Co., now operating on a restricted basis, is expected to open on June 5, according to the Washington "Post" of May 28, from which,we also take the following: The articles of incorporation for the new institution were filed with the State tax commission yesterday (May 27) after having been approved the • day before by Judge Joseph C. Mattingly, of the Prince Georges County circuit court. The charter for the new bank, recently approved by the Maryland State Bank Commissioner, grants the right for the new institution to open on a $25,000 capital. It is expected to operate on a 100% basis. A conservator will be appointed for the Seat Pleasant Bank, and as the stock of the trust company is liquidated it will be placed to the credit of the depositors of the new establishment. An application for membership in the Federal Reserve System will be entered. MASSACHUSETTS. Governor Ely of Massachusetts on May 27 announced that the Bay State National Bank and the Merchants' Trust Co., both of Lawrence, Mass., closed since the National bank holiday, would re-open about July 1 under a reorganization plan approved by the Comptroller of the Treasury, the State Department of Banking, the Federal Reserve authorities and the State Supreme Court. The Boston "Herald" of May 28, authority for the foregoing, went on to say: The plan, affecting 20,000 depositors, calls for the operation of both banks under the charter of the Bay State National in the quarters of the Merchants Bank. Fifty per cent of the deposits of each will be taken over by the new bank, or a total of about $6,000,000. The balance of the assets and liabilities will be held in trusteeship, and stockholders and depositors of both banks will be asked to subscribe to $825,000 in new stock. Depositors will receive certificates representing the 50% of the deposit not assumed by the reorganized bank. MICHIGAN. The Allegan State Savings Bank of Allegan, Mich., will re-open on July 5 next, according to an announcement by officials of the institution on May 29. The bank has been closed since the proclamation of the Michigan banking holiday. A dispatch by the Associated Press on May 29, reporting the foregoing, went on to say: Under a conservator's plan, approved by State and Federal authorities, a 100% assessment was made against stockholders, and 50% of all deposits will be impounded. The other 50% of deposits, officials said, will be released gradually, a part on the opening day. The impounded 50% will be released when conditions warrant. The new Wabeek State Bank of Birmingham, Mich., organized and owned by U.S. Senator Couzens of Michigan, and to which reference was made in our April 29 issue, page 2910, opened for business on May 22. The new institution has a capital structure of $100,000, made up as follows: $62,500 capital; $17,500 surplus and $20,000 undivided profits. George B. Judson is President of the new bank; Cecil R. Cummings, Vice-President and F. C. Schlorff, Cashier. In noting the proposed opening of the new bank, the "Michigan Investor" of May 20 had the following to say regarding Mr. Judson and Mr. Schlorff: The new President brings 24 years' experience to the new bank. In 1909 he opened the Highland Park State Bank with E. G. Leibold. Secretary to Henry Ford. He left in 1917 to become Cashier of the Bank of Detroit. Mr. Judson succeeded Senator Couzens as President of the Bank of Detroit and continuecrin that office for seven years, when the bank was consolidated with the Guardian National Bank of Commerce in 1930. He also became an officer of the enlarged bank and resigned in March of this year asISenior Vice-President. Mr. Schlorff, Cashier of the Wabeek State Bank, was also formerly associated with the Bank of Detroit and the Guardian National Bank of Commerce. 3847 MINNESOTA. The following Minnesota State banks were reopened on May 25 by order of Elmer A. Benson, Commissioner of Banks for Minnesota: Bank of Wilmar at Willmar; Farmers' State Bank of Cyrus and the First State Bank of Leroy. Reopening on an unrestricted basis of the following State banks in Minnesota was noted in a Minneapolis dispatch to the "Wall Street Journal" under date of May 29: Audubon—Farmers State Bank; State Bank of Audubon. Evan—State Bank of Evan. Glenville—Citizens State Bank. Mazeppa—Bank of Mazeppa. Minneapolis—Marquette Trust Co. Otisco—Otisco State Bank. Pillager—Security State Bank. Spring Grove—State Bank of Spring Grove. MISSISSIPPI. Reopening of the People's Bank & Trust Co. of Tupelo, Miss., and its two branches at Rienzi and Nettleton, Miss., releasing $92,000 to depositors, was reported on May 24 by the Mississippi State Banking Department. J. S. Love, State Superintendent of Banks, said the three reopenings brought to 196 the number of State banks that had been reopened since the March banking holiday. The Jackson "News,"from which we have quoted above, went on to say: The project marks reopening of a bank in liquidation, Mr.Love explained. The reorganized institution will have capital of $55,000 and surplus of $53,000. To-day's release of deposits equals 5% of the total, with 20% deterred deposits aggregating $271,000 to be paid from time to time, Mr. Love said. Additional assets of the old bank, he said, should account for collections equivalent to a minimum 15% dividend above the 25% assured. More than $700,000 in preferred and secured deposits already has been paid in the old liquidation, the Superintendent said. Officers of the new bank are: V. S. Whitesides, President; F. L. Spight, Chairman of the Board; R. W. Carruth, Vice-President; E. M. PerrY, Vice-President; W. H. Patton, Cashier. The bank reopened under a decree from Chancellor James Finley under whose jurisdiction a committee will handle deposits trusteed for depositors. Three appeals from the Chancellor's decree have been filed by persons opposing the reopening. Advices from Natchez, Miss., to the Jackson "News" under date of May 27 stated that definite assurance that a new bank would be formed in Natchez to succeed the Britton & Koontz National Bank, was given with the announcement that the stock-selling campaign had gone over the top and that A. B. Learned, President of the Britton & Koontz National Bank; G. L. Wooley, Executive Vice-President and • Conservator, and L. T. Kennedy, attorney, were in Washington for the purpose of filing an application for a new National bank. The dispatch added: The committee also will confer with officials of the Reconstruction Finance Corporation with a view to soliciting aid in the liquidation of the old Britton & Koontz Mational Bank. MISSOURI. The National Bank in North Kansas City, North Kansas City, Mo., was granted a charter by the Comptroller of the Currency on May 22. The new institution, which is capitalized at $50,000, succeeds the National Bank &Trust Co. of North Kansas City. NEW JERSEY. The following with reference to the affairs of the Citizens' National Bank of New Brunswick, N. J., which closed on Feb. 14 last, was contained in a dispatch by the Associated Press from Newark, N. J., on May 25: A committee of depositors in the Citizens' National Bank of New Brunswick presented a reorganization plan to Treasury Department officials yesterday(May 23), which they hope will result in reopening the institution. After conference with Senator Barbour and Representative Sutphin, the committee interviewed William Smith, one of the reorganization directors, in the office of the Comptroller of the Currency. Details of the plan were not made public. The committee included Louis L. Hendler, Raymond A. Hale, Charles Englehardt, Robert F. Mitchell and William Woodruff, all of New Brunswick. The committee was made up of members of Joyce Kilmer Post, American Legion. They said their post considered reorganization of the bank a necessary public project in New Brunswick. Deposits in the closed institution, they said, amounted to approximately $900,000. The institution already has borrowed funds from the Reconstruction Finance Corporation, William Gugelman, conservator and also Cashier of the North Arlington National Bank of Arlington, N. J., announced on June 1 that the conditions required by the Comptroller of the Currency for full opening of the bank had been met, and the institution is expecting authority from Washington to resume business without restrictions. The Newark "News" of June 1, reporting the above, went on to say: The bank was required to raise $50,000 additional capital stock and dispose of $50,000 worth of North Arlington short term municipal notes which it held. Directors and other stoekholders took the entire stock issue. North Arlington property owners, Gugelman said, acquired the greater part of the municipal notes. Their sale was expedited by agreement of borough officials to accept them in payment of taxes or assessments to the extent of 50% of the amount due. "Nothing that we can see," said Gugelman, "stands in the way of immediate reopening." Financial Chronicle 3848 NEW YORK STATE. Normal operation of the Jamaica National Bank, Jamaica, L. I., under the terms of a license approved by the Secretary of Treasury, began at 8 a. m., May 31, when the bank was returned to its board of directors after being under the supervision of a conservator since March 4. This bank is the first in New York to be released from the supervision of the conservator. The New York "Herald Tribune," from which this is learnt, continuing, said: Stockholders of the institution, at a meeting on April 6, voted for a reorganization plan based upon the issuance and sale of 4,500 shares of preferred stock to increase capitalization. Holders are to receive 6% interest on the stock, which was sold at a par value of $100. The issue was approved by the Comptroller of the Currency and the Federal Reserve Bank. The bank has its main office at 163-18 Jamaica Ave. and a branch office at Sutphin Boulevard and Hillside Ave. OHIO. License to reopen on an unrestricted basis was granted the Commercial Banking Co. of Green Springs, Seneca County, Ohio, on May 26 by the Ohio State Banking Department, according to a dispatch by the Associated Press from Columbus, Ohio, on that date, which added: The bank has been in charge of B. A. Young, former Cashier of the Institution, as conservator. A meeting of the stockholders of the National City Bank of Cleveland, Ohio, to act on increasing the capital and serving as liquidator of the Union Trust Co. of Cleveland and the Guardian Trust Co. of that city adjourned until June 5 after approving the plan in principle, according to Cleveland advices to the "Wall Street Journal" on May 31, which furthermore said: The plan will have to be approved by the Comptroller of the Currency, the State banking department, conservators of the Union Trust and Guardian Trust, and the Reconstruction Finance Corporation. When approval is received complete report will be made and final action of National City stockholders taken. On May 24 the Ohio State Banking Advisory Committee approved plans for the organization of the People's Savings & Commercial Bank of Cleveland, according to Associated Press advices from Columbus, Ohio, on that day, which continuing said: The new bank will replace the Lorain Street Savings & Trust Co., which is now in the hands of a conservator. The People's Bank'would have capital of $200,000, surplus of $40,000 and $10,000 in undivided profits. The Huntsville State Bank at Huntsville, Ohio, has received a license from the Ohio State Banking Department to reopen for normal business, according to Columbus, Ohio, advices by the Associated Press on May 24. The institution had been operating under a conservator. OKLAHOMA. The directors of the Reconstruction Finance Corporation on June 1 authorized the purchase of $25,000 of preferred stock of the First National Bank in Frederick, Okla., now being organized to succeed the First National Bank of Frederick. The authorization to purchase the preferred stock is contingent upon the subscription of the common stock by those interested in the new bank. PENNSYLVANIA. Further referring to the new Pitt National Bank of Pittsburgh, Pa., organized to take over the assets of the defunct Diamond National Bank and Monongahela National Bank of that city, a Pittsburgh dispatch on May 31 to the New York "Journal of Commerce" contained the following: An agreement under which the Pitt National Bank will take over the assets of the Diamond National and the Monongahela National has been approved by the United States District Court. The bank being formed assumes 40% of the deposits of the Diamond and 65% of the proved claims against the Monongahela. The new bank will open with capital funds of $1.050.000 and deposits of about $7,500.000. VIRGINIA. The board of directors of the Reconstruction Finance Corporation on May 26 authorized the purchase of $200,000 worth of preferred stock in the reorganization of the Petersburg Savings & American Trust Co. of Petersburg, Va. The preferred stock authorization is dependent on the subscription of $300,000 in common stock by those interested in the reorganization. The purchase of $50,000 worth of preferred stock in the Bank of Waverly, Waverly, Va., which is being reorganized, was authorized on June 1 by the directors of the Reconstruction Finance Corporation. The authorization to purchase the stock is contingent upon subscription of the common stock by those interested in the institution. June 3 1933 contingent upon subscription of the common stock by those interested in the bank. WISCONSIN. The following Wisconsin banks have been re-opened without restrictions according to Minneapolis advices on May 29 to the "Wall Street Journal": People's State Bank of Augusta; State Bank of Fall Creek at Fall Creek; Phelps State Bank at Phelps, and the People's State Bank at Three Lakes. Additional List of Banks Licensed to Resume Operation in Second (New York) Federal Reserve District. The Federal Reserve Bank of New York, supplementing ts statement of May 24 (noted in our issue of May 27, page 3665), issued the following list showing additional banking institutions in the Second (New York) District which have been licensed to resume full banking operations: FEDERAL RESERVE BANK OF NEW YORK. (Circular No. 1236, May 31 1933). MEMBER BANKS. • NEW YORK STATE. Jamaica.—The Jamaica National Bank of New York. Red Creek.—The Red Creek National Bank. NONMEMBER BANKS. NEW YORK STATE. Buffalo.—x Adam, Meldrum and Anderson State:Bank. x Bank in Buffalo branch territory. ITEMS ABOUT BANKS, TRUST COMPANIES, &c. Paul J. Daspet sold a membership on the Commodity Exchange, June 1, to Harold L. Bache for another at $2,500, and George N. Berlet a seat to Enrico A. Stein for another at $2,500. Arrangements were made, J- une 2, for the sale of two New York Curb Exchange seats, one at $42,000, up $10,000 from the previous transaction, May 26, and the second at $43,000. The membership of Paolino Gerli in the New York Cotton Exchange was sold, May 27, to William W. Cohen for $18,500, this price being $250 in advance of the previous sale and that of Samuel T. Hubbard was sold, June 1, to George F. Mahe for another for $19,500. Arrangements were completed, May 26, for the sale of a membership in The Chicago Stock Exchange for $6,500, up $1,500 from the last previous sale. A Chicago Board of Trade membership sold, May 27, at $9,000 net, off $800 from the previous sale. Next membership is offered at $9,500. A Toronto Stock Exchange membership was sold, June 2, for $25,000, up $5,000 from the last previous sale. George Brinton Caldwell, o- rganizer and 1st President of the Investment Bankers Association, died at his home in Bronxville, N. Y., of heart disease on May 27. He was 69 years of age. Mr. Caldwell was formerly President of George B. Caldwell & Co., Inc., New York,from 1924, when it was organized, until his retirement in 1931. Until recently he was Vice-President of the United States Bond & Mortgage Corporation, a director of the Irvington National Bank, Irvington, N. Y., C. W. McNear & Co., investemnt brokers of New York and Chicago,and an executive in other financial concerns. Through Mr. Caldwell's efforts the Investment Bankers Association was formed in 1911. He served as the Association's first President for two terms, in 1912 and 1913. James Loeb, retired banke-r, and son of Solomon Loeb, founder of the banking house of Kuhn, Loeb & Co., died on May 27 at Murnau, Germany, near Munich, of pneumonia. He was 65 years old. Mr. Loeb, who was born in New York, was a graduate from Harvard in 1888. Following his graduation he entered the firm of Kuhn, Loeb & Co. He retired from banking in 1901 and in 1905 he moved to Murnau. He founded the Psychiatric Experimental Institute at Munich, now part of the Kaiser Wilhelm Institute, for the systematic study of mental diseases. WASHINGTON. The following is from the New York "Sun" of last night (June 2): On June 1 the directors of the Reconstruction Finance Corporation authorized the purchase of $125,000 worth of preferred stock of the First National Bank of Bremerton, Wash., which is being reorganized. The authorization is Sale of 7,000 shares of Continental Bank & Trust Co. scheduled to take place at auction to-day, was postponed untll 10:30 a. m.June 6. Also to be sold is a certificate for 5.000-20.000ths of beneficial interest In certain assets segregated from the merger of the Straus National Dank Into the Continental Bank and at the same time there will be offered 2,805. Volume 136 Financial Chronicle shares of $100 par of the stock of the American National Bank & Trust Co. of Chicago, which was formerly the Straus National of that city. The sale is for the account of Straus interests, the stock In both the Continental and the American National banks being shares they received in exchange for their interests in the Straus National Bank of New York and the Straus National of Chicago. The distribution of a 10% dividend to the 32,000 depositors of the defunct Federal National Bank of Boston, Mass., was begun on May 22, according to the Boston "Transcript" of that date. The current dividend is the second of similar amount-10%—that has been paid to depositors since the Institution closed Dec. 15 1931 and was placed in charge of Herbert Pearson, receiver. It is payable to both savings and commercial depositors. The failure of the Federal National Bank of Boston was indicated in our issue of Dec. 19 1931, page 4104. Our last previous reference to its affairs appeared in the "Chronicle" of April 15 last, page 2551. At a recent meeting of the directors of the Sussex & Merchants' National Bank of Newton, N. J., Charles L. Inslee was elected Executive Vice-President of the institution; Frank B. Boss, Vice-President and Cashier, and Rolland T. Hull, Acting Trust Officer. Mr. Boss has been associated with the bank for many years as Vice-President and Trust Officer, and Mr. Hull has likewise seen long service, his father having been one of the Presidents of the old Sussex National Bank. The change in the official staff was the result of the resignation of John P. Dalton, who had been Vice-President and Cashier since 1926. Mr. Dalton leaves to assume the Executive Vice-Presidency of the First National Bank in Paterson, N. J. Judge Henry T. Kays is President of the bank, which was originally organized as the Sussex Bank in 1818. A consolidation was effected in 1925 of the Sussex National Bank and the Merchants' National Bank. Spencer Carpenter, formerly Assistant Treasurer of the Commercial Trust Co. of Jersey City, N. J., was promoted to a Vice-President and placed in charge of the Bergen Ave. Branch of the institution at a recent meeting of the directors. Mr. Carpenter succeeds Timothy J. Callahan whose sudden death occurred in Atlantic City on May 19. The new VicePresident—according to the "Jersey Observer" of May 29, from which the foregoing is learnt—entered the employ of the Commercial Trust Co.as a clerk in 1906 and rose through successive stages to Assistant Treasurer in 1926, the office from which he has now been advanced. He is a member of the Jersey City Chamber of Commerce and the Bergen Avenue Business Men's Association. That the Potter Title & Mortgage Guarantee Co. has been separated from the Potter Title & Trust Co. of Pittsburgh, Pa., of which it was an affiliate, has been announced by officials of the trust company, according to the Pittsburgh "Post Gazette" of May 29, which went on to say: 3849 bank disaster by a hurried merger of the two largest banks. By an eleventhhour rally of industry and business behind the Credit Corp. of Akron, $15.000,000 was raised to put through the coalition. Later, $18,000,000 of Reconstruction Finance Corporation aid was received and advances made by the Credit Corp. repaid, the corporation remaining as the bank's largest stockholder, with 37.000 shares. Cramer found the bank's collateral either pledged to the R. F. C. or largely "frozen" in real estate and other loans. A Vice-President of the Illinois Merchants' Trust Co. (Chicago) and a former Deputy Governor of the Chicago Federal Reserve Bank, Cramer had scarcely had time;to draw upon his banking experience to meet the problems here wheu the banks of the country were hit by heavy withdrawals which turned into serious "runs." In swift succession came the "Akron plan" of restricted withdrawals by which it was hoped to;stem the tide, the Mar. 4 bank closing and failure of the institution to:gain a license. Then followed Cramer's dramatic fight to form a new nationallbank in Akron,forovhich he won It. F. C.approval only to have the reorganization',move, now up for approval, brought for' ward and the Cramer plan put aside,at least temporarily. Cramer is 52. A Kansan, he started in Chicago as a bank messenger. L. S. Burk has succeeded Carl L. Jernberg as President of the Liberty Bank of Chicago, Ill., according to the Chicago "Journal of Commerce" of May 29, which added: Mr. Burk formerly was connected with the National Banking Department. Deposits of the bank have been increasing substantially, according to officials who report current deposits totaling $3,700,000, compared with $2,200,000 in March. We learn from the Chicago "News" of May 29 that depositors in the closed Midland National Bank of Chicago were to receive a 32% dividend on May 31, according to an announcement by M. E. Jensen, the receiver of the institution. The paper mentioned continued: Approximately 2,500 depositors will receive between $90,000 and $100,000. It is the bank's first dividend since closing June 24 1932. The closing of the Midland National Bank was noted in the "Chronicle" of July 2 last, page 71. Announcement was made May 24 that the Dansard State Bank of Monroe, Mich., plans to reopen about July 1, according to Monroe advices on that date, appearing in the Detroit "Free Press," which added that revised plans for reopening the institution have been approved by the State Banking Commissioner for Michigan. The closing of this bank on Aug.28 1931 was noted in our issue of Aug.29 1931, page 1398. The First National Bank of Lyman, Neb., capitalized at $25,000, was placed in voluntary liquidation on May 10 1933. The institution was absorbed by the First National Bank in Morrill, Morrill, Neb. A dispatch by the Associated Press from Spartanburg, S. C., on May 23, stated that $100,000, representing a dividend of 10%, was to be distributed the following day to depositors of the defunct Carolina National Bank of Spartanburg, according to an announcement by J. L. Campbell, receiver. The payment, it was stated, would bring the total paid to the depositors since the bank closed to 45%. The name of the Potter Title & Mortgage Guarantee Co. has been changed to the Pittsburgh Title and Mortgage Guarantee Co., under the management of officers who have no connection with the bank. None of the officers of the bank are now either directors or officers of the mortgage company and the bank will confine itself to that of banking and trust business. William L. Isom, former President of the American National Bank of Spartanburg, S. C., was acquitted in the Federal court, on May 26, of a charge of misapplying the funds of the bank, according to a dispatch by the Associated Press from Anderson, S. C., on May 27. The respective directors of three small Virginia banks— the Bank of Carson at Carson; the Prince George County Bank at Prince George, and the Bank of Stony Creek at Stony Creek—have approved plans for merging the institutions and submitted the same to their respective stockholders for ratification, according to advices from Petersburg, Va., on May 22, to the Richmond "Times-Dispatch," which went on to say: A dispatch by the Associated Press from San Francisco, Calif., on May 30, stated that, according to a disclosure on that day, the Standard Oil Co. of California plans to acquire a substantial interest in the Anglo-California National Bank of San Francisco. The advices, continuing, said: All three of the banks were licensed to reopen after the close of the national bank holiday, and each has increased its deposits materially since then. The merger is advocated in order that a larger bank with capital sufficient to meet the requirements of the three localities will be available. This is in accord with the present banking policy of both State and Federal bank authorities. Under the consolidation deposits will amount to over half a million dollars and resources will be more than three-quarters of a million. It is proposed that the name of the new bank be "The Bank of Scrutheide Virginia." Sterling B. Cramer, President of the First-Central Trust Co. of Akron, Ohio, since last fall until the failure of the institution to reopen after the National banking holiday in March, on June 1 became Executive Vice-President of the Fifth Third Union Trust Co. of Cincinnati, Ohio. In reporting his appointment, a dispatch from Akron on May 31 to the Cleveland "Plain Dealer," said in part as follows: A little more than twelve months before he (Mr. Cramer) succeeded Harry Williams as First-Central chief. Akron bankers had averted a major K. R. Kingsbury, President of the Rockefeller subsidiary, confirmed rumors of the move which would mark the initial entry of the Rockefeller fortunes into western banking. The expansion program, planned by the local institution, would be financed through the enlargement of capital stock, much of which would be purchased by Standard Oil. The first of the expansion steps was reported to provide for acquisition of 15 banks throughout the State, with resources approximating $20,000,000, now controlled by the Anglo-National Corporation, a holding company. "The Anglo-California Bank always has done a large share of our business, and our faith in the institution leads us to acquisition of a direct interest in the future program of the bank," Mr. Kingsbury said. "The bank is planning on expanding its facilities, and we believe there is no time more propitious than the present for sound expansion." The oil company executive is a close friend of the Fleischhackers, principal owners of Anglo-California. Appointment of Frank K. Galloway as Vice-President and Manager of the Hollywood and Cahuenga branch of the Security-Eirst National Bank of Los Angeles, Los Angeles, Calif., was announced on May 19, following the monthly meeting of the directors. He succeeds the late George G. Greenwood. The Los Angeles "Times," from which this is learnt, continuing, said, in part: 3850 Formerly Assistant Cashier of the bank, Mr. Galloway has been engaged In banking in Hollywood for nearly a quarter of a century. . . . His entire business career has been with the bank branch which he now heads. He began as a bookkeeper in the old Hollywood National Bank in 1910, remaining with this institution when it merged and became a branch in the Security-First National system. Advancing through the regular clerical positions, he was elected Assistant Cashier in 1917. . . . He is now serving his third term as President of the Hollywood Clearing House Association, which he also served one year as Secretary. THE WEEK ON THE NEW YORK STOCK•EXCHANGE. The stock market has continued buoyant during most of the present week, though, at times, price movements were somewhat irregular. On Saturday stocks soared from 1 to 10 points and the turnover established next to the highest record for end of the week trading in the history of the Exchange. Many stocks among the industrials, rails, utilities, oils and metals reached new high levels for the present year. The trading was so heavy that the ticker continued to fall back and at one time was about 20 minutes late. Profit taking was in evidence at various times during the week, but this, as a rule, was quickly absorbed as the market continued to forge ahead. Call money renewed on Monday at 1% and remained unchanged at this rate throughout the week. The avalanche of buying that flowed into the stock market on Saturday carried prices upward from 4 to 6 points, and in some cases, up to 8 or 9 points. Transactions were bunched in sales of 5 to 25 thousand shares and the volume of business was so large that the tickers were, at one time, as already stated, 20 minutes behind the transactions on the floor. The largest gains were recorded in the mining shares, Homestake Mining reaching 227 at its top for the day and closed at 220 with a net gain of 3 points. Heavy profit taking appeared during the second hour, and while this canceled part of the early advances, the gains, at the close, were of a substantial character. Amer. Tel. & Tel. was one of the strong stocks and closed with a jump of 531 points to 119. Other noteworthy gains were American Can, 331 Points to 913-1; American Car & Foundry, 531 points to 2531; American Commercial Alcohol, 33% points to 33%; American Tobacco B, 3 points to 89; Central RR. of N. J., 43/i points to 803'; Continental Baking pref., 4% points to 69; Drug, Inc., 331 points to 543'; Eastman Kodak,..43 points to 80; Goodyear 1st pref., 3 points to 70; International Cement, 3 points to 29; Liggett & Myers,531 points to 90%; Standard Gas & Elec. pref. (7), 3 points to 36; Union Pacific, 103- points to 112; United Air & Transport, 2 points to 313/s; United States Industrial Alcohol, 43% points to 52; Western 8 Union Tel., 23/i points to 45%; Westinghouse, 2 points to 4331; Worthington Pump, 2 points to 35; International Shoe, 4 points to 49, and J. I. Case Co., 33- points to 733. Despite early losses, stocks continued to move ahead on Monday, public utilities, oil shares and mining stocks leading the upward surge. American Can reached its peak for the past two years as it broke through 93, oil shares reached new tops for the year, Amer. Tel. & Tel. and Auburn Auto hit new highs for 1933 and stocks like Douglas Aircraft, Warner Brothers and Howe Sound reached new high levels. The gains ranged from 1 to 5 or more points and the tickers were again far behind the floor transactions. The outstand/ ing advances were American Car & Foundry pref., 31 2 points to 40; American Hide & Leather pref., 4 points to 43; American Metals pref., 4% points to 65; American Smelting 2 pref., 53 points to 603'; Auburn Auto, 43% points to 583%; Byers Co. pref., 6 points to 62; Central RR. of N. J., 43/i points to 85; Federal Mining & Smelting, 73% points to 48; Inland Steel, 33% points to 36; Ludlum Steel pref., 33% points to 393%; New Haven pref.,3 points to 48; Reading Co., 7 points to 533%; Standard Oil of Kansas, 6 points to 25; 4 Tide Water Oil pref. (n), 33% points to 403 ; United States Steel pref., 23% points to 973%, and Wilson Co. pref., 2 points to 49. The New York Stock Market, the Curb Market and all commodity markets were closed on Tuesday in observance of Memorial Day. Stocks were higher, but prices were irregular on Wednesday, and while the trading continued fairly heavy during the early dealings, the activity simmered down toward the end of the day. Railroad shares were strong during most of the session and there was considerable demand for the metal stocks and industrial issues, though the reaction during the latter part of the trading left the closing prices somewhat lower than the day's best. The turnover exceeded 6 million shares and approximately 920 listed stocks figured in the transactions. Mining issues moved briskly forward under the leadership of Kennecott and Anaconda, and there was a June 3 1933 Financial Chronicle very considerable amount of speculative interest displayed in the rubber and oil issues. The gains for the day included among others, Allied Chemical & Dye, 2% points to 102; American Can, 23% points to 893%; American Metals pref., 23% points to 623/3; Brooklyn Union Gas, 23j points to 76; Ludlum Steel pref., 23% points to 42; Radio Corp. pref., 3 63 points to 363%; Wilson & Co. pref., 53 points to 53%; 4 4 & Towne, 23% points to 21; and United States Rubber Yale pref., 2% points to 273%. Railroad shares, copper stocks and oil issues were the outstanding features of the trading on Thursday, and Nvhile many of the active stocks moved upward,there was considerable irregularity in evidence during the greater part of the session. Profit taking was apparent but was well absorbed as the market continued to move upward. The buying in the copper group was stimulated by the improvement in metal prices and the favorable outlook for further advances. Distillery stocks and allied issues like National Distillers and Libby-Owens Glass were among the strong shares, and industrial stocks such as J. I. Case Co. and Goodyear Tire showed substantial gains. Oil issues also were in demand on the strength of the advance in gasoline prices. The principal changes were on the side of the advance and included such active speculative favorites as American Can, 13% points to 91%; American Locomotive pref., 2 points to 45; American Metals pref 23/b points to 65; Brooklyn Union 3 Gas, 2 points to 763 ; J. I. Case Co., 5 points to 74%; 4 2 Central RR.of N. J., 43% points to 90; Coca Cola, 13/ points 4 to 84; Delaware, Lackawanna & Western, 23 points to 3831; Detroit Edison, 2 points to 78; Federal Mining & Smelting, 23% points to 505 ; General Printers Ink pref. (6), 23% points % to 53; Inland Steel, 23% points to 38; International Business Machine, 2 points to 122; Laclede Gas (6), 105 points to % 4 603%; Pere Marquette, 2% points to 213 ; Reading Co., 4 points to 56; Tide Water Oil pref. (n), 23/ points to 433/2; Union Pacific, 131 points to 10931; Universal Leaf Tobacco pref. (8), 4 points to 109, and Wilson & Co. pref., 53j points to 59. Speculative interest centered around the railroad shares and public utilities as the market again moved vigorously forward on Friday. The gains ranged from 1 to 10 or more points and a number of prominent issues broke into new high ground for 1933. United States Steel reached a new peak above 54, and there were numerous other fast movers like Allied Chemical & Dye, Du Pont, Homestake Mining and Air Reduction. Some profit taking was in evidence but this made little impression on the list as the market rushed ahead. Among the noteworthy gains for the day 4 were Air Reduction 33 points to 83, Allied Chemical & % Dye 103% points to 1125 , Auburn Auto 3 points to 673%, Coca Cola 43% points to 883%, Ludlum Steel 5 points to 47, New York & Harlem 7 points to 143, Pere Marquette pref. 8% points to 283%, Ward Baking pref. 5 points to 333%, and Western Union Telegraph 53% points to 493%. The market was strong at the close with prices near the best of the day. TRANSACTIONS AT THE NEW YORK STOCK EXCHANGE, DAILY. WEEKLY AND YEARLY. Week Ended June 2 1933. State, Railroad Stocks, Number of arul Miscell. Municipal db For'n Bonds. Bonds. Shares. 4,311,340 6,953,640 Saturday Monday Tuesday Wednesday Thursday Friday Total _ 6,076,350 4,753,570 6,877,860 $2,073,000 3,311,000 HOLIDAY. 11,841,000 3,283,000 2,986,000 11,073,000 15,631,000 3,780.000 Week Ended June 2. Total Bond Sales. $424,000 718,100 39,893,000 15,720,100 773,800 882,000 1,146,000 15,897,800 14,941,000 20,557,000 33.943.900 577.008.900 Jan. 1 to June 2. 1932. 1933. 7,746,055 226,871,029 159,224,340 $3,943,900 $11,364,850 15,433,000 14,534,000 57,632,000 32,080,000 $238,982,200 317,597,500 813.859,900 5341,425,550 327,016,500 650,619,300 1933. Stocks -No. of shares_ Bonds. Government bonds-State & foreign bonds_ Railroad St misc. bonds Total $7,396,000 11,691,000 28 972.760 557.632.000 515,433,000 Sales at New York Stock Exchange. United States Bonds. 28,972,760 1982. $77,008,900 $57,978,650 $1,370,439,600 51.319,061,350 DAILY TRANSACTIONS AT THE BOSTON. PHILADELPHIA AND BALTIMORE EXCHANGES. Boston. Week Ended June 2 1933. Saturday Monday Tuesday Wednesday Thursday Friday Total Prey week revised Philadelphia. Baltimore. Shares. Bond Sales. Shares. Bond Sates. Shares. Bond Sales. $3,000 54,930 18,100 98,806 Holl day. 9,000 94,451 35,000 67,831 3,000 36.495 42,006 74,399 $11,100 11011 day. 58,786 13,000 44.549 11,300 37,203 5,076 -- --55:000 8,067 Holt day. 2,000 5,774 14,000 3,165 2,670 1,0 00 352,513 $68,100 256,943 $35,400 24,752 $22,000 292,205 $33,050 193,596 550.800 13,507 $38,200 Volume 136 Financial Chronicle THE CURB EXCHANGE. Trading on the Curb Exchange closely followed the movements of the big board during most of the present week, and while there were occasional periods of hesitancy, the trend, on the whole, was strongly upward. On Saturday the dealings were so heavy that the facilities of the curb market were taxed to the utmost. The buying centered to a large extent around the public utilities, industrials and specialties, though the mining stocks were also in demand at times. Profit taking was frequently in evidence, but made little impression on the strong upward movement. On Saturday the trend was sharply upward as arge blocks of stocks changed hands under a flood of buying orders. The industrial list attracted a large part of the speculative intere it, particularly Aluminum Co. of America, which reaclod 83 at its top for the day and closed at 8134 with a nef gain of 5 points. Alabama Great Southern was up 334 p Ants to 3334; Great Atlantic & Pacific Tea Co. surged ,orward 5 points to 176; Pittsburgh & Lake Erie (234) forged ahead 434 points to 5734, and United States International 1st preferred moved ahead 4 points to 42. Mining stocks were strong and advanced under the leadership of Newmont, followed by Hudson Bay, Roan Antelope and United Verde Extension. Investment trusts were active and strong, and oils shared in the advance. Mining issues and oil shares led the rebound following the early weakness on Monday. The upswing developed around mid-day when Humble Oil & Gas suddenly turned upward and registered a gain of 73% points. Industrial shares were represented in the advance by Cord Corp., Sherwin Williams and John Deere, and there were lesser gains by other members of the group. Public utilities were under pressure in the early dealings, but steadied later in the day and many issues showed modest gains at the close. The Curb Market was closed on Tuesday in observance of Memorial Day. Public utilities assumed the market leadership during the early dealings on Wednesday but were superceded later in the day by the industrial shares and oils. Some profit taking was in evidence around the middle of the session but this gradually fell off as prices continued to move toward higher levels. Oil shares were in demand at higher prices, especially Humble Oil which moved up to 7334 at its top for the day followed by Gulf Oil of Pennsylvania with an advance of 234 points. Public utilities were represented in the upturn by Electric Bond & Share, American Gas & Electric corn. and pref. and Cities Service, the latter making a new top above 6 with a gain of 1 point. Celanese 1st pref. was up about 3 points and the prior pref. gained 5 points to 85. Following a weak tone during the early dealings on Thursday, new buying flowed into the market and large gains were scored by the public utilities and industrial stocks, while many miscellaneous issues registered substantial gains at the close. Aluminum Co. of America, for instance, dropped back to 78 and then swiftly climbed up to 80. General Tire and Rubber, usually inactive, jumped 8 points to 62 and Pittsburgh & Lake Erie rose 4 points to 64. Public utilities were irregular at the start but improved as the day progressed. Consolidated Gas of Baltimore was a strong feature and closed with a gain of 134 points. American Gas & Electric reached 373% at its peak for the day and Celluloid 1st prof. scored a gain of 734 points. Oil shares were higher all along the lino, particularly Humble Oil which was exdividend and made a net gain of 134 points to 71 and Gulf Oil which forged ahead 234 points to 52. Mining shares were higher and moved ahead under the guidance of Newmont which broke through 43 at its top for the day. The big demand for curb stocks whirled all sections of the list upward on Friday and many substantial gains were recorded among the active speculative issues. Aluminum Co. of America led the uprush with a gain of 53% points to 85, and General Tire & Rubber moved up about 9 points at its peak for the day, though it lost part of its early improvement and closed with a net gain of about 3 points. Public utilities attracted considerable speculative attention, % Alabama Power pref. (7) forging ahead 53 points to 85, Electric Bond & Share rushing upward 4 points to 2634, and Public Service of No. Ill. improving 5 points to 38. Investment shares were higher, Selected Industries pref. having an advance of 634 points to 68. Mining stocks also moved up, Newmont leading the forward movement with a further gain 3851 of 13 points to above 44 and Pioneer Gold made a new top % above 12. The gains for the week included many prominent stocks such as Aluminum Co. of America,82 to 85; American % Gas & Electric, 353 to 3934; American Laundry Machine, % 1334 to 153; American Superpower, 43 to 5%; Asso. Gas & Electric A, 134 to 234; Atlas Corporation, 1434 to 1534; Brazil Traction & Light, 1134 to 123 ; Central States % 3 Electric, 234 to 33 Cities Service, 4 to 5%;Commonwealth %; Edison, 70 to 73; Consolidated Gas of Baltimore, 5934 to 613s; Cord Corporation, 1134 to 12; Creole Petroleum, / 534 3 to 5%; Deere & Company, 1934 to 193 ; Duke Power, 55 % to 60; Electric Bond & Share, 25 to 2834; Ford of Canada A, 834 to 1134; Gulf Oil of Penn., 46 to 5534; Hudson Bay 3 Mining, 734 to 934; Humble Oil, 6134 to 73%;International Petroleum, 13 to 1434; New Jersey Zinc, 45 to 5134; Niagara Hudson Power, 103% to 113 ; Pennroad Corporation, 234 % to 334; Singer Mfg. Company, 13834 to 1433 ; A. 0. Smith, % 4234 to 45; Standard Oil of Indiana, 2634 to 2934; Swift & Company, 207 to 213%; United Gas Corporation, 23 to 3; % % United Light & Power A,634 to 738; United Shoe Machinery, 463% to 47; and Utility Power, 134 to 23%. A complete record of Curb Exchange transactions for the week will be found on page 3879. DAILY TRANSACTIONS AT THE NEW YORK Week Ended June 2 1933. Saturday Monday Tuesday Wednesday Thursday Friday Total Stocks (Number of Shares). EXCHANGE. Bonds (Par Value). Foreign Foreign Domestic. Government. Corporate. 597,721 $2,675,000 888,136 3,966,000 949,610 671,339 1,240,255 $185,000 803,000 HOLIDAY 4,098,000 203.000 3,271,000 109,000 5,659,000 228,000 Week Ended June 2. 1933. 1932. -No,of shares_ Stocks 4,347,061 1,053,153 Bonds. Domestic $19,669,000 $15,541,000 Foreign goverwnent 1,528,000 328,000 Foreign corporate 720,000 1,036,000 $21,917,000 $16,905,000 Total. $131,000 $2.991,000 170,000 4,939.000 162,000 154.000 103,000 4,347,061 $19,669,000 $1,528,000 Sales at New York Curb Exchange, Total CURB 4,463,000 3,534.000 5,990,000 $720,000 $21,917,000 Jan. 1 to June 2. 1933. 1932. 28,821,092 22,261,893 $376,113,000 16,020,000 19,148,000 $314,914,100 12,334,000 31,662,000 $411,281,000 $358,910,100 COURSE OF BANK CLEARINGS. Bank clearings this week will again show a decrease as compared with a year ago. Preliminary figures compiled by us, based upon telegraphic advices from the chief cities of the country, indicate that for the week ended to-day (Saturday June 3), bank exchanges for all the cities of the United States from which it is possible to obtain weekly returns will be 13.8% below those for the corresponding week last year. Our preliminary total stands at $4,578,277,369, against $5,312,804,827 for the same week in 1932. At this center there is a loss for the five days ended Friday of 9.4%. Our comparative summary for the week follows: Clearings-Returns by Telegraph, Week Ending June 3. New York Chicago Philadelphia Boston Kansas City St. Louts San Francisco Los Angeles Pittsburgh Detroit Cleveland Baltimore New Orleans Twelve cities, five days Other cities, five days 1933. 1932. $2,674,099,579 $2,952,079,795 144,844,615 174.887,319 165.000.000 189,000,000 145,000,000 161,000,000 37,346.621 44,699,174 52,300,000 57,500,000 68,944,000 77,305,000 No longer will re port clearings. 59,680,112 60,604,341 18,930,888 50,638,683 33,690,183 48,557,049 26,310,298 44,610,447 23,098,326 Per Cent. -9.4 -17.2 -12.7 -9.9 -16.4 -9.0 -10.8 -1.5 -62.7 -30.6 -41.0 $3,884,030,134 468,074,725 -11.8 -16.9 $3,815,231,141 763,046,228 $4,352,104,859 960,699.968 -12.3 -20.7 !A m00 000 'an • Total all cities, five days All cities, one day $3,426,146,296 389,084,845 er 010 onA on, . 10 o • Complete and exact details for the week covered by the foregoing will appear in our issue of next week. We cannot furnish them to-day, inasmuch as the week ends to-day (Saturday) and the Saturday figures will not be available until noon to-day. Accordingly, in the above the last day of the week has to be in all cases estimated. In the elaborate detailed statement, however, which we present further below, we are able to give final and complete results for the week previous, the week ended May 27. For that week there is a decrease of 5.5%, the aggregate of clearings for the whole country being $4,183,475,985, against $4,428,309,840 in the same week in 1932. Outside of this city there is a decrease of 15.4%, the bank clearings at this center recording a gain of 0.4%. We group the cities according to the Federal Reserve districts in which they are located, and from this it appears that in the New York Reserve District, including this city, the totals show a gain of 0.2%, but in the Boston Reserve District there is a loss of 10.5% and in the Philadelphia Reserve District of 4.2%. The Cleveland Reserve District has suffered a contraction of 22.6%, the Richmond Reserve District of 28.7% and the Atlanta Reserve District of 2.8%. In the Chicago Reserve District the totals are smaller by 30.7% and in the St. Louis Reserve District by 12.4%, but'in the Mmneapolis Reserve District the totals are larger by 3.3%. The Kansas City Reserve District records a decrease of 17.2%, the Dallas Reserve District of 2.4% and the San Francisco Reserve District of 14.5%. In the following we furnish a summary of Federal Reserve districts: SUMMARY OF BANK CLEARINGS. 1932. 1933. Week Ended May 27 1933. 110 cities Total Outside N. Y. City 4,183,475,985 1,407,279,981 32 cities 224.089.814 1931. 1930. 4,428,309,840 -5.5 6,588,414,329 8,388,192,446 1,663,716,148 -15.4 2,329.272,250 2,958,934,344 193.966.244 +15.5 322.273.814 1932. Inc. or Dec. $ % 8 First Federal Reserve Dist rict-Boston398,322 -7.0 370,619 Maine-Bangor.. 2,062,751 -38.5 1,268,889 Portland -Boston _ . 171,489,498 189,622,697 -9.6 Mass. 749,341 -21.4 588,712 Fall River_ -262,415 -18.0 220,316 • Lowell 562,143 -33.9 371,832 New Bedford3,122,348 -18.6 2,540,965 Springfield _ _ . 2,190,944 -53.6 1,015,578 Worcester _- . 7,525,250 +2.9 7,743,485 -Hartford Conn. 5,360,053 -34.4 3,517,434 New Haven . 6,620,800 +0.2 6,636,700 R.I.-Providenc 466,520 -37.3 292,303 N.11.-Manches' Total(12 cities 1 196,056,331 218,943,584 -10.5 1931. It 1930. 8 441,233 2,364,296 305,000,000 704,112 350,558 654,123 3,256,212 2.292,017 8,969,066 5,641,940 8,520,000 395,759 441,881 3,098,641 360,000,000 868,968 864,479 717,267 3,962,152 2,610,768 10,888,626 6,100,083 10,171,400 615,404 388,589,316 Inc. or Dec. 1931. 217,809,108 314,158,012 -30.7 Eighth Fed ra I Reserve Dis trict-St. Lo Wsb b Ind.-Evansville 65,500,000 -19.5 52,700,000 Mo.-St. Louis 15,895,390 +4.8 16,665,489 Ky.-LouLsvill L 7,629,774 +15.2 8,790.509 Tenn.- Memp els Jacksonv Ile No clearings; only one ban k open. 454,991 -47.9 237,265 Quincy • 1930. 5 810,375 144,517,896 4,447,000 2,285,033 2,700,982 17,151,000 1,797,370 3,646,815 23,385,899 2,647,608 5,724,932 4,946,079 1,641,435 4511,375,586 k891,845 3916,112 2032.468 2,( 9,78 515,139,043 678,01 535 b 80,059,113 10,301,141 866,598 \ 1 b 129,700,001 33,940,291 12,984.790 643,178 1,126,945 97,870,030 177,752,026 Ninth Fede -ill Reserve Dist rict Mione apolis 1,907,175 +1.4 3,207,720 1,933,310 Mlnn.-DuiutTh .._ 41,817,138 +5.7 47,243,918 44,208,319 Minneapolis. __ 13,088,474 -0.9 14,052,777 12,967,470 St. Paul_ _ 1,549,846 -19.4 1,404,373 1,249,478 N. D. -Fargo._ _ 604,569 -24.7 648,694 455,051 S. D.-Aberd en 279,895 -6.3 387,293 262,321 . MOnt.-BIUlnws 1,503,980 +13.2 1,940,658 1,702,360 __ Helena 4,035,068 61,494,497 19,467,067 1,474.408 839.394 515.743 2,468.390 Total(4 citi 0_ 78,393,263 89,480,155 -12.4 60.751,077 +3.3 68,885,433 90,294,567 Tenth Fede ral Reserve Dist rict-ICansa a City153,416 -76.8 236,033 35,549 Neb.-Fremon presen Hastings-- __ No clearings available at -11.9 t. 1,457,325 2,059,322 1,284,371 __ Lincoln 21,566,608 -13.4 25,381,906 18,669,701 Omaha 1,740,990 -42.1 2,278,994 1,008.216 Kan. -Topeka __ 3,576,599 -58.1 3,820,226 1,498.381 Wichita _ _ _ _ _ 58,548,031 -15.6 65,120,538 49,414,671 Mo.-Kan. City_ 2,433,615 +2.3 3,702,688 2,488,990 St. Joseph_ _ 603,683 -32.6 833,978 406,671 -Colo.S ga Colo. 722,567 -47.6 784,048 378,951 Pueblo 2,414,879 34,035,249 2,333,660 6,191,754 93,987,095 5.215,319 857,261 1,135,293 62,778,309 269,734 400,339,649 Second Fede r al Reserve D istrict-New York6,457,975 4,071,068 5,232,162 +103.8 -Albany. • 10,662,054 N. Y. 776,558 1,146,977 624,693 -2.9 606,376 Binghmaton 32.741,794 43,656,793 22,835,913 -8.0 20,998,727 Buffalo 1,296,915 836,010 722,568 -40.3 431,049 Elmira 1,248,258 598,139 559,236 -50.8 274,887 Jamestown_ _ _ New York_ _ 2,776,196,004 2,764,593,692 +0.4 4,259,142,079 5,429,258,102 6,790,964 9,528,619 4,964,512 -2.3 4,849,151 Rochester 2,996,081 6,035,295 3,262,496 -18.4 2,661,883 Syracuse 3,013,131 4,181,347 2,309,508 -8.6 2,110,213 Conn.-Stamfor 548,883 644,400 362,985 -24.1 275,634 N. J.-Montclal 25,015,010 19,611,855 -30.5 30,520.944 13,629,335 Newark 25,668,303 41,348,238 23,158,923 -12.0 20,377,603 Northern N. J Total(12 cities 2,853,072,916 2,848,238,543 1932, % $ $ $ Seventh Fedler al Reserve D istrict-Chi cago-Mich. -Adrian - Clearing Hou se not functio ning at present. 640,007 340,404 -17.5 280,914 Ann Arbor..--70,122,572 -1.8 109,186.025 6,887,182 Detroit 3,370,342 2,215,495 -65.3 769,420 Grand Rapt Is.. 1,907,554 1,931,000 -80.5 375,936 Lansing - - __ 1,759,340 922,322 -60.3 365,828 -Ft. Way ne Ind. 12,403,000 10,831,000 -28.3 7,768,000 Indianapolis _ _ 1,512,538 1,458,911 -71.7 413,097 South Bend __ 3,121,559 2,605,678 -89.9 262,159 Terre Haute._ _ 16,385,819 12.552,431 -22.8 9,691,756 :ise 2,163,027 724,134 -78.6 154,881 Ia.-Ced. RapIds 4,670,000 4,838,598 -19.6 3,888,297 Des Moines __ 2,941,519 1,878,464 -2.1 1,839,364 Sioux City_ __ Waterloo -- _ _ No c.earings available. 1,170,844 833,873 -95 5 37,342 Ill.- Bloomin -I'll Chicago.. _ _ _ _ _ 181,904,652 199,409,074 -8.8 349,146,802 801,883 429,628 -0.9 425,631 Decatur_ --__ 2,456,962 1,950,467 -11.1 1,733,719 Peoria 1,894,636 514,919 -2.4 502,397 Rockford_ _ _ __ 1,323,176 -49.9 1,770,213 Springfield. _ --663,414 Total(7 till 0. Ilreek Ended May 27. 1933. 1933. 330.684.844 We now add our detailed statement, showing last week's figures for each city separately for the four years: Clearings at Week Ended May 27. . Clearings at Total(18 MI66) Inc.07 Dec. S $ $ % 8 Federal Reserve Dists, 400,339,649 3E8,589,316 218,943,584 -10.5 196,056,331 lit Bo8ton...-12 cities 2,853,072,916 2,848,238,543 +0.2 4,362,202,000 5.575,323,863 2nd New York 12 " 431.393,422 357,693,067 265,336,815 -4.2 254,294,882 3rd Philadelphia 9 " 327,626,941 246,829,048 185,155,712 -22.6 143,329,391 4th Cleveland_ -. 5 " 134,318,148 114,449,363 68,055,714 , 95,467,812 -28.7 6 " 6th Richmond._ 125,497,745 103,031,409 73,209,686 -2.8 71,194,383 6th Atlanta_ _ _ _10 " 678,020,536 515,139,043 314,158,012 -30.7 217,809,108 7th_ Chicago.---18 " 07,870,030 177,752,006 89,480,155 -12.4 78,393,253 8th 85. Louis.-- 4 " 90,294,587 68,885.433 60,751.077 +3.3 62,778,309 9thiM Inneapolls 7 " 146,440,244 104,217,733 90,802,834 -17.2 75,185,501 Ransaselty 9 " 10th 45,1E8,213 40,229,167 30,300,298 -2.4 29,580.672 Ilth Dallas____ 5 " 255,997,093 189,278,720 156,465,312 -14.5 133,725,515 12th San Fran...13 " ranalla June 3 1933 Financial Chronicle 3852 +0.2 4,362,202,000 5,575,323,863 Third Federa Reserve Dist rict-Philad elphia 2,613,323 3,906,634 -92.6 289,199 -Altoona _ _ Pa. Bethlehem.... Clearing Hou se has suspen ded de snags. 745.304 356,325 -37.7 221,903 Chester 2,014,305 1,109,356 -36.7 702,231 Lancaster 246,000.000 251,000,000 -2.0 340,000,000 Philadelphia 2,309,202 2,021,594 -52.2 966,695 Reading 3,363,165 2,029,697 -34.6 1,327,858 Scranton 2,109,760 1,415,901 -11.8 1,249,209 Wilkes-Barre 1,300,000 1,032,908 -21.5 York 810,787 3,238,008 2,464.400 +10.7 2,727,000 N.J. -Trenton- 890,499 1,543,710 414,000,000 2,911,422 3,585,837 2,682,708 1,717,753 2,974,000 357.693,067 90,802.834 -17.2 104,217,733 148,440,244 Eleventh F de ral Reserve District-0 alias860,511 -33.5 571,983 Texas -Austin __ 21,550,649 +2.2 22.021,990 Dallas 4,726.432 -9.5 4,278,422 Ft. Worth -1,278,000 -10.9 1,138,255 _ Galveston_ 1,884,706 -16.7 1,570,022 La.-Shrevepo i. 1,357,493 26,890,000 6,727,000 1,900,000 3,354,674 899,621 29,950,271 8,536,983 1,823.000 3,978.338 -2.4 40,229,167 45,188.213 Total(9 citi 0. Total(5 tit( ). 75,185,501 29,580.672 30,300,298 Twelfth Feder al Reserve D istrict-San Franc sco.20,849,089 -15.6 22,860,538 17,602,447 Wash. -Seattle __ 4,630,000 -23.3 6,784,000 3,551,000 Spokane_ -- __ 360,022 -35.8 582,988 231,176 Yakima_ _ _ - 17,757,402 -12.5 21,999,118 15,544.698 Ore -Portland.. 7,888,819 -2.0 10,994,927 7,734,588 Utah-Salt L.0 ii 2,875,871 -9.1 4,476,125 2,614,286 Calif-Long 13'ell Los Angeles_ -- No longer will report clearin P. 2,337,040 -14.8 3,310,668 Pasadena.-- --1,991,737 5.378,829 -55.0 6,341.008 2,423,123 Sacramento-.• San Diego -- _ No longer will report ciearin gs. 90,406,815 -13.1 106,421,074 78,548,800 San Francisc D. 1,213,649 -9.3 1,612,571 1,100,888 San Jose_ - -- _ _ 824,140 -6.3 1,351,684 772,449 Santa DarbaxtL. 870,528 -15.8 1,123,419 732,817 Santa Monl s. 1,073,108 -18.2 1,420,600 877,506 Stockton. ._ 32,865,010 18,890,000 782,674 29,239.715 15,032,457 5,770,026 3,938,724 4,000,000 139,339,145 1,868,485 1,357,621 1,473,236 1,440,000 431,393,422 1,087,493 Total(13 dB a) 133,725,515 156,465.312 -14.5 189,278,720 255.997,093 Grand total (1 to _ 4,183,475.985 4,428.309,840 -5.5 6,588,414,329 8,388,192,446 cities) Outside New Yo rk 1,407,279,981 1.663,716,148 -15.4 2,329,272,250 2,958,934,344 Week Ended May 25. Clearings at 1933. Total(9 cities) 254,294,882 265,336,815 -4.2 Fourth Feder al Reserve D istrict-Clev elandOhlo-Akron. Majority ban Its unlicensed; Cleari ng house not I unctioning. b b b Canton b 52,234,000 45,403,768 36,778,877 -16.8 30,582,880 Cincinnati _ -77,164,808 112,837.976 62,606,813 -36.4 39,795,624 Cleveland 13,017,800 8,726.900 6,414,100 -7.1 5,960,500 Columbus 1,797.887 1,389,084 938,493 -23.2 720,945 Mansfield b b b Youngstown b 78,417,429 -15.5 114,144,488 147,739,278 66,269,442 Pa.-Pittsburgh _ 185,155,712 -22.6 246,829,048 327,626,941 Fifth Federal Reserve Dist rict-Richm ondW.Va.-Hunt'n_ 314,887 -74.2 81,298 3,135,618 -38.0 Va.-Norfolk _ 1,945,000 Richmond _ __ 25,011,201 -9.0 22,748,389 S.C.-Charlesto 898,691 -44.4 648.452 49,157,242 -32.8 33,020,782 Md.-Baltimore16,950,173 -43.3 D.C.-Wash'ton_ 9.611,793 375,575 2,308,148 28,590,352 1,533,008 65,534,002 17,108,278 957.057 2,951,780 37,043,000 1.700,000 71,546,492 20,119,819 114,449,363 134,318,148 Total(5 cities). Total(6 cities). 143.329,391 68,055,714 95,467,812 -28.7 Sixth Federal Reserve Dist rict-Atlan ta1,300,000 Tenn.-Knoxvill 2,129,848 +51.7 3,231,988 8,966,717 Nashville 8,587,278 -7.7 7,926,615 33,587,584 Ga.-Atlanta.. _ 23,700,000 +4.2 24,700,000 1,129,298 Augusta 602,110 +42.9 860,171 748.495 Macon 432,945 -29.2 306,689 11,733,899 Fla.-Jackfenville 7,637,501 +26.0 9,625,000 12,382,747 Als.-131rmingbm 9,316,964 7,919,539 +17.6 1,241,267 Mobile 795.125 632.943 +25.6 -Jackson_ Clearing H'se not function! ng at pr esent. Miss. 98,745 84,318 96.337 -12.5 VIcksb urg - _ 31,842,657 14,347,513 -New Orleans La. 21,471,185 -33.2 122.716 36,483,723 103,031,409 CanadaMontreal Toronto Winnipeg Vancouver Ottawa Quebec Manisa Hamilton Calgary St. John Victoria London Edmonton Regina Brandon Lethbridge Saskatoon Moose Jaw Brantford Fort William New Westminster Medicine Hat._ Peterborough Sherbrookes Kitchener Windsor Prince Albert _--Moncton Kingston Chatham Sarnia Sudbury $ 55,336,359 75,581,982 50,108,015 11,180,076 3,324.958 2,325,454 1,667,816 2,702,108 4,790.390 1,405,418 1,111.488 1,682,231 2,346,269 1,858.180 199,982 217,596 873.944 357,442 644,985 380,567 327,735 138,739 397,634 475,962 725,535 1,671,955 182,489 694,391 374,244 309,150 304,157 392,503 Total(32 cities) 224,089,814 1932. 71,194,383 73.209,686 -2.8 1931. 1930. % -7.0 +27.1 +79.6 +10.7 -9.8 -32.6 -8.4 -31.4 +22.5 -0.3 +5.2 -9.2 -21.5 -36.3 -15.1 -1.9 -22.2 -18.2 -11.6 -12.0 -22.0 -3.1 -19.8 +2.5 +12.2 -22.0 -40.0 +11.3 -22.6 -19.8 -3.0 -0.5 $ 123,621,660 96,412,163 42,477,240 13,420,421 4,697,243 4,430,436 2,433,941 5,195,563 4,625,983 2,088,893 1,532,953 2,393,668 4,476,586 2,624,667 307,874 344,415 1,332,023 525,161 836,771 501,334 442,810 172,996 557,831 675,891 716,908 2,406,656 305.524 609,702 547,831 448,166 427,160 683,344 $ 107,326,353 106,739,598 43,823,533 16,168,440 5,179,880 4,820,875 2,504,279 5,262,513 6,555,271 2,138,800 2,160,589 2,622,779 4,758,083 3,866,516 375,826 592,628 3,962,648 1,647,833 910,891 941,082 778,139 234,370 781,460 796,069 1,098.793 5,262,513 346,505 803,656 631,718 460,167 523,612 947,425 193,968,244 +15.5 322,273,814 330.884,844 8 59,502,489 59,445,045 27,899.240 10,098,134 3,685,464 3,448,591 1,821,309 3,938,196 3,909,271 1,409.338 1,056,674 1,852,586 2,989,556 2,918,731 235,530 221,892 1,123,847 436,844 729,285 432,425 420,106 143,218 495,956 464,271 646,612 2,144,747 303,969 624,008 483.743 385,490 305,004 394,675 125,497,745 Total(10 cities) 1,712,504 16,033,721 38,357,021 1,510,784 1,220,275 10,582,004 17,734,801 1,740,196 enc. OT Dec. b Clearing house not functioning at present Volume 136 Financial Chronicle 3853 THE ENGLISH -GOLD AND SILVER MARKETS. PRICES ON PARIS BOURSE. We reprint the following from the weekly circular of Samuel Montagu & Co. of London, written under date of May 17 1933: GOLD. The Bank ofEngland gold reserve against notes amounted to £185.988,501 on the 10th instant,as compared with £185,988,164 on the previous Wednesday. No purchases of gold have been announced by the Bank of England during the week. In the open market, moderate amounts of bar gold have been available daily and have been readily absorbed by the Continent. The demand continued keen and prices ruled well above franc parity. Quotations during the week. Equivalent Value Per Fine Ounce. of £ Sterling. May 11 123s. 6d. 138. 9.09d. May 12 123s. 3d. 13s. 9.43d. May 13 123s. 6d. 13s. 9.09d. May 15 123s. 3d. 13s. 9.43d. May 16 1238. 13s. 9.76d May 17 138. 8.43d. 1248. Average 1235. 5.00d. 13s. 9.20d. The following were the United Kingdom imports and exports of gold registered from mid-day on the 8th instant to mid-day on the 15th instant: Imports. Exports. Germany £301,279 Italy £29,960 Netherlands 3,417,907 Netherlands 402,747 Belgium 63,400 Belgium 1.100 France 1,222,845 France 74,323 Switzerland 163,880 Switzerland 29,373 Iraq 22.289 Austria 24,745 British South Africa 1,316,039 Czechoslovakia 17,265 British India 561,767 Poland 2.400 British Malaya 39,642 Australia 112,017 Canada 645,025 British West Africa 62,359 1J. S. A 25,980 Other countries 16,961 Quotations of representative stocks on the Paris Bourse as received by cable each day of the past week have been as follows: May 27 May 29 May 30 May 31 June 1 June 2 1933. 1933. 1933. 1933. 1933. 1933. Francs. Francs. Francs. Francs. Francs. Francs. Bank of France 11,900 11.800 12,000 12,400 12,700 Banque de Paris et Pays Ras 1,660 1,647 1,630 1,690 1.700 Banque d'Union Parisienne 380 366 382 383 Canadian Pacific 311 309 302 314 Ili Canal de Suez 18,585 18,570 18,690 18,650 Cie Hiatt d'Electricitie 2,570 2.626 2,630 2.655 Cie Generale d'ElectricItie 2,370 2,295 2,270 2,330 2:3543 Cie Generale Transatlantique56 56 57 56 _Citroen B 525 527 536 550 Comptoir Nationale d'Estompte 1,160 1,157 1,150 1,180 1:180 Coty Inc 240 234 230260 Courrieres 348 357 362 -itii Credit Commercial de Franoe 816 820 825 840 Credit Fonder de France 4.820 4,820 4,810 3,870 4:856 Credit Lyonnais 2,240 2,230 2,220 2,290 2,300 Distribution d'Electricitie is. Par 2,680 2,670 2,570 2,650 2,630 Eaux Lyonnais 2,940 2,900 2,860 2,900 2,900 Energle Electrique du Nord 749 762 745 773 Energie Electrique du Littoral 980 994 1,005 1.010 French Line 57 56 --Zi Gaieties Lafayette 92 56--ii 92 93 94 Gas le Bon 1,060 1,050 1,040 1,060 1,060 Kuhlmann 620630 630 640 L'Air Liquide 830 -iia 827 830 840 Lyon (P.L M.) HOL/909 902 880 860 Mines de Courrleres DAY. 360 350 350 360 -570 Mines des Lens 470 470 450 470 470 Nord Rs' 1,260 1,250 1,260 1,280 1,280 Orleans Ry 862 Paris, France 1:616 Lois 1,010 1.620 _ _ __ Pathe Capital 97 97 97 99 Pechiney 1,190 1,168 1,160 1,200 1:220 Rentea 3% 67.50 66.70 66.80 68.70 68.50 Rentes 5% 1920 106.60 105.70 105.70 109.60 108.50 Reines 4% 1917 76.90 76.90 76.40 77.80 78.00 Bente))434% 1932 A 82.60 81.70 81.80 84.30 84.90 Royal Dutch 1,730 1,702 1,660 1,730 1,750 Saint Gobsin C & C 1,215 1,250 1,320 1,574 Schneider & Cie 1,609 1,585 1,587 1,589 Societe Andre Citroen 530 530 520 551) "lie Societe Fiancatse Ford 85 78 78 81 80 Societe Generale Fonciere 145 139 138 143 150 Societe Lyonnalse 2,865 2,920 2,920 2,900 _Societe Maraellaise 587 586 587 589 Suez 18,700 18.500 18,600 18,600 18:566 Tubtre Artificial Silk pref 180 180 182 186 Union d'Electricitie 920 907 890 900 -Ho Union des Mines.. ____ ____ 190 ____ 180 Wagon-Lit 76 76 77 80 ---- £7,971,390 £581,913 The S. 8. "Strathaird" which left Bombay on the 13th instant carries gold to the value of about £898.000: ofthis £600,000 is consigned to London, £238,000 to Amsterdam and £60,000 to New York. The Transvaal gold output for April last amounted to 895,097fine ounces, as compared with 946,863 fine ounces for March 1933 and 949,796 fine ounces for April 1932. SILVER. The market developed an easier tendency during the Past week. Prices declining from 19 1-16d. for cash and 19%d. for two months quoted on the 11th instant, to 18 3-164. and 1834d.for the respective deliveries yesterday. With the pressure from America easing, the market could offer little resistance to some moderate sales from the Continent, the demand from the Indian Bazaars and speculators being insufficient to offset offerings. Although towards the end of the week the decline in the New York quotation caused free selling, on some afternoons, the price there fluctuated sufficiently to attract buying also from the same quarter. Following firmer advices from New York, there was a sharp reaction here to-day, but, as regards the outlook, it seems probable that silver in, common with other markets, may be influenced to a large extent by developments in the general political situation. The following were the United Kingdom imports and exports of silver registered from mid-day on the 8th instant to mid-day on the 15th instant: Imports. Exports. Germany £39.690 Germany £6,228 Netherlands 22,120 France 1,938 Belgium 3,000 Canada 2,208 British South Africa Other countries 3,069 4,049 British India 12,806 Australia 15,719 Other countries 2,871 £99,275 Quotations during the week £14,423 IN LONDON. IN NEW YORK. Bar Silver per Oz. Std. (Cents per Ounce .999 Fine.) Cash Delis. 2 Mos. Dello. May 11...19 1-16d. May 10 1931d. 34% May 12_19d. 191-16d. 34% Mai 11 May 13- _18 d. May 12 184d. 34 May 15--18 d. 186-164. Mai 13 33 13-16 May 16_-18 -164. May 15 18Mel. 32 516 May 17..19d. 19 1-16d. May 16 3334 Average--18.687d. 18.7404. The highest rate of exchange on New York recorded during the period from the 11th instant to the 17th instant was $4.00, and the lowest 23•87%• INDIAN CURRENCY RETURNS. (In lace of Rupees)May 7. Apri130. Apri122 Notes in circulation 17585 17666 17636 Silver coin and bullion in India 11044 11158 11128 Gold coin and bullion in India 2626 2626 2612 Securities (Indian Government)... 3915 3882 3896 The stocks in Shanghai on the 13th instant consisted of about 143.400.000 ounces in sycee, 250,000,000 dollars and 8,760 silver bars, as compared with about 150.000,000 ounces in sycee. 245.000,000 dollars and 8,460 silver bars on the 6th instant. ENGLISH FINANCIAL MARKET -PER CABLE. The daily closing quotations for securities, &o., at London, as reported by cable, have been as follows the past week: Sat., Mom, Tues., Wed., Thurs., Fri., Afar 27. May 29. May 30. May 31. June 1. June 2. Silver, per oz-- 1834d. 18 15-16d. ---19 1-16d. 1834d. 191-164. Gold,p.tine oz. 1228.10d. 1233.3d. 1236.10d. 1236.10(1. 1228.1d. 122s.50. Consols,2%%. 7234 7234 7234 7334 7334 7334 British 334%w.L 9834 9834 9834 9834 9834 9934 British 4%1960-90 10934 10934 10934 0934 109% 109% French Rentes 66.80 66.80 (in rarie)3% It. Holiday. 67.50 68.70 68.50 French War L'n (In Paris)5% 105.70 1920 amort_ Holiday. 105.70 106.60 109.60 108.50 The price of silver in New York on the same days has been: Silver in N. Y., 3434 per oz. ot.a. Holiday. 3434 3534 3414 3544 THE BERLIN STOCK EXCHANGE. The Berlin Stock Exchange resumed trading on Friday, April 29 1932,after having been closed by Government decree since Sept. 18 1931. Closing prices of representative stocks as received by cable each day of the past week have been as follows: May May May May June June 27. 29.. 2. Per e'ent of l'ar Reichsbanic (12%) 125 125 125 125 124 129 Berliner Handelo-Gesellschafi (5%) 93 93 94 93 93 92 Commerz-und Privat-Bank A. G 51 51 50 51 51 51 Deutsche Bank und Disconto-Gesellschaft 53 53 53 53 53 54 Dresdner Bank 52 52 52 52 52 51 Deutsche Reichsbahn(Ger Rya) pref(7%)_. 97 97 97 97 97 98 Allgemeine Elektrizitaets-Geaell(A E G) 25 24 25 24 25 26 Berliner Kraft u Licht (10%) 112 111 110 112 113 114 Deesauer Gas (7%) 111 111 112 113 116 117 Geefuerel(6%) 92 91 92 92 94 Hamburg Elektr-Werke (834%) 104 104 102 103 106 105 Siemens & Ilaiske(7%) 157 157 158 159 163 159 IC Farbenlndustrie(7%) 130 129 131 130 132 136 Salzdetfurth (9%) 181 178 180 185 187 Rhelnische Braunsohle(10%) 199 201 202 203 198 197 Deutsche Erdoel(4%) 114 112 117 118 115 120 Mannesmann Boehm 70 69 70 69 66 72 19 19 18 18 19 Hares 19 Norddeutscher Lloyd 20 20 19 19 18 24) In the following we also give New York quotations for German and other foreign unlisted dollar bonds as of June 2 1933: Ask. Bid Ask. 29 Hungarian Defaulted Coup 155 Hungarian Ital Bk 734s.'32 f71 V(r . Kohoiyt 634s, 1943 70 3312 3612 An oquia 8%. 19 6 ptlieces ., 23 25 Hatztadt 65. 1943 C -D..._ 13 4 18 AustrianDefaultedCoupons 170- Land M Bk, Warsaw 88,'41 43 80 Bank of Colombia.7%.'47 1 3112 1312 Leipzig o'land Pr. 630,'46 53 55 Bank of Colombia,7%.'48 13111 3312 Leipzig Trade Fair 7s, 1953 2412 26 Bavaria 6348 to 1945 4112 Luneberg Power, Light & 38 Bavarian Palatinate Cons. Water 7%, 1948 46 50 Cit. 7% to 1945 24 Mannheim & Palat 7s, 1941 43 20 45 1334,'47 122's2412 Munich 78 to 1945 32 35 1 7 B5Dogloovtaia(6C°%I.om1940bial 9 Muni° Bk, Hessen,75 to'45 26 29 Buenos Aires Scrip 1 10 20 Municipal Gas & Plec Corn Brandenburg Elec. 68. 1953 501 Recklinghausen. 75, 1947 28 5212 33 Brazil Funding 5%,'31-'51 44 45 Nassau Landbank 634a,'38 6212 6412 British Hungarian Bank Nat Central Savings Bk of 634a, 1962 Rungs.,, 734a, WIN__ 137 39 Brown Coal Ind. Corp 1 35 36'2 National Hungarian & Ina. 6hs, 1953 Mtge. 7%, 1948 136 38 Call (Colombia) 7%. 19 1 6143 47 6135 Oberptalz Elea 7%, 1946.. 3012 33 z , Callao (Peru) 734%, 1944 1 4 8 Oldenburg-Free State 7% Ceara (Brazil) 8%, 1947__ 1 812 1012 to 1945 27 31 City Savings Bank, BudaPorto Alegre 7%,1968__ 11612 1712 pest, 75, 1953 3 0 12 84 Protestant Church (Ger1 32 177 Deutsche 13k 6% '32 unst d many) 78. 1946 29 32 Dortmund MUD Bill 68.'48 30 32 Prov Bk Westphalia 65,'33 79 81 Duisberg 7% to 1945 115 18 Rhine Westph Elec Ts 1938 40 4.5 Duesseldorf 7s to 1945 24 28 Rio de Janeiro 8%, 1933.. 1 23 26 East Prussian Pr. 6e, 1953. 40 43 Rom Cath Church 6345,'48 47 49 European Mortgage & InR C Church Welfare 7s,'46 391 41 vestment 7355, 1966 _ 51 Saarbruecken M Bk 6s,'47 74 1 49 76 French Govt. 534s, 1937 110 Salvador 7%, 1937 17 French Nat. mail SS.6a,•52 109 ifi" Banta Catharina (Brazil) 1 16 Frankfurt 75 to 1945 25 28 8%, 1947 11612 18 German Atl. Cable 7s, 1945 54 57 Santander (Colom) 7s, 1948 1 1412 1515 German Building & LandSao Paulo (Brazil) 6a, 1947 1 17 19 6aok 1914% 1948 bs 657 . . 31 Saxon Public Works6%, 281 '32 1 52 Haiti 6% 1953 72 Saxon Mate Mtge 65, 1947 51 67 86 Hamb-Am Line 634s to '4() 61 64 Siem & Halake deb 65, 2930 275 295 Hover Harz Water Wks an Stettin Pub Utli 7s, 1946_ 42 39 27 Tucuman City 7s, 1951___ I 20 24 23 Housing & Real Imp 75,'46 30 33 Tucuman Prey. 7s, 1950-- I 33 3 7 Hungarian Cent Mut 78'37 1 8012 32 Vesten Else fly 7s, 1947_ 1 10 20 Hungarian Discount & Ex36 Wurtenberg 7s to 1945-- 32 change Bank is, 196-.3. 1 291 31 Flat price. Admit 7,to 1946 Argentine 5%. 1945, 3100 Bid 26 3854 Financial Chronicle By Commercialand wisccuancoussews Shares. Barnes & Lofland, Philadelphia: Stocks. - -- • --National Banks.—The following information regarding National banks is from the office of the Comptroller of the Currency, Treasury Department: CHARTERS ISSUED. Capital. May 20—The Hibernia National Bank in New Orleans, New Orleans, La. Tne capital stock of this bank is $2,700,000 and is composed of $1.200,000 common stock and $1,500,000 preferred stock. President, A. P. Imahorn; Cashier, G. L. Owen Jr. Will succeed Hibernia Bank & Trust Co. of New Orleans, La. May 20—The National Bank of Commerce in New Orleans, New Orleans, La. The capital stock of this bank is $2.700,000 and is composed of $1,200.000 common stock and $1,500.000 preferred stock. President. 0. G. Lucas; Cashier, Dale Graham. Will succeed Canal Bank & Trust Co. of New Orleans, La. May 22—The National Bank in North Kansas City, North $50,000 Kansas City, Mo President. Nathan Rieger; Cashier, V. K. Tuggle. Will succeed the National Bank & Trust Co. of North Kansas City, Mo., Charter No, 10367. 200,000 May 23—The National Security Bank of Chicago. Chicago, Ill President, Norman B. Collins; Cashier. John L. Brichetto. VOLUNTARY LIQUIDATIONS. 40.000 May 16—The First National Bank of Bardwell, Tex Effective April 24 1933. Liquidating agent, J. W. Tolleson, Bardwell. Tex. Absorbed by Citizens National Bank in Ennis, Tex., Charter No. 13667. 60,000 May 18—The First National Bank in Midlothian, Tex Effective April 4 1933. Liquidating agent, First National Bank In Midlothian, Tex., Charter No. 13670. Succeeded by First National Bank in Midlothian, Charter No. 13670. 25,000 May 25—The First National Bank of Lyman, Neb Effective May 10 1933. Liquidating agent, C. F. W. Bloedorn, 804 Security Bldg.. Denver, Colo. Absorbed by First National Bank in Morrill. Neb., Charter No. 12625. BRANCHES AUTHORIZED UNDER ACT OF FEB. 25 1927. May 20—The Hibernia National Bank in New Orleans. La. Locations of branches: 340 Verrett St., Algiers; 3401 South Broad St.; 1100 Decatur St.; 1427-29 Dryades St.; 129 Bourbon St.; 4121 St. Claude St.; 4300 Magazine St.; 4101 Canal St.; 3400 St. Charles Ave. (Certificates Nos. 813A to 821A inclusive.) May 22—The National Bank of Commerce in New Orleans, La. Locations of branches: Camp and Gravler Sts. (Louisiana Bldg.); 1529 Dryades St.; 941 Decatur St. 3200 Magazine St.; 800 North Clairborne Ave. '(Certificates Nos. 822A to 826A inclusive.) May 24—First National Bank of Seattle, Seattle. Wash. Locations of branches: 2050 Market St.; 216 Broadway North; 1209 Dale St.; 4824 Rainier Ave. (Certificates Nos. 827A to 830A inclusive.) Auction Sales.—Among other securities, the following, not actually dealt in at the Stock Exchange, were sold at auction in New York, Boston, Philadelphia and Buffalo on Wednesday of this week: By Adrian H. Muller & Son, New York: $ per Sh. Shares. Stocks. 1 1.020 Edrington Investment Co., par $100 25c. 31 American Indemnity Co., par $10 $10101 4.400 American Tin Corp., Dar $10 $50 lot 2.400 California Ahumada Mining Co.. par $1 $11 lot $55 Earl Carroll Realty Corp., par $100 $23101 250 44 East 72nd St. Building Corp., par $100 $5 lot 60 The Planet Insurance Co., par $10 $6 lot 18 Strawn Coal Co., par $100 $2 lot 16 Strewn Merchandise Co., par $100 534 102 Texas Pacific Coal & 011 Co.. par $10 5 10 Texas Pacific Coal & Oil Co., par $10 $2 lot 29 Traders Compress Co., par $100 $10 lot 29 Traders Compress 011 Co., no par 1 250 Edrington-Minot Corp., par $100 $10101 Theatre, Inc., par $10 855 Earl Carroll $10 lot 20 Guaranty Abstract & Title Co., par $100 $1101 Ii.( Interstate Compress Co., par $100 $3 lot 12 John E. Quarles Co., par $100 $3 lot I() Texas Indemnity Insurance Co., par $10 $1 lot 19 Texas Electric Railway, par $100 50 National Republic Stockholders Trust Certificate of Beneficial Interest $25 lot 69 20 Continental Illinois Bank & Trust Co $7.50 lot 6 Central Republic Bank & Trust Co., Chicago, Illinois 200 United States Kings County Bond & Mortgage Corp.. 7% corn. pref., Par $100; 200 United States Kings County Bond Sr Mortgage Corp.. $5 lot common, no par $5 lot 25 Premier Guaranteed Mortgage Bond Corp., corn., no par $12 lot 50 Premier Guaranteed Mortgage Bond Corp., pref., par $100 $5 lot 10 American Woman's Realty Corp., pref., par $100 $126 lot 20 Fred F .French Investing Co., Inc., pref., par $100 . 10 59 Locust Avenue Corporation, pref., par $100; 10 59 Locust Avenue Cor$11 lot poration, common, no par 20 244 North Bay Shore Drive, Inc., pref., par $100: 20 244 North Bay Shore EIS lot Drive, Inc., common, no par $25 lot 34 Fort Wayne & Jackson Railroad, common, par $100 $11101 10 Hotel Irvin for Women par $100 3 100 Stony Point Land Co., par $100 200. 291 Texas Land Syndicate, no par 10 Rickenbacker Motor Co., common, no par; 5 National Radiator Corp., corn., car.. no par; $500 Promissory note dated Jan. 12 1929. due June 12 $1 lot 1929;$300 Promissory note dated Aug. 11 1928, due Feb. 11 1929 Per Cent. Bonds— premises at 11-45 47th Ave., $8,000 Bond and mortgage (second mortgage) on $4,500 lot Long Island City. New York, 6% due may 15 1935 $4,000 Erie Railroad General Lien 4% bonds, due 1996, fully registered-55% & int. $1,000 Erie Railroad Co. Prior Lien 4% bonds, due 1996, fully registered.79% & int. Promissory notes aggregating 52,337.86, dated from Jan. 10 1930 to Nov. 1 1930. due Jan. 10 1933 to April 22 1933, bearing Interest at 6% per annum.$10 lot $20,000 Maryland Mortgage and National Title Co., convertible 534%,series 10% & lat. A, due Dec. 11948. With coupons attached By R L. Day & Co., Boston: 6 we United States Trust Co. of Boston, par $10 26 2 Farr Alpaca Co., $100 4634 25 American Manufacturing Co., pref.. par $100 2634 ID Dennison Manufacturing Co., 7% preferred. Par $100 7X 6 Everlastik, Inc., preferred A Per Cent. Bonds— $1234 flat $5,000 Baragua Sugar Estates, Inc., deb. 68, July 1 1947 $27 lot $400 Hartford Aetna Realty Corp. 68, Jan. 1959 reg. certificate dep 1234 flat $2,000 New England Southern Mills 7s Dec. 1933 coupon 1. Assignment of lease from Locateill's Capital Theatre. Inc. to J. J. Theatrical Enterprises, Inc.. dated July 23 1930; 2. Assignment of lease from Ball Square Theatre, Inc. to J. J. Theatrical Enterprises, Inc., dated July 23 1930: 3. Assignment of lease from Central Amusement Co., Inc. to J. J. Theatrical Enterprises. Inc. dated July 23 1930; 4. Assignment of lease from Dedham Community Theatre, Inc. to J. J. Theatrical Enterprises, Inc. 35.000101 dated July 2 1931 June 3 1933 10 Philadelphia National Bank, Par $20 5 Central-Penn National Bank, par $10 4 Integrity Tru.st Co., par $10 12 Integrity Trust Co., par $10 25 Real Estate-Land Title & Trust Co., par $10 26 Penn. Co. for Insurances on Lives and Granting Annuities, par $10 25 Ninth Bank & Trust Co $ Per Sh. 51( 2334 7( 734 734 27 10 By A. J. Wright & Co., Buffalo: Shares. Stocks. 20 The Como Mines 5 Zenda Gold Mines $ Per Sh. 20c. 25c. CURRENT NOTICES. —Louis K. Boysen & Co., announce the opening of offices at 105 So. La Salle St. (Chicago) where they will conduct a mortgage service for holders of mortgages on farms and city property. In addition to the regular mortgage collection business the firm will engage in the liquidation of mortgages for investors, particularly under the provisions of the Federal emergency mortgage measures. In 1920 Mr. Boysen joined the First Trust & Savings Bank. Chicago, as organizer and manager of the Real Estate Loan Department and later its affiliated institution, the First Trust Joint Stock Land Bank of Chicago. —Holsapple, Safford & Co., members of the New York Stock Exchange. announce the association with them of a group of former members of the Chase Harris Forbes organization and previously of Harris, Forbes & Co., C. Ashmead Biddulph, Robert E. Cleary, George K. Coggeshall, James H. Jenkins and John W. Sharbough. Earle T. Hoisapple and George Safford also were formerly with Harris, Forbes & Co. previous to the establishment of their own firm. —Kean. Taylor & Co., members of the New York Stock Exchange, announce that Michael J. Donovan is now associated with them. Mr. Donovan is widely known in investment circles and until recently he was -P. Murphy & Co. associated with G. M. —The American Associated Dealers, Inc. announce that A. Vere Shaw & Co., New York City, have accepted the supervision and management of Trusteed Industry Shares and Trusteed American Bank Shares, new series; both restricted. management trusts. —G.H. Walker & Co., members New York Stock Exchange, with offices in New York and St. Louis, announce that Anthony L. McKim has been admitted to general partnership in their firm. Mr. McKim will represent the firm on the floor of the Exchange. —J. S. Bache & Co., whose main office is at 42 Broadway, New York City, are opening a Boston office, located at 10 Post Office Square (street floor). The new Boston office will be in charge of Daniel W. Gurnett as Resident Manager. DIVIDENDS. Dividends are grouped in two separate tables. In the first we bring together all the dividends announced the current week. Then we follow with a second table in which we show the dividends previously announced, but which have not yet been paid. The dividends announced this week are: Name of Company. Railroads (Steam). Beech Creek (guar.) Continental Passenger fly. (8.-a.) Morris & Essex -a.) New York & Harlem (s. Preferred (s. -a.) Old Colony (quar.) Philadelphia Bait. & Washington 01-10 -Pittsburgh McKeesport & Yough.(5.-a.) Tunnel RR.of St. Louis(s-a) Per When Cent. Payable, 50o $2% % $2% $234 $134 $134 $134 $3 Books Closed Days Inclusive. July 1 Holders of rec. June 15 June 30 Holders of rec. May 31 July 1 Holders of rec. June 6 July 1 Holders of reo. June 15 July 1 Holders of rec. June 16 July I Holders of rec. June 17 June 30 Holders of roe. June 15 July 1 Holders of rec. June 15 July 1 Holders of reo. June 15 Public Utilities. July American Gas& Elec.,corn.(guar.) ...- 250 Holders of rec. June 9 2% July Holders of reo. June 9 Common (s-a) 131% Aug. Holders of tee. July 8 6% preferred (guar.) $134 July Amer.Superpower, 1st pref.(guar.) Holders of rec. June 10 Holders of tee. June 5 Appalachian Elec. Pow.,$7 pref.(guar.) $134 July $1 34 July Holders of rec. June 16 Atlantic & Ohio Teieg. Cs. (guar.) $134 July Holders of reo. June 20 Battle Creek Gas Co. $6 pref. (quar.) Bell Telephone Co. of Canada (guar.)— $134 July 1 Holders of rec. June 23 134% July 1 Holders of reo. June 20 Bell Telep. of Pa.634% pref. (quar.) $1X July Boston Elevated fly.(guar.) Holders of rec. June 10 Brazilian 'Frac., Light & Power, Ltd.— $IX July Preferred (guar.) Holders of reo. June 15 Canada Northern Power Corp., Ltd.— 20e July 2 Holders of rec. June 30 Common (guar.) 134% July 1 Holders of rec. June 30 7% preferred (guar.) Citizens Water Co.(Washington. Pa.) July 7% preferred (guar.) Holders of rec. June 20 July Columbus fly., Pow.& Lt., corn.(guar.) $2 Holders of reo. June 15 % July 6% preferred (guar.) Holders of rec. June 15 1% July Duke Power Co., common (guar.) Holders of rec. June 15 July 134% Preferred (guar.) Holders of rec. June 15 Eastern N. J. Pow. Co.,6% pf.(quar.)- - 134% July Holders of roe. June 15 $1.44 July East Tennessee Teleg. Co (8.-a.) Holders of reo. June 16 June Gas Securities Co., C0E11111011 (monthly)-- g Holders of roe. May 15 500 June Preferred (monthly) Holders of roe. may 15 $134 July Gold & Stock Telegraph Co.(quar.)Holders of tee. June 30 Greenwich Water dc Gas Systems • 111% July 6% preferred (guar.) Holders of rec. June 20 Hackensack Water Co. cl. A (guar.) ...- 43340 June 3 Holders of reo. June 16 % July Indiana Mich. Else. Co.,7% pt.(guar.)Holders of ree. June 5 iss% July Holders of rec. June 5 6% Preferred (guar.) Indianapolis Power & Light Co. 134% July Holders of rec. June 5 634% preferred (guar.) $2 June 1 Holders of rec. June 1 International Power Securities pref $134 July International Teieg. Co. (guar.) Holders of rec. June 30 Jersey Central Power dc Light Co. % July 7% preferred (guar.) Holders of reo. June 10 134% July 6% preferred (guar.) Holders of rec. June 10 % July rreiriers of rec. June 10 534% preferred (guar.) Kansas Elec. Power Co.,7% pref.(qu.). IX % July Held :re of reo. June 15 6% preferred (guar.) 134% July irsiders of rec. June 15 700 July Keystone Public Service pref. (guar.).— Holders of reo. June 15 $2 July Lynchburg & Abingdon Telep. Co.(8.-a.) Holders of reo. June 15 Marion Water Co. 7% pref.(guar.).— 1,1% July Holders of rec. June 20 $154 July Metropolitan Edison $7 pref. (quar.) Holders of rec. May 31 $134 July Holders of rec. May 31 6 $6 preferred (guar.) $154 July $5 preferred (guar.) Holders of rec. May 31 Holders of tea. June 15 Mississippi River Power 6% prof.(an.) 134% July July 10 Holders of roe. June 30 New Eng.Pow. Assoc., corn.(guar.) _ 500 6% preferred (guar.) % July 1 Holders of tee. June 10 500 July 1 Holders of roe. ALM 10 $2 preferred (guar.) Volume 136 Name of Company. Public Utilities (Concluded). New Jersey Pow. & Lt. Si) pref. (au.)... If Preferred (quar.) New Jersey Water Co. pref. (:man)._ -New York Mutual Telep. Co.(s.-a.)Northern Ontario Power Co., Ltd. Common (guar.) 6% preferred (quar.) Northwestern Telep. Co.(s.-a.) Northwestern Utilities,6% pref. (quar.). Ohio & Mississippi Telep. Co.(annual)._ Ohio Public Service Co. 7% pref. (mo.)% preferred (monthly) 5% preferred (monthly) Pacific & Atlantic Telep. (s -a.) Pacific Tel.& Tel., corn.(quar.) Preferred (quar.) Penn Central Light & Power Co. 55 preferred (guar.) $2.80 preferred (queer.) Peoria Water Works Co.7% pf.(qu.)._. Rochester Tel. Corp.(quar.) 634% preferred (quar.) San Joaquin Lt.& P.,7% pref.(queer.).. 6% preferred A (queer.) 7% preferred A (queer.) 6% preferred B (quar.) Scranton Elec. Co., pref.(queer.) Southern Calif. Edison Co., Ltd. Original preferred (quar.) 534% series C preferred (guar.) Southern Canada Power Co.. Ltd. 6% preferred (guar.) Southwestern Gas & El. Co.8% pf.(qu.) 7% preferred ((mar.) Toledo Edison Co. 7% pref. (monthly)% preferred (monthly) 5% preferred (monthly) Union Elec. Lt. & P.of III.,6% pt.(qu.) Union El. U.& P.of Mo.,7% pf.(qu.). Union Traction Co.(5.-a ) U.S. Elec. Lt. & P. Shs., Inc., Del.ser.A Vermont & Boston Telep.(annual) Westmoreland Water Co.(quar.) Wisconsin Pow.& Lt.,6% pref.(queer.). 7% preferred (guar.) Wisconsin Pub. Ser. Corp. 7% pf.(MO655% preferred (queer.) 6% preferred (guar.) Fire Insurance Companies. Halifax Fire Ins. Co. (s.m.) Home Fire at Marino Ins. Co.(queer.)... Bank & Trust Cos. Irving Trust Co. (quar.) United States Trust Co.(guar.) Financial Chronicle Per When Share. Payable. $155 5154 $134 75e July July July July 50c 135% $155 134% 5255 58 1-3c 50e 41 2-3e 50c 5135 $155 $134 70c 134% 5134 51% I 3,4 % 155% 134% 155% 3135 Books Closed Days Inclustee. Holders of Holders of Holders of Holders of Name of Company. rec. May rec. May rec. June rec. June 31 31 20 30 July July July June July July July July July June July 25 Holders of rec. June 25 Holders of rec. June 1 Holders of rec. June 1 Holders of rec. May 1 Holders of rec. June 1 Holders of rec. June 1 Holders of rec. June 1 Holders of rec. June 1 Holders gf rec. June 30 Holders of rec. June 15 Holders of rec. June 30 30 15 27 16 15 15 15 15 20 30 July July July July July June June June June July 1 Holders of 1 Holders of 1 Holders of 1 Holders of 1 Holders of 15 Holders of 15 Holders of 15 Holders of 15 Holders of 1 Holders of 10 10 20 20 20 7 7 7 7 5 1 1 1 1 rec. June rec. June rec. June rec. June rec. June rec. June rec. June rec. June rec. June rec. June 2% July 15 Holders of rec. June 20 13.5% July 15 Holders of rec. June 20 134% July 2% July 134% July 58 1-3c July 50c July 41 2-30 July 155% July 134% July 75c July June 26c 54 July 30e July June 75e 873.5c June 13.4% June 134% June 155% June 15 Holders of rec. June 1 Holders of rec. June 1 Holders of rec. June 1 Holders of me. June 1 Holders of rec. June 1 Holders of rec. June 1 Holders of rec. June 1 Holders of roe. June 1 Holders of rec. June 1 1 Holders of rec. June 1 Holders of rec. June 15 Holders of rec. May 15 Holders of rec. May 20 Holders of rec. May 20 Holders of rec. May 20 Holders of rec. May 20 15 15 15 15 15 15 15 9 16 20 31 31 31 31 31 45e July 3 Holders of rec. June 10 50c June 15 Holders of rec. June .5 25e. July July $15 1 Holders of rec. June 9 1 Holders of rec. June 20 Miscellaneous. Affiliated Products, Inc.(month.) 50. July 1 Holders of rec. June 19 Allied Chem. & Dye Corp., pref. (qu.)- 134% July 1 Holders of rec. June 12 Alpha Portland Cement, pref. (quar.)- - $154 June 15 Holders of me. June I -American Factors, Ltd.(monthly) 100. July 10 Holders of rec. June 30 American hosiery Co.(quar.) 3735c June 1 Holders of rec. May 25 Quarterly 37550 Sept. 1 Holders of rec. Aug. 24 American 15ifg. Co., pref. (queer.) $154 July 1 Holders of rec. June 15 American Tobacco Co.. prof. (quar.) --- 155% July 1 Holders of rec. June 10 Anchor Cap Corp., corn. (quar.) 15e. July 1 Holders of rec. June 20 $655 Preferred (quar.) $135 July 1 Holders of rec. June 20 Andian National Corp ur$1 Juno 15 Holders of rec. June 5 Associated Breweries of Canada, Ltd. Preferred (quar.) $134 July 1 Holders of rec. June 15 Bandini I etroleum Co.(monthly) June 20 Holders of rec. May 31 Sc Bankers Invest. Trust of Amer.(s. 30c. Juno 30 Holders of rec. June 15 -a.) Beatrice Creamery Co., pref. (quar.)- $134 July 1 Holders of rec. June 14 Biltmore Hats, Ltd. 7% pref.(guar.) 134% June 15 Holders of rec. May 15 Bohn Aluminum & Brass Co.eons.(qu.) 25c. July 1 Holders of rec. June 15 Borg Warner,7% pref.(queer.) 13.4% July I Holders of rec. June 15 Boston Investing Co.(s-a) $135 June 15 Holders of rec. June 5 British American Tobacco Co., Ltd. Ordinary stock (interim) 10d. Cables.5 Wire, Ltd. Am.dep.rec.555 pf 70. June 3 Holders of rec. May 5 % Canadian Car & Foundry, pref. (queer.)44e, July 10 Holders of roe. June 26 Carreras, Ltd., ord. reg. Cl. A June 19 Holders of rec. May 23 15% Amer. dep. rec. for reg. A 15% June 26 Holders of rec June 1 Ordinary register cl. 11 June 19 Holders of rec. May 23 15% Amer. dep,rec,for Ii reg 15% June 26 Holders of rec. June 1 Carter(Wm.) Co..6% pref. (guar.) ---- 155% June 15 Holders of rec. June 10 Chicago Dock & Canal Co.5% pf.(qu.)_ 134% June 1 Holders of rec. May 27 Chic. Junction Ry.& Un. Stkyds.(au). $2% July 1 Holders of rec. June 15 Preferred (queer.) $134 July 1 Holders of rec. June 15 Clorox Chemical Co., el. A (quar.) 500 July 1 Holders of rec. June 20 Coca-Cola Co.,class A (s. $155 July 1 Holders of rec. June 12 -a.) Common (quar.) $155 July 1 Holders of rec. June 12 Coca-Cobs Internat. Corp. corn. (quar.). $3 July 1 Holders of rec. June 12 Class A (0.-a.) July 1 Holders of rec. June 12 $3 Colgate-Palmolive-Peet Co., pref.(qu.) - $135 July 1 Holders of rec. June 10 Col. 1310g..5 Loan Assoc.(N.0.) June 1 Holders of rec. May 31 $1 -a.) Congress Cigar Co., com.(guar.) (s. 25e. June 31 Holders of rec. June 14 Commercial Credit Trust. prof. (qu.) 50c. June 30 Holders of rec. June 20 Consolidated Paper, pref. (guar.) 17 Mc. July 1 Holders of rec. June 20 Consolidated Paper, pref.(quar.) 1735e July 1 Holders of rec. June 20 Corporal Investors, Ltd 4c. Dart Mfg. Co., pref.(guar.) $1% June 1 Holders of rec. May 8 DeLong Hook & Eye Co.(guar.) 50e. July 1 Holders of rec. June 20 Extra 250. July 1 Holders of rec. June 20 Dominion Textile Co., Ltd.(quar.) July 3 Holders of rec. June 15 $1 Eastern Theatres Ltd.. 7% pref.(0.-a.).. $355 July 31 Holders of rec. June 30 Edison Bros. Stores, Inc., pref. (queer.).. $13i June 15 Holders of rec. May 31 Electric Contr. & Mfg. Co. (queer.) 250. July 1 Holders of rec. June 20 Equity Fund, Inc.,(initial) 100. June 15 Holders of rec. June 5 Falconbridge Nickel Mines 100 June 30 Holders of rec. June 15 Faultless Rubber Co.,corn.(quar.) 590 July 1 Holders of rec. June 15 Freeport Texas.6% pref.(queer.) 134% Aug. 1 Holders of rec. July 14 Goodall Securities Corp. (guar.) 50c June 1 Holders of roe. May 29 Gorton Pew Fisheries Co., Ltd. (quar.)_ 50e June 30 Holders of rec. June 20 Granite City Steel Co.(quar.) June 30 Holders of rec. June 15 2,50 Grant (W.T.) Co., common ((uteri 25c July 1 Holders of rec. June 12 Gum antee Co.of North Amer.(quar.) $154 July 15 Holders of rec. June 30 Hamilton United Theatres, Ltd., pf.(qu) $134 June 30 Holders of rec. May 31 Hanna(M. A.) Co. $7 pref. (queer.) $134 June 20 Holders of rec. June 5 Helms (Geo. IV.) Co.. common (queer.).. $154 July 1 Holders of rec. June 10 Preferred (guar.) $134 July 1 Holders of rec. June 10 Hercules Powder common (guar.) 6755c June 24 Holders of rec. June 13 Hollinger Consolidated Gold Mines 1% June 17 Holders of rec. June 2 Honolulu Plantation Co. (monthly)_ _ _ _ 25e July 10 Holders of rec. June 30 Mygrade Sylvania Corp. common (qu.). 50c July 1 Holders of roe. June 10 $1% July I Holders of rec. June 10 $634 preferred (quar.) Ideal Financing Assoc., $8 pref. (quar.) $2 July 1 Holders of rec. June 15 50c July 1 Holders of roe. June 15 $2 Cony. preferred (quar.) Class A (quar.) 12550 July 1 Holders of rec. June 15 Indiana General Sore. Co.,6% pf.(qu.)- 155% July 1 Holders of rec. June 5 Investors Corp.0tH. I., $11 Prof.(guar.). $135 July I Holders of rec. June 20 Kekaha Sugar CO.(monthly) be July 1 Holders of rec. June 25 Kresge (S. S.) Co. pref. (quar,) $134 June 30 Holders of rec. June 15 Langendorf United Bakeries el. A 250 July 15 Holders of rec. June 30 20e June 15 Holders of rec. June 1 Ladle Calif. Salt Co.(quar.) 30c July 1 Holders of roe. June 15 Lorillard (P.) Co. common Num%) Preferred (quar.) $1% July 1 Holders of rec. June 15 2s, 100 June 2 Holders of rec. May 15 Lyons (J.) & Co., Ltd., ord. mg Amer. dep, rec,for ord. mg 25.100 June 2 Holders of rec. May 15 Metropolitan Coal,7% pref. (quar.)_ 13.4% June 30 Holders of rec. June 23 3855 Per When Cent. Payable. Miscellaneous (Concluded). McClatchy Newspaper, 7% pref. (queer.) 4334e prefrred (queer.) 43340 Motor Motor, cone. ext 50c Mohawk Min. Co. cap. stk. (Ilquidat'g) $5 Morrell (J.) & Co.(quar.) 50c Morris (Philip) Consol., Inc. (queer.).._. 4334c On account of accumulations 43340 Myers (F. E.) & Bros. Co. pref. (quar.)_ $155 National Gypsum Co. 7% pref. (quar.)_ $154 National 011 Products,$7 pref. (quar.).. $134 Semi-annual $1 Extra $1 National Standard Co.(guar.) 30e Noranda Mines (Interim) a50c Ohio Finance Co., common (quar.) 25c 8% preferred (quar.) 2% Pacific Tin Corp., special stock $1 Parke, Davis & Co.(quar.) 25c Pechiney, A bearer shares 17.53f Amer. dep. rec. for A bearer shares__ _ 17.53? Prentice-Hall, Inc., Prof.(queer.) 75e Pure Oil Co.554%,6%,8% pref. divs. o mitred. Reynolds(R. J.)Tobacco Co..co m.(111r.) 75c Ruud Mfg. new common (quar.) 25c New common (queer.) 250 St. Louis Bridge, 1st pref. (s-a) $3 20 preferred (s-a) $1 34 Siscoe Gold Mines, Ltd. (quar.) 30 Southern Acid & Sulphur, pref.(quar.).. $1% South Penn Oil Co.(quar.) 200 South Porto Rico Sugar Co.com.(qu.).. 400 Preferred (quar.) 2% South West Penn Pipe Lines (quar.) $1 Standard Oil of Ohio $5 pref. (queer.).... $134 Stein (A.)& Co., pref.(quar.) $1% Thomson Electric Welding (queer.) 250 Time, Inc. (queer.) 3755c Extra 12340 Tile° Products Corp.(quar.) 6235c United Molasses Co., Ltd., pref.-Div. p assed. United States Foreign Secur. let pf.(qu.) $15i Wagner Elec. Corp., pref.(guar.) $1% Waukesha Motor Co.(quar.) 300 Wellington Oil Co., Ltd.(queer.) 20 Wesson Oil .5 Snowdrift Co., Inc. Common (guar.) 1255c Western Canada Flour Mills pref. (qu.)_ 750 Western Maryland Dairy $6 pref. (qu.). $135 Westvaco Chlorine Products Corp. 7% preferred (quar.) 134% Books Closed Days Inclusive. Sept. 1 Holders of rec. Sept. ri Dec. 1 Holders of rec. Dec. 1 June 15 Holders of rec. May 29 July 20 Holders of rec. June 24 June 15 Holders of rec. May 27 July 1 Holders of rec. June 20 July 1 Holders of rec. June 24) Juno 30 Holders of rec. June 15 July 1 Holders of rec. June 17 July 1 Holders of rec. June 20 July 1 Holders of rec. June 20 July 1 Holders of rec. June 21) July 1 Holders of rec. June 29 July 10 Holders of roe. June 13 July 1 Holders of rec. June 10 July 1 Holders of rec. June 10 June 12 June 30 Holders of rec. June 19 June 7 June 13 Holders of rec. June 6 June 20 Holders of rec. June 10 July 1 Holders of rec. June 17 June 15 Holders of rec. June 5 Sept. 15 Holders of rec. Sept. 5 July 1 Holders of rec. June 15 July 1 Holders of rec. June 15 June 30 July 1 Holders of rec. June ID June 30 Holders of rec. June 15 July 1 Holders of rec. June 12 July 1 Holders of rec. June 12 July 1 Holders of rec. June 15 July 15 Holders of rec. June Si) July 1 Holders of rec. June 15 June 1 Holders of rec. May 25 June 30 Holders of rec. June 23 June 30 Holders of rec. June 23 July 1 Holders of rec. June I() June 10 Holders of July 1 Holders of July 1 Holders of June 15 Holders of rec. June roe. June rec. June rec. June 1 20 15 6 July 1 Holders of rec. June 15 June 15 Holders of roe. May 31 July 1 Holders of rec. June 20 July 1 Holders of rec. June 15 Below we give the dividends announced in previous weeks and not yet paid. This list does not include dividends announced this week, these being given in the preceding table. Vane of Company. Railroads (Steam). Albany & Susqueeanna (s-al (semi annual) Atlanta Birm. & Coast, pref. (a a) Atlanta & Charlotte Air Line(s-a) Bangor & Aroostook, corn.(quar.) Preferred (queer.) Boston & Albany Barton & Providence (queer.) Quarterly.. Carolina Clinchfleld & Ohio (quar.) Guaranteed certificates (quar.) Chesapeake & Ohio (quar.) Preferred (semi-annually) Chestnut Hill (quar.) Cleveland & Pittsburgh, guar (guar.) Special guaranteed (quar.) Guaranteed (quar.) Special guaranteed (queer.) Dayton & Michigan 8% pref. (quar.)Delaware RR. Co. (s.-a.) Erie & Pittsburgh 7% guaranteed (guar.) 7% guaranteed (guar.) 7% guaranteed (quar.) Guaranteed betterment (quar.) Guaranteed betterment (Queer.) Georgia RR.& Banking (quar.) Grand Rapids & Indianapolis (s.-u.)Greene (N. Y.) (5.-a.) Illinois Central 4% leased line Lackawanna RR.of N.J.4% gtd.(qu.). Little Miami original guaranteed Special guaranteed (quar.) Louisville fiend.& St. L.5% pf.(s-a)Common (s-a) Mill Creek & Mine HUI Nay. de RR.(a-a) Mobile & Birmingham pref.(s -a.) Morris & Essex (s. -a.) Nashville & Decatur 734% gtd. (s. -a.) N. Y. Lack.& WesUn.5% gtd.(queer.).. Norfolk .5 Western common (queer.).... North CaroUna (8.-a.) North. RR. of New Jer. 4% gtd. (queer.) 4% guaranteed (guar.) Norwich & Worcester,8% pref. (quar.)_ Phila. Bait. & Wash.(s. -a.) Pitts. Bess. & Lake Erie com.(8.-a.).... Pittsburgh Fort Wayne .5 Chicago (qu.) 7% Preferred (queer.) Quarterly 7% preferred (quar.) Quarterly 7% Preferred (quar.) Pittsburgh Youngstown & Ashtabula 7% preferred (queer.) 7% preferred (quar.) Reading Co. preferred (queer.) 2d preferred (guar.) Rensselaer & Saratoga,com.(s-a) Sussex (s-a) Terman Rys., pref. (final) Union Pacific common (quar.) United N. J. RR.& Canal Co.(guar.)._ Quarterly Valley RR.of New York (s-a) West Jersey & Seashore, corn. (s. -a.)Common (s -a.) 6% special guaranteed (0.-a.) Public Utilities, Alabama Power Co., 57 pref. (queer.).... $6 preferred (quar.) $5 preferred (quar.) American Telep. & Tcleg. Co.(quar.)--Amer. Water Wks. at El. Co., pl.(quar.) Attleboro Gas Light Co.(queer) Bangor Hydro-Elect. Co., 7% Pf.(qu.) I.% preferred (quar.) Bell Tel. Co. of Pa., 635% pret (queer). Birmingham Water Works,6% pf.(QU) Per When Share. Payable. Books Closed Days Inclusive. $435 5455 $255 $455 500 $134 $235 $2.125 $2.125 $1 $135' 62550 $3 The 87550 500 87550 500 $1 $1 87350 87550 873.40 800 800 $255 $2 $3 $2 $1 $1.10 50c 234% 34 5134 $2 434% 93340 $134 32 3% $1 $1 2% 5155 75e 134% 134% 134% 134% 134% 134% July 1 Holders of rec. June 15 Jan. 1 Holders of rec. Dec. 15 July 1 Holders of rec. June 12 Sept. 1 Holders of rem Aug. 20 July 1 Holders of roe. May 31 July 1 Holders of rec. May 31 June 30 Holders of rec. May 31 July 1 Holders of rec. June 20a Oct. 1 Holders of roe. Sept. 20a July 10 Holders of rec. June 3() July 10 Holders of rec. June 30 July 1 Holders of rec. June 8 July 1 Holders of reo. June 8 June 5 Holders of rec. May 20 Sept. I Holders of rem Aug. 10 Sept. 1 Holders ot rec. Aug. 19 Dec. 1 Healers of rec. Nov. 10 Dec. 1 Holders of rec. Nov. 10 July 5 Holders of rec. Junej16 July 1 Holders of rec. June MI June 10 Holders of rec. May 31 Sept. 10 Holders of roe. Aug. 31 Dee. 10 Holders of rec. Nov.3D Sept. I Holders of rec. Aug. 31 Dec. 1 Holders of rem Nov.30 July 15 Holders of rec. July 1 June 20 Holders of rec. June 10 June 19 Holders of rec. June 13 July 1 Holders of rec. June 12 July 1 Holders of rec. June 8 June 10 Holders of rec. May 2(3J June 10 Holders of rec. May 26 Aug. 15 Holders of rec. Aug. 1 Aug. 15 Holders of rec. Aug. 1 July 10 Holders of roe. July 3 July 1 Holders of rec. June 1 July 1 Holders of rec. June 9 July 1 Holders of roe. June 20 July 1 Holders of rec. June 15 June 19 Holders of rec. May 31 Aug. 1 Holders of rec. July 20 Sept. 1 Holders of rec. Aug. 21 Dee. 1 Holders of roe. Nov. 24) July 1 Holders of rec. June 15 June 30 Oct. 1 Holders of rem Sept. 1 July 1 Holden of rec. June 1 July 4 Holders of rec. June 1 Oct. 1 Holders of rec. Sept. Oct. 3 Holders of rec. Sept. Jan.2'34 Holders of rec. Doe. Jan.4'34 Holders of rec. Doe. 13.4% 134% 50c 50c $4 50e 33-4% $135 , $255 $255 $235 $135 $155 155% Sept. 1 Holders of rec. Aug. 2 Dec. 1 Holders of rec. Nov.2 June 8 Holders of rec. May 1 July 13 Holders of rec. June 2 July 1 July 1 Holders of rec. June 17 July 1 July 1 Holders of rec. June la July 10 Holders of rec. June 20 Oct. 10 Holders of rec. Sept. 20 July 1 Holders of ree June 19 July 1 Holders of rec. June 15 Jan 1'34 Holders of rec. Dec. 15 Dec. 1 Holders of rec. Nov. 15 $1% $13.4 $254 $135 $3 134% 1 3.4% 134% 155% July 1 Holders of rec. June July 1 Holders of rec. June Aug. 1 Holders of rec. July July 15 Holders of rec. June July 1 Holders of rec. June July 1 Holders of rec. June July 1 Holders of rec. June July 1 Holders of rec. June July 15 Holders of rec. June June 15 Holders of rec. June 15 15 15 20 9 15 10 ID 20 1 Financial Chronicle 3856 Name of Company. Per Whoa Sham AWOL". Books Closed Days Inclusive. Public Utilities (Conflated). Bridgeport Gas Light Co.(guar.) 1300 June 30 Holders of rec. June 18 Brit. Col. Pow.. cl. A.(quar.) fr.500 July 15 Holders of rec. June 30 Brooklyn Sz Queens Tran Corp.. pt.((Lu') 8134 July 1 Holders of rm. June 15 Brooklyn Union Gas Co.(quar.) $131 July 1 Holders of rec. June 1 Butler Water Co., 7% pref.(guar.).— 154% June 15 Holders of roe. June 1 Carolina Tel. dc Tel. Co.(guar.) 8231 July 1 Holders of reo. June 24 Central Kansas Power 7% prof.((MAL)- 131% July 15 Holders of rec. June 30 7% preferred (guar.) 134% Oct. 15 Holders of rec. Sept.30 7% preferred (quar.) 134% 1-15-34 Holders of rec. Dec. 31 6% preferred (qua:.) 134% July 15 Holders of me. June 30 6% preferred (guar.) 144% Oct. 15 Holders of rec. Sept.30 6% preferred (guar.) 134% 1-15-34 Holders of rec. Dec. 31 Citizens Pass. By.(Phila.,Pa.) OM July 1 Holders of rec. June 20 Commonwealth dr Southern Corp.— $6 preferred (quar.) 8144 July 1 Holders of rec. June 9 Commonwealth Utilities pref. A (quar.)- 3134 July 1 Holders of rec. June 15 Preferred B (guar.) $134 July 1 Holders of rm. June 15 Preferred C (guar.) $134 Sept. 1 Holders of rec. Aug. 15 June 15 Holders of rec. June 5 Concord Gas Co.(s. $8 -a.) July 1 Holders of rec. June 15 Connecticut Elect Service,corn. (guar.)- 750 900 July 1 Holders of rec. June 15 Consol. Gas of Baltimore corn.(quar.)._ Preferred A (quar.) $111 July 1 Holders of rec. June 15 Preferred D (guar.) $154 July I Holders of rec. June 15 Preferred E (quar.) $134 July I Holders of rec. June 15 850 June 15 Holders of rec. May 12 Consolidated Gas Co.of N.Y.com.(qu.) Preferred (quar.) $134 Aug. 1 Holders of reo. June 30 Consol. Gas. El. Lt.& Pow.Co.of Bait. Common (qua:.) 900 July 1 Holders of roe. June 15 141% July 1 Holders of rec. June 15 5% preferred series A (guar.) 6% preferred series D (guar.) 144% July 1 Holders of roe. June 15 154% July I Holders of rec. June 15 511% preferred series D (qua:.) Consumers Power Co..$5 Prot (1111ar.)-- sve July I Holders of rec. June 15 6% preferred ((Mar.) 144% July 1 Holders of roe. June 15 6.6% preferred (guar.) 1.85% July 1 Holders ot rec. June 15 131% July I Holders of rec. June 15 7% preferred (quar.) 6% preferred (monthly) 500 July 1 Holders of rec. June 15 550 July 1 Holders of rec. June 15 8.8% preferred (monthly) Dayton Power & Light Co.6% pt. (mo.) 500 July 1 Holders of rec. June 20 Diamond State Tel. Co..634% Pt.(qu.)_ 154% July 15 Holders of rec. June 20 Duquesne Light Co.5% 1st prof.((Mari 131% July 15 Holders of reo. June 15 Eastern Gas dz Fuel Assoc.,6% pf.(qu.)- 134% July 1 Holders of rec. June 15 434% preferred (guar.) $1.125 July 1 Holders of roe. June 15 El Paso Elec. (Del.),7% pref. A (qu.) 131% July 15 Holders of rec. June 30 $6 preferred B (quar.) al% July 15 Holders of roe. June 30 El Paso Elec. (Texas), 6% pref. (qu.).., 131% July 1 Holders of roe. June 30 Electric Bond & Share Co.$8 pref.(qu.) $IM Aug. 1 Holders of rec. July 8 $5 preferred (guar.) $134 Aug. I Holders of rec. July 8 Empire & Bay State Teleg 4% gtd.(qu.) Sept. 1 Holders of rec. Aug. 21 4% ruaranteed (guar.) Dec. I Holders of reo. Nov.20 51 Elizabeth & Trenton Bit. (s. -a.) Oct. I Holders of rec. Sept.20 $1 5% preferred (s.-a.) $134 Oct. 1 Holders of roe. Sept. 20 Empire Power Corp. $6 pref.(qua:.) $134 July I Holders of roe. June 16 Escanaba Pow.& Tree.6% pref.((Bt.). % Aug. 1 Holders of ree..July 27 6% preferred (quar.) 141% Nov. 1 Holders of rec. Oct. 27 6% preferred (qua:.) 144% 2-1-'34 Holders of rec. Jan. 27 Frankford & Southwark.Phila. City Passenger By $414 July 1 Holders of rec. June 1 $IM July 1 Holders of rec. June 15 Georgia Power Co. $6 prof.(guar-) $131 July 1 Holders of rec. June 15 $5 preferred (quar.) Germantown Passenger By.,(qual.)....... 51.3134 July 1 Holders of roe. June 15 (qu.) 5134 July 1 Holders of roe. June 22 Green dc Coats St., Phila.Pass.By. $134 July 1 Holders of roe. June 20 Gulf Power Co. $6 pref.(qual.) Gulf States Utilities Co., NI pref.(qu.),.. $134 June 15 Holders of roe. June I $111 June 15 Holders of roe. June 1 $534preferred (guar.) Hackensack Water Co. A (guar.) 43510 June 30 Holders of ree. June 16 Honolulu Gas Co.(monthly) 15c July 1 Holders of rec. June 15 June 30 Holders of rec. June 29 Illinois Bell Telep. Co.(qual.) $2 Indiana Hydro-El. Pow. Co.7% prof 87340 June 15 Holders of rec. May 31 Indianapolis Water Co.,5% pref. A (qu.) I M% July 1 Holders of roe. June 100 Kansas City Pow & Lt., pt. B.,(Qua:.)... $144 July 1 Holders of roe. June 14 Kings County Lighting (guar.) $134 July 1 Holders of rec. June 19 134% July 1 Holders of rec. June 19 7% Preferred (guar.) 6% preferred (guar.) 144% July 1 Holders of rec. June 19 131% July 1 Holders of rec. June 19 5% preferred (guar.) 8144 June 15 Holders of rec. June I Laclede Gas Light Co.common(quar.).. 8241 June 15 Holders of rec. June 1 -a.) 6% preferred (s. Lexington Utilities Co.634% pf.(qu.).. 134% June 15 Holders of rec. June 1 Lone Star Gas Corp. common (quar.),,- j160 June 30 Holders of rec. June 15 $134 June 30 Holders of rec. June 15 6% preferred (quar.) % July 1 Holders of rec. June 16 Long Island Ltg. Co.7% pt. A 134% July 1 Holders of rec. June 16 6% preferred B (quar.) Louisville G.& E.(Del.), A&B em.(qu.) 43410 June 24 Holders of rec. May 31 Marconi Wirel. Tel. Co.— 2% June 3 Holders of roe. May 24 Amer. deposit rec., ordinary bearer. 2% June 3 Holders of roe. May 24 Amer. deposit rec. ord. reit Memphis Nat. Gas Co..$7 Pref. (qual.).. 8134 July 1 Holders of roe. June 20 $154 July 1 Holders of rec. June 17 MemphisPow.& Lt.Co.,$7 pf.(qu.) SIM July 1 Holders of rec. June 17 $6 preferred (guar.) % July 1 Holders of rec. June 21 Miss. Vail. Pub. Serv.,6% pref. B (qu.). Monongahela West Penn Public Service, 134% July 1 Holders of roe. June 15 7% cum. preferred (guar.) 2% June 15 Holders of rec. June 1 Muncie Water Works Co..8% pref.(qu.) Nassau & Suffolk Ltg. Co..7% pf.(qu.)- 134% July 1 Holders of rec. June 16 350. June 15 Holders of rec. May 31 National Transit Co.(quar.) New Eng. Gas & El. Assoc. $531 pf.(qu.) $134 July 1 Holders of rec. May 31 New England Tel. & Tel. Co 8134 June 30 Holders of roe. June 10 New York Pow.,k Lt.$5 Prot (Qua: -- $134 July 1 Holders of rec. June 15 .) 7% preferred (guar.) 134% July 1 Holders of rec. June 15 N. Y.dr Queens Elec. Lt.& Pow.(qua:.) $2 June 14 Holders of rec. June 2 New York Steam Corp..$7 pref.(qua:.)- $131 July I Holders of rec. June 15 $6 preferred (quar.) 3144 July 1 Holders of rec. June 15 $im July 15 Holders of rec. June 20 New York Telep. Co.. pref. (guar.) 500 June 28 Holders of roe. June 15 New York Transportation CO.(guar.).Newark Telep. Co.(Ohio)6% pref.(qu.) 141% July 10 Holders of rec. June 30 June 10 Holders of rec. May 31 Quarterly 81 % July 20 Holders of rec. June 30 Nor. States Pow. Co.(Del.) 7% pf.(qu.) 6% preferred (quar.) 134% July 20 Holders of rec. June 30 Ohio Edison Co.,$5 pref.(quar.) $141 July 1 Holders of roe. June 15 RS preferred (guar.) 8144 July I Holders of rec. June 15 81.65 July 1 Holders of rec. June 15 $8.60 preferred (quar.) $7 preferred (quar.) $134 July 1 Holders of rec. June 15 $7.20 preferred (quar.) $1.80 July 1 Holders of roe. June 15 Oklahoma Gas & Elect. Co..8% rd. (qu) 134% Juno 15 Holders of rec. May 31 7% preferred (titian) 134% June 15 Holders of roe. May 31 Peninsular Telep. Co.. (quar.) July 1 Holders of rec. June 15 260 7% preferred (guar.) 134% Aug. 15 Holders of rec. Aug. 5 7% preferred (guar.) 141% Nov.15 Holders of roe. Nov. 5 7% preferred (guar.) 141% 2-15-34 Holders of roe. 2-5-34 Pennsylvania W.& Pow. Co., eom.(0n.) 760 July 1 Holders of rec. June 15 um July 1 Holders of rec. June 15 Preferred (quar.) Philadelphia Co.$O Pref.(guar.) 3134 July 1 Holders of rec. June 1 85 preference gm July 1 Holders of rec. June 1 Phila. Elec. Pow. Co..8% M.(luar.)-z500. July 1 Holders of rm. June 10 Phba Germant'n & Norrtst'n RR. Wu./- $114 June 5 Holders of roe. May 20 Ponce Elect. Co.. 7% pref. (guar.) 131% July 1 Holders of roe. June 15 Pub.Serv. Co.of N. H.. $6 pref.(qu.) 8134 June 15 Holders of roe. May 31 85 preferred (quar.) $141 June 15 Holders of rec. May 31 Public Service Corp.of N.J.corn.(qu.). 700 June 30 Holders of res. June 1 8% preferred (quar.) 2% June 30 Holders of rec. June 1 1% preferred (guar.) 131% June 30 Holders of roe. June 1 $5 preferred (guar.) 8141 June 30 Holders of rec. June 1 Cumulative preferred (monthly) 500 June 30 Holders of roe. June 1 Public Service Co. of Oklahoma, 7% prior lien stock (guar.) % July I Holders of roe. June 20 lien stock (guar. % July 1 Holders of reo. June 20 6% prior Public Service El.& Gas Co.7% (qu.). 141% June 30 Holders of rec. June 1 preferred (guar.) $131 June 30 Holders of roe. June 1 $6 Queensborough Gas & El.6% pt.(qu.)._ 134% July 1 Holders of rec. June 16 July 1 Holders of roe. June 15 Ridge Ave.Pass. By.Co.(guar.) 83 Shenango Valley Water Co.8% pf.(qu) 141% &lot. 1 Holders of roe. Aug. 20 6% preferred (guar.) 154% Dec. 1 Holders of roe. Nov.20 Na... of ConsPane. Public Utilities (Concluded). Savannah Elec.& Pr.,8% pret. A (qu.)7,4% Preferred B (quar.) 7% preferred C (guar.) 634% preferred B (guar.) 2d & 3d Sta. Pam. By.Co., gtd.(quar.)Sout