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H""'
map
periodical
■ESTABLISHED
1 o
1(W
room
general library
univ. of
mich.
Reg. U. S. Pat. Office
Number 4680
Volume 167
It's Time to
New
Taxes and Government
,.;
Recognize Inflation!
Society of the U.
Holding
'
points out, fixed commitments arising from
•
concealing infla¬
ilays recent inflationary trend to
^ gold supply and expanding bank
j credit. Denies more bank credit
i
.
Mr. Tabell, in presenting problem of when to buy
or sell and what
buy and sell, describes methods used in studying causes and
effects.
Says statistical approach is mainly a study of causes, and r
technical approach, i.e>, evaluating prices, is concerned mostly with: ;
analysis of effects. Explains various methods of forecasting trends •
and upholds practicability of Dow Theory; Analyzes present market
\
situation and holds though we are still in a bear market, "time is *
running out for the bears." Concludes rails represent outstanding
to
tions makes
tion from public, Mr. Parkinson
impossible massive reduction in expenditures. Criti¬
budget and spending policy, and says substantial
economies can b$ achieved with Executive cooperation. Sees need
of: tax reduction to-support formation of risk capital, and calls
attention to sluggish action of stock market under boom conditions.
cizes President's
•
.
is needed to maintain government
"we shall not
.
;
-
Reveals harshness of
bond prices, and wants
buying curbed.
/
j
U. S. gold
There is
| In other countries which have
experienced inflation in recent
the
of
years,
prices
steeply progressive income tax rates, and says
long be able to endure our taxing irrationalities."
than
more
ities
and
world
have
isting and
i t.
tential
m
country
and
the
past 10
in spite
po.rtuni-
the
their
o u s
have
Millikin
we
liberty
offer
the
Eugene D.
for
marketing
here
the pace of our inflation.
of
for¬
eign products.
What
explains this difference
in our experience compared with
that, for example,, of France and
Italy? The most obvious answer
those
at
are
to
rise,
lagged
behind
op-
ties which
ob-
countries
they
Manifestly, these factors of in¬
fluence
our
we don't know; and
officials* and many of
(Continued
disintegrate
Na¬
tion's economic.health. 'And
this
(Continued
on page
26)
*An
address
by
York, New York
*A statement by Mr. Parkinson
distributed
Sen.
Millikin
before the Economic Club of New
page 33)
on
en--
City,
March 4,
"
1948.
"
About
dozen years ago,
a
in one of the very last of his
long list of contributions to financial sanity in this country,
the late H. Parker Willis wrote:
buy Gen-
e r a
1
or
Allied
necessity is found to be that of placating the discontent
large groups of citizens.; Where-such discontent is due
supposedly high prices,- or the difficulty of borrowing
banks, the remedy that naturally suggests itself is that
making credit cheap and abundant, that all
to
buy freely;
bring about
See
PICTORIAL
INSERT
for
pictures taken at 22nd Annual
a
merely
power
Dinner of the New York Secu¬
rarer cases,
Chemical,
the
of
adjunct to
an
bring about
an
a
cases
central
suc¬
com¬
panies
Edmund W. Tabell
at the
time.
That is why the "when" approach
wrong
buy
important.
approach
But the "what"
is
(Continued
at
of
dynasty of political dictators
artificial redistribution of
other
is
banking
or
securities
cessful
to
be able
may
o r
American
of
of curbing credit in order to
decline in prices. In such
who desire to
chasing
in
or
Motors
Telephone.
"Nothing is more discouraging in the economic history
of the past twenty-four
years than the lush growth of erro¬
neous, not to say, absurd economic and financial ideas among
the political administrators who had
happened to acquire
great power. In every dictatorship of the sort, an inevitable
becomes
by Continental Press
Syndicate, Brightwaters, N. Y.
com¬
But you
can
equally
on page
34)
pared
lecture
delivered
by
to
impor-
^Stenographic transcript,
for the "Chronicle,"
our
fiscal
or
state of
our
know what inflation is and in this
country
enhance
in gear with the
Central Banking—In 1948
-
strength
far
in
well
pany.
po¬
i 1 i
tary
years,
that
is,
cessful
in
is
1
Genera
a
let
*
Motors.
Motors
recon¬
prices, in
Parkinson
EDITORIAL
relief
this
I.
eral
p r o b 1 e m s,
from our ex¬
some¬
Yet
might buy,
importance. /
You
us
say.
Gen-
equal
trenched, sue-."
exceeded
T.
of
is
struction
times
i
questions
with
and
of
those
..
inflation
the
v
Whether you are buying securities for investment or for specula¬
tion, there are two questions that are uppermost in your mind.
One
is, when to buy or sell; and the other is, what to buy or sell.
Each
help
our
its
purchase at present.
,
connection between my theme of
main
the
to
in
have
line
in
from
upward
gone
the
in
of
and
~
"Taxes and Government Spending" and the overriding theme of this
meeting, "The United States in the World Today;"
■,
It seems quite clear that our influence in the world
today derives ! of
commod¬
equities
tenuous
a
Forecasting
Members of New York Stock Exchange
and postwar condi¬
war
Copy
Market Analyst, Shields & Company
/
.
should be
Sen. Millikin
new,
economy,
bankers aid in
*
or
no
a
By EDMUND W. TABELL*
government activity, whether old
allowed to claim sanctuary against sensible
S.
j Asserting fiscal officials and many
Market
Spending
U. S. Senator from Colorado
President, The Equitable Life
Assurance
Price 30 Cents
By HON. EUGENE D. MILLIKEN*
THOMAS I. PARKINSON*
By
i
York, N. Y., Thursday, March 11, 1948
Mr.
pre¬
of a
Tabell
before the Small Investors
Columbia
University,
City, March 4, 1948.
Forum,
New York
pur¬
and wealth. The future of central banking in
'
(Continued
;
rity Dealers Association.
on page
25)
*
State and
Havana
Lithographing Go.
STATE
AND
Municipal
MUNICIPAL
R. H. Johnson & Co.
Established
Bonds
BONDS
1927
INVESTMENT SECURITIES
"
Hirsch & Co.
Members New
and
25 Broad
York
Stock
*
St., New York 4, N. Y.
Chicago
Teletype NY 1-210
Cleveland
Geneva
New York 5
Exchange
other Exchanges
HAnovpr 2-0600
Bond Department
64 Wall Street,
London
(Representative)
Members
PHILADELPHIA
BOSTON
Albany
Troy
THE NATIONAL CITY BANK HART SMITH & CO.
Woonsocket
Bond Dept. Teletype:
Washington, D. C.
Bankers
Underwriters and
QUOTED
Gordon Graves & Co.
INSTITUTIONAL
30
Distributors of
Head
(Incorporated)
Established
1899
CLEVELAND
Chicago
Denver
Columbus
Toledo Buffalo
New York
Cincinnati
*
to
26, Bishopsgate,
London, E. C.
In
HAnoVer 2-6980
CITY OF NEW YORK'
Wisconsin Power
Brokerage
&
for Banks, Brokers
f
Light Co.
(When distributed)
irahaupt&co.
Hardy & Co.
_£2,300,000
Members New York Stock Exchange
<
York Curb Exchange
j
Reserve
Fund
Bank
conducts
every
banking and exchange
description
business ,,
Trusteeships «nd Executorships
also undertaken
,
THE
OF
Toronto
and Dealers
Capital-—;
The
NATIONAL BANK
1-395
Montreal
Capital'-—£4,000,000
£2,000,000
Paid-Up
t
A>ssn.
India, Burma, Ceylon. Kenya
and Aden and Zanzibar
Subscribed
:
THE CHASE
•
Dealers
Service
the Government in
Office i
Colony
OTIS & CO.
INVESTMENTS
Tele. NY 1-809
Bond
.
Municipal
Corporate Securities
Broad Street, NewYwk
4, N.Y.
T®1- WHiteH,l|
3-2840
New York
Kenya Colony and Uganda
Branches
—
NY 1*708
of INDIA, LIMITED
*
and
SOLD
York Security
52 WILLIAM ST., N. Y.
NATIONAL BANE
-
—
New
Bell Teletype NY
Springfield
TEX. EASTERN TRANSMISSION
BOUGHT
■.
Scranton
Harrisburg
Wilkes-Barre
TENN. GAS & TRANSMISSION
Common Stcck
•.
OF NEW YORK
Syracuse
Buffalo
of
Members
New
30 Broad St.
,
\
Tel. DIgby 4-7800
New York 4
tile, NY,
1-733
f
Members New York Stock Exchange
and other Principal Exchangee
111
Broadway,
REctor 2-3100
Boston
N. Y. 6,
Teletype NY 1-2708
Telephone: Enterprise 1820
THE COMMERCIAL
(1098)
Maiket Effect of large
MARION
"t
Accrued Dividend Payment
Professor of Business Administration,
7% Preferred
Corporation
Broadway, New York 5
BArclay 7-5660
Teletype NY 1-583
price on the ex dividend date by an amount equal
widely accepted belief. If X Utility Co. preferred is worth $115 per
the day before the ex dividend date, it is logical that it should sell at $95 the
That
stock should decline in
a
d
a
i t s e 11 s?>-
y
"ex"
purchased
$20
a
dol¬
the
lars per share
has
simply
the
Twenty
Longchamps, Inc.
the
115
dividend,
$20
amount
entire
the
high bracket
held X Utility
it advanta¬
to sell the stock just prior
A
income.
who
former, Preferred might find
the
The
value.
geous
ffipONNELL&ro.
of
value * of
the
j
after this date.
Members
continuing in-;
Stock Exchange
Curb Exchange
more
than
months
6
and
if
for
the
It'would
plus! cost was less than 115, this would
dividend, j have the effect of converting what
the
Tel. REctor 2-7015
O. K.
That the stock
Burrell
would
incentive
j wQiild otherwise be ordinary in¬
decline I
come
capital
appear
exists
bracket
upper
dend
to
taxpayers
25%. Even if
If
The International Bank
gravity.
>
Nevertheless,
there
to suppose
reason
is
This
dends
due 7/15/57
interest
the
ers
dividend
purchase, he would not only avoid
accretion to ordinary income
not deemed to accrue as
but
with
dividends.
on
If
does.
do
to
has
an
individual
it
bracket
taxpayer
in
loss
capital
would
addition
have
120
Broadway, N. Y. 5
WOrth 4-3113
is possible that
Bell Teletype NY 1-1227
resulting competition of sell¬
immediately
date
before
and
the
ex-
of
buyers
shortly after the ex-dividend date
a
a
Quoted
lllj
may
high
the
tax
are
might
a
the
Divi¬
reason
is true,
this
find it advantageous to sell. If he
waited more than 30 days to re¬
some
that such mar¬
ket action is not at all inevitable.
income
involved
—
Members Baltimore Stock Exchange
and
possibly to repurchase
shortly after the ex-dividend date.
were
Sold
—
Ml
sell
able
due 7/15/72
Bought
;
large divi¬
to $95 on the ex divi-]
dend date seems almost as inevit¬
3%
Dorset Fabrics
strong
middle and
long-term capital gain, taxable
at an effective rate not to exceed
a
loss
branch' offices
our
that a
for
stocks about to paly a
and taxable at full fates into
a
La.-Birmingham, Ala.
Direct wires to
loss
from $115
as
NY 1-1557
or
non-deductible
The
vestment
BROADWAY, NEW YORK 5
New Orleans,
would, however, be added to the
cost basis of the repurchased stock
and thus in effect carried forward.
,
If the stock had been held
the stock a;s a;
Exchange
St.,. New York 4, N. Y.
HAnover 2-0700
ductible under the wash sale rule.
$.315 j to the ex* dividend date and per¬
representedj haps to repurchase on or shortly
price,
2%%
Members New York Stock
25 Broad
carried for¬
ward for similar application for
five years. Even if the stock were
repurchased within less than 30
days the accretion to ordinary in¬
come Would be avoided, although
the capital loss would not be de¬
income-
ordinary
be taxable as or¬
would
from; taxpayer
tracted'
Bought—Sold—Quoted
ex
sub-; dinary
been
X Utility plied against other capital gains
or
applied (up to $1,000) agaihst
of
share
a
at
day before
dividend date and received
Preferred
dividend.
and Development
*
Steiner,Rouse & Co!
to the dividend is a
share
For Reconstruetion
Bought—-Sold—Quoted
calm and conservative value analyses and that those who sell stocks in advance of Substantial
dividend arrearage ill Order to convert dividend into a capital gain may safely do so
without fear others" in similar circumstances Will defeat their own' purposes.
payment on
Hanseatic
120
120
Louisiana Securities
University of Oregon
laws and stock market behavior.
upon
Neva York
Alabama &
,
the effects of payment of large accumulated dividends under present taxation
Concludes buying and selling in stock markeKs not invariably based
Prof. Burrell analyzes
Bought——Sold—Quoted
New York
<
By O. K. BURRELL
POWER SHOVEL
New York
Thursday, March 11, 1948
Study in Economic Behavior
A
.
FINANCIAL' CHRONICLE
&
Central States
prevent stocks about to pay
sizable dividend from declining
which might be ap¬
(Continued
Detroit Int'l Bridge
28)
on page
Elec.(Va.)
Common
Tobin
'
Packing
Common
No Likelihood oi Credit
WM.E. POLLOCK & CO., INC.
20 Pine Street, New York 5, N.
•
through heavy government bond holdings, have ample
no
Aetna Standard Engineering
American Time CorR.
Baltimore Porcelain Steel
Bates Manufacturing
a
'
General Aniline & Film "A"
Hood Chemical
International Detrola
Kirby Lumber
Newmarket Manufacturing
Northern New England
authorities
the loan volume is still compara¬
tively low
and
professional,
have further,
Title Guaranty & Trust
built up
United Artists Theatre
Members N. Y. Security Dealers Assn.
Hanover 2-4850
Teletypes—NY 1-1126 & 1127
37 Wall St., N. Y. S
Established 1886
on
20-year average,
a
related to deposits and poten¬
tial rHerves. Emphasis upon the
as
recentfYise
"business"
of
distinguished
from
loans,
to
feeling
of brokers1 and others on collateral
inescapable security," has obscured a number
as
loans
a
William H. Hillyer
crisis.
Mean T
of significant facts.
'
•
"i
•
'
•
'•
Frank C. Masterson & Co.
Established 1923
Members New
64
York Curb Exchange
WALL ST.
:
.
NEW YORK B
HAnover 2-9470
Teletype NY 1-1140
-
us
first
them.
They
are
particularly
Curb and Unlisted
examine the lend-
$3,100,000,000
jn
to
$1,500,000,000 where they have
since remained stationary. Loans
of all descriptions "for
purchasing
or
carrying securities" have risen
only $700,000,000 during the 6V2year period.
Such retardation in
collateral loans has made
1945,
fell
room
corresponding rise in real estate
mortgages and consumer credit,
which have increased
respectively
from $4,700,000,000 to
$8,200,000,-
000 and. from
near zero
in 1941 to
above five billion dollars at this
writing. In other words, the plac¬
ing of securities trading on a
near-cash basis since 1932 has
laxed the pressure all
is
York Curb Exchange
Members New
Chicago Stock Exchange
New York 6
39 Broadway
Teletype NY 1-1610
Digby 4-3122
more
(2) No borrowing category need
suffer
Joseph McManus & Co.
re¬
around, so
money avail¬
able for all classes of borrowers.
there
Securities
for
a
that
while, with commodity markets in
(1) Brokers' loans were roundly
a down-slide, the bankers' utter¬
eight million dollars in 1929, as
ances yield little more by way of
compared with only a million and
guidance than the familiar dictum a half at present. More currently,
that this will be a tough year call¬ commercial loans
(including open-5
ing for exceptional courage. For¬ market paper) have about dou¬
tunately there are figures, past bled since 1943, rising from $7,and
present, which resolve much 770,000,000 at the end of that year
of the confusion and provide bank to
$14,760,000,000 in 1947. Thisi
borrowers of all categories with a has taken place while brokers'
basis upon which the forthcoming loans, after
rising from $614,000,year inay be judged.
000 at the close of 1941 to above
Let
H. Hentz & Co.
in the
business mind
United Piece Dye Works
^Yeerve<miGompaT\i^
evident from Table "A" herewith,
Federal
Time, Inc.
Telecoin Corp.
Sees
reserves.
"
s
inflation, from
Punta Alegre Sugar
Taylor Wharton Iron & Steel
Pacific Telecoin
Bell
need to fear deflation spectre at present.
i v t<3>—
—
because
they ing ability of our banks.
It is a
can
find
no
fact, generally overlooked, that
the aggregate of bank loans in
fitting parallel
for present this country are below the 1929
conditi o n s. high level, despite a fourfold in¬
Contradictory crease in adjusted demand de¬
warnings of posits (not including government
deflation and and intra-bank balances).
As is
apprehen
Clyde Porcelain Steel
Warner & Swasey
of obtaining added cash
depends for dividends are wondering what 1948 will bring
Electric Bd. & Share Stubs
Merchants Distilling
means
.
Now that bankers have tempered the optimism of their annual reports with more than
customary degree of caution, those millions of borrowers upon whom a bank normally
Boston & Maine R.R.
U.S. Finishing com. & pfd.
Taca Airways
•
•;
Remarking that current bank loans are below 1929 level despite four-fold increase in bank deposits,
Mr. Hillyer contends business borrowers do not face danger of a growing stringency of loanable funds.
Points out credit conditions are easier than in period preceding 1920-21 recession, and banks now,
0lctu.alTtlaTUel6 Qu
Artcraft Manufacturing
Hoviiig Corp.
By WILLIAM IIURD IIILLYER
V.
Teletype NY 1-2846
HAnover 2-8244
Stringency in 1948
because
banks
lack
Mission Oil
funds.
Commercial
banking
are
reserves from sources
obtaining
that
institutions
were
denied them in the
stringency: through gold
^
1929-32
imports. The gold stock of our
banking
system
was
approxi¬
mately four billion dollars in 1929
to
support
$40
whereas today
back
billions
we-
(Continued
on
of
have
page
loans;
$23 bil-
30) '
Members
New York Security
Dealers Ass'n
Teletype—NY 1-376-377-378
ACTIVE MARKETS
We Maintain Active Markets in U. S. FUNDS for
Members
New
York
Stock
Exchange
Noranda Mines
United
New
York
Curb
Exchange
Brown Co.
Rhodesian Selection
New
Cotton
York
Commodity
.
Chicago
Exchange
Exchange,
Board
of
New Orleans Cotton Exchange
And other
Minn. & Ont.
Inc
Trade
Exchanges
Placer
Paper
Development
Canadian Securities
Department
Kingdom 4%
'90
Soya C,orp.
Gaumont-British
Great Amer. Indus.
Empire State Oil
Utah Southern Oil
Scophony, Ltd.
British
U. S.
Securities
Radiator, Pfd.
Department
Equity Oil
.
N. Y. Cotton Exchange
Bldg.
NEW YORK 4, N. Y.
CHICAGO
DETROIT
PITTSBURGH
GENEVA? SWITZERLAND
Goodbody & CO.
James M. Toolan
,
Members N.Y♦ Stock Exchange and Other Principal
Exchanges
115 BROADWAY
Telephone BArclay 7-0100
NEW YORK 6, N. Y.
Teletype NY 1-672
•
SIEGEL & CO.
39
Broadway, N.
!!
Y. 6
DIgby 4-2370
Teletype NY 1-1942
67 Wall Street,
Tel. HAnover 2-9335
& Co.
New York 5, N. YBell Tele. NY
1-2630
Number 4680
167
Volume
THE COMMERCIAL
INDEX
Articles
and
News
"
Market Forecasting—Edmund W. TabelL
Government Spending
Eugene D. Milliken
—Sen;
FINANCIAL
B. S.
Financial Sentiment
_____Cover
It's Tithe to Itecognize Inflation!—Thomas I. Parkmsoru.Cover
—O.
Posing question:
Burrell
K.
2
3
4
tended to become
4
be too conservative
6
,
Shortcomings of*World Bank—Robert S. Byfield_i__
%.
V
A Sto^k Market
__w
The Dynamic Aviation Scene—Selig Altschul
Paradox—J. Allen Harvey
agam, or
6
Program—Rep. Leo E. Allen
Tax Reduction Essential to Obtain Risk
Capital—Emii Sch:
'
market
15
measure
of
Reserve Board Announces Amendments of
U—
and
T
Regulations
•
A
'
the
provide
the
Tf
16
ings
William
D.
Shows New Issue Advertising
'
^
21
Capital Gains Tax..
21
Buffet's
Directors of New York Board of Trade Endorses
Coinage Bill
v
-
______
25
...
Bank- and
>
Stocks..^—:
Insurance
12
_______
the
13
Canadian Securities
^
20
_________-------------------
Comilig Events in the Investment Field—>
$>,
Dealer-Broker Investment Itecortimendations
8
: —;
Diplomacy...---—------------ 14
of the KewS—Carlisle Bargeron.—
T:-;.
Eirtzig—Failure of Sterling
f
Washington Ahead
From
Funds
Mutual
-"
NSTA Notes
~
News About
*
Report
Securities
—
Securities
Railroad
v
Offerings^—
Security
Utility
44
——-t
16
Corner
Securities Salesman's
Securities Now in Registration.-^.---- —
—
5
.,34
(Walter Whyte Says)—
Tomorrow's Markets
Washington and You
;.■>
40
^
State of Trade and Industry
The
-
43
27
42
22
—----—-
Governments
.Our Reporter on
Prospective
5
Wilfred May-—--
-
Public
16
—
——
Banks and Bankers.
Our Reporter's
22
—
—
—_
—
Observations—A.
-
—
37
18
————
Indications of Busittfess Activity^
44
— --—--— -—
.evi¬
COMMERCIAL
The
Dominion
Weekly
Twice
Published
:
Other
and
WILLIAM
'
'
'
REctor
HERBERT D.
*$25 00
COMPANY, Publishers
DANA
B.
Park Place, New York
25
•
Bank
Q. S. Patent Office
Reg.
2-9570
SEIBERT,
8, N. Y.
to 5576
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per
per
per
year.
year.
Publications
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rate
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•
FINANCIAL CHRONICLE
of
Countries,
of
account
of
the fluctuations in
exchange, remittances for for¬
eign subscriptions and
be made in New York
advertisements must
funds.
WILLIAM DANA SEIBERT, President
WILLIAM
>
»
Business
RIGGS,
D.
as
»
S.
135
La
Salle
St.,
(Telephone: State 0613);
Drapers' Gardens. London, E. C., Engand,' c/o Edwards & Smith.
,
.
111.
3,
Copyright 1948 by William B. Dana
Company
Reentered
ary
25,
York,
as
1942,
N,
Y.,
secohd-clflss matter
at
the
.under
CERTIFICATES
Bond &
Mtge. Guar. Co.
Possessions.
United
Territories
Pan-American Union,
and
835.00
/
ters,
Prudence Co.
Febru¬
are
not
an
unbiased
Lea Fabrics
statistical
foundation
for \ prediction
than
the
In seeking for a concept
mal
of
ratios
price-earnings
remember
current
which
italized
than
is
the
that
earnings
influenced
nor¬
one
rate at
are
by*
cap¬
more
factor; (1) the prospect
earnings; (2) the yield
fixed in¬
one
of 'future
obtainable oil high-grade
securities; (3) the past rec¬
ord of established earning power;
come
the random variations in op¬
timism and pessimism occasioned
(4)
by
wars,
psychology,
forth.
new-era;
financial stringency, and so
first and last factors
The
flections
the
of
we
are
re¬
psychologi¬
very
cal states which
wish to
meas¬
the influence of basic
changes ,in psychology probably
dwarfs the effect on the market
ure;': And
bias.
But the exact nature of the
normal relationship can be estab¬
lished only after making certain
Punta
If
Alegre Sugar
Susquehanna Mills
U. S.
Sugar
Warren Brothers "C"
DUNNE & CO.
Members N- Y. Security Dealers Assn.
25 Broad
St., New York 4, N. Y.
WHitehbll 3-0272—Teletype
NY 1-956
arbitrary
assumptions.
This
is
particularly necessary to handle
cases, such as those oc¬
curring in
1932
the number of
rely
an
1933,
and
the statistical
on
where
is tbo small to
cases
I
Metal Forming
concept of
Corporation
average.
The
basic
New Stock
assumption made is
that the level of stock prices will
indeed
normally
with
down
and
Up
move
current
earnirigS, but
less
than
proportionate to the
change in earnings. The dampen¬
ing effect of the historical record
of
normal
is as¬
sumed to be particularly strong
when earnings are extremely de¬
flated
past
or
earning
The
current
BOUGHT
of the
terms
SOLD
—
—
QUOTED
FIRST COLONY
CORPORATION
power
inflated in
record.
while
V
52 Wall St.
New York 5, N.Y.
Tel. HA 2'H0J10
Tele. NY 1-2425
that
affect
is
reason
earnings
present yields,'even the investor
leaves the
will give weight to potential capi¬
tal gain or loss when~stock prices
come
securities.
This
factpr of established earning pow¬
er as the one major factor which
should normally affect
price-earn¬
ings ratios.
Everyone is acquainted with the
axiom of the conservative investor
earnings which are inflated
above normal are worth a lower
multiple of current earnings than
normal or sub¬
normal.
The concept of normal
very low or high.
By
computing
variations
in
price-earnings ratios from the es¬
timated normal a rough index of
go
speculative
sentiment over the
past 07 years may be presumed to
be available.
A study of this in¬
dex
yields
a
variety of
In the first place, as might be
rest largely expected, no simple repetitious
pattern is revealed.
There is in¬
but this judgment
will be influenced in turn largely
by tfre record of the past.
fore, * the rate at which
There¬
current
capitalized should be
are
99
WALL
STREET
NEW YORK 5, N. Y.
conclu¬
SUGAR
Raw—Refined—Liquid
,
earning power, must
judgment,
LAMBORN & CO.,Inc.
sions.
those, which;.are
on
/ '
-
extreme
changes in yield from fixed in¬
Of
...
V-
unmistakable
deed
the
influence
in
tions
of
random
psychology
(Continued
varia*
caused
on page
Exports—Imports—Futures-
of
evidence
*
Dlgby 4-2727
by
24)
We
are
interested in offerings of
B. v. D.
High Grade Public Utility and Industrial
Corp.
PREFERRED STOCKS
Analysis available on Request
Spencer Trask & Co.
Members
New York Stock Exchange
Members New York Curb Exchange
New York 4
-135 S. La Salle St., Chicago 3
25 Broad Street,
HA noVer
Tel.:
2-4300
Tel.:
\
FINancial 2330 ^
C. E.
Unterberg & Co.
Members N.
Y.
Security Dealers Ass'n
61 Broadway, New York 6,
N. Y.
'
Members
U.
S.
Members
of
But
Lawyers Title & Guar. Co.
Newburger, Loeb & Co.
States,
per
do
*
post office at New
the. Act of March
Subscription Rates
in
and
Broadway
System Teletype N. Y. 1-714
analysis of turn¬
ing points within months or quar¬
rough index of basic
a
Lawyers Mortgage Co.
N. Y. Title & Mtge. Co*
I. 1879.
Subscriptions
basis
1908
Security Dealers Assn.
2-4500—120
TITLE COMPANY
.
Offices:
annual
an
Bell
Subh evidence should be flated or deflated relative to the
of some value in answering the preceding
10 years does reveal
$64 question today*
Are present the existence of a definite rela¬
price-earnings ratios so low that tionship.
the market could resist a decline
In discovering the existence of a
in earnings?
Even if past expe¬ relationship certain accepted sta¬
rience provides no simple pattern tistical
procedures
have
been
but only some indication of rela¬ used to minimize the influence of
tive probabilities this is a firmer subjective judgment and personal
earnihgs
Every Thursday (general news and ad¬
vertising issue) and every Monday "(com¬
plete statistical issue — market quotation
records, corporation news, bank clearings,
atate and city news, etc.).
*
/
Other
Chicago
REctor
Manager
Thursday, March 11, 1948
]
Established
Members N. Y.
that index in the most
on
permit detailed
Lester V. Pltim
that
.
J.K.Rice,Jr.&Co.
past.
must
Business Man's Bookshelf.—
-
on
above
-————Cover
(Editorial)
It
SeC
We
Of
use
nately, the statistics available
mystical
attempts
to read
mythical mind of the market.
Regular Features
As
Tennessee Gas Trans. Co.
earnings ratios and the amount by
which current earnings are in¬
29
—
Prentiss M; Brown Stresses Need of Tax Coordination
Gold
by
Poor composite
be used
Tax Committee of Association of Customers' Brokers
Propose Change ih
present
and
(w.d.)
Finishing Com. & Pfd.
to
changes in market sentiment over
—_____L__20
Monetary Fund's Currency Sales Exceed $500 Million
r
4-6551
Texas Eastern Trans. Corp.
correlation between annual price-
U. S. French Chamber of Commerce Explains Franc
,__
STREET, NEW YORK
sta-
19
EffeCtive.__._-
...
these
and below this normal could then
Ektche & Co. Hblds Currency Devaluation Aids Gold Mining. 19
Devaluation
back
going
extends
17
±
__________
U. S.
of
recent years, a long period of time
is available for study.
Unfortu¬
varia¬
tions
Standard
earnings
his¬
On
level
the
index and reasonable estimates of
ratios
dence,
Lehman Brothers Survey, Conducted by Roland Pdlmedo,
-
the
a
earn¬
torical
16
Riggs)
we
normal
based
Fifty Years! (Tribute to Elizabeth F. Kelly and
-
statistics
one
nor¬
-
to
a percentage of the av¬
of the preceding decade.
The Cowles Commission studies
If
Thomas Graham Defeated for Louisville, Ky., Mayoralty....
1947
it.
Dorset Fabrics
earnings in terms of the
to
price
Deposits in
sold
Kingan Corii. & Pfd.
references
erage
criterion
Preston Delano Reports Increase in National Banks' Loans
frequent
say
1871.*
of
and
I
that
now
obsolete junk.
Telephone: WHitehall
current
past,
itstics
11
,
easy
my
again attained.
somehow
is
Julien Collins Warns Against Abrupt Deflation..
,
But
what
10
:
and
Obsolete Securities
Department
related
an¬
could devise
; 6
___.
free
rid of all
know where
99 WALL
happen
<S>-
mal.
5
so
got
are influenced by
this important factor is the element
alyst knows
Financial Analysts Elect New Officers..
*
cannot be
psychology.
too
or
that
.
William D. Riggs Honored by "Chronicle" Staff
v;
Ycu
Philosophically speaking, it is probably im¬
states
'
.
feel
ve
Holds it would
1929 crash could not
high imply
17
____
on
current
low
Grounds for Tax Reduction—Roswell Magill
!
' '
'
'*
*
$
*
that
price earnings
ratios are tod
14
Situation—Thomas K. Finletter„
assume
fact
that
13
The Difficult International
psychology.
to
to, the
-
Labor—Roger W. Babson__
to
that peak of 1929 bull market
possible
—Philip L. Cafret
A Warning to
of
12
United Froilt Needed by Securities Industry
"
shorter^ but Wider in amplitude.
earnings but that superimposed
8
am
I
1
Most students would agree that market levels
7
The Interest Rate Pattern—John H. G. Pell
.
low that the
so
a
changes
prices since 1881, Points out influence of mass psychology on
maikeh trends, and concludes periods of
optimism have apparently
The Benelux Union: A Step Towards European Integration?
Problems of Foreign Aid
price-earnings ratios
I'M DANCING
declins in business earnings, Mr. Plum ttaces
in financial sent.ment and their effects on stock market
i
Measurement of Financial Sentiment—Lester V. Plum
.•—Hedy D. Jellinek
are present
maiket could resist
No Likelihood of Credit
Stringency in 1948
—William Hurti Hillyer______________
LOOK, MA,
Economist; Calvin Bullock'
Market Effect of Large Accrued Dividend Payment
.
AND COMPANY
By LESTER V. PLUM
Cover
______
CHRONICLE
Measurement of
Page
Taxes and
"
&
year:
in
15 Broad
New
York
St., N.Y. 5
Bell
TeletVDe
Stock
Exchange
WHiteha!) 4-6330
NY
1-2033
jilll-'/
Aihanv
-r
Boston
•'
-
Teletype—NY 1-5
Glens Falls
-
/c..
:
Schenectadv
-
Worcester
Telephone BOwling Green 9-3565
Teletype NY f-1666
•1
THE COMMEBCIAL
(1100)
CHRONICLE
FINANCIAL
&
Shortcomings of World Bank
Towards
European Integration?
The Benelux Union: A Step
World Bank as set up at Bretton Woods can suecessfully operate only when anchored in a firm foundation of sound
political and economic conditions. Holds it practically impossible
for Bank not to be influenced by political considerations, and fore-
of New York
the Netherlands has
universal interest as
Asserts while Benelux has good chance for success, long period of adjustment Will be required to solve differences in
price structures, agricultural systems, and over-all economic policies.
1
says
Looks
of a customs union for Europe
nade its appearance several times as one of the possible remedies for Europe's ills. It was
mentioned officially in the General Report of the Committee of European Cpoperation,
in
and eventually to
left by the dis¬
appearance of the vast German
market.
Another important ad¬
their
economic collabora¬
integration. For
regional
1947, but the
tion and eventual
Committee
this
reason,
it appears worth¬
while to analyze its various aspects
and to attempt an evaluation of
concluded
that ''no
Background
full. and
effective
operation
a
•the
the
"a
toms
of
result
tional
con¬
in-exile
themselves
of
union,
three governments-
on Sept. 5, 1944. This ac¬
provided for the formation
.
customs union
a
of
towards
between
plete economic union between the
sev-
Hedy D. Jellinek
jeral large and
The
involves com¬
economies
plex technical negotiations and
adjustments which can only be
by progressive stages
period of years." While no
agreement was reached in Pans
on
the question
of a customs
union for Western Europe, a study
idea
■the
of
integrating
the
the Belgo-Luxem-
of
economic
jachieved
over a
unit.
economic
Since
the
them
abortive.
The
last
to lower their tariffs
Brussels
in the middle of November, where
problems
until
on
It should
confronting the customs union
Belgium, Luxembourg,
had
and the Netherlands.
raised
between
.
Thi.i customs
popularly
union
called
been
standing
by
it
to
This
the
A
Benelux Union is blessed with cir¬
cumstances
so
unusually favorable
since
as a
in this
success
criterion,
case
would
1937
the
of other European na¬
reaching the same
Its failure^ on the other
would immediately elimi¬
case
tions bent
goal.
hand,
nate
eventually the state of full
economic integration. :
all
hopes
entertained
for
jnot
son,
a
a
the
Benelux
nevertheless
ample of
-
experiment is
highly useful
a
the problems
Netherlands
nation
-
revive
customs
was
nomic »union
countries.
the
for
a
common
uis-a-uis
the
rest
the
fullest
three
union
in the
the word
is ap¬
customs
a
of
sense
parent from the continued main¬
or
To
imports
illustrate,
into
the
Netherlands from France will not
widen considerably their markets
be subject to customs procedures
for each other's products by abol¬
at;(the
ex¬
involved
gone.
tive purposes.
a
at the
look
Byfield
S.
Robert
hoping
now
!
ishing customs barriers between
;
Franco-Belgian
Continued
«f!'>•/!>
•
on
page
frontier,
24)
v.-
•
■
If!
■
>
-"/i'K't
the
has
*'
our
turned
International
hands.
was
FROM BEAR TO BULL.. AND WHY
v
with
so
uncertainties
many
still
are
•
wtt*1 trade as-a-whole1 not unlikely to slump.
Major Angas is recommending this policy, with
*
Yet
certain
qualifications.
Just off press, Digest
Why."
......
' "
••
his
201, "From
current
Bear
.J
to
Bull, and
center
by Dr. Harry White of the U.
Treasury in Washington.
'''■'•■•A"
•„
...
The above Digest will
shortly be •followed by another,
entitled "The Coming Bona Rescue Inflation," con¬
cerning which little has been written in the press,
even
cause
later
So
though it is'an approaching factor which
a new boom
when a slump is expected,
a
slump when a boom looks secure.
far
Rescue
I.
tion.
Send
America has suffered or enjoyed a
Inflation under Roosevelt; a Deficit
by
Mi J.
fourth,
a
•
'
1
of
»
•
•
>
■''/.<
■
.
i
■
...
' '
•
Council
on
International
nervous and
multuous
S.
Issued, as market conditions
warrant;
minimum
Or, FREE with
the Articles of
conditions
of
a
The
will
basic
'
The
cost
of
this
tirpe:
■
(2) To promote private foreign
investments by means of guaran¬
tees
or
other
participations in loans and
made by pri¬
elements.^
likened to politi¬
stability includ¬
Thereafter will come the
a
per
of
the
"
tation.
v
comparable to the
Bank, the Fund and other phases
of the more advanced stages of
rehabilitation and reconstruction.
These
are
But this type
go far
of analogy does not
enough.
The
builders
of
our
mythical
Mr. Capital¬
ism, a contractor with great ex¬
perience, but who of late has had
tough
sledding.
They: haven t
given him anything like a free
house have employed
(Continued on page 23)
second
i
Argo Oil
,
Foundation Co.
DuMont laboratories
Graham Paige 4s, 1956
regular subscription—
Bought—Sold—Quoted
Seligman, Luketkin
calendar year
YM
».
}
;
1
&>
Co.
;
41 Broad Street
ANGAS
*
*
^
instal¬
plumbing, heating
and electrical components which
are
admittedly essential to the
proper functioning of the habi¬
lation
investments
q Cash
a
systems, and it goes without say¬
ing, the primary appeasement of
hunger and basic housing needs.
;
(1) To assist in the reconstruc¬
tion and development of terri¬
tories of members by facilitating
the investment of capital for pro¬
develop
ing, the creation of sound currency
accepted
;;'v
to
structural
cal and financial
and New Zealand are now mem¬
,,
is
These may be
Agreement of the
,
task
mental attitude; that is, a
to build.
Then comes, the
foundation and the erection of the
effect. All
important countries except Russia
bers.
first
INCORPORATED
mii
"cold"
proper
Bank to put them into
M
( MAJOR
banks
It is conceded that these obser¬
Mone¬
ductive purposes.
THREE MONTHS $8
Q.
15
that
vations may be controversial, but
By December 27th of that year
sufficient countries had
blind.
These Are Tax Deductible
knows
war.
ernment.
1
$25 Q
of
con¬
cannot be effective under the tu¬
the
a
leading bear at last turns around, his ex¬
planations make interesting reading. Successful buy¬
ing nearly always looks and feels wrong at the
time,.for money is not made on the Stock
Exchange
except by buying stocks when cheap, and the public
Infla-
foundation
fight wars, but it is appar¬
ently not understood that even a
gigantic institution of this kind
nating agency for representatives
of the United States on the Bank*
When
$2 Q for Digest 201, and Its sequel, 202. Or, One dollar each.
ONE YEAR
Everyone
Electrol, Inc.
and a post-war Bank lK)an Infla¬
These three inflations, all of a different
type,
firm
a
the
and
Trade
in
cannot
A
■
the
importance is paramount.
Digest, 202, is
.
•
U. S.
and
may
>
.
These do not exist.
Treasury
American
scene.
in
a
political and economic
ditions.
experts. Stabilization plans had
previously been made public both
by Lord Keynes in London and
announced at that
Managed Money Cycle, that really
govern the swings in prices and profits in
which
businessmen and investors are vitally interested.
It is a difficult
subject; therefore rarely understood
by bankers, brokers, or investors.
But its practical
...$1 q Cash
..
apparently to be followed
Bond Rescue Inflation.
a
I*
Another piece of
financial, folly is ahead.
You
ought to know about it in advance; for it is these
subtle monetary factors/hidden away in the nuclear
forecast
V
>
.
Read
now
namely
unresolved,
chored
of work on the part of
arid
British
international
sound
itself the culmination of over
two years
at
re¬
basic maladjustments
ing must be based on monetary
stablity which in turn must be an¬
in 1944,
the
envisaged
was
not of itself create monetary sta¬
bility, for its successful function¬
at that time
conference
but
as
monetary organ¬
ization—a financial plan. It can¬
accurately vis¬
scarcely have been
ualized at Bretton Woods
such
The Bank is
1948, could
The world as it is in
In view of the world-wide un¬
U
what
the
non-existent.
are
that, worthy and necessary as
are, their achievement on any
dress of
the Axis Nations have
on
;
•
Bretton Woods must await the
victories
military
they
scale
but
anything
been
The
predictable events since Bretton
Woods, it is of interest to recall
the chief purposes of the Bank as
Today it may look, to the general public, Irrational
for an almost consistent bear to start
buying stocks,
sion
pe¬
and
riod
:
.
A careful analysis of the fore¬
going goals leads us to the conclu¬
world has had
Fund,
the
Export-Import
tenance of customs frontiers be¬ Bank of Washington, and various
tween the participating countries. other lending agencies of the Gov¬
weak¬
either partially
are
(4) In short, its objectives are
the international flow
erf all types of capital for produc¬
The Western
postwar
of
to promote
come
tary and Financial Problems was
equivalent, how¬ also established. This is a coordi¬
to
many,
and
maintenance
balances of pay¬
ments.
V-E
V-J days
and
the
and
equilibrium in
Con¬
Woods
reasonable terms.
participation in the Bank perhaps our point may be illus¬
Fund was provided for trated if we
compare European
by " Congress in July,
1945, - at post-war reconstruction to the
and the col¬ which time the National Advisory
building Of a house.
tariff
to
ever
eco¬
totally eliminated, especially Ger¬
they
stage,
That this is not
has
war
reasons
Economically
.
trade
,
.
between
markets
first
in the Benelux area,
lection of duties against its mem^
bers will be entirely eliminated.
once
ened and with some of their for¬
eign
at
Bretton
e
on
of the worid will come into force
to the project.
of
this
In
in
it
returned
The aftermath
While
perfect standard of compari¬
favored
that agreement.
Nothing further
underscored the
on
customs union elsewhere.
-
attempt to
failed.
more
•not automatically indicate success
;in the
final
customs
reach
done until 1944 when the governjnents-in-exile of Belgium and
ias to lessen its value
most
treatment under
full
tion, outlined in Some detail as
early as 1944, that is designed to
American Governments, who de¬
manded
a
the first stage in a planned evolu¬
objections
British and
"Benelux," is being gen¬
erally watched as an indicator of
even
union. It does, however, represent
effort
the workability of European eco¬
nomic integration. Actually/ the
common on
called
be
the
by
be noted at the out¬
this subject,
of Benr
elux which started operations on
Jan. 1, 1948 is far from being an
economic union, and cannot yet
progressively
achieved.
doomed
was
po¬
that the economic entity
general reduction of 50%
a
t h
good-will and cooperation, the
prerequisites
for reestablishing
international
trade,
rebuilding
shattered economies and reorgan¬
izing bankrupt currency systems,
stronger
the world market.
a
set in order to avoid a misunder¬
in each other's favor, with a re¬
duction of 10% foreseen each year
it discussed some of the
..were,
sour
Scope of the Union
Ouchy agreement of
1932,
in
which the three countries agreed
the Netherlands. This study group
held its first meeting in
F u.n d,
formulated
over
from
'
Develop¬
(3) To promote long-range bal¬
anced
growth
of
international
single
a
and
investors and to provide fir
able
Monetary
pleasing.
sition
the
was
the
temational
to be reaped
the nineteenth century
several attempts towards reinte¬
gration have been made, all of
nevertheless set up by
some* of the governments repre^
on the Committee under
the leadership of the BelgiumLuxembourg economic union and
n
market, and the long-run benefits
latter
group was
stitution,
I
result
and the Netherlands into
Reconstruction
nancing out of its own resources
if private capital were not avail¬
coordinate ihr
result from the fusion of the Bel¬
of
rented
in¬
expected to
for
vate
its
and
have
of
Bank
International
the
when
Bank
the markets
production
the
ference,
advantage
cartels and other
adherence to international
policies, if security of its loans is to be protected.
Bank as government-subsidized private corporation.
ment, popularly known as the World Bank, has Jseen relegated to a
subordinate position in filling the world's economic and financial
needs in this transition era is already well known. Since July, 1944,
gian-Luxembourg economic union
union
part
immediate
creased
and* the
Netherlands is not new, but dates
back to the separation of Belgium
from Holland in 1830, prior to
which this area had been a single
bourg
stronger
tegration, they hope to gain both
three countries.
indus¬
trialized countries
com¬
for its
upon
That
the world
to win for
of
some
a
on
formerly supplied by German in¬
dustry,
Thus, by regional co¬
operation leading to eventual in¬
first step
as a
realization
the
particularly
'highly
Once in
trade.
competitivevpositibn
market, they hope
cord
cus<-
re¬
becoming the
fourth ranking area in interna¬
union is
convention
undoubtedly
their
from
sult
customs
a
cluded by the
of
pen'' and
that
Benelux
The
by
stroke
that will
sition
be brought
into
the gap
vantage is the improvement in
their international bargaining po¬
its chances for success.
union
toms
can
cus¬
borders,
narrow
need
sees
'
<
interventionist
During,the discussions on the Marshall Plan, the idea
published in
September
Stock Exchange
Writer points out
customs union between Belgium, Luxembourg and
indicator of workability of European economic integration.
Federal Reserve official
ROBERT S. BYFIELD
By
Member, New York
By IIEDY D. JELLINEK
Research Department, Federal Reserve Bank
\
.Thursday, March 11, 1948
New York 4,
N Y.
Number 4680
167
Volume
THE
COMMERCIAL
&
FINANCIAL
(1101)
CHRONICLE
5
Wm. D.
Steel
The
Observations
Electric Output
C&rioadings
State of Trade
Commodity Price Index
Food
Price
Business
Index
.
like
overlooking the truism that a nation is a composite of diverse
individuals, is particularly acute under present conditions.
The high degree of selectivity of the market
vailing in the similar week of 1947.
.Order backlogs suffered some slight contraction as was true of
previous weeks, though demand for most manufactured goods con-i
tinued to be substantial.
•
-Industrial
-
\
t
.
experienced
some
is
cessive week.
Most producers, however, were able to obtain an adeof raw materials and were bothered little by labor'
*
*
*
•.
lower than 1937.
since
<
A. Wilfred
,
turnout
last
.
cut back
sheet
steel
shortages.
were
and
15.4% below the record-breaking high of 13,006 in Jan¬
1946.
\
Nearly one-half of the 11,000 January charterings were concen¬
trated in the five States of California, Illinois, New Jersey, New York,
uary,
and
New
and
Jersey with 504 and 415, respectively.
long line
a
His brother
Chairman
Riggs,
o
Lamborn & Co., formerly was as¬
sociated with
"Chronicle."
the
a
have
ail
but
component of desirable issues combined w.tl
stale. Thus, the discounts of 10 to 40% at
a
gone
one
the closed-end
of
trusts
are
selling in
now
Abitibi Power &
Brown
Paper Co.
Company
Minnesota & Ontario
Paper Co.
HART SMITH & CO.
52 WILLIAM ST., N. Y. 5
Bell
HAnover 2-9980
Teletype NY 1-395
Montreal
New York
<
Toronto
the
Y
Y
Selectivity
practicing his selectivity on a statistical basis. At the close of
splendid annual report for 1947 President F. C. Crawford (former
NAM President) wisely cautions:: "We wish that we might confine
than
lis
the statistical comparisons that mark 1947 as our out¬
peacetime year.
However, while these -tangible results
do justify a measure of satisfaction, we cannot overlook the un¬
certainties that are an inherent part of today's conditions." ' Mr.
this report to
IIODSON & COMPANY,
standing
at the textile industry and in the Far West, the recent Crawford then goes on to cite the corporate risks arising from
commodity prices has set bankers hurriedly looking over inflated wages, prices, inventories and slow deliveries. Not only ate
or indirectly on inventories of raw ma-; these factors
impossible to measure quantitatively,' but they vary
'yy..:-i-
.
For the banking
L,/''
'
'
:
whole, s states the magazine, there
are at least four things that help explain the new policy.
The first is
the mildly restrictive measures that the Federal Reserve Board has
applied to the money markets under the leadership of Marriner S.
Eccles. The second is the repeated warnings for caution in lending
policies from federal and state bank supervisory authorities. Third
system
as
a
in
order, the campaign for voluntary restraint now being conducted
by the American Bankers Association, and fourth, a general uneasi¬
bankers over the rapid increase in loans to business and
agriculture in Ihe past two years.
from
industry
Inc.
' Y
*
*
.
■
...
/.
;■
'•
'■
.
'
industry,
to
and
from
even
to
company
165
Broadway, Now York
company
single industry." Most textile, meat, and retail companies
have not been able to escape from the devotion ot cash' earnings
within
and
a
and
unit-expanded
to
reserves
high-priced inventories,
with
liquidity—in contrast to rails and utilities. Such sharp bal¬
sheet differentiations also frequently occur between companies
imuaired
ance
scrutinized by the intelligent in¬
industry, and must be
within
an
vestor.
*.'/ .Y.-'
'
"New Er»" vs.
among
.
C.
men.
and
that depend directly
terials."
\
Charles
of
comes
eye
wary
spill in
ness
Riggs
newspaper
Unfortunately for the lazy speculator, much more must be done
payment, but have also turned cautious about the kinds of loans they
will grant regardless of rates and terms.
In New York, some of the
big banks not long ago were scuffling with each other to make term
loans at 1V2% to 2%, and now they are happy to leave that business
to the insurance companies. Southern bankers are beginning to cock
-
Mr.
of
now
are
Qualitative
Growing evidence of a tightening in credit is being reflected by
banks and, states "Business Week" magazine, in its current editorial,
"Bankers are not only edging up interest rates and want quicker re¬
loans
those attending were;
Seibert, editor an<
D.
market, reflect the public's realization of trust managers' difficulties
in combating the selectivity element which obstructs their policy of
consistently attempting to "beat the market" with capital gains.
-
a
the shorter term,
steel, agricultural machinery,
petroleum,
earnings, whereas
that
which
third with 629; in fourth and fifth positions were Ohio
was
Among
Herbert
the wide declines in the motion
distilling industries, and contrari¬
and
Dow-Jones industrials
cally manifested by
New York had 2,747 incorporations, the highest number
individual state, while California was second with 840 and
Illinois
in
advances
1947
those
Ohio.
any
Riggs by his associates at
gathering.
tainable at four-to-five times earnings.
11,0C0 stock companies incorporated in the United
States during January, 1948, according to the latest compilation by
Dun & Bradstreet, Inc.
This represented an increase of 874, or 8.6%,
from the December figure of 10,126 and was the highest total for any
month since January, 1947, when 12,112 new businesses were incorpo¬
rated. The January, 1948, figure was 9.2% below the January, 1947,
for
over
selling at about nine times
multitude of other equities are ob¬
Similar is the latters' contrast
with the comparatively low 5%% dividend yield on the D-J com¬
panies. And even among the stocks comprising the Average, dispar¬
ities in capital appreciation and dividend performance are notable; .
Thus far this year we note that aircraft and airline issues have
out-performed the averages, and practically each day a number ol^
new highs and lows for the year are being simultaneously registered
Inspection of investment company portfolios will attest to the
contrasting dynamism and decadence of different sections of the
securities market. For today's net result of these expert managers
having used the most painstaking and informed judgment is typi¬
their
G. M. plants in this
country made only an estimated 39,720 cars and trucks the past week,
47,000 shown in revised figures for the preceding week.
total
A gift was presented
for example in
as
picture
in
The
far beldw the
There
the
Miller's Restaurant
at
March 9.
to Mr.
storage battery stocks.
week,
of
because
May
•
.
wise
Ward's declared, probably would have
.exceeded the preceding week's, if General Motors had not been forced
to
'
Likewise
the
beginning of 1947, although the DowJones average of industrial shares has fluctuated
within the unusually narrow limits of a 7 % range
around the median, and shows a mere net decline
of 5V2% in the interval, nevertheless individual
issues have advanced and others declined by as
much as 50%. This has likewise applied to groups,
..
1
In the automotive industry, according to Ward's Automotive Re¬
ports, the industrial gas shutdown is reflected in preliminary totals
for February, which list only 274,694 cars and 109,525 trucks made in
the U. S., for an aggregate of 384,219. This is only slightly higher than
the 379,158 made in the same month last year and well below the
424,872 turned out during .January. ;
v
\
;
The trade authority reported
that February, compilations for
Canada bring the total output for both countries to 400,582, and esti¬
mated production to date this year at 952,212 vehicles, r
The
given
ner
on
The
long-term record shows that" since 1929.-, publisher of the "Chronicle";. Wil
although the Dow-Jones average has declined by liam D. Seibert, President, ant!
almost 50%, 185 individual issues are now selling other officials and members of Rk
above their former peaks. 147 stocks are higher staff. A number of former "Chron than in both 1929 and their 1937 bull market icle" employees from the financia!
highs, while 38 issues are higher than 1929 but district also were present.
dif-|
ficulty in an attempt to fill their requirements, notwithstanding the
fact that steel ingot output continued to advance for the second sue-!
quate supply
disputes.
quantitatively evidenced by the actual diverg¬
equities and groups.
ent movements of individual
?
.•
..
of steel and steel products
users
of
.
noted in total industrial output last
most part well above the level nre-
was
icle's"
As usual, much of the current investment comment insists on
referring to "the market" rather than to stocks. This error, which is
was
for the
honored by the "Chron¬
employees, f(or his 50 years
continuous service, with a din¬
icle,"
"THE MARKET" VERSUS STOCKS
Failures
J
week with production
Delaney Riggs, business
advertising manager of- the
"Commercial and Financial Chron¬
and
By A. WILFRED MAY
Auto Production
Industry
Moderate improvement
William
Retail Trade
-
and
Riggs Honored
By Staff of "Chronicle"
Productioa
'YYYv.
y
Cyclical Companies
''y-'vjv'
•
oil
crude
producer
that
-
postwar stage of! bur economy
over
speculator must take note) of likely "New
industries, as against the cyclical nature of
continual
had
has
the long-term investor or
Era" attributes of some
other reported earnings
—despite the fact that iiTmany cases both categories are priced at
very low price-earnings ratios.
Included in the former group may
well be the aircrafts, liquors, certain chemicals, and possibly even
railroads; and in the latter declining category: retail stores, coppers,
and oils.
If our diagnosis is correct, the former shares will rise over
the long-term while the latter are falling.
;, :i. .v .,
=
And of course the variegated incidence of a Defense Economy
At this
Kingwood Oil Co.
A
*
the
past
earnings
seven
years.
,
The dollar volume of retail trade
slightly during the week and
remained moderately above the level of the like period a year ago.
Favorable weather in some areas and promotional sales of spring
merchandise stimulated consumer buying. Shoppers continued to in¬
sist upon good quality and moderate prices. Easter apparel and arti¬
cles for home sewing attracted considerable attention.
;
rose
volume increased slightly in the week with a sharp
attendance at the wholesale centers. Some retailers re¬
Wholesale
rise in buyer
stricted
their
purchasing to current needs while awaiting the
reaction to goods already in stock.
sumer
STEEL OUTPUT SCHEDULED AT
'
'
-
The steel gray
than
no more
takers this week. Steel
a
on
the
wane.
High premium
week ago are finding few if any
who
a
•
.
month ago were
and
taken into account.
•
•
*
•.
*
New York 5, N. Y.
Tele NY 1-2078
*
any
is becoming increasingly
concerning himself with
selective appraisal of individual issues, rather than with a fantastic
concept of "the market" as a whole, will be indispensable!
repercussions on the investment markets, it
evident that the thorough security analyst,
ly, in its current review of the steel market.
Y * " While it is true that a considerable amount of steel is still
PETER MORGAN & CO.
31 Nassau Street♦,
Tel. BA 7-5161
M Y:y/Y',.'
'
Analysis Available
event, and irrespective of the course of the domestic
world's political and economic events, and the manner of their
I„
anxious to
buy steel at gray market prices are staying away from such sources
in droves, according to "The Iron Age," national metalworking week¬
consumers
must be carefully
96.6% OF CAPACITY
market this week is
prices that obtained
con¬
Market 2%-3 Vs
being
i:.v;
\Ye^Offeri
"deardorf
sold in ihe
premium market at higher than mill prices, the crackup
ih the super gray market will bdgin to filter down, states the trade
paper.
Already conversion deals which utilize ingots purchased on?
the outside and processed into flat-rolled material are falling apart
in those instances where third quarter demand was involved.
I ; I Conversion operations for the first and second quarters of this
year are still being held intact, but beyond that date there is a wall
of silence
which
is
Time Inc.
(I
Dravo
?-;•(
Automotive
|
„
'
causing first class jitters for ingot makers who
^
the
are
factors
chief
in
putting
CORPORATION
Corp.
price
this
One
year.
broken
up
of
the
large
automotive
companies
has
up
even
its conversion plans for the second quarter and spewed
unconverted
material
into
the
open
market
for
FREDERIC H. HATCH & CO, INC.
.
It
is
now
certain
that
hundreds
steel
fabricators
who
:
.
V.
-
(Continued
on page
39>■'•••
^n/y. security
were
63 Wall
-YY.
%
Established 1888
sale—with
MEI
of
[
-tj
few takers, notes "The Iron Age."
Street, New York 5, N. Y.
41 mm w
* * i
Dealers
Teletype NY
executed by
CO.
1
.
y
«B..«JwV'MewYc9,k7^ '
Green 9-79
X
1-897
Share
TEIUER &
Establuhed W3l
'"Tel,
association
Bell
30(S per
Orders
Bought—Sold—Quoted
resistance against conversion deals beyond the second quarter of
its
1
companies
drilling
,-n
American Maize Products Co.
have supplied the raw material, the magazine adds.
*
v
BOwling
e
THE COMMERCIAL
.me?)
The
t
CHRONICLE
FINANCIAL
&
Dynamic Aviation Scene
By J. ALLEN HARVEY*
By SEUG ALTSCHUL*
Mr,
Financial Consultant, Congressional Aviation Policy Board
Harveyrnoting general business is at peak while stock market
is at bottom, looks for improvement when public faith is reestab¬
lished in our economy and current plethora of uninvested funds
\
Congressional adviser defines in detail legislative status of air defense programv Asserts despite pre*sure for general budget curbs, Congress will find it impossible to resist pressure for'increased aircraft
I want to make it clear that
We find
maintain
final
re-v
sponsibility of
the
report
with the
rests
itself.
Board
It is
fine
a
re¬
port and must
be
viewed
as
constructive
a
contribution
the
to
tion
avia¬
develop¬
of
ment
the
It
country.
was
great
a
~~
ments
prepared by the Navy and
Forces
marized
separately,
under
proceedings
A
ground -that
I
be
may
able
properly disclose and which
fce of
The failure of the Secretary of
Defense
formulate
to
major hinderance
Perhaps this is one
a
to the Board.
from
why
master
a
the
Board
making specific
refrained
It
interest
is
to
you.
extremely
important to
widespread miscon-!
dispell some
ceptions as to
did
what
the
Board
did not recommend.
or
reports
paper
to
popular
have
belief
News¬
fostered
that
the
the
Board
fense
fore
N,
Y.
Society
of
Security
Analysts, March 9, 1948.
as
level of aircraft
information
same
was
re¬
,
by the President's Air Pol¬
is small wonder that the Congres¬
sional group was very much dis¬
pleased.
The
that
significantly
de¬
"notes with deep
it
concern
that
services
budgets
the
1948-49
in
are
armed
amounts
arbitrarily allocated by the Bu¬
even
the Budget. They do not
approximate the stated re¬
of
quirements of the services."
In'
strong recommendation,
the, Board urges the Joint Chiefs
# ;
BOSTON
really
bestir
request
from
a
the
is
Boston
&
Prior
Maine
Gruen Watch
Company
DuMont Laboratories
RR.
Data
on
Los Angeles
Also
Waller J. Connolly & Co., Inc.
24
Federal Street,
Tel. HUbbard
Boston
2-3790*
10
Tele. BS 128
New
mittees.
It is
group
to
tures
but
Stock Exchanges
Angeles
Pittsburgh, Pa.
Hagerstown, Md.
N. Y. Telephone—WHitehall 3-7253
and Los Angeles
LOUISVILLE
also
the
It
Southern
Gas
Pittsburgh Rys. Co.
Murphy Chair Company
Co.
Incorporated
Long Distance 238-9
Military
total
H. M. Byllesby &
Training
Plan.
The
and
RIttenhouse 6-3717
of
>•: +
will
When
into
flow
their
endorsement
by
Now, what
and
and
B
mean?
requirements
un¬
sets of conditions.1 '
A
summarizes
the
B
would
aircraft
require
action.
a
com¬
procurementpro¬
of 63 million pounds annu¬
ally for the next five years. Plan
A
would
to
an
of
average
111
million
73
(Continued
page
ST. LOUIS
1948, the
amendments
customer to
a
to
make
9.5
20 times,
much faster the flow.
so
It will not be because of inflation
psychology that this will happen.
They will flow
Just the opposite.
there because it is a place of safety
where they will produce earnings
income and, above all else,
they will represent a part owner-
and
hip of
.
country's resources.
our
*Mi.
Harvey is associated with
the St.
Louis office
G. Ed-?
of A.
wards &
Sons, members New York
Stock Exchange.
!
its
Regulations T and U in order to
sub-^be
account
after
in
an
undermargined
(one having a margin of
less than 75%) without having to
supply additional margin.' Such
substitutions
be
in
an
account
may
made, for example, by the sale
security and the.purchase
one
of
another.
stitutions
Previously such sub¬
limited
were
by
the
that the proceeds of sales of
rule
securities
in
an
undermargined
account be used to the extent
nec¬
on
have
adjusted
an
value
the
maximum
great
or
(2)
securities
drawn upon
of
that
of
ments
do
not
add
to
the
amend¬
amount
of credit available for stock
ket
transactions
under
The text of
■>-
■
Regulation T, relat¬
ing to substitutions,
as
mar¬
existing
as
amended,
follows:
tered
or
or
regis¬
at
last
as
be
may
with¬
the deposit in the ac¬
cash, securities, or both,
the
the
loan
maximum
deposited
(plus the amount of any cash de¬
posited) is at least as great as the
securities
maximum loan value of the secu¬
rities withdrawn, and the current
market value of the securities de¬
posited
(plus
cash
any
as
exempted securities shall
value
loan
the amount of such cash,
as
value
The
ac¬
(1) cash may
be withdrawn upon the deposit in
the account of securities having
such
basis.
the
except that
to increase the margin on
remaining securities until it is
75%
'.loan
maximum
securities in
the
of
count,
the
withdrawal,
exceeding
the
essary
the
such
account,
would
debit balance
if
permissible
count
32)
SPOKANE. WASH
•
statement issued by the Board of Governors of the
System on March 9, it is stated that effective April 1,
Board of Governors of the Federal Reserve System has
made technical
reads
on
great
value
of
the
amount
of
deposited)
is at least
the current market
as
the
securities
drawn."
,
.with¬
...V:,v;v
M1IIIIIIII1IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII
I
i
Bassett Furniture Ind.
SECURITIES
For
Stix & Co.
INVESTMENT SECURITIES
309
Scott, Horner
Mason, Inc.
olive
street
&
of
Immediate Execution of Orders
Quotes call TWX Sp-43
Exchange
St.LouisI.Mo.
Pac.
other
LD 33
(llllilllllillillllllllillllllllllllllllllUP
from
Std.
COMMON STOCK
Floor
11:30
Time:
Sp-82
$4
at,
A
per
share
Prospectus Furnished On Request!
it
Corporation
Members Standard
of
Exchang*
on
to
standard securities
Brokers
Members St. Louis Stock
10:45
Wisconsin Central Airlines, Inc.
hours.
.
Lynchburg, Va.
or
A.M.,
Dan River Mills
Tele. LY 83
1
NORTHWEST MINING
Trading Markets
American Furniture Co.
-
Stock
Exchange
Spokane
Dealers
-
Branches
Kellogg*, Idaho
and
Members:
Underwriters
Peyton Building, Spokane
at
Yakima, Wn.
-
8.5
,
Federal Reserve
step aircraft production! regulations.
pounds annually during this fiveyear period.
By contrast, in the
22.8
16%
press
of
initial
Earnings
14%
times earnings rather than at
stitutions
A
Simply this, the Air Force and
Navy submitted, separately, their
of
a
permit
Plans
are
what do they
—
Regulations T and U Amended
In
-
"No withdrawal of cash
LYNCHBURG
o'-.
move.
funds
of
...'
Times
191
10
the public's faith is re-established
in our form of economy, then the
of
The Two Plans
bined
PH
165.65
communistic
wide
in
war
'
h
'
Activity
185 +
capitalistic corporate form
impor¬
tant single factor contributing to
winning the war and must, of
necessity, be the most important
factor in combating any world¬
indi¬
no
gram
Stock Exchange Bldg. Phila. 2
Telephone
Teletype
23%
—
Our
the
inclusion
military
Company
159
of economy was the most
plethora
items, however, is
Plan
PHILADELPHIA OFFICE
Bell Tele. LS 186
the
Budget.
reserve, and is intended to per¬
mit a defensive
1st
Floor, Kentucky Home Life Bldg.
LOUISVILLE 2, KENTUCKY
in
occupy
ex-
the Board any more than
approval
of Plans A or B.
Strom berg Carlson Co.
Warner Company
BANKERS BOND m
view
defense
a
Sterling Motor Truck
-
realistic
strength necessary to wage an ef¬
fective
air
offensive against a
major enemy. Plan B is slightly
less ambitious, primarily without
Nazareth Cement
Consider II. Willett
Policy
29%
163.21
;''•:/+ + :■
our
186
212.50 +
that some, our corporate equities.
If at this
attempt was made to estimate and time Ihese equities are selling at
project all budget elements. In¬
cluded are estimates for. Univer¬
Plan
Central Louisiana Elec.
American Turf Ass'n
Air
Business
Inclust. Avgs.
is for this reason,
der two
j
tookk1a
relationship
conceptions
Empire
is
what to do.s
;
The- Co ngressional
Walnut Street, Philadelphia 2
New York
Los
Private Wire System between
Varnish
it
Curb Exchange
Philadelphia, New York
Reliance
propose
.
FRB Level of
,
•
sjnee the end of the
August, 1945:
Who will give, odds this pattern
will
not
continue for 'the year
outside •1948?
an
men
1420
American Air Filter
for
easy
Look
of the Dow-Jones Industrial Aver¬
age
164.38
10, 1948_,_.
stocks.
paradoxical picture of
Dow-Jones
17, 1947-,-.
Feb.
.
much lower market
a
common
market averages of common stock
over-supply of money,
over-supply of water must
an
cancer¬
business level of activity and our
An
like
ex¬
large expendi¬
something else
again for a number of Congress¬
men to try to tell other Congress¬
cation
Member 0/
York
ing.
the
economy
nimble bit of- crawfishing
for
the
at
different places.
Of this
amount, over $28 billion is float¬
May
penditures may be found in the
jealously guarded prerogatives of
Congressional appropriation com¬
such
York, Philadelphia and
the
many
makes
the level of aircraft
on
level
Allen Harvey
have a plethora of funds
with the public and resting in
out
and
group
Joshua
we
war,
comes
>
which
.:
our
economic experts will'have
a
tications of
fi¬
to
moving
with the failure of their prognos¬
over
is hardly.in a position to
ignore the .Board's repeated ad¬
monitions.
(.."
Aug. 17, 1945___.
Another compelling reason for
May 29, 1946—.
the Board's reluctance to take a
Marshall
BUCKLEY BROTHERS
Members New
called
to do
get and
sal
Request
Preferred
Traded in Round Lots
Congress
•
jus¬
tify his requests in the 1949 bud¬
Federal
B'Dl
action
.Congressional
nerditures
Central Illinois Public Service
for
;
■
the appropriations. The
Secretary
of Defense will be fprced to
of
Portsmouth Steel Corporation
to
order
this
by
eliminates
in
spots
of
nance
,+
:
-
'
The
in
deficit
$200 billion in
wilij
themselves
picture
business in its inscru¬
while
dropping to a lower level of ac¬
tivity
Should this happen many
counselling services and the so-
Govern¬
well
market
stock equi¬
common
paradoxical
up, wh.le
table way
ous
tune
our
ties may present us wjlh another
the
"
direction.
Board
PHILADELPHIA
•'
»<
As likely as not the
of
level
financing
-v.':.';
And you may 'feel certain that,
the Joint Chiefs
of
Staff
stand
Board
clared
a
it
to the
icy Commission in July, 1947? but
at no time was it forthcoming. It
reau
*An address by Mr. Altschul be¬
of
flow, and it
and seek in a
place to
some
reck.
result
a
ment
.definite plans as to
unified aircraft program
.should entail.
recommen¬
quested from the Secretary of De¬
may
find
will not play hide
shoes.
As
been parsed to the Joint Chiefs of:
what
proposals.
This
v/ith such observations and back¬
<?>
babies
need
has:
ball
such
expenditures.
Board'glong
the
more
dations
the
words,
They will beiorced to ad¬
To be most helpful to you today,
I would like to discuss only a few
cf the
more
important recom-t
of
plans.
ether
Staff.
leading to the final product.
mendations
In
vance
reason
the
Plans
so-called
of unified
sum¬
the
At no time, however, does
the Board endorse or recommend
plan has been
in
and
and B
pried
Altschul
We
called for a five year aircraft pro-} of Staff, through the Secretary of
an '
all-time
curement
program
ranging
up¬
Defense, to present to the Presi¬
dent and the Congress, not later high, both in
wards to about $17 billion.
amount
and
than June 30 1948, a realistic na¬
This, simply isn't so.
on
an
hourly
tional program. The main deter¬
All the Board d el, was to dis¬
close the statement of require¬ mination is to effect the adoption rate, and yet
Air
\
;
,
peak levels, and vits counterpart,'the stock
have wages at
privilege tq
have
parties
Selig
at
the
peace.
guidance of the Board; some
The
business
market, at almost the .bpttqm of a two-year downward move, .with
very little public faith in our corporate form of economy.
We spent
$250 billion to win the war, and it looks like another $50 billion to
I speak in a private capacity and not as an official spokes¬
Congressional Aviation Policy Board.
We prepared certain studies for the
of our recommendations were accepted, others were mot.!
of the
man
flows into corporate equities.
In airline and manufacturing industries Mr. Altschul looks for long-term prosperity,
dominated by very high degree of selectivity between companies.
appropriations.
Thursday, March 11, 1948
-
225
EAST
MASON
PHONES—Daly 5392
Chicago
Stock
ST.
Chicago: State 0933
Exchange
MILWAUKEE
(2)
Teletype MI 488
Number 4680
167
Volume
From
THE COMMERCIAL
to
comes
to
exceed
Warning
now
there
is
their
a
of
gossip against their superiors, they
are
unsound ground,
on
!
a
ew
of
-ssuance
ders
oror
thej
by
White
•that
>
House
the
sub-|
ordi nates
in|
government:
with
That
me.
Censorship
must
be
not
complaint
against
be
may
ewspaper-i
the;
At
men.
Bargeron
Carlisle
time, publica¬
tion of the
or¬
told
am
I
in
my
When i
news.
the
can't write
And
must
I
r'
that
say
look
askance
I
some
underling who sought to feed me
poison against his boss.
I mus
Then last
White House Correspondents' An-' say, too, that none of them has
der raised an
outcry of censorship.
Saturday night at the
attempted to peddle his stufi
nual Dinner, the Raymond Clap-|
with
me.
They
know
who
to
per award of $500 was given to?
1
Nat Finney of the Cowles news-i peddle it with.
I have friends, of course, who
papers for "exposing"
this gov¬
tell me of things but they are not
ernment censorship attempt.
ever
Mr. Truman
the
in
gracefully presented
then apparently said
award;
aside to
an
Mr.
Finney, in ef-;
this
was
the first time
that
feet,
he had
get
known
ever
prize for
a
story from
a
assistant
fourth
reporter to
a
to
the
the;
third
as¬
sistant of something. The outcry
against government censorship was
revived.
Mr.
Truman's
thrust, it
view
a
their bosses in
getting
to
American
free
press, they say, Mr.
Truman would:
There
three of them
are
a
year,
the
of Clapper.
name
known
I have never
correspondent to get one
of these awards who did not de¬
a
..
columnists
other newspaper-;
and
against their superiors. 'The
men
columnists
have
reprehensible
thrived
I
crew;
prised that the
other
over
an
effort to limit these subordinates'
disloyalty.
It
is
a
situation
of
the
what
It
is
boiling-over pa¬
can't keep Silent at
a
of the lower levels
saturated with
left-wing
being:
young minds
their superiors
steer
who seek to
in
the
way
they think they should go, by
feeding smear stuff to the columynists. Tn manv instances they are
before
T. Folliard
and
of Mr. Edward
the
Washington
"Post,"
last Pulitzer
award
the
of
stories
a
se¬
Klan-like
some
on
for
of
got
who
in Georgia, having a mem¬
group
bership of at least 100 people.
W. L,
of
Co.,
to
Inc.,
The
the
trenches, with no understand¬
ing of the broader purpose of his
situation
under
Roosevelt
which
and
before
Pearl
flourished
which
"official Washington in
.stew,
firm
in
W.
-
made
L.
of
Canady
transact
investment
will maintain
a
a
kept
continual
Harbor
order
and honesty of highest order to keep costs down.
perish
Our danger
not
in
As
our
savings decrease
of
cause
tax
higher prices,
becomes
burden
the
and
unbear¬
an
develop¬
greater output.
»
able impediment to new
of grat¬
Leo E. Allen
that we
and
ment
With
great responsibil¬
the
tilities,
of
end
many
hos¬
recent
people thought that
everything
was
accomplished—
that they could sit back to a life
statement
the
minds
Franklin,
the'
"Can you
As
I
the
&
been
closed,
you—our
offices at
h i s
City.
with
Mr.
Canady resigning to form his own
v.,'.;."-.Yd VS
firm.
no
nothing./;
War
economic benefits for
people—whether they be the
conquered or the conquerors. War
merely demonstrates man's in¬
ability to govern his passions and
other
meetings
nation that are
being held with an entirely dif¬
ferent motive.
They would tear
selfishness.
down the pillars which have given
The position of the United States
our people more liberty, freedom,
contentment than possessed by
in the world today has become
that
of a fountain head and a
any people since the beginning of
time! : ;In order for us to remain hitching post for all other demo¬
successful,
it will -require the cratic, or semi-democratic, nations
any
-of
scores
are
our
greatest perseverance, patriotism,
vigilance on the part of all
and
of
us.
.
this
initia¬
individual
work,
tive, and
made
just rewards for labor,
nation great, and can
nation great. The ques¬
tion is—shall the people work and
prosper under our system of free
enterprise, or follow the teachings
of those favoring varying kinds of
keep this
to
no
stagnate
uncjerf that
diVcrt"
■
work was
three centuries,
had
The early
to survive.
work
to
founders of this nation had
work, or there could have been
nation.'•./
' ; Y,y-; v
went
Honor
hard work.
Carnegie and Schwab
and
steel—Hill
of
field
the
who
th'ose
to
in any field by
achieved,, success
in
the field
of railroads-
Ford and Chrysler
in the field of
in
Gould
transportation
in
Lowden
.and
Burbank
—
the
agricul¬
of
field
field
ture—Morse and Bell in the
of a
,
Swift in the field of
world.
the
A
fountain
tured
own
head,
largely
supply
manufac¬
goods to supplement their
the
their
raw
materials
to
for
industry—or
manufacture.
We
are
most
a
most
House. Conaccountable for
legislation
that
The
by
are
we
proposed
destination.
that
reaches
never
During the past session of Con¬
gress thousands of bills and reso¬
lutions
were
in
introduced
I need
not
that if we passed
merit, and
say
out all bills with some
they
enacted into law,
were
afterwards, %/hich keot
up
a
con-
stant conflict and bickering when
men
should
have
been
working
together, took a new twist after
Truman's ascension to the throne
Then
it came
to be used
as .a
smear
against
the
conservatives
whom Truman
placed around him:
Byrnes, Snyder, Steelman, for ex¬
Now French,
name
Rogers & Co.
The
firm
of R. D. French & Co., City
HOUSTON,
TEX.
exceed
by
many
government
revenue
billions
tens
of
ask
dollars.
of
is
people—are you for
biggest army,
the biggest
the
biggest
the
navy,
air
force,
situation
which
the
ing billiortS'of dollars for atomic
bomb development, scientific re¬
search
regarding
methods
for
modern warfare, a large army and
navy
reserve,
national
guard*
R. O. T. C., and universal mili¬
tary conscription—and their reply
is
"Yes."
You
if they
them
ask
of our vetei*ans
through college subsistence and
on-the-job training at a cost of
billions—their answer is "Yes.""
You ask them if they favor ade¬
favor taking care
quate care for the disabled vete¬
their widows and orphans—
answer
is "Yes."
You ask
rans,
their
if they believe the
them
old peo¬
hitching- post,
because
almost
every democratic nation looks to
us as an anchorage for their storm
tossed economies. Therefore, any
ple should be provided for com¬
fortably, the answer is "Yes."
You ask them if they favored the
British Loan, The Greek Turkey
major disturbance in the national
economy
of the United
States
Loan, The Interim Aid Measure—r
and
their
like • an
"Economic
Atomic Bomb" setting off a chain
ask
them
might
be
reaction
which
could
stroy not only the
easily
de¬
economies—but
all the nations
Plan—and
shall
education
their des¬
tinies to ours.
Whether we like
it or not. this is ourd position in
the world today. It is a position
"Yes."
anchored
grave responsibility, and*
which requires statesmanship
of
one
and
sagacity. There is wide divergence
in opinions on how we can best
discharge our responsibilities in
the international field. My own
opinion is, that above all, if we
are to help others we must be cer-
answer
the
interest
of
All
Rules
over
national debt
billions
five
annum.
these
many
the most
our
on
to
dollars per
with
pitals, and numerous social
Principals of the firm remain the
and
tutions
small town, as
newspapers
*An
address
of Russell &
Street, has been changed to Rus¬
of
sell, Long & Burkholder.
March 4,
be
permitted
well
Russell, Long & Burkholder
spondents insist the underlings of
should
associations.
careful attention
Committee.
LEXINGTON,
KY.—The
name
Long, 257 West Short
Allen
all of these bills were enacted
(Continued
on page
31)
.J,
/iC,
by
Congressman
the;..Economic Club
York!yNew York City,
1948.-.
Underwriters and
Distributors of Investment
Securities
large cities,
and I; other vehi¬
before
New
as
u
'
61
Broadway
of the
Obviously,
insti¬
Every
along
measures,
others have received
the
same.
say.
many
Naturally all favor payir.g
amounting
of
and
structure
changed to French, Rogers & Co.
is
airports, roads*
Federal grants for
and
have
their
"Yes." You ask them if they favor
the governments of
which
You
is "Yes."
answer
if they favor .the Ma:v
unparalleled in his¬
The nation could afford
tory.
spend¬
Yqu ask them if they favor
luxuries of churches, schools, hos¬
White House tried to get at, and
if the publishers and the corre¬
government
industrial
the
marine
corps
in
the
world?—and their reply is "Yes"
•
packing,.
National Bank Building, has been
had
this
an
•
You
many
—
ample.
It
created
which stands
na¬
tional expenditures would
■
.
Con¬
gress—all with some merit. Fre¬
quently I receive letters asking
me why the Rules Committee has
held up certain measures.
Often
the
particular
bills n^ay
have
considerable merit.
I am certain.
industry there was
our
oi
is respon¬
legislation that is
Chairman
and
communication—Armour
of
in
because they rely upon us
for
~
Hard
Out
and
achieves
versiiy
Committee
Rules
am
for
sible
biggest
work has but begun.
settles
War
in true Amer¬
must be mindful there
throughout
general
securities.
Philadelphia,
maintaining
headquarters in New York
has
high school graduate to college for
the next ten centuries. So I say to
us:
The
Wall Street, New York
firm
the
challenging
keep it?"
we
family throughout the world.
An amount that would send every
time
meet here
we
every
have
men
republic—at
our
same:
icanism
such
that
projected
ourselves
remind
should
constantly
The
hand.
considered
that confront every Ameri¬
Truly, this should call to our
can.
we are
example of the decrease—prices
rise, wages grow meaningless be¬
here
share in the
ities
of Rules
Functions
Committee
is that while
which J
privileged
are
fails.
Economy
—and the national debt is the best
we
equal;
patriotism,
feeling a deep
to
If
United States economy and the
savings of the past
relief, and aids, we are- Committee on Rules of The House
presently
building new of Representatives go hand in
not
;with
itude
our own economy is safe.
American economy fails, world
tain that
wars,
wealth.
Get¬
at
sense
|
ex-
consummg our
from
meet
free
economy
earth.
As
and
Wealth
tion
n a
should
the
information
of
that
this
settlers
City.
Mr.
Canady
was
formerly
President of Paul & Co., Inc. of
52
»
Danger of Not Building New
in
the creed of Americans.
The New York office of the latter
superior.
The
is
Announcement
and
has to be one-sided, gleaned from
the narrow post of a corporal in
economy
that
on
For
GaseasSy A Go.
formation
Com¬
waste, head of powerful House Rules
pression of opinion.
"isms"—and
Formed in New York
business
paid for.
cles
their
kind of leadership.
paid; their tattle-tale stuff bought
Manifestly, the youngster's stuff
lives
Loyalty Board,
they know to be going on.
q, case
bright
i
experiences
Service
Civil
the
"exposure" of
?n
su¬
being
triots: who
for
Blank's
ries
not
periors being crooks and the sub-
/ordinates
^ecently
Mr.
sur¬
newspaper¬
would be concerned
men
this
on
am
given
We
certainly put this censorship over.!
Long live the American free press.) serve recognition, including my¬
I It
sounds good but it
is the! self, but not for the particular
bunk.
/.II."
job for which he got the award.
•/' I
have forgotten the phrasing;
Mr. Finney, is certainly capable
of the original White House brder!
of recognition, * hut my guess is
if I ever saw it. But I knew quite
that he was just about as surprised
well at the time what its objec¬
to get it for this job as the next
tive was.
It .was intended to put
->"e.
This is true of Mr. Burt An¬
an end to the
practice, ever since
drews
the "Herald-Tribune,"
of
the New Deal got underway, of
who got some sort of an award
subordinates
feeding
poison
to
.
war
the
got one myself once.
said, shows his pique at being I believe: The Pulitzer Prize, one
in his effort to impose
given by the Atlantic City Cham¬
censorship. If it were not for the ber of Commerce and the one in
the
efficiency, also
had
Benjamin
scandal.
a
thwarted
of
repairing
made by of
happiness
and
contenment.
when he, That just couldn't be. How could
along with others, was ardently it—with the destruction of over
The truth is that Mr. Truman
struggling with the formation of a trillion dollars in property. An
was justifiably disgusted over the
the Constitution. The mob in the amount that woul build a million
award to Mr. Finney. These news¬
streets called "Franklin what are dollar hospital, fully equipped, for
paper awards to Washington cor¬
every
city, village, and hamlet
you trying to give us?" He turned
respondents have come to be left¬
to-them and replied scornfully:
throughout the world. An amount
ist rackets. I say this freely be¬
"A Republic—if you cart keep it.'
that would build a $3,000 home for
cause I
it with
doing
is
alertness
to
who
men
tysburg,
would
at
honor
1
news
get, that is censorship.
certainly
tc
no
obstacles,
path
any
put
or
At
battlefield,
thai
against me
censorship. I have
had
to
quit;
against gett'ng the
prattling to
n
censorship.
something
applied
constitute
which
is
is
wealth
new
Gettysburg, over 80 years ago, Abraham Lincoln said: "The World Will Little
Note, Nor Long Remember What We Say Here, But It Will Never Forget What They
Did Here." The Great President was speaking to a patriotic group who had met to pay
I, for one, do not care if every
months
employee in the government is
over
the; prohibited by decree from talking
ago
aim
national cooperation and
.
to them with over-the-fence
co run
ex-
citement
run.
building
of present
Congress to bring about a sensible balanced government by checking
carefully appropriations. Defends outlays for Marshall Plan as avoiding larger future national defense
costs, but warns we must safeguard economy and efficiency of foreign aid granted, and demand inter¬
no
f—
recrudescence
of
are
not
we are
mittee stresses
two groups in
Washington correspondents
they get out of their original
their publishers. In iact, -when
role they can be more absurd than, the usual
Just
Aid Program
Congressman from Illinois
the
and
.
7
Chairman, Rules Committee, House of Representatives
of the News
being ridiculous there
heteiogeneous midst
our
(1103)
CHRONICLE
By IION. LEO E. ALLEN*
By CARLISLE BARGERON
it
FINANCIAL
Problems of Foreign
Washington
Ahead
When
&
New York
6, N. Y.
if
into
&
FINANCIAL
Tax Reduction Essential to Obtain Risk
8
Capital
THE COMMERCIAL
(1104)
CHRONICLE
Dealer-Broker Investment
By EMIL SCHRAM*
President, New York Stock Exchange
Recommendations and Literature
Warning of shortage of risk capital, Mr. Schram urges passage of House Tax Reduction Bill, to¬
gether with a reduction of the Capital Gains Tax to 12*/2% and elimination of double taxation of
dividends. Sees need for investment incentive and a healthy risk capital market as means of main¬
It is understood that
taining full employment and full production, or alternative of government providing industry with capCites substantial decline in ratio of stock represented in total of new corporate financing,
v
Prior to
inflation
danger of
and since the end of the war, inflation and the threat of more
few weeks ago
a
I have
cern.
a
been
never
in¬
rienced gentlemen how to write a
tax bill." It
to
has always made good
having
foreign and do¬
that,
after
price level.
I
recognize that
sense
inflation is, to
mestic commitments in the imme¬
me
taken care of our
psychological
years,
we
should
sizable surplus in the
proportion of about one-half for
debt- reduction and one-half for
impact of
our
tax
under
gle
diate
large extent,
state
mind.
acts
of
use
The
postwar
any
relief.
We continue to strug¬
under
the
he;
be
weight
heavy
of
individual tax rates and
wartime
these condi¬
tions must
burden ; in
practically
has become almost
■
all
carefully
weighed.; This
brackets
consideration
permit the lowering of the stand¬
ard of living of many classes of
)ur -people.
I do not exaggerate
the case when I put it bluntly in
I
have
bearable unless
taken
'
into account in
Emri Scl*ara
^
appearing here today.
,
,
Mr.
Chairman, this Committee
hat
hears
the end of exhaustive hear¬
hat
jf
dollars
record
has been
a
*Vith
a
factual
statistics
data.
I
will
and
try to avoid
extending the record in this re¬
spect. However, if there are any
questions on the part of the mem¬
of the Committee that I feel
bers
qualified
to
I
answer,
shall
-
be
to
say
reaching in
excess
for-this
of $9 billion
year,
and
fiscal
$18 bil¬
lion for this and the coming fiscal
thoroughly documented.
In fact, by this time you gentle¬
men must be
fairly well saturated
necessary
willing to
are
suffices
It
un-
surplus, that gives promise
ings. I have followed the proceed¬
The
we
manner.
a
ings most carefully.
all
possible figure of
is
year,
ample
some
justification
for
substantial tax reduction. Pres¬
require
conditions
ent-day
sub¬
stantial reduction in
personal in¬
tax rates to be distributed
come
of
ment
this
judg¬
This is
Congress.
good ethics and sound economics.
is an
factual information if requested.
say
Our
study indicates that there
inadequate supply—I might
alarming shortage—
Before leaving the question of of risk oT equity capital, and that
inflation, which has be^n a burn¬ the problem falls into two parts:
he adequate flow of such capital
ing issue in several attempts to
enact tax legislation;
and its proper function. The Pres¬
my contacts
and
observations clearly reveal ident himself, in his Jan. 7 Mes¬
that production rolls 'at' a most sage on the State of the Union,
satisfactory rate. As an example, declared:
even
an
-
the
week
ended
Feb. -28,
last,
121,298 passenger cars and trucks
were
produced,
representing
an
annual rate of 6 million units,
while for the
corresponding week
Of 1947
the figure was 108,497
units; but for the
years ago,
dering
in
when
week
same
we
getting
our
two
bearings
after the war, production amount¬
ed to only 17,575 units.
I could
Mo
and oh. The fact is that
have buckled down to work.
on
we
There
:
is
concrete
evidence
that
ptice and supply are fast becom¬
ing /thecontrollingv factors.
In
other words, it is as it should
be:
"Consumer Is King." So much for
the
"We
good.
today far short of the
are
industrial capacity we need for a
growing future. At least $50 bil¬
lions should be invested by indus¬
try to improve and expand our
productive facilities over the next
few years."
floun¬
were
the
In
thirties,
business
that
we
could
There
/economy
Not Healthy
definite spots in the
that do not make as
are
pleasant reading. Make no .mis¬
about it, our risk
capital
take
markets
are
far from
being in a
healthy condition. Before support¬
ing y this statement of fact—the
problem which has really brought
.me here today—I
wish to state
ciation
and
profits.
have been true at that
time, but elong with it went the
distressing fact of more than 8
million
unemployed during* the
so-called "recovery period."
It
can hardly be a coincidence that
high employment and large capi¬
side
omy,
the
experience
to
more
last
pres¬
hope
erations will/result
dorsing
the
your
in
delib¬
your
in¬
community property
raising of the base
uf exemptions from
$500 to $600.
feature and the
4
■
appreciate
fronting
you
the problems congentlemen in\ gaug¬
ing the
revenue
various
proposals
of
aspects of
in
adequate Federal
sound
the
thought of telling
paid
was
tion to
an
in dividends.
States
billion
In
of
were
expenditures
billion, corporate
new
in
money
approximately
.
sold
on
the
new
•
$4.5
finance
to
the
plant
and
equipment, which are estimated
at $15.7 billion, and for additional
working capital. The pace of ex¬
pansion continues—the estimate
of
anticipated expenditures' on
new plant and
equipment for the
first quarter of 1948 is $4.1 billion.
I
am
not accustomed to
dealing
in these astronomical figures. One
thing I do know is that if
we
are
today with
you
expe¬
keep the people working and
happy in their jobs, this vast
amount of money will have to be
found.
Senate Finance Commit-
targe, out-of-reason and that they
to
the
inflationary forces;
add
In
commenting
compensation for its efforts.
I
not here
am
the returns
on
the
output
forces,
we
naturally
to defend some of
net worth. My sole
on
in
interest
we
business
portant
profits as
have most im¬
discussing
uch is because
in
consider
to
this tax
bill, and I hate to see one
alement in the equation becloud
our
perspective.! I am, honest
enough to concede that, despite
the advancement of our society,
human
doesn't
nature
to
seem
change. We, therefore, find that
in a period of scarcity, Which is
usually of relatively short duralion,
excesses
bound to
are
Their importance
likely to be exaggerated.
The
s
orofit
is
motive
in
inherent
our
ystem. It is the impelling, driv¬
ing force that sends us ahead. We
oil want to be
for
justly compensated
7
(; v
efforts.
our
The
since
period
not
been
has
been
of
one
pansion,*1 and I
would
ill
has
war
Stock
Betz &
Di¬
Sullivan, 123 South Broad
Street, Philadelphia 9, Pa.
Cosden
frank to say I
other way.- We
insatiable demand
no
an,
this
over
globe
well
as
at
as
America has been the only
producing nation itf a position to
export 1 goods
in
any \ sizeable
-
imount.
limited
what I
.
There continues to exist
various
—
Memorandum
of
shortages,
Charts
922
,
York
Stock and
long
we
as
profits
Will
selves
to
Bear
Bull—and
Also
situa¬
extraordinary;
tions will be corrected,
Bond
shortly
trial
Co.,
"The
v*
worth, prospective
owners
courage step
available
Foundation
neering,
Co.,
Home
written
for the
with
the
Brochure
"human
touch"
investors—single copies $1
(quantity
prices
quantity to deal¬
ers in the Rdcky Mountain
States)
—Frederic A. Adams, U. S. Na¬
Colo.
Bank
*•
New
sults
Insurance
Salle
Co.—1947
re¬
Dempsey-Tegeler ■ & ? Co.,
210 West Seventh Street, Los An¬
geles 14, Calif.
•- 7 7
7/7
-T-
Kingwood
Oil
Co. — Special
suyvey—Petfer Morgan & Co., '31
Nassau Street, N§w York 5, N.Y.
7
Building, Denver 2,
7.
'
■■
England
Railroad
Stores,
request—
upon
not available in
tional
Department
& Co., Inc., 120 South La
Street, Chicago 3, 111.
Co., 25 Brodd Street, New York
4, N.Y.
—
Engi¬
Tennessee Products
and
Inc.—Memorandum—A. G. Becker
&
Trusts
analyses of
are
Wellman
Chemical.
&
of conditions and outlook—Hirsch
National
Company —De¬
Developments. «f" the
Week—Current
developments > in
the
industry—Vilas & Hkkey/
49 Wall Street, New York 5, N. Y.
City
of
Bank
New
York—Circular—Laird, Bissell. &
Meeds,-120 Broadway, New York
5, N.Y.
1
Pathe Industries, Inc.—Detailed
description of company and its
operations—Comstock & Co., 231
:
South La Salle Street, Chicago 4,
7
III.
-'■>
w,.
United Fruit Co.—Memorandum
—A.
this to say: It has been the ro¬
Television 1948—Analysis of In¬
mance ot American industry that,
vestment opportunities of the in¬
when profits 4n a given
industry
exceed more than a fair return dustry,- history and - development
—E. W. Axe & Co., Inc., 730 Fifth
on net
fisk capital and
uses—Seligman, Lubetkin &
Inc., 41 Broad Street, < New
4, N. Y.
Also
Inflation"
Mining Industry—Review
Investment
man¬
of
Federated
Gold
investment ap¬
hydraulic
control
equipment for aviation and indus¬
(Digest 202)—$1. Both, available
free with regular subscription to
Major Angas' Digests.
-
and
Electrol, Inc.—Analysis of
ufacturer
York
Rescue
t
praisal—Kalb, Voorhis & Co., 15
Broad Street, New York 5, N. Y.
Why
As for competition. I Rave but
with
ted.—Review
'V
available
Coming
—
.
(Digest 201)—Current forecastMajor Angas, .Dept. FC 311, 570
Lexington Avenue, New York 22,
N. Y.—$1.
Company
Distillers Corp.-Seagrams Limi¬
Exchanges
—single copy
$10—yearly , (six
issues) $50—F. W. Stephens, 15
William Street, New York 5, N. Y
From
Harvester
item—Goodbody & Co.,.
Broadway, New York 6, N. Y.
115
Curb
man
maintain competition,
take/care of them¬
and
De*roit
Research
from
the
York 5,
Dan River Mills, Inc.—Detailed
circular—Strader, Taylor & Co.,
Inc., Peoples National Bank Bldg.,
Lynchburg, Va.
charts
in
spiral
covering 12 complete
years, and showing monthly highs,
lows, earnings, dividends, capi¬
talizations, and volume on virtu¬
ally every stock listed on the New
—
Wall Street, New
1
bound book
scriptive analysis of special situ¬
ation on 86-year-old New Eng¬
it the lathe and his desire to ren¬
land company—-Raymond*. & Co.,
der an honest day's work; and 1
148 State Street, Boston 9, Mass.
have equal respect for the inge¬
nuity of American business.
As
confidence in
Corporation
r
Mass.
am
and
Petroleum
New York.
giving interesting
returns—Chas. A. Day & Co., Inc.,
199 Washington Street, Boston 8,
told, but they do not
seriously alarm me because I have
faith
Co.,
issues
tremendous ex¬
American goods and, services,
home.
Yields
am
have it
had
tave
for
the
contraction—it
of
one
Cash
occur
the fringes.
on
Kidder
M.
&
Co.,
Wall
1
Stpeet, New York 5,/N.Y.
.
'
■
'
.
y
White's Auto Stores,
.
cial bulletin—First
Inc.—Spe¬
Colony Corpo¬
ration, 52 Wall Street, New York
Avenue, New York, N. Y.—paper
5, N. Y.
—$1. (500 to Public Libraries and
advantage" of an
non-profit institutions.)*
opportunity. As a result of
these ^attractive profits,
capacity
.
.
-
..
;
„
•
/
,
:
forward to take
added
at
times
has*
panded and
become
the
Over-ex¬
is
consumer
the
American Airlines,
sis
in current
COMING
Inc.—Analy¬
EVENTS
issue of "Aviation
gainer. These hills apd valleys in Bulletin"—John H. Lewis &
Co.,
our
economy have always*been 14 Wall Street, New York
5, N. Y.'
difficult to level out.
V * — ■}
M
;
Capital Is Key to Fair
-Competition
B. V. D.
As
I have tried to emphasize,
key to fair competition, is
capital.* I do not exaggerate when
that
creased
tries
this
to
say
mittee
distinguished
there
capacity
where
the
com¬
will: be
in
these
profit
>
in¬
indus¬
motive
&
Co.,
61i Broadway,1
New York 6, N. Y.
7
<
:
j
abused, if-we help to
capital
available
in
the
.
hands of
a
Central
Co.
1420
Illinois
Data
Public
Service
Buckley/Brothers;
Walnut Street, Philadelphia
—
2, Pa.
.
—
■
Also: available
;
are
Portsmouth Steel, Gruen Watch
and DuMont Laboratories.
on
actment of the excess-profits tax
in any form. It is uneconomic and
tax
structure
place in
except in
an
emer^
Dangers of Excessive Borrowing
go
out
from
i
to
and
tell
corporations
borrow
insurance
(Continued
the
on
page
38)
Illinois
Public
.
Service
O'Connor
&
Co., 135 South La Salle Street;
Chicago 3, 111.
Ont,
Dinner of
Traders
the Toronto
Association* at > the
King Edward Hotel.
March 17, 1948 (New York City)
Association of Customers; Brok¬
quarterly meeting.
March
■..
.
>
18, 1948 (Minneapolis,
Minn.)
7
.
'
7liK;
-•
7/v-
and
City Bond Traders Club
Spring Party at the Nicollet Hotel,
Minneapolis.
April 19, 1948 (New York City);',
Security Traders Association of
New York 12th Annual Dinner at
Clary Multiplier Corp.—Analy¬
sis—Maxwell, Marshall & Co., 647
South Spring Street, Los Angeles
14, Calif.
to
money
companies
Central
Co.—Analysis—Doyle,
our
gency such as war.
we
(Toronto,
Twin
,
no.
1948
Canada)
7, Annual
ers
„
and has
Field
memoranda
willing investor. 7
Before leaving the subject of
profits, I wish to add that I am
unalterably opposed - to-the reen-
wasteful
7,'.
Bond
is
presently
make
investment
March'12,
Corp.—Analysis—€V E.
Unterberg
the
I
In
:
.
.
Are
ascendency over the
seek
that they encourage labor to
more
Corporate Earnings
^Washington, D. C., March 10,! now gaining
inflationary,
corpo¬
There are those
who contend that profits are too
earnings.
addi¬
increase in bank credit
securities for
"Statement by Mr. Schram be¬
fore the
According
year.
to
money.
I do not
appear here
any
our
Department of Commerce, corpo¬
rate profits in 1947 were $17 bil¬
lion,*: of which only about 38%
these
interest
revenues and
resembles
estimates of the United
amount
I
always existed
by side. In a dynamic econ¬
fostering full employment,
situation
mittee. I
ent provisions.
all
discussing
ourselves
rate
undistributed
of more than $7
from what I have
gathered that this Committee
may
/see fit to
modify some of its
generate
This may
that I endorse passage of this
bill,
MR. *4790, now before this Com¬
assume
told
were
the funds it required from depre¬
tal formation have
&tek Capital Markets
find
in accordance with the best
glad to do so, or I will be pleased
•o supply additional statistical or
in
Insurance
v
—Memorandum—A. M. 'Kidder &
others have been with respect to the
as many
^
the
a
firms mentioned will be pleased
the following literature'.
gest—Analyzing trend—Geyer &
Co., Inc., 67 Wall Street, New
York 5, N. Y.
several
apprehensive
as
a
runaway
a
and
the
interested parties
sharp increase in the cost of living has been our chief domestic con¬
flation
of
Bank
withdrawal of stock exchange registrations is sign of unhealthy capital market.
leading to
send
to
ital funds.
and says
Thursday,-March 11, 1948
Clinton
Machine
Co.—Analysis
of world's largest manufacturer of
small
gasoline
motors — Coffin,
the
Waldorf-Astoria
Hotel.
May 10, 1948 (New York City)
Annual
Stock
Election
New
York
Exchange.
Nov. 15-18, 1948 (DaHas,
Tex.)
National Security Traders
ciation Convention.
Asso¬
!
Number 4680
Volume 16Z
In
THE COMMERCIAL^ &
CHRONICLE
FINANCIAL
1947, International Harvester
more
(1105)
served
people—employes
customers, and stockholders—in
greater measur
than ever
before. Past and present profits made this possible.
I
is
word
a
nearly everybody's
on
tongue these days.
to know that
seems
Latin word
■
But not
"profit"
everyone
comes
from
~
time
hourly earnings of factory employes.
Progress in wages!
;•
"y,
Progress for Stockholders;
;
■'
/94-7
a
'
\
meaning "progress."
*■
International ' Harvester is proud of the
fact that it made
We
hope to do equally well in coming
But
years.
we
the progress,
are
in
even
L
iimnBiEiLLiin
BuimiiiWi
Jj?
■ 'I'llHUMMHUIH
mm:'
iii.ii;'
n
inn I
'•Hill
llllim
hihiiiM
THE
proud of
more
iiiimiMnni
■'ii'mmniM
if
,
CffimT?
'
/
(jiiim
good profit in 1947.
a
*
'!•
V
i
i mil
iiiii—biii
urn iih
Mllll—Willi
iiimuwiiiiiii'
mi m
'"iimmmi
111 lllllllllllll II! I'
mini1'
"inwmm
|
direction, which
every
past and present profits have made pos¬
Today
sible.
imately 42,000 people who have invested
their
Progress in Job-Making
we
we
Since the
ill
war
we
have invested 130 mil¬
savings in
planning to invest 85 million
are
for
a
In 1941,
Last
year
>
Uti
''
use
of their
■■
.
Dividends paid from 1947 income
43 per
were
■
cent higher than in 1941.
total of 215 million dollars.
almost
over
What Were IH Profits in 1947?
entirely by the 215 million dollars
which,
mt
approx¬
paid to stockholders about 27 million
money.
'
more,
This expansion has been financed
mi
business.
dollars in dividends for the
plants and tools, and
new
our
had 34,000 stockholders.
•
lion dollars in
Company is owned by
our
the last 20
years,
retained out of profits and
we
have
plowed back
into the business.
Greater production of our machines will
During 1947,
men
and
an average
women
were
of about 85,000
working for Har¬
vester. At the end of the year,
ber of
people
States
on our
was more
1941
more men
Harvester
now
Profits today
payrolls in the United
employes at the end of
about
was
num¬
greater production by
our
custom¬
who put these machines to work. And
PROFIT PER
greater production is the need of all
America in
IN
slowing down inflation.
DOLLAR OF SALES
1/3
LESS
:
1947 THAN IN
1941
-
than 90,000.
The number of
30,000
the
mean
ers,
So there
60,000.
and
women
Progress for Customers
1947
the
working for
than before the
mean more
are
On sales of 741 million dollars,
were
41 million dollars.
profits in
(In addition,
Company had income of 7 million
dollars in dividends from subsidiaries and
war.
in miscellaneous income,
jobs tomorrow!
making
a
total
profit of 48 million dollars, equivalent to
Progress in Wages
9.8%
1947
,
'I—WWII
inn"
ggir
Hill'1'
on
Our
11 mill
hx/i cents. As will be
IF
'IHIHilHWttl'l
this is
lilM7
144-1
■
J'!!
I'll
inr
Mi]
lUHIHtf fHlM
IIII"
iJU
""wmwi m
|wni»
We believe
is
USUI
ffiP
m
liiliT
■lllllll—lllllli
iffllll"11
'ii imiiviaiiHii
EE
mm
For
Harvester
paid total
wages
and salaries
as
an
increase of 119 per cent
customers
1947—more
And
we
produced 741 mil-
we
sold these
and
1941
sales.
goods in 1947 at
reflects both the 30,000 new
increase of
was
a *
one-third less
a
76.5%
beenT Seated
since" 1941
and
in
an
average
from the chart,
was one-
straight
5j^ cents
per
dollar of sales
reasonable rate of profit.
We
know
ability to
that
earn a
has made it
it
is
our
continuing
reasonable profit which
possible for International
Harvester, in 1947, to
serve more
people
—employes, customers, and stockholders—
in greater measure
jobs which
have
margin of profit which
than in 1941.
-
goods and services
than double
com¬
pared with 121 million dollars in 1941.
This is
our
lion dollars worth of
in
of 265 million dollars in 1947,
seen
margin of profit which
■ Mini—mil
ill I ii
IHTP1
a
was
third less than in 1941.
Mfnuvi
untrf
Eg
KitimpP"-
invested capital.)
profit on each dollar of sales
INTERNATIONAL HI
than
ever
before.
9
Central Republic Co.
Illinois
The
Illinois Brevities
Co.
It
The Illinois
Co. Inc., William Blair & Co. and
the'sale
investment bankoffer¬
ing to the holders of the out¬
standing 41/2% preferred stock
of record Feb. 16, 1948 of rights
Among the
which underwrote the
of
shares
stock
were
new
A.
G. Becker
A.
Co., Inc., Cen¬
&
(Inc.), MulCo., Alfred
Co.
Republic
tral
&
Ross
laney,
share (flat)
& Co., Inc.,
$100 per
C. Allyn
at
Holley, Dayton
Gernon and Carter H. Harri¬
O'Gara
&
the
30,000
4.80% preferred
for
subscribe
to
Co.,
&
of Chicago. These
rights expired on
& Co., all
son
subscription
March 1, 1948.
Leaded
Co.,
Bank
of
The
First National
Chicago
and
Halsey,
Inc., on Feb. 18 pub¬
Stuart & Co.
licly offered $85,000,000 State of
Illinois
1%%
and 2%
Service
Recognition Bonds, Series B, due
May 1, 1950 to May 1, 1960, inclu¬
sive. The 1950 to 1959 maturities
priced to yield 1.10% to 2%,
according to maturity, and the
1960 maturity was offered at 99 lk,
This
and investment firms,
by five Chicago houses,
by
veterans
which
voters
the
was
in
-
of
these bonds
114% rate,
1%% rate.
bonus
approved
illustrated
and
detailed
available
and
interested
to
investment dealers and other
at
carrying
a
and
ferred
pre¬
stocks.
common
was
of
cents
10
on
stock, payable March
amount
like
A
extra of 35 cents was dis¬
Dec. 20, which brought
an
total
on
payments in last year to 75
cents per
share.
COMSTOCK & CO.
Teletype
On
Co.
Dearborn 1501
CG 955
headed
Inc.
of
/**WJ :
in
the
exclusively in under¬
of securities,
providing investment dealers with at¬
specialize
held
stock
outstanding
share
for
dealers,
department of our
in no way with
serve
them exclusively.
retail
but
proceeds
Hall
Street
'
fering.
Salesv
the
for
report
annual
This
Co.
the
of
Common
ing
Central Paper
Common
»
,.
Jan. 31,
>
■
to
the
a
new
consecu¬
1946." Profit for
1947
York
Stock
Stock
Chicago
Associate
Member New
Haskell,
President
of
Co.,
announces
Exchange
Exchange
York Curb
1S5 South La Salle St., Chicago 3,
1948
Merchants
HI.
Tele. CO 650-651
ago,
7.17%/ It
J
Stock
Standard Silica
Common
voted
no
ended Feb. 29
this
at
time, it
Last year,
;cents
of the best years
Mr/Haskell
prices
hurt
the.
said,
•
The
of
publicly
was
•
issue
new
Pet
cumulative
*
'
of
Milk
100,000
Co.
preferred
offered
underwritten
underwriters,
011
by
which
41/2%
stock,
March
group
headed
4,
issue
an
Member
New
'
and other
York Stock Exchange
Principal Exchanges
208 So. La Salle St.
CHICAGO 4
Fhone Andover
1430
Tele. CG 150
f"
included
Monsanto
of
due
1978
of
34%'
The
Ohio
Other
Co.
Chi-,
Blair
offering
Co.
&
William
were
and
The
Illinois
The net proceeds
construction
-i
*
S'!
.
stock
pro¬
subscription
Halsey,
Inc.
Co.
a
which
group
successful bidder
on
■
Feb. 25 for
24% equipment trust
tificates,
series
JJ,
to
which
of
reserve
cer¬
mature
266,
day
1.45%
to
maturity.
prices
at
2.55%,
the fol¬
to
to
$
$
The directors of Admiral
among
manufacturers
sion and
per
share
compared, with
income
eral
taxes
all
073,556 in 1947
1946
per common
1946.
earned * in
$5,200,250
v
of radios,
appliances, on March 3
a
$9,491,-
were
$10.99
stock,
for
1947 V.
Corp.,
televi¬
to
$7,660,559/or $8.79
in
$
included,
yield
according
creating
846,506 shares of outstanding
from
lowing
company
$2,500,000 for future
equal
cates
on
the
price adjustments,
sions
reoffered
common
with
in
to
$8,-
(including Fed¬
of
of
$4,800,000
$7,600,000
in
'
/
,.' ■
Victor
Provi¬
increased
1946
in
taxes
and
Sit
1
Chemical
consolidated
Central
a
.
share. This
net profit of
1946,
/
equivalent,
preferred dividends of $131,-
444, to $2.65 per common share.
*
The
*
*
.
ard Gas & Electric Co. at the ad¬
to be
will vote
approving the election of the
following candidates as directors:
Edward
O. Boshell, William J.
held
annual
meeting
today/(March 11)
on
Froelich
Patrick
J.
and
Lannan
for
Public
reports
the
year
Utility
John¬
A.
and
George E. Allen, William M/
Flook, Robert J. Levy and Thomas
A.
O'Hara
holders of
meeting
It
is
Dec.
will,
by
the
hoard
new
President of
Electric
the
Co.
It
the
elected
directors
of
Standard Gas &
Chairman
and
board.
Mr.
that
following
stockholders' meeting, be
as
been
3, 1947.
contemplated
Boshell
The
stock).
originally
for
by
for
voted
be
(to
common
had
scheduled
further
is
of
con¬
templated that Mr. Boshell will
become a member of the board
; of Philadelphia Co. and, upon
appropriate action by the direc¬
tors and stockholders of Phila¬
delphia Co., will become Chair¬
man
of the board and
President
Mr. Boshell will
all connections with Stone
of that company.
sever
&
Webster, Inc., Stone & Web¬
ster Service Corp.
(of which he
West
(an
80% owned subsidiary of Stone
Vice
Texas
Works
sales
Christian
and
(to be voted for by holders of
cumulative preferred stock);
$4
is
sis
by holders of
stock);
Kent
(to be voted for
prior
preference
&
President)
Mortgage
and
Loan
Co.
Webster, Inc.).
—
TRADING MARKETS
—
Corp.
Foreign Securities
Income
Portland
5(4—-1952
General Electric
Chicago, North Shore &
Bought
Sold
Milwaukee
Quoted
Common
Railway
Central Illinois
Stock
Public Service
-
Common
ZIPPIN
&
COMPANY
Specialists in Foreign Securities
208 S. La Salle iSt., Chicago 4„
Telephone Randolph 4696
Brailsford & Go.
208
Illinois
S. La
Tel.
State
9868
WilliamA.Fuller&Co.
Members of Chicago
Salle Street
CHICAGO
Teletype CG 451
.'v
Stand¬
of the
stockholders
journed
son
'
profits,, after
share,
were
after
Cochran
❖
into household, indus¬
trial and pharmaceutical products.
the
was
Mullaney, Ross
"
*
largely the result of high selling
prices made necessary by the in¬
crease
in the price of corn and
Net
&
and
Co.
&
A. E. Staley Manufacturing Co.,
si;*
Stuart
per
,
Julien Col¬
Co.,
processes
writer.
*
&
Co.
soybeans,
by stockholders. Allen & Co., New
York, will
be manager under¬
*
McCormick
$146,353,726 in 1947, an all-time
high in the 42 years of the corpo¬
ration's operations. This was an
increase of 47% over 1946 sales,
*
for
(Inc.), The
K e h b 0 n
Co.
&
Company,
Decatur, reported sales volume of
Kaiser-Frazer Corp. on Feb. 19
announced that it plans to offer
additional
Hall
Illinois
,
«'
;
•
Co., Central Republic Co. (Inc.)*
s|:
are
gram.
stock,
value, at $110
Whipple & Co., William Blair &
&
to be applied towards the utility
company's
no
share and dividends: Bacon,
lins
bankers which participated
this
preference
par
B,
Harris,
$10,000,000
bonds,
Service
*;•
of¬
of
over
$2,114,658
250,000. shares
Chemical Co. $4
cumulative
per
un-
in¬
Chicago
were
offered
Common
FAROLL & COMPANY
//./ /•/
$21,302,264, an increase of
the $19,408,526 sales in
the previous year.
The consoli¬
dated net profit for 1947 was $2,044,384,
equivalent,
after
pre¬
ferred dividends of $197,069,. to
10%
compares-
the nationwide group of
which on Feb. 6
publicly
on
of
group
mortgage
of
others, Julien Collins &
Harris, Hall & Co, (Inc.),
.
underwriters
but
publicly
a
which
15.
•■!;
*
following
among
company's
Corp.
Stock
'
•.
vestment bankers
$433,000 each March I from 1949'
*
•
1947 of
$2.47
r,
v;
The
history, although not as large as
the previous year, which was ab¬
normal." We fully expected to do
$200,000,000 worth of business for
year,
'..
,
on
March
record
of
the company paid 12 V2
Jan. 3 and 25 cents on
15.
Dec.
certainly one
in the company's
was
of
shares
900,000,
stock/payable March 31
holders
to
be made
can
the
On
common
estimate of profits for the fiscal
year
dividend of 15 cents per
a;
share
to 1958, inclusive. These certifi¬
;
*
national repute addressed various
analysis techniques/ It is anticipated that the
security
on
proceedings will be published in book form.
as
stated that, "while
was
Distilling
Corporation
Common
$168,260,0(10
were
Co.,
Tel. ANDover 5700
forums
common
shares
New
pro¬
on
•
STRAUS & BLOSSER
Members
Society of Security Analysts, the Financial Analysts of Phila¬
delphia, the Investment Analysts Club of Chicago, and the Investment
Statisticians Association of Los Angeles. '.'.4 '//
V
At the National Federation's first annual convention,' held in.
$4,330,000 Missouri Pacific Rail¬
y
,
York
are
/',/
.
of W. E. Hutton
past President of the New York Society of Security
Mr. Samuels is Assistant Treasurer of/the, Continental
a
Analysts Societies are the Boston Security Analysts Society, the New
accrued
proceeds
road
$2,931,473,
on
$10,894,881.
Common
Members
1,
with $157,008,000 for
corresponding period a year
an increase of $11,252,000, or
the
641,150 shares outstand¬
stock. For 1946, prof¬
31, 1947 were $23,782,944, as
against current liabilities of
Disintegrating
Common
and
net
mort-.
Feb.
.
headed
was
Samuels
Casualty Co. of Chicago and .'is Vice-President of the Investment
Analysts Club "of Chicago.
.1
\
/
The member societies of the National Federation of Financial
Dec.
<
Portsmouth Steel
Metals
due
and
Analysts.
compared
common
share
H.
that sales for the 11 months ended
in
$3,597,154, equivalent after
dividends to $5.45 per
on
Richard
Hooper
of the Analytical Department
Hooper is head
Co.
or
$4.51 per
631,400 common shares
outstanding.
Current
assets
at
it
,
Detroit Harvester
Common
&
Foods
National
established
O.
L.
Woodwortb
New York last week, 27 analysts of
H..
C.
fered
preferred
share
first
construction
derwriters
ended
year
31,
641,672 for
in.
The
Feb. 20
tive year and compares with $157,-
Bowser
Mr.
and
(Inc.) also V
Co.
bonds,
Company.
was
(Inc.)
Halsey, Stuart & Co. Inc.,
William
program.
sales record for the fifth
Chicago
of
series
applied to¬
be
to
are
1947
amounted
$217,915,297,
according
to
120 South La Salle
per
as
Kennard
Co.
&
100.485%
Beatrice
series
Tea
held
*
gram.' /.
struction
Dec.
share
Power
company's
first
Correspondence invited.
FLOYD D. CERE CO.
each
34%
wards the Iowa company's con¬
■-
stockholders
common
*
tractive issues for their clients.
compete
giving effect co
split-up. The present
record March 15.
cago
no
to,
common
quarterly cash dividend of $1
Mullaney,
Ross
&
Co.,
and
others, participated in this of¬
we
of
April 15 will receive the usual
on
Public
own,
stock
after
the proposed
Blair & Co., The Illinois Co. and
taining
preferred
share
each
for
writing and distribution
Main¬
power
unit volume.
3% bonds, due Feb. 1, 1978
100.99% and interest. The net
at
three-
a
12 votes for each share held
to
one
high
in¬
pub¬
gage
Serving Investment Dealers
of
$6,000,000 Iowa
Co. first mort¬
Light
&
of
groun
a
bankers
offering
Power
'5 »t*
share
on
voting
will be increased from four votes
the
Peb??19 Halsey, Stuart &
vestment
lic
sh
ijt
i
Salle St.
10.
paid in each
was
quarter during 1947, and, in addi¬
bursed
CHICAGO 4, ILI*
each
of
1978, at
per
declared
recently
common
tion,
231 So. La
The
interest.
The
20 to holders of record March
INC.,
basis.
gage
a
$1,050,000.
dividend
share
INDUSTRIES,
common stock
reported to be approxi¬
earnings
the
Co.
to be applied towards the power
usual
Inquiries invited on PATHE
the
up
for-one
Illinois
mately $2,500,000, compared with
$2,058,000 in the same period last
year. For the full year 1948 sales
are
estimated at $12,500,000, and
net
financial institutions.
Harvester
will vote upon a proposal to split-
participated, in the public of¬
on Feb. 18 of $15,000,000
Sales of Webster-Chicago Corp.
year were
Lucien
and Richard H. Samuels, Secretaryis Vice-President of Eaton & Howard,
IricV of Boston and President of the Boston Security Analysts Society.
fering
for the first months of the current
brochure will be off the press
Woodworth
Treasurer.; Mr.
■:<
Central Republic Co.
November,
of
the balance
and
Vice-President;
<X: Hooper,
annual meeting to be
May 13, the stockholders
on
Harris
sold in April,
were
one-half
year,
*
The officers are KennarcT Woodworth, President;
re-elected.
a
The initial $300,000,000
1946.
RATHE INDUSTRIES, INC.
balance
the
was
for
working capital.
International
of
were
with accrued interest in each case.
and
the Annual
their
At
tinental Illinois National Bank &
Trust
last
We
stock,
*
Con¬
Co.,
Trust
Northern
pro¬
redeem the
used to
Analysts Elect
Meeting of the National Federation of Financial
Analysts Societies, held on March 4, 1948, the retiring officeis were
At
addi¬
tional
Harris Trust & Savings Bank,
The
net
ac¬
4'4%
held
bond issue,
syndicate of 258
A nation-wide
hanking
^viz:
the
Financial
priced
preferred
preferred stock, are to be
$385,000,000
*
<<
A
be
ceeds to
of these bonds,
company's recent sale of $3,000,000 4.80%
applied towards its construction program.
ers
dividends,
per
two outstanding issues of
and accrued interest. The net proceeds from
together with proceeds from the Wisconsin
1978 at 102.46%
1
Jan
($100
crued
Halsey, Stuart &
(Inc.) and
was
share) and
at par
Company, all of Chicago, on March 1 publicly offered $3,000,000 Wis¬
consin Power & Light Co. first mortgage bonds, series B, 3V8% due
Thursday, March 11, 1948
& FINANCIAL CHRONICLE
TH^ COMMERCIAL
(1106)
U
Stock Exchange
209 S. La Salle Street'Chicago
4
CG
T#»l
95
TVarhorn
5600
Tele.
CG 146
4
'167-
Volume
Number 4680
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
\
Collins Warns Against
Head of 1BA tells
It-
•>
Los Angeles
California Club it may be danger¬
ous for Treasury to slash billions
dsbt "in first quarter sal-:
from
Sales
Sees need of tax revision
vo."
*
and
changes; in
Securities Act.
Sales
'
r
fhey
&
Company,
investment
bankers of Chicago, and President
lins
ciation
over
of
America in
an
I he
C 1
California
b -In Los
u
Angeles
March
V
•
:
September of last
tral research
considered
.
increase in sales volume
stalled
came
were
achieved
stantially increased sales
I.
research
near
still
threat
a
The
American
economy,
NTet income after
an
tion to halt
would
ous.
it;
Julien
H.
to
22,820
$24,173,417,
:
'
Total
?
Earnings per'share of Common Stock
:
-
.
Collins
I
short-term- interest rates;
(2)
vancing
of
rate
Federal
Reserve
creasing
reserve
the
bank' deposits
discount
in
Reserve
of? the
Board's
Reserve
ad¬
'
///;' 1
V --:-
cities;
policy
Federal
of sup¬
porting government bonds on the
V
'
andvFederal? Reserve
ury
moves
yet have been realized,"
Mr., Collins declared., "They al¬
fluence
all
on
in
the
first
on/the
available
quarter
of
the
a
pact
first quarter
of
debt
economy <could well be
flationary
;
,
than
believe'.,'.
,,
people
/v/vvolume.
off before
forms its
depression
severe
own
•?? >?'v'' *%/>•
The Company
con¬
dition," he concluded.,< /.;//
,
Plant AdditionsI
v
per¬
violentt correction
of: that unbalanced economic
6.
.
The problem of taxes is of par¬
ticular importance,:: Mr.
Collins
/.
,
declared/but he predicted
plete revision of the
///'
-V?
com¬
a
/
tax structure
wiir not take place this
year, but
may be worked out in 1949.; I
'
:•
?
A
four
on
(1) adoption of
of 50%
main
personal incomes;
on
reduction of the maximum
to
ty*:
long-*
VvV,
come? particularly
bracket;
and
duplication
earnings.
of
■
in
the
survtax
taxes
corporate
on
•.
securities,
Mr.
Collins
stated
that
legislative
reform
aimed at ending the confusion that
has arisen in
practice procedure
curities has
not
•••'
...
-v
a
■'>'
% .-s
v.* .41-
that our; technow develop. ? ?
processes
can
-J,u■ 1
:
■■
v..
v»'
selling of
gotten
very
se¬
its
:
a
-:/ ,/
Supplies
manufacturing
processes.
One of the principal
| accomplishments within this
duction
1
■T
at
--U
use
acetate.
j
■
?::?
;,v
;j The Company also carried forward its plans
duce
a
pro-
in the manufacture of cellulose'
:"v-/
-
•
is the
program
its plant at Bishop, Texas, of essential
chemicals for
j
substantial part
to pro¬
of its increased jrequire-
J ments of cellulose.; Arrangements were made with
„j the Government of British Columbia for a Forest
"j. Management License for cutting rights to large
,
tracts
of forest which will
quirements for
a
provide the^ timber
cellulose plant to be'erected
re¬
near
Prince
Rupert, B.C. Progress was made in the prep¬
plant, and in engineering
preliminary to actual plant construction.
r
I
.
?
Sales Outlook{
The
in the
two
Expenditures for research amounted to $2,825,119.
In 1946, $2,284,571- was spent,; The cumulative
expenditure for research since 1925 amounts to
: mote
than- $17,400,000.
Company looks forward
I increased sales volume
substantially
plant facilities. The Company's operations involve
processes, and it holds strong
positions in the/chemical fiber industry, the indus¬
trial chemical
4
i
The
industry, and the cellulosic plastic
',4.??/?;;
industry.
Company is
a
principal producer of cellulose
! acetate
yarn
i It
and staple fiber for-textile purposes.
also produces viscose
process yarn in substantial
■\ cellulose
I
By virtue of the
acetate,
processes
used in making
the product in its primary form
may be converted either into yarn or plastic mate-,
rials, affording flexibility of operation.
,
Annual
Report
The
Company's operations in 1947 are reviewed in
the Annual
Report to its stockholders. A copy will?
be sent without
charge, on request. Please address?
Celanese Corporation of America,
Dept. 136,
180
-
far.
to a
in.1948 from its additional
{ chiefly,chemical
volume.
fields jn which it has pioneered/
chemistry for: the development
'?-v. of its yarn and
plastic products, and that of petro:.?■
leum chemistry for the development of basic organic
?, //chemicals derived from petroleum gases.
program
.
im the
offering and
7'<v/?;vr;
•-
Company advanced its long range program for
\ assuring the supply of basic materials essential to
1
v
re¬
/-
I;? :?
'.
that of cellulosic
In the matter of
legislation
garding
•
The Company continued its long-range research
;,
(4) reduction of the
Plan.
«'■
.•/'?,.:-V
f^ResearchiUV^^
in¬
earned
.
nical knowledge and research
'"'.'■•'i'
121/2%;; (3) allowance of
for
Employees Retirement .Income Plan,
to the,
Company of the Group In-
The
.
?/,/?e:iHcient equipment and
(2)
gains?tax rate from
substantial credit
and
wages
than three and
more
costs
surance
y
work
/
C."
carried forward its program of expansion and modernization of plant facilities.»
Expenditures for 1947 amounted to $36,470,175,
compared with $20,310,661 in 1946. Some of these
expenditures contributed to the increased sales
volume during the year,.and others will raise pro-
U
range capital
25%
A
.,/i?>Upon completion of the current program, the
'
Company's plants will have the most modern and
objectives';
maximum, surtax
a
and the
I Raw Material
in
? duction levels in; 1948.,/>??/•'
The IB A, he said, was concen¬
trating
for
payments
aration of the site for the
."But inflation must be fought
^
share of the
!
,iiij-./.'//vx/v?>■;'
v
/&v.*\
r-
■
-
JveflScient ^prddiiciion Achieved xhrbugh expanded'
more; de-r<
many
*1,
represent sound and sustained value
of consumer purchasing power.;.
manufacturing, processes, chemical researchsto
*:&•% produce new/and1 improved products, and more
the
on
materials and
^ / The Company's price record has been accomplished
t?,; ■ tfirough such factors as technological improvements
salvo.i The im¬
retirement
raw
Steady and appreciable rediiction in the relative
cost of .Celariesef
yarns; t;o?f he, consumer.
used
be, dangerous for the. Treasury, to
fire all, its debt slashing billions
in
of
?
markedly, resulting in greater consumer purchasv/nring power.,Irv .terms of real wages, this has meant
government/I securities
owned
by the; Federal Reserve
Banks, Mr. Collins stated,/'It may
t
I
>
year
and< which is expected to be
to
retire :
?" "■? Xe V1?v v/v VV
direct
to
employee benefits.
compensation covered Company payfor Federal Old
Age Benefits, Federal and
Unemployment Insurance, the Company's
1
/ Average wage1 rates" for industry have increased
•./
Treasury
will ' be
costs
ments
/V
levels that
security markets."
•? \ Commenting
surplus, which
?
generally higher
rates, in holding the prices of its products at
..terms
significant in^
a
:
and salaries paid to Celanese employ¬
to
$62,520,107 in 1947.
addition
1 State
Coinpany succeeded, despite substantially in-
wage
may not
ready have had
The
-creased
•.
I."The full impact of these Treas¬
VI?
*.;//
Prices:,
I
,
open market.
;
94^- /a//VS.,:; /V?C?Vr;/•'./Ve';,V
wages
employ of the Com¬
of December 31, 1947.
as
one-half millions of dollars for
:
respectively, making a total of $10,198,064
?v/ for 1947 compared with a total of $7,988,685 for
at
in the
This added
Stock
---
banks; (3) in¬
requirements on
altering
Cash dividends of
$3,032,347 and $7,165,717 were
declared on the Preferred Stocks and Common
„
women
salaries, the Company spent
-
(4)
re¬
on.
amounted
In
amounted
$3.83 compared with $2.36 for 1946, after pro¬
ve 'Vaiding for the Preferred Stock dividends.
■?.-;./
the
and
men
ees
to
inflationary effects of
the huge wartime expansion
of
currency and bank credit, among
which; are: (1) sharp increase in
and
advanced
petroleum chemistry is carried
and its subsidiaries
pany
Collins
reviewed the various proposals to
offset
amounted
'•??/;■ compared with $11,577,000 for
1946.
«
Mr.
taxes
increase of $8,114,001 over
1946. Provision for
Federal Taxes ,on Income amounted to
$15,887,000
still
be
and
expanding production operations of the Com¬
required increased personnel. | There were
an
danger¬
more
in¬
were
pany
defla¬
abrupt
New facilities
Company's petroleum chemicals
development center at Clarkwood,
Employ
'oyees
Income and Dividends
the
to
country.
the
in the chemical and
textile divisions.
infla¬
is
at
Corpus Christi, Texas, where
search in
through sub¬
cen-r
Summit, New Jersey,
be
among the finest industrial lab¬
to
for
the opening*)/ the
year saw
laboratory
oratories in the
ciencies. Sales results
that,
though
1946.
o.n
warned
tion
largest in the Company's history,
to $181,083,608,
representing an
$45,881,397, or approximately 34%
principally from
new
plant facilities and improvements in existing
plant facilities, as well as improved
operating effi¬
address before
the
the
amounted
increase of
the,Investment Bankers Asso¬
of
were
.
Julien H. Collins of Julien Col¬
Madison
...
Avenue, New
-V''
York 16, New York.
-
-
•
'Reg. U.S. Pat. Off.'
He added that since
1941,-the IB A
and
the
Securities
Commission, have
than
80
and
amendments
curities /and
the precise
Exchange
agreed
to
Exchange
in
manner
on
more
the
Acts
CELANESE CORPORATION OF AMERICA
Se¬
but
which
the
''c
-
•
changes
should ;be
deadlocked: '
'
'
made:" is
'
'
still
180
MADISON
TEXTILES
•.
AVENUE, NEW YORK 16, N. Y.
PLASTICS
•
CHEMICALS
|11
4
9
j
12
COMMERCIAL
THE
(1108)
inflationary
calamities,
Bank and Insurance Stocks
<
=
'
<
t
i
.
i
•
• 11
of
Berry
that
loss
single
decision
Se¬
"Last
Association
his
that
imately $900,000. In April of last
of
a
value, rate increases now in ef¬
to
fect and in prospect, and
This Week—Insurance Stocks
there occurred in Texas City,
3'ear
improve¬
ment in maintenance and fire pre¬
Texas,
explosions of
series of
a
ammonium
nitrate,
.
.
over
.
people were killed, 3,000 in¬
500
control,
an
improving
quote briefly from some of the
jured, and property destruction
annual reports to stockholders issued by the fire insurance companies cycle may well be in prospect.
the
aggregate
amounted to
"With loyal support from staff, in
and which are now being received in some numbers.
directors and stockholders, your more than $32,000,000." Notwith¬
Aetna Insurance Co.'s report by President W. Ross McCain was
management
feels
inspired to standing the terrific losses sus¬
ited by this column in the Feb. 12 issue of the "Chronicle," and will
year
in many cate¬
view the future with reasonable tained last
jiOt be repeated.
Co. is of par-^
Home Insurance
t
interest
icular
*
iew of the
time
this
at
in
proposed merger of its
the
Reference to this
made by President Harold V.
in
though
cific terms of
the
merger
owned
in his report: "Due to in¬
creased values,, new construction
and the accelerated activities of
says
report,
annual
the
details are given.
no
Co,
Colony Insurance
Old
by Boston, is now
in
its
41st
year
of operation.
President Donald C. Bowersock
>arent company.
Smith
—~~
while
98.7%
nine fire-marine affiliates into
s
vention
be of interest this week to
It may
Spe¬
agents and our entire staff,
the writings of the two companies
our
agree-
ailed to stockholders of all the
Sents, however, have since been
1947 were $20,206,054,
or
a
growth of 37.86%, which
fcompanies concerned. The report
joints out that total net premiums growth, following an increase in
the year 1946 over 1945 of approxi¬
written by the "Home Fleet" ag¬
gregated $178,709,911 in 1947, the mately 53%, has resulted in in¬
highest in history, compared with creased premium writings in the
After
$147,795,814 in 1946.
This repre¬ two years-of 110.84%."
sents
a
gain of $30,914,097
or referring in the report to the high
20.9%.
In
commenting
on
the fire losses of the year and other
fact that earned premiums for the catastrophies, Mr. Bowersock says:
^ear 1947 by the parent company "Your management is optimistic
Amounted
to
$100,725,940,
Mr. over the long-range. possibilities
Smith said: "The Home is the first in our business and, as a result, is
to
build
for
tne
American
property
insurance continuing
future."
company ever to reach the hun¬
for the year
to
Referring
backed by its adequate pol¬
icyholders' surplus and reserves,
to maintain its current respected
pany,
position and wholesomely to ex¬
pand as the future unfolds."
has
Insurance
Fire
few words to say
a
classes in several
rates
whole
jurisdictions, on
have not been,
along
to
situation."
improve this
in premium reserve
not
nor
prevailed."
Company
is
celebrating its 75th Anniversary,
the gain
Home
are
offering of these securities for sale, or as an
circumstances to be construed as an
offer to buy,
*
or as a
solicitation of an offer to buy, any
initially being offered by the Company to
offering is being made only by means
ofsilih securities, These securities
its Stockholders and such
of the Prospectus,
March 11,1948
NEW ISSUE
attained, however,
fully realized un¬
til
the
policies written at the
earlier and lower rates have fully
been
yet
will they be
The industry-wide
re¬
1947 will no
deficiencies in
major classifications of business^
and we feel that further rate in¬
creases should be made effective;
it is quite generally, expected that
such increases will be made.
doubt develop-rate
Another /comment of ' import¬
made" by Mr; Layton of Na¬
tional Fire is as/ follows: ."Prog-
140,750 Shares
!•
Authorities. of
states in enacting
Company
($10 Par Value)
Subscription Price to Warrant Elolders
share
!
During the subscription period, the undersigned Underwriters may offer,
shares of Common Stock acquired through the exercise of rights and any
shares of unsubscribed stock at prices not less than the subscription price
set forth above, and not greater ,tnan the highest price ^t which thfe Common
Stock is then being offered by others in the over-the-counter market plus the
amount of any concession to dealers.
their
degree which will be
*
J
.
F. S. Moseley & Co.
first Southwest Company
Schwabacher & Co.
surance
group
of 88 fire insurance
Hornblower & Weeks
1'
Shelby Cullom Davis & Co.
;
Bosworth, Sullivan & Company
i.:
'»
».
■
'j
„i
/'
*
Putnam & Co.
Whiting, Weeks & Stubbs
to
,
this,
that the remaining
similar legisla¬
tion prior to July 1,, 1948, which
will enable them to comply with
the requirements of the Federal
enact
will
states
laws."
!
from many, more
Excerpts
space
earnings figures have been
No
[
re¬
could be presented*; but
will not permit.
ports
cited, intentionally. In a later is¬
sue
it is purposed to present tables
of
net
investment
income,
underwriting ' profits
net
losses,
or
profits, etc. for
representative com¬
total net operating
number of
a
panies.
>
.
;
Corporation
.//Investment analyst looks for no
and corporate bonds and halt in decline in
*'
municipal bond prices. Predicts yield of 4*4% to Al/z% on high
grade preferred stocks bought in 1948.
.•/.
;
between government
-
,
Maynard H. Murch & Co.
National City Bank
2l/z% government bonds—the so-called tap issues—will hold through¬
out the balance of the year, or until demand for these investments
lifts the
the
due
of
r e
tax
payments, is
net
b
t
s
a n
1948
-
tial
the
cash
•
H. F. Boynton & Co., Inc.
H. C. Wainwright
struction,
certifi¬
by
Federal
1947, in¬
Ot least
they
decide to discontinue further
soon
John
Reserve
These
H.
sales
Pell
G.
V
well be the case,
companies may
as may
insurance
life,
cates held
the
are
play than was the case a year ago.
If the break in commodity prices
results
in
some
curtailment of
residential
and
industrial con¬
issues of bills
and
investors
better prepared for the role
is
used,
largely, to re¬
maturing
tire
unusually
an
about equal to
are
stitutional
amounts:
being
in
are
liquid condition. If new security
issues and construction activity in
in
-cash
s
u
a
investment
institutional
many
accounts
recipient
of
time
ments and that at the present
na-,
,
exceeded other invest-r
ernments
the
to
;
seasonal
t li
During the early months of the year
price above the peg.
Treasury,
made
,
f» rJ 4
government bonds. : '
of
\
by the largest group, life in¬
companies.
surance
of New York
& Co.
Since
exceed
institutions
are
cash
annual
outlays, these
recipients of
have
and
net
approximately
three billion dollars a year avail¬
able for investment at the present
time. Their most important source
ments and
with
they
recently
last
as
subscribed
to
•
dollars
gages
on
was
September they
approximately
a
worth
The. supply of new
issues and mort¬
(mortgages
on single family
mostly taken by sav¬
banks but
life
insurance
are
available
Laird, Bisseil & Meeds
Members New York Stock Exchange
•20 BROADWAY, NEW YORK 5,
.
N. Y
Telephone: BArclay 7-3500
Bell Teletype—NY
1-1248-49
and
to
other
than
companies
money
companies
investing institutions:
rose
and
switched
governments
vestment
new
insurance
interest rates
into
media.
modity
break
some
cause
may
downward
readjustment of sched¬
ules—the
demands
banks
lenders
be
not
may
savings
on
institutional
other
and
;
as.
great as
insurance
from'
long
competing
There
is
doubt, however, that sales of
in¬
little
gov¬
*
*
»
• *
,
'
Short-Term Rate,
of
bond
greater
some
has
weather
gest that the peak of the wave of
selling on the peg may already
have been passed.
»;il:
' / r
As
cerns) during the last half of 1947
Request
mortgage
not concerned
fluctuations.
companies invest in multiple fam¬
ily units as well as industrial con¬
Circular
demands. In¬
delayed
building projects: the com¬
1948
clement
anticipated. Weekly statistics sug¬
2V2%
non-marketable 18-
bonds.
corporate
ings
are
short-term
for
invest¬
of income is interest from
homes
Stein Bros. & Boyce
i.
Company
non-bank eligible
likely that the Federal Reserve peg of long
It is-
year
(L. A. Gibbs, Manager Trading Dept.)
i
is probable
it
President, Wall Street Investing
•
billion
Conrad, Bruce & Co.
Fahey,Clark & Co. Granbery.Marache & Co. M.A.Manley&Co.
>
Pacific Northwest
Referring
!.■
loelikopf, Hutton & Pomeroy, Inc.
Schoelikopf, Hutton & Pomeroy, Inc.
Mitchum, Tully & Co.
Moore, Leonard & Lynch
properties.
F. S. Smithers & Co.
Alex. Brown & Sons
William R. Staats Co.
Wagenseller & Durst, Inc.
7.;.
government
!u
The Milwaukee Company
[ Pacific Company of California
;
Watling, Lerchen & Co.
A. C. Allyn and Company
Incorporated
,
' '
j Merrill, Turben & Co.
f
has, for approximate¬
ly 30 years, been a member of the
Oil Insurance Association, an in¬
White, Weld & Co.
Mackubin, Legg & Company
'
adopted such legislation and
have
By JOHN H. G. PELL
satisfacK premiums
to
Security Insurance Company of
McDonald & Company
W. E. Hutton & Co.
Dean Witter & Co.
« v,u.
.
I
requirements for the supersinsurance business to
New Haven,
•
Wisconsin Company
acted
are
The Interest Rate Pattern
banks.
and
the Congress and to the
Federal Government."
v
Corporation
Paine, Webber, Jackson & Curtis
Decision
companies which insures large oil
The
;
laws pnd estab¬
vision of the
Copies of the Prospectus may be obtained from any of the under¬
signed underwriters of the unsubscribed shares only in States
in which such underwriters are qualified to act as dealers in
securities and in which such Prospectus may legally be distributed.
v
be
pleased to. report
that the legislatures of 43 states
We
upon.
ance
companies; savings banks, ning the inflationary flames) but
action of
and ex*- corporations, eleemosynary insti- some of the selling in late Dec.
t u t i o n s
and
individuals.
The
and Jan. was in anticipation of
pected that by that date the sev¬
eral states will have
perfected largest .yolume of sales have been lower prices and in preparation
tory
f
would
15
Law
Public
30, 1948, by a voluntary
Congress.
It is hoped
,
a
| First of Michigan Corporation
comply with the requirements of
I' About the same considerations
Public Law
reductions in government hold¬ hold for savings banks as for life
No. 15 to keep the business of in¬
ings by the Federal Reserve banks insurance companies: some selling
surance under adequate control of
offset
increases
resulting from of long governments was the re¬
the
respective states so .far. as
possible
thus - making
Federal purchases of bonds at the peg sult of demand for mortgages on
prices, and - prevent these - pur¬ houses built Or bought last year
supervision of the insurance busi¬
chases from increasing commer¬
(the government guaranty of GI
ness unnecessary. The moratorium
cial banks' reserve balances.
housing loans makes them particu¬
until Jan. 1,; 1948, in.respect of
Sales
of
non-bank
eligible larly attractive and has unques¬
certain anti-trust laws, originally
bonds
to
the
Federal
Reserve tionably increased the liberality of
granted by Congress in Public
banks have been made by Insur¬
institutional appraisals, thus fan¬
Law No. 15, was extended to June
Court
Rights, evidenced by Subscription Warrants, to subscribe for these shares
have been issued by the Company to its Stockholders, which rights will
expire at 3:00 P. M., Eastern Standard Time (12:00 Noon, Pacific Stand¬
ard Time), March 24, 1948, as more fully set forth in the Prospectus.
The First Boston
the .various
lishing requirements and prac¬
tices designed to meet the plain
recommendations of the Supreme
Common
per
-and
latures
ment
$23.50
Legis¬
Insurance^Depart-
has; been made by the
ress
Standard Accident Insurance
Lazard Freres & Co.
who
ance
-
-
executive
refers to the Supreme Court
insurance
another
,
various
in
sults of operations for
no
is
has
-
creases
matured.
This is under
Spring¬
of
field Fire & Marine Insurance Co.
Steps are being
this .line.
taken
equity, most of this loss is elimi¬
nated. President Frank H. Thomas
after referring to the fire losses,
written
premiums
satisfactory
Insurance
.
Herbert
S.
William
'
has been made in
progress
for
net
in
11.6%
during 1947 over 1946. A statutory
underwriting loss in excess of
ratio of 95.3% which "indi¬
Boston
continued
right direction, there still is
much more to; be accomplished
that
year,
company's operations in 1946
during the past year,
the
legislation
enable the states to
would
the
view of the many adverse factors
pense
the
forces
that
expected
was
which
.
operating
Mr. Smith
combined loss and ex¬
a
Berry
"The. same
economic
which adversely affected
sufficiently increased to meet the
and, while
cate that The Home has had a $800,000 was incurred during the
year, particularly in
year; however, after adjustment
for
points to
Mr.
As
1946.
over
it:
,
benefited' from
in¬
rates which
were made effective during
1946
and 1947.
The full favorable in¬
fluences of these increases have
results
ment
puts
heavier load of losses;
some
red-
in
of Na¬ although their effect on the year's
Company results of the company was not as
r" .
in his re-, severe."
port regarding rate increases, as
follows: "Although rate advances
have
been
granted on
certain
the
still
ink showed considerable improve¬
D. Layton
President F.
tional
underwriting
gories,
Security's
experience, though
the
immediate reduction in pegs set
In
this
connection
it - is
of
interest to revert to Mr. Harold V. ; ;for government bonds because of Treasury redemptions, and exSmith's report, to
Fire Association of Philadelphia
Home stock¬ •/ presses belief current spread between yield of short-term and longterm securities will be maintained, i Sees, however, widening spread
reports a moderate expansion of holders in which he says: "The
dred million mark in earned pre¬
miums."
optimism in the belief that our af¬
fairs
are
sufficiently controlled
and flexible to permit the com¬
follows:
as
we reported to you
legislatures of 44 states
be in session and that it
would
much
that
commerce."
are
year,
had suffered amounted to approx¬
1947,
"interstate
comments
His
it can be hoped
trying nature is
of
the effect that insur¬
to
is
ance
history. With increasing insurance
=====
E. A. VAN DEUSEN
By
J.
curity says in his annual report:
"During this period the largest
fol¬
"Notwithstanding the diffi¬
culties
<>•■■»•
•
Peter
President
spiral,
etc., concludes his message as
lows:
Thursday, March 11, 1948
FINANCIAL CHRONICLE
&
v
We
and
have
accept
|*
.
7"
*
;; /
accustomed to
normal, at shorthalf
grown
as
term interest rate of less than
the
There is no
long-term rate.
inherent
ship:
the
function
for this relation¬
reason
of
short-term
a
which has been been
ity
preference
state
social
: •
of
-
is
a
de^pribed as
And liquid¬
liquidity preference.
function
rate
psychological state
is
the
undoubtedly
a
reciprocal of the
vof ^confidence
.
in political,
andi economic equilibrium.
The following table gives sam-
(Continued
on
pkge 42)
Number 4680
167
Volume
THE COMMERCIAL
&
FINANCIAL
CHRONICLE
Company; 60 Fifth Avenue, New
York
City^-Cloth—$4.50.
Television 1948—Analysis of in¬
,
vestment opportunities
Trade with the Union of South
Africa—-Analysis
Securities Industry
PHILIP L.
By
distribution
CARRET*
Commenting
depression in all branches of the
on
Mr. Carret asserts most urgent need is
many problems.# Holds N.A.S.D. can do
ness,
its
a
a
great deal
its members than it is doing.
International
•
Trust
the
study
the
f
o
business
that
wp
we
prolonged
riod of
sion
:
pe¬
depres-j
with
ranks
our
praeti-
cally undimin¬
;;
—————V., :.f *"-'■:,■ * r —t
exchanges. Both, in effect, repref
sent an effort to substitute /the
economic level; both tend to;
mote instability in place: of:
ability
tomers;. and
the industries
whose
.capital
needs
Philip
L. Carret
*
;
v
all
be
record
trifle
.blind
to
us
•conditions
the
that
present
real
a
threat
;to the continued soundness
•business.
to
•
play
; s
•
cannot
course,
fact
we
r.y
•
.
present
credit
of which
proud.
That pride, of
;
sup¬
iegu4
•
can
of the
Any industry which is
yital role in the expand¬
a
ing economy of these United Stated
be
■must
stream
mew
able
both
to
of
capital.
attract
As to
steady
a
blood and of
new
new
/have
.our
appear
blood,
we
only to look around us in
daily work to see that we ard
»%t
dealers could count
field
and/
v
on
which
v^qtiii
/
tions
of
publicize
consolidated
received
balance
for
from
expended
were
the
sheet
year.
the
of
becoming
:
day
every
of
gray beards.:
Despite
of
more
heads,
gray
a
if
not
the fascinate
,ing variety of problems which is
characteristic
,are
not
promise
.When
•I
our
attracting
;
in
we
have
of
young
sufficient
need
we
men
of
numbersi
additional
doubt
no
business
cap'tal
that it
will-be
^forthcoming but certainly the cur¬
rent situation is not stimulating tci
'its procurement. • ; y v;
j :1
•
I'
Perhaps
;
greater read mess; ori
the part of all of us to
acknowl¬
a
edge and vto study the. other fel-i
'low's
>
problems would
ers
as
the
of
!
customers__
share.
per
The
$200,715,831
89,058s 156
go
long'
a
Tod
of us are inclined to confine1
thinking to our particular
.problems.; An *qver-the-couriteii
/dealer may feel that the. 'gross
.many
30,262,816
26,536,766
1
•uJ
3,774,718
.
~ $369.718,573
the
was
largest in the history of the Company.
Operations at the principal plants
acids, alkalis, dyestuffs', tar derivatives;-roofings,? coke and nitrogen products
to supply.
Labor,- material and other costs-of operation continued" to rise. In
for
rates
wage
Company
have
paid
approximately doubled whereas the
in
addition
to
regular dividends
of
sel'ln? prices
special dividend
in
inorease
average
$6.00
share,
per
a
'
.
^onstruction
<.vV''i,C°/ts
levels,
v.*-*
set
was
aside
for
out
of
to
the
excessive
1947
The "financial- condition
■
Directors, look
.
and replacements
in order to provide
000,000
:
of
future
income
the
with
at
were
as
and
continued
and
strength
/■'.
1948.
its
of
resources
evidenced
are
balance' sheet.
the
by
The
confidence.
•
Dated, March 10,
trad¬
high level. While it is not possible to forecast future price
replacement costs and other costs applicable to the year, $10,to the general contingency reserve.
addition
an
Company
new
a
construction
V
.■;,
Respectfully submitted,
,
'
; CONSOLIDATED
•
v
y-i
t *
(
.
F.
GENERAL
President
EMMERICH,
J.
■
.
•
i \
-
Accounts
■
$344,446,0§5.66
Sundry Investments
at cost
or
as
stockholders,
Government
U/S..
$40,542,626.28
less____.- 28,047,710.21
.
itieS' at
-
reserves
Accounts
and
Insurance
)
t
*-1—1,993,872.78
.
1,303,231.38
Sundry
«
317,964,142.78
Re-
V "ceivable—less Reserves- 29,531,031.88
.
■•-'Inveritories
cost
or
whichever
market
■
;
at
is
-
.
•r".
1
•
-
i
Common
36,499,143.36
178,889,795.89
.
Prepaid
-.
'•/_";■
other
-
Taxey Insurance; etc._„
assets
\
^
.
'
$12,006.44000
:
c
"
,
Total
Surplus.-/-
± _ t,
_
_
Stock
Capital
,
.
•;
-••;
and
..
..
,
•
"
'
k
'
(Surplus r_L—_i_---i-$242,148,672.85
Dadubt Treasury
'
•
21,305,942.61
,
101,037,235.00
129.104.997.85
V
'""v
■
I
Shares
:. 2,128,597.06
wiii,
t.v T<kal
.
.
i
Further
Patenty Processes,; Trade Marks, Goodv
'
v
Capital Surplus-—-.-..—
,
r
restored tf.
•
'
per
•
position off nan rial health com *
Stock, without
value,
basis
$5.
Share
• ■
Issued 2,401,288:
par
■
,
•
,
surplus
and
capital stock
••
-.
lower,
^'DEFERRED CHARGES".
.
^eps.uratewithi its importance ;td i
the! national economy, y;; :: f; 'i
nZ
40,000,000-00
30,656,776.82
Contingencies__,
•*'
.
business itself pnh
Notes
Secur-
and
;
General
'
,
at J
"A
1—;i£ 14,809,375.00
Securities
;-cosfc
ities
.,
$244,010,261.80
;
Investments
;
.
,
'
Obsoles-
cence, etc.
'•
.
cost_"_;r^__v:_; 39,835,196.25 A
Marketable
are
willingly cooperate, If all of ;Up
work- together^ there is every rea¬
son to believe that, the securitieF
C$58,215,049.40
Secur-
27,154,649.99
—
Depreciation,
"^sh-A
;
by
the
$3.-
1,383,019.02
——.
Taxes Accrued
CURRENT ASSETS
Insofar
affected
are
$12,004,957.27
Payable-
Accrued
Wages
"a/ '.1
investments
liabilities
current
.etc, ,at,
;
1947
liabilities
,
.
■-■rl /Rehl Est.ate,, Plants, ;Equipment, Mines,
"
BALANCE SHEET—DECEMBER 31,
assets
property account
/
to be studied by, a
newly-formed committee of the
N. A. S..D. ;y
In-, any
efforts , tr
strengthen our industry the N. Y
Secur'ty Dealers .Association wil1
they
19,370,286
;
.
000,000 assets" proposal ■ of; the
Securities,and Exchange Commi$>ion.
-1
J*-.".Gross additions to the property account aggregated $41,302,108. Retirements were $4,578,035. Substantial capital
expenditures.,are being made by all
divisions, including expansion and improvement of plants for all. the Company's
/vasic, products and providing facilities for manufacture of a number of products not heretofore made by the Company.
./The new central research laboratory at
Morristown, N. J., has been completed and is functioning effectively,
,
retail quota¬
legislation., such
"300
31,
$365,943,855
L—
ability
hourly
average
relatively small.
$3.00
December
business
of
have
their -customers.
so-called
close
J
year
Company's
benefit both to deal¬
problems
proposed
a
way to help, in their solution;
and
our
the
at
for:
•
/Collection
Company
\
•
receipts
business for the
k®en;
™s
securities ,havc
unlisted
been of great
7, N. Y.—Paper—$1.00.
$30,311,484.
capacity-'rate. 'Demand
exceeded
the la: t decade,
v
the assist¬
at
-p,gain
,
-
of the lines here mentioned.
to
Building,
Woolworth
1589
Total Receipts
-.-^were
The efforts of its Quotations Corn-,
mittee
the
was
.Interest and dividend
the
on
Presented
•
illogically strayed upon the exchanges
It is gratifying to note that the
N.A.S.D. is already at Work "alone
come
Stock—*'. 25,837,300.48
'•
$574,818,141.43
.
\
'
-
216,311.37237
1
————^—$574,818,141.43
Total
'.our
:
of
no
particular
S.
Governmant
Securities
include
Savings
Treasury
with
Notes
principal
value
Vv,Air
Reduction
listed
the
on
consists'.of
York
New
187,189
"
Further
concern
i:
stock exchange may fret over the
,loss of business caused
by unrrealistic restrictions on margin,, trad-!
vyyvy:-:1./ CONSOLIDATED INCOME ACCOUNT
'
"
■
^
Incdme- (Ather
fioh,
than
dividends
obsolescence, repairs and
General Contingencies
and
interest)
renewals,
all
Other'Income:
•
31,
1947
for
depreciastate and local taxes——.
after provision
Provision fpr
.
DECEMBER
ENDED
YEAR
-Grt»s4
w
mg - and -give no" thought to the
problems of the over-the-counter
;dealer.
a;
,• ;• '• •; *;
•; y
$58,976,493.55
It may be that the most
.need of our business: is a
•'
urgent
united
front for the
study of our many
pressing problems. We have the
"foundatioh for such -unity in
thej
Consumer Buying Habits in
H
$3,288,280.40
486,437.99
3,774,718.39
1—i—■
$52,751,211.94
Set
Illinois Com*
Converse^-Uhi-
lected South Central
miinities—P. ID.
v
-"Gross" IncOihe before provision
:
■
(Federal1 Ihcom'e * Taxes xaL-—~
I
J
■;
-<•
■
'■
•'
-
take
an
Chicago^ 111.
Company
example. of problems af
fecting different segments-of th<
securities- biisinessc whieii
-appear]
; superficially -i unrelated
$ but-are
Net- Income
"Mv
fu^dah^rifqlly the ;sam^ take - the!
•competitive bidding Tsituatipp
;and|
Small Business
a^ -Gb^rriment
'Busi¬
(may
be^ obtained front
Superintendent of DocUmehtsy U;
-
^Remarks by, Mr; Garrett,
,
S.v
Goveimiherit.'.^rlhtihg-
President of Carret, Gammons &
Washingtoin
;Ccr., Inc.; at the 22nd AnnuaFDin-'
-
ner
of
the
.
New
r
York I
Security;
-
Office;
25^
Studies in Financial Organiza*
Association,w^few* York'
City, March.15,
X~ ' tion—1T.Balogh—.The- MacKfillah
^Dealers
-
-
,,
on.
Common
Treasury
$250,069,123.85
30,311,484.05
S tock
_
^
_
x —/ x -
J-'/ -1,-
Stock,-, not. included
$21,611,592.00
/ JJ _
c— ^
1,684,701.00
in .Income._a__u
Dye Corporations
'
19,926,891.00
$230,142,232.85
< /■ ••
<
v
)
<"{
7'v- >'
■.}/
r
'•
;
<
■*"
•
'< *"•
•' t
v".
-<i
.-We
have; examined
theT
consolidated,
We^consideVe^.
I
necessary in
general
7
.
balance, sfheet .of the
the circumstances.-1
Addition* of '$10,*000,000
has
:
; 5
*
made to*■ the IV»s«rve for General Contingencies In recognition of
and ptherr costs considered applicable; to the year. The, reserve provision*
beeh
£ y,constr«ctioft - and* replacement- costs
v'J.
^ 0
) 'I
r.
•'
*..
Allied, Chemical & Dye Corporation and its.
!subsitliari' bohiPanieis as or December 31, "1947; and the statements of . consolidated income and surp'us for the calendar
Wr then- eprted/ have Reviewed^ the Aysteih df intetnill control and the accounting procedures of the company and its >
suhsldftary^compapies-and^«.without-#"detailed andit of; the transactionsj have examined or tested accounting
IcoordV1 of--the- companies-and- other- supporting evidence,, by methods and to ,the extent we deemed appropriate. .Our
dxamiHatioo -yfafr^madeT iA accordance with'generally abbepted auditing standards and included all procedures which
'
.
XJ. S. Department oPCom-
merce^ Washington 25, D^Q-frPa>
.
on
..
•
LicensesA-Office- bf ; SfhalT
per—15c
Dividends
X,
$219,757,639.80
'19471—J-a_—
declared
Allied. Chemical &
x-■
A/
rfrr- i-v
ness,-
:
year
:
- -
L
—
_
Less:
$3.75.> 'v''
•
1
Cloth-t-
SURPLUS ACCOUNT
Sur.phis '"afc" December 31 ,l' .1946/_ 1 ^ /_ _,—
( Surplus at; December "31,i"-1947/_A-;—•
T6esteii'-4 Zlff .Davis/Publishing
death more/ for: 'its-"- members.UT<
—/—-------—--—
:"
i
-
^Germany; What N o w7--rJoachifn
grea
22,439,727.89
$30,311,484.05
Dividends
a
Income Taxes--'————"——
for' Federal
versify of Illinois College of Com¬
merce
and Business Administra¬
;NatioriaT Association: of Securities tion;''Bureau of a Economic * and
Business Research^ Urbana, .1111.Dealers; the* quasi ^-official bodv t«
&
■'■'V.
*
.which all of us belong. In ad'difio
caij do
$48,976,493.55
10,000,000.00
;—:—
_———j.*
.
and
8.
Stoak Exchange, had a market value at December 31, 1947
shares of common stock carried at cost. '...
Surplus consists of $107,483,153 earned surplus accrued to the Company siiifce its organization and
'•$21,621,845 accrued to its constituent companies prior to the Company's organization.
Company,-Inc.,
;',:0f $18,407,81^nTrcasury - Stock
to him
./Similarly,! a member of a!
;INj\.S\D. 'dbes
other ;U.
$22,000,000;
of
had a market value at-December 31,
1947 of $17,828,756.-- Marketable Securities' consisting
144,900 shares of common stock of the United States Steel Corporation and 270,000 shares of capital stock of the
of
.
are
'/U.
v
J* '"GoVefnmeni Securities
profits of 'underwriting houses tift-1
;,der conditions of competitive bid¬
ding are to be viewed with .awe'
but
in
Dye Corporation
(depreciation) and contingencies
cost
payments ordered by Government (tcxes)
co®t of using the tools (compensation to owners)
un in r
to, over-the-counter
securities
ing
Co.,
56 Consu¬
governments
City—TAD Publishing
New York
C°St °f ®uman
T-u
Orf
exchanges
in the effort to preserve - for the
over-the-counter market trading
in securities which logically be¬
long in that market, perhaps to
restore
foreign
New York
•
Trade and Allied Associations—
-The-cost-of-tools, wearing out
of leaders in the underwrite
ing
non-profit institutions).
of
c?st °t goods and services bought from others
energy (wages and salaries)
.
"
•
effort to solve the competitive
ance
Libraries
of
cpnsolidated income account
These receipts
'
Through the N.A.S.D., if
that
organization
will
assume
leadership^ those of; us not pri}
marily interested in .underwriting
would be happy toy cooperate in
an
and
Public
in
com¬
plete addresses, also addresses and
lates
Colonial
ihppmafor the year
1^47'the Company
i
superf
.theh
to
ana the
>
-
Perhaps bidding problem. - In ; turn, we
regulatory should hope that over-the-counter
the
-authorities whose rules and
Nations sometimes
seem
a
burdensome deserve much
.'for the clean
-
ply..
;
,
we
City—Includes
telephone numbers of
to
(50c
Stockholders'.
A7
formed.
serve our cus^
..
y
ficially; desirable
o
publications
their
—$1.00
York 20, N. Y.
icare
'
^.+9^7,
pro}
unimpaired
t
To the
'J<.
threaten the ability of our indust
try to serve its customers by narj
rowing profit margins to an un+
withi derly markets; both
ished and
Co., Inc., 730 Fifth
Allied Chemical &
1
havp*
have
experienced a auction; block for negotiation;. both
,
York
Avenue, New York, N. Y.—paper
war—
Avenue
plus
New
broker
face
soundness
1230
tions
development
and
—E. W. Axe &
West
48-page directory of the Associa¬
of the in¬
for
more
falling or stagnant markets, bearing high operating costs in th
of meager profit margins. It speaks well for the fundaments
•in
.
Company,
Americas, New
dealers iii all branches of the. securities business have had to fcperat
<
Division,
history
13
..
businesses enjoyed boom conditions in 1947,
% While most
.
South, and
United States since the
securities busi¬
united front t6
dustry,
geographical
African banking transactions
with
President of New York Security Dealers
Association "
.
of.
of
(1109)
^educted£in arriving at the; net income for the-'*-
excessive
has been
y^ y,:",' t •
*
»
•, "*,1
>
*.V
u jn
tour*ophiion*: the- accompanying consolidated general- balance sheet and related^statements of Income and surplus> present fairly--the* position* of" the Allied CIiemlcaLAs T)ye. Corpptatlon and its subsidiary companies at December 31.
X947; arid 'the- results of. their operations -for- - calendar - year, - subject
to> the deduction of contingency reserve
>
[provisiori lb- arriving at -net'income and not. as--an. appropriftUon thereof, <Jn conformity with generally accepted
V,
accounting,principles applied, on a: basis consistent with that of the preceding ybaj/i .*•
.
v*. a
applied.
Mar«di
9.. 1948;
♦
.
•
:'a
;
.
_
'
"'X'.•
*
w<i)u."? west, f^int & co.
14
THE COMMERCIAL
(1110)
&
FINANCIAL
n
tween
the
effective
plan and its
date
\\
The
1
■
-
March
on
15 also.
It is naturally difficult'to make
The January
railroad earnings reports
large proportion of the carfiers they did not make very inspiring
a
Unusually
reading.
the court try were,
weather conditions throughout most of
the major factor in the showing of most
likely <$>
—
severe
of
course,
Moreover, it appears
roads
of them will again be
affected in February.
that many
adversely
Those
that
railroads
show
did
substantial year-to-year improve¬
ment, in the
opening month of the
conspicuously' in the
minority and have been attracting
quite a bit of market attention.
One of the outstanding perform¬
year
were
in this respect was the Den¬
ances
Last year Denver & Rio Grande
Western
did
ments the "real" earnings
amounted
to
$1.27
Rio
Grande
tion
less
than
was
fairly well from
reorganiza¬
little
a
and
earnings in
be¬
years
shad
The ' stdcl
the possible
1948 "real"'earnings
the strong' financial
Considering
of
status
the
and
company
th(
high level of current earnings' ii
is expected in many quarters- that
additional
an
dividend
will
forthcoming later in the
be
year.
1
;
This
the
In
first
its transportation
40.2%, or nearly 2 points
that of the Class I carriers.
widened
spread
Denver
last yeaf
in favor of
Rio1 Grande
&
Western
when its ratio dipped to
37.1%, compared with the indusi try performance of approximately
;40%.
1
.i.
.
Judging by the
started
year
way
the current
there
out
is
good
a
possibility that the company's
per¬
formance relative to the industry
•will
show
1948.
further
betterment
in
For this opening period
is indicated that the overall
portation
costs
for
heavier in
were
the
it
trans¬
industry
relatiion
to
rev¬
Warning to Labor
with
the
like
1947
On the basis of 1947
rev-
each drop of 1 point in the
enues
transportation ratio,
or naturally
ratio, is equiva-
'in the operating
| lent to $1.67
on
the
eral
full operates
in
at
Until
Now the
loss.
a
general.
.
share
a
annum
per
stock, before Fed¬
common
.
Last year Denver & Rio Grande
Western reported earnings of $7.05
ja
share on its common stock.
! However, a substantial proportion
of this was represented by cred¬
its
the
to
-These
.items
maintenance
merely -bookkeeping
were
did
and
earning
accounts.
not
real
represent
For
power.
the
credits,
to
amounting
$286,751.
As a result, net income for the
(month, after all fixed and contingent charges, was reported at
$684,814. This was in sharp" con¬
;
trast
with
reported
net
a
a
loss
opening month last
pany
had not
credits
as
through
of
the
manufac¬
pie
II
turers
had
fairly
"break
the
as
illus¬
tration
called.
lOW
year
even
maintenance
accounts.
ance
1948
credits
report,
have shown
from
the
net
preferred
January
would
income of $398,-
063 for the month.
for
the
company
After allowing
dividend
require-
as
cerns
Roger
ate
reduced
withstand
a
tlieir
bond
interest, etc.,
higher
We
all
break-even
point
is
today'than it was.
now
skating
'
■
thin
on
/';,
•
that before the
means
erhployers could stand
able
reduction
before
in
consider¬
a
business
gross
it
was
necessary to dis¬
people.
Then when, the
break-even point of no profit was
approached 011 the decline, they
to
reduce
continue
Today the situation is
Not
be
will
come
in
as
can
the
prolong
this
increase
in -the
level, when the next
ple
gradually,
go
heretofore,
as
dif¬
very
only is there
much
a
much higher.
wages.
-This
Fur¬
be
to
would
let
result
would
charge,
and
to
reach
losses
people
in
unemployment
wages
a
that
means
employers will
recourse
be
are
next
movement
ployment cycle
failures
and
in
will
the
cause
em1
many
heartbreaks. ;
Z/i:
Labor-Saving Machinery
Telephone BOwllng Green 9-6400
Teletype NY
1-1063*
'
re¬
never
Worlc
the;
become
has
debtor
nation
for
all
times, with a record size of ad-i
verse
trade balance.
In spite o
largest
/'
refuses
the
Egyptian
to
Gov¬
moderate-its
demand for the unlimited posses¬
sion;; of
and for
Anglo-Egyptian
Sudan
early evacuation of the
-
an
Suez
Canal Zone by Britain. In¬
deed, neither of the two countries
could Mve
been more
Britain
to
claims
if
had
British
all
been
unfriendly
their
sterling
declared
Government
by the
null
and
void, instead of making sacrifices,
which Britain cannot afford in
order
to
them.
appease
Both
countries,
having
pocketed the
sterling allocated to them, have
remained fundamentally hostile.
The
the
explanation lies partly in
that
Britain's
future
fact
capacity to
macy.
Bagdad.
the
sterling diplo¬
pursue
is not trusted in Cairo and
It is realized that, once
reserve
is
exhausted,
gold
Britain would not be able to
tinue
to repay her sterling
either in the form of gold
the
of
form
unrequited
con¬
debts,
or in
exports.
Pessimism
regarding Britain's fu¬
capacity to make financial
ture
somrj
sacrifices in the interest of buving
000,000 between 1945 anc;
Sterling diplomacy assumed|.
friends tends to nullify the effects
relief
of
amount
the
to
largely the novel forrr
of allocating sterling, convertible
or
otherwise; for the repaymcn'
of
however,
claims have
These
debts.
war
'no, moral justification whatever'
haying originated through the in-:
Many readers know that" th
large utility companies -are,, pbvf equality of economic war effort.
operating at about full capacity Tn the "interest ;"ofthe' comfnor
and
cannot
supply '
their
any
new
delivered, two
or
more
generators
more
yegrs
hence. "Feeling that general
would not be
ness
busi-/
good at that
so
time,
I suggested to these public
utility men that their customers
might
this
for
not
new
the
need
frdm
power
capacity when it is. ready
delivery.
1
;
■/'•(••
[
;
To this
to
they replied: "In order
the
attitude
of
labor
the large manufacturer^
offset
leaders,
have
orders in for4
now
ing devices which will
labor-sdv-
the
the
than
case.
practically
cause
a
employ¬
break-even line
more
quickly
a
year
or
not be
dej
than
electric
more
than-
power
ever
United
the
State.c
ali
claims.'
arising
from
Lend-Lease,
the
;same policy should have been ap-,
plied
to other 'claimants!
And;
since it was'politically impossible
for many creditor governments tc
agree to a cancellation or reduc-i
tion
their
of
claims, the British
Government ought to have taken
the
initiative
for
reducing the
war
debts owed
to
them.
.'
sterling diplomacy.
Possibly the granting of Amer¬
ican
the
assistance
Marshall
difference
yiew.
Britain
to
Plan
from
this
under
make
may
obviate
it^
for
necessity
the
.
a
of
point
If so, and to that extent,
would
Mr. Dalton, when Chancellor
the
Exchequer,
presenting
would
the
with
ments
was
o'\
in favor o.l
creditor
govern-;
counterclaims
have resulted
in
thai
drastic
a
reduction of their claims.
He
was
in
prevented
this, however, by
the Foreign Secretary, Mr. Bevin
who
was
Would
afraid that such
a
course
incur
forced
goods
which
The
above
ployment situation
bad
when
unless
turn
the
labor
over
sensible,
a
it
that the
means
may
next
union
of
leaf.
will
not
more wages,
more
in
labor
very
comes
leaders
new
now
If labor is
only
cease
but it will
production. Mem¬
unions
debts
should
get
Treasury to
owed
Irag with
be
bust
em¬
the
a
treat
the
to
India, Egypt and
generosity which was
quite unjustified amidst Britain'!
prevailing difficulties. In partic¬
ular, the terms, granted to Egypl
and
Iraq
was
anxious
inspired by "ster¬
ling diplomacy." The governmenl
were
to reinforce Britain's
political and military position
the
Middle
East
friendship ' of
after their leaders and insist that
Iraq
something be done to check this
sterling
present dangerous situation.
rate,
Governments.
was
buying
by
the
Egyptian
To
released at
resulting
in
an
in
the
and
that end
a
the United States to subsidize the
countries
the
ruinous
additional
of
same
Middle
the
in
East
Greece and Tur¬
way as
key has to be subsidized. It seems
probable, however, that even al¬
lowing for the Marshall aid, Brit^
ain
could
scale
a
afford
not
funds for
debt
war
that
creditor
'
Warning to Labor Union Members
the
a con¬
least
When
"
they used to.
bers
through 1948. Most concerns have
backlogs of orders which, if they
•cause.
Cancelled -practically
unpopularity among;
foreign countries. To avoid this
his
influence
in
the
Cabine".
delivering
deliver
Business Outlook
Most things now indicate
tinued
good
business
at
These
two.
labor-saving devices will require
asking for
New York 4, N. Y.
Britain
II
War
of
heretofore.
GUARANTEED RAILROAD STOCKS-BONDS
latter were
that in reality they al?c
so
£700
go,
much
smaller falling off
business would
ers
support
the form of subsidies oi
assumed
1947.
Hence;
not
fixed
financial
past
loans—the
they will be forced to shut dowii
unionism during the last 15
years,
it will be much more difficult to
are
thermore, owing to the increase of
otherwise
the
In
quickly without warning.
before."/ Employers" are troubled
both by the increased
wage rates
and by the slow-down
probesses
by which many wageworkers are
will
financial aid to variou:
governments after 1945 in the
hope of securing their goodwill.
it will come very sud¬
Instead of employers beihg -this, the British Government len']
able to reduce wages or let
abroad or contributed to foreign
peo¬
comes
other costs
which
in-a
longer
denly.
livered for
have
ishment
paid.
and narrower
operatingmargin cushion than there was in
previous booms, but the labor and
only
in
result of Britain's impover¬
constituted subsidies. Since
wages-and
the
employment of
most of the people.
ferent.
Someday, howr
so high that
will
crash
a
are
war
charge
able
longer.
prices
power until
What About Employment?
This
cohtinental
govern¬
World Wars' I and II
of
And
.
are
ice.
through
Louis
former
sterling,
to allocate
The
years.
charges in
the form of taxes and labor costs
have actually ^increased.
There¬
the
were
position to continue
the traditional policy. Such is the
force of tradition, however, that
the Foreign Office has continued
of
the
have
concerns
yet their actual fixed
much
against
a couf
break-even
con¬
r,
•
many
fore,
.
T
diplomacy," and Britain was : the.
a
con¬
the
ernment
Einzig
4
Napoleon
ahd- maintained
ments
diplomacy has re¬
unmitigated failure. Iii
thrown.
Dr. Paul
profitably for
concerns
bust
that
so
to
| '
,
_
in
25 Broad Street
gov¬
o
banker:
to
Anglo-Iraq Treaty of
Friendship was promptly over¬
through two World Wars
within one generation, she is nc
Owing to
Babson
shrinkage in busi¬
Obliged to oper¬
discharge em¬
ployes.
Although
cluded
ments;
XIV' and
afford
expensive for¬
Iraq, the government which
-
t o
•
could
an
s'erling
sulted in
n' t i - •
ncntal
coalitions
period of prosperity/but it;can¬
finally prevent it from falling
over the brink.
U j
before beihg
at
a
loss or
Where
Special Securities
by
p
V
eign policy. The question does not
arise; however/ for in both coun¬
.fi-,
s u
difficulties,
tries
not
able
were
greater
Bonds
all
had
t
r
o
ex¬
v
it had been possible to
the end for which this
indulge in such
centuries
of
foreign,
was pursued, it is open to
question whether Britain, amidst
Mr.
for¬
b road
Britain's
resources.
achieve
a
cushion
a
considerable
the
Guaranteed Stocks
a
creditor
policy
carry
cancelled,
past. The government
smaller
eliminating the mainten¬
forms
of
part
the
Even if
' essential
Bevin's
C
reduce
Even
erosity
a n-
to
exports
on
change
should
and
point
-
still
com¬
this gen¬
ern
buying.. Then
people will be thrown out of work
break-
were
the
that
friendly
the public will stop
applied
acted
not
ever,
is
•
This
also
yet started to put
the
arain
gener¬
realized
eral years
a
even
-
point,"
In
the
not
through unrequited
or
government^
moreover, has so many-** artificial
stimulants up its sleeve that it
could keep business good for sev-f
low
above
$49,979
earlier.
year
Labor Government is subject to
quixotic generosity in repaying war¬
unduly rapid pace, whether in the form
11
ally
As-
most
War
!first
'month of 1948 the
company again
had substantial maintenance
is
The
account of its
on
releasing dollars
countries.
p
principle applies to bdsiriess
same
are
.
•
of
liancial
..
World
•
ness
income taxes.
external debts.
on
—
time sterling-balances, at an
means
usually requires that seven stories- be/filled
with guests before the hotel makes a prdfit.
Income from business
above/that is mostly profit; but a hotel that is only three-quarters
they Wetd°af-year ago. to merchants
Rio Grande Western, and business¬
however, was able to accomplish men in
gen¬
eral. In other
a
reduction
of 4
j
points in its,
transportation ratio in January, words,, the
month.
\ t
,
10 stories
&
^compared
much criticism'
r»-.
A hotel of
-
than
enues
Denver
!
Babson, pointing out break-even points in business have risen,warns labor union members
employment situation may be Very bad
when the next bust comes, unless they cease asking for more wages
and deliver more in production.-Sees increase in use of labor Sav¬
ing machinery because of high wages.
year
i ratio Was
'below
whole.
a
as
ENGLAND
secured Allies
Mr.
transportation ratio consid¬
a
j postwar
'
credits.
selling less than two times
now
By ROGER W. BABSON
in the prewar yeArs normally
'dustry
:
maintenance
taking
Britain
A
the mountainous nature of
erably higher than that of the im-
.
continues
company
LONDON,
r.
For
the territory served and the con-
jroad
torium
^
eign" policy.
| sequent heavy grades. Reflecting
the
physical characteristics 1 the
<
share/'. Re¬
as lriuCi!
a
is
paid," or declared, on " the
preferred stock.
Two
of
these
an
$10
as
effective, confidence in Britain's ability io
her debts will be lost. Says Britain needs complete mora-
pay
ported earnings could be
$4 higher than "real" earning!
ago,
year
from
high
as
under Marshall Plan is
1
the
since
that time three $5 dividends have
were
go
'•
ma^
if
Western
a
Tentatively,' how¬
Dr.
Einzig criticizes British Labor Government for seeking goodwill of creditor countries by generosity in repaying wartime
sterling
J balances. Holds policy has been failure, and unless assistance
reasonable to expect
seems
that "real' earnings tni£ year
The
share.
a
consummated
was:
it
ever,
the preceding
the equivalent
The Denver &
over
share.
a
the
this early date.
as
$0.75
improvement
year's deficit,
to
for
estimates of 1948 earnings at
any
operating standpoint. Fundamentally the road is at a disadvantage
j due" to
;
stock
common
on the
month
been
& Rio Grande Western.
ver
i
spotty, and for
were very
By PAUL EINZIG
"
stock
//
"<
third; payable March 15, is from
1947 earnings. An initial
dividend
of $1 a share is payable on the
common
^Thursday/ March 11, "1948
f
the
of
consummation.
.
CHRONICLE
torium
allocate
the
satisfy
would
countries.
Britain needs is
to
repayment on
what
Indeed,
complete mora¬
a
her, external debts for
on
the period of the Marshall aid.
There is
Britain 'has
she
is
-
popular saying that
a
not
realized thai
yet
"broke";
France has
that
already realized it; and that Italy
has
already
matter
of
forgotten
As
it.
a
fact, there are at last
signs to indicate that the British
real¬
Government is beginning to
ize that in the matter of debt re¬
payment
far
Britain has
beyond its
ing of the
been
means.
£100,000,000 of Pales¬
tine
sterling balances
step
in
the
though it
•
then,
it
is
even
effected for reason's
with
in
Britain's
bal¬
difficulties. But
of payment
British
is the first
right direction,
was
unconnected
ance
living
The freez¬
accordance
with
do* the
right,
traditions
to
thing for the wrong reason.
Volume
167
Number 4630
THE COMMERCIAL
&
FINANCIAL
CHRONICLE
The
tion
United
is,
ment
By THOMAS K. FIN LETTER*
"""
HoWj^arshali Plan
situa^n.
,wide paliic^l uiiion.
"
H
'■
''TT*
.*•'
(
*
'
,r'_ '• '-remove"veto
form pieffactiye for
so
maintaining peate, and
*
At
of
relating to national policies, to call it a panacea.
which is ghiiig to save the country. There is,
;m short, aTendency to overstate the effective'*•n~ssof anyone
—1—~It'"
—L-?*
'T
'.T—
•
Dai'ticuiav na-1 The recommendations-which weTVnliYtirms
particular, na
Jhe recommendationsfwitich weV,solutions,
a
p
in
tional ..policy.
na.,e in' the"irtrrpaR^irtfT tWvAir basis or a
the' 'increase ',6l[ the--Air.
pithcr
either
:
I
believe that
the
•.
.ystab.iishment~-'by .-about $1.4 bil- Tin
Gre ek-
.ion hi 1948 and by
further $1.3
a
the
world
rpcrinnal
regional
a
nn
on
a
States
of western Europe,
case
tested
in
Korea.
for
the
of
authority
is being
Greece
and
Korea, the
difficulty is that there is
disagreement between Russia and
basic
.
the western democracies.
not
of
No sat¬
Greece
and
Russia and the "i/Vest.
example, it is^ obvious that
than
948; there can be no economic recov¬
The case of Palestine is differ¬
assumptiOiY ery of Europe until
the-people of ent. Russia and the West have
*
hat t e Marshall Plan: would' be¬
Europe have political' security. voted together, so far, on the
w+
sal
training, come taw. 1 agree with't.'e state¬
'They never will restore European Palestine question.
The
great
gp
ment by the Secretary of Defense
; have all been
production until they can be as¬ lesson we must learn from the
■overstate d i
I .chat if the Marshall Plan-were! to.
sured that they are not going~ to present collapse of United Nations
es p e c i a lly
ifi if it probably wo.uld be
neces-( have their work interrupted by authority
in; Palestine
is"v that
\ w a n t, there¬
32ry to i; crease our military;. ex-r internal
fights with ■ Communisis something is inherently wrong in
.cndHures to a total
fore,
not '".to
inTachyyear or by aggressiop from Russia or the United Nations itself.
overstate
fhe! equal to that c.f the Marshall 'Plan Russian" satellites. 'Fbr this rea¬
What is wrong is, I
think, fairly
■' importance of
cr the four years of its projected
son it is of the utmost importance
clear. It is that the provisions o'
'■'v.; TTT-T'T;'.
a strong Mill-" ;"l ,fe—r.amely; about
$17 bilUonhf-j thatk asr soon as possible the eco¬ the United Nations Charter1 for
Turkish aid, billion
;
frh
f:
the
Marshall
Plan, univer¬
■were
in
194.9 hmore
made
Article
and
109
there
,
onthe
'
do
(1)
?;V.
~
t
Such
is
would
Military'EstabHshment solves
problem at all.
Its value is
.tially ^short" term,
a
are
n.s
r
Qurb
v V
nomic
5
to-
-.But
.
the
is
same
f
arma¬
no
world
>
the
eccnomic
an
of
provide
proposition and that
can
giving
supple¬
force
cation
United
Europe.'1'
current
and
a
political
large
security. r; Ruty
of
be 'reached
for
unifi¬
Europe
measure of
Stales
v"
move
western
political
solution to the problem
peace
we: are
You
■Perhaps
mot, I
that
which*
western
the creation of
nations of western
domg fairly- well
military 'and economic
peace.
aid
Europe be
mented' by a' political sqlution
whicii will assure1 security to the
..
then
fundamental
no
essen-
for "an
-
believe, be^saibv o,f>'pur
political policy; :
.J
b-p h e b hJ "We must, I thirk, recognize, one
a
infidequately
or
United States/ But such
'•
with our
policies ,for :
^Nothing
necessary.
unarmed
armed
■
We
airyarm.
be more likely to provoke
sion-: than the1 spectacle of
aggret
an
the
'
Not Doingi-Wdl. )p
v';. / political Policy
Establishment
around
absolutely
•
llshment.v■ \.'
M litary
a
be* built
.to
yEstab-
four
may
this
even * a
Europe—a
full
for
disarmament
states
now
have
not'
at
of
the
been
things:
(2) Carry out the disarmament
provisions
of the United Nations
Charter by a schedule of disarma¬
ment
which
will
progressively
reduce
tion
the
armanents
states
the
as
decisions
the
on
basis
the
(4)
Amend
the
statute
present
in
a"*
Palestine
police force
"under
case
the
-such
affair.
as
emergency,
when
calm
but
at
a
would
the
authority to try and
individuals
uie
who
the
race
sooner
later
or
al¬
is
which
is
not
Treaty
of
all
of
this, if
shield
behind
States
can
it
is of
which
the
United
Work'for peace. "And
the
highest importance, I
making .much
attempts
at
headway witb
reaching;
hot
means
course
must
our
be
done
that
about
something
the
United
political -! Nations organization.
b
:'j
s
*
■
i
this
be
'
weakness
tions;
And
of the United
the
make
the
guarantor
United
of
the
it
to
make
Mmted
time
is
>
peace.
'
short
haste
'Now
our
aggressive
'must
we
power,
this
law.
Court
And
of
in
peaceful world is
a
I
been
in the
is
past,
now
tolerable i' stitution
not
TT;.-' This>announcement is neither
be¬
lieve, made necessary by the f ict
I have referred to before, namely
.that war, whatever it may have
;T-TT-'tT;Xot
a
New Issue
•
an
offer to sell
nor a
solicitation of
effect,
make
of
government
power
in
the
ular.
States
There
»•
which
in
and
to
-
no
can.'achieve
.problem
tacked
of
on
•
must
fronts
i
policy
ments
be
at
,^nd
aggressive
The "incidental
:
There is, for example, the- coo
"nomic <apprcach: Clearly in the
ideological struggle-between Eas
effects
(Continued
and West it is of first
that the
an,
offer
.friends
in
25,000 Shares
mi
>
)l; '■
importance
Uni+ed States sustain
Capital Stock
if
western
Europe.
We
must-give western Europe enough
to
e t
duftng
this
temporary
($100 Par Value)
emergency.
We must also give
them the means to buy ndustriM
and
agricultural equipment with
they cai recreate their
which
once
great
Western
primarily
civil
rights
which
of the
are
liberties
matters
other
essence
civilization *
ern
the
or
the
or
capacity
concerned
now
with
not
individual
the
of
productive
Europe is
but
Price $225 a Share
of
things
of west¬
with
the
question of getting enough to eat
tomorrow
and
keeping
homes
'
warm,,and
going,
They
are,
their
their
factories
therefore,
peculbrlv
assuming,
as
in
a
vulnerable
position to
Communist propaganda.
On.t'^is part of our foreign pol¬
icy for peace we are doing wellthe
success
However
that
■
t'-e
the
an
before
not
Pima
Plan.
take
and
it
address by Mr. Finthe
Bond
Club of
New York, New York
City, March
8, 1948."'
:
' 1
*
v
f
,
•
v
CARL
M.
our
alternatives.
are
SMITH, BARNEY & CO.
MORGAN STANLEY & CO.
reasonable,
Marshall
must
policy
*Part of
*
of
we
Marshall
military
letter
seems
f
i
March
11,1948
LOEB,pHOADES& CO.
MERRILL L
would
on page
to buy any of these Shares.
& Co.
arma¬
warfare.
be
that the'firmaments race would be
••
P. Morgan
a
the
that'wgrywould be eliminated'as
an
institution'in human affairs,
at¬
once.
it
of law within the extreme¬
ly limited field of national
The
peace.
peace
many
parte-,
one
the
Nations
give
only for
especial
is
carried
short, would be
United
•the world, in general but for the
United
the
with
in¬
an
In¬
be
was
accordance
t
-T
"trying tc
the
would
/'>•'■••-<
business
war.
to prevent any nation or
individual of any. nation, from
politics for
1
-
this
create
and: that
with
ox
Nations would have
through
its
police
believe, 1 hat' we realize that the
make
Nations
security
No
nation would pos¬
armaments which would en¬
The
to
Na¬
this
leadership must
forthcoming immediately. The
<
to
principles of law.
•
we ase
be
out
"
that
ac¬
cepted by all the nations, would
of the United Nations
counsel
a
no.e
con¬
impartial and judicial body which
would see to it that this authority
time
..
depressing th
violate
disarmament.
The effect
ternational
.
'■
have
punish
would
of
provision
cerning
violating
a
not
prevails.
I
'political union — helpful though
hope that such a police force can
political solution. it would
be, would not give !,he
most sure to lead to war. We must Economic and military policies will
be created to prevent a humilia¬
full
sense
of security
to these
tion of the United Nations in the
elpb Indeed, uhey are: nece-sary, peoples. ''
r ^
.But in the, final analysis they will
present Palestine confusion.
But
For
here we come upon
the 1 am very doubtful/
/uve to f ail .'unless they are sup¬
;
tcopH rnndamental fact, and that
lively - short' tine within which ported • by -the fundamental g of
is that this political solution we so
U. S. Should Take Leadership
we
nrM achieve ! some
p^njrye political agreement 'among the
in Revamping |y. N.
desperately neeq must be a world
program for creating a peaceful peoples of the world. jNv>-:
Some strong leadership by the
world.
The
political solution.
This of
Military
Program
For tjh'is Treason it is particularly wide
United States is necessary to cure
must, I think,be regarded as' a
ment
the
Court
force,
pressure'of aiv imme¬
diate
the
International
any
the
Such
must be* created
of
that
so
the
moment, as is
being suggested, to enforce a
decision
na¬
seven
Court
The
last
of
International
able
out
police
a
the
of
police force of
votes out of the 11.
sess
nation
carried
improvise
cannot
an
Article- 43 for 4he creation of the
United Nations Police Force.
the world.
police force and
a
the
Carry out the provisions of
'
a r
of
propose
•
•"t
states
organiza¬
(3) Eliminate the veto in th"?
Security Council and provide for
settlement between
a
member
Nations
the United Nations is created.
be reached which does
can
involve
Charter
have
In Greece and
isfactory solution
the
will
Nations
Palestine,
of
United
under
policy
will
success.
moment,
the-
United Nations organization which
our
United
of
tion
determine
peace
of
is,
I
believe, for the
States to call a genera!
United
conference
amendment to the Charter of the
will
not
or
remedy
15
crisis. How
a
met
world
the
the
Korea
basis.*
is
chapce
any
proponents of any particular pro¬
Each particular plan is the one thing
mhhbhi
crisis
seeking
There^'s a great tendency at the present /Cime for the
gram
United
passing through
whether
pro¬
establish international police force and
K** ~ T* ■""
V
to
as
power.
the
this
solve economic problem, but leaves unsalved problem of world-
Nations in present
U. iS. Cake leadership in amending its charter
poses
,
may
$ees Uni.el
which
now
U. S. debga'e at orgaDization of United Nations reviews serious
problems facing U. S. in intsrnational
,
Nations organiza¬
should be, the instru¬
or
will use to carry oiit its
policy
of, seeking world peace. And the
United
Nations organization* is
Partner, Coiideit Brothers,' Attorneys, New York City
Formerly Assistant to Secretary* of State
"
Hill)
PIERCE, FENNER & BEANE
42) K
National Banks' Loans and
firaham Loses
By JOHN DUTTON
LOUISVILLE, KY.—Thomas
Graham of the Bankers Bond Co.
h
vV
e
President
1
a r n s
e y,
at
had
kept the elec¬
tion in doubt
the
vote.
Dann S.
4
if-.'-..
Civilian
•
•
'
•
The
underwritings
he
stated
clined to
of
(U, S. Dept. Commerce figures.)
f
•
into this problem a little deeper one finds that the, accu¬
To go
mulated
Mr.' Grahafn
not personally in¬
savings
long-term
individuals,, representing
of
bil¬
lion in 1947 to reach an estimated
$160.3 billion, according to figures
The Institute of Life
compiled from government and private sources.
in
nsurance
Inc., is
engaging in the securities business
from offices at 64 Wall
Street,
Distributors,
its
publication
1948,
Matters" for February,
"Money
presents the following figures:
•,
City.
banks
31,
*•
..;Vy.'*■
<:■
;
Charles F. Holden Opens
r
t
1941
*
-
$50
28
Savings accounts
VA. —Charles
F. Holden is engaging in a securi¬
ties business from offices at 106108 North Saint Asaph.
Savings and Loan Assns.__
5
27/v-
Life insurance
showed
discounts
and
de-'
a
The; percentage of
to
total
de-
v
obliga- >
(including $6,000,000 guar- 5
anteed obligations)1 on Dec. 31,1947 «• aggregated • $38,825,000,000,
;.
which is
deposit figures are de¬
deposits
of; : individuals,
partnerships and corporations: of
$48,079,000,000, which ; increased
$2,300,000,000, or 5%, in the three
month period, and: time deposits
of individuals, partnerships, and
corporations of $18,700,000,000,
which
increased
$38,000,000, or
two-tenths percent.
Deposits of
more
'
*
?
.
;
•
with Federal Reserve Banks of ;;.,
$11,695,000,000, and balances with'
other banks (including cash items ;•
in process of collection) ) of $9,~
>
.
213,000,000, a total of $22,076,000,*-» i
000, showed increases In, the three .
and twelve month periods of 9%'
and 10%,
respectively.
The unimpaired capital stock of x,
the banks at the end of 1947
sav¬
was
$1,78Q,000,000, including $27,000,-1;:
000 of preferred stock.
Surplus
was
$2,400,000,000,
undivided 1
profits $893,000,000, and reserves ^
$349,000,000, or a total of $3,642,-';
000,000. Total capital accounts of » ■
$5,421,000,000 were $292,000 more Y'
than in October, 1947, and $272,-
cashiers'
and
than at the end of 1946.
Cash of $1,168,000,000, reserves i
,
$408,000,000, or^ more than 9%,
and deposits of banks of $8,411,^
certified
States f;V
029,000,000, amounted to about the
same as in October, but were 8%
were $718,000,000 less
October; deposits of States
and political subdivisions of $4,726,000,000 showed an increase of
and
of
political subdivisions of $3,-
and
than in
than in October. Postal
of ;2%hsince vr
obligations
including
States Government of
the United
decrease
a
October, and a decrease of 7%I in t v
the year; Other bonds, stocks >anA In¬
securities heldv of $5,185,000,000, • >
in
mand
.
$1,392,000,000.
were
discounts at the end
Loans and
$21,500,000,000 an
-
increase
10
* ■■■..
securities, and
tions
the recent
of 1947 totalled
56
.
21%.
.
since December, 1946., Included
1947
J__ ' $6
'
#Savings bonds
i
dealers
United States Government
000, or 3%, since October and an
increase of $3,200,000,000, or 4%,
000
and
6, 1947 and 21.90 on Dec. 31, 1946.
Investments ' by the banks in
Delano
Preston
deposits of national banks
on
Dec. 31, 1947, were $82,000,000,000, an increase of $2,500,00.0,-
checks
ALEXANDRIA,
loans
ings deposits were nearly $3,000,-
'
Growth of Long-Term Savings r
,(in billions of dollars)
brokers
posits on Dec. 31,1947, were 26.11 t V
in comparison with 25.19 on Oct. i;
The
more
,
of
crease
000,000 were $258,000,000, or 3%,
•"
.
to
chasing or,carrying
basic $900,000,000
the
savings of the people of this country as a whole, increased $8.6
Franklin Distributors, Inc.
New York
their
investment^ United States Corpora¬
dividends alone during 1947, the substantia]
other forms
challenge the election.
Franklin
while
$5,174,000,000—an increase of 18% over the $4,402,300,000 paid
out in 1946.
Mayor,
was
exchanges
of this most depressing situation is that
the
covering such contingen¬
requires at least seven votes
a
and into
of
sum
tatute
elect
venture capital is; concerned, and also the
as
distributed in cash
tions
question as
the election,
that
far
brokers and investment dealers were watching business go by
doors
some
of
as
The strange part
into the 'Open.
understood
for a total of
over-the-counter; during 1947, was sinking to another new. low.
and
was not boomed as leading
candidate until labor opposition to
legality
insured
dollar amount of business transacted on the various stock
death,
to
purchased"by. Aipcricans ;last .year.
$21.7 billion, was
<
$2,430,000,000,
farmers,
loans to banks, etc.,
reported
of Dec.
as
46%, while
up
of
and others for the purpose of pur¬
more
,
active
$34.8 biL
billion.; While at the same time the« volume of new security
$191
supported by Democratic or¬
ganization leaders.' Mr. Farnsley,
however, although he had i been
nentioned for the post as early as
a
few hours after Mr. Taylor's
While there is
previous
*
included loans to
advances
by the 5,013
58.8 n)il.
;>
mf
loans
other
which
call, and $3,600,000,000, or
than
$127.5 bib ;
all
1947,
6,
$3,129,000,000 were
W&" M.
date of
4 %
"Magazine of Wall Street" states that a record amount of
life insurance,
ly
Mr. Graham came
i;'
$52.50
$9.1 bil.
Seventy-five million policy holders are now.
is
Oct.
loans
loans to individuals of
consumer
of
as
industrial
and
$11,061,000,000 were up 29% in
the year, loans on real estate of
$4,860,000,000 were up 37%, and
1946.
the race
in the contest and was strong¬
cies
employment
Farm income
.
.
166-
$49.9 bil.
' 47.5 mil.
________
;
Commercial
of
5,019 national
banks
Preston
<s>-
re¬
the
Now
.
„/100.2
(factory workers, aver.)__ $25.20
Wages and salaries.^.-
Thomas Graham
Mr. Graham came into
it
reports.
Cost of living (1935-39=100)
Weekly earns,
November.'
the
for instance note the
.
banks
ported by the
the
ing the death of Mayor E. Leland
Taylor, until a successor could be
chosen by the Aldermen to act
until the regular elections next
-ince
L
.
'1940-';
temporary
to
method of obtaining some of this business.
a
following figures taken from authentic government
Mayor, follow-
late
devising
loss as to
a
national
000,000,
or
nearly 3%,
than
Currency
The returns from the call covered the
in the United States and possessions.1
$2,500,-
more
31, 1947, amounted to
the
of
March 3.
on
assets
•
Byck, Presi¬
dent' of
the*
B oar d,
had
b e e n serving
as
active
fhe
Yet, the market seems to be substantial
last
until
Delano announced
5,011
invest¬
ments, such as postal savings, governments, savings banks, building
and loans, and insurance. To any large extent they do not seem to
be buying equities. The average security dealer has been somewhat
year.
Comptroller
$88,000,000,000,
Most of these people
putting their savings into what is called semi-riskless
are
breaking a tie
which
than
more
were
P.
Charles
F
gain in
The total assets of national banks on Dec.
beneficiaries of the way the national income
been some of the main
for
vote
especially highly skilled factory workers have
and
has been redistributed in the past few years.
of
Aldermen cast
his
ventures,
ness
f
o
Board
the
vestors has been created.
the
n
of savers and in¬
Farmers, operators of certain smaller busi¬
During the years since 1940 a new elite group
a hotly
contested battle
Mayoralty of Louisville,
6-5
the
lor
Deposits Up in 1947
Comptroller of Currency Delano reveals deposits increased 4%,
while loans and discounts advanced in same period by 24%, and
investments by national banks in U. S. Government obligations
declined 7%. Reports capital accounts of banks show only slight
Securities Salesman9s Corner
Mayoralty by
Single Vote
lost
Thursday, March 11, 1948
CHRONICLE
& FINANCIAL
COMMERCIAL
THE
(1112)
16
of
$1,400,000,000,
7%,
or
i
44
since October, and an
^
$4,171,000,000,
increase of
24%, in the
or
000,000
than
more
December,
in
.
1946.
year.
Savings bonds in the hands of the public increased $44 billion,
Now Twitchell Co., Inc.
r BUFFALO,
of
name
N,
Y.—The
Williams
savings accounts $28 billion, Savings and Loan Associations $5 billion,
firm
Twichell,
and
Incorporated, M. & T. Building,
has
been, changed
Company, Inc.
,
Twitchell
to
lit & insurance $17
an
billion,
a
total increase between 1941 and 1947 of
Meanwhile the investment security busine'ss remains at
$94 billion^
all-time low. People are NOT buying equities,' New risk and ven¬
ture
capital
:
is non-existant for all
practical,
;
IW; H„ Keener In Ajo
The Securities Ex-,
in Ajo..
'
x
■••rV "xiiVv
.
■
in so-called riskless securities $94 billion.
INVESTMENT DEALERS ASSOCIATION OF HOUSTON
Meanwhile American in¬
CITY,. UTAH—
of A. P. Kibbe & Co.
ers
upon
whose shoulders lies the task of gathering tpis huge fundi
of venture
the
The following officers
;
,
V
i
.
the
Securities
Exchange
&
Y,
eH?..
.
,
;
,
Vice-President—Dana T. Richardson, Underwood; Neuhaus & Co.
Secretary-Treasurer—E.> C. Hawkins; Rauscher, Pierce. & Co.
capital which is needed by American business, must have
cooperation of
•
elected for 1948 by the Investment ,.;
were
Dealers;Association of Houston;. 1.
;
V
President—Neill T. Masterson, Jr., Ghas. B. White 8$ Co.
.
high standard of living in this nation. The brokers and security deal¬
A. P. Kibbe is engaging in a se¬
curities business under the firm
name
In the short
of seven years the people of this country increased their holdings
space
dustry is running out of working capital. Risk and Venture capital
must come out of hiding if we are to go forward and, preserve <our
A. P. Kibbe & Co.
j SALT, LAKE
The policies of the Administration?
change Commission?
AJO, ARIZ.—W. H. Keener is
engaging in a securitiesybusiness
,
Is this■ an
purposes.
indictment of the people in the securities business?
r("">. '
;.'V 1
v
'
■.
Commission,r other
^agencies of the government, and the encouragement of all the people.
i.,
' -i,
i
.v
[■
86 Years
'if
1
nation, whether the
'•
.a
P A
in Business
Street realize it
into
England Company
Common stock
era
earnings
\
security, at all costs, American business
of-prosperity
be obtained.
can
previous 10
American finance
period
per
can. we
.
.
measure up
1947
to
share.
'•/'
'
'
-
..
.
■
,N
KINNEY-COASTAL
OIL
,
.
B. E.
State St., Boston 9, Mass.
dnd
Teletype BS 250
HAnover
WHitehall
2-7914
3-9030
'*•
:
Cities,
This
list
L 'W
Our
' a, V, » S
w,
,
offers yotl
and
.:±:'
i'i' vl
A ''
charge^for; addressing
States
'
I
/
^
jis.'-v.' ;.'r
f
;♦/
selected
'
is $5.00
Al; d.
States
K i.
\ tfT'
'
complete
or
D.
per
I LIST
Cities
(■
(
,
can
at
a
also
*'■*''
t
list
(main
offices
;
only)
,
-
,
V.--.
V
,
f
•* i in«
t
'
.
)r',
or
small
additional
the
within
list
on
$
thousand.
24
hours. >
gummed
■
roll labels
charge.
'
"
1
Simpson & Company
Bell Teletype DN 157
Herbert D. Seibert & Co., Inc.
;
:
'
'
'25 Park Place
•
.
.
•'
REctor 2-9570
'
If
'l-S^
•
(United
^
if/.
■
A
r.'
•"
•
thousand,^/'
$6.00 per
completed
supply
1
■? t-<-f
!■
v..
.
addressing
We
COMPANY
"
'
Canada)
N.
All
California Building, Denver 2, Colorado
Telephone KEystane 3101
or
SPECIAL
1'
J
m^st
the
available,i\'J"..**"i'v.:
»
i,v;"
*
arranged alphabetically by States
the Cities' by. firm names.
isx revised ;dally:
.
'<■
mailing department
our
wlthln
and
.
\-r
.
Y, Telephones:
Nhrth
of
,
;
..
:
fjveri flrSl" aitd bapfc listed In "Security Dealers
»
■
Established >92<)
:
have
for
up-to-tho-minute service
request,H
■'
N.
a.fmctal stenCIl In
We
■' " % 1/
'
m
*
in'.jthq^lii^oiW'.oi
opriopppriupity?-J!j
BROKERS, DEALERS and BANKS
,
t
i
I
engaged in retail
MACKINNIE OIL & DRILLING COMPANY
Tel. CAP. 0425
;vr
:
..
_
FOR
special situation mailed
148
,W
j.
♦..
■
'"
r.-.
;';
<*• s j■
■
on
r
•
new
PRIMARY TRADING MARKETS
Descriptive analysis of this
,'
are
a
years.
$13.08;
earnings $6.32
Those who
and
grow
can
ami
Highest annual earnings
for
'U
t ..\;
ing securities have the largest market open to them
averaged $4.58 per share
Over
directed
i
more
New
people: can bd;
from the present trend toward security and
away
•? I
l" -1
those who condemn \ Wall
If the savings of the
not.
or
equities and
politicians and all
want to CIRCULARIZE the Investment
dealers of this
Our future is in the hands of the brokfers and security
\
New York 7. N. Y.
Number 4660
Volume 167
THE COMMERCIAL &
have been
Grounds ioi Tax Redaction
symptoms of
pression. We
in individual income taxes, high
Treasury official during Roosevelt Administration asserts individual
tax rates are too high and exemptions too meager. Points out lower
taxes do not mean proportional reduction in revenues, because eva¬
sions become less, and holds inflation is not aided by tax reduction.
investment.
a
can
help prevent this
the tax discour¬
Fifty
Years!
agements and the drain of funds
to
the
tax
collector.
Should
in¬
A
flationary execesses! again threaten
Pfroduction-wise
with
tax structure. At the
time, under these conditions
Thoughtful citizens generally ask two questions about Federal
reduction. (1) Can the Federal budget stand it? (2) Would tax
reduction be a good thing for the country? The first question, stated
more specifically is: What are Federal expenditures and surpluses for
nues
will be swollen,
Wise
restraint
same
retirement
1949
increased.
likely to lawful deductions. Evasion is less
b e ?
T h e tempting. Q o 11 e cti on becomes
second
ques¬ easier, less costly. Thus, I feel that
tion
involves the estimates of revenue loss in¬
two
subsidiary volved in H.R. 4790 probably are
points. Would on the high side.
it be better to
use
plus tb: reduce
the
debt, Or
it, at least
in part, to re¬
duce taxes ?
What
will
be
the
effect
of
tax
Rotwell' Magill
reduction
the
on
omy,
econ¬
the
on
production of goods, on inflation
oh deflation?
or
k
To answer them requires
different
at
conclusions.
Moreover,, the very difficulty and
complexity
of
fiscal
problems
makes it easy for ignorant or un¬
scrupulous men to confuse the
issue with slogans and false state¬
ments
and
special pleading. A
contain
cost
of government
down to a figure we can afford
in
less
prosperous
times than
these. An important way to stim¬
cut in the cost of govern¬
a
is
ment
to
tough tax rates of the war. Our
country and the world need all
the production we can get. One
v/ay to get production is to give
,
the worker and the foreman and
are
based.
tal
or
expenditures show an anticipated
surplus of $7.5 billion for 1948
and $4.8 billion for 1949, or $12.3
billion for the two years.
The
small
Hence, it is not surprising
staff
that the
mittee
the
of
Joint
Com¬
the
estimates
surplus at
$8.8 billion for 1948 and $7.6 bil¬
lion for 1949, or $16.4 billion for
the two years. Neither of these
estimates takes any account of
possible reductions in the budg¬
eted expenditures. Both sets of
estimated
expenditures
include
^billions for European relief. Hence,
on
the face of the record the great
of
tax
receipts
penditures will permit
excess
able amount both of tax
business.
into
tions
years.
In
Federal
an
tax
ex¬
of his business
equal
footing
to
To such fine
its staff;
•••.
>
'
our
;
:
haying*
to
;
,
/
,
loyalty;
furnish
steady
so many years,
upstanding American citizens.
We have great satisfaction,
..
therefore, in offering
congratulations today to
V
MR. WILLIAM D. R1GGS, our Business
Manager,.
MISS ELIZABETH F. KELLY, Editorial
and Secretary to the President
for
witlr tax¬
Assistant
<
who have this month reached the
should
: It
on
think it has merited their
employment for
payers in. the community states.*
It .should contain an increase in
exemptions.
and
contacts',
worth knowing, a friend worth
Glad that it has been able
bill*
a
FIFTIETH ANNIVERSARY
'
,
revision of the rates.
some
of their connection with
The exact amounts of these revi¬
our
organization.
sions will have to be determined,
of course,
The Commercial & Financial Chronicle
by the Congress in the
light of the whole budgetary situ¬
As
it
reduction
of
ation.
possible. In
duction
taxes
lines
$4 to
my
in
of - this
I
have
today,
appears
individual
a
1948
is
re¬
Bacon, Whipple Co. Adds
outlined, would be
enormously beneficial to the econ¬
omy.
Carter H.
CHICAGO, ILL.—Bryan S. Reid,
income
along the
amount,
U,
tax
$6 billion
judgment,
MARCH
Jr.
has
of
added
the
(Special
Corbrey Adds
to The Financial Chronicle!
Bacon,
been
to
staff
LOS ANGELES, CALIF.—Wil¬
Whipple & Co., 135 liam O. Turner
has joined the
Street, members
staff of Carter H. Corbrey & <?o.,
of the New York
and Chicago
650 South Spring Street.
Stock Exchanges.
South
half
or
La
Salle
one-
are
selves
to
buy
as an
any
of record dhlyand is under
offering of these securities for sale,
or as a
no
circumstances to
solicitation of
an
offer
of such securities. The offering is made only by the Prospectus.
Great corpora¬
$6,084,000
out of earnings, and the
corporation or the new ven¬
no
chance
to
get
new
money
in the market. The basic
reason
is that those citizens who
normally provide risk capital out
of their savings have savings so
small after taxes that they invest,
all, in govrnment or gilt-edge
To keep our enterprise
if at
be construed
forced to finance them¬
has
ture
This advertisement appears as a matter
The Laclede Gas
Light Company
4V2% Fifteen Year Convertible Sinking Fund Debentures
bonds.
system healthy, there must be a
steady flow of new risk capital
into it. Taxes must be reduced to
possible.
make that flow
will
Inflation
not
be
notably
by tax reduction, for the
reason
just given. If money is
saved and invested, inflationary
aided
Due March 15,1963
Dated March 15, 1948
Rights, evidenced by Subscription Warrants, to subscribe for these
Debentures have been issued
mon
pressures
by the Company to the holders of its Com-'
Stock, which rights will empire
set
not increased. A
of the money left in
a reason-? individuals' pockets through tax
reduction reduction would be saved. More¬
over
map
Proud
judgment,
my
purposes
.
concern
employees
of
,
work fifty years
can
fruits of
take away from
his labor—not to
The Treasury's latest esti¬
mates of budgetary receipts and
Treasury has erred on the side of
understatement of the surplus for
a
provisions to put taxpayers
on
one
,
.
many stamina and worth.
the business manager the
every additional dollar
analysis of any governmental or he earns
by working harder and
political question. The best I can
taking on more responsibilities.
do is to state as simply as I can
Many analysts have observed
the facts on which my own con¬
the diminishing floOrof risk capi¬
(1)
Is
ih the non-community property*
States
a
Tlie Chronicle is proud that it has such
I favor the
time
to,
The affections of his fellow-workers,
bill should certainly con¬
a
bring
presidential election year is not him two-thirds
the ideal time for dispassionate
third of
clusions
such
personal
give the government
the exercise of good judgment ap¬
less to spend.
•
*
plied to a lot of statistical data
Second,
individual tax rates
and to such intangibles as men's
are, too high and exemptions are
incentives to work and to produce.
meager. The individual taxpayer
Reasonable men can certainly ar¬
has had almost no relief from the
rive
Substantially.
of
The respect
reducing individual income taxes
to strive in every way we can to
the
a
automatically
at this
look forward
And keep- the confidence of his employers,
-
enactment
tain
.
be
can
For these reasons;
(2) Is tax reduction wise? In
judgment it is, for a number
of reasons. In the first, place, ah
of us would agree that economical
government, like an economical
family budget, is hard to achieve,
in the presence pf billions of dol¬
lars of surplus receipts. We ought
my
questions "are hard to ulate
All these
answer.
Reduce Taxes Now
sur-
any
use
Wise to
and, with
test
with
reve¬
expenditures, the surplus for debt
fiscal 1948 and^
"•;'V
a
to
long to look*back upon!
The man/(or woman) who
government
on
so
But
less
a
long time
Not
disturbance, We will be better off
onerous
are
on
March 22, 1948,
as more
.
fully
forth in the Prospectus.
/
great part
and of debt reduction.
Indeed, the over, inflationary pressure is not
surplus approximates lessened by the fact that it is the
total Federal expenditures during
government which is spending
the thirties. If expenditures are
money for goods rather than in¬
reduced, as Congress has resolved dividuals.
A
big
government
and as certainly should be done,
budget is no cure for inflation.
Subscription Price to Warrant Holders
estimated
the
for
case
comes even
tax
reduction
Debt Reduction
Reduction
of
Diminishing Returns Operates
the
Desirable
debt is cer¬
tainly desirable. It is possible in
calculating revenue losses these years both to reduce the
from
tax
rate
reductions, the debt and to reduce taxes; Both
usual process is to figure
that should be done. Paying down the
In
revenues
will
tionately
with
decrease
the
propor¬
decrease
debt
will
not
increase
that
things,
tax
rates,,- like
to
the prior
including the undersigned,
may
publicly offer
the expiration of the Subscription Warrants subject
subscription rights of warrant holders, or otherwise.
in
incentives; tax reduction almost
certainly will. Reducing the debt
other does < remove 'some of the infla¬
Copies of the Prospectus may be obtained in any State from such of the
several Underwriters,
including the undersigned, as may lawfully offer these securities in such State.
;
subject*'to the
eco¬ tionary potential, and so is de¬
diminishing return. sirable; The studies I have seen
When rates are lowered, the gen¬
come to the conclusion that debt
eral tendency is for revenues to reduction does not and should not
drop less than proportionately prevent tax reduction.
and, in our past history, increases
Estimates of revenue very far
in revenue have followed tax re¬ in advance are
trickyr War-de¬
duction. For. one practical reason, ferred demands and /overseas re¬
people do not wrestle quite so quirements have maintained
are
The several Underwriters,
Debentures prior to
anyone's
rates. This practice overlooks the
fact
ioo% and accrued interest
be¬
stronger.
nomic law of
hard
to
find
the
last
dollar
of
business volume at record figures
since
*
the
war
and
the
on
Lehman Brothers
,
:
March 10,1948.
Merrill Lynch, Pierce, Fenner & Beane
Paine, Webber, Jacksori & Curtis
Hayden, Stone & Co.
reyenue
estimates are; based upon a: con¬
Finance, United tinuance of active business ' and
States Senate, March 5, 1948, *
high employment. Recently there
^Statement of Mr. Magill before
the Committee
17
de¬
a
'
tax
(1113)
re¬
up on
by easing
Urging substantial reductions
CHRONICLE
wants
us
downward spiral or
severe
Formerly Under Secretary of the Treasury
Member, Cravath, Saine & Moore, New York City
mean more
some
adjustment. None of
By ROSWELL MAGILL*
Says lower taxes will
FINANCIAL
Lee Higginson Corporation
THE COMMERCIAL
(1114)
18
CHRONICLE
FINANCIAL
&
the
With William S. Beeken Co.
.
to The
(Special
PALM
WEST
FLA.—
BEACH,
those segments which
over-greedy and thus
prove helpful, rather than harm¬
ful, to our economy at large. The
drop in food prices from a fabu¬
lously high level could stimulate
HENRY HUNT
The following is an excerpt from a radio broadcast
Burrows, CBS satirist, heard Saturdays at 7:30 p.m.
"The
*
>
Science
Economics
of
text
as
called
&
CORPORATION
120 BROADWAY, NEW YORK 5, N. Y.
books
Beginners'
called
I
Will
T.
called
I'll
.
book
a
Abe
he
his primitive fash¬
However
book
Confused
for
the conversion fact
that
remains
the ratio of
or
quotient to the diminu¬
of-sub-stabilized control per
tion
this
capita—and
other
is
darned
seri¬
■
'•) .-A
*
books such as Gettridge on Gold
Shipments, Gettridge on Devalu¬
;.,V
RUSSELL BERG FUND
INC.
ous."
ation
,\A
Wellington Reduces Cash Position
and
Monohan
'Gettridge
from
Is
these
Shmoe.'
a
books
Capital Stock
t
;
1
■
Prospectus
on
manager
-
underwriter
Investment Counsel
■
.
approximately three
duced
.
its
has
cash
and
years, re¬
government
also called cycles
1948.
Gettridge divides them into
semi-annual
cycles,
bi - annual
cycles, and semi-annual bi-cycles
went
'
are
.
.
The
bulk
into
of
the
investment
reduction
bonds
and
preferreds, its equity position ris¬
ing from 51.7% to 58.9% during
study of cycles is in Get¬
tridge's newest book on cycles
the
entitled
Russell, Berg & Company "
75 Federal
.
which
bond position from 28% to 9V£%
during the first seven weeks of
ordinary income of the Fund.
.
,
for
that
Fund
sizable cash position
these trends
Request
and
trends
.
.
investment
learn
are
a
up
trends,
down
trends,
side
trends, and just plain trends
'
V
maintained
Now
we
in economics there
*
Wellington
highly technical study called
—a
"
.
this
.
'Wheels
in
period.
These -invest¬
ment changes should increase the
Head.'
Your
This book may be a little difficult
for the layman as it is written in
Street, Boston
TELEPHONE LIBERTY 2-955O
Sanskrit
writes
.
in
Gettridge
.
change
may
it
is
radio
"Now
the
on
subject of
result of
Fundamental
causes
there
a
.
.
or
,
ramifications,
caused
Now
the
by
famous
father
of the
ramifications.
English econo¬
"It
etary
rise
no
the
it is of
ther
apparent
capita mon¬
individuals can
of
a
quires
—
this
reasonable .to
turn
from
assume
inflated
our
a
that
most where
short time for
reason
"Since 1939 farm
risen 1 nearly
income
building
products hav.^
as
much as
twice
materials,
much
as
about
basic
as
Notes
John
four
durable
eight times as much
prices. : With prices in
general
averaging
about
67%
higher than in 1939, it would seem
that
the
necessary
adjustment
stock
as
would
in
require
farm
extent,
further
a
plans to launch
investment
a lesser
decline in building ma¬
should
durables
rise
somewhat.
is
and
was
prices
dollarwise
article
of
reduced
in
The
Company,
-
-
*"'•
^
<
to
correction
Commonwealth
ably
industries
ises
to
where
exceed
months,
of these
National
Corporation has
Income
„
case
prom¬
for
rently afford
than 6i/2%,
Certificates of
•'
w'
ma¬
chinery,, railroad equipment, nati*
.J
'
,
—
Chicago
—.
.
New Orleans
i
Meridian
He
y i
.
the
Depart¬
ment for State
National
curities
Prior
he
Robert H. Wheat
J.
Se¬
Corp.
thereto
was
S.
with
Todd
&
Co., in Cincinnati.
With
Barbour, Smith & Co,
(Special
LOS
S.
to
The
Financial
ANGELES,
Leach
has
Chronicle)
CALIF.—Geo.
become
associated
•'
t
s
■
T
"
with
Barbour,
Seventh Street, members., of
the
Smith
&
Co.,
210
Eos Angeles Stock Exchange
Leacfrwas forrperly.with Iftfst
Co.' and Nelson Doug¬
•
WELLINGTON
your
FUND
73rd Consecutive
Quarterly Dividend
investment dealer
This dividend of 20c
per share
from
ordinary net income
or
PHILADELPHIA
2, PA.
to
payable March 31, 1948,
stockholders
March
of
record,
17, 1948.
Iltlllllllllllllllllllltllllllltlllllllllllllltl
WALTER L. MORGAN
SHARES OF CAPITAL STOCK OF
IN
Philadelphia
Something the investor will
President
actually read—
"INVESTMENT TRUSTS"
By
a
Sales Executive with
Written
with
a
formulas.
COMMON STOCKS
esting.
touch.
No dry statistics.
Educational.
the usual sales
(Series S1-52-S5-54)
Sales Promotion
Experience.
human
(Series K1-K2)
No
Manager
Inter¬
A relief from
An
"plug."
r
/
A-l
that
Single copies $1.00. Quantity prices
Prospectus from
upon
or
request.
quantity
Keystone Company
of Boston
may
dealers
a
available
in
the
in
Rocky
local investment dealer,
THE
PARKER
ONE COURT STREET. BOSTON 8, MASS.
of
sales
associated
now
leading mutual fund
seeking
a
new
in
New
Thoroughly familiar
copy;i
with
sponsor,
connection,
York
City.
with every
phase of mutual fund business.
or
CORPORATION
is
writer
sells,
preferably
be obtained from
Congress Street
Boston 9, Massachusetts
to
(Not
Mountain States.)
Prospectus
your
50
man¬
of
ager
A MUM INVESTMENT FUND
PREFERRED STOCKS
Tke
St.
for¬
was
merly
established 1928
Los Angeles
Participation in
local investment dealer
with
rated, 20 North
FUND
30 Years'
your
has
asso¬
Raffensper¬
ger, Hughes &
Co.,
Incorpo¬
.
(Serie3Bl-B2-B5-B4)
'
Wheat
WELLINGTON
BONDS
(
Chronicle)
IND.—Robert
ciated
is
New York
.
investing tlieir capital
~
Financial
H.
INVESTMENT FUNDS
.
The
West
industrial
incorporated
•
to
prospectus from
Funds
^
better
become
of iron and
equipment,
mining
Lord, Abbett & Co.
*
of
J'
INDIANAPOLIS,
California
»tsm
mm lis! Mmim,
Custodian
"
return
a
on
cur¬
Raffensperger, Hughes
si
**
folder
new
Robert H. Wheat Joins
many
-\. r
Prospectus upon request
"■
a
whose shares
lass & Co.
if
.
Series
Research
and
demand
machinery,
a,
'
;
-
Securities &
Mortgage
CHICAGO
K,
'
periods and second place
fri the other period.
rate.
supply
in the
as
Fund, Inc.
,
held first
place
combination funds in four
among
and
strong
oil and
'
smaller
favor¬
situated companies in'those
financially
\
•
the
two-
Chosen and confined to the stocks
Affiliated
-
of
one
one-half
around
current
farm
<f
•-
.
parison of investment companies'
performance covering five periods
ranging from one to seven years,
little likelihood
adjustment
in our economy resulting in as
drastic a decline in earnings and
dividends as this, and particular¬
ly if investments are carefully
of
new
Commonwealth Investment
"There appears
the
a
open-end trusts (assets $3,900 000)
can 'boast: Sft' enviable
perform¬
ance
record,
In "Barron's" com¬
Mr.
"s
Company
published
entire
our
around
to
dividends
steel,
STREET. NEW YORK 5, NiY.
ANGIllS
has
Loan
;
it
•
spon¬
Depression."
IN(.0«»08A!l!e
-
its
Investments
Chicago
On a historical basis
present prices for stocks would be
justified
if
industry's earnings
of
an¬
open-end
under
economy.
HUGHW. LONG & CO.
WALL
new
and adjustment.
inflated, they are
so comparatively
deflated that it
may be said they are the cheapest
they have risen most,
fortunately this has not been
has
summer
folder listing 18 "Cushions
Against
(Special
.
lOS
a
trust
Selected
apparent that stock
prices must increase quite sub¬
stantially to complete the neces¬
down
come
Co.
sorship and management.
also
-
48
&
next
products and, to
a
and
"It
Lewis
that
decline
terials, whereas the price of steel,
iron
H.
nounced
materials and
thirds of their
Inflation
business recession; fur¬
that such a correction re¬
.
income
favorable
a
years.
were
found.
be
prices of farm products which has
occurred, is more indicative of the
long awaited correction and ad¬
justment of relative prices, than
Croontch
sharply in
or
seems
that
the
"We know that per
Prospectus from your Investment Dooler or
York
the low level of stock prices.
former
.
New
Hare's Ltd. has the following
interesting comments to make on
the adjustment in farm prices and
and
was
lower
which would legve
automoDiies, chemicals,
and supplies'
materials
etc."
\
theory by
marriage, feels that the
problem is due to the export of
gold ingots as against gold outgots.
.>
;
a
the
...
(and
mist Lord Croontch who
of
winner would
Deflation
I
inflation—its
take
in
farmers
somewhat
a
one
position relative to their average
position over a long period of
and
are4'experts who think that
is
it
% tL
over
well
mean,
Investors Inc.
infla¬
it—It's the
supply of
rather an-undersupply of
an
editor
Tribune," for not only
identifying Jack Benny- as: "The
Walking Man": but also for nam¬
ing last Saturday as the day-when
week he died.
tion—as I understand
at
level, yet
gas,
sary
correction
Far from being
"Herald
last
because
'
Congratulations to John Crosby,
However his style
now
same
"The Walking Man"
always
Sanskrit—he feels
less confusing.
power
checked
urai
building
pur¬
hitherto absorbed
inflated
food
prices.
Because
of government
'parity' price supports, the decline
in
farm
products
should
be
chasing
times
Gettridge
on
consumer
the index
Syn¬
You'
quote .from
Meyers.
all authorities, this
saw a derealization of
past year
Gettridge's
Monetary
Quotient and
recent
a
according to
from
quote
fact
the
in
General
of
made
goods,
consumer
by " excessively
since
ever
conclusively
proved
another
'The
also
and say in
man
study
Glitch
chronization
.
use
also
man
by
Tonight,<£>-
Simplified for
and;
Professor
.
will
"Economics
Experts.'
book
I
'Economics
fascinated
has
first learned to talk to his fellow
ion, 'Business is Lousy.'
Prospectus upon request from
your investment dealer, or from
SECURITIES
for
demand
through releasing
TRUST FUNDS
NATIONAL
been
the
Shmoe"
a
to
have
"Gettridge Is
NATIONAL
RESEARCH
industries.
This
should
prove
painful
only
H.
By
major extent in our
a
goods
correction
Pratt is- with William
S. Beeken Co., Guaranty Building.
George
to
case
durable
Chronicle)
Financial
Thursday, March 11, 1948
Frederic A. Adams
Investment
U.
Trust
Specialist
S. NATIONAL BANK
DENVER
2,
BLDG.
COLORADO
iiiiiiiiiiiiiiiiiiiiii iiiiiiiiiiiiiiiiiiiiiiiiii
Box
N 311,'The
Financial
Commercial
Chronicle,
25
Place, New York 8, N. Y.
&
Park
/*■
Volume 167
Number 4680
THE COMMERCIAL
Lehman Brothers
tion, it is also generally believed
that firms who do not appear in
the ad, have no, or no important,
part in the offering.
comprehensive poll recently completed
by Roland
Palmedo, of Lehman Brothers, New York investment
banking firm
advertisements of new securities
issues, although restricted by the
Federal Securities Act, to the barest
essentials, are read by a surpris¬
ingly
large
<$>
proportion
of
sent
only
aimed
at
by
adver¬
these
dressing
tise men ts,
accused
lacking appeal, invari¬
tion,
Palmedo
Roland
"always"
the
re¬
the under¬
noted
in such advertise¬
names
•
all
Half the intended audi¬
mainder.
showing an unusual de¬
reader interest. Eightyfour percent stated that they were
decidedly or partially influenced
in rating underwriting firms as to
size and
prestige by new issue
ments,
of
advertisements.
,
"This return shows clearly that
the
advertising
is
successful
mercial
and
so
Atlanta, Fort Worth,
Dallas,
Seattle,
Portland,
Me.,
Richmond,
Buffalo,
Louisville,
Minneapolis, Omaha, and Port¬
poll
ical distribution in representative
cities of various sizes.
Summary of Questions and
Do you
half
one
i'r
notice the
you
2%
names
of the
underwriters?
always
Usually
34%
Occasionally
realignment of the world currencies with
The
Stock Exchange, 36 Wall Street, New York 5, N.Y.
«It is hardly
likely, that any recovery in Eu-<3
r
~
~~
rope
can
be lasting unless the gold mining companies provide a
major
currencies
are
put into means for American investors to
proper
-
of currencies of
MASS.
office
at
quarters
formerly
Tifft Brothers.
Chester
E.
Berman
were
—
Street
occupied
Ernest W.
in
by
Arnold,
Thompson and Henry
will
sentatives
Messrs.
Main
332
be
in
the
repre¬
offices
new
and
Thompson
formerly co-managers of the
Worcester
office
of
Bros.,
was
also
associated.
Muir
&
of
the
50th anniversary
the
founding of the firm, or¬
sells
but
balance
on
Edwin H. Muir,
of the late John Muir, founder
company,
is
the
present
Barth
fornia
Street,
members
a
to
cisco
similar
choose
would
be
to
Mr.
is
plan
Canadian
achieved
whether
value
the
increasing
well
as
the
American
of
the
the earnings of
companies.
ownership of gold
is., illegal
citizens
for
than for the
industry, Bache
of the arts or
use
Never
Co.,
that
state
the shares
a
rating
in
you
firms as to
underwriting
LOS
ert
ANGELES, CALIF.—Rob¬
C.
Ortwin
is
now
with J. A. Hogle &
affiliated
Co., 507 West
Sixth Street.
Bader With Hirsch & Co.
(Special to The
Financial Chronicle)
CLEVELAND, OHIO
E.
has
Batter
with
Hipch
Avenue.
He
become
&
Robert
associated
—
Co., 1010 Euclid
formerly with
was
of Cqrtiss, House & Co.
This announcement is not
an offer to sell or a solicitation of an offer to
The offering is made only by the Offering Circular. *
'
•
size, prestige, etc.?
Decidedly
tising, and investment companies
Not
52%
16%
buy these securities.
32%
Partially
.
regardless of location.
half
of
the
poll
was
The other
such
countants, and management en¬
gineers in 17 representative cities.
Replies
were
received
from
49% of the individuals addressed,
which is regarded as an extraor¬
dinarily
large
proportion
of
re¬
survey
based
was
the
on
theory that financial advertising,
in particular
issue
new
stores
manufacturers
and
use
them,
express
cigarette
are
appro¬
priate to the group they
are trying
to, the product they are
;offering, and the nature of the
sell
,business the seller is engaged in.
jit is equally logical that invest¬
ment securities, which are a
very
distinct
kind
interest
to
gories
of
highly
and
lines
—
...
of
merchandise,
certain
persons,
specialized
limited
of
cate¬
marketed
by
wholesalers
retailers, should use copy and
appropriate to these ele¬
media
ments.
Not
much
No
—
26%
Dated
February
1948
•
and interest by endorsement
by Southern Pacific Company
18%
underwriters
......
No
Due February I, 1968
Guaranteed unconditionally as to payment of principal
.
The issuance, guaranty
aopear?
-
-
----
35%
the activities of
underwriting houses by their
advertisements of
new
and sale of these Bonds
are subject to
Interstate Commerce Commission
authorization by the
65%
Do you measure
In the
v
opinion of Counsel, the Bonds will be legal investments for Savings Banks organized under the
laws of the States of California, Illinois, Michigan, Minnesota, New Hampshire, New York, Ohio
and Rhode Island and for savings banks organized under the general laws of Pennsylvania.
secu¬
/'
1
<
„
'
t
«
'
rities?
Only way
Chief way
Largely
Price 100.35% and accrued interest
9%
14%
.
47%
~~
Small part
30%
Deductions
The Offering Circular may be obtained in any State in which this announcement is circulatedfrom
only such of the undersigned and other dealers as may lawfully offer these securities in such State.
Interpretations of the compiled
answers
will differ, $ays Mr. Pal¬
J
medo, but at least these conclu¬
sions appear justified:
(a)
New issue advertisements
the close attention of a
part
they
of the audience to
presumably are ad¬
HALSEY, STUART A CO. INC.
v
-
j,
(INCORPORATED)
(INCORPORATED)
\mvvnrvnni eim;
J
-
SCHOELLKOPF, HUTTON A POMEROY, INC.
L. F. ROTHSCHILD L CO.
BURR &. COMPANY, INC.
GREGORY A SON
dressed.
HARRIS, HALL A COMPANY
OTIS L CO.
BEAR, STEARNS A CO.
receive
whohi
of the Poll
I,
:.
know
Do all important
Yes
Bonds, Series B, 3?&%
19%?
.....
What governs the order?
Don't
Railway Company
First Mortgage
55%
Yes
large
*
Plan
50%
names mean
anything to you?
ideas, language
and media to
propagate them which
to
All
Does the order of the
advertis¬
ing, is addressed to a limited and
fairly well-defined audience. De¬
partment
Central Pacific
43%
5%
4%
Amount of participation.. 73%
What Audience Is Wanted?
to
7%
...
few lines
s
Alphabetical
Size of underwr
turns.
The
First
advertisement?
an
First line
vestment
bankers,
commercial
bankers, trust company and sav¬
ings bank officers, lawyers, ac¬
$37,396,000
How many names do you read in
in¬
to
sent
all....
at
HIRSCH L CO.
INCOlt.OII.TEft
Offerings of
of
new
securities
are
interest
chiefly to individual
institutional investors, those
officers of corporations who are
and
concerned with
New
writers,
tional
gineers, and
accountants.
dividuals
whom
the
The in
poll
was
advertising
as
well
as
a
The Bonds are
offered when,
as
WM. E. POLLOCK &. CO., INC.
"
(c) The prominence and stand¬
ing of an underwriting firm, in
opinion of this audience, is
a
considerable extent
on
approval of counsel, to
modification of the offer .without notice, and to authorization by theTntcrstate
for delivery at
and if issued and subject to acceptance by the Purchasers, to
prior sale, to withdrawal, cancellation or
the
based to
GRAHAM, PARSONS & CO.
in its aspect of institu¬
finance, securities .sales aid.
dealers, banks and trust company
officers, lawyers, management en
to
issue advertising is
important, for the signing under¬
(b)
Commerce Commission of their issuance, guaranty and sale. Bonds in temporary form will be available
the office of Halsey, Stuart & Co. Inc., 35 Wall Street, New York, N. Y
March 10, 194S.
&
and its
predecessor
1%
industrial, transportation,
public utility, distribution, insur¬
ance, mining, amusement, adver¬
6
partner
Gibbons
Do such advertisements influence
of
cers
n
With J. A. Hogle & Co.
by
other purpose
any
a
thereto
firm, Gibbons, Newlands & Hess
by
now
oi
Hess,
Fred G. Gibbons
the time,
higher price for gold
a
reserves as
Co.
was
of
Parliament would have the effect
of
&
prior
in
difference
wide
a
devaluation or a subsidy
before the Canadian
currency
officer
Hill, Richards
might not
opinion, says Bache & Co., as to
the imminence of the devaluation
Canada
Gibbons
formerly
an
take
great.
as
Stock
was
British
although the ex¬
action,
tent of the devaluation
&
partner.
o„
Ex changes.
16%
senior
k
Co., 482 CalL
likely that the Canadian Gov¬
ernment
Since
the
Financial Chronicle)
The
to
FRANCISCO,
CALIF.—
Fred G. Gibbons has become as
sociated
with
It is regarded
Empire countries.
Canadian gold mining
afterward.
(Special
SAN
and San Fran¬
ganized March 10, 1898 as Muir &
son
With J. Barth & Go.
advantageous position in its ex¬
port trade, since it purchases on
balance from the United States
Powell, adopting its present name
soon
Fred G. Gibbons Now
dis¬
ling would place Canada in
in
is
1
the New York
however,
Co., members of
1 r
1
J.
of the pound and of the
dollar.
Regardless of
Muir Observes 50 Years
John
MWBW—■
i
the devaluation of the pound ster¬
There
Tifft
with which Mr. Berman
European
i
.I.
gold
situation and specifically on Ca¬
nadian gold stocks maintains that
as
resident
Arnold
the
coun¬
f
Bache & Co.'s study on the
Hay¬
den, Stone & Co., members of
principal exchanges, are opening
an
in
involved
of the
of
participate in the ownership
gold still in the ground.
Recovery Program."
Worcester Branch
WORCESTER,
some
tries
Hayden, Stone Opens
the European Re¬
Plan is stressed as "fundamentally sound" in a study on the
gold situation released by Bache & Co., members of the New York
covery
the adver¬
tisements of sound issues.
of
49%
Yes,
sent to senior offi¬
were
52%
46%
No
theory that financial advertising,
in particular new issue advertis¬
ing, is addressed to a limited and
fairly well-defined audience. Of
the 600 questionnaires, therefore,
securities?
Occasionally
the
on
issues of
new
Yes, always
gold mining shares provide means of investors to
profit by higher value of gold.
in
appearance
celebrating
look at advertisements of
Currency Devaluation Aids Gold Mining
Bache & Co. say
relationship
with
each
other," the report contends. Brit¬
ain's increasing financial difficul¬
ties has provided greater validity
(b) Appearance below the first to discussions concerning a pos¬
line of signatures may diminish sible devaluation of the
pound
the attention received, but in its
sterling. Only recently, Secretary
effect on prestige is better than Snyder stated, "There will un¬
not appearing at all.
doubtedly have to be devaluation^
quent
the New York Stock Exchange,
Answers
Do
based
was
The prestige of an under¬
writing firm is benefited by fre¬
land, Ore. This assured geograph¬
frequently criticized,
tention percentage."
The
trust company
officers, law¬
Cleveland,
is in part responsible for this at¬
1
com¬
accountants, and manage¬
engineers in (a) New York,
(b) Chicago, (c) Boston, Phila¬
delphia and San Francisco, (d)
which
copy,
bank
bankers,
ment
observes. "Perhaps the
survey
stark; brevity of the
bankers,
that the poll shows that:
(a)
whose
industrial, transporta¬
utility, distribution,
mining,
amusement,
savings
medo
in
audience to whom it is addressed,"
the.
and
yers,
getting the attention of a surpris¬
ingly
large
proportion
of
the
has been
to,
to investment
sent
occasionally
addressed, and
read
by practically
gree
to obtain
The other half of the poll was
tion-catego¬
ries
ence
geograph¬
advertising, and investment com¬
panies, regardless of location.
occupa¬
writers
as
public
insurance,
the
s'. -in
chief
so
himself
officers of
were
by over
the per-
so n
eye to
favorable opinion he seeks.
Thus, of the 600 ballots sent
out,
one-half were addressed to senior
of
half
an
distribution,
fair sampling of the audience
that the underwriting investment
bankers is interested in and ad¬
that
vealed
read
carefully selected not
among these groups,
a
The poll re¬
ably
from
ical
writers.
long
were
but also with
under¬
thfe
It is also the opinion of Mr. Pal¬
a
audience
the
Holds
(d) While it is the popular im¬
pression that the signatures are
in the order of size of participa¬
by Roland Palmedo of prominent
banking house
indicates surprising interest among audience
addressed.
Reports
S4% of replies stated parties addressed were influenced in
rating
underwriting firms by size and prestige of new issue advertisements.
According to
19
(1115)
CHRONICLE
volume, as well as the char¬
ter, of underwriting done.
Poll conducted
-
FINANCIAL
;he
Survey Shows New Issue
Advertising Effective
„
&
22
(1118)
THE
COMMERCIAL
J.
P.
News About Banks
Bankers
and
REVISED
Mr.
regular meeting of the
Board of Directors of the National
City Bank of New York held
from his executive position in the
Rentschler companies to devote
his full energies to the bank's af¬
fairs.
Mr. Rentschler served as
on
Chairman
of
the Clearing House
Committee, of
which
he
was
member during the days of the'
bank holiday in
1933, and was
a
active in the affairs of the Bank¬
ers Club and the American
Insti¬
tute of
tor
Banking.
of
the
He
New
was
direc¬
a
York
World's
Fair, Inc.
His greatest
banking,
interest, outside of
in
was
education.
He
life trustee of Princeton
(of
which he was a graduate) and
w&S
a
Massachusetts
Institute
nology and from
trustee
William Gage Brady
Howard
C.
S.
Rentschler, who died
March
3.
Tech¬
Antioch
College.
active
was
was
ind
Treasurer
of
the
Mr.
the
on
American
Chinese Movement for Mass Edu¬
on
W.
Randolph Burgess,
Vice-Chairman of the Board, was
.appointed to the newly created
cation.
office of Chairman of the Execu¬
tive Committee. Howard C. Shep¬
March
•
Funeral services for Mr. Rent¬
schler
#
*
Gordon
Chairman
Sohn
the
0f
Rentschler,
Board
of
*
of
the
as
The
date
for
special stock¬
at which
the
a
National City Bank of New
York
holders'
and
stockholders will be asked to vote
City
Bank
Farmers
Trust
Company
since
1 9
40,
died
in
Havana,
Cuba^on Mar.
3.
He
years
62
was
old, and
his death
caused
was
by
a
heart
attack.
Mrs.
Rent¬
schler
was
with
and
him
they had been
spending
a
the
on
meeting
transfer
to
the
Chemical
Bank & Trust
sets and
Company of the as¬
banking business of The
Continental Bank & Trust Comoany of New York. It is expected
that the call for the
meeting will
be sent out on or about
Mar. 15,
at which time full details
of the
terms and conditions of the
trans¬
action will be made known.
The
Board of Directors of The Con¬
tinental Bank &
at
its
Trust
special meeting
approved
the
definitive
Company,
on
execution
contract
Mar.
5,
of
the
with
the
in
Cuba.
Chemical Bank & Trust
Company,
subject to the approval of the
M
;R
banking authorities prior to
holiday
Gordon 9. Rentschler
r.
e n
schler
elected
to
the
t
-
was
Presidency of the
Bank at the age of 43, and in 1940
he became Chairman of the Board
of
the
Bank
and
the
City Bank
Farmers Trust
Company. In addi¬
tion to heading the Bank, he was
a
director and member of the
Executive Committee of the
Union Pacific
RR., trustee of Con¬
solidated Edison Co. of New York.
His most active outside interest
his
were
Princeton
chusetts
He
life
trusteeships
in
University and Massa¬
of
Technology.
Institute
also
was
trustee
Carnegie Institute
of
of
the
Washington
and the Ford Foundation. He
was
a director of the Home
Insurance
Co., Anaconda Copper Mining
Co.,
Corning Glass Works, National
Cash Register Co., Federal Insur¬
ance
Company and Discount Corp.
of New York.
Mr.
Rentschler
born
was
in
Hamilton, Ohio, Nov. 25, 1885. His
father, an Ohio manufacturer, was
President of
Hooven, Owens &
Rentschler Co., Hamilton
Foundry
and Machinery Co. and G. A.
Rentschler Co., and the son
started
work in
ries.
one
of his father's found¬
Eventually
family
he
enterprises.
headed
One
the
of
Rentschler companies did a
stantial
business in sugar
the
sub¬
mill
machinery. He thus acquired
knowledge of the sugar industry
and
in
war
his services
the
years
following
were
the
availed
of
by the National City Bank which
had extensive
sugar interests in
Cuba. In 1923 he was
elected a
director of the
bank,
years
officer
later, when
of
the
he
bank,
and
two
submission to the stockholders.
Elliott V. Bell, New York State
Superintendent
nounced
he
an
retired
of
Mar.
on
5
Banks,
that
he
an¬
had
approved the application of direc¬
tors of
sets
to
Continental t'o sell its as¬
Chemical Bank & Trust
Company. The latter has applied
to the
Banking Department, sub¬
ject to the approval of the
Super¬
intendent and the
Banking Board,
for permission to
operate branches
at the three offices
now
main¬
tained by Continental Bank
Co.,
namely:
30
Broad
Street, 512 Seventh Avenue, and
Madison Avenue, all in New
York City. A
previous item in the
345
matter
issue,
in
appeared
our
Mar.
4
page 1012.
!!'.
*
!|t
,
Sherwood M. Bonney was elected
Trustee of the Irving
Savings
Bank of New
York, at 115 Cham¬
bers St., on Mar. 9.
Mr. Bonney is
a
Director and
a
Secretary-Treas¬
urer
the Sun Chemical
Corp.
graduate of Dickenson
College
and
Harvard
Law
School, Mr.
Bonney was Manager of the Tax
Department of Arthur Andersen
& Co. and a Junior
Partner of
of
A
the
law
firm
of
Dunnington, BarthoMiller prior to his affilia¬
tion with Sun Chemical
Corpora¬
tion. He served in World
War II
low &
as
a
Lieutenant in the U. S.
Navy.
>it
Plans
for
*
$
a
public offering of
approximately 25,000 shares of
stock of J. P. Morgan &
Co. Inc.
owned
by the late Thomas W.
Lamont, Chairman of the Board of
the
banking
The
the
on
house,
were
stock
represents
*
Arthur
outstanding
capital
stock
of
of
Minnesota Power & Light
2
Minnesota Power & Light, a wholly-owned
ican Power &
Light, is planning to sell
subsidiary of Amer¬
100,000 shares of common
funds for its construction program.
The offering is
currently scheduled for an early appearance (subject to final
agree¬
5,
stock to
S.
*
tic
Kleeman,
President
ment
Colonial
Trust Company of New
York, announced on March 8 that
the
bank's
International
on
Division
ment of iron
South >and/or
West
African transactions (export, im¬
or
Mr. Kleeman has the follow¬
both).. Several banks re¬
ported a large and increasing vol¬
lent
customer
manufactured
it to
owe
for
with
of
that
products
pay
for
imports, and the problem of dol¬
lar buying power does not at the
to
the United States.
"The
have
gathered
to
seems
which
from, this
indicate
how
we
survey
great
are
the yet scarcely
developed possi¬
for
two-way trade be¬
bilities
tween
Africa
the
and
Western
Hemisphere."
of
F.
McNamee
...
and
.
Carl
J.
Heiles
have
been
promoted
from Assistant
Vice-Presidents to
Vice-Presidents of Manufacturers
Company of New York,
Trust
Harvey
D.
Gibson, President
of
that
institution, has announced.
McNamee will be located at
the bank's Fifth Avenue
and 43rd
Street Office. He is a native New
Mr.
Yorker and has been in the bank¬
ing business since 1919. He was
with the State Bank
when it be¬
came
a
part of the Manufacturers
Trust Company in 1929 and
was
appointed an Assistant Vice-Pres¬
ident in June, 1941. Until
recently
he has been
Officer-in-Charge of
the bank's
University Place Office.
Mr.
Heiles, also a native New
Yorker, became associated with
Manufacturers Trust Company in
1924,
was
made
an
Assistant
Secretary in 1929
and in 1934
was
promoted to Assistant Vice-Pres¬
ident. He is located at the
bank's
Fifth Avenue and 43rd
Street Offive.
*
*
the staff of the Union
Trust Com¬
pany of Rochester, N.
Y., was an¬
nounced
on
March 1 by William
Foster, President, according to
the Rochester
"Times-Union"
W.
which further
reported in part:
thur
are
F.
"Carl
R.
Snider, Ar¬
Kurtz, Alfred
F.
Janus,
Benjamin M. Haag and Harold M.
Kern.
With the exception of Mr.
Kern all have held
officers' posi¬
tions.
Snider,
who
has
Vice-President, has
been
been
a
named
Vice-President and
Secretary, suc¬
ceeding Deloss M. Rose, retired.
Arthur
F.
Kurtz,
Assistant
an
been
named
Vice-President.
"Alfred
F.
19475632
certain
Vice-President, has
Haag,
comes
an
Assistant
an
been
named
Benjamin
Assistant
M.
Secretary, be¬
Assistant Vice-President.
Kern,
becomes
an
a veteran
Assistant
(Continued
on
These
areas.
activities
tend
industrial
to
of
has
revenues
the national
the last decade.
The
the
the
slightly
in
average
capital setup, adjusted for
proposed
financing, is about
54% debt, 21% preferred stock
and 25% common. The
company's
1945
account
restated
was
original cost,
pursuant to orders of the Federal
Power
Commission, with $9,055,-
000 plant acquisition
adjustments
being amortized over a 15-year
period.
At Dec.
employee,
Secretary."
page
29)
involve
larger
Light, since
the
amounts
of
use
of
electric
case
95,000
kw.,
of
source
mented
the
are
but
power
plants.
principal
are
by
74,000
While
the
supple¬
kw.
steam
company's
hydro
generation
is
relatively
stable, present demands for elec^
tricity require substantial use of
steam power,
which last
about 30%
resented
of
year rep¬
total
out¬
The company now has under
construction
additional
capacity
(33,000
kw.
steam
and
12,000
hydro) scheduled for completion
in 1949, and another 33,000 kw.
put.
steam
should
unit
able in 1951.
become
avail¬
These additions, to¬
gether with the proposed high
voltage
transmission
line
and
other construction, should reduce
costs and permit further growth.
in
the basis of
on
a
The
company's hydro-electric
plants, with an installed capacity
steel
Growth of
spend
taconite,
power and labor than is the
with direct shipping ores.
of
diversified
wojild
much
num¬
stabilize
exceeded
Lawrence W. Simon Is
Opening Own Office
(Special
31,
to
The
Financial
Chronicle)
1947, depre¬
CLEVELAND, OHIO — Law¬
$9,814,000 was rence W. Simon
is opening offices
18.3% of utility plant, totaling
in the Union Commerce Building
$53,503,000 on an original cost
basis.
If $9,056,000
utility plant
ciation
of
reserve
acquisition adjustments are added
to utility plant as above and
the
of
reserve
$1,508 000 already
crued
for
plant
ac¬
acquisition
added
amortization
of utility
adjustments is
depreciation
reserve,
to
then the ratio of total reserves to
total utility plant is
18.1%. When
considering that the company's
generating iacilities are predomi¬
nately hydro-electric with over
$3 in hydro plant for every $1
in
steam
plant, the above ratios
in line
appear
average.
with
the
general
-
Share
earnings,
after
allowing
for the present increase in
stock,
have been as follows in recent
As
Reported
Special
Special
Amort.
Amort.
Lawrence W. Simon
to
Charge
Charge
$1.24
$™'
$1.24
2.59
2.59
2.32
1.81
0.46
3.37
0.93
3.81
company
dividends
at
expects
the
to
annual
pay
rate
of
share.
There has been
the
heavily drawn
postwar
ore reserves
which
on
been
during the
periods.
war
According
the "U. S. Steel
News," recent
estimates of such
remaining
range from
However,
all
to
the
re¬
18 to 40 years.
conserve
Childs
in
of
Vice
Blair
&
Co.
&
with
was
and
Co.,
was
a
Inc.;
C. F.
partner
Borton, Kay & Co.
Herrick to Manage
Dean Witter Dept.
the
ore
area
re¬
mining
(in which
Steel is the leader)
New
and
are
York
Exchange
commodity
ex¬
that Martin R.
announce
Herrick, formerly with the firm's
San Francisco
of
manager
York
Wall
enlarged
commodity
New
department,
14
Street.
The
the
office, has become
its
also
company
association
with
announces
the
firm
of
ac¬
G.
Richard
Cronin
tively engaged in perfecting meth¬
ods of developing "lean" or
second
representative
grade
office.
particularly taconite.
Steel's subsidiary expects to
ores,
spend $34,000,000 in the next six
years on this program, and Re¬
serve Mining
Company of Cleve¬
(owned by Wheeling
Stock
principal
changes,
principal
companies in this
land
busi¬
formerly
prior thereto he
in the
have
to
U. S.
securities
Dean Witter & Co., members of
some
conjecture
remaining life oi
the high-grade
Mesabi Range,
U. S.
the
was
2.27
0.93
2.88
a
He
President
2.32
2.44
$2.20
in
engage
ness.
Amort.
Charge
The
and
Before
After Spec.
Year:
sources
Janus,
Vice-President.
of Minnesota Power &
this
industries, in¬
docks furnish supplementary em¬
ployment, and the tourist and va¬
cation business is
important in
serves
Vice-President, has
a
process
to
mining of
grade ores and taconite is
favorable from the point of view
the
products, cement, paper,
wood products, and flour. Dairy¬
ing
is
an
important
industry,
grain elevators and coal and iron
regarding
"Mr.
also
are
plans
The trend toward the
years:
*
Promotion of five members of
They
There
diversified
from
announced
lower
electrified
cluding the manufacture
plant
,
Charles
ore.
The mines
company's operations.
information
low-grade
and iron
we
her to try to buy from
permitted South Africa to
ber
our
her at every
opportunity. The sale
of her gold and diamonds has
to
is the most im¬
ore
purchased
power
company.
excel¬
many
$60,000,000
subsidiary
mines in the country.
are
almost
entirely
ing to say in the matter:
an
in
portant industry of this area, the
Mesabi, Vermiliorh. and Cuyuna
iron ore ranges together consti¬
tuting the most important iron
.
"South Africa is such
has
whose operations are
pooled with those of the parent
company.
The mining and ship¬
Of the number replying,
70% reported that they had been
Mining)
at
company,
survey.
port,
approval), with Kidder, Peabody handling the deal
Wisconsin served by a
that 350
banks
throughout the
United States and Latin America
had been invited to aid in the
handling
SEC
population estimated
This includes 40,000
a
292,000.
Mr. Kleeman said
war.
and
negotiated basis.
with
West African banking trans¬
actions with the United States
and
since the
a
raise
Minnesota Power & Light
oper-f>ates in northern and central Min¬ American
Rolling Mill, Clevelandnesota, serving 186 communities Cliffs Iron, and Montreal
recently completed a study of the
geographical distribution of South
"Mr.
12%%
Feb.
on
issue of Feb.
-
made
March 9.
death
our
page 617.
and
Trust
known
became
the
in
moment appear to be a deterrent
her continued purchases from
*
Directors of The
Continental Bank & Trust Com¬
pany of New York, at a special
meeting on Mar. 5, fixed April 12,
o
,
at
The Board
succeed Mr. Brady.
;
*
8
Episcopal Church.
erd, Senior Vice-President, was
Appointed President and Director
;o
held in New York on
St. James Protestant
were
200,000
ume.
a
President's Committee for the fi¬
nancing of foreign trade, Treas¬
urer
of the National War Fund
March 9, William
Gage Brady, Jr.,
President, was appointed Chair¬
man of the Board to
succeed Gor¬
don
of
Rentschler
Sheperd
of
1921-36
Lamont's
noted
was
the
of
The stock will be offered
Beane.
CAPITALIZATIONS
At
Co.
Thursday, March 11, 1948
M. Loeb, Rhoades & Co. and Mer¬
rill
Lynch,
Pierce,
Fenner
&
BRANCHES
OFFICERS, ETC.
&
CHRONICLE
shortly by an investment banking
group headed by Morgan Stanley
& Co.; Smith, Barney & Co.; Carl
CONSOLIDATIONS
NEW
FINANCIAL
Morgan
shares.
NEW
&
Steel,
A
Washington
Mr.
D.
Cronin
in
the
recent
and
as
New
York
graduate
Lee
is the
registered
son
.o£
University,
of
George
Cronin, partner of Dean Witter-
& Co.
in San Francisco.
Volume 167
Number 4680
THE COMMERCIAL
New York
George Geyer, Geyer & Co.; Francis Adams Truslow,
President of the New York Curb Exchange;
Herman A.
Graham
Feldmann, Geyer & Co.
&
FINANCIAL
CHRONICLE
Pictorial
Insert
I
Security Dealers Association
C. E.
Unterberg, C. E. Unterberg & Co.; James P. Conway,
Association of Securities Dealers, Inc., Wash¬
ington, D. C.; Wallace H. Fulton, National Association of
Securities Dealers, Inc., Washington, D. C.
National
Walker, National Quotation Bureau; Robert K. McConnaughey, Securities
Alfred F. Tisch, Fitzgerald & Co.; T. Geoffrey Horsfield,
Wm. J. Mericka & Co.; Col. Oliver J. Troster,
Troster, Currie & Summers
George Kilner, Brown, Lisle & Marshall, Providence, R. I.; Richard M. Barnes,
A. M. Kidder & Co.; Maurice Hart, New York Hanseatic Corp.;
Hanns E. Kuehner, Joyce, Kuehner & Co.
•
Exchange Commission, Washington, D. C.; Emil Schram, President of the New York
Stock
Exchange; Harry A. McDonald, Commissioner of the Securities & Exchange
Commission, Washington, D. C.
c
„
j
£'ry Sam S
ol Mag,d
h
n
K
H. D. Knox' & Co., Inc.
r
m,
+Vl_
rninnini
TVwcf
Jrv>
Cn
•
Tnr
w^rhprt
n
Knnv
MTRvan
Hill Thompson & Co., Inc., M. T. Ryan,
Vice-President, Colonial Trust Co.
Howard C. Allen, Albert Frank-Guenther Law, Inc.; Meyer Willett, C. E. Unterberg
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John M. Hudson, Thayer, Baker & Co.,
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York
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Securities
and
Dea)ers
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Exchange
Commission;
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Bert Seligman, Ward & Co.; David Morris, David Morris & Co.
& Co.;
Pictorial Insert II
THE
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Thursday, March 11, 1948
Twenty Second Annual Dinner
Eugene M. Cohen, Stern & Co.; A. Joel Canter, Sartorius
& Co.; William F. Goulet, Goulet & Stein
Max Furman, Attorney General's Office; Chet de Willers,
C. E. de Willers & Co.; Allen MacDuffie
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T.
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R. V.
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Wright, R. V. Klein Co.
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Mike
York
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"Volume 167
Number 4680
THE COMMERCIAL
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CHRONICLE
Pictorial Insert III
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T.
J. Bryce, Clark, Dodge &
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Johnson & Co.
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Shaskan & Co.; Lloyd E. Lubetkin, Seligman, Luhetkin & Co.; Carter H. Corbrey,
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Lester Pett, R. H. Johnson & Co., New York; R. H. Boardman, R. H. Johnson & Co.,
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THE COMMERCIAL
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Success
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Chicago;
Jr., F. H. Koller & Co., Inc.; Edward H. Robinson, Schwabacher & Co.;
Ted Plumridge, J. Arthur Warner &
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Thursday, March 11, 1948
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G.
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John J. Fitzgerald,
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and
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&
Frankel, Seligman, Lubetkin & Co.; Edward W.
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Co.; John J. O'Mara, Goodbody & Co.; Irving J.
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Henry Oetjen, McGinnis, Bampton &
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THE
Number 4680
167
Volume
COMMERCIAL
&
FINANCIAL
CHRONICLE
Shortcomings of World Bank
(Continued from page 4)
hand; in fact, they have actually
hampered him.
The contractor down the street,
Mr. Communism, who wanted the
But the loans of the Bank may be
considered political merely be¬
them the
cause
Great Powers
In
they
a
are not commercial.
market
mercial
economy,
a
com¬
proposition must meet the
through
investing publics of the
often parties
obligations
autarchy as the case of Nazi
Germany amply illustrates.
Interventionist
foreign investors
Many of these government
here.
(paternalistic)
policies at home lead invariably
unholy examples of statism as foreign exchange
controls^
subsidized exports, confiscation o|
gold holdings owned by private
to such
to
loans
were made at par at com¬
inter-governmental rivalries.
British and Russian clashes of fi¬ paratively
low
interest
rates
nancial interest in Persia (Iran) while outstanding dollar bonds of
date from the 1880's. Instead of the same obligor were kicking
oil, as now, control of custom around oh the market at tre¬
to
23
and
Import Bank of Washington and
governmental agencies mak¬
ing loans freely to foreign coun¬
tries which defaulted
on
their
other
Banks and bankers and
were
(1119)
citizens, government bulk trading
everything in his power needs or desires of consumers at
as a substitute for free
the house from being built a price they are- willing to pay.
exchanges,
Obviously,
private
investment
quotas, boycotts of foreign goods,
in the hopes that the builders
firms would hardly have loaned houses then was the bone of con¬ mendous
discounts
below
par, all kinds of trade controls and mi¬
will get disgusted* throw out Mr.
many of them in default. In some gration barriers.
Capitalism and give him the job. $250,000,000 to France at 4V4%, tention.
Free acting capitalism has been
It would not serve any purpose instances the Federal Government
In view of all this, the plumb¬ which is what the World Bank
did.
to cite additional instances of po¬ through Its various agencies made so badly crippled in the inter¬
ing, heating and electrical sub¬
job, does
to keep
contractors had better watch their
timing, Otherwise their materials
might lie out in the yard and rust
while the "battle as to who
was going to build the house was
being fought.
away
is frankly recog¬
The situation
nized in the second annual report
of the Bank covering the fiscal
Fifty million dollars of bonds at
5% for 15 years might have
been salable to, the public on an
unsecured basis, but the involve¬
ment of a larger sum might have
necessitated the giving of specific
security or the pledge of collateral
by the borrower as in 1916 when
France obtained a 3-year loan in
say,
litical lending, for the ultimate
judgment of the political or non-
political character of the loans of
the World Bank will finally be
made, regardless of defintion, by
their role in the global rivalry
of the
Soviet
and the Anglo*
Saxon systems.
.
By force of circumstances the
the United States.
United States is by far the larg¬
period ended June 30, 1947 and
It must be remembered that in est stockholder of the Bank and
published ;Jja, September. In a
the
entire - decade,
1920-1930, for the time being |the American
sense- Its text comprises a rather
remarkable. treatise on the pres¬ France borrowed only a total of capital market is the only place
in the world iii which the Bank
ent-day ills of the world, its dis¬ $484,000,000 ■from American in¬
organization^
its
unanticipated vestors and this included not only may market its debentures.; No
the
government itself but the loan may be made without Ameri¬
needs and the hopelessness of any
can approval. ~ The credit of the
but the most thoroughgoing rem¬ provinces, municipalities and gov¬
,
.
.
ernment controlled
edies.
management of the
Bank has been so willing to adopt
such a forthright attitude toward
the
That
should really not be
considering the high
its problems
surprising,
character of its personnel.
After
and
all,
in
r
contrast
to
What has too Often occurred with
not generally recognized and here
We must take issue Wifa official
and interpretations of
the Board itself and its managers.
statements
Despite its denials, the Bank is
.
.
in which it describes
briefly the
operations and Oranizational structure of the Bank.
Therein,
under
the
heading
purposes,
"Non-Political" it is stated "The
Bank must take steps to see that
the proceeds of any loan are used
*.
without regard to political or
.
other non-economic influences
the Bank shall not interfere
.,
4
in
the political affairs of any mem¬
ber. Only economic considerations
shall guide the Bank in its deci¬
sions. That belongs in boldface
type. It's the heart of the Bank's
policy."
Of course, whether the Bank is
a
political institution, makes po¬
litical loans or is influenced in
making loans by political
as
a
economic
well
as
is
considerations
large extent
a
to
matter of defini¬
tion.
The
fact
.mere
that
the
Bank
Operates
partially with the help
capital
raised
primarily
of
through the
sale of debentures to
the
public does not make it a
private institution. Its share capi¬
tal is government
capital raised
by taxes
and
not"
by
voluntary
contributions.
The combination of private and
Public money is a novelty and the
arrangement is akin to a govern¬
ment
subsidy of
a
private under¬
taking, but with the private
ey
non-managerial
mon¬
and
non-
Voting.
The activities of the Bank will
hot be political
it will not loan
in the
sense
that
money to a foreign
maintain a particular
country to
Political party in office or to purChase or manufacture munitions.
rests
upon
U. S. Treasury
commitments. The Russians knew
all this when
of the Bank.
In
apparatus including
gold standard.
Private foreign lending was a
logical concomitant of pre-1913
the
ahe£d.
international
There
volved
business
were
in
the
even
before
they
were
the
export
risks
of
a
War I,
character
seems
In
investor was
equipped and able to undertake.
1930
not fore¬
at Bretton Woods and
seen
even
demonstrated
even
that
a
"natural"
our
opinion
of
in, 1922.
of the grave
one
the
whole
World
Bank
set-up is that the scheme
stopped short of giving the man¬
agers of this institution sufficient
powers
to use in the event: it'
modern conditions the risks were
were
Mar¬
super
deficiencies
period of foreign lending
which began in 1920 and ended in
lems of the Bank
or
been
for
private
The new
retrospect, therefore, it
a
a super-World
plan to operate
realistically in 1948 style.
The
World Bank concept would have
Bank
in¬
strange that (many of the prob¬
was
then, for all the
Marshall Plan is is
capital
but
World
of
■
v ,
needed
What was
shall Plan everi
conditions.
they made their de¬ which
cision not to subscribe to the stock
tive vehicle to solve the problems
that lay
much, of its
under
should
greater than before 1913.
have
to
assert
its
claims
against recalcitrant borrowers at
a
before.
French loan this year no doubt
date.
a brave, new, col¬
One ■ of the primary causes of
experiment in interna¬ been eliminated
by World War II; wholesale default on the
part of
tional planning.
It was intended on the
contrary they have been foreign
obligors was the tremen¬
to do a job which private capital
generally aggravated.
dous decline in the price of vari¬
obviously could not or would not
Most of the nations of the world ous commodities
entering into in¬
do.
After all, the international
have been drifting steadily toward ternational trade.
capital markets had been virtu¬
public regulation and regimenta¬
Consider for example the fol¬
ally disintegrated years before
tion in domestic affairs including lowing table of wholesale prices
World War II.
There is a good
ourselves. This is a stimulus, not which
existed
on
the
dates*
deal of dispute as to why this oc¬
a deterrent to economic isolation
mentioned:
curred, but it is our feeling that
the following are among the more
Comparative Wholesale Mces of Various Commodities:
they would have demanded
statement
the
on
part
Government
French
and
some
of
the
of
the
Export-Import Bank as to which
loan would have a prior claim, if
any,
on
any
foreign exchange
needed
to
service interest and
-
sinking fund.
Furthermore,
the
French
in¬
debtedness to countries other than
the United States is large and in¬
cludes
the
a
$400,000,000
British
and
loan
from
various substan¬
tial credits from Canada, Sweden,
Switzerland and Latin America.
political institution and its loans
The Bank for International Set¬
for the most part will; be political
loans. There is nothing wrong tlements at Basle has computed
that post-war loans and credit
with this and we shall go further
by commenting that, the 1948 granted to France and her colonies
world being what it is, things totaled $2,880,000,000 on Dec, 31,
1946, of which $2,000,000,000 had
could not be otherwise.
been advanced up to that time.
Let's see what the Bank says
One
can
readily imagine that
about itself.
i
small commercial loans granted
In May,
1947 it published a
pamphlet entitled "What the In¬ by Uhited States private bond¬
ternational Bank Means to You," holders might become lost in a
a
Bank
,
Had investment bankers floated
government boards and councils in
recent
years,
it
contains dis¬
characteristic of the Bank that is
guaranteed
corporations.
While ,only a small part of this
sum vis still outstanding, the Ex¬
port-Import Bank of Washington
authorized since
V-E Day . two
long term loans to France totaling
$1,200,000,000 and carrying coupon
rates at 2%% and 3%.
respect to 'government or quasi-
tinguished members of the legal
profession in America, and abroad,
some top ranking economists and
considerable commercial, invest¬
ment and central banking talent
from various countries.
However,
there
is a second
or
attempts to induce these foreign national field that it should take
an extreme optimist to underesti¬
care of their old
obligations, but the average in¬ mate the risks of private foreign
vestor is largely unaware of such loans today if they, are viewed .in
activities and feels that his gov¬ the light of the economic philoso¬
ernment "let him down,"
phies plaguing the world.
One of the really tragic failures
The era of 19th Century Liberal¬
ism really ended in 1913. With of the post-war period was the
its demise there virtually disapr inability of the Bretton Woddsr
peared many of its attitudes and planners to create a really effec¬
debtors to take
The circumstances which caused
the defaults of the 1930's have not
The Bank is
lective
valid
reasons:
era of private lending
which had culminated in 1930 has
(1) The
to
an
inducement
political alliance,
France
for
has
used
foreign loans
political purposes since the
of
Colbert,
Louis XIV's
time
Prime Minister,
For decades be¬
fore World War I she strongly en¬
couraged the purchase of Russian
securities by French investors to
strengthen
the ties between the
two countries
as
an
offset to the
growing power of Germany.
These
loans, which totaled 11.3
billion francs by 1914, were among
(2) With the advent of whole¬
defaults of the early 1930s,
sale
the
the
problem of the protection of
American bondholder natu¬
rally
became
there
existed
paramount.
While
yah.
Wheat No. 2, red, winter, bushel.—.
Jan 1
1
1932
$1.54
$ .52
8.95
4.35
—
.18
.07
Native Steer hides No. 1 lb—„—.
.25
.08
Cotton, middling uplands, lb—
Wool, fine comb (Boston) lb—
Jute, average of grades, lb—
Silk Jap, double ex. cracks, lb
Copper, Electrolytic (N. Y.) lb—.
Tin, pig, spot (New York) lb——.
Petroleum, east Brad; bbl,—_
*-,,
Rubber, sheets, lb——...
.20
.065
.24
.19
Hogs, Prime (Chicago) 100 lbs,—
Coffee Rio, No. 7 lb.
investing
can
>
i
^1929
been considered
disastrous failure by the Ameri¬
public.
Foreign
bonds
were
widely
scattered
among private holders and coun¬
try banks through the U. S. While
pur foreign lending of the 1920's
was not by any means the debacle
generally believed, no Gallup Poll
among holders or former holders
of such securities would be need¬
ed to show that public disfavor
shuffle of such astronomical pro¬ and prejudice exists today to al¬
most as high a degree as ever,
portions.
/
despite the rise in quotations for
There is nothing new about po¬
many foreign issues since 1940.
litical loans and, in fact, they
Now, with possible minor excep¬
comprise a large part of the inter¬
tions, the American investment
national movement of capital dur¬
market is the only one in con¬
ing the past. 75 years. Financial
dition to export capital.
assistance is often
.
overwhelmingly
a
future
some
.074
—
.1675
Is it any wonder that the entire
debt structure col¬
an
were
21
3.85
1.85
.18
.048
opposing view.
They do not
fear the monopolistic or imperial¬
istic implications of government
lapsed and that the debtors de¬
pendent upon the export of raw
materials
.07
.4975
„
international
.035
2.10
5.12
controlled
not able to obtain
cartels
or
market
ar¬
rangements, and,, of course, their
viewpoint is shared by the Do¬
minions and most European busi¬
nessmen and by the raw material
producing nations of the world.
dollar
exchange to service their
obligations?
Just now, in 1948, commodities
and
particularly; raw materials
again
recently
rose
to
great
heights. If the World Bank makes
a
substantial number
of loans
raises its head and affects
under
terest
present
price
.
If, as a nation, we are out to
smash any cartel in the world that
conditions,
our
in¬
procedures available
guidance, the experience, future date?
Will the experience of 1929*
contacts and proffered cooperation
of the U. S. investment banking 1932 be repeated, even in a milder
adversely, should we not
give the Managers of the WorldBank ample powers to protect it
and to encourage arrangements
which
Woud
tend
to
mitigate
serious raw material price de¬
fraternity, which could have been degree?
clines in the future?
and
for
a
plethora of
^
tried
tested
what is going to happen when and
if such prices decline at some
our
extremely helpful, were summa¬
rily rejected. In our opinion the
actions of the Federal Govern¬
ment left
much to be desired
As
we
stated before, we are liv¬
This
world of international
and financial relationships which
ing
in
a
and
we
is
a
complicated subject
present detailed
cannot
plans of any such scheme at "this
are highly regimented by govern¬
time.
Such reasoning we will ad¬
helping Ameri¬ mental controls. The rules of the
mit sounds rather extreme at the
can citizens to cope with the un¬
game are made and will be made
present time, but sooner or later
Russian
securities
unless
they willingness
of
m an y
foreign by governments. Why neglect to copper, sugar, rubber, cotton, wool
were
attractively priced but the obligors to make reasonable ad¬ vest the Managers of the World
and other raw materials may de¬
proof of their political character justments on their defaulted debts. Bank with sufficiently wide pow¬
is indicated by the uses of the We suspect that there was some ers to function within such a col- velop chronic surpluses as they
did in the inter-war period and
loan proceeds in Russia, which ideological bias on the part of the lectivist framework?
included
such purposes as
One of its powers should be to then
in
Washington,
the Administration
there
will
be
plenty ost
building of un-economic but mil¬ which at various times did not make collections, if it desires to trouble
for
those
who
have
itarily strategic railways and the hesitate to be more solicitous do so, in terms of commodities.
erected a new structure of inter¬
suppression of revolution. After about the sovereignty and rights Admittedly the natural interests
World War I France favored pri¬ of quite a number of foreign coun¬ of the United States lie in the en¬ national loans.
vate loans to Czechoslovakia, Po¬ tries than Jt .was about' the just couragement of unrestricted in¬
land and Roumania as part of her claims
of
its
own
citizens. It ternational enterprise, production
Customers Brokers Ass'n t©
program to throw a "cordon sani- castigated the investment bankers and consumption.
taire" around Germany.
who floated these loans, criticized
A considerable body of opinion Hold
,
Qtrly. Bus. Meeting
The financing of the Balkan the profits they made and fre¬ in this country is opposed to in¬
The Association of Customers
ternational cartels, whether good
railways is a 50-year story of quently indicated that the rates
Brokers will hold its regular quar¬
competitive power politics and in¬ charged the borrower were un¬ or bad, and favors the enforce¬
ment of this standpoint by full use terly business meeting on Wednes¬
trigue, involving financial insti¬ duly high.
day, March
17, at 4 p.m. at
tutions and the issuance of loans
(3)
American
financial ob¬ of the Clayton and Sherman anti¬ Schwartz's Restaurant, 54 Broad
in Paris, Vienna, Berlin and St. servers have witnessed with dis¬ trust laws.
The British, as we know, hold Street.
Petersburg.
may the spectacle of the Export-
the props of the Triple Entente.
It may be argued that French in¬
vestors would not have purchased
when it came to
.
.
24
(1120)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
has
Measuiement of Financial Sentiment
(Continued from page 3)
and other untoward events.
wars,
Furthermore, long secular trends
seem to be
present.
The period
1881-1912, for example, was char¬
acterized by a generally high level
of optimism, while the deteriora¬
7 of which
psychology remained
unchanged, and in 6 of which psy-
chology
deteriorated.
Excluding
where
cases
itial
,
postwar
j
shorter
in
optimism
similar
a
burst of
optimism after World War II. The
psychology remained i upswing in
psychology in 1945-46,
unchanged the lessons of past his- !
however, had an amplitude more
tory suggest that the odds are 3 than 8 times that
of 1918-19.
to 1 against the
possibility that
The gain in optimism after the
psychology will deteriorate when first World War was
tion
of
sentiment
rudely tested
beginning in
1913 resisted a return to normal earnings increase by a significant by a drastic postwar recession, but
amount.
Some of these cases of
levels, even in the early phases of
psychology,
already
far
below
worsened
psychology
involved normal, resisted
the earnings recovery during the
going very much
world war years.
Excluding them, lower. The decline in market val¬
prosperity of the twenties.
The
the conclusion follows
that, prior ues in 1920-1921 was thus caused
record of the year
1947 shows
to the experience of
1946-7, the by the drastic decline of earnings
clearly a lack of speculative sup¬
odds were 10 to 1 against the
pos¬
rather than by a strong wave of
port, but the level to which psy¬
sibility that psychology would de¬ new
chology deteriorated in that year
pessimism.
Despite
much
teriorate in peacetime
during a talk about historical analogy to
was
not significantly below the
trend of rising
earnings.
Yet the support the chance of a mild re¬
long-run average since 1913. Per¬
greatest year-to-year deteriora¬ cession after the
end of a war, the
haps the more modest price-earn¬
tion of psychology in all
history recession after the first World
ings ratios of the period since 1913
took place in 1946-7.
This experi¬ War was far
from mild. Just what
merely reflect the greatly magni¬
ence
does not speak so well for
fied instability of earnings evi¬
the market was
discounting in
the use of historical
analogy. The 1947 cannot be
dent since that date.
At any rate,
determined, but
situation is not improved if one
the existence of a secular trend
the
drop in optimism between
in price-earnings ratios suggests begets a new dilemma by assum¬
1946 and 1947 showed the greatest
ing that the rare behavior of the
that major attention
should be
amplitude
in all
history since
market in 1946-7 was caused
by a 1881.
given to the patterns of year to
too sanguine reliance on
analogy
Of the three cases when
year change rather than to the
psy¬
in predicting the usual
postwar chology gained
absolute level from which such
despite a drop in
depression. One can only say that
changes take place.
earnings the most difficult to exrecent
experience was
unusual
plain is the period 1926-27.
Burns
The
and
Mitchell
in
their and that
falure to predict specific
trend of business activity as well,
monumental study of business cy¬
events by analogy does not de¬
as earnings was down
cles have suggested the
during most
possibility stroy the validity of relative
prob¬ of 1927.
that speculative activity follows a
Furthermore, earnings
abilities for the future based on a
started
declining from a going
peculiar pattern relative to booms
study of the past.
Probabilities, level higher than the average
and depressions.
Major depres¬ so useful for
measuring risks, level over the past 10
sions
are
years.
If
usually separated by never
imply certainty.
we have
several minor cycles in business.
any historical analogy to
Of 31 downswings of
earnings suggest that a decline of earnings
There is some statistical evidence
from 1881 to the
present, 23 oc¬ in 1948 might be attended
that after reaching a peak and
by im¬
curred when earnings had reached
proving psychology it must be the
collapsing in the major depres¬ a level above
the average of the
experience of 1926-27.
But the
sion, speculative activity is slow
preceding 10 years, one when usefulness of the
to recover when business turns
analogy is defi¬
up
earnings were about equal to the
in succeeding minor
nitely limited.
Despite the re¬
cycles.
Af¬ past 10
years, and 7 when earn¬
cent
immense
ter several such mild
deterioration
in
expansions ings were
already subnormal. In psychology we are
and contractions of business are
today at levels
18 of the 23 cases when
earnings still very slightly above the de¬
experienced speculative sentiment fell off
from a high level there
gree
of optimism prevailing in
gradually builds up to another was a
deterioration of psychology. 1926.
Also, our current level of
peak just in time for another ma¬
Psychology also deteriorated in earnings is
jor depression and drastic liquida¬ the
roughly 67% above
one
case
when earnings fell the
tion.
ten-year average, while earn¬
Thus, major business recov¬ off from
normal
levels.
When ings in 1926 were
inflated by only
ery occurs after the most severe
depression is over, but speculative earnings fell from levels already 29%. Finally, one should remem¬
subnormal, however, in only 4 out ber that there is no
sentiment does not'recover until
evidence at all
of
much
later
in
the
sequence
of
events.
The
ra¬
major business cycles occurring in
1882, early 1893 and 1907.
How¬
ever,
speculative sentiment can
sometimes attain respectable lev¬
immediately after
pression, and in the period 18931907 optimism
apparently reached
a high in the minor
business cycle
peak of 1902, and turned down be¬
fore
The
the
major
collapse
downward
in
secular
price-earning ratios
1907.
trend
of
after the year
1913, and the stormy political and
history of this period
de¬
odds
out
turn
that
psychology: can improve sig¬
nificantly if earnings decline by
follows:
That
will
psyschology
The
as
(1)
an
result
earnings
decline
deterioration of
in
(2)
That
an
One
earnings
decline
ings
from
an
normal
decline
subnormal levels
or
ness
ings
of" psy¬
can
chology: 5 to 3 in favor.
Some
of
the
considered
in
of
earnings
If
one
economic
less
tend to make
interpretation
difficult,
there
sults may be summarized as
fol¬
lows.
Out of 26 major declines 22
but
dence of
is
more
evi¬
some
a
repetition of the usual
pattern between the major busi¬
ness
cycle-peaks of 1920
The most
and 1929.
interesting question to
with
counter
or
to
annual
changes in earnings. Viewing the
past
ability
of
of
evidence
as
one can
the
of future
prob¬
arrive at estimates
normality
or
abnormality
the
experience of 1945-1946
when speculative sentiment
gained
enormously in spite of a drop in
earnings. One can also weigh the
odds
in
favor
speculative
such
of
the
belief
is
support
that
today
at
low levels that stock
prices
a decline in
earnings
might resist
from present high levels.
This can
be done on the basis of
relative
probability without the necessity
of reading the
composite mind of
millions of investors.
earnings
1881-1947, 10 were
a
deterioration of
speculative sentiment but
some
of
the
changes in psychology were so
slight that they should perhaps be
interpreted as evidence of no
change. Using this interpretation
and
excluding from consideration
gains in earnings of small
amount
(less
than
cases
where
5%),
there
.
32
were
.
earnings increased, in
the
statistical
.?
>
ket
basic
ation
earnings
1893,
while the
ings trend turned upward
time in 1894, even
though
age
earnings in 1894
1893.
In the three
were
cases
earn¬
some¬
aver¬
below
in which
psychology improved despite an
earnings decline, psychology was
already below normal in all cases
and
or
merely recovered to normal
nearly normal levels. In
all three
which
started
was
(1884-5)
also the decline in
cases
from
a
already below
or
not
more
level
normal
than 20-30%
above normal
(1918-19, and 1926r
27).
explanation of the
Further
improvement
in
psychology
may be the
decline in average
year
to year
about
1884
but
1885.
proved
that
in
the
earnings from
slight (only
was very
11%)
earnings
fact
and
was
the
trend
of
uniformly down in
turned
The
up sometime in
explanation
of
im¬
psychology
in
1918-19,
aside from the fact that the
earn¬
ings decline was slight (less than
6%), probably lies in the return
I to
■
peacetime conditions after the
close of the war.
«,
—
past
necessar¬
without any
in psychology.
high levels of
become
past
less
inflated
experience
they
continue
no
no
at
decline
the
high
a
in
that factors other
than
move
up
trends of
earnings
chology.
probably
affect
psy¬
If the level of optimism
in 1948 should
merely be restored
long-run normal
and
earnings
should be maintained the market
could advance about
25%.
solace
one
by
obtain
can
concluding
market is far from
r
only, two
And
the
years,
1946
ad¬
lasted only one year.
This
latest
and
shortest
of
all
periods of optimism, while endur¬
ing only one year, exceeded all
history in amplitude.
The bull
market
psychology
period
of
of
optimism
the
in
early
1897-1906
attained the second highest level,
but
was
brief
nearly
rise
in
equalled
1929.
by
The
the
rise
of
some
that
.
the
closely
as
of
Towards
to do.
seem
„
.
conclusions put the
responsibility
success
or
failure squarely
upon the
investor's independent
ability to judge the
ture
earnings
ditions.
To
speculator
risks
and
the
can
random
trend of fu¬
business
extent
take
con¬
that
the
additional
variations
toms
regimes
of
the
signatory
powers will not be unified and the
proceeds of import duties will nbt
pooled.
No joint administra¬
tion is contemplated for the time
be
being, and at present separate
change control restrictions
maintained.
foreign
National
Some
can
Indeed, the in- of
of psychol¬
help him about as
they harm him.
interesting
past
secular
trends.
a
As
study
time
the
gambler's
revealed by past
experi¬
and bet instead that the
fu¬
ence
ture, as sometimes happens, will
be exceptional.
Such speculators
are
perhaps too conservative if
they assume that 1929 could not
happen again.
The level of
timism in 1929
in
op¬
not the great¬
was
history. The phenomenal
prices was a result
level of stock
of
the
the
chance
synchronization of
volatility of earn-'
increased
ings,
evident
since
1913, with
a
simultaneous
rise
amplitude
sentiment.
When
into its component
thus
in
split
up
elements
market
the
in
of
peak
1929
the
of
usual
the
bull
much
seems
less
obviously impossible to reattain.
assets
,.
gold
and
likewise
are
recommendations
customs du-
I
trade agreements -with
countries, and on the im¬
ties,
I
on
on
third
plications
of
complete
union.
•
A
•
economic
}
~
considerable amount of
use¬
ful work is also being done
at
an
unofficial
level, through numer¬
private meetings between in¬
ous
kept
Netherlands,
which
in
problems
discussed and plans
the future.
are
made
are
separate; moreover, each member
for
country wiil continue to levy its
own excise, turnover and
luxury
taxes, which may differ consid¬
erably between the three areas.
The
new
customs
tariff,J
Although the Benelux Union
probably is blessed with consid¬
erably more favorable circum¬
worked
sion
out
by
by
mixed
a
established
for
commis¬
this
purpose
the
convention
of
1944,
is
drawn up according to the
League
of Nations scheme
elaborated in
1937, which advocated
ad valorem
duties.
a
mise
the
It
represents
between
slight lowering in
a
the rates of the
a
Belgian and
and means, on
schedules,
average,
compro¬
the
former, and
the
latter.
rise
a
Provision
a
general rate, and
maximum rate; the latter is not
to be less
than
10%, and is to be
applied only to countries discrim¬
inating against the members of
the customs union.
The
second
follow
the
stage,
the
expected
to
months
of
commencement
of
within
effective
a
present
few
Benelux
agreement, will
see
customs
the coordina¬
tion of excise and transit
charges.
the
differences in excise
Since
taxes, and particularly in transit
charges,
the
considerable between
are
countries,
have to be
imize
equalization
gradual_so
impact'oh
the
will
to min¬
the indus¬
as
tries concerned.
Problems to be Solved
the
stacles
union
third stage, the last ob¬
to
complete
a
customs
to be removed
are
and the
paved towards a full eco¬
nomic union. The latter aim in¬
volves
the
task
of
way
achieving
equilibrium between the two
sep¬
arate
economies, a tremendous un¬
dertaking indeed. The prepara¬
tory work towards this final
stage
is already in
progress, and is be¬
ing conducted by five mixed ad¬
ministrative
working
subcommissions
on:
problems
of
indus¬
transport and harbors.
than
any
other set of
countries that might wish to em¬
bark
on
The administrative
structure of
is centralized in a Bel¬
gian-Dutch secretariat
functioning
in Brussels under a
Dutch secre¬
similar project,
a
it will
long period
of adjustment for the
implemen¬
tation of its
plans, The outstand¬
ing problems are the differences
nevertheless
in
the
tary-general and
a
Belgian viceAt this level final
pol¬
chairman.
icy-making
based
decisions
are
taken,
on
1944
conduct
research
and
make
i Ratified
submission
April,
1947.
at
to
the
end
of
October, after
parliamentary approval
in
need
price
a
structures
of
the
member
countries, in their agri¬
cultural systems, and in their bal¬
of
ance
concern
payments positions, with
itant contrasting over-all
economic nolicies.
Prices
lower,
and
erlands
than
have
wages
the whole
on
Belgium
in
been
in the Neth¬
during
the last year or two,
owing to the
larger measure of control in the
former country
during
period.
war
the
post¬
It is unfortunate that
hardly
any
wage-price statistics
published for Belgium.
The
are
only price index available is
retail
on
1936-38
352
prices
(on
one
the basis of
100), which stood at
August of this year.
This
be compared roughly wjth
=
in
may
the
Dutch
of
cost
available fori the
39-100)
of
in
known
index
date (1938-
179.
at
all
While
pub¬
coun¬
well
Belgium,
wages
risen at
try have
higher rate
no
are
it
is
in that
that
lands.
living
same
only
statistics
lished
a
considerably
than; in the Nether¬
Thus,
the
differences
.
in
the
wage-price structures of the
two countries will necessitate the
exercise of great care in the pro¬
cess of integration.
For the pres¬
in order
ent,
tionary effects
to
avoid
infla¬
the
the Netherlands
on
of
an influx of high-priced Bel¬
gian goods, and possible pressure
for
devaluation
authorities
cided
on
until
evens' out
gions.
•"
in
;
•
the
the
Belgium,
Benelux
maintain
controls
goods
of
to
'
Benelux
'
stances
wage
In
conclusions
also be derived from
weigh
dustrialists from Belgium and
the
to
as
who
to
as
are
ogy are apt to
imponderable element
odds
ex¬
often
the
A final observation
may be di¬
to those speculators
European Integration?
the technical spade work
of three mixed commissions
estab¬
lished by the convention of
in
also
„
where they physically enter the
Benelux area, but only on reaching the Dutch frontier. The cus-
Such
for
was
if brief.
rected
refuse
(Continued from page 4)
,
business
they
1936-1937
even
The Benelux Union: A
omniscient trial
development; agriculture and
conditions
and by
observing that changes in fisheries; distribution and priori¬
psychology follow > earningsas ties; prices, wages and currency;
and
forecaster
an.
in
substantial
est
earn¬
only about 4%.
But one is also
impressed from a study of the past
Perhaps
lasted
1937.
to
vance
change in psychology
the market in 1948 could
to
1936
for
up
change
With
ings and
more
earnings
a
move
to
chology
made
might
definitely bearish
level.
probably
uniformly
downward during the
major re¬
of
the
longer
was
cession
of
because
relative
The only possible
explan¬
is that the trend of earn¬
ings
is
four years from 1927 to 1930. The
third wave of bull market psy¬
is
Such is not
real
This
longest
period
of
sentiment covered the
of
case.
could
from 1897 to 1906 inclusive.
buoyant
optimism
equal
second
those
If, for example,
merely remain at the
level through 1948 the mar¬
same
re¬
chology.
In
one
case
(1893-4)
psychology .remained about the
1884-5
Out of 35
upswings of
in the period
accompanied by
5%,
attended by declines in
psy¬
were
same.
be investigated is whether
swings
in speculative sentiment
generally
move
than
study
to yield
of
years
psychology
this
but
The
in
activity and perhaps earn¬
already so high that they
turn only one
way, the results
ily the
earnings
excludes all declines
duration
earn¬
are
conclusion.
probably too small to be signifi¬
cant.
belief that if
in 1948
a
decline
seem
declines
statistics are
these
probably conclude
weight of historical evi¬
in
or
greater intensity. Thus, the
longest period of abnormally high
optimism was the span of eleven,
Dutch
will deteriorate further.
In view
of the fact that
many people be¬
lieve that current levels of busi¬
earnings
will result in deterioration
11%%'.
must
that the
high levels will result in
deterioration of psychology: 18 to
5 in favor.
That
about
dence favors
from
(3)
than
more
psychology: 23 to 8 in favor.
major de¬
a
did
cases
about
study of price-earnings
tios suggests the existence of such
a
pattern between the peaks of
els
7
teriorate.
waves
of optimism
apparently tended to become
passed
have
gain
corresponds to
Thursday, March 11, 1948
de¬
have
quantitative
iof
movement
the supply situation
between the two re¬
:
1.
,
,
/
.
;y'
The problem of establishing .an
equilibrium between the agricul¬
tural systems of the Netherlands
and
Belgium
is a very delicate
Belgium's agricultural s>ec-|
tor, 'preponderantly the Flemish
one.
area,
of
the
is afraid of the superiority
Netherlands' modern pro¬
duction and marketing techniques.
While Belgium is roughly selfsufficient in dairy products, the
Netherlands has normally
been!
Nurnber 4680
167
Volume
THE COMMERCIAL &
the
Belgian Ministry of Foreign'
export above 50% iof the
of her sbutter and cheese Affairs, these credits amounted to
able to
volume
prices below those of the domestic mar-i
ket.
Before the war, Belgium
used quotas to protect herself
from
Dutch "dumping/' hut
quotas obviously cannot be con¬
tinued once customs frontiers dis-:
appear.
The Netherlands, like¬
production, usually ;at
wise,
tUre
a
total
'
of
4,130
million Belgian
francs by the middle of June 1947
of which
1,400 million had been
disbursed
under,
agreement
shown ^complete agreement with
the Benelux idea, but actually has
been
ments
January, 1947, the
having
accumulated
remainder
under
the
mercial
payments
two
consecutive
agreements
member
have
a
conclusion
in
on
their
part
determination
that
their continued
will not be able in the fu-. June, 1946 and June, 1947.
Outstanding among the politito use subsidies for boosting
The
program.
countries
shown
bring their plant to
com¬
concluded
self-help
ropean
of
the
sponsoring similar move¬
in Europe under the Eu¬
to
successful
a
augurs
well
collaboration.
the future of central
full
economic
union
for
perhaps somewhat overlopg quotation from a
the world
taken from the author's "The Theory and Practice of
This
1
discussion of the future of central banking in
between
1
fiasco
unemployment.
threat of
problem
basic
Another
which
dealt with before
will have to be
become a full eco¬
nomic union is the difference in
the over-all economic policies of
the Netherlands and Belgium. The
Benelux
can
of
th£
Ouchy agreement,
completely absent today, as
are
Benelux, being
a
is
to
not
subject
like
program
chance.
customs union,
the most-fav-
with
Should
other
clause.
The United
States in particular not only has
succeed;
others
may,
successful.
or
half
Benelux
European
could
ored-mation
even
it;
may
Central Banking"
about
the
wholly
exchange
foreign
end
the
after
afford
to
position
the
of
adopt
policy of
liberalism, including
nomic
a
relaxation of most domestic
the
trols and
of
gradual
the
succeeds,
alleviation
To
trols.
analyze
ramifications
the
of
various
this
problem
would go far beyond the
of
scope
this paper, but it is clear that the
economic integration of the two
will require similar, if not
identical, government policies.
areas
This leads
to
us
related
a
sub¬
ject,
namely the necessity for
adjusting the monetary and finan¬
cial systems of the member
tries.
ing
While
the
has
faced
lished.
union
-
have
for
to
be
before
later
or
common
a
shelved
it will
sooner
effective
of
been
moment,
coun¬
subject, includ¬
question
currency,
the
this
an
be
can
estab-
v.,
=
,
Conclusions
Real
The
of-the
to
obstruct
Questions
decision required
of
operated by the central banking mechanism. A threatened system of banking, to accompany and support their managed
drift toward a credit and banking system of this kind has
economy needs.
been observed in those countries in which political dicta¬
The real question to which the American people
torship has taken strong root, notably in Italy, Germany
must address themselves without delay is whether or
they intend to continue to
not
Sound
diffi¬
so
seriously the
today has little or
us
nothing to do with Treasury campaigns to sell bonds to ob¬
tain funds to retire other bonds. Neither is it concerned
with this, that or the other new fangled, highly artificial
trarily conceived of as designed to promote greater justice.
The management of central banking under such circum¬ system of reserve requirements, the acknowledged purpose
of which is to convert the banking system of the country
stances almost necessarily becomes disassociated from the
'automatic' control exerted by the gold standard or any into reluctant holders of Treasury obligations at rates fixed
similar standard of money. On the other hand, it must, in by the borrower — and to do so in such a way as to enable
order to succeed, find a new means of domination of other the Reserve
System at the same time to deny other borrowers
banking institutions. It may, therefore, tend to compel such access to the banks of the country. All such proposals or
other institutions to use their funds according to directions
and in no other way, or it may gradually seek to eliminate procedures are at best but makeshifts designed to enable
the other banks and to substitute for bank credit a system political groups or cliques to tide themselves over crises
of political or so-called 'government' credit, controlled and which periodically arise, in the absence of any settled or tried
problems
union will be
new
as
real
and the United States.
answered is whether the
managed economy, which by
Banking Or?
submit to any sort of
greatly limiting the
so
of free enterprise, or by so severely handicapping
perhaps, by virtual abolishment of it in key seg¬
ments of the economy, renders the application of time
"Evidently if government planning in the usual sense
agricultural and manufacturing
scope
it,
establishment of the full Benelux
Union program, or whether that
of the term—-the direction of
undertaking has
interest
tested
granted by reference to current desires regarding commod¬
ity prices, securities values, or business activity generally—
is to take the place of a distribution of capital based upon
ability to manufacture and sell goods economically and lim¬
ited by the actual consuming power of the community, the
access of each class to wealth to be determined by its pro¬
question. Many of us are much too
good chance for
a
survival and final success.
lieve the "latter to
guess,
v
This
be
the
be¬
better
f
■
.
I
conclusion
is
\
based
on
a
number of economic political, and
psychological factors. In the first
category,
find several circum¬
we
stances that
vorable,
exceptionally fa¬
are
and
which
from most
entirely
are
other countries
that might wish to take
a
similar
stfcp. These include the similarity
of
the size of the countries and
their populations, the absence
of
competition
in
between
j? *)afe*'2
them
in
dustrial character .of Belgium and
the agricultural character of the
Netherlands lends the union.
The
latter
relationship has been con
scioiisly intensified by the mem¬
ber
countries
jjnke
the
their attempt
to
trend
a
illustrated
by
foreign trade statistics, which
show
tp
in
up for the elimination of
Germany,
that exports
the
from
Holland
Belgium-Luxembourg
union rose to 21.4% of total Dutch
exports
ubly
in
1946,
10.2%
in
compared
1938,
and
ptitcl) imports from that
to-14%
from
of
through government edict, the regulation of rates of
and the dictation of the amount of credit to be
ductive power,
then
an
that
of
that
efforts
come
a
at the
the
di
are
further illustrated by the credits
extended by Belgium to the Neth¬
can
retain
or
return successfully to
for them to operate
The
entirely new technique and philos¬
successfully
on
an
even
cus-
arguing about
i
it impossible
adequately.
which
before the American people—or
issue
it is
deal
superficialities.
Endorses Buffett's Gold Coinage
wealth.
Such
ideas
in" turn will be
the effort to consolidate the
motivated merely by
political power of a given clique
and while doubtless always covered by the usual
professions of desire to promote the good of the community,
will after all be subservient to a conception of public wel¬
or
group,
fare which is based upon a
person
continued authority of a given
Fundamentals
"From this it is clear that
a
large question of economic
in the
sense
the choice (as to the future
incident to
organization. 'Sound banking'
banking) must be made as an
of the term which has been
past years, is incompatible
admitted during
Bill
of Trade Directors, by vote of 19 to 3,
return to a gold coin standard.
The return to a
advocate
advocated by the Board
gold coin standard was
New York Board of Trade. The vote on the motion
was 19 in favor, and three opposed, while some of the directors re¬
frained from voting. The Board's opinion is being sent to members
of Directors of the
of
H.
a petition that^
introduced by^ Con¬ presented -to the directors, two
leading economists were guests of
Howard Buffett, be en¬
Congress with
5031,
R.
gressman
the directors at the meeting where
the action was taken. Dr. Waiter
Jefferson, President
E. Spahr, of New York University,
of the New York Board of Trade,
arid Executive Vice-President of
released the following statement:
the Economists' National Commit¬
"The subject of the Gold Coin
tee on Monetary Policy, spoke in
Standard has been under study
favor of the move, and expressed
for many weeks by our organiza¬
the opinion that this action could
tion.
It originated in the Inter¬
national
Trade
Section,
which be taken at the present time. Mr.
acted
Floyd
and his associates.
of central
New York Board
group
W.
repotted it to the
directors.
recommendation of the In¬
ternational Trade Section in favor
of the Gold Coin Standard has
The
been
considered by the directors
at the last two
that
full
and
tion on both
Harold
Glasser,
of Monetary
former
Director
Policy, United States
Treasury, and now Director of the
Institute for Overseas Studies, op¬
posed the action at this
time, and
meetings. In order
expressed the opinion that
conditions would place too
complete informa¬
a
I
con-
or
ought to be before them—is a basic one. Until
decided correctly we shall not accomplish a great
solvency in the older sense of the term must be
Banking will doubtless in such conditions be¬
mechanism of control which cannot be expected to
with the so-called 'planned econ¬
erlands, under both financial anc omy' which has become so popular an ideal with sundry
commercial agreements. Accordsocial reformers. If a planned economy has a banking sys¬
pg to information published by tem of its own which it is
prepared to substitute for the
Ik ^
excePtion is the traditional rivalry older system, 'it has not yet made that fact manifest nor
between the ports of Antwerp and Roterdam, which, however, may well
has it done anything to demonstrate the superior efficiency
1'itfUe
intrastate basis
after
or feasibility of its own course of action.
complete union.
In this sense then
1
older
practices—or at least to their outward form¬
same time that we continue under a system of
politically controlled economy which makes
self-supporting and whose
efficiency will be judged merely by the extent to which
it succeeds in carrying out for the time being the ideas of
a
ruling clique in connection with the redistribution of
course
in
we
abandoned.
area rose
regional self-help
of the
inclined to suppose
principles of banking more or less out
toms and
ophy of banking will have to be worked 'Out. In such con¬
ditions the entire concept of liquidity and probably also
with
that
11.5%,.
The sincere
section
effort
or
complementary be either prosperous or perhaps
aspect that the predominantly in¬
have greatly
which the
dark were
and had not escaped the
evidently with us in 1936 —
discerning eye of Dr. Willis.
The question that remains to be
cult
employed in financing World War II
questions which plague us today and about
authorities appear to be so completely in the
obviously that of providing an efficient means
assuring wealth redistribution, and the lines along which
it must work in such an event are
obviously only the reverse
of those which are determined
by the older canons of bank¬
ing soundness and liquidity.
,
by
aggravated the state of affairs and magnified the prob¬
lems which engage us, but in all their essence the
for
exchange restrictions.
Netherlands, on the other
hand, with her domestic produc¬
tion
"The
seriously
impaired,
and
'new'^central banking which many 'reformers' ap¬
struggling with a grave balance
pear to have in mind is a type of credit manipulation aimed
of payments position, adopted a
at the reorganization of economic
society along lines arbi¬
policy of strict goverment con-,
case
Munich.
this aspect is
foreign
that it is well to re¬
today) written and published some years prior even to
Of course, the unfortunate policies and prac¬
as
(Continued from first page)
The
war
definitely not the
penetrating analysis (which might as
well have been pointed at the situation as it stands
eco¬
con¬
outgrowth of the
reference to this
As We See It
soon
could
war,
an
mind ourselves that such is
the
latter, finding
chance, in a
deal with it by use of Treasury and Federal
operations. We are so prone to suppose that
situation by which we are today confronted is
to
tices
herself, partly by
relatively favorable
to us to be
seems
Reserve
no
union
hot, be
published in 1936
good a commentary as one could make on the
bankruptcy of thought about "inflation" and the
as
current
way
fail,
customs
if
belief
-entirely possible to retain old institutions to which
the public has become accustomed -even after the basis for
them has disappeared, so that there is no longer a footing
upon which they may rest with confidence."
that it is
Thus, while the achievement of
a
banking becomes 'enigmatic, since at^
present, as on similar occasions, there is widespread
-and
psychological
factors the
of her dairy products.
Belgium-Luxembourg
eco¬
Thus a
special agreement will making for the success of Benelux nomic union and the Netherlands
is the
extremely favorable recep¬ will probably take a long
have to be reached on the ques¬
time,
tion it has
received, both from during which a number of knotty
tion of differential farm prices,
the United States and Great Brit¬
which is awaited with anxiety,
problems will nave to be straight¬
ain. The objections raised
by the ened out, it has a very good
particularly by the Flemish popu¬
great powers, such as the outcry chance for success.
lation, harassed with a chronic
Certainly- no
surplus of manpower and there-; against "discrimination," which other group of countries at the
were directly responsible for the
fore particularly sensitive to the
present time could embark on a
the export
25
(1121)
FINANCIAL CHRONICLE
sides should be
fairly
great
world's supply of
gold metal."
strain on the
monetary
world
ff
■
2G
(1122)
THE COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, March 11, 1948
mathematical
Taxes and Government
(Continued from first page)
and
in turn has, I
suggest, a most inti¬
mate and crucial
relationship to
the spending and taxing
policies
by
As
know,
you
for
the
the
President's
fiscal
1949,
commencing next July 1, calls for
expenditures by the Federal Gov¬
ernment
of
year
roughly
$40 billion.
The budget expenditures for 1939
were
roughly $9 billion.
It is easy to raise too much or
too little sail on this contrast. Un¬
less one can forget World War
II,
it is obvious that the difference is
not made up
exclusively of avoid¬
able
increases in
Hounding
expenditures.
figures, the pro¬
posed Executive Budget for fiscal
1949 includes $11 billion for namy
tional^ajtefense,; $7 billion for
ternaugf&i affairs
$6
burton
and
est
for
and
in-
finance;
veterans'
services
benefits; $5 billion for inter¬
the public debt.
on
Government
The interest charges (except for
temporary increases
due
to
pos¬
sible shifts into
higher rates) will
fee reduced as the national debt
is reduced but
they cannot be
eliminated
modest
to
or even
for
compass
Some
come.
services
and
brought within
long time
a
of
the
benefits to
costs
in
Its Economies
policies.
The Congress works for
economy. The Executive Branch
the
government
committal
promotes
its
to
high spending and
taxing policies.
Leading members of the Presi¬
dent's party, who are expert in
bur fiscal affairs, stand
appalled
before
and
these
are
spending tendencies
giving public warn¬
now
from
present fantastic and
perilous levels to as much as $55
to $60 billion within the next few
years-and that this can end only
in
catastrophe.
v.'
full possibilities of econ¬
omy ' in the management of the
The
Government
cannot
be
had until there is like-mindedness
and
cooperation
between
a penny
less than $40
for the next fiscal year.
This
Presidential
run
billion
policy,
you
will appreciate, is bound to exert
heavy coercive
cise
"will decline rapidly, others more
slowly, but here again we should
ourselves, keeping in
possibility of the adop¬
new variations in
benefits,
the
tion of
to annual expenditures over
many
years of several billions of dollars.
The
remainder
of
the
large
items which I have
mentioned, for
our
foreign affairs and our backstopping military affairs, are di¬
rectly attributable to the unhappy
exigencies which require us to
preserve
watchfulness
our
readiness
during
postwar period.
this
and
anxious
*
No Massive
Reduction in
Thus it is clear that
truly mas¬
reductions in expenditures
in
Federal
taxes,
say for illustration, of from
$15 to
$60; billion, cannot be expected
until
we
get the world
postured for peace.
soundly
I mention these matters not in
defeatist
but because
sense
Congress
are
we
a
in
frequently deluged
with angry demands that
expend¬
itures
to
brought down overnight
we
level of somewhere between
$20 and $25 billion.
a
The
what
point
we
is, I suggest, to do
with what
can
to work with.
Congressional
It makes subordinates
feel safe in open defiance and in
more subtle forms of resistance.
An appropriation intended to be
firm and complete for
for
year
specified
a
with regard
a
full fiscal
purpose, made
have
we
The passion which
ticular need but also to other
requirements, is ren¬
dered meaningless by administra¬
tive
punching techniques which
.
develop situations requiring addi¬
tional appropriations for the same
during
the
fiscal
same
Thus, for example, the Congress
makes an appropriation for a con¬
struction project, the progress of
which
should
be
paced
the
over
whole fiscal year.
Contrary to this
intent, the contractors are offi¬
cially urged to run days, nights,
Sundays and holidays so as to
the
spend
rapidly
as
available
money
stand
cannot
by in
mainder
of
be
for
fiscal
the
year,
re¬
and
obviously it would add additiona
Stratagems of this kind, if no;
halted, will make a farce out of
orderly appropriation procedures
forts
for
readily realizable and
important lesser accom¬
vitally
There
is
tween
our
which
we
which
vast
a
difference
be¬
approval of functions
believe are
necessary,
we
hope
are
temporary,
which at best by their nature
call
for
large expenditures, and the
administration of those functions
which may be loaded with
waste.
No
activity of the government,
Vrhether old line or
newly created
under
the
claim
sanctuary against sensible
compulsions of world
conditions, should be allowed to
economy.
When
idealists
fall
on
their
faces and lead others into
trouble^
it' can often be attributed to
their
lack of
concern
midgings
of
the constant
over
history
that
noble
governmental economic and social
objectives
cept out of
I
warn
adhere
at
objectives
is
more
are
a
unsupportable
ex¬
the
and
however, that to
same
time
sound
to
fine
procedures
easily said than done. You
will be opposed
by every wastrel
to
and
disband
organization
them
in
the
his
anc
nex
Substantial
effect
is
to
lodge control of
strings in the Executive
Departments rather than in the
Congress where it is intended to
be by the Constitution.
the purse
There
are
numerous
other tech¬
niques used by other executive
agencies to obstruct the expendi¬
ture policies of
Congress and to
make them
look bad.
Thus, if an
appropriation is cut, the work is
not
intelligently
redistributed
among the remaining employees
It is concentrated at
places where
the public will be inconveniencec
and, ; therefore,
incensed
agains;
efforts for economy.
For example, if the
payroll for
janitor service
were
reduced,
would indeed be
surprising if any
of the supervisors or
higher-ups
were
Economies
<
;
to lose their
jobs.
The tactic
would be to make the cut
among
those who wield the
anc
brooms in the corridors of
public
buildings and any resulting un¬
tidiness would be loudly attrib
uted
to
a
penny-pinching
Con¬
gress.'
Then,
agencies
Can
of
have
the
cases
where
government
af¬
of his
own
to support the formation of
sufficient risk capital to keep our
going and advancing.
times
are • good
it is
assumed and often pro¬
economy
Because
easily
claimed by persons who ought to
know better that business can ob¬
tain all of the funds it needs.
an
S
h
u c
practices
stopped
in
could
moment
a
The
be
and
sub¬
stantial
economy goals could be
achieved without the. slightest dif-
"iculty and without impairment'of
essential
any
President
function
-
disapproval
-
the
his
if
and
is
to
were
the
Con¬
<■
v
i It is unfortunate
dent
-
he
cooperation with
-
if
proclaim
to
were
either
that the Presi¬
silent
when
or
he
speaks, he
deprecates and refers
sarcastically to the efforts of Con¬
gress to achieve economy.
* •
I add
and
obstruction
in
the
being
are
executive
carefully
as¬
sembled and those who have been
chuckling
over
cleverness
and
stature
with
their misbegotten
who
their
have
bosses
gained
because
it, may find themselves in
deep trouble.
very
Congress Setting Up Own Budget
Procedures
Also, let
me
gress is
setting up its own budget¬
ary procedures which will bring
the making of appropriations into
sensible
relationship
with
estimates
Congressional
budget
put Congressional
and which will
observers
into
the
has
its
of
goal
at least
the
that
there
on
1949
as
for
Congress
should
the
proposed
be
fiscal
by
the
President.
Many members of Congress be¬
be
substantially
increased
harming any essential
without
function,
Most
and
effort
an
will
be
so.
businessmen, I venture
would
guess,
ment's
without
sa.y
hesitation
that
a
to
mo¬
anyone
with $40 billion to
spend, regard¬
less of the importance of the ob-
pectives, could easily do with
at
least 10% less and do
in
a better
job.
please remember that division
fiscal
policies
between
the
Board
ident
of Directors and
of
the
lowed.
the
Pres¬
Company is not
When
the
al¬
President
of
the Company does not
carry out
the fiscal policies of the
Directors,
he gets fired. The
Congress
not
fire
the
President
United States.
can¬
the
of
Since this is not
a
political meeting, I shall withhold
a
recommendation.
Please let
me
And
se¬
observe also
that
ing to risk their capital today in
the
venturesome
more
enterprise.
ture
capital
tated.
■
forms
of
This shortage of ven¬
can be easily anno¬
•
••
,
An
examination
of
the
sources
same
writer
urging him to
against
economy
writer's
own
cerned.
letter from the
pet
There
wider
spread
desire
for
-
far
so
have
the
as
project is
will
work
con¬
ment
indicates
1947
had
that
business
depend much more
internal sources 'of fi¬
on
has
been
in
true
to retain
neces¬
much
larger por¬
profits than customary
tion of its
a
to obtain funds for
its mini
even
expansion and replacement
needs.
are
to
have it.
Tax Reduction Needed to
Keep
Our Economy Going
are
trying to cut the
Federal Govern¬
our
ment
pursuing empty
They appreciate the
are
shibboleths.
not
funda¬
is the present
high
individual income taxes.
Leading to State Socialism
Our
risk capital will have to
from the government under
State Socialism, or from the mid¬
come
dle
and
upper
income brackets
private
enterprise.
The
open opponents of the free enter¬
prise system and their cryptoassociates are not unaware of the
under
lected
on
the additional amount of
income >; received
by
.
income
persons
brackets
,
in
for
for
or
assumption of
increased responsibility or for re¬
from risk investments, are
the rates to watch when we are
turns
estimating effects on incentives.
They show how, much of the extra
for
extra
effort
for
or
risk investment the
on new
individual
who
makes
additional
must pay
is
it
of
to
the
Federal
If his income is
bonds in
nearly
securities
taking
form
the
only
of
repre¬
20%
of
the
se¬
1947,
appreciably.
stocks
mon
type
of
to
more
financing
aside
from
cases
which
com¬
secure
specific
might be cited, of
Also, the rush
to
equity
finance
a
cap¬
busi¬
by
incurring inflexible pri¬
indebtedness
discourages
ority
new
equity capital and in periods
of recession is
perilous to existing
equity investment.
Now
us
look
briefly at the
the
last two .years.
In 1946 anc
1947 life insurance
companies anc
banks
accounted
for
between
1946.
Because
their
the
nature
and
the
laws
portfolios,
assume
such
and
of
these
are
their
governing
investors
substantial
at
risks
liberty to
risks, did not increase
their holdings of
stocks
increased
at all
them
in
only
slightly in 1947.
Still
another
indication
Public
he
of it to the Fed¬
it
those
brackets to
for
another
from
in
which
the
income
look
must
we
risk
capital to keep the pay¬
rolls going. Let me illustrate, as¬
suming a married taxpayer with
two
dependents and with net in¬
come
before exemptions:
In order
to
have
the
in¬
same
left after taxes under present
rates as he had in 1939, an
come
individual
$5,000
takes
a
as
with
income
net
a
in
year
1939
of
must have
a
net
income of
$5,864,
a
net
income
$9,550
give the
of
It
to
income after taxes
same
was
enjoyed
with an $8,000 net
a
$12,257 income
a
$10,000 income
$20,119 income to
by
a
taxpayer
income in 1939;
today to match
of 1939; and a
equal a $15,000
income in 1939. To match a $25,000 income in 1939, it is actually
to have an income of
$40,000 today and a $50,000
in. 1939
represents the
equivalent of an income of nearly
necessary
income
$12^,000 today.
The
higher
up
the
income
bracket, the more fantastic is the
increase
the
in
equivalent
A
income
to
necessary
have
which
to
i3
an
taxes
income
income
it
match
income after
$228,000
equal to
in
now
is
$75,000 in
1939; an income of nearly $313,000 represents the
equivalent of
only a $100,000 income in 1939;
and
an
would
an
income of
of
over
be required
the same income
$1,260,000
today to give
after taxes as a
$500,000 income in 1939.
The
of
risk-taking is indicatec
by the type of business which die
it possible to raise
outside
capital
for
expansion
in' 1947
find
of
war
1939.
of
Individuals who
take
addi¬
$1,000
over
let
type of purchasers in securities in
cannot
view
us
evidence, today
is
numerous
lack of purchasers for
ital.
ness
Let
tax
risk-taking
the
of
derstanding of what has happened
drastically in
This shift from
income
invest¬
an
to the take home income since the
but also the actual
money volume
of
issued
common
stocks
de¬
creased
net
risk
returns him
angle: There is little general un¬
stock issues to other
drop
$50,000, and he
to
relationship of
curities
56%
pay
eral Government alone.
the
1947 as con¬
trasted to nearly 40% in 1946.
Not only did the
common
suc¬
which
risk-
real
capital,
about
issued in
securities
of
in 1946.
stocks,
sented
1947 repre¬
contrasted
as
only about 40%
Common
:
two-thirds
issued
a
Government
successful
a
must pay 71.3%
Notes and
income
additional net in¬
an
$1,000, he must
tional
sented
his
investment
the types of new securities which
„
an
$1,000,
makes
of
ment which
by examining
being issued.
of
If
he
risk
ital
be obtained
alone.
and
makes
can
in¬
him
36% of it to the Federal
returns him
come
risk
returns
income
net
$25,000
cessful
successful
a
which
vestment
alone.
•
-
absence of
Those who
demonstrable
reasons
important evidence of the
scarcity of real risk-taking cap
1946,
we
mental
More
very
if
the
of
one
Government
Business in 1947 found it
mum
in
to
nancing than
prior years.
be
economy
causes have been
why
individuals
are
not providing adequate
risk-tak,
ing capital today, I believe that
many
taxpayer will be al¬
corporate funds used for fi¬ lowed to keep.
For
nancing the expansion and re¬
example,
the
individual
placement of facilities and equip¬ wTith surtax net income of $10,000
consistency; in the
to
earlier
of
business
today he receives a letter
denouncing extravagance, and to¬
a
While
profit
when
fakery
in
suggested
reward
Scarcity of Risk Capital
practically all of the purchases in
receives
customary
added effort
howling for economy. A
member of Congress cannot
help
being
puzzled
and
disquieted
morrow
been
different
not will¬
are
loudest
considerable
had
sufficient individuals
or
among many of those who do the
is
much smaller
pro¬
1947 than
a
years.
so
ago. —This can
only
that, despite the surface in¬
ducements, of apparent prosperity,
year-
three-fourths of the purchases of
new
security issues in 1947 and
there
more
businesses
the
mean
our
$2.5 billion reduction in
a
expenditures
year
act
competed the expression
now
new
The
portion of the total in
are
Federal
agencies so that we can
own
information.
TJie
on
been
1947.
incfeasing for
and • are
spread be¬ alternatives
highly
tween the rates paid on issues in¬ pleased with the .present situa¬
volving greater risk than those of tion.;
the gilt-edge variety,; is now sub¬
The marginal rates which de¬
stantially-larger than it was * a termine the amount of tax col¬
sary
that the Con¬
say
has
heavily
of
yield
average
time.-
some
that instances of defiance
agencies
more
The
.
market in the last year or so,
in
manufacturing
accounted for
Yet
examination of the facts shows
curities
waste out of
we
reduction enough
tax
money
Be
Achieved
But
mops
sound economy.
you,
him
reassemble
The
plishments.
for
equipment
Gov¬
sluggish action of the stock
and
especially in the last few months,
is a significant indicator.
saved.
expected to
idleness
the
Federal
the
the President, repeatedly af¬
that not a penny can ;be
made to do
one
ef¬
>pss,
firms
to deteriorate in the
contractor
secure
unless
ernment returns to the citizens by
quite clearly that this is not true.
can
weather, the
disaster
their, top
lays the foundation for ad¬
ditional
spending.
The uncom¬
pleted project cannot be allowed
fiscal year.
our
inevitable
are
lieve that this minimum reduction
possible.
This
to
in order.
are
things
where the perpetrators feel
in doing them because
as
jectives, for going to heaven in
leadens
These
-
costs
often
fact reductions
ex¬
penditure
eo
often rules our
policies and
actions for the full scale immedi¬
ate attainment of
grandiose ob¬
jump,
to proselyte the people to
pressure
their Congress for • in¬
creased appropriations where in
risky
certainty that our
living cannot be held
and raised, that we have no es¬
cape from economic and political
money
not only to that par¬
year.
sive
therefore
efficient
judgment.
purpose
Expenditures
and
of
pressures
per¬
Other agencies spend time and
gress.
that the government cannot be
to
altars in their keeping are being
desecrated by a barbarous horde
n the Congress.
White House and the Congress.
The President takes the
position
for
have engaged in
hucksterism
the
order
reconcile
help
public that the sacred
the
mind
educational
as
cuts,
their
against
that complete departmental frank¬
ness in the production of facts and
opinions necessary for the exer-
such
erans
by
biysterical
ings that unless their progress is
halted, our expenditures will rise
of
vet¬
our
Divided
The Federal Government
today
stands divided in its expenditure
of
Spending
fected
suade
Federal
Federal
..-I
who
cannot look at the feet of his idols.
of the Federal Government.
budget
emotionalist
every
investment
standards of
sented
figures which I have
to
pre¬
do not take into
consideration the 68% increase in
you
the cost of living as of December,
1947 over the average of 1939.
utilities
and
telephone Harshness
companies, where relatively little
risk is
involved, accounted for
We get
slightly more than half of the new picture of
of
Steeply Progressive
Tax Rates
an
the
especially
harshness
graphic
of
our
Number 4680
167
Volume
THE COMMERCIAL
&
FINANCIAL
CHRONICLE
progressive income tax they represent one of the most im¬ should be prudently assured by
testing the relation of in¬ portant causes.
making ample discounts for pos¬
I believe it should be
come taxes paid per dollar of inempha¬ sible upsets in calculations. I be¬
sized
that
cbm'5 by taxpayers in different
important relief to lieve such a bill will attract wide¬
(1123)
27
steeply
rates by
those who bear these unfair bur¬
dens in the postwar era can
brackets.
single person
only
The reductions which in my
come
when there is wide
public opinion will be
with no dependents and with net
authorized by the
support for it.
income before exemption:
tax bill before us as it leaves the
Please remember that there are
The $5,000 income man pays 10
Congress—let us face it frankly—
about 54 million individual in¬
will only make a good start at
times, as much as the $1,000 in¬
come
Let
assume
us
a
taxpayers; that about 52
million of these have net incomes
come man;
$10,000 man pays 25 times
-The
as
much as the $1,000 man;
$20,000 man pays 70 times
.The
as
much as the $1,000 man;
of
under
$5,000
personal
exemption and credit for depend¬
ants; that of a total present annual
individual income tax
liability of
as
The
a§
much as the $1,000 man.
Let
a net income base be¬
exemption of $5,000.
using
son
fore
man pays 3 times
the $5,000 income man;
The $20,000 man pays 7 times
as much as the $5,000 man;
•The $25,000 man pays 10 times
as
as
as
incentives
and
much
as
the $5,000 man; '<
The $50,000 man pays 27 times
much
as
the $5,000 man;
The $100,000 man pays 69 times
much
as
much
the $5,000
a3
There
is
their
extent,
to
the
in
■/
■
enor¬
mously magnified by the wartime
increases. During the war it was
considered justifiable
policy ito
repress risk investment for every¬
thing but war production. There
less
was
the
need
for
about
coneern
margins of savings in the mid¬
dle
and
the
Americans
married
a
who
pay
taxes.
The
'about
was
$10,000 a
Federal in¬
in
average
000
answer
actually takes. For the $50,income
$24,000
pays
family—which now
the nnhlic would
—
reduce the tax to $7,500.
;
question also
for risk investment because Uncle
'About how much do you think a
Sam,
married
one
putting
But
way
another,
or
was
who
most of the money.
up
now
confront the
we
neces¬
sity of financing a dynamic, for¬
ward-moving peacetime economy
out of our private resources, and
1 suggest that our job now is to
repress and eliminate as rapidly
as possible every obstructive fac¬
tor. Our taxing irrationalities are
luxuries which we shall not long
be able to endure.
answer
ally, the Federal
such
our
experience
own
upon
see
the
depressing effect of high tax rates
on savings, venture capital and in¬
centives.
increase
Great
Britain
years the
in
tax
preceded
in
rates
by
many
The
High's story.
in
Britain
1910
initiated
income
tax.
reached
tax
And
relatively
rates
much
did.
Moreover,
there
reductions
income
than
truly
in
no
im¬
British in¬
there .were
would
in
amine
the
this
country,, It
worthwhile
.appear
ratio
of
as
to
ex¬
savings
to
national income in Great Britain
over
a
period of years. In 1911,
befofe the income taxes in Great
Britain became very heavy, sav*
ings represented approximately
16% of total national income. By
.
1924,
this
ratio
had
dropped
to
something like 11%. And by 1938,
the ratio was
actually down to less
than
;7%.
The
,
-
.effect
of
this
decrease
in
tal
and, ' therefore,
in
the
source of supply for capi¬
investment in Great Britain,
nardly
needs
us, are
well
elaborating.
acquainted
All of
with the
trials which
are
afflicting Great
Britain today and the difficulties
she is
having in building up her
industries and capital investments.
Jt is not
that
the
sole
my
intention to imply
high
cause
tax
rates
are
the
of Great Britain's pres¬
I
feel
those
tend
to
additional
Federal
hobble
our
will be forthcoming
omy
often
taxes
econ¬
as
and
is warranted by sound
regard for the fiscal situation.
as
as
limited
with
revisions
can
passed
later
in
But the vital
with
tion
bill
thing is to make
income
an
and
to
tax
reject
a
The
reverse
scattera-
in direction, in and
itself, will release constructive
hopes and energies with chain
action values far
re¬
beyond the im¬
mediate amount of reduction.
people
will have received
authentic
an
sign that we are on
the way to
the doing of those
things necessary for a free and
solvent economy.
Congress is
is
and
politi¬
a
beginning of
LOS
to
The
Financial
massive
Building.
He was previ¬
ously with C. E. Abbett & Co. and
Slayton & Co., Inc. -
of,
ex¬
we
can
go along.
we
as
(Special
The
House
of
fore the Senate Committee
Financial
Wood is with F. S.
nance, which calls for
tions of approximately
tax reduc¬
$6.5 billion
the assumption of a
135
South
La
Salle
He
Street.
previously with Central Re¬
public Co.
foreign
made for military and
be
affairs in fiscal 1949, strong argu¬
ment
it
can
to
The
Financial
QUINCY, ILL.—Harry C. Peter,
has joined the Staff of W. G.
Houston & Co., Mercantile Building.
son
House
the
of
Rep¬
fiscal 1949
endar
(which covers the cal¬
period from Jan. 1, 1948 to
jjohn R. Kauffmann Adds
(Special
•
to
The
Financial
tial
'>
surpluses for debt reductioh
contingencies.
In
ST.
LOUIS, MO.—Harry Weidehas been added to the staff
Of John R. Kauffmann and Com¬
personal opinion, the
Senate will adopt the structural
of
features
an
the
increase
House
in
bill—such
individual
ex-
emptions, provisions whereby
married couples in all of the states
have the benefit of splitting
income, correction of inequalities
.may
ductions
believe
Senate
of
the
will
income
taxes.
bill
it
as
provide
est amount of tax
Such
a
But
(Special
a
vo The
Financial
LINCOLN, NEB.—Dale C. Tinst-
man
with
is
First
Trust
Co.
of
Lincoln, 10th and O Streets.
a more
reduction.
mod¬
-
bill would accommodate
With Herrick, Waddell Co.
i
were
thrown at
-
prices, the question was raised in the minds of sellers, whether
they had done the right thing or not.
...
NEW
LOOK
Nonetheless, banks and other institutions are now holders of
large amounts of shorts with considerably less income, instead of
longs with higher earnings.
They have the liquidity that fear
.
demands without the
predictions that
,
.
income that results from confidence.
.
The
.
.
being made in the financial district as to what
would happen to quotations of long Treasuries, interest rates and the
cost of carrying the debt, have not been materializing as had been
forecast.
are
were
Many investors have oversold their long positions, loans
leveling off, with lenders much more cautious in their loaning
.
.
.
operations.
...
of
All
not
which
income,
institutions
many
have
now
wanted
sell
to
yet the
securities
undesirable
as
to this:
up
smaller
It
...
be
adds
calamity has not taken
could be that long-term government bonds may
with
them.
.
they
as
.
to be
appeared
when
.
RETROSPECT
The
income
earnings angle should not be overlooked as one
better feeling and tone that are in
longer-term government market. .
.
Liquidity is
or
of the important reasons for the
evidence
in
the
.
desirable and needed by all financial institutions at times, but
and quite a few (sold out) former
owners of long-term governments are finding this to be the case. . . .
very
Shorts
taken
were
position.
.
in place
on
.
.
of longs because of their protected
,
i
.
However, is their position any more favorable than that of
authorities stand ready to buy all
the longs, when the monetary
the
of
THE
maturities
distant
more
them
offered
the
at
support
...
MARKET
"
is
demand
good
\V,
.
'./.v.*.
continuing for
the
turities of the partially-exempt obligations,
the
intermediate-term
ma¬
with the large city banks
principal buyers, although dealers have been positioning some
of these securities.
it
takes
rather
s
.
The market is very thin
.
little
very
action
in
either
pronounced price movements.
.
...
for all of the exempts
direction to bring about
side
in
measure
the
The interest
partially-exempts
intermedate-term
is
the buy
on
in
due
some
sifting out of the called 2%s by holders that are still
to
in need of the protection of tax
exemption.
...
well
Longer maturities of partially-exempts continue to be
(Special
to
The
Financial
and small.
this
.
issue.
Chronicle)
GENEVA, NEB.—James W.
Hammond is now connected with
from the big city institutions.
away
.
.
Dealers and traders
.
.
.
The
on
due Dec.
2s
.
The longest
also showing interest in
are
15, 1952/54, which have
been
small commercial banks, which have been re¬
ducing their holdings of mortgages.
take
.
the neglected list of late, have been under some
accumulation by
to
.
has been taken on by bank investors, both large
.
.
.
Savings banks continue
fairly
substantial amounts of the longest ineligible
These
on
purchases seem to be the results of
t
Herrick, Waddell & Co., Inc., 55
liberty Street, New York City.
!
| Oscar L. Richard Dead
«
bonds.
.
.
.
short-term Treasuries.
out
the
restricted
.
(but at
bonds
Oscar L.
Richard, special part¬
ments,
stocks.
as
well
as
some
a
letting
sharply reduced rate),
the
mainly into private place¬
of the new and outstanding preferred
...
in C. B. Richard & Co. which
ner
was
founded by his father in
1847,
NOTES
-
Government Trust Accounts,
died March 5 at the age of 92.
during February, according to es¬
timates, bought about $157,000,000 of
Alan M. Mayer Dead
']
sales of
Insurance companies are still
.
.
proceeds of which have been going
Alan
M.
Mayer, member of the
believe
-be
the Senate that margins of safety
on
that be stood their ground and
powers
the longer maturities that
bank and non-bank investors, without altering support
pretty much
^Tew York Stock Exchange, died
that
them by
"pegs" because of the sheer
...
However, when the
continued to take all
bank-eligible
Chronicle)
the
leaves
authorities to withdraw all
ing the play
With First Trust Co.
i
itself to considerable sentiment in
gainsaid
...
bought, with the out-of-town commercial banks apparently tak¬
However, I do not
can
securities markets.
It was the lack of this ingredient that was
largely responsible for the heavy selling of long-term Treasury issues,
which not only carried prices to new lows, but at times threatened
Street, members
Of the St. Louis Stock Exchange.
of
estate and gift taxes in com¬
munity property and common law
states, and across-the-board re¬
...
CONFIDENCE
Confidence, that very intangible but extremely important force
plays leading roles in every walk of life, especially in the fi¬
nancial business, seems to be gradually returning to the government
pany, 511 Locust
_
my
ago,
attitude toward
They have been acquir¬
been
.
.
.
Chronicle)
July 1, 1949), and leave substan
and
heavily
which
and
could
operate in the
last half of fiscal 1948 and through
resentatives
very
Chronicle)
be made that the bill as
from
came
issues in the last few weeks.
levels?
v
Despite the extraordinary ex¬
penditures which .will have to
were
distant maturities, not so long
more
ing the longer governments in fair amounts, and this has
was
mann
billion.
move¬
.
which
reflected in better prices for Treasury bonds.
Moseley & Co.,
ent difficulties.
it
these
Chronicle)
Fi¬
on
.
investors,
have quite definitely changed their position and
A
passed a tax bill on which
hearings are now being held be¬
on
The
With W. G. Houston & Co.
Representatives
institutional
the sell side of the
on
Bill
has
year
to
CHICAGO, ILL.—Paul B.' Isher-
(Special
Tax
House
Business conditions and the
.
.
too much of it won't pay expenses,
With F. S. Moseley & Co.
also emphasized,that this is
reason for not
doing the best
no
with King
merce
remarks
reductions
.
.
However,
everyone
Chronicle)
ANGELES, CALIF.—Wil¬
now
tax
prices and loans will be very important in making the trend
of the longer-term Treasuries, which seem to be getting ready to do
better, if given some encouragement.
place.
properly
my
distant maturities.
more
liquidity
With King Merritt & Co.
(Special
income
15
reduc¬
tions which might frustrate all re¬
lief.
of
March
ment of
the
of
this session of Congress.
start
the
weight of the liquidation.
some
and
measures
.
to force the
in
administrative
be
.
relief
additional
combination
restrictive
certain—
be—it is not
may
that
credit
RENEWED
system.
confident that
from
which
for
was
as
savings
private
excise tax
our
relief
approximately
national income of $209
were
tax
penditures; or of taxes until we
get this world postured for peace.
per
taxes after World War I
come
income
is
institution
we
'
'
.
Britain
high
sooner
V
portant
Gerat
in
1 pointed out that we cannot have
in
graduated income taxes even be¬
fore the United States adopted an
losses, capital gains, depreciation,
accumulation of surplus, problems
of small
business, the hodgepodge
of regressive levies and
inequities
Actu¬
favorable Opinion described in Mr.
The
Government
among others, double tax¬
of dividends, treatment of
ation
My advice is to bring the facts
to that great body of potentially
increase in taxes in the
Liberal
clude,
Governments
on
payments, the money markets continue steady, with some of the
eligibles and a few of the tap issues still above support levels.
Trends of commodity prices and bank loans, which have been
downward, are responsible in no small way for the mild optimism
that seems to be coming into the government market, especially in
Merritt & Co., Chamber of Com¬
United States.
Great
assisted by expert advisers.
Subjects under consideration in¬
liam M. Miller is
It
The
tee
average
$50.'
are
$131."
At the
alone
to
family
a
The
'around
is,
in Fed¬
pay
sensitive to public opinion.
Example of Britain
We need not depend
week—that
a
taxes?'
was
children
two
year—should
a
income
eral
cal
'
$60
earns
$3,000
with
man
of
Code
•
asked:
was
revisions
energetic
The
"This
for
Revenue
study
by
the
House Ways and Means Commit¬
$900'—approximately
half the $1,700 which the govern¬
ment
and
Internal
under
they
with two
earned
should
come
cross-
what
man
Reporter
By JOHN T. CHIPPENDALE, JR.
Despite
v
.
plans for further
non-controversial
,
representative
children
brackets available
upper
of
"Early in 1947 the Gallup Poll
year
were
issue
Digest":
>
.
Stanley
range
reductions
the
It
recent
a
Readers
believed
distortions
Longer
inequities.
I quote from a story by
redistribution
tives.
and
elimination of at least the
grosser
of
0These
believe that
if properly in¬
formed would give their approval
section
objec¬
to
brackets do not understand
upper
grossly slanted to serve "hate
the rich" policies and to achieve
wealth
savings
which must be
reason
a
of
and
those who do not bear the income
tax burdens of the middle and
asked
been
work
of life
ways
High
man.
Ry the late 1930's our progres¬
sive income tax rates had already
for
protected.
$10,000
The
as
have their interests, their
payers
make the same compari¬
us
that which must be done.
before
man pays 99 times
roughly $21 billion, about $12 bil¬
much as the $1,000 man;
lion are charged against those tax¬
$50,000 man pays 265 times payers
having those incomes of
as much as the $1,000 man;
under $5,000.
The $100,000 man pays 669 times
Those 52 million income tax¬
The $25,000
Our
spread support in the Senate.
March 2.
from insurance
companies.
.
•
♦
. . . The successful flotation
of the
undoubtedly had a favorable effect.upon
Treasuries, especially the exempts.
Age and Survivors Trust Fund.
large New York State issue
the
market action
of the
marketable bonds principally
Federal Old-
The main buyer was the
28
(1124)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
dividend
Market Effect of Large Accrued Dividend
(Continued from page 2)
by the full amount of
the
The
divi¬
dend.
To
same
somewhat lesser extent the
causes
in the
operate
may
interest
bonds where the
of
case
determine,
lump
The
shown
"flat" and where interest
lations are
accumu¬
subsequently paid, only
that interest accrued and
paid from
purchase is regarded
the date of
income.
as
Money received rep¬
interest accrued
and
resenting
unpaid at the date of purchase is
regarded as return of
capital.
While
that
portion of interest
which
as
(1)
and
where
$3
the
taxpayer
or upper
bond
a
period and who has
a
of all
stocks met
the fol¬
The
(c)
at least
was
distribution
The
"cash. /
repre¬
in
•*
'
The
of
equal
was
was
,in
'•■
amount
of the
more
extended
distribution
,
tribution
the
6%
to
market
dis¬
value
book profit
(e)
The
traded
security
the
on
was
one
New York Stock
Exchange or New York Curb
distribution, and
Market.
shortly after the ex
(2) Available price quotations
interest date.
This, too, has the
in the "Wall Street Journal" or
practical
effect
of
converting
sizable
interest
would
nary
income
otherwise
into
ordi¬
long
a
be
term
capital
gain.
This
would
be
doubly true if the taxpayer had
current
or
capital
carryover
losses
against which
gain might be offset.
the
that
sell off
by
an
stocks
on
the
and
ex
distribution date
amount less
tribution.
may
than
the
dis¬
Perhaps the "bloodless
verdict of the marketplace'Ms not
based entirely on calhi, dispas¬
sionate
analysis of the elements
value, but at least partly
understood
economic
human
events.
Preferred
sells
on
of
little
reactions
If
X
around
to
Utility
115
over
extended period, it is possible
that this comes to establish its
value to uncritical observers and
an
especially
chases
to
those
made
were
figured
This' idea
whose
pur¬
around
of
logi¬
cally should be modified when a
large distribution is made, but
nevertheless
justment
such
may
not
a
be
mental
which
(1)
the
day before
date
the
on
1 Some
such
to
by a
potential
distribution date.'
be
of
and
the
the
distribu¬
ex
first
quotation
distribution date, and
(2) the price decline from the last
day4-1pefore
the ex distribution
date and the price approximately
days after the ex distribution
30
date.
for
This
the
price
date
a
three
quotation
which
weeks
to
varied
six
dividend
ex
There
seemed
using
the
dates
to
be
exactly
was
but
30
This* comparison
order
days.
necessity
days since
(see following) for the in¬
move¬
(4) The amount of the distribu¬
human
the
only possible
explanation for the theory of "resistance
points"
or
resistance
levels
in
stock
prices.
'
also
compared
with
the
ex
the
30
distribution
intervening
movement of
adjustment
of
in
possibility that
the initial decline might approxi¬
amount of the distribu¬
mate the
tion
but
that
shortly thereafter
pther;v factors men¬
tioned previously might partially
the
tax
and
eliminate the initial decline.
This
material
in
lyzed
then
was
order
ana¬
determine
to
whether in general securities tend
to fall in price in an amount ap¬
proximately
the
of
amount
a
large cash distribution.
(5)
Price
stocks
quotations
for
obtained
were
these
for
dates
exactly 30 days prior to the
dividend dates.
of
purpose
havior
studying the price be¬
of
period
the
the
ex-
This was for the
these
roughly
interval
in
stocks
coinciding
between
of
the
the
with
the
an¬
dividend
and
dividend date.
ex
(6)
These
data
arranged
in various ways in order to throw
light
the
on
these
price
stocks
in
behavior
the
of
periods
im¬
mediately preceding and follow¬
ing the distribution of dividends.
Table
price
is
I
a
ferred
stocks
certain
of
in
the
the
of
summary
behavior
pre¬
period
im¬
mediately
following
significant
distributions of dividend accruals
Twenty-two
shown in the table.
on
not
were
different
the
table
The divi¬
those paid by
companies.
closing price on the
day* before the ex dividend date
would
an^
closing price
investors
the
dividend
date
Included
is
adjusted
previously.
5 is not
eral
market
the
day
as
an
$8 distribution
Included
also
different distributions
three
are
Chicago
on
North
Western Preferred.
Four¬
teen different companies are
rep¬
resented in the table.
no
account
the
the
dividend
ex
shows
the
date.
price
Column
decline
ol
<
the
movement.
for Columns 5 and 6
cline
shown
in
general
,
Column
market
the
ex
dividing
dividend date
on
the
when
eral market movement
eral
$271.40
such
Moreover,
the
the
variations
amount
22
showed
the
the
of
stccks
in
clines
in
the
total
$11.83; 10 showed declines
ing to
the
total
It
whether
tock
If
to
appears
is
the
make
the
factor
many
would
persons
have
decline by
on
gen¬
the
have
on
paper
which
by
Approx.
Ex
'
30
Approx.
30 days
days
Amount
Distribu¬
Distribu¬
of
-
-
-
-
Valspar Corporation 4%__
Radio Keith Orpheum 6%___
U. S. & Int. Securities
5%
United Stores 6%__
-
-1
-
-
-
;
in Table
After Ex
tion
After Ex
tion
while
2
Distribu¬
Distribu¬
Date
tion
tion
price
These
ican
and
Woolen
Unadjusted
Date
$77.10
In
(1)
.♦
These
tendency
stocks
decline
to
29.00'
28.70
30.50
23.70
12.50
13.30
23.50
4-12-46
21.50
5.00
(2)
The price decline on these
a date 30 days following
stocks to
2 This
is because capital
losses may be
ordinary income in an
$1,000 in any year
although such losses may be carried for¬
ward
for
5
years
for
deduction from
ordinary income in an amount not in
excess
of $1,000 per year.
deducted
divi¬
from
not
exceed
to
95.17
_
less
distribu¬
36.60
shown in Colum 6, Table I
5.60
7.00
.40
3.75
3.75
4.50
•
___
4.90
6.00
3-46
7.70
3.00
4.00
3.90
8.00
4-46
7.00
7.00
5.50
8-22-47
7..10
+7.50
16.50
+ 1.00
16.00
15.50
18.00
17.20
5.00
5.75
6.25
13.75
18.60
.
3.30
W u
—
*
'
,
1
►
4.60
'i
,
'
,,
10.00
10.00
9.80
5.50
4.60
5.00
5.00
4.90
1.50
2.80
8.00
10.00
10.10
6-14-45
15.00
16.50
9-13-45
11.75
12.00
11.20
12-20-45
10.83
10.00
9.40
.
'
7-45
1
16.60
4.00
—
8.00
16.50
.70
5.00
—
6.65
—
10.00
5.40
5.00
2.20
8.00
10.00
•
imW
7.00
9.00
16.00
12.20
15.00
24.80
.
f.OO
11.75
21.00
14.00
14.80
5.50
1-19-44
+2.00
1.30
16.00,
16.20
33.00
12-15-44
41.90
15.50
20.00
19.25
20.05
19.25
<21.65
20.00
7.00
3.50
3.50
2.50
15.00
13.50
13.50
19.00
5.00
4.00
4.00
+4.00
6.00
6.00
5.80
_
9-
6.00 ' *:
1-44
1D30-44
8-13-47
-
5.25
7.00
4.60
17.80
1.80
:
6.40
5.00
6.00'
$270.33
$271.25
$271.40
$321.00
$328.90
MU
—
3.97
——
4.70
26.40
——
7.00
15.00
w
13.05
6.00
15.50
A
2.80
10.83
10-10-45
r
.
3.95
-
11.65
3.00
—
12.00
'!
.
12-
328.90
n
Adjusted 30-Day Price Decline
5.00
6.00
11-14-46
■f
a
dividend
date to amount equal to the divi¬
decline
9.50
12-
showed
ex
dends.
amount
the
it is evident
then
summary
less
27.00
9.50
Amer¬
that:
ex¬
58.50
$79.00
less
Column
were
More than
$55.60
the
stocks
Radio-Keith-
Distribution
Adjusted
de¬
behavior of two stocks
out of the 22.
Less than
$57.00
<,
over
Distribution
27.00
than
amounts
of
$58.50
•
a
Moreover, the
Distribution
Date
in
show that
almost be accounted for by
can
the
1.65
—
2.40
"
2.80
3.20
'
—-
'
*
'
.40
■
Totals
in
of Column 6
than
Unadjusted
6-47'
II
greater
nine
declines
than the dividend.
excess
which
amount
Amount
than
shows the
22 stocks showed
amount
an
dividend
low.
or
persons
as
de¬
to
variations
e>
tion
11-
2
the
than distribu¬
12-14-44
-
Table
of
central
greater
Total of Column 2, Table I—270.33
Distribu¬
1-30-47
-
of the
TABLE
12-19-46
-
variations,
no
stocks
amount
Add declines greater
tion from Table II
Total
aver¬
$14.95. The
the
Reconciliation to Table I
6-14-46
(111.)
an
showed
p5per profits
of
in
dividend.
in
o'
would
losses
divi¬
cline in price over about 30 days
Of
many
the full amount
was
for these
tion from Table II
Stocks Following
6-
(111.)
13
a
than the dividend but that those
stccks
on
The
ex
In terms of
of
The data
the
might be
an
$270.33.
date approxi¬
a
Orpheum.
of
on
distribution;
was:
*
36.60
95.17
■
be-
Column 6 of Table I.
previously dis¬
cussed is effective it
would
totalled
distribution
differ¬
piice
pected that those stocks
1-24-46
Armour
the
amount¬
no
historically high
tax
12-12-46
Chicago Milw.
cline
of $12.75.
amount
tax
,
indicates
tendency
than the dividend in
more
total
stocks
however,
three
amount
The
distribution
amounting to less than the
dividend
would
the
the distribution per stock
$12.29 and the adjusted 30
was
dividend;
Date
Armour
table
we
of
.
day price decline
decline exactly equal to
nine showed de¬
a
the
ex¬
basis
ket movement.
of
dividend.
the
of
conclusion
date
ages,
adjustment
clearly indicates
de¬
$328.90 '-after
adjustment for the^ general mar¬
by
the
the
a
22
dend
central tendency for stocks to de¬
cline on the ex dividend date
the
amount
mately 30 days after the
and
distribution
to
somewhat
;
is, of course,
price decline to
These compare with the total dis¬
tribution of $270.33.
tion
-
valid.
the
gen¬
movement
with-
the
This
on
such
er
distribu¬
adjustment for the
market
amount
an
It is doubtful, however, wheth-
tion date has almost no effect.
The total decline in price on the
ex
distribution date was $271.25
without
;
dividend'
ex
365.50
Ex
J
ex
the
amount
the divi¬
tended
factor, above.
almost
on
the
stocks
than
expect
exactly
equal to the total distributions.
Adjustment for the general mar¬
ket movement
these
on
an
actly contrary to what
takes
the ex-distri¬
on
following
these
greater
to decline on the ex dis¬
tribution date by an amount less
than the distribution. In total the
is
date/ by
„
dividend.
stocks
date
evident
decline in price
cline, in
Even casual examination of the
data indicates
no
tendency for
bution
entirely
date
•>.
decline in price
is-
days
movement
into account.' !v
of
dividend
Columns 5 and 6 in Table I
ap¬
pear to indicate that in the 30
used
6
which
decline
ex
approximately equal to
the only difference is that the de¬
the
the
dend.
the same,
are
total
on
dividend
ex
dividend
dates
on
presumed
also exactly $41.25.
was
It
price from
The
stocks
stocks do
a date
approximately 30 days
following the ex dividend date
but adjusted for the general mar¬
Price Decline to
7o
date
and
ket
be
the
and
these
Column
ex
on
Large Dividend Distribution
General Public Service
6%_____
$41.25
adjusted for the gen¬
before
stocks
was
5
decline from the
ex dividend date
movement.
the
might
to
have .paper losses. The total
dis¬
tribution on these six stocks
in¬
as
be
Deduct declines
made by
Price Behavior of Certain
Preferred
Distribu-.
the
the ex
for the
Column
6 shows the decline in
ir
American Woolen Preferred i1945.
umn
2i
$58.50 distribution
a
TABLE I
Ex
on
general market movement
dicated
ence
1946 as well
in
dividends
separate
the general market movement
general
prior to the dividend date than
at
date of the dividend.
These
the
were
price decline takes
security prices. This
was
the
test
made
was
the amount of the decline in
price
the ex dividend date.
This
date, adjusted to eliminate the ef¬
of
difference
Only six of the 22 stocks
higher one year
materially
between
on
approximately
fect
case
Column 2 shows the amount o'
the distribution. Column 3 shows
decline in price from the last
day
before the ex distribution
date,
and the price
the
to
dends
no
30
tervening general market
after
used in the
securities,
the
utility
average
in. the case of utility
securities,
and
the
industrial
average in the case of industrial
from
which
ment.
was
railroad
railroad
are
were
spread over four
since the price was ad¬
years and
justed
The
date.
averages were
the
was
day before the
average the
dividend
ex
from
weeks
date
closely centered around
for
ap¬
sold
and a date approximately 30 days
following the ex .dividend date.
The price decline shown in Col¬
ex
ad¬
made
rationalization
seems
quotations
compared with
decline from the
tion
days
behavior
price
was
price
last
tion
ex
adequate
distribution
an
the
represent
dend.2
ac¬
Col¬
in
the denominator of which
nouncement
of securities for
case
available the amount of the
were
tion
the
not available.
were
significant number of
buyers. If this is so it would be
a force
tending to prevent a fall
in price equal to a
large distribu¬
on
against
were elim¬
inated where price quotations be¬
fore and
after
the
distribution
this
value
checked
were
(3) In the
bonds
Financial
and
this list and securities
capital
There may also be psychologi¬
cal reasons, not at all associated
with value analysis, for
anticipat¬
ing
"Commercial
Chronicle"
was
shown
day before the
repurchase
what
which
of
into
taken
shows the price
or
"just
prior to the distribution.
niay find-it profitable to sell the
bond just before it sells "ex" a
numerator
securities.
sented the payment of accruals.
brackets who
over an
1945, 1946
share.
per
(b)
(cl)
Nevertheless,
of
Monthly
list made
(a) The payment
sale.
the fhiddle
made
lowing tests:
nary
has held
is
single distribution
a
distribution date by an
representing the decimal
equivalent
of
a
fraction,
the
same
was
a
Preferred
on
followed
Guides for 1944,
and
the
index
4
umn
is
data
after the ex distribution date and
Poor's
and
Payment
price approximately 30 days
date
The
count.'
propriate Dow Jones Average for
the date approximately 30 days
below:
search
1947
cases
from
.
A
Stock
ordi¬
income, it must be deducted
the purchase cost, which
Will increase the capital gain on
procedure
in detail
Standard
accrued at the date of
was
purchase is not taxable
in
Procedure
Interest is
Thus,
sum.
whether
decline
tributions of dividends.
individual buys a bond
a
an
after
do
price more or less or about equal
to significantly large single dis¬
deemed to accrue with time.
where
possible,
stocks
accumulations of several years are
paid in
the
if
Preferred
a
of this study is to
purpose
Thursday, March 11, 1948
<
Number 4680
167
Volume
larger-
are
ciently great to have
(3)
That
minimize
of
ex-Dividend Date
156.00
172.00
58.50
139.00
27.00
investors
taxes
but
do
act
123.50
16.50
clare
to
in
only
the
119.00
120.00
insignificant portion of total
stock trading;- While there is no
where
share
less.
TABLE m
:'V
dividend
the
or
103.25
20.00
ecutive
63.00
15.00
vices
1,000.00
1,071.75
190.08
ment
Amount
of_
.
;
.
i,
.
Price 30 Days
.
Distribution
£t.
:
'h^-
58.50" <
Vi
57.00
of
ex-Dividend Date
Distribution
"
140.50
73.50
77.00
5.00
40.00
53.50
3.75
38.00
110.00
117.50
40.00
*47.75
128.50
128.50
39.50
After
' +
.15.00
11.75
•:
>
.
15.50
V
"
*
-
i
.
•
16.00
vT-»
.
i
i
14.80
f
.
19.25
;
•
13.50
v!
:
17.80
'189.25
>
'
si ; tV
t
■
.
•
•
:
;
/
■ n
•
"
249.75
«*
'
V'1''
Price Decline •'
:i"
Amount
ex-Dividend
V
'
of ;.;
30 Days
'
•;
Distribution
"
;
>
5.00
/.
After
some
Ind.,
has
from
$1,200,000
the
'
6.00
^
repre-j
customers do
to
'
t
*
merely an illustra¬
the power of printer's ink.
tion of
possible to
pur¬
propose
two general¬
A
substantial
a
payment
vert
the
Date
:
Adjusted
financial
.40*
7.70
7.00
4-7.50
announced
C. Wright, President
bank, reports that work is
starting immediately in remodel¬
ing added space to provide in¬
creased quarters for the bank's
personal credit and trust depart¬
ments.
The
bank's capital was
of the
divi¬
on
in
of
affairs
the
the activities of others in similai
financial
circumstances
tire issue of new
sately
do
upon' calm
so
and
recently
without
cold
to
of
com¬
parative value analysis.
fear that their
corpora-
own
activities and
+ 1.00
4.00
Lion
the
The
press.
John
level.
in order to con¬
dividend to a capita!
may
based
is followed
it
by
the
„
increased from $600,000
$1,500,000 through the issuance
pre-emptive rights to holders
of the bank's 12,000 shares of $50par
capital
stock
to purchase
18,000 additional shares. The en¬
gain;
by analysis and discussion, of the
21.50
6.00
newsworthy
frequently when such a divi¬
is
to
of its lease
quarters on
the street floor and lower arcade
arrearage;
is
stock
new
long-term extension
covering the bank's
izations. :prie* of these is theoreti¬
cal and the other practical. These
dend
arrearage
capital
$1,500,000
"has completed negotiations
with the Field Building for a
(2) That those individuals whc
and
to
cago
receive
announcement.
Wayne,
its
Salle National Bank of Chi¬
La
Summary
On the basis of these data it is
wish to sell stocks about to make
dividend
&
Fort
increased
of
,
_
Bank
of the Currency.
stocks may be
brokers de¬
in "order
80.25
i
•••
r.
>!«
of
Company
sale
was
amount of $300,000. The enlarged
Capital became operative on Feb.
25; according to a recent bulletin
of the Office of the Comptroller
;
the publicity ihcident to
it is by
dend
8.00
•:
1,125.25
It may
customers'
stocks
ex-Dividend
•'
7.00
4.50
3.00
■'
v
dend
Approx.
30 Days
'
23.50
,!
6.00
3.75
"
"
12.50
92.00
■
-elatively large payment on divi¬
Unadjusted
Unadjusted
9.50
85.00
,
the
dividend
*
Trust
5.00
...
pay¬
$22,500
National
6.00
52.00
;
\
>:<
Lincoln
8.00
.
,
of
1947."
5.00
v
7.00
purchases of those who
some
the
After
'.Date
but
as
(>
ex-Dividend
■
J,,;
Date
251.15
-
■
Dividends $10 and Less
■
41.50
ad¬
departure from
a
,
The
the desire to receive the dividend
J
190.08
■!'
5.00
10.00
105.50
.
dividend
amount
semi-annual
last
particular; dividend." It may, be
that
the apparent concentrated are:'
+'
; .
:.v; /
buying prior to the ex dividend
(1) That buying and selling ir
date is occasioned not so much by
the stock market is not invariably
21.65
19.00
11
'
140.00
a
1
15.00
;
"buy
for
the \ dividend." - This
practice may not "make sense"4
chase
'
41.90
■'
the
clare that
i.::.
24.80
•
"33.00
19.25
i
12.20
'
•
14.00:
16.00 vi-'■'
v
20.00
*
V21.00
12.00
+ 10.00
-
-
18.00
,
1-3.50
v
:
10.83
v
"16.00
A ,17.20
the
paid Dec. 31,
7.00
91.50
dividend date.
sent
•
,•»
*
-
,
1,027.00
Adjusted
23.70
::
quarterly
in
3.00
,
80.00
77.10
"
30.50
•
*
9.50
; 35.00
The
the bank has paid since its or¬
ganization. By virtue of the recent
sale of 15,000 shares of additional
Stock, this quarter's dividend will
be paid on 90,000 shares as against
the 75,000 shares on which the
Amount
Drop
114.00
ex
Date
stock¬
usual semi-annual dividend \0hich
Less
or
Before
^
■
16.50
Price
'
$10
ex-Dividend Date
ex-Dividend
79.00 V
29.00
.
Dividends of
Approx.
30 Days
Unadjusted
\'Unadjusted
27.00
Paid
Prior to
;
^
Date
>.
Vice-President.
represents
Stocks Which
v
ex-Dividend
ex-Dividend
Date
*
;
,
to
of March 20,
added:
"This
•/
30 Days After /.
31
as
according
to
an
announcement
made by W. W. McEachern, Ex¬
103.00
" v Dividends Over $10 ■'j
March
15.50
■■
'
holders of record
10.83
48.50
Price Decline
payable
11.75
106.00
.
;
-
of
quarterly dividend
15.00
on
'
Bank
March 5 to de¬
on
1V2 %
a
The
now
.
102.00
per
•
bank
,
of
137.00
130.00
v
directors
91.00
excess
$10
was
-
the
$5,013,000.
126.00
.
-
general opinion and belief. The
50%
surtax bracket is reached
■i
in
was
The
-33.00
share and those stocks
of $10 per
at
99.00
the price behavior of those stocks
where the dividend
stand
95.00
in Table I arranged to show
higher tax brackets makes up only
of
Virginia voted
127.00
price ef¬
a
data
to
Amount
ex-Dividend Date
interesting to speculate as data included in Table I includes
ranging
from
$3
to
to why the tax factor does not dividends
operate to produce declines of $58.50. In all cases the dividend
a
significant proportion of
less than the dividends. The fol¬ was
pre-dividend
price of
the
lowing may be suggested as pos¬ the
stock.
Nevertheless, "it may be
sible alternative explanations:
(1) That investors are not gen¬ true that investors generally at¬
erally aware of the possibility of tempt to convert to capital gains
only dividends of unusual size in
tax saving- im sale and repurchase
to avoid: the receipt
of a large terms of dollars. This hypothesis
can
readily be tested with the
dividend-distribution.
:
(2) That the buying and selling data in Table I. Table III follow¬
activities
of
investors
in
the ing is a summary of the essential
by which the hypothesis may
be tested it is certainly contrary
funds
$1,437,000, says
the announcement, the capital and
Distribution
It is
way
totaling
reserve
29
and deferred
reserves
income
Before
Prior to
dends.
an
unallocated
Price Drop
Price 30 Days
not suffi¬
of extraordinarily large divi¬
It will be noted that the
case
Economic Behavior
IV
Stocks Which Paid Dividends in Excess of $10 Per Shar
fect.
slocks of the group.
(1125)
130.00
amount and
since
it was largely
by the price behavior of
Relation to
seems
ities of those with incomes of this
for a 30-day decline in an
amount greater than the dividend
but this evidence is probably un¬
only two
TABLE
of around
improbable
that the buying and selling activ¬
dency
reliable
taxable income
a
$16,000 and it
equal to the dividends. The totals
would appear to indicate a ten¬
caused
THE COMMERCIAL & FINANCIAL «CHRONICLE
v
,
with
date was at least
dividend
the
-
will
their
defeat
stock
was
pur¬
"
:ommon
''
7.00
5.50
•:
.
•
•"
5.00
10.00
■
■
13.75
5.75
;
A
10.00
4.60
;
8.00
10.00
6.00
■•■•■N
5.25
7.00
v
:
1.50,
2.80
10.001
;
-
4.00
6.00
;
6.00
v
5.00
'
"
;
«
+4.00
7.00
,
:
1.80
*
6.40
,/
•
The
above
4
82.00
'
'
tabulation makes it
evident that this hypothesis must
,
/be
abandoned.
with
which
the
It
dividends
ex
in
the
in
30
dividend
the
is
excess
days
stocks
of
$10
following
date decline
more
than, not less than, the aggregate
of
the
dividends,.
This clearly, is
the opposite pf what \ypuld be ex¬
pected if the tax factor were the
dominant price determinary force!
(4) That investors
general¬
ly aware- of the possibility of tax
savings by sale of stock prior to
are
77.75
71.25
shows the
the
25, by the sale of new
«
prices of the stocks at
dividend date and 30 days
ex
prior to the ex dividend date.
Here at least is a consistent
\ i
pat¬
tern!, although it thoroughly dis¬
proves : the
hypothesis ; that ; the
selling of investors on account of
tax
considerations tends/ to de¬
the price of stocks on which
a large dividend is declared in the
30 days prior to the ex dividend
William
of
^
the 22 stocks
O.
*
$
I
,
•
&
banking af¬
Col has been elected a director
the Hartford National Bank
the
Bank and
in ,1880
was
The
which
National
Cashier of that in¬
Central
vacancy
Hartford
we
Mr.1 Robinson
Mercantile
,
fill the
caused
by the death of Curtiss C. Gar¬
from
with
Company of Hartford,
Trust
and
Conn., to
lowing to say in part:
affiliated
•
.
of J-
diner.
became
#
Robinson, Jr., of the
law firm of Robertson, Robertson
viewing his activities had the foL
He
.
is
"Courant"
quote states that
a trustee of the
Hanover
Bank
Trust
&
\
y
'
i
•
*
'
*
lit
:!t
i|t
B. Glenn Gulledge,. Executive
Vice-President
of
thei
Tower
St. Louis, died on Feb. 23.
55 years
In the St. Louis
of Feb. 24 it
of age.
Democrat"
"Globe
stated that Mr. Gulledge suc¬
was
ceeded
Secretary^ of the Treasury,
SfiVder, as Manager of
W.
John
Finance Cor¬
Reconstruction
poration, St Louis
#
©f
He was
Grove Bank & Trust Company
the
Company of New York.
when, in 1893, he was
named Cashier of the Asiatic Na¬
stitution
increases in /the periods
Through the sale of $50,000 of
prior to the ex dividend date tional Bank. In 1909, when the new stock the South Philadelphia
ranging from modest to substan-* Asiatic"- hierged' with the Naum- National Bank of Philadelphia in¬
vthp ex'dividend; date but "they; do
National
Bank, he was creased the capital on Feb. 20
not as a general rule; repurchase tial. The increases for this group keag
the stock;jn the period immedi¬ of 19 stocks amounted, in the ag¬ elected; a director and Cashier; of from $300,000 to $350,000, it is
the
combined
institutions. .He learned from the Bulletin issued
ately following the ex dividend gregate to 75.8% of the aggregate!
of dividends. Two of the 22 stocks was made Treasurer of the present
,date.lit is.possible, of course, for
by the Office of Comptroller of
were
Trust
Company in the Currency.
unchanged and only ' one Naumkeag
v
V
0investors.to convert a.large divi¬
showed a decline.
1914, and continued in that capac¬ V.*• ",)■'[ i ;
;'
' *
'■*
*
' ..
: j
'
dend into a capital gain but;to do,
If tax conscious investors sold ity until his retirement in 1937,
this; if is-only necessary that the
Edwin G. Uhl, Comptroller oi
#
•#
' >;•
in, the period ; immediately ; prior
; stock'b^;soid prior to the e^t divi¬
Land Title Bank and Trust Com¬
the ex
dividend date,; such
dend date, dt is not necessary that; to
-It was made known in the Prov¬ pany of Philadelphia, has been
activities were overbalanced by
the stock* be repurchased after the
idence (R. I.) "Journal" of Feb. elected Vice-President and Comp¬
cx
that
Frederick B. Kimball troller of that bank.
dividend^date: Unless the dn-j the purchases of others. Clearly 28
the tax factor is not a dominant
■'.
would retire on Feb. 29 as Trust
•; ij
* i
&
♦
gVyestor! wishes ,to retain a position
price making force. / .
,/
i Officer and Vice-President of the
r in the stock.
•
'■ ■/''
The offer, of 15,000 shares of
,j
ItJs not easy to account for thte Rhode Island Hospital Trust Com¬ additional stock of The Bank of
If this hypothesis is correct it
would! appear that the
selling apparent, "burst of buying" in the pany of Providence. In part the Virginia of Richmond, Va., to its
"j ! • ■/ stockholders on a pro rata basis
between the/ announce¬ "Journal" said:
•pressure *~on "the
stock .should period
ment of large dividends3 and the
"Mr. Kimball,, who has been as¬ during February resulted in an
hiake itself! felt in the period imsociated with the bank for many oversubscription
of some 8,000
niediatelyrpreceding the ex divi3 The
thirty
day period
will rarely
;
above
those
that
were
dend date. We can /test it, there¬ coincide exactly .with the announcement years, joined the staff of the shares
fore, by comparing the price 30j date. Sometimes the announcement is American National Bank upon available, according to an an¬
earlier and sometimes later.
graduation from the Providence nouncement made on March 2 by
4The evidence indicates that it would
days prior to the ex dividend date
with the price on the ex dividend have been generally profitable to buy Manual Training High School in Thomas C. Boushall, President of
thirty days before and sell on the ex:
1902, remaining with that bank the bank. The sale of the addi¬
date. If the hypothesis is sound,
dividend date. In many cases, however;
until
it
was
absorbed
by the tional shares adds $500,000 to the
We should firth that generally the this 30 day period was
prior to the
bank's capital and surplus, which
announcement.
Moreover, the price be¬ Rhode Island Hospital Trust Co.
showed
now
are
F.
Lucius
Chapman, formerly
active in Salem, Mass.
Vice-President."
/
fairs, died on Feb. 26., He was ,89
years of age.- Advices to the Bos¬
ton "Herald" from Salem, in re¬
press
date.4 Nineteen
a
:■
stock.
$2,400,000.
ters
Peoples
$350,000 to $437,500 on February
"
80.25;
of
price
The bank's quar¬
approximately dou¬
ble the space originally occupied
in 1940," said Mr. Wright, "and
deposits have grown during this
period from about $7,000,000 to
over $60,000,000." The increase in
capital was noted in our issue of
February 12, page 731.
to
National Bank & Trust Officer. In 1936 he advanced
Trust Company of White Plains, to the position of Trust Officer
N. Y., increased its capital from and in Jahiiary, 1944,'was elected
The
.
'
•
offered
the
at
chased
purpose.
(Continued from page 22)
4.60
v'; 2.50
3.50
1
1.30
+ 2.00 1
'
own
these
NewsAbout Banks and Bankers
9.00
;
5.00
\
of
$60 per share, bringing the bank's
combined capital and surplus total
"
•
5.00
price
11.65
•
5.50
■
in
rise
joining the
after
office in
1932,
from that position in¬
and stepped
to the
office,^in 1943,
post with the Tower Grove
Bank Jan. 1 of this year,
h
•
y v
.
,
,
The
"Mr.
advices likewise said:
same
formerly
Gulledge
at Marion,
banker
was
joining the RFC was a
to
a
111., and prior
special
J
k
'
r
"
-
<•
;
representative
Federal
the
for
,
Credit
Intermediate
Reserve
Federal
Bank
and
in 1SL
Bank
Louis."
lie
,
Whitney, Vice-Pres¬
Nelson M.
Whitney
ident
of
the
Bank
of
New
National
-
on
Feb. 27,
Orleans, La., died
according to the New
.
,
Prices of /these stocks decline
in
the 30 days ending with the ex
dividend date. Table IV following
havior
indicates
for
by sale
ing
that
such
possible
the dividend was not
on the ex dividend date.
buy¬
followed
in
1906.
"In 1924 he became an
with
Assistant
$576,000 of undivided profits
$3,576,000.
Adding other
totals
Orleans
28.
the
"Times-Picayune" of Feb.
Mr.
late
founded
old.
Whitney,
George
the
bank,
whose
father,
Q.
Whitney,
was
62 years
Morgan L. Whitney, a son
Nejlson M. Whitney, is
Viqe-President of the
National
Bank.
of
Assistant
Whitney
30
(112?)
THE COMMERCIAL
No Likelihood of Ciedit
j
.
(Continued from page 2)
lions in gold to underpin loans in
trol
all
The
commercial
banks
of
action
around
billions—a better than 50%
ratio as against 10%, or a
fivefold
stronger
metallic
base
curity
not
in
their
holdings,
government se-i
which
they
do
he^tate
to sell
and as
other investments
offer a. more
attractive yi^ld with reasonable
Safety. Increased clerk hire £nc(
for
con-
and limit of bank
landings.
Special Reserve Requirement
has
lessened
with
his
case are consumer
governments to loans. They
done so
to the extent
of
than
ten
biiypn" dollars?
credit' and term
loans, along with loans on col¬
lateral security and business loans
in the broader sense.
*
thg
movement,
while
slower' tharV
We should next
compare bank¬
when initiated, is still Under
way. ing conditions of 1948 with those
(4) Operations of the Federal of 1921, the third
year postwar in
Reserve System are no
longer ap each instance. Th6 1920-21 bank
important "restraining influence'! loan contraction was
around $5,over bank credit volume
•
because; 000,000,000;
the
Ranks'' heavy U. S. bond}
portfolios make them less depend¬
ent than
formerly upon the Fed-?
eral
hence
Reserve
rediscount
(a)
the
Reserve
System
raised f the
suddenly and! sharply
discount rate. This action put ati
*
effort, now
abortive, to invoke Congressional
15%. Why? BecUuse
or
Federal
rate} effective
apparently! banks at
the
Federal Reserve rediscount. Furthermore (b) the gold tide was
Y
brake
on
lending, since
that time had
of additional
LOANS
<•
'Vv;,
'
t.
,
'
'
"A"
'
"The'Commercial
to
&
reserves
no
soiirce
other
than
Count
curbs
by
order.
'
2
*
3
would
gold
is
coming
into
United States at the rate of a
dollars quarterly. As to
lion
third
factor,
duction
with
is
evidence
beginning
inflation ' may
current
Electric
is
course'of
uncertain,
drastic
slides
price-cuts.
the
but
pror
much
IN
and
Im¬
1
•
,
j
,
•
*'
pbints away from
feared Y
1920 bank loans
inflationary?
of
II
total
bank'
of
.30
66
of
investments;
loans
to
r
bond
total
actual
in
so
doing,
banks
in- the
manner.
usual
However,'the
holdings by
Federal
Reserve
Blanks
halted, as more and more of
the long-time maturities find
their
into
way
institutional and individ¬
ual boxes.
'
>
:f:: ':r'-"The Money.-Is
There4?,
Viewed
broken
from
making " full
any
;•
angle,
allowance
and
for ;; in¬
-
collateral, real estate dividual bankers'
5 policies
loans, total investments, general
banking 7 cauUon;/
Government securities; de¬
reality cannot. be ^ignored;
~
mand
70
and
.
time
deposits,
the Id"years of 1938-47.
.. Study, of
these charts
'
O
some
50
has
during
interesting ©inclusions;
The
whole
banking
is
money
dictable
lead
.
-
to
seems
be
into
U, S.
* 1'
and;
and
and total
-V
60
^
'181
rise of Federal bond
potential,
durmg the
perspective,
of
"orderly"
invest¬
and
outstanding,
wider
down
•'
180
; 36
market
munds
pro¬
war
yet
»-
'
29
175
meeting the de-
at the
and postwar
spans, 194047 and 1914-21. Chart
"B" gives a
*
35
create more reserves than it
woulj
have: created in
been, for the past four
both
loans
full
N»
150
m'.
31
,
around ;75%
were
1947, only 30%. The
serves
to
?o
120
a
25
v-..
28-,;
73
108
24
■
31
."
70
tory. Chart "A" expands ouf view
by showing the proportion of re¬
100
/ 1Q5
'
th,e lowest in banking his¬
years,
(J
100
/ri2
•43
74
Continuing the comparison be¬
tween the two postwar
periods'(In
ments has
I and
,:'1'
-
24
•
7107
90
30
Ad justed,
portion
'f
<97
.
"
,•
-'?23
f
end
I
38';
y
,
that
COMMERCIAL
V, '
45
91
.
occurred
ther
•/
115
'146
100
whirlwind. Nor does the spectre be
inflationary. A paradox of the
of
deflation spread so / deep a 'postwar
money; rharkfet, as pointed
gloom5 at the mbment.
^efl-scaled fptit by the Federal Reserve itself,
appraisal : gives., the recession
a
f. would arise if the System should
purely correct!vevlabel.::'
have to support the
government
1 -
irj
downward.adjustment*
haye
39;:
-Phd
(not to include Government and
interbank), f Includes
Postal Savings,
i'ltem 1 p|us 2.
§U. S. Government
securities.
movement
the 'fact
47
..
.
63
46
v.
-
.
;
.65
43
4;!
104
94
\
185
'»■
103
44
81
V
1947-1—:
of
Goid
100
44 '.>■
•71
40"
Sept. 1947——
the
41 41 •'
:
88
39,;
1946_::—
5
%
Reserves
; '700 "
84
.85
1944: hi-1
•
Po>eat.al
,
Deposits
•7* 80
;
85
pec.
bil4
Gold
S%of.
Total
85
,;
June
the
seen:
1943---,-
•:
and
101
49
Dec;': 1945 J—-X
catch -up
be
commodity
General
mediate
that
to
1942—
Dec.
the
are
now
63
—
4
t.% cf
-
Deposits
:•<" 129?*
64 .:
Pec.
federal Re^
unlikely andj
have smajl effect
anyway j
Board
serve
1940—___
1941
Dec.
Redis4
Chronicle")
Deposits, Potential Reserves,
1
Dec.
their
above-mentioned
74
—
'
.
Financial
(Figured in round amounts)
Dec.
Outlook
for
1948
affords
a
marked contrast
respecting two ojf
the three 1920-21 factors in
PANKS
Reserves, War and Postwar Periods
jto
V».Vv
'
1939-
DeC;
Outlook for 1948
W v.
As Related
for
'(
CHART A
••*
expressly
then
demotion
from
within the last two years and
(Prepared
.
Time
and with the sudden
drop in com¬
modity prices. Legislative curtail¬
ment of the banks'
lending ability
is therefore improbable. In
similar
more
•
Percentage of Total Loal.s
t% of
oth$r costs are forcing banks to
augment their1 earnings. This ^heyj
can
accomplish only by shifting
have
TABLE
Stringency in 1948
powers
Thursday, March 11, 1945
plan of Mr. Ecdles and his friends
*
':
Banks have huge potential
reserves
CHRONICLE
was
19 years ago.
(3)
fresh
FINANCIAL
ebbing, and (c) industrial
*%oi
production
had
outspaced
the
inspired
Demand
by
the
situation relatively mild U. S. bond
infla¬
above
referred to, namely, ,tha
Date
Deposits
tion, resulting in temporary ovey
vast
June 1929
potential reserves and the
""•190
supplies with attendant collapse
inability ojf the Federal Reserve of pr.ces. The
Jujae 1933 JT_
160
consequent strm-i
Jgf .1936-System to1 apply the customary gencies
"85
and failures intensified
f.
"effective restraint on bank
1937
89' Y
credfjt general feeling of
caution,which
;
1Q07"""7 "
expansion."
Likelihood
of
91
jMY turn tightened the money supply,
j
1
Eccles's project becoming a
i938__-_::j
81
reality
$38
gold
than
for
&
there;" Barring
but
of
course
one
"the,
unpre¬
possible
to
contingencies political and inter¬
} ; ' national, indications point to a
salubrious
structure
undergone so radical a change
W^rld War I that its com¬
for
1948
bank
atmosphere
business borrowers;*-."
since
Ho
ponent
same
30
rnd
longer bear the
no
their
-
ratios
are
Laclede Gas Light '
Debentures Offered
other
i(T general
•.opsy-tufvy: .Government " securi¬
ties have clifnbed
from-the:posi-
20
of
aon
10
s e c o n
imounting' to
)f the
Loans
1
,U. S. OorarnMont Securities
•
Actual Tlua
Potential
cept
Roaorrea
or
Prepared expressly for the "Commercial
■
'
.•! '
,i
■:
>Y''
r
>
■
■
V<T
and
V
'
t
■
■
.
BANK
LOANS, INVESTMENTS AND
Figures
v
are
y
a
.
■
.
DEPOSITS, 1938-1947 (in billions
for "insured
commercial banks"
of
dollars)
v
6*/,;
rediscountihg
Lynch,
percentag
lead
dominatin*?
Banks
abundant,
m
fantastically
have seen, in the
shape of swollen U. S. bond
port¬
folios, Our chart "A"
shows that
as we
such
reserves, instead
fractional to loans, are
tiples
thereof.
of
being
now
mul¬
Consequently tne
becpmte in¬
banks have, in
effect,
dependent of the Federal Reserve
System' insofar as credit is con¬
cerned. Instead of the
banks being
the mercy of
Federal Reserve ;
it is the other
Way around: the
at
.
Brothers
and
Pierce,' Fenner
a
group that is
offering
Laclede
Merrill
&
Beane
underwriting
of
$6 084 000
The
Light Co. 4^% 15-
Gas
year convertible
sinking fund de-
oentures
the
which
company
making to. holders of its
Federal Re¬
now
are
at
.
Lehman
reserves
by the device of borrowing
serve
Financial Chronicle"
,
CHART B
OF
a r
small
a
loans,! to
d
;on where the ratio is
reversed.
Potential reserves,
virtually non¬
existent in the earlier
period ex¬
•
,
STRUCTURE
parts
relationships with each
stock
at
a
price of 100%
crued interest.
The
is
common
and
ac¬
:
underwriters may publicly
offer debentures
prior to the ex¬
piration of subscription warrants
on March
22, -194&, subject to the
prior subscription rights of war¬
rant
holders
offering
tures
or
may
otherwise.
Any
also include deben¬
acquired
by
the
under¬
writers through the exercise of
subscription warrants purchased
by them, or in anticipation of un¬
Federal Reserve
System, must ab¬ subscribed debentures to be taken
sorb government
securities at the up pursuant to the underwriting
banks' behest and so
'
V
provide therr agreement.
with the additional
The debentures are offered to
lending power
that the System was
supposed by common
stockholders
for
sub¬
its founders to
purvey through scription at the rate of
$100 prin¬
operations of rediscount.
cipal amount of debentures for
>
•
A significant and
perhaps dis¬
quieting development of the 20-
each' 40 shares held of record at
year
1948..', The
"B"
span
is
loans.
as-revealed
in
Char!
the
increase in real estate
This
mars
an
-otherwise
the
close
vertible
of
business
Feb.
on
debentures
24,
con¬
are
initially at the option of
the holder into common stock at
the basic price of
$6.25 per share,
degree the/ .taking debentures for purposes of
banks' loan portv conversion at 100% of the
opulent picture of
lending possi¬
bilities, fOr i^ayiike^
liquidity
folios
is
of the
princi¬
impaired.* On the
othe
hand, the growth of time
deposits
^110%vsiii'fce
1939—
has
abou
kept pace with that of
mortgages
ihus
offsetting in part the rigidity
that
such
bring.
might
otherwis'
*
Federal
le
le
loans
and
Financial Chronicle"
i
System
banks if they resort to
U.
end
-he
upo
Reserve
selling to
effect
a
would
mar'-ed
without
■
Net
b
other
of
are
Y
from
to be
the
.r
sale* of
applied, with
funds,
full, at
a
toward payment in
maximum of $6,558,321,
the
company's
outstanding
instalment notes.
'
Laclede
operating
Gas
Light
Co.
is
an
the
utility engaged in
manufacture, purchase, sale
and
distribution
gas
for
md
industrial
£
/oke
extern
rom
doub
proceeds
debentures
3V2%
Among the cross currents that
ouia
lA.peae
an
easy
now
o
redit from banks to
business, thi¬
ne most to be
feared arises fron
le
added
burden thrown
y'0K«>rs
Prepared expressly for the"Commercial
'
;
pal amount thereof.
gas
to
residential,
uses.
the
public of
commercial
It
also
sells
and other residuals derived
the manufacture of
gas, and
nerchandise gas appliances.
Number 4680
167
Volume
THE COMMERCIAL
&
FINANCIAL
CHRONICLE
Of
course
(1127)
,
.
!
:
-
1
these
I
the
solve
would
aid to airports,
roads, education, the Greek Tur¬
key
Loan,
The Marshall • Plan,
they favor such as
training, that
we must necessarily provide thou¬
sands of additional Federal em¬
military
Believe
•
.
j
■
Present Congress
when I
me
*
that the
say
present Congress,-under the effi-
-
hjcient
and
able
leadership., of
Speaker Joseph W. Martin, Jr., is
working to bring about a sensibly
government
in
the
"Its " work is. to
balanced
States.
-United
J
bring;1'back
harmony J the
into
the
■?;• .extent ox government. This Con1
gress is working to make the gov;
ernment of the United States conthe1 governed
of
heeds
V
and
.
'
with
sistent
-
the
of gov¬
purpose
ernment.
In
'
.
have
not
other
pressing needs of
more
will'be retained
people
and
which
for
functions
their
tions,
will
overlapping functions,
discarded.
be
exist
end, unnecessary func¬
own
n
,
V;;. The problem of Congress is to
give
.
the
States
of
the
the
they
! price they,
United
the
people of
kind and
government
amount
need,
at
a
afford to pay. It
is going to be a big job—and we
are
going to have great opposi¬
tion from those who survive and
can
of inefficiency
in government. But regardless of
the
obstacles, it is our job tq
eliminate these expensive func¬
because
prosper
In
other
be able to break down;
the
tain the
na¬
impede
to, whether
as
countries
the
of
Europe and the Orient would bei
come communistic if we failed to
is
aid.
their
to
come
think
I
therp
something to be said on both
of that question.
Evidence
sides
Switzerland.
desert of
tion.
little
oasis
in
a
despotism and despera¬
And
kind
A
their
government, and the de¬
of
yet,
termination
government, for
no
need
to
are
retain
which
purpose—if
or
national
our
which must remain solif we are to give assistance
to the other peoples of the world.
;
.There are
some
common
sense
fundamental principles which un¬
derlie
any
States
';
may
of
the
United
the
attempt
make to assist the rest
world
in
getting, back to
to
the
Swiss
American
dollar
keep
their
freedom,
franc
rivals
the
sanity. We must never
forget that the last war was like
'
the
It
obvious
is
to
give
we
many
.
These billions of dollars
going to
come
sacrifices
they
—
scales
victory,
of
but
tiles, machinery, everything that
people can eat. and wear, and use
for shelter, or for production. > All
of these things must be produced
by us in the United States through
perspiration, privation and peri
j
severance.
is
It
will
have
the
That
suffice.
not
We
must
which
has
kept
spirit
Switzerland
dollars
that
obvious
also
alone
and
free
prosperous.
spirit must be aroused and
nurtured in the other nations and
among
of the world
will
determined
to
to have a
help themi
The only way we can help
selves.
other
people to regain sanity and
prosperity is for them to be will¬
ing to cooperate with us to this
It
end.
ably
is
true
is
there
inescap¬
a
such
a
weariness, those peo¬
war
indulge in the satis¬
dependence.
to
help them get in position to again
become virile and self-sustaining.
our
enemies.
and
allies
'We ask only for peace, but we do
We ask other
peace.
na-
'be
friendly with each
the sake of harmony.
This certain nations refuse to do.
-It is
and
interesting
speculate
now
to look back
to
what might
as
have haopened had there been no
Pearl
1
.serve
1
Harbor.
because the
go
in. We
fact
did
that
But
practical
no
would
purpose
remains
furnish
now,
we
men
did
and
sacrificed their lives, We did pour
;Our
an
avalanche of goods and
services for our allies, and for our
•own
•a
armed
forces.
We
did
incur
national debt that is far beyond
anything
•
known.
any
nation
has
ever
We do have that national
debt resting uoon us today. We
do have to build and maintain a
•defense—I mav say a super-de¬
fense in the
defense
extending
is not in
free world
a
or
a
It
Check
is
ERP
Expenditures
un-American to
not
hat the billions of dollars
payers
asked
are
to
insist
tax
our
into
pour
Europe in rehabilitation be spent
economically and wisely. It is not
unreasonable that we must mainain
First
air—but
which
will
certainly
be
a
adequate
United
cannot
eign countries and the leaders in
foreign countries to believe and
depend upon us and expect us to
give them military and financial
support, and after a year or two
or
three, the American people
should be forced by mal-administration to the decision to do no
States
of
America
always take care of them.
we can hope to do is to
The best
independent check on ex¬
penditures.
It is not un-Amer¬
an
whole plan is
gigantic beyond human concep¬
tion. The opportunities and temp¬
tations for waste and graft and
this
will be innumerable.
safeguard by economy
We
must
arid
efficiency
period
of
millions
every move over a
if
years
of
dollars
hundreds
of the
of
Amer¬
people's money are not to be
ican
wasted in this venture.
We
tions
must
make
understand
the
na¬
that America is
them on a basis of
being mendicants. We are
helping them on a basis of inter¬
national cooperation.
We realize
not
helping
their
suffering in
world without it
accounting.
proper
a
ples
whose
hard
our
Halsey,
the
those
procoun¬
earned
dispensing
money
are
and
entitled to
are
for what purpose it is being
It is the duty of the Con¬
gress to protect the people's mon¬
and the people's interest in this
ey
regard.
If
-j
&
offered
10
Central
$37,396,000
Railway
and
Co. Inc.
March
on
publicly
first
mortgage
bonds, Series B, 3%%, due Feb. 1,
1968
at
100.35%
terest.
The
accrued in¬
and
bonds
uncondi¬
are
tionally guaranteed
princi¬
to
as
pal and interest by the Southern
Pacific
Co.
The
group
awarded the bonds at
sale
was
competitive
bid of 99.40.
on a
nations
movement
all working to¬
are
we
gether for world prosperity, world
peace,
world sanity and world
then
progress,
will
Proceeds,
exist
there
longer
no
a
these
make
dollars
count
is
together
other
with
funds, will be applied to the
chase
the
$37,524,500
first
pur¬
acquisition otherwise of
or
of
refunding
non-callable
gold
mortgage
bonds, 4%, due Aug. 1, 1949, now
outstanding
in
the hands
public. All such bonds
will
persuade these other
that in this cooperative
can
we
to
immediately be sup¬
Stuart
associates
It
peo¬
suiting communism and chaos,
It is absolutely
*!
tion, it is absolutely vital to our
security in the future that if
embark upon this program we
we
prepared to go through with it,
through the seeurement of such
be
cooperation as will assure that
the American people will not be
disillusioned and disappointed and
will
any part of tlie
being communi¬
It is im¬
complete the job.
perative
cooperation
be
founded
upon
honest administration, in order to
fulfillment of the in-1
tended purposes, and thereby at¬
tain peace and sanity in the world.
guarantee
Nothing like this has ever bei
been tried.
It will cost the
fore
only billions
of
dollars, but will operate to
create inflationary forces which
will tend to keep prices up in this
country. It will tend to strip us
of many of our essential raw man
terials which we need ourselves.
There
will
be
disputes as
to
whether or not the countries we
are
helping should try to repay
us
in some degree by furnishing
us with strategic materials which
we do not have, and which they
may possess in abundance. There
will be countries which will claim
that
although they have these
means of repayment,
they ought
not to be made to repay unless
all countries are made to repay.
There will
be countries which
American people not
will
seek to defraud us
actually
perhaps, or at least some of the
in those countries who
leaders
seek
because
be
cancelled,
$40,723,500
owned
of
by
of the
acquired
so
with
together
such
bonds
now
Rail¬
Pacific
Central
way.
'
The company
ing
also has outstand¬
$32,604,000
funding
Aug.
the
1,
of
and
Series
re¬
A,
due
bearing interest at
1974,
rate
first
of
bonds,
4%%
per
to
annum
are more
than
now
we
rea¬
lize.
American people
The
possible
or
must be
all of these
familiar with
made
probable disappoint¬
these potentiali¬
ments, and all of
ties, because we dare
not, gentle¬
the
dare not risk committing
country to' this plan, giving
ten,
twelve, or fifteen billions
men, we
worth
goods,
of
services
and
then
of
in
good
them
decide
conscience
tinue the program
us
con¬
and thus leave
absolutely without a friend on
the globe.
There
will
be
graft, corruption and
inefficiency. There will be those
America
aid I of
beneficent
and
who will turn on us when we stop
giving.
tries aided
the
between
Finally
as
in
leaders
between
coun¬
differences
several
countries.
well
as
which
are
absolutely
this
gigantic
task of
economy
to
America leading
world Cooper¬
a
ative movement back to recovery,
embarking
are
it is
on
this be¬
the only path we
which
see
60
may
lead
to
can
spiritual
cultural enlightenment,
and material well being
peoples
everywhere in the
on
peace
of
.
date
any
notice
days
at
on
prices
at
through operation of the sinking
fund
on
prices
after
or
scaled
Aug.
1950 at
1,
100.35%
from
to
100%.
All
Central
of
is owned
stock
mon
Pacific
Co.
companies
time
the
The
in
successor
to
Pacific
preferred
outstanding
operating
of
is the
various
of
time
from
in
other
for
1861
constructing
and
lines in Cali¬
railroad
and
com-'
Railway
interest
organized
purpose
Railway
and
by Southern
commencing
western
states,
including the construction, under
the
authority of the Pacific Rail-
road
Act
of
progress,
to
per annum.
series B bonds will be
ranging from 102%% to 100% and
fornia
and prosperity.
cause
least
must eliminate incom¬
we
petents here and there in order to
achieve
the efficiency and
the
We
3%%
new
redeemable
difference of
We must compose
views
peace
The
of
people who in every country will
seek
to
take
advantage ■ of the
vital
rate of
1862, of
Sacramento,
Calif.,
a
line from
eastward
to
meet the line of the Union Pacific
world.
Unless
do
we
this
we
run
the
hazard of confusion and chaos. We
can
where
see
peoples
tired
then
being
built
The two lines
were
west¬
joined
of
suffering, war weary, frustrated,
may sink into an apathy that will
encourage
evil
opportunists to
assume control and involve all of
us
Railroad
ward.
in another world war.
at
to form
tinental
by
of course, that the
risks either way are stupendous.
We have been told that we are
We realize,
Promontory,
1869,
the
Utah
on
May
railroad.
Railway
States
are
served
California,
countries, but that we must un¬
dertake these "calculated" risks
if we are to save the rest of the
from
world
confusion
and
That may be true.
chy.
other
if it
hand,
is
a
anar¬
On the
calculated
risk, then I submit to you that
least we can do for
people
is
economy,
to
the
the American
demand
efficiency,
and honesty to the
fl
last
lars
count,
,%1
and to assure in the
of this vast international co¬
operative movement back to spir¬
itual, cultural, and material prog¬
ress
for the peoples of the
world.
ft
;/
greatest measure possible the suc¬
cess
k
10,
the first transcon- v
Oregon, Nevada and Utah.
people's possible degree in order to keep
machinery the cost down, to make the dol¬
through disillusionment that they
cannot
stories
in
best efforts there will
our
difficulties.
be
that
fact
the
and
have
spite of
the
face
must
Aug. 1, 1949 and thereafter at the
us, simply taking "calculated" risks in un¬
selfish and dertaking this relief of other
defraud
to
they
We
international
this
that
the interest of the nations we
expect to help. It is no invasion
of their independence.
vital to civiliza¬
own
there cannot be disorder, warfare
and
render
is not un-American that
planted by demagogues, with re^
would
dollars
other
in
leaders
self-centered
Efficiency
corruption
that
likely
of outstanding 4s of 1949.
tion
ican to insist that the beneficiaries
question of some¬
body's national pride being in¬
jured. The very fact that we want
will
Must Safeguard Economy and
Obviously,
is
it
more,
Mortgage Bonds
Proceeds to be used in redemp¬
Pacific
spent.
lead for¬
we
Imperative
are
The
for
so
also consider this: if
American
the
of
bushels of
wheat and of corn:, they're hogs
and cattle: they're clothing, tex¬
people
give—not only to our allies but
to cur enemies of World War II.
We have made liberal concessions,
"other
do
Offers Central Pacific
aan
America.
Must
Halsey Stuart Group
to
to
to
we
we
than
in
afford
To
that
sure
know where their money is going
International Cooperation
faction of a complete
get
be
more
we
from the toil, sweat
ples anight
tidhV
:afe
must
expend
degradation, deprivation, beggary
and suffering for them. We must
are
have followed with grants of bil¬
•not
of
our
to Europe," and that would mean
tries
is
going to
billions of dol¬
nations
other
lars.
and
aid
the
lions of dollars and will continue
both
the world, they
time they desire dis¬
peoples
American
terrible war weariness
which breeds supineness. I do not
a fire
breaking out in a neighbor's say that Americans might feel the
estate, but which finally so threat¬ same if they had gone through
what other people have experi¬
ened our own estate that we had
But the grave danger of
to help fight the fire.' We must enced.
never
forget that we not only the present situation is that with
peace and
tipped
the
help
,
citizens
Swiss
of
of
because
,
peoples
is
we
to
rich American take care of us,¥
would, were we not going to
the American people can at any
help Europe at all. As you know,
general election say to their Con^
there are two schools of thought
gress. "We will give no more aid
.vent
there
continue
they hear stories of graft, cor¬
ruption, black markets, of peoples
who sit'.down and say "Let those
.economy
of
think
continue extending foreign aid. If
or
the other peoples. The on¬
ly possible way in which Amer¬
ica can help the other peoples of
the world to recovery is for the
tions
to
at any
can
of defense
measure
another point I
is
We
not
do
down.
weaken
so
must
other
of Europe and
will have to main¬
we
same
interest of
decide
recovery
the Orient
the
less.
consider very carefully-.
Even should the American people
it becomes certain Russia will not
stop
to'others.
be
Tnere
had
help.
the
that
aid
care of them, they
disappointed
and
this
whole' plan would end in frustra¬
tion, waste, and bitterness.
going:to cooperate, until
are
reasonblay
as
ourselves
not
States to take
we
this
do
will
some
would
we
extended
demonstrated
tions
as
tear
not
we
defenses against the oppres¬
of the world as to be defense¬
own
sors
weary
words, until it is absolutely
the
those
under
that
That
our
help
if
these
people, war
they are, sit down and
expect "the people of the United
to
or
defense
amount
the
fact
of
extend
thereof,
we
must
clearly
that we will
spend as much for na¬
to
ment, careful study must be given
so
thai
those
functions
which
the
regardless
we
in the marts of the world.
sett'ng about this job of re-
serve
that
help
well
as
do
we
Even though that may be true,
it is true, it still remains a
might just
Plan
recognize
valuating the purpose of govern¬
•
world.
must
we
we
Aim of
Y
the
to
modification
we
to realize that
They do riot seem
when we enact the very measures
-
fact
much
tional
problem."
f
ployees.
trie
Marshall
r
universal
Plan
Defense
oiher nations under ihe so-called
should get rid of' a large
that
we
how
number of Fecteral employees and
:
Marshall
think
face
many
gress
i
cated to other parts of the world
to the detriment of all the
con¬
and
confronted with the unde¬
niable fac.s thay say "But Con-
'
of
National
when
u
or
peoples
Relation
eminent living witnin its income.
}
emergency
of
who demand all
things insist upon the gov-
Still
•
any
tingency.
the government could not
live within its income and wartimes taxes could not be reduced.
Eventually it would bring about
national insolvency.
jaw
.
,
;
meet
for
neighbors,
according to
our ability to help.
But in help¬
ing we must make certain that
and
to
(Continued from page 7)
•
must and do have
we
compassion
31
32
(1128)
THE COMMERCIAL
&
FINANCIAL
CHRONICLE
ture
The Dynamic Aviation Scene
(Continued from
few
Air Forces and Navy is expected
days ago, the President
signed the Procurement
Apt. of
1948; containing hew provisions
dealing with research costs. It is
to
now
fiscal year to
6)
page
a
June 30,
end
1948,
actual aircraft production for the
approximate about
million
21
15%
pounds.
'
The Plan A program would en¬
tail an expenditure of almost $17
billion
for
the
five-year
period.
.Now this is all very interesting
but
these
plans ' are
merely
academic
•
unless
action.
translated
into
\"
'i.
The all-important question
~
<
.
mains just
.
how much
!
.
re-
will
money
.
and
Navy.
Air
Research
and
come to another
development
'•
,
alone for both the
curement
Forces
.
$176
tween
budget and the sepa¬
service requirements.
as it may
seem, Congress
has - not - been "
not
even
recently,
the
on
the
;
this
There is
condition
a
elements
can
by
June
this
risk
is
30.
against
probable,
and
which
and
as
maximum
a
only in exceptional
is
to
increased
research
fortunate
aircraft
such
look
to
a
new
series
of
times of
stand
may
^
i
air-
that
industry, as a whole is
housed under too
large a roof to
profitably
sustain operations at
current levels of production and
comes
.tures
,
creasing
volatile
national
security
and
,
as
threats
to
strike
in
our
closer
home; it is likely that
regardless
of
unbalanced
will
•
find
it
budgets,
Congress
impossible to
pressure for increased aircraft
appropriations. The Czech crisis!
t
-;
for
example; served
as
a
strong
enlarged aircraft
£
stimulant for
ah
;
procurement
program.
I
have
been
*
radio.
about
commentator's
Lockheed received
for 30,000
planes. I do
which
-
;
men's
order
an
not -know
room
responsible; for
! So
.
attendant is
this information.
I masked ? my bootblack this
morning for enlightenment but he
'
..
wasn't
helpful.;' Finally,
very
in
.would have
done, I. tried ,an, analytical
ap
proach. A military
plane of any
.desperation,
as
you
consequence
woulcL)
least $100,000
per
'
30,000- would
average
at
unit.. A total of
come
to
about
$3
three
Budget
billion- which is
more' than
times the 1949 Air Force
?
jj
1
request.
.funds
craft.
And
where would the
frbm to pay; for air¬
programs- contracted
with
come
other aircraft
builders? v
conclusion
is
that
this
Lockheed
My'only
alleged
order must
consist of
a
can
prove,
a;
expendi-j
heavy
drain
on
;
Even
with
the
implementation
of.Plan Ay disclosed
by the Board;
the recommended procurement of
111 million pounds of
aircraft
an¬
nually is well within the physical
capacities of the industry.
Diversification Abortive
a
statment
Maintenance
working Cash resources of a
company whose physical facilities
remain idle. ;
}.
-
.
asked
that
-
resist
the
,
research.
7
t
his
and
shifting
The
sands are
advised
am
start
a
in
that
bills
While
the
in
excellent
before
have
nature,
chance
of
Congress
companies.
Strange as it may
of
appropriations and
authorizations.
of.
five
a
appropriations
;ry.
We
be
may
with
will
no
type one-horsepower
-
and
ice.
even
j
financially sound, efficient;
lealthy and modern air transport
industry is also a prime requisite
among the for national* security.
For this
reason, the Congressional Air Pol-:
seem, there icy Board was very much con-^
a
cerned
with
the
airlines
and
enced
year
orders
much
as
condition
tried
.
1945
later
that
and
year.
serv-'f'
,!/1
.
of
pressure
increase
load factor.
the
of
break¬
Actual load fac¬
tors,
however, dropped substan¬
tially with increased seat capaci¬
ties, increased schedule frequen¬
cies, decline in traffic and exten¬
sion
of operations* into
territories.
'
marginal
to
of
the
With
few
to
and been
romance
the. victim of as, many
Eventually
dwindled
in
the'spring of
> //
exceptions, the car¬
come
to riers handled their
financing Very
grips with some of its problems; poorly.
During the favorable mar¬
Few
industries
have
experi; ket conditions of 1945 and 1946^
in back¬
For
•
rising costs,
with little improvement
in the
rate
structure, resulted. in the
uneven
example, more than
ago, Martin reported firm
for
300
transports.
again
"
.
This
constant
an
in /
Freight rates oL the < certificated
carriers were/lowered to a
point,
well below the; cost of such
rotate
;
slow
costs, passenger ]
were lowered
increased, until
1947
assur¬
Concern With the Airlines
been
.
rising
rates
or
A
;
-
expected;
increased traffic
accompany
not
Th^
to
" '
realizing ' the - ■ economies
Despite
Com¬
only
a
few
nancial
disappoint;
carriers
houses
in
set
their
order.
fir
Those
ments as have the air carriers;
It companies who did arrange such v.
industry as a financing-/went in for ;the most
recording new peaks paft, for long-term indebtedness
their
backlog orders as progress in profits, the
airlines, as a group! rather than for equity money.
payments are received on
accoun ; were losing their collective
shirt! This was a serious mistake. One
of
completed work-in-process in¬ In
1946, the aggregate operating m a j or
result is • that the • indust^ J
ventory before actual deliveries losses of the
certificated domestic as; a whole;/*is saddled with a
are made.
*
"/ !
carriers was $10 million, with al¬
heavy debt burden., and with a
In
the
aircraft industry, the most $20 million indicated for
last relatively small;equity (!"cqshion"'-
only 25.
Most companies do not
is ironic
whole
reduce
but
while
was
.
In
an.
effort
to
utilize'excess
plant; facilities' arid maintain or¬
ganization personnel, a number of
aircraft companies attempted ven-*
tures into non-aviation fields.
most yritho'ut
A1
exception, 'this di
versification
has
been
a
most
unsatisfactory experience and en-i
tailed substantial losses..
The air¬
craft builders are in
an
inferior
position to compete with eStab
lished companies in the consumer
fields, particularly those with
en-!
trenched outlets. "
\
As
a
means
of
contracting the
industry/ discussions
tions
of
conSolida-;
or
mergers frequently ap¬
pear. A f^w years ago, a
merger of
Lockheed with' Consolidated-Vul-i
tee. was
in
the advanced*, discus¬
sion stage only- to be
upset by a
ruling*,; of • the
Department" oi
backlog
resents
for most companies
rep¬
production volume tha
15%
delivered until two or
years; have elapsed.. This
three
simply
two
or
that
net
ever, unti) recent years it
this leverage could
only
in
ap¬
an
industry's:
for
some
annual volume
one
direction—up.
leverage also has
*
was
are
financing;
jn
need
of
Many car- •
equip- ~;
new
ment and have neither the funds
nor^
the
credit for such financing.
Of coutse,
felt
velopments
operate
tional
However;
of:
habit of oper-j
a
may
future
riers
worth!
leverage in their operations. How¬
that the
backlog at
date must be divided
by
three to arrive at an
proximation of
of the
The airlines possess tremendo'us
means
any one
Such losses represent
year.
a
may not be
such unforeseen deas:
first}/the
-
brief background
view,, is the
lack of
stability which is found
in
the
industry.
It
is
to
this
problem, that the Board addressed
grounding
Gohstellations
a
number
of
mendations.
noteworthy
recom
s-
and
been
1
.
what happened to. the air carriers!
The
airlines have always op¬
n
the ,TWA and Na-;2.
strikes- and the
ultimately eventuate.
ating in reverse—with even more later the DC 6's have
Underlying the highlights of damaging effects.
And
that
is help to the industry.this
no
/
All is not lost.: Both the indus¬
t
try and the CAB have benefited
erated
on an
extremely low work¬ from past experiences;
For the
ing capital and their profit mar-i most part, ' domestic! and overseas
^
gins have been very thin, when route expansions have been
taper-; \
existent.
f
ing, off,/a' better balance between
In
the rate structure;
/and costs is
retrospectTTtS^easy to see
the cause of many of the diffi
being achieved and: the; introduce
culties how besetting the airlines" tipir of nawi'
equipment; are. some ,;
; Both the industry and the Civil oL the factors whichu promise an
Aeronautics Board, ; since the end overall r
imprpvem^nt in ; .airhnq;
of the war, have been
geared to conditions for;;1948. ./I
a
f
program of large scale expan¬
However,; bef6re we discuss the ,
sion based on an
expectation of 1948 outlook; it,; WOuld be well tp
continuing increases in the annual look at a- few/'Cf rithea^reeommcrt■
At
present,
appropriation
services
to
and
contract
end
of
a
provision
in
; act
requires
obligate
their
the
the
funds
authority before
the
each
fiscal year.
Justice.;
This is
r#.v,
'y -V
I-; It is not generally realized, but most destructive "v to * economica I
T
Research and
Development
planning. - The! Board; proposes
.under the law, where a1 combine
i.
Now—-to get back-on the
that" Congress remove
beam. of; such
the time
two ^companies' would
The- Board advanced
a series of
limitations on the; expenditure oil
.have; a-- concentrated " position::in
recommendations
calling, for, ;
th^- industry, the Attorney Gen appropriations-as well as on con-r rate of traffic growth; As a
result]
tract authorizations.
I much enlarged research and de
The presen* within the
era! had no alternative but
to rule
past three years, route
velopment program. The
tendency: is for the services'toob mileage •• has
sound
against this- proposal, i
increased
^ess ,oL
:
almost
I
this, approach. is
ligate all available; funds
obvious -.-.Were certainahc
100%, the investment in flying
and no
mergers "permitsensible person can
contract
authority; .before the end equipment- has increased more
quar-j ted,
however, .fewer;. but "far ofrel swith these
new
to
r
any
having
:
traffic
ground
and ' indirect
expenses
which might have been
however;
continue
one
soldier
'»
cargo
industry has also
in •;*
successful results.
log figures, as
reported, and fre¬
quently very difficult to detect!
and
The
aircraft
that the dynamic selective pattern
within the industry will continue
eaders
the
freight and
volume.
certain,
of
process, costs have risen,
sharply and were beyond; control.
from the
come
their
volumes
sharply, .largely, due: to
In this
headway^
front.
1
of
Mail
of total airline activity.
age
Further, the
planning
may
this trend must
;o
-
continues to increase
rapidly, the
volume remains a -small
percent¬
con-
be expected to
many of the ills of the indusT
As indicated earlier, the clue
cure
without
effect.:
evaporation
While
year
program may make real
Of
course,
increased
dependability
not
were
mail.,;//.'-"/.;' /':/!"/;' //
These measures may re¬
the time limit on expend-
basis
aggregate
good deal of water
evaporated
the
this
the
air travelers. /Poor
standards
reliability and
collective
an
was
spectacular; accidents
discouraged many .: would-
declined
enactment
adjourns
consequence,
of
service
now
summer.
•backlog of the aircraft
industry is
estimated aL
approximately $1,^
separate
be
of
I
remaining on top. Man¬
agement, as always, will remain
a
key- element in accomplishing
quite
go on con¬
current
900,000,000, there is
distribution of orders
series
which
the
are
in their 1947
vol¬
compared to 1946.
as
greater
oeing
drawn to be introduced
shortly and as they are non-con-
ance
,
this
But
5%, with a
actually show¬
The general
falling off of in de¬
mand for all
passenger traffic
was
a
factor
in
this
condition.
Of
entire
regardless of what happens.
industry is rarely
static, dynamic events
stantly.
a
session.
about
decrease
a
umes
right direction has been made.
essen¬
financial
ing
package
be purchased by Congress at
may
only
number of carriers
is too much to
It
the
in¬
of
crease
more
ordinary lines petitive factors will prevail.
prevalent.
is
Much
f
is
manufacturing enterprises. It
is also a rapidly
changing busi¬
ness
that
>
international
the /standard
peculiar to
ratios
proposed remedies, it
be desirable to examine the
that the
in
emergency.
of
\
recommendations
remains
outlays
of
many
the
fact
capital
tially a contracting business
and,
such, does not lend itself to
of
some
obviate
as
may
industry's background and
of its
existing ailments. ,!.>■'•
ommendations.
expect
move
may
builders.
industry will bene¬
to the extent of the im¬
plementation of the Board's rec¬
Tact
The aircraft
industry
awards,
-
which
substantial
advanced, designed to make
for a healthy aircraft manufac¬
turing industry. I To best under¬
The
however,
troubled
premium"
passen¬
collateral
have available today
needed for a complete
be
itures
beyond economic boundaries
may
be considered as an
"insurance
j
be
source
atmosphere.
material¬
rec¬
ger traffic to range
between 25, to
which, if adopted, ,35% / above 1946,
actually/ 1947
very
constructive to volume showed an overall
we
roversial
normal
Over-Capacity
builders
...
the
The cost of
maintaining the air¬
craft industry in its
present size
that
contracts,
in
to
example, most
industry
projections expected 1947
The aircraft
the
mean
The "Insurance Premium"
for •'
cases.
obvious,- however,
survive
competitive
cralt
much
more
unable to
any
,
would
be
almost
in
This
prompt utilization of many mar¬
ginal producers who would
no
stronger in the
opposite direction.,
s.
/
As the international
scene be
;
available
other
simply failed
ize.. For
fit only
platform
production facilities will again be
needed.
traffic
pro¬
vjew of
isting of all these proposals.
be
can
than
would
capacities
builders
program was started. In the event
of
another
crisis, all
important to qualify th$
applying to a single con¬
as
A
„
are
and
excess
aircraft
are
prove
me
ex¬
the
for
loss
The
rapid expansion in time of
emergency. Maximum production
during the last war was not at¬
tained until 45 months after
manufacf
research
apparent
the
mature
more
hie aircraft
for
j. that such
get
conditions.
used as part of the broad
this
were
pro-N
Forces for Expenditures
It
is
forces
is
now
the
"
to
some
and
earnings.
along
curement.
a
obtaining
na¬
climate
working
increased
aircraft
in
the
everything else.
This
\
to
of
the most part
have been accustomed to
earning
15% and more on their regular
with
great desire by certain
in Congress to reduce
exposed
able
world
istent
the Ordnance Bureau
do
field
ance
It
some
with
tain
development work; : Such manu¬
facturers, for example, are in the
automotive, refrigerator or appli-
used
items in the national
budget must
be cut and aircraft
appropriations
/ are
to
in
cor¬
taxes and retire part of the
tional^ debt.
This* means
turers
tract
Perhaps
the Joint Chiefs of Staff
rect
.
advanced
as
President's budget.
be
15%
relatively limited
aircraft program,
*
would
can
these
be considered as a form of
''insurance" in a period of uncer¬
and the Chemical Warfare Service
It
least
at
as
so
of
of
many
may
Services
,
effectively
until
up
Armed
insertion
surely would not result
production business. • •{
Strange
sold,
The
the
/fed provision
15%'
sult
the
-
for
uneconomic
today,
a
ommendations
the aircraft
industry
as
given research contract.
act.
asked
are
for
There
many
point in
taking on research and developr
ment contracts which
might, re¬
rate
/•:
'
of this
there
of
it is true
features surrounding
Ironically enough, while the air¬
industry ttiay be the chief
beneficiary, it had. very little, if
Anything to do with the passage
production. They saw
million. But
remember, there is
mofrelationship whatsoever be^-
.
on a
high
as
that
Congresses but merely
vides
government procurement.
military establishment
the United States. While
craft
divisions
Congress actually appropriate for
defense?
;
..',,,/
*•
: ]
For
the
1949 fiscal year; the
President's
budget
calls
for
a
combined- expenditure
of about
$1,250,000,000 in new aircraft pro¬
;
possible to obtain
the
of
Thursday, March 11, 1948
plane;
.
.
■:
,
,
.
,
•
,
<
.
proposals.
'
■>
j
the pasty research
costly, to most aircraft
,
stronger aircraft companies would
the- fiscal year, of sound
or5
no;;
Simply not; to lose control over
such rfunds.
The v Board vwoulc
have Contracts* awarded*
wr'a1 con
was
very, ieyolvev TM 1 extehf ' of-the
hlticompanies :mate; contraction vof ithe
! and .did not bulk
industry
very large in!
desirable, 'from
order
the ^ economic
backlogs. The chief value
tihuing evajuatibn hasis/^n n a
of research
Ji
standpoint/ of,;both' number, and > The Board
awards was and is
is in favor of a sue
size;of facilities is
in
the.
extremely dif-4 cession of five-year
possibility* of (following ficulb ;to •'
programs, re
ascertain.^ - Thet^Board
through on a, successful
viewable yearly, for
develop- -took- no r official position for oh
research, de¬
I ment and obtaining a
velopment,, and procurement of
production against mergers
; in; the
aircraft! aircraft.'. This has
| contract. For the most
,
i ever,
I
,
nuisance,
as
tions existed;.
.This. is all;
-
part; how-
research
projects
'• were
rigid profit
,
i/
a
restri*u
V*:
■
.
industry,,.;.;.,•
-•1
'V
/
'
'
■
♦
they ,a?e,bo^
effect oh the, indtistry; /.
;S* '
has
times and the labor force
mere
than doubled
£l
A
\
"
The
.
than 10
sv
Cpngressiohai :Board/s
—!?/-Recoi»meha»tihii'-:
The traffic
'ft 'f„.
ri
•
i", '■&
During the period of rapid ex- 1 Ihes -'eould potential/pf/ the;airV
feeihcreased : enory- ^'
pansion -and. eompetitioiv for - newmPusly "'- iF ohiy ^ there ^/existed^ a
routes/ route - awards were often cohditioh. 6f /
Cbmhlete: reliability
based on extremely optimistic
es-»and safety m flying." Toward'this.
timates of
•
-
traffic/ and
costs
and" end
the Board recommehdedL:
*■ V
frequently-were made: faster than
(k) *The target program forMtfr
they: * could * be
effectively ab¬ staRaflbhvbf
.'dltfamoderrf
many-advari^ sorbed! What's; more
important,
.
-..i
tages as it allows management to imarvv.
weather; n^vigatioh';/landing, aids, :
of, .the
aircraft * industry route.. extensions
occupies* plan more
and'/'hirway^ctraffic^cwiitrbF
a very
efficiently, equalizing showed little relation to
special place in the Ameri-1
any over¬ tern proposed
peaks and valleys experienced in
by specaal commit-"
can:
all standards of national
economy today. In a broad! current
route tee 31 "Of the 'Radio Technical
production.;
Moreover planning.
<
*
^
^
measure, it my be considered parts such a
CommfeSibh for Aeronautics»(the
program does hot bind fur
The expected
rapid /growth ipRTGAfp^gram); should;".■/■be-''veitt
The
-
.
changed nowl"OnlV
dations advanced? ^y^thet^opgEes:;
sionaLa Board,/^If ^ implemented^: v
*
Number 4680
167
Volume
THE COMMERCIAL
first priority in the
security and
as a move toward eventual finan¬
cial independence of the air trans¬
portation ' industry.
(b)
Authorization of funds
should be made for the first year's
portion of the program, with an
dorsed
as a
interests of national
endorsement to future Congresses
to
ages
the
United
States
FINANCIAL
&
CHRONICLE
inter¬
mile
for
gateways, shipments are
by domestic airlines thus
adding to their mail tonnage.
•
Post
Office
Domestic parcel post by air
may
have a protracted wait as col¬
about one-tenth that amount. The
national
carried
lateral
actions
must
first
be
evaluated.
One
most
Big
that
the
Board
should
directs
the
but
the
the
and
have
amount
the
and
been
of
Post
actual
efficient and cost conscious.
It is not
stren-
very
too high
was
rate
payments
Four
objected
ously that this
makes
the
of
the
the
Office
disbursement
(1129)
but
there
danger of runaway inflation.
,
generally appreciated,
has
been
real
progress
terminal facilities by various air¬
lines.
•
The
return of DC-6 equipment
regular service soon should
give an important lift to the op¬
and
every
and
recommendation that they
continue1 appropriations
to the
tion
time, the Board has to justify
its actions.
completion of the program.
All •' interested agencies of the
awarded the carriers by the
Aeronautics Board.
erations of the carriers flying this
Air
extra-fare equipment.
These are the more
Government, including the mili¬
'services, industry, and the
private flying organizations agree
tary
that the RTCA plan represents a
desirable system to insure safety
dependability of flight by all
of aircraft under all weather
and
types
conditions.
i In fiscal 1947-48 the commercial
Civil
connection, the Congres¬
Policy Board recom¬
mended that a
plan should be
developed by the CAB for speed¬
ing action on mail rate and route
Air
and for
cases
of pending
There
delay
in
reducing its backlog
cases.
little
is
rate
doubt
and
that
route
the
cases
Transport Outlook Favorable
Despite this cautious
In this
sional
appropria¬
come
note
to
as
the lack of
of
generosity on the part
CAB, the immediate out¬
the
look for the air transport
industry
is as a whole, a favorable one,
Mail
payments
being
in¬
creased by the CAB, not the full
amounts
requested by the sep¬
arate carriers, but enough to be
helpful and to be effective.
are
1,000
pending before the CAB is to the
approximately
$40 million due to" air-trafficcongestion delays, flight cancel¬
lations, and schedule unreliability.
decided disadvantage of many of
the air carriers and the entire air
predictions
transport industry
are
extremely
transportation
dangerous.
Events
are
fast
cases
ing and
alter
operating
lines,
air
about
aircraft, will lose
urged for the
is
support
Full
development
9-year research and
project, estimated at $75,400,000.
The
proposed modernized' airtraffic-control
system
requires
much 'technical development,
through a program" guided by the
Research and Development Board
and financed from the budgets of
services. The Con¬
fhe interested
'is urged to consider favorabty toiese coordinated budget re¬
quests and that necessary funds be
appropriated In each "year to in¬
gress
'
completion
sure
the
of
RTCA
program.
In view of the complete accord
interested
in this program by all
agencies of the Government, in¬
cluding the military, this proposal
may
be
acted upon favorably
within the next year or two.
The
Air
Policy
Board, ' in
another recommendation, proposed
,
'
that:
*
,
,: "The Congress should give early
all
of
class
first
movement : of " which
rflail,
ap¬
involved."
costs
Of course, nowhere near
this amount ever will be awarded.
In another
l Of
course, the air transport in¬
dustry would- be; benefited "sub¬
stantially by this development. At
the present time; the certificated
with
of
to
as
the
Congressional
Board
speeding rate cases.
all fairness, we must under¬
In
stand
determination
the
that
mail rates has
never
been
an
of
easy
task.
Despite
cisms
pointed at the CAB in this
the
various
criti¬
this direction. «■'
•
Perhaps, the implied criticism is
mail
its
making
in
enough
ous
compensation awards.
like
should
I
deviate
to
some¬
from
Policy Com¬
mission which highlights this en¬
what
the
and
quote
President's
a
passage
the
is
railroads
of reve¬
estimated
problem.
The
Commission
declared: "The CAB should act
tire
rates
determining air mail
it grant enough
to keep all the lines in
in
but
mail pay
that
,
business to the extent required by
than
$5 million per year.
fact/that most
to the
be
can
quarrel with it.
no
However, it is virtually the same
mandate laid down in the Civil
Act of
Aeronautics
1938
and
the
"that the CAB
concluded:
give
It is small wonder that the
swer.
this
sation
class mail to air
is
this
effected. It
were
; condition
first
of
which
1
'
'
.
•
♦
-
'<
*
i
*
'
•
.
!
-
-
'
*'
recommended
priate
that
appro¬
1 e g i s 1 a t i 0 n should be
enacted for establishment of do¬
mestic air parcel post,
able,
at
to
nearly
reason¬
(experimental rates, subject
more
curate costs;4 of carriage
ascertained.
As
you
-
/
can
.
ac¬
;
be
r
tional
know,
tonnage
is
highly profitable
solicitation
livery
or
obtained
at
a
rate without any
pick-up
and
de¬
to the carrier.
;It is not generally realized, but
domestic carriers are * benefiting
in
a
expense
limited
way
from,{|Jhis,.inter¬
national
parcel post!, service. In
order to deliver parcel post pack¬
Frequently, we are prone to see
one side of the question. There
but
appears
to be the general impres¬
the Civil Aeronautics
that
carriers
guarantees certificated
fair
a
the investment.
if
rate
of
return
on
This is true, only
standards
certain
met and
are
conditions fulfilled. The CAB can
not
make
subsidy payments to a
carrier unless the honest, efficient
and
economical
management re¬
And as
no clear cut stand¬
quirement has been met.
yet, there are
international
parcel post is now in operation.
It should be an important help to
the international airlines. Addi¬
..
made.
Boai'd
established
During
1945,
the
cents
45
a
per
mile rate for
ton
American, East¬
arid TWA. Here is
United
ern,
how
they
turned
months
ended
stead of
a
out
for
the
12
Dec.
31, 1946 in¬
projected profit of $5,-
estimated
profit of $7,162,000
came
to
but
$976,402;
TWA's projected profit of $3,459,000 turned into a deficit of $9,675,898. Now, the projections of
in
individual
various
CAB
It
is
air
that
possibly
traffic
carriers
made
proceedings before the
not been any better.
have
continue
will
passenger
its
growth
trifcnd during 1948. The overall in¬
crease in revenue passenger miles,
however, may not exceed 10% of
the
6
billion
flown
miles
revenue
during
passenger
1947.
How¬
the distribution of the traf¬
ever,
fic promises to become more uneven
than at any time in the
route awards
"certain
changes \ in
Competitive
past.
will
cause
traffic
;
patterns.;/;,.
While
operating costs
shown
•
«
h
a v e
trend,
downward
no
the
fare structure is much
passenger
ards which makes this determina¬
tion quick
and easy. It is true that
recently, the CAB has come
up with some comparative yard¬
sticks as to costs, but conditions
under which the separate air lines
more
operate differ widely.
It is also very difficult for us
to see the pressures working to
keep mail payments down. I re¬
call
improved
when
I
Aeronautics
proposed
a
was
with
Board,
the
the
over
It's Time to
'
Any
serious
accident
have its effect
as
is
bound
damper
a
on
air travel.
Congestions at airports, unless
improved, will be a disturbing
A
sharp decline in general busi¬
will
ness
not
leave
airlines
the
unaffected.
The
individual degree of suc¬
in the air transport industry
cess
is
selective than at any
more
now
time
in
the
past.
increasingly
tion
of
It Will become
*^0.
route
static
and
inter-rela¬
The
differing
awards,
levels of mail pay,
ment
in
service
types of equip¬
remain
never
factors
are
that
must
be
ignored.
Ift many quarters there is great
never
uneasiness about the condition of
air
many
carriers.
balance
some
bankers
from
In
Civil
Board
rate of 30 cents a ton
do
look
at
leaves the
A
sheets
recognized
what,, the
countries
it has
been
that inflation is just
dictionary says it is,
sudden rise in the sup¬
ply of money.
They knew that,
when they increased their money
supply and adulterated their cur¬
rency, they decreased its purchas¬
ing value; they expected it to buy
less and therefore expected prices
of
commodities and equities to
rise.
We have deluded ourselves
should
time
The
carriers
have
dead
been
this
But
ago.
a
have
who
are
increased
been -deluded
supposed
demand
to
which
puts
and which recedes when
the optimism is turned into pes¬
simism and enthusiasm into cau¬
prices
up
tion.
Inflation-Deflation Confusion
Therefore,
instead
of
experi¬
encing a rise in commodity prices
generally, and stocks particularly,
comparable with the inflation of
our money supply, we have been
confused with a warning against
inflation
today
and
a
warning
to
cause
of the
lit
fact
cancelled
the
were
General
abruptly
contracts, the
placed in a far mor$
mail
were
;
commercial
never
not
position.
Many
ob¬
" freely
predicting
precarious
servers
do
proportion of -a
I recall in 1934 when
Postmaster
airlines
they
the
major crisis.
thiswblow.
from
recover
would
aviation
flounder¬
But it did. Despite their
Without immediate mail
support,
the
surviving
airlines: emerged
stronger than
ing and
subsidy
,
before.
' v
/
<
'
;' Certainly the airlines of today-
ever
.
than
entrenched
better
far
their
counterparts of 1934.' .They
have
adequately ' demonstrated
their
essential
value
fense I structureof
The
States.
the
in
the
washed
aside,
de¬
United
has
industry
bulwarks which carl not be
strong
easily
"he
difficult transition
industry, many of
the
individual
companies
will
correct their maladjustments and
emerge on a higher plateau of sta¬
bility and earnings which will
surpass anything seen in the past.
Despite the
period of the
tiplied
the
<
available
we
Un¬
to
our
have mul¬
of
number
realize
dollars
we will
however much
people,,
that,
,
politicians vacillate from inflation
deflation
from day to
day, the
of prices must be upward.
trend
We
causes
First, there is the
gold supply, Mhich
during the past two
nearly
$4 billion.
Be¬
intracacies—or shall
basis for a mushrooming expan¬
sion of the money supply. Though
the Treasury makes a check pay¬
its account with the Fed¬
ment
on
eral
Reserve
Bank to
pay
the
the gold, it then proceeds
to
make a
simple bookkeeping
entry that the issuance of a gold
certificate is justified, whereupon
the Federal Reserve Bank restores
the
Treasury's deposit
This
cannot
have
three
times
as
as
it
was.
that the
means
Treasury has
paid nothing for the gold, and the
seller has a bank deposit for its
purchase price in our banks. This
increases our money supply by
bank
this
the
deposit
amount)
(fourrfifths of
could
and probably
result, via expansion of
credits, in a further increase in
deposits
of
approximately
Bank
Credit Expansion
other
creased
of v our
source
in¬
supply is the ex¬
tension of bank credit, that is, the
purchase by banks of bonds or
other
and
evidences
loans
often
to
been
indebtedness
pointed
continuing
the
of
borrowers.
out
It
has
that this
of additional money
source
is
money
supply
contribution to
its
adulteration
of
our
dollar.
Actually, most of the increase in
money
supply has been due to
•this
type
of
bank
credit
expan¬
sion.
the
At
beginning of 1946 we
$150 billion money supply,
excluding the Treasury's deposits.
Notwithstanding the retirement of
had
s
Government debt since that time, •>
this has risen to $170 billion at ••
the
beginning of 1948.. The stage 1
and the foundation is laid,
for still further increases*
What '
is set.
cap we
expect except higher prices
and demands for
higher wages to
meet those higher prices?
And
yet our public officials
charged with fiscal responsibili¬
with the
loans,
provide our banks
of making further
of which are long-
many
and
term
unsuited
for
bank
fi¬
nancing, arid further purchases of
assets fdtf their own earnings purposes.
It isri't necessary to go on
•providing-'.ithV commercial banks
with rfcsetH'efe which enable them
to continue to make these loans
purchases; with their ' infla¬
Remedies
that the reason for
continuing the financial policies^
which
provide the banks with'
these additional reserves is that
It
is
they
said
are
,
in order to
Government
bond
necessary
support
the
market.
This is not true.
are
There
other ways of supporting the
bond market- with¬
out
credit
rise
equities.
.
wholesale
The
price»index
of
the Bureau of Labor Statistics has
risen
from
the
during
78.6%
163.7%
last
the
of
ten
1926
that
years
level'to
at the end of 1947.
That
manufacturing through bank
more
arid
more
money.
Two
policies, both of them de¬
liberately developed and-- coil-tinued
bv
our
Government, are Re¬
sponsible for the increasing sup¬
ply of money.
We don't have to
buy gold in the way we buy it.
We
don't have to support the
Government bond market' in the
generally are
way we are supporting it. 1:
about twice what they were ten
We are deliberately and con¬
years ago.
But during that same
tinuously increasing our supply of
period the • supply of money in
dollars
and
moaning
over
in¬
this country has risen about three
creases in the cost of living. What
times, or from $58 billion to $171
we are trying here to point out is
billion. - Let us not delude our¬
means
selves with
action
prices
the idea that without
on our
part
ernment's part
ply of
the
money
near
or on our
Gov¬
this inflated sup¬
will
future
come
arid
down in
remove
the
'
.
tionary consequences.
possibility of a fur¬
in
commodities
and
ther
-
means
ing
or
/
ties continue to
Government
we
.
•
available for spend¬
used to have without
as
.
would
much money
the threat
,
the amount of the new deposit.
However, even this is not all, for
the so-called "excess reserves" in
wake up to an understand¬
we
ing of the fact that
to
principal
say the manipulation—of our
banking system, when gold comes
into
this
country, it forms the
and
against deflation tomorrow.
not
It
the
until
removed.
are
we
the
is
facing the air
are
not
insur¬
problems
today
rate
are
our
has amounted
The
mountable.
even
a
by those
represent
our interests by the idea that in¬
flation is just an activity in the
business world, an optimism, an
or
country.
addition to
static view.
til
knowing.
other
in this
bank
that
two
are
4oo%.'
the
rise
of the tremendous and continuing
increase in the volume of money
volved
Recognize Inflation!
their best to keep us
its
Effect of Gold Supply
There
impression that the companies in¬
long
down
come
-
of
seller of
factor.
(Continued from first page)
namely,
Act of 1938
r
revision when
awafds to everyone's satis¬
faction.
sion
.
,
Parcel Post
Along with first class mail, the
Board
CAB has not solved mail compen¬
may
mitigate against the early enact¬
ment of this recommendation.
were
important
favorable aspects.
There are also many ifs which
can offset this improved
outlook
to
not
causes
years
should
and
Office department would increase
its deficit by some $96 million if
transfer
subsequent 12-month
whenever
such
awards
a
comparable peri¬
CAB has been following it for 10
ods a year ago. Further, a period
years. After discussing the various
of adversity has been good for the
airline costs to be used as yard¬
airlines, it has made them more
sticks,
the
Commission further
.
complete
to estimate the net operating
,
this problem further study
investigation." ";
.
In other words, here were two
railroad space would be retained
by the Post Office regardless of outstanding independent aviation
the air service.
inquiry groups who considered the
best thinking on the subject but
However, because of certain
operational 'problems,
the
Post failed to- come up with the an¬
at less
This is due
ted
Air
there
to
determinations, has attemp¬
the
could be expedited by air were to
be so transferred, the volume of air
nue
rate
making its various mail
United's
commendable recommendation and
pay "per
may continue
illustrate: The
Commission wasn't much better in
that if all first class mail which
$47! million more mail
year. Tift estimated loss
in
certain
gressional Board has no easy an¬
swer.
The President's Air Policy
matter, no infallible formula has
ever
been presented.
The Con¬
honest, uneconomical or ineffi¬
cient management.','. This is a very
At an average
rate of 45- cents per ton mile, the
air- carriers / would receive about
CAB
feel
in
mov¬
997,000 for American, an operat¬
ing loss of $318, 315 was realized;
Eastern's projected profit of $3,754,000 fell far short of the $8,221,876 profit actually realized;
miles ofaiRmail per year.' The
post Office department estimates
ton miles per year.
air
given trend
a
period
carriers haul about .33 million tons
179 million
that
This
tion
the
given situation
There are too
a
overnight.
variables to
income for
proposal must be coupled
the previous recommenda¬
in
many
ing costs and efficiency yardsticks.
the public interest, provided their
difficulties are not due to dis¬
mail wouhb be about
can
indefinitely. \ To
quickly
?
almost
recommendation, the
Congressional group recommends
that the CAB should expedite es¬
tablishment of air carrier operat¬
the
be
can
preciably expedited - by air car¬
rier, and in its considerations,
Congress should weigh the public
benefits of such a transfer agairist
the added
dockets.
that the CAB has not been gener¬
r
consideration to the transport by
air
economy. Mail rate
requesting more than $232
are reported on the CAB's
million
Any
will
made
in
effecting
economies
through joint operation of various
important is¬
sues in the- airline
picture is the
question
of
mail
compensation
year
33
that, if we continue to
inflate the
supply, we shall soon real¬
ize- that the prices about which
money
we
are
now
complaining will be
Piqthing compared iwith those that
we are certain to experience late-
;
'* P
34
(1130)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
.
V
-
.
Thursday, March 11, 1943
.
outlived
now
Tomorrow's
suspect.
severe
and
Whyte
t
make
certain
(Continued from first page)
You might buy a stock at
the
low
point reached by the
bullishness
Here
'is
they
x
.,
stock
American
Brake Shoe bought between
are:
might
50
few
*
now
X
•
-
•
X
started
classic example is the govern¬
ment prediction made after V-J
X
when I
X
tion
famous
"raise
prices"
theory
or
would
be
unemployed
months.
declined in value.
million
seven
It
within
was
that
six
people
or
Truman
market
made
to
has
happened
technicians
also
If
con-;
ap¬
you
attempt
a
y0u
thought at
Perhaps if I tell
once.
you
v
about some
of
the technical data we
have at
my office at Shields & Co;
it
have
equally
a
approach
fundamental
of that
since
glaring errors
mistakes perhaps have
been so well publicized.
to
his
retailing. Stock
no
the
of
beheve that
you,
forecast of the
mar¬
ket by the, use of a
few
charts
and graphs, let me
disabuse
and
hold
avoid "defla¬
their
What
proach.
can
wages
that time needs
tion."
nature
is
there is in the
as
seven
based
mentioning
the
just as much work
nected with the
technical
this predic¬
upon
Mr.
the fundamental or statistical
ap¬
proach—the approach with which
i think most of
you are familiar.
X
there
,
is. in
about- the
simplicity 0f
technical'approach. I think
the
Day in September, 1945, that there
There are two approaches to the
question of when to buy and what
to buy. The first is what we call
longer. Sell it.
any
ago
warning
A
but you
wrong stock and
averages,
the
My only point in
foregoing,
have
gest you get rid of it.
*
weeks
buy
60
or
by
badly, when viewed in retrospect
75%, higher, the stock
you have bought may have shown
little or no price appreciation
or,
during that period, might even
about 19.1 don't like its action
*
market
Some forecasts
economists have turned out rather
find that while the
averages move
doing well. It's
currently about 38J/4. I sug¬
Guard against it by
American Chain bought be¬
pruning, of holdings tween 19
and 201/4 is now
*
the forecaster.
tant.
x
38 and 39 isn't
raising stops.
A
and
'..
•;
By WALTER WHYTE=
Universal
list
So
changes.
Says—
=
have to- re-examine
we
the
Markets
Walter
their usefulness.
but
of
will
give
not
you some idea of the
work
involved.
amount'
We
have
recommend, the
Under the heading of when to
Briggs bought between 29
roughly, charts and graphs cn
al¬
Conceding that both approaches most
purchase of various stocks I and 30 is now about 29. Un¬ buy, the fundamental approach
every stock listed on the
have their strong and weak
takes
into
points, New York Stock
was
consideration
many
practically alone. Every¬ load that one too.
Exchange and
it would seem evident that a com¬
the
things.
Its main concern is tne
more
important speculative"
X
❖
#
body else, or almost every¬
of
both
approaches bonds and the more
broad, economic trend. For ex¬ bination
active issues
should bring better results than
body else, was bearish and
Hold the
on the New York
Curb. In addi¬
following for the ample, the stage of? the business a blind adherance to
either ap¬
cycle we are in—whether busi¬
pointed to all sorts of ob¬ time
tion, we also have charts on the
being, Anaconda bought ness is
proach.
In
fact,
many
of
the various market
stacles in the future, all of
going to be good for a
averages such as
at 31V2-32V2,
stop at 29; Avco period of time, whether it is near larger groups and individual in¬ the
Dow-Jones, the New York
which spelled pessimism. The
vestors use
both approaches, if
a top or at a
bought at 4-4 V2, stop at 3V2;
bottom. It takes into
"Times," the New York ."Herald-!
Commies
were
acting up; Bethlehem boughj at 30-31, consideration many fundamental only for checking purposes. In my Tribune" and "Standard &
Poor's."
own
work, which obviously is Also we have
Truman's policies were rais¬
things, such as bank clearings,in¬
data on the
stop was 28. Raise that figure terest
more'
rates, commodity * prices, concentrated, on the technical ap¬ active commodity futures.
ing (use your own word here) to
This
30.
proach, I find the fundamental data is
Caterpillar ; Tractor production purchasing
in the form of
ad nauseum. In fact
power, and
point and
every¬ bought between 54-55 had a the more
intangible factors-^-such approach is of inestimable value figure charts of which I will tell
in
as the political
thing visible and invisible stop at 53.
substantiating technical evi¬ you more later.
situation, the for¬
Suggest lowering
Taking into con-!
dence
or,
in some cases, as a sidcration the
pointed to lower — oh, much it to 52. Consolidated Vultee eign situation, and all things of a
various charts of
general nature that might influ¬ warning, when the technical pic¬ half
point, one point and three
lower—prices.
ture has only a
bought 12-13 with a stop at ence the broad swings of
potentially attrac¬ point
❖
*
X
prices.
fluctuations, we hayei over:
11, should now have its stop Broadly speaking, it is the field of tive pattern. I believe a great 2,000 charts of this
type showing
So the market
the economist.
many
followers
of
the ; funda¬
being the raised to 12. Douglas acquired
fluctuations, over
;
y
1
the
past
ten
mental
inconsistent brat that it is, re¬ between 50 and 52
Then, of course, under the
had an old
heading of what to buy from a
fused to follow the pattern set
stop at 48. Raise it to 50. fundamental
approach
are
the
for it Instead it went
up and Dresser Industries
more or
turned dull.
week,
the
bought be¬
During the past
pessimists
have 20,
grumblingly taken to the side¬
lines
and
taken
the
over.
tween 21 and 22 with
can
have
now
moved up to
optimists have
True, 1 there is
*
less statistical factors
stop at lating to
dividual
its stop
study
21.
stocks in each
of
trained
X
*
individual groups
a
this
group.
the
A
a
stocks didn't go
downxwas
ap¬
stop
12.
at
With
under
17
raised
parently enough to change the bought
tune.
'
,
X
Now
X
all
with^
X
<
the
this
market
is
nice
and
Unfortnately
isn't
!?to 15.
concerned
a
24, stop 22, is
X
about 27:
—Walter
[The
views
article
do
■
nomic
expressed
Whyte
in
hold
on.
■
■
this
with. those
The
-
unanimity of opinion
holding on to all
anything but comfort¬
our
able. Here and there
should
be
too
stock
a
well
eliminated.
and
Stops,
According to E. C. Sammons,
President, the United States Na¬
Bank
has
also
purchased
When the structure is
completed,
the Yoncalla branch will be
moved
to Drain.
Avery L.
Lasswell, Dou¬
Pacific Coast
dent
County
of
Farmers
and
Presi¬
Security,
will
Orders Executed
on
Pacific Coast Exchanges
ket is its
that the
Stock
Exchange
New York Curb Exchange
(Associate)
San Francisco Stock
Exchange
Chicago Board of Trade
14 Wall Street
New York 5, N. Y.
COrtlandt 7-4160
Teletype NY 1-928
Private Wires to
Principal Offices
8an Francisco — Santa Barbara
~
.
by
President
Sammons,
it
is
learned from the Portland "Ore-
gonian," has to do with the
Oakland
—
for
Sacramento
Fresno
in
of
John
nearly 30
years
staff,
as
F.
a
Huxtable,
charge of the United States
Na¬
Bank's new
Metropolitan
branch, which is expected to open
in 60 days. Mr.
Huxtable, formerly
Assistant
promoted
Vice-President,
to
the directors in
the bank in
Vice-President
was
by
January. He joined
1918.
call
we
Here
we
with
more
pessi¬
or
own
best barometer ,and
a
and sup¬
large extent
future
moves.
which
the
cause
ingness to buy
sell
of
and
this
the
willingness to
countless
vestors
in
fluctuating will¬
or
number
speculators
of
not
changes
which
cause
fundamental
in the price trends
shares.
It requires exhaustive
by trained and competent
technicians.
research
me
repeat because it is very
important:
proach
is
a
or
mainly
the
The
fundamental
ap¬
the statistical
approach
a
study of
technical
causes;
approach
study of effect.
•;,
is
and
mainly
•
has
study
a
of
dis¬
exact
its
science.
weak
effect
of
obtaining
tunities
the
maximium
which
tors
of
earnings
technical
and
One
that
for
reason
of
the
it
is
the
technical
fac¬
often
more
direct
nomic,
study
is
training,
of
or.
the
constant
individual industries
possible
to.be
of
aware
,
it
the
approach is
Each approach
and
strong
points.
by either
direct ratio to the
method
is
in
competency of
.
I do not mean to
get
we,
I
con¬
v
•
discourage
you
from : doing
technical
work.
I
think you :will find if
very inter¬
esting and, later on after the;lec¬
ture, if you want to question hoe
about
than
the fundamental approach. With¬
out the
compulsion of broad eco¬
of keeping
this data up to: date
requires a full
e!ght-hd'ur day of one cpefson. The.
study'and ^interpretation of: the
graphs requires ;ai» lot jnore addi¬
;
increasing
approach, is
it,
suggest,
I
a
,
will
be
glad
portfolio
very
minimum
technical ! graphs
that
study in order to get
ture
are
the
of
to
of
might
broad pic¬
you
a
market.
But
if
you
go ng to base your
buying, and
such graphs
selling
decisions on
you
have had
important changes in price trends., before
adequate
However, its relative simplicity
training, I warn you against it.
is perhaps its
greatest danger. If:
you believe that by the use of
Use of Charts and Graphs
a
fevy technical gadgets '.you are on
To portray the fluctuations of
the road to a life of
ease, you are our various technical; indicators,
in for a cruel
disillusionment.
we use a chart or
graph. There is
It is
an
amazing realization
many people after
working
that
many
years to
a
vague
understanding
of
the
They believe
that the investment of
their hardearned savings
is just a casual
problems involved.
no
magic
significance about a
There
is -no
connection
chart.
with signs of the
zodiaqor crystal
ball
is^
gazing.
It
just *
a
visual
portraval of what has happened in
particular stock, or commodityy
There is an old Chinese prof erb,
(
a
"A
picture
words."
-
is
That
operation and requires a
minimum
of time and
study. This is a
a
worth 1.
is
all
a>
thousand
chart
a
is—
happening
error.
grave
Unless
devote
and
as
time
willing
speculations
feels
he
as
does
-
to
effort
and
study to his investments
business
he
is
one
much
and
to
-
the
profession ^from which
his livelihood and unless
or
that-
his
training
and
background are sufficient to
derstand the many problems
be wiser,to
sult tramed and
vestment advice.
competent
un¬
in¬
con¬
in¬
r
v
ing, I am very happy if
70% accuracy/in forecasts;
sider that above average.
delay or advance the attainment
of these levels.
;
\ c
use
We
various buying and sell-
.
value, but
quite often
factors
purchases and sales.
clusion is arrived at. With all; of
this checking; and double check-!;
suggested.
Prices
will
often reach the ultimate level
in¬
the
use
upon one single v indicator.
graph or. chart Jis: checked
against many others before a con¬
oppor¬
fundamental
volume,- number of. ad¬
Each
fundamental
by the
lot
based
studies
dicated
•
include,
tional time.-' The forecasts are' not
funda¬
factors plus psychological
factors,- will quite often result in
Equally obvious, the accuracy of
volved, it would
forecasts
•
method/ which is
the
which
ing pressure gauges,
„Tbe physical labor
change until long after it
occurred.. The additional use
he earns
Obviously, neither
an
and
accumulate wealth, know
country but all over the
Briefly, it is a study of, so little about retaining it They
'nvest or speculate without
and demand; a
even
study of
effects
Let
change
odd
mental
in¬
only
them briefly later
To continue, we have
so-called breadth; of the
cover
on
also
mental
con¬
varying demand
-
at¬
and,declines,, highs and'
lows, short interest, issues traded,;
these
.
are
The technical
approach neces¬
sitates the study of a vast
amount
of
technical
data
in
order
to
evaluate the relative
strength of
the buying and
selling pressures
member of
Vice-President
We
govern the market's
of
ap¬
tional
an
*
much
so
ply of stocks will to
world.
the bank's
Members
York
•
might have
supply
pointment
Schwabacher & Co.
optimism
often
of the technical
,
on the price of
securities. This approach is based
upon the principle that the mar¬
continue to head the
present staff
as Manager of the new
branch of
the United States
National Bank.
1'
concerned
causes.
A further recent
announcement
Securities
Monterey
banker
not
causes
purchase of the Farmers Se¬
curity
Bank
in
Yoncalla, Ore
suggested at the property in Drain, Oregon, for the
time of purchase have since erection of a new bank building.
New
f
cerned with the effects that these
the
glas
,
•
technical, approach.
the
were
,,
•
the
Portland, Ore., that it has added
34th branch in
Oregon with
tional
of
Quite
fundamental
has
Approach
are
its
which
Technical
'
•
0
ating stock prices is what
Branch
makes
acting
application
these
talk.)
various
count it. In other
cases, the market
to recognise a funda¬
factors
of
explanation
meaning, but I will
piarket;, graphs
will refuse
whicli influ¬
causes
!The opposite approach to evalu¬
that the
isn't
statistical
the
*
U. S. Nat'l Bank of Portland
34th
'
th e
fundamental
approach - requires
exhaustive research by
competent
economists and security analysts.
Announcement is made by the
United States National Bank of
stocks
and
are
Successful
■———i—
Opens
c
ence the. price trends of the
gen¬
eral market and individual
stocks.
not
coincide
■
in my
iust
picture
a
of
what, has
been
in the market.. If is
graphic portrayal of facts.
;
;
The main
elements in the con¬
struction of
a chart or graph are
three in number; In order of their
importance
(2)
volume;
various
these
they
facts.
of
The
price;
(1)
are:
(3). time.
methods
There are
portraving
tyne
of
chart
most' of
the
the
.
oscillators.',
all
any:
vances
a
^
mentioning
tempt to
we
900; monthly:
have .various
studies, .together
without
their
of
extremes
a
which
necessarily at any
of the
Chronicle, They are presented as
those of the author
only.]
time
security analyst.,'
am
studies
mism.
nutshell, the fundamental
approach, is a study of the eco¬
Raise stop to 23.
More next Thursday.
*
"God's
in His heaven and all's well
with the world," the truth is
say:
now
In
addition,
We
average
graphs
take
not
In
.
over
with net changes and
(I
.
more.
charts.
range
very ' im¬
portant factor of public psychol¬
ogy. The investing'and: speculat¬
ing public can often go to wild
as
_
While it would be kind of
comfy to
the trained
stop to
bought 23-
15. United Aircraft
with individual
happiness or
unhappiness. It goes along its
contrary way thumbing its
nose at seers and
hopeful ones
with equal
neutrality.
liabilities
or
moving
of
compared with
phangss
G. L. Martin
in mood' are not timed to'
other
funda¬
companies." All of ; those
between 15 and ; 16 things are
changes, '•( In
fundamental factors. mental
marly
in¬
stop at 12, is now This type of study is the field of stances,, the market will- anticipate
'
X
and
use
technical,approach:
proach is that it does
into consideration the
just the relation between gross and net
stop should be earnings, profits and losses, assets
the
poten^
unfavorable
For example, one of the weak¬
nesses
of
the
fundamental, ap¬
It requires
study of balance sheet items,
the
now
about 1714: Raise the
cozy. All the market has to do
is to go up and make a lot of
people- happy.
stock
years
have available
to
'
Lockheed came into the list
little in the action to give the
complex corporations:
between 13 and 14 with a
optimists anything at which
to point. BUt the fact that
drawn
were
saved
if their
errors
.
appraisal
of
the
many
facts relating to the
management
and operation of
many large and
'j!
serious
tially favorable or
situations by the occasional
In¬
or
approach would. be
some
attention,
re¬
requires
sort
from
you are familiar with is
tvoe.of chart that you see in
New
York
"Times"
or
the
New York "Herald-Tribune/' You
:
Number 4680
Volume 167
example -that in the
:"Times>;theyhave a
fhart of the New York, "Times;'
lo-CombSned.Stock average.,. This
ic what is Jiaown $s a vertical lme
rhart. Along the sides, of the
chart Is a pr-ce scale of the aver*
age running, let us say, from 100
to 125
If during a single day the
average ranges in price between
107 50 and 108.75, a vertical line
bar is drawn on the scale beween 107.50 and
108.75. If the
closing price is 108,,a short horifind, for,
u/ill
Lw
COMMERCIAL &
channel
York
Upper
only
i
.
.
the
av¬
;IWhat
of,
another
£orecastiiig,itrends? I think the
«st"xknowh;!; method is what is
mow** ^s^Me Dow Theory, It is to a new High of 213 at the end
occasion
the ;^ldesf ;|ihd most publicized Of the month, However* the, rail
market
when; I averages
moved iheory of stock price movements average again failed} tbj make - a he
will re-enter the- market at a
sharply out of trend oh the upside,
and commands a greater following new
high. This wa$; definitely level
approximately 28
points
to reach 383.
move-
outside,?: the,
,
islpw
lipwaru trend ehanh^:;"The'iirsf:
t
,To compensate,for
this* the trend channel
trated
>
was pene¬
the downside to reach
a low of 42 in the
,1929-1932 crash,
By 1935, the average had returned
on
the trend channel and has
mained within it ever since;.,
to
warning signal because above-the low. Howevor,4t is pqs->
from
the start, of the ? rise in sible that both averages will make
April, 1942, the ;rails had pre¬ new lows and that; the bull mar¬
viously led almost every rally* ket pignal will be given at a lower,
This divergence in the action of level than
188,. However, the Dow.
very easy
cind
flow of the tide. If
.
to
you go
he seashore you; will find that
.
a
re-.;
averages was definitely
bearish. Qther technical indicators
also turned bearish.
l;.
v
,,
ranging, for example;
from 100,000 to 3,000,000. shares.
The time element is in ,the fact,
that it is a daily chart.
Other
charts portray a weekly range or
monthly .range, There is no. dif¬
ference in principal.
The only
difference is that on a longer time
element it may be necessary to
have widef
price and yoluihe
ranges.: ' A glance
at the idaily
chart will show you clearly the
action of the New. York "Times':
average over a period of the last
two or three months together with
the volume of trading and closing
price level.. The same type of
chart can be used to portray the
actionf of the other averages and
of individual stocks or commodi¬
.
volume
other, day
is
.
coming in.
abpye^ifei^^
not
ity opinion
was about a 1.00,
We
didn't count very far because just
in the stocks beginning, with A
on
and B we found almost 40. So your
one.
,
growth; trend
and
some
even
.
is
still
continuing
growth stocks
are
higher than in 1929.
The
today
you
;;
,
as
a
bit further than did the, previous
Then you know
that,the tide
las changed end is running ?out.
Dow! formulated his famous-prin¬
>
ciple of successive highe and lows
as indicators of the trend in the
-
Major Trend
following .words.
The next trend: is the majoi: or
primary trend.: A maj or uptrend
is called a; bull market. A major
"It is
,
j
;;
•
at
44.00.
The
next
inter¬
,
demand for stocks. Obviously, the
causes for these changes in supply
back to a shade below the
previous downside penetration at
and demand
age
185 and
53.
was
a
recovery
of
.
a:
buii period
the, average of
ap-
•
one
.,
j
case,
Suppose,. for i example,
a:
.
•
; ,-v;
.
Most of these
charts
v»
■
are on an
.
The
scale.
arithmetic
units
are
,
equal distance apart.; .Fpt;
ample, the distance between 3
4 is the same as between 24
25 and likewise the distance
an
tween 10 and 20 is the same as
ex¬
and
aqd
be¬
be¬
However, many
tween 80 and 90.
technicians prefer charts that are
based on a logarithmic scale. This
important ele¬
in price change is not the
is because the most
ment
the percentage
"An example may make
this; clearer.
Suppose one stock
mpves from 5 to 10, another moves
point change but
change.
from 25 to 30 and another moves
In each case the
from 100 to 105.
stock has
advanced
5 points and,
ah. arithmetic scale, the move
on
,
-
suppose
shares
had
you
each
of
%
are
only averages* These
declines are seldom i
time it reaches 35 there is
,
stock
_
or
and
16,
40 and 80,
are
important not only to the
speculator interested in profiting
from the intermediate swings, bu'
to the investor interested in pur
All show l0O%
250; and 500.
advance.'
or
On the
advances men¬
tioned in the arithmetic chart, the
advance from 5 to 10 would oc¬
chasing or selling securities at the
most
advantageous price level
While,a major bull market may
result in a price advance of ie
us
say
100 points in the Dow
Jones averages, the intermediate
swings may have traveled over a
range of 250 points.
Ability to
five times the space of. the
advance from 25 to 30 and 20
times the space of the advance
cupy
from 100 to 105.
From a "when to buy or Sell"
angle in the technical approach,
our first
problem is to ascertain
in what stage of the trend we are
at the
moment. Actually, there are
four trends operating in the, mar¬
ket at the same time.' They are
(1) the k>hg-term growth of the
nation trend
(2) the major trend
(3) the. intermediate trend (4) the
minor trend. The two most im¬
portant trends are the major and
the intermediate.
The (growth, of the nation trend
has been moving slowly upward
since .parly ' colonial days and as
far
as
knpw, is still advancing.
we
If we,start at 1897
op a logarith¬
mic chart of the Dow-Jones in¬
.
find the high
and low
range was between 58
(high).and 29 (low). If we draw
a line
from the high of 58 and
connect each successive high frorii
that time until today, and if we
draw a line to connect each suc¬
cessive
date,
we
low
29 in 1897 to
find that the market has
moved in
for
we
a
front
•
slow uptrend channel
50 years. At the moment,
the
average
at ,168,' the
over
with
lower limit of the
upward trend
.
to;
a
about
about
high in February, 1946 of
207 in the industrials and
68
in
the
rails.
Then
a
secondary correction carried both
averages sharply lower to' 185 in
the industrials and 60 in the rails
by the early part of March. After
reaching these low points, the
market
rallied.
The
industrial
.
in April penetrated its
high to reach 209 but
failed to reach its
forecast these, moves obviously re,
former high by two points. This
suits in substantial profit oppor
was
the first really
important
tunities.
v• I. ;/" ,.>[
■" ;• ■:;;>
warning signal of an imminent
downtrend. At this point, several
Superimposed upon the inter
mediate trend are a large number other indicators began to
give
of minor swings. These minor cautionary signals. It was during
swings usually last from a day to this period that the boom in "new
two weeks, arid result in price issues"occurred,
People
were
changes of 5% or less. They are rushing into brokerage offices to
caused by. the. market becoming buy these speculative; new stocks.
temporarily overbought or over¬ Most of them were shares ; of
sold or by a quick interpretation smaller,
privately owned com¬
ol news events. These moves ate panies
in > the consumer i goods
in most, cases, impossible to pre
group
the type of thing that
diet.
I
have
never,
seen
any had boomed during the war be¬
method, technical or otherwise cause there was no competition
that has been able to forecas
for the public dollars from the
with ariy degree of accuracy these durable and semi-durable groups
minor term moves. Even if you which were all engaged in war
were able to, forecast 75
% of these work. In most cases, these issues
minor swings, the cost of commis
were not sold for new money for
sions
and
taxes
would
un
expansion but were "bail outs";
doubtedly resuIt in a loss of that is — the owners sejling out
capital. They -■ are best avoided to the public at a high, price.
However, I have a number, of However, the public was opti¬
minor swing indicators.
I study mistic at the moment and rushed
them in order to more ad van
in to buy these speculative stocks
tageously time iritermediate term arid pushed prices sharply higher,
purchases or sales.
All during this period stocks were
.
dustrial average
a
sup¬
ply of stock fpr sale and the stock
reacts. This narrow trading range
Or shelf may continue for a num¬
ber of; months,
Then suddenly,
tbe supply: and demand picture
changes. We find that when the:
stock reaches 35 it does; not halt
there.
-
There is
demand for
a new
the stock. Wpere formerly buyers
wqre not willing to i pay, over 35,
a
.
8
,
and .35: for a period of -time, Every
time it reaches SG there is a de-^
mand for the stock and it holds
at- that level.
Conversely, every
tpey are now bidding higher. But
the. supply of stock at 35 has now
change of trend is indicated. In to penetrate the previous Febru¬
changed and .sellers are now un¬
advances or
other words,' if only one, average ary high. Thus for the second time
ever in a straight line.
Quite often makes a new high or low, it can¬ this! divergence between the two willing to sell at that price. It, is
each major moye consists of five not be a very important moye un¬ averages signalled the end of the evident that the supply and de¬
mand pattern ' has now changed
stages^-three; in the .direction of less ,the other averages confirm it. intermediate move. After b de¬
the main trend and two corrective
cline into early December, the and the stock!may move up to 40
I There are other principles and
rail average rallied to a new high or, 45 before a new supply area is
reaction, moves in the opposite rules in the Dow
Theory but the
direction.
at. 54.17, in early January of this reached or the demand dries up.
"[» , ;,v > >[ ;/>>/.
successive highs and lows/ and
From; a technical approach,/ we
;. The intermediate or secondary confirmations by each average are year but the industrials failed to
are not concerned with causes of
confirm by several points,
trend is superimposed upon the
perhaps
the
most
important
the change in supply and demand.
major
trend.
An
intermediate features. Using j ust these two f Here again, the divergence be¬
centages
distances. But
purchased 100 term move
usually lasts two to basic principles, it might be in¬ tween the two averages resulted
before the
six months and accounts for an
teresting to review the action Of in a change of trend and the in¬
advance began.
In the first in¬
advance or decline of about 10%
the two Dow-Jones averages from dustrial
average
for the
third
stance
you
would have 100% in the
time in 18 months declined below
averages.
If the major Jan. 1, 1946 to date.
profit at 10, in the second case
trend is lip,, an upward move in
165. Again for the third tihie the
Ever
since
the
low
you, Would have 20% profit at 30
the intermediate trend is usually
market, met support in that area
reached in late April of 19>42
and in' [the final case, you would
followed by. a corrective reaction
arid the average held at a low of
about 93 for the industrials and 24
have only 5% profit at 105. The
that retraces about one-third to
for the rails—both averages had ! 164.07- on February 11. The rail
vertical logarithmic chart portrays
two-thirds of the previous ad¬
been in a major uptrend. On Jan. average continued its impressive
graphically the percentage change.
vance
action and.held at a low of 47,48
before the uptrend is re¬
There is the same distance on the
1, 1946, the industrials were at
sumed.
These corrective phases about 195 and the rails at 64. This or more thari eight points above
chart between 1 and 2 as there is
running counter to the main trenc intermediate advance continued the previous May. low. Since that
between
will occupy equal
stock
has, been fluctuating between < 30
-
ties.
.
but thq techriiqal. patterns t quite often resem¬
ble-qach other., A study of re¬
versal patterns is quite important*
the.rails to approximately
This,
-
likely to be :dif-
are
ferept ;in; each
proximately 50 % of; the previous
decline ,by the industrials and ap¬
t
,
mediate move, was an advance
thdt carried the industrial aver¬
as long as
high point ex¬ proximately 33j/3% by the rails or
ceeds that.of previous high,points. just, aboqf in line with noririai
downtrend. is; called, a bear mar¬ It is> a, hear period' when the tow technical procedure,'
', ■;
ket.,. These major trends, usually point becomes lower than the pre¬
; i The/ next ; interrriediate move
last about two or ,three years -for vious Jow, points."
was a decline; that ended iri late
advancing . trends, and appro^iV
That is only* one part of fthe May,
On the decline, the rail
mately. 15 to 18 months for the de¬ Dow
Theory, Another important iaverage reached b new low at
clining trends. These, figures,are,
point is the principle of confirma¬ 40.43 hut the industrial average
of ; course,; only, average figures
to
confirm - a
renewed
tion. There are two- Dow-Jones failed
There are many cases fin which
averages
the industrial average downtrend by holding above; its
both bull, and heart markets have
and the rail- average.
(Actually, previous February low of 160.49
lasted for. longer periods of; time there is a third
average — the and declining pnly to 161.38 The
Once a" bull market has started,
utility average, but this average next phase was, one of advance;
the advance is usually at leas
is
not
included
in5 the
Dow The industrial average reached a
80% and in the case of a bear Theory.
Under the theory* both new high at 187.66 in July but the
market, the decline is usually the industrial and rail averages rail average failed to confirm a
around 33 %. Here again the per¬ imust reach
ai high or low before new hull market by its inability
,
Theory signal con¬
findings of the other
fit: is, important to be able to
recogr>ize, at an early, time,; the
reversal; of an old ^trend arid,the
beginning of a new trend. ..When
a. trepdi reverses, it is because of,
a, change in the supply of or the,-
in October, 1946 with the, indus¬
trials af a low of ,160.49, and the
rails
Dow
the
indicators.
the trend had
first
,a point
the previous wave
the
.
a
firms
changed to a bear market. The
phase of the? decline ended
v
it, recedes, it,recedes
before
changed arid the bull market had
rqach/ quite as high
the beach
and when
tbat
and indicated
know the tide
,
,.
their previous lows of 185 and 60
But suppose the next wave does
how
.
.
hat happens
one of the tools
technical approach.
Qther ipdicators, make it possible
to predict a change in the trend
in
Used
Finally, in September, both the
industrials and, rails penetrated
.
the
theory is just
,
.
of
,
the. two
wam .Comes in, breaks, and jtheri
-'"11 goes hack..Another wave comes in
line; is ■ drawn ! across the
It is amazing to note that;
vertical line indicating the closing
today, a .vlittle:^ higher on the beach,
nrice. This takes care of the, price, with 4he ayerages, selling at less
;>#hd doesn't recede quite
element. The volume (eIement is 'J',!*int£;^hal1E'^pf-; their- v 1929 highs,
Si as it did the last time.
covered at the lower. part of the;
ire?. aj-e., imany stocks that are The^^xt wave. reaches a( little
chart where there is another scale ^p^^jhmher today than they
up the beach. As long as
zontai
bull market signal is given
188, the follower of the Dow
Theory will re-enter the market
three-.points above jwhere, th£y
sold ofter being out. of the market
iQt qt least a year and a half; Alsd
at
he industrial average reacted to
199 in early May but recovered
ban any, other., In essence,; it is
to understands Its, basic
approach is the same as the ebb
3$
new
methods hands.
of the
some
(1131)
passing from stronger into weaker
After Caching 209 in April,
;Meth«i^^|^f'.orecasting Trends
On
two. occasions did. the
erages
nr
is about 135 and
limit is about 260.
FINANCIAL. CHRONICLE
average
previous
the rail average
We
are
If
a
;/
trading
mentioned
with its
concerned
more
effect..
»
,,
.
range
above
-
'
!.„■
r,; r:(
like the
occurs
one
after
a
sharp
it
decline, the chances favor
being an accumulation or de¬
mand
near
a
occurs
odds
area, and that the stock is
low. If the tradirig range
after
favor
a
a sharp advance, the
distributional or sup¬
ply area and the proximity of a
high. However, these areas seldom
are
as
regular and even as the
time, the Averages have rallied to
clearly defined range of 30 to 35.
[approximately 168 and 50. That is
The patterns are quite often ir¬
where we are today.
Under the
The., fact that they are
Dow Theory, the last Signal was regular.
irregular sometimes gives us a
|the bear market indication of clue to a
recognition of a change
I September, 1946 when the 185 and
of- trend b^1/the; formation of a
[60 levels were penetrated on the
reversal pattern.-.
;
^
[downside. We have received, no
There are several reversal pat¬
new signal since that time.
While
terns.
The rail average, at,, the
i the averages have failed to give
.
b
bull
new
signal, they
indicate a con¬
moment is an example of one[ The;
rails.declxried to 44 iri October an<J
further downtrend.
aftex; backing and filling between
44 and 53,; declinedsharply to[
40,43 in May. Thferi they rallied
iriarket
have also failed to
tinuation of
a
not only would the in¬
dustrials have to penetrate the
October, 1946 low of 160.49, but
To do this,
the
by
rails
would have
to
confirm
selling belovr the May*
1947
low of 40A3. A penetration by one
without a confirmation
by! the othrir would have no sig¬
average
nificance.
To indicate
a
into, the 44-53 range and
have backed and filled in roughly
back
that
area since. This type of, pat¬
tern is called a, head and shoul¬
ders bottom with the left shoulder,
t
at >44-53 from October, 1946 to,
April, 1947, the head at the May
must sell lpw. of 40.43. arid the right shoulnew bull
both averages
above their previous highs, This
would be the July, 1947 high of
mafket,
,
der in, the 46-54 level from.June*;
1947 to date. A head and shoulders
187.66 in the industrials and the pattern is perhaps one of the
January, 1948 high of 54.17 in the clearest indications of a reversal
rails. >".
; ' .'
At, the top of the market^
V
■ pattern.
you quite often get a head arid
The Dow Theory Practical
shoulders top, that is, the opposite
of the pattern we have just de-*;
The Dow Theory is a simple
scribed.
For
example,
a
lefts
and logical one. It has worked in
fcboUlder in 40-50 area, a head at
practice. It is far from perfect be¬
55 and a right shoulder again at
cause obviously the very nature
■
of the
,
theory necessitates buying
and selling after the market has
had a substantial advance or de¬
40-50 arOa.
There
are
other
types
of re¬
Another is double
cline from the low or high point. top or double bottom where an av¬
For example, the last signal re¬ erage or individual stock reaches
sulted in selling stocks at 185 or a high or low and later reaches
(Continued on page 36)
-28 points below their highs. If a
versal patterns.
,
r),
,
MA'
1-1-:
.V ,
1
1',
:■
THE COMMERCIAL &
36 : (1132)
"vw»
CHRONICLE
FINANCIAL
in
nish-support on any further test¬
ing of the lows.
') But even if the 160 level is
and lows, number of daily ad¬ dict the approximate- amplititude penetrated, it would not change
(Continued from first page)
the same point and holds.
An¬ vances and declines, short sale of an advance or decline. In the my opinion that the trading range
outlined above, you will of the last 18 months is. an ac¬
other example is a rounded top studies both in round lots and odd chart
area.
It
would
be
or
rounded .bottom
where
the lots, odd lot purchases arid" sales, note that the stock in question is cumulation
stock forms a sort of dome pattern price of the ten most active stocks in a trading range between: 29 quite
normal to have :a quick,
nt the top or bottom.
There are and other internal market factors. and 32. A rally to 33 would in¬ sharp shakeout and a penetration
In some cases the actual figures dicate an uptrend.
of the previous lows followed by
some ten or fifteen other recog¬
nizable reversal patterns but the are used and in other cases vari¬
Under point and figure theory, a quick rebound back into the ac¬
ones" mentioned are pOfhaps the ous moving averages are used.
the stock should rally about as cumulation area. It would have no
more important ones.
far as the width of the base. The great significance if the rail aver¬
Answering When to Buy or Sell
base in this case is either 29 or age failed to confirm by breaking
Measuring Present Situation +
All; of thbse various working 30. There are six columns from the May low of 40.43. With the
At the present time, the aver¬ tool?
that I have been mentioning the first 29 to the last 29, inclin¬ rail average now close to 50 and
ages give
no
clear-cut reversal are used to answer the "when" to ing blank spaces. Therefore, the with its present bullish pattern,
this does not seem probable. Per¬
signal. The rail average has a po¬
buy or sell question. Again I cau¬ stock should rally six points'from
tentially strong head and- shoul¬ tion you that you cannot use just 29 or to about 35. If 30 is the base, haps the main reason 'why the
ders bottom but the industrial av¬ one indicator or method
there are eight 30s, so the second industrials will not break their
blindly.
bottom but you could also say it
bas formed a triple top. Actually,
working tools.
it
dication, then
has' been
relatively
a
must
against
indicator
an
If they all,
or
the
same
majority, give the
great
narrow
check
signals of the other
the
in¬
decision
a
be
can
trading range for over 18 months.; arrived at./,»'
r.;..;
Another working' tool of the
In answering thb "what" to buy
technical approach is the use of
question, I use "still another type
trend lines: In discussing the Dow
of chart or graph.
This."is what
Theory, it was pointed out that
is known as a point "and figure
a trend is formed
by a series of
chart. I have charts of this type
successively higher or successively "or almost
every issue on the New
lower tops, and bottoms.
If we
jYork Stock Exchange and also
draw " a • straight line across " the
quite a number pf New York Curb
tops and across the bottoms we
ssues and speculative rail bonds.
breaking of
.
Have
trend line.
a
indicates
a
For example,
change in trend.
a
trend line drawn from the August,
159.95
of
1945 "low
through
the
slightly above 200 in August, 1946.
there
15 points 'higher
Theory.
At the
are
no
important
.
"Bear Market Reversals."
roughly
averages,
the New
'Times" average, the New
"Herald
Tribune"
Standard
n
all,
and
&
Poor's
have
we
moving average!; A moving
straightens but the sharp
up and down fluctuations of the
market.
For example,
I use a
Dow-Jones
minor trend.
line chart.
chart,
All
2,000 charts
a
the industrial
average sold at for the last 21
hours.f The figure is obtained by
almost
and
ex¬
Volume
only
point chart por¬
enter
the
pattern
notation
29.
or
made
is
until
the
full point to either
Fractional moves are
a
disregarded entirely. It might be
several days before either 31 or
29 is reached, or the stock
may
from
move
29
and
The
a
average
to 31 and back to
30
to 30
up
notation
either
n
for the
major term trend. If the actual
price of the Dow-Jones industrials
crosses the moving average by a
certain amount, it quite often in¬
200-day moving
time
ther
31
price for the last hour added. I
also use a 28-day moving average
and
point and figure
a
main
stock moves
simply adding; the prices of the
industrial average for each of the
last 21 hours and dividing by 21.
For the nekt hour, the price of
22 hours ago is dropped and the
trend
In
the
ndirectly. A one
trays graphically the fluctuations
Of each full point. If we start, for
example, at a price of 30, no fur¬
the
that
for the intermediate
ple
of
may
case
be the
day.
same
figure
and
chart
make it clearer.
of the moving aver¬
ages is to chart the net change of
the moving average. For example,
if the 21-hour moving -average
32
advances 23 cents from that of the
29
use
the
previous hour's moving
that advance is plotted
would
as
hour
The
bought
a
When
one
or
plus
or
and starts to reverse,
is quite accurate in
also
use
major.
minus signal
it very often
signaling a
studies
gap
technical approach.
when
in
In
Jhigh of
causing a
ranges.
A gap occurs
of
reversal
sufficient
this
gaps,
time
various
any
Also,
move
to
31
necessitates
as
week or all in one day.
event, the chart pattern
has
there
give
no
is
time
no
types
indirect
an
amount
significance.
indication
of
clue
to
the
of volume.
Some of the working tools men¬
before such as the Dow
but we haven't
discuss them
tioned
to
Theory,
trend
lines,
demapd
evening.
Another series of working tools
is the so-called "breadth of the
areas
and
terns
-
can
be
supply
reversal
40%
cycles.
or
(3)
in
more
a
the
price level.
(4)
Practically no
public interest in the stock mar¬
ket.:^) Price-earnings ratios
price-current asset ratios
attractive
levels.
at
and
very"-
Leading stocks
of
low
160.39.
If
count
we
February,
tops, the
implication, if 160 is broken;
on
a 6-9%
yield '
(6) Average daily volume
ranging from 300,000 to 600,000
shares a day, without any
appre¬
ciable
pickup during sharp minor 1
sell-offs."^ f ■
,Ypu wiil note
elements
:
• v.
_
that most of these
present today.
are
incorrect; Also it is very
the pattern'is quite
area.
Also
early ,1946.
correct in
the
downside
ob¬
about
were
70%-80%
forecasting the lows:
"what" to
a
time
buy
such
sell question. At
or
the
as
of 5 to 1 and would
How
possible recession in business? One
have
,
to that is that the market
answer
has
been
moving in
direction
from
opposite
an
business
for
We have
last 18 months.
already
the
53 point decline in the aver¬
a
decline
That
ages.
forecast
presumably
business recession
a
that
hasn't yet happened. Perhaps the
stock
market
has
already dis¬
counted a slight business reces¬
There
and
expect the market
we
sion and will
is
reaches
that
need
no
ahead long be¬
move
business
be
seven
its
low.
should
we
the
near
400
from
years
level six
or
now.
"Rails Represent Outstanding
Purchase"
higher in the face of
commodity prices and a
lower
phase
decline
can
will
move
fore
the
a
-
to
present, indi¬
vidual issues have quite diverse
patterns.
Many
reached
their
downside objectives in the first
of
to be
seem
pretty good wager.
had
before, I use the point
figure method to answer the
and
;
As for individual stocks, I be¬
lieve that rails represent
an
out¬
standing purchase. Their technical
action has been excellent.
the
industrials—very
industry
sumer
I
like
goods
or
steels,
.
t s,
m e n
shares
As for
roughly—I
prefer the durable goods
heavy
or
above" the
con¬
soft goods stocks,.
machinery
equip-
automobiles, agricultural
implements, oils, household appli¬
built up substantial .base patterns.
In some cases, they have
pene¬
trated these ranges on the upside
follow exactly the 1919-1921 pat¬
tern
when
commodity
prices
issue
dropped
the
and indicate individual
market and business
ket trends of their
bull
mar¬
Other is¬
own.
have just about reached their
lows but will require considerable
time to build up base
patterns.
sues
Others are in a relatively weak
technical position. Constant
analy¬
sis of the fourteen hundred
or
issues
charted
often
opportunities
proving portfolios.
up
many
turns
for
im¬
The combination of these point
and. figure charts together with
the various
other studies men¬
before, to explain fully
these working tools I would
the entire
only
you
I
course
have touched
of
10
lec¬
them
upon
briefly. Again I warn
not to rely upon one single
very
sharply
and
the
stock
dropped with
fact, a correction of the ab¬
normally high agricultural com¬
modity price level is a very con¬
it.
In
structive
if
development.
follow
we
tern,
it
der
the
of
of 63.90 in
trial
pat¬
logical that
seem
pattern.
started
advance
386
in
Frofn
low
a
August, 1921 the indus¬
average
year
an
even
1§19-1921
the
would
But
should also follow the remain¬
we
that
eight
an
reach 840 by
indicator.
A combina¬
tion of the various
working tools
must be used.
v
v
.
up
a
Perhaps
you
Theory,
bear
that
interested
are
still
in
a
However, I believe
long trading range out¬
by the industrial average
the
for the
mately
past 18 months will ulti¬
turn out to be a large
accumulation
area'
with
stocks
passing from weaker into stronger
hands.
Since
liquors,
as
type of company had little
competition
dollar.
for
the
may
years,
their
be
the next few
over
of
sales
record
industry shares will show greater
the current
stocks
averages
have
built
will
undoubtedly
move
price appreciation.
We
have
individual
wrote
issues
a
you
if
-
to
time
mention
I
recently
but
summary
with
patterns.
to
not
issues
on
individual
attractive
technical
I will be glad to send it
you
write
me.
That is
about all I have to say.
,
September,
1946
when
the averages first entered
170-160 range in the DowJones industrial
average, ! have
the
would
seem
running
late
out
for
a
May, 1946,
quite
average
a
element
also
it
probable that time is
have been in
is
Bears"
time
a
bear
the
bears.
We
bear market since
or
bit
21 months.
longer
than
market.
Also
This
the
it
is
interesting to note that the time
pattern after the first World War
is
being
The first
closely
war
followed
ended in
today.
November,
consistently reiterated the opinion
1918 and the market reached its
that the 170-160 area was a
longterm buying range. This area has top one year later in
November,
and
been
dozen
used with
entered
on
occasions
more
in
the
than
past
a
18
months and each time the 160-165
area
I
has furnished strong
support.
expect it
will
continue
to
fur¬
1919.
1921
It reached its low in
or
21
months
European phase of
ended in
the
period will not be duplicated.
If the indus¬
;vV ' '
the
From
no
consumer's
ahead too, but I believe the heavy
once
'
This
or
No matter how prosperous
things
war
ad¬
moving
"Time is Running Out for
in
market.
lined
such
pictures, department stores.
Bear Market?
are
we
That
advance.
ledjDy the luxury type
possibility of substantially higher
what position the market is in at
the present moment. Under the
Dow
stocks
was
They
base patterns that indicate the
levels.
We Are Still in
vance
is
1956. That obviously
individual
1942-1946
at
That
uncertainty is ended, the
and
relatively backward in
was
1929.
1921-1929 advance, we would
is ridiculous but
chemicals, etc. This type of
ances,
culminated
September,
advance of 600%.
the
technical
pat¬
point and
figure ' charts. However," the most
market" studies. These consist of
important feature of the point and
plottings of the volume, new highs .figure chart is its
abality to pre¬
160
need
volume other than the fact that
the number of price
changes will
day is above the
the previous day, thus
"gap" between the daily
are
or
or*
that
jectives of individual issues out¬
lined by the distributional tops of
all
x
a
column
one
There
x
would be exactly the same. Thus,
It can be seen that each vertical
the
the
the low of
next
month,
high of one day is be¬
low the low of the previous day
or
x
followed by 30, 31, 32 then
31, 30, ,29 and then '30, 31, and 30,
31 again. The next move is
30, 29
followed by 30, 31 and 32. This
price movement may have taken
place over a period of a year, a
change in trend.
I
tober
the
favor
and 29
of the oscillators reaches
extreme
an
intermediate
are
As I said
there is already a 31 in the first
column.
After 31 there is a 30
or oversold and therefore
reversal of trend whether
it be minor,
tions
Seldom
x
switching to the next column
ognize when the market is over¬
near
x
this case, the move starts at
in the first left hand column.
The next change is 31 then 32.
oscillator.-. Its
an
x
In
is in attempting to rec¬
use
x
30
plotted as —23.
This
plotting of net changes
is, .known
main
of
24.
tures.
be
of
type
clined; to
tools, that I use. In addition,,
trial average declined to even 140
are, other, technical indica¬
tors that J did not even mention. and advanced 600% as it did in
30 xxxxxxxx
+23.
A decline from the previous
months
basis.
there
31xxxxxx
average,
as
decline
paying dividends
main
33
Another
of
Fifteen
downtrend. (2) Three
intermediate
more
149
to
136
it must!, be" realized that is
depending
on
You must; remember^ that
our
objectiyes are only approxi¬ whether a three, point,, one point
of the nation "trend is'
mate and that quite' often; possi¬ or half point chart is used. On the growth
bly 30% of the time, the indica¬ other hand,; a. count across ■ the slowly moving upward. While the 5
to
tioned earlier in my talk are the
35
34
reversal
a
of
these
more
one
regardless of the
Perhaps an exam¬
point
a
in
all
would
time element.
trend.
dicates
would expect a decline
end
hand:
of
everyone
count
we
at
more
as
evidence
ahead, indicating
a
major decline
weather
the
I am in¬
event,
As I said
point and
clusive element is, price.
and
the
It is simply the av¬
price
erage
and
chart is
quite different
that of the usual vertical
from
average
average of
industrials
for
figure of 32 down
It read
"Recognize
following factors
of fair
that
is
follows:
as-
because
the top outlined by the
1941 to October, 11947
graphs of this type.
figure
of
York
average.
over
,
'
York
average
The construction of
the February lows.
Another working tool is the use
moving
the 'last
the
expects that they will.
28, then the 32 line; is a top.
There are eight 32s so in that
to
important
Jones
long-term trend lines in either
average."
The rail average, on
some charts, is in an intermediate
term uptrend from" the May and
December, 1947 lows. Both aver¬
ages are in a minor uptrend from
21-hour
area.
point and figure; method Is an ex¬
commodity fin
tures.
While I use this type of tremely valuable tool for market
chart mainly for individual issues, forecasting. For example, as early
as April, 1946, with the industrial
1 also have point and figure charts
for half point, one point and three average at 208,' it. indicated the
point fluctuations of all the Dow- possibility of a decline to the 170of! the
This trend line indication gave a
moment
that
from
former lows is
probability
If the stock first reacts that they will hold above the Oc¬
most
on.
February, 1946 low of 184.05 was
penetrated on the downside at
reversal, signal
than, the Dow
We ' therefore
38.
is
the rally objective is 35-38
and the stock should be sold in
say
It is how 21
months
was reached.
high
October, 1946 to February, 1948 840 figure is
obviously, ridiculous,
lows; if 188 is reached," indicates it is not
beyond reasoning that the
a
as clear as in the example above.
possible rally objective of ! 235
will
to 285, again depending on what 1929" levels
again be ap-;
Most"of these charts are based on Usually, the base Or top formation
is quite irregular. There is also chart is used. Taking the extremes proached at the end of the next
one point fluctuations but I also
in both cases, it implies 32 points
have a number of half point and the possibility of false penetra¬
upward swing. The. top; range of
tions out of trading ranges,: How¬ down or 19% against 153 point :
three point fluctuation charts.
our growth of the
In
nation trend
ever, in spite of. its. failings, the higher or 91%. That means odds
addition, we have data
A
line -often
trend
a
alternative
194c.
Recently,
I
happened to be
looking over an old ;
technical
bodk published by H. M.
Gartlev
in 1934. In it was.an item
headed
.
You
May, 1946.
since that
•
erage gives no indication.
You
might say, it has formed a triple
Thursday, March 11,
.
#.
•
August,
later.
the
last
May, 1945 and the
The
war
mar¬
ket reached its high one year later
U. S.
SAVINGS
BONOS
,+
Volume 167 " Number 4680
THE.COMMERCIAL
Indications
The
are
Latest
Previous
Week
-Mar. 14
Week
D6.6
.Mar. 14
Ago
94.6
1,741,200
Year
Month
Latest
ALUMINUM
95.8
1,705,100
1,670,900
—Month
1,676,400
Stocks
Feb. 28
5,387,125
5,399,000
5,434,000
15,796,000
15,986,000
2,780,000
15,173,000
2,520,000
2,561,000
2,193,000
7,963.000
8,127,000
at
:
and distillate fuel oil
Residual fuel oil (bbls.) at
(bbls.)
7,690,000
5,444,000
8,824,000
9,199,009
9,141,000
8,933,000
111,040,000
109,886,000
9,594,000
33,836,000
49,206,000
9,731,000
34,004,000
.
at
-Feb. 28
Total
shipments
AMERICAN
102,988,000
11,719,000
OF
AMERICAN
and
11,493,000
[L
CIVIL
ENGINEERING
RECORD: M
1
of
Feb. 28
public
and
$187,872,000
71,728,000
112,144,000
55,527,000
56,617,000
Mar.
Mar.
Mar.
Mar,
(U.
Bituminous coal
S.
629,970
719,316
Benzol
79,602,000
57,173,000
27,712,000
21,737,000
.51,690,000
35,436,000
:
100,596,000
27,275,000
22,479,000
4,796,000
Pennsylvania
(tons)
output
12,910,000
•12,900,000
11,190,000
Feb. 28
(bbls.
of
42
1,229,000
1,167,000
output
131,700
136,000
of
freight
EXPORTS
Month
154,829,000
164,913,000
144,674,000
11,792,000
11,635,000
10,005,000
50,000
of
50,000
150,000
7,688,000
7,761,000
6,852,000
5,631,000
.4,757,000
4,215,000
188,196,000
164,775,000
1,838,000
920,000
1,121,000
.
—I
;
and
r
export
(bbls.)_
ASSOCIATION—
December:
motor
of
176,598,000
158,736,000
—
(bbls.)
(bbls.)
stocks
Number of
128,900
4,854,207
(bbls.)
imports
1,097,000
131,700
7,213,246
5,216,990
gal¬
(bbls.)_Z
output
TRUCKING
Month
12,874,000
1,238,000
Feb. 28
♦7,366,076
5,613,036
alloy
Dec.—
182,059,000
oil
AMERICAN
COAL
Feb. 28
.
7,463,112
produced
including
170,578,000
oil
Volume
-
119,430
INSTITUTE—Month
production
gasoline
(bbls.)
Increase—all
$127,871,000
133,154
INSTITUTE:
—
$123,813,000
66,640,000
and
Beehive coke
'
849,991
$128,741,000
49,139,000
138,066
December:
tons)—Month of
PETROLEUM
domestic
Natural
BUREAU OF MINES):
lignite (tons)
anthracite (tons)
STEEL
products,
(net
14,722
pounds)
products imports (bbls.)J
Indicated consumption—domestic
—
COAL- OUTPUT
steel
50,700
19,650
(DEPT.
November:
727,038
719,990
of
of
Refined
Mar.
municipal.
Federal!
735,952
_—
construction
State
805,376
NEWS
Total U. S. construction—
private construction
791,039
,
,
AND
lons each)
Domestic crude
Feb. 28
ENGINEERING
of
stainless
Crude
CONSTRUCTION,J
(thousands
IRON
AMERICAN
36,901,000
44,270,000
RAILROADS:
(number of cars)
Revenue freight rec'd from connections
(number of cars)
Month
—
43,461
15,549
December)-
ingots and steel for castings
(net tons)^—Month of
January,
103,672,000
40,607,000
50,839,000
49,782,000
of
PRODUCTS
Steel
freight loaded
Revenue
Ago
47,589
(end
WROUGHT
COMMERCE
Total
ASSOCIATION
Year
Month
MINES)
December
of
aluminum
Shipments
Feb. 28
Feb. 28
__;
OF
4,771,350
4,895,000
15,807,000
-Feb. 28
Gas oil
-
(bbls.)
5,318,237
5,463,000
Feb.28
Gas oil'and'distillate fuel oil output
(bbls.).:
-Feb. 28
Residual fuel oil output (bbls.)
-Feb. 28
Stocks at refineries, at bulk terminals, In transit
and in pipe linesFinisihed and
unfinished gasoline
Kerosine < (bbls.) at
5,342,325
.Feb. 28
.
.Feb. 28
»
of
ALUMINUM
.
OF
Production of primary aluminum in
the U. S.
INSTITUTE:
output—daily average (bbls. of 42
gallons each)
Crude runs to" stills—dally average
(bbls.)
Gasoline output (bbls.)_«
Kerosine output (bbls.)
-
(BUREAU
Previous
Month
Ago
92.7
Crude oil
.
Activity
production and other figures for the latest week or month available
(dates
either for the week or month
ended on that date, pr, in cases of quotations, are as of that
date):
Indicated steel operations 'percent of capacity)
Equivalent to—
Steel Ingots and castings produced (net tons)
PETROLEUM
(1133) -37
cover
AMERICAN IRON AND STEEL INSTITUTE:
AMERICAN
CHRONICLE
FINANCIAL
of Current Business
following statistical tabulations
shown in first column
&
1
carriers
reporting—
transported (tons)
(BUREAU
OF
235
SYSTEM—ly35-3!)
EDISON
ELECTRIC
FAILURES
IRON
AGE
233
238
South
America
To
Europe
To
INSTITUTE:
(in 000 kwh.)
(COMMERCIAL
STREET,
249
and
Asia
To
Hectric output
•
249
North
To
28
794,398
Mar.
AND
INC.—:
INDUSTRIAL)-
—
COMPOSITE
DUN
&
6
5,292,595
5,251,935
5,412,361
4,786,552
-.Mar.
Oven
4
113
93
97
58
(net
■*
(per lb.)
.
Plgi iron (per .gross ton)
!
Scrap steel (per gross ton)-,
-
Mar.
l
-
METAL PRICES
!
(E.
A
M.
J.
Electrolytic copper—
Domestic- refinery
Export refinery
Straits', tin
-
3.23940c
3.23940c
♦3.19411c
coke
$40.37
$40.37
$40.17
$40.00
$40.83
Unfilled
•
.Mar.
21.200c
21.200c
21.200c
20.650c
Mar.
—
3
3
21.575c
21.600c
21.450c
21.425c
6,489,537
—
—
tons)
STEEL
(short
of month
PRICE
items
(net
All
3
94.000c
94.000c
94.000c
70.000C
3
15.000c
15.000c
15.000c
14.875c
Cereals and
.Mar.
3
14.800c
14.800c
14.800c
13.800c
Meats
.Mar.
—
3
12.000C
12.000C
12.000c
10.500c
5'r
MOODY'S BOND PRICES DAILY
AVERAGES:
.
,
CITIES
168.8
.Mar.
9
.Mar.
9
100.75
111.25
111.25
104.49
Fats
117.20
198.5
178.3
209.3
208.2
201.9
183,4?
—^
205.3
20L9
——
236.1
208.3
—
227.3'
204.9
213.6
Sugar and sweets—
oils.
and
143.4
237.5
and -vegetables,.—4—;
100.69
1
183.8
170.5
205.7
——
-!-l———
j—
110.70
100.72
153.3
206.9
172.7
Beverages;—!!———
Average: corporate
167.0
209.7
—
—
110,345
707,060
15".
i
—
103,740
585,818
MODERATE
LARGE
January
—
Fruits
1
:
FOR
IN
——1——
"■*
Bonds—!
892,913
593,660
(short tons)
bakery products-—
products
395,700
1,151,101
1,039,633
OF
116,798
of
foods
Dairy
E»gs
tons)
•549,488
.
December:
————
Mar.
103
5,192,700
4,797,000
5,650,266
603,063
(DEPT.
month
INDEX
FAMILIES
•6,199,754
5,886,474
tons)
at end of
.Mar.
———
of
__!
_j.__
—
FORCINGS
1935-1939=100—As
All
615,206
MINES)—Month of Dec.:
(net
orders
INCOME
at—
at—
(New
Govt.:
Shipments
317
353,012
394,577
tons)
COMMERCE)—Month
$36.67
"
200
-
—
$32.23
$40.00
CONSUMERS
(New
U. a
2.86354c
2
2
QUOTATIONS):
York) at_
York) at
Lead
*St. Louis)* at
Zinc (East'jR". Louis) atLead
2
Mar.
Mar.
—
—i——
957,230
341,613
31
.
tons)
(net
COMMERCIAL
!
•
,
Finished steel
411,911
(net
tons)
——:
Oven coke stocks at end
PRICES:
(net
tons)———
tons)
OF
(net
Beehive
(net
,net tons)
cost
America
tons)-:
(BUREAU
Production
BRAD-
.„
Central
(net
Africa
COKE
765,123
399,786
MINES)—
exports of Pennsylvania anthracite
tons)
To
INDEX—FEDERAL RESERVE
AVERAGE=100
,
December:
U. S.
SALES
93*5
1,908,255
-v
2,123,152
„
—
DEPARTMENT STORE
235
2,071,830
-
—
183.7
178.2
199.0
,
190.1
181.7
187.9
.Mar.
•
'
Industrials. Group
MOODY'S BOND
U.
;
S.
YIELD
114.27
120.02
Rent ——!!———'
—-—1—
115.9
115.4
108.5
110.52
109.97
117.00
Fuel, electricity and ice_^^———
129.5
127.8
117.3
9
103.65
103.64
103.47
110.52
93.1
92.6
116.41
116.41
116.02
.Mar.
9
105.86
105.69
105.17
113.12
112.93
112.56
118.40
9
115.24
115.04
114.85
Gas
112.75
9
.Mar.
——
DAILY
114.85
110.20
.Mar.
._
——
Clothing
115.04
9
.Mar.
——U_—
122.09
9
.Mar.
Railroad Group
Public .Utilities- Group
9
.Mar.
120.84
'192.1
—
and
Other
electricity
fuels
and
v.
—
ice_-
1-
month
—-
9
—.
—i—___
,
2.45
9
1
,:
'
9
3.10
j
-2.83
,
-
3.53
<+
-
^
'8.40
3.01
2.89.
:
2.90
In
2.65
,
,
3.14
.
3.44
U.
(tons
of
lbs.)
.'•*,•
(tons of
2,000 lbs.)
stocks at end of period
copper
COTTON
2.73
'
2.91
SEED
9
403.5
•414.3
412.6
-
2.61
NATIONAL FERTILIZER
ASSOCIATION—WHOLESALE
ITY INDEX BY
GROUPS—1935-39=100:
J
<
^"Fats and oils.
!—•2!I__
1
1———a-——+
;
^Livestock —i—!_U2—2—1-222
—_.i
Building
-
4
!
Mar.
~
_T__!
:
6
247.9
242.3
220.8
220.8
172.7
^
4^—w---;—
,
212.7
211.1
163.5"
232.8
11232.8
6
157.0
157.0
6
137.7
137.6
137.9
Mar.
6
143.0
•
•,
138.1,
217.0
214.6
•
126.3
211
Unfilled,orders .(t6ns).,.a.t----Lr.—
OIL, PAINT.
V*
.
——r—
AND
DRUG
REPORTER
commodities
;,2_
Hf.usefurnishings
.
;
181,709
99
-.y"
.
,,,436,430
Feb.28
,
Feb. 28
—_r——1—,
■____;2_iJ—.:
4——— Feb.28
—-
—-
..
t,
103
432,911
-
v,;
147.6
commodities
Index
!
195.1
181.7
146.4
170.3
'
176.5
other than
figure.
■'
productsproducts and foods—
*
«
-
•
!!
74,035
160,038
959,571
"831,166
..1.042,907
-
1,260,309
1,015,813
72,533
——
to Jan. 31———
Jan.
to
-
'
,
to
71,651
102,576
627,353
510,877..
503,007
590,628
,V
■
31——
475,034
426,356
*
v-
204,250
188,851 :>
31——
867,852
702,223
Jan.
31—
743,346
593,116
106,574
697,719
''
.
626,19'#
t
bales)—
etc.. (500-lb.
to
:
'
■
,\
'
11,910
?
'
10,524
1,129
•
9,338!-
7,751
12,207
-
.
,11,581
bales)—
31——————
1
1.868
1,687
1
Aug.
•
71,207
1,284,575
31
'•;
--
Jan, 31——.!^:;L^
131.2
17,130
..
16,011 ""
!■
13,005
29,370
23,355
.22,753
17,857
t!34.3
tl32.5
$122,777,000
$101,334,000
$108,249,009
31168,000
29,838,000
32,312,000
8,118,000
6,924;000
16,216,000
17,975,000
15,550,000
36,017,000
27,829,000
30,593,000
26,283
.
155.5
154.i:'
192.1
191.9
191;$,*
134.9
139.3
143.6
137.5
119.1
123.9
111.2
Policy
173.9
173.6
182.3
154.8
153.9;
157:3 1.':/
153.5
153.5
Feb. 28
153.9
154.1"
—J—.Feb. 28
147.3
147.5
,
142.0
/n'H
339.9
i48:6!b''"*
■
V!
.
no
bounit:
—
1,
I
—'
—
-
—
_—
35,323,000
63,581,Q00
$283,410,000
$219,223,000
$258,173,000
16,124.000
16.814,000
(BUREAU OF MINES)-
December:
(bbls.)
from mills
Stocks
end
(at
7,888,000
69,114,000
CEMENT
of
135.7
November:
——
Shipments
of
128.7)' iCapaclty used
■
of
values^.
Production
:
INSTITUTE OF LIFE
—————
Month
142.7
of
dividends
Total
158.9
Feb. 28
middle
endowments'.,-——:
Surrender
125.5
119.0
at
PAYMENTS TO
—
Annuity payments
129.3
143.7
BENEFIT
Disability payments
173.0
135.3
benefits
Matured
138.6
Feb. 28
—
14,951
tl
COMMISSION—
Employment
(1935-39 Average=100)!.——
INSURANCE—Month
98.6
:155.6
COMMERCE
Railway
INSURANCE
Death
137.0
131.6
*131.7
145.8
.Feb. 28
farm
543,035,000
_
POLICYHOLDERS
174.1
146.9
,
LIFE
167.5
201.2
of
January
176.1
193.3
170.5
188.5
nq.2
163.7
159.2
Feb. 28
;
All commodities other
than farm
•Revised
Jan.
INTERSTATE
tivr 1. v
182.8
.
153.7
Feb. 28
-
544,257,000
.
31
———-
to Jan.
1
Aug.
Produced
PORTLAND
;
685,105,000
*
-
(500-lb.
Jan.
Stocks
.
f>:
groups—
materials
170,988,000
v
Aug. 1
1
grabbots,
Motes,
574,856
—*1 Feb. 28
v
-
651,193,000
r'
to Jan. 31—:;,——!—
Shipped Aug. 1 to Jan. 31——
102
Feb. 28
—
646,464,000
152.916,000
.
159.2
Feb. 28
—
,
Semi-manufactured articles
Manufactured products
All
185,944
Feb. 28
products
goods
Miscellaneous commodities
Raw
;
materials
allied
Jan.
31-^
Aug.
Produced
.
i
-"u 'i
Feb. 28
Feb;26'
—
Metal and metal products—;---!-<
and
192,670
147,0
*
,,0
_
products,-——r_—
Fuel and lighting
materials!—I——-
Chemicals
101
5
;.:j
—i—
-4
Hides and feather
Textile products
Building
_Mar.
y^v, :2,:.
S..' DEPT. OF LABOR—1926=100:
4—1—
805,334,000
152,706,000
1 Shipped Aug: 1 to Jan. 31——
INDEX—1926-36:: AVERAOE^100-4-—Ui—
'.V
Special
,
423,510
•
196,886
"
PRICE
Farm,products
'*
:
■
WHOLESALE)PRICES—Uv
All
Feb.28;
.160,350
V 171,191
169,597
190,943
Feb. 28
____
104,119,000
677,340,000
.
Feb. 28
1. Feb. 28
.1
4:
to
1
109,368,000
639,650,000
'
.
Jan. 31—
Aug.
fiber
Stocks
Percentagemf'activity-,,-^—C—_4_4—^—2
*
121,742,000
—
Jan.
Produced
Hull
,_T_.
Aug.
»
'
Shipped
—
766,758
853,648,000
-
(tons). Aug. 1 to Jan. 31
(tons) Aug. X to Jan. 31——.,.;-
(tons)
^Stocks
•
NATIONAL FAPERBOARD ASSOCIATION:
Orders received
(tons)
'
Production4 (tons) 2—22;—!l—2i2!i_ J
Meal—
Produced, (tons)
'199.9
—-
,;r
Shipped (tons) AUg,;i
JLinters—rynping bales—
133.7
137.2
220.7
31
Aug. 1 to Jan. 31—*_
Aug. 1 to Jan. 31—!—
(tons) Jan. 31—
Stocks
"
6
2,174,269
1,426,011
;
Hulls—
,
127.8
"
158:1*'
Mar.
and
Shipped
155.2
,
142.9
143.0
Mar.1 6
2,823,221
2,256,672
COM¬
(pounds)
(pounds)
Produced
146.9
233.4"!
OF
(pounds) Jan.! 31——
Stocks
'213.7
155.1'
—
Cake
,,
209.4
•'
.
162.2
163.5
6
3,583,155
—
to Jan. 31—
.
Jan.
Produced, (pounds)
1159.0
t i,
.
Oil—
Stocks
.
•
217.3
,
Mar.
-
'
n,,c'l5?:5
178.4
Mar.
,
11—
All' grpups combined
330.18
Refined
,
220.8
6
f
1
b'^3.1
Fqqo
252.1
6
Mar.
oi
:. Mar.
——
;
machineiry 1——
318.3
282.6
1
PRODUCTS—DEPT.
(pounds)
Shipped
260.8
.263.2
Aug.
Oil—
Produced
•242.0
310.3
277.4
Mar,. 6
.
—
239.1
250.1
324.3'"
'
Mar.: 6
materials
Fertilizers
>
6
244.0
258.0
,}
SEED
Stocks
235.5
i
Mar.
<.
a—__
.
4—
Chemicals .and
-drugs—4-,^Fertilizer materials
Farm
-
i-1
Miscellaneous commodities
Textiles
-
6
6
Mar,
—__—_—
6
Mar.
Grains
Mar.'
Mar.
;
227.0
(tons)
(tons) Jan. 31-—
Crude
,
Hr.
uw
228.7
mills
MERCE—
)•
;
6
•76,035
3,795,325
2,778,869
COMMERCE
(tons) Aug. 1 to Jan. 31
.
'
Mar.
•151,948
-.♦96,513
422.8
"
COMMOD-
113,446
(tons
1,115,984
OF
at
COTTON
I.
•78,313
•96,729
71,533
DEPT.
—
Received
Crushed
Mar.
•80,954
108,816
118,855
—
of'2,000.'lbs.j
Stocks
COMMODITY .INDEX—;.-
82,516
102,314
—
9.02
,
3.03
•
■
137.1
Jan.:
lbs.)-.
2,000
91.9
142.1
179.1
customers—
S, A.
Refined
2.80
3.54
of 2,000
(tons
Deliveries .to
•'
3.18
3.41
3.00
9
Refined
2.55
"2.94
;
Crude
2.79
,r.
;2.85
.
3.53
9
2.20
3.13
^3.14
•
9
Industrials Group
.:
2.91
•'
3.13
9
2.45
■'
'•
,."v\ 2.83
,
2.90
1
9
Railroad Group
——,.—
Public Utilities Group——
1
r
2.451
3.10
.
9
MOODY'S
of
Copper production in U. S. A.—
Govt. Bonds—
Average corporate
146.4
—
INSTITUTE—For
■
19A.4
144.4
192.3
Miscellaneous
COPPER
179.0
162.0
165.0
—
Housefurnishings
AVERAGES:
191.2
^-Revised' figure.
<bbl%)IT,~——T
month)
(obis.).
—.di'iii-.'io--;—.
tPrdlikiKaVy''fifeure.
.
14,557,OCO
.12,380,000
16.267,000
11,494,000
9,953,000
•6,209,000
10,921^000
'
19'/o
85 'fr
38
(1134)
THE COMMERCIAL
&
banks
at
when
time
a
the
Business
gov¬
ernmental authorities caution the
banks
it
curtail
to
sensible
the
them
to
approach
isn't
help
to
needed
their
get
Or
loans?
funds
•either through the present owners
of
business
the
of
thrifty
willing to take
who are
risk in the form
I must
a
stock
common
some
people
our
of
through
or
purchases?
repeat that, undertaking
fortunate
was
in
en¬
tering the postwar period in
extremely liquid position, but
a
result of higher prices and
an
as
an
expansion of operations, cash and
equivalent have run off consider¬
ably. The working capital position
of industry is
worsening; the ex¬
tent to which this is
taking place
is being obscured
temporarily by
the sale of capital
securities, in
large part debt securities. In its
the task that we do of world re¬
"Bulletin"
construction
Securities and
at
costs,
enormous
adding heavily
the budgetary
to
burden, and with the public debt
large, I think it is foolhardy to
deliberately additional
private debt. The
so
the
situation
"The
funds
marketable
the
approach is through
capital markets.
not going to dwell on the
am
individual
It
is wiih us and we must face it;
but I do say let's make it as equit¬
able
burden.
tax
possible, and for heaven's
as
sake not interfere with the proc¬
business.
of
esses
tax structure simply does
permit those who in the past
in business and
have invested
securities
representing
investment
with
the
think
It
to
been
it
discuss
we
which
I
it needs.
has
testified- here,
at
and
in
length
some
corporate
form
of
liquid
cash
securities
and
to
quarter of
is
still
somewhat
I
fig¬
and
continued
a
accentuated change in the compo¬
sition of current a'ssets and liabil¬
in
the
direction
less
of
liq¬
uidity.
Decline
Of
In
Equity
billion
$4.5
Financing
new
money
raised through the capital markets
last year, stocks represented only
one-third, or $1.5 billion. Accord¬
ing to the Securities and Ex¬
change
Commission,
common
but $784 million.
study, that when the Amer¬
ican worker leaves his home to Toward the closing months of the
take his place on the job, there year, common stock offerings were
is waiting for him from $3,000 to largely confined to the larger com¬
$39,000 which has been invested panies in the public utility and oil
in plant and equipment and raw industries, while the market was
materials so that he can perform virtually nonexistent where other
his work.
stock
offerings
were
involved.
Time and time again the report of
Growth of Small Capitalists
anticipated common stock financ¬
Our study recognizes that vast ing was sufficient to depress se¬
changes of an economic and social verely the stocks of even the
nature have crept into the econ¬ strongest and most successful cor¬
omy in the past 15 years, which porations.1
I think we must take into account I wish our study had been less
in
dealing with this important correct in its implications.
subject. Consistently and often I
I have with me and would like
to my associates in business—
say
not
in
alone
throughout
New
the
but
York
entire
country
where the wires of the New York
Stock
cotton
Exchange reach out—in the
belt, the corn and wheat
areas
of
rich
the
oil
Middle
districts
West, in the
of
Texas
and
California and the timberlands of
the
Northwest—that
most
the
of
one
wholesome
things that has
happened in this period of the last
15 years is that it has been made
possible for the masses to accum¬
to
totaled
incorporate
Exhibit
C
and
ing
which
tion
1946
and
years, never
ment bond, a savings account, and
who in only limited numbers ever
held
ing
in
stock certificate represent¬
a
ownership
proprietorship
or
business undertaking,
a
old
or
new.
banker's
New York Stock
Exchange,
mindful of past
experiences, has,
through an extensive advertising
endeavored
program,
to
discour¬
age
the small, uninformed inves¬
tor.
As
result of
a
our
efforts, we
by the public
of over-sheltering the "little fel¬
have
been
low."
to
to
It
accused
has
been
our
objective
encourage the smaller investor
buy
U.
S.
where risk
Wealth
Government
bonds
is minimized.
has
aged
noticeably in
the past 15 years and older
people
who are living on
pensions, trust
funds and
ted
of
accumulated
capital—and there
them—are
really
or
inheri¬
are
lot
a
having
a
struggle to keep their heads above
water.
rich,
There
who,
in
are
some,
order
to
have
within reasonable limits their
cus¬
tomary standard of living, to edu¬
cate their children,
etc., aref ac¬
tually using principal to meet the
deficit, which really means, in
large measure, to pay their taxes.
The statistics
a
single
and
the
are
in
our
government
trusted with
study. Not
agency
en¬
discouraged
man¬
financing prospects.
new
is
record
no
of
those
projects that do not reach the
registration stage.
Reverting to
our
tabulation and the letters and
telegrams received in connection
with this exhibit, I emphasize that
most of these companies are rela¬
tively
small
their
and
listed
not
Stock
on
Exchange
the
or
New
York
other
any
na¬
them.
on
conclusions I have drawn.
if
than
accept
to
from
known
sale in
What
the
raise
of cqmmon stock
large
book
be
discount
value
market.
is to
through
might add:
I
the attitude of the
bank compelled
a
capital
to grant
rights to stockholders where this
new
exists
.
or
and
where
a
might not have suf¬
ficient savings to avail himself
of his rightful portion of the new
stock?
This
is
dilution
with
a
vengeance.
Volume
of Stock
Exchange
outlined
in
offerings
tax
our
study,
the stock market also is suffering
from persistent foreign liquida¬
below the
tion of the
I
a
am
equity.
advised
limited
dilu¬
.
that,
number
liqui¬
a
of
except
our
a
small
bank
in
Nebraska held
a
1 See
we
p.
32,
have .dealt
length."' 1
etc.
with
whether
in
Maine, Ohio, or
majority or con-
of NYSK
this
«stndv
problem at
that action be taken of
urge
sufficient sweeping character to
gain the
necessary
contend
that
10%
some
They
short of
anything
theless,
in
Never¬
appreciation
the
of
problem, I recommend
that this Congress incorporate in
H. R. 4790 a provision that will
exempt dividends to the, individ¬
revenue
from
the
ommendation
million
3%
present
normal
income tax. -This
involves
of
rec¬
but
Federal
$165
revenues.
There is
sales
indorsed
without any sufficient offset from
new risk
savings.
The
volume
New
York
year, as a
of
trading
Stock
last
percentage of the mean
listed, was down
number of shares
to
14%,
the
lowest
since
1942.
This year to March 1, the volume
too
capital
intended
feature
as
of
a
revenue-producing
tax
receipts from
the
tion, for what it
period of 1947, a reduc¬
tion
of
22%.
In the first two
months of this year the volume
of
trading
of
about
shares
the
9%—the
At
and
1942
two
parts:
such
only
rate
lowest
capital
Having
stated
to
the
as
into
flow
the
of
func¬
proper
Congress
amend, I
that the
adequate
laid
was
falls
base
supports passage of this
4790
slightly
which
problem
the
of
record.
on
I
capital, and its
tion.
number
that
bill H.R.
may
fit
see
now come to the two
proposals that I think will make
risk capital function. Neither
pro¬
posal
involves
this
dealing
■
First:
the
of
to
individual
the
Code
for
which
rislf-taking;
which,
to
repeat,
not intended to be a revenue pro¬
ducer.
of
-1942,
that
result
in
Set the stage to induce
capital to function properly,
which a reduction in the maxi¬
Second:
effective
mum
to
Act,
will
you
recall,
Taxation of
and
substituted
creased
rate
the
of
ment
income
like
TNEC
refer
to
that
or
debt
the
is
I have been
194.2
is
by the Fed¬
consequent ex¬
emption) of all interest payments.
Since
dividends
distributed
are
not
are
deducted, equity
discriminated over
against creditor financing."
financing
so
is
Practically all recognized inde¬
pendent
several
tax
years
studies
and
in
the
last
recent
study
by the Treasury Department sub¬
treating
this
delay,
a
condition
.
of
without
•
My initial recommendation was
to give the shareholder a credit
of
the
10%
dividends received by
individual tax
payer.
Ob¬
on
informed that since
from
revenues
capital gains
a range of
hundred to four hundred mil¬
lion dollars
annually. It is
my
belief that for
the
1947, due
year
to
sharply diminished activity on
the securities markets, such rev¬
the
3%
to
the
income
normal
and
Committee,
income
than
capital
25%
12V2%.
gains
to
we
12V2%
of
government
income
of
now
maximum
are
the
rate
of
gains: will
revenues
who may
some
when
in
I
statements made before this Com¬
mittee by Secretary of, the Treas¬
Snyder and
ury
Budget
In
these
—and
rightly
My.
so.
with
concern
the
equity
capital
the
to
as
all
fact,
an
stated
of
will
us.
matter
The
the
periods
in
of
create
bids
for
of
em¬
concern
change
sale
are
of
to
proposed
securities
most
strength
needed.
confidence by
securities
in
are
condition
market
offerings
It will
of
a
invite
when
markets
our
unsatisfactory
be
in
way
periods
of
sharply declining prices when
support is most needed. It is my
conviction that the
simple change
in the capital gains law will
courage
en¬
liquidity, continuity and
orderliness in
our
markets.
Before
leaving the subject of
capital gains, let me add that ex¬
perience with the capital gains
and
position
investor
and
the
arises
market
primarily
desire for a
of
out
state-
caution seemed to prevail
men-s,
of
Director of the
Webb.
my
earnest
continued high level
of employ¬
Jobs
ment and economic progress.
underlie revenues, capital values,
and almost every other economic
consideration.
I
think
can
of
no
other way of promoting continued
high
employment
mum
of loss to
at
the
quirement
with
fair
of
mini¬
a
the Treasury, and
time serving
same
the
re¬
than to
play,
stimulate risk capital by the pro¬
which
to
by the
Remember
of H.R. 4790
modification
/:
•'
that
responsibility
outlined,
have
I
Congress.
it
to
is
.
grave
a
that
argue
it
be well to reduce business
and necessarily the
expenditures
Of
gainfully employed,
and
attempt to revive employ¬
ment later on. Our experience in
does
past
dence
in
economics
of
control
so
able to turn the spigot
at will.
confi¬
of the
induce
not
knowledge
our
as
to be
off and. on
I should not like to con¬
decently; nor would I care to live
with the responsibility of having
deliberately
created
"healthy"
unemployment.
A moderate
change
in
continued
high
losses provisions has
brought
structure
tax
our
can go a
at
long way
production and a
level of employ¬
ment.
\y-SrJ.,
.
Conclusion
opinion, the
my
change would not encourage ex¬
cessive speculation. As evidenced
by the markets, it has not done
In
pos¬
sible condition is alluded to in the
to secure larger
such,
and
This
revenues.
strategic points
so.
a
main idle, or the. head of a lamily
who cannot find a place to live
am
of
change recommended
encourage large speculative
activity.-This same claim was put
1942
be
further in¬
a
national
in
will
in
to
seems
chance
the
feel that the
forth
conse¬
govern¬
have had with the
again result in increased
to the Treasury.
I know there
a
the
front the worker who has to" re¬
I
a
of
excess
benefit
long-term
on
long-
reduced
Gentlemen
the
the
law,
opinion that
in
not
With
on
be
will
reduction in
a
of
revenues
crease
the
effective rate cf taxation
of
stronger possibility in the light of
the latest economic developments
number
factor.
tax
with
shrinkage
words, relative to the size of the
budget, the capital gains tax is
scarcely of significance as a rev¬
I recommend that the
maximum
on
least
individual from
the
Chairman
Mr.
would
enue-producing
at
effect.
to
have been reduced to
neg¬
ligible
proportions.
In
other
enues
through the de¬ phatically that,
(and
effective
long-term
on
capital gains from 15 to 25%.
re¬
study
financing
at present encouraged
eral tax system
ductibility
in
which
and
I
the state¬
to
page 26 of our
on
I
com¬
point.
made
was
report
ferred to
the
expand
which
6-months
maximum
from
Dividends
will not take the time of this
would
the
taxation
experiences
to
the
holding periods
long-term holding period and in¬
present
dividend
mittee
eliminated
18-and 24-months
taxation
gains,
12V2%, and the exemption
dividends
reve¬
and practical credit controls were
exercised. The 1942 Revenue
of
long-term * capital
changes
the Treasury, and would
not encourage excessive specula¬
tion in the markets where sound
So much has been written on
the" injustices of the double taxa¬
of
such
increased
to
nues
term
Double
when
surtax
■
risk
possible
feature of the tax structure
a
worth
was
;
risk
accomplish;
subject
the
Revenue
are
conten¬
of
personal
rates will tend to
passage
capital gains and
provisions of the Internal
losses
my
flow
capi'al with the community prop¬
erty principle and a reduction in
posal
and
(2)
was
i;'
•
the
along with
the
in
dividends
reward
It
a
for
-
Renew
one
vital
(1) to the injustices of the dou¬
taxation
with
have fluctuated within
hope you may entertain of enact¬
ing this bill into law. I refer: •
are
were
million
*
things first in
risk
capital, we
is
I
consideration
ble
source
$12
good of
wish it amended;
appreciable
appreciate that
any
loss of revenues.
To
advocating the changes that took
place as a result of the Revenue
Act
the outset
risk
the year 1940.
would
the
this
than
more
at the annual rate
listed
above
little
of
was
10%
structure.
knowledge, the last published
figures of the Treasury show that
my
the
preserve
we
must:
quent
provision, as
stated, was never
the
to
as
national
gains
have already
pre¬
Recommendations
ment's
The
I
of trading on the New York Stock
Exchange amounted to 37,788,892
shares against 48,305,280 shares in
same
long delayed.
Capital Gains Taxes
the
on
Exchange
and
are
consider first
To
results.
will not do the job.
Act
of
of
urgency
investor,
order
the
tend
effects
States that is not currently selling mitted to the Congress point up
for
considerably less than
its .this problem. I do not exaggerate
known book value.
when
I
To press the
stress
the
an
in
furthermore, it would legislate in
principle a provision universally
for
largest
urban banks, there is
scarcely a
bank stock throughout the United
point, if
who
phase of the
understand
pared with recommandations clos¬
ing
these loopholes. I strongly
urge that this be done in this bill
solely out of respect for revenues.
I have received very strong let¬
ters from many able industrialists
a
I
and
law
of
the
and
large
holders
at far
waver
tee l.ave studied this
holders, brought about, in
many instances,
by tax factors,
adding to the supply of stocks
tion
sell
stock
ques¬
justice,
to light the existence of a few
loopholes. These are the result of
oversignt. TVe Treasury dnd Mr.
Colin Stam of the Joint Commit¬
precedent for the adop¬
tion of this recommendation
and,
deducted from corporate net
income for Federal tax purposes
and interest payments to bond¬
plant.
1
revenues.
really doing
problem when 1
individual
Insurance companies need¬
ing additional capital have had to
made for additional investment in
dating value, resulting in
loss in
ham
this
ual
Trading
"Creditor
important operating
public utility'companies have re¬
cently offered stock at prices to
yield 7x/2 and 8% to insure the
success
the
management of
to
•
Two sound
compiling these data
internreting them, will deny
no
tion
securities
tional securities exchange.
I am
equally interested in them because,
unlike larger companies with es¬
tablished credit, they have prac¬
tically no place to go when doors
of the capital markets are.shut
termed
maintain
1,
approved
were
by the Congress, there would re¬
agements which have approached
are
The
Jan.
23, 1948.
These
withdrawals comprise 145 issues,
mainly stock issues, and I regard
them as eloquent evidence of the
unhealthy condition of the capital
markets.
Moreover,
investment
there
capitalists
all
who, until in recent
before saw a govern¬
registra¬
between
Jan.
Thus
small
prepared
withdrawn
have
statements
growth
of
as
Exchange Commission show¬
the
number
of
companies
on
this land
record
tabulation
a
them
over
the
from the records of the Securities
ulate money. Actually, gentlemen,
have experienced a mushroom
we
in
mendation and if it
tion
prewar
recent
more
show
stock
a
sult
but is
1947,
above
that
sure
will
of
Using
results.
imagination and thinking in
terms of incentive, I am confident
that if I had made this recom¬
taxes, the tendency would be to
liquidate
the
institution
rather
As
am
ures
stocks
our
event
if
or
1947
on
little
had to be sold to pay inheritance
levels."
in
industry
funds
the
the third
venture
supply
of
type
the
reason,
death the
stockholder
sales,
a
rough
measure
of
declined again
during
which
ities
Our
not
in
of
liquidty,
sound
I
1948, the
follows:
as
ratio
increases in the
heavy
2,
in
compelled to sell
were
of about $500 million,
revenue
based
insti¬
an
unforeseen
any
Exchange Commis¬
sion, in measured terms, described' condition
ecourage
risk
March
of
tution and
of
Capital
trolling interest in such
lor
Thursday, March 11, 1948
viously, this would involve a loss
Tax Reduction Essential to Obta in Risk
(Continued from page 8)
CHRONICLE
FINANCIAL
•Let
me
conclude
paragraph from
"It
sion
is
of
my
our
the
final
a
conviction that
taxes in
in
with
tax study:
revi¬
pro¬
manner
would have
strategic importance in support¬
ing economic growth, Economic
forces have
a
cumulative tenposed
dencv.
that
this
The
study
time to
vestment
is
reduce
when
a
in¬
substantial
surplus is expected by the
can
nating
a
Federal
when
elimi¬
reasonable provision for
Government,
this
taxes
job-creating
discourage
be
particularly
done
without
debt retirement.
I wish to refute
of thinking
which is all too common. To en¬
"In conclusion,
the
able
form
'either-or'
the
capital markets
their
properly
type
economic
to Ppr~
function
is not to invite a repe-
Number 4680
Volume 167
THE
tiiion
of the practices •, of the
twenties.,. Effective controls pre¬
clude this possibility.
It is most
f
desirable, however, to reverse the
trend of the dormant and stag¬
nant thirties, and to resume the
COMMERCIAL & FINANCIAL CHRONICLE
The State of Trade and
(Continued from page 5)
willing ta go into the steel gray
into finished products are
Industry
Continuing the upward trend visible in some grains late last
week, all leading cash and futures markets scored substantial
advances in the week just ended.
>
'-make it possible for the
(1)
which are the traditional'
groups
of venture capital to accu¬
source
mulate funds; and
^
Basic factors behind the
falling apart of the premium steel mar¬
(l) Nervousness over consumer and light
product demand
public; (2) ability of many fabricators to quickly
ket are:
on
the part of the
reduce their Unfilled orders
by
made from
(2) "provide incentive for them
invest such funds, profitably.
to
.
■
turning them into finished products
steel; (3) the desire to get the full benefit of the weak¬
which has appeared in the
gray market prices, and (4) setting
up production schedules on the basis of regular steel mill and
ware¬
BHP—-
;
First Boston
——
.
The American Iron and Steel Institute
announced on Mon¬
day of this week the operating rate of steel companies
having
Group
94% of the steel-making capacity of the industry will be 96.6%
of capacity for the week
beginning March 8, 1948, an Increase of
2 points, or 2.1%. This compares with
94.6% one week ago. A
month ago the indicated rate was
Underwrites Standard
Accident Ins. Stock
92.7%.
This
investment
banking
group
which has underwritten an offer¬
week's
operating
1,670,900 tons
a
month
an
ing by Standard Accident Insur¬
ance Co. of 1.40,750 shares of com¬
mon stock at $23.50 per share to
presently outstand¬
holders of its
ing stock. The offering is on the
basis of one new share for each
2^ shares held of record at the
close of business March 10, 1948.
Rights to subscribe evidenced by
transferable
subscription
war¬
rants,
will
March 24,
expire
p.m.
on
1948.
Proceeds
pew
3
at
the
from
sale
of the
stock will provide additional
of insurance written by the
company and its subsidiaries in
ume
.
few
last
years.
the subscription period
During
ti)e underwriters may offer and
sell shares of the unsubscribed
stoclc and
as
FREIGHT LOADINGS OFF DUE TO HOLIDAY
Loadings for the week ended Feb. 28, 1948, totaled 791,089 cars,
according to the Association of American Railroads. This was a de¬
stock
purchased
to
or
be purchased by them through the
exercise pi subscription warrants
prices nGt less per share
the price to present holders.
at
than
crease
Livestock prices trended sharply higher at the close. With
hogs leading the advance, practically all of the decline suffered
earlier in the week was wiped out.
Cocoa
above the
same
week in 1946.
ELECTRIC OUTPUT INCREASES, AFTER FIVE WEEKS' DECLINE
The amount of electrical energy distributed by the electric light
Dullness
industry for the .week ended March 6, 1948 was 5,292,595,according to the Edison Electric Institute. This was an in¬
40,660,000 kwh. over the output for t|ie preceding week and
was the first time in six weeks that a gain was shown over the
pre¬
ceding seven day period.
The peak was reached in the week ended
Jan. 24, 1948 when 5,436,430,000 kwh. were turned
put.
The produc¬
tion for the March 6 week was 506,043,000 kwh.,
qr 10.6%, in excess
of that for the week ended March 8, 1947, and was the ninth consecu¬
tive week that output exceeded the 5,000,000,000 kwh. mark.
crease
stock, par $100, of J. P.
Morgan & Co. Incorporated from
the estate of the late Thomas W.
■Lament, who was Chairman of
the bank's board, is being made
AUTO OUTPUT CLOSE TO POSTWAR PEAK IN LATEST WEEK
Production of cars and trucks in the United States and Canada
declined the past week.
Estimated
output of
cars
and trucks in the United States and
Canada the past week amounted to 108,700 units last week, "Ward's
Automotive Report" states.
This compared%ith a revised total of
an
same
week of 1946.
about half
& Co.; Carl M. Loeb, Rhoades
Pierce,
Fenper & Beane. The stock rep¬
Co, and Merrill Lynch,
resents
12V? % of the bank's out¬
standing capital stock of 200,000
shares.
.
^
A.:A.';
AvAA
.
A: '.A
This is the third public offering
stock of J. P. Morgan & Co.
Incorporated and brings the total
of
number
distributed
shares
of
.the
public
in
.60,250 shares.
that
i
A" AAAAA':;:"A■AA
as
the pjrice
RETAIL AND WHOLESALE TRADE AGAIN MOVES UPWARD
Stimulated by promotional sales and mild weather in
high
a
as
were
pnly
the prewar level; in the corresponding
total pf 286 failures were
reported,
A .A;:A
ing remained moderately!: above that of the
industry and trade groups except in manufacturing,
an increase occurred in mortality in the week just ended.
Retail
trade with 49 had the most failures, three times as many as a
to
Corresponding week
a
ago, Dun & Bradstreet, Inc., reports in its survey of trade.
Easter merchandise continued to attract favorable attention with con¬
year
siderable response to some clearance sales of winter goods,
Consumers continued to seek their
spring apparel with emphasis
Spring coats, suits and dresses sold well.
handbags and millinery. Main
floor blouse departments reported a high volume with soft shirtwaist
cottons and inexpensive pure silk print blouses among the best sellers.
Linen, rayon, and cotton piece goods were in large demand as interest
in home sewing grew.
Men's shirts and accessories sold well and
nationally advertised shoes were steadily purchased.
on
Easter
There
was
merchandise.
considerable
interest in
stantial demand.
There
was
a
moderate increase in the buying of foods suitable
and both
dried and fresh fish were readily purchased.
Poultry and most fresh meats sold well and frozen fruits and vegeta¬
bles were in large demand. Dairy products and meat substitutes con¬
tinued to be sought, but some slight decline in the volume of con¬
fectionery and baked goods took place.
use
.
The arrival of mild weather in
stimulated
the
demand lor
all
-vV-A
some
hardware,
sections of the country
building
materials, and
AA;':AAA:<yA \-AA;^'''!'AAAA A'' AAAA A A-':1
Interest in garden tools increased in some areas. The demand for
automobile accessories and small electrical goods decline somewhat,
while the supply of branded major appliances generally improved.
The volupie of cheaper quality furniture decreased moderately in the
week, but interest in items of good quality remained large. :
,
for the period
ended Gn Wednesday of last week was estimated ,to he from
7 to 11% above that of a year ago. Regional estimates exceeded
those of a year ago by the following percentages: New England
4 to 8, East 6 to 10, South 5 to 9, Middle West 10 to 14, Northwest
12 to 16, Southwest 13 to 17, and Pacific Coast 0 to 4.
Retail volume for the country in the week
<
incurring liabilities of $5,000 or more, Nine of the 93 failures in the
liability class .had exceptionally heavy losses exceeding $100,000; in one of these failuresHosses ran over $1,000,000. Small failures
with liabilities under $5,000 rose from 14 last week and compared
with six in the corresponding week last year.
upper
In
some areas
the dollar volume of retail trade increased slightly during the period
ended on Wednesday of last week. The dollar total of consumer buy¬
VAiuoti'''■ :-A A paints, .;^A .A A"'
Large failures involving liabilities of $5,000 or more predomi¬
nated, accounting for 93; a rise from last week appeared among small
failures with losses under $5,000, which totaled 20. Concerns failing
in the larger size category increased from 79 a week ago and were
almost twice as numerous as in the same week of 1947 when 52 failed
to
manner
as
week of 1939,
by
ney
markets
Trading in domestic wools in the Boston market continued dull
There was a strong demand for fine wools with in¬
creased interest shown in medium wools but very few lots of desir¬
able types were available.
Contracting for this year's clip in the
Western States appeared to be lessening in all areas.
for Lenten
Despite the sharp upward trend in failures, they
investment banking syndi¬
headed
Morgan Stanley
& Co. and including Smith, Bar¬
cate
textile
Practically all foods continued to be abundant and in sub¬
Rebounding from the preceding week's decline, commercial and
industrial failures rose in the week ending March 4 to the secondhighest number in any week since early 1943. Dun & Bradstreet, Inc.,
reports 113 concerns failing, up from 93 in the previous week. Almost
twice as many businesses failed with probable loss to creditors as in
the comparable week of 1947 and over five times as many as in the
■today, March 11, at $225 a share
by
cotton
the past week.
of
BUSINESS FAILURES TURN UPWARD
Sale to the public of 25,000 shares
characterized
tone continued to show easiness.
comprised 103,265 cars and trucks built in the
United States, while Canadian assemblies, totaled 5,435 units.
bf capital
lower for the week but prices trended
and power
120,130 units in the preceding week and 125,925 units in the same
Morgan Sold
were
After fluctuating unevenly during most of the week, cotton
prices moved sharply higher in the closing days of the week, largely
influenced by the belief that the European Recovery Program would
get started sooner than had been anticipated, Inquiries were fairly
numerous but volume of sales in the 10 spot markets fell to
75,800
bales for the week, from 97,900 the previous week and 130,900 in the
same week a year ago.
Toward the close of the week there was con¬
siderable short covering by mills and commission houses in anticipa¬
tion of increased foreign demand. Registered sales under the gov¬
ernment export program during the week ended Feb. 20 totaled 34,960 bales, compared with 51,800 a week earlier and 23,200 two weeks
previous. The mid-February cotton parity price was announced by
the Department of Agriculture at 30.75 cents a pound.
This was a
decline of 37 points from a month earlier and was much less than
had been expected in the trade.
of 14,287 cars, or 1.8%
below the preceding week due to the
Holiday which was generally celebrated on
Feb. 23.
It represented a decrease of 58,902 cars, or'6.9% below the
corresponding week in 1947, but an increase of 8,692 cars, or 1.1%
and coffee
firmer at the close.
Last week's total
J. P.
again the leader in the rise
as prices reached the high¬
Country offerings of corn remained limited
satisfy continued good shipping demand. Demand was
also good from cash and commission houses as well as
professional
traders. Wheat closed higher aided by strength in the feed grains,
continued small country offerings of all grains and the unsettled
political outlook abroad which is expected to result in speedy con¬
sideration and approval of the European aid program. Domestic flour
buying remained slow and export demand was also comparatively
quiet. At the close of the week, the government was said to be in
the market for moderate quantities of flour to meet March export
requirements.
week in 1941.
tamont Stock In
was
and failed to
Washington Birthday
000 kwh.,
capital funds, made advisable by
the substantial increase in vol¬
the
ago
rate
is equivalent to 1,741,200 tons
against 1,705,100 tons lkst week,
and 1,676,400 tons one year ago.
of steel ingots and castings
Boston Corp. heads
First
The
■
Corn
est level in two weeks.
ness
only other • course - is to house shipments, "The Iron
Age'*'points out.
have
the
government
provide,
Most steel officials hold to
the belief that basic steel demand will
funds.
Nowhere has this policy
support high steel operating rates for many months to come.
Oil, gas
been compatible with the main¬
and water pipe requirements are so heavy that it
may take a few
tenance of initiative and incen¬
years, at the minimum, to supply the material needed
by those in¬
tive,, and, in the end, of freedom." dustries.
"The
39
March 2, comparing with 276.81 a week earlier and with the recent
low, of 270.60 on Feb. 13. It is, however, considerably below the post¬
war peak of 308.82 recorded on Jan. 16.
On the corresponding date a
year ago the index figure was 257.89.
market in order to turn their backlogs
now, backing water.
path of economic progress which
•
Despite the cracking-up in the steel gray market and the
characterized the American econ- j
hesiomy until attention was eoncen- j
bfiw c?.nverJ*°? cie^als, normal steel market demand con¬
tinues at an all-time
high. Therp is little or no chance that the detrated more on the division of the
national product thah on its size.
■!!■ ' pVrqh£l5e,of ^ Premium priced steel will have any
effect on regular steel orders for
some time to come.
Funds for. business expansion canThe refusal
Ph consumers to pay premium prices or to enter into
rot, be met entirely through tfie
additional complicated conversion arrangements will
put strong pressure on steel
generation of funds through in¬
mills to take more
regular orders and to quicken deliveries.
ternal sources, and tye must:
(1135)
There
was a
slightly rise in the total dollar volume of wholesale
trade during the week. The number of buyers registered at the whole¬
sale centers increased considerably with mail and telephone orders
continuing to be substantial. Buyers generally remained cautious
A AAA>: AAA 'A;AAA'-'-.-AA ^AA-A'vAA AAA;A '■ and avoided long-term commitments. Order volume was moderately
above the level of the corresponding week of 1947.
About two-thirds of the week's total failures were concentrated
16,500 shares. It was offered by
Department store sales on a country-wide basis, as taken from
in two regions, the Middle Atlantic and Pacific States. Nearly all of
Smith, Barney & Co. Feb. 3, 1942, the increase from a week
the Federal Reserve Board's index for the week ended Feb. 28, 1948,
ago occurred in these regions, with Middle
at $206 a share. When offered the
increased by 5% from the like period of last year. This compared
Atlantic casualties rising from 22 to 35 and Pacific from 18 to 34. ?
with an increase of 15% in the preceding week. For the four weeks
statement was made that the stock
WHOLESALE FOOD INDEX MOVES UPWARD
ended Feb. 28, 1948, sales increased by 6% and for the year to date
>
•
The
first
was sold
the
did
consisted
block
to broaden
company.
sented
■AAA
ownership of
stock
The
partnership
not
repre¬
holdings.
It
company
represent
fi¬
A'
nancing.-
The second block to be publicly
sold
at
was
$200
offered
a
on
share.
It
year ago.
of
A
a
general stiffening in staple food markets last
week resulted in
reversal of the downward trend of the Dun & Bradstreet
price index. Following six successive declines, the March 2
figure advanced to $6.79. This marked a rise of 1.4% over the sixmonth low of $6.61 recorded a week ago but it is again below the
$6.77 registered on the corresponding date of 1947, when food prices
reached their first decontrol peak.
food
18,750 shares and represented
entire holdings in the-bank of
late J. P. Morgan.
increased by 6%.
Retail trade in New
WHOLESALE PRICE INDEX LIFTED BY FIRMNESS IN
York City the past week reflected little
similar week of last year. Unfavorable
affected department store volume which in turn pre¬
vented expansion of consumer interest in spring merchandise.
change from that of the
weather
According to the Federal Reserve
sales in New York City
April 8, 1943,
Consisted
wholesale
Board's index, department store
for the weekly period to Feb. 28, 1948,
de¬
This compared with
FARM PRICES
A'-"A,
an increase of 30% (revised)
in the preceding week. For the four
the
There was a sharp upturn in the Dun & Bradstreet daily whole¬
weeks ended Feb. 28, 1948, sales increased 7% and for the year to
the sale
commodity price index late last week as the result of a firming
date rose by 6%.
'
up in good, grain and cotton markets. The index closed at 282.35 on
of
creased 10%
below the same period last year.
•
40
(1136)
THE COMMERCIAL
Securities
•
•
Albuquerque (N. M.) Associated Oil Co.,
Albuquerque
March 5 (letter of notification). $200,000
capital stock ($1
No underwriter.
par).
Payment of rentals
on
oil and gas
leases and purchase of leases.
All
American
Industries, inc., New York
Oct. 30 filed 100,000 shares
($1 par) common (name to
be changed to American Steel &
Pump Corp.) Under¬
writer—Herrick, Waddell & Co., New York.
Price by
Proceeds—To pay off indebtedness incurred
in the acquisition of the capital stock of A. D.
Cook, Inc.,
American
I'
Feb.
Broadcasting Co^
Inc.,
New York
($1
par)
pro¬
posed maximum offering price of $12.50 per share.
Un¬
I'
Company
Proceeds—For .corporate
has plans to
norw
purposes.
about $5,325,000 for
television facilities in New
York, Los Angeles, Chicago
San Francisco and Detroit.
Shares will be sold to "the
spend
persons with which the company had network affiliation
agreements at Jan. 31, 1948, arid,to such other persons
as may be selected from time to
time by the
company."
•
I]
American
Optical
Co«;
Southbridge, Mass.
March 4 filed $10,000,000 of
20-year sinking fund deben¬
tures, due 1968. Underwriters—Harriman Ripley & Co.
and Estabrook & Co. Interest rate and
price by amend¬
ment. Proceeds—To
pay off a bank loan and short-term
as
well as for working capital.
notes
Business—Oph¬
thalmic and optical products.
Angus Mines, Ltd., Montreal, Canada
^
Feb. 12 filed 600,000 shares of common
capital stock ($1
par).
Underwriter—James A. Robb, New York.
Pro¬
ceeds—To
develop gold prospects.
Ark-Tex
Development
Co., Inc., Dallas, Texas
Feb. 12 (letter of
notification) 120,000 shares of common
stock.
Price
$1.50
each.
Underwriter
George
Cooper, Dallas. To purchase saw mill equipment.
—
R.
—
Associated
Feb.
Grocers, Inc., St. Joseph, Mo.
(letter of notification) $150,000 unsecured 6%
and 7.350 shares ($100
par) common stock,
24
I
Central
to
ceeds
be
sold
will
at
par
finance
to associated store
cooperating
underwriting.
buying
.
,
operations.
Coast
No
.
,..
_
Atlantic
Pro¬
owners.
Fisheries
Co., Boston, Mass.
Feb. 2 filed $556,500 4J/2%
general mortgage and col¬
lateral trust convertible bonds and
166,950 shares ($1
par)
common
stock.
Underwriter
Buffalo.
Offering — The bonds are
—
•i
Doolittle
&
being offered to
stockholders at the rate of $1,500 of bonds for each
1,000
common stock held.
The stock will be reserved
against conversion of the bonds.
Unsubscribed bonds
will
be
publicly
offered
by
underwriter.
Proceeds-
General corporate purposes.
•
•
Austin
Brothers, Dallas, Texas \
(letter of notification) 500 shares capital stock
March 5
($100 par).
writer.
•
To be offered at $115
To be added to
capital.
per
share.
No under¬
v
Black Hills Power &
Light Co*, Rapid City, S. B.
3
(letter of notification) 19,900 shares common
March
($1
par).
Underwriter—Dillon,
Read
&
Co.
construction and to reduce bank loans.
Inc., For
v
-j1,
Central
Nov. 21
15..
be
filed
offered
at
$50
and purchase of
share.
per
new
Proceeds
—
.Construction
equipment.
Brown Radio
Feb.
Productions, Inc., Nashville, Tenn.
(letter of notification) 1,250 shares ($1
par)
24
stock.
Price —$8.75
each.
To
be
sold
by
Charles H. Brown and S. W.
Brown, Jr.
Underwriter—
Mid-South Securities
Co., Nashville, Tenn.
ment
in
return
machine tools.
for cancelling $15,000
open account for
Price—$2 per share. Underwriters—R. A.
Keppler & Co., Inc. and Henry P. Rosenfeld &
Co., New
York. To provide
operating funds, etc.
Casa
Feb.
2
de
Paga Gold Co., Seattle
of notification) $100,000
(letter
A
bonus
of
one
at the rate of one new share for each 10 held.
White, Weld & Co. (jointly); The First Boston
property additions and expenses.
Proceeds—For
Century Steel Corp., Hollydale, Calif.
Nov. 10 filed 4,000 shares ($100 par) common.
Challenger Airlines
No under¬
Co.,
Salt
Lake
City, Utah
shares ($1 par) common stock, of
which 400,000 are being sold for the
company and 200,000 for the account of Claude
Neon, Inc. Underwriting
—None.
Price—$2 a share. Proceeds—For equipment
filed 600,000
purchase and general funds.
City Title Insurance Co., New York
25 (letter of notification)
5,000 ghares of capital
Price—$9. To be offered stockholders of record
Jan. 20 for subscription in ratio of one new share for
Feb.
stock.
each
six shares held.
Rights expire 3 p.m. March 23/
Unsubscribed portion will be taken up by Chilson New¬
berry Co., Inc., Kingston, N. Y.
General corporate
pur¬
poses.
•
Co., Inc.
March 4 (letter of notification)
$250,000 capital stock
(par $5). Price—$5 per share. No underwriting. In¬
cash capital.
crease
Stanley & .Co.; The First
Corp.; Halsey, Stuart & Co. Inc. Proceeds—To
finance
construction program.
a
Bids—Company plans to
invite bids to be opened March 23.
Consolidated
March
due
1
Edison
Co.
of
N.
Y.,
Inc.
(3/25)
filed
4i *
of
debentures.
Offering—Common
p.m. (EST) April
Underwriting—Unsubscribed debentures will be of¬
bidding... Probable bidders: Morgan
Stanley & Co.; Halsey, Stuart & Co. Inc.; The First
Boston Corp. Proceeds—To lredeem on
May 1 at $105 a
total of
273,566 shares of outstanding $5 cumula¬
tive preferred stock and
to
reimburse
pansion expenditures.
treasury for
ex¬
'
.
,,
Consumers Cooperative
Missouri
Assoc., Kansas City.
.
Oct.
16
filed
$1,000,000 4% non-cumulative common
stock ($25 par);
$4,000,000 of 3y2% certificates of in¬
debtedness cumulative; and $1,000,000 of
1%% loan
certificates cumulative. No
underwriting.
the public. Common may be
Offering—To
bought only by patrons and
members.
Price—At face amount.
Proceeds—For acqui¬
sition of additional office and
plant facilities.
{' '
'i
''KtJ*
($1 par) commbn stock. Underwriter—P. W. Brooks &
Inc., Newi York. Proceeds—To retire secured in¬
Co.,
•
•
•
Cribben
March 5'
($5 par).
&
• •
and supplement
•
"
•■
.
working
v
Underwriter—Swift, Henke
(Texas)
Power
&
4^
■4
i
CORPORATION
OJ
,
-
Boston
!
i
New York
.(j
\
Light Co.,
competitively. Probable
Co. Inc.; The First Boston
Equitable Securities Corp.;
Halsey, Stuart &
Corp.; Blyth & Co., Inc.;
Harriman, Ripley & Co.; Glore, Forgan &
Co., and W. C.
Langley & Co. (jointly). Offering—Debentures
will be
offered publicly.
Stock will be offered present stock¬
basis
of
one
new
Price—Common stock, $60
a
tion program.
share
share.
for
each
four
held.
Proceeds—Construc¬
to friends and associates.
Price—$100 per share.
Pro¬
ceeds—To retire 7% preferred
stock. Business:
"Super
Markets" in Los
Angeles, Riverside, Colton and San Ber¬
nardino County.
Florida
„
utt
di
,vtoPittsburgh
Chicago and other cities (v.Bntc
•
Kingston Products Corp., Kokomo, Ind.
notification) 14,618 shares common ($1
par). Underwriter—Alison & Co., Detroit.
March 5 (letter of
Lewis
(J. H.) & Co., Inc., New York
(letter of notification) $20 000 debenture bonds.
Price—$500 per unit. Underwriting—None. Machinery
March 1
export business.
Power
Corp.
March 2 filed 40,000 shares
ferred stock and
stock.1
1i 11
(3/24-31)
($100 par)
cumulative pre¬
llOMO^shares ($7.50
Underwriters—Kidadr, Peabody
Lynch,
Power
&
Light Co.
(3/15)
Feb. 12, filed $10,000,000 first mortgage
bonds, due 1978.
Underwriters—Names to be determined through
competi¬
tive bidding.
Probable bidders: Halsey, Stuart & Co.
Inc., Blyth & Co., Inc.; W. C. Langley & Co., The First
Boston Corp,; Glore, Forgan &
Co.; Shields & Co. and/
White
Weld
&
Co.
(jointly); Harriman, Ripley & Co.;
body & Co. (jointly); Kuhn Loeb & Co.; Salomon Bros../
& Hutzler.
Proceeds—Approximately $5,500,000 will be
company's general cash funds on the basis of
to
property
additions,
Pierce, Fennbr'& Beane.
par) common
& Co. and Mer-
Offering—Com¬
and
the
balance
will
be
used for construction purposes.
Bids—Bids for the pur¬
chase of the bonds will be received at Room
2033, 2 Rec¬
tor
St., New York,
Louisville
Feb.
12
up
(Ky.)
to 11:30
a.m.
(EST), March 15.
Gas & Electric Co.
(3/16)
^
*
(-
<
filed
$8,000,000 first and refunding mortgage
bonds, due March 1, 1978. Underwriters—To be. deter¬
mined through competitive
bidding. Probable bidders:,
Halsey, Stuart & Co. Inc.; Lehman Brothers and-Blyth
&
Co., Inc. (jointly); the First Boston Corp.; Harnman,
Ripley & Co.; Glore, Forgan & Co.; Kidder, Peabody
& Co. Proceeds—To pay
$2,450,000 of short-term-bank
loans and to reimburse
treasury for expense of property
extensions and improvements. Expected about March 16.
•
Markley Corp., Plainville, Conn.
(letter of notification) 37,790 shares of common
($1 par) and 12,000 warrants for holders to purchase
March 8
a
like number of shares at $6
per share.
Coburn & Middlebrook,
Hartford, Conn.
Underwriter—
To finance work
discharge debts.
Michigan Consolidated Gas Co. (3/29)
Feb. 26 filed $7,000,000 first
mortgage bonds, due 1969.
Underwriters—To be determined
by competitive bidding.
Probable
Bidders—Halsey, Stuart & Co. Inc.; Lehman
Brothers; Dillon, Read & Co. Inc.; Glore, Forgan & Co.;
White, Weld & Co.; Harris, Hall & Co; (Inc.). Proceeds
common
& Co., Chicago.
offered
bidders:
on
Gas
filed
(jointly); Shield & Co. and E. H. Rollins & Sons (joint¬
ly); Harriman Ripley & Co.; White, Weld & Co. and
Kidder, Peabody & Co. Proceeds—For construction and
other corporate purposes.
•
Dallas
Feb. 26 filed 68,250 shares of common
(no par) $4,000,000
25-year sinking fund debentures, due 1973.
be
plan.
& Electric Co., Wichita, Kan.
$5,000,000 first mortgage bonds due 1978.
Underwriters—To be determined through competitive
bidding.
Probable bidders: Halsey, Stuart & Co. Inc.;
The First Boston Corp. and Blyth & Co., Inc.
(jointly);
Merrill
Lynch,
Pierce,
Fenner
&
Beane;
Lehman
Brothers, Bear, Stearns & Co. and Stern Bros. & Co.
11
—Construction program.
Fitzsimmons Stores, Ltd., Los
Angeles, Calif.
2 filed 10,000 shares of
6% cumulative first pre¬
ferred stock ($100
par)..
Underwriting—Officers,,direc¬
tors and employees of the
company will offer the stock
FIRST BOSTON
Kansas
Feb.
Sexton
Co., Chicago, III.
(letter of notification) 1,500 shares of
Dallas
reorganization
l-Odoral, Inc., Wilkinsburg, Pa.
(letter of notification) 200,000 shares of common
stock (par $1). Price—$1 per share. Underwriter—Ster¬
ling Graham Co., Pittsburgh. Purchase of products, etc.
and
bonds, due 1966;/vdth warrants to purchase 60,000 shares
capital.
company's
•
r'<'
Crampton Manufacturing Co.
Feb. 5 filed
$600*000 first mortgage 5V2% sinking fund
debtedness, finance inventories
the
of
Expected at early date.
15.
fered at competitive
a
—
consummation
unfunded
$25
Feb.
The
(only such amount to raise $3,635,500). Un¬
Smith, Barney & Co.,- New York.
Price
and interest rates by amendment. Proceeds—To
permit;
derwriter
added
stockholders of record March 25 will be given
right to
subscribe for debentures in ratio of
$5 of debentures for
each share held. Rights will
expire 3
share
stock
mon
each
for
holders
Corporate and Public Financing
Power Co.,
Dubuque, la.
$20,000,000 first mortgage bonds, due:
'1978;?
$5,000,000 sinking fund debentures, due 1968 (to be
placed privately), and 1,500,000 shares ($3.50 par) com¬
Interstate
Feb. 5 filed
$57,382,600 of 3% convertible debentures,
Convertible at the rate of one common stock
1963.
common
underwriting j
Merrill Lynch, Pierce, Fenner & Beane and Kidder Pea¬
Underwrit¬
share
stock
Capital funds.
Louisiana
Columbia Gas & Electric Corp. (3/23)
Feb. 20 filed $45,000,000 of
debentures, due 1973. Under¬
writers—To be determined under competitive
bidding.
Probable Bidders—Morgan
Boston
Chemical Corp., New York
(letter of notification) 20,000 shares of
(par $5). Price—$5 per share. No
Ford
•
Colin Pharmacal
share
•
March 3
March 8
writing. Price—$100 a share. Proceeds—To purchase
rolling mill, equipment and for working capital.
March 1
Proceeds—I
Construction expenditures.
Hagerstown,
Power & Light Co.
ing—Debentures to
of
production
(10 par) stock will be
issued with each $1 worth of
production notes. Under-
notes.
Corp.,
stockholders may purchase the new common stock
mon
No bids received at competitive bidding Dec.
may be negotiated.- Groups formed to bid if
& Co. and
common
Cameron Aero Engine
Corp. (3/15)
Bee. 29 (letter of
notification) 101,000 shares of common
stock (par $1), of which
85,000 shares will be sold to
the public; 8,500 shares will be issued
to underwriters
as additional
underwriting consideration and 7,500 shares
will be issued to American Die & Tool
Co. for invest¬
Dry
filed 40,000 shares ($100 par) cumulative pre¬
Underwriting to be determined by competitive
Sale
Corp.
t
(Pa.) Glass Co., Inc.
5,000 shares of 5% cumulative preferred
stock (par $50) and
7,150 shares of common stock (par
$50). Underwriting—None.
Offering—Both issues will
26
of
issue i& reoffered include: W.-C. Langley &
Co., Shields
Brockway
Feb.
ISSUE
Md.
Ddc. 29 filed 254,682 shares
($10 par) non cumulative 6%
stock and 70,643 shares ($10 par)
non-voting common
Class B stock. Underwriters—To be sold through com¬
pany officers and employees to stockholders, employees
and customers without underwriting.
Price—At par.
Proceeds—To retire indebtedness and for working capital.
Co.,
shares of
Chemical
Thursday, March 11, 1948
Registration
writer—Lobe, Inc. To purchase capital stock
Dredging Co. and pay current expenses.
debentures
both
in
CHRONICLE
Creek
bidding.
at
derwriters—None.
Now
ferred.
13, filed 250,000 shares common
FINANCIAL
INDICATES ADDITIONS SINCE PREVIOUS
amendment.
Uawrenceburg, Ind.
&
Mountain
Co.
States
Expected about March 29.
Telephone & Telegraph
(4/5)
March 5 filed
$25,000,000 30-year debentures, due April
1978, and 191,881 shares of capital stock ($100 par)*
Underwriting—Underwriters for bonds to be determined,
through competitive bidding. Probable bidders: Halse^,
1,
Stuart & Co.
Inc.; Morgan Stanley & Co.; Harris, Hall &
(jointly). Stock will be of-4
Co. (Inc.) and Drexel & Co.
fered present .stockholders at
three basis. American
$100 per share ona.one-for-
Telephone & Telegraph Co. owns
167.
Volume
THE COMMERCIAL' &
Number 4680
FINANCIAL
CHRONICLE
*
burse treasury for .costs of
extensions, additions and im¬
telephone, plant and repay outstanding
to, parent, American Telephone & Telegraph
Co,
Bids—Bids for purchase of bonds will be received
at Room 2315, 195 Broadway, New
York, up to 11:30
,
1948
Cameron Aero Engine Corp.__—
Louisiana Power & Light Co.
ll;30 a.m. (EST)~
Common
^
-Bonds
Virginia' Electric & Power Co.
jjoon (EST)_^_——
;
Bonds & Debs.
March 16,
j.l:30
a.m.
35c
Pennsylvania
Underwriters
.Feb.
$700,000 4% 10-year first mortgage bonds
Underwriter—Alex. Brown & Sons, Baltimore.
Price—Par. Proceeds—To retire $635,000 of
41/2% first
mortgage bonds, due April 1, 1948.
Expected late in
March.
(3/17)
par).
Texas Electric Service Co.
(3/29)
Feb. 20 filed $5,000,000 first mortgage
bonds, due 1978,
and $5,000,000 Of sinking fund
debentures, due 1973.
Underwriters—To be determined by competitive bidding.
Paine, Webber, Jackson & Curtis and
—
Probable
Playboy Motor Car Corp., Tonawanda, N. Y.
Feb. 13 filed 20;000,000 shares common (lc par). Price—
$1 per share. Not more than 100,000 shares will-be of¬
fered to employees and officers at 87 Vz cents per share.
Boston
& Co., New York.
capital equipment and working funds.
1948
1948
Public
Service
Co.
of
bidders, Halsey, Stuart & Co. Inc.; The First
Corp.; Harriman, Ripley & Co.; Blyth & Co.,"Inc.,
Kidder, Peabody & Co., and Smith, Barney & Co.
(jointly); Glore, Forgan & Co., and W. C. Langley &
Co. (jointly);
White, Weld & Co.; Hemphill, Noyes
Co., and Drexel & Co. (jointly). Proceeds*—Finance con¬
struction program. Expected about March 29.
Proceeds—For
i
New
•
Hampshire
Feb. 6 filed 199,627 shares ($10 par) common stock.
Underwriters—Kidder, Peabody & Cp., and Blyth & Co.,
Inc., New York. Offering—To be offered present holders
at rate of one share for each VM shares' held.. New Eng-.
land Public Service Co. will waive its rights to subscribe
to 141,101 shares,
Price—By amendment. ■ Proceeds-
—Bond & Pref.
March 24, 1948
Florida Power Corp.————Pref. and Common
Construction program and retire short-term loans.
1948
Consolidated Edison Co. of N. Y. Inc—Debentures
Dallas, Tex,
$7,000,000 sinking fund debentures, due
1973, and $2,000,000 of first*mortgage bonds,"due 1978.
Underwriting—To be determined through, competitive
Ex¬
,
•
Pyramid Life Insurance Co., Charlotte, N. C.
27 (letter of notification) 100,000 common shares
($1 par), to be offered to stockholders at $2 per share.
No underwriter. For capital surplus.
Feb,
''v
March
29, 1948
Michigan Consolidated Gas Co.
————Bonds
Bonds and Debs.
Co.—
Utah Power & Light Co.—.———Bonds
March
& Debs.
31, 1948
.inOhio Power Co
-Bonds
—
•
Drury
April 5, 1948
-V>;/// >■ '
Thomas
(F. C.)
per
share.
of
Underwriting—None.
record
ratio of
March
one new
expire March 24.
•
Feb.
25
(letter of notification)
April 6, 1948
Southern Counties Gas Co. of Calif————Bonds
San Diego Gas & Electric Co.
Feb. 17 filed $10,000,000 first mortgage bonds, series C,
due 1978.
Underwriters—Halsey, Stuart & Co. Inc. and
Charlottesville, Va.
associates awarded the issue March 9 as 3s.
•
.
Underwriters—Walston, Hoffman
Goodwin and Hart¬
ley, Rogers & Co. Offering—63,785 shares are to be
publicly offered (25,000. on behalf of company and 38,785
for account to Marcus Nalley, Chairman); 20,000 shares
will be offered to employees, executives and directors
artd 35,367 shares are to be issued in acquisition of all
publicly held stock or partnership interests in certain
subsidiary and affiliated companies.
•
Inc., Boston, Mass.
Dec. 24 filed 83,333 shares (no par) $1 cumulative con¬
vertible preferred. Underwriter—AtlaS Corp., owner of
100,000 shares pf the registrant's common stock, has
agreed to purchase all shares not subscribed for by other
stockholders. Offering—Offered for subscription by com¬
mon stockholders of record Feb. 2 at $20 on the basis of
common
shares
held. Rights expire
March 1. Proceeds—To pay off indebtedness.
Schenectady
.
1978.
bid-?
ding.
General
•
•
March* 4 (letter of notification) 239,000 shares
($1 par).
No underwriter.
Oklahoma
'
Gas
&
of common
For corporate purposes.
Electric Co.,
Oklahoma City,
'
Oklahoma
Feb. 20 filed 65,000 shares of cumulative preferred stock,
($100;par). Underwriters—To be determined under com¬
petitive bidding. Probable bidders: The First Boston
Corp.; H&rriman, Ripley & Co.; Lehman Brothers and
Blyfh & Co., Inc. (jointly). Proceeds—To be applied
toward construction program.
/Pacific Gas and Electric, San Francisco
Jan. 29 filed
686,953 shares ($25 par) common stock.
Underwriting—none. Offering—To be offered at par to
holders of outstanding common stock of record Feb. 27
at the rate of
April 9,
one
share for each 10 held.
Proceeds—To finance
a
Rights expire
construction program.
Pacific Telephone & Telegraph Co. (3/16) ;
Feb. 13 filed $75,000,000 30-year debentures, due March
1» 1978. Underwriters—Names to be determined by com¬
petitive bidding. Probable bidders: Morgan Stanley &
Co., and Halsey, Stuart & Co. Inc.
Proceeds—To reim¬
American
Selected
•
(4/1)
subordi¬
/
'-Sfnn*' 1!
■
•
.
New
Dallas^ Ife'xas
//;.
-.,
Eastern
Alaska
2
(letter ' of notification)
($100 par).
V:
-
3,000 common shares
For working capital and current debts.
of Calif. (4/6)
Southern Counties Gas Co.
bonds, due
cpmpetitive
bidding. Probable bidders: Blyth & Co., Inc.; Halsey,
Stuart & Co. Inc.; The First Boston Corp. and Harris,
Hall & Co. (Inc.) (jointly); W. C. Langley & Co. and
Glore, FOrgan & Co, (jointly); White, Weld & Co.
Pro¬
ceeds—To reimburse treasury for capital expenditures,
including construction costs. Expected April 6.
;/
Feb. 26 filed $7,000,000 3V4% first mortgage
1978.
Underwriting—To be determined by
Sperti Foods, Inc., Hoboken, N. J.
,
(letter of notification) 30,000 shares 5% cumu¬
convertible preferred stock, ($10 par).
Price—
$10 each.
Underwriters—White, Noble & Co., Detroit,
and Clair S. Hall & Co.,' Cincinnati. To operate phar¬
maceutical division and for general corporate purposes,
Feb. 26
lative
the Rockies, Inc., Colorado
Springs
March 5 (letter of notification) 35,000 common shares.
For purchase of bus, a jeep and camping equipment.
•
York,
Steak 'n Shake, Inc., Bloomington, III.
Feb. 2 filed 40,000 share? of 5Op cumulative convertible
preferred
stock,',^($1
par)
and
shares (50c par) common
^opk^bf which 49,000
sold and the remainder rese'fypd for qonve^siorL
writer—White
&
up
to
noon
(EST), March 15.
20 filed
March 22.
Wilson-Jones Co.
160,000
will be
Under¬
Co., St, Lqtiis,. Mo., Price—$8, for the
(3/19)
Feb. 25 filed 32,937 shares of comjnon
stock (par $10).
Offering—To be offered for sub-*
Underwriters—None.
scription by stockholders of record March 19 in ratio o^
one new share for each eight shares held. Rights will ex,4
pire
on or
before' April 30.
Price—$12 per share. Pro}
of securities and as+
I
ceeds—Plant additions and purchase
sets of other companies.
Starlite Campers of
participating
15 at rate of
(3/22)
$20,000,000 Series M first mortgage bonds
due March 1, 1978; 50,000 shares of Series B preferred
stock ($100 par) and about 2,000,000 shares (no par)
common stock. Underwriters—To be determined under
competitive bidding.
Probable bidder: Halsey, Stuart
& Co. Inc.' (bonds only); W. C. Langley & Co. and The
First Boston Corp. (jointly); Lehman Brothers; Kidder,
Peabody & Co.; Smith Barney & Co. (preferred only).
Common stock will be offered under a subscription plan,
with details to be filed by amendment. Proceeds—To be
applied toward the payment of $4,000,000 of bank loans
and
toward construction
expenses.
Expected about
Feb.
Seattle,
V '.4.
'Wash.
1
West Penn Power Co.
.
Transit Co.,
pur¬
Price oL
debentures, 100. Proceeds—To pay .for construction ex¬
penditures, including $11,000,000 of bank notes issued to
finance construction.
Bids—Bids for purchase of bondst
will be received at office of J. C. Leighton, 90 Broad St.,
11,400 shares of common
Underwriter—Buckley Bros, proceeds to selling
South
Ripley & "Co. Proceeds*—For corporate
including construction. Expected March 29.
of debentures for each 25 shades held.
$100
March 4 (letter of notification)
stock.
(jointly); Smith, Barney & Co.. and
(jointly); White, Weld & Co.^
to common stockholders of record March
;
-
Corp.
Securities Corp.
,
In^oihii: v ..
of common stock, (par $2.50).
.
Co.,
Virginia Electric.At Power Co. (3/15)
Feb. 17 filed $10,000,000 first and refunding mortgage
bonds due 1978, and $11,753,800 convertible debentures
due 1963.
Underwriters—Bonds to be offered under
competitive bidding. Probable bidders: Stone & Webster
Securities Corp.; The First Boston Corp.; Glore, Forgan
& Co., and W. C. Langley & Co. (jointly); Halsey, Stuart
& Co. Inc.; White, Weld & Co.; Merrill Lynch, Pierce,
Fenner & Beane, and Hallgarten & Co. (jointly). Deben¬
tures will be underwritten by Stone & Webster Securi¬
ties Corp., Boston. Offering—Debentures to be offered
Shares,
Seminole Oil & Gas Corp.,
March
Oil Incorporated, Salt Lake City, Utah
poses,
Paper Co., Chester, Pa.
March 5 (letter of notification) not over 12,000 shares
of common stock (no par). To be offered to employees
between March 15 and Nov. 30, 1948. Aggregate total
not to exceed $300,000.
The shares to be distributed
will be purchased through the facilities of the New York
and Philadelphia Stock Exchanges.
:
March 1 filed 300*000 shares
Proceeds for investment.
&
Harriman
Scott
due
.
;
Cassel
To retire bank loans.
Power
Securities
Underwriting—None.
corporate purppses.
stockholders.
•
Price—$100/
debentures.
nated
Probable bidders, Dillon, Reed & Co. Inc.; The
First Boston Corp.; Halsey, Stiiart & Co. Inc.; Glore,
Forgan & Co.; Harriman Ripley & Co., and Stone &
Webster Securities Corp. (jointly). Proceeds—-To be ap¬
plied toward the retirement of 6% gold debenture bonds,
2024, prepayment of $9,500,000 of notes floated for
construction purposes, and $31 million to be deposited
with the corporate trustee under the mortgage secur¬
ing its5 first mortgage bonds'. Expected about March 31.
Discount Corp.
(N. Y.)
$295,000 first mortgage
Underwriter—C. F.
19 filed
Union
(B. F.)
Feb. 26 (letter of notification) $1Q0,000 20-year
•
Ohio Power Co., Canton, Ohio (3/31)
,<
March 2 filed $40,000,000 first mortgage bonds, due
Underwriting—To be determined by competitive
Saul
stock
Fenner & Beane, R. W. Pressprich & Co. and Equitable
Co., Washington, D. C.
March 4 (letter of notification) $45,000 41/2% promissory
notes.
No underwriter.
To reimburse issuer.
Northeast Airlines^
share for each six
Md.
(letter of notification) 11,250 shares of common
stock
(no par).
Price—$20 per share. UnderwriterJackson & Co., Boston.
For equipment and working
capital.
Feb.'26
Jan. 15 filed 119,152 shares of common stock (par $1.25).
one
Price* 101.39
Sanitary Products Corp., Taney town,
B
& Light Co. (3/29)
$3,000,000 first mortgage bonds, due 1973,
and $3,000,000 of sinking fund
debentures, due 1973.
Underwriting—To be determined by competitive bid¬
ding.
Probable bidders include: Halsey, Stuart & Co.
Inc.; The First Boston.Corp. and Blyth & Co., Inc. (joint¬
ly) ; Kidder, Peabody & Co., Merrill Lynch, Pierce,
ury for expenditures and for purchase of new facilities.'
Expected as we go to press.
;
/
-
Nalley's Inc., Tacoma, Wash.
Price—$100.
Utah
Feb.
Proceeds—To reimburse company's treas¬
and interest.
class
Additional working "capital.
bonds.
outstanding stock. Proceeds—To repay ad-v
vances from American Telephone & Telegraph Co. ex¬
pected to amount to about $41,000,000 March 31, 1948.
Expected about April 4. :
/
of
Trailways Service, Inc., Washington, D. C.
holder.
of
Holders
1 are given the right to subscribe in
share for each two shares held. Rights
Mountain States Telep. & Teleg. Co.—.Debentures
73.35%
Inc., Olean, N. Y.
March 4 (letter of notification)
1,440 shares class B 6%
cumulative preferred stock (par $50).
Price—$50
.
Safety Heat Elements Inc., Middletown, Conn.
Feb. 27 (letter of notification) 30,000 shares of common
stock (par 100).' Price-r-$3.25 per share. Underwriter—
H. P. Carver Corp., Boston.
Proceeds to selling stock¬
^- -Debentures
filed
bidding, Probable bidders: The First Boston Corp., Hal¬
sey, Stuart & Co. Inc., Blyth & Co., Inc., Smith, Barney
& Co. and Kidder,
Peabody & Co. (jointly); Hemphill,
Noyes & Co. and Drexel & CO. (jointly); W. C. Langley
& Co., and Glore, Forgan & Go.
(jointly); White, Weld
& Co.; Harriman Ripley &
Co., and F. S. Moseley & Co.
(jointly); Lehman Brothers. Proceeds—For construction
•
t
_
8
purposes.
Lane, Inc., New York
March 9 (letter of notification) 2,059 shares of common
vstock (par $25). Price—$25 per share. Underwriting—
None. Equiping and decorating new location.
.1
April 1, 1948
Schenectady Discount Corp
Restaurant
Texas Power & Light Co.,
March
pected late this month.
March 25,
Texas Electric Service
17 filed
due 1958.
penditures and finance improvements.
Columbia Gas & Electric Corp
-Debenture
Denver & Rio Grande Western--Equip. Trust Ctfs.
:
Corp.
Underwriter—Tellier
-
Refrigerating.& Warehousing Corp.*
Washington, D. C.
Stone & Webster Securities Corp., New York;
Price by
amendment.
Proceeds-To reimburse treasury for ex¬
-Common
March 23,
Telephone
Feb. 26 filed 40,000 shares $2.25 preferred stock (no
—Preferred
Wilson-Jones Corp. r".
Terminal
capital and expansion of business: retail drug stores^
1948
March 22,
West Penn Power Co.-
.
for funds used to purchase McFarland Drug
Co., Topeka,
Kan., and the $332,500 balance will be used for working
1948
Pennsylvania Telephone Corp..—.,.
March 19,
Drugs, Inc., Kansas City, Mo.
100,000 shares of preferential cumulative
participating stock ($4.50 par).
Underwriter-
&
Blosser, Chicago.
Price-r-$5.25 per share.
Proceeds—$140,000 will be used to reimburse company
..Debentures
March 17,
common.
Straus
1948
(EST)-
i
Taylor Food .Co., Raleigh, N. C.
24 (letter of
notification) 100,000 shares ($1 par)
Price—$1 each. To retire bank loan and for
working capital. Underwriter—Griffen & Vaden, Inc.,
Raleigh.
.'
Feb,
'
Parkview.
Chicago Ind. & Louisville
V Noon (EST)—,—.——,-u*
Equip. Trust Ctfs.
Louisville Gas
Electric Go. (Ky.)
Bonds
Ohio, State of-'—--Bonus Bonds
Pacific Telephone & Telegraph Co.
'
(EST), March 16.
a.m.
Jan. 27 filed
March 15,
'L
is
advances
March 11, 1948
Chesapeake & Ohio Ry.,
Noon. (EST)
--Equip. Trust Ctfs.
41
preferred stock and $2.50 for the common. This stock
being offered by stockholders who are members of
the Belt family.
provements to
NEW ISSUE CALENDAR
(1137)
*
Prospective Offerings
Arkansas
•
Power
Light Co.
&
^
reported company plans sale of $10,000,008
bonds.
Probable bidders include: Halsey, Stuart &Uo.
Inc.; Blyth & Co., Inc.; The First Boston Corp.; White,
Weld & Co.j!Glore, Forgan' & Co. and Harriman Ripley
March
5
• Co. (jointly).
5
1
.
1.
**+
.
'
f
MA
•
,
'
(Continued on page 42)
v
'«
rj
1
42
THE COMMERCIAL
(1138)
5
(Continued from page 41)
dated
Broadway Department Store, Inc., Los Angeles
March 16 stockholders will vote on creating a new issue
of 250 000 shares ($25 par) cumulative preferred stock;
and on iricreasing the authorized common from 1,000,000
U
Solomon
Natural
•
r'r
fit
'
1,1
u
fl
A
ii
I?
i'
H;
California
Oregon
Power
Power
f,
I
•
•
Gulf
®
no
3ft.
(3/16)
Stuart
in;
Stonfe
(3/16)
State of
■.
Ohio
will
bids for the
open
$200,000,000 Veterans' Bonus bonds due 1949-1963.
Gas & Electric Co.
,'?•
j;
-
stock.
approve
While
reclassi¬
the
amendment
would not affect the 6%, 5Vi% or 5%
preferred stocks
outstanding, 2,215,175 shares of unissued first preferred
stock would be callable. Also, under the
proposed amend¬
ment, directors would be authorized tb fix the dividend
redemption
price
and
issued.
as
conversion
any
James B.
rights
df
Black, President, states
that the sale "of additional first preferred stock
requires
more flexible prbcedure than is now
provided by the
a
'articles of
!•
basis of
incorporation.,
Pacific
v
,
j
Lighting Corp.
iMarch 4 directors authorized the filing of
registration
a
.'statement with the SEC covering 321,728 shares of
coimimon stock (no par) for offering to. stockholders at
thfe
rate of one new share for each five held on
April 15.
authority to issue
Proceeds would be used
j Expected
|share.
and to
&
the
16
Iiayden,
Pacific
rate,
retire $4,500,000 notes due June
Stone & Webster Securities Corp.;
Probable bidders:
Halsey,
on
authorized
v
'
-
future series
12,000,000 first mortgage bonds.
for construction
vote
issue any addL
underwriter:
fication of the preferred
Corp.
on
current plans to
Traditional
•April 13 stockholders will be asked to
Utilities Co.
States
March
sale of
March 3 company applied to FPC for
offering
:
will
be
made
!-•■'
■.:
April" 16 at" $40
'
...
,,
Southern New England Telephone
! March
Co.
Inc.; Salomon/Bros. & Hutzler;
Merrill LynfcH, Pierce, Fenner & Beane and
White, Weld
& Co. (jointly).
and
vote
would be able to de¬
we
time
our
problems
of
problems of
and
energies
rather
peace
little evidence from any¬
is
than
the
end
of
the
that she will
should
people
choice " is
accept
any
will
In
whether
I
make
not
the
proposal.
have
do
something such as I have
deny that the choice is to do some
just described or whether we have such
thing as I have proposed or
World War III at some date within
to face up to getting ready for
the reasonably near future. How¬
World War III. To get rid of war
ever,' it must be admitted that as
is
such
a
high prize' that we
yet thbre is no evidence of any in¬ should be
willing to play the most
terest on the part of the United
outside of
States'
program.
outside chances.
Government
such
a
inaction
this
that
all
the
in
The
pushing
for
is, 1 believe, not at
idea is impractical,
but that the Unitfed States is just
plain not ready to give
liance
armaments
on
its re¬
up
as
the main
guarantee of its security.
For all
supporting UN, there
is no evidence, at least in so far
as
official opinion is concerned,
that
the
United
to take a
antor
oh
of
our
States
chance bn law
our
own
security
ready
Russia
that
not
I
such proposal.
any
we
offer
an
rejected^
;
11
Connecticut
U.
P.
Co.
Commission
per
*
held
hearings
company's, petition to issue $15,000,000 30-year 3V8%
ion
debentures.
May
be placed
and
to
were
if
are
agree
agree
to
that
of
we
the rdad toward
ful
world:
fuse
such
ahead
create
the
For
privately.
i
,
solidify
Co.
par
is
offering,
as
a
1,000 000
shares of
value common stock
Americah
more
deeply concerned: with
problem
of
time/ before.
Wottld
in
I
believe
support
their
positive
any
would put
than
peace
at
which
power of the
that
a
and
purpose
of
engaging
drilling of oil wells
as a
in
the
contractor
for others. The Deardorf Oil
viding
thus
which truly
political bloc,
against Russia but
at peace
high ideal of pro¬
example of how a world
might work.
that such
a
pies
first
call
on
the
cor¬
Long-
it
to
4.49%
4.39%
4.72
6.36
i9i6_;::::::
4.73
3.43
*920
6.18
7.37
____
u
_
________
in addition to the stock
new
being
offered, consists of 1,000,000 shkres
of common
stock,
par
10 cents.
this
I
3.91
may
Russia
cooperate.
Assume
very
well be the
determined
world
sooner
1941
later
or
conquest
2.84
,.
■
Russia to succeed in any such am¬
bitious plan.
is
danger that the
countries face
non-
today
the fact of disunity. The seiz¬
of
Czechoslovakia
and
the
ure
pending conquest of Finland
a
sad reminder
are
of the Nazi tech¬
nique which picked off one coun¬
try at a time while the leaders of
West
unified
and
solid
non-Iron
whose
floundered
unable
to
about
agree
union
Curtain
on
of
the
countries,
jm^fn objective would be to
create world peace, would not
a
un¬
policy.
political
weak
thing.
Credit
/
bonds, that is corporate
bonds in which tnere is
of
believe
that they are very, deeply right. I
believe
that
they
have, truly
lowered
default, will fluctuate
conditions
ness
kets.
A
too
be
It would be much
arid
risk
some
coverage1 ot
even
of
with busi¬
equity mar¬
narrow
spread, be¬
we
tween them and money market
something immediately bonds,
particularly in the railroad
and dare now to give tlie UMtect
field, has been la/gely rectified
Nations
the
power
to
enforce by market declines
during -the
world peace or we will soori face
past two years.
~
•-,<
must
do
World
War
1.04
At the turn of
the. century long
and short rates were
about equal.
In 1907 when credit
was
strained
In
1916,
World
were
just
War
beginning to
cidence
of
I
well above
before
III.
V"
Short
a n
k
s
them)
'•>
-
the
short
liquidity
long:
It
rate
be restored.
liquidity
rampant,
and
in
materially
anything in
stability to
or
inter-
relationship will
Furthermore,
the
principle of estate taxation and
the level of estate tax
rates stimu¬
late liquidity
preference as much
as
the prospect of atom
bombs.
No
successful business
proprietor
advancing in
do
years
can
anything except sell
during
1948;
afford to
out
and
Bonds
corporate bonds prevailed in
combined
interest rate
con¬
long-term government
quality (money market)
ade,
war
Fort
reasonable to
Corporate
was
soon
at
A "normal"
spread of about 1%
was
prewar
buried
prevail
may
again
in
1929
credit
strained and the short rate
and
suggest that the
geld
seems
a
1%-%
1920
Nor is there
as
commercial paper rate of
1V4 % to
In
the outlook for world
facts
well
cent past may be
expected to con¬
tinue fo'r some time to
come:
was
rising in¬
peace
1947 this fever had not
the
as
clude
that
something like the
short-long relationship of the te-
arid best
subsided.
in
loans
of
credit are both at all
time Highs while the rate on com¬
mercial ; paper
has
risen
little
more than
one-half percent from
its all time low: and also
in the
World War I—the war to
end wars—the world
settled down
In 1941
state
consufner
between
above the long.
oreference was
current
that commercial
preference.
enjoy perpetual
the
entered
we
reflect the
of
quantity of
-m,
short rates
dence
Knox.
0.54
2.58
1947^4.-.,-
war.
that
assume
bond
corporate
During
yield of
314% iS expected.
this
Either
the
1%.
in
.
5.78
not
seek
Paper
5.07
that the nature of the Rus¬
is
cial
Bonds
4.86
dictatorship is so similar to
that of the Nazi dictatorship that
A
capitalization,
of
liquidity preference
'
Term
Year
1929
again
as
\Commer-
1924
sian
poration's equipment.
Total outstanding
all
old
of
by cir¬
lead
long and short1 interest
[prepare his estate for the impendrates during the present centurv:
century: ing tax: There is statistical"evii
It might be
by the West might
persuade Russia to join with this
any common
have
forced
take
of
show of determination
wisdom
and
will
the
In
(Continued frond page 12)
would
to the
an
the
in
been
td
apr"
exceed
.
1900
war
Corp.,
opinion of the cor¬
poration has sufficient drilling to
keep its rig busy for several years,
which
United States in
eventually
even
spiead
(who
re¬
outside
which
world
into
did
The great
Iron Curtain
the
has
may
or
a
'
and
continue *
municipal
bonds
are
bought / mostly
by [-commercial
mainder will be used for working
ware
ernment
1948
has
should
it did during the past
as
and
"normal"
they
time
bonds
widen;
proach,
b
to
Drilling Corp., a Dela¬
corporation, was formed for
the
to
government
Municipal
Iron Curtain" political bloc would
make it much more difficult for
Deardorf
want
on
After
capital.
war
corporate
thereafteryThfc '
come-
between
spread
to
Drilling Corp.
The
stock is priced at 30 cents a share.
Proceeds of the offering are to
be used by the company for the
purchase of a completely equip¬
ped
drilling rig,
and
the
re¬
Deardorf
that
seized upon the choice.
they
government
program
the great
the
any
that
they
next
I think that
when .the
matter.
by force.
The creation of such "outside the
of
believe
lems
believe,
the
that
general dnd>in particular its gov¬
history to the prob¬
international policy.
I
moreover, that they are
of
what
and
cumstance
1907-^.r
case,
&
year,
fully
be
time in their
devoted not at all to any nation d:
wen,
Tellier
realize
peace¬
union
Curtain
wants peace
would
•)
to
also
alert than at any
are more
in fact demanding of the
government f that
something be
done.
I
think
that trie people
during 1948, and for
time to
some
pep-;
are
come
the
will prevail
the search
of
Ii believe that the
have none of it.
DOne
that
should go
we
Russia
political
a
Iron
a
Russia
offer,
an
now
are-
making
if
without
But
Tellier & Co. Offers
10-cent
believe
States back
still would be far
we
where
bloc in the elimination of
.
speculation,
make
were
we
Be
I
pie
will
Public Demands Something
;
United
for peace.
.
ahead
devoted
reasons
will
if
even
is
profitable business.5
aggressive
rather than
military force.
subsidiary
Many
is
as a guar¬
given to support this basic hesita¬
tion on our part.
The usual one
is
such
be
of
talk
our
But
reason
than
acting in¬
would through
that the idea of world conquest
not a
people
first place, I repeat that
heard of no one who will
the
itself
defend
countries
and it
its
consolidated
power
impress
any
would-be
wcirld
conqueror
give hope
such pro¬
gram.
But
it
does
not
follow
therefore that the United States
Itiaction
many
to
war
to
several
dividually
thing that Russia has done sihee
war.
I, doubt if
deny that the
the
15)
page
there
to
Effect of Hesitation and
we
able
more
Difficult international Situation
over
¥
On
(3/23)
11,575 shares with SEC- and offer such shares for sub¬
(Continued from
1
RR.
to
V-iiH-VW-;-
I
r
Western
scription by stockholders at $100 per share
l-for-3.
Proceeds for working capital.
The company will receive bids up to noon (CST) March
16 for the sale of $1,800,000 equipment trust certificates,
fl
a*
Grande
Graham-Newman
k
III-
are
There
stock.
:&Co-;
40,000 to 50,000 shares (no par). Presently company has
34,715 shares outstanding.
Company plans to register
(3/11)
Indianapolis & Louisville Ry.
Co.-
tional
Feb. 27 stockholders increased authorized common from
Inc.; Salomon Bros. & Hutzler; Harriman, Ripley & Co.
Inc., and Lehman Brothers (jointly); Harris, Hall & Co.
(inc.); The First Boston Corp.; R. L. Day & Co.
•>V
,ical
icates, dated May 1, 1948, and maturing semi-annually
over
a
period of 15 years.
Probable bidders: Halsey,
Stuart & Co. Inc.; Salomon Bros. &
Hutzler; Harris, Hall
& Co. (Inc.); Harriman Ripley & Co. and Lehman Broth¬
ers
(jointly); Kuhn, Loeb & Co. and Blyth .& Co., Inc.
(jointly).
The company will receive bids up to noon (EST) March
11 for the sale of $4,750,000 of serial equipment trust
Chicago
Rio
asked
reducing preferred shares to thfe
number now outstanding. The holders wi-1 also
vote on!
changing the name of the company to Mathieson Chem-
company has issued invitations for bids to be re¬
ceived March 23 for $4,530,000 in equipment trust certif¬
Light Co.
March 9 company asked the SEC for authority to borrow
$7,000,000 from Equitable Life Assurance Society of U. S,
on 3 l/4 % notes.
Money will be used to pay a $2,500,000
bank loan and to finance plant construction.
•
&
will- be
on
Ohio, State of
»(
V
and
stock
common
bidders
Probable
program.
Works
stockholders
30
creasing by 500,000 the- number of shares of
White, Weld &-Co. and Paine, Webber, Jackson
Denver
maturing annually from March 15, 1949 to
March 15, 1958. Probable bidders: Halsey, Stuart & Co.
St
construction
Alkali
Mathsesen
March
Co.
The
certificates
it
•
Gas
Commission
15-year debentures
permission to sell $1,500,000 4V4%
'privately to John Hancock Mutual Life Insurance Co.
Smith
-
& Curtis (jointly); Dillon, Read & Co.
Inc.; The First
Boston Corp.; Halsey, Stuart & Co. Inc.; Morgan Stan¬
ley & Co.
>
Co.
&
Chesapeake & Ohio Ry.
il
Merle
&
asked SEC for permission to sell at
bidding $30,000,000 debentures due 1968.
for
Proceeds
California P. U. Commission
to
sell at
competitive bidding $4,500,000 bonds and
100,000 shares of common stock (par $20). Probable bid¬
ders include:
Haliey, Stuart & Co. Inc. (bonds only);
Blyth & Co., Inc., and The First Boston Corp. (jointly);
Merrill Lynch, Pierce, Fenner & Beane (common); Harriman Ripley & Co.; White, Weld & Co.; Merrill Lynch,
Pierce, Fenner & Beane and Kidder, Peabody & Co,
(jointly on bonds); Salomon Bfos. & Hutzler; Shields
& Co. (bonds only).
Carolina
Dick
and
i
applied to Maine P. U.
company
for
company
competitive
March 4 company requested
•
8
Co.
Public Service Co.
Maine
March 5
Halsey, Stuart & Co. inc.;
Harris, Hall & Cb. (inc.);
HUtzler;
Consolidated
include:
Traditional underwriter, Blyth & Co., Inc.
ing capital.
&
&
March
proceeds of $1,850,000 which will be added to work¬
net
Bros
•
1,200,000 shares, and changing the par value of the
common from no par to $10 par.
It is the present inten¬
tion to offer publicly 80,000 shares of the new preferred,
which it is estimated will provide the corporation with
•
Pfobablb bidders:
Kidder, Peabody
(jointly).
/to
Thursday, March 11, 1943
15, 1948 and maturing annually April 15,
April
1949-1963.
•
CHRONICLE
FINANCIAL
&
the
1920's.
During the following dec¬
lowered capital formation
with
the
emergence
of
government
deficits, narrowed the
During the recent war
spread.
years
the
supply
of
new
capital
and
long
individual
arid
ment accounts
income.
The
increased
enormously expanded:
the spread shrank
ing
a
low of less than
at the war's end.
two
further, reach¬
years
a
y4
of
high rate of capital
formation combined with
a
Fed¬
eral Government
surplus have
stored
1920's
conditions
more
expected
1%
During the past
resembling the
than the 1930's.
that
re¬
these
It is
conditions
seeking tax exempt
during
years and
to
increase.
sued and
eral
are
Bonds have
beeri is¬
being issued by sev¬
in~ order to
provide
for
ments.
two
past
are
states
funds
the
is expected to contihue
soldiers
States
and
being called
additional
bonus
pay¬
municipalities
upon
to provide
streets,
roads,
schools,
systems, parks and play¬
grounds, etc., etc.; and construc¬
tion costs have multiplied. At the
water
same
time, the trend of income
taxes is downward, and it is ex?
pected that there will be a tax re¬
duction 'in
1948 and
possibly an¬
As might be- expected,. long-term
municipal
other
bonds
in
1949.
have
declined
than
more
other class of money market
bonds: their yield has risen from
1.45% in April, 1946 to 2.45% in
any
January,
1948.
The
decline
•
in
municipal bonds has carried them• :
to a point where the
municipal,
yield compares favorably with the
corporate
ment issues
large
invest¬
bond s ." outstanding
declined during the war,
comparatively
govern¬
by
fiduciary
municipal
which
while the supply
new
underwrite
:
bonds
supply of state arid
issues shrank to small
proportions
of
also
-
There
for
yield .'for
are
this
three
state
investors/of
modest
possible
of
affairs,
means.
reasons
and
the
true
explanation may lie in a
combination of the three: (1) the
supply pressing
been unusually
on
the market has
large during the
past year because of bonuS bonds
ssued
cause
(2)
on
large
counts
by several states, and be¬
of
high construction
balance
in
individual
may
have
'he
costs;
aggregate,1
investment
become
"ac¬
sellers
;
Number 4680
167
Volume
THE COMMERCIAL
yield
buyers because of the
drain of estate taxes and because
many people of means have been
dipping into capital in order to
maintain living
standards;
(3)
while large estates are shrinking,
foundations, college endowment
funds, and other tax exempt in¬
stitutions are
growing rapidly:
more
and more, rich men are
rather tl^an
only
4%
to
4V2%
while
yield between 5% and 6%. Future
tax
rates, future capital needs,
from
stock dividends but,
common
mder
conditions
they exist in
the early part of
1948, and in re¬
lation to the long-term
govern¬
leaving their fortunes to founda¬
tions and colleges because they
cannot leave them to their chil¬
dren. The quantity of investment
funds available
for high-grade
taxable
bonds
and preferred
stocks has grown and is growing
absolutely as well as in relation to
as
ment and other interest
felt that 5%
for
the
is
reasonable
a
yield
common
rates, it is
well
on
of
rate
Considering
States have
example,
find
be
net
a
.or
great absolutely or in percentage
as the rise in the municipal bond
this
the
to
the
of
proved
will
stocks
ferred
This
though
$7
time to
these
form
of
stocks. Indus¬
be expected to
continue the" practice of issuing
convertible preferred issues be¬
cause,
under conditions existing
today, they cannot obtain funds
was
the
on
who
were
reported that
of
the
task
apparently
the
to
refer
to
as
there
is
nothing
of
successful
busi¬
group
was
preferred
The
winning
issuer
3%%
j
a
price
offering
100.35
price
to
99.40
of
rate
coupon
paid
group
bonds
long
on
and
govern¬
which prevailed dur¬
ing the 1920's might be expected
today, particularly sihce the in¬
creased
convertible
of
use
pre¬
ferred issues for obtaining money
which
really should be equity
offsets
money
mand
tax
Of
for
increased
the
de¬
high-grade issues from
institutions. A yield
4V2% on high-grade
exempt
4Y4% to
preferred
stocks
to
appears
be
a
bit
of
spice
was
added
by the fact that the issue
guaranteed unconditionally as
to principal and interest by the
Southern Pacific Co., not to men¬
tion the 1% annual sinking fund
which becomes operative Aug. 1,
is
1950.
•;
:•
Common
yield
issues, in fact, that
■/>! •'
rule
current
ftion
to
dividend
stocks
rates
ranges
of
from
com-
nothing
ridiculously high figures.
since
dividends
And
frequently
are
changed, omitted, and resumed, it
verges
all.
the realm of fancy to
on
discuss
stock
common
There
is
yields
nevertheless
at
some
of *
slightly larger
total of outstanding 4s due Aug. 1,
a
next year.
relationship
between
the
which
to
stocks
likely
At the present time the
common
sell.
stocks of
lished
are
Several
Ohio and in the
rather
to
seems
than
the
of
these
But
the
since
entire
to be marketed in
one
into
a
is
operation
the several groups have
themselves
issue
welded
single
syn-
DIVIDEND
NOTICE
ex¬
DIVIDENDS
one
on
Counter House
salesmen
to
inquiries
in
New
needs
follow
York
two
up
Over-the-
experienced
stockholders'
engaged
company
in
important basic industry and paying
•its
first
Western
eral
Exchange.
commissions.
active
All
dividends.
and
replies
has
held
Stock
Low
listed
priced.
House
is
continuous
in
strict
live
on
Lib¬
always
leads.
confidence.
Box K 312. The Commercial & Finan¬
cial
York
Chronicle,
7,
N.
25
Park
Place/ New
OF
ELECTRIC
of
Company (Delaware)
on
of
the
on
Class
Stock
of
books
STOCK
share
per
to
31,
will
p;
L.
to
rowers
put
prospective
notice
on
March
15,
15,
Service
Co.
of
as
B
meeting
same
cents
Class
bor¬
(25c)
of
dividend
a
share
per
Common Stock of
to
will
March
15,
Safeway
February 27,
quarterly dividends on
the
Company's $5 Par Value Common
dividend
Cement
per
on
of record
at
the
close
Stock is
and is
MILLER,
Treasurer
with
issue
payable April 1, 1948
The dividend
of
March 12, 1948.
the
at
to
share
stock¬
the close of busi¬
at
the 5% Preferred
on
rate
of $1.25 per
payable April 1, 1948
holders of record
February 26, 1948
of 25c per
rate
March 18, 1948.
ness
share, payable March 31, 1948
stockholders
HOWARD
up
a
its Common Stock of 25
upon
the
at
the Common
on
holders of record
Company has this day declared
dividend
on
and 5 % Preferred Stocks.
and is
cents
similar
a
dollar ($1) per share was declared
the Cumulative Preferred Stock
pany,
Series A of the Com¬
payable May 1, 1948, to stock¬
holders of record at the close of business
April 5,1948.
At the
at
to
share
stock¬
the close of busi¬
March 18, 1948.
ness
MILTON L. SELBY, Secretary.
DIVIDEND NOTICES
February
THE YALE & TOWNE MFG. CO.
March
twenty-five
by
the Board
the
1948,
1,
No.
share
per
236
PACIFIC GAS AND ELECTRIC CO.
of
DIVIDEND NOTICE
of past earnings,
March
15,
of record
1948.
Common Stock Dividend No.
'
'
F.
DUNNING,
1948.
27,
declared
was
to stockholders
business
of
close
dividend
a
(25c)
Directors out
of
payable April
at
1948,
4,
cents
Secretary.
■
.
'
129
'
k
of Directors on March 3,
1948 declared a cash dividend for the
Board
The
first quarter
York
New
of the year of 50 cents per
upon
the Company's Common
Capital Stock. This dividend will be
paid by check on April 15, 1948, to
common
shareholders of record at the
close of business on March 19, 1948.
The Transfer Books will not be closed.
Rosario
Honduras
&
share
Mining Company
■••
-
NO.
of
this
10,
1948
382
Directors
of
Board
Y.
March
•
DIVIDEND
The
5, N.
Broadway, New York
120
)
Company,
E. J.
this day, declared an interim
first quarter of 1948, of Fift'
share on the outstanding capita
stock of this Company, payable on March 27,
1948, to stockholders of record at the close o!
business on March 17, 1948.
for
EASTERN
RACING
a'
held
meeting
Beckett, Treasurer
San
a
LANGLEY,
C.
w.
ASSOCIATION, Inc.
SUFFOLK
the
($.50)
DOWNS
Francisco, California
Preferred and Common Stock
Dividend Notice
Treasurer.
At
meeting of the Board of Directors of
Racing Association, Inc., held on March
19^8. a quarterly dividend of 25c per share
a
Eastern
5.
—
was
_iiL!
of
The Electric Storage Battery
ital
on
of
record
E.
dividend
upon
the
and
ptock
20,
of
25c
Stock
per
share
Common Stock (both
$2.00 Par) payable April
record
March 20,
11,
1948,
15,
March
to
stock¬
1948.
31,
The Directors
The
1948.
WILSON
1948
have
from
declared
the
Accumulated Surplus of the Company a
($.75) per
Common Stock, payable
dividend of seventy-five cents
open.
share
W. ATKINSON, Treasurer
March 5, 1948
on
the
March 31,1948, to
stockholders of record
of business
the close
March
on
16,
1948. Checks will be mailed.
H. C. ALLAN,
Secretary and Treasurer
CANADA DRY
Philadelphia 32, March 5, 1948
•
WARD BAKING COMPANY
meeting
a
ada
on
of
per
both
March 1,1948.
and
a
on
on
dividend
of business
1,
1948 to
at
March
the
15,
closed. Checks will be mailed.
J. Williams,
V. Pres. & Secretary
Secretary
%
%
prcdecessorv
of Directors has declared
quarterly dividend of $1.37 Yx ®
Preferred Stock payable
share on the
April
1,
1948
Common
a dividend of
75per share or three per
value of the shares
been de¬
clared this day, payable on April 1,
1948, to stockholders of record as shown
by the books of the company at the close
of business on March 5, 1948. The
cent
of
(3%)
The
on
Texas
par
Company has
stock transfer books will remain open.
L. H. LINDEMAN
January
30, 1948
Treasurer
to
holders of record
March 16, 1948.
of $0.15
record
on
The Board
Preferred
the Common Stock;
of
182nd Consecutive Dividend paid
by The Texas Company anu its
the
1948. Transfer books will not be
Wm.
COMPANY
the
dividend
share
payable April
stockholders
close
per
Cumulative
share
TEXAS
1948 declared
quarterly
regular
$1.0625
$4.25
THE
meeting thereof held
a
February 24,
the
Incorpo¬
Ginger Ale,
Dry
rated, at
Checks will be mailed.
RICHARD ROLLINS
Preferred Dividend No. 10
The Board of Directors of Can¬
Dividend No. 10
has declared a
cents a share on the
payable April 1, 1948
holders of record March 16, 1948.
The Board of Directors
dividend of 15
Common Stock
to
L.
T.
MELLY, Treasurer
475 Fifth Ave.
TIPTOP
New York
N. Y.
17,
a
de¬
the No
2, 1948
was
President
March
this
further
and
the
holders of
of
1948 to stock hold¬
1948,
Quarterly Dividend
Com¬
payable April
pany,
holders
Par
March
ALLAN J.
190th Consecutive
has
the Cap¬
this
of
Stock
gtife company
quarterly divi¬
been declared
clared
to
COMPANY"
dend of 50^ per share
Preferred
the
on
record
quarterly
LION OIL
A regular
declared
Corporation payable April 1,
ers
Stock
dividend of
ninety-three and three-fourths cents
($.9375) per share was declared on the
Cumulative Preferred Stock 3.75%
Series B of the Company, payable
May 1,1948, to stockholders of record
at the close of business April 5, 1948.
same
^
Stock Dividends
The Board of Directors of General Portland
San Diego
came
for
the
Treasurer.
Preferred and Common
The
business
Electric
at
closed.
1948
KNOUREK, Treasuier
Stock is
to
bids
be
not
BONNYMAN,
Common Stock Dividend
ing from the high of 97.333 for
&
record
Safeway Stores, Incorporated
Okla¬
27/hS down to 99.429 for 3s.
Gas
Stock of
of
1948, payable March
twenty-
29,
1948, payable b"
stockholders of record
business
W.
of
was declared on tn<
the Company, for the
CEMENT COMPANY
first mortgage bonds, rang¬
seven
dividend
th
GENERAL PORTLAND
separate bids for its $10,000,000
The following day
96
a
The Board of Directors of
homa, for instance, received six
new
closed.
NO.
1948,
the
At
bility of keeping their offerings in
bounds even if it means splitting
up potential new issues.
Public
of
the
Company for the quarter ending February 29
1948, payable by check April 20, 1948, to stock¬
holders of, record as of the close of business
to the desira¬
as
at
Common
the
on
stockholders
Transfer books
1948.
be
not
declared
has
business March
of
Stock
record
DIVIDEND
Company
Company
close
a
Common
A
cents
Preferred
of
104
dividend
a
1948, payable March
15,
ant.
meeting he
March 5, 1948, declared a
quarterly divideni
thirty-seven and one-half cents (37>/2c) pe.
share
at
above
50
the
COMFANl
Louisville Gas
DIVIDEND NOTICE
Y.
COMMON
of
March
Transfer
1948.
the
on
stockholders
to
business
NO.
declared
has
Co.
1948.
a
Convertible 4%
LEADS!
A
Well-established
AND
Directors
share
per
Pacific
&
February 27,
STOCK DIVIDEND
Company
Company
of
Moufitain
Mexico,
1948 declared
WANTED
meeting of the Board of Directors
held March 1, 1948, a dividend cf
'
of
jps
At
■
GAS
Board
Electric
THE ATLANTIC REFINING CO.
PREFERRED'
above
$5.00
the
close
31,
The
Rocky
New
PREFERRED
The
of
DIVIDEND NOTICES
at
51/2%.
Some well regarded
chemical stocks, at one extreme,
Louis,
Raton,
served
stock transfer books will remain
and
SECURITY SALESMAN
St.
outstand¬
moderate-
$200,possibility that
On the
this offering might be
split up
into several segments, a number
of groups had been formed for
the bidding.
•
:
long records
earning power and
HELP
Joseph L. Martin, Treasurer
March 4, 1948,
102Y4.
G.
amount of
000,000.
with
dividend payments are selling at
prices which yield between 4y2%
at
Stock of the Corporation, to stockholders
the close of business March 31,
1948.
Stores, Incorporated,
Cents
Tuesday bankers will find
busy
with
another
huge allotment of veteran bonus
bonds, this time for the State of
number of well estab¬
a
concerns
bf continuous
share will be
mon
The company has outstanding
$12,500,000 of first mortgage 3%%,
due
1961, which are subject to
call
Twenty-five cents (25(f) per
paid.April 15, 1948 on the Com¬
of record at
running
an
No. 8
of
sized issues brought out this week
themselves
return
competing types
of investments and the prices at
of refunding
ing obligation.
purpose
Cases In Point
a
Bonus Loan
,
obtainable from
the
Wisconsin Michigan
1948,
v v
Next
the
on
Dividend
dividend
A
Power Co., is reported preparing
to raise some
$14,000,000 for the
February
dividend
Stocks
obtainable
be
eight
some
in
ending
April 20,
Proceeds will be applied to the
retirement
Another
The
be
the close
On
additional
An
reasonable expectation for 1948/
i
Light
to
River Oh,
Corporation
3.60%, the latter consideration,
preferred stocks
—the spread
will
OFFICE
tractive.
yield
bids
that
appears
of
of
by itself, making the bonds at¬
the
a
Wiciiita
Up
&
at
yield
tween
ment
now
quarter
a
fixed
was
return
for
check
re-
and
satisfactory
terms
in'
the
equity markets. Under these cir¬
cumstances a two point spread be¬
on
called
ing the market's reaction to such
issues.
the
for
DIVIDEND NOTICES
the
opened next Monday on $10,000,000
of first
mortgage bonds, it
five
of
the
Stacking
long experience
that
corporate
finance officers should be watch¬
inquiries which assured a highly
satisfactory demand upon formal
opening of subscription books.
trial concerns may
while
The
ception, and certainly gives sup¬
port to the contention of those of
was
rush
a
The
coupon
to that figure tend
up
no
the
after the
soon
known there
made
in
such
be
even
spread
a
is
two
separating
bearing
People
come.
issues should be in the
new
and
groups,
there
no
ness
In
order to maintain accepted capital
structure ratios, at least 25% of
some
only
placing the bonds.
utility companies will need a
billion dollars of new money each
for
from
thousand
a
or
tric
year
bids
undertaking
tenders this evidently had little
It
estimated that the elec¬
has been
a
"out-the-window"
$37,396,000
banking
pre¬
during the next several years.
for
operation.
substantial
be
real
a
attracted
good quality
offering
new
earlier this week, found investors
in a highly receptive mood and
expected that the supply of
issues
seems
surprise to find nine
ten groups in the running for
ar
preceding paragraph.
new
Issues
LOUISVILLE
for
reasons
New
bring out the competition.
It
adequately explained in
were
It is
.
possibly
likes
<
offerings
20's
first
3%
With Louisiana Power
magic these days about $10,000,000, but the fact remains that
this index, has risen to
4.13%.
It is interesting to note
that this rise in yield is not as
—
tip
offerings along the
what the
underwriting
Certainly
The
bonds.
a
100.14.
Meanwhile
valuable
a
new
fraternity
railroad company, that of the Cen¬
tral Pacific Railway, brought out
for
100.8133
was
groups
1.79%.
"Street Size."
late
lowest
will
York's
potential issuers in the
some
greet'
.ines of
shown by
yield
of
might be
.o
Since then, the yield, as
3.42%.
cost
here
was
satisfactory. It having
that New
apparent rush of bids which
1946 when Standard
and Poor's index showed a yield
of
interest
There
April,
until
likely
very
bid
mortgage
bid
seeking the issue.
decline set in which continued
a
other
(1139) -43
similar is¬
The Magic Figure
high-grade
the
During
6%.
well
with
bonds, sold last week, as l3/4s and
2s, were marketed by the State at
preferred stocks was at all times
above
lone
recalled
regarded
Stocks
on
top
job.
how
done
Ohio
the
will
During the first quarter of this
the yield
the
first
Michigan and New York for
sues,
stocks.
investment funds of individ¬
uals in the higher income brackets.
century
simplifying
norm
the
Preferred
CHRONICLE
and
number of well situated oil
stocks
business conditions, and
many other speculative influences
will affect the returns obtainable
FINANCIAL
dicate for the purpose of assur¬
ing a nationwide distribution
a
future
&
44
jl,
.
THE COMMERCIAL
{1140)
Thursday, March 11, 1943
CHRONICLE
FINANCIAL
&
importing nation
;
BUSINESS BUZZ
I,':
The
whom.
must
i
sold
be
shall
500
buy from
bushels
million
at
not
more
than
per bushel, Lake basis, or
purchased (if the market is lower)
$2.00
1,l
on
|
•
•
•
than
less
not
at
scale
a
of
floor
prices.
;:i':
!h
Behind-the-Scene Interpretations
*<#..
from the Nation's
And You
Capital
These floors range
in
steps
10
of
downward
cents
per
year
from
$1.50 the first year to
$1.10 during the last year of the
nil
,
five-year agreement.
if;
Federation of Labor and the Congress
c£ Industrial Organizations into one big union—the dream that al¬
ways thwarted President Roosevelt—is now being talked here as a
real possibility for the next 12 months.
This
merger
would put into^
—
~
is to make just enough passes at
a single organization most of the
civil
rights legislation to keep
crganized labor support for the
sentiment stirred up in the South
present Administration. It prob—but without carrying it too far.
&bly will take place too late, how¬
Merger of the American
;
(f'»
i
iti'
.
:K
it
1
L
hi-
I;
s'K
political fortunes
to do the
ever,
;»
{ (h
sir
||,iM
II:1?
u:
fi) h *
»&•
(.'V
.'i'f.
chief
the
the
the
of
opponent
from
The
AFL.
merger,
other is
waning power of the
com¬
from
need
union.
Some of . the
commies
already
have
been
their
various
from
Truman.
opposed
Wallace
can¬
and the prospect
Mr.
may be defeated
will
"purged."
Ml'.
didacy
Truman
The
hasten the isolation of the com¬
»}-
mies from the CIO ranks.
affairs ex¬
|;fl
I'-M-
;IWM.,
■
•
■
'
a
the present
some
trol
might
Congress
Likewise,
tion.
into
slap through the pending bill to
make big labor unions subject to
the
anti-trust
laws.
Chairman
Hartley of the House Labor Com¬
mittee
knows
this bill
doesn't
chance
a
has been holding
hearings on it for future reference
by another Congress.
.....
»ls
••
Chairman
ment
*
scores
of
Taber
John
What
the
want the
Southern
Democrats
Republicans really to do
We Will Settle for
Inquiry
or an
an
Order
from
★
123 South Broad
St, Philadelphia 9, Pa.
Clear thru-—Montgomery, Scott & Co.
New
York <fi
Philadelphia
work
the
for
devoted
weeks
time
of
to
Now
of
j
war
of
partment
Numerous
boards
Finally,
it
is
Cartels
cartel-like
a
are
odious to the
except when
Government wants
the
four,
rather
.
England P. S. Pfd.
New
thr:e
than
everything.
new
sets
of-
officials
must
Remington Arms
argue
Dorset Fabrics
s>:
inflame the
,
It's
Reds.
Along came the new single
"Department of National De¬
fense."
This was supposed to
and
by
money
save
co¬
buying and spend¬
ing. What has actually happened
ordinating
;
in
numerous
that
is
cases
a
fourth set of bureaucratic agen¬
cies
and
has
on
services.
oi
S.
U.
them.
coordina-
of
and delays business, be¬
money,
a
dation"
of
top
of, the
Thus
the
laid
over,
three
rival
been
now
before
Army,
"consoli¬
Navy
and
relations
on
the
new
nounced
Wheat
to
world wheat deal
buy
Soya Corp.
agree
aggregate of 500 mil¬
lion bushels of wheat
the three Drincioal
a
year
from
producing
na¬
tions, .he U. S., Canada, and Aus¬
tralia.
The
producing
M. S. Wien & Co.
ESTABLISHED
nations
N.
Members
agree to
sive
supply the wheat. Exten¬
quota
forth
Finishing
Tucker Corp.
deal
this
Under
importing nations
an
an¬
International
the
by
Council.
30
some
U. S.
good idea to keep an eye
a
arrangements
are
set
40
Y. Security
1919
Dealers Ass'n
HA. 2-8780
Exchange PI., N. Y. 5
Teletype N. Y. 1-1397
specifically how much each
HAnover 2-0050
Teletype—NY 1-971
revamping
a
a
and
Ralston Steel Car
FOREIGN SECURITIES
,
Oregon Portland Cement
Riverside Cement A & B
program
of
schedule
factory
All
Issues
Spokane Portland Cement
each
what
Trading Markets:
Firm Trading Markets
r.ARL MARKS & r.O- INC.
would produce
time. The wartime
experiences
in
governmental,
management were studied, as
were
industry's problems and
during
con¬
exports, even when the
wheat trade might other¬
tion have been added. This costs
'control agencies and pro- :
a
require
would
also
for spe¬
cific contingent industrial war
adaptations by the thousands,
kind
a
industrial mobilization plan
modern
grams for mobilizing man
industrial power. The plan
i.e.,
would
; ar¬
Munitions
A-N
the
consisted of
t
Secretary Forrestal
fourth, for the De¬
of National Defense.
adding
withheld for fear the fact of
of
war
FOREIGN
.
LERNER & CO.
SECURITIES
SPECIALISTS
Investment
50 Broad Street
New York 4, N. Y.
AFFILIATE: CARL MARKS & CO. Inc. CHICAGO
■
capacities.
—
10 Post Office
Securities
Square, Boston 9, Mast.
Teletype BS
Telephone Hubbard 1990
69
Indiana Gas & Chemical
South Shore Oil & Dev.
BUSINESS ANALYST
H. & B. Amer. Mach.
With practical experience in use of statistical methods in
Pitts. Steel
sales,
Foundry
man
LEWIS & STOEHR
,jf
<
Incorporated
Established 1926
80 Broad St.
inventories,
economics.
Pfd. & Common
—
Herbert H. Blizzard & Co.
of
Air 'Forces had public
consisted
A TALKING MAN
—
staffs.
industrial mobilization plan. The
House
payroll—aroused mild discussion
among. Southerners of another big
merger of political significance
but still
a
long, long way off
completed
was
It represented an enor¬
squelch rivalries within the ser¬
Board set out to draft a
i plan
also
' j
channeling
over
affair.
cause
national domination
and
:
virtually the day after
i V-E' Day;
the
Appropriations Committee
—pet demon of all those who have
a
vested interest in the Federa
each week!"
assisting the Board in working out'
the plan. Then its nublication was
money.
From
-
zero
Board, and incidentally no insig¬
nificant
cost.
Industrialists
by
characteristic waste of govern¬
a
in 1948 without' a
strike wave, but
program
volume
mous
long
reorganization
$2
U. S. Government,
vices
ernmental
,
wise return to normal.
'Frankly, Black, I'm getting a bit sick of trying to divide two
pocket borough.
junking
the
In
and
'
continued government
world
of the Left.
this
elaborate
rangements
the former
spring.
Steel labor already has Army-Navy Munitions Board In¬
said
it
won't
strike.
Seiioils dustrial Mobilization plan, just as
strikes, labor appreciates, would it was all but completed, is af
only further throw the knife into forded a most typical develop¬
Mr. Truman's chances of re-elec¬ ment both of the effect of gov¬
have
■r
are
price
quota wheat.
Its
can
so
market
the
tween
on
difference be¬
by the
producers
third
dustry with strikes over the
of
wage
increases
round
!)
they
can't
also implies that
in times of high prices
present^ must subsidize
the
like
voice in their party's
They
guar¬
The agreement
They recognize the necessity for
a
Republican victory to break
pect that organized labor this year
will not "act up" and tie up in¬
!i
a
at least
can
the U. S.,'
This
of
they
way.^'1' ••-'7'
last fall.
more
so
delivery of?wheat in years
of short
production;
The ar¬
rangement, thu& implies contin¬
uance of a tf. .S. farm program,
even if it were not likely'any¬
a
key.
sons,
as
observers here of labor
Hence they
.
on some
antee
favorite
or for a redheaded menThey would like to have
decisions.
professiona'
most
Incidentally,
'%
limited scale
votes
electoral
of
that the U. S. and
nations must
other,;producing
to cast them for
arrange
is
specify
stockpile wheat
they
All
trade
shortages
What the agreement does not
i
is to withhold
achieve
to
is
peace¬
disappear and surpluses reappear.
candi¬
Democratic
President.
for
date"
naming
of
notion
the
"Southern
normal
wheat
of
after world
world,
.
Commies also
mies in the CIO.
i}
the
arrangement
the
volume
time
v
10
the
of
"stabilize"
to
<
iJnlt
Theory
:v
•
5t-
%'it
only to the 500 million bushels.
cf Mr. Truman any
ilf
I;:
U. S.) to any consumer—it relates
Taber's committee turned down a
;'i
,
retically may be sold at any price
(when not given away by the
material good. subcommittee proposal to with¬
hold certain Federal funds from
As a matter of fact, it may not
the South so long as Negroes are
actually come to fruition until the
discriminated against. : |
defeat of the labor-supported can¬
Hf
if"
didate at the polls next Novem¬
ber
demonstrates to the
union
Incidentally, do not expect Mr.
leaders
the
necessity.: to
close Truman to fail to get* the Demo¬
ranks
against what they think cratic
Presidential
nomination.
will be a hostile Administration. Southern politicos are talking this.
So far the merger of the AFL They do so to put pressure on the
and the CIO is just in the talk White House to abandon openty
stage. There have .been, no overt the civil rights program. As far
moves
made lately .to bring it as the public is concerned, how¬
about.* The last" formal negotia¬ ever, it is all eyewash,' say the
tions
occurred* before John L. professionals.
The .only circum¬
Lewis and his United Mine. Work T stance under which it would be
ers for the second time withdrew
likely for the Democrats to junk
Mr. Truman, so it is said, are those
from the AF of L.
L
in which all hope was given up
In union circles, however, it
for his re-election.
Then if the
is said that the uniting of the
Democratic,
conservatives
could
two federations now appears to
influence the selection of a stand¬
he
a
possibility for the first
ard bearer more- to their liking,
time, and desirable to mobilize
he would be chosen to lead a. new
labor's political strength more
kind of Democratic Party in 1952.
efficiently
for
the
defensive.
His Presidential race next Novem¬
Two developments suggest the
ber would then be only symbolic.
unification is possible for the
first time.
One of these, is the
Actually the Southern revolters are leaning somewhat away
departure of John Lewis, the
k
'
The deal does not relate to
sales
of wheat above quota which theo¬
;
.
.
t
New York 4
Telephone: DIgby 4-0985-6-7-8
to
,
commodities;
This represents a real
currently earning in
broaden
his
outlook.
dentiaL Box I 310
excess
Offices
knowledge
Empire Steel Corp.
of
opportunity for
of
basic
Susquehanna Mills
a young
$6,000, and desiring
centrally located. Confi-
The, Commercial
& Financial
icle, *25: Park Place, New York 7, N'. Y.
' *
Chron¬
Hill, Thompson & Co.. Inc.
Markets
and
Situations
for Dealera
120 Broadway, New
Tel. REctor 2-2020
York 5
Tele. NY 1 -2660
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