Full text of Commercial and Financial Chronicle : March 17, 1949, Vol. 169, No. 4786

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|MM; MM*.
U&RAWf

MAR

j 8 1940

ESTABLISHED 1S39

Chronicle

Reg. U. S. Pat. Office

Volume

169

Number 4786

New

Neither Boom

York, N. Y., Thursday, March 17, 1949

By RAYMOND RODGERS*

Market

holds

economist

post-election

will be dispelled

investors

University

fears

The outcome of last November's election
of businessmen and investors.
A

spending along with greater effi¬
ciency of management and labor,

fidence

to maintain

arena

to much in

the

mostwith
his

ly

rumors,

left,
over

of

rumors

at

American

confi¬

-

foot

businessman,

ring

ordinarily the
able

mists,
gin

is

e e

t he

bed!"

In

vate

conver¬

sation

pri¬

some

people
Rodgers

opinion that

we

press
are

ex

-

the

the brink

on

the

House,

economic

an

holocaust

by

a

decision

of

address by

Dinner

Club,

consumer

spending.

Foresees

recession such

no

Ever since the end of the

war we have been
subject to periodic
of pessimism, some mild and some
fairly serious. Now once
again, business sentiment has become pessimistic; and the question

had

waves

is raised

to whether the well advertised recession is

as

At

the

faced

with

real

a

red

it

State

don¬

the

dangerous road toward
Socialism, seeing that no

socialistic economy under any title
has created the prosperity, stand¬
ard

of

living

and civil liberties
country has so enviably
enjoyed under the free enterprise

that this

Time
:

Get Our Feet

to

on

the Ground

It is time that the rank and file of the

\

country got their feet
in their

on

tjhe threat

recession

—

state of affairs in busi¬

if threat there be

—

magic for¬

mula

to

of

a

pro¬

(Continued

2.10%

Due

are

pected
a

to

ex-...

to

do

certain

amount'of

crystal

ing

gaz-

-

but

I

on

page

or

doing

should do to protect the voter. One could scarcely
expect them to do other than to repeat most of the New
or

Dealish type

of

nonsense

showing" of ap¬
which the crack-pots have invented

plying the panaceas
during the past decade
the

and to "make
two to

or

a

the economic ills of

cure

economist

very

thing, and the only
harmful public policies it

in

this

sort

concentrating on
analysis of what is actu¬
ally going on currently. The old
saying about coming events cast¬
ing their shadows before them is

Funds,

on

38)

page

Association,

New

York

City,

March 10, 1949.

of

preventive measures, there is
little hope of greatly improving the situation by
(Continued

39)

the

greatest

*An address by Mr. Lindow be¬
the National Mineral Wool

likely to bring forth, is a skeptical population, nay a
definitely disbelieving population. So long as the vast
majority of the voters can be "soft-soaped" into acqui¬
very

the

fore

is

escence

that

by

(Continued

prevention of the

sure

.

think

careful

universe.

The only cure for this sort of

Wesley Lindow

make

can

contribution

on

page

42)

■

"

State and

<

Municipal

Franklin Custodian

February I, 1961-84

Prices

pre¬

dict^ the fu¬
ture., Econo¬
mists

people of this

the ground, figuratively speaking,

thinking about the current

We find

no

Westfield, N. J.
School District Bonds

clear

the

key.

Meeting of Detroit Bond
Detroit, Mich., March 11,

finally starting.

out-

set, I want to

depression less disturbing than the think that this
type of activ¬
continued lack of realism about the
requirements of the
balance. When
ity has yield-;
situation. It was to be expected, of
Maurice S. Benjamin
the Republi¬
course* that the political ed pretty dis¬
cans recovered
powers should, at the first sign of
mal results. I
approaching "bad times,"
from seeing pink elephants they
begin to make the welkin ring about what government is am inclined to

were

that which

as

developed after World War I.

:Mim$As %■ We % See It li|:l

nounced

holding

down

Town of

in

make

in three States

Dr. Rodgers at

1949.

tures, and holds heavy government spending would bring increase

that I know of

ness.

think that the voters want to turn

*An

have advanced.

con¬

never

bank

cases,

industries show declines, others
Predicts only small decline in equipment
expendi¬
some

EDITORIAL

—29,000 votes

Interpreting this personal
victory as a mandate from the
atomic proportions — you know,
people, the President, with his
one of those chain reaction affairs
little-Kaiser as adviser, launched
that feeds on itself until all is de¬
a program for a
managed economy
stroyed! They seem to think that
that far outstripped his predeces¬
all
of
the
economic
sins
of
sor's ideas.for controlling our free
(Continued on page 42)
enterprise system. Why he should
of

shock to the

a

points out while

'—<♦>

the

in

won

close

to

things

,

under

Raymond

and

be¬

n g

was

the

and

White

opti¬

i

n

in

other

incur¬

of

economist

an

dent opponent
who
had one

Even

most

Asserting danger lurks in generalizing from isolated

"mandate" for anti-

wildly,'

leading

there

are

and

a

the preliminaries entered

swung

every

hand

rumors.

and

the biggest political
with practically no backers at the record odds of 15 to 1. He

abroad in
On

businessmen

politician who

amounted

high income.

"s

of

capitalist planning program. Cites stocks selling below net working
capital as illustrating investment opportunities created by political
worry now proving unwarranted.

months and looks for
government

ours.

By WESLEY LINDOW*

Vice-President, Irving Trust Company, New York City

by public's realization that lawmakers

will ''hold the fort" and not be subservient to

Though stating boom honeymoon
is over, Dr.
Rodgers predicts no
severe
depression in next few

this great land of

Copy

By M. S. BENJAMIN

.Senior Partner, Benjamin Hill & Co.

Professor of Banking, New York

are

a

The Business SituationIndependent Congress Paving
Way for Higher Stock Market Actual and Prospective

Nor Depression
In the Offing

Prophets of doom

Price 30 Cents

inc.

A Mutual Fund

yield

1.70%-2.35%

COMMON STOCK FUND
PREFERRED STOCK FUND
Bond

BOND FUND

White,Weld&Co.
Members New York Stock

Exchange

INCOME (BALANCED) FUND
Prospectus

40 Wall
Bolton

on

Philadelphia

Amsterdam

Providence

15 BROAD

DISTRIBUTORS, Inc.
Street, New York 5

STREET

Bell

Bond

Wires

THE

New York

,

CHASE

1-395

NATIONAL BANK

Connect

THE

OF

Dept. Teletype: NY 1-708

Department

HAnover 2-0980

Teletype NY

Private

FRANKLIN
64 Wall

Buenos Aires

HART SMITH & CO.

OF NEW YORK

request

Street, New York 5

Chicago

London

THE NATIONAL CITY BANK

UTILITIES FUND

Montreal

CITY

OF

NEW YORK

Toronto

NATIONAL BANK

LAMB0RN & CO., Inc.

of INDIA, LIMITED

99
Bankers

to

the

Government

Office:

26,

Underwriters and

Bishopsgate,

Distributors of

Lqndon, E. C.
Branches

Burma, Ceylon, Kenya
Kerieho, Kenya, and Aden
and

Subscribed

Paid-Up
Reserve
The

Bank

Capital

Capital—
Fund
conducts

banking and exchange busings

•

also

Dominion Securities

Exports—Imports—Futures

Grporatioti

Established

<

undertaken




1899

(Incorporated)

of

40

CLEVELAND

,

Trusteeships and Executorships
i

Raw—Refined—Liquid

New York
v

Cincinnati

Chicago

Columbus

Denver

Toledo

DIgby 4-2727

Buffalo

i

/

Bell

available

request

Members New York Stock
Exchange
and other Principal

Exchanges

Ill

Broadway, N. Y. 6

4-6000

Boston

4

Teletype NY 1-2708
Telephone: Enterprise 1820
Private

System Teletype NY 1-702-3

upon

IRA HAUPT &CO.

WOrtb

Exchange Place, New York 5,N.Y.

Hampshire

COMMON
Prospectus

OTIS & CO.

£4,000,000
£2,000,000

description

Municipal

SUGAR

£2,500,000
every

bonds & stocks

NEW YORK 5, N. Y.

Corporate Securities

Zanzibar

Public Service
New

and

In India.

Colony,

CANADIAN

STREET

in

Kenya Colony and Uganda
Head

WALL

Hendricks

&

Wire

to:

Eastwood, Inc., Phila.

2

(1170)

THE

COMMERCIAL

&

FINANCIAL. CHRONICLE

Thursday, March 17, 1949

Back to the Gold Standard?

Central Public

"

Utility 5V2/52

By WALTER E. SPAHR*

,

v

Amerex Holding

Executive Vice-Presidfent, Economists' National'Committee

Corporation
BOUGHT

—

SOLD

—

QUOTED

abandonment

caused

was

by scarcity of gold or by breakdown- of: gold cioin standard.
ignorance and apathy> regarding currency problem.

Corporation
A sound

120 Broadway, New York 5
Teletype NY 1-583

ism

General Public Utilities Corp,

or

i

Common, Stock

ftfcpONNELL&fO.
Members
New

Exchange

New

120

York Stock

York

Exchange

Curb

NEW

BROADWAY,
Tel.

2-7815

REctor

is

be

by
government

against

a

people's

that

£ts

currency and the
cate reserves held by

its

eral

morally

Dr.

Walter E.

'

or

devised

never

destructive

instrument

of

notes

and

of this

country, they can be, and
paid out upon demand to for¬
eign central banks. .V

V

are,

man¬

a

Reserve

deposits
cannot be paid out to the people

Spahr

Perhaps next to war,
has

gold-certifithe Federal

Reserve banks against their Fed-

financially

kind

Oil Stocks

Although the gold reserves held
by the Treasury against part of

free¬

issuance is

both.

Mining Stocks

.

'

bankrupt,

HADING MARKETS IN

V

eral Reserve banks.

dom. The gov¬

or

more

The

human

tion

welfare than that of irredeemable

reason

Inactive Stotks

Stocks

Removed

from

A

the

in

States

STEIN & COMPANY
Members Nat'l Ass'n of Securities Dealers, Inc.
27 William St., N. Y. C. 6, N. Y.
1 Montgomery St., Jersey
Tel. DIgby

City 2, N. J.

Tele.: NY 1-1055

4-2190

have

money system

redeemability

so

far

deemable in
but the

silver

is

not

sue

North American Refractories
Common

-

are

promises

authorized to is¬

to

which they

pay

do not redeem in other irredeem¬

Stock

able money,

silver certificates

cepted.

Hialeah Race Course

The

to

pay,

Incorporated
1st

Floor, Kentucky Home Life Bldg.
LOUISVILLE

KENTUCKY

2,

Long Distance 238-9

Bell Tele. LS 186

Southern
Textile Securities
AND

Properties
A. M. LAW & COMPANY
(Established 1892)

cash

asset

to

as

are

NOTES
Memo on

Request

BUCKLEY BROTHERS
York Stock Exchange

Members New

i

;

and Other Principal Exchanges

*

New York 5
BArclay 7-7835

Philadelphia 2
PEnnypacker 5-5976
Private

Philadelphia,

/" ;v

120 Broadway

1420 Walnut St.

Wire System

York

New

between

Angeles

Los

and

8/10 of 1%

American La France

which

approximately

Bausch and Lomb

only

Dayton Malleable Iron

of their note and de¬

posit liabilities. /' -ll'.
A
noteworthy aspect

Haskelite

Manufacturing

Hydraulic Press Manufacturing.
Stromberg-Carlson Co.

;

★

not

—

to

cash

that

the

Federal

long

we

as

continue with

present system.

•

*

our

i

;

banks-

can

pay

out against

H. M.

Byllesby & Company

PHILADELPHIA

OFFICE

Stock Exchange Bldg., Phila. 2
Teletype

Telephone

PH 73

'RIttenhouse 6-3717

Reserve

;and deposits ranges ordi¬
narily from 1/70 to 1/100 of what
The
peculiarities
of the socalled
"reserve" of. the Federal": they would have to pay out if we
were on a gold coin standard.
Reserve banks call for emphasis.
Since the argument that there
Only gold certificates are lawful
is not enough gold to go around
reserves, against Federal Reserve
is so common, it. justifies exami¬
notes and the deposits of these

or

PARTICIPATION

TAX

—

mand

so

Our Federal Reserve banks

BOND ^

amounted

■

CORAL GABLES

banks; all that
out was the $370,-

pay

of

the

or

of silver certificates.

mBANKERS

Mobile, Ala.
Direct wires to our branch offices

deposit liabilities of the

overvalued silver and minor coin,

to the security un¬
both, printed on our
paper money are all
inaccurate
or
misleading except in the case

derlying,

*U-U»

their

of

ex¬

;

promises

statements

Turf Association

American

St., New York 4, N. Y.

HAnover 2-0700'

Reserve

they could
000.000

can

50%

our cheapest, on de-' the Federal Reserve banks to pay
foreign central banks in out their reserves to meet their
order to maintain the parity be¬ note and deposit liabilities, it is
tween our irredeemable currency promptly
and vigorously urged
and gold. Our own people, on the that we do not have enough gold
other hand, must be satisfied with to* go around.
Nothing is said
irredeemable paper
money
and about the fact that the only asset
money,

,

Treasury and Federal Re¬
banks

serve

con¬

are re¬

redeemable

directly in gold.

Federal

over

ver

overvalued silver,

an

government

our

and

to

of
this
except at a discount./ There-: situation is that when it is sug¬
fore;
our
Reserve
banks
must* gested that we return to a re¬
stand ready to pay out' our best deemable
currency
and require

direct

is',

gold

Silver certificates

cerned.

Our

as

note

of foreign central
against the people of

regiment
the people of the United States
but cannot compel foreign central
banks to accept our irredeemable
paper currency or overvalued sil¬

irredeemable

an

in
in

amounted

States lies in the fact

that

Description of Our Monetary
System

notes and deposits at any time is
generally a relatively small item,
| For example, on February 2, the
Federal Reserve banks held only
$370,000,000,
approximately,
of
asset cash against $46,000,000,000,
roughly, of Federal Reserve notes
and deposits.
On that same date,
-they held in gold certificate reserves over $23,000,000,000 against
their $46,000,000,000 of notes and
deposits.
They could not pay out
the gold certificate reserves which

favor

and

banks

'

,

,

Today, the people of the United

New York Exchanges

25 Broad

stand that the only asset cash
which the Reserve banks can pay
out1 against their Federal Reserve

for this discrimina¬

the United

paper money.

Low Priced Industrials

Members New York? Stock Exchange-

,

principle that it is the duty of the
issuer of promises to pay to meet
them when they mature, we have
exempted from-: such obligationboth our Treasury and. our Fed-

potent
can

either

Steiner, Rouse & Co.

law

.

uments

r

authorizes
5

a

designed to com-! cash that can be paid out is not
lawful ; money for reserves in
to pay.
But despite the general these banks,
acceptance by our people of the;
It is also important, to under-

the

ernment

YORK

integral part of

Of contract

employed
a

,

t

n s

that

Bought—Sold—Quoted

/

It

most

Electric & Gas Corp.

Scores public

pel people to fulfill their promises

nor

of

one

Bought—Sold—Quoted

New Orleans, La.- Birmingham, Ala.

neither

honest.

New York State

.

is

an

i

■

system

sound

Rights

monetary system is

"

■

Louisiana Securities

good economy. It is a basic instrumen'
assurance of human freedom.
It is one of mankind's best protectors against Social
a
governmentally-managed economy in some other form.. An irredeemable paper

in the

money
*

Monetary Policy

on

Spahr attacks "liability currency" and1 contends most, serious consequence is loss of popular control
the public purse. Says irredeemable currency depreciates people's savings and investments and'leads
to foreign trade and foreign exchange distortions. Holds present is opportune time for return to gold*
redeemable currency, since gold reserve is now twice amount required^ by law. Denies gold standard'

New York Hanseatic

BArclay 7-5660

J.-

over

request

on

Alabama &
'

v

Dr.

"

Analyses

:A

■

Professor of Economics, New York University1

their

notes

nation.
Briefly, it is indefensible
But these so-called "re¬
required to hold reserves in the banks.
for two reasons:
form of gold certificates against serves," which are ostensibly held
First, there is never enough of
their notes and deposits, and yet, against all these notes and de¬
at the same time, they are not posits, can in fact be used to meet anything to go around if it has
value.
Scarcity is a fundamental
permitted to pay out these, re¬ the claims of foreign central banks
requisite
of
value.
There
are
serves t£> the people of the United
only, some of which are1 under
never enough bridges or elevators
States.
The Treasury cannot pay the control of governments that
or ships to go
around if all who
out to our people any of the gold are either Socialist or managers
have a right to use them demand
which it is required to hold against of the people and their; economy
their services at the same time.
part
of
its
outstanding
paper in some other form.
Special devices are required to
money.
The only asset cash which the
meet
unusual
and
unexpected
This arrangement is a case o| Federal Reserve banks can pay
loads
thrown
upon
scarce
and
domestically
against
their valuable
granting institutions the privilege out
goods which, in the in¬
of issuing promises to pay with¬ notes and deposits is composed of
terests of economy, are designed,
out at the same time imposing silver, silver certificates,
United ordinarily, to carry an average
upon
them a corresponding re- States notes, and minor coin. But load or to meet a typical demand.
this money is not lawful for re¬
sponsibility to redeem these
There are enough, only, of those
serves
in
our
Federal
Reserve
promises.
goods to go around that have no
banks, although it is treated by value.
Privilege without corresponding
our
government as good enough*
responsibility would, appear to be
Second, the ratio of our gol-I
for
the
people of the
United
without any valid defense.
We

NORTHWEST MINING

SECURITIES
Immediate Execution

For

of Orders

Quotes call TWX Sp-43

or

of

Exchange

A.M.,

from

Std.

Pac.

other hours.

10:45

on

to

Time:

Floor
11:30

Sp-82

at

*

STANDARD SECURITIES

CORPORATION
Members Standard Stock Exchange
of

Brokers

-

Spokane

Dealers

Underwriters

-

Peyton Building, Spokane
Branches at

•

Kellogg, Idano and Yakima,

The
of

Bingham-Herbrand
Corporation

Toledo,

The
a

Wn.

Ohio,

has

acquired

Billings & Spencer Co.

Connecticut corporation located
in Hartford, Connecticut.
Circular upon request

...

SPARTANBURG, S. C.
L. D. 51

Teletype SPBG 17

have, in this country, a great body

States

in

the

conduct

of

their

daily transactions.
*An

convocation

fore
Established

address by Dr.

Men's

College,
March 15, 1949.

1856

In other

Spahr be¬
Claremont

at

Claremont,

Cal.,

is lawful

words, the money that

for reserves

in Federal

Reserve banks cannot be

paid out

domestically, while the only asset

stock<;to

money

and

deposits

is

relatively high.
It is approxi¬
mately 13% as compared with an
average of roughly 8% for the
years
1915-1932,
during which
time our country and our Federal
Reserve

System

operated

on

WM. J. MERICKA & CO.
'

Incorporated
150

Broadway

Member

New York

:

Cleveland

Stock

Union Commerce

Exchange

Building

CLEVELAND

a

gold coin standard.

H. Hentz & Co.
We Maintain

Members

♦

New
New

New

York
York

Commodity

Curb

CANADIAN

Exchange
Exchange

Exchange,

Board

American

Markets For:

Exchange

Cotton

York

Chicago

Stock

of

INDUSTRIALS
CANADIAN MINING

And other Exchanges

NEW YORK 4, N. Y.
CHICAGO

DETROIT

PITTSBURGH

GENEVA, SWITZERLAND




OVER-THE-COUNTER

"

OILS

investments.
T he conse¬
quence is that foreign trade is

INDUSTRIAL STOCK INDEX!
10-Year Performance of

35 Industrial Stocks

eign

son

BRITISH SECURITIES

to suppose that

and
silver ahd to go where they will,
when they will, in their search for
are

N. Y. Cotton Exchange Bldg.

N. Q. B.

it can develop
properly until private enterprisers

CANADIAN

»

New Orleans Cotton Exchange

not obtain

tied in knots and there is no rea¬

i

Inc.

Trade

Today, private enterprisers can¬
gold for use in foreign
trade.
Our government and our
governmental institutions control
foreign exchange, trade, and for¬
'

Goodbody & Co.
Members N. Y. Stock
115 BROADWAY
Telephone-BArclay 7-0100

Exchange and Other Principal Exchanges
I

to

obtain

i

a

In

gold

V

profit.

NEW YORK 6, N. Y.
Teletype NY 1-672

enabled

short, we have slipped

sycfem.

of

liability

(Continued

into

currency.

on page

36)

BOOKLET

ON

REQUEST

National Quotation Bureau
Incorporated
46 Front Street

New York 4, N

Y.

Volume

COMMERCIAL

THE

4786

Number

169

INDEX

The

Articles and News

Primary

CHRONICLE

FINANCIAL

&

(1171)

Blundering NASD

securities
Situation—Actual aiut Prospective—Wesley Lindow.

The Business

Independent Congress Paving Way, for Higher Stock Market

'

.

,

Back

Standard ?—Walter E. Spafir

G.Monlton

Future of the Securities Market—J. A. Livingston

Our

Equities?—Richard D. Weinberg

or

8

Organizationj—Ferdinand Eberstadt..".

Shrinking Dollars—Roger W. Babson

>.

.. .

The

reasons

assigned

was

a

practically

99

WALL

.

15

Can the United States Avoid Socialism?—Eric Johnston.....;

President's Economic Report—A Menace to

\

25
Business—Harry A.

McDohMd

26

,

.

NASD

is

Blundering NASD

Building

Prospect List for. Mutual Funds.

Douglas Laird Advises

on

Government Steel Plants

Says

NYSE Polls Members

12

Will Not Relieve

Seat Retirements

on

Market for Israel Securities

Secretary Snyder Reports
Progress
World Bank Sells

a

17

...•

not

19

Stocks Are Undervalued

20

Sylvia F. Porter Advises Long Governments for Bank Portfolios

21

Hear! Hear!

23

rency's Policy

Municipals

on

Security Listings and Annual Reports

Public

Spending

31

33

Leo Wolman Cites Record High Wage

London Stock

37

(Editorial)

16

Bank and Insurance Stocks

Man's Bookshelf.

12

'. .j

Canadian Securities

14

Recommendations

Dealer-Broker—Investment

Einzig—"Still

Indications of Business

a

blight

member

No

"(a)

Refport.......

Our Reporter's

. .

and

...................................46

the

on

same

deal

shall

dealer except at the same

page

Public Utility

!

Governments.

Prospective Security Offerings

,

23

30

Securities Now in Registration

5

Industry

The State of Trade and

(Walter Wliyte Says);.

Tomorrow's Markets

or

of

38

with

any

grant

nonmember broker

TOTAL

ASSETS

£155,175,898

or

foregoing, no member

Associated Banks:

of

broker
such

to

Deacon's

Bank, Ltd.

such

or

TRADING MARKETS—

dealer in any syndicate
public of any issue

as

general

case

General Public Utilities

Corporation

from any nonat the
sell such se¬

dealer except at the same price at which

member would buy

transaction such

the

curity,
the

Williams

|

sell any security to or buy any security

#"(3)

15.

page

25, which reads

general public;

of

on

Burlington Gardens, W. 1

contemplating the distribution to the
securities or any part thereof; or

time

,;tSee article

Smithfield, E. C. 1

Charing Cross, S. W. 1

Glyn Mills & Co.

group

member

48

Washington and You

OFFICES:

64 New Bond Street, W. 1

prices, for the same commissions or fees,
conditions as are by such member ac¬

"(2) join with any nonmember broker or

44

;

throughout Scotland

in any transactions with any

or

member of the

*

Securities Salesman's Corner

OFFICE—Edinburgh

Bishopsgate, E. C. 2

8 West

nonmember broker or dealer
nonmember broker or dealer any selling;
concession, discount or other allowance allowed by such member to a
member of a registered securities association and not allowed to a

allow

14

Securities

Railroad Securities

3

terms and

"(b) Without limiting the generality of the
shall
1
"(1)

45

...

.

HEAD

Branches

49

41)

.

Our Reporter on

Incorporated by Royal Charter 1727

corded to the general public.

5

«

on

Royal Bank of Scotland

follows:

18

and Bankers

Place, New York 5

Telephone WHitehall 4-2250

LONDON

.

.

the securities field.

on

16

News About Banks

.

by members to non-

discount

^Refers to NASD Rules of Fair Practice, Section
as

20

Observations—A. Wilfred May....

no

(Continued

20

NSTA Notes

40 Exchange

behind this special privilege
make membership in the NASD so* necessary, of

is to

Fund Business

Wiesenberger

Young & Gersten

V:

Of course, the purpose

6

.'

Prominent Personalities in Mutual

of

rule

40

Activity

Mutual Funds

—Arthur

members is

18

Ahead of the News—Carlisle Burger on

From Washington

.

needless schism has been set up distinctly harm¬

NASD

The

8

Gaping Deficit in British Trade Balance".

a

"

pedes and hampers wide distribution.

22

Coming Events in the Investment Field

;

Bought—Sold—Quoted

obvious

Cover

.

5V2s

DUMONT LAB. "A"

pointed out, decidedly damaging to small business. It is
our enterprise is best promoted by such a distribu¬
tion and it is equally evident the barrier set up by the
NASD in forbidding their members tfrom giving discounts
(tantamount to making it impossible for a merchant to buy
at wholesale in other lines of business) to non-members im¬

43

.".

DIgby 4-2370

N. Y. G

Teletype NY 1-1942

widest

the

Regular Features

;

As We See It

Level

Exchange Official Year-Book Issued

a

siegel & co.
39 Broadway,

public interest and to issuer corporations seeking
possible distribution of securities and, as just

ful to the

Insufficient Spread Between Corporate and

Government Bonds

Business

Here,

31

Production

L. Sumner Pruyne Sees

■■■

Sustain

Cannot

Southern Production

so

ness.

Lavish

Holds

Lutz

Petroleum Ht. & Pr.

CEN. PUB. UTIL.

without profit to themselves. Non-mem¬
bers, therefore, do not get into new corporate issues,
resulting in an absence of breadth of distribution that
would otherwise exist—particularly so in the case of
smaller issues—to the decided detriment of small busi¬

24

Bank Investments

as

Revise Forms Covering

Kentucky Utilities

SOUTHERN PRODUCTION

participate in the distribution of new issues under¬
by a member of this Association unless they are

willing to do

Phillips Barbour of Comptroller of Cur¬

Advises

Robertson

ACTIVE MARKETS

non-member firms can¬

written

Export-Import Bank Grants $6 Million Loan to Israel

(Boxed)

YORK

NEW

Telephone: WHitehall 4-6551

securities markets of this pro¬

Because of the NASD setup,

17

Belgian Bonds via New York Bankers...

Charles J. Collins Says

L.

current

monopolistic implementation?

vision and its

International Monetary and Financial

on

.

'

inauspicious star and nurtured

an

What is 'the effect upon

16

Topic of Forum

gift.

STREET,

public.

3

(Editorial)..........

Irving'• S. Olds
Shortage

Hurley

:

;

born under

was

largely chargeable the

■

.

16

Dangers of Credit Controls—Keehn W. Berry...

to

-

16

32

SEC

existence

its

monopoly. To it, the Maloney Act gave the
choice of creating for its own membership special financial
monopolistic advantages. Unwisely, the destructive alterna¬
tive in that choice was accepted and implemented through
elaborate so called fair practice provisions,^: so that NASD
members were, prevented from dealing with non-members
excepting on the same basis as they dealt with the general

The

L.

the only national securities

arose

in the cradle of

30

J.

legislation

for your
a

your

Red Cross
received
obsoletes—-

yet

you

association—the National Association of Securities Dealers

despair.

Freedom,vs. Security—Francis Adams Truslow

The

Out of this

/

—and; to

Free Economy

—Emerson P. Schmidt
1949 and the Securities

[

22

-—John Diilton

empty

current

have

liberal cash

dustry when the Maloney Amendment to the Securities Act
of 1934 was passed.
;
-

.

the

our

legion and often completely

are

will

you

for
But

it's

"
woebegone day for. the securities in¬

<

We think it

...13

Should Get Behind-the Byrnes Bill

Investment Dealers and Brokers

the attempts being made to determine the

are

miss the mark.

10

...

pockets

of the doldrums in which the securities business finds

itself.

Our National Security

Cash

Many

7

.............

CHARITY?

drive!

cause

YOU RECEIVE

doubt

No

abolish NASD.

6

Monetary Policy and Economic Stability—M. S. Szymczak.

DO

AS WELL AS GIVE

Congress should

Against public interest and interest of investors.

4

,

widest distribution of original

Prevents

thin markets and impairs liquidity.

-the

2

Can the Government Maintain Full Employment?—Harold

Causes

AND COMPANY

The bane of
5% yardstick. Doctrine contra to our free enterprise system.
Takes no account of profits. Prevents adequate statistical studies.

.Cover
Depression in the Offing—Raymond Rodgers... .Coyer

nor

the Gold

to

monopolistic.

Tfnsifin

cause

issues.

.

.—M. S. Benjamin
-Neither Boom

Cover

B. S.

of recession of small business and of doldrums in
field charged to NASD. Tabooing of discounts to non-

members

Page

3

or

be, from or to a person who is a member
not engaged in the investment banking or

may

public

ind

securities business."
I

Published Twice Weekly?

>

Drapers' Gardens, London,
c/o Edwards & Smith.

E.

ind,

and

COMMERCIAL

The

FINANCIAL

CHRONICLE
Reentered

Reg. U. S.
WILLIAM B.
25

Park

Patent Office

WILLIAM

DANA
D.

to 9576

2-9570

REctor

President

Business Manager

March

Possessions,
Dominion

Thursday (general news and ad¬
vertising issue) and every Monday (com¬

$25.00

plete statistical, issue — market
records, corporation news, bank
gtate and city news, etc.).
-

$25.00

Chicago

Offices:

3,

111.

135

S.

(Telephone:

La

quotation
clearings,
'




and
per

Monthly
per

Note—On

the rate

Salle

State

and

$35.00

Canada,

U.

St.,

0613);

Quotation

per

of

.

Record—Monthly,

the

PREFERRED STOCKS

Prospectus

upon

request

year.

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

Corporation

Common Stock *

in

$38.00

(Foreign

& Gas

High Grade Public Utility and Industrial

of

year:

year.

year.

interested in offerings of

S.

Members
per

Other Publications

Every

Other

of

States,

United

Union

are

Febru¬

Countries, $42.00 per year.

Bank

~

in

Territories

'

Pan-American

Other

We

".
' ;
■ * ;
Subscription Rates

1949

17,

New York State Electric

>

at the post-office at New
under .the. Act, of March

Subscriptions"

Editor & Publisher

SEIBERT,

RIGGS,

Thursday,

8, 1879.

New York 8, N. Y.

HERBERT D. SEIBERT,
WILLIAM

Publishers

DANA COMPANY,
Place.

Eng-

B. Dana

second-class matter

as

ary
25,' 1942,
York,
N.
Y.,

C.,

•

1949 by William
Company

Copyright

Spencer Trask & Co.
Members New

25 Broad Street, New York

Members New York Curb Exchange

135 S. La Salle St., Chicago 3
Tel.: Financial 6-2330

Teletype—NY

in

of exchange, remittances for for¬
eign subscriptions and advertisements must
be made in New York funds.

4

Tel.: HAnover 2-4300

postage extra.)
fluctuations

York Stock Exchange

Albqnv

-

Foftnn

-

Glens Falls

1-5
-

J. Arthur Warner & Co.
INCORPORATED

120

Broadway, New York 5, N. Y.
Te'ephone WOrth 4-2300

Fchewtodv

-

4

THE

(1172)

COMMERCIAL

&

FINANCIAL

CHRONICLE

obtaining

Can the Government Maintain Full Employment?

attempts to
X

j

bring about stabilization and full employment. Maintains factor of
or legislative action to overcome depression under present
volume of contraction in private business sector may well greatly exceed any
practical possibility of expansion in public sector.

Maintains

statutes.

variance

to

economy

manage

timing will prevent effective

less

or

depressed from 25 to 30% of the time.

and

has the confident backing of

business

the

Administration.

ex¬

ecutives
p o

as

It is

not

so

flation
where

development of
in order to realize

alike have

ing in long-term
the

national

the

lated

the cure.
In

govern¬

ment

circles

-

Ithe slogan
recent

has

in

years

the

been

"maintenance

full

of

which
of

Harold G. Moulton

em¬

ployment"

—;j V
only another

is

saying,

let's

pressions

economy

economic

formu¬

goals

government.
The
scope and mandatory character of
the program is indicated by the
cestimony of Mr. Clark of the
Council of Economic Advisers in

and

by

is

de¬

production that neither the con¬

in any

need

,

culture, labor, and State and local
governments, to coordinate and

Is There

a

Current Crisis?

utilize all its plans, functions and
resources for the purpose of cre¬

present
business situation the Administra¬

ating and maintaining

tion

the

to

reference

With

is

ditions under which there will be

ati once reassuring and
alarming. We are told that the

afforded

business

useful

portunities

.

.

.

con¬

.

.

.

employment op¬
for those able,

willing, and seeking to work, and
promote
maximum
employ¬
ment, production and purchasing
power."
A special clause was in¬
to

excellent be¬

is

outlook

production and employment
and
income
are
still high, that
the best estimates for business in¬

cause

high,
and that government demands for
serted which provided that gov¬ goods and services will increase
ernment policy shall be carried
considerably, and that the only
out "in a manner calculated to real
danger spot at the present is
vestments this year are very

foster and promote free competi¬
tive enterprise."
It was to facili¬
tate the carrying out of this policy

development of a psychology of
fear on the part of businessmen

that

lhat

the

Council

of

Economic

Advisers to the President and also

the Joint Congressional

Commit¬

tee to review the President's eco¬

nomic report were created.

a

and

soft

the

recent

These

developments have

turn

led

hensive
which

sions

275-3),

to

the economy.

conception

are

of

implement

Bill

provi¬
(H. R.

maladjustments

serious

exist, "some of which

face."
gers

"to With

established

the

ad¬

others

and

We

are

of

respect to prices.
prices are guilty

The

and

evisages

new

"This

that

we

balance

when

jobs in accord with abilities'
are
available for practically all
who are able and willing to work,
and when the vast

policy of promoting maxi¬
mum
employment, production and
purchasing power, and for other
purposes."

provision with
respect to the fostering of private
enterprise is omitted.

*Copy of

The

address

an

made

absorbed

be

promptly by a
sufficiency of purchasing power.
This
sufficiency
of
purchasing
power in turn depends upon how
can

national income is flowing

re¬

the

highest sustainable levels of
investment and production but not
income

much

so

'frozen

savings'

called

to

total

to

sot

Con¬

their full share

buy

output, but not

come

to

as

the

or

lead

or

'over-production.'

in

should receive enough in¬

sumers
come

result

to

as

so

of

much in¬

either inflation

cause

impoverishment of invest¬
plant and
equipment.

in

ment

should

Farmers
income
ward

to

receive

enough

them closer to¬
parity of income,

carry

genuine

opportunity and living standards
for

the rest of
income

sonal

to

not

income

to

the country.
should

achieve

equality

of

them closer to(italics mine) into

carry

enough equity

the income structure

the

of

Per¬

distrib¬

be

so

that large

population

want

in

markets.

is

We

may pause here to observe
despite the super-prosperity
of the past three years this happy

that

state of balance appears never to

flationary cast or the deflationary
becoming so pronounced

cast an unemployment aggregat¬
ing at least 10 millions. At the

beginning

.

.

important

of

our

1938

.

tal

investment

bears

to

national

to

at

income

relation
to

or

other economic landmark.

that

is

It

or

have

had

that

was

substantial

capacity and considerable
unemployment; the 1937 depres¬
at

a

time when

there

of

are

no

reliable

reactions.
ment

Act

action

it would
to

be

cast from

prominent that the whole

so

...

becomes

seriously

af¬

It is perilous to delay

Detroit Harvester

existed.

balance

that

as

It

will

be

recalled

beginning of 1946 the
regarded the im¬
serious

so

of

1947

profits

we

as

to

seem

were* told

dangerously
high, that the masses of the peo¬
ple were suffering from restricted
buying power, and contrariwise
excessive

purchasing power
was causing such serious inflation
that
price controls were indis¬
pensable. At the beginning of 1948
the situation was grave because of

Portsmouth Steel

rapidly mounting food prices and
growing disparities in the struc¬

Texas Eastern Trans*

ture of wages and prices.
It is pointed out further

i
on

—

Quoted

essential

in

Goodbody &_ Co.
Members /V. Y. Stock Exchange and Other
Principal Exchanges
105 West Adams St., Chicago
Teletype NY 1-672

the

balance

in

the

involve both adjustments
relationships
between

Depressions

.

v

principal measures designed
to correct "dangerous" tendencies
involve: (1) banking policy; (2)
fiscal policy; and (3) price con¬
trol.
No great importance is at¬
tached to the first in view of the

demonstrated

inability of central
banking institutions in this and
other countries to prevent fluc¬
tuations in business activity. Price
control is also of secondary im¬

a

means

of

checking inflation.
begins emphasis is
expansion of expen¬

When recession

shifted to

an

ditures

the

in taxes is item No.

use

of. income

such

the

to

prevent deflation. At
present juncture an increase

taxation, public expenditures,
and credit regulations. One grows

gram.

confused

rising

as

about

the.,

possibility of

The

nor

of such payments is

gov¬

and other
agreements.
An in¬

contractual

wage

urally

involves

paying

out

more

money
for the same volume of
goods produced. On the one side
means

that the money cost

has

—

rising

The

prices
the

of

control

lies

beyondauthori¬

fiscal

determining contractual
are

made in the realm

of

business; and the additional
money required to finance the ex¬
panding requirements is obtained
chiefly from bank credit expan¬

.

view

is

1 in the pro¬

'

At the

.

The

prices, wages, and profits, and also
government policies which affect
flow and

circulation

-

.

fact

sion.

is placed upon increased taxes as

the

into

chiefly by

agreements

Suggested Means of Checking

that

economy

the

crease in wage rates, unaccompa¬
nied by an increase in output, nat¬

ties.

possible.

portance, aimed at the prevention
of rampant inflation. Primary re¬
liance is placed upon fiscal poli¬
cies.
In a boom period emphasis

of
Sold

erned

the

Accord¬

the achievement and maintenance

Request

gets

amount

costs

recon¬

ingly, it is still necessary to con¬
sider what
types of action are

fore¬

were

in

purchase
the
higher - priced
goods. The so-called spiral of ris¬
ing costs —rising prices — rising

of business

taken.

be

found

to

However, the Employ¬
assumes
that positive

should

is

received by workers enable them

nomic Advisers contend—by which
to determine what policies would

recurrence

receding.

are

margin of profit. ♦ On the other
side, the higher money incomes

indi¬

criteria—as the Council of Eco¬

no

in

of
increased, which
commonly necessitates an advance
in prices in order to preserve the

coming recession and

a

billion

principal price motivating fac¬
Money enters the hands of
the people through the medium of
wage,
salary, interest, rent, and
dividend
payments;
and
the

production

running to the
magnitude of 6 to 8 million.
%
If

$9

tors.

this

we

had unemployment

cators

and

explanation of the lack of

money

unused

sion occurred

1947

the

depressions

way

there

fiscal

correlation

expected

when

time

in

fiscal 1948; yet prices rose sharply.
The most rapid advance in prices

that the Treasury controls neither
the principal pipe lines by which

any

of beginning
them.
This
was the case, for example, in 1929
and again in 1937. Moreover, they
often begin when tnere has been
no
rampant antecedent inflation
with accompanying stresses and
strains. The 1929 depression came
at the end of a period of moder¬
ately declining prices and at a
a

few

when

the

deficits of the war period were
accompanied by rising commodity
prices.
A deficit of nearly $18
billion in fiscal 1946 was replaced
by a surplus of roughly $7 billion

The

in early prospect.

notorious

deficits

again in¬
price level re¬
mained virtually stable. The vast
but

ation; and prices

tell whether depression

is imminent

1940

to

creased

."

with

cannot

we

and
pros¬

some
.

.

Experience has clearly demon¬
strated

increased

somewhat. In the

1948, at the very time when the
budget surplus was reaching max¬
imum proportions.
Now we are
again approaching a deficit situ¬

which

rate

a

ascertainable

some

deficits

rose

occurred in the first half of fiscal

know
health
requires capi¬

free economy

the

perity period of 1936-37 the budget
was
virtually brought into bal¬
ance, yet prices advanced.
From

whether the continued good

/

;

Central-Ill. Pub. Serv*




1936

prices

attention

ciled to the

Ferry Cap & Set Screw

7-0100

but the trend of prices
only slightly downward. 1 In
the early '30s there were large
deficits, yet the price trend was
sharply downward. From 1934 to
every year,

given to the
capital investment
upon
economic
conditions,
the
Council has not found adequate
quantitative analyses that deter¬
mine
a
sustainable
relationship
between the increase in produc¬
tive capacity and the increase in
"It

com¬

was'

of

consumers'

be¬

changes in the fiscal situ¬

stantial government surpluses

taining continuous prosperity.
"Notwithstanding
the great
of

conclusively

correlation

no

modity prices. In the prosperity
period of the '20s there were sub¬

by the fact that ho
can comprehend
the enormous variety of economic
relationships and no techniques of
analysis can forecast with assur¬

influence

is

ation and the movements of

imposed

amount

there

tween

stabil¬

.

sustain employment;
that we shall have

Arg} Oil

FArclay

the

This is the principle on

The evidence shows

principal limitations (to
functioning of the Council)

are

surplus.

ceeding.

Administration

Amerex Holding Corp.

Tplnnh«ne

.

a

"The

of

plenty. ..."

that

115 Broadway, New York

.

has

economic

to

not

that at the

action."

—

ity.

degree

do

hither, and disinflation
"The problem is at one and
the same time to prevent the in¬

fected

Bought

sible

which

land

the

reflation

Club of New York,
City, March 10, 1949.

•Prospectus

that

assurance

ceive enough income to encourage

yon.

economy

Colorado Milling & Elev.

prices, wages, and profits which
are
workable, in the sense that
they contribute in the largest pos¬

va¬

Business should

rious groups.

to

have

by

York

which the government is now
pro¬

*

danger of deflation. In short, there
is inflation here, deflation there,

Dr. Moulton before The Economic

New

the Council great difficulty is the
lack of criteria by which to de¬
termine the relationships among

output created

by the combination of maximum
employment with our unrivaled
resources
and
managerial skills

parts

are

attained

is

useful

suffer

still
in equal

testimony

before
the
Joint Committee of Congress on
the Economic Report:,

the

are

a

To quote from Mr. Key-

serling's

are

told that the dan¬

program

state of "balance" throughout the
economy.

on

of grievous inflation
us

Stability

and

na¬

tional

control inflation would

appear to
be to replace a budget deficit by

condition

ital expansion as a means of main¬
Criteria for Judging

deficit! it

a

money

given

"A

prices

which

are

still hidden deep beneath the sur¬

introduced,

recently

are

we

program

and

Spence

hand,

by Mr. Keyserling that

surface

embodied in the

the

now

an

Those who raise

uted,

compre¬

more

a

of

accompanied by price
is simply a level¬
ing off process conducive to health

very

in

informed

spots

monished

Employment

are

development

readjustments
in

A New Program for Full

We

consumers.

On the other

%

reached

have

with

impasse

to
would

collection of data

to

seem

has

government

into the channels
of circulation, which raises
prices,
and when it has a surplus it sub¬
tracts money from the channels of
circulation, which lowers prices.
Accordingly, the obvious way to

of

tinued maximum employment and

other way and it is
possible for them to secure them
by having the government itself
ernment
with the assistance become a producer, he
is not
and cooperation of industry, agri¬ afraid to take that final step."
.

We

of productive
essential to con¬

so

enjoy
perpetual cealed dangers in any given plan
prosperity.
The original spon¬ nor the required scope of govern¬
sors
of
the
Employment
Act ment intervention should prevent
of 1946 conceived that the gov¬ action
which will be effective.
ernment
should be required to The President has shown how
maintain or provide full employ¬
earnestly he seeks effective action
ment.
But, as finally passed, the by declaring that if it comes to
term "full employment" was
the point where the people cannot
dropped and instead of a manda¬ be furnished goods which they

.

ments to occur.

"Encouragement

and

.

reflation

produce
has

recently been
disinflation. In short, we should
not allow any extensive readjust¬

the

way

tory provision it was declared to
be
the
"continuing policy and
responsibility of the Federal Gov¬

and

there

in

policy. Con¬
cretely, it is contended that when
the

which

by

what

increase

an

to government fiscal

pumps

profiteering;. those who reduce; ance the actions and reactions of
are seeking to. undermine! a free people.-" ' ■"""' ■" * '
interpreting the President's con- stability in the economy, and those
More specifically, the Council
:eption to the Joint Committee of who maintain prices are guilty of expresses a lack of confidence
monopolistic collusion.
Congress.
In his words:
with respect to programs for cap¬
capacity

prevent

must

we

concerned with depressions

searched,
in
vain,
for

from these premises

produce deflation
where there has recently been in¬
that

with controlling and participat¬

much

and

1 i t i cians

cause

It is argued

criteria

policies
sustain full employment.

Economists, mathematicians,

This bill has been developed by

physicists,
engineers,

that

Keyserling and
as
well as Mr. Nourse
definitely that there are no

determine

by

national money supply, and
that this in turn is
primarily due

of Messrs.

adequate

^>-

astronomers,

nature

states

Recurring depressions have been the plague of the capitalistic system—in other coun¬
tries as well as in the United States. Over
the course of the last century business has
more

with

caused

the

just quoted.
This report, which bears the sig¬

Clark,

executive

.

been

rectly

Advisers (December, 1948), which
takes a stand fundamentally at'

insuperable difficulties confronting President's Council of Economic Advisers in

cites

balance

Third Annual

Report of the Council of Economic

By HAROLD G. MOULTON*

Moulton

satisfactory

a

when he reads the

President, The Brookings Institution

Dr.

Thursday, March 17, 1949

beginning of a depression
Treasury outlays cannot be ex¬
panded with sufficient speed to
check the shrinkage in the private
Whereas

sector.

the

latter

pro¬

ceeds

weekly and even daily, some
time must elapse before a corre¬
sponding expansion in public dis¬
can
take
place. * In
1937, for example, the government
sought to arrest the recession by
bursements

of

means

general
rural

increased

relief,

relief

outlays for:
transient
relief,
rehabilitation,

and

student

aid, old age assistance, de¬
pendent children, aid to the blind,
Civilian Conservation Corps,

Civil
Administration, Works
Progress Administration, Bureau
of
Public
Roads, Public Works
Works

Administration, and self-liquidat¬
ing projects of the Reconstruction
Finance Corporation.

vigorous

and

Despite this

extensive

effort to

,

widely

held

commodity prices

are

that

di¬

arrest

the

recession,

(Continued

on

the

page

decline
41)

Volume 169

THE " COMMERCIAL

Number 4786

CHRONICLE

FINANCIAL

&

(1173)

might be said that the public is
presented with the opportunity of
acquiring expert management

Observations

Actually, with the discount
appreciably exceeding the man¬
agement's charge, the investor is
receiving a substantial bonus for
accepting the services of the man¬

By A. WILFRED MAY
The Investor's Attitude—'29 and '49
One

Part
In

dead

agers.

today's investing atmosphere American business is worth more

than

alive, in the apt words of Howard Vultee, securities ex¬
While the truth of this observation
realized, it is also worthwhile to point out the

pert of the Marine Midland Corp.
is becoming generally
r

arkable3>-

rem

,

securities

ap-

which

praisal
over

t

r a

trusts holding

the

but

ying
con¬

of

A. Wilfred May

which

p o r

vesting

the

media:

trust and the

transactions

t a n t incom¬

pany.

in

typification of the valuation
pf assets in the late 1920s, a time
when

the

Street

mere

address

of

use

as

for

0.61

0.89

lieu

of

41

the previous multiple-

a

shall

the

stock of which had

common

maximum

the "S

but

highly

a

doubtful
which

asset value of $6 per share,
stock they

lic

for

jointly sold to the pub¬
a
share. Just one

$17.50

month thereafter

tion"

our

"S Corpora¬

still another

concocted

cor¬

porate vehicle, which we call "B
Corporation."
"S
Corporation"

-

is

snapped

up

at

$20; in addition to 1,000,000 shares
of preferred at $50.

•

management is
But he
venture
the
guess
that at
future time the market will

,

■

<

of

above

course

do

mathematical

flating this pyramid, one
lar stunt was outstanding in

Int'l

Market

emplifying the public's appetite of
time.

that

the top
stead

of

would

Our

rung,

•

"B

Corporation,"

announced that in¬

subscriptions

accept from

in cash,

the public

it
in

payment for its own unseasoned
stock at the $20 price (double its
asset
mon

was

cal

value), certain leading com¬
stocks, as U. S. Steel, which
selling at 238, Allied Chemi¬

at

324, and General Electric
(old) at 395. Thus not only were
those dizzy heights- endorsed as
the

valuation

the

of

underlying

data
not

expert

really
238

reasoning

validity.
least they do quite

476.

General

Electric

5,055 workers who were scheduled to return to work on
Wednesday following furloughs, which began on Feb. 11, will again
have to leave their jobs after Saturday along with 455 workers of
the Jersey Central Lines as a consequence, of the miners' walkout.
Current estimates place the number of railroad workers at 62,000
will be out of jobs by the close of the week because of the

industry.

value

the

43

Not by any

7

per

For the week ended Feb.

insurance
the

26, continued claims for unemployment

dropped 2%, while

first decline in continued

initial claims declined 7%.
claims in three months.

reported at about 68% above

This

was

Total claims

one year ago.

16

5

11

Gen. Amer. Inv..;

15

Lehman

12

Newmont Mining

10
10

Corp._

U. S.-&

activities.
:":-.77

CHICAGO, ILL.—Cruttenden &

Co.,-

209

South

We

see

but two

that

of

E

x c

h

a n ges,

the

announce

admission

to

general part¬
ners hip
of

41

market's

of

case

the ten funds the

ratio

pense

25%

in the

was

exceeded

discount

desta, formerVice

55%
in

the

on

1947 such
1946

average.
excess

and

Di¬

of

lien Collins &

assets,

90%,

M

If

87%.

the

to

market

equal

discount

the

were

expense,

*

*

States

;

•. •

it

77''

automotive

and buses.

•;

.7

.7-

firms

.

7'

declined

was

estimated at 441,300 vehicles, including 109,000 trucks

This compares with the December total of 486,981 vehicles,

including 108,526 trucks and buses.
7.
Curtailment of car output for major model changes by two large
firms accounted for the drop in car production. But the January out¬
put was 35,600 above vehicle output in the same month of 1948.
Final 1948 production totals showed that 5,285,425 vehicles were
made in the United States, including 1,376,155 trucks and buses. Sev¬
eral
1949

leading industry executives have predicted a 10%
output because of more steel becoming available.

STEEL OUTPUT SCHEDULED AT NEW

P

o-

HIGH LEVEL FOR

The

two-week

coal mine

shutdown ordered by John L. Lewis,

President of the United Mine Workers Union,

sion

Robert A. Podesta

viously reported

of this week,

in

the

increase in

CURRENT WEEK
r.

desta's admis¬
ana

firm

just

.

by the Automobile Manufacturers Association.

Output

Co.
•'

At the end

was

❖

United

of

Ju-

rector

the latter exceeding the former by
of

-Presi¬

dent

all
ex¬

by the

the

on

lished

Chicago Stock

3

37

16%

cos._

output

slightly below the December rate, but truck and bus production in¬

and

Robert A.-Po¬

Aver, of 10

7

*7-'

;

creased, according to the February issue of "Automobile Facts," pub¬

36

.

■'

Street,

York

29

Foreign- 13
Niagara Share___ 20

■

January

'{■' members New

La, Salle

;

21
N

ployees engaged only in the production and marketing of iron and
excluding mining, shipbuilding and other non-steel-making

steel

to
was

the
pre¬

(Continued

"Chron¬

effective

on

Monday

will not hurt the steel rate, but if it should last longer
on

page

35)

icle" of March 3.

Time Inc.

at

STATE AND MUNICIPAL BONDS

Kingan & Co.

CORPORATE BONDS

Continental Airlines

LOCAL STOCKS

McGraw

"G"

chain of trusts.
means an isolated in¬

(F. H.) & Co.

Bought—Sold—Quoted

;

FREDERIC H. HATCH « CO., INC.
NOW

Established
Established

Since that New Era

period when
the public was rushing in to pay
thousand per cent premiums on
;




<

week

resenting 93% of the capacity of the steel industry and cover em¬

25

15

_____

of $1 200,000,000

cident of .the time!

~

reduction in work hours

Rome, New York division of the Revere Copper & Brass, Inc.

to the above-described assets com¬

prising

*

-

Plant shutdowns, layoffs and

fore the October crash the market
a

agreement.

.

32%

Cons. Inv. Trust-

790, and Allied Chemical at 648.
Such subscriptions by the public
amounted to $16,000,000, and be¬
attached

a new wage

that

trust
management,
was
re-buying Steel at twice

or

opened for

$5,000,000 and $6,000,000. The Pennsylvania hauls some 112,000,000 tons of coal annually.
On Tuesday of this week the New York Central Railroad stated

were

assets, but the public in exchang¬

ing them for "B" stock at double
its asset value for the privilege of

are

tween

embody precise

logical

or

But at the very

and

in Gruttenden & Go.

Trust Shs.

16%

Pennroad

ex¬

'J*

*!•

•»*

.

The

given to the adverse effect this scheduled closing will have

increased last week with announcements of such action being made by
General Electric, Hoosac Mills Corp., International Shoe Co., and the

so.

'

appointment almost two years ago of
head of the Bureau of Mines. In trade circles cogni¬

serious decline in the road's traffic

coal

believe

Monday of

on

his

over

furlough approximately 20,000 employees. Elaborating
it said, the suspension of mining operations will cause a
and will cut gross revenues be¬

further,

who

again

Mississippi, starting

The purported purpose of the shutdown was to protest to
Truman

will

it

that

will
some

national economy was the action taken by John L.
in ordering a shutdown of both bituminous and

contract with the operators terminates
on
June 30 and, according to reports, coal producers are presently
being confronted with stiff resistance to current prices in negotiations
for sales contracts covering the year beginning April 1.
The immediate effects of the coal mine stoppage brought forth
the announcement of the Pennsylvania Railroad on Saturday last,

worth having for nothing.

Price of

Invest. Inc.

Company-

Adams-Am.

Blue Ridge

steps

to

ex¬

Robt, Podesta Partner l

Asset Value

to Gross

Atlas Corp.

in in¬
particu¬

other

presume

whether

opinion

our

week

this week.

investment

pert

*

Apart from

777 "V"-'.

Discount from

Ratio

of Expense * in

While the public was offered
common

his

express

last

dramatically illustrate the oscilla¬
V'7.77v7-;,,'°''-177.'7.:77''-.
'
*
*
*
4'
■"."•77! 777- 7:Wv
tion in investor psychology over
The January, 1949, payroll of the iron and steel industry estab¬
Wall Street's 20-year span from
management.
•
:
•
lished a record for the month at $202,057,000, according to estimates
Blue Sky to Cemetery.
;
of the American Iron and Steel Institute and made known on Friday
>
The following table shows in the
case of
10 leading closed-end in¬
(This is the first of, two instal¬ of last week. It represented the highest payroll on record for that
ments
on
investment trusts and month and was 12% higher than in January, 1948. In fact, it was only
vesting companies, the percent¬
holding
companies
"then
and exceeded by the monthly payroll in December, 1948, when wage earn¬
ages of 1948 gross investment in¬
now." The public's similarly oscil¬ ers worked an average of one hour per week longer.
come which were taken by man¬
agement expense, together with lating attitude as it has applied to
Employment set a postwar record t>.f 650,200 workers in January
the respective market discounts at the utility holding companies, will with earnings of hourly piecework and tonnage workers averaging
the end of the year.
Brokerage be described in next week's col¬ $1,713 per hour compared with $1,573 in January, 1948, and $1,694 in
commissions are included in man¬ umn.—Ed.)
7'77- :v,
1
December, 1948.
The foregoing figures are based on reports from companies rep¬
agement expense.

bought 6% million shares of "B
Corporation". at $10 per share

and
1,000,000 shares of its
double that figure, or

funds'

their expert management
offered for hire completely free
charge for 31 years on the av¬

shares,

These prevailing discounts are of
highly significant in revealing to¬ erage.
:7"7'77''jv' 7
day's investor's complete disdain
This writer does not

a

subsidiary which
Corporation"

new

call

ent market valuation of the

prospects of
Lewis

The present mine workers

36

•

Overall industrial production for the country at large edged
slightly higher in the past week and was very moderately above the
level of the comparable week of 1948. This increase in output was
attained despite sporadic walkouts and the grim specter of unem¬
ployment looming in the background.
Increasing the concern of business and industry over the future

Union when discussions

37

0.49

multiplication of underlying val¬
let us review the ramifications for management, in appraising it
of a trust organized by one of the as a liability rather than in its
most seasoned and respected in¬ previous role of invaluable addi¬
vestment banking houses : whom tional asset. One way of portray¬
we
shall call "G."
In January, ing this current write-off of man¬
1929, this firm organized the "G agement is by comparing the dis¬
Trading Corporation" for expert counts in the market's pricing of
Stock market investing, securing the trusts' own shares, with the
for this purpose $100,000,000 from ratio of management expenses to
an avid public.
Six months there¬ the gross investment income. This
after this ''trust" together with an approach merely makes the pre¬
already super-inflated public sumably plausible assumption that
the gross income is not dimin¬
utility holding company, which we
shall call the "C Corporation,' or¬ ished by "inexpertness" of expert
we

29

U. S. & Foreign

Index

present coal stocks and the apparent advantageous bargaining po¬
sition which will have been created for the United Mine Workers

3

0.72

Production

Business Failures

on

21

0.63

Pennroad

ues,

ganized

0.71

__

their

major pol¬

premiums.

Wall

a

good

was

General Amer._

Lehman

Industry

Price

v

zance was

11

Newmont

sizable discounts from asset value

THEN
For

.

0.40

Commodity Price Index
Auto

and

James Boyd as

16

Nevertheless—today's investing
Aver, of 10cos. 0.78%
25%
public persists in appraising the
reformed trusts operating under
So
the
additional
conclusion
genuine investment standards, at might be drawn that under pres¬

investment

utility holding

32%

Output
Trade

Food

*

President

25

Niagara

well

as

icies.

im-

two

Price of
Trust Shares

Retail

State of Trade

anthracite coal mines east of the

to Average

Company

Investment

the

Act of 1940 subjects each of

the

1920's, to¬

ward

in Market

advantageous Consolidated

which

pre¬

least

the

aspects of the trusts' new look is
the fish-bowl of public scrutiny to

in

of Expenses

Net Assets

present atti¬
and that
vailed

Asset Value

them have

the

tude

follows:

Discount from

Company—
through the wringer of
drastic legitimization under the Adams-Am. Int. 0.74%
1.87,.,
aegis of legislation supplemented Atlas
0.75
by minute SEC supervision. Not Blue Ridge

the p u b 1 i c's

late

year

Ratio

also gone

between

trast

last

of

market's valuations of such
a 20-year defla¬
to a sound investment level,

tion

the years.

this is the

managed, with the size of
price's discounting of
This comparison as

market

assets undergone

Clearly
and
dramatically
p o r

assets
the

eral

occurred

has

comparing management expenses
calculated as a percentage of the

Production

Electric

Carloadings

•

Another way of viewing the
public's present valuation of hold¬
ing company functioning lies in

underlying assets (already vastly those assets.
inflated), not only have the gen- of the close

in

oscillation

;

,

Steel

The

gratis.

5

MEMBERS N.

ATLANTA

Teletype AT 288

Long

.

-

1888

\

1894

RHODES-HAVERTY BLDG.

1,

Y. SECURITY DEALERS

ASSOCIATION

GEORGIA

Distance 421

63

Wall

Street, New York 5, N. Y.

Bell Te'etype NY 1-897-r

6

(1174)

COMMERCIAL

THE

&

FINANCIAL

CHRONICLE

Monetary Policy and Economic Stability
:

,

/':,

(

v

By M. S. SZYMCZAK*

From

j

Thursday, March 17, 1949

.

Washington

Member, Board of Governors, Federal Reserve System

6'Ahead of the News

Governor Szymczak points out changing role of monetary policy from rigid stabilization based on international exchange rates under a gold standard to a system of measures to maintain internal economic
stability. Says principal aim of postwar monetary policy is to attain high level of business and employ-,
ment, without resort to inflation. Stresses price stability as objective and contends there should be flex¬
ibility in formulating monetary policies. Sees crucial problem in regulating monetary supply by creation
of government Treasury surpluses or deficits in right amount at right time.

!4
>

By CARLISLE BARGERON
An

official of

aircraft manufacturing firm came to see your
■correspondent recently in a most" anxious frame of mind. Whether
Congress was to appropriate for a 70-group air force, a 55-group or
other

some

size

an

He is no defense
Indeed, he has only a hazy
knowledge of what our defense requirements
are, just what it' will take to perform our global
leadership—to which by common consent of the

making policy decisions sometimes admonish the academic
economist to avoid theorizing in a vacuum. However that may be, the policy maker himself
must beware of making decisions in a theoretical vacuum. Absorbed as he must be in day,

the
policy maker
can easily lose
perspective. If
o n

s,

he fails to

re¬

nineteenth
century mind. It seemed to place
the mysteries of money matters in
elegance

ing

the

to

hands and to ' protect
them from erring mortals.
Also,

After

it fitted well into the mechanistic

never,

view

had

what has gone
before and to

dominated

what

m

s

S ymczak

V

new

my own warn¬

this

in

with
In so

country

both

theory and practice.
doing, I realize that I may not

say

anything new. But my purpose is
to provide perspective for con¬
sideration

of

•monetary
the

immediate

more

issues,

to in my

come

•in

which

shall

I

second lecture and

seminar

between

the

two

lectures.

Modern Monetary Policy

/

Our conception of the
responsi¬
bilities of monetary

been

policy
evolving

continuously

has

and

broadening for the last-half
tury

The

emphasis placed

cen¬

During the nineteenth
and the early years of

or so.

century

the
be

port also

cially

Still

tion.
as

the

rigid

stabilization

international
than

■stability

of

with

exchanges,
internal

nations

the

the

adhering

to the gold standard. The domestic

supply

individual

of

thus

was

determined

assumed

na¬

to

be

automatically by in¬

ternational market forces and the

responsibilities of monetary policy

relatively

Under

established

rules,

gold

monetary

stand¬
central

or

largely

passive.

regarded as
The
primary

function

accorded

the

authorities
smooth

was

to

was

operation

of

the

fixed

with 'inflation.

both

involved

of

these

immediate

use

signals
of

the

expressed
activities

was

through
of

the

central

banks.
Basis

of

Standard

The

the

System

popularity

of

the

gold

standard system, in theory and in

practice,

was

tors.

The

matic

fashion

standard

posed

to

due to several fac¬

impersonal and auto¬
in

which

mechanism

*The

operate had

first

of

two

the

was

an

flexible

were

price

and




and

they regarded
flexibility as a

wage

good thing.

continuously
of

needs

industry.

domestic

The

trade

Federal

and

Reserve

Board's Annual Report for 1923 is
a
classic example of the newer

thinking with regard to monetary
or central banking
policy. At that
time, when gold was flowing to
the United States, the Board in¬
dicated
ratio

that

signal
of

the increasing gold
the. System, was not "a

of

for

automatic

an

Reserve Bank

credit.

easing
The

re¬

port stated: ''It is its (i.e., the Fed¬
eral
Reserve's) responsibility to

regulate the flows of
ditional
in

tions

of

the

trade and
In

and ad¬

new

credit from its reservoirs

accordance

with

indica¬

solid

economic

needs

industry."

bility

of

the

international

sta¬
ex¬

primary preoccupa¬
tion of monetary policy became
definitely subordinate to domestic
as

a

-tremendous industry, representing an
It cannot exist unless we continue

on the building and destruction of planes.
Thus it
tremendous lobby to agitate that we can't build too

spend billions

lias developed a

planes but we don't need anything else.
•
♦•
It is not a new lobby.
The aviation industry has

many

.

been a tre¬
national affairs for many years.
It
has contributed generously to the campaigns of candidates for Con¬
gress on the grounds they were "air-minded," or alive to the needs
of aviation. The campaign of one such candidate got $100,000 from
the industry.
This candidate's only issue, in fact, was that he was
"air-minded," while his opponent, an older man, was steeped in the
mendous pressure group on

our

older modes of travel.

There

time,

a

was

constituted-a

big

and

of course, when advocating a "Big Navy"
profitable business. Steel and Shipbuilding

behind it.

industries Were

*

1

in the Hoover Administration when a "Big
Navy" lobbyist brought suit against them for money he claimed
they owed him for "breaking up" the Geneva arms limitation con¬
ference in
1927.
The shipbuilding and related Steel firms were
raked over the coals by a Senate investigating committee, and since
that time the Navy seems to have had no outside, pocket-book influ¬
ence
behind it.
For one thing, presumably, the Steel industry is
A

blow-up

came

busy enough without having to fall

back

the building of Navy

on

vessels./
The

this climate of thought,

changes

of

mechanism

without

not

was

hardships. Gold standard

coun¬

tries experiencing a contraction in

gold stocks found themselves
with

deflationary

These harsh effects

sures.

sarily put the rules of the
severe

After

test.

tests, it

more

a

con¬

pres¬
neces¬

game

to

succession of

inevitable that

was

flexible concept of mone¬

tary

policy
would
emerge.
It
eventually became the practice of
the monetary authorities—that is,
the central bankers, who after all
to

broader

into

come

direct

contact

fects of the gold flow mechanism.

central

banking.

established,

Federal

little,

such

rationale

By

of

practices
modern

1914

fulfill

statements for public

of

our

coun¬

and

the

publicizing

when

Reserve

System was
the special contribu¬

information,
of

relevant

statistical facts.

branches

other

the

of

Armed

have

Forces

more

less

or

always had to go along on their own, developing friends in Congress
as best they could.
George C. Marshall, as the prewar Chief of Staff,
was an unusually good missionary for them.
I

not

am

industry.

It is

arguing against the government assisting the aviation
a serious question, though, as to whether the industry

shouldn't pursue its problems openly and not cloud them

in a lot of
agitation having to do with National Defense and to the detriment

gold

or

the propaganda
The Air Force

be

commerce,
ture.
As a

seasonal swings in
industry, and agricul¬

result, the originally
narrow
concept of monetary Or
central banking policy under the

,

tremendous and questionable propaganda
circumnavigated the globe without stop¬
ping. This propaganda included responsible statements that we are
now in position to bomb any nation in the world from this country,
The statements were not true in the first instance, or at least they
were
deceptive, because this plane was enabled to remain in the
air for so long only through being refueled several times on its
flight. The refueling' planes, of course came from relatively nearby
Recently, there

about

lapse

a

miles.

was a
bomber that

B-50

of

the

late

Twenties

and

But since that

has

highly advertised accomplishment, the Air Force
propaganda blast about a B-36 that remained;
9,000 miles and carried a bomb load for 5,000 of these
This propaganda stated bluntly that we thus had a bomber

loosed

another

in the air for

early Thirties would further
change the character of monetary
policy.
The breakdown of the
gold standard internationally, in¬

that

volving

had already

and

widespread

devaluation

relation

of

depreciation
currencies

gold, put monetary
policy in many countries into di¬

foreign exchange
particularly over

movements.

Subsequent
monetary reorganization brought
a

position of

influence

over

the

more

positive

activities

take-off

from

this

country,

drop

load

a

of

bombs

on

'//

The propagandists were not even content with this.

.

They per¬
information that targets in Russia
been marked out for just such a mission.

mitted to "leak out" to the press

This

to

seems

be

bellicosity

at

its

height.

Undoubtedly there

those who feel that this sort of bullying is ,the way to deal with
But to this writer it seems to be might^ dangerous business.

are

Russia.

over

transactions,

could

Russia and return.

in

to

And

certainly, it is not for the Air Force to be determining at
point whether or not this is the proper treatment for Russia.
Indeed, this is not the purpose of the Air Force. Its motive is to im¬
this

press

Congress, and apparently its propagandists are not concerned
They have gone clean wild.

with .the risks involved.

of

banks and other financial institu¬

tions.
You

With First Trust Co.
are

acquainted with devel¬

that

from

in behalf of the Air Force does not precipitate war.
propagandists seem to have thrown all restraint to the.

winds.

CSDecial

house

on

page

28)

NEB.
and

with

are

—

John

First

T.

Alt-

Edith L.

the

Baker, Simonds Adds
isophni

Chronicle)

Financial

Trust

Company of Lincoln, Trust Build¬
ing.
" ;;: ;// /

t0

The

Financial

/

Chronicle)

DETROIT, MICH.—Theodore Z.
Roberts

is

with

& Co., Buhl

Baker, Simonds
Building, members of

the

Stock Exchange.

Detroit

Norman Barnes Co. Formed
With Bache & Co.

want

(Continued

The

Brownlee, Jr.

mental reorganization measures. I

only to remind you that two
new
techniques
of
continuing
monetary policy were introduced

to

LINCOLN,

central

to

only this, but at this time with the Military appropriation
pending in'Congress, it will be little less than remarkable if

bases.

banking was con¬ opments during this' period in our
We devalued the
of preventing own country.
undesirable monetary and credit dollar and undertook a compre¬
hensive overhauling of our mone¬
stringency during periods of tran¬
sient emergency, such as might tary machinery.
Time does not
aVise from a temporary drain of permit a review of these funda¬
tion of

Not

With this background of devel¬
oping ideas about monetary man¬
agement, it was only to be ex¬
pected that the great financial col¬

about

by
the

to

open-market

capital

of the harsher ef¬

Little

And

responsibilities

veloped—including, in

rect control

became

rein¬

monetary policy more effectively,
new
policy techniques were de¬

with the human problems of adjust¬
ment—to act in a way that would
some

to

operations,
a
systematic bank supervisory
policy,
formally
issued
policy

Policy

fronted

their

the

than

more

The operation of the gold stand¬

sup¬

appeal-

adjusting

monetary and credit conditions to
the

to

.

of

means

try,

Changing Role of Monetary

the

Szymczak under alls¬
pices of the Charles E. Walgreen
Foundation
for
the
Study
of
American Institutions, University
pf Chicago, Chicago, 111., March 9,
1949.
The second and concluding
lecture will appear in next week's
issue.

people quite generally
that prices and wages

gold

lectures/by

Governor

functioning as an overt- buffer
against
the
upsetting • conse¬
quences of gold flows and as the

what

investment of millions of dollars.

effects.

ceived

:

As a matter of fact, they
assigned the double role of

branches of

and it is this sort of fnfluence
it impossible for Congress to
is really needed by way of a

fighting force.

Back of the Air Force is a

bilities.

mitigate

Gold

balanced

responsible
in favor of the Air

agitation

detriment of the other

making

determine

force

had

Popular

Carlisle Bargeron

fact

that

was

a

obtained in practice
questioned.
The real

little

a

discount

authorities
were
ac¬
knowledged to have even more
extensive and flexible responsi¬
were

is

that

monetary

the

to

armed forces,

the

bill

of

primarily

a

metal.

Force

modified

environment,

rather

such

icy under tire gold standard

new

counteract

discount rate, the chief instrument

monetary policy.
It is a fair
generalization that monetary pol¬

and

scarce

the

was

assumption of

the

un¬

unit

currency

quantity of the

In

55-group force

prosperity.

continual

the

for

bility

gold

ambiguous. A net inflow of gold
was a signal to ease
monetary and
credit controls, a net outflow was
h signal
to tighten controls. Re¬
to

constant relationship be¬

a

substantially

on

lines.

a

it is this sort of influence that is

v

only a war¬
time measure, its reestablishment
was

:■:/•■■■'•■
that with

of the other services.

its

and

fiat

force would mean

suspension

considered

was

that

could be avoided by main¬
the

been

its

he did know

probably squeeze by and with any
A 70-group
lesser size force he would be sunk.

In those

era.

prewar

where

have been elevated—or

his firm could

economic
stability.
Accordingly,
during the Twenties, major gold
movements
were
interpreted as
calling for deliberate measures to

for

simple

There

idea

the

the

But

1,

high degree
of flexibility in domestic prices
and wages.
Whether such flexi¬

the

standard mechanism and the rules
were

in

Finally, the wide acceptance of
the gold standard theory reflected

ard

action

standard
of infla¬

know, the civilized world
many, many sad experi¬

comfort

monetary

facilitate

the

for

reason

has had

thought

meager.

banking policy

;

particularly in
clearly saw
between national

By the nineteenth century,

you

tween

with

sponse

nine¬

group

another

taining

ard

who

the

popularity of the gold
was
a
widespread fear

pied

were

This

in

prosperity and the
unhampered flow of international
trade at stable exchange values,

money

tions

enterprisers

century,

thinking about monetary af¬
fairs.
This theory was preoccu¬

money

from the commer¬

connection

the

limits of

Active sup¬

economy.

came

England.

would

than

the

influential

so

teenth

most

rather

within

minded

were

the

resources

possible

ences

the

of

national

a

in

saw

world markets the

use

•the twentieth century, the
theory
of the gold standard' dominated

•of

on

develop¬
possi¬
bility of greater specialization in
they

cause

ment of

in

countries
had

and individual

Gold Standard Background of

v

society which
scientific thought in

organized

the nineteenth century.

may

ing
and
review
contemporary
policy broadly in the light of ex¬
perience

of

the sta¬
come
after, bility of international exchanges
the result will attracted
support from all those
be
inferior who
were
especially impressed
policy.
with the
advantages of, an ex¬
Let me take
panding volume of international
Economists in particular
this oPPortu- trade.
nfty to heed supported the gold standard be¬

*

War

we

try," Soviet Russia.

the

disruptive effects of
the gold standard
regained the form it had

World

world,

just what it will take to defend ourselves against
that tremendously "efficient and civilized coun¬

of internal consequences.

problem to

late each

nations of the

standard theory had to be
broadened to take more account

gold

Olympian

importance to him.

expert,: either.

to-day opera-'^
t i

of vital

was

Those who have the task of

tRnpciaJ

to

The

BOSTON,

Financial

MASS.

—

Walter

Kulakowski is with Bache &
21

Congress Street.

CHICAGO,

ILL.

—

Norman

Barnes ha,s formed Norman Barnes

Chronicle)

J.

Co.,

&

Co.

with

offices

at

111

Monroe Street to engage
curities business.

in

West
a

se¬
:

Volume

Number 4786

169

THE

FINANCIAL

C0MMERCIAi7~&

stocks

common

Future of the Securities Market

thd

w'-"-'

.'.'y'.r

'

in

it's time the Stock Exchange and investment firms started talking about

says

market

to

from

come

of

mail

income group,

000

well

as

well

as

-

Most

as execu¬

They

are

i

s

1

c a

t

And the hats shown

own

ment

in¬

the

the

great

strength

the

haves.

have

You

viewpoint of the haves.
But
and Truman got their
votes from' the have-nots.
And

Roosevelt

machinists
The

among

Federal

Reserve

million-persons

are

our

have.

And

;

political
The

influ¬

new

a

society, which is af¬

they're

using

their

to get security,

power

farmer

musters

votes

j
in

Congress for support prices for
wheat, corn, and cotton, and so
The

on.

esti¬

in

fecting your livelihood. They have
political power, which you don't

among

common

Your

for

...a /

labor

leader

minimum

gets votes

social

wage,

curity, unemployment

and

compensa?

power—the people in the
security business, the big inves¬
tors, the large institutions, are
have-nots.

it

on

the

perspective

vades

money

have

And

fact

that

dominates

the

the

a

and

breadth

of

up and up
from millions of

a

tried

to

don't

surplus
all their

They don't use
on
food,
clothing,

arid

to

manufacturer,

cross

In

and i

the

'twenties,

middle-income and

yes

territorial

even

come.

Customarily

they'd

We

buy

are

through

changes

pleased

.

have

.

.

certificate

a

(Continued

on

of

page

to announce that

ROBERT A.

PODESTA
to

general partnership in this firm

come

citizens." It's

our

U

8cL

HLMANN
members

new

york

stock

ATS HAW

;

exchange

nu
Eoard of Trade Building

CHOTTfllDin 5 Co.

■
crs

Lincoln

lf]civ

KANSAS

CITY 6,

IJorh S>/oc! (Cxcftanqe

8, Neb.

MISSOURI

CHICAGO

an

J Oil. tr f^rincipaf (SxcfianqtS

4, ILL.

Omaha 2, Neb.

Telephone DEarborn 2-0500

just wouldn't ring true
March 16, 1949

millions

many

who

don't

of per¬
stocks—to

own

PAUL UHLMANN, JR.

the $60-a-week shoe clerk, garage
or soda jerker.

JOHN

LATSHAW

mechanic,
The

is

ad

propaganda

RUSSELL K. SPARKS,

that

bounces back.

about

Manager of Trading Department

If you say a thing

often

enough

-business,
the

if

even

it

offer

can

from

well

you, as

business,

last

own

I

Let

j

others in

believe

true.

proof.

the

as

to

come

isn't

your

think

Correspondent, BACHE & CO., New York

it I
I

Private Wire

to

Scherck, Richter Company; St. Louis

quote

me

annual

report of
Merrill Lynch, Pierce, Fenner &
Beane.

It

says:

.

"The

Merrill

Telephone

Baltimore

3600

Teletype

KC 67,

68,

69

Lynch customers are the kind of
people who keep this country run¬
ning.
The men and women we
serve are

a

We

the

the

and

'

men

harvest

who

the

till

the

them

with

modest

banks

crops;

the

are

as

Manager of the

We Are Pleased to Announce

Syndicate Department
That

We

Have

Become

Members

of

our

housewives

savings and the big
insurance

and

Mr. W. Harman Brown, Jr.

fields

they are
machinists
and
longshoremen;
doctors
and
lawyers; engineers
and school teachers; business executives, bankers, merchants, ar¬
tists,
entertainers.
Numbered
^among

announce

appointment of

cross-section of all the

people who live in America. They
are

pleased to

are

New York Office

of the

companies i

with millions to invest."

120

Broadway

And yet, the Merrill Lynch re¬

port,

itself,

suggests

how

small,

how limited in scope, the security
business it.
Merrill Lynch did

about

10%

of all business

on

Telephone COrtlandt 7-8640

NEW YORK STOCK EXCHANGE

the

New York Stock Exchange. It has

172,000

customers

on

its

books.

OTIS &. CO.

This includes customers who deal
in

commodities

This

as

well

as

stocks.

Exchange firms together
had about 1,720,000 customers, or
*An
at

a

Established

1899

suggests that all New York

Stock

address by
luncheon

Philadelphia

Mr. Livingston
meeting of the

Securities

Associa¬

tion, Philadelphia, Pa., March 15,
1949.




CLEVELAND

Dewar, Robertson & Pancoast
NATIONAL BANK OF COMMERCE BLDG.

SAN ANTONIO 5, TEXAS

New York

Chicago

Columbus

Long Distance 15

Bell

Teletype SA 3

So¬

Without

profits, without capitalism, people
become pawns of the State; the
only way of going into business is

per¬

men
in the
upper-income

a

barrier&r-

whole

brackets didn't spend all their in-

as

or as

all kinds of barriers:

barring the Iron Curtain.

long-term

economic

and

and go

grocer,

barriers, political; barriers,
racial barriers, religious barriers,

dividends and high returns.
Social

as a

As long as

money
a

cial

fluctuations

on

save^up

security dealer—there's freedom.
Money—capital—makes if possible

Exchange mid investment
talking about suc¬
in investing. You ought to

a

the

druggist,

started

pitfalls,. more

free society.

a

can

business—as

a

"Nothing Ventured,
Gained." It's time the

on

Profits—

out.

its

broker's office.
The same goes
for railroad workers and farmers.

sons

into

It
shows
the- Wright
Airplane, Kitty Hawk, with

put less emphasis

of

man

a

has been admitted

unsubstantiated assumption.
Most people don't own stocks.
Most house painters never entered

So the ad

non

see

Stock

cess

made

private property—are the sine quo

headline

firms

philosophical

A good

be

can

of

stirring declaration of a faith—
declaration of faith based on an

—to

important.
case

under¬

are

campaigns to make
realize that profits are

workers

sensible.

the

on

big

taking

tomers away? Another ad is more

Nothing

corporations

Large

Gimbel's putting
saying: "Beware the
Merchandise."
Why scare cus¬

Bros.

hearing

a

Importance of Profits

get
the

sign

a

held

sign of great social change. Unlike
30 years ago, profits—per se—are
proof of achievement. They're
something to be apologized for.

being that it's easy to be
goldbricked when you buy stocks.
What kind of psychology is that?
up

Economic Committee

Congress

not

tion

You

The mere fact
subcommittee

standard of liv¬

our

ing
a

"I

a

profits—Are they too high?—is a

quick."
It emphasizes
pitfalls of investment. Another ad
emphasizes FACTS, the implica¬

ownership. The dollars with which
it has carried

of

dunce cap on his head

headline:

industry derives from

depth

of the Joint

Exchange advertising in
hasn't helped win cus¬

with

and

under

You sell profits and antici¬

pations of profits.
that in September

Defective

rich

are

market.

customers, by and large,
who

and

thought

or
influence people.
Do
remember this ad showing a

you

Bulletin":

"Sunday

That epitomizes the tem¬

soul, and lifeblood of stocks and

tomers

se¬

money

estimates of 15 to 20

shareholders,
some

persons

funds.

healthy and democratic
development.
We
believe
that
the

exf

an

recent Presidential election.

A

of

with

securities other than govern j- tion, and so on.
When it comes
bonds:
That's only abouj;, to political .power—in contrast to

throws

on

through the whole mass of the
people is an American develop¬

much

is

is responsible for .an

million

to say: "This
(distribution of business ownership

American

have

6% of the country's adult popula¬
tion.
It's at wide variance with

the

ment.

we

rich man's

a

stocks

owns

mate that about six

worker, the broad¬

goes

is still

•

and

Board

of all

the

ad

the evidence

.

machinists.

|

Homburg of the well-to-do
vestor, the rough straw of
farmer, and so on.

that

hands

types-Mhe White skull" cap of the
house painter, the striped denim

The

deal

longshoremen;
ditto for farmhands among farm?

of

rancher,

scrimp and
have for pennies. They have some¬
thing left over to invest.
You

these have-nots have

iceptioh

the

were

don't

ence

man

k-

business."

Texas

its

on

v£;■

Sure, farmhands own
stocks; ditto longshoremen and
machinists. "But
the
longshore¬

typ-

owners

of

business

business.f

a!s

o c

hokiers,

the

customers

■'■v.,

They

indicates that basically the securi¬

as

businessmen.

of

■

shelter.

ties

men,

well

as

brim

...

Basically, a Rich Man's Business

tives, farmers

of the railroad

population.

the

are

employees

^

S.

mmunity.

women

Livingston

order

books.

They

J. A.

U.

the

Sears, Roebuck alone has 14,000,-

from every
c o

past

man

—

from every

...

Stock

business.

And profits are the heart,

bonds.

common

.

the

security

of you saw a head¬

of the times. Profits

per

of com¬
stocks because of what hap¬
pened in '29.
1
Advertising

the

attack.

mon

Past

in

"Cld Asks Boost in Wages, Cut in

afford

could

who

savings in

some

the

some

Profits."

of doing so or are afraid

now

everywhere

nowadays
too much

takes

stocks but who have never

advertising by $iost investment firms, especially the advertising of the New
York Stock Exchange, has been founded on an illusion.
Maybe you remember the ad that
was used two
years ago headed: "Stockholders' Meeting."
The text ran in part: "They

Up to

put

incentive for sales efforts.

more

customers

new

on

I

line

change recognizes that in its lat¬
campaign—to go out and reach

investing and put less emphasis
Blames attacks

But

hurt

Perhaps

est

suc¬

on price fluctuations and pitfalls and more on dividends and high
profits and unwillingness to take risks as injuring securities business and
reveals switch to life insurance in lieu of stocks and bonds to provide individual security. Contends
securities market is now largely professional and decadent, and urges more study and research of mar¬
ket's functions. Stresses greater importance of selling over mere trading and sees in over-the-counter
cess

relurns.

business¬

the

The New York Stock Ex¬

away.

Financial Editor, Philadelphia "Bulletin"

Financial columnist

collector

tax

have

Stocks

bonds.

or

called

be

investment.

man's

By J. A. LIVINGSTON*
fv

to

used

.7

(1175)

CHRONICLE

Denver
Toledo

Cincinnati
Buffalo

conven-

43)

8

THE

(1176)

COMMERCIAL

Our National Security
Chairman, Committee

CHRONICLE

Dealer-Broker Investment

<

Recommendations and Literature

'V '

V.V; v-' ".\.

■/.'

■

•

send

to

v

•

'j

firms mentioned will he pleased
parties the following literature:

interested

down requisites for sound policies. Stresses importance of clear, sound
more economy and efficiency in armed services and
Says disputes have marred harmony of our military establishment, but
causing loss of civilian control essential to both economy and efficiency.

r -'".v

It is understood that the

National Security Organization appointed

on

Thursday, March 17, 1949

.

National Security Organization, Hoover Commission

on

Prominent investment banker describes work of Committee

by Hoover Commission and lays
and integrated national security
overhauling of military budget.
objects to single chief of staff as

,

Co. Inc., Investment Bankers

Chairman of Board, F. Eberstadt &

,

Organization

By FERDINAND EBERSTADT*

.

FINANCIAL

&

policy, and calls for

Chemicals—Circular—Hirsch

&

Co., 25 Broad Street, New York 4,
N. Y.

Brown

&

Sutro &

York

Bigelow—Circular—

Co., 120 Broadway, New

5, N. Y.

I

hope you will not think me presumptuous if I talk with you this evening about your
business. Drugs, Chemicals and the Allied Trades are not the only businesses that you are
in. Whether you know it or not—whether you like it or not—the biggest business that
one

is

is

the
of

of

in,

every
you

business

I would not
say that you can get the whole
set
in
your
pocket,, but, don't
worry, you will have more room
in your pockets after March 15—

-

govern¬

ment.
While

busi¬

nessmen

always

have,

proud

their

of

obtainable from

In less than

Eberstadt

the executive branch of the

Federal

Government

panded from

annually to
lion,

Ferdinand

of

score

The

has

ex¬

$4 billion business

a

of

one

$40 bil¬

over

military

In the great

establishment

Commission, I
participate in

We

Chairman

to

think

of

ourselves

peace-loving people, yet

as

75%

over

the Government

Printing Office in Washington. I
suggest that you get them and
study them and, if you agree with
them, that you write your Sena¬
tor and Representative that you
want prompt action.

alone claims $15 billion or about
one-third of the national budget.
like

work of the Hoover
was privileged to
a modest way as
the

of

tional

current

We assembled for

military expenditures and

costs of past wars.
The magnitude of the executive
branch is indicated by the fact
are

1,800 separate
units in it—many of them indi¬
vidually greater than any other
enterprise in the

aggregate,

over

wi^fld. In the

they

erhpUk

2
the

over

million persons—mpre than
entire population of Philadelphia,
the nation's third largest city. The
national
military
establishment
alone employs over 887,000 civil¬
ian personnel—slightly less than

Commission's

task force committee

of the annual expenditures of our
national
government arise from

that there

19

(on the post office), the
longest 73 pages (on the State
Department). Their cost ranges
from 10c to 25c apiece. They are

govern-

years,

24

pages

mentvjV;:;;;.;;';:;.'.:1"',''
a

of

The shortest is

small booklets.

not

their

in

room

consists

set

entire

The

particularly
pleased at the
growth

more

mendations

they

are

and

more

pockets unless these recom¬
are. put into effect.

your

com¬

panies,

will

and each succeeding year you

are

of the growth

of

was

the Na¬

on

Security Organization. Ours
hard-working

a

our

committee.
first session

the 8th of June,

1948, and de¬
Commis¬
sion by the middle of November.
During this period, our Committee
was
in session for 25 full days
and 10 long evenings. Of the 14
members of the Committee, an
average of 9 attended part or all
of every session. The long distance
on

livered our report to the

attendance

record

to

went

Raymond B. Allen,
the r University
of

Dr.

the population of Washington, D.C.
It is futile to expect that the

size

around the world,

our

was

Internal

ago.

years

can

be

score

a

that.

can—and

The

The

Hoover Commission

Hoover

rendered
Its

its reports to

has

Congress.
have

re¬

ceived strong public approval.

However,

firmly
sound

unless

and

man

have set
tion

in

very, little

positive

Ex-President

Hoover

an

example of coopera¬
the public interest." The

Commission ^has

Congress
Branch

that

President Tru¬

ensue.

and

of

do

its

part.
Executive

the

and

will

done

their

part if the
people indicate beyond question—
and regardless of party affiliations
and

ideologies

and will insist

—

that

they wafit,
having, an effi¬

on

Security

cient and economical government.

The reports of the Hoover Com¬
mission are "must" reading for

to examine the National Se¬

curity Organization, with a view
exploring
how
its product
could be improved, and at the

to

time its costs reduced—how

obtain the

terms

of

our

I

like

these two

military

ports each

of

government
and

you

far

than

more

the

re¬

to

the

makes

"15th

on

of

March

thereafter.*

quarterly

Hoover

and

The

Commission

reports have
relation to the size

a
very close
of the final figure which you enter
in your tax returns.

They are printed in large and
easily readable type and are in
*Address

by

Mr.

Eberstadt

at

Annual Dinner of the Dmg,
Chemical and Allied Trades Sec¬
tion of New vork
New

York

i^oard

City, March

of

Trade,

10,




1949.

the

National

often confused. The

are

is

part

a

Security Organi¬
not necessarily the

zation, but
most important part.
The
tional

main

of

purpose

our

the

military, in a
continuing
effort
on

terms

na¬

defeated,

we

of

years

lay. ahead.

peace

Disillusionment ended

in

another

1

Wall

Fire Insurance Stocks—Bulletin

failure to enter the League
of Nations.
The defeat of Hitler,
our

Mussolini, and the Japanese War
Lords rekindled bright hopes of
lasting world peace—particularly
this time

as

became

we

active

an

member of the United Nations.

is giving way to
disillusionment. Again we are in¬
Again

clined

hope

think

to

that

the
settlement of our problems with
Russia lies a long, bright vista of
peace.
I certainly hope it does,
but

beyond

history

indicates that even
result has been
achieved, other problems involv¬
ing our national security will not
when

this happy

be absent.
And so,

country reaches
manhood, we have
realize that national se¬
as our

international
to

come

curity is

relentless

a

and

accordingly.
{A second and equally important
condition is that military strength
is only one of our national se¬

resource's.

curity
forces

—William R. Staats Co., 640 South

Soring

to

are

The

armed

but the cutting edge of

policy— an element of
in the background in
times of peace, in times of war a
last and desperate resort. A sound

a

strong,
self-respecting,
peaceloving,
democratic
people.
Its
secondary, ^but perhaps no less
important, purpose is, in default
maintenance

of

peace, to
assets prompt¬

ly and effectively in defense of
our national
security.

national security policy cannot be
based on military strength alone.

New

of

use

all

of

national

our

political,

sources,

civilian,

mili¬

scientific—in

fact,, all categories
human, material and spiritual

Congress

1948

Stocks

all,

we

viewed the provision in the Con¬

stitution

laying

the duty

"to provide for the

defense"

termittent
neither
of

Congress

upon

at most,

function.

our

other

as,

in¬

Unhappily,

experience

nations

com¬

an

nor

that

justifies
this
comforting view.
Wars' are but
explosive
manifestations -of
a

Lumber

&

Co.—

111.'

Bend

Railroad—Study—Straus &
Blosser, 135 South La Salle Street,
Chicago 3, 111.
Southem

passing
Security Act of 1947
and they undertook to supply a
long-standing ajid costly defici¬
ency in our government organiza¬
tion and procedures.
The purpose
the

Act is to

provide, upon a
continuing basis,

ond

comprehensive program for the
security of the United States.
Its

a

between all

gaps

e p a r

tments

of

the various

and

government
agencies concerned with national

security; to bring them together
organic whole

an

duce

so as

to pro¬

unified

policies and action
along the entire security front

—in time of peace, as
time of war.
The

National

well

as

in

In

the

views

tion in

our

lished

new

Security

affairs.

a

a

new

new

con¬

func¬

of

policy
formation, administration, coordi¬
nation

and

control.

The system
series of pol¬
icy-forming coordinating and op¬
erating agencies. Contact between

operates through

them

a

is

maintained,
not
only
through interlocking memberships
(Continued

on

page

Coral Gables, Fla.—Tax partici¬
pation notes — Memorandum —
Buckley Brothers,
1420 Walnut

issue

contained

are

Fernandina Port Authority, Fla.
Toll

Insurance

Steel,

strnmberg

Co.,

Kentucky

Carlson

30

Broad

Gerber Products

Harris-

Salle Street, Chicago 3, 111.

Macon, Dublin & Savanna Rail¬

Wellman

Co.—Data—B.

road

Engineering.

Co.—Report—

A. G. Becker & Co., 120 South La

Utilities,

and

Bonds—Cir¬

Co.,

Street, New York 4, N. Y.

Of

Firemen's

&

re¬

Atlantic City Electric,
Harvester, Texas Eastern
Transmission, El Paso
Electric,

burg

Revenue

Road

cular—Allen

Pizzini

W.

&

Co., 25 Broad Street, New York 4,
Over

Stock

the

-

N. Y.

Counter

-

Index

—

Industrial

Booklet

recording

10-year performance of 35 indus¬
trial

stocks—National

Also

available

data

is

New

on

Orleans Great Northern

Railway.

Quotation

Bureau, Inc.. 46 Front Street, New
York 4, N. Y.

Marshall Field &

Cook

—Newhard,
and Olive,

Co.—Analysis
Co., Fourth

&

St. Louis 1, Mo.

Railroad Income Bonds—Tabu¬
lar

comparison—Vilas

& Hickey,
Street, New York 5, N. Y.

49 Wall

Minneapolis

with

Industry

comment

better

on

Analysis

—

111.

the

of

some

situated

companies in the
industry—Bache & Co., 36 Wall

Street, New York 5, N. Y.

Monsanto Chemical—Analysis—
Goodbody & Co., 115 Broadway,
New York 6, N. Y.

available

Also
Television

Stocks—Circular-

Television

Shares Management
Company,
135
South
La
Salle
Street, Chicago 3, 111.
*

*

—

Memo¬

N. Y.

of

Chemical
Corp., Polaroid Corp., analyses of
the prospects for Railroads, and

leaflets
Oil,

Corporation

studies

are

Food Machinery

on

Gas, Continental

Natural Gas
States Power,

Magnavox,

Stocks,

Northern

Paramount,

&

Laboratories,

Abbott

Brooklyn Union

♦

randum—Granbery,
Marache
&
Co., 52 Broadway, New York 4,

Service Elec¬

Public

tric & Gas and Pure Oil.

Frank G, Shattuck Co.—Memo¬

Amerex Holding

Corp.—Analy¬
Hansoatic Corp.,
120 Broadway, New York 5, N. Y.

sis—New

Fuller

Salle Street, Chicago 4,

South La

Television

Co.—Analysis
& Co., 209

Gas

A.

—William

York

Also available is an.analysis of
the possibilities for Central Public

Utility 5V2S of 1952.

randum—A.

Kidder

M.

& Co.,

Wall Street, New York 5, N.

Standard

1

Y.

Dredging Corp.—Cir¬

cular—David A. Noyes & Co., 208

Street, Chicago 4,

South La Salle
111.

American Insurance Co. of New¬

ark,
&

N.

J.—1948

summary—Blair

Co.," Inc., 44 Wall Street, New

York

5, N. Y.

Also
on

Struthers

Wells

are

memoranda

&

Co.,

209

Street, Chicago 4,

South La Salle

available

Corp.—Memo¬

randum—Cruttenden
111.

Chase National Bank, Corroon

and

Reynolds Group, Great Amer¬

ican

Insurance

Co.

sheet

of

1948
may

Suburban Propane Gas Corp.—

National

and

City Bank of New York.

A

score

stock

insurance

also be had.

Circular—Hallowell, Sulzberger &
Co., Broad and Chestnut Streets,
Philadelphia 7, Pa.

"

•

Organ¬

It has estab¬

methods

New-

—

burger & Co., 1342 Walnut Street,
Philadelpia 7, Pa.

Detroit

earnings

•

Memorandum

—

Street, Philadelphia 2, Pa.

Warner & Co., Inc., 120
Broadway.
New York 5, N. Y.

ican

at

City

Over-the-Counter—Brochure
surveying the market—J. Arthur

attempts to discharge

it

York

—

5, N. Y.

least of

society. To the extent

Mill

Commonwealth &

Laird, Bissell &
Meeds, 120 Broadway, New, York

ment

considered

New

19

on

Aerovox

these two

fundamental conditions in

all

Ira

—

14,

City Banks—Break¬

Bank

cept in Federal administration. It

our

York

come

.

recognized

the National

as

Chicago

'

♦

■

downs of government bond port¬
sources of growth in¬

re¬

tary, i ndu str la 1, psychologcal,

d

Circular

folios and

ization thus embodies

we

'.

■

It involves the wise and constant

of

—

Circular—Swift, Henke & Co., 135
South La Salle Street, Chicago 3,

Corp.

In the past we have been accus¬
tomed to think of peace as the
normal
condition
of
society—at
that

Angeles

Los
'

.

establishment, but to bridge the

to

Street,

Calif.

national

of

Dry

Chicago South Shore and South

Investment Companies—Analy¬
sis of investment trust
companies

ever-

and, that if we
are
to survive, we must recog¬
nize is as such and deal with it

present problem

and

constant

Co., Mississippi Valley
Building, St. Louis 1, Mo.

.

frightful war. This ca¬
tastrophe was generally ascribed
to

Street, New York 5, N. Y.

—White &
Trust

Canada ;;

Haupt & Co., Ill Broadway, New
York 6, N. Y.

more

maintain

civilian

acceptable

our

was

dropped our guard, confident that

and

investors

interested in revising their
equity
portfolios—G. H. Walker & Co.,

objective is not merely to create
a
technically, efficient military

resources,

and

the

When the Kaiser

long

for

of

means

permanent

security organization is to

marshal all

oeace

discover a success¬
disposing of inter¬
national disputes without resort to
war, this condition will continue.
Our
generation
has
received
particularly bitter and expensive
instruction
along
these
lines.

emphasize the

the National

mon

23rd

to

establishment

they

reading

our

Organization and the
establishment, because

of

lighter

and

resources

distinction between

Security
military

of

we

ful

strength.

would

marshal all of

They are
reading, but

are

maximum national

security at the minimum cost in

every American citizen.
not
exactly light

agreeable

Organization

liberties.

people
back the

insistently

Commission,

and, until

struggle

strength

to

the

recommendations

action will

was

same

Commission

recommendations

the

The function bf our Committee

But

should try to make
bur
government
as
economical
and as efficient as possible.

we

National

external

and

developments preclude

all

came

of

government

reduced to what it

who

international

President of

Washington,
way
from
Seattle to attend practically every
meeting. He traveled a distance
about equal to a couple of trips

of

ceaseless

handy pocket form.

Common Stock Program for In¬

vestors—Prepared

34)

Anglo-Palestine
Co.,

Palestine

Fxchange

Invest¬

Bank

Ltd.—Circular—Amer¬
Securities

Place,

Co.,

40

York

New

5,

analysis in current issue of

"Financial Survey"—Peter P. McDermott

N. Y.

&

New York

Argus
dum—W.

Corp.
C.

Ltd.

Pitfield

—

Memoran¬

&

Co., Inc.,

30 Broad Street, New York 4, N.

Y.

Brooklyn Union Gas Co.—Study
—Wood.

Walker

&

Co.,

Street, New York 5, N. Y.

63

Wall

Railway—

Central

Wisconsin
Brief

In

the

Co.,

sarne

Financial

CIT

Corp.,

44

Wall

Street,

5, N. Y.
issue

are

Corp.,

Duval Texas

data

on

Chrysler

Sulphur

Co.,

Kennecott Copper Corp., Pure Oil
Co.

and

U.

& Mining

S.

Co.

Smelting, Refining

\

■

Volume 169

Number 4786

THE

THE

COMMERCIAL

&

FINANCIAL

TEXAS
and

CHRONICLE

COMPANY

Subsidiary Companies

STATEMENT OF CONSOLIDATED INCOME

STATEMENT OF CONSOLIDATED EARNED SURPLUS

1, 1948 and 1947

For the Years Ended December 31,1948 and 1947

1948

1947

1948

Cross Income:
Sales

and

Earned Surplus

services

$

.$1,080,886,431

...

Dividends, interest and other income.

(1177)

41,034,343

Beginninc

at

Year

of

1947

'

•

$370,112,561

$281,813,129

819,210,821
Add:

20,756,514

Profit realized from the sale of certain

$

$1,121,920,774

European
sqbsidiaries, less applicable Federal income tax

839,967,335

7,689,997

—

Net
•

:JV

profit of four European subsidiaries during
period not consolidated, from December 31,

'

1939

to

January

1,

1947,

date

restored

to

consolidation

1,259,563

—

Operating Charges:

Costs, operating, selling and general

$

609,277,898

28,400,162

♦Taxes (other than Federal income taxes)

165,980,980

106,312,617

;

$536,093,541

$397,075,306

40,619,469

26,962,745

Deduct:

Intangible development
dry holes)

(amortization and

costs

;

...

Cash
Stock

Depreciation

Year

for the

21,930,679

38,384,322

.

785,716,568
31,810,494

expenses.

Net Profit

38,552,814

Depletion and leases surrendered

;...

'AW

35,230,524

11,585,460

;

.

6,503,894

$

906,049,658

$

215,871,116

$

...

dividend—336,528

stock of The Texas

of $58 per

share.

Earned Surplus

701,343,157

$

dividends declared...

shares of the capital
Company at assigned value

End

at

,

19,518,624

.............

Year

of

—

138,624,178

v

$475,955,448

$370,112,561

STATEMENT OF CONSOLIDATED CAPITAL SURPLUS
For the Years Ended December 31, 1948 and 1947

Interest Charges:
Interest and amortization of discount and
expense
on funded debt.
$
Other interest

3,760,164

charges

$

3,760,166

629,972
$

4,390,136

$

211,480,980

$

134,312,617

Federai. Income Taxes

for

Capital Surplus

4,311,561

$
Provision

1948

551,395

45,500,000

Becinninc

at

Year

of

Earned Surplus

to

$

Excess of value assigned to 336,528 shares of the

capital stock of The Texas Company, declared
as a stock dividend, over par value thereof-.-.

28,000,000

165,980,980

$

$ 77,669,213

Add:
.

11,105,424

.

Net Profit Carried

1947

$121,997,933

"

106,312,617

Excess of cash received for

capital stock of The

Texas Company issued during 1947 over par
*In addition, state and Federal

paid

accrued

or

1948

and

in

gasoline and oil

the amounts of

taxes were

value thereof

•;

Capital Surplus

;

.......

<

5176,851,775 during

at

.

—

DECEMBER 31,

1948

1947

Current Liabilities:

Cash

....$

0. S Government short-term securities,

112,545,797

$

Notes and contracts payablfe..■;

108,535,081

cost..,

81,593,000

and notes receivable, less reserve of
$850,000 in 1948 and $650,000 in 1947

92,240,762

83,189,654

at

Provision for Federal income

Accounts

.....

$

Accounts payable and accrued liabilities.

120,644,719

taxes

....

Dividend payable

2, 1948

4,809,222

'96,953,262

82,695,939

10,679,021

6,120,311

(less U. S.

January 3, 1949 and January
10,332,004

......

Total current liabilities

refined oil products and merchan¬
determined on the first-in, first-

$

6,081,730

*.

Treasury obligations held for payment of taxes:
1948—$45,000,000; 1947—$30,000,000).....

Inventories—

10,095,755

$

124,046,017

$

103,721,227

$

60,000,000

$

60,000,000

cost

method,

which

in

the

aggregate

was

163,630,538

Materials and supplies, at cost.

Total

current

Long-Term Debt:

^

lower than market

129,444,146

31,192,771

25,688,275

.-

assets

$

481,202,868

$

3% Debentures, due May 15, 1965
2V»% Debentures, due June 1, 1971
2 Vz %

467,501,875

notes of The Texas

payable to banks in
ments from

-

Advances (Note 1).......

and

.$

158,911,691

$

17

80,000,000

semi-annual

install¬

22,100,000

(less related special

de-

posits)

2,108,610

Total long-term debt. :.

145227,326

80.000,000

Pipe Line Company

February 15, 1950

Other long-term1 debt

Investments

$121,997,933

194S AND 1947

1947

Cl'RRENT AS5ET9:

out

44328,720

,

LIABILITIES
1948

dise, at

•

•

..

$133,103,357

ASSETS

Crude and

.

Year

of

$166,832,295 during 1947.

CONSOLIDATED BALANCE SHEET

>

—

t.

-■:.

•-

•

End

2,790,486

$ *164,208,610

$

142,790,486

Reserves:
For

benefits under • employes'
plans—excluding <
$1,590,000 included in current liabilities above $ .7,909,662

For

Properties,-Plant

and

Equipment—at Cost:

Producing

$

Pipe line*;..

Manufacturing
Marine

.

.

; r..

.

...........

566,610,908

$

101,472,145

y
.•

r

5,764,476

$1,234,529,247
for

depletion

$1,055,442,349

1,950,574

i

25,000,000

25,000,000

t

$

34,839,729

$

36,139,419

344,940,600

$

336,527,400

-

.

and

Surplus:

Issued

par

and

value $25—

outstanding:

1948—13,797,624

shares
(including 17,199 shares issuable
against scrip outstanding); 1947—13,461,096 shares

Capital surplus611,519.445

Net properties, plant and
equipment.. $




»

Authorized 14,000,000 shares

depreciation, .amortization

..

Deferred Charges

.'

9,188,845

i

$

.....

reserves

Capital stock,

140,545,215

Other

and

Capital Stock

66,368,625

157,096,679

i.....:

Less—Reserves

Total

270,304,489

76,770,599

5,673,839

Marketing,

contingencies

$"

-

1,930,067

78,740,545

326,905,077

;

493,718,999

foreign exchange fluctuations.".

For

■

623,009,802

$

487,204,696

13,969,400

$

11,355,129

....$

$1,277,093,761

121,997,933

Earned surplus

568,237,653

133,103,357

475,955,448

370,112,561

Total capital stock and surplus.

$

953,999,405

$

828,637,894

Contingent Inabilities (Note 2)

$1,111,289,026

$1,277,093,761

$1,111,289,026

The foregoing balance sheet and statements
should

be read

in

are taken from the Annual
Report, dated March 15, 1949, to stockholders of The Texas Company, and
conjunction with such report which contains the Notes to Consolidated Financial Statements and the certificate of
Messrs. Arthur

Andersen & Co., Auditors, attached to the financial
statements.

The said balance sheet, statements, and
report
form of

a

are

not

A copy

of the report to stockholders

intended to constitute

prospectus in respect of any security of The Texas

Company.

an

may

be had

upon

application to the Company.

offer, solicitation of offer, representation, notice, advertisement,

or

any

9

(1178)

*0

COMMERCIAL

THE

dends

Co., St. Louis, on March 10 announced that since the
first of the year the bills payable to banks have been substantially
reduced, amounting at the end of February. to less than $4,000,000.
At Dec. 31, 1948 notes payable to banks totaled $10,500,000. John A.
Latzer, President, adds: "We shall^
continue to liquidate our loans, amounted to $8,099,915, with cur¬
and notes payable will probably rent liabilities at $3,108,200.
*

be

largely wiped out by the end
quarter." Net sales for
the
calendar
year
1948 totaled
^

$153,513,696,
and net earnings,
taxes, were
$2,397,275, equal to $4.55 per com¬
mon
share.
This compares with

of

were

in

Co.

Power

$10)
They

at

an

which

additional

67,306

stock

fered

common

to

same

underwrote

also

common

following

(par

share.

Per

included in the

were

group

stock

common

$15.8714

shares

which

of
of¬

were

and

St.
Louis, and George K. Baum &
Co.
and
Prescott,
W r i g h t.

Inc. and Stix & Co., both of

pre¬

current
liabilities
$21,518,218.
w
.
\
income

Co.

of

for

Cit; r. and

the

its

6% pre¬

ferred stockholders of the util¬

for retirement and cancellation

ity firm at the

July

price, the
subscription privilege expiring
on March 14, 1949.
same

Ih

1949.

1,

received

funds

addition
the

from

on

any

of

sale

fixed

subsidiaries, excluding those of its

property to March 31, 1949
deposited for the same
purpose arid propier notice will be
mailed to each preferred stock¬
holder on : or about April 1, 1949,

British

as

will

The

consolidated

net

Chemical

Monsanto

Australian

and

sales * of

Co.

and

its

subsidi¬

be

the-amount

to

of

the

retire¬

■'■;! 'Joseph Faroll & Co.

••■

v

our

makes present security prices most attractive

economy,

of

pay

the expenses of nine out of ten brokerage houses.
Stocks, particularly
those outside of the prime investment class seem to have no bottom.

Every item of
news,

<6>-

high farm prices.

every

particle of rumor,
is im¬
mediately re-

was

fiected

guaranteed

in¬

,

$2.30 compared with $2.03 in
Since 1944, when this com¬
pany
became an independently
owned and operated public util¬
ity, earnings per common share
have averaged $2.14.

common

*

.•

Richter

Scherck,

included [ in
the
group of underwriters offering
on Feb. 25 an issue of $20,000,Louis,

Indiustrial

Corp.
fund

15-year

sinking

31/i%

debentures

due

1964

at

101^ and interest.

Co., St. Louis; Boettcher & Co.,

according
on

to

March

announcement

an

9.
*

*

*

Edison

Brothers. Stores Co., St.
Louis, operating a system of 202
women's shoe stores from coast to

coast,
The volume of sales of Consoli¬

due

Denver, Colo, and Union Secur¬
ities Corp., New York, N. Y.,
:

reports

a

net

Co.,

income

for

the year 1948'of $2,526,307, equal

charges and Federal income

Supply

Co.

re¬

ports sales of $6,715,000 for Feb.,

1949,

compared

for the

month last year, a

same

decrease

of

$6,970,000

with

For the two

3.7%.

months
ended j Feb.
St. Louis, to $2.67 per common share, as
28, 1949,
sales were $15,830,000, against
—$35,645,596,—was the iargest in against $2,817,147, or $3.02 per
its history and its net profits were common share, for 1947. This de¬
$14,520,000 for the correspond¬
exceeded only in the year 1946. cline was the result of higher op¬
ing period in 1948, a decrease of
Consolidated net profit after pro¬ erating costs. Harry Edison, Pres¬
4.7%.
•
*
vision
for income taxes
aggre¬ ident, stated that the sales in 1948
amounted to a new high of $75,Current assets .of Wagner' Elec¬
gated $1,501,677, equal to $3.73
per common share, against $1,317,- 026,770 and represents an increase tric Corp., St. Louis, as at Dec. 31,
of 5.76% over 1947. The company 1948
amounted:; to
385, or $3.23 per common share,
$25,294,512,
in 1947, and $1,527,295, or $3.85 expects to open 12 additional new against $24,782,666 a year previ¬
per common share, in 1946.
Cur¬ units during 1949.
ous, while current liabilities to¬

dated Retail Stores, Inc.,

V

-

..

I.

its

subsidiaries

at

Dec.

31,

1948

*

*

sp

taled

Totalv consolidated - sales
of
Ely & Walker Dry Goods Co.,
r

St.

•

in the fiscal year
ended Nov. 30, 1948 were the
highest in its history, amount¬
ing to $165,750,660, of which
$28,023,681 were inter-company
sales, resulting, in a net profit of
$5,938,599, * after provision for

ST.

Louis,

Federal
serve

of

income

taxes

$4,500,000

for

and

re¬

contin¬

in

form

the

of

promise.

$8,527,790

compared

.

with

$9,018,933

at Dep. 81, 1947.: Net
for: the year 1948, after

income
taxes

amounted
of

the

This

$3,807,081, or 5.18%
of $73,405,176.
equal

the

stock

15,

to

489,231

$7.78

1949

was-

per

shares

outstanding.

distribution

stock

reserves,

sales

was

on-

common

Feb.

to

total

net

share

overhead

and;

v

of

A 2%

made

on

stockholders
1948.

to

record

Dec.

29,

Teletype—SL 486

It

fore

our

ends

we

,

spend

billion

$1

economic

tide

and

administration. in

which

its

advisers

to

an

one

of

top

economic

at

a

recent

nates

our

never

before.

business

structure

to

keep the ball rolling.

of

us

of

Too many

our

refuse to accept the realities
times. Harry Truman was

elected by claiming the credit for
full employment, high

and

wages

in

Wilh Olis in New York

of

W. Harman Brown, Jr., has been
appointed Manager of the Syndi¬
cate
Depart¬
ment

of

New

the

York

Office of
&

Co.,

Otis

12 0

Broadway,
cording to
made

Sold

Landreth




SL 456

St.

be

too much for them to tell

they

are

pis that

going to create the very

inilation which they seek powers
to control.
Truman Will Prevent

"1932"

a

The

big question for investors to
answer
is which is going to be

preferable, cash
too many

are

or

equities? There

among

us

who are

—

We

have

the

following

recom¬

rity payments to be increased and

a

expanded.

coverage

aid

be

to

National

lief.

Also Federal

for public re¬
Health Insurance,

granted

embracing

dental,

medical,

care.

and

Federal aid to edu¬
large scale slum

Federal
and

low

cost

housing.

Development
of
the
Columbia
River Basin along TVA lines. The

of all or part of this pro¬
will cost the national gov¬
With

passage
gram

ernment billions of dollars.

supply, high gov¬
spending, high employ¬
ment, high personal income, high
farm income, record bank deposits
huge

our

money

insurance

with

holdings,

a

billion, which
increasing
rather than decreasing, it is dif¬
ficult to see how we can drop back

is

annual budget of $45

na-

to

deflationary level.

a

Further,

New

under the terms of the Full Em¬

ployment Act of 1946 the Adminis¬
tration is pledged to take what¬

v e

his

en¬

in

-

now

maximum
W. H.

Brown, Jr." '

Co., in 1923 and

of Brown

Harriman,

From

was

later

Harriman

&

Ripley

Co.

Garfield 0225
L. D. 123

to

1945

&

Mr.

Co.,

Brown

Deputy Fiscal Agent for the

Federal Land Banks and the Fed¬
eral
and

Building

1923

of

Intermediate
more

the

partment
York.

recently

Bond

of

steps it deems necessary to
maximum employment,

ever

assure

the

i.
'*

Quoted

Louis 2, Mo.

thinking in terms of 1932.
are
sitting back hoarding

shows definite signs of

Brown,

ment
:

SCHERCK, RICHTER COMPANY
Teletype

to curb
expecting

powers

would

an

today.

Mr.

was

Bell

It

$250 billion national debt and an

Manager of the Syndicate Depart¬

street

Members St. Louis Stock Exchange

extraordinary

inflation.

and

announcement

Bros. &

i

lSt.Louis l,Mo»

perhaps,

ac¬

He became associated with Brown

Southwest Gas Producing

—

of
economists.

ernment

.

Bought

for

clearance

field, his first
assignment having
been
as
a
runner for
J. P. Morgan & Co.

Southern Union Gas

Olive

of by many

"sane"

knowing what they have in store
for us, is not so foolish in asking

cation.

financial

Consolidated Dearborn

Rockwell Mfg.

509

"sound,"

The Administration

optical

career

Mountain Fuel Supply

SECURITIES

than likely that be¬

present economic cycle
shall witness an inflation

that is undreamed
our

as

tire business

Delhi Oil

INVESTMENT

more

is mended program: Minimum wages
spending and will not hesitate to to be raised frorfi 40 cents a a hour
spend fantastic billions of dollars to 75 cents an hour. Social Secu¬

cally

L.D.240

Stix: & Co.

is

The government

spent- practi¬

Commonwealth Gas
,

up
to its
As regards its power, we
by now that it is

Yorker, has

Black, Sivalls & Bryson

ST. LOUIS 2, MO.

everything

live

know

completely
ignored. Fear

the

be

unlimited.

are

stem

only

assume t.iat the

to

power

prospects

,

Berkshire Fine Spinning

BUILDING

its

should

dividends, ex¬
tras, earnings
and

t i

LANDRETH

could

Democratic vic-

Administration will do

in

who

Peltason Jenenbaum Co.

a

It is fair to

lory.

news

'

rent assets of the corporation and

by

They
their
press conference spoke in
taxes, of $1,007,346, equal to $3.66
terms
of
a
business
depression dollars, waiting for the bottom to
per common share, compared with
costing the nation $800 billion. drop out of everything and then
a
net of $898,493,
or
$3.26 per
The present confused times call they will step in with their cash
common share, for the preceding
fori a clear appraisal of the action and reap the harvest. Despite all
fiscal
year.
Current
assets
at
to expect from, a political econ-r the current talk and concern about
Nov. 30, 1948 totaled $4,589,378,
"deflation," if any part of the
We
and current ^liabilities amounted omy such as we now have.
must bear in mind that our econ¬
Truman program is enacted it is
to $1,133,632.
5
omy is no longer a "free" competi¬ difficult to envisage anything but
tive one.
The government domi¬ "inflation" ahead,
Western Auto

after

(St.

placed-through G. H. Walker &

Loan

Manufacturing

Louis, for the lyear ended Nov.
30, 1948 reported a net income',

Nov. 1, 1963, has been privately

was

Beneficial

000

Vandervoort-Barney, Inc.
Louis)
314%
debentures,
:

Burkart

St.

^

An issue of $2,009,00(1 Scruggs-

-

St.

Co.,

$

$

sir

❖

F.

shares.

that the continuance

things

Good

.

1947.

these

Time and again
the voter

campaign

ducing selling.

■

to

the

warned

of

one

by

way,

auring

City.

Kansas

record

on

Gloom and despair are rampant once again in Wall Street. The
volume of business currently being transacted is insufficient to

aries, amounted to $161,609,441 for ment fund available and the aate, is once again
the calendar year 1948, compared terms; and conditions for making beginning to
Richard D. Weinberg
with $143,403,161 for the previous tenders for the sale of their slock dominate
ev¬
to the company. 1
eryone's ac\ 17777p&fr:- '.
On April 12, the stockholders of year. Net income was $18,042,473,
tions.. Reason and logic are abdi¬
$1,097,195
recovered
The Empire District Electric Co., including
Net income
of Landis
Ma¬
from insurance companies for loss
cating. It would seem that 1929
Joplin, will consider a proposal to
chine Co., St. Louis, after all
of profit from the destruction of
rnd the resultant train of events
increase the authorized common
charges 'and
income
taxes,
the Texas City plant.
Based on
have left such a deep impression
stock from 400,000 shares to 550,amounted to $318,713, or $6.16
the
number, of
shares. of both
with the investing public that they
000 shares, par $10, and to mod¬
per common share, for the year.
are blind to the differences
preference and common stocks
oper¬
ify the preemptive rights of stock¬
ended
Dec.
2l|, 1948, which ating today in our national econ¬
outstanding at the end of 1948,
holders.
The
350,000 shares of
compares with a net of $291,458,
the income was equivalent to $3.95
omy.
common stock presently outstandr
or $5.60 per common share, for
per common share, compared with
They do not differentiate be¬
ing are owned by 3,697 stockhold¬
1947.
$3.59 for 1947. As of Dec. 31, 1948
ers. Average earnings per share of
tween an administration that was
there were outstanding 4,274,945
common stock amounted in
1948
reluctant to
Snider Co.

a

1932-type depression, without realizing full inflationary implications
of the Truman policies and philosophy. Concludes
government's
spending of "fantaslic billions," together with expanding status of

ended

yqar

1948 amounted to

31,

.

Ameri|(^an^erv-,

of

Kansas

..

of

•

Mr. Weinberg maintains too many people are thinking in terms of

.

.

.

Net

)!■

at

$£$,108,369,

were

Equities?

or

By RICHARD D. WEINBERG

$497,601, or $2.26 per common share, as
against $784,921, or $3.01 per com¬
mon
share in 1947'arid $657,783,
or
$2.64 per common share, in
1946. On April 1, 1949, there will
be
deposited in; the retirement,
fund from the net1 earnings of 1948
the sum of $63,183 to be used for
the purchase of j preferred'stock

219,196 shares of Central Maine

*

1979, at 101.31% and accrued in¬
terest: Stifel, Nicolaus & Co.,

1948

30,

the

assets

against

Dec.

underwriters who
1
publicly offered

2%% bonds, due Feb. 1,

gage

Current

year.

Nov.

subsidiaries

a

compared

with $6.27 per share in
vious

ice

and

&
Co.
included

51

March

on

-

Missouri in¬
vestment
bankers participated
in the public offering on Feb.
16 of $40,000,000 Duke Power
Co. first and refunding mortThe

Co.

&

group

$133,147,182,
and net
profit amounting to $3,222,916, or
$5.79 per common share, for the
year 1947.
si:

stock,

t

Stix

of

•if

common

*

Cook

Newhard,

after Federal income

sales

*

equal to $6.69 per share on

the

Thursday, March 17, 1949*

Cash

on

was

Pet Milk

of the first

CHRONICLE

After payment of divi¬
preferred stocks, this

gencies.

Missouri Brevities

FINANCIAL

&

and

Marx

Credit
was

Banks

Manager

Syndicate
&

Co.,

De¬
New

mum

production and

purchasing

maxi¬

power.

Despite all these virtual guar¬
continuing high plateau

antees of a

economy,

securities,

through the purchase of
it is possible at the

present time to buy a

partnership

businesses giv¬
ing a return ranging from 7 to
15% for less money than the net
working capital per share. In al¬
most all cases an appraisal of the
company's properties would result
in leading national

in

a

ent

valuation far above the pres¬

price of the company's stock.

Despite the general fear that last
year's dividends will not be main¬
tained

i due

to

this

year,

in many cases

the'completion of capital

Volume

THE

Number 4786

169

be
I,

dividends

smaller

the

..

go

to

V'

tors from

ing from the darkness of slavery
and feudalism
into the light of

difficult to remember when

civilization.
A new
market potential of almost a bil¬
lion people may be opened via

a

7 Needed;.■; i-vf ■, y '-orA

extremes.

either going to
worth

We

the

seem

Everything

paper

is
still an expanding economy. The
ingenuity of business in coping
with the problems and complexi¬
ties
of our modern
civilization
;

it is written on.
incapable of for¬

to

be

to

reach

pendent conclusion

sane

society.

the

means

to whether

Bear,

of payment so

clenched fist,
:wIn

constantly

7 P.:

.

,

'

Corporation

Adds Three to Staff

capital, tnan the present.

John

M.

Egan,

A.

Stearns

& -Co.,

Wall

1

vate wire to Loewi &

■

Mason

Exchange,

the installation of

announce

conclusion, viewing a1! fac¬

a

(Special

pri¬

Co., 225 East

Wise.

Street,' Milwaukee,

SAN

Financial

The

to

FRANCISCO,
is

Moreland

now

7;7!7'77:Th e

activities of Commercial Credit Company

carried

are

consisting of Finance Companies, Insurance Companies and Manufacturing Companies. The con¬
solidated
written

solidated
in the

operations, total volume of receivables acquired by the Finance Companies,
income credited

net

Earned

to

Surplus

were

Sheet

Balance

hand

on

U. S. Government

;

Payable—Unsecured Short Term
Payable and Accruals

Obligations..

$ 40,434,313-50

Funds Held under Surety

9,632,195-02

45,755,098.96

"Personal Loan"

<

2,179,280.99
...

j7

UNSECURED NOTES:

Other Current Assets:

.

5,844,884-37

$

'

26,016,26730

.

)

5,727,273-19

t

'

Total Current Assets

iV

CAPITAL

\

"Manufacturing Companies"
Company Cars ($826,346),
Repossessions ($198,296) and Other

$

7

,

25,000,000.00
50,000,000-00

(Prepaid Interest, Expenses, etc.)
f

:

Few

A

:

SUBSIDIARIES

174,857.81

*

Outstanding 250,000 shares
Stock—$10 par value

$25,000,000.00

Authorized 3,000,000 shares
Issued and

outstanding 1,841,473 shares
Capital Surplus
*.
Surplus.

6,732,845-44

18,414,730.00

17,831,440.61
37,277,708.24

Earned

1,792,269.00

•

$597,698,391.73

Facts,

of

as

December

31,
'

NET INCOME

Acquired

Companies.
Companies...;
Manufacturing Companies.

■

-

$

Insurance

83,410,751

7

1948
.a

-

Finance

$ 1,767,992,887
y
37,362,657
90,440,269

Premiums, prior to Reinsurance

Net Income from Current

Operations...!
Non-Recurring Credit from Reserve for Contingencies,

38,607,700

Accumulated since 1939

Employes:
»
Companies
Insurance Companies-.. v...., 7
Manufacturing Companies

Net Income Credited

•

7

»

4,183
1,287
5,675

-

7

Total

From

v

-*

Earned

C

»

v

*

-r

v.

't-

*

$

21,163,448

4,500,000

Surplus
Stock:

Operations

MORE THAN

BALTIMORE 2, MARYLAND

16,663,448

.

Non-Recurring Reserve for Contingencies

From Current

11,145

—

to

$
,

:

Net Income per Share on Common
Credited to Earned Surplus

COMMERCIAL CREDIT COMPANY AND SUBSIDIARIES

HOME OFFICE

3,691,270
6,240,875

12,547,557

Number of

6,731,303

;

United States and Canadian Income Taxes

Finance

98,523,878.85

$597,698,391.73

OPERATIONS

Manufacturing Companies




110,000,000.00

25,000,000.00

Salaries, Wages, Commissions

•

'

STOCK AND SURPLUS;

Common

1,170,877-04

7-

Gross Income

11,652,979.33

1,015,475-60

$35,000,000.00

Issued and

5,561,968.40

•

Net Sales of

$10,637,503.73

Preferred Stock—$100 par value
Authorized 500,000 shares

Land, Buildings & Equipment—

■

20,374,064.54

J

.

MINORITY INTERESTS IN

19,110,390.37

$589,173,277.29

.

FIXED AND OTHER ASSETS:

Gross Insurance

*

„,v

SUBORDINATED UNSECURED NOTES;

..>*7.
$ 4,709,935-93
8,673,181.25

Premiums and other Receivables.............

Gross Finance Receivables

'i-

Notes, 3% due 1957.........;.....

Receivables—"Manufacturihg
Companies".
i
"..
Inventories—"Manufacturing Companies"

CONSOLIDATED

■

-

■

468,101,528.88

|

Trade

DEFERRED CHARGES

....,

Note, 1-5/8% due Aug. 1, 1951
Notes, 2-3/4% due serially 1953/1956
Note, 3% due Jan. 1, 1963...; .7.;

$ 20,171,379.93

;

Expense—' 'Insurance Companies"

Security Value and Exchange Fluctuations..

...

Accounts and Notes Receivable.

7

'

,

$494,117,793-18

Unearned Income;

.

Losses and Loss

28,125,140.34
....

Total.. 7

on

$331,972,611.20

77

>

.

RESERVES FOR:

Sundry Accounts and Notes

Losses

•.')

PREMIUMS—"INSURANCE COMPANIES"

82,836,617.07

Open Accounts, Notes, Mortgages and
Factoring

Less Reserves for

-*

.

UNEARNED

$335,221,655-82

V.

515,635-67
8,925,159.06

'

Total Current Liabilities

49,986,821.32

/

Motor and Industrial Wholesale,

14,450,159.49

Agreements.

Reserves—Customers Loss Reserves and other...

79,687-20

Motor and Industrial Retail and "F.H.A."..,

.

$284,794,500.00
23,287,156.98

'

Accounts

Accounts and Notes Receivable:

7

1948

31,

Reserve for Federal Income Tax

$ 50,066,508.52'

o.'

December

of

Notes

$ 51,974,536.72

Less Reserves

Direct

7

year

LIABILITIES, CAPITAL AND SURPLUS

_

Other Marketable Securities

.

previous

any

CURRENT LIABILITIES:

Marketable Securities:

•

as

:/

ASSETS
CURRENT ASSETS:

■

larger during 1948 than for

history of the Company.

Consolidated

Cash in banks and

premiums

gross

by the Insurance Companies, net sales volume of the Manufacturing Companies and con-

I

$1L00
2.44
$ 8.56

350

OFFICES IN PRINCIPAL CITIES

OF THE UNITED STATES AND CANADA

Chronicle)

;

CAL.—Ray

Building.

in three main divisions,

on

Cohu,

connected

Colvin & Co., Russ

COMPANY

CREDIT

the

Colvin & Co. Adds
--

Highlights of the 37th Annual Report of

COMMERCIAL

Zollner

bution of Mutual Funds.

7

;

L.

Corporation, 1 Wall Street, New
York City, in the Retail Distri¬

Street, New York City, members
of the New York Stock

with

associated

come

to

Loewi & Co., Milw.

Pernaps

shall yet find a way to arrange

people all over the world, is
improving. • Half the

of

inde¬

a

as

capitalistic

our

Cohu

and

of apprecia¬

Bear, Steavns Wire

clamoring for the miracles of

we

secu¬

11

and Walter F. Anderson have be¬

that their
emergence will be under the guid¬
ance of our own system and not
shews. no signs; of exhaustion. Our
standing of living,- as well-as that that of our ''friends" with the

our own

always better than ours; At times
such as these it is up to every*
investor

are

Let

light it is

better return

a

greater likelihood

tion of

China, India; Indonesia and other
backward areas, wherg the people

distressing eventualities?
us
not forget that ours

and

is

thousand, or not

economic opin¬
The other fellow's opinion is

mulating
ion.

•

a

reasonable

a

rities offered

progressive

Thinking

Investor

(1179)

population of the world is emerg¬

period of record earnings and high
dividends.
Have
they not just
We here in America habitually about- discounted the most dire

7/7;: M'

CHRONICLE

he should hold cash or buy secu¬

' .■

r

,

Independent

-

may

rule.

,

FINANCIAL

&

well rities at current prices. Most stocks
have been going down for almost
three years now.
This, during a

expansion programs, larger rather
than

COMMERCIAL

with
•

12

(1180)

THE

COMMERCIAL

&

amounted to

Michigan Brevities

share,

5, 1949, the largest dividend in nearly
It will be equivalent to $3,750,000 on the 15,000,000 shares
stock outstanding. In^
1948, 15 cents was paid on March and net income was $440,447,724,

'

#

The

common

29 and 20 cents

Oct. 18. George

on

T.

equivalent,

Christopher,
President
and
General Manager of Packard, said:

$9.72

"The

While

1948

year

most

successful

Packard.

in

The

the

the

of

one

was

history of
entered

company

1949—Packard's Golden Anniver¬

Year—in

sary

condition

the

in

financial

best

its

long history."
Consolidated net earnings for 1948
were $15,109,439, eqjal to slightly
over $1 per share on the
15,000,shares of

000

stock

common

out¬

dends

per

at

were

construction

after

both

sales and

pected
sale

income

net

war—9.4 cents per
1948

in

1948

000,000

.

equivalent

500,000,

to

about

1

As

are

Quality

of

the

*

Securities and

that

this

sale

of

the

on

Salesmenship of MUTUAL INVESTMENT FUNDS

Tuesday evening, March

con¬

He

$14,-

net

a

Prospect List"
and

1948 resulted in

the

"Hu¬

tion."

h i g hThis compares with net rolls amounted to $1,283,865,090 per
last
lights of. Mr.
year.
For
$1,100,091, or
seven
1947, net sales after dividend requirements on
Laird's
totaled $3,815,159,163, and net in¬ the class A stock'. In 1947 net sales
sug¬
cents per share, for 1947.
Con¬
solidated net sales and other in¬ come was $287,991,373, equivalent, were $4,507,489 showing a profit
gestions were
a
that
salesr
after preferred dividends, to $6.24
come for 1948 amounted to $233,of $66,023, or 12.7 cents per class
man
should
162,258, as against $117,135,499 on per common share. In 1948 for the B< share. In both years, $1.40 per
make n o t
an
unconsolidated basis for 1947. first time, yearly sales of Frigi- share was paid in dividends on
m o re
than
electric
Working capital at Dec. 31, 1948 daire
refrigerators
for the class A stock, while the class
three or fouf
totaled $46,957,291, compared with homes exceeded 1,000,000 units.
stock
received
15
cents
• B
per
calls
on
a
Net working capital amounted
share.
$34,741,499 at the same date in
$
t■I- #,;!.■ •-;
Douglas Laird
' '7
to $1,086,680,131 at Dec. 31, 1948,
prospect and
1947.
>!:
»!i '' : .s&'
7
that "Luck",
an
increase of $221,307,026 over
M. M. Burgess, President of
in
The stockholders of American
net working capital of $865,373,105
Slieller - Manufacturing
making - • sales
is
correctly
Corp., 4
at Dec. 31,. 1947.
Box Board Co., Grand Rapids,
announces that the book value
spelled WORK. Have a plan and
>
work that plan.- Appeal to the
of record Feb. 18 were recently
of the common, stock at the end
,

he's

getting the

pert

advice
investor.
The

their

of

utmost

they

ever,

the

as

morale

the

of

The

of

■

dependable income and the real¬

Equa¬

man

a

profit of $462,128, or 89.6 cents
share on the class B stock

standing.

income

—

ization

a

on

New York Institute of Finance

the subjects of

$7,-

Standard Tube Co.

of $6,092,925 in

10

cents for each dollar of sales. Pay

15, at the
discussed

"Building

and

*

Net sales of

>

Douglas Laird, Vice-President and Director of Sales of National
Research Corporation delivered a most
effective ad¬

of

dress

bonds

new

as

during

has plans under
for

the

amount

well

as
quantity of customers should be the aim.
Mr. Laird advises appeal to the "Peace of Mind Instinct." "

ex¬

necessary

reported

reported by DOUGLAS K. PORTEOUS

the;

000,000 of preferred stock.

$463,-

were

J

i

of

securities

is

11.5 cents in 1936-1941. Total taxes

paid by GM

••

program

substantial

a

It

sideration

of

average

an

■'

'

■

make

company

dollar of sales

against

as

of

1949.

of dollars, net income represented
a lower margin on sales than pre¬
in

to

additional

.

all-time high in terms

an

* '

■

requirements

Thursday, March 17, 1949

Douglas Laird Advises on Building
A Prospect List lor Mutual Funds

Michigan Consolidated Gas Co.'s

deducting divi¬
the preferred stocks, to
share of common stock.

on

$1.24 per
with

or

compared

or

19 years,

of

CHRONICLE

$2.85 per share, be¬
fore a reserve of $250,000 for de¬
cline in inventory prices, for the
year 1947.
\:

The directors of the Packard Motor Car Co. on Feb. 23 declared
dividend of 25 cents per share on the common stock, payable March

28 to holders of record March

$571,338,

1948,

$1,313,810,

7
a

for

FINANCIAL

the

must

ex¬

wealthy

salesman

importance,

is

how¬

largely
build
They must be¬

morale.

own

same

very

lieve

wholeheartedly and enthu¬
siastically in their merchandise.
They

must

mental

stay

health.

definite

in physical i and
They must have a
of

program

.continually

reading

inspirational
literature,
such as, Dale Carnegie's "How to
Stop Worrying."7T77-/77
' j..

■

:

■

.

H. B. Chichester With

.

C.

Rex

given the right to subscribe on
or before March 4,1949 for 139,-

F.

342 additional shares of

motive

common

the basis of

on

two

offering

was

held.

and

1947.

He

pany

expects

that

term

a

loan

has been ob¬

Reconstruction

Finance

ceeds of this loan

also headed

writers

a

who

bankers

for

of under¬

group

business in

Corporation. The

the

that

the

share,

$2,400,279,

in

all

A

plan

has

been

land

issue

of

for working capital.

$3,-

series
100

due

A,

and

15,

Jan.

interest.

Net

igan

1964, at

private

company

will

be

able

needed

at

public

expects
to

that' it

obtain

some

about

future

offering

ov

sale, of $1,000,000 additional de¬
bentures

permitted

the

under

' '

The Detroit Stock Exchange re¬
that
trading
volume
in
February was 213,597 shares hav¬
ing a dollar' value of $2,805,213.
This compares with January trad¬

ing of 201,545 shares having a dol¬
of $3,347,173, and with
294,474 shares, having a dollar
value of $3,546,783, which changed
hands in December, 1948.
~
lar value

The

most

active
were:

stocks

Detroit

Co., Kinsel Drug Co.,
General Motors Corp. and Gen¬

volume

14

in

their

annual

re¬

port to almost 434,000 stockhold¬
Net sales were $4,701,770,340

Industrial

15-year

314%

debentures

at

*

Common Stock

t

Moreland & Co.
I,

Member

Detroit

Stock

Exchange

for

Federal

the

preceding fiscal
for 1946, both

current liabilities of $149,059.
*

*

■

Muskegon




*

.v..,

/ Lear, Incorporated, has
cised

the

building
cupies

option
and

to

exer¬

buy

property

the

it

oc¬

at 110 Ionia Ave., N.W.,

Grand

Rapids,
amount,

for

undis¬

an

according

to

M.

Mock,
President.
Lear has occupied this building
on

a

rental

basis

since

renting the building with
chase

option

from

the

Building,

1945,
a pur¬

Manu¬

Lie.

of,

*

ended

year

Nov.

Hayes

*

a

*

Manufacturing

ended Dec.

Corp.,

31, 1948 reported net

profit after

to

equal

taxes

$2.57

of

$2,720,606,
share

per

on

1,059,834 shares of capital stock.
*

Other

Wood, President of
River Raisin Paper Co., Monroe,
points out that the extensive plant
modernization program is nearing

and

the

anticipated

benefits from improved paper ma¬
and

new

high

limited geographic

a

to effect time economy.

77 In
building the necessary broad list
of
prospects,, Mr.
Laird
stated

area

that

all

should

pressure

turbine
and
generator
equipment are beginning to be
realized. Net earnings after taxes

(Special

checked

telephone books

or

reduce wasted

to

to

The

Financial

Chronicle)

with

;

7

ILL.—Harry
B.

Chichester

has

become

associated
with
C h

Farwell,

a

pman

&

Co., 208 South
Salle
St.,

La

members

of

the New York
and

Chicago

Stock

Ex¬

changes.

Mr.

Chichester for
many

years

was

a

partner

in

Fred

B.

H.

W.

Chichester'

Fairman & Co.

With Daniel F. Rice

addresses

and

names

be

(Special

current

The

to

Financial

FLA.

MIAMI,

city directories

Chronicle)

A.

Raymond

—

Wilcox is now with Daniel F. Rice

efforts.

In dealing with the most im¬
portant
factor
in
selling, the
Human Equation, Mr. Laird sug¬
gested that salesmen first of all
should thoroughly know the busi¬
ness,

then put that knowledge in

back

the

their

of

minds—hence¬

concentrating

with

the

on
the selling funda¬
Attention, Interest, De¬

prospect
mentals:

As

there

are

very

few'

fol¬
De¬

troit,

of

shares

Cell-Q

outstanding);

Ex$6.26
Harry; Ferguson,

Corp.,

Detroit,

born

$1.53

(against

$1.83);

Kalamazoo

(against $2.66): Kent-Moore
Organization, Inc., Detroit, $1.53
(against $1.06); Lonergan Manu¬
facturing Co., Albion, $1.34 on
class B stock (against

$1.58); R. H.
(against
capitalization);

Mahon Co:, Detroit, $6.46

present

on

Motor

Muskegon, $12.58

(against
turing

$2.17);
Inc.,

$8.04).

Co.,

class A stock

$17.40); Rudy Manufac¬

Co.,

(against
Corp.,

Specialties
on

54

Dowagiac,

cents);

Detroit,

Universal
Dearborn,

The
$2.74

60

Udylite
(against

Products

$6.43

'

cents

Co.,

(against

I'"**

MV (Special

to' The

Financial

rH7 7;;;

Firm
''

Chronicle)

William
H.
Goolsby is with Merrill Lynch,
Pierce, Fenner & Beane, Dempsey
GA.

MACON,

—

Hotel.

There is

Funds

are

instinct

to Acquire,

to

develop

(against

:

:

With Merrill Lynch

tion in all

$2.10

cents

„';: 7

salesmen;

Stove & Furnace Co., Kalamazoo,

(against $5.23);
Detroit, 50

$2.43); Home Dairy Co., Saginaw,

Mr.

previously with Gor¬

music

the

in

few

profit, (Greed); are the instinct
to protect, to defend (Fear).
In
talking with a prospect it is im¬
portant to understand which of
the. instincts are. dominant, then

Inc..

was

world there
they are
developed by the study of sales
principles and the daily applica¬
tion of these sales principles.
igies

are

distribution of Mutual Investment

fiscal year as
Products Corp.,

Ingraham Building.

Co.,

Wilcox

don Graves & Co.

prod¬

$4.34 (against $3.69 in the
preceding year); American Seat¬
ing
Co.,
Grand
Rapids,
$6.32
(against $2.52); Clark Equipment
Co.,
Buchanan,
$10.24 - (against
$8.21); Detroit Steel Corp., Detroit,
$5.48 (against $4.59 on same num¬

latest

Allied

&

sire and Action.

a strong personal equa¬
selling; you and the cli¬
ent.
You ' sell
people who are
human beings—they act to satis¬
fy a demand. Reasoning power is
normally of little importance in
making decisions, people act ac¬
cording to instincts. The two in¬
stincts aiding you in the retail

the

lows:

Muskegon

L.

completion

service to the holder

a

through

forth

*

Grand Rapids, for the 12 months

$4.37

Grand Rapids.

Charles

you

ber

income

after taxes. Current assets at Jan. 1>
1949 amounted to $280,227, against

boiler,

—

the

*

and $107,331

chines

Lansing

for

*

This compares with a net of

DETROIT 26, MICH.
—

1,

Jan.
1,
1949
$106,203 after provid¬

$62,000

taxes.

1051 Penobscot Building

Bay City

Feb.

ended

*

i

Co.

30, 1948 was $296,985, or 48 cents
per share, as compared with $138,444, or 22 Mj cents per share, for
the preceding fiscal year.

for

weeks

amounted to

and

PRECISION CASTING

sinking

due

*

facturer's

DISPLAY FIXTURES

Die

Superior Tool &

Michigan corporations re¬
ported earnings per common share

Richard

L. A. DARLING

Loan

10114 and interest,

closed

ers.

.

Net income of

JR

offering of $20,000,-

Beneficial

Corp.

year

Detroit, in 1948, C. E. Wilson,
President, and Alfred P. Sloan,
Jr., Chairman of the Board, stated
March

public

000

$131,856 for

achieved by General Motors Corp.,

on

the

Farwell, Chapman & Co.

.

to

Watling, Lerchen & Co., De¬
troit, participated on Feb. 25 in

£ ing

peacetime
physical
production
was

of

shares, which will remain un¬
changed.
yv;,;^

53

SJ»

record

t(»

.

of 1,000,-

The net profit of Baxter Laun¬
dries Corp., Grand Rapids, for the

eral Finance Corp.

A

inventories

and

authorized capital

'

/'•y •>'•/

Packard Motor Car Co., Scotten,
Dillon Co., United Corp. Parke,
&

»

if

should work

so

000

Jarvis

-

•J;

1964,

Edison Co., McClanahan Oil Co.,
Gar
Wood
Industries,
Inc.,

*

1948

Corp./ GerityMichigan Corp. has paid off $300,000 of a $650,000 bank loan/'

fund

10

during February

Davis

machinery
Doehler

render

stockholder

obtained

be

conscientiously
recom¬
mending liquidation...
Time is the big asset and one

total

from

ports

•

Dec. 31,

or

presently planned to provide
up to 15,000 shares for this pur¬
pose. There are presently issued
and outstanding 499,500 shares of
common
stock, par $5 out of a

1947. From cash already received
the sale of the die casting

indenture.

j *

ended

year

cash

Other

should

lists

a

is

totaled
$7,009,318, against $6,663,732 for
the six months ended
Dec.
31,

improvements to property.

The

by

pay

a

The Stockholder

purchased will be acquired by the
company in the open market. It

Sales in the first-half of the fiscal

pro¬

to

additions

either

on

time-payment basis. The shares

months

date,

net

used

for

can

fight.

proxy

company

in

usually be obtained from

can

the

earnings of Gerity-MichCorp., Adrain, for the six

if

The

be

and

list

Directories

the

from

the management at the time of

may, if they so desire,
buy shares of the capital stock of

$1,000,000 additional, when and

and

to

are

loans,

Navigation Co. whereby its

employees

ended Dec. 31, 1948 were
$474,287 (including $243,095 non¬
recurring profit on sale of equip¬
ment), and equaled 61 cents per
share/as compared with a net of
$505,730, or 66 cents per share, for
the corresponding period in 1947.

ceeds

bank

oy

Cleve¬

&

num¬

quality.
The
prime
source
naturally is ones' present
clients,
then
relatives,
friends
and contacts.
A good list can be

.

approved

the directors of Detroit

an

aim for both

an

and

bers

office buildings.

of

ing of existing indebtedness and

Box Board

be

prospect list thqre

a

obtained

renegotiation liability, refinanc¬

000,000 15-year 41/&% converti¬
ble
sinking
fund
debentures,

building

should

or

$4.27

V

desires and

CHICAGO,

to be used

offered

can

In

com¬

or

or

result.

com¬

$2,677,288,

and sold for account of Ameri¬

publicly

prospects instincts

substantial sales commissions will

Net profit for

was

share, for 1947.

per

1

of

high volume of

a

common

with

pared

pro¬

close

full

are

payment

per

shafe,

per

the

1949.

$4.77

tained from the

ton,

same

the

in

at

added

the year 1948

tis, investment bankers of Bos-,
The

$14.10

was

$9.57

fixed assets only,

by

Paine, Webber, Jackson & Cur¬
Mass.

1948

of

against

amount of $3,000,000, secured by

This

underwritten

parts

of

auto¬

appliance

1

share

new

one

shares

President

manufacturer, announced March

$1 par

stock at $10 per share

for each

Jacobs,

Jacobs Co., Detroit,

L.

the sales attack directly
toward .the
satisfaction
of the
desire promoted by the dominant
instinct.

7

suggestions
and
profitable
services

—

for
use

William

making full
of banking
H.

Kniffin

—

McGraw-Hill Book Company,

330

42nd Street, New York
Y.—cloth—$3.00.
'

18,

West
N.

Revision of the Taft-Hartley Act

—Selected

references—Industrial

Relations Section,

Princeton Uni¬

versity, Princeton, N. J.—paper—
150.

/.•/ 7.7

Mr.

Laird, drew upon his suc¬
selling
background,
in
stating that you do not sell Things
(items)—you sell what they will
Do
(Program).
Illustrating for
one particular prospect motivated
by the instinct of fear, you should
emphasize Safety and Peace of
Mind through the knowledge that
cessful^

there has

Bank—Practi¬

How to Use Your

cal

never

been

an

obsolete

(London) Of¬
Volume I—
Thomas Skinner & Co., Gresham
Stock

Exchange

ficial Year-Book, The,

House, Old Broad Street, London,
E. C. 2, England, and 111 Broad¬
way,

New York 6, N.

Y.—cloth—

$30 for vols. I and II duty

What Every Corporation

paid.
Direc¬
for

tor Should Know—A handbook

Mutual fund, nor has there been
an
obsolete holding
in a fund.

the corporate

executive—Percival

E.

The

This prospect

erick Press, 313 West 35th Street,
Npw Ynrk 1. N. Y.—cloth—$3.50.

Mind

through

have Peace of
dependence upon

can

Jackson

—

William-Fred¬

Volume

THE 'COMMERCIAL

Number 4786

169

ously dissipate

Our Shrinking
Dollars

antees—particularly in the

as my friend Tom Wil¬
Asheville, N. C., is con¬
stantly .preaching,
we
parents
should spend more time in teach¬

here, Mr. Babson points to

ex¬

ing

of

our

children to develop char¬

race as por¬

acter

as

tending increase in government

Here

are

well

to

as

save

money.

few of his suggestions:

a

'

spending, chief
tion.

Says

CHRONICLE

if

as

they

were

these

same

leave

our

neighbors when they

-

presence.

children.

A

that 24%

of high

recent

of

oui

1

profession

or

trade.

We

parents

Things

to

-

.

.

of God's plan to have

Save

savir^gs,

up money

school children

the

complain of parental clashes with

more

children

our

vary

they should all

in accordance with nature's

laws

If young people neglect storing

shows

survey

/

■

Other

Get the confidence

(2)

;

13

J' should set them an example of
(3) Along with teaching them sane praying and
listening to God,
to save money we should teach
realizing that in meditation and
them, by example, the importance quietness is power. Of
course, our
of
saving health, by ourselves children' differ and should be
having only good habits.
treated differently.
It is a part

criticising

or

respect for their parents' opin-

ions.

friends

best

our

then ridiculing

no

(1181)

of

is

strive to store up knowl¬

one

diversification;
why

reason

but

they

are

this
our

best investments.

edge and become experts in some

of infla¬

source

should put
character, as well

parents

stress

more

FINANCIAL

(1) Set children an example of
honesty. Avoid having our chil¬
dren hear us speak to neighbors

and

Hence,

liams

Holding threat of inflation is still
of armaments

of

age

the atomic bomb.

By ROGER W. BABSON

pense

capital and de¬

our

stroy the value of our currency?
I hope not, but there are no guar¬

&

on

'

v

savings, in rearing children.

as

When

I

was

considered
tues.

At

tender

a

taught to

thrift

boy

a

was

of the greatest

one

age

and put

in

toy

a

bank.

I

But

under¬

can

Summary of 1948 Operations

were

we

save our money

it

vir¬

stand

why

Celanese

Corporation of America

well-

some

informed par¬
ents hesitate to

offer

this

vice

to

1948

1947

$230,384,672

$181,083,608

ad¬

their

children

sales

at

*

this time.

The
'

federal taxes

money put in
the savings

bank

lost

ago

Roger W. Babson
v

total dividends

nearly

chasing

-.;

.

highlights of the

insurance

banks

owing

wonder

if

the

'when

parents

dren

to convert

into

will

day

41,056,497

capital, including funded debt

238,383,988

will

•:* 190,437,978

chil¬

counsel

clothing, jewelry, ma¬
and certain common

stocks?.

"inflation has about

time before
that

sured

believe
its

run

the

we

can

likelihood

rest

as¬

seri¬

of

Current

booming production and

the strategems of the money man¬

in Washington may, for one
two more Presidential terms,

agers
or

avert

about

Since, however, the basic

cause

inflation

It

will

have

not

been

remain

constant

and

vivid.

well gradually influence
millions of people to shun the
savings
banks
and
high-grade
bond s,
including governments.
may

Such

retardation

a

of

the

mulation of capital could

Cost
The

continuing

about

.debt incurred

It is

the

tainous cost of

single

in

factor

the recent infla¬

to meet the cost of

prospective moun¬
preparations for the

war, that renders
sible to bring inflation
tive halt at this time.:
how

many

armament

Prior to

194-0

it impos¬
to a posi¬

No

with

one

can

billions

more

race

our

Russia

eventually cost.

may

enforcing
the "Pax
Bfitannica" for the past couple
of centuries,

made it possible for
to thrive as a nation without

us

much on national de¬
fense. We have been able to spend

.spending

developing farms
and factories, building homes and
educating our people.
U.

S.

funds

What We

to

Parents

us

Should

Britain

Great

But

forced by
fer

on

has

Do

Company's capacity to produce.

"

Income and Dividends-Net

income

nature

of its

tries

taxes

taxes

amounted to

$39,484,000,

principally

an

rection of assuring
raw

declared

Stocks and Common Stock
a

total of

total of
In- the

the Preferred

$10,198,064 for 1947.

was

total for the

It has been the

substantial

year

per

a

considerable extent, the«

same

$62,520,107 for 1947.

was

V:

of acetate

of

of the

yarn

year

Company. Group insurance payments to employ¬

surpassed that of the two

and

use

of

an

by 14,000,000 pounds.

signalize

trend that has been ap¬
time in the textile industry, the
a

apparel purposes.

time in the

development

was

history of synthetic

cellulose acetate filament

price of viscose

process

•

t

yarn

"

•

that for the first
yarn

the price of

is lower than the

filament

yarn.

dependents amounted to $1,281,559.

plan at the

$58,540,300, covering

22,198 employees.

Company contributes the major cost of

a

Retirement Income Plan, in which the

employees
participate. The cost to the Company for the sec¬
ond
year of the Plan, which ends on June 30,
1949, is estimated at $2,064,588. As of December

31, 1948, there

increasing proportion of acetate yarn in

The second

■».

will

production of vis¬

cuprammonium filament yarn, other

fabrics for

*

yarn

-

The

by March 1949, the annual

production of acetate filament

and their

end of 1948 amounted to

the production

exclusive of tire cord yarns.

parent for some

achieved and operating

ex-

and the pro¬

employees include group in¬

the entire cost of which is paid for by the

Life insurance in force under the

These figures

Company's record over a long period of
years ha» been one of reducing the prices of its
products in terms of Consumer purchasing power,

of this policy the Company has

surance,

ees

than tire cord
yarns,

The

means

Added benefits for

compared with

]

for tire cord. In the third

yarns

wages and

employees of the

other than

cose

By

wages to

cuprammonium filament

It is: estimated that

■

yarn

including

Company engaged in construction work, paid

the reversal in the
relationship in
production in the United States be¬

tween cellulose acetate filament

rate

V

prices of the Company's principal products.

^

Employee Relations-Total

significant.

basic raw materials and substantial
wage increases
granted generally to employees in the Company's
plants, no increase was made in 1948 in the

.

progressing.

the pioneer in the

in 1948 amounted to $69,127,336

rate

was

work is

:

which engineering and construction

are

exceed the combined rate of

greater production

on

therefore

Price Policies—Despite the high price level of

as

lumbia,

manufacturing processes.

developments in the; textile industry in 1948

other yarns,

period expenditures for plant

efficiencies realized.

Company, Ltd., near Prince Rupert, British Co-

stable sources for a share of the

and fourth quarters

$63,128,033, approximately 49% of total earn¬

ings. In the

is the building of a purified cellulose plant r

salaries,

yarns

In the last ten years earn¬
ings retained in the business have amounted to

year.

by our Canadian subsidiary, Columbia Cellulose •;>

duction of viscose and

power.

brought into

principal item remaining on the current pro¬

gram

complete inte¬

development of cellulose acetate

the rate of

growth of its plants has resulted from the Com¬

pany's earning

manufacturing functions

The first

share.

Company's practice to finance
very

yarn, was

in this country, the Company also holds the
position of the nation's principal producer. Two

part of its plant additions from

earnings. To

The

yarn

paid

dividend of 60^,'

of $2.20

production of

of 1949.

Operations—As

commercial

'] X "

dividend of 40ff

•

Completion of this plant is expected shortly, with
full production anticipated by the second
quarter

packaging.

materials used in its

Textile

the Common Stock and in each of the second,

a

for the

respectively, making

$15,161,990 for 1948 compared with a

first quarter a

making
a

on

Company's current program of plant addi¬

production in the fourth quarter of the

gration. It has sought integration mainly in the di¬

$ 15,887,000 for 1947. Cash dividends of $3,032,345

for the past three years.

1948 marked the substantial completion

Hill, South Carolina, the Company's fourth plant

weaving and knitting

without the restrictive elements of

$25,565,000^ compared with

were

of the

policy of the Company to achieve close

coordination of all its

in¬

com¬

tions in the United States. Celriver, near Rock

plastics and textiles. It is

yarn to

and

$12,129,645

The year

supplier of basic materials for

.a

industry,

It is the

of $15,310,583 over 1947. Federal income

amounted to

the chemical

operations, the Company has de¬

chemicals,

as

$41,056,497

pared with $36,470,175 in 1947, making a total

veloped broad markets in such divergent indus¬

tors, and for food

crease

additions in 1948 amounted to

^

mills, plastic materials to molders and fabrica¬

,

been

people.

of $97,837,333

cals to

Hie United States

Navy,

of

manufacturing purposes, such as organic chemi¬

generally exceeding the

have totaled $143,255,814.

'"/'*> ^

spent in peacetime relatively lit¬
tle on its armed forces. The Brit¬
ish

whole the demand for the

Company's principal products continued strong,
with the market demand

Plant Additions—Expenditures for plant

placing its products within the reach ofjarge

Industry Position-Through

of modernization of existing

Over the year as a

r~

new mar¬

efficient

proved operating efficiency and greater volume.

on

next

'

program

■-•'L

masses

previously installed facilities. The

third and fourth quarters a

of War

greatest

bringing

tell

a more

-:.V*

kets,

attributable

plant facilities contributed substantially to im¬

tion has been the terrific national

war.

plant facilities and to

utilization of

accu¬

become

serious affair.

a

was

/•"

panded its initial markets and opened

greater volume of production resulting from

after

-eradicated, the. threat of inflation
will

$181,083,608

further sharp rise in prices

a

and hold the value of money
where it is today.
of

sales increase from

$230,384,672 in 1948

course.

inflation has been eliminated.

ous

in 1947 to

additional

that

be true; but it will be

may

some

Sales—The
to a

Threat of Inflation Still Here

This

'•v. -

all surplus funds

economists

'

.36,470,175

come

land,

Many

were

12,436 employees

K.

participat¬

ing, representing 96.6% of those eligible.
Annual

Report-The Company's

tions in 1948

are

reviewed in the Annual

to its stockholders. A

charge,

on

request.

copy

opera¬

Report

will be sent without

Please address

Celanese

Corporation of America, Dept. 136,180 Madison
Avenue, New York 16, New York.

circumstances to trans¬
the

unpleasant duty of

policing the world. We must now
take

ful

on

the headaches and fright¬

expense

national
have

tions.
and

the

!

3-83

'

;

expenditures for plant additions

companies,

to

shrinkage
in what they could
buy with the
"funds they have invested in bonds.

chinery,

6.61

earnings per common share

power.

*

Literally

^hospitals,

I

paid

year

billions in purchasing power have
been lost by colleges,
universities,
-and

10,198,064

I

has

50% Of its pur-

.

24,173,417

15,161,990

•

15,887,000

39,484,000 '

net income

few

a

years

25,565,000

income

on

of maintaining inter¬

order,

though

even

CHEMICALS

PLASTICS

TEXTILES

we

help of the United Na¬

Will

the

cost

of

our

new

fateful responsibility danger¬




••••••••••••••••••••••••••••••••*••••••••••••••••••••••###V

^

14

(1182)

THE

COMMERCIAL

Connecticut Brevities

&

FINANCIAL

.

CHRONICLE

C □ M I N G

Public

Net

earnings of Powdrell & Alexander, Inc. for the year 1948
were $2.57 per share
compared to $3.79 for the previous year. Consoli¬
dated sales amounted to
$23,062,990, whic& $vas 5.4% above the 1947
level. The year
marked the end of the sellers' market in the curtain
industry. During the second-half
of the year merchandise began to
back up at the mill and the com¬

to

pany curtailed production. Inven¬
tories on a first-in, first-out basis

had

amounted

to

$4,753,039
at
the
year end. Working capital rose to
$6,404,095 during the year,

the

rate

latter part

increase granted the
of 1947. The company

the

of

At the

meeting of Bill¬
Spencer
Company
on

March

1st

Bingham

it

announced

was

that

Corporation
Toledo, Ohio controlled 153,425
shares, or about §2%, of the com¬
pany's outstanding oommon stock.
A

board

new

of

directors

New

$1,200,000
1974 to eight

and Mr. R. J. Ahern who

the

1943 the

was

the

re¬

year

share.

per
*

*

*

Scovill Manufacturing
Company
$2.43 per common share in
1948 against $3.31 in 1947. Sales

earned

for the

year

were

from

up

$76,-

956,232 to $80,617,513 but earnings
were
handicapped by the large
of

amount

construction

of

new

plant, installation of machinery
and moving expenses, as well as
by rising wages and material
costs. During the year,
$9,317,994
spent for

was

plant assets. To

new

provide permanent financing the
company plans to issue $4,985,000
of

the

authorized

but

convertible, but the
be

may

at

include

may

series

new

different

a

rate

and

conversion feature.

a

Stockholders will meet

March

on

21 to approve the issue.

Common

stockholders

will probably have
right to subscribe to one share

the
of

preferred

for

each

24

shares

owned.
*

Mr.

#

#

.V

Albert

Sessions
Redway,
Vice-President
and

Executive

Light

was

"•

Public

*

*

its parent,

Greenfield Tap & Die
has
been
elected

Corporation,
President

and

effective

Paper

General

March

Manager,
of American

28,

Goods-

Co.

William

F.

Doran, Treasurer and Assistant
Secretary, has been elected VicePresident of the company.
/

•

struction

work

peacetime

in

1948

reqord

of

The consolidated net

operations for the
to

$2.75

stock.

share

per

to

rose

a

$22,971,965.
profit on the

year

equal

was

of

common

Uncompleted work

year end amounted to

a

the

at

little

Holders of warrants which
holders
Power

of

the

ever

pany was

1947 volume, the com¬
able to reduce its short-

term bank

financing from $1.5 to
$1.0 million.

Co.

took

48,675 shares

—

The

Arrow-Hart

&

Hegeman

with

approximately $8 million. An

additional

estimated

$24 million
money will be required to
carry out the company's construc¬
of

new

tion

program

scheduled

through

or

Company earned $2,798,$7.00 per share in 1948 com¬

pared to $7.95 in 1947. On a con¬
solidated basis, including foreign

wholly owned subsidiaries, these
per
share earnings would have
been
$0.37 higher in
1948
and
$0.67
higher in
1947.
Working
capital at the year end was equal
to $14.40 per share and the com¬
pany has
no
debt or preferred
stock

Southern

*

New

Company's

shows

that

was

Diablo

Country Club.

$8.92

per

annual

income

John G. Law!or
BALTIMORE, MD.
Lawlor is engaging in
business from

Opens

$3.79 for the previous
large part of the increase

year.
was

A

due

.03

800

.24

$6,399

$1.94

a

a

June 5-8,1950
of

Canada

34th

Association

annual

Club,

meeting

Montebello,

*

June 10-12, 1949

(Minneapolis,

.

Minn.)
Twin City

Lake.

.

June 10, 1949 (New York City)
Municipal Bond Club of New
York Field Day

Annual

at Sleepy Hollow

securities
Ed-

Mr. Lawlor was

Financial

at

the

Minaki

of

June 24, 1949
Bond

Boston

Concord

F.

Mr.

merly with

Edward

in

Co.
was

Boston

an

and

officer

Dacey

Dacey

of

E.

was

&

for¬

Trust

Funds,

Inc.

(Special

LOS

to' The

Financial

Chronicle)

ANGELES, CAL.—Vernon

C. Badham has

joined the staff of

Dempsey-Tegeler & Co., 210 West
Seventh Street.

the

at

United Public Service is entered at the
proposed

in appraising the break-up value is Middle
The valuation above assumes a possible
break-up of this holding company. As of Oct. 31, 1948 it had net
current asets (cash and Canadian Government
bonds) of about $1,7
220,000. Also, although the balance sheet is not
very clear on this
item, the company at the end of 1948 had about $1,390,000 in crsh or
Canada.

constituting its* miscellaneous investments.
This included
24,930 remaining shares of Winnipeg Electric. Investments in sub¬
sidiary companies were carried as follows:
Book Value

Great Lakes Power

Company (100% of

stock and $500,000 6%

Transit

Club

of

Toledo

38,540

750,387

3,884

1,773,220

4,463

$425,962

Corp

2,221,036

15th

an¬

close

$3,584,864

earnings from, these investments do

relation

to

the

Utilities

market

of

As¬

value

of

The Broadmoor Hotel.

Dec. 4-9, 1949 (Hollywood, Fla.)
Investment Bankers Association
Annual Convention at the Holly¬
wood Beach Hotel.
•

of about
be

25%

$3,400,000.

should

no

On

this

securities

$6,000,000.

allowed

for

which would reduce the value to

Because of the trend
in

any

basis

ahead

Middle

of

its

West

common

breakup value (cash, marketable securities and

a

subsidiary stocks)
least

at

bear

to

seem

book

Canada, which has

stock, would have
Traders

Convention

not

values, except perhaps for Great Lakes
Appraising the total earnings at eight times would give an

Power.

estimated

Security

$379,075

75,000

Reserves

The

(Colorado Springs,

Annual

$3,207,2.93

$5,805,900

Northern Public Service

<

1

5-9, 1949
Colo.)

notes)

Company

Winnipeg Heating Company

Less

Net Income

com¬

Balance

(Toledo, Ohio)

However,

Canadian

discount

a

taxes

and

of at

exchange,

$4,500,000 (see table above).

.

.

toward; government ownership of utilities

Canada

there have been
long-standing proposals for the sale of
Winnipeg Electric and Great Lakes Power to government

agencies.

As

Dudley L. Hayes Joins
Walston, Hoffman
(Special

to

The

Walston,
of

Chronicle)

Hoffman
America

&

Goodwin,
Building.
Mr.

any

ment.
Financial

of

The

There
Power
to

a

was

formerly

a

partner in

Utilities

at

the, end

Winnipeg Electric it

Exchange,

use

Hayes

West

shares

FRESNO,
CAL. —Dudley
L.
Hayes has become associated with
Bank

Middle

obtain

Bailey, Selland & Davidson.

does

of

1948

not

Members

New

York

and

Boston

Stock

Exchanges
Associate

PRIMARY MARKETS

Members

York

stock
or

a

that

it

is

currently selling around 28V2

the

on

can

invest¬

Montreal

market value of $700,000.

might, however, be

potential profit in the Great Lakes

a

Company, in which Middle

West

owns

the entire

a

relatively high multiple of earnings.

equity.

Sale

It is conceivable that such

additional value, for both the Great Lakes Power
and

ing value
Some

or

(American company).

some

estimates have been reported
seems

unreasonably

high

to

unless

the

30-90c

Winnipeg
additional

On this basis liquidat¬

might be said to lie in the approximate

Curb

■

24,930

likely

government agency might recognize reproduction
cost, or might

this

New

Exchange

only

substantial profit through sale of this
remaining

value for Middle West

Tifft Brothers

retained

appear

Electric, might yield another $1-3,000,000

Connecticut Securities

above

meeting at

Mathews

prior thereto

is carried

Totals

Association

outing at Inverness Country

sociation

under the firm

Norman

Springs Water Co.

The major problem

Lodge, Ontario.

National

ChronicIe)

securities business from offices at
945 Main
Associates.

Sand

West Utilities of

(Canada)

Dealers

of Canada 33rd annual

Oct.

BRIDGEPORT, : CONN. —Nor¬
F. Dacey is engaging in a

name

of

selling
price, less the liquidating dividend declared in the interim.
Upper
Peninsula Power common stock is carried at about eight times estimated share earnings.

mon

man

Street,

t-

stock

International

(Boston, Mass.)

Outing

Investment

G.

partner in E. R. Jones

The

.

The

Security Traders As¬
sociation; Summer Party at Gull stocks

Club.

to

The Service Company will remain
existence, serving primarily some of the former subsidiaries, in¬
cluding Central & South West Co.
book value.

(Canada)
Dealers

Seigniory

nual

(Special

(approx.)

Country Club, Concord, Mass.

Co.

1948

to

.12

94

companies, earlier carried on the books
at a figure around
$521,000 (largely "Beneficial interest in insurance
trust") has been omitted above, as it is understood that there is no
recovery value in the insurance trust, which will be retained in

of

Governors at the Greenbrier.

June 21-24, 1949

John

—

offices at 1813

mondson Avenue.

Board

Municipal Bond Club of

Office in Baltimore

Tele¬

share compared

400

(book value).

in

Investment Bankers Association

Spring Meeting of the

Dempsey Tegeler Adds

report

for

Upper Peninsula Power

Middle West Service Company.

May 18-21, 1949 (White Sulphur
Springs, W. Va.)

June 17, 1949

;-

■

England

phone

net

*

.C5

l

& Goodwin
*

'■

.14

155

Cash

Country Club.

outstanding.

1951.

'••'•"V-

$1.36

The investment in service

Francisco Security Traders
Association Annual Outing at Mt.

Quebec.

up
of common stock

placed by the underwriters. The
financing provided the company

Per Share M.W,

$4,500
450

Miscellaneous Assets

San

019

and

tures, which have been privately

not guaranteed:

are

United Public Service

34,000

May 14-15 (San Francisco, Calif.)

at

&

$5,340,800 of 3% convertible
debentures, due Jan. 1, 1959, leav¬
ing $382,100 unsubscribed deben¬

in its

attempt to compute esti¬

an

Sand Springs Water

Municipal Dealers an¬
Outing
at
Norwood
Hills
Country Club.

Electric

were

Light

course

is

Middle West Utilities Co. of Canada

172,000

an¬

party.

Investment

Norman F. Dacey Forms
$2,433,750— Own Firm in Bridgeport

Connecticut

number of miscellaneous items

a

The following

Estimated Values

4,500

stock¬

common

held.

Thous.

St. Louis

over

$20 million. Despite an increase
in business of almost $5 million

&

recently issued to

one

shares

two

nual

previously

.

plus cash.

values, which of

May 9, 1949

General

Manager of Geometric
Tool Company and a director of

nual cocktail

each

Shares

May 5, 1949 (St. Louis, Mo.)

The
annual
report
of F.
H.
McGraw and Company shows that
the
company's volume .of con¬

January, 1949

Company still has

330,740

St. Louis Municipal Dealers

In

for

No. of

Astoria.

*

distributed

portfolio,

New York dinner at the Waldorf-

Utilities

shares held.

The

Exchange

mated

March 9.

on

&

was

share of Kentucky Util¬
This completed the
major distributions, and the stock has been selling recently on the
Curb around 2. What does the current value of the "stub"
represent?

April 22, 1949 (New York City)
Security Traders Association of

savings banks in
given a hearing by

Connecticut

Commission

Securities

-

15

ities

Commission dinner.

Com¬

unissued

preferred stock.
The present
preferred stock pays 3.65% and is
not

state

earned $54,573

company

$0.29

or

For

Gas

one share of Wisconsin Power & Light for
shares, and two shares of Public Service of Indiana for

four

each

April 20, 1949 (Washington, D. C.)
National Security Traders Asso¬
ciation

(an important subholding company), distributing one
share held. In February, 1948 one share of Central
was distributed for each two shares of Middle

each

West; and in November

..

*

West

for

each

the

petition for permission to
3Y4%
bonds due

sell

the

President.

*

Haven

pany's

was

elected, consisting of" four men
representing Bingham - Herbrand
elected

*

i

South

Illinois Public Service

sociation first quarterly dinner at
Downtown Athletic Club, j

to $23,018,833.
22,000 telephones
were changed from manual to dial
operation.

of

&

share

March 21, 1949 (New York
City)
New York Security Dealers As¬

dur¬

A total of about

Herbrand

-

Middle West has been following a leisurely dissolution program
which is now almost completed. In 1947 it divested itself of Central

meeting at the Boston
Speaker: W. Wendell
Reuss, New York City.

the

construction

18, 1949 (Boston, Mass.)

Yacht Club.

ing 1948 amounted

annual

&

in

for

By OWPN ELY

monthly

had by 82%
state. Ex¬

now

families

Utility: Securities

Field

Boston Investment Club
regular

690,561 telephones in service

phone service is

Investment

Middle West Corporation

March

at the end of the year, an increase
of 44,675 during the year. Tele¬

penditures

ings

EVENTS
In

Thursday, March 17, 1949

exceed

even

there

are

range

$4

a

very

$2-3.

of

share, but
substantial

"hidden values" overlooked in the above
analysis. '

Primary Markets in
Statistical Information

Hartford

and

With Courts & Co.
(Special

Connecticut Securities

Chas. W. Scranton
MEMBERS

NEW

New
New

London

Hartford

2-4301

7-2669

New

YORK

STOCK

J.
a

EXCHANGE

York

Canal

6-3662

.

,

Hartford

7-3191

Powell

Jr., have
Courts

New

York:

BArclay

Waterbury 3-3166
Danbury 5600

The

Financial

BURLINGTON,

Co.

Haven 6-0171

Teletype NH 194




&

to

Bell

7-3542

System Teletype: HF 365

New

and

N.

Robert

York

Co.,

With Ames, Emerich & Co.
(Special

J.

members

Powell,

The

of

with

the

CHICAGO,
chenger
staff of

Stock

Exchange.
Mr.
Powell, Sr., was previously Bur¬
lington representative for R„ S.

Dickson & Co., Inc.

to

Financial

C.—Robert

become associated

&

<

Chrcntcle)

105

bers

has—been

change.

added

to

1

Leithe

Ames, Emerich & Co., Inc.,

South
of

Chronicle)

ILL.—Paul S.

La

the

Salle

Street,

Chicago

mem¬

Stock

Ex¬

i

Volume

&- FINANCIAL

THE- COMMERCIAL

Number 4786

169

CHRONICLE

FRIENDS AND OPEN THE DOOR

' Every

„

connected

organization

Byrnes Bill

is

worthwhile.

By JOHN DUTTON

Halsey,

as

,

VVith Leason & Co,.

support to measure which proposes
/
dividends up to $2,000 per year.

(Special

to

The

CHICAGO, ILL.—Miles R. Du-

7, the New York

i

investors.

and

for

our

the

On

item ap¬

this

morning

peared I received a telephone call
from an alert security dealer here
in New York.
He asked me if I

go

out to

BEVERLY

Atkins

E.

help people on some¬

semi-annually

15, 1949 to
inclusive.
The

has

been

added

reoffered,

the

Proceeds

certificates

to

staff of

TO CREATE GOODWILL, MAKE

to

Inc., 8943 Wilshire Boulevard.

vide

for

electric

Becker

&

Co.

gestion:

(Special

the

from

sale

the

of

to

Representative Byrnes in Wash¬
ington and tell him that we are
Here is

legislation enacted.
i

■

v.

■

-

.

i

"Representative John W. Byrnes,
/'Washington, D. C.

pro¬

Rouse

new

rigan, Jr.

be

used

&

companies of the-Standard Oil (Indiana)
recprds in all phases of their operations:
the production and transportation of crude oil and the
refining and marketing of petroleum products. Since 1938,
each year has shown new high records in crude
reserves,
pipeline traffic and'dollar volume of sales. Crude oil pro¬
duction has increased in every year but one, and refinery
runs in
every year but two.

offered for the granting of a

tax credit on annual dividends up

to

$2,000

\ "As

a year.

who has been engaged

one

1947.

other

toward passage.

of

one

sources.

These

that

was

him

that

new

our

we

investments benefit the public,

stockholders.

And Summary

/

'

production in 1948 averaged 221,252

STATEMENT
EXPENSES

OF

1948

operating revenues
$1,236,957,533
Dividends, interest, etc., received
7,658,101
.

Gain

suggestion

third

should

We

ourselves

arm

that
with

to

customers

our

see

and

to write

in their own
are
behind it.

message

a

that they
Then we should take the card out
words

-and mail it for

that

sure

it

them, just to make
He

done.

was

said,

too, that if we asked everyone we
know, our friends, neighbors, sup¬

pliers, as well as customers, to do
this, that the security business
its

make

could

force

felt

for

nection, it would be up to us to
find

the

out

name

of

our

Repre¬

Washington, and the

representative of those upon whom
we call, in case we too, like many
others, do not know who he is. Do
you think anyone in the security
business doesn't know his Con¬
gressman? COULD BE!

Oln
"This

for

good
Need

I say

too,- is
Here is
tomers

especially
qualifying prospects.
more to you?"
Here

clients

sound

a

approach.

chance to go to your cus¬

a

and

new

prospects

for

a

change and offer them cooperation
in an unselfish effort to help them,
as
a

well

as

yourself, in achieving
If we all got to¬

desirable goal.

gether behind this bill and worked
along the lines this alert, progres¬
sive dealer-here in New York sug¬

gests,

we

could stimulate business




1,353,318
$922,810,305

on

.

.

..

•

$
dry holes, retirements and

Federal and state income taxes.

Crude oil

6.

barrels

.1-7.

a

only
pro-

substantial net addition

runs

day,

a

at refineries in 1948

16% increase

a

averaged 426,794
1947.

over

Employees at the end of 1948 numbered 48,692, an
2,725 since the end of 1947. Total wages and
paid in 1948 averaged $4,452 per employee. Back
each employee there is an average capital investment

increase of
benefits
of

;

of $26,700.

8. The company was owned bv 97,073 stockholders

on

December 31, 1948. No institutional stockholder owned
so much as 5% of the stock and no individual owned so
much

1%.

55th consecutive year in
paid, and the equity of stock¬
steadily increased by plowing back a
substantial proportion of earnings.
as

1948

was

the

which dividends have been

holders has been

Standard Oil and its subsidiaries sell petroleum prod¬
In the 15 North Central states, con¬

9.

ucts in 40 states.

taining nearly X of the nation's population, the company
largest refiner and marketer of petroleum products.

is the

STORY

IN

FIGURES

PRODUCTION

1948

1947

80^978,286
8,241

7,772

Gas wells owned, net, at year end

738

579

70,464,282*

taxes

.

.

15,267

14,114

116,756

.96,678

87,483

58,513

barge traffic, million

barrel miles....

..

36,353,710

$ 29,365,616

20,997,610

17,438,774

57,351,320

$ 46,804,390

13,403,888
22,229,000

MANUFACTURING

Crude oil

at

run

refineries, barrels

Crude-running capacity, at
end, barrels

day

per

Bulk

.........

4,539,647

3,886,880

$827,929,590

Gross income

$ 94,880,715

Net

....

Net earnings.

$

140,079,286

Dividends

paid by Standard Oil
Company (Indiana)— Regular and extra dividends paid
wholly in cash—$2,125 per
share in 1948 and $2.00 in 1947$
Extra dividend paid in capital
stock of Standard

Oil

403,400

•:

.$1,205,957,775

,290,397

year

end

4,490

year

end

29,612

$922,810,305

140,079,286

a

94,880,715

40,441,410

30,570,249

99,637,876

64,310,466

$9.16

$6.21

$2.878@

$2.00

paid—including, in

dividend in capital stock

of Standard Oil

Jersey)

at

value

$ 30,570,249

.$1,245,786,091

*

earnings

1948,

our

on

Company (New

average

carrying

books

Earnings retained in the business.

Com¬

Net earnings per

(New Jersey) —127,583
shares at average carrying
value—together with equaliz¬
ing cash payments in lieu of
fractional shares.
(Market
value of distribution on Sep¬
tember 10, 1948 was equiva¬
lent to $0.7534 per share on
Standard Oil Company (In¬
diana) stock)
v

4,515

30,278*

FINANCIAL

Dividends

32,480,351

.........

outlets^served, at

Total deductions... V$1,105,706,805

.

134,663,854*

465,275

21,545,740
2,144,482

4,489,264.

.

.

plants operated, at

Retail

27,990,567

156,206,614

year

...<..

MARKETING

Total sales in dollars.

agencies)..
Interest paid,
Minority stockholders' interest in
net earnings of subsidiaries
..

end, miles

year

*

collected from customers for gov¬

.

Pipeline"owned, at

~~

(exclusive of taxes

ernment

TRANSPORTATION

$717,915,210

amounting to $155,853,420 in
1948 and $142,252,684 in 1947

pany
'

but made

year

! to proven reserves.

Tanker and

942,641,159

26,383,848
42,311,000

...

abandonments.
Other

during the

Pipeline traffic, million barrel
miles..,....:/..'.;.....

expenses

below...$

and

sales

1,170,457

operating and general

a

contacting

.

other than those shown

letter to me, he writes:
wonderful medium for

is

.

Depreciation, depletion, and amortization of properties—
Depreciation.
.$
Depletion and amortization of
drilling and development costs

a

change in Washington. In this con¬

sentative in

.

Materials used, salaries and wages,

Loss

extensions of fields not

duced

Oil wells owned, net, at year end

1947

$910,746,050
10,710,937

$1,245,786,091

.....

..,

prospects, and tell them about this
bill.
Then we should ask; them

and

replaced the record breaking quantities of crude oil

;

sale of investments and

Total income

.

14.6% increase over 1947. A total of 597
completed in 19.48, 17% more than in

a

Crude oil produced, net, barrels..

DEDUCT:

postcards and we should go

penny
out

was

on

capital assets,

large and small, in this country.
His

•

,

were

New discoveries

THE

1947

Sales and

ing investment and opening up of
the capitial markets, as relief to
the sorely pressed investors, both

day-

a

oil wells

INCOME

1948 and

bill, explain

what it would mean in encourag¬

i-

:

.

of Earnings Retained and Invested in the

Business for the Years

are

,

"

favor-ble toward this

■

•;

-

•

AND

Write

us

barrels
new

i 1947.

t

Net crude-oil

5.

representative in the
tell

and

-

■

CONSOLIDATED

suggestion

each

own

our

House

*

■

employees and

our

"Very truly yours."

to

'■

>

,

'

outstanding gains in all categories in 1948 were
especially welcome in helping to overcome the oil short¬
age of the previous heating season. The increases were
due largely to capital expenditures of more than $630,000,000 during the past three years. Of this sum, 32%
was provided
by plowed-back earnings, 39% by borrow¬
ings, 23% by depreciation, depletion, etc., and 6% from

of the bill and let me know
can do to further its

should

$1,205,957,775, comparedTwith

The

4.

whatever I

Hisv second

totalled

3. Net earnings for 1948 were $140,079,286, or $9.16
per
share, compared with $94,880,715, or $6.21 per share, in

bill offers. At this time the
equity markets of the country are
stagnated. Your bill would open
up the capital markets for an in¬
dustrial expansion
that we so
sorely need.
'
"Would you please send me a
your

we

new

$886,290,397 in 1947/

appreciate the enormous
incentive of capital expansion that
readily

course

set

Sales in 1948

2.

in the securities field since 1926, I

copy

In 1948 the

1.

group

pressed with the item in the New
York 'Times' concerning the bill
you

\

Dividends

I

paid

share.'

per

share........

(©Including $0,753 as the
on
Septem¬
ber 10, 1948, of the divi¬
dend in capital stock of
Standard Oil Company
(New Jersey).)
market value

'

,

Net

7,961,059

worth, at the

year

end*.... .$1,018,721,446

Book value per share, at

Total dividends paid. .$

40,441,410

$ 30,570,249

Balance of earnings retained ......$
Earnings retained and invested in
the
business
at
beginning of
year (after deducting at January

99,637,876

the

$924,870,060

year

$ 64,310,466

end
_

:

'1,/

1948 for

Employees, at the

vacations earned in

1947)

Earnings retained and invested in
the business at the end of year. .$

422,928,319
522,566,195*

364,404,010

$60.51

year

year

end.,..

end-

....

97,073

97,495

48,692

45,967

*Revised figures conforming to'new statistical classification.

$428,714,476

*Including $197,000,000 restricted by terms of de¬
benture and bank-loan agreements of subsidiary com¬
panies and about $15,600,000 of earnings of pipe-line
subsidiaries segregated under provisions of Consent
Decree in Elkins Act suit.

$66.65

PEOPLE

Stockholders, at the

1, 1948, $5,786,157 of payments
in

Copies of the iggS Annual Report available on request as
long as the supply lasts. Write Standard Oil Company,

,.

gro

Financial

&

Co.;

Chronicle)

Co. and Charles

TentkBonsecutive Year of Breaking Records

/'The writer was very much im¬

t

Otis

with Shearson, Hammill
Co., Cotton Exchange Building.
He was
formerly with Steiner;

a copy

of the letter he sent: lAA,';

Inc.;

&

following

its

:- reports on

•'

;

500

sociated

to

will

the

The

'

behind him and that we want this

loco¬

and

ORLEANS, LA.—James
F. McKillips, Jr., has become as¬

STANDARD OIL [INDIANA].

First, those of us who are in the

cars

NEW

in

securities business should write to

switching

James McKillips, Jr. With
Shearson, Hammill & Co. *

him in any way that I
getting behind this bill
he offered the following sug¬

and

:M

less

1,000-h.p.

& Co. Inc.

would help
could

/10

equip¬
not

Freeman & Co.; McMaster Hutch¬
inson & Co.; and Wm. E. Pollock

au¬

the Interstate Com¬
merce
Commission, at prices to
yield from 1.40% to 2.80%, ac¬
cording to maturity.

Herrick, Waddell & Reed,

thing like this YOU ARE BOUND

subject

thorization by

HILLS, CAL.—Irene

$4,725,000:
•

cost

Sept.

March 15, 1964,
certificates, issued under the
Philadelphia plan, were imme¬

diately

to

15

Associated in the offering were
R. W. Pressprich &
Co.; A. G.

■

When you

business.

'

and

(Wednesday)
of $3,780,000
The Delaware, Lackawanna and
Western
RR.
V-k tfe
equipment
trust, .certificates,
due
$126,000

Chronicle)

Financial

Inc.

Co.

the award yester¬

day

"Times" reported that Representative Ket has joined the staff of Leason
John W. Byrnes, Republican, Wisconsin, (see the "Chronicle," March & Co., 39 South La Salle Street.
10, 1949, p. 29) offered a bill granting a tax credit of 20% of annual He was previously with Harris,
dividends up to $2,000 a year.- The effect of the legislation would
Upham & Co.
be to forgive the tax on dividend f
;
———
for ourselves while we are trying
earnings entirely for the smaller
to do a constructive job for in¬ With
Herrick, Waddsll Co.
investor,- and it would provide a
tax rebate up to $400 for all big
vestors, for our country as a whole,
(Special to The Financial Chronicle)
On March

Stuart &
won

railroad

gauge

motives, 300 box
hopper nars. "

Equipment Trust Gtfs.

How about it?

associates

well as investors, to lend
tax credit of 20% on annual

business,

Here
opportunity to do something

an

-

estimated

Diesel

get busy and push this bill.

'

Writer urges all in securities

ment

than

Offers Lackawanna

with the securities business should

Should Get Behind the

standard

Halsey, Stuart Group

FOR NEW ACCOUNTS.

Investment Dealers and Brokers

(1183)

S. Michigan Avenue, Chicago So, Illinois.

E. Cor-

16

(1184)

THE

COMMERCIAL

&

Relieve

By H. E. JOHNSON

This Week—Bank Stocks

occasion

Government

a

Although at

to

criticize
build

time the increase in the dividend of J.
P. Morgan
& Co. from an annual rate of
$8.00 to $10.00 provided a spark to the
otherwise dull market and even
though there seems to be little diffi¬
culty in distributing sizable blocks of bank securities
through secon¬
dary offerings, banks stocks have continued to reflect
the investment
psychology evident in the market action of listed shares.
Because of their characteristic
stability of earnings and dividends,
however, the range of the fluctuations for most bank stocks
has been
smaller than for most equities. In a number of
cases current prices
are higher than at the end of last
year. Since Dec. 31,1948, the DowJanes Industrial' Average .has
declined from 177.30 to 176.02 on
March 15, 1949. At the same
time, Standard & Poor's index of nine¬
teen New York
City bank stocks rose from
approximately 91 on
Dec. 31, 1948 to about 94 at the
end of last week.
*
;
The individual market
records of

18

New

York

banks

t

Mr.

Ave.

-

___

Chase

Trust

_

National

Chemical

$25

308

831/4

32%
38

National

(J.

National
Public

S.

4.33

1.80

5.00

its

49%

4.46

89%
35%
38%

1.80

39'/4

2.00

50%

2.80

80,00

6.67

260

12.00

254

'

■

r.

1.60

and

4.65

4.62

15 %

P.)__>

15'/a

151/a

15%

0.80

5.08

48%

52 %

491/4

2.40

4.87

227

199

201

227

40

National

37 %

37 %

84 V*

80

81

*371/4

590

4.41
4.03

540

4.00

4.79

38%

37%

540

•;

1.60

83%

'

38%

Trust

10.00

39%

2.00

5.16

585

35.00

5.98

From an examination of the
above figures the narrow fluctua¬
tions of most stocks is
apparent. With the exception of some of the
higher priced shares and one or two of the
others, the price changes
over the past 2V2 months have
been confined to two or three
points.

However,

moving
as
"r a
p idly
.

of the stocks are higher
Dec. 31, last.
At present prices yields
range from a low of
4.03%-for National City to a
high of 6.67% for First National.
While the outlook for bank
earnings is primarily dependent upon
the conditions of general
business, new banking regulations, taxes
and credit manipulations will also
play an important part in operating
results.
"

than

on

•

,v

...

The trend cf business for the
past several months has been down¬
ward.
It is believed,
however, that a moderately lower level of
business than prevailed in 1948 would
have little effect on bank
operating earnings. Also the recent
slackening in the pace of busi¬
ness could be beneficial from the
standpoint of regulation and taxes.

If,
years

as

seems

have

evident, the inflationary

pressures

of the past two

their

run

possible

as

course, no further demands for additional
would likely be made
by the regulatory authorities. Also
the pressure for
higher taxes on corporations may be relaxed if the
Congress were convinced that such action would have a
beneficial
effect on the economy. Inasmuch as the

reserves

vestment

to

for

needed

these

posed large mills."

out,
step by step,
rational plans

Irving

S.

Olds

improvement
no

}

pro¬

;

.

for

the

'

have

programs

steel

;

to dampen interest in bank
tion of this threat could have a favorable
effect.

Alfred J. Casazza

BANK

1

■

DALLAS,

TEX.—Dewar, Rob¬
Pancoast, National Bank

ertson &

in

supply,"
"Such

Mr.

Olds

continues.

mills, in all probabil¬

new

ity,' cannot be constructed and
placed in operation in less than
two

it

three years.

or

is

unbalance

demand

and

adjusted.

mills

are

to

to meet the

will

the

the

steel

their

member

Building,

firm

the

of

Exchange.

has
New

announce

become
York

Partners

Pancoast,

Creston A.

have

Austin.

proposed

The
of

INSURANCE

York

STOCKS

an

projections of certain

are

Stock

H.

H.

W.

'Lewis

Hart,

King and Edward H.

Mr.

the

is

Dewar

President

Investment Bankers Asso¬

ciation of America.

120

Stock

BROADWAY, NEW

YORK 5, N. Y.

Telephone: BArclay
Bell

Teletype—NY

(L. A. Gibbs,

(Special

7-3500

are

Manager Trading Dept.)

Financial

and

of

the

TWIN CITY SECURITY TRADERS ASSOCIATION
The Twin

out¬

ing June 10, 11, and 12 at Grand View Lodge, Gull Lake, a resort 140
miles north of Minneapolis. "Operation Fishbite" is limited to 125 res¬
ervations in lodges and cabins and members are urged to make reser¬

Pillsbury of the First National Bank of Minneap¬
1. Tariff, covering transportation, greens fees, food,
lodging, boats, etc., is $30.

G.

Bache &

H.

Welch

of

the

set

in

date

Colorado

the

of

Springs

in

honor

Security

BS-297
CLEVELAND

15

PRIVATE

WIRE

CLEVELAND,
TELEPHONES

210

W. Seventh

SYSTEM

:

231 S. La Salle Street
FRanklin 2-7535

CG-ios
'

Street

Russ

Building

YUkon 6-2332

LA-1086

SF-573

CONNECTING

LOUIS,

Hartford, Enterprise

Providence, Enterprise

7008




:

NEW

LOS

6011

YORK,

BOSTON,

ANGELES,

SAN

and

all

of

Ex¬

question
the
present
Governors seeks to de¬

of the

part
as

well

their

to

if

see

members

at

on

this

to have the benefit

as

views

program,

like

CHICAGO,

FRANCISCO

Enterprise 6066

favor

the

to

as

type

of

that they would
developed.
any.

the

of

retirement

of

of the reduction in the number of

memberships
with
the

desired

suggested

any

financing of

Members who

at

The

Broadmoor

Full details will be

not

are

of

the

Commission

and

will

be

attended

by all National

Association

Officers, National Security Traders
Chairman, Presidents of the local Affiliates
National Security Traders Association Officers and

Committee

past

several

shown

President

in

also

reports

having attended winter meetings of
being gratified at the great interest
the National Security Traders Association.

of

the

Affiliates

included

with

and

President

Welch's, letter

report

by
the 1948 Treasurer H. Frank Burkholder of
Equitable Securities
Corp., Nashville, Tenn., which made very pleasant reading and some
suggestions to all National Security Traders Association members by
Morton A. Ca.yne of Cunningham &
Co., Cleveland, Secretary of the
National Security Traders Association.

was

a

for

in favor

memberships

requested

to

inform

reasons

are

the

therefor.

For Israel Securities
"What

will

together

methods

plan.

a

of retirement of

■'

former members of the Executive Council. The President is anxious
that each Affiliate be represented at this dinner.

Also

Portland, Enterprise 7008
Detroit.

Convention

Oct. 5 to Oct. 9.
•

Traders

The

SAN FRANCISCO 4

Michigan 2837
•

PHILADELPHIA, ST.
TO

Wall Street

LOS ANGELES 14

Schofield Btiilding
Superior 7*44
CV-394

CHICAGO 4

WHitehall 3-0782
NY 1-2875

that

&

Annual
as

April 20 the Association

Association
<57

the

to take.

Board of their

Sincere

again honor all the members
of the Securities & Exchange Commission and
key members of their
staff at a dinner in Washington. This will be the third annual dinner

INCORPORATED

Square

a

which

Co., Chicago, President of the
National Security Traders Association, informed the members of its
28 Affiliates, the Associations' activities during last
year and also gave
them the highlights of some of the Associations' plans for this year.
located

GfiYGR & CO.
Office

thor¬

Boylan stated in his letter
in its further
study of this

also

NATIONAL SECURITY TRADERS ASSOCIATION

On

HUbbard 2-0650

very

include in their letters the extent

City Bond Traders Association will hold its annual

announced later.

JO Post

a

memberships to advise the Board,
giving the reasons therefor, and

He

NEW YORK 5

Ex¬

plan would be
very funda¬

of

principle

unsound step

time

Edward

BANK and INSURANCE STOCKS

t

the

of

number of commit¬

a

have

ply
and
demand
determining
price and, therefore, that any seat
retirement plan would be a most

olis before May

Jackson

B.

Co., Dixie Terminal Bldg.

BOSTON

10 years by

He requested members who are

Chronicle)

connected with

now

BoylaB

change has always advocated of
free and open markets with sup¬

in

OHIO—John

William

P.

termine the extent of interest

NSTA Notes

Chapter, American

The

the past

members

contradiction

the

address by Alfred J.

CINCINNATI,
Dunlap

1-1248-49

to

of

mental

of

Two With Bache & Co.

Exchange

Robert

subject has been dis¬

over

important

vations with R. K.

Members New York

This

Board

to

Casazza, Vice-President
Savings Banks Trust Co.

Laird, Bisseli & Meeds

n

any seat retirement
a

•**

Institute of Banking, on March 23
will hear

co

a

Savings Banks Round Table

New

again
s id-

Mr.
of

sufficient size

of

that

Dewar, Alton E. Robertson, John

between

If

be

Commerce

W.

supply

been

Hal H. Dewar

of

By that time
of

for

purpose

was

should not be retired with
present
Exchange funds.
The Board was
also strongly of the opinion that

much

that

expected

present

formulate

plan

the; unanimous
opinion
of
the
Special Committee that seats

steel

in short

now

question of

of the Board and after

mills of great size at this time is
bound to consume large amounts
of steel of the kinds

Board

ough study of the matter reported
to the Board in
May, 1948,
The
then
Board
of
Governors
ex¬
pressed complete accord with

satisfying
new

March

reviewed the question
at
length.
In
January, 1948, a
Special Committee was appointed
by the President with the approval

are
va¬

the current abnormal demand.

"Building further

Gover¬

change and

"Any government plan for adding
millions of tons of new
ingot capacity, as has been sug¬
gested, could not be carried out in
factor

an¬

that

of a group of
members that

tees

many

a

to

3, the request

groups

rious steel companies
by the end
the year 1949, Mr, Olds
says:

be

on,

letter

a

meeting

a

of the
nors on

cussed

of ingot
capacity in
period since 1947, and

of

to

Exchange,

in

e r s

he

ered.

that plants which will add another

time

Stock

addressed

that-

Address Bank Group

and

at

'

American

2,000,000 tons of steel capacity
scheduled for cqjnpletiop by

•

nounced

a

industry 7 has added nearly
brief

b

which

and

NYSE Members,

7.

,

8

the
membership

possibility of enacting such
shares, the elimina¬

legislation has tended

m e m

the

Pancoast Become

This

been: under

.1

con¬

reducing

and

of its facilities.

under

again consider

Dewar, Robertson &

"ex¬

still

ship opinion.

York

the

suddenly established policy.
for example,

such

the
v

New

March

.carr.y

previously mentioned, most

as

inevitable in order to provide an
adequate return on the huge in¬

now

5,000,000 tons

'

5.10

54'/a

Trust-

is

Pointing out that the

4.48

"

double what they, were a
few years ago.
Higher prices for
steel products would appear to be

is

Robert P. Boylan, Chairman of
the Board of Governors of the

.

about

of

mem¬

bers, has been

way. for many years."

5.52

1,200

52%

252

own

.

mem¬

sideration, and invites member.

a

in

.

initiative

5.05

4.00

1

4.57

99
>

33'/2

267

City

York

14.00

\ 39%

1,150

_

Morgan

'

output.

steel

In U. S. Steel's
case,

5.20%

Federal

serious problem must be
the way of adequate raw
materials and a sufficient supply
met

Boylan notifies

matter

says

the

"that- of skilled labor to operate these
in¬ large new plants.
Construc¬
and
dustry, on the tion
equipment
costs
are
-

is

yinlH

that

increasing

of

on

bers of adverse report of
Special
Committee made last April, but

:

critics,

Olds

the

:

:

''''

'■

'

40%

-<

1,145

-_7--77~7-

-

Pate

$1.30

38%

V*

1.218

.

Guaranty Trust
Ifving Trust
Manufacturers Trust

New

'

V 38

53%

323

98

39 %

__

T.

381/2

97 %

40%

___

!'■

82%

„

L—U—7
_.

First

310

38

National____i.______
Exchange

Corn

|

"

35%

Bank

Commercial

U.

Price

39'/*
90

Dividend

1948

$25 %

99V2

,

____

Bid

Low

329

V

7"_7_

_

__

Current

Chairman

stated,-

-

showing

Current

$24 %

$25'/a

~

®ank of New (York & Fifth
Bankers Trust
Hanover

Dec. 31,

High:;

S&nk of Manhattan

Brooklyn

Price

proposal

means

a

$>-

out,"

pansion

1949

-

fact

stands

Bid
Price Range

as

c e n

a 1:

r

Truman's

plants

"The

the range in 1949, the price Dec.
31, 1948 and the current market is
tabulated in the following comparison. Also
presented are the annual
dividend rates and current yield.

Central

President
steel

one

Membership

Seat Retirements

releasing the 1948 Annual Report of the United States Steel
Corporation, Irving S. Olds, Chairman of its Board of Directors, took

lighten existing posi¬

or

Of

Shortage

In

narrow range.

1949

NYSE Seeks Views

5 million-ton capacity was added in nation since 1947.

tions,

liquidate

Thursday, March 17,

Irving S. Olds, Chairman of U. S. Steel Corporation, says additional
steel needed for plants would only
aggravate present situation. Says

Since the first of the
year the market for bank shares has been
relatively quiet. With the exception of occasional demands from in¬
stitutional investors, investment interest has been
lacking and as
there has been no great pressure to
most stocks have moved within

CHRONICLE

Asserts Government Steel Plants Will Not

Bank and Insurance Stocks

*

FINANCIAL

Israel
vestor

has

to

the

offer

in

the

new

the

State

American

of
in¬

of marketable

way

securities?"
To

discuss

number

of

members

this

the

of

munity will meet
ternoon

informal
ers

by

and

financial
on

a

other
com¬

Thursday af¬

(the 17th) in

an

hour of

discussion, at the Bank¬

Club, 120 Broadway, at 3:45—
invitation

founder

tine

question,

brokers

of

the

of

A.

H.

American

Sakier,
Pales¬

Securities Co., pioneer in the

distribution

of

Palestine

(Israel),

securities in the United States.

„

Volume

169

THE

Number 4786

COMMERCIAL

FINANCIAL

&

CHRONICLE

of the

World Bank Disposes
Of Belgian Bonds

Secretary Snyder Reports on Internationa!
Monetary and Financial Progress
Council on International Mone¬
tary and Financial Problems, he transmits to Congress a report for
half year ended Sept. 30, 1948.

>

On March 14, Secretary of the Treasury John W. Snyder, as
Chairman of the National-JVdvisory Council on International Mone¬

tary and Financial Problems, which was set up by Congress when

International

Bank

Reconstruction
announced

participation of the United States in the International Monetary Fund

and

The

March

■proved,

re¬

contracted

on

Netherlands, Denmark, Chile and
Luxembourg.
In the fiscal year

covering
developments

ending June 30, 1948, net income
of
the Bank was sufficient to
eliminate the deficit existing on

in

its unconditional guarantee

June

leased

re¬

a

port

principal,

interest

ginning
will

six-

period
ending Sept.
30, 1948.
The Council

has

served

the

advisory

body

as

the

for

an

earned

surplus

of

million, plus nearly $4.3 million
in its special reserve. As of Sept.
30,

1948

mitted
to

the Bank

had

loanable funds

Life

In¬

are:

surance

$5.3

over

New York

chasers

Co., $10,000,000; the Bow¬

ery

Savings Bank, $2,000,000; New

York

Savings

uncom¬

•East River

amounting

approximately $475 million.

Bank;

$1,500,000;

Sept.

in

the

lending

not

is

indication

an

The

Belgian loan carries

between

the

4 lk%

issue
gium

and
to

the
be

sold

rate

to

on

the

and

who

ference,

selected for this purpose at

mission

the

&

Co.,

request of the Belgian

ar¬

cated

of

the

International

serve

that the contract for

the sale of the

Belgian bonds

1%

1

directly
*4 % dif¬

statutory

a

is

Agreement,

the

Bank's
That

fund.

service

a

is

of

to

Bank's

was

Of this

the

institu¬

com¬

charge/ which, under the

Articles

Gov¬

ernment.

Officials

in¬

paid by Bel¬

3%

Bank.

Barney

an

terest rate of 4%%. The difference

investors, is paid

Smith,

an

securities in the Bank's portfolio.

to the

were

of

established policy of disposing of

equal

was

re¬

said,

bonds

32

Bank's

This method of sale, they

tional

Bank stated

Savings Bank, $1,500,-

1953,

The sale of the bonds

;

000; and the Dollar Savings Bank

1,

amortized

the

ranged by Morgan Stanley & Co.,

Jund payments, $16,000,000 King¬
dom of Belgium ftonds. The pur¬

30, 1947 and, by Sept. 30,
1948, the Bank had accumulated

be

to

sources.

semi-annual installments.

to

.

the

month

The

bonds will mature in 20 years. Be¬

sinking

and

interest.

accrued

add

order to
field of fi¬

Bank's

operations and not be¬
any immediate need to

of

cause

paying

Belgium to provide foreign ex¬
change for purchases of steel mill
and power plant equipment. The

has

as

are

the

nancing

interest

3%

a

its recent loan to the Kingdom of

for

it

bear

17

primarily in

broaden

$16,000,000 of bonds were received
by the International Bank under

Development
15

and

par

sell privately, with

to

bonds

The purchasers

rate.

and the Worlds
Bank was ap-

arranged

in New York

3% issue of Kingdom of Belgium
with institutions through Morgan
Stanley and Smith, Barney.
The

City of New York, $1,000,savings banks are located
City.

000. The

I Places $16 million of guaranteed

As Chairman of National Advisory

(1185)

*A%

charge

operating

to

allo¬

special

re¬

charge is
cover

the

expenses

consideration
of

certain

fi-

nancial

as¬

pects

John W. Snyder

the

of

European Re¬
Program
in
accordance
with the Foreign Assistance Act
of 1948.
Chief financial problems
covery

of

.

reviewed

ERP

during the

pe¬

riod included the amounts of dol¬
lar

assistance, the terms of

ment

for

credit

a

assistance

pay¬

extended

on

basis, the utilization of

counterpart funds resulting from
aid received

on a grant basis, and
payments plans to facilitate intraEuropean trade.
v

The report points out that the
European Recovery Program is
one phase in the changing pattern
of international financial

develop¬
during the postwar period.
States has provided

ments
The

United

financial
tion

of

the

aid

for

the

development

reconstruc¬

economies

war-torn

and

of

foreign na¬
tions not only through the Eco¬
nomic Cooperation Administration
but

also

such

the Export-Import Bank,
National Military Establish¬

through other agencies,

Last year was

*£•.

of accomplishment,

one

a year

of record

production for General Time, manufacturer of clocks, watches and
timing devices. To meet the world-wide demand for

our

WHEN TIME COUNTS-

COUNT ON GENERAL TIME!

products which include the celebrated Big Ben*, Westclox* and

The

as

the

ment

and

the

Office

of

Foreign

Liquidation Commissioner.

During this period, the Council
continued to coordinate the activi¬

ties

United

the

of

sentatives

States

the. Fund

on

repre¬

the

and

Seth Thomas*
certain

timepieces, Stromberg* and Haydon* instruments*

manufacturing operations

were

GTfaimly of products answers
every

extended to Scotland, in
"Waking up"

addition

to our

long established plants in the United States

BIG BEN, the

and Canada and

our

newer

plants in Australia and Brazil. Sales

our

outlets

the Fund and the Bank.

cover

number

now

89

foreign countries. General Time's 1948 operations produced

the

highest sales in its history—more than double

any pre-war year;

RECORDERS, and

advisory and consultative
international exchange
problems, and in implementing
the purposes of the Articles of
Agreement."
The Fund has not
only provided yaluable advisory
tional

the

field

of

devices
many

available

its

■.

YEAR

IN

Sales

$11,4

Oi .$39.8

million

tal

beauty and fine crafts¬
have served

$30,295,022
2,047,808

11,922,197

10,379,292

Americans

"In Factories"

Book Value per

to
for

Earnings

per

$43.18f

$35.83f

$ 8.47f

Common Share

Common Share

$ 5.07f

VICES,

are

The

Council, in its report, points

that the resources of the In¬

Monetary

ternational
not intended

Fund

in

dispensing
machines, and precision
industrial controls.

'

|Basec/
dend

on

366,378

common

shares giving effect to stock divi¬

payable to shareholders of record December 14,

1948.

"And ail

world
through

million,

out

used

automatic

1948 amounted to $639.9

tember,

almost

for

1,200,000 hours (Since 1813).

sales of the Fund
1947 through Sep¬

March,

THOMAS

HAYDON TIMING DE¬

own
currencies, including
million in Belgian francs,

currency

uses.

CLOCKS, masterpieces of

1947

3,291,838

Working Capital

the first sale of this currency. To¬
from

SETH

$34,600,324

Net Income

coun¬

member countries in exchange

for

manship,

resources

In the six-month period, AprilSeptember, 1948 the Fund sold an

equivalent

made

;

BRIEF
1948

for meeting short-term balance of

their

V

are

"At Home"

THE

interna¬

payments deficits of member
tries,

a va¬

business and industrial

monetary problems but has

also made

TIME

riety of ingenious timing

on

in

"Punching-in"
STROMBERG

nical,

services

of

than 225,000 in North America and

more

In the

body

one

world-famous

many

products.

with

judgment of the Council,
"real progress has been made in
establishing the Fund as a tech¬

daddy of

alarm docks, is

Bank

by consulting and advising
them
on
major ■ problems
arising in the administration of

time-telling need

abroad

Copies of the full Annual Report
are

available

on

♦Reg. U. S. Pat. Office

clocks

are

•

our
or

Westclox

request.

over

the

•

fadories

export sales,
watches

and

distributed.

are

to meet the type of

financing which the ECA program
is designed

to cover and that, in

general, use of the resources of
the Fund is limited in accordance

with

its

purposes

to giving tem¬

assistance

porary

balance

of

in financing
deficits on

payments

current account.
In

of

Sivrliyc"N i-W; y

its review of the operations

International

the

Council
billion
made

1947 to

noted
dollars

during

that

the

Bank,

over

a

in loans had been

the

period,

May,

September, 1948, including
the

loan commitments to France,




iy'iiilllil

half-

(Ifsjaox DIVISION,

M SAdf-M*#, p. *

S£TH THOMAS CIQCAS MVISiM, THOMASTOH, CON*,
STflOMBYBG THAI CORPORATION, NSW
•......-

r,

-

....—

.

YORK, M. Y,

*

* ] WJSTIAH ^j^QWAKY, lTO.,W?MtO«OMH, OKI.
HAYDON MANUFACTURING COMPANY, TOMtlMGIOM, COWt.

--a*****"

18

COMMERCIAL

THE

(1186)

FINANCIAL

&

CHRONICLE,

shares, and in dollar
$106,646,375 to $127,975,650. The additional funds put
into common
capital are to be
supplied from previous earnings
now in undivided profits.
Formal

Thursday, March 17, 1949.

10,238,052

amount from

News About Banks
CONSOLIDATIONS
NEW BRANCHES
'

NEW

bankers

and

OFFICERS, ETC.

REVISED

action
be

all

stock is
regular meeting
of directors on May 10, and it is
contemplated that dividends at the
current annual rate of $2.50 per
on

.

'

The Chase National Bank of the ' the

City of New York has announced
the opening of its second
office in Japan in the

banking
Yamato

Building in Osaka, Japan. The
other
Japanese
branch of
the
Chase National Bank is located in

bank

*

*

*

Frank Mullen has been elected

Vice-President

Controller

and

oi

Greater New York Savings Bank,

Renard

Brooklyn, and Ernest D.

and

Vice-President

named

appointed Assistant General Man¬
ager of the bank at its head office,
Toronto, Canada. Ernest H. Mitch¬

mortgage officer according to the

ell, Vice-President of the Cana¬

March 12.

dian Bank of Commerce

was

New

Tribune"

"Herald

York

of

(Califor¬

si*.

Alexander has been with the bank

of the State Street Trust Company,

39

Boston,,

and

'

years.

Mitchell

Mr.

36

sj:

,,

was

March

on

*

Trust

Manufacturers

Copley

Manager of its
Square office, in Boston.

*

*

*

Company

also

11

elected

u,::

■

*

<

of

of

the

the

East

*

*

Bay official staff

Anglo

Bank

of

California

San

nounced

on

Calkins,

o

National

Francisco

were

an¬

March 7, by Allard A

President.

Elwood

J

.

been manager of Anglo's Oaklanc
main office for the past 6% years
has

been

the

heac

in San Francisco; George
Keffer, Vice-President at tilt
Oakland
main
office, has been

M.

Si?

The National Exchange' Bank of

transferred to

office

named

[

Vice-President

and

Man¬

of that office; Elvyn C. Evers,

Assistant Vice-President and Man¬

the

on

British international trade situation is not
1

and has been with Manufacturers
Trust

National

Bank

Manufacturers

acquired

was

Trust

by

Company.

Mr. Henry, a graduate of Wharton
School, University of Pennsylva¬
nia, has been with the bank in
various departments of its opera¬
tion since

1936.

also

is

that

announced

Otis

Va.

of the Currency.

of
*

*

Company since 1937 when

the 93rd Street office of the Chase

It

Wheeling, W.

sis

British exports

y

I

Berkeley

its 100th anniversary
on March 5, the Detroit Bank
of
Detroit, Mich., publishes in its
March "Monthly,"
"The Detroit
Bank Story," covering, the period
from the inception of the insti¬
tution in 1849 to the present time.
Founded as the Detroit Savings
Fund Institute, the bank, it is
Marking

March

All

office.

became

ap¬

effective

on

15.

are

matter

mere

a

of form

received

much

so

;Mr.

Brown

reference

as

ba'ance

of the governrri

e

For

t.

n

though

iven

the

statement

made

'

the
Parliamentary
Secretary
10
the Foreign
by

the

truth

the

ports. If a large part of the Brit¬
exports is paid for with the
aid of war-time sterling balances,
tion

truth

is

"gap"

out

at* the

imports and exports if.
part of the latter are given away
practically for nothing. Statistic-'
ally an overall balance of overseas'
trade may have been achieved—•
though even from this point of
view it is permissible to consider

the

at

wrong place.

Throughout 1947 and during the
greater

part

of

1948

British

the estimates of invisible exports

of¬

ficial

of Coca Cola

1857 resulted in the bank's incor¬

change, an¬
nounce
that; it

nomic situation, in order that the

is

tensified

Bottling Co. of New

been appointed to
serve
on
the Advisory Board of
Manufacturers
Trust
Company's
York,

have

poration; its name at that time
was changed to
the Detroit Sav¬
ings Bank, by which it was known

--

,

-

«-

'

;

<

the New York

S t

realize^ the

k

o c

Ex¬

*

*

■»

proposed

that Robert A.

the word

*

harder

the

main

bank

heretofore

5 Park

Place,

three

years

office
has

branch
ago
in

a

the

of

at

been

was

opened

bnq of the most amazing centuries
in the history of makind."

this

J
_

•;>"

.i

.

*

in

#

temporary
quarters adjoining the new build¬
ing conveniently located to serve

Mercantile

National

the large residential and business

las,

has

Dan D.

Rogers, who has been

for
a

Vice-President and director of the

Texas,

Bank,

Dal¬

election

accepted

the

Robert A. Lovett

many

at

the Park Place office

abling it to serve
efficiently.

its

en¬

customers

more

:v, ;

;

;

Robert
member

Wyckoff
of

the

Bernard,

New

York

a

"The

firm of Bernard, Remsen, Millham
6 Browdish, died of a heart at¬

tack on March 10 at the Municipal
Court, Borough of Manhattan. As
attorney for the East River Sav¬

Mercantile

elected

H.

L.

Bank's

Chairriian

Nichols,

of the board and

board

the

of

last

eight

Southwestern Public Service Co.,
as
a
director of the bank, suc¬

ceeding Rogers."
■

■'

"Times"

the

Los

Angeles
March
11,
H.
W.
Vice-President and

of

Sanders,
Treasurer
Detroit

Dollar

(Mich.)

\
f

director

'

:

Rochester American Insurance

$

America

of

San

of

issuance of
on

tional

of

Dis¬

the-

work in World War II. He served

Commander and

basis

the

of

Bank
at

of
a

stock divi¬
one

addi¬

each five shares

This dividend has the ef¬

increasing

was

Navy Cross.

awarded the
-

,

m. g. Newcomb Agent
For Federal Land Bank

the

common

,r




public

1947

should
the

crease

output

that

ensure

effort

and

the

and

of

keeping

in¬

Innumerable

the
at

line

Among others,
Sir
Stafford
Cripps, during the
debate on the American Aid Bill,
put forward with some emphasis
the claim that in'1948 Britain had
achieved

an

overseas

What

overall balance of her

trade,

visible

the

as

trade

speedy

about

of

Macdonald

G.

Newcomb

as

was

at the

more

gress
Britain's

is true, being a
experienced politician than
Mr. Mayhew, he did not follow
up this claim by a statement that
Britain was no longer interested in
recovery
but in experimenting.
Indeed, he sought to cover himself
by pointing out casually that an
of

our

mean

dollar

tion of John T. Knox to the
tion of Deputy Fiscal
will

be

Agent.

posi¬
Of¬

Nassau Street, New York City.

continued

at ,31'

Aid

smooth passage of
through Congress

that the statement

tion.

share

the

this

deficit.

experience

British

But

dollar

deficit.

any superficial reader of
speech—that is, the over¬
whelming majority of the public
in Britain and abroad—the dis¬

tinct

tive

to

impression

was

conveyed

that the British Socialist Government has succeeded in
i.*v>

politicians

Britain's

;

co very"

criticized

is

a

Conserva¬

for
"belittlingtowards
readdresing
non-

progress

when

British audiences

or

readers. But,

the possible adverse effect of such

pessimistic
in

utterances

comparison

that

may

.Qri.,

disappear

with the

dangers

arise from overstating

solving; the1 the achievements.i
Ll..

that;

Ministers

weapon.

often

the

make
realize

achievements

overstate

have

j

will

Government

double-edged

the

considera¬

hew, Congress may hew off some
of the
Marsnall Aid." Possibly"

account

about

under

quote the pun that cir¬
culates in London freely, it wasfeared that "thanks to Mr. May¬

to

on

made

To

safeguard

cisms

was

precise moment when Con¬
had
the
allocation
of

He said just

his

their fiscal agent and the promo¬

and

Marshall

visible exports. It

overall balance does not

particularly unfortu¬
point of view of the

was

covered' by the surplus of her in¬

elimination

every

nate from the

deficit of

Was

in

But

opinion in the respective country
of the politicians who deliver the
speeches. From this point of view
Mr. Mayhew merely followed the'
established practice.
*
,

Mr. Mayhew did

Success-.

Lake

Aid.

been, achieved. And it has
unfortunately become a practice,
to deliver speeches at UNO con¬
ferences primarily from the point
of view of their effect on public

speeches by Min¬

as

en'danger the continuity

has

during recent months took

same

even

Marshall

that Socialists claim that recovery

con¬

sumption.
isters

that,

fact

of

electoral considerations,
are
at times apt to overshadow
considerations of public interest..
It
is
for
domestic
consumption

raising

down

the

stressing

face

country

British

and

towards

trade

it, it appears to
be balanced. Admittedly, in doing
so they tend to weaken the eco¬
nomic effort of the British public,,

towards

maintain

on

the

on

unquestionably
outweighed its

was

in

to

disaster

marks

8,531,710

to

drive

from

Federal Intermediate Credit Banks

appointment by

fices

outstanding

it

desire

country

British

that

electorate

They think
it only natural that they should
concentrate
their
publicity

austerity
grave situ¬
the progress achieved

the

less before the com¬

or

is not really balanced.

a

The Federal Land Banks and The

has announced the

eapital structure of the bank from

shares

the

enough about this'to
himself against criti¬
of being overoptimistic. In answer to critics he
is in a position to ouote his re¬

The Farm Credit Administration

Francisco

common

share for

owned.
fect

a

the

'«holds

tinguished Service Medal for his

*

*

special meeting on March 7 voted
overwhelmingly in favor of the
dend

Kenney & Powell

of, Los

Angeles.
Shareholders

Niational Bank of Detroit

NEW YORK

elected

member of the board of directors

Manhattan Life Insurance Co.

Lovett

Union

of

was

of Union Bank & Trust Co.

Youngstown, Ohio
'

California,

a

Savings & Trust

"

•'

and

Oil Co. of

Trust Co.

•

War I as a Navy pilot,
attaining the rank of Lieutenant

'

According to

appearing in court for

was

'

which

her

Mr.

in World

-

'

ings Bank of New York, Mr. Ber¬
nard

tions to become Under-Secretary
of State.

12 months

ing general election, to explain to

accepting

economic

drifting

director of the

a

j Politicians being what they are,
they do not go out of their way,

spurred to in¬

in face of

saved

greater

assignments, Mr. Lovett
"Rogers began in 1909 with the resumed his partnership with the
old Guaranty State Bank & Trust- firm ou. June 1, 1946. In May, 1947
Co. The change will be effective he again
relinquished his partner¬
ship and other business connec¬
immediately.
s

law

having
the

wartime

March 9 which also said:

eco¬

recovery.
The govern¬
desire to claim credit for

prior to
"""
—
the war, Mr. Lovett has spent the

years

part

the

Eco¬

deficit.

towards

ment's

firm

population in the Chelsea District. as active; Chairman of the board years in government service.
He withdrew from Brown Bros.,
The greatly increased business of for the National
City Bank of
the bank has necessitated larger Dallas, formerly the Liberty Harriman & Co. in 1940 to accept
space
both for serving savings State, it was announced on March appointment as Special Assistant
customers
and
the
handling of 8. Henry C. Beck, Jr., President to Secretary of War, later serv¬
mortgage loans. The transfer of of the company bearing his name, ing as Assistant Secretary of War
certain departments to the new was named a director,- according for Air in charge of the Army Air
building will also relieve conges¬ to the Dallas "Times Herald" of program. After five years in these
tion

and

ation but to

year.

A p artner

..

of

over-optimistic.

nomically there is still a gaping

efforts.

measures

.

While

gravity

rather

as

During the sec¬
ond-half of 1948, and even more
since the beginning of this year,
the
trend
of
propaganda
has
gradually changed. To an increas¬
ing degree the stress was laid no
longer on the need for working

will
6, 1936, at which time Lovett
"Savings" was dropped, rejoin t h eThe
new
main
office
of
the and the title, The Detroit Bank, firm on April
1-. He resigned
Broadway Savings Bank at 250 adopted. Included in the "Month¬
West 23rd Street, opened on March ly" are "High Lights of a Cen¬ as Under Sec¬
15, it was announced by Thomas R. tury," in which are set forth vari¬ retary of State
in January of
ous
happenings, year by year, "in
Cox, President.
'•

.

workers should be

until Jan.

Fifth Avenue office.

publicity pursued the aim
making
the
British
public

of

It

balance

wrong

especially

Britain's international
is relatively easy to-

in

accounts.

a

But there
opinions that it

two

accumula-;

of

sterling
indebtedness,
then
those
exports are useless
from the point of view of the'
solution of the problem of the;

argument.

no

blurted

was

the

with the aid of the

or

moment.

wrong

was

of

be

The object

ish

of State, observed that
Mayhew merely blurted out
at

country does not export for

A

export trade is to raise the
means with which to pay for im¬

Mr.

it

a

of

crombie & Fitch Co., and G. Wil¬
liam Priggen, Secretary-Treasurer

of

through

achieved

the sake of exporting.

members

Guernsey, President of Aber-

this

that

fact

the

to

was

of
unrequited
exports
a deficit in hard curren¬
cies is well worth noticing.

noted, has experienced only two
changes of name:
in
1871
an
amendment to the Banking Act of

L.

would

result of the

a

surplus
against

personally

moment, .and

Bros., Harriman & Co.,
Street, New York City,

Wall

59

as

balance and the casualness of the

of

Mayhew

matter

Rejoin

rude shock

a

"Mayhew incident." Reports of the storm aroused in the United States
by Mr. Mayrnew's
speech
problem of the balance of pay1lat Lake Suc¬
nients, which is precisely the im- 1
cess gave rise
pression that was meant to be
conveyed. The difference between
jto strong
the emphasis laid on the overall
criticisms, not

could

Brown Bros. Harriman

for by imports.

not paid

by Congress of the second annual instalment of Marshall Aid

Whether

Lovett (o

British

as

LONDON, ENGLAND—Those who imagined that the allocation

Minister

the

pointments

favorable

as

politicians claim. Says export deficit gap is still large and even if
closed, dollar shortage would net be remedied because much of

(capital $500,- ager of the Berkeley office, has
Dr. Paul Einzig
Office was the
nue
and 27th Street office and 000),
was
placed in voluntary been made a Vice-President at
direct case of
:
;
John A. Henry of the 23rd Street liquidation on March
1, having the Oakland main office; Fred¬
the trouble, it was regarded as
W.
and Lexington Avenue office have been absorbed by the Wheeling erick
Clinchard,
Assistant
being but a manifestation of the
been appointed Assistant Secre¬ Dollar Savings & Trust Co;, ac¬ Manager at the Oakland main of¬
tendency
of
the
government's
taries.
Mr. Conrad started with cording to the March 7 Bulletin fice has been promoted to Assist¬
propaganda.
Mr.
McNeil,
the
'the Chase National Bank in 1927 of the Office of the Comptroller ant Vice-President and Manager
W. Conrad of its Fourth Ave¬

ran

*

"Mayhew incident," arising out of British
Labor Government's optimistic propaganda, Dr. Einzig contends

Commenting

oe

| The promotions of four members

ager

of New York announces that War-

issue

our

Schmitt, Vice-President, who has
*

Marshall H. McCormack, of Welnia), will succeed Mr. Alexander
as Senior Agent in New York. Mr.
lesley, Mass., Assistant Secretary
years,,

in

Feb. 24, page 868.

.

By PAUL EINZIG

I

be

appeared

crease

named.

•'!:

Alexander, senior
agent of The Canadian Bank of
Commerce, New York, has been
T.

will

paid, in line with
York, he was 67 years of age.
His mother, the* former
Jennie the bank's policy in recent years
Blair Wyckoff, was a member of to pay out in dividends approxi¬
the Wyckoff family of Brooklyn mately 50% of earnings. A refer¬
for
whom
Wyckoff
Street
is ence to the proposed capital in¬
*

*

in

Born

share

Tokyo, Japan.
William

time.

the

at

New

In British Trade Balance!

common

to be taken at the

CAPITALIZATIONS

Gaping Deficit

a

the rate of dividend to

on

paid

Still

-

M't

?y *

M

:•

1

:"v

* L* .X- 1

v \ \

Volume

169

Number 4786

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1187)
rrvw

asset, yield, and earnings plumbed for the year. But to those
relationships discussed above will who are
interested in investment,
be
of
no
benefit
to
the

i

Stocks Are Undervalued!

;

Charlas J. Collins, Chairman of Investment Cdunsel, Inc.,
Detroit,

have

Prices,

receded

months

in

time
over

the

again,
period of

a

face

or

and

the

of

benign

h

stocks

d

o

g y. v

are

un-.

1 ued.

e r v a

According
to
the analysis:
"Cheap n e s s,
when

one

discus¬

-to-three-

month
Charles

J.

is

n

that fie

matter

a

must

pared

e

S

of

S

what

0

the

today

pay

with

price

inter-

val,thecheap-

Collins
•

stock

as

will

f

a

price
com¬

be

its

to three "months hence;

ope

Here it is quotations

the dollar.. This compares with

on

$1.60 being paid for each $1 of net
tangible assets at the peak in 1946,
$2.20 in 1937 and $2.50 in 1929.

short-

over a

tinue

for

cause

of certain

for

selection

occasional

BOSTON,

an¬

are

that

only

occur

intervals."

Dodge

and

become

MASS. — Charles A,
Jack I. Loudon have

associated

with Pearson,
Co., Inc., 50 Congress
Street, Both were officers of H. L«,
Nason & Co., Inc., which has been
Erhard

&

dissolved.

Bancroft Mitchell & Co.

*

If

•

,

To Open in New York City

severely taxed by per¬
sistent
price
erosion.
In
due
course, their conviction was hand¬
somely-rewarded, but only after

'

•

Bancroft Mitchell

preliminary anguish of heart and

fices. at 1 Wall Street, New

mind.

City, to

many

ahead

years

There

the present
level

est

-

is

no

guarantee,

Bancroft

in

instance, that the low¬

of

prices

has

yet

"

Mitchell

will

form

Co. with of¬

York

in the securities

engage

business.-'Mr.

been

&

Mitchell

was

pre¬

viously with Shields & Co.

C. B. Richard

\On

to

Admit

April 1, Harold C. Richard

will be admitted to limited

nership in C. B.
60 Beaver

become
It

frozen

Co.,
Street, New York City,

members of the New York

Exchange.

be¬

cosi

into

the

economy.

is

doubtful, that is, if plants
can be replaced for less than half
again their current carrying val¬

Furthermore, when

ues.

con¬

one

siders the company after company

(Bendix Aviation and Montgomery
Ward, for' illustration)- that can
now

quotations, alone,
being purchased. To the
wno,

hancement

or

for

estate

reasons, is
to maintain and build

endeavoring
a
principal fund along the
sound

en¬

income

lines

that

he

would

shares

over

a

short

bought in the market for

less than its working capital alone,
one

appreciate the statement

can

same

of Marine Midland Trust's Howard

build

F. Vultee, that American business

business, the price quotation

any

for

be

period,

while

important, must be subor¬
dinated to the position and trend

of values."

"An investor in shares—that is,
who is not
continually shift¬
ing his position in keeping with
:

one

today

is

alive.

In other

worth

than

dead

more

words, sharehold¬

in

many cases, can forget
will, the 'know-how,'
plant and equipment, and can
liquidate their companies for

ers,

the
the

good

than

the

present

market

QUICK

still
SUMMARY OF

less

evalua¬

FOR THE YEARS

the monthly

"Turning to income return, the

eddies of prices ano.
sentiment—becomes a partner in

30

the

Jones average are

business where his funds

are

placed.

To him the most impor¬
thing is not where the com¬

tant

industrial

in

stocks

the

will sell thi;

turn

was

then

on

and

occasion

common stock

month

or

assetwise,

at an expanding
rate, and whether he has acquired

his shares af an attractive
figure
relative to such individual com¬
pany prospects. Under such a pro¬

the

in

the

1942.

Stocks

preceding that
late 1937 when, after an
collapse in market prices,
return

attained.

was

year

were

that his values

nessed

yields

are
increasing and
period of time, the
rriarket quotations for the
shares-,

well

as

a

the

as '

will
such increase.

income

return

necessarily

thereon,

reflect

in

1946,

were

opinion

that

stocks

selected

common

undervalued

are

at

the

present time.

A pessimistic public
engendered by fears
doubts as to aptness of

psychology,
of

war,

the legislative program

being

re¬

quested of the present Congress,
by an apprehension that post¬

and

boom

war

will

be

followed

by

market

moved

1949?

the fundamentals that give value
shares over any sustained pe¬

riod—another picture is present.

-"On

the

basis

of

net

tangible
assets
(plant,
equipment,
and
working capital less all debt), the
representative and leading Amer¬
ican
companies making up the
Dow-Jones industrial average
available at

a

are

stock market evalu¬

ation of around $1 for each $1 of
such assets. This low
evaluation,
which

ignores good will, patents,

secret

processes, and other valu¬
considerations not reflected

able

by

balance sheet, has only been
witnessed on two previous occa¬
sions in the past 22 years.
One
was ^ the
big depression of the
early '3Qs, when, for the deficit
year 1932 (General Motors com¬
a

sold

mon

these
sets

at under $8 a share),
companies' net tangible as¬

were

available

at

around

52

cdnts.on the dollar. The other was
in early 1942, or at the ebb
point




1,146,500.80

Gross Income

.

Income

-

1,343,654.32

'

up

and

can

Foreign Income Taxes

Section

cash

net

dividend

9,042,499.64

9,325,458.19

$
ASSETS

Net Ificome Before

Deduction of

Minority Interests

14,917,202.72

14,758,683.60
•

Deduct

•

equity of minority

t holders of subsidiary's

102

ratio

OVER

157,000,000

stock in income

common

57,400.15

-

-

Net Income

•

•

9

•

xxxx

127,358.11

14,859,802.57

•

®

14,631,325.49

OVER

accumu¬

lations, is still active and the
corporate

24,084,141.79

•

Act, which bears

excessive

MILLS & PLANTS

Provisions for Federal and

pro¬

1948.

Revenue
on

23,959,702.36

Foreign Income Taxes

it be said

of

the

678,458.53

Provision for Federal and

be less than in
down

1,457,579.52

Charges

24,762,600.32

Net Income Before

1929,

in the face of

But

25,417,281.88

IN 30 LOCATIONS

grams, by and large, are ended or
nearing completion, meaning that
cash needs for 1949 will
probably

ments to

to

Credits

next

when

Corporation expansion

of

values, income
yields and prospective earnings—

(

i-*-——•.

that dividends will be reduced in

terms

asset

TIMBERLAND

-

buying points alluded to
but, in each instance, the

postwar collapse, is responsible. In
of

OF

prices, wit¬

1936,

such reductions.

our

23,418,946.00

Operating Income
Income

1937

tractiveness

is

24,270,781.08

1,850,000 ACRES

'

7.7%

might be reduced it can be said that
they were reduced after the 1942
above

it

120,445,637.30

almost
a

"To the argument that dividends

and

shares,

$143,864,583.30

138,402,144.86

REGIS

1947

$162,672,925.94

and Rentals

Expenses- \

under 4%.

"Under the last mentioned defi¬
nition as to what constitutes at¬
in

1948

Cost of Sales and

;

in

again, historically speaking,
distinctly underpriced. : At

that,

over

was

1933

the other extreme of

investor knows

ST.

:

The

The

was

share

the

'

'

preceding
stocks

prices,

(•

were

yield got to around 7%.

31, 1948 & 1947

?:Net Sales, Royalties,

bargain counter and

regardless
of
what
may
prove the near-term direction of

gram,

DECEMBER

7i

Dow-

currently yield¬
ing 6.3%. The last time this aver¬
age afforded such an attractive re¬

next, but whether the
company is progressing, earnings

pany's

ENDED

FACTS

ABOUT

CONSOLIDATED INCOME

tion.

13,000

EMPLOYEES

disburse¬

Dividends Paid: Preferred Stock

income is still sub¬

Companies like duPont,
General Motors, and U^S. .Steel
have already increased their rates.

"Finally, there is the factor of
earnings. Let us begin by saying
that earnings may be off this
year
by as much as 25%. This is not a

$

Common Stock

normal.

Provisions for
—

amounted

to

828,208 "
4,136,571

depreciation and depletion charged against income

$4,568,416 for 1948, and $3,576,403 for 1947.
OVER

17,000

STOCKHOLDERS

prediction,' but

merely echoes a
general conception at the moment.
a decrease would leave earn¬

Such

ings, for the group making up the
Dow-Jones industrial average, at

ST. REGISTRAR

around

$15.50. On this basis the
industrial average, at present lev¬
els of 175, is selling at around 11

times

earnings.
the

over

past

This

low

v;')

and

R

rate,

two

decades, was
equaled or broken only during the
war years
1940-41-42, in late 1937,
in the early '30s—each

a

230

').

PARK

CHICAGO

AVENUE,
•

NEW

BALTIMORE

•

IN CANADA: ST. REGIS PAPER CO.

pe¬

YORK
SAN

17,

N. Y.

FRANCISCO

(CAN.) LTD., MONTREAL

riod when stocks, in the
light of
their subsequent price action, were

distinctly undervalued.
termittent

mism,
average

the

peaks

of

PRODUCTS

At the in¬
i

public

Dow-Jones

opti¬

industrial

generally attains.a price-

earnings relationship of 20.

v.

:

Bags and Bag Filling Machines
Papers .. Panelyte-laminated plastics
.

\

...

Multiwall

.

i,

Printing, Publication and Converting
... Tacoma Bleached Sulphate Pulp
..

part¬

Richard &

factors, such
wage rates and taxes, that have

as

individual

!.

offering

opportunities

those

.

of the war, when these companies
were available at .'around 85 cents

range period and
that are

r

careful

courage

"The ; present, low
dollar-forsing common
stocks, re-i. dollar evaluation of net tangible
quires defini¬ assets, however, overlooks an im¬
tion.;
Tos the
portant factor not present in the
trader, who is:- iwo earlier periods just mentioned.
This is. the higher price level that
interested
in
now
stock
market
prevails-and, to a consider¬
swings over a able degree, will probably con¬
:

of

,

1

o

that shares

other

at

against

as

immediate quotations, it ap¬

pears

.

c

longer-term, values

more

most

statistical and economic
portents. Planting time is never
i
v
asset and income values.
;
'
■;
so pleasant as the harvest period.
t.
The investment advisory firm, Investment Counsel, Inc., of De¬ Those who
purchased stocks in
troit,- Mich., through its Chairman Charles J. Collins, has issued to 1941 and 1942 out of the belief
its clients a discussion of stock market conditions, in which the con¬
that they were distinctly under¬
tention. is made that because of temporarily depressed investor psyvalued, had their patience and
•,

Dodge, Loudon With
Pearson, Erhard & Go.

stock

trader.

Michigan, holds current quotations reflect temporarily depressed
investor psychology and give little attention to enlarged
earnings,

^

„

19

Ha**-*

"The

Stock

I

20

(1188)

THE

COMMERCIAL

&; FINANCIAL CHRONICLE-

Thursday, March 17,, 1949

Prominent Personalities
(Tenth of

a

Series)

\ ARTHUR WIESENBERGER

By HENRY HUNT

Prospectus

request from

upon

your investment

NATIONAL
RESEARCH

Stock

dealer,

or

On

from

SECURITIES

New

Dec.

York

Yields

31, 1948, 89%

Stock

of the 986

Exchange

Senior Partner, Arthur Wiesenberger & Co.
Members of New York Stock and Curb Exchanges

Highest Since '42
listed

stocks

common

dividend

Arthur Wiesenberger has
possibly done more to popularize '
investment company shares than any other
single person. His
"Investment Companies" Year-Book,
published since 1941, is
considered a "must" for
any dealer in such securities.
Al¬
though Arthur was originally interested

the

on

following
tabulation taken from the magazine, "The
Exchange," discloses that
a
large majority of these dividend payers yielded over 5% at the
year-end with the heaviest concentration in the 6 to 8.9% bracket.

&

CORPORATION

120 BROADWAY, NEW YORK
5. N. Y.

were

Distribution of 883 Listed Common

The

payers.

Stocks Paying Dividends in

,

primarily in listed investment company
stocks, in recent years he has given mu¬

1948

tual

Number

of Issues

(%)

Less than 2.

Yield (%)

■ <

Bullock Fund, Ltd.

2.0

2.9.

13

Dividend Shares, Inc.
Nation-Wide Securities Co.

3.0

3.9.

22

CO 0

4.0

4.9.

68

10.0

5.0

5.9.

99

11.0

6.9.

119

CO 0

.

00 CO
-

1

1

1

1

1

iiiiii

1

i

i

i

i

'

t-L o CO

i.

t

rt
;l;

^

10.9

1

I

1

6.0

12.0 and

mately

from

yields.
Investment
Dealers

19453

shares has

Dow-Jones

89

over

senior

Established 1894%

a

of

year, the net asset value of Wellington
increased, while the general market, as measured by the
Industrial and Composite Averages, has declined. •

Note:

Feb.

of the Fund

28, 1949:
'

(1) The rise in

at the

end

of

'

'

'

,r 2-28-49

2-28-49

$36,210,056

.

1948

52.90%

he

3.43

2.14

preferreds..

17,445,938

25.48

Arthur is soft spoken, a good salesman and
is a bachelor and dwells in a

27.41

10,986,617

16.05

12.99

Total

resources

—$68,455,562

Principal sales since the first of the

100.00%

:NCO&eOflAUP

48

WAU

101

A'jr.f.r.

STRUT

NEW

SCKK

S. N Y.
rutrcm

heart

common

works of art to the

Brooklyn Museum of Art, the Boston Fine
Museum, The Berkshire Museum (Pittsfield, Mass.),
Springfield Museum of Fine Arts (Springfield, Mass.), and
The New York Historical
Society.
His prediction for the mutual fund business is that it will

A Sales Record to Shoot At

become

an

increasingly important factor in the fundamental

Financial

about

years,

double

those

of

the

year

before.

The

is emblazoned

.

,

New

investing tlieir capital

field

(1)

1946

(3)

Savings Banks.
Government Bonds.

(4)

Investment Companies.

8,600,000

2,200,000

1947

15,300,000

3,500,000

1948

34,400,000

Authorizes $6 Million Loan to Israel

mittee.

Bond- Club
hold

its

of

annual

jHoward
come

W.

Knepple

has

be¬

associated with the munici¬

pal department of Wm. E. Pollock
&

Co., Inc., 20 Pine Street, New

York

City.

Mr. Knepple has been

V::'% in Wall Street for 25 years.

'

IN
,

BONDS

(Series B1-B2-B3-B4)

'

(Series K.1-K2)

COMMON STOCKS
(Series S l-S2-x>3-S'4)

The

Prospermia from
local investment dealer

£7/ie

^Seorpe

New England
Fund

PUTNAM

1931

FUND
Coffin & Burr

Directors of the

nomic

On

19

the

Board

of

Di¬

rectors of the Export-Import Bank

authorized

a

credit

the

to

State

Putnam Fund Distributors, Inc.
50 State

Street, Boston

PORTLAND

BOSTON
HARTFORD

CHICAGO

BANGOR

on

authorized

March 10

a

credit

of

eco¬

ticipating is expected to amount
to the

equivalent of $1,500,000.

Because of the small

area

of the

Israel in the amount of $35,country, highway transportation
000,000 to assist in carrying out has
long been dominant over rail¬
the agricultural phase of the de¬
road transportation in transporta¬
velopment program and ear¬ tion of both goods and
passengers.

additional

an

$65,000,000

financing projects in the fields
transportation, communication,

Although this credit represents
10% of the total motor ve¬
hicle requirements of the State of

industry and construction.
The credit announced today in
amount of $6,000,000 for the

Israel for the next three years, it
is expected to go far toward re¬

purchase of buses and trucks is

tion which has become critical due

of

an

It

fleets

truck

carriers

operating

in

the

as

country.

the

chassis

of

buses

and

heavy trucks in the United States.
NEW YORK

had

of

only

Congress Street

Boston 9, .Massachusetts-

Bank

development program.
Jan.

common

Founded 1898

to

urgently needed for the execution of Israel's

The State of Israel intends to buy

Incorporated

^Prospectus upon request




of

of buses and trucks

and

of Boston
50

Board

of
nearly 20% in the size of the bus

£/3o&ton

of $65 million earmarked

part

$6,000,000 to the State of Israel for the purchase in the United States,

allocation from the $65,000,000.
will provide for an increase

or

Keystone Company

is

the

General Distributor

Tke

trucks

and

Export-Import Bank of Washington announced

that the

for

ORGANIZED

grour

buses

new nation, in addition to
$35 million already granted.

marked

PREFERRED STOCKS

for

Credit

by Export-Import Bank for allocation

will

<
-•

Life Insurance.

New Shares

Year

$1,500,000

day June 10 at the. Sleepy
Country Club. James D.
Topping, J. D. Topping & Co., is
Chairman of the Field Day Com¬
Hollow

It depicts the "Four Pillars of

Sales of

New Shares

Municipal
York

his literature in the unique trademark

Security"—

following table

Municipal Bond Club of Howard Knepple With
New York Field Day
Win, E. Pollock & Co.
The

all

(2)

Sales of

Year

on

designed by Rockwell Kent.

the
sales

Congratulations, Harry, Lon and Bert!

INVESTMENT FUNDS

his friends

The increasing popularity of Affiliated Fund is indicated
by
fact that again in 1948, as in each of the live
preceding

eys tone

in

entertains

savings program of every adult in the ,U. S.—comparable to
the present status of life insurance and
savings banks. This

,

Certificates of Participation

he

Despite the dullness of the general securities markets during
January and February, sales of the shares of Affiliated Fund, Inc.,
were slightly ahead of sales in the same two months of last
year.

were

.Funds

Manhattan where

Arts

So. California Edison

is the basis for this statement.

Custodian

of

Some of his acquisitions are reported to be
outstanding. He
is interested in the activities of
leading art museums through¬
out the country—some
years ago he was elected a Patron of
the Philadelphia Museum of Art and a Life Member of
the
American Museum of Natural
History. He has also donated

Gas, U. S. Steel, and the
4.48% conv., Allis Chalmers
3Vi% conv., General Mills 5% and Philip Morris 4%.

HUGH W. LONG & CO.

free spender.

a

four-story "brownstone"

the

and

stocks of General Foods, Southern, Natural

preferred stocks:

*

business associates on a lavish scale. His
hobby is col¬
lecting modern paintings, English antiques, and rare books.

100.00%

included the

year

v '-»■:*->>■< •; % '
v>
specializing in investof its kind in Wall

firm

He

2.63

'

Wiesenberger

Street. During the past decade he has spent over a million
dollars advertising and
publicizing the advantages of both
closed-end and mutual fund shares.

3.54

1,461,800

U. S. Government bonds and cash..
'

Arthur

was

only

53.43%

2,351,151

and

department near-by.

head, post-dates the turn of the century. (Ed.

and Holland, ^
In 1938 Arthur started his own
firm,
ment company shares—the

% 12-31-48

Convertible

Investment bonds

en¬

Scotland, Switzerland,

in

4

the

successful from the outset. In 1928 he
organized Hahn
Dept. Stores (now Allied Stores, Inc.) and was operating V.-P.
until 1930 when he joined E.
Naumburg & Co., commercial
•bankers. From 1932 to 1938, Arthur headed the foreign de¬
partment-of Distributors Group, Inc., where he handled a
large volume of business with investment trusts in
England,

and

Appreciation bonds and preferreds
seniors.:

in

Arthur himself was born in
1896.);
graduate of Columbia University, Mr. Wiesenberger's
early business training was in the merchandising field where

-

Common stocks

gentleman

sits

to cast a.watchful

seems

A

,

the diversification of resources

an

Its

Only Arthur's secretary,-a vivacious and

year, Wellington Furid has maintained its
position in common stocks and other'equities while investment bonds
and preferreds were slightly reduced and U. S. Government bonds
and cash were similarly increased.
The following schedule shows
on

resembles

looking

Dyke beard

efficient red

the

Since the first of the

;

.

Van

a

trance foyer and

securities, particularly the better grade preferred stocks, which
large part of the Fund's investments; (2) the relatively good
market performance of the bank, drug, finance, food,- insurance,
natural gas, tobacco and utility common stocks, which are substantial
holdings.
>
are

office

distinguished

a

with

Wellington Reports

V

?

first

This favorable comparison is due ot two factors:

'

CALVIN BULLOCK

private

eye on the research

the

may

are
covered with railroad and in¬
dustrial posters of the 19th
century. The
furniture is of the same vintage. The bust

interesting to note that stock yields today are approxi¬
at their highest on record in relation to high-grade bond

Since

or

by which dealers

walls

ei

_

of

Mailable

of publicity
pioneered in

English counting house of the 1880s.

It is also

frotbecttuu

share

^

?

11.9

means

Arthur's

92

'

—

a

full

successfully

now
advertise mutual funds within the
present SEC regulations
arising, from the
Securities Act of 1933.

128

CO CO

1

their

also

devising

of Issues

7.9

7.0—

9

has

•

Number
Yield

funds

and

'

(By Yield Groups)

The

bodies

Palestine.

Israeli

the

built

in

The additional cost

pounds

truck and

will; be

bus

in

of completing the
in which

program

Export-Import

Bank

is

par¬

only

lieving
both

the
the

to

trucks

transportation

of existing

over-age

buses

and

situa¬

the

and

steady

increase in population.
The

credit

Import

from

Bank

the

the

for

Export-

truck

and

bus program will bear interest at
the
will

rate

3J/2%

of

mature

terms

lished

are

for

in

the

pef annum and

15

years.

same as

the

These

those estab¬

agricultural credit

in the amount of $35,000,000 which
was

approved

on

Jan. 19, 1949.

_

Volume

169

Number 4786

THE

COMMERCIAL

the

amount

within

Sylvia F. Porter, columnist and government bond expert, sees more
safety in government securities during deflation period. Says Treas-

«

should adopt positive debt refunding policy, based

ury

diate and

one

ment

'

long-term issues.

FINANCIAL

of

obligations

CHRONICLE

due

will rise to nearly1.
Logical aeot manage¬

year

$92 billion.

interme¬

on

&

would

indicate

wisdom

tne

Of

upon' which

policy

cent-years,
has had

corrected.

By issuing

the Treasury could

consideration of

restricting

of

schedule

are

any

policy should be based: <'
"(1) Because of the Treasury's

spacing maturities so that tne
heavy loads and gaps in today's
longer-terms,

(1189)

shortest-term

direct

refunds

in

obligations

to
re¬

the passage of time
unusually severe and

an

influence

on

government

21

'(4) Beyond question, all insti¬
tutional * invesuis

should

secondary reseives
readily marketable
cient

to

mands

cover

for

all

funds

—

issues—suffi¬

foreseeable de¬
and

margin of safety.

have

short-term,

to

allow

a

But, in addition,

investors should hold
longer-term
obligations for the purposes of in¬
come.
An average

Speaking before the Annual Savings and Mortgage Conference help restrain an undesirable price bond portfolios.
Statler, New York rise in the market should one de¬
"Surveys indicate that portfolios
maturity for a
City, on March 14, Miss Sylvia Porter, editor and nationally-syndi¬ velop in the future. As one in¬ of banks in general are much government list ot five to six years
cated newspaper columnist of "Reporting on
formed Washington source com¬ shorter today than at
could not be criticized as underGovernments," a weekly
any time in
newsletter on
*
:—
mented, the arguments for re¬ recent years.
And neither eco¬ conservative.
Yet
today, many
-U. S. Govern¬
dous domestic
and
international funding with otner than certifi¬ nomic nor political factors now bank
portfolios of governments
ment securi¬
cates 'are. at least persuasive—if
expenditures.
discernible confirm this as the average out at far, far shorter
"Since neither of these may be not conclusive.'
wisest policy.
ties, empha¬
than this."
,}L
sized that "the
forecast, it appears appropriate to
"(2) While the prospects are for
"(5) On bank credit legislation,
Miss Porter concluded her ad¬
debt manage¬
consider
possible debt manage¬ there is only the slightest chance a more positive refunding pro¬ dress
by urging banks to remain
ment and fis¬
ment and fiscal policies against a that
Congress will vote the '10 and gram, such coupons as 2Ya% and "as flexible in thought as Wash¬
cal policies of
background of
easing
inflation 4' legislation proposed by Presi¬ 2V2% are not to be anticipated
ington
fiscal
authorities
insist
the
Treasury
pressures
and
rising
deflation dent Truman and being incorpo¬ until now ineligible bonds enter
they are in policy" and to rec¬
and
Federal
rated .in a bill by the Federal Re¬ the bank-eligible lists.
pressures."
The first ognize the
opportunities for safe,'
Reserve Board
Miss Porter divided her talk in¬ serve
Board, regardless of the date for this is May, 1952.
profitable investments available in
will
continue
to two major parts: a listing of
salesmanship abilities of Federal
"(3) The stated policy of this the government market. "The in¬
to exercise
a
probabilities for the immediate Reserve Board Chairman McCabe. Administration—the White
House, stitution which follows the basic
future and general suggestions on The
profound in¬
probability instead is that Treasury
and
Federal
Reserve rules now will have
of the American Bankers Association at the Hotel

.

fluence

on

trends

of

the

look:
Sylvia F. Porter

for

"(1) It is probable there will be

-the rest of our

tors

determining
is

moves

these, policies

debt

actual

on

taking

management

atti¬

realistic

a

able

to

carry

investment

out

a

program

realistic
returning

maximum income and profit with¬
in the bounds of
"The

'

appropriate safety.

prospects for important
government debt man¬

in

"shifts

agement

policies

in

the

not

too

increases

Treasury

certificate

yield

pattern

earn¬

definite

clues

actions

to

banks should take in

which

spheres out¬

side the highest-grade list, which

is,

of

the

course,

government

market.

authorities

serve

have

maintain

to

order

and

about

worry

undue

stability in the government bond

said,

by the special session—so that

market;

continue the cheap
money policy; to extend support
to long-term bonds when the need
for
support is demonstrated; to

movements lie ahead."

hold

CHICAGO,
ILL. — Louise
GJ
Rice is being admitted to limited1
partnership in Daniel F. Rice &jj
Co.,
Board of Trade Building,

serve

requirements

are

re¬

not auto¬

deadline-—and

the

board

will

as

'reluctantly' accept the authority."
In discussing general bank port¬
folio

to

the 2i/2%

appear

ping

no

that

would

anchor until there

undue

risks

anchor.

in

This

drop¬

policy

,

particularly

seem

appro-'

policy, Miss Porter suggested priate should deflationary trends
are

four

premises gain ascendancy in coming months.

major

"no

matter

what

Daniel Rice

members of the

Exchange,

on

to

to

allowed

be

closer

fluctuate

to

New York

1

toning

au¬

their

down
/

'

"(2) It is probable that major
Treasury maturities through the
will be refunded into

summer

new

certificates, carrying a 1
% rate
and the Treasury will not begin
on any major program involving
intermediate securities until later

cial

are

This program might be

funding.

short

maturity positions in gov¬
in view of today's eco¬
and

tomorrow's

started,

political realities and
probable economic and

however,

issues

"(3)

...

where

none

earnings problem

need

exist

or

intenr

sifies an already existing earnings

problem.. Moreover, it adds to a
bank's temptation to over-reach
in other, more speculative mar¬

stable

to

•

SULPHUR WELL

bond
strong

DEPOSITS...

spring—which the present
economic
outlook
suggests well
be the case—there is

may

bonds for

"It creates an

re¬

into the

This results in sacrifice of income

.

1949,

for

up

government

remains

market

in

•n O:

the

sary.

come

the

If

political realities. They are mak¬
ing what amounts to a fetish of
'being short for shortness' sake.
where such sacrifice is not neces¬

late

higher-coupon

large-size,

bond

too-

ernments

nomic

jl

and

Reserve

even

are

chance that the Treasury will
limits

chases

of

institutional

on

series

G

F and

Practically all of the elemental sulphur used in this

good

a

country

lift

sale

bond

Institutional

of

savings

'&0&(\Ony'

in

the

cap

rock

SEDIMENTS

POROUS

depths of 300 to 2,000 feet below the surface. It is
melted in

LIMESTONE

price

-

and SULPHUR

place by pumping into the deposit water

heated under pressure to a temperature

companies, savings banks,
savings and loan associations, pen¬

above the
LIMESTONE,
SULPHUR and

melting point of sulphur. The melted sulphur flows

ANHYDRITE

etc., were permitted
to $1,000,000 of the Fs
and Gs combined (issue price) for
the calendar year, provided the
purchases in excess of the existing
$100,000 limit were made in a

appreciation these days, it makes
up for this lack by offering the

,/

mined at

ance

sion

(GUMBO)

s>

over¬

LIMESTONE

insur¬

as

occur

lying certain salt domes. The sulphur is

1948, such

July,

investors

UNCONSOLIDATED

from mines in Louisiana and Texas.

There, the sulphur deposits

savings bond drive, scheduled for
May 16 to June 30.
Under the
formula devised during the F and
G

comes

pur¬

period during the next

a

mercial and industrial banks hold¬

kets to obtain the

tial

to

cover

While the United States

expenses.

Government
fer

earnings essen¬
overhead and other

market does not of¬

opportunities

for

great

to

funds,

buy

great advantages of stability and

ing

official

time

protection.

-

-

r -

-')

e:;

-

"In any:

cline

or

period of Economic de¬
'softness,' these-'advan¬

tages will gain in importance. The
bank which has

in

sition
is
on

worthwhile po¬

bonds

and

receiving satisfactory earnings
these holdings will then be in

art

enviably

—both

..V;;;.-./;;-:

Miss

key

comfortable position

psychologically -and actu¬

ally.'.'
■

a

government

to

Porter

declared

the trend of

bonds in

v,;:
that

the

government

the next several months

away

sayings

.

face where it is allowed to
means

"(4)

buy

The

'positive'
which seems

program

Loading operations at
Sulphur

refunding

,

so

built at

continuing
inflation
threat, this threat would appear
to be valid only if we experienced
a
disastrous crop failure or,* be¬
cause

Cold

of

an

intensification of the

War, took

on more tremen¬




of the huge vats of

Sulphur

Texas

are

Such

mine.

constantly

being

mines, from which shipments

are

continually made.

of increasing importance
1950, 1951, 1952 and in the years

thereafter.

maturities

Bond

over

the next few years carry coupons

ranging, from

2%

do

3y8%

and

of

the

of

one

Newgulf,

become
in

issue

"Despite public statements

our

our

proper

Treasury

about

at

mountains

logical for the Treasury should

the movements of business.

added.

rif,

up

is only one relatively small

the signs that de¬

is produced.

*..**,

to $100,000
(issue price)' of the Fs and Gs
combined, also provided the pur¬
chases were made during the spec¬
ified offering period.
to

there

"At this time,

j= ANHYDRITE
q:

pure

deposits ' or issuing
of deposit were

thus, the key to all other
high-grade bond markets—will be
:

-

Com¬

—and

flationary forces are moving into
control are many and clear," she

sulphur nearly 100%

--sfe

solidify in vats. By such

certificates

permitted

and

from the limestone and is pumped to the sur¬

up

specified two-week period.

l%s in
can

higher-coupon
still

.

1950.

refund

Thus,
these

intermediates

considerable

save

EXAS

the

to

eliminated.

If

replace

and

75 East 45th St.

interest.

teriific

floating

the next three years

just rolls
maturities

over

Mines:

securities

New York 17, N.

Y.' JNC;

Newgulf and Moss Bluff, Texas

the

Treasury does
not move out into longer-term refundings, it will be building up
a

ULPHURfO.

into

Banks will be eager for the inter¬

mediates

debt.

If

L:.v.

•

■

-

over

the Treasury

callable issues and

intp new certificates;

'

Stock

March 24.

the

to

argument temporarily.

"Too

maintaining

Admit

-

continued.
banks

J

long rate,
but in view of present economic
move

when

commer¬

economic

'peg' be only on the long
2%% rate and that the short-term

rate

to

she

ernment

"Many banks are overlooking
opportunities in the government
market right now," Miss Porter
many

reason

losses,"

the authority granted to the board

Re¬ there
logical

a

Board—is

argument in urging that the gov¬

this year.

i

for

months, at least.
"Fundamentally,
Federal

thorities

improve their

one-

set

some

uncertainties,

banks to

for

seems

Congress will 'reluctantly' extend

until matically lowered after the June

rate

VA%

of

government paper

distant future should be carefully

for

basic

the

to 2y2% for long-term

year money

weighed by all banks. For in those
shift will lie definite opportunities

ings While enhancing the; safety of
their portfolios,
In them will lie

in

after mid-summer and the present

tude, and only that institution will
be

further

no

lives.
Only the institution which
keeps closely informed at all times
on the economic and political fac¬

and

She listed

these points in the immediate out¬

,inve stment
markets

no

bank portfolio policies.

all

I

■

•

*

*

'

•

7 •'

5

22

(1190)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, March 17,

1949

Can the United States Avoid Socialism?

Canadian Securities

By.ERIC JOHNSTON*
President, Motion Picture Association of America, Inc.

By WILLIAM J. McKAY

Former Chamber of Commerce head maintains instead of

Recent

speeches by Sir Stafford Cripps, British Chancellor of
the Exchequer and Governor Towers of the Bank of Canada, although

ditching capitalism, we have preserved priownership system by evolving "insurance economy." Declares neither laissez-faire nor Commu¬
can
prevent depressions. Stating it is equally foolish for the State to do
everything as nothing,

vate

;

nism

highly encouraging with regard to past performances, both contain
implied warnings concerning the future. In connection with the grati¬
fying

he advocates the middle road to avoid

made during the$>
past year in both countries the currency controls and the artifici^
vital role played by ECA aid is rigidity of sterling.
frankly admitted. The point is also
During the recent period of sell-;
stressed that despite this assistance ers' market the British Socialist
the problem of U. S. dollar short¬
government, and to a lesser degree
progress

.

,

still acute.

age is

Liberal administra¬

Canadian

the

of tion, have been able successfully
both these official statements it is to minimize by increasing govern¬
logical to deduce that an economic mental controls the effects of the
high point has been reached at pressure of natural economic
least temporarily in both Britain forces..
Now with
the obvious
and Canada.
By grace largely of trend towards buyers' markets in
Marshall Plan operations Britain a growing list of commodities and
has been able to bridge the previ¬ increasing difficulty in finding ex¬
ously wide gap between exports port Outlets, the evils of over¬
and imports. Similarly Canada in valued
currencies maintained at
the first 11 months of ECA oper¬ the expense of drastic import con¬
ations has received $671 million or trols, are becoming ever more ap¬
40% of the offshore authorizations. parent.
The current conditions
Although it is learned from British now favor courageous action on
White
Papers published in the the part of the British and Cana¬
past few months that Britain has dian governments to break the
achieved
near-balance
in
world currency impasse. The solution of
trade as a whole, it is now ad¬ this problem elearly lies in per¬
mitted
that the
overall
picture mitting sterling and - the Canadian
conceals a large and growing defi¬ dollar to find the natural levels at
cit with hard-currency countries. which exchange restrictions and
Governor Towers also frankly ad¬ import
controls are no longer
mits that 1948 turned out to be not necessary.
This would pave the
only a most successful but also a way for a general revaluation of
fortunate year as far as Canada's the world's currencies, the con¬
exchange position was concerned. summation of which Would constiReading

between

lines

the

Consequently he voiced the warn¬
ing that U. S. dollar revenue from
ERP purchases would not last in¬
definitely and therefore undue
optimism should not be based on

tute

long step forward towards
the elimination of. the U. S. dollar
a

shortage and
wprld trade..

freedom of

greater

Tonight I want to talk about how America can avoid Socialism.
But Tirst of all, I think we
ought to know what we mean when we say Socialism. It
means different
thipgs to different people. Do we mean the British brand of Socialism?
Britain's

<£>_

so¬

cialism is like
the

famous

Britisn

of

'arf

Both

the

Canadian

and

financial spokesmen single out the
problem of the U. S. dollar short¬
age as the root of their countries'
economic

difficulties.

spect

to

In

this

re¬

however they

form

merely con¬
general practice of
placing the principal blame for all
the

the world's economic
lack

of

U.

would be

S.

woes

on

the

dollar

more

exchange. It
logical however to

consider the tremendous influence

the

on

universal

tion of the
tions

economic

rigid

of

Britain's

universal

•

situa¬

world-wide ramifica¬

the

and

-I

and

currency

foreign

trade,

regulations.

It

is

efforts to expand and to liberalize

trading

founder

on

relations

the

sympathy with

rocks

of

now

British

a

market

free

offerings

as

a

in connection

with the

who

nursery

trend

rhyme

ting

named

My Son John,
with

and

shoe

on.

we mean

have

i

s

a

it?

sole

Eric A.

of the

state

the

is

of pro¬

means

duction and

distribution; the only
employer and the solitary boss?
Where

the

his job at

worker

is

chained

mean'what

we

some

of

ultra-conservative 'friends

my

when

mean

they

"Look

say:

here at home.

around you

got socialism

We've

free funds is likely to

considerable.

be

The

corporate-

The first

today

reason

a

after

earlier

especially
paper issues as

result of the cut in Swedish ex¬

in
the
price of lead,
finally staged a moderate recov¬
ery.
Despite continued favorable
reports from the new Alberta oil
decrease

the Western Oil group failed
to make any notable
headway and

the golds likewise remained
narrow

trading

in

a

range.

the

wonder

if

we

can

and

a big but
capitalism,
every shore by the
of socialism..

prosper

island

as

of

We know that our kind of

to

benefit

was

port prices, and base-metals fol¬
lowing the somewhat surprising

on

capi¬

talism is vastly different,from the
old-world brand which was rigged

can

Stocks

is

We

march.

13V2%

which

is that capital¬

socialism

and

many.

bid.

reasons:

ism is dead in most of the world

arbitrage rate continued strong at
weakness,

the

few

But still

escape

and- not

St, Louis

Municipal Men
Hold Outing

To

PROVINCIAL
MUNICIPAL

CORPORATION

we

wonder if

we

the trend.

The second

reason

;

is this: we're

afraid that socialism might engulf
us

if

sion

had another deep depres¬

we

the shattering scale of the

on

It

held

Thursday, May 5.

my
conviction that
American people
are
almost

of

afraid

they

are

And

another

of another

I

depression

Brink

A. E. AMES & CO.

now

that

the

colored the

We

.

INCORPORATED

.

are

youth.

buy¬

.

.

WALL STREET
YORK

5, N. Y.

saving

to

its

were no

ravages

and

of

ner

Trimble, senior part¬

Trimble

NY

1-1045




Mr.

Trimble had

vestment
more

been

banking

than 35

years.

in

the

business

than

the

shiftless, and the

memory sears our souls.

We

greatly expanded role

been little

than

more

a

We had used gov¬

us.

Instead

of

ditching capitalism,
we insured its continuity and pre¬
served
our
private
ownership
system and our private freedoms
by evolving what I like to call

an

We insured against old-age des¬
titution; we insured bank depos¬
its; we insured' the unemployed
we

insured

insured

minimum wage; we
stabler price for farm

a

products;

a

insured home mort¬

we

gages through government.

finally,
the

And
insured ourselves with

we

Employment

warn

Act

1946

thunderheads

so

car

we

take preventive action in advance.
All

these

lesser

to

acts,

a

greater

buttress

degree,

or

pur¬

our

chasing power.
So, in practical
effect, we insured the manufac¬
turer, the retailer and the profes¬
sional

of

man

least

a

a

was

an

We

epoch-making de¬

decided

and

then

and

we

didn't

want

the distribution of goods and
in the hands of private

jobless

recollection is

an
<

ing for

consumer were

then

now, overwhelmingly alike
that desire.

as

in

We made that decision because

private

ownership

proved

had

beyond, question for us to be the
best way to get production. Every
other country today struggles with
the problem of how to produee
Our problem - was to distribute
more equitably the abundance we
could produce.

decision

fitted

scheme

into

whose

the

address

by

Mr.

ters

of

in

those
our

freedoms,

bones.

they are

They

are

not

doms, they are equally determined
that

all

resources

our

public

and

private

must be administered to

for

York, New York City, March 10,
1949.

more

this

is

it is," he said,
socialism,- then X

of it."

'

insurance economy ap¬
proach offers Americans their

I

is

things
plenty and

want—security,

freedom.

.

recognize, of course, that there
conflict among these three

some

aspirations;
security,
other

if

we

two.

depend

overemphasize
sacrifice the

we

may

But

here

the good

upon

American people to
cate balance.
I

should

we

the

sense of

keep the deli¬

recognize, too, that the insur-'

ance

Resistance
in

ers

the

right

laissez

believ?

from

"total

the

left.

The

faire

extremists

sions

are

be

faire

and

on

nothing

from

comes

complete

ners"

will

approach

economy
resisted.

believe

on

plan¬
laissez

depres¬

inevitable.

They say
be done about them.

can

The "total planners" offer

a

sure¬

depressions—-total

planning;
It is time

that

total

exploded the myth

we

planning

de¬

prevents

pressions.
Look

at

nonent

of

Russia

has

Russia—the

great

ex-

total

planning.
But
depressions, Russian

style.
On

recent trip to Russia, I
myself
how
business

my

for

siw

develop in the Soviet Union.
When I told Molotov that Russia

rtn?es

has its business cycles, its u ~s
downs, he didn't deny it.
sponded
obliquely
by
"But

don't

we

have

and

Fe re¬

saying:

unemploy¬

ment.";
That's

if

Let's
A

an¬

don't have
can't have a

you

unemployment,
depression.

Russian

the

always

swer—that

you

But you can.
about that—

see

depression

"hard

means

times" for the individual, whether

it's

Russia

in

anywhere
In

ard,

America

in

or

comparison with

suffers

times.

But in

chronic hard

from

stand¬

our

worker

Russian

the

or

else.

Russian sbde, he
goes from "hard times" to intoler¬
able times, when even the bare
depression,

a

necessities

life

of

become

acute

•scarcities.
In America,
depressions have
generally been caused by over¬
production -and under-purchasing
power and by decline in new cap¬
ital investment in plant and equip¬
ment.

In

the

Soviet, it's just the op¬

investments

tion

plant and equip¬
concentra¬
capital investments
in

on

heavy
tools

all

of

case

the

arbitrary

industry
of

paucity of
a

in

This

ment.

and

kinds

consumer

the

for

goods.

trucks,

for

in

a

It is

ppwers-that-be in

Kremlin insisting

Russian

machine

results

example,

making
while the

on

desperately

people

need

teakettles and pots and pans.

Johnston

before The Economic Club of New

by

are

prevent another deep depression
*An

in¬

lose

out

Russia's depressions are
freedom of move¬ posite.
caused by under-production, overment and freedom of opportunity
After a century and three-quar¬ purchasing power and excessive
principles

bred

to come, but

to

bailed

in

The

guiding

the hopeless something
to
be
tossed
aside
feet and the frivolously or heedlessly.
opened, painful
Just as the American people are
i"
determined to keep their free¬

many years

want

Business, labor, agricul¬

owners.

The

if

socialism

services

ture and the

about

was

maybe

"but

certain

market for his goods and services

cision.

man

himself,
he
was
baited
by a
neighbor
who
condemneq
the
HOLC as ''socialistic."

tc

against approaching eco¬

us

nomic

of

\

the

of

was

fire remedy for

remember

trudgeJ: of

&

Co., Philadel¬
phia, died suddenly at his home.
WORTH 4-2400

prudent
more im¬

The economic devastation of the
1930s not only colored our think¬

James K. Trimble Dead
James K.

ment had

American

t

TWO

|

,

ory of its ruthlessness.
It was
merciless in sparing neither age

scar.

NEW

,,

tormented by the mem¬

improvident

ing department for Edw. G. Taylor
& Co., St. Paul Building.
•

That Was

there

depression
colored
the
thinking Of three generations.' It

mune

manager of the

to re¬

and

We wanted then, as we want now,
to keep the means of productior

That

and the

CINCINNATI, OHIO—Robert J.
Brink is

economic

correct

as

We remember that the

Buying Mgr.
For Edw. G. Taylor

oui

system

isn't

■

the Home Owners Loan
Corpora¬
tion.
A
conservative
banker

the

of

as

wan,

convinced

am

the

depression of the 1930s had an
impact on our thinking as lasting
as deep
as any other event
in our history.

nor

CANADIAN STOCKS

use

our

This

is

,

and dinner will be

began to

government.
Up to that point in our highly
individualistic
economy
govern¬

unhappy 1930s.

thinking of the gener¬
ation on the way down; the think¬
ST. LOUIS, MO.—The St. Louis
ing of the generation in its prime
Municipal Dealers will hold their and the
thinking of youth on its
annual outing on May 9 at Nor¬
way up.
\
wood
Hills
Country
Club.
A
cocktail party

to

our

arid

new

for

the

and

GOVERNMENT

in

it

insurance economy.

suggest two

on

areas

CANADIAN BONDS

I'll

seas

pressure on

government

They

best chance for three basic

resources

we

reminded

am

•they

believe

lieve economic distress.

referee for

now."

Why?

rushing

3s of 1949-52 Were fairly popular
issues in this co.untry the eventual

We
then

They think public power devel¬ ernment mainly to see that the
opment, public housing and social "rules of the game" were fairly
security add up to socialism.
1 and equitably enforced.

washed

as

us.

socialism

I

we?

the

and

power

a

do

because

was

to "abuses

rate fixed by. the

a wage

state?
Or

wedded

didn't

Why

I

"Well,
with

go

go socialistic.
divorced capitalism
and

the

for

run

and

we'd

there

an

Why We Avoided Socialism

Where the

owner

gospel

depression

Johnston

s

n

economic

an

world

touch

was

and

the

as
s

u

as

almost

social¬

ism
R

fco-

the

whether

-

Do

get¬

its steam right then,

up

It

worla

was

practice
speedway of today.

It is

The

socialism

excellent

partial social¬

total

today.

are

toward

found

one

ism.

we

cialism

shoe

one

off

the ^^s of

and

•

and

1959-49 and the Second War .Loan

$900 million,

socialism.

1930s

lonesome

nearly

oi

home

survive

total

Jeremiahs

bis

issues

time

the

the

like

it's

probable heavy internal bond re¬
demptions next October and No¬
vember.
Callable
and
maturing
at' this

our

tell

sion legislation "socialism."
kn'ow that social legislation

than

'arf;

early

of

in

to

great trans¬
whole economy.
a

the boy in the

sharp de¬

result

like

about

American capitalism that we were
close
to
socialism
in
the
1930s

cline of the Canadian dollar in the

impact of her pronounced in the

little exaggeration to state that all

world

in

ease

British

brought

formation

drink

*

'

_

it

During the week there was re¬
the showing of 1948. In this con¬
newed strength in .the external don't.
nection the fear that ECA offshore
Yet here we are at the all-time
section of the bond market with
purchases of wheat from Canada the Dominion 4s of 1950-60 in steeple top of industrial prosperity
can no
longer be depended upon
under capitalism and we're talkespecial demand. The internals on
certainly gives point to this timely the other hand were inclined to in^ about how to avoid socialism.

admonition.

socialist state.

a

Social Legislation Not Socialism

They aren't frightened any more
some one calls anti-depres¬

when

So
their

I

say

to

the

argument

total

that

planners
state

the

should do everything is as foolish

Volume

the

as

169

Number 4786

that

argument
do

snouni

the

state

noihing.

Development Program
I

should

into

like

our

leader

to

see

role

new

project

us

as

wuriu

a

the

techniques of our in¬
surance
economy whicn
we
are
using
to
strengthen
the
home

YIY; y" y
Everyone

there's

agrees

pressing need lor

gent,

ur¬

an

development.

i'oou—more
ter—tnose

shel¬
which
crying for.

clothing—more
the

are

things

people everywnere are

Thei
to

e s

More

an

urgent,

expand

exchange
among

ly

proved.
as

is

er

of

gooos

could

borrow

have

the

im¬

Americas

the

among

out

the

economic

breed: poveny

distress, chaos

to

nations,

stagnant

that

How best

pulsing ilow

a

and

and coninci.-

gain tnese ob¬

can we

Our main postwar reliance has
been<on

ECA.

We

billions of

away

have

given

substance

our

conscious program of world

a

in
re¬

covery and reconstruction. It has
been a necessary program, but we
can't pursue this course forever.
We

need

question

happen

to

ask

ourselves

"What's

now:

after

ECA

this

going

could have it insured

We

can't
about

gin

until

We've

then

to

got to be¬
We've

now.

the

off

recovery

backs

the American taxpayers.

of

.

We ought to get moving at once
to

this job where

put

where

and

into

it

best

can

it
be

belongs
done—

tne hands of American

vate

pri¬

enterprisers. Government-to-

government loans and grants can

equal the accomplishments

never

of

full

a

of

use

private

venture

capital.

money

partnership with the capital
me

and

resources

the

man¬

alraid

It's

As

to.

a

matter

of

fact, it has three great fears.
examine these fears:

Let's

The first great fear is the fear
of

seizure

through

without

alization.
The

compensation

expropriation

or

nation¬
is

the

or

change its earn¬
pesos or pounds

into dollars and

bring the dollars

ings

liras

in

back

home.

great fear is the fear

of restrictive foreign laws on man¬

agement.
These

reasonable fears. They

are

justified fears,

are

unless it knows it

doing

(

it
in

back

and
our

bring

own

going abroad

can earn money

that

money

currency.

do to stimulate

a

surging flow

of American private capital abroad
to help

industrialize the world?:

I suggest a
,

-

One:

lish

a

mutual
antee

three-point program:

I propose that we estab¬
government fund — on a

insurance basis—to guar¬

American investors against

propriation
not

of

or

course

nationalization. But
from

normal

busi¬

risks.

This

American

capital

c a

in¬

form of totalitarian government.
"It is a fact, however, that totali¬

Chi«

in

New

g o,

York

c!

an

conditions which will enable

Hall,

tarianism

man¬

d

ican

Most

capital

Mr.
C.

Longford Felske

into part¬

enter

n<
■

Felske

has been with

Harris,

importantly, Amer¬
can

a

,

Hall

since the firm

•,

.

organized in 1935, except for
period of World War II service

nership with the nationals of other

was

lands.

a

This is the absolute oppo¬

site of "colonial imperialism" and

with

of the

commander.

exploitative practices which
such

earned

economic
is

bad

a

era on

in

name

the

which the curtain

descending.
Partnership
capitalism

the

Navy

as

lieutenant

a

was

with the Investment Bankers As¬
sociation.

now

is

the

20th century pattern of world de¬

It has

already been

successful'where it has been tried

enterprising

by

Latin

American
is

America

Such

They

prime

in

fact "homecompanies.

reasonably

are

ex¬

enter¬

"local"

and

discrimination

safe

from

count—less
likely to be seized without com¬
pensation.
~
If

on

any

sounds like a
stupendous undertaking, then I'll
say that of course it is.
But it
shouldn't frighten us.
The stake
program

my

is,,also stupendous.
ChJ-Y''' :
*
' *

It is

For

this is

:yy

The

Oregon Portland Cement Co.,

Portland, Ore., reports for the fis¬
cal year

ending Dec. 31, 1948, gross
1,401,906 barrels of ce¬
ment, as compared with 1,086,828
barrels in 1947.
This represents
sales

of

a

an

increase of 28.99%.

pany

r—

economic

and

—

is

a

time

a

charged with the
large
sums
of
money, will qualify him in the in¬
vestment banking field.
f

Johnson, former North Caro¬

to

The

com¬

reduced debt from $1,225,000
The profit for the

$985,000.

before taxes, was $798,584.46.
After
taxes
of
$319,584.56, net

lina

State

First

with

Corporation

profit

After

$478,999.90.

was

for

$5

per

share

on

13,711 shares preferred stock, the

per

"A"

State

of

from 1932 to 1949 and he

director

body

of

Local

created

by

was

an

act

of

municipal

the

he

one

a

the

and

bonds

and

Mr.

Securities Corpora¬

enable

them

to

public..
Mr.

Current
.

is

market

fairs

of

every

in

town

the

city

county,

His

State.

new

and

an

these Debentures.

offer to sell

The

will

assume

duties immediately and

continue to live in Raleigh.

wide

.

This announcement is neither

,

Johnson

solicitation of an offer to buy any of

nor a

offer is made only by the Prospectus.

$20,000,000

The Columbia Gas

System, Inc.

3% Debentures Due 1974

also for leadership

who are fully aware that
great transition is upon us.
I
men

think

that

in

men

business

Dated March 1, 10Due March 1,

can

107J

help provide this leadership.
sume

do

I

without

businessmen to
kind

question

economic
or

Do

I

convert

weather-cock

cause

is

Interest

every

proposal
either

I most certainly

that

mean

thinking

of

-

Price 100.70% and Accrued Interest

they

to

the

those

suggested

every

Copies of the Prospectus

immediately good be¬
something new?
Em¬

it's

payable March 1 and September 1 in New York City.

must accept

themselves

believe

change

as¬

leadership,

adventures

abroad?

not.

must

of

that they

mean

for
do

ask

new

a

signed

as may

What I mean is this:
They can
recognize the need of change when
change is needed and advance

enlightened

for

American

business leaders today.
I
am

I've

like

the

seen,

MORGAN STANLEY & CO.
BLYTH & CO.,
;

American system.-;

committed to it.

I

It's the best

and I've seen them all.

STONE &

The pattern of the FHA has proved

if

us

businessmen.

we

a

It's

a

contin¬

never-ending job.

work at it

as

But

effectively

as

March 16,

1949.

j

HARRIMAN RIPLEY & CO.

DREXEL & CO.
*

j

is plenty of room in it for
improvement, and that's the job

uing job,

INC,

W. E. HUTTON & CO.

There

for

be obtained from only such of the under¬

That is the

answers.

way

may

legally offer these Debentures in compliance
of the respective States.

with the securities laws

phatically, I don't.

constructive

render

greater service to the investing

Legislature to supervise the bor¬

earned

KIDDER, PEABODY & CO.

the

North

on

experience

wide

asset to First

tion

a

rowing activity and financial af¬

$14.

drivers'

con¬

of

Johnson possesses will be a great

also

Government,

that

Carolina

Carolina

North

stated

Johnson

Mr.

$5.73

the-counter.
around

the

Jones

The stock sells over-

common

share.

of

of

authorities

that

Treasurer

as

was

foremost

Securities

Vice-President.

as

Mr. Johnson served

Mr.

siders

Treasurer, has become

associated

he

investment

ties
Corporation,
111
Corcoran
Street, has'announced that Charles

seats.

by

which

DURHAM, N. C. — Charles F.
Jones, President of First Securi¬

year,

way of life. That is true in Amer¬
ica; it is true today around the
world,
where
newly
powerful
masses are everywhere in the po¬

litical

financial problems, together with
his duties as State Treasurer in.

First Securities Corp.

M.

so

crack-pots count

knowledge of North Carolina mu¬
nicipal problems, particularly the

Charles Johnson With

•

class

time of great
transition. We can expect day' in
and day out to be confronted with
new
problems and conditions at
us,

CI. A Com.

In 1948—Debt Reduced

allowing

peace.

'

*

on

firms.

partnership

become

owned"

the

Oregon Portland Cement
Earned $5.73

attracts

sense

common

few followers when the screaming
their adherents by the million?
\

y%

■

Why is it that such

<

Prior to 1935 he

and

developed in other
that in the early
John L. Collyer
stages steps were taken with the
support of the people that turned
out to be links in a chain of
bondage to the state."
He denounced those who have held that the profit
motive "is a sordid, shameful thing."
Rather, he:
said, it is "the mainspring of American life, the basis
of our initiative and energy, of our productivity,
and of our unequaled standard of living."

Presi"
t

n

nounced.

And

next, there is much that
American capital itself can do to
improve its welcome around the

e

has

countries

B.

Edward

agement to get the job done.

government setup should
be shaped along the lines of the
Federal Housing Administration.




with of¬

San Francisco.,

seizure of their properties by ex¬

ness

Monroe

Street, invest¬
banking

vestment, they must make it truly
welcome.. It
is
not
asking too
much to expect them to create fair

who

In view of these fears, what can
we

(Inc.), Ill

fices

here

Private capital isn't

v

Harris, Hall &

ment

When I

The third

ident o£

r e s

firm

It

great, fear

P

foreign

j

second

fear that it can't

C. Longford
a Vice-

—

elected

Co.

of other countries, Amer¬
ican
private enterprisers could home and abroad—without paral¬
carry
forward this program of lel or precedent in our past.
world economic development as a
As we move into this new pe¬
mutually profitable business ven¬
riod, we in business must never
ture.
forget above all else that in a
But private capital isn't going
democracy no system is sacred
abroad today in any substantial
and
unchanging.
The political
amount, and there are good rea¬ power Of the people includes the
sons
why it isn't.
'
power to change their economic
power

been

has

West

Time of Transition

and

CHICAGO, ILL.
Felske

We must make it

I propose that we over¬

want

hard-

a

L.

unhealthy intimacy is developed that en¬
further favor seeking and more depend¬
ence
upon government.
It is my
personal conviction that we have
reached or passed a danger signal
warning that the intimacy be¬
tween
government and business
already is too close."
The American people have dem¬
onstrated "that they do not want
communism, fascism or any other

Harris, Hail & Oo.

governments and nationals that if
they

of

courages

managerial fear in two
In the first place, our diplo¬

ways.

Private Enterprisers Can Do Job
In

"An

Felske V.-P. of

the

come

remarks

cent address:

of the seed money.
Three:

pertinent

businessman—John

Collyer,
of the B. F. Goodrich Company—in a re¬

President

same

our govern¬

of

successful

and

possible to bring home the fruits

ample.

how to

that

dollars

abroad.

begin now to think about
prises
get the job of world econ¬

got to
omy

wait

it.

the

on

some

are

headed

removed.

ther

23

Hear! Hear!

America will be further and fur¬

the convertibility

American

earned

velopment.

think about it

to

Two: I propose
ment guarantee

into

(1191)

Here

.

basis.

to

its

completes

mission in 1952?"
think

bank

insured, but tne
who put up his own money

world.

jectives?
I

his

from

loan

mats must make it clear to

are

of

pitn

help create

swamps
'•

services

immense¬

standards

The

Uaae

clean

oenelit

will

constructive world lead¬

a

to

and

greater

CHRONICLE

production and qual¬

work for

we

FINANCIAL

&

home

wider scope.

world

a

worlds peoples.

us

living

as

role

of

me

Ah of

need

pressing

stimulate

and

trade mid commerce—for

insures private
purchases.

It

-

for

investment would have a
The private investor

eign

man

world¬

a

one.

loans

COMMERCIAL

ity products, we'll spread the ben¬
A
small
part
of
the
interest efits of our system, spread the
charges goes into a mutual insur¬ ownership and broaden the con¬
ance funu to underwrite loss.
The fidence of all our people in it.
insurance fund I suggest for for¬
And
the threat of socialism in

wide program of agricultural and

inauscrial

good

a

bariK

Must Have World-Wide

.

THE

Incorporated

SMITH, BARNEY & CO.

SECURITIES CORPORATION
WEBSTER

s

his

will

24

(1192)

COMMERCIAL

THE

do

Reveals

Comptroller of Currency's Policy
Municipals as Bank Investments

on

Boston

:

frowns
proper

the

that

rumor

of

Comptroller

a

upon

the

Currency
bonds

revenue

investments

for

as

national

banks. As you know, this is com¬
pletely erroneous, but the fact that
such

a

foundationless notion could

gain currency indicates a. need for
clarification of our basic policies
in

this field.
If

had

I

~;■/"

emphasize

able to speak to
I should have tried to
certain fundamentals

which

might have

were
J.

L.

Robertson

the

language the attitude of
Comptroller of the Currency
to

respect

national

banks

and other

in

investment

by

bonds

revenue

common

not for the

Phillips Barbour

concise

with

one

were

it

considerable evidence

that they are not.
As you know,
basic principle on this sub¬

our

ject is credit soundness.
there
and

Although

both general obligations

are

special

which

municipal securities.

expected

knowledge,

obligations

revenue

are

ideally suited for bank
The text of the Deputy Comp¬ portfolios, neither type of security
is universally suitable or unsuit¬
troller's letter follows:
able. Even the fact that "general
Mr. Phillips Barbour
The Municipal Forum of New York obligations of any State or of any
political subdivision thereof" are
100 Broadway
<
exempt from the usual statutory
New York 5, New York
,

limitations

Dear Sir:

and

restrictions

ten

days I have

postponed

national banks does not

any and all such general
tions are suitable bank

rearrange

ments.

my

schedule

in

order

to carry out
my tentative com¬
mitment to address the members
Of the Municipal Forum of New
on

the subject of
municipal

obligations as
However, the

bank

has

great

been

so

investments.
of

pressure

that

work

I

>

am

Obliged to give up the hope and
inform you that I must cancel the
engagement.

:

.

.

This is especially regrettable to
me because there seems to be
con¬
siderable scope for clarification of
the position of this office
regard¬

ing general and special obligations
Of public bodies.
,/

During the past
•

that

mean

writing you, in the
hope that I might find a way to

York

from

a

cluding

mental
net

year, we heard
of sources
in¬

number

—

some dealers in

obliga¬
invest¬
1

unit

The fact that Congress has evi¬
denced general confidence in such
fact

that

cannot
in

the

negative
1930's

the

it

was

deemed necessary to enact a mu¬

nicipal bankruptcy

are

special

some

statute

than

revenues

by
an

of

the
air¬

hospital, for examples.
In short, revenue obligations are
substantially similar to corporate
or

a

securities
This

.

seems

s

comparable, types,

obvious enough, but

know from

we

is

of

experience that it

not

always bopie in mind by
bankers—oh, apparently, by

all bond dealers either.
In

;•

substance

a

;

ma-i

terially superior; as an invest¬
ment, to a privately-owned sys¬
tem in the same

eommunityi .The
credit
soundness
of
obligations
issued by a .municipality to fi¬
nance certain public
operations on
special

a

basis is

revenue

no

bet¬

ter than the fundamental financial

and management soundness of the
which
they have fi¬

facilities
nanced.

We

are

all

the

of

aware

considerable variation in the rat¬

ings and yields of public utility
securities, but some bankers ap¬
pear

the

to be dazzled by the fact that
of a great city appears

name

the

face of a revenue bond,
though they know that the
city's credit is not pledged to the

even

payment

of

principal

in¬

and

I would not be

Where

essential

an

service

is

being rendered—water, for exam¬
ple, or to a slightly lesser extent,

ference between

sold

tion

at

fraction

a

of

their

face

value.
In a word, the statutory
exemption for general obligations
was

intended to be

never

a

carte

blanche for investment in such

curities

without

regard

inherent qualities and

ability

for

the

se¬

their

to

their suit¬

investment

port¬

folio of the particular bank.

municipal

Turning to

revenue

bonds,

electricity—in an estab¬
community, the quality dif ¬

or

lished

and

a general obliga¬
"revenue bond" may

a

well-nigh
disappear, depending
upon factors mentioned herein. At
the

other

which

are

extreme

dependent

are

bonds

upon

public

utilization of facilities which

are

not

toll

essential—for

example,

bridge in competition with
we

ent

from

which

I

believe

is

other

any

bank

a

to

securities

in

the

a

a

rela¬

tively satisfactory free bridge,

or

One

to

such

factors

think that

All

such-

have

not

minimize them.

we

factors

to

are

thoroughly considered

be

well

as

magnitude of the entire

as

mu¬

nicipal portfolio in relation to the
particular bank's capital structure
and: deposit: situation. Yet analy¬
sis of these factors is wasted effort
and

hardly worth the trouble if
fails to concentrate on qual¬

one

ity. As
the

mentioned at the outset,

a

keystone in the structure of
policies is credit

investment
soundness

with

and

—

respect

to

government
or

special,

this

is

State

true

as

local

and

obligations,

general

to any other type of
a bank invests its

as

asset in which

depositors'
keystone

funds.

and

not

are

available,

the weight of the intangibles inr

One

credit

available

information
to

•

.

Is

prospective

^

purchasers
and
is "utilized \ by
fhem. That job is" one^ in which
all

interested parties can benefiT
cially participate: issuers, under7
writers, dealers, bank supervisors
and members of the banking fraT
ternity.
* "1 ■
t

I wish I could adequately con¬

,

vey to you my pleasure in; learnt;
ing the very unsurprising fact that

the investment bankers

to

foster

the practice

are

eager

of making

available full information regard¬

ing governmental
porate

Revenue Bond

sent to

you

well

as

as

cor¬

securities.

Certainly the
Report form which
and which the In¬

me

vestment Bankers Association

ex¬

pects to distribute for

the

bond.

might

made

will

chase of investments, despite their
importance, are subsidiary to the
factor of credit soundness, which
I
think of as the "reasonablyassured
payment - at - maturity"
a

creases.

that

collapse. All of the remaining
policies that enter into the pur¬

future

near

how

in

long step in the
direction of improved practice in
this field.
ful

a

It represents a thought¬

attempt

financial

to set forth

facts

in

essential

orderly and

an

comprehensible fashion which, as
a
running record, will go far to
reduce

ask

is

use

the-

credit

soundness

in¬

credit

tangibles to which I made refer¬

soundness is to be determined. All
of us know that beyond a certain

ence, and enable banks to acquire

point intangible factors enter into

such determination.
The
job at hand is to hold the in¬
tangibles to an irreducible mini¬
every

It

mum.

in

is

principle that
of

the

the

light
in

we

of

the

this

Office

Comptroller of the Cur¬
insist that national banks

rency

maintain

credit

files

muhicipals which

their

on

adequate to
of informed

are

permit the exercise
credit judgment in determining
their quality. And I susoect it is
largely by virtue of that insistence
that

the

confusion

and

rumors

I

mentioned have arisen. However,
it is our conviction that the policy
sound

and

must

be

followed

though bankers may some¬
encounter difficulty satis¬
re¬

obligations on an informed and
intelligent basis — obligations
which are demonstrably sound.
In

that

concluding permit
a

me

to

say

few days after the election

last fall, my barber

explained to
me
why the pollsters were so
wrong
in their predictions.
My

barber, incidentally, is
vestor

in

that

investment
ferred

to

field

as

daily in¬

a

highly

hazardous

commonly
"turf."

the

He

re¬

said

the pollsters asked the owner how
the

race
was going to
come out,
they also inquired of the trainer,

and

asked the

even

jockey for his
forgot to ask

opinion,—but they
the horse!
ers

The Investment Bank¬

Association,

in

launching

its

program, is avoiding that mistake.
You

are

going to the best

for information and
a

quality had to be based on
intangibles, no sensible invest¬

sources

then mak¬

are

ing it readily available. The prin¬
ciples and practices involved, as
well

commercial bankers who failed to

as the ideas
upon which they
based, are so patently sound
that they will be accepted by all
concerned provided only that they
are
clearly and forcefully pre¬

make

sented.

banker would

ment

in

Railroad

Company

Equipment Trust Certificates, Series H
on

the

To be guaranteed

unconditionally as to payment oj principa' and dividends by endorsement
by The Delaware, Lackawanna and Western Railroad Company.

to

2.80%, according to maturity

to

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

The

available.

From

With

the

a

isn't

case

buying

bond,

a

he is being sold a bond
and
solely on the "say-so" of one whose
primary
concern
may • be
the

apologies

substitute
tion

of

this

our

for

form

views

having

of

for

to

presenta¬
a

personal

appearance, I am

Sincerely,
(Signed) J. L. ROBERTSON
*

Deputy Comptroller of the
Currency
March 11, 1949.

profit

to

be

-transaction.
No

derived

-

,.

.

unknown

on

The New York Security Dealerswill
hold
its
first

in

country

the

of

mere

Security Dealers to
Quarterly Dinner;

Hold

makes

concerns

of

parts

...

bank
.

NY

the

of

:

well-managed
to

out

•.-5

Association

mouth recommendations of

OTIS & CO.
V

(INCORPORATED)

quarterly dinner meeting on Mon¬
day, March 21, at 5 p.m. at the*

friends

McMASTER HUTCHINSON & CO.

who

Downtown Athletic Club.

support

the

own

some

strength

to
1

not

word-of-

cannot'

or

credits- with

bankers

nicipals

.

do

their

endorsements; and yet
on

bond dealers

WM. E. POLLOCK & CO., INC.
•'

soundness

completely on in¬
tangibles, and that is not enough.
As a matter of fact, the banker in

the

HALSEY, STUART &, CO. Inc.

FREEMAN &. COMPANY

credit

on

chased is based

►distant

INCORPORATED

facts

standpoint of the purchasing bank,
the quality of the issue so pur¬

loans

A. G. BECKER &. CO,

base

the

are

—

Issuance

R. W. PRESSPRICH &. CO.

because

not

such

yield 1.40%

adequate credit study of

an

issue

which

each September 15,1949 to March 15,1964, inclusive

interested

that bond. And yet
dealers have sold bonds to

were

semi-annually $126,000

be

buying

many

(Philadelphia Plan)




To the extent the

facts

Weaken

It the'entire determination of

Delaware, Lackawanna and Western

March 17. l')4<>

financial

structure

the

bond's

to

financial facts.

necessary

3,780,000

Priced

of

important and I would
you

fying their burden of proof
garding bond quality.

mature

soundness

diversification of risks, and proper
maturity schedules. All these are

even

To

credit

bonds, whether corporate, gen¬
eral municipal, or special revenue
issues, and that is by means of a
careful appraisal of all relevant

deposit

as

the

Hence, to repeat, the rea)
job before us is to see that the

is

2l/i%

mine

hears a great deal about
investment policies as they

relate

own.

There is only one way to deter-

analysis,- secondary reserve re¬
quirements, integration with lend¬
ing policies, capital position, earn¬
ings considerations, taxation,

times

The

bank's

issue,

and to what extent.
bank

of the borrowers, and;'
principle should govern
respect to investment secur¬

ities,: either private or public. No
banker, investing his depositors'
funds,
should
rely
exclusively
upon the opinions or conclusions
of a bond dealer, nor is it fair to
impose upon the dealer the re¬
sponsibility for making a decision
which
properly
should
be
the

your

may

invest

same

with

characteristics, which • must be
analyzed and weighed before it
is possible to decide intelligently
whether

affairs

the

consider ac¬
quiring. Every issue has its own

un¬

suggesting that no
revenue bonds are of
exceptional
quality. Definitely there are many.

gas

what

value of

(later
unconstitutional) and that
hundreds of general municipal ob¬
ligations went into default and
held

with

the

Association's approach to the mat¬
ter. Revenue bonds are no differ¬

-

terest of the bond.

course,
derstood
as

Thursday, March 17, 1949

a park, canal,
college, toll road, or
tunnel.;'
The point to be stressed is sim¬
ple enough and jibes prefectly

the

H

municipally

owned transit sysytem is not

Of

obligations

to

rather

operating

port

on

past

many

because they are supported by the
full taxing power of the govern¬

re¬

garding securities investments of

For the

of

ligations of certain municipalities,
but, broadly speaking, general ob¬
ligations
are
inherently
on
a
higher plane of credit soundness

some

•,;

been

your group,

principles." " There
tendency on

definite

revenue obligations which are to
be preferred over the
general ob¬

11, addressed to Phillips Barbour, VicePresident of The First Boston Corporation and member of the Pro¬
gram Committee of the Municipal Forum of New York, Deputy
Comptroller of the Currency J. L. Robertson outlines in clear and
—

part

or
a

doubtedly there

letter dated March

securities

rules
been

place spe¬
cial revenue obligations on
the
same plane with the
general obli¬
gations
of
municipalities.
Un¬

Corporation, credit

<$>—

consti¬

as

special

the

pals, whether obligations are revenue, special, or general in char¬
acter.
Says every issue should be analyzed and weighed before
being accepted as sound investment.
a

them

CHRONICLE

category of in¬
vestment securities subject to spe¬
cial

soundness should be basic prniciple of banks in investing in munici¬

In

FINANCIAL

consider
a

has

J. L. Robertson, Deputy Comptroller of the
Currency, writes Phillips

Barbour, Vice-President of The First

not

tuting

&

continue

have

that

bought
basis arid

seem

to

do

mu¬
some

to expect them
so.

In

making

Members

of

the

.

Dinner

Com-;

mittee

are:
Oliver
J.
Troster,:
Troster, Currie & Summers, Chair¬
man; Hanns E. Huehner. Joyce,:
Kuehner & Co.; Lee D. Sherman,:

L.

D.

Sherman

&

Co.;

John

J.

loans any well-managed bank in-r
sists upon being furnished with

O'Kane, Jr., John J.vO'Kane, Jr.

adequate

Goodwin; Inc. •"*,

information

regarding

&

Co.;

Erwin

Stugard,

Bond

&
-

5

.

Volume 169

FINANCIAL

COMMERCIAL •;&

THE

Number 4786

-

which

President's Economic Report—
^
A Menace to Free Economy
By EMERSON P. SCHMIDT*

and

will

If

denies this, let him state
whether or not he is willing to

anyone

buy stock in

steel mill even

a new

the

ablest management.
is how democracies com¬

mit suicide.

We make it

so

tough

Arguing President's recommendations in his lates: Economic Report are designed to destroy free mar¬
kets by regulating and restricting contracts betwee l employers and workers, between house owners and
tenants, and between producers and consumers, Dr. Schmidt attacks proposed new economic controls

for private

and entrance of government into steel industry. Ho^ds government intervention encourages organization

beginning, catastro¬
phe is not clearly visible we con¬
clude that the only cure is more

\

of

';v'-'■

'-y'

pressure groups.

legislative recommendations of the President's Economic Report of January 1949
to the
Congress, and H. R. 2756, based thereon, appear to run contrary to the spirit and
purpose of the Employment Act of 1946. The President's recommendations (and H. R. 2756
consti- &

tute

these

recommenda¬

would
displace
t h e
judgment
of
form)

the

citizen

in

a

wide

range

of situ¬

ations by gov¬

rectives

and

edicts.

free

is
Dr. E.

P. Schmidt

society
free

the

designed to destroy

appear

Or

death"?
lose

he

when

meant
we

will

we

first have to

our

do

completely

fore

freedom be¬
has

what

see

been

done to us?
What Does the President
-

there¬
that the use of

recommend

so

employed
on
delay

selective
they

a

without
be

be
be
basis

allocation powers
that they may

authorized

o

Propose?

where

prove

needed," states the President.

Again

he

"If

says,

it

proves

I shall not hesitate to
allocation authority
?
to

necessary,

the free market. The heart of free

use

contract

channel such materials into home

is

control

the

between

workers,

between

of

substance

the

contracts

and

of

substance

These recommendations

contract.

would

the

employers and
house owners

.

building."

(Pages

and

12

16,

re¬

Who is to decide the

spectively.)

"selective" basis and who will de¬

termine

"it

when

neces¬

proves

The
people,
expressing
between producers sary"?
and consumers.
They would de¬ themselves through the free mar¬
stroy the liberty of the investor ket m u s t h a v e their will
by government control of con¬ thwarted.
What this may mean in practice
struction and other materials.
Destroy freedom of contract and is that raw materials and finished

tenants,

the free market in goods and ser¬

products

vices—then you destroy the

ernment edict from

These

dations of freedom.

which

instruments

foun¬
the

are

and

uses

con¬

demand, into channels de¬
by
the
government

sumer

termined

Asia

bureaus

and
been employing.
It

have

will

ment

Perhaps; but who

ers.

Many dictatorial regimes, in¬
cluding Hitler's, came into power
by constitutional means. Further¬
more, the weakening of the econ¬

through the use of the Presi¬
recommended powers, in¬

omy

dent's

of

stead

leading

conclusion
been
lead

likely
that

conclusion

the

to

to
the

Congress should have granted still
greater powers over the people to
the bureaus,

add

and now it must do

1946?

a

to

room

whittles

A

From what

terials

ing economy, and a public crying
out for mere and more controls

apparently made necessary by the
chaos created by the prior con¬
trols. v Because each new control
directive

or

is

small

relatively

to affect only a lim¬

and

appears

ited

number of persons,

the total

impact and restrictive character of
controls

cumulative

the

is

tion

tion

all

knowing just how and why it

happened.

'

is the

This

by

posed

direction now pro¬

President

the

United
intends

no

Even

States.

of

though

the
he

such evil result, which

he does not, this does not change
the
direction in
which we are

moving and

are

Dr. Schmidt filed

quest

honey,

of
■

Joseph

O'Ma-

Wyoming,; Chairman,

Joint Committee

port.

of

pursuant to re¬

Senator

of

•

on

Economic Re¬

;...




jor raw material costs $40 per
ton), fuel, power, labor, depre¬
ciation, maintenance and other
costs."
Under these

conditions we

not

per year.
In fact, the steel-mak¬
ing capacity of the American steel
industry has risen from 82 million

tons in

1939 to 96 million tons at

present time.
tons of additional
are

scheduled

various
We

tility
and

steel

have

for

completion
in

companies

mere

is

facilities

not

name

certain

to

that

we

use

scores

the

of

While

economy.

President

the

'

during the

ence

wage
the

war

and especial¬

1945-46, demonstrated that
control is impossible when

in

ly

government has fostered a la--

bor

that is

movement

than

erful

the

ideas. We

Controls—The
recommended

new

still

harmful

the

to

economy

general

President urges

"selective"

which

in

Who

areas

there

of the economy

is price

To be

decrying the need
facilities where this threat of both
for
over-all
price controls—the
price control and of price with-*
recent memory of OPA being too
holding powers were granted or
vivid. The OPA was not abolished
threatened
or
even
where
they
"too soon" as many are wont to
would be legally possible? Scarce-'
say;
the OPA broke down and
ly a better way to perpetuate
the President merely officiated at
shortages could be devised.

price controls,

the final rites in the Fall of 1946.

Rent

He, himself, said that the Admin¬
istration had given serious consid¬
eration

by

not

Control—The

tenant

off'{the

this

but

because

would
there

have
was

been

"no

futile

point

in

only fails to provide housing'

himself, to say nothing of pro- ;,
viding housing for others, is given
a
real increase in his income by'

rent

who

well

the landlord
housing as
housing for others is fore--

control,

(Continued

seizing empty packing houses"!

a

while

provides his
as

own

on

page

•

proposed issue of $9,690,000)

business?

There

or

place.

steel-using

:

plants

no

are

*As

of

to

raise
to

Yield 1.40% to 2.65%,

all

more

Certificates

Issuance and sale of these

of

Circular may

i

Certificates

•;

'

...

be obtained in

are

subject to approval by the Interstate Commerce Commission. The Offering

•

any

.'

T-

(see

■'

■' ' '

.

■

...

•

TNEC

OTIS &, CO.
(INCORPORATED)

groups

ago'

•

this

R. W. PRESSPRICH & CO.

years

.

HALSEY, STUART &, CO. INC.

several

enter

that to¬
day are condemning "the indus¬
try" for not expanding were the
same

j

State in which this announcement is circulatedfrom only such of the
undersigned and other dealers as may lawfully offer these securities in such State.

expand

business.
The very

according to maturity

proc¬

Hundreds

could

dollars

each March 1, 1950 to 1964, inclusive.*

fully provided in the Agreement, on and after March 1, 1954 the
maturing on or after March 1, 1960, are to he subject to redemp¬
tion at the election of the Company at any time prior to maturity either as
a whole or in
part (but not less than the whole of any maturity), in the
inverse order of maturity, on
any dividend payment date on thirty days'
published notice, or on any other date on sixty days' published notice, at an
amount
equal to the principal amount thereof, plus, in each case, accrued
and unpaid dividends thereon to the date designated for redemption.

le¬

making, and many have
If the steel outlook were

newcomers

on

the

fabricators abound

the

to

any

dertaking, although partial
over

annually $211,000

as to principal and dividends by endorsement
by Wabash Railroad Company

,

and

i

guaranteed unconditionally

To be sure, opening an inte¬
grated steel plant is a major un¬

essors

Equipment Trust Certificates

of indi¬

and

March 11,

1949.

who

for

to

going out to seize the
ranches, but this
was
impractical and it also con¬
sidered seizing the packing plants,
cattle

ac¬

Priced

means

pressure?

invest in job-making

would

(Philadelphia Plan)
To be due

even'

price level is:
fairly stable."
Here, indeed, is
complete negation of a free econ¬
omy.
Flexible
prices, - always;
ready to rise here and decline:
here, are the heart of the adaptive*
process.
Even though inflation¬
when '/the

vestment into

controls.

more

The

2lA%

steel
is

told;

are

p.

Equipment Trust, Series B

It

pow-5
itself.'
include;

more

government

recommendations

The

ary
pressures are
past as indi-'
levels, thereby en¬ cated
by general price' stability,
couraging excessive demand and
individual prices are to be stopped
checking supply. Instead of help¬
from
expressing underlying
ing to restore balance and reason¬
changes in demand and supply
able prices, these controls are de¬
conditions!
signed to make the price tag say
But
this
is not enough.-The;
something which is not true.
A
urges
that a govern¬
free price equilibrates supply and President
ment bureau be given power to,
demand; price-freezes perpetuate
withhold price advances until an
and accentuate the disequilibrium
Is
and
always breed the economic investigation has been made.
chaos which leads to outcries for this the way to lure additional in¬

good

a

discusses

control and implies
that
such might be necessary, experi¬
wage

$3,165,000.

to refer

anyone

the

ten

Price

and

depress prices below their

(First Installment of

gal or patent barriers to free
entry,
if .1 am in the packing or
business, have I any
obligation to grow bigger? -

ones

discovered,

war

natural market

ma¬

types of economic

not

millions

sectors

the

action

the
entity.

is

so.

fatefully

so

controls

Wage

would

to

automobile

done

;

price

thinking.

with

it

into steel

medicine

the

tried
in
decadent
Europe, now
getting some 10% of our free en¬
terprise steel and steel products.

generated such- hos¬
free market prices
become so allergic

ability, privileged to go into the

:

with

have

construc¬
"if

but

an

tivity composed of
vidual enterprises.
But

We

that selective
price controls merely divert the
inflationary
pressures
to "other
in

12), "Sharp rises in the prices;
of
essential
products
may
be

1949.

profits that steelmakers are
unwilling to charge buyers a price

attractive.

early

two other

ship the largest amount of fin¬
ished steel
history, should now
be
threatened
by its politicians

toward
we

sectors where the returns will be
less

to

Two million
steel capacity

the

be passed to

government

expanding

industry
a

are

lucky that we are getting at least
a million tons additional capacity

The steel industry is condemned
for

for

Testimony

"Supplementary

yearly ton of salable finished
steel, the base price of which av¬
erages about $75 per ton, accord¬
ing to the "Iron Age."
On this
new
high investment base, noth¬
ing can be earned, after meeting
raw
material, (steel scrap, a ma¬

restore

to

which last year enabled producers

become

allergic to profits that the steel
industry is induced to quote its
prices at a figure which will not
supply much capital for plowing
back.
To erect an integrated steel
mill today probably costs $400 per

good it would not be too difficult

being moved.

:

Now

selec¬
tive price control which will only
drive labor and capital out of theproposed

Wabash Railroad

"collectivist"

of

steel

ever

•

have

States with

abolished "too soom"

was

it—is

Plants—

needs" has touched off

deal

Hayek in his "Road to Serfdom"
and
Jewkes in his
"Ordeal by

experience this process
works and how the people lose
their freedom and liberty without

'

.

critics

so

by private industry fails to meet
our

not

actual

..;

times that the United

our

and

down

Truman's recommenda¬

steel

of

group,

an

present

same

com¬

thinking of

broke

would

Steel

that legislation

fully realized—until it is too late.

Planning" have shown how from

The

interesting

an

the

it

55% of the world's steel capacity,

advice, how
long
would it be before they
would cry
"concentration" even
louder?

on

socialism.

more

over-

heed?

to

authorize

erty, bit by bit.
From it comes a
less and less effectively function¬

their

lowed

It is indeed

mentary

Would

Why?

administration

minded
have

lib¬

and

was

and

7% of the world's population and

expanded. These same people to¬
day are also very vocal in con¬
demning
"economic
concentra¬
tion." If the "steel industry" fol¬

quickly raise
cries of anguish which a political -

President

freedom

down

a

industry

the

intervention

control

25

history is not likely to record that

be¬

who

Monographs)

and

diversion

such

not

would the

uses

diverted?

be

of creeping
which

process

his

or

car,

Government

This is the process

house,
home, or

that

said

it

who

man

could be pre¬
vented from following his own
wishes.
A
government
bureau
knows best what is good for the
people—this is the America which
we would be fostering.

so.

intervention.

the

chicken

a

for his

Employ¬

In practice

that

build

garage

have

mistakes

equally

is

made,

rational

the

to

that

mean

would

tell?

can

Act of

may

and Con¬
always repeal the pow¬

only "if needed,"

gress can

be

freedoms extolled in the

not

used

to

"good
for
the
people." Is this consistent with the

be argued that, these powers
be abused, they will be

may

'

areas

expressed by free market

as

authori¬

the

be diverted by gov¬

can

tarian governments of Europe

Hearings

Controls—"I

Mandatory

fore

market. These

recommenda¬

tions

preserve

Do we know what

Henry

mandatory

The heart of

to

said, "Give me liberty or give me

di¬

ernment

a

Patrick

wit

the

we

liberties?

our

bill

in

tions

Have

Then

road.

the

at

cause

:

socialist

our

to go down the

we propose

fateful

The

wnich

initiative to function,

and then when it fails to meet

needs;

•'Price

assets

venture cap¬

new

ital to move into the industry.

This

United States

the

reproduce

encourage

under

*

Director of Economic Research, Chamber of Commerce of

(1193)

CHRONICLE

26)

26'

(1194)

THE

COMMERCIAL

President's Economic Report—

to get

way

the

to

way

whole?

this

Is

the

to

way

the most economic

courage

housing

facilities?

signed to

Or

the

pave

ernmental

Let

Is this the

housing? Is this
protect tenants as a

more

Economy

Commissioner, Securities and Exchange Commission

it

of

de¬

for gov¬

way

housing?
"believs in"

who

everyone

rent control ask himself this ques¬

tion:

Suppose

voters

who

there

there

were

ants,

would

rent

control?

"What

voters who

still

I

Let

moral

more

were

landlords

were

than

"believe
him

in"

also

ask:

economic

or

ten¬

were

right

does the government have to take
from landlords and give to ten¬
ants?
What is the difference be¬

tween

shows how far

this

both normally and

Minimum
be

can

economically?"

Wage

said

for

us

Something

—

minimum

wages

designed

to
prevent
sweatshop
conditions.
But what is a govern¬
ment

to when it is concerned

up

about

inflation

time

same

and

at

yet

recommends

the

nearly

100% increase in minimum wages,
when

it

is

perfectly

that

aware

the rise in the minimum wage
will give an upward thrust to the
entire wage structure because as

the minimum rises

above

wages

pressure

torical

it

each

will

under

in order to retain the his¬

differentials

in

the

wage

structure—differentials which

vhighly prized in

our

are

society?

With the growing soft spots and
the unemployment in our econ¬

will such

omy
on

not

wages

more

workers to price themselves

(with
lout

right

the

labor

does

to say

ing to
The

government

the

have

work

an

pay

at

all

unless

you

employer who is will¬
you at least 75 cents
v

Chamber

of

Commerce

the United States in its
"The

aid)
What

hour?"

per

and

market?

to American citizens, "You

not

find

can

fiat

government

of

shall

upward thrust
force more and

an

Economics

of

pamphlet,

of

Minimum

sWage Legislation" has fully an¬
alyzed the conditions under which
minimum wage bill

a

job;
(3)

(1) destroy
(2) stimulate inflation; and
help or hinder the low-in¬

come

is

Before any

groups.

taken

action
proposal this

this

on

we

continue

will

mission rates and defends SEC

cadent

Europe.

be

inception of corporate shares and the chartering by the various kingdoms and
commonwealths of divided enterprise, there has necessarily had to be a trading or a barter¬
ing in such shares or securities. The institution of the stock exchange, as we know it to¬

great

a

J

shall follow
the fateful steps traversed in de¬
the

facts,

cisions

Given time
beleve

we

will

be

e v o

re€S>

a

lutionary
The

"stock

sound.

ret

w o

very

de¬

ex¬

The

by

Pressure

the

more

tend ency

Groups

economic process,
the citizens forced

are

combine themselves into pres¬

sure

in

groups

their interests
of

the

order

protect
to get their share

or

government loot.

ment

by

finally

break

down,

romance

must

and

-

some

form of authoritarianism will take

great deal of

a

Govern¬

groups

pressure

rfemainsf

the

very

cept

Harry A. McDonald

of

in

trading. I,
velopments of the past generation. personally, have always regarded
over—this is evident from the de¬

One hundred years

the fa¬
mous French
economist, Frederic
Bastiat, stated (almost as though
he

had

ago

seen^the President's

rec¬

ommendations and H.R. 2756!):
"Cast your eye

Which

are

moral, and the most peaceable
tions?

Those

where

the

least with private

terferes

na¬

law

in¬

activ¬

ity; where the government is the
least felt: where individuality has
the most scope, and public opinion
the
most
influence; where the

machinery of the administration
is

least

the

important

and

the

least

complicated; where taxation
and
least
unequal,
popular discontent the least ex¬
cited
and
the
least
justifiable;
where the responsibility of indi¬
is

lightest

viduals and classes is the most

the

mechanism

our

of

stock

a

least

the

artificial

from

dis¬

tural

course.

.

—From

.

"The

An instru¬

you please, that must
guarded carefully that it not be
the object of public scandal and
public ridicule so as to defer its
intended purpose.

as a group, represent Chi¬

You

cago.

the

represent

a

interested

all

are

securities

business.

very

in

You

vibrant part

about

few

a

securities

They
are

of

the

business

problems the
faces

in

1949.

well.
You-

are

undoubtedly

with my personal

irig that of
vestment
It

was

familiar

background, be-1

businessman and in

a

banker for many years."-

pleasure

my

to be

a

for

several

member of the De¬

appointment to the Securities and"

Exchange

Commission.

T*

have

an

understanding of- your
and, speaking for the

be

their

backgrounds

may

different

Reuss

man, perhaps the closest student
of selective service medical sta¬

New

tistics, has demonstrated that this

the

correct.

"Reader's

(See his article in

Digest,"

August,

1948,

41.)

P.

Again the President states, "Few
our
workers enjoy systematic
protection against loss of income

of

through temporary
disability." (p. 17).
have

compulsory

benefits

programs

upon

millions

have

other

through

of

forms

group

or

permanent

Three states

sickness
millions

the

other

workers

sickness insurance,

rounded by advisors who mislead
him and force people who know
the facts to lose
confidence, espe¬
cially when these facts are readily
ward

as

Sound

in the Chamber's "To¬

Social

Security," for

Yacht

Club.

railroad
c

i

at

Reuss,

a

talk

1 i

s

with
W.

Wendell

Reus*

"The
for

foregoing points,
among
many others which might be made,
suggest the direction in which the
people are being led.
That such
a

program of intervention and in¬

dividual

interference

should

be

given serious consideration during




1929

to

our

cannot

three-fourths

only one-tenth

In 1929 the invest¬

Baltimore

Railroad

Indus¬

the

change.
of

the

Stock

Exchange
its merger

Philadelphia Stock Ex¬
There have been

plans

being

rumors

in the

discussed

Midwest for further consolidation

try in Terms of its Credit Status
and

Operating Performance."

A

general invitation is extended to
all

members

of

the

outlook

of

railroad

securities.

Walter R. Brailsford Dead
Walter

R.

Brailsford
March

9

where he

in

Brailsford, head of
Co., Chicago, died
Palm Beach, Florida

&

was

spending his annual

winter vacation.

of

operations.

contraction

industry and edly made

to those who are interested in the

example.
The

even

industry earned $644 million

The

spe-

on

from

has recently announced

a

t, will

Outlook

industry,

business

is

concerned

period in which the investment

a

changing.

and how it adjusts to

You

is known

it.

the link between what

are

the

as

customer.

No

"issuer"

insurance

still

of

This

represents i

facilities

necessary

a

23,

twenty

1928,

Stock

*An

I

by

a

dimin¬

is

one

close

as

told

Exchange

the

remind

Nov.

Securities

the

the

to

seems

In that

day.

connec¬

business

securities

.Mark

like

is

Twain

trade

learning the pilot's
"Life on the Mississippi."

in

YOu""WiH recall that Mark Twain

experienced

by

its

Commissioner

Associates of Chicago,

111., March 3, 1949.

tne

to

the

be

re¬

to

securities.

But

there

pool of individual

a

had

he

to

the

learn

available

this

of

only

year

dollars

It

was

different by night and by day.

looked different
the

in

the

washed

and formed

new

than

fall

it goes.

banks

away

channels and he

had to learn it all
so

the

in

It

and in the spring

summer,

torrents

over

again. And

billion.

thing, the character of

securities

sell

you

has

been

changing.

Security trading has
progressed
through
wild-cat
banks, the railroad days of Gould
and

Fisk, the fabulous mining
ventures, the era of the "coal oil
Johnnies," the local legerdemain
street

of

financing,

railway

public

utility holding
expansion of the 20's,

Bolivian and Peruvian

Today

8's of the

industrial

ties,

in

grade

and

whether

has
list

what

high

trade

pretty

a

they

securi¬
listed or

utility
be

over-the-counter.

high standard of living

means that
people have a
little left over for savings.
It is
these savings which are needed to,

and

more

rate of
cates

more

staggering

maintain

sums

se¬

keeping

savings.

just

securities

with the

up

To me this indi¬
thing—those who

one

sell

securities are not approach¬
ing the people who have the sav¬

ings.

'

■

„

A

New

»

Mass Market

Increasingly,

hears

one

that

brokers must learn to understand'
and

this

tap

market. J. A.

strange new mass
Livingston, a promi¬

financial

nent

writer,

recently,

chided the industry for not apply-,

its analytical talents, used
skillfully in appraising the cor¬
poration securities it sells, to dis¬
ing
so

covering and analyzing this
market

securities.

for

by

the

A

Federal

Board showed that most

country

what

ingly

high

fewer

familiarity
disapproved

people
was

with
of

it

Still

how tp go
simple buy order.

know
a

time when

a

know

surpris¬
of'those

investment.

of

placing

Reserve

even

percentage

stock

form

a

not

new

survey

people in.

stock is. A

indicated

who

as

do

common

common

broker¬

a

house boasted about its promi¬
nent customers.
Today, the ten-,
dency is to point to the number
of
shop
foreman,
small
shop¬
keepers,

housewives in the
we
expect
these

and
If

accounts.

people to take an.interest in the
market and invest their savings in

it, perhaps we had better begin,
by letting them know what the
market is. It is, I suppose, a mer¬
chandising job.
The public must
be taught the ABC's of investing.
is

It

not

a

an

job.

easy

largest
industrial
plant in the world have become
to great for a relative handful of

are

opportunity

service to

our

to

But

the

large and
perform

economic

providing

industry
capital it needs.
by

system
with the

Introducing these new people to
security investment will require
aggressive selling techniques. But
this should not call for high-pres¬
sure
selling. .Salesmen have
a.
high

responsibility

with these people:

this

new

destroyed.

market

to deal fairly
If they do not, I
likely to be.

is

'

~

Role of Security Salesman

Salesmen of

required to

the

is

there

finance enterprise in this country.
The

billion

new

We also find that the rate

prospective rewards

..

you

become
of

the

period.

same

R

the

company

and

in

age

Changed

the

supply

half

a

invested

has not been

There

one

and

one

direct investment in

of

about

A

Character of Securities Has

For

potential

curity issues out of liquid savings
of
individuals
totaling over $8

ferent

up.

vast

were

this

back

investment

today being tapped by our in¬
vestment banking channels. Last

recently

coming

for

which far exceeds any demand of
the capital markets.
Only a frac¬

river all the way down, and then
he found it looked altogther dif¬

well
of

necessity should be,
The rapid growth
statistical
department is

informed.

the

people

proof that the investor today seeks;
more
information.
The market
letters

the

Chicago

McDonald before the Stock Brok¬
ers

of

goes

search

to

selling of
grow more dif¬

that

you

ficult each

to supply.
The billions
billions ofr:clollars required

The

Chicago,

in

saving^ of all the people.

they occasionally are not as accu¬

can

year
was

be

investment

awakening

I

in

ago

,

produced by these depart¬
ments are helpful. Unfortunately,

year

mass

change
address

savings

the picture as you. I don't have to

each

years ago, on

am

third

upon

undoubt¬

ished volume of business.
Over

their

a

savings

remains

shift

In

over

in

—

income

institutions,

invested

the

and

of that

Boston

Mr.

whole

weath¬

Then again, your customers are
dollars; in 1947, less than a third
amount, $198 million.
At changing.
The changing income
the same time, the number of peo¬
pattern in our nation means that
ple engaged in the investment more people have more money,
business has diminished by 50%. and fewer have lots of
money. Our

to

18

in

1%

ment

Fri¬

held

be

which

observers

of 1 % in 1947.

day evening,

and

protection

of

the

Club

declined

has

Boston Invest¬
ment

expert

the investment industry
today is not sharing the nation's
unprecedented prosperity. Its par¬
ticipation in the national income

speaker at the

of

reasons

,

Depressed

fathom,

be

regular
monthly meet-

ing

For

most

guest

cash

individual policies and a host of
other arrangements.
It is unfor¬
tunate that the President is sur¬

available

will

Investment Industry

McLaughlin,

York

City,

March

of

in

a

habits of the nation are

trulyf"*

Reuss,

&

is

connected with the

everyone

securities

believe that I should have and do

unsatisfactory state of the nation's

partner
Co.,

and

the

problems and they
^writes-'that
the Commission's problems as

health."

MASS.—W. Wendell

for

er-vane

are your

To Hear Wendell Reuss
BOSTON,

Ex¬

one of the members of the
of
-Staff reminded me that learning

other members of the Commission

"

recall

can

Detroit

tion,

Chicago's citizenry, and I am most
happy to be here to talk to you

problems

Law."

I

the

on

ex¬

associations and meet¬
troit Stock Exchange.
All this
ings are the least fettered; where
happened, of course, prior to my
labor, capital and production suf¬
placements; where mankind fol¬
lows most completely its own na¬

people's

York Stock Exchange

be

years

actions,

security,

the

change,

economic system.

You,

country.

for

$100,000.

seat

a.

this

ex¬

trading

The prosperity and possibly the
change, Le., the free market for survival of the investment indus¬
the buying and selling ofsecuritry will depend upon how well it
ties, as a great instrumentality in senses the direction of this

ac-

tive, and where, consequently, if
morals are not in a perfect state,
at any rate they tend incessantly
to correct themselves; where trans¬

fer

when

mentality, if

the globe.
the happiest, the most
over

over

in

definite

a

shares, and a
Exchange sold for

this

on

days

were

of

con^ about its present* condition.
stock
We happen to be living through

market difficulties.

is not

seat

there

million

a

been

is

still

—while

Fried¬

volume

the

ceeded

has

tion

been, and

percentage of rejections under the
military recruitment programs has
provided striking evidence of the
H.

year

when

.

to

—they, too, have an
appreciation of your present day

Maurice

following

The

day.

has

tervenes in the
more

share

electrify the change sold at almost such a fig¬
thoughts of- ure.
Today a million shares is an
of
the
indi= active day on the~Big Board.
The
vidual. There volume of activity on the New

in¬

government

to

Boston Investment Club

Dr.

:

great first half-million

of

changes.

and

your

is

day,
suit

change" has a1 well
Government

inspection of trading transactions.

Since the

we

or

tapped by better public understanding of
Halds widespread trading is discouraged by high com¬

by aggressive selling techniques.

help

pamphlet might merit study.
Socialized Medicine—The Presi¬
dent's
report states,
"The high

and

securities

to have

are

to

whether

shall

we

layer, of

be

which

or a

people,

the

lead

ket for securities in increased individual savings, awaiting to be
to

debilitated economy,
whether our economy is to be se¬
cure from external aggression and
internal
retrogression,
whether
strong

a

to

it

may

author¬

Committee

determine whether

Kulaks?

Where

the

have traveled.

this

to

up

down

we

decisions

make

practice and that of
the Bolshevist dispossession of the

.

is

It

en¬

use

is

Asserting stock exchanges are great instrumentality in our economic system and must be guarded care¬
fully, Commissioner McDonald notes depressed condition of investment industry and ascribes it to greater
leveling of income among people as well as change in character of securities. Foresees new mass mar¬

period of unprecedented pros¬
perity and widespread well being,
a

itarian road

Thursday, March 17, 1949

1949 and the Securities Business

(Continued from page 25)
himself to his tenants.

CHRONICLE

By HARRY A. McDONALD*

A Menace to Free
ibly made to transfer income from

FINANCIAL

&

tq. this
its

in

a

found

only

industry

is
revolutionarj-

market.

rate

-j.

About

a

talk in New York,

able to document this trans¬

ition with facts and figures. There

or

complete

as

they might be..

particularly
prepared
by a well-known Eastern house.'
It purported to be an analysis of
the
second
preferred
stock
ofAmerican &
Foreign Power, - a.
I

came

shocking

across

one

a

recently,

Volume 169

subsidiary
Share.

The story this market let¬
told was alarmingly incom¬

ter

plete.

There

bers of what then

&

Bond

Electric

of

lar stock.

point
who

to

them.

use

buy
kind

perfect

pot

selling

Public

than

at

less

percent

quarter
the

on

a

Specie value,

will give a prefer¬
to each other in our Nego¬

ence

tiations.

we

In

have set

we

Stock

one

Commission
and that

testimony whereof
hands this 17th

our

day of May, at New York, 1792."
From this you can see

were

document,

it

back in those

is

substitute for informed sell¬

a

of

rate

Inevi¬

Even if the market letter
a

of

other, that we will not
or sell from this day for
person
whatsoever,
any

any

tably they boomerang.
.

Sale

and

each

to

Worse still, from your

tries

Purchase

Stock, do hereby solemn¬
ly promise and pledge ourselves

in¬

are

the

Public

of view, they hurt, rather
help, the security salesman

.than
1

for

that even
days the keen com¬

petition in this industry required

ing.

that the members be bound to

tical department.

agreement setting a minimum rate.
The xk of 1 % rate lasted for many

It is equally important that
each salesman be his own statis¬
laws

not

do

selling.
tion.

bar only to
misrepresenta¬

are

a

and

The

securities
effective

prevent

They

.carelessness

The

salesman

should

be

able to supply information and to

well-founded opinion if

express a

an

years—until 1856. For a brief pe¬
riod during the Civil War a brisk
market made it possible to lower
the rate to Vs of 1%.

share basis and the
sliding scale type of rate did not
appear until just before the First
The

necessary.
In this connection, I
know from my own experience

that

per

World
more

there

security salesmen

are

This

War.

scale

became

complex with each revision.
In 1947 the new rates were adopt¬
form themselves fully about the ed, based mainly on the money
security they are selling.
But value of the transaction rather
there are others, and we all know than on the number of shares in¬
jthehi, who are Satisfied to take a volved. In a sense, this was a re¬
jquick look at the market letter, turn to the original concept of;
listen to a couple of rumors, and "one-quarter persent
on the
grab for the telephone.
specie value." However,.this sim¬
"; Of course, things have grown so ple basis is combined with a slid¬
complicated that it isn't enough ing scale having numerous cate¬
As everyone knows, it is
for you to, know just particular gories.
perhaps
the
most • complicated
company situations.
You are ex¬
schedule ever adopted.
pected to be something of an ac¬
It is too early to say how the
countant, tax specialist and law¬
yer.
You must be an expert on new rates will eventually work
who make it their business to in¬

...

"

,

policy, appre¬
significance of the
value
of
the
dollar,

particularly

out,

fiscal

government

they

as

might

ciate fully the

affect the volume of market trad¬

changing
know all

ing.

contract

about

Higher rates do not neces¬
sarily, bring
greater
revenue.
Where people buy for investment

renego-

tiatlon, Regulation T, and be able
to appraise things like "refund¬
able Federal Taxes

on

the commission

years

minute

the " general

on

and economic outlook.

only

Is

it

"customers'

name

found

been

time

The

searched for

the

a

has

ings in securities

has

.,

first

another

was

can't raise

their pay,

title

their

But

ner."

on

I rather agree

you

either raise
a part¬

them

make

or

of "if

case

further reflection,
with that thinking.

the Exchange

on

to insure fair administration of

or

the

nate this

keyman in the shop. One
large
Eastern
house
recently
came up with the term "account
executives," which I thought at

as you

of investors or to insure fair deal¬

From

industry

SEC,

appropriate for the protection

or

title to desig¬

new

high com¬
principal.-.

up

know, does not
set
commission
rates,
although
under the Act it is empowered to
order a modification if "necessary

are

man"

inadequate?

time

to

missions, which eat

servicing an
any
wonder that

into

go

account.

the

ness—is discouraged by

of the ingredients that

some

ioday

the bread and butter of this busi¬

political

These

is usually an in-,

significant part of the cost.
But
widespread trading—and that is

income of

arising from the car¬
ry-back of operating loss."
And
of course you must -be up to the
prior

So far, the Com¬

Exchange."

mission has
As

used that power.

never

matter of

a

integrity

practice, when

an

Exchange is considering a change

&

FINANCIAL

CHRONICLE

other professional
in this coun¬
try. The average security dealer,
and salesman, and customer's man,
has the genuine interest * of his
customer at heart.

But there

customer's
stantial

.

There have been many sugges¬

broadening

for

tions

market

for

advance

almost

accepted

as

to increase
This method has

way

a

market activity.

followed by a fairly steady

been

may

modifications

some

number

of

it

Detroit

corporations in

large

recent years.

Some

observed

was

ago

years

that

in

the

big investors were fast disappear¬
ing and that more and more equi¬
ties were
showing up in trust
funds and estates where trading,

may

I

and

desire

had

you

I

dealers

therefore

the

on

three

a

individuals,
I

two

had

about

customers of B

&

Co.

Two lines of

inquiry were tied
together when further investiga¬

is

assure

those

of

with it is to

different

seven

busy place, and
you that the intent
a

connected

be

helpful in every
manner
possible to people en¬
gaged in the legitimate distribu¬
tion

%

of

have

investment

securities.

transactions

in-and-out
was

Detecting Frauds

At

rities.
far

as

an

affirma¬

as

Its object is to maintain, so

humanly
in

public

possible,

our

business

to facilitate the

application of the

nation's savings to the sustenance
and growth of our economic life.

Bradley Higbie & Go.

Keystone

the ultimate purchaser.
this
point Keystone

Is Formed in Detroit

was

made

DETROIT, MICHIGAN — The
by it over
the market and whenever unusual the past year.
Stock
Exchange
an¬
A comparison of Detroit
activity in a security is noted for the transactions in the questioned nounces the admission of Bradley
which there is no explanation, an accounts indicated that they had Higbie as a member of the Ex¬
immediate check is made.

particular
stock

case

a

chase

over

In this

out

in

change suddenly jumped from 5
One of our investigators was
assigned to look into the trading.

to 7.

•

-

At about the

same

time another

investigator was inspecting the
books of a brokerage house which
we
shall
call
A.
In
checking
blotters he

customer
a

technical

tion

in

T

which

purchased for

across

came

violation

of

stock

Regula¬

had

been

account and re¬
sold at a profit the same day but
no money
had been paid by the
customer

of

the

to

similar

an

the

cover

stock.

He

instances

another account.

purchase
several

found
in

that

In each

and
case

in

the

stock had been purchased from or
sold to

a

exclusively for in-and- change and the registration of his
trading invariably at a profit firm Bradley Higbie & Co. with
contemporaneously offices in the Guardian Building.
Mr. Higbie has been associated
bought or sold by Keystone.
It
was also possible to uncover sev¬
with the brokerage business for
eral other accounts of this same many years and formerly was a
type with other brokerage houses partner in the investment bank¬
and to associate them with the ing and brokerage firms of
Keane,
customer's man.
Higbie & Co. and Alison & Co.
Now the pattern was clear—but More recently he was President
who was supplying the customer's of McAleer Manufacturing Co. and
man
with
his
information?
A Chairman of Higbie, McDonald &
i
study of the time slips, giving the Co.
exact time each order was placed
The offcers of the newly formed
with the broker for execution, and company in addition to Higbie,
the
time
of
execution, showed who will serve as President and
that the leak was at the Keystone
Treasurer, will be Wm. E. Shoe¬
end; and other lines of inquiry— maker, Vice-President; Frederick
cancelled checks, toll slips, etc., F.
Mueller, Secretary, and Peter
finally pointed to one man—a C. Higbie, Assistant Secretary and
trader for Keystone.
Assistant Treasurer. All were of¬

been used

quiet

normally

the New York Stock Ex¬

on

sale

and

securities

When

second brokerage firm—

confronted, he confessed.

B & Co.—which becomes the cen¬

His confession

tral firm in the picture.
The in¬
vestigator learned that both ac¬

ficers of Higbie,

clearly involve the customer's man
and also another brokerage firm.

had

counts

introduced

been

to

will

It

be

was so

while

a

broad

before

broker A by a customer's man of

the

transactions

B & Co. and that he had also sup¬

The

profits of the fraud

plied the orders.

are

as

McDonald & Co.

to

Lester Watson Dies
Lester Watson, partner

all

unravelled.

in Hay-

den, Stone & Co., died March 6.
Watson made his headquar¬

Mr.

esti¬
mated at about $300,000, of which
are

ters at the firm's Boston office.

■K

produce
final

before

$4,500,000

Spokane, Portland and Seattle Railway
Equipment Trust of 1949

§ome

confronted

are

with regulations

manner

2%% Serial

promulgated by the Securities and
Exchange Commission. One of the
things which

seems

to raise

(Philadelphia Plan)
To

query in the minds of those
engaged in the business is this
one, which is so often put to me
.

"Why do

encouraged the low priced stock,
and that has become fairly stand¬

which make

which

the

this

annually $300,000

on

each April 1, 1950 to 1964, inclusive

value and dividends by endorsementjointly and severally
by Spokane, Portland and Seattle Railway Companyt Northern Pacijic Railway Company
and Great Northern Railway Company

brokerage

houses?"

ard among the motors

mature

To be guaranteed unconditionally as to par

send inspectors

you

Equipment Trust Certificates

a gen¬

eral

in to check the various

up

large

a

of

part

Detroit

extent

The

you

require?"

by the NASD?"

market.
/

"Can't you get sufficient
information
from
the
reports
work" have

to

which

lower

be

to

Priced

.

priced stocks increase market ac¬

on

in

depends

commission

some

rates.

measure

This,

of

Course, brings up the whole ques¬
tion
I

of fees
had

some

arid

and commissions.

the

staff

check

for

.

Issuance and sale of these

of the early history of fees

commission rates. Here is

an

interesting item which they turned
up.

1792

It is the agreement made in
between

the

various




members of the various

divisions,
satisfied that they have only
one
sincere purpose--and that is
to be constructively helpful.

mem¬

am

On

the other

2.55%,-according

to

maturity

Certificates

subject to approval by the Interstate Commerce Commission. The Offering
State in which this announcement is circulatedfrom only such of the
undersigned and other dealers as tMy lawfully offer these securities in such State.

Circular may

be obtained in

hand, after many
in the investment and se¬
curity business, I know for a fact
that
security dealers possess
as high a
degree of honesty and

are

any

HALSEY, STUART & CO. Inc.

sioners but the directors and staff
I

me

Yield 1.35% to

duplicated

tion?

tivity

to

"Why does

and so forth.
May I make this one observa¬
After having
served two
years
on
the SEC, and having
come
daily in intimate contact
with not only the other Commis¬
.

insti¬

tutions and in the integrity of our
financial markets.
Its purpose is

asked for the details of each pur¬

know, the SEC main¬

constant

conscious of the fact that

ple who each day

I

always personally con¬

revealed that in each of the

tion

!

surveillance

It

confidence

Second, the broker-dealer in¬
spection served to indicate that a
fraud was being perpetrated on

inspection and what we call a fly¬
ing quiz into a suspected manipu¬

you.

information

advance

Keystone's proposed transactions

or

lation.

administers

statutes.

ceived of the SEC

refer-... in time for him to act thereon.

am

began with two routine
investigations — a
broker-dealer

As

ac¬

by

plot started to thicken. Two tive, positive force rather than a
were
suggested
at this- restrictive, policing one. As I see
point:
it, it is the function of the SEC
First, the transactions uncov¬ to guide the financial practices of
ered
by the manipulation quiz America's
business
corporations
suggested that the customer's man and those who deal in their secu¬

all

tains

Keystone

supervision

The

ring to the fraud against the Key¬
stone
Custodian Funds recently
Uncovered by the Commission.
It

coinci¬

customer's

same

their

its

frauds

This story not
customer's man

the outside.

on

this

serviced

count.

tain types of fraud.

involves

that

dence

Ex¬

Inquiry

revealed the

Co.

&

man

best intentioned house may not be
able to protect itself against cer¬

several

B

are

am

know, is reduced to almost

Investment

nil.

executed

been

at

this audience is composed of peo¬

.

registered investment
The Keystone purchases

change by other brokers.

inspections be made and the
fringe discovered and
Let me give you an
example of the kind of thing such
inspections may turn up—situa¬
tions which, incidentally, would
never show up in the periodic re¬
ports.
It demonstrates that the

but

of

Broker-dealer

SEC

a

company.

eliminated.

only

all

and

the SEC is only one phase of the
work assigned to that body. The

Funds,

dishonest

Regulations and Policy of SEC

.

as

from

Funds

implicated.

way

houses,
resold

Custodian

management are, of course, in no

these accounts, and that the pur¬
chaser was Keystone Custodian

odic

When they are adopted,
the rule of the Exchange,
to be enforced by the Exchange.
They are not the rule of the SEC

in

immediately

stone

discussion.

informal

discussions

These

in¬

accounts in

that

it will usu¬
ally bring its proposals down in

Stock splits are generally

terest.

numerous

several different brokerage
the 'stock had
been

are

exceptions. And these exceptions,
generally, by virtue of publicity
given to .their acts, go a long way
toward creating a suspicious atti¬
tude on the part of the public.
For this reason it is imperative
and for the good of all that peri¬

adoption.

Market Interests

purchases of the stock in

commissions and expenses consti¬
almost $200,000.
The Key¬

tute

commission rates,

in

they

Suggestions for Broadening

had effected sub¬

man

question for

27

(1195}

Meanwhile the rrianipulation in¬
vestigation revealed that this same

as any

industrial group

or

"We, the Subscribers, Brokers

was no

Such omissions

constituted the

New York Stock Exchange:

mention, for
example, of the proceedings in
which the company is involved un'der the Public Utility Holding Com¬
pany Act. There was not even a hint
that a plan of reorganization had
.been formulated which drastically
.affected the rights of this particu¬
excusable.

COMMERCIAL

THE

Number 4786

■

r"

-fi

:

A. G. BECKER & CO.

OTIS & CO.

INCORPORATED

v.,;-;,:..

THE ILLINOIS COMPANY

(INCORPORATED)

McMASTER HUTCHINSON &, CO.

years

March

15, 1949.

MULLANEY, WELLS &. COMPANY

k

28

.(1196)

THE

Our

Reporter

COMMERCIAL

(Continued from
at that

By JOHN T. CHIPPENDALE, JR.

level

.

the

.

of

the inegilibles.

provided

a

method of general

monetary policy, while the regu¬
of margins afforded a se¬
lective

instrument

credit
but

conditions

important
of these

sellers and

all buyers, as is always the

case

of

as

1

.

to

influence

a

The import¬

innovations,

well

as

of

our

monetary structure with which
they were associated, is that they
meant a still more explicit com¬

when prices

focused

taken place.

bility.

for

.

.

.

this

is

time.

DECLINE

.

buoyant

a

restorer

advancing government bond.
confidence, which is needed at

of

classifies
influence

one

an

.

.

only

.

.

this

period, these loans have declined $268,000,000 with
New York Federal Reserve District showing a minor

the

gain.

The largest drop in business loans was in the San
Francisco area, followed by sizable declines in
Chicago, St. Louis
When there is a loss of earning assets the banks
.

.

.

and Dallas,:

.

.

.

generally seek other outlets for these funds in order to maintain
income. ..."

.•GOVERNMENTS,'IN- DEMAND

•

-

-

1

-

—"

•

-

\

-

Things are running true to form because the reporting member
banks, during the seven-week period, when business loans were
receding, made commitments in government bonds amounting to
$383,000,000.
This was in excess of the total business loans that
were lost by these institutions*
The. largest? buyers of government
.

.

.

.

bonds

the

were

commercial

.

.

banks

in

the

Chicago district, followed

by the member institutions in Cleveland, San Francisco, Boston and
Atlanta.
Out-of-town deposit institutions,

nec¬
con¬

figures of the

reports.

.

.

reporting

member

banks

for

there

the

war

are

stitutions

to

to

get

in

the

on

longer-term

'

tions.

.

.

ELIGIBLES

The

trend

of

impact.

business

tain earnings.

come

.

loans

the spread between the longest
taps and
tant,eligible has widened and it is indicated that

■

,|

of the bank bond, who
them,

are

.

eligible

;•

bonds

?!

into

because

faster

move

the

issues.

.

.

.

They

believe

the

the limited supply and sizable
demand
the up side thaii the ineligible issues.
v
.

however,

swaps,

being made

are

from

.

.

nearer-term

quality required

are

these

institutions

been

has

important

advance of the longer eligible bonds.

getting

rid

of

substantial

order to get in on the

:

/:

moving out of the

are

not readily available.
very

amounts

...

of

longs before they

.

in

and

run

mortgages

/, The buying of
the

recent

Savings banks

their

price
to

be

issues

in

seem

shorter-term

.

too far in price.

up

.

.

by these banks.

V

being

are

quirement

*

•

are

much

the

higher

BULLISH

prices

being predicted

longest bank bond, according to
2V4S

distant
market

due

1956/59

taps look
followers.

also

good

on

does

not

...

seem

headed

for

for

many,

for

very

consistency

with

to

a

be

long government bonds.




on

the

is

well

the

framework

enterprise

emerging
mary

of

a

free

private
became the

economy,

conception
of

purpose

of

all

the

the bullish
market

banking

which

policy.
monetary policy

of

these institutions

on

hazardous
too

much

or

.

.

its way to 104, with
.

limits

.

.

The most

some

for

money

govern¬

business, but for the time being
risk

involved in being bullish

a

prising

tries

pursued

national

velop

to

be

final

national

of

fectly

limitations
east

pro¬

general

a

total

a

such

con¬

to

mone¬

behavior

reason

in the

the

present

per¬

stability

community. But the
our ability to fore-

ideal is

an

tainment

the

on

economic

sufficient

On

a

adjusted

needs of the

The

in the experi¬
international

success

continuous

ten¬

a

excessive,

tary flow that is at all times

inter¬

was

monetary

reveal

dency and maintain

pro¬

problem.

hand;,there

viction that

the

to

answers

total

Ideally, monetary policy should
completely forestall either ten¬

not expected

monetary

the

times

at

become

coun¬

fully as possible the
ductivity of their resources.
were

that
to

of

sur¬

an opposite
tendency,
producing price declines and un¬
employment.

economic

as

agencies

complexity

it will show

were

income and to de¬

real

well

as

monetary

price rise, or tnat at other times

monetary policies designed to
promote high levels of employ¬
and

the

ducing the symptoms of

and

ment

of

this

of

will

ilow

dency

peace-

tul world in which member

to

is

itself

that
impossible of at¬
suppose

future.

near

that

most

At
can

we

feasibly

consultation and cooperation
through these organized channels
would
give the world a better

an

aim for is to achieve
approximation to this ideal.

to

want

state

wartime

at

this

stitute,

to

be

devised

internationally,

as

a

for

aware,

was

the

supply of
consistent with the needs

money

of

a

expanding econ¬

This is easier said than done,

omy.

the

for

and

stable

a

with

term

the

international

agreement
reached
at ' Bretton
Woods providing for the estab¬

in¬

economic

vate

A well functioning pri¬
economy requires stability in

certain
much

of public policy as
requires flexibility in
important part of wise

areas

it

as

others.

An

policy making, as I see it, is to
recognize and adhere to the bound¬

in

and
an

additive items.

amorphous

Rather, it is

mass.

We have currency money issued
by the Treasury and the Federal
Reserve Banks.
mand

the
a

deposit

We have the de¬

created

money

commercial

banks.

We

by

have

large amount of other liquid
in the form of time

sets

as¬

deposits

and

savings accounts, building and
loan shares, and the cash value of
readily convertible insurance pol¬
icies.
We have an even
larger
volume of other liquid assets in
the

form

Government

of

secur¬

ities, exchangeable into money at
par, by redemption or sale.
We
have

other

still

assets—e.g.,

cor¬

bonds

and obligations of
State and local governments—that
porate
are

high in liquidity, and
by
nature
close
to

very

therefore

Some of our money,

money.

when lodged in the

over,

of

Federal

property

banks,

of

and

pressure

more¬

possesses

multiplying

investments

been
dollars.

and

the

through
into

These bank

still

reserves

called high-

the ultimate

we

concern

policy is not with the
ply

realize that

of monetary
money sup¬

itself, but with the flow of

money

through the economy.

The

active money flow in the economy
bears the impact of changes in the

supply and of the activa¬

money

tion

or

money

mcney/

deactivation

stocks.

In

of

our

existing
complex

system, both of these types

of monetary

or

concept

cept undertakes to compromise the

advantages of flexibility and sta¬
bility in economic policy.
■

Strategic Factors in the Money
/ Flow
:0/;:;
.

■

The major changes that do occur
in the economy's money flow are

heavily dependent on certain stra¬
tegic forces such as capital forma¬
tion by private business, consumer

expenditures
and

for

durable

goods
international

housing,

trade.
each

To
of

and
greater

a

less degree
is subject to

or

these forces

influence

by

thorities

the

monetary

through, the

conditions

which

on

terms

au¬

and

new

money

borrowers.

is available to

How¬

their susceptibility to such
influence is qualified by the fact

that these forces

ily

dependent

factors.

in turn heav¬

are

non-monetary

on

\

'*

The volume

of business

.

capital

formation, for instance, is affected
business

greater when

a

which I shall refer again in a
few minutes.
Essentially, this con¬

by current expectations of future

The

even

built-in,

—

to

ever,

reserves

Banks

Reserve

commercial

what has been termed

automatic, flexibility

..

significance, from the stand¬
point of monetary policy, of this
point complex money structure becomes

sub¬

of

source

a

stability.

"money supply," at
aries of each of these areas.
The
our
own
country, is a
highly
complex
concept.
Our importance of this aspect of policy
particular money supply is not a making is reflected, I think in the
considerable recent popularity of
quantity of readily identifiable
least

correctly

former gold standard mechanism.
The fruit of this
thinking, as you
arc

times

have

of the money problem.
It
recognized that some mechan¬
had

all

at

money.

pects
ism

monetary policy to do its
part, it must provide the economy

loans

and

flexibility in the making of
policy, not the least of
flexibility can itself

which is that

become

Supply
For

more

not

We must not overlook the risks

of

public

was

early postwar
thought regarding the future role
of monetary policy was not ne¬
glectful of the international as¬
was

monetary manage¬

on

The

entirely clear. But that
its responsibility was to be a
large
one, there can be no doubt.

side, with
.

eco-r

play in realizing this conception

was

taken

leaders.

pri¬

public

policy, including monetary

central

or

that

higher prices.

ranges

a

system.

Not high employment alone, but
stability at high levels of employ¬
ment and output, achieved within

to

"

102, at least, according to

Picking price

ment securities is at best

there

of

...

Investors, traders and dealers alike
The

be pursued
example, "full
through
inflation,

"free private enterprise"

I

EVERYBODY'S

em¬

not to
For

"make-work"

part

„

.

group,

goal of high level
was

costs.

nomic

Although most of the activity and glamour is in the
longer
end of the list, there is nonetheless
sizable volume in the mediumterm obligations with the larger commercial
institutions the main
operators in this classification.
The 2%
obligations, especially
the later maturities of this
.

this

•

obligations into the longs because loans

of the

over

projects was
considered unacceptable.
And, of
course, all policy measures were
expected to meet the general re¬

and

.

much in the savings bank
classification,

great

a

was recognized as an undesirable
long-run solution. Resort to waste¬

intermediate maturities into both the
longest eligible and tap issues,
The small and medium-sized
commercial institutions which are

Very

assume

concern

employment"

will

short

to

the

the

all

at

.

the

public economic policy

was

But

ful,

Sizable

discussions it became

have

ployment

SWITCHING PRONOUNCED
i

re¬

Employment Act of
1946, which was passed, incident¬
ally, by a conservative Congress.

bank

of

on

that

tense

owners

can

restricted

the

prevent

issue than the

the most dismany

to

responsibility
for
the
maintenance of continuously high
levels of employment. There is no
better testimony as to how in¬

.

purchase the ineligibles in place of
hurry liow to make further swaps from the

not in any

lasting

a

postwar

into the government market in order to main¬
1 '
*
\

Also

had

a

these

would

of

•

.

.

experience of the

of

was

From

.

stitutions must

unemploy¬

large-scale unemploy¬
dominant question in
all discussions of postwar
policies.

ment

ATTRACTIVE

holders

the

Thirties

How

currence

obliga-

is also having an important effect
eligible issues (especially the longerterm obligations) because they have withdrawn from the
market
many of these obligations that were earmarked for sale.
The
opinion is that as long as business loans show a
declining trend
there will be a greater demand for bank
issues, since the deposit in¬

non-bank

But

depressed

clear
upon

eliminated

soon

ment.

...

BANK

Both

view

In

progressive
expansion
and
balanced growth of world trade.

projected to function in

decisions

the

monetary problems it is not

to

Complex Structure of the Money

.

higher-income

contribute

Conception of Monetary

these

out-of-town

order

insti¬

the

sponsibility

Policy

banks are also investing excess rehelp maintain their earnings.
Likewise,
fairly sizable sales of shorter-term issues by these in-

in

cooperative

Bank—could

The huge demands generated by

loans,

serves

—the

institutions,

authorities.

ment.

Postwar

formerly used

were

that the

Monetary Fund —
adequately assure relative
stability of international exchange
values, and that the second agency

ment

.

In addition to putting funds to work that

;■!,

substantiate

as

felt

was

Interna¬

the

—

the other

outbreak of World War II.

according to indica¬
tions, have been the heaviest buyers of the longer Treasury bonds,
the

these

tutions

dividuals and

an

could

new

...

and

of

It

and

tary and Other public policy. You
Need for Flexibility in
will recall the upsetting, though monetary mechanism internation¬
Formulating Policies
not altogether novel, experience ally than had been provided by
Such an approximation is by 110
we had of reaching a
cyclical peak any former gold standard system.
means an unambitious goal. It in¬
A stable expansion
in business activity without
of interna¬
ap¬
evitably requires all. the foresight,
proaching full levels of output tional trade, if a favorable envir¬
knowledge, and judgment that we
and employment
You will also onment for such expansion could
can muster.
One cardinal virtue
recall
tnat
established,
would
progres¬
previously
accepted be
to be cultivated is flexibility- both
notions as to the potency Of mone¬ sively strengthen the new inter¬
in thought and in action. No
rigid
tary policy, fostered particularly national financial institutions and
in the Twenties, were seen to be permit them to perform their re¬ policy, no matter how well thought
out in advance, will enable us to
grossly exaggerated. To combat spective functions with increasing
cope adequately with. the prob¬
the powerful forces of maladjust-' effectiveness."^
'
lems of an uncertain future.
Nor
ment during this
Such then is the postwar con¬
period, reliance
can
monetary authorities expect
had to be placed on other meas¬
ception of the objectives of policy to avoid
mistakes that will require
ures—notably fiscal policy. Even in the management of money, and,
remedial action. Improvisation and
with the extensive use of other as I have
said, the goal of a stable
policy measures, large-scale un¬ but progressive private enterprise reversibility should be included in
a proper
concept of flexibility.
employment persisted until the economy puts a very heavy re¬

the money market.
One of these forces is the trend of
business loans, which have been on the slide for the past seven weeks,
according to figures published by the reporting member banks.
upon

For

first

International

an

Fund

Bank.

isfactorily high level of business
and consumption activity the
principal preoccupation of mone¬

LOANS

BANK

operating in the economic picture, whether
deflationary or anti-inflationary, are having

as

national economic sta¬

on

tional

ditions and widespread unemploy¬
ment made reattainment of a sat¬

Forces

them

monetary policy

During the Thirties, sheer
essity 01 depressed economic

.

.

IN

since

great

a

mitment to active

More favorable developments appear to be ahead

.

Treasuries,

market

.

.

Thursday, March 17, 1949

of

Monetary

particular

in

area.

the inclusive reform

However, there does not seem to be any
danger yet of quotations being near a top, because the market is
just coming out of an abnormal period that should never have

-

authority

new

...

advancing.

are

•

over

lation

ance

no

control

required on stock
loans.
Thev' reserve re¬

quirement

.

Psychology in the government market market has changed so
completely in three months that again it seems as though there
are

and

of

margins

powerful

...

.

banks

lishment

the

vary

requirements

reserve

market

...

.

CHRONICLE

6)

page

time—authority to

member
The government market has turned
strong after being on the
firm, buoyant side for several weeks.
The break-through to new
highs lor the year by the longest eligible and ineligible bonds has
had a favorable effect upon market psychology.
Most investors,
dealers and traders are looking for higher prices for the more distant
obligations.
The fact that Federal again moved up the offering
price for the longest tap bonds indicates they are hot averse to hav¬
ing quotations continue on the constructive side.
Also, higher
prices for the eligibles may facilitate swaps from these bonds into
.

FINANCIAL

Monetary Policy and Economic Stability

Governments

on

&

change reflect the in¬
dependent decisions of many in¬

plans

activity, and investment
subject

are

expansion,

to

modification,

postponement,

withdrawal

the

look

as

changes.

sumer

wants

Demands

durable
that

economic

or
out¬

for con-\
from

goods

stem

now

deeply

are

im¬

bedded in the American standard
of life. The state

trade

is

political

a

of

international

reflection

tensions

as

of

well

world
as

the

product of reciprocal needs among
nations for goods and services. In

general, policies operating through
the

cost

and

availability
of
ways in which
authorities can in-

money—the major
the

monetary

Volume 169 % Number 4786
fluence developments—are apt to
meet with greater success when it

THE ..COMMERCIAL

achieved

vices

is

through

automatic

de¬

undeniably appealing
of restraining rather approach to the
problem, and its
than
stimulating monetary expan¬ potentialities
are
well
worth
sion.
stressing.
But I suspect that its
I might add at this
juncture that potentialities can never be great
the complexity of the
money flow enough to preclude entirely the
process is the basic justification need for specific tax on
expendi¬
is

for such instruments of
monetary

ture

policy

what

and

margin

as

instalment

consumer

regulation.

requirements
credit

By influencing credit

conditions in selected areas, these

instruments help to keep the
of credit in

maintain

balance

sound

well

as

credit

use

to

as

conditions

in the sectors affected.

afford

a

means

They thus
keeping certain
monetary
forces

of

strategic -non naving an undue influence

from

the money supply and on

on

the

monetary flow through the econ¬
omy.
While they are relatively
new

techniques
of
'monetary
policy, in the brief period they
have been available
they have had

helpful

a

supplementary

effect.

The extent to which
they may be
forerunners of a broader develop¬
ment of selective credit

technique
judged at this stage of
monetary
development.
Much
more
experience than we have
cannot

be

had to date will be
necessary be¬
fore the
desirability of such a

development

be judged.

can

adjustments
tax

policy

proper

viewed

or

as

a

separate area of public policy, the
fiscal operations of government

play

a significant role in monetary
affairs. They cannot be ignored in

consideration of contempo¬
monetary problems.
current
surplus on a cash

any
rary

A

basis

that the government's

means

outlays

are running less than its
income, and it is .therefore having

contractive

flow

money
current

outlays

effect

in

cash

the

on

the

A

economy.

deficit

that

means

of

excess

income, and that the

net effect of
the government's fiscal
operations
is to have an expensive effect on

the current monetary flow.

sequently, under
nomic

a

whenever there

tendency for the
become

ought

is

a

monetary flow

excessive, and deficits

to arise except when
desirable
to
expand
the

never

is

it

eco¬

policy, surpluses should be

accumulated

to

Con¬

stabilizing

This

principle of fiscal policy is,

ought

or

to

be

by

now,

a

thor¬

oughly

elementary
notion.
Though I cannot speak with the
authority of one who is directly
concerned

policy, it
more

lem

with

seems

making

to

me

that

a

much

relevant and difficult prob¬
is how to provide for gov¬

ernment surpluses and
the
right amount at

time.

fiscal

deficits of
the

right

other words,

In

to me, the
really crucial problem in develop¬
ing an adequately stabilizing eco¬
nomic policy is that of providing
proper flexibility in government

Flexible

A certain

Fiscal

amount

It is my

government

ate

a
deficit.
With no opposing
changes in expenditures, this au¬

tomatic ebb and flow of revenues

influence
Such
be

stabilizing
monetary flow.
influence
may

the

stabilizing

supplemented,

equally
the

exercise
on

of

course,

fluctuation

outlays

behalf of such items

as

made

by
in
on

unemploy¬

ment compensation.
A

stabilizing

fiscal

policy




to

found

debt

reduce

be extinguished, while the imme¬
diately available supply of bank

for

used

as

retire

to

held

new

creation

money

increased.

be

If

surplus is

a

Federal

debt, bank

Reserve

reserves

as

well

the money supply will thereby

ex¬

of
that

one

budget
will

contribution

mum

surplus

make
to

contraction;

but

such

rapid
if ex¬

changes would be necessary
penditure adjustments are to be
heavily relied on to promote eco¬
nomic

make

stability.
Aside from the
problem of workability, I am not
sure
that we ought to rely on
changes in the volume of govern¬

ing

ment

our

expenditures

major
means for ironing out fluctuations
in the economy.
For the scope of
the government's direct rule in
the market place is related pri¬
marily to the size and nature of
its
expenditures on goods and
services.
is

as

a

I think the scope

of this

elements

the

of

one

that,

free private enterprise econ¬

a

ought

itself

be

to

kept

as

Long- Run

"Neutrality"

of

Fiscal

stability at high
employment, insofar as
it depends on fiscal policy, may
involve resort to deficit financing,
but only on a temporary and not
of

on

a
permanent basis.
A belief
in the need for a chronic govern¬

ment deficit to attain

stability

re¬

to

me, a lack of
confidence in the viability of our
seems

The
long-run
fiscal
of budget neutrality—

economy.

objective
i.e., of a balanced budget—is, in
outlook,

my

with

the

levels

the

bilization

be

may

of

use

tension

situation

in

of

stable

employment

real

our

danger
lapse into

will

of deficit finance.
the

international

persists, no retrench¬
huge military 'budget

ment from a

will be possible.
a

welfare

At the

same

time

expansion- in

considerable

the

activities

the

of

govern¬

prooable.
This combina¬
a
welfare and garrison
state means a large and growing
volume of government expendi¬
tion

for

tures, implying in turn
volume

of

an average

to

are

revenues

fault

maintain

financing.

on

Should

de¬

we

monetary ob¬
way, the result

ligations in this
may be to create a demand for
comprehensive direct controls in
order to
of

combat

it

is

through borrow¬

so

the

that

central

banks—in

country the Federal Re¬

Banks.

*

chronic condi¬

a

inflationary

pressures.

finance affects

mone¬

tary

policy through its manage¬
of outstanding public debt.
Aspects of debt management, such
methods

of

the

pattern
all

and

level

of

rates,

be comprehended

in, or
related
to,
modern
monetary
policy. The principal objective of
debt
of

management from the point

view

of

monetary stability is
easy enough to state: during in¬
flationary periods when the mone¬
tary flow is excessive, it is desir¬
able

to

into

public

attract

investors'

funds

debt

holdings and
private
investment

away
from
expenditures,

thereby
reducing
the active money supply. During
deflationary periods, it is desir¬
able to induce an exchange of
public debt holdings for cash,
thereby
increasing
the
active
money supply.
In

this

of

area

ment more than
the

monetary

importance to all of
also

ask

seems

debt

in

a

and

be

organization to stabilize a
progressive private enterprise
economy
by the application of
monetary and other public eco¬
nomic policies?
;

You

all

are

familiar

tremes.
one

with

supply.
their signifi¬
will depend on such factors

the nature and strength of the
funds and

position of

commer¬

cial banks.
To illustrate my point, a sur¬
plus might be. used to retire debt

held
this

by
case,

the

the

nonbank
process

public.
of

lating and disposing of

permeate

liability

itself

Firm Name

will

Country

to

Be

Blanchard & Co.

that

know

we

too

little

Blanchard

think

March

and

Co.

&

from

John

Watts

partnership

the

entire

31.

Fullerton

advance us

NYSE

along the road of sta¬
bility. I do believe our knowledge
and understanding is great enough
that

proceed with some
confidence of ultimate success. In
so

we

going forward,
that

we

monetary

must recognize

policy

can

carry

only its share of the responsibility,

This

announcement

is

of

securities for sale,

to

buy,

any

securities.

as

The

the

New

York

Stock

will consider the proposed transfer of the membership
the

of

late

Edward

C.

William B. Fullerton.

Fiedler

stood that Mr. Fullerton will act

individual

an

member

of

circumstances

no

an

offer to

offer

is

buy,

made

be

to

or

construed
a

by

only

as

means

of

offering

an

solicitation of

as

an

offer

the Prospectus.

■'U

Subscription Offer
of

structure,

and

New York State Electric & Gas

Corporation

with

i

Common Stock

a

($25

international

value)

par

byy

:

.

■'

yy§|;§

But within this limitation, how
much

be

can

done?

Are

General Public Utilities

there

changes to be made, through re¬
financing operations, in the ma¬
turity and ownership distribution

Corporation

of the debt that would

improve it
from the point of view of mone¬
tary stabilization? During infla¬

tionary periods, is some flexibil¬
ity in the prices of government
securities compatible with main¬
tenance of orderly market con¬
What

would

be the

confidence in the orderliness and

as

the

of record 011 March 10, 1949,
Subscription Warrants evidencing the
right to subscribe for shares of Common Stock of New York State

Electric & Gas

12, 1949.

Corporation

as set

government

The undersigned have entered into
Utilities

any

even

may,

thus far

with much

Stock

more

been

given, the an¬
coming. We
have, after all, only acquired our
present huge public debt within
swer

at 3:00

P.M. April 11, 1949.

with General Public
Corporation whereby the undersigned have agreed to form

and manage

selves,

se¬

Firm answers to questions such
these are prerequisite to devel¬

Yet,

forth in the Prospectus dated March

Subscription Warrants expire

sure

flexibility? Would
these effects compensate for the
known
advantages
of
certain
of

General Public Utilities Corporation lias mailed to its stockholders

to

a

agreement

an

of securities dealers, which shall include them¬

group

obtain subscriptions for the Common Stock.

Such dealers

under certain conditions, offer and sell shares of the Common
as

more-fully

set'

forth in the Prospectus.

and

such

Securities
as

are

other

may

registered

Inc.

obtained'from

be

members

Dealers,

of

the

National

functioning

dealers

in

as

securities

the under*
Association

Participating
in

this

State.

will be slow in

the past decade.

We will need to

The First Boston

proceed cautiously in building up
our
experience
in
improving
methods for its management.

Lehman Brothers

Corporation
Wertheim & Co.

Concluding Comment
In

the

present

lecture,

ing policy in relation to economic

reduction in the money supply; it ;stability.

You will

see

Merrill

I have

endeavored to sketch the evolving
role of monetary or central bank¬

that over!

March

15,

1949.

Lynch, Pierce, Fenner & Beane

f

to ;

It is under¬

will Exchange.

—

under
or

of

Exchange

that many other public policies—

particularly fiscal policy

Get

to

Membership

On March 24 the Board of Gov-.
ernors

can

and

asset

is
on

can

know enough to havle a ra¬
tional basis for'action that will

securities market.

.

surplus

result in

Inverness

never

situation, we
doJ know that monetary policy
must maintain orderly conditions
at all times in the government

In

accumu¬
a

Bond

outing

Friday, June 24.

on

retiring

Dealers

the money

speaking,

reserve

at

truth

has

the

annual

-m—mamm—

I do not believe that any

possesses the ultimate
the question.
Nor do I

of

cance

held

Club

the

signed,

demand for investable

15th

announced

answers

Copies 'Of the Prospectus

as

Outing
The

—

has

question.

intensive thought than this matter

on

its

OHIO

Toledo

of

to me, we are limited in the

knowledge. With a debt of the
magnitude, of $250 billion, with
a
stable level of long-term in¬
terest rates held long enough to

tense

on

of

range

basic

cies.

effects

TOLEDO,
Club
that

deficit will be reflected in differ¬

Broadly

To Hold Annual

question: do we know
enough about economic behavior

opment of debt management poli¬

ent

to be carried effective¬

are

the

:

Bond Club of Toledo

very

disposing
financing a

in

ly,

with

basic

manage¬

curities market?

timing of sur¬
deficits. They extend
also to the way in which a surplus
is disposed of or a deficit is fi¬
and

We must

We

us.

ourselves

anywhere else in
fiscal field, it

development of stabilizing policies
by
the
incompleteness
of
our

pluses and

surplus

part.

■

and

fined alone to the

Differences

cial
must

ment

stability

a

in

and

history is

wide

effects of such

implications for monetary
policy of a stabilizing program of
government finance are not con¬

nanced.

their

do

On April 1, Laurence C. Keating,
given to
They extend will become a partner in the New
Other Aspects of Government
from a doctrinaire affirmative to York
Stock
Exchange; firm
of
Finance ;Yyb'"vy•
an
agnostic negative.
My own Blanchard, Snow & Watts, 115
In addition to the
management
position, as you might deduce, is Broadway, New York City, andOf budget surpluses and
deficits, towards the middle of these ex¬
the firm name will be changed to
government

ditions?

The

of

bilities

the

broader

a

must

this

balanced

a

fiscal

our

extent

correctly,

consistently

to

recognize, too, that if the responsi¬

run

budget.
In
this
situation,
the
temptation — and the danger — is
to slip into a policy of chronic
deficit

the

of

y

government

equally large if in the long
we

from
own

serve

point of view of sta¬

needs,
that we

excessive

an

consistent

output.

From

If

entirely

achievement

high

and

to

feasible to do

must

The problem of

flects, it

monetary expansion it should be

refinancing, ma¬
turity, distribution, and of course

Policy
levels

maximum contribution to

financed

as

possible.

as

a

have

pro¬

reading of
a proper one, then we
conclude, I think, that the
contemporary role of monetary
policy is indeed a matter of cru¬

is

A similar type of
analysis ap¬
plies to the financing of a deficit
—leading to a similar conclusion,
namely, that if the deficit is to

to rapid expansion

been

direction

.

policy of

a

history

has

a

If we agree that this

maxU

a

undergone

If I have read the

29

public agencies charged
carrying them out will need
more flexible
role, but with more to be adequately equipped with
definite
responsibilities
toward appropriate authority to
perform
facilitating the maintenance of their proper functions.
high levels of employment, stable
values, and a rising standard of
Editor's Note: The second of the
living—in short, towards facilitat¬ two lectures b,y Mr. Szymczak will
ing greater overall economic sta¬ appear
in
the
"Chronicle"
of
bility.
'
■ /'i-:■■■■,s1:..
March 24.
the

by the commercial banks, a
portion of the money supply will

will

of

change

held

reserves

change.

trend

a

monetary restraint.

would not in
/

used

if

penditure items do not lend them¬
or

a

of

automatic

volume

budget.

Deficits

unchanged, revenues will rise as
the monetary flow expands, tend¬
ing to reduce a deficit or increase
a surplus.
As the monetary flow
contracts, revenues will fall, tend¬
ing to reduce the surplus or cre¬

itself

the

impression that most

of

the structure of tax rates remains

will

of

Management of Surpluses and

fiscal

is

hand,

selves readily

Policy

flexibility
policy can
be provided on an automatic
basis,
that is, without requiring delib¬
erate and specific action by either
the Congress or the Executive. If
in

surplus

other

a

tion

finance.

the

position

side

ment is

monetary flow.

On

the

and

running in

are

total

owner.

(1197)

the years it has

from taxpayer to security

expenditure

Treasury

surpluses and
deficits.
Whether
considered
within, the scope of monetary

only shift the ownership of

money

Clearly, this last dis¬

omy,
stable

by

CHRONICLE

be induced.

v-And Deficits

ally

would

FINANCIAL

general, my preference is for re¬
lying on the tax rather than the

in

The monetary flow
through the
economy is also affected strategic¬

Just

adjust¬

ought to be a part of a pro¬
gram of fiscal stability, I am not
prepared to discuss in detail.
In

role

f

well.

as

expenditure

or

ments

Timing of Treasury Surpluses

a

an

matter

a

&

as

the

30

(1198)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, March 17, 1949

Freedom Versus Security

:

•

,

.

.

'

.

v

•

"""

By FRANCIS ADAMS TRUSLOW*

"

"

.7 '

;<)

-

"

President, New York Curb Exchange.
Mr.

Southern Pacific Railway
Southern Pacific
in

the

was

opening months

conditions

that

of the railroads that

one

of

prevailed

the

current

throughout

of

very

the

the country. In January
gross revenues declined 11.8%
earlier to
$40,590,117, with most of the

part

from

drop-accounted

freight.

nance

by
The

I want

for

materially higher and despite a cut in tax accruals
a net
operating loss of $599,672. In January 1948
a net operating profit of over
$3 million.

the road sustained

there had

been

On the

;

basis of reports from the

to expect that

it

area

February results will also be

seems

influences

.

gencies

choice,

three

of

colonial

trine

so

and

i

ideal
di

n

i d

v

human

more

than

10

points from, its 1949

1

free¬

brands of

our::

revolutionary
days

called

it

There

picture
which

are

many

fundamentally.
is

of

one

Its lines also

the

serve

regions where

the

favorable aspects to
It is the dominant

most

other

the

Southern

the

sections

of

the

central

and

has

Details for last year are not available but in the pre¬
years

brought about a reduction in interest rates and the burden of fixed
charges. These annual fixed charges are now down to around $20
million.

Ten years ago

been

strengthened
$100 million.

they

were

materially,

modest

a

but,

with net

current

decline

in

business

through

current dividend rate of $5.00 a share will be covered
by a good
margin and no cut in this distribution seems to be in prospect.
Moreover, the company is going in for an important dieselization
program
which should improve the operating performance and
cushion the effects of what traffic decline does come.

one

America

travels

and

the

Congo

in the

even

not

Meeting

freedom

freedom

to

thoughts,

from

fear

that pur lib¬

erty is at the mercy of men and
unprotected by law.
This free¬
dom is not
and

something which

others

right which

have

not.

men

ercise
the

so
long as they
right to others.

By

this

some

It

believe all

we

have and which all

Investment Dealers Association of Canada will be held from June 21

through June 24 at Minaki Lodge, Ontario. The tentative program is

is

of

concept

is

men

may ex¬

"grant

too

freedom

Meeting of the outgoing District Executive Committee
members.

been tested in

Luncheon—special speaker.
Meeting of the outgoing Dominion Executive Committee.

years.

Tuesday, June 21
10:30 a.m.
1:00 p.m.
3:00 p.m.

have made

1

•

Annual

tricts. Committees; Election of officers.

5:30 p.m.

out

attempt to argue
far they have not

ruled

a.m.

1:00 p.m.

5:30 p.m.
*

Friday, June 24

in

and

slavery

Special Forum, discussion of problems of members.
Luncheon-Especial speaker.
New President's Cocktail Party.

that

cisive.

its

11:00

a.m.

a.m.

was

to

conceal

porarily

Trains from Toronto and Montreal will be made up into a special
train at Capreol on the morning of Monday, June 20.
i...

It is also announced the arrangements have been made to hold

the 34th

June 8,

annual

meeting of the

Association, from June

1950 at the Seigniory Club, Montebello, Quebec.




5

through

gov¬

be

de¬

In

times

dered

of

and

an

attack

on

y

war'we

timate

that

economic

*An address by

Dinner
of

tic

emer¬

Mr. Truslow at

Meeting of the Conference

National

of

the

of

some

time;

force

of

(American)

the

affairs.

opinion,

conscience

the

Organizations, Atlan¬
City, N. J., March 3, 1949.

from

the

world

the

horrible f

it daily inspires unwit-f
stooges in our land to call,
continually for more and more:r
gifts from government. By adroit j

(political)

false

statements, it has drawn usstrange competition. A com-|
petition which leads us to try to >

into

of

and

whole

our

na¬

persons

a

offer, not what Russia'offers itsf
people, but what it pretends tof
people that it offers its peo-f
pie. By every insidious device it;

people.
that is the mind

of

tof

State."

discoverer!

the

ting

the

tion, is the opinion of

Welfare

not

who

in the parties, for seeks to build up the idea that
parties taken together are the government is something more t
than
the people
it serves, that;
nation;
and
the -parties,
each
claiming to be its true exponent, government can give material se-f
seek to use (public opinion) for curity and that government owes,included

are

the

their

Yet

purposes.

it

material

stands

parties, being cooler
and larger minded than they
are;
it awes party leaders and holds
check

in

party organizations.

openly

one

ventures

determines

It

the

the

character
is

It

the

number

of

ideas,

it.

the

fact

are

that

beings

the

millions

of

hu¬

this country are
of this Republic
and
exercise
a
greater wisdom
than any party.
Our history is
authority for the fact that, so
man

the

in

least,

we

away

glib logic nor
us by force.
■

The

Nazis

,

have neither been
from freedom by
had it taken from
to

convert

us

the

fresh and new —
inevitable—a wave of

seem

future.

them

Finally

we were

overgrow

What
more

ing

could

provide

not

so

fought
effectively

easier

an

oriental method for

or

destroy¬

opponent by inches?

an

f

Obviously the political slogans
I

have

cited

Russia.

not

were

One of them

made
born

was

?

in

t

in

McKinley's. campaign.
They are
merely the psychological dyna¬
mite

which

thing

of

has

been

Democrats,

the play- *
Republicans ;

Therefore,

•

they are not mistrusted and their
implications open the way into
the minds of thoughtless
people
for

the

wild

i

:

*

assertions

exported ~
As these slogans
whip up our desire for security f
without
work, , they hasten the t
process of infiltration.

by Communism.

we

indicated

and

;

production

and Californians alike.

j

tried

from democracy to Fascism by ap¬
pealing to our admiration for ef¬
ficiency.
They
called
freedom

autocracy
something

They result in

for

husbandry, such ideas ca.i7
the machinery of our
as to clog it to a halt, f

proper

government

far at

strong.

very

government action
and spending and taxation. With -'
so

Bryce, take your
authorities for

or

soil,,

watered

the

demands

1

,

both

Such

fertile

and

grow

any

country, and it is more in¬
disputably sovereign.
It is the
central point of the whole Amer¬
Lincoln

seeks.

the

weakness

•

the;

greater

and

policy.

a

than

by

other

choice,

Moscow

planted in

human

see

in

direction

minds

end. that
of

needed to

are

political tears of office!
seekers,
contributed
free
off
charge and free of .knowledge, j

national

product, of

of

imagination

No

resist

to

security to each citizen.>

No great powers of penetrative

the

above

How

those

soft

protection

decadent.

invitations

sound; when

to

•

con-

we

■

trast them with others which rang

Commiinisi Attack
i i

on

Freedom

Today the so-called Communists

out in our

erty

or

in Moscow are pursuing the im¬
memorial Russian ambition to.exn

tread

pand which

history: "Give
give me death."

from the

they

inherited

from

centuries of nomad raiders, from
Byzantine, Tartar and) Muscovite
rulers and more recently from the
Romanovs.

-

freedom is

more

Their

attack

on

subtle and

■

v-

"took surdity,

Behind,

Public

"A

was

*

Cradle

heel; but it has
quickly how to exploit;
vulnerability. It has walled-

off

you

conduct

them -stands

Th'ursday."

the

example of its own peoples' "se-.\
curity" and insulated its own peo-v
pie from knowledge of ours. Tnusprotected from too obvious ab¬

the

but

garage'."

Achilles

our

our

not the ul¬

are

in

above

surren¬

freedom to the defense
of the nation. After such surren¬
ders there were
always those who

"A*

learned

time;

have tem¬

our

suggested

fool

Commonwealth'': "The

that

voluntarily

mule."

a

every

from

Grave."

Moscow

fool

may

the

of

time,, decadent and tried to make their

has it been the
last, when the
administrative doctrine of major¬
ity rule has been adroitly ad¬
nor

vanced

are

should

not the first

human freedom,

Afternoons

a

the majority
majority wanted

wants

Meeting of Incoming Dominion Executive Committee.
Conference with members of the Press attending Conven¬

being left free for golf, fishing, tennis and other
recreation. There will not be an annual dinner, but special speakers
will address the luncheon groups on the first three days.
,

was

which

tion.

10:00

argued with¬

ours

if the

This

all

you

some

even

reasoned

years ago,

success

ernment

Thursday, June 23

10:00

desires

Douglas, striving for the PresL
denc.y 100

speaker.

Retiring President's Cocktail Party.

'

,

,

away.
So
been successful.

meeting; President's Address; Reports from Dis-

V1:00 p.m. Luncheon—special

immediate

men

it

Wednesday, June 22
a.m.

country for 173

our

Often

true

parties, however,

to

think and speak and

and the
'

is

ican polity."

try to attain,
equality it has given men
before the law, all economic and
political actions have ultimately

follows: ^

can

and

speak
them, write them and try to put
them into practice.
It is freedom
to worship as we choose.
It is

have

ONT., CANADA—The 33rd annual meeting of the

It

own

the

de

words to say the same thing
when he reported in his "American

Volga Valley.

exist.
our

"It

Lord Bryce, 60 years ago,

freedom

refugees from lands where they

do

think

both

more

commonplace to us
only visible in the eyes

are

"Fifty dollars
"Security

can't fool all of the people all the

men

become

and
of

Lincoln

people

people

freedom.

means

and

acres

"Freedom from want."

time."

Rhine.
Despite a fog of propa¬
ganda, there is muted testimony
that America still

the

you

Amazon, in
and along the

basin

this

public opinion and cor¬
appraised its worth when

said:

all

We have made the words
synony¬
mous
in the Upper

a

I. D. A, of Canada to Hold Annual

rectly

more

that wherever

have

1949 it seems
reasonable to expect that the year's results will not match those of
the preceding year.
Nevertheless, it is considered likely that the

TORONTO,

scribed

than any people of
the
world, we have attained a
high degree of freedom. So much
so

in

The

Abraham

land

This freedom is many
Finances have
things.
assets now above Things so deeply rooted that they

Southern Pacific reported earnings of $10.27 a share
on its stock compared with
$8.86 in 1947 and a 10 year average of
$9.44. With the poor start of the current year and the likelihood
least

a

above $30 million.

Last year

10:00

""Forty

chicken in every pot."
freedom j
"Two cars in every
country
"Share the wealth."

are
eventually
judge is what we call
"public opinion."

free and talked and sung of free¬
dom

just',

and

of

freedom

on

tried.

liberty with freedom blessed.
Not only have we fought to be

identify

the company had pared its non-equipment debt
by more than $237 million, to $456 million. Refunding operations
vastly improved the once formidable maturity schedule and also
seven

of

half-truths

plain lies, painted them with.sym-L
bolic but meaningless
words, andlaunched them at the most vulrfJ

Opinion

the practice

produced

tacks

he

Our songs have been of

southwestern

and

Another consideration has been the basic improvement in debt

'

thousand

tribunal before which all such at¬

earth."

industrial

of

years

people, by the people, lor
shall not perish from

rapidly growing sections of the country.

nearly normal levels.

as

to

One hundred and seventy-three

people

of gross, and should cushion the
impact of the in¬
evitable drop in railroad traffic as general business returns to more

ceding

the

the

in

favorable trend

and finances.

of

Pacific

California

railroad

population growth has been so
marked and is continuing.
As a result, over a period of years it
has consistently been accounting for an
expanding proportion of
railroad gross in the country and in the region
where, it operates.
Continuing territorial expansion augurs well for a future relatively

at

permitted

was

government

of

Public

.y

largely indicative of the inclination of the public, under liberty and
Francis A. Truslow
conditions, to put the worst interpretation possible on any preferred it to
developments affecting railroads, no matter how temporary those death. Almost fourscore and seven
influences might prove.
Conversely, in the more recent improved years ago, Lincoln—midstream in
sentiment toward carrier shares, indicated
by the better market our history—called for the high
tone late last week, Southern Pacific stock was
among the leaders resolution: "that this nation, un¬
on the up side.
Many rail analysts look for the stock to continue der God, shall have a new birth
to give a good account of itself.
of freedom—and that

{

been

'

recent

,/

J,any
before.
history,
I In it they have gathered up a

doc-

us
by claiming for their nerable.spot in our democracy—1;
intrigues the protection of the the desire of free people for ma-7;
same rights
to free speech which terial
security for themselves andf;
they are pledged to destroy. Their their children. Moscow was not*
arguments are as logical and as the discoverer of this
passage into!'
fundamentally 7 specious
as " the
our fortress,
Politicians have been.:
pleading of Stephen Douglas.
walking it for years chanting po-f
iitical slogans: V- *

dom. Thefire-

Southern Pacific stock broke

high to reach a low of 39%. It could hardly be held seriously that
fundamentally the situation had deteriorated to that extent. The

not

than

our

confuse

of
u a

has

freedom. 7 Their

More recently men who do not
believe in freedom have sought to

i

pursued

the

of

dangerous

launched in

,

persist;,;) ■}:•■'ff .Lff;f77; !f7"f'

independent
history, we
have

equally

sacrifice

our

equal to the danger of
entitled to the

are

and

war

centu¬

ries

road itself.

break

.

necessity

a

Through

r

obviously temporary, the release
of the road's January statement
brought considerable selling into
the whole rail market,; with marked
weakness in the stock of the
are

■

!'

to

.

for

ing to this, early 1949 performance are, however, obviously of a
purely temporary nature. To a certain extent they should be com¬
pensated for by a subsequent movement of freight that has been
backed up by the weather.
The poor showing should certainly have
been fully anticipated as the storms had
received wide publicity
in the press. Despite this
preparation, however, and despite the fact
that the adverse

-

security.

same

only reasonable

The factors lead¬

poor.

1

:

talk about, our
country's ancient;, ideal of freedom,- and our human desire
I think there is today a conflict between this ideal and this desire.
Perhaps
there has
always been, such a conflict. Perhaps the only novelty is that never before
ha$there been the
'
<S>-

46.5%

also

was

v

on
the other hand, were sharply higher.
in the cost of transportation, with the ratio for the
compared with 40.5% a year earlier. Mainte¬

was

to

up

of

year

for

Expenses,

biggest rise
month

a

*

ancient ideals of freedom and human

our

providing economic security
by destroying individual liberty.Notes trend toward paternalism in nation and cities
present situation,
in which "everyone wants the
products of industry, but few are willing to share as stockholder^ in risks
of financing it." Points out
productive capacity alone, and not dead hand of government, is only guar•y
v
v- X"'*.v
antee of' security.
; •
V
t/ '/ \ ■
Vr-/■ -

weather

western

growing antagonism between

on

desire for security, calls attention to Fascist and
Communist doctrines of

hard hit

severe

by the

year

most

was

Truslow, in commenting

our

more

on

bust,";
die;"
•

and

''Pike's

tbe

;•
so

old

-

;

Peak

Spartan

or

one

frontier,.""Scratch hog

-

It is

cient

me."

and

easy

-

and

act

in

f;

L
v

active. freedoms—to

speak

or

Vff<;

to confuse the

promises,- made

1

lib-

"Don't

me

—

the

an-

think

with
name

f
'

Lie 1

of

Volume

169

Number 4786

THE

freedom, which would destroy it
if-

fulfilled.

which

The

freedom

nation

our

upon

built

was

did

not

COMMERCIAL

Certainly Bryce would find no
to alter his 19th century

another—a

reason

remarks

he

could

return

today.

promise security; it promised
only the unfettered equal right to

ahead

ernments

ho

man

pursuit

the

and

1

or

a

will towaid his fellow
of

the

most

vir¬

widespread

of our country that, almost
without exception, every man will
take the time to help other men

in

succeed

dertake

the

and

work

will

they un¬
freely to

give

those who meet misfortune.

characteristic
that
to

in

men

other

gallantly

This

rooted

deep

so

willingly extend

we

try

is

lands

help

our

and

even

diminish

io

Guarantee

i.' v;;;'

/:

the

:[■

V :•/

\

But

it is unsound and danger¬
indeed it is a fraud, to twist
this generosity into a belief that

government

material
zens

security

individual

attempt.

is

It

to

it takes

away

in

unsound

capacity of
duce diminishes

citi¬

its

freedom

the

need

all

to

though

even

their

guarantee

can

the

because

people to

a

the

as

produce

pro¬

individual

live

to

is

re¬

moved, and because the conditions
which affect the needs of individ¬
uals

beyond

are

much

less

tion

of

the

the

prediction,

control

regula¬
is dan¬

or

It

government.

because

government
only provide for the material

gerous

ex¬

Like

can
se¬

curity of some citizens by taking
away the earnings of others, or
by seizing the sources of produc¬
tion and, finally, when all free¬
dom and personal incentives have
been
destroyed, by substituting

fear and force as the incentive to

J

long

Equity

ers

So

flict

industry
we

not

who

the

old

We like to dream of
in

world

some

per¬

each

which

unspecified mechanism not as yet
supplied by the architects of Uto¬
pia. It is a fine dream provided you
it

treat

all

count

it

leaves

that

human

I

cannot

ac¬

about

know

we

those and all other human
,

of

out

beings.

overemphasize the de¬

can

amendment to its

an

stitution.

Under

this

enemies
it

a

of

and

omy,

state

our

who

of corrupting

way

by

even

see

our

in

econ¬

businessmen

who perceive its sales appeal. We
must not deceive ourselves about

desperately

danger¬
the habit of
turning to government for pro¬
tection against economic troubles
or
to encourage people to wor¬
ship safety. We are not supermen
this.

is

It

thing

ous

and

a

to

these

often

been

vulnerable

are

we

foster

to

It

enticements.
the

practice of

has

people to vis¬
thing and,

our

ualize ourselves

as one

satisfied with

the.,picture
made, act another "way..
i

formula
to
a

we

securities

Without such

The
vision

added
usual

curity

each

to

year

that

they slide
thrown

legislature
ductive
hand

of

be

cannot

for

their

in business

ipost self-reliant of peoples, they

who

have

them

there

the

are

the

to

to

courage

take

not—God

stand

is the time

help

stand.

If

no less accustomed
English to carry the
of the State
into ever-

widening fields. Economic theory
did not stop them, for practical

proud of getting on with¬
out theory.
are

...

"It is in the

self

West, which plumes
being pre-eminently the
freedom, enterprise and

help,

that

this

tendency

is

most active, and plays the strang¬
est pranks, because, in the West,
legislators
are
more
impatient
and \ self-confident
than \ else¬

where."
t

wti v-

.

'

' yV:

"••

••

At-

•

v/.k *•>•




Freedom
-

Perhaps

our

for

vs.

the

first

time

in

history this conflict between

the ideal of freedom and the de¬
sire for security has reached a

point where

we must face it and
decide which will control.

Under
men

no

other

attained

to

economy have
such a high de¬

10

is

to

simplify
of registration of se¬

process

time

same

to

the

issuer

so

as

complete

call

to

for

description

a

than

to

the

to

the

recent

Commission's

not

been

given to them by a Ponzi scheme
of using the productiveness of one
•"MP'. 4v.i'vMr.4v;

:.u

IVJ

)

:-n.

NAM

All

made

changes
in

other

the

of

forms

interested

vited

sion

Com¬

persons

submit

to

in¬

are

views

data,

the

on

and
revi¬

proposed

in

and

contends

Spending Cannot
•

spending,1 except

government

S

study prepared for the National Association of Manufacturers
Harley L. Lutz, Professor Emeritus of Public Finance of

University, and tax consultant to the NAM, holds it is erro¬
government spending is now sustaining
national
pro-<3>

to believe that lavish

ternation between extreme stimu¬

"The volume
of

government
demonstra¬

of

national

oduction,

national
come

in¬

or

per¬

lation

extreme

and

repression,"

the study continues:

"The
of

effect

the economy

upon

alternation

an

furious

the

between

of

spending
that
be required at one time to
curb depression tendencies and the
confiscatory rate of taxation that
would be required at another time
to eliminate the inflation resulting
from the previous spending cure
rate

would

Dr.

income," for depression, can be likened only
study

pointed out,
"except when

Harley L. Lutz

it

occurs

on

the

broad to dominate
economy, as during the war.
ciently

"Once strong

a

suffi¬

scale

inflationary forces

have been set in motion and

the

provided by its
an ample sup¬
inflationary energy, the
has

financing measures
ply

of

continues

movement

its

under

cessation of
government operations on a large
own

despite

power

scale."

to life

the moon.

on

"There, for two weeks, the tem¬
perature stands at something like
150-200 degrees F., and for the
next two weeks at
100

'

something like

degrees below

"In the
nation
tion

zero.

kind of fantastic alter¬

between

extreme

extreme

and

to

terprise

of

would

have

than life

have

better

no

nothing

say
as

the

on

en¬

economy,

survival, to

growth,

economic

the

the

would

chance of
of

if governments

undertake

stabilization

stimula¬

repression that

would be required
were,

it

know

we

of

surface

Notice

is

also

given

that

the

Commission has under considera¬
tion

certain

proposed revision of Form

a

10-K

government and of the signifi¬
of its operations, if gen¬

cance

erally

a

the

under

Securities

change Act of 1934.

Ex¬

This form is

prescribed for annual reports
der
section
13
of
that Act

un¬

by

corpora¬

insurance

companies

24-K for bank
It

is

also

and

Form

holding companies.

proposed

that

the

vised form be used for annual

ports under section 15

re¬
re¬

(d), of the

by issuers which have hereto¬

fore used Form
The

study, the

be

the

on

the

current, lavish scale,

a re¬

cession would already have set

in;"

ations of government constitute a

part of the grand
nomic transactions
scribed

as

total
which

of
is

eco¬

de¬

the gross national prod¬

uct," the study remarks. "The ex¬
perience of the war period demon¬
strated that government can,

by

a

ence

have

of

pect

and it

"There

^

,

not

entirely

yet

can

estab¬

be such dom¬

ination when the budget has been

are

to

proportion.

more

nearly

normal

In particular, it is not

and

somewhat

cern

direc¬

tions."

shall

be

well

there

offset

Holding that if the government
undertake

continuously to

in

not
more

loss

of

nation

can

respect to changes in the business

tions would involve "fantastic al-

come

burdens."

:::w

a

'A-'*; )

v-*;

realize

to

enough

fiscal

spending
blood

to

from

heavier taxation. Healthy rejuve¬

reduction

.

rejuvenation.

advised

is

the

dominate the economy, its opera¬

are as

of

measures

"When this problem is faced, as
sooner
or
later it must
be, we

adrenalin

both

still

is

should be with the most ef¬

fective

effective

in

senescence

uncertain,

but as that
stage is approached the major con¬

that

results

of movement toward

rate

follows: The item with

form

indications that

some

down, or in Dr. Alvin Hansen's
words, it may be moving into the
stage of an 'old, tired boom.'

yet clear that government, by its
fiscal policies, can produce equally

should

influence,"

up:

,

lished that there

reduced

pros¬

would

the postwar boom may be slowing

expansion in the scope
"The
taxing, spending, and bor¬
fatigue
rowing, completely dominate the
is

taxation

invigorating

sums

its

"It

reduced

an

influ¬

depressive

a

the economy, "the

upon

have

of heavier taxes

prospect

would

1-MD.

principal changes which the

ques¬

possible except by resort to
asserts, is shown by the fact large scale inflationary financing
that there is "evidence of growing of the
spending requirements."
timidity and of a growing belief
The study concludes that, just
that but for the public spending
as

economy.

for

added:
a

this would not

The timeliness of the

sufficient

10-K

it

become

NAM

of

Form

Then,

tion whether the public spending
path toward greater econ¬ could sustain
gross national prod¬
omy in government. Advocates of
uct against the decline that would
budget reduction would be under ensue from the
private sector of
a
far heavier handicap than at
the economy. There is good rea¬
present."
son to believe that

having
securities
listed
registered on a national se¬
curities exchange.
It is ,proposed
present

spending."

"It would then

serious road-block, in

the

issuers

tions, Form 11-K for unincorpo¬
rated
issuers,: Form
13-K
for

creased taxes necessary to support
the

adopted,

and

approved

would be

"It is self-evident that the oper¬

revision makes in the items of the

has

of

duction.

rules.

proxy
1

with

accord

tion

It

Dr.

Princeton

of

purposes of the re¬

Act

wealth.

with

been

a

government

gree of security., as in ours.
But
they have earned it by increased
production, and by wider distribu¬

of

A

by

that the revised form replace the

Security

have

scale that dominates the economy as in war, has no
demonstrable relationship with movement of national production.
on

and

us.

grown

of

national

exchange.

amendments

eco¬

in government

or

when

in¬

and

on a

has heretofore been required and
the revision of the remuneration

se¬

dangers of this trend or its
intensity. No one needs to point
out
the
political advantages of
treating it as a band wagon and
rolling with it. If there are states¬

now

land

Exchange Act of

commercial

of Form

items

against this trend,

on

of

general

more

curity is possible.
I cannot overemphasize the

consultant

un¬

ing to the business and property
of

capacity, and not the dead
government, is the only

honest guarantor of whatever

the instructions

line

sonal

investors.
Among the more
important changes made are the
amplification of the items pertain¬

Pro¬

met.

re¬

Sustain Production
Tax

that

for

by a courageous At¬
torney-General and a courageous

,

itself

given

obtain more complete information

out

"Thus it has come to pass that,
though the Americans conceive
themselves to be in practice the

men

been

curities and at the

These demands, when
into law, and are not

men

action

the

State's

budget of $35,000,000. Se¬
almost meant bankruptcy

in Oregon.

said of us:

than

has

panies.

nomic

.

government was still very new,
competent
foreign
observer

have

be

$100,000,000 would have been

over

on

The

Noting that there exists now "in the moon."
quarters" a concern that
for incorporated investment com¬
Any substantial increase in pub¬
undesirable
deflationary
conse¬ lic
panies, Form 17 for unincorpo¬
spending, the study emphasizes,
rated investment companies, Form quences might be produced by a
"probably could not sustain na¬
substantial
decline
of
public tional
22 for reorganized issuers, Form
production against the de¬
23
for successor issuers and spending, the study goes on to say: cline in the
private sector of the
"Such a conception of the role
Form 24 for bank holding com¬
economy resulting from the in¬

opinion

an

reported

8-K.

and

in

recent

Lufz Kofds Lavish Public

p r

lowing forms: Form 7 for provi¬
registration, Form 11 for
unincorporated issuers, Form 13
for insurance companies, Form 15

inoperative by a legal opin¬
ion and such an opinion was is¬
sued and supported by the legis¬
lature.

ex¬

writing to the Securities
Exchange Commission at its
principal office, 425 Second Street,
amended by the Commission. N. W.,
Washington, D. C., on or
Items with respect to the descrip¬ before
April 15, 1949.

gross

sional

made

have

decades ago, when the
of handing our troubles

Many

notice

securities

con¬

can

have

been substantially conformed with
the remuneration requirements of
the
proxy
rules
as
recently

com¬

dustrial corporations

are

amendment

constitutional amendment

items

ship with the

prescribed for the registration of

on

pension of $50 per month re¬
gardless of need. Fortunately even
a

into
leaping flames by
politicians seeking office or seek¬
ing to hold office, by Communist

elaborated

more

ble relation¬

1934. This form is the general form

a

fanned

Form

revised

be

maining items of the form have

comments

remuneration

pre¬

der the Securities

the State would pay to every man
over 65 and every woman over 60

a natural human
desire for security is today being

to which

gree

the

The

movement

proposed revision of Form 10

Last November its voters

go.

adopted

will

spending has

the Securities and Exchange Com¬
mission has under consideration a

guarantees

new

are

securi¬

other

mission.

security.

on

has shown how far such demands

fields

neW

information

to materially important
legal proceedings or important de¬
velopments in such proceedings.

pottage.
I shall
freedom,
and
take
my

Only recently the State of Oregon

in

witi

information

a

morning. It takes

try to

for

respect

neous

number of the frail

a

but

rising daily, and

security

calls

new

and

the

increase its guar¬

material

item

mere

form replace the present Form 10
for, corporations and also the fol¬

desires of certain weaker

beings;

of

antees

and modified

contracts

which

Another

panies having listed securities.

matter of

a

The demands

government to

a

It is proposed that thd revised

don't

and

believe it in the

ihto account

theory.

choice between

a

being sought.

such

as

less

and

and its subsidiaries.

Security Listings

A

dangers implicit in the pursuit of
are even

re¬

of new

ties

31

hibits have been deleted since this

been revised

that

scribed for annual reports of

In the field of government the

ibstract

believe

Will also change Form 10-K

French

security

good of all and all
compensated in propor¬
tion to the work they do by some
are

I

mess

a

On

repealed:
risks nothing — has

men

item has been

new

tion

garding important changes in the
physical properties of the issuer

they make this choice,
may sell their birthright

been

Works of the

A

SEC to Revise Form

nothing."

man

to
have

added calling for information

no

'

fect

occurred.

the

as

,

freedom.

of

others

using every facility of banks, in¬
surance
companies, stock owners h i p,
business proprietorships,
farm development and the thous¬
and and one places that savings
can
be stored and put to use in
a great nation.
We must save and
store, but we must also risk. The

been

give

information
changes which

con¬

no

aspired.

chance

lives

to

more

When

can

has

year

and

illusion of security and the great¬
est ideal toward which man has

to buy our own security. We
must
store
our
savings • wisely

"He

ideal

choose.

must

choice is

save

produce.

the

with

ever

fiscal

expanded

important

becomes, as
it has become today, a force that
threatens to destroy freedom, then
we

the

investor

But when that desire

choose

of

production

savings, it creates

must

private

has

that

from

those

expenditure

if

made

obtain the capital,
i
In our

proverb

as

during

somewhat

(1199)

for

for

this

effectiveness

supplied,

to

long

for

management
from the own¬

as

McGraw-Hill Company
shows that industry plans to spend
about $55 billion in the next five
years in new plants and equip¬
ment; that is, industry plans in¬
be

pouring in. " But

the natural, human
security is supported
by a corresponding human effort
to produce and save, and is paid

the

should

longer

desire

the risks of productive

that

taxation

of

sources

security.

and

dicate

new

as

plan,

made the unfhlfillable promise of

the

wants

expansion. Yet risk
capital is needed. A recent ex¬
tensive survey of industrial plans
oy

s

governments
to fail. They must
confiscation,
money
manipulation, i repudiation
arid
force—first to pay
and then to
control the people to whom they

of business back into its main¬

tenance

gov¬

can

Ponzi

resort

is not available

money

which

cannot appear

products of industry, but few are
willing to share as stockholderpartners in the risks of financing
assume

in

unlike Ponzi, when new funds are
no

the funds that roll in in search of

Everyone

unproductiveness of

plan

keep the money

pursuit of security, re¬
gardless of the consequences, is
no
matter of lofty tneory.
It is
piling up money in savings banks,
insurance
companies;' are
hard
pressed to find places to invest
security.

CHRONICLE

government
guaranteed security works well so

Security

vs

Dusiness, except
diverts earnings

ous,

any

to

race

This

it.

y

of Material

Security

the

security."

Risk

s

to

troubles of ail the worla.
No

in

us

desire for

It is

men.

tues

to

of

change its ideal of freedom for its

of men in our
monopoly on good

group

country has
one

of

FINANCIAL

indulge without fear
of the punishment properly im¬
posed on Ponzi.

However, he might find' that his
own
country had gone a little

life, liberty
happiness.

the

offset

to

&

y

i

,*

of

•■<...

t

i

it '

only through.

a

governmental
-

;f

.

32

(1200)

THE

The

COMMERCIAL

FINANCIAL

&

CHRONICLE

ing past accumulations
chasing power.

Dangers of Credit Controls

Another

*

contending only effective inflation check is less government spending and

lem.

credit, and

Urges small banks

influence to prevent

use

to

Any effort to look ahead as a basis for planning our future operations impresses upon
We have had greater problems and more far-reaching ele¬

the uncertainties involved.

loose

turned

were

feeling that the demand has been
met and that a slump is inevitable.
On the other hand, the implica¬
tion of the President's recent

quest
of

and
control inflationary forces is that
the

effect

full

mot

what

of

in

is

what

and

done

have

we

prospect

is

yet reflected. We had some¬
this

what

the

mind

on

of the business" com¬
little more than a year

part

munity

state of

same

a

.ago, yet within
a
few months
the readjustments had been made
and the

inflationary forces created
during the war period reasserted
themselves and carried

us on

with

a strong volume
of business and
higher price levels on the whole.

So

still

we

have

had

debate

whether

we

and

adjusted ourselves
to the full impact of what we did
during the war, or whether as the
President intimates, we may have
need

for

trol

machinery for the

further

of

price and
•

As

a

which

pressure

result

of

the

financed the

we

con¬

on

our

structure.

wage

manner
war

in

effort,

increased the currency in cir¬
culation from around seven bil¬
we

lions to
still

$28,500,000,000, and it is
this last .figure.
We

near

increased
same

bank

deposits

by

the

financing methods from

war

$60 billion to $144 billion. These
are very general markers indicat¬
ing the accumulation of buying
which accrued during the
period when our productive effort
power

was

be sold.

to

directed toward creating war

supplies, rather than to creating
things for the folks at home.

booms,

as

when

What

work

at

situation?

in

our

nothing—toward drawing off that
purchasing power by any revision
of

fiscal policy. Some has been
absorbed by the spending of it for
our

ternal

affairs, therefore, have
direct effect on our in¬
price levels, wage levels,

bank

deposit levels, and on the
legislative demands for further
regimentation of our economy.
I slurred

the one-fourth of

over

Federal

tion.

It

budget

should

be

not

The President proposes

for

social

further

benefits

budget

a

sorts
and
requirement of better various
$40,000,000,000. There seems mendations in that

than

little

prospect

that

ignored,

present however, in view of the demands

Federal

re¬

which

the

d i

President

the

of

recom¬

r e c

t ion

made in

Government's

expenditures, leav¬ the

a

tax

collections

retirement

for

of

able

to

apply the most direct

the

in

I

sure

am

no

of

one

us

in this

is

opposed to the principle
certainly not
ary forces.
Tax collections spent
opposed to social benefits, but I am
by the government distribute pur¬
opposed to the politicians' use of a
chasing power. Tax collections ap¬
promise of more and better bene¬
plied to debt reductions can be fits as a basis for
getting votes.
used as a powerful force, contract¬
That approach to providing for
ing our banking structure and re¬ those members of our
society who
ducing purchasing power.
need help creates a state of mind
A
glance at the headlines of on the part of those who receive
any
edition of our daily press such benefits and an approach to
will give you a clue as to why the the solution of national
problems
Federal budget cannot provide for on the part of, government offi¬
effective

and

check

inflation¬

on

appreciable' reduction of the

any

room

of social benefits. I am

cials

which

lead

must

us

all

in

government debt. Notwithstand¬ the end into trouble.
ing our often expressed desire for.
are embarked upon a
of preparation for war,

we

peace,

program
a

of defense to be

war

Demand
I

It is

sure.

have

mands

program

Public

Upon
been

Funds

talking about

de¬

National

the

our

eign situation also calls

upon

us

for economic aid to other

parts of
the world to implement our for¬

policy.

eign

on

an

to

add

involves

a

Such

foreign

distribution

aid

abroad

of

things created since the war's end.
our
goods,
the
production
of
That is a painfully slow process,
which creates purchasing power at
because the new pux'chasing power
home but without the correspond¬
distributed in creating those goods
ing
absorption
of
purchasing
went a long way toward offsetting
power
as
in the case of goods
the
purchasing power absorbed

benefits.

These all work

as

infla¬

tionary factors because they mean
added
spending
power
spread
about.

goods were sold in

If

serious in

the war-time accumulations.

doubt

that

the

domestic

add

national

our
-

the

interest

mar¬

debt

of

cost

which

of

is

$4.6 billion,

attributable

to

we

in

meet

and

demand.

vate

affairs,

we

rationalize

the

which

in

program

slse

particular

we

are

Do

terested is essential.
let

disposed to

are

that

some

one

munity

will

satisfy

itself

find
that

Lumber is still in short supply, al¬
though prices have dropped some
recent months. Many articles
are in supply, which a few months

in

r

limit myself to

for any
ment

do

address

by Mr. Berry be¬

fore the Louisiana Bankers Asso¬

ciation, Baton Rouge, La., Jan. 24,
'I

u

t,l




which

house

for

economy

and

foreign affairs.

enough

retirement

putting

order.

position

our govern¬

save

debt

our

.

to
as

own

They also point

the extent to

mestic
our

in

can

in

much

instrument

up

*An

economies in

which

our

is dominated
our

These

policies

do¬

by
in

headlines

expect

to

us

controls

but

to

ness

are

continue

to which it has been

ways

in

function

to

accus¬

tomed and still avoid the creation
of additional inflationary forces.
By reducing existing outstanding
credits we dry up existing pur¬
chasing
power.
By
expanding

credit

ing
of

use

increase

we

It

power.

preventing
purchasing

in

purchas¬

for the purpose

was

so

ernment
if

even

of

months

recent

legislative grant

a

of additional power

to

control

gov¬

some

practices and

include

to

the

policies of the life

insurance companies.
While

the

community

at the moment is anticipating a
slump in business, it was only last

that

Autumn
in

those

government

in

authority
demanding

were

ours

in¬
and

forego

reasons

the

which

correction

ing to do with
I

of

keep

balance

tion
sure

if

we

of further
and

to

prime
to

our

Federal debt

to

and credit.

you that one
importance is

public budget
the addi¬

prevent

inflationary

create

nossible,

of those hav¬

money

have indicated

measure

that

in

some

a

be

pres¬

surplus there,
used

as a means

to

retire

of reduce

$5,000,-

of $1,000,000 of de-,
In order to meet that re¬

posits.
duction

of deposits, the
banking
system must dispose of $800,000 of

bonds, or other investments, which,
is the

of the

amount

withdrawal,

the reduction in the

system's

of

to

banking

requirements.

reserve

sale

bank

ments

results

in

$800,000 of invest¬
depositors in turn

withdrawal

of $800,000
deposits and creates the re¬
quirement on the banking system
to liquidate $800,000,less $160,000, or $640,000 worth of its in¬
vestments,
which : * carried
on
through to conclusion involves a

of

contraction

bank

of

deposits

of

ment.

Operations

Open Market

Now, let

consider for a mo¬
the leverage which the Fed¬

ment

eral

business

for

reserve

withdrawal

agency to control credit
it involved the extension

such

20%

by the amount of the reserve re¬
quirement. It is a multiple of 100
divided by the reserve require¬

heard

in

the

on

of

The first sale results in the

the Federal Reserve is influenced

in available credit that

much

deposits

basis
000.

we

the

crease

of the need for

$1,000,000, the

overall maximum

in¬

by

power

an

of

increase

further

a

Contra-

$5,000,000.
The effectiveness of
the purchase or sale of bonds by

us

has

Reserve

the

over

avail¬

able

supply of credit through its
open market operations. That is
one
of the orthodox approaches
to the
control of the expansion
and contraction of credit. By buy¬

ing government bonds, the Fed¬
I eral Reserve can pump reserves
have attempted to show you that into the banking structure, and
there is still plenty of potential these reserves, as I have just in¬
pressure on the inflationary side, dicated, are capable of multipli¬
arising primarily out of the vari¬ cation within the banking system.
of

grant

a

control

additional

forms

ous

of

to

power

inflationary

forces.

demands

the

on

public treasury, plus the possibil¬
ity that we have not exhausted
the

tremendous

the

accumulations

of

period, to justify us in
feeling that a shift of the think¬
ing of those in authority back to
war

trolling inflation through credit
expansion may come as quickly as
they

shifted

the

other

What has been

Autumn.

the President would

will hear

we

and

last
said by

way

of

means

indicate

of these

more

credit

that
ways

control, and

it is important that we as bankers

should

try to think
through and

posals

these

pro¬

understand

They serve
on

implications,
where

us

if

they

should

we

The orthodox methods of credit
control

have

been

the

the. rediscount rate
market

There is

rediscount

Reserve

in

rate

that

quence

as

a

that

is

Federal

little

of

use

change
conse¬

of credit

con¬

create additional

can

by

the

little

of

means

Banks

the

reserves

so

privilege with the

Federal

trol.

the open

operation of the

Reserve.

the

change of

and

sale

of

govern¬

ment

bonds, rather than by bor¬
rowing.
Let US niqn

?5ng enough to trace

through the effect of the purchase
of government bonds by the Fed¬
eral Reserve and the sale of them

by it.

It will clarify the nature of
the open market operation and the
of

effect
under

conditions

present

policies.
to

market operations

open

the

If

bank

a

sells

and

bonds

Federal

by obtains
Reserve

Reserve, it there¬
credit at the Federal

a

available

as

reserves

for

re¬

to five
times the amount of government

equal

purchased by the Federal.
by the sale of

bonds

the other side,

On

government bonds by the Federal
Reserve to bank depositors it can
draw down bank deposits which
on

re¬

requirements, can be a theo¬
maximum

retical

sold.

bonds

five

of

the

of

amount

the

over-all

of 20%

basis

the

serve

times

government

As you

the

see

can

market operations give the
Federal Reserve a very substantial
control over the expansion and
contraction of credit.
Why then,
open

for additional con¬
of you by any
viewed with a certain de¬

chance

their

over-all

of 20%

requirement

the

to lead

support for credit,

as a

basis

the

serve

them, so that we can acquaint our
friends in the business community

not go.

are

the

commu¬

result will be
contraction

That

inflationary forces, we would post¬
pone all forms of public improve¬
ments until we hit a period of
really slow business and needed
that spending to keep our busi¬
ness
machine
going.
However,
in public improvements as in pri¬

the

move

credit controls

business

applied on a
broad enough base to permit busi¬

tend

through the last war, and Veterans' bene¬ should start elsewhere.
Watch
upward push from the fits of almost
$6 billion, the total your own community and its pub¬
War period.
lic improvement program.
Steel is still in such of these items
approximates threeshort supply that a few days ago
fourths of the Federal budget—
J There is no single cure for in¬
the President threatened to build
$30 billion out of a total of $40 flation. "It
requires a combination
adequate facilities with public billion.
These
figures
suggest of things to stem the tide. I shall
funds, if private capital failed to how limited the opportunities are
;

with

the
cre¬

right to

a

times.»

five

tors to the extent of

less

with

on

.

most

in

the

of

if
the
Federal
Reserve,
through its open market opera¬
tions, sells bonds to bank deposi¬

adopted do
not hamper and restrict business

our

were

we

the

structure shows the final result of

I

in

consumed

the

increase

an

that the

see

desire to protect ourselves against

theirs,
That is fundamentally
kets.
The extent of our expen¬ we say.
market. It is not possible to make
one of the reasons inflation, once
ditures for defense has not yet
an
estimate
of
the
purchasing
has
normally
run
its
been determined but it is gen¬ started,
power
accumulated during the
course.
Every individual busings
erally
anticipated
that
it
will
war period and figure from that a
and every cor«imimity recognizes
exceed
$15,000,000,000 < for
the
proportionate increase in prices as
in the abstract the dangers and
coming year.
The figure for for¬
an
indication of the inflationary
eign economic aid is put at some¬ knows that if something is not
effect of that accumulation of pur¬
done to stop the trend it leads to
thing in the neighborhood of six
chasing power. It is anyone's gtiess
suffering for all,
to
seven
billion dollars.
If .to hardships and
as
to whether our present price
but each business and each com¬
this we
when

credit

of

additional ways and means of con¬

Treasury.
which may well in¬
There have been growing demands
undertaking on our part
upon
public funds at state and
to help Western Europe to arm
local levels.
We have programs
itself.
War
expenditures
are
for elaborate public improvements
doubly
inflationary.
They
in¬
as well as various forms of soqial
volve expenditures which do not
a

volve

nity has

over-all

totals.

government debt, we would then
be

will perhaps be for

pressure

substantial part of current further increases

ing

control

com¬

of credit and the

use

think

I

his

quirements will be less than $40,- message to Congress.
Here also
000,000,000. Of course, if we could the indications are that instead
drastically cut back the Federal of a reduction in the requirements,

capacity to produce
our
ordinary
needs.
They
are
That accumulation of inflation¬
expenditures which mean the dis¬
ary buying power was the force
tribution
of
added
purchasing
which pushed our price levels
up¬
power
to bid for the available
ward in this postwar period. We
supply of civilian goods. The for¬
have done very little—practically

very

which goes
into governmental operations, be¬
cause it is small as compared with
the pressure from the foreign situa¬

of the other in¬

some

are

fluences

world

i>n
a

goods the

The Budget

re¬

curb

to

powers

to

the grant

Congress for

to

further

ferred

had

deposits created by each loan,
the reserve, to work out the

initiative

uncertainty in the war years and th? postwar years because of the larger forces

by' <$>"
reason of our war effort. At the
ago could not be had by the ten¬
moment a very large segment of der of the purchase price. It does
not follow, however, that a market
our business community is antici¬
pating a slump in business. I take is satisfied merely because the
it that fear arises because goods product does not move without
in many lines are in more ready sales effort. We have had periods
supply, which gives rise to the of active business, which we re¬

which

the

of proper over-all

but

ments of

economic

thereby of additional infla¬
tionary pressure. I think the bank¬
ing fraternity recognizes the need

insurance investments.

us

factor—and
bankers be¬

as

1949

wise,

ation

warns further
Opposes Federal control of

economy;

we

our

prevent

over-all

drastic Federal credit curbs, and

more

regimentation of banking will lead to regimentation of entire

of

munity—is

Federal Reserve's open market operations can only expand and
further raising of cash reserve requirements will not solve inflation prob¬

says

the
less

the other fellow to the other

members

long

as

important

is where

come

government bond prices are pegged

as

not restrict

.

here

Debt, attacks Administration's proposals for stricter credit controls. Points out

pur¬

increase

President, Whitney National Bank of New Orleans

Promiiient Southern banker,

of

Credit Controls

By KEEHN W. BERRY*

reduced National

Thursday, March 17,

agitation
Have

trols?

any

of satisfaction the often re¬
peated assertion of the Treasury
and the Federal Reserve authori¬
gree

that

ties

they

will maintain

the

price of government bonds?
How
does that policy fit in with the

expansion
available

contraction

and
credit

by

operations?
If an expansion

of

the

credit

desired, the policy imposes

base is
no

of
market

open

particular problems from the

point of view of open market op¬
erations.

buys

ket

The

Federal

Reserve

ln6 'mar¬

bonds#
thereby

and increasing the
position of the banks and
creating more lending power. The

reserve

Federal

with

will

Reserve

troubled

not

be

government bonds

going down in the market with its
buying support to hold them up,
so
it can pour in additional re¬
serves
to meet its ideas of what

needed

be

may

to

broader base for credit

If,

provide

ai

expansion.

the other hand, the Fed¬
desires to restrain

on

the full value of the bonds. On the

eral

assumption

and that is
them has
been needed throughout the post¬

that

requirements

20%,

these

over-all

are

reserve

approximately

reserves

serve

as

a

Reserve

inflationary

what

we

forces,

are

told

by

banking sys¬ war period and still is needed, the
Reserve
needs
to
sell
its loans by five Federal
times the amount of its bond sale. bonds to bank depositors to set up
That works out because in con¬ that cycle of selling of bonds and
nection with each loan of funds, investments and shrinkage-of de¬
base

on

which

the

tem may expand

deposit picture of the bank¬ posits and available lending pow¬
ing system as a whole will go up er which I have described to you
by that amount, except for the before.- How can it sell and at
amount which must be carried as the same time support the market
the

against those deposits. The
operation can be repeated with

reserve

at the

prices?

publicly announced pegged-

The -two things *are itt^

Volume 169

Number 4786

COMMERCIAL

THE

consistent. To make contraction of

Board

would

credit work

power

to

operations

through

means

open market

selling

ment bonds under

govern¬

co

the

need

additional

classify banks in order
the pressure where it is

put

needed.

You

will

&

FINANCIAL

CHRONICLE

trols the need for legislative grant
of power to the Federal Govern¬
to

ment

-regulate

the

investment

policies and practices of life in¬
surance
companies.
Obviously
market.
cash reserves did not meet
With an announced
the none of the plans applicable solely
peg
for government bond
prices, the problem for that same reason. I to banks will stop the flow of
result must be that
doubt if any of you would want government bonds which was un¬
open market
operations operate one
someone
in government to have der way at that time from the
way
on
credit, and that is toward expan¬ the power to determine just where insurance companies to the Fed¬
sion! of the credit
eral Reserve.
The Federal Re¬
your bank belonged in a govern¬
base—not the
contraction of it.
ment
classification.
The special serve was forced to buy the bonds
That hastily drawn sketch of reserve proposal is the
entering to maintain its present policy of a
orthodox credit
controls
market for
government
should wedge to a course which can lead pegged
would

suggest to
so

posals

moment

co

recall

I

said

a

that the increase in

ago

establishing. control

arbitrary control of seg¬
ments, if not even individual units
of our banking structure.
It is a

for

very

the

have heard

we

and

new

credit.

lowed

why

declining

a

To date

us

many

over

pressure, which

normally bring

untried

we

pattern

pro¬

have fol¬

which

our

an

close relative of direct selec¬

tive control of credit.

neighbor, Mexico, is using in its

It

has in

it

of

that

of credit

lies

bonds

more

plied

posed

some

respond

to. go. The cash reserve
requirement there is now 50% on
demand .deposits and
they have

also

way

put

ceiling

a

loans.

on

1

suspect we have gone far
enough
with raising cash reserve

require¬

to point the fin¬

threat
to

that

if

they fail to
they may

suggestion

join another class.
;
Governor' Szymczak- has

pro¬

posed another form of special re¬
I

serve.

hope

just how

ments to realize that it is
not the

read

understand

you

works.

I

am

I

sure

cannot

solution to

it

our

problem.
A cash
reserve requirement is in
the form
of a
blanket rule, which works

arbitrarily

and

applies

v

pressure

where it is not needed and
works
so
mildly at other points as to
fail
to
accomplish
the
desired
result.
There has been
agitation
for

a

change in the basis for fig¬

uring

cash

reserve

effect

giving
the

to

the

requirements
character of

explain it to you.
I have
his statement several
times,

and

Federal Reserve.

ger of government at segments of
ihe banking system with the im¬

power

face

under its present policy
the holders of govern¬

with

fight against inflation.
"We have
simply raised cash reserve re¬
quirements.
If we are
going to
follow
Mexico, we have quite

arbitrary

was

to face with the fact that the control

ment

element

an

bonds. The Federal Reserve

decides

when

of

trol

with

sell

and

available.

credit

case

not

to

As

banks,

the

The bondholder
make

in

the

remedy
of government

was one

the

pro¬
con¬

that particular seller

over

to

keep him in line with government
• we
{concur
in
that

government bonds, shall we bring
them in for similar treatment?
I

the

on

increased

reserves

de¬

or

—we

tions,

tion

that

increase

an

in

reserves, or deposits, which
with each purchase of

the

arise

government

bonds

will

not

deposits

—

not!

when

Max

by

the

will

credit

as

not

have

control.

of

is

that form

Such

authority in

involved in

is susceptible of

of

centraliza¬

of you

any

to

recall

Schmelling came
Germany before

from

over

the

heavy¬
weight championship in New Jer¬
sey?
I am told that when he was
paid for his fight in U. S.
dollars,
the

German

Government

representative

Reserve

over

control

is

so

in

of

the

these

pose

hand

on

those dollars

had
to

a

take

behalf of the

on

German

not needed and in

failing to apply it

his

homeland. The Ger¬
Government in an effort to

control the application of purchas¬
ing power to conform with certain

jective.

where it would
accomplish an ob¬
To attempt to work out a

overall plans

change in

ment

reserve

our

method of

requirements

applying

will

have

the effect of

of

starting such a round
trading and
political

horse

jockeying
centers

and

have

we

between

as

the

the

smaller

never

money

and

passing

it

to

on

an

banks, while still making
showing of increasing
reserves required and reduc¬

over-all

total

had laid, had developed a
elaborate system of tagging
money and declaring the use

which

to

plied.

I

sort

Board

proposal is
of

in

the

its

one

which

Federal Reserve

Annual

Report
Congress in 1945. It has been
put forward since.

peatedly

provides for
al

reserve

In

essense,

a

in

to
re¬

It

secondary addition¬
government

that is

a

in

step

applying

money to make some

not spendable.

some

overdrawing the picture a
bit because I want you to see in
those proposals the opening in the
tent flap through which the camel
direct

control

develop before
we

of

our

credit—

and

eyes,

do about it.

can

bonds.

plan for in¬

ing fraternity takes
in what is

any

further
The

Federal

bonds

it

will

never

come

secondary

such time

changed
issue

as

to

some

until

reserve

the requirement was
specify a particular

type of government bond,
at which time, of course, the gov¬
or

ernment

that

would

fix

obligation.

the

rate

The major fault

in that proposal was indicated

the

Federal

on

Reserve

Board

who

ones

widely

banks,

operating

differing

under

conditions,




the

may,

and

of

means

controlling credit
expansion
during the last few
years should be enough to indicate

have

the

credit

and will also

er

allocation

provide automatic

materials

of

to

to

us

that

choice lies between

our

regimentation

the

of

banking
economy and through it of busi¬
of

in

the

general

pegged

that

the

may

become

as

open

restraining factor
stimulating factor.
the present policy it can be

well

Under

used

abandonment

or

market, in order
market operations

as

for

a

a

practical

to increase

purposes

lined

are

controls,

I

Governor

which

suggest
Eccles'

that
talk

Iowa Bankers last Fall.

into the

have

been

\vhich I have just out¬
moves
toward
direct
you

read

before

the

He tossed

discussion of credit

con¬

and

the

not

larger

which*

ones,

means

that it is the duty of each-

of you

to follow the developments,

which relate to

leave

it

field and

our

others.

to

In

not

broaden"

a

it comes back to the broadprinciple, which the founders of

way,

our

government

understood

so

that except for the eternal
vigilance of the individual and the
well,

restraint of such checks and
ances

as

put into

are

balw

the frames

work of government itself, gov¬
ernment through the ages has beer*
inclined
to
gradually
encroach*

the liberties of the individ-tf,
We have dropped many •

upon

ual.;

the checks and balances

originally;

part of our framework of gov-*
ernment and this makes it all the!
a

more

ually
new

our

important that we individ-*
consider
carefully
each/
field of activity into which,
government .is disposed to
N"-

>

L. Sumner

:

Pruyne, Vice-President of First National Bank of Boston,

tells ABA

Savings and Mortgage Conference

yield between high grade corporate
insufficient
At the Annual

Bankers

of

re¬

economy

desirable.

The

make that
approach

course

is

not

dled

difficult
at

much

spots
less

be

han¬

and

with

can

cost

Savings and Mortgage Conference of the American.
on March 14, L. Sumner

Halsey, Stuart Group

c o n-

that

tended

Offers

present

in¬

in

spread

An

yield

come

t

r m

the

t*o p-

quality

corpo¬

e

and

the

yield

is

April

for

The

ships

which

must

from

come

a

final collapse or from dislocations

which will
mental

result

and

modifications

the
of

funda¬

our

phi¬

1,

1950

14

of

$4,500,000

Seattle

and

1949,

L. S.

Pruyne

from

inclusive.

plan,

re-of¬

were

fered, subject to ICC authorizar.

corporate

issues.

1964,

to

certificates, issued under the

Philadelphia

tages inherent
in

March

Portland

maturing $300,000 annually

not

disadvan¬

the

headed-

2%% serial equipment trust ctfs.,-

adequate com¬

pensation

group

Railway equipment trust of

of government

bonds

award

Spokane,

bonds

rate

Spokane Equips.

underwriting

by Halsey, Stuart & Co. Inc. won.

between long-

-

tion, at prices to yield from 1.35%;

.

"Corporate

bonds, if they are
of top quality, .yield no more than
one-half of 1 % above the yield of

to

the

certificates will be used to provide

longest

is¬

government

term

sue," Mr. Pruyne said. "May I ex¬
the personal feeling that this

press

one-half

additional

of

1%

is

not

2.55%, according to maturity.
Proceeds

for

the

to

cost

electric

in

the

corporate

have

with

being that the purchaser

is subject to

over

particu¬

long

a

historical

by

period

precedent,

might include at least two periods
depressed business conditions.

of

Not

only

the

corporate

is the marketability

issues

poorer

of
than

that of

governments, but also and
more
important, the market vul¬
nerability appears greater.
This
is because of the strong probabil¬

ity

that

for

indefinte

an

period,

the market for government issues

will enjoy the support operations

the

by
4

Federal

savings

mind

that

tional
per

that

one-half of
market

with
a

should

one-half

is

this
one

of

only

$1,000 bond.

siders

of

Reserve

bank

yield

11

$5

in

addi¬

1%
per

year

one

con¬

offset

only

When
will

System.
keep

point of additional

vulnerability

governments)

(compared

in the

course

year's time, I believe that the

inadequacy of this yield differen¬
tial becomes clearer."

-

road

passenger

gondola
Other

the vicissitudes both

company

which,

risk

maturity,

long

a

issues.

credit

a

less

the

of

standard?-,

than

esti¬

$6,-

cars:

three diesel-

freight

locomotives;.

train

cars;

and

109
"

cars.

members

writing group
&

new

not

inherent

bonds

sale

equipment

178,800: 500 box

These

the

following
railroad

gauge

mated

from

adequate compensation for what I
believe to be the disadvantages

much less

hardship than will come
from allowing things to drift, with
the ultimate suffering and hard¬

is

credit risks.

cover

portfolio
savings

a

the result

buying of bonds and

>n

Pruyne, Vice-President of the First National Bank of Boston, who*
presided over a panel discussion regarding the administration ojf the'

there the deter¬

even

their operations if the needs

our

to

spread of Va%

a

and governments

issues

Association, held in New York City

combined

the authorities will be free to

those

If you are still unconvinced that

ing about these proposals as they
come up. As I said
before, the real*
political influence in the banking
group lies with the smaller banks,

Betweeit
Corporate and Government Bonds

lar

withholding
which may

bit

a

Boston Banker Sees Insufficient Spread

and the credit

reserves

supply and

only

abandon the program of a pegged
market does not involve anything

to

some

in the

us

should not go,
more think¬

we

must do

us

move.

-

of the industry and of the

Investments

proposals

governmental

and
!:

allocation.

proper

it without

than with the Federal Reserve. To

power

assur¬

usefulness.

interest

the

are

.

as

made and

tered

it

the

in

Congress for^J945
of the plan. The
Board pointed out that inasmuch
as
the
special reserve require¬
ment would apply to 14,000 scat¬

government

that

I see it, to regimentation free of difficulty and there are
banking structure and some who have moved far enough
through it regimentation of our in long&itqrm municipals and in
entire economy.
long term governments that they
might be hurt. It is a fundamen¬
Regulating Insurance
tally sound approach, however, and

lead,

of

the

statement

at

large
banking units, because they do not
that sort of standing before so drastic as allowing government
Congress. There are too few of the bonds to find their natural level.
large units and they are too easily Prices would undoubtedly move in
disposed of politically. The small that direction. Pressure can be ap¬
banks who make up a little less plied, however, very gradually by

in its Report to

its

its

prices

have

by

itself

for the

reserves on which the .loan

return

get

e

deposit structure can be ex¬
panded, The discussion of ways

influence Congress in
these powers sought,

the

t h

to

through its open market opera¬
tions, withdraw reserves and de-*
posits from the banking structure
by the sale^ of bonds, as well as

bonds.

on

which

The help

from

lender),

action of each borrower and lend¬

the

abandon

buy

order

verse

government

lines

in

use

ofV continuing

Such

of

step is
to

will

in

the

would

of

government

policy of fixed

invest

bank

first

Reserve

present

restraint in

The

other

or

lender

productive and which have
ance

the

than 14,000 of the total of 14,000
banking units of the country are

in

to

System without
legislative grant of

creasing
the
over-all
reserve
requirement but permit¬
ting the bank to hold it in cash or
it

the

and

mination of when that will happen
lies with
the bondholder rather

more

being done.

business

acting independently and on
will apply the available

bondholder

ness

am

We do not need go that route, but
I fear we shall, unless the bank¬

Question of Reserves

out

our

ap¬

problem has
point that we need

first

without much

bickering.

Another

the

could be

our

Influence of Small Banks
I

may

came

kind

sure

pendable and

—the

of

each
am

labels to

This is

time for that

in

and

ing the amount of credit available.
not the

control

are

Reserve

provide

not gone to the

smaller

bank

the

own,

credit

Federal

its

adopt

the

each
his

government

very

as

fixing the rates to be applied to
each
type of deposit, there
is
plenty of room for making the
load lighter on some of the
larger
units

which that govern¬

In

banks

before.

seen

(whether

bank,

man

put

in

our

and at the
general at¬

a

which

borrower

as

bond

broad

to

as

creates

form

The Remedy

pressure where it is

base

man

Control of credit expansion can
be moved from the hands of the

which

a

a

organizing to op¬
in other parts of the world.

only

such

when

credit,

in

proposals

direction of

vested

we

applying restraint

on

of

time

same

arbitrary

centralized

which

contraction of credit. It has
the faults of the
present system in

and

supply

mosphere

direct and positive

are very

moves

power.

expansion

all

strangling

Government and to give
Mr. Schmelling in lieu of them a
special' kind of Mark, spendable

the

over

risk

credit structure will be expanded.
It operates to regulate the over¬

government

and contended for the

war

machinery by which the Federal
tive

available

to

come

here

effec¬

be

we are not so

must

tive about it.
Whether or not the
permanent system is the best
one,
whether or not one based on the

more

without

than

fraternity if the public is to know

posits which arise out of the Fed¬
eral Reserve's open market
opera¬
so

understood

are

economy

a

decide

regimentation

r

Do

have

present certainty of the mar¬
price for government bonds
enables the bondholder to

ket

which

credit

some

will

the

American public—and they must
be
understood
by the
banking

works,

machinery

merely
confuses
the
situation
without doing anything construc¬

type of deposit would be better, a
change to one on classified de¬
does
posits
not
provide
the

all of

It merely removes

right sort of

experiments which lead
direction which

and

33

that if

means

the

rather

credit

manner

through the channels to which it
is accustomed.

simply

have

controls

over-all

the
the

I
gather
that
the
which he proposes is
for the purpose of
putting a tag

it

They

proposal

of
in

to

are

credit

credit

and essential uses, all of

as

badly off that we
special types of
some
spendable
and

that

out

available

All of this

.

we

its

meet

repeat, if the full implications of
these proposals for the control of

still not clear

am

ly

me

needs

to

distribution of the avail¬
through independent

of

to

business

leave

able

cities, and country

seems

proach to the control of credit, will

to how

and I

ap¬

remedy for the insurance compa¬
nies, there " are other holders of

system
It

orthodox

more

form of credit control will

reserve

cities

This

a

banks to provide their reserves for
a further increase of
credit. Sure¬

banks!

trols.

ap¬
con¬

permit

use and
in its effect on
our
economy that we should op¬
pose it to the limit of our capacity.

reserve

losophy of life involved in
proaching it through direct

policy. ; If

deposit, such as correspondent
bank
deposits, and other demand
deposits, as; against our present
central

(1201)

of

were

the

under¬

A. G. Becker.

Co., Inc.; Otis & Co.; The Illw

ncis Co.:

McMaster Hutchinson &

Co.; and Mullaney, Wells & Co.

;

34

THE

(1202)

FINANCIAL

COMMERCIAL' &

CHRONICLE
both

are

Our National Security
the

Cabinet

other

and

high

levels, but also at what, without
any reflection on the higher-ups,
is called the working or staff
level.

,

> This

tee

organization

view

to examine with

asked

was

Commit¬

our

a

promoting "its economy,
efficiency, and improved service
in
the
transaction
of
public
business."

The

National

for Sound
Security
basic

most

sound national

requisite

for

security programs

is

clarity and consistency of over¬
policy. Integration of
our domestic, foreign and military
policies is the first and most es¬
sential
step.
The
act
contem¬
all national

Board

ing together the logistic require¬

services as
in the military budget

ments of the separate

established

providing efficient and eco¬
policies for their fulfill¬

and

ress

provided

necessary.

Committee

impressed

was

disputes

ment;
(2)

end;

among

Overhauling

the

military

budget;
(3) Improving teamwork
throughout the National Security

Vve

all

7; '

> •

organiza¬

an

to

a means

not

substitute

a

an

bureaucrat, it

end in itself. Above

an

is

it

tool,

except to the

all,T

either

for i

sound

policy or competent peoples i
Through study and staff work; I
organization will contribute

good

Relating scientific research
development more closely to
strategic planning;
(5) Expediting plans for civilian

and

know that

tion is only a
is not

1949

military

our

' /

people,

(4)

to

(on which the

of

advantage of the potentialities
scientific research.

complex, and interlocking
parts, it is still but an instrument

account,

No

structure

be

without rec¬

ognition of the fact that

in all its

vast,

higher authority—of the Presi¬
dent, who is Chief Executive of
the Civil Government and Com¬
mander-in-Chief
of the Armed
of

curity Council, whose
ship includes the President, the

judgments and decisions;
But, in and of itself, organization
to

sound

is not

automatic

an

i

either

means

it.

tangible

sign

that

of

progress

senior

the

is

fact

and

military officers of the Navy

have joined

their counter-numbers
in the Army and Air Force at the

Pentagon Building. In the purely
military field, single commands
have

established

been

in

most

by

is the appor¬

Munitions Board
responsibilities

the

Procurement

of

of warfare.

means

The Committee's conclusion

thal^

greater measure of centralized
authority is required within the
military establishment compelled
consideration of the question of
a

where

this

should

authority

be

located.
Should it be

Another instance

tioning

from

areas.

overseas

the

are

ventional

civilian

the

Making adequate provision

for—and against—new and uncon¬

of

placed in the hands
single military chief of staff

a

commander

or

mentalities

in

or

the

civilian

of

instru¬

direction?

of

like

the

cratic
a

differing types

different

dustrial

•

are*,

that often accompany

rows

merger

arise

bureau-/

and

personal

public,!

and

Some

causes.

or

consolidation

concerns.

*

in-

of

Certainly

.

'

you

would not undertake to deal with
these in your businesses
by chang-7

ing the by-laws or the certificate
of incorporation. You
might pre¬
fer

fly-swatter. You know

well
to

*

very-;

what

a

how

cure

causes

them

and

them,

and I don't think
take them too seriously.
'

carries the ultimate

civilian and military

(6)

this.
A

established under the
President as the primary policyforming agency, an agency which
is advisory to, and a staff aid of,
Se¬
member¬

and

17,

coordinate by the many evidences it noted of
of discovering the right answer or ;
constructive,
cooperative efforts
—including economic, industrial, of implementing it. That still de¬
military establishment is currently by the services. Real advances in and
manpower — mobilization in pends, and always will depend, on
spending over $-300 million a year). budgetary matters, public rela¬ case of
war,
and providing for human judgment and action, not p.
It, too, should supply a two-way tions, handling of legislative mat¬ continuous
appraisal of the effect on organizational expedients.
>
linkage capable both of adjusting ters, education and training, as of all national
The disputes which have marred
security programs
scientific research to the require¬ well as a great deal of unpub- on
our
national
resources,
both the harmony of our military es-o'
ments of strategic plans and of licized, day-to-day cooperation on
human and material; and
tablishment and have caused con-,
enabling strategic plans to take working levels, are examples of
siderable concern to
is

Board

scientific activities

complete

of the National

possible

involve:
(1) Strengthening central au¬
thority in the military establish¬
They

.

Substantial prog¬ Organization;

has in fact been made.

The

Development

The Research and

would

duty

has

tee did not agree.

National

The

proved to be a failure.
With this contention the Commit¬
1947

ment.

plates that this process should be¬
gin with the President.
The Na¬
tional Security Council was, ac7

the President.

They will be advanced to support
the contention that unification un¬
der the National Security Act of

nomical

however, of the
and
operation of the
Security
Organization

cordingly,

present organization.

to tbe whole

the

has

important responsibility of bring¬

to

Requisites

Munitions

The

(Continued from page 8)
at

Organization

Thursday, March

Congress, which among the Services so as to re¬ The
Committee,
accepting
the you
responsibility duce interservice competition;.?• *1'{ basic principle of civilian control
There is, however, another type
Secretaries; of State,
The
consolidation
of; the
Air over the military forces, which has of dispute between the
Defense, for controlling American policy;
military:
Force and Naval Air Transport stood
Army, Navy and Air Force, and and of the people of the United
throughout our history,, rec¬ services which is more fundamen¬
the Chairman of the National Se¬ States. The success of the instru¬ systems
into the Military Air ommended that the authority in tal than those that I have-- just
curity
Resources
Board,- is
to ment must always depend ulti¬ Transport Service is another ex¬ the military establishment should mentioned. It is the
type of dis¬
weigh our foreign risks and com¬ mately upon the wisdom, skill, ample. Joint educational facilities be placed firmly in the civilian pute that arises ; from
perfectly *
mitments
against our domestic, and foresight of those who wield are being perfected and joint train¬ hands of the Secretary of Defense. natural
and, indeed, laudable serv¬

'

strength and

Forces;

bring them into realistic balance.
The second requisite to sound

conclusions will

Council's

be

di¬

rectly related to the quality of the
information at its disposal. If the
intentions of foreign nations are

The deficiencies in
and

decisions

tions

to

turn,

the

recommenda¬

and

President

the

and

size

and,

cost

in
the

of

the National

vided by

Security Act

yet operating smoothly
and effectively.
The Central Intelligence Agency
has not achieved the desired de¬
not

are

ambitions/

Should

war

un¬

happily

Committee considered and

The

military estab¬

occur, each service wantd
to be prepared to do its full share
and more, and to that

*

end, it wants

its full share and more of current-

appropriations.

We

ought

be

to

mighty pleased

that they do. A
military service which had no
such ambitions wouldn't be worth

opposed to the establishment a rap. We don't want our
Army, ;
a military office because,
Navy, and Air Force made up of
opinion (a) it would seri¬ a bunch of sweet little
the military establishment a sense
Lord Fauntcivilian control leroys.
of cost consciousness or a general ously jeopardize
'
realization of the vital importance of the military establishment; (b)
A strong and competent civilian
to our national security of utmost it would not result in a decrease
Secretary of Defense, if given ade¬
of military appropriations or their
conservation of our resources.
was

security.

The.Committee failed to find in

of such

in their

depend¬
Without
the National Security Coun¬

ability in

succeed in assessing
The military Services are far too
appraising "the Objectives,
prodigal with government funds.
commitments,
and risks of the
Economy, however, cannot be
United States in relation to our
achieved simply by ordering the
cannot

cil

ice
The Committee's Rejections

lishment—currently $15 billion a rejected:
(1) A single military chief of
year—appear to be unduly high in
terms both of the ability of the staff and general staff over
all
economy to sustain them and of three military services.
The majority of our Committee,
the
actual
return
in
military
strength and effective national with some members dissenting,

of proficiency and
its estimates.

that,

exag¬

or

organization

largely to the fact
integrating processes pro¬

that the

either

underestimated

The costs of the

mittee are due

gree

cil's

ing—notably joint Air Force-Navy
Air Training—is being extended.

Yet

procedures noted by the Com¬

incorrectly reported or their mil¬
itary strength and potentials are
gerated, this will affect the Coun¬

the

Integrating Processes Not
Operating Effectively

security measures is complete and
dependable intelligence. The Act

properly placed the central intelli¬
gence agency directly under the
National Security Council. Obvi¬
ously,
the
correctness
of
the

of

and

economical

more

that there is
of

no

reduced

favored

I cannot

say

commander having

military

a

use.

record in .history

appropriations,

authority and

quate
of

the

President

the

and

backing

Congress;

should have

no difficulty in deal¬
ing with this type of dispute, pro¬

vided—and this is

very big pro¬
with suf¬ tide of
but I can say that no such in¬
viso—he knows what our national
extravagence, waste, and
clarity to
stance was brought to the atten¬
duplication to recede. There must
security policy is and what lines
tion of our Committee. And fi¬
curity plans is realism of military constitute a practical guide as to be a will to eradicate
waste; the
of military policy and strategy we
planning proper.
The Act places the size of our military needs.
(c) because those foreign
first step is to instill, through edu¬ nally,
intend to follow—and particularly
the responsibility for supplying
The want of firm and clear topmilitary
establishments which
cation and
whether we want to put all of our
leadership, a strong
it upon the joint chiefs of staff,
have been built around a single
level national policy on which to
conviction throughout all ranks
eggs into one basket, or whether
"subject to the authority and di¬ base strategic plans leaves the that waste is harmful to our na¬ military establishments which
we want to divide them among
rection of
the Secretary of joint chiefs of staff to do their
highly militaristic in form and at¬
tional welfare.
several baskets.
Defense."
titude, have lost out in the end
planning
in something
of a
Nowhere is cost consciousness

Armed

Forces.

.

Broad

oped

.

the

devel¬
Security

policy,

National

Council in the light of information
received from the central
gence

and

agency

and

other

intelli¬
sources,

by the President,
thus passes downward to the joint
chiefs of staff. Receiving this pat¬
approved

tern,

function

the

chiefs

of

staff

is

the

of

joint

translate

to

it

into strategic plans, to determine
•—on

minimum

a

military power,"
continuity of

a

ficient

.

national

by

.

.

The third requisite to sound se¬

sufficient

but

scale—the

military 'and logistic
requirements and to assign proper

Here they are left ex¬
more essential than in the military
the heavy pressures of establishment—that vast and com¬
service policy and ambition, gen¬
plex organism which currently
erated from below, unopposed by
absorbs more than 30% of the an¬
countervailing pressure of national nual national
vacuum.

posed

budget.

policy from above.
The
lateral
linkages
•

between

000

joint chiefs and such agencies
the National Security Resources

military and logistic responsibili¬
ties to the respective

failed

to

over

$10,000,000
ship—has
upon

safety—$.1,000for a modern
$250,000 for a tank,

$4,000,000

bomber,

Board, the Research and Develop¬
ment Board, and the Munitions
Board—linkages that should keep
strategic planning in constant and
sound relationship to civilian re¬
sources and scientific skills—have

services.

The awful

cost of reasonable

the
as

when

to

military

*

The

The

$150,000,000 for a
a
high premium

put

economy.

the

this is

operations.

essential. No

This, of course,'is

joint

own

violent

disputes,

cessive

expenditures,

cations,

etc.,

the ex¬
the dupli¬

the military es¬
to be sure, be
reduced
somewhat
through im¬
proved organization, but they can¬
tablishment

in

can,

not be dealt with in a

disputes it.

one

chiefs of staff
system in the last war gave a
performance
which,
while not
perfect, was as near perfection as
Our

major sense

through organizational expedients 7
alone.

They are repercussions of.

sincere

and

basic

differences

on

likely to attain.
very carefully
abandon this strong

military strategy accentuated by.'7
rapidly advancing technology, but,
they transcend these. They go to
the
very
heart of our national

system.

security policy.

effort

is

think

should

before

budget needs a
major overhaul.
At none of the

single military

commander in the zone or theatre
of

We

military

that

entirely different ques¬

tion from having a

human

Military Budget

an

The

fighting got tough.

I would like to make clear

to

we

and proven

The Committee

And so,

also rejected:

'

7.

the first and most essen-,

sufficient successive
stages, alike of prepa¬
(2) Merger of the three military tial step toward harmony, econ¬
The fourth requisite to sound strength and responsiveness.
ration. of review, and of Con¬
departments into a single depart¬ omy and efficiency in the military, •
security planning is adequate con¬
Finally, the Secretary of De¬ gressional adoption, are there ade¬
services is clear and sound policy^
ment; and
trol and management of the mili¬
fense, although endowed with gen¬ quate means for checking, audit¬
(3) Merger of the Naval Air In military as in other matters
eral powers of over-all manage¬
tary budget. The Act places the
ing and control.
There is urgent Arm with the Air Force or vice the beginning is the "Word," the
responsibility for this function on ment, especially through his con¬ need of better fiscal
;
policies and versa.
plan, the policy, the basic objec¬
the Secretary of Defense. It pro¬ trol of the Budget, has hitherto
closer inventory control through¬
The' Committee
was
tremen¬ tive. k'V .:..-^7777 ■ :
.7
vides him, in the power over the lacked the clarity of national pol¬
out the military establishment.
Is the sound course to seek milidously
impressed by the
fine
budget, with a strong check on icy guidance, the authority, the
The Committee was unable ? to spirit with which particularly the tary victory through destruction
the size and nature of the national staff assistance, the organizational
compare with any degree of ac¬
younger
officials and officers of the enemy's military power, or
military establishment.
instrumentalities, and the sheer
who appeared before it have ac¬ through destruction of his civilian1
The Act provides other agencies time necessary to enable him to curacy the cost of similar func¬
7
>
tions in the three services because
cepted the basic principles of the and industrial life?
to contribute to both the economy keep the whole process in order.
National Security Act and showed
of dissimilar organizational struc¬
Even if such a victory were.7
and efficiency of security plan¬
It is these factors, rather than
tures and budgetary and account¬ hopeful
confidence in working possible, what ate its fruits?
>
ning.
any single organizational defect,
to

develop

with

_

4

.

-

'

1

The National

Board,

as

the

Security Resources
high-level civilian

agency responsible for advising
the President on vital economic
and

industrial aspects of security

planning,

two-way func¬
strategic needs
necessary
supporting

the

It should fit

into

the

for

industrial

nation

or

to

the

The first year of

operation

mobilization of

the

military

establishment.

themselves

imposed by available human and

tional

exaggeration.

material

resources

the

on

the

of the strategic planners.




desires

was

certain conspicuous in¬
stances of disunity at the top levels
lent

indicate

its

marred by

These

also

of

ing procedures.

to

They

sensa¬

have

of outmoded

other evidences

organization and ob¬

solete fiscal procedures

Committee

that

convinced
substantial

savings, without diminution of the
Services'

combat

efficiency,

are

convinced

Its

investigation

Committee

major

areas

there

that
or

improvements

to

greater

within the framework that it sets

.

up.
a

are

efficiency

the

and

economy

our

Committee's

con¬

national security

oh solid foundations.
The problem now is not how to
replace them, but how to build on
them, firmly and intelligently.
system rests

On

the correct solution of such-

problems
not

as

these

may

depend1

only the safety of this coun-1

try but even the survival of our
civilization
itself.
They cannot

comment

settled by simple or¬
expedients. They can¬
should not be, settled:
civilian Secretary of
Defense
or
a
military chief of
staff. Such questions can finally
be settled only by the President*"

of

t.hp P.onffress

Current Disputes

closing I would like to
briefly on the relation
organization
to
the current

Before

aspects

in

the

viction that

six

in which
interest of

This seemed to the Committee
point of real importance. It

confirmed

the

possible.

been, and probably will continue

be, exploited by those opposed

k

These and many

the

limitations

and

best

potentialities.

serves a

tion.

plans

that explain why the National Se¬
curity Organization is not yet
operating to the satisfaction of

possibly be
ganizational
not be, and
by either a

and the oeoole. after

Volume

169

Number

4786

thorough consideration, study and
debate., The battles of conflicting
views on these important matters
now

going
They will

won't

on

Organiza¬

tional expedients aimed at block¬

ing off discussion of these
tions

at

or

reaching

determination
lower levels,

ques¬

final

a

these matters at

on

and

dangerous

are

will in the end prove ineffective.
And

far

so,

amendments

the

than

urgent

more

to

.organizational

Act

other

or

expedients,

the

is

need for formulation of clear and
-sound national

security policy.
protect our national

In order to

security,

:

must accept the oner¬

we

and

ous

ever-present duties and
responsibilities of national man¬

hood.

We
must
not
shy away
debate, discussion, study in
.searching.for sound national se¬
curity policy and military strat¬
egy.
Above
all, we must not
attempt to seek the solution by
stifling
argument.
These
were

from

the tactics of Hitler and the Prus¬
sians before him.

why

reason

-they went down to military de¬
feat is because the single and allunaided by the
discussion, chose

.powerful chief,
benefits of free

[the

wrong military strategy.
The problem of national secur¬
ity, which Used to receive such

V

Jimited

attention, is now, happily
'blessed b.v much .attention from
sides.

many

This is

wholesome

a

condition, but at times somewhat

[confusing to the reader of the
[daily press.
Since

Nov.

15

last,

when

our

.Committee submitted its report to
the Hoover Commission, the Com¬
mission

issued

has

mendations;
has

its

recom¬

Secretary Forrestal
his
views,
and
has
recently

Truman

forwarded his recommendations to

Congress. While each of these sets
•of recommendations differs some¬

what

from

the

others, by and
large, they are all very similar.
Considering the magnitude ancl
'•complexity of the subject, the
■differences
and
:

surprisingly

are

few

I am not, of course, in a posi¬
tion to tell you what Congress will
do. No one, so far as I know, has
had

the

temerity

publish a
booklet entitled "What Congress
Will
Do."
However, based on
.some experience in the field, I am
certain that Congressional action
will be sound and
I

was

to

sorry

Uncle

see

Sam

lose the services of Secretary For¬

; His

restal.

has

received

ever

citizens.

its

of

any

service

of

record

with the finest that

compares

nation

his

our

from

Fortunately,

is not unacquainted

successor

with military matters.

He did

an

■outstanding job on the industrial
mobilization
plan of 1939.
The
•industrial mobilization organiza¬
tion which we finally adopted—
•after

•of the

plan.
heavy

wiil

loyal

interest

can

wish him

in

and

his,

we

well.

tremendous

ment

familiar with the
problems and diffi¬
in

inherent

culties

of

a

years

smoothly

new

establish¬

the

business.

country is now-facing the great¬
est challenge in its history. It has
'embarked

on

the

new

business of

world

leadership, an undertaking
•of
staggering
magnitude,
com¬
plexity and importance.
It will
•take
years
of
experience
and
much
expensive experience be¬
fore we succeed
in getting our
•new business of world leadership
running smoothly and in black.
For

lenge
in

-To

my

part,

and

this
do

feel

I

will fulfill

field

as

that
chal¬
its destiny
sure

meet this

country will

it

has

in

points out, is that such items have
costs

sonnel.

so,

We

will

also

need

the

.most efficient and most economi¬

government that-we

as

effect

much

on

steelmaking

do wage

increases, sometimes more, because they go on and
steel leaders privately say that if they are forced
in wage costs higher prices will have to bear the load. '
This means that as far as regular mill prices are concerned there
is no chance that base steel quotations will be lowered this year
unless the bottom falls completely out of the steel market, which is
a remote possibility.
Or unless a steel price war breaks out, and it
as

For that

.

reason

to pay more

is too

soon

to look for that.

The steel

is much confused by the turn of events this

consumer

week, and the steelmaker is
received

cannot

be

Cancellations

better off.

no

taken

lightly.
are being replaced by firm orders
trade paper notes.
*

They

are

fast

as

as

now

being

multiplying but they
the holes open up, the

output is

This week it is scheduled at 102%, unchanged
from last week and, concludes "The Iron Age," it will continue so
over

100%.

next week and the week

following,

or

close to it.

The American Iron and Steel Institute announced this week
tha*

the

nuerating

rate

of

steel

companies having

of the

94%

steel-making capacity of the industry will be 102% of capacity
for the week beginning March 14,
1949, as against 101.4% in the
preceding week.
0.6 point

up

or

The Institute reports the schedule of operations
from the previous week.

0.6%

This week's operating rate

is equivalent to 1,880,400 tons of
steel ingots and castings compared to 1,869,300 tons a week ago,

1,843,500 tons

can

sible have.




pos¬

rise of

2.7% as compared with the Feb. 8 low of $5.66, but it is
5.1% from the $6.12 recorded in the first week of the
year.
index represents the sum total of the
price per pound of
31 foods in general use.
The

100%

or

a

COMMODITY PRICE INDEX REFLECTS SLIGHT VARIATION
FROM PRECEDING WEEK

The daily wholesale commodity price
index, compiled by Dun &
Bradstreet, Inc., varied only slightly from day to day during the past
week. The index finished at 258.81 on March
8, comparing with 259.41
on March 1.
The current figure shows a
drop of 4.1% from the year's
high of 269.91 registered on Jan. 5, and it is 6.1% below the 275.49
recorded

month ago, and 1,757,400 tons, or

week in 1940, highest

CAELOADINGS

AD VANCE

REMAIN

1948 AND

Loadings of

prewar

97.5%

MODERATELY IN

UNDER LEVEL OF LIKE

LATE ST

WE£K

PERIODS

IN

freight for the week ended March 5, 1949,

ceding week but a decrease of 86,432 cars, or 10.9% under the cor¬
responding week in 1948.
It also represented a decrease of 100,223
12.4%

or

movements
a

and power industry for the week ended March 12, was estimated at
5,530,629,000 kwh., according to the Edison Electric Institute. This

represented

a decrease of 20,982,000 kwh. below output in the pre¬
ceding week; 245,988,000 kwh. or 4.7% higher than the figure re¬
ported for the week ended March 13, 1948 and 766,786,000 kwh. in
excess of the output reported for the
corresponding period two years

ago.

irregular last week and fluc¬

with net

changes for the week

Activity in grain futures on the Chicago Board of Trade was
on a par with the
previous week. Sales for the week totaled
196,887,000 bushels. This represented a daily average of about 33,000,-

000
or

bushels, which

the like week

little changed from that of the previous week

was

a

year ago.

Early strength in wheat and

corn was

largely due to

aggres¬

sive buying of those grains by the government.

Wheat

purchases by the government were estimated at about
28,000,000 bushels and corn at 5,000,000 bushels, the former represent¬
ing the largest single week's business of the season. Farmers con¬
tinued to place substantial amounts of corn into
government loan
stocks, which were reported at 148,000,000 bushels as of Feb. 1, the
largest in years for that date. Flour showed a slightly easier trend
as

export trade slackened and domestic bookings and directions

mained small.

buying.

Lard

Despite

was

re¬

steadier under expectations of renewed army

slight uptrend at the close, final hog prices were
reflecting weakness in wholesale fresh s
pork prices. Cattle prices advanced moderately, while lambs rose to ;
the highest March level on record.
i
below

those

of

a

week ago,

a

Trading in spot cotton markets during
generally slower than in the preceding week.

Buyers

as a

a narrow

rule showed

pending developments

on

The

more

range

the past week

was

Prices moved irreg¬

throughout the period.

>

disposition to remain on the sidelines,
farm legislation in Washington. Domestic

mill demand slackened with

a

purchases mostly for filling in purposes.1

distant cotton futures showed weakness early in the week,

reflecting the greater than anticipated decline in the mid-February
parity price for the staple. There was a moderate volume of price-

fixing against previous purchases by the EC A and possible sales to
Japan, India, and Spain. The market tone was aided to some extent
by the report that the ECA has cleared up the matter of credits to
China affecting recent shipments of the staple to that country which
had been held up. Entries of cotton into the government loan stock
during the week ended Feb. 24 totaled 75,072 bales, against 69,781 the '
week before. Total loan entries for the season to date were placed
at 4,708,355 bales, or about 32% of the prospective 1948 crop.
RETAIL AND WHOLESALE TRADE SHOW NO MATERIAL

CHANGE
was

OVER PRECEDING WEEK AND YEAR AGO

favorable

shopping weather^ in many parts of the na¬

tion the past week. Consumer purchases rose slightly, but retail vol¬
ume
in the period ended on Wednesday of last week was slightly
below that of the corresponding week last year, Dun & Bradstreet,

While Easter promotions
during the week, the response generally re¬

Inc., reports in its current review of trade.
became

more

numerous

mained moderate.
There

was a

moderate increase in the demand for Spring ap¬

parel in the week, but dollar volume was slightly below that of a

Easter

ELECTRIC OUTPUT EASES FOR SIXTH CONSECUTIVE WEEK
The amount of electrical energy distributed by the electric light

range

about

year ago.

below the similar period in 1947.

narrow

a year ago.

were

generally small.

There

totaled 705,552 cars, according to the Association of American Rail¬
roads.
This was an increase of 17,424 cars, or 2.5% above the pre¬

cars,

corresponding date

price

tuations held in

year.

1947
revenue

the

on

Grain

of the old capacity one year ago and 1,281,219 tons for the aver¬

BUT

35

down

ularly and held in

w

The coal strike and coming steel labor demands are causing gen¬
eral concern, and while the steelmaker and steel user try to deter¬
mine which way the wind will blow, the output of steel is
solving
some of their problems.
For the eighth consecutive week steel ingot

.

.

.

promotions of women's apparel

were

under

way

in many

localities.

Spring suits were more eagerly sought than last week and
women's short-length coats were very popular. The sales volume of
cotton dresses rose in many sections, while the demand for men's
furnishings increased slightly, but the response to promotions of
Spring suits remained limited.
Retail food volume continued

near

vious week, though consumers bought

the high level of the pre-

,

somewhat less meat than

in recent weeks.

There

AUTO

OUTPUT

RECEDES

MAINLY TO

Production of
the

FRAME

cars

and

past week dropped

FURTHER

IN

LATEST

WEEK

DUE

SHORTAGES
in the United

trucks

to

an

estimated

States

and

Canada

113,903 units compared

(revised) units in the week preceding, according to "Ward's

Automotive Reports."
The principal reason

temporary

suspension

divisions

of

because

for

the

decline

of

shortage

a

attributed to the

was

assemblies

car

by
of

three

frames,

of

Chrysler

the

agency

was a slight rise in the demand for garden tools and sup¬
last week.
Hardware and paint were sold in a moderately
larger volume than during the previous week. Occasional furniture
and floor coverings at moderate prices were requested frequently.
The sales volume of heavy case goods dipped slightly, but house¬
hold soft goods continued to be sold in a sizable quantity.
Interest
in automobile supplies was moderately below that of a year ago.
Retail volume for the country in the period ended on Wednesday

plies

of last week

Output in the similar period a year
in the last week of 1941, 131,410 units.
Last

week's

output consisted

of

ago

84,340

114,689 units and

was

cars

and

24,393

trucks

built in the United States and 3,078 cars and
2,092 trucks in Canada.
BUSINESS

FAILURES

Commercial

and

DOWN

SLIGHTLY

industrial

failures

ended March 10 from 185 in the

Inc., reports.
the

dipped to 179 in the week
preceding week, Dun & Bradstreet,
were considerably larger than in

Although casualties

comparable weeks of

1948

and

1947

when

102

and

58

occurred

respectively, they continued to be well below the prewar level.
In
the same week of 1939, 286 failures were
reported.
Failures involving liabilities of $5,000 or more declined to 154
from 162, but exceeded 84 in'the
small

failures

with

liabilities

corresponding week last year, while
$5,000 increased slightly to 25

under

from 23 and compared with 18 a year
ago.
The East North Central States
reported a
from 24, this region's highest number since
all other

areas

declines

sharp rise to 45! failures
1942, whereas in nearly

FOOD

below that of

a

year

Regional estimates varied from the corresponding levels of
year ago

by the following percentages:

to

down

4, East and Southwest down

to

down

3, Midwest down 2 to down

up

a

New England unchanged
1 to down 5,

South

6, Northwest down
3 and Pacific Coast down 3 to down 7.

up

1

1 to

Many merchants continued to order additional quantities of
Spring and Summer goods.
Total wholesale dollar volume rose
very slightly in the week and was somewhat below that of the similar
week last year.

While the number of buyers attending many whole¬
dipped during the week, it was well above the number
in the corresponding week a year ago.
Department store sales on a country-wide basis, as taken front
the Federal Reserve Board's index for the week ended March 5, 1949,
decreased by 9% from the like period of last year.
This compared
with a decrease of 7% in the preceding week.
For the four weeks
ended March 5, 1949, sales decreased by 6% and for the year to
date by 2%.
sale markets

Here in New York retail trade last week reflected the largest

decline percentage-wise since the start of the year with depart-

14% under the like week of 1948.
SLIGHTLY FOLLOWING

slight drop in the Dun & Bradstreet wholesale food price index
last week interrupted the
mildly upward trend shown in the pre¬
ceding three weeks.
The index eased to $5.81 as of March 8, from
$5.82 a week earlier.
It compared with $6.61 on the corresponding
year

ago, or a decline of

Federal Reserve Board's index, department
City for the weekly period to March 5, 1949,
from the same period last year.
In the preceding
of 3% (revised) was registered under the similar
week of 1948.
For the four weeks ended March 5, 1949, a decrease
of 6% was recorded below that of last year and for the year to date
volume decreased by 4%.
According

to

the

store sales in New York

A

a

estimated to be from 1 to 5%

mentfstore sales running according to estimates, at approximately

prevailed.

PRICE INDEX RECEDES

THREE-WEEK RISE

date

was

ago.

stated.

others.

however, we will need
■sound
policies, sound organiza¬
tions and loyal and capable per¬

cal

■.

be the paramount issue this year in
negotiations, since it is unlikely that Mr. Murray will continue
thwarted in his efforts toward greater social gains as long as
Mr. Lewis' United Mine Workers have been able to wring out a
large pension for their members.
Mr. Murray, in the opinion of this
trade authority, will push the demand for social security and pen¬
sions to the hilt and will only stop short perhaps of an actual strike
which it has the right in its contract to invoke.
The joker in the demand for social benefits, "The Iron Age"

It takes

to
get
one
operating
and
in
black.
Our

^L'-

.

It is doubtful if wages will

Corp.'s

All of you are

•

,

be

to

for

In

.

steel

to 118,267

all

;
the

beginning of May steel firms will receive notices
from the union for a wage meeting to be held in June.
Some agree¬
ment should be reached by the middle of July, states the above trade
authority, or the industry will face an impasse.

principles
In his new and

the support of
patriotic citizens.

own

"our

pensions.

the

need

and

our

!

the groundwork for
a new wage agreement in July the United Steelworkers are quietly
getting ready for one of their biggest fights on social security and

responsibilities,

1939

-terribly

.

Just

Around

(1203)

cause

the large coal stockpile will disappear."
as John L. Lewis is apparently laying

over

number of unhappy exper¬

a

iments—paralleled

•he

the steel people much concern, states "The Iron
Age," national metalworking weekly, in its review of the steel trade
If it-runs three or four weeks all self-confidence

to

constructive.

Industry

the current week.

age

narrow.

CHRONICLE

(Continued from page 5)
than that it will

submitted

President

FINANCIAL

&

a

on.

One

COMMERCIAL

The State oil Tiade and

lives.

lose

lives.

save

THE

.

12.1%.

The latest figure represents

declined by 11%
week a decrease

.

36

COMMERCIAL

THE

(1204)

Thursday, March

CHRONICLE

FINANCIAL

&

purse

Back t© the Gold Sfc
people must use the note and
deposit liabilities of banks, both
which

of

far

in

irredeemable

are

This snift from

asset to

an

so

bility

seems

mined, that
their savings are
slowly disappearing and are be¬
coming a hollow shell, that a can¬
cerous
growth is eating deeply
into the economic, social, and po¬
litical fabric of the nation.

has been gradual

and

currency
subtle,
it

reasonably

.clear that most people have no
understanding of this shift or of
its significance.
There is today
widespread acceptance of this sys¬
shift

the

this

to

of

type

the acceptance of it
have involved a gradual loosening
of the bonds of integrity.
It is a
of

States

should

issuance
Reserve

willing to approve the
by
the
Treasury and
banks of

irredeemable currency

an

since such

is dishonest.

a currency

which will not be redeemed
preferable to promises to pay

are

that

could

should

and

be

re¬

T

deemed.

to assume that we in the

person

II

honesty
our

will

not

United

States

another

provide

standard

illustration of it.

sound

A

currency

Socialism

into

mentally

govern-

in
waiving

economy

We

other form.

some

a

or

managed

-

are

ism.

tion

speqie payments is

this gate to Social¬

probably

Euro¬

generally a feeling of increased
well-being; and, remembering this
when later stages of the disease
reveal
distresses,
the
common

For

example, when

of

ma¬

promptly

went

we

by

into

notion

that

today

a

an

rency

provides

seems

highly prob¬

There

able that there would be an over¬

is

basis

factual

no

sort of guar¬

Return to

a

Coin System are Most

a

Gold

Favorable

If the United States is to have a

this

for

assumption. Our very severe busi¬
ness depression of 1873-1878 came
during
the
period,
1862-1878,

practice is to demand more doses whelming drive for further de¬
of the same intoxicant, in larger valuation of our
'
dbllar, and cur¬
ing From Our Irredeemable
and
larger
amounts and with rency depreciation in other forms. when we had an irredeemable
Currency System
greater and
greater frequency, We seem not yet to have learned currency. The recession of 1937One of the consequences flow¬ until the patient collapses, v
1938
came
under
our
the virtues of, and necessity for,
present
ing from our irredeemable cur¬
We have
not run this course a fixed monetary unit and a re¬ system of
irredeemable money;
rency system is the loss by our
We do not and the drop in the index of in¬
yet; but the people of the United deemable currency.
people of their control over the States have the disease which ac¬ seem to understand that both are dustrial production for the period
government's use of the people's companies an irredeemable cur¬ necessary if the bloodstream of involved in those years was sharp¬
public purse.
Since individuals rency. They like the . artificial industry and commerce is to be er than for any corresponding pe¬
cannot
demand
redemption
of stimulation it has given.
They healthy and if our nation is to riod during the years 1929-1933.
these promises to pay, the Treas¬
(The
high
was
118
lor
May.
cry out in protest, like the person flourish.
ury and the Reserve banks can
Now is the time to correct our 1937; the low was 76 for May,
hopelessly addicted to a drug,
issue many more promises, and when it is recommended that this defective
currency system.
We 1938, a drop of 36%. In 1929, the
the government can spend much
intoxicating poison be taken from have been fortunate in escaping high was 125 for June; in June,
more money, than otherwise would
them.
They manufacture all sorts some of the worst consequences, 1930, the index was 98, a drop of

Some of the Consequences Flow•

IV

Conditions for

against business recessions.

some

or

irredeemable paper money.

our

widespread
irredeemable cur¬

antee

depression, it

moment that he

one

seems

and,

currency,

our

we

for

properly

terprise, or for the opening up of
foreign trade to private ingenuity
if he or she is not fighting against

period of business expansion.
The

•

may

over
their public
for economy and honesty
in government, or for private en*

resumed in

we

an

the

purse, or

often,

followed

over

control

direct

Resump¬

and expansion.

recovery

!

-

fighting Socialism or a governmentally-managed economy, or
for a return to the people of some

be engulfed in a severe

nipulation
should

and

standard

usually,

business

1879,
the

into

fallen

have

monetary

is

of

encouraged.

and

she is

long-time

be

■

We

investment,

should

control

of

or woman

man

assume

a

commitments, and production

that guarantee, and we are keep¬
open

have

sound currency,

a

economy

cialism.
No

would

we

redeemable and

savings,

further
monetary

currency.

(4). Because

is^ perhaps
the best single guarantee a people
can
have tnat they will not
be
led

and

in

money

for

our
to¬

people that reaches to every trans¬
action and person utilizing money,
it provides an easy means of regi¬
menting a people, a subtle instru¬
ment by which their savings .and
enterprise can be impaired or de¬
stroyed, and an open gate to So¬

It should dis¬
our

our

or

government

irredeemable currency

an

instrument

It should

of

of

more

provides the government with

people

our

of

agitation

manipulation

in¬
pean practice of cheapening our
at its outset, there

sidious because,

standards

adminstration

the

courage

itself too often in this
permit any responsible

to

Since

70

deposit liabilities.

honest money.

in ending

people in some other form.

out against

pay

It would provide
an

restore

particularly

is

disease

paper

and

and credit system.

nation.
The

note

with

of events in which

have to

now

their

world

political rot that eats into prac¬
ing wide
tically every fiber of strength of
a

they

and

more

1949

Socialism

toward

management of

money.

100 times more asset cash than

to

potent force

a

ward

provide the Fed¬

banks with from

Reserve

(3)

irredeemable

of

use

Na¬

and

eral

our

It would

(2)

has repeated

irredeemable currency con¬
stitutes
a
moral, economic, ana

acceptance *of this practice
means that we think promises to
pay

The sequence

the

the value of

currencies is followed by dictators

An

Our

irredeemable

by

the Revolution,
poleonic Wars.

the public purse.

over

caused

money,

people of the gold coin stand¬
system and, consequently,

control

of

be

from the devas¬

back to recovery

ard and

thing that the people

United

the

struggled painfully

France

tation

appropriate
that which deprived

liberties was
the

gold standard

redeemable currency, after

a

which

United States of their

currency and

remarkable

and

Probably the greatest step thus
far taken to rob the people of the

tem in this country.
Both

out and instituted a

nation's

This is not obvious to
the general
public. It requires
time for them to perceive the fact
that their vitality is being under¬

lia¬

a

a

economy.

gold is concerned.

as

of

march

and would enable them to
brake on the public spend¬
and further depreciation in

a

ing

deadly germ in

a

bloodstream

the

Our

planting

of

case

(Continued from page 2)

be

put

17,

redeemable
is

currency

make this change.

to

the present

most favorable time in which

a

has

States

The United

than

more

an

ample

supply of gold to accomplish this

'

•

be

possible.

arguments as to why we should
The result is that the control of continue with our irredeemable
the people's purse has passed to
currency.
pressure
groups,
both domestic
Our people wguld do Well to
and foreign, whose good will the
review the parallelism
between
majority of Congress endeavors
our
situation and popular atti¬
constantly to buy.
Congress, in tude
today in respect
to irre¬
turn, controls the Treasury, and deemable
paper money and that
the Treasury controls the Federal
which
prevailed in France 159
of

Reserve banks.

Congress

can

bow

to, and attempt to buy the support
of, vote-delivering pressure groups
because it is easy

for it to require

described by Andrew

years ago as

in his "Fiat Money In¬

White

D.

in

flation
our

the

We

France."

"secure"

irredeemable paper money by

Treasury and Reserve banks
gold taken from our people and
additional promises to
which they cannot obtain.
The
pay since they are irredeemable French "secured" their irredeem¬
and since the people can place no
able
to

issue

paper

restraints

such issuance

on

mands for redemption.

by de¬

>

by

people

our

redeemable

a

the subsequent orgy

currency and

of

of

governmental spending, profli¬
our national patri¬

gate waste of

heavy and destructive tax¬

mony,

ation,

and

seems

not

•clearly

huge

Federal

be

to

employment

of

an

•

value

of

of

mass

they understood better the virtues
and dangers of an irredeemable

their

fathers

our

sults

paper

deemable

of

irredeemable

it has depreciated rapidly in recent years.

;The

As¬
and apparently • of the
people, contended that

sembly,

or

currency has been that

.

majority of the French

The

niOneyihan did their most
monetary economists and

generally

consequence

which

expert

debt,

understood.

Another

not

could

The connection between the loss

by confiscated
the people
employ in redemption.
money

lands

church

people's savings, of

under

with

currency

seventy

some

John

They

utilized

who

years

irre¬

sad re¬
earlier

Law.

often

this

economic

have

some

now.

One

claimed,

the

poison.

But. we
reactions

dangerous
is

drive

tne

of

use

of

tne

fixed monetary standard for our

The

becoming one
terests

situation is rapidly
of the goldmine in¬

versus

the

welfare

of the

people of the United States."
Besides this group that would
devalue our dollar again because
of

their

costs, we have in
this country a multitude of pow¬
erful groups that would fight for
further currency depreciation
should we slip into a severe busi¬
recession.

ness

If
we

high

should fail,
would not consider reducing
peach

our

of

size

the

crop

bushel

our

We

more

basket

expect

bushels

in

our

of

estab¬

ties,

income

from

,

retarded.
'

Jpbrt permits

—

do
ex-

Cuba, Dominican

Republic, El Salvador, Guatemala,

Haiti, the Commonwealth of the
Philiopines,
Saudi
Arabia,
and
(The Union of South Af¬

Tangier.
rica

has

some

controls

of

minor

government extends its
controls through the channels of
and

a

it

touches every person
transaction that employs

money,

present arrangements
they are freed from any

because

responsibility
to
redeem
their
promises to pay.
This system al¬
lows them to escape the problems
inherent

in

a

fractional

reserve

system An irredeemable currency
an easy, but it is not the proper,
solution to the problems involved

is

fractional

in

importance.)
When

like

They

Only eight little countries
today require import or

not

the

on

which

It

was

a

man

the

heels

of

on

ard

and

herent
cies

in

and

standards.

French

irre¬

redeemable

a

cur¬

the deadly evils in¬
irredeemable
curren¬

manipulated
1

monetary

This

is
it

a




devise $ by
booms
But the point is that

prevent business

can

recessions.

irredeemable

an

currency

than

trouble

more

any

of

deposit insurance

would

We
may

suppose,

mobile for

accident caused

an

people

to

withdraw

the banks and Treasury.

not, ordinarily, one
blame a fine auto¬
by

reckless driver and, as a

matter
principle, adopt ' cheap auto¬
mobiles on the theory that they
are safer than the most expensive
ones.
But we do something analo¬

a

of

part

gold than has been the case in the
past, although no one can possibly
know what our people and foreign

causes depositors might decide to do in
other respect to withdrawal of gold from

monetary system, thus far known.

From

1929, to March,

October,

1933, which included the period of
the
heavy runs on banks from

1932,

November,

to

March,

1933,

of

at

gous

deposits, there was an increase in
money in circulation
of $1,706,883,000—that is, from $4,838,185,000 in October, 1929, to $6,545,068,000 in February,
1933.
The in¬

to that in respect to monetary
Because a gold stand¬

standards.

ard holds, people

in check and

ap¬

plies strong brakes when we at¬
tempt to go to extremes in our use
of credit, we blame the gold stand¬
ard for the results flowing from
of

abuses

has

standard

The

credit.

ti

did

it

"caused"

not

gold

criticized

been

cause

be¬

prevent, or be¬
the depression

beginning in 1929. The facts are
that
the
gold standard did not
cause the recession and depression
following

1929,

and

it could

not

prevent them. We have been as ir¬
rational on that point as would be

a

Return

Currency

to

a

Redeemable

Should

System

time

which

national

we

system

did not have a

of

insurance

of

gold coin in circulation
period was $208,015,000—
that is from $363,051,000 to $571,-

crease

of

for this

066,000.

The monetary gold stock
$110,000,-

of the United States was

in February, 1933, than
1929. (In Octo¬

000 larger
it

was

in October,

ber, 1929, it was $4,381,000,000, in
February, 1933, it was $4,491,000,000.) r During that period, the gold
stock rose to its peak of $4,975,-

1931. The low
$3,941,000,000 in July,
1932, showing a maximum swing
of $1,034,000,000 from the high to

000,000 in August,

point

was

A

return

person

automobile for

by

an

It is sometimes alleged

cannot return

until

tem

by

the

United

to

a

a

lead

leadership

abroad

case

the

before

cart

that we
gold coin sys¬

currencies

stabilized. This is

the

horse;

way,

should

are

of putting

make

and

we

this

it much

May,
was

1920, when the price level
as compared with 64.5 in

167

On Feb. 2, 1949 with a
of $24,279,000,000 our
wholesale price level was 158.8. v

July, 1932.
gold

stock

These

data

obviously

do

not

to

the
widespread
notion
that our gold standard broke down
in 1929-1933 or that our gold sup¬

restoration of the gold
coin system, at our present rate of
$35 per ounce of fine gold, should

ply could not withstand the peo¬
ple's withdrawals. The trouble lay
chiefly in the illiquid non-gold
assets of the banks.
The people

easier

for

construct

Accomplish

(1)

a

should

subtle type of deemable currency of approxi¬ States to a redeemable currency
control
and
has
exceedingly mately 160 years ago. Fortunately would restore to the people of this
far-reaching implications. It is a for France, he at least swept that' country control over their public
money.

No monetary system

the

III

rode into power
the

of

and

rency

What

horseback—

system

the

who would blame a fine
an accident caused
the low. Of this sum, a heavy pro¬
unreliable driver. \
: portion was exported and ear¬
(5) With private enterprise able marked for export. During the
to obtain and to use gold in for¬ period of maximum variation, the
eign trade, there should be expan¬ increase of gold coin in circula¬
sion in foreign exchange, trade, tion was $91,077,000. The increase
and investments of all kinds, and of money in circulation, including
foreign countries should be able, the $91,077,000 of gold coin, was
What
our
generation does not sooner than otherwise would-be $674,235,000. Even when the gold
seem
to have learned from the
the case, to stabilize their curren¬ stock for that period was at its
experiences of the past are the vir¬ cies in terms of gold and to in¬ low of $3,941,000,000,it was $1,092,tues of a fixed monetary stand¬
crease their production.
537,000 above the $2,848,463,000 of

system

banks operate.

Napoleon—who
on

reserve

money and to all
deposits is about 13%. The

all non-gold

bank

there should be less inclination on

cause

insurance

and

to

of money.

lished bushel to measure the fluc¬

tuations in our supply of peaches.
bonds, annui¬
But if our costs and selling prices
they were, they insisted, enlight¬
policies, has
ened,
progressive,
and
liberal. do not suit us, we seem ready to
ideclined sharply in a relatively
They ran some of their most ex¬ manipulate our monetary stand¬
short space of time. Billions upon
^
pert monetary economists out of ard.
billions of dollars of purchasing
France so that they could pursue
If problems of production scar¬
power
have been destroyed by their
and
of
"enlightened" course with¬ cities
unemployment
this depreciation of our currency.
out having their sins and stupidi¬ could be solved by manipulating
Because foreign trade, exchange, ties
pointed out by those uncoop¬ monetary standards and by issuing
; and
investments are under gov¬ erative and old-fashioned econo¬ irredeemable money, such prob¬
ernment control, we have distor¬ mists.
lems
surely
would have been
tion
and
stagnation in foreign
We know noth¬
The reasons why our Treasury solved long ago.
trade and foreign exchange, and
and
Federal
Reserve authorities ing of importance about currency
'currency stabilization and recov¬ defend our irredeemable currency manipulation that people of many
ery in foreign countries have been
system
should
be
understood. generations ago did not know.

their

approximately 50%.
That is
requirement. Their
surplus reserves on Feb. 16 were
over
$11.5 billion in gold certifi¬
cates.
The ratio of our gold stock

twice the legal

our

our

have

to

their note and deposit liabilities

is

the virtues of this dangerous type

or

people.

;%

of gold certificates

expressed arguments in behalf of

product.

a

to

reserve

average for 1915-1932 was about
Widespread fear of a de¬ 8%.
If past experience is any guide,
pression now would seem to indi¬
cate some fear that irredeemable the
typical withdrawals by our
currency may not prevent a de¬ people from our gold stock should
pression despite the commonly- be about $2.3 billion of gold. With

these

Many, if not most, of
goldmine interests seem to
put their desire for profits ahead
of the importance of maintaining

>

The ratio of the Federal Reserve
banks'

21%.)

man

not peaches.

despots, but real democrats, the
true representatives of the people;

from

goldmine interests for a higher
price for gold because their costs,
partly * as a result of our currency
depreciation, have risen sharply in
the face of the fixed price of their

order

they

were,

flow

that

desirable purpose.

very

open

(6)

up

A

other

countries

to

thejir currencies and

re¬

foreign trade.

support

\V>

Volume

169

Number 4786

afraid

were

that their deposits
paid and they want¬
They did not seem to

would not be
ed

cash.

whether

care

or

reason

that

our

redeemable

they

it

in

was

paper

gold for the very good

money

paper money

in

Therefore,

gold.

withdrew

was

relatively

little

gold.
••1 Our

people were not deprived
of the gold coin
system in 1933
because of scarcity of gold or be¬
cause
the
gold standard broke
down; they were taken off that

standard simply because the gov¬
ernment
wished to substitute a

''managed"

,

irredeemable

paper

All the evidence is to the
effect that when the banks were
money.

opened
been

in

1933

able

to

should

we

have

gold

resume

pay¬

ments- without

a
ripple.
But at
time, the Administration told
people that there was not
enough gold to go around and

THE

COMMERCIAL

FINANCIAL

CHRONICLE

labels such
as
"Liberal," ! "Pro¬ of our leading citizens should set¬
gressive," "Conservative," or "Re¬ tle down to the job of driving the
to discuss it.
In short, we do not actionary," without defining these
majority of our present office
wish to meet what is perhaps the terms
precisely
as
intelligent holders out of power.
most fundamental issue involved. people are supposed to do.
It is futile to expect the
general
The general public does not un¬
If our physicians should aban¬ public to understand or to
demand
derstand that they have lost con¬ don the principles of their sci¬ a redeemable
money.
The restor¬
trol over the public purse through ence and should simply ask their ation of a
redeemable currency is
the loss of the gold coin system. patients what they would have, a task for
intelligent and resolute
They do not understand that it is and then put on their prescrip¬ leaders.
Once this gold coin bill
our system of irredeemable
introduced
in
money tions labels designed to please, we is
Congress, our
that has invited profligate gov¬ would have a situation comparable leading citizens
must, by resolu¬
ernment spending, a dissipation of to what now prevails in the field tion and
otherwise, fight for its
our national
patrimony, a depre¬ of so-called political leadership.
passage.
ciation in the purchasing power of
As to money, the people in this
(2) The weight of our standard
our
dollar, and our march into the country seem to support an irre¬ gold unit—$35 per fine ounce—
Death Valley of Socialism
deemable currency in preference should not be altered.
It has been
The public
The rea¬ fixed for 15
does not seem to to a redeemable one.
years, and fixity is a
understand the fact that gold and

sons

silver exist

explanation is not

as

because ir¬

money

redeemable paper money is a dan¬

and

gerous

for this are several and their

The

easy.

cen¬

have embraced the notion that
can

that, therefore, it

labor and will buy other people's

tal

goods

what

to

necessary

suspend redemption.
That was probably one

of the
pieces of economic illit¬

greatest

and

services

anytime.
The public

to

seem

or

Nevertheless many of our peo¬
ple continue to allege, as though

flects itself in

it were

Administration where

This

i

fact, that there was not
gold to go around then
and there is not enough gold to
go around now; and that, there¬
fore, we could not maintain the
gold standard then and we can¬
a

enough

not

it

do

now.

informed regarding our gold hold¬

and

and

ratios

they

that there is

thing to

then

and

now,

not to understand

seem

enough of any¬
around at once if it

never

go

has value.
The

simple fact is that we can
easily return to a redeemable cur¬
rency now, and we should do so.
Our suspension of gold payments
has

16 years.
In one
will equal the 17year
period
of
suspension
of
1862-1878. In 1940-1942, inclusive,
the ratios of our gold stock to
money and deposits ranged from
21.7 to 24.6% -as compared with
now

more

run

year

about

we

13%

turned

Those

now.

in which

years

to

were

could have

we

redeemability

can

the

Public's

Misunderstanding
and Apathy

be

saved

irredeemable

leadership in this field

from

the

evils

of

unless

currency

will

tricacies
and

understand

and

bad

principles

the

of

in¬

good

monetary standards and

systems;

public

the

in

general
never do.
It is the duty of states¬
men to understand these problems
and principles, and to inform the

people

the

of

volved.
the

issues, in¬

major

It might be supposed that

of

mass

people of this

gen¬

eration would understand that

an

irredeemable currency is

the worst
type of currency ever devised by
man.
Nevertheless,
our
people
are showing a remarkable apathy
regarding that lesson and the fact
that

have

we

currency

irredeemable

an

system.

Apparently,

apathy

arises

in large degree from the fact that

people

in

general

confuse

the

convenience of paper money as a
medium
of
exchange with the
other

vitally important functions
performed by gold—that is, its
virtues as a means of storing up
Value,

as

payments,

a

standard

as a

standard of value,

against
and bank deposits,
as

a

of deferred

reserve

paper money
as

clearing

a

agent, as a means of carrying on
foreign trade and of settling ad¬
verse

balances of payments.

Any

intelligent

adult
should
understand that gold is a less sat¬
isfactory medium of exchange for
general use than is a redeemable
paper money or deposit currency.
Our
people,
obviously,
have
missed the essential point and, as
a consequence, they regard them¬

u

selves

as

currency.

volved

matter

in

satisfied

with

a

libility

The lack of honesty in¬
such

that

we

a
currency is a
try to ignore to¬




depression,
our
again depreciate

government may

huge Federal debt into

to obtain votes.

sary

tion

of

of

the

wisdom

is

neces¬

The

or

is

proposal is altogether
ondary in both parties to the

self-server

no

tolerated

ques¬

soundness

a

this

across

tant problem and easily provide a

major

excuse for currency

depre¬

for

if

discovered.

The

be

need

statesmanship, for people
integrity and with de¬

of absolute

sec¬

termination

to

be

right.
sideration
of
Since both political parties are
obtaining
votes.
Both parties regard their function bankrupt is so far as high and
as that of
playing a game—a game proper standards of leadership are
based upon hypocrisy, cynicism, concerned, and since both are
busy
hollow pretense, lack of principle day and night seeking to please
and conviction, moral cowardice, self-serving
pressure
gr o ups,
the
assumption that they must with the consequence that the
oretend to fool the neople though people
of the United States are
they know the people realize the | being sold down the river to the
nature

of

this

con¬

degrading

slavery of Socialism, it

per¬

j

formance
The terrible need

of this

sonably clear that the only hope

! to

coun¬

save

people from Socialism

our

an opposition party to and to obtain
those in power—an oppo¬ 1 again lies in

sition

that

it

will

the

be

elected.

have

sole

right,

its

as

that

it

sound

a

currency

,

be

known to be best for

country | able to suppose that the minority
regardless <>of popular attitudes of statesmen of both parties in
and public understanding of the
I Congress would welcome an opour

issues involved. It is their task to ; portunity to joint a group devoted
protect and to educate the general to the truth and to statesmanship

public

to what those in power

as

doing.

are

and to

nothing else.

the

use

it

to

see

needed

required

to

explain

to

our

would

aid

in

fulfillment

the

of

this great responsibility promptly
organize to save this nation from

of the

it

and

organized opposition to
that

done

sential

things are done
properly.
Once the es¬

facts

are

laid

before

accurately and properly,
they should be free to respond as
best

they can.
Education is one
thing; regimentation is something
else.

in

this

we

manner

do

not

today.

called leaders in office

proceed

Our

stituents

think

opposition
course.

they

they

parties
can
solve

problems properly

con¬

The

want.

pursues

Both

so-

simply at¬

tempt to find out what their

think

(1)

If

we

to

are

have

a

re¬

keeping

will be

more

costs

i

v.

n

the

same

seem

to

important
by the use of

Federal

Administrationf out¬

standing citizen

groups

must ap¬

parently provide the support, and
perhaps the leadership, for such a
bill.

-

A

leaders

large group of outstanding
should

be

able

sir

up

enough" support in Congress
get the proper law enacted.

and
at

are

high¬

level

not, then

a

If

third party composed

would

we

that

can

In this

remove

problem

man¬

best

as

we

from

the

troublesome

position

it

cupies,

provide

greater

and

now

surance that it will not prove

to

gerous

should

oc¬

as¬

dan¬

our

monetary standard
experience a severe

we

business recession and depression.
While

in

the

last

Congress,

Howard Buffett, then a Represen¬
tative from Nebraska and the au-v
thor of

bill to return this

a

try to

coun¬

gold coin system, issued
a
warning that we should heed. *
Said he:','''.".:
'.V
;;
a

American

squander.
hands

It

as

heritage of

an

intrusted

was

custodians.

to

Unless

ancestors

and our posterity. For
blessings of this land of lib¬
erty, and its unparalleled achieve-1
ments, are intimately connected
with the right of the individual
freely to obtain gold in exchange

1 "Our

Human

28,

Irredeemable

Paper
Money,"
(Washington, D. C., July

Events

1948).

:

i

it is safe to say reduction

effectively resisted than

ever

before

:

dependent

on

of

record.

ly,"

Dr.

"The

Wol¬

out, "wages in
the

States

of the

have

behaved

as

ceeded

would

the

in

business

Prof. Leo Wolman

sys¬

ness

had

after

business

vive.

This

its

passed

peak and
wages began their rise sometime

American

had

was

wages

ently.

begun

to

re¬

observed

behavior

in
I.

the

period

line,

prices, showed in the
persistent
rate 'of

quarter
money

real

years

but

doubtful
will

react

typical

to

a

before

moderate
In

mean

more

and

business

that

has

characteristically followed
long periods of expansion. On this
question

it is safe to say that
in industrial employments
likely to resist reduction more

wages
are

strongly and
ever

more

effectively than

before."

Vicfcor Cevasco Honored
Victor

J.

Cevasco,

terms,

tendered

Vice-

at

a

Law,

luncheon

Michael's

Inc.,

on

was

March 11

Restaurant,

112

Greenwich

Street, New York, by

his

associates

agency

on

the

oc¬

casion of his 48th anniversary of
continuous

service

with

the

ad¬

vertising firm.

Theo.

Bernstein, Jr., Dead

Theodore

advanced

what

first

President and Treasurer of Albert

the

both

in American history.

simpler

the

expected

in

Bernstein, Jr., partner

New York

to

only

debatable and
But

the

decline

dented

in

with

important question is how wages:

in Carl M. Loeb,

seems

a

question.

at what appears to be an unprece¬

Put

wages

pace

rising cost of living, and at the

wages,

1914-1939,

and real wages

as

changes in

increase.

century,

rate

money

only in keeping

of

after

Taking 1914

wages corrected for

a

of

since the end

years

though

Frank-Guenther

long-run

War

three
war,

go up still more is

until

'

change

movement

the pattern which

they began to act differ¬

reasons,

upward

"Currently, the prevailing wage
level, however measured, is the
highest on record. Whether it will

1930s when, for a variety of

annual

were

slightly higher than in 1945.

tem.

1914

course

wages

end of 1948 real
wages were

a

competitive,

World

of

increased substantially, they suc¬

be expected to
behave

the

in

United

the

if the

as

and

wages, both money and real, con¬
tinued through World War II. But

pointed

man

course

business

unrelated phenomena.

"Historical¬

to

to

ner

times of

riod since World War I
wages be¬
gan to pursue a more or less in¬

g

rough dividing

our

business depression.

to

savers

in

even

<£>

pace

1 i

or

considering the present atti¬
in Congress and

it

1

with

deemable currency
But

non-bank

of

most

In an address at
Chicago University sponsored by the Executive
Program Glub of Chicago on March 11, Dr. Leo
Wolman, Professor
of Economics of Columbia
University and a specialist in labor affairs,
in reviewing prewar and
postwar wage levels, says present wages are

in Congress must

again someone
introduce a bill.

hold

and

—

in event of decline in business.

to

Be

Should

private

per¬

is, into United

carrying an in¬
high enough to induce

terest rate

University economist also holds

in industrial wages

"The

tude and lethargy

general

of

American wages seemed likewise

What Our Monetary Program

States Consols

a

Wolman Cites Record High Wage Level

VI

the

people

In

time

Columbia

see

these

Wars,

The other is the destructive

their decline sometime after busi¬

| liable custodians of it, let all who

now

for the fruits of his labors." i

the

to I to prove ourselves worthy and re-

and

us

accept this

and to ref und most of it into
manent debt—that

manipula¬
business depres¬

data

But, if

to

currency

we are

Our generation is the trustee of

this great heritage.

people what the facts and prin¬
| those who feel no such responsiciples involved are and to fight
j bility and who are either indiffor them against all odds. That is
| ferent or thoughtless or are busy
what responsible and intelligent
undermining and dissipating our
leadership involves. It is the duty priceless heritage.
to

to

car¬

to

that

officials

the

facilities

they are analyzed
scientifically by competent ex¬
perts. Thereafter it is the duty of
our

custom in

They be¬
haved, in other words, like prices.
They were highly sensitive
to
short-term changes in the business
situation, rising with expanding
business and falling with declin¬
ing business.
They also lagged
considerably behind changes in
business
activity.
Wages began

duty of government officials

to

in

sion.

old
to

attempt to pay
public debt.
But now our

they

Past

generations did not work,
Many
government
problems,, and save, and invest, and develop,
like those involved in a people's and fight, and die to pass on to us
money,
are
completely beyond a great national patrimony and free¬
the ability of the mass of people dom merely to give the degenerate
to understand properly.
The gen¬ political parties of this generation
eral public cannot themselves ob¬ an opportunity to dissipate
this
tain the data needed and there is patrimony and to impair or de¬
the further question of the ability stroy
the
freedoms
for
which
of the majority of the people to mankind has struggled throughout
analyze the data properly.
;
V
It is the ages. ,;
the

tion

est

an

good

States

invitation

now

repair.

can

a

our

the creation of a
nationwide organization to which
people of understanding and in¬

Five thousand men and women
opposition needs |
leaders who will state and fight of high, purpose could create such
for 'the
truth
and
for
what
is an organization. ? It seems reasonSuch

is

tegrity

basic

consideration

not

seems rea-

off

be

the

ciation.
It

for

course

to

restored, we shall be recorded by
history as faithless both to our

particularly impor¬

a

sufficiently high

debt as a permanent
institution, as
the British accepted their debt at
the close of the Napoleonic

cur

nation

would

safer
seem

to

debt, because of its huge size,
ries new dangers.
One is

whatever

do

built

The

would

ness

as

taxes

ably short period of time.

"The

safety.
In times of busi¬
depression debt burdens are

regarded

of

honest money redeemable in
gold
was not given to this
generation

posi¬

a

effects

37

to retire much of it in
any reason¬

tion of

which

is to

gather the

this

and

each

is

an

•

general

great probability that, should we
slip into another severe business
recession

United

there

.

It is not expected that people in

very

organization composed of in¬
telligent and fearless leaders in

watch

General

and

currency

have not yet learned the fallacies
in that idea, since there is a

exist in Congress. Both
political parties have ac¬
cepted the view that the task of

that

Is

this

irredeemable money, it
doubtful whether our people

is

not

principle

Problem

ic

leadership and
guidance in this vitally important

re¬

v

Big

a

try is fqr

with

our

by

our

Since both political parties are
the business of buying votes

in

matter.

does

manipulating

we

economy

to do.

expect

Effective

our

our currency in some form in an
effort to stimulate recovery, we
should do our best now to remove

with

to

the

greatest ease.
A

have

stabilize

it because of what it enables them

people re¬
Congress and
we

irredeemable

and this makes it easy for
Congressmen who also want

our

cur

our

preferably

money,

money,

major

Our people are in the main un¬

ings

apathy of

right

truth regardless of facts or of

monetary economists may
Our people are temperament¬
ally against gold. The want paper

anywhere,

not

the

ever

of

say.

does

political trickery, what¬ understand that an irredeemable
case may
have been, to paper money and governmentally
which our people have ever been managed
economy
go
hand
in
hand.
subjected by their government.
eracy

Cross

Gold," appears to
have
been
thoroughly
diffused
among our people as a fundamen¬

product of the printing press
that gold represents stored

and

requisite of a good
monetary standard.
(3) Since we, in recent years,

the

unreliable instrument

—that irredeemable paper money
is

a

fundamental

tral contention made by Bryan in
his famous speech, "Crucified on

our

was

(1205)

day; we attempt to pass over that
subject in silence; we do not wish

that

,

&

this

is that in the pe-

his desk
a

Rhoades & Co.,

City, died suddenly at

March

heart attack.

11, apparently of

38

COMMERCIAL

THE

(1206)
trade

Tomorrow's

showed continued

news

resistance.

consumer

Among them

i

various Standard

❖

Yet, despite this news, the
persisted in display¬

.

Whyte

Says—
By WALTER WHYTE=

strength beyond the 180

in the meantime there

least

weeks

than

at

*

*

and

tional

a

their

of

penetration

frac¬

a

chances are,

it

however, that it

the

180.

does

start,

I

But

don't

*

reac¬

was

Whyte

[The views expressed in this
article do not necessarily at any
time coincide with those of the
Chronicle. They are presented as
those of the

author onii/.]

* With
one
average
going*
through the warning was out.

With the other

average

con¬

firming, the warning became
a full fledged signal. At least
that is the accepted interpre¬
tation of the Dow theory and
its followers

legion.

are

should

tell

Good

current

great

a

complete

picture

deal

In my

column of Feb. 3 I
said, "It is during such times

the

first

months

two

number

of

1949.

of

industries

have

is

work

in
to

most important ob¬
economic
analytical

maintain

a

balanced

foundations
are
often point of view.
This is a huge
laid for real advances." Since country and the economic machine
that

that

was

written the

trials have gone up

indus¬

about five

points.
-v

^ In the

*

❖

*

the

on

rails, the

which seemed to be in
a
particularly bad position
from a widely accepted pub¬
lic viewpoint. "Oddly enough
the rails
give as much
promise as any other group.
In fact they give signs of be¬
ing able to make the grade
.

.

before the industrials."

even

of bits and pieces scattered
geographically,
and
distributed
by industries into many separate

nevertheless

pieces.

It

is

eralize from
At

interrelated

in

to

dangerous

a

few isolated

gen¬
cases.

times, business may be down
area, it may be up in an¬

one

other. Production may be down in

industry,

one

increasing

but

in

another. The great danger is that
a

person

will

generalize

on

the

basis of isolated conditions which
are

not at all

typical.

consumer

whole economic
pay

tends to judge the
scene

by his

own

envelope and the prices in the

stores in which he deals. The busi¬
tends to

judge the whole
own particular
position and what he hears from
nessman

situation from his

Last

Friday, March 11, the
rails suddenly came to life. In his business contacts.
As I see
fact that day represented vol¬ it, it is the economist's job to try
to
put all the pieces together
ume arici activity, the first in
near
and far,
and to be
properly skeptical about the tran¬

❖

.'V

#

'

It is

interesting to note that
news
during the rally was, if
anything, hardly bullish. Un¬
employment figures from the
Bureau

Labor

of

dolorous.

were

Statistics,

Commodities

shaky. Nonferrous metal
prices were being cut. Retail
were

Pacific Coast

Securities
Orders Executed on

Pacific Coast Exchanges

Schwabacher & Co.
Members
New York Stock

Exchange

New York Curb Exchange
San Francisco

(Associate)

Stock Exchange

'

Chicago Board of Trade

New York 5, N. Y.

14 Wall Street

Teletype NY 1-928

COrtlandt 7-4150

Private Wires to Principal

San Francisco—-Santa

Offices

Barbara

Monterey—-Oakland-—Sacramento
,

in

view

economic conditions.

Particularly

today the keynote of our thinking
should be the word

"perspective."

highlights

of

present a few

business situa¬

the

ords ih

see

■

r

-

•

■

1

v

Retail Sales

-

has > run 10% below
£ Next,--let us take up the matte*
January,
cotton mills of retail sales.
Here again, we
produced 20% less than last year. need
perspective to get the whole
Petroleum
supply has finally
picture.
Over recent months;
caught up to demand, and output there have been
1948.

In

*

has

been

reduced

from

recent

sales

examples which the pessimist may
point to as ominous signs of the

ample,

various

of

pared

kinds

as

com¬

with a year ago. For ex¬
for six successive weeks

sales in New York City de¬
been lower

now,

partment stores have

the

must than

side

good

a

earlier,£the declines

year

averaging about 6%.

Such

spective.

of-declines

•

Thus, steel production
been
running 8% over the

has

first

in¬

numerous

stances of dollar declines in retail

peak levels. Car loadings are down
10% from last year. These are all

months

two

of

1948.

Motor

vehicle

sales

in

ruri

a

may

seem

ominous

and suggest that goods
might be piling up because of lack

production is up 7%, and
electric power production
is up

of

7%.

tive,

Production

of

newspapers

sharply as
the fact that news¬
print consumption was up 14% in
January as compared with a year
ago.

there

are

duction

many

has

whole

appears

cases

been

cari

We

the picture in better perspec-*

however, by looking at thd
tonnage figures of deliveries.
It
is noteworthy that the United Par¬
cel Service reported that the ton¬
deliveries

of

nage

last

exceeded

in every week since Christ¬
except two which were pracJ

mas

where pro¬ tically unchanged. There may be
some special explanation for thi£

steady. Taking
machine, it

economic

that production decreases

production increases,

purchases.

consumer

See

year

so

that total

difference

between

dollars

>

and

tonnage, but it suggests to me that
the

physical volume of sales must
been increasing rather than

have

This may have been
production has
been declining.
negligible fraction of last due partly to sales promotions at
markdowns and partly to a chang¬

industrial

within

a

year.

The

Figures

Unemployment

of

In

spite of this, unemployment
the highest level
since the end of the war.
The

should

I

like

also

tail sales,

perience in different

This

December

it.

agriculture and industry— the increase

over

12

months

was

aside the war years of certainly not spectacular.
Agricultural
production
As a matter of fact, it might be
definitely turned the corner so more informative to refer to the
that instead of shortages, we be¬
figures on employment. The Cen¬

to

call

your

attention to another aspect of re¬

unemployment stood at about 3.2
million in the middle of February.
was

with a
luxury

ing composition of sales
declining - proportion
in
goods.
'

has increased to

up from 2.7 million in
January, and was about twice the
First let us turn for a moment level as
recently as last October.
to the production situation today.
However, it is interesting to note
It is ^noteworthy that last year we that
unemployment in February a
set new all-time production rec¬
year ago stood at 2.6 million, so

I

as

•

.

Census Bureau has estimated that

Highlights of Business Situation
I shall try now to

'

'

we

'

of

for

namely the varying ex¬
In

the; stores.

these

ments of

month

latest

the

—

departments'

the

of

available

depart¬

purposes—some

department stores in the.
Federal Reserve dis-.

York

New

trict showed

very

sharp declines.:

example, sales of refrigerators;
were
down
62%
from
a
year',
For

leaving

earlier.

course.

ironers, etc., were down 44% and.

confronted

Weather

high

with

conditions

surpluses.

suggest

sus

Bureau estimates for February

that show

a

agricultural production will ployed.

continue this year.

about

The agricultural situation alone
a
tremendously
important

was

1948.
the

total

It

the

of

During the
labor

57.2

happens
same

force

as

year

is

million

em¬

31%.
how

up

inflation up¬ have have increased about 900,000
—these are accounted for by an
surge and again in the recent ces¬
sation
of
inflationary pressures. increase of 300,000 in the Armed
One-third of the consumers price Forces, and an increase of .600,000

factor in the postwar

stoves,;

the pessimists can
figures to illustratethings are getting. Yet

Again,
bad

that elapsed,
to

washers,

these

take

there

estimated

of

sales .of oriental.rug$ were down'

that this is
February,

in

Sales

were

a

number

of

other

departments in which sales were

substantially,

wear

in

such

basement

as

girlsV

stores

(up

umbrellas, parasols,,
and canes
(up 16%). These are.
not very glamorous figures but it:
is interesting
to note that the:
17%),

and

index

(cost of living)

grains

and

-

.

of the total labor force.

third—which

in

terms

of the in¬

.tsrio




of

of a balanced
thinking about

idea

the

urge

point

call over-employment.

may

dollar increases in. some depart-,
consists of in unemployment.
ments
exactly offset the dollar
foods dependent on
Perhaps I shpuld stop here for
decreases in other departments, so
sitory waves of public psychol¬ grains. The failure of the corn a minute to comment on the treat¬
that
total
dollar sales in these,
ogy, which may or may not be crop in the summer of 1947 and ment of lay-offs in the unemploy¬
stores were the same in December,
the
earlier
consistent with the facts and fig¬
shortage
of
wheat ment figures.
As we all know,
of both years.
;
ures at the time.
represented
inflationary factors there have been large layoffs from
time to time in some industries,
For another example in the re¬
Now in saying this, I do not for which were highly dramatized in
such as the railroads.
Thus, it is tail field, let me refer to ■ the
one
minute want to imply that the sharp increases in the price of
The wholesale price index important to see how the Census West Coast. We hear a good deal'
the economist is so wise that he meats.
Bureau counts these people who about prospective difficulties on
knows just how to do this. On the for meats reached a point about
have been paid-off with the hone the West Coast and there are un¬
contrary, he must feel his way as 21/4 times as high as the peak fol¬
The doubtedly some serious situations.'
One of the of being recalled to work.
best he can for there are no scien¬ lowing World War I.
repercussions was, of rule is as follows: if a person is But conditions are not uniform in
tific formulas to keep everything important
laid-off with instructions to return this area. Department store sales
in a neat order.
You will note, course, that wage demands were
further stimulated by the increases to work at a definite date within have bee# holding up better in
however, that I said I deemed this
30
days, he is counted as em¬ San Francisco than in Los An-1
to be the economist's job, although in cost of living.
ployed. This is the same thing as geles. In the month of January,
Last year, wheat and corn came
he will probably often stumble in
a
vacation without pay.
On the department stores in San Fran-'
into abundance and meat prices
carrying it out.
other hand, if he is given no defin¬ cisco sold 3% more than a year
One difficulty is that economists finally began to decline. The cost ite date to return to
work, or if he earlier, while in Los? Angeles,*
of living stopped increasing, and
use a jargon of their own, and a
is told to return to work after 30 sales were down 6%. The latest
term may easily mean different at this point the consumers price
show
days, he is counted as unemploy¬ weekly figures avaBable
irdex has turned down by a small
ed. This treatment seems reason¬ that for the week ending Feb. 26,
things to different people.
For
margin. There has been practically able to me.
example, the word "recession" is
However, if you pre¬ San Francisco sales were up 2%.
no
downturn in broad classifica¬
orr everybody's lips, but it is used
fer to consider all laid-off em¬ and Los Angeles sales were down
tions of the index except in food
*so loosely that it can mean any¬
ployees as unemployed jeven 17%.. '
..
costs.
.v
g
thing from a very minor down¬
though they have a definite date
>
Moreover, different kinds of
turn
in
business
In the case of industrial pro¬ for return to work within 30 days,
activity to a
stores
are
showing
strikingly
major collapse involving extensive duction, we reached a new peace¬ you would increase the unemploy¬
diverse results in these two cities.
time peak last fall. The Federal Re¬ ment figure by less than 10%.
unemployment.
For my part, I
Here, let me quote some figures
propose to use the word "reces¬ serve index of industrial produc¬
Thu§,,in perspective, it seems to for sales by independent stores in
sion"
to
indicate
an
economic tion, seasonally adjusted, reached
me thaft the unemployment figures
December, 1948 in both Los An¬
in
October
and
November.
downturn
of
the magnitude of 195
are
not as bad as is sometimes geles and San Francisco. Sales of
Since then, there has been a very
1920-21 or 1937-38.
In both cases,
suggested.
They are worse than building materials dealers were
the Federal Reserve index of in¬ mild decline. The figure for Jan¬ they were a year ago, but they do down sharply in both cities—27%not represent an undue proportion in Los Angeles and 19% in San'
dustrial production fell about one- uary was 191, which would be

from

two months.
SH

to

It has

real point, in that I want

very

figures
normal.

production

have been approximately offset by

introduction

this

has not seemed academic.

came

The

that

hope

tion

group

.

I

num¬

ber

but

y/.;

column I also

same

commented

is made up of a tremendous

something

to

back

us

the
as

has tended to suffer from what

A

been

producing less than in the same
period last year. Bituminous coal

the

around 1940 levels.

a

One of the

jectives

laking

about

the future.

❖

*

(Continued from first page)
applicable here.
analysis of the

think

viewed

While it may seem hard-hearted
in¬
,to say so, I also think that such ^
well when there
volume of normal unemployment
has been so much pessimism in
business. Perhaps it may be well will be a healthy thing in improv¬
to consider some of the diverse ing overall productivity—in which
labor has a major stake and which
trends in different industries in

Besides such pluses and minuses,

Prospective

possibilities and probabilities for

*

*

The Business Situation-

Actual and

be

It may seem strange that this

and related items is up

si:

ft

force, -I

should

is indicated by

:Js

labor

apparently

same.

also be considered for proper per¬

.

lows.

r

about the

However,

Thursday.
—Walter

future.

near

February

year ago.

future.

More next

possibilities for

reasonably

minor

a

tion.

Among the oils the leaders
hold the best

The

start.

can

will be well above
when

ac¬

will

think it will be

industrials

the

(2)

had followed suit with

top

a

widely

any

real break

a

Abbott Laboratory has al¬
plied lower prices, had no
ready gone up and stands out
place in the calculation of fu¬ as the leader of the
drugs. I
ture stock movements. It was
suggest Bristol and Myers at
easily apparent that (1) the, 31 with a
stop at 29.
rails had broken their, old i

lows

see

be more
temporary obstacle.
a
point from where

There is

hold

week, I wrote that logical in¬
dications, though they im¬

will

figure

cepted

groups

,

so

probably start that

think

don't

promise of more
The first is the drug
group; the second is the oil
last
industry.

and

ago,

additional

two

market

or

Thursday, March 17, 1949

dex shows up so

when the industrials hit 180.1

But

are

will

the

I think

so

time to think of reaction.

figure. Oils and drugs point
rally.
higher prices.

to

Two

or

strength will be widely
acknowledged and it will be

which

,

week

the next

talk

In

ing. underlying strength.
this

Expect continuation of cur¬
rent

Oils, etc.

Within the next week

market

=

Skelly,

sjs

Markets
Walter

Texas,

•••

*

*•

such issues

are

Amerada,

as

'

CHRONICLE

FINANCIAL

&

dex

today would involve a

drop

about 2% below the peak last
and

about

1%

below

fall,

the level

a

So long as

unemployment stays in the range
of

something around 5-6% of the

Francisco

as

compared

with

the

earlier.' Sales of hardware
stores were down 10-12% in these

year

Volume

169

Number

4786

THE

jcities. This is certainly grist for
the pessimist's mill.

dealers

in

tires

down

in

Los Angeles,

shut they were up 2% in San Fran¬
cisco. Sales of automobile dealers
^were

3%

up

in Los Angeles and

^11% in San Francsco. So
accessories c did

On

the

other

stores

-*10%—we hear

down

were

great deal about

a

^declines in liquor sales

as

tip-

a

"Off of the famous recession.

Yet, it

decline.

Currently,

of

ment

Commerce

the

."places
1

were

Should

of

drinking
Perhaps we

6%.

up

conclude that

lot of the

a

J drinkers

in v California
south for the winter.

moved
>

*': We do not have time to go into

*more

of

variations

the

in

The results will be available

in large quantities. He is choosier

of last

than in the past. He wants his
money's worth. He shops around
Until he finds what he wants and

„

he

is undoubtedly spending
oh luxuries.Y;-;.

•

less
:•

,

Is There Shift to "Buyers'

b \:;

Market"?:

i

,

In this connection, there is a
good deal of talk about the shift

;

from

sellers'

a

buyers'

itself

not

is

market.

market
I

stitutes

to
if

wonder

of the term "buyers'

use

a
the

market"

misleading and

evidence, of

the

con¬

lack

of

perspective I have been speaking
of.
Strictly speaking, we have
broad

sellers'

markets

buyers' markets only
in the

of

course

thinking

a

and

broad

few times

a

life-time. I

of. those

times

am

when

there is

an-overwhelming lack of
balance between supply and de¬
mand. Thus, in 1933, we had a
real buyers' market. During the
and

war

immediate

i

period we had
ket.

But

have

a

into

come

postwar
real sellers' mar¬

supply

as

in

one

do

not think

and

demand

balance

recently

accurately described
that

say

sellers'

After
is

market

as

to

buyers'

a

accurate

more

have

I

situation is

from

gone

a

competitive

a

all, a competitive
normal market in

the

free

our

enterprise

system.
It
competition, not only be¬
sellers of one product, but

means

tween
1

we

market

market.

another,

that the

market. It would be
to

^

industry after

sellers

between

of

v

ail

help

products.

And

now,

word

a

the

down.

is

one

we

year

the

President's

budget

of

turn to the question

us

business

plant and

This

expenditures.
of

one

the

These

equipment
certainly

crucial

most

economic

the

of

is

elements

picture

expenditures

today.

have

been

running recently, .at peak levels
for
peacetime,
and
there
are
signs that they are tapering Off.
The real question now is whether
this mild tapering off process will
continue
will

or

be

whether

the

serious.

more

decline
Some

bring

on

quickly.
we

sharp and that this will

will

the
My

see

famous

own

only

recession

feeling is that
a

tures this year.
the

I

am

alizing from occasional
have not been

gener¬

cases, and

allowing adequate¬




it.

There has

been far less

speculation, and inventory

Republicans—by going to the peo¬
inform them, no doubt,
that their duly elected represen¬
tatives

This

mayhap,

are,

S.

O.

Bs.

is

n^| the stuff of which a
champion is made, but rather the
stuffings of a demagogue.

Moreover, World

War I ended

budget

government

Went

This

Worry
the

wonder

supplies for
then

produced

peacetime
abroad

recovery

are

aries" and

Allies

our

products

for

called

now

here

for
and

"reaction¬

"selfish interests."

Si¬

multaneously his leading economic

these

for

room

the accruals of fat

to

come

from

earnings in the

last several years."

spring of 1920, when govern¬
to the matter of
proposed tax increase.
For ment bonds went through a down¬
the moment, it seems clear that ward
spiral which brought the
the tax increase is quiescent.
I Liberty Loan 4/^s down to 82 in
brings

us

the

the word "quiescent" rather

than

"dead"

will

I

back

come

and

will

it

then

primarily

ture,

curity,

base

decision

the

business situa¬

continues

unlikely that

be

new

sen¬

shaky, it
taxes will

be enacted in

large amount. How¬
ever,
if business sentiment has
then recovered from the present
pessimism, we may yet see an in¬
in

crease

It

taxes.

membered

should

the

that

be

re¬

expenditure

estimates in the Federal budget
will probably have to be raised,
I have

as

already pointed out, and

this in turn will
the

in

visualize

tax

Under

other

of

of

enactment

an amount

maximum
In

in

the

on

I

$2

up

to

billion.

believe that

key to the tax situation lies
the

three

or

business
four

I

situation

months

off.

some

'

..

have

we

and supports for agricul¬
mortgage

economic

Repeated?
Before

briefly to

the 'popular

idea that

history is bound to repeat itself

factors

these

machine

cracking

to

not

to

the

creak in
it has in the
but it is not

up.

probably in for real
in looking
things
over, it is a good idea to try to
balance out the pluses and mi¬
But

to try to take a little broader
look at the picture than you can

nuses,

out

of

office

your

Congress
The

mandate

only

not

for

Fort

the

Holding

people

this

gave

no

they
That is why their

against it.
Congressmen

are

program,

are
opposed.
The
plans for increased and
profits taxes on business,

President's
excess

'stand-by

for

the

manage

to

powers

entire

economy

SHALL NOT PASS.

Business prospects generally are
For 2l/z years industry

excellent.
after

industry has

postwar

boom

conditions.

While

with

faced

adjusted
ordinary

to

one

from
peace

is

group

inventory loss

and

a

buyer's market, another is ready
to. begin on a new cost competitive
basis.

This

to

return

normal

a

buyer's market may have another
year to go
before all businesses
catch up. Prices are coming down
benefit

the

for
The

savings

the

of

consumer.

food and clothing
will add much to the public's pur¬
chasing

on

Even more than in

power.

the

1920s, the whole world faces
dynamic up-building with an

a

for goods

unprecedented demand
and services.
The stock market

far has

so

re¬

flected

only the threat to our
enterprise system inherent in
the
post-election political
pro¬
gram.
SEC-regulated
and
re¬
free

stricted
been

have for years
chart for psychotic

markets

more

of

a

emotional reactions than

a

barom¬

eter of business and economic fac¬

For

tors.

index

tion

is almost at

time

Federal
produc¬

the

instance,

Board

Reserve

of

record peace¬

high; the

a

same applies to our
income.
In spite of in¬

national
creased

ple

are

record
on

high taxes must be levied

business.

How about the stock¬

holder,

venture money and the
capitalistic system. Visualize the
following
table
after
Truman's

gains

FAIR

to

DEAL

SHOPPE

is

estab¬

lished:

such

since

and

1929 to 1948

opportunity to buy bar¬

an

in

at

Wages

The

20%

being

following

list—by

"Spend and spend and tax and
a philos¬
ophy that brought this country to
industrial stagnation in 1939 with
unemployment
mounting
to
12

the

plants

business

in

thrown

for

no

representative
complete—

means

epitomizes the investment oppor¬
which have been created

tunities

by the adverse political factors—•
now

fortunately disappearing:

Approx. Net
Working

V

buying working

discount,

nothing.

,120%

.

__

Dividends

a

long-established

good-will
800%

stock market—even

the

extent of

the

of

Yet there has never been

capital

Increase

outlays

unprecedented

nify

money.

Approx.
Book

Current

High

Price

1946

Capital
Bendix

$38.00
36.20

Aviation

Boeing Airplane

Value

$42.70

34

58

41.40

23

35

Bohn Aluminum—.

'

are

trouble.

econ¬

omy.

Our

may

Some industries and some com¬

window.

32.20

47.41

24

74

Douglas Aircraft

91.30

124.34

56

109

Endicott Johnson

43,00

61.13

33

51

8.60

13.04

4

General Cigar
General Precision EquipmentGeneral Tire & Rubber

37.00

44.72

19

22.86

29.50

15

41

20.00

53.00

20

60

Hart, Shaffner & Marx

38.00

61.00

23

61

Hercules Motors

20.00

32.00

13

39
82

Eureka Williams

22

*

41

80.00

67.90

42

Lima Hamilton

12.00

15.46

9

14

old-time seasonal patterns are be¬

Lockheed

23.10

39.06

19

45

ing reestablished in

Mack

tries.
may

it

is wise to

remember that

many

indus¬

A look at old sales patterns

do

lot

a

to

keep

things

in

perspective when difficulties arise.

Yet, I don't want to gloss

over

Everyone should

ex¬

ercise great caution in the current

situation.

closing, I want to refer

de¬

the

rescued

unemployment, more peo¬
at work than a year ago.
Federal, State and Municipal
ing a deflationary cycle. Further
planning toward the Welfare State, budgets call for record peacetime
with pensions, benefit payments expenditures. The armament pro¬
and free medical care for all, en¬ gram for defense, ECA and the
tails such huge expenditures that forthcoming Atlantic Pact, all sig¬
inflation—even while

combat

tax" recalls memories of

many places just as
last couple of years,

see

de¬

were

powers

whole world's economy was enter¬

phasize again the matter of per¬
spective.
This is not 1920.
Our

difficulties.
Will 1920-21 Recession Be

insurance,

lead you into a sense of security
which might be false but to em¬

panies

ago

Taxes

whole system

a

weeks

broad system of social se¬

mention

corpora¬

running

about

words,

a

a

few

a

manding "extraordinary

scared

and

posit insurance, etc.

And

increase, mostly

tions, in

the

deficit.

circumstances it is not hard

such
to

increase

mean an

expected

Also,
of props

early summer

in

the

on

a
very
short time,
everybody badly.

the matter of

to

increase

tax

a

think

I

to life again in a few
believe that Congress

come

weeks.

because

who

II

%

and

us

dilemma

which

from

War

demands

business

down

the

World

legislation to restore unbridled
privileges to labor leaders, and

Planning Protagonists Breeding

of

with peace and disarmament. The

million;

as

accu¬

$39

and

year

afraid that

pessimists have been

unlike that

more

would spend more than $45 bil¬
billion in lion a year:? It is simply,unrealis¬
the last half of 1948.
The figures tic to assume that we are in a
may
go even higher,
since the normal peacetime situation like
budget estimates did not make ;We had after Wojld War I.
provision for expenditures for the •
Moreover, the economic struc¬
Western Military Alliance, and it ture is now
propped up in a num¬
is likely also that the farm sup¬ ber of
places in a manner unheard
port program will cost more than of in 1920. We have a relatively
was
allowed for. Of course, the stable money market and a pro¬
upward trend may be slowed by tected government securities mar¬
changes in timing, but the direc«- ket.
The government is deter¬
tion is quite clear.
mined to avoid the experience in

this

of

mild decline

in plant and equipment expendi¬

to be

with $41 billion in the first half

a

very

Con¬

well

•

people fear that the decline will
be

of

as

In short, the economy of the
Report would bring a
increase in spending this •sharply, and by 1920, expenditures whole country is to be subjected
were reduced to $5 billion.
to management by planners—the
year, reaching a new peacetime
In contrast, we are now in a kind who predicted 12 to 15 mil¬
peak in the latter part of the year.
icold War and the budget is grow¬ lion unemployed six months after
It is expected that Federal cash
Who would have the war was over and as a result
expenditures in the second half of ing steadily.
1949 will reach an annual rate of thought that in the fifth year after purposely set in motion the post¬
about
$46 billion as compared the war, the Federal Government war inflationary forces—the kind

of

Now let

heads

steady

If business

<

the

ple—to

and

The present postwar period

lar to

Economic

to

y■i

can

the

and

timent

j

the

over

gressmen—Democrats

war

great speculative spree.

War I. /

tion at that time.

Expenditures

But

-

seems

Plant and Equipment

Dick,

following World War I than simi¬

increases in government

on

matter of

lot about our moods.

the

was

speculative

great

a

seems to me

rather

up

think that

I

|

area

The pattern of spending by the
Federal Government outlined in

over, to maintain aggregate pur¬
chases at a very high level even
though the particular choices by
each person are made only after a
competitive search for the best
place to spend.

a

of

mystery.

a

adviser calls for controls over pro¬
to act as an mulation has
bee n
relatively duction and
prices—even to the
offset, at least in part, against
small. Probably no more than 2%
extent of empowering the govern¬
weak spots in the private sector
of total national production went
ment
to go into business.
of the economy.
This
This is true not into
inventory accumulation in counselor states thai the
general
only of the Federal Government,
any year since the war—as com¬ welfare
cannot be entrusted to
but of state and local governments
pared With 5% after World War I.
business leaders but must rest in
as
well.
Expenditures on high¬
Yet, World War II was a much an
authority
delegated by
the
ways, schools, hospitals, etc., by
bigger war, lasted a lot longer, President.
Mr.
state and local governments are
Keyserling also
cost us
several times as much,
urges labor leaders to "be militant
expected to be up about $1 billion
and piled up purchasing power to
in your demands for continuing
this year, according to govern¬
a much greater extent than World
ment estimates.
higher wages, there being plenty

may

Words tells

I think it
The sharp

ana

good thing.

a

is

program

No

in the

govern¬

on

This is

trend

spending this

us„e

point here is not simply a
definition; it is aymatter
spirit. Sometimes our clioice of

pessimism,

a

(Continued from first page)

system,

President threatens to deliver this

world,
thing they could get their hands
here and abroad, is worried; that
on.
Inventory speculation was
indices of production and prices
widespread, and it appears; that
are
faltering; unemployment is
something like 5% of our aggre¬
The same businessmen,
gate national production in 1919 rising.
piled up in business inventories big and small, who turned out the

level at about %

a

spending.

which

On the buying side, it means suf¬
ficient aggregate income, more¬

The

been

binge.

a

generated

and Harry became experts in nonagricultural
commodities
often

uncer¬

Government Spending

than

of

has

wave—in which every Tom,

year's peak.

count

a

39

Independent Congress Paving
Way (or Higher Stock Market

just by buying and reselling any¬

—which means

in

granted that we
recession—just as a

attitude

product

Meanwhile, I am inclined to
characterize plant and equipment
outlays this year as another 1947

ment

cases.

have

for

business conapse in i920

these

; Apparently," the
consumer
is
still willing to go on buying goods

t

current

taken

is

lot

some

should

and

the

up

following World War 1
Everybody has

business-cycle -conscious.

nas

...

cities, but they illustrate the
dangers
of
generalizing
from

I

month

clear

to

two

Scattered

war

repeated.

This

SEC

tainty.

sales

pessi¬

the

hangover is expected after

Depart¬
the

and

tabulating the results of their
annual survey which is by far
the
most comprehensive
of all.
time this

and

be

become

are

^up

;

bust cycle
will

For example, the McGraw-

is interesting to note that sales of
'liquor stores in Los Angeles were

16%

of

end

from this idea tnat the boom-and-

outlays on plant and equip¬
ment by only a small amount this

must

J were down 8% and sales of drink¬

of

waves

the

business in the aggregate will re¬
duce

cline is expected. The "Wall Street
Journal" Survey showed an 8%

of

recurring
since

(1207)

re¬

;

have stemmed in no small degiee

It

sales

CHRONICLE

recent months have all shown that

Hill survey showed that a 5% de¬

Francisco

ing places in that city

The

mism

this subject in

on

FINANCIAL

along the lines of the 1920-21

San

in

hand,

in • San

•

surveys

&

cession.

•

year.

Francisco than in Los Angeles.
.' liquor

The

:

v

and

cars

better

increasing.

even

accessories

and

17%

ly for the many cases where plant
is holding up well or

expansion

But let's look further. Sales of

;

.were

COMMERCIAL

their

keep

full
a

Give
share

corner

for the good

the
of

of

weak

spots

attention
one

things too.

eye

but

open

Lee Rubber & Tire

,

Truck

Manhattan

•

34.05

39

38.04

28.60

Shirt

>

12

42.74

17

47

65.74

56

104

:

Montgomery Ward
National Department Store

56.70
27.50

31.82

15°

Niles

16.00

23.70

8

y 50.00

58.00

32

69

31.00

48.00

26

100

20

Bement

Pond

Pullman Inc

Schenley Distillers

35
26

U. S. Industrial Chemical

26.50

65.34

White Motors

31.00

54.76

15

/
* 62
44

Yale & Towne

36.00

63.00

22

62

It

is

question of Congress or Chaos.
Let us thank God
for Congress, which is operating toward the banishment of business¬
now

a

men's fear and the return of investor confidence!

40

COMMERCIAL

THE

(1208)

CHRONICLE

FINANCIAL

&

Thursday, March

Indications of Current Business
The

following statistical tabulations

shown in first column
■

.

'

steel

Indicated

Latest

Previous

Week

1

'•

steel institute:

Month

Week

,

Latest

."Year

Ago

Ago

'

97.5

102.0

101.4

100.0

Mar. 20

1,880,400

1,869,300

1,843,500

1,757,400

5

5,186,800
115,506,000

5,344,250
5,412,000

5,351,200
5,389,000

Mar.

5

17,400,000

Mar.

5

Mar.

5

2,134,000
7,004,000

17,621,000
1,597,000
7,330,000

16,464,000
2,274,000
7,003,000

5

8,528,000

8,225,000

8,221,000

5,352,900
5,311,000
15,451,000
2,821,000
7,354,000
8,700,000

5

Equivalent
Steel

(percent of

capacity)

-

;—*

Total

shipments

AMERICAN
Steel

institute:

petroleum

american

Crude

output

(bbls.)

output

Gasoline

(bbls.)

Kerosene
Gas

to

runs

oil

distillate

and

fuel

Residual

Finished

Residual

output

(bbls.)
oil

fuel

Mar.
Mar.

(bbls.)

(bbls.)

oil

at

at

5

126.365,000
19,090,000

124,382,000
19,389,000

117,169,000
21,239,000

111,474,000
9,843,000

5

56,416,000

57,746,000

64,175,000

32,749,000

Mar.

;
,

fuel

.

Mar.

at

(bbls.)

at_.

distillate

and

oil

output (bbls.)

unfinished gasoline

and

Kerosene
Gas

oil

;

oil

fuel

5

5

79,792,000

80,246,000

82,383,000

48,114,000

(thousands

IRON

Revenue

y

american

of

of

of

Month

of

motor

Volume

of

freight

BUILDING

Revenue freight received from connections (number o,f cars)—Mar. 5

civil

construction

engineering

record:

Total

U.

engineering

—

construction

$1,261

$1,391

889

•974

1.08o

490

550

278

•292

312

105

110

34

•89

100

Warehouses, office and loft; buildings

33

•36

,"."38

51

•53

62

Mar. 10

Mar. 10

'.1

construction

Public
State

67,732,000

45,780,000

Mar. 10

—

67,962,000

50,514,000

17,682,000

,.

—_

——

Remaining

30,254,000
;

19,082,000

Public

Other

bureau of mines):

s.

Mar.

5

10,330,000

;*10,870,000

11,385,000

5

697,000

812,000

687,000

1,176,000

Mar.

5

155,500

•160,900

161,300

Public

13,179,000

Mar.

Beehive

126,300

13

205
30
55

110

120

•287

311

46

•4

4

building

3

104

106

than mili¬

facilities)

naval

•45

110

utilities

construction

or

25

36

v,a:->

257

telegraph

and

Nonresidential building (other

tary

•180

20

—

Residential

12

176

.

public

10

•35

10

construction

Telephone
coal output (u.

24

10

32

Railroad

28

•22

11

—

utilities

98

26

21

Institutional—

types

•93

89

—

,

and

Hospital
Farm

114

25

Educational

$95,996,000
46,660,000
49,336,000

35,587,000
10,193,000

33,150,000

Mar. 10

municipal

and

Federal"

__r

Religious

$131,155,000
85,375,000

50,832,000

118,476,000

building

restaurants and garages.
nonresidential
buildings.—

Other

•

(nonfarm)
(nonfarm)

building

Commercial

725,258

1

construction

Industrial

l

•■

$118,564,000

$184,579,000
66,103,000:

Mar. 10

construction

Private

:.v

OF

millions):

*

425

Private

791,984

;

~

,

\

■

599,866

news-'

■

S.

629,824

632,622

303

2,650,796

Stores,

682,143

688,128

705,552

5

•303

•2,883,836

$1,146

DEPT.

S.

February (in

construction

new

Nonresidential

Mar.

303

,726,974

(tons)

CONSTRUCTION—U.
of

5,410,438

reporting

transported

LABOR—Month

Total

6,940,204

6,056,282

ASSOCIATION—

January:
carriers

Number

48,183,495

alloy

including

(net tons)—Month of Jan.—

TRUCKING

AMERICAN

7,463,928
5,761,959

139,588

produced

February—_______

of

products,

steel

stainless

and

railroads:

freight loaded (number of cars)

Ago

125,890

INSTITUTE:

for castings

steel

tons)—Month

Shipments

Residential
association

Year

Month

119,285

pounds):

of

STEEL

AND

ingots and

(net

(bbls. of 42 gallons each)__,.__-.Mar.
stills—daily average (bbls.)
Mar.

Crude oil output—daily average

Previous

Month

(DEPT.

PRODUCTS

COMMERCE)—Month of January:

OF

to—

ingots and castings (net tons)

WROUGHT

ALUMINUM

Mar. 20

operations

Activity

production and other figures for the latest week or month available (dates
or month ended on that date, or, in Cases of quotations, are as of that date) :

cover

(bbls.)
r.
Mar.
Stocks at refineries, at bulk terminals, in transit and in pipe lines—

.

1949

either for the week

are

1

iron and

american

17,

>

104

....

Industrial
»

-

STORE

DEPARTMENT

INDEX—FEDERAL RESERVE

SALES

'

•

Electric

'

nonresidential

Mar. 12

5,551,611

5,530,629

5,722,086

5,284,641

and

(COMMERCIAL

AND

INDUSTRIAL)—DUN

&

BRADMar. 10

185

179

other

of

.Mar.

8

3.75434c

3.75434c

3.75628c

3.27585c

Mar.

8

$46.74

$46.74

$46.74

$40.37

Mar.-

lb.)

(per

8

$36.25

$37.25

$37.58

$39.75

Fig iron,, (per gross ton)——

60

10

7

public service
and

9

•68

80

38

40

t

5

public

46

10

—

7

36

enterprises-

development—

11

12

6

(BUREAU

MINES)—Month

OF

February:

Bituminous

*RON AGE COMPOSITE PRICES:

steel

20

-

102

192

COAL OUTPUT

Finished

25

20

'

36

facilities

naval
water

Miscellaneous

All

24

55

Military and
Sewer

Conservation

FAILURES

institutional

"go

19

•„

and

Highways

(in 000 kwh.).

output

i.

INSTITUTE:

ELECTRIC

EDISON

266

229

232

243

5

Hospital
All other

.Mar.

60
25

Educational

SYS

Beehive

and

coal

Pennsylvania

(net

COMMERCIAL

PAPER

of February

As

tons)

tons)

47,170,000

50,395,000

•3,722,000

4,675,000

•623,200

540,100

OUTSTANDING—FED¬

BANK

RESERVE

ERAL

.458,000

i

tons)

(net

(net

,939,000

632,000

lignite

anthracite

coke

NEW

OF

'.''

YORK—

V

$301,000

$268,000

5270,000

(000's omitted)

vf l'V

♦METAL PRICES (E. & M. J. QUOTATIONS):

Electrolytic copperDomestic refinery

CONSUMER

at

.Mar.

—

23.200c

9

.Mar.

York)

(New

tin

at

9

23.425c

.Mar.

9

103.000c

.Mar.

•Straits

9

19.500c

PRICES

BOND

DAILY

23.425c

94.000c

21.500c

21.500c

■

15.000c

19.300c

21.300c

21.300c

17.500c

17.500c

'

V

.

101.68

101.63

101.62

112.93

112.93

111.25

-Mar. 15

119.00

118.80

118.80

117.20

117.00

116.80

115.04

-Mar. 1-5

112.19
104.83

112.00

104.66

-

.Mar. 15

108.34

108.34

108.52

113.89

113.70

113.31

112.93

117.40

Mar. 15

Other

-Mar. 15

2.38

2.38

2.45

3.00

3.01

3.01

3.10

.Mar. 15

2.70

2.71

2.71

2.79

2.80

2.81

2.90

-Mar. 15

3.05

3.05

3.06

3.13

-Mar. 15

3.46

3.47

3.46

3.53

3.26

3.26 '

3.25

3.40

-Mar. 15

2.96

2.97

2.99

2.78

2.79

2.79

2.89

_Mar. 15
Mar.

370.5

375.8

375.6

Crude

In

U.

ITY INDEX

ASSOCIATION—WHOLESALE

408.6

192.3
146.4

lbs.)

76,594

•69,438

82,959

(tons of 2,000 lbs.)

80,275

78,298

93,588

98,611

96,070

106,823

83,841

91,053

70,146

273

*288

286

226

•227

238

of

2,000

customers—

(tons of

A.

of

2,000 lbs.)
of period (tons

lbs.)

2,000

STORE

DEPARTMENT

METAL

Farm

SALES

(FEDERAL

251.2

310.4

306.8

305.9

319.7

205.1

205.7

192.5

264.6

218.8

217.7

j

235.9

219.0

Average=100)

seasonal variation
seasonal adjustment
for

237.0

238.1

167.1

166.7

190.8

190.5

190.7

211.3
163.5

Mar. 12

190.0

190.1

Mar. 12

217.4

217.4

217.9

232.8

__Mar. 12

materials—

142.5

142.5

143.8

157.0

142.9!

142.9

143.3

137.6

150.5

150.5

151.3

143.0

—

drugs

'Chemicals

and

'Fertilizer

materials

♦Fertilizers

...

__Mar. 12

—

machinery
groups

Mar. 12

•___

1.

combined——

—r

.Mar. 12

155.6'

155.6

155.6

138.1

-L--

.

Mar. 12

210.7,

211.1

207.1

216.3

United

Lead

of

Zinc
RR.

short

(in
(in

Silver

fine

EARNINGS

—

Orders

association:

ounces)

255,552

180,379,

193,205

Net

104

Net

80

87

287,302

t +

'Unfilled orders

(tons)

at

5

267,685

343,983

r

S.

PAINT AND
DRUG
AVERAGE=100

''

\

INDEX —1926-36
—__Mar. 11

PRICE

REPORTER

'

WHOLESALE PRICES NEW
1926—100: •
~

>'

133.1

S.

DEPT.

OF

LABOR—
159.0

158.8

Mar.

8

171.6

8

161.1

161.3

8

152.3

Mar.

8

142.2

Mar.

8

135.9

Mar.

8

177.8

Mar.

8

201.3

Mar.

8

131.5

'

>

170.5

Mar.

products—

Foods

8

Mar.

vFarm

146.4

156.9

161.0

162.5

187.1

156.9

171.8

152.3

152.9

147.6

142.3

143.1

150.0

135.9

138.0

177.9

178.3
200.4

193.1

131.4

134.9

%

Mar.

and

•Revised

164.6

148.4

208.1

207.0

195.1

8

220.4

221.4

Mar.

skins

164.6

8

Mar.

Hides

R

Mar.

Grains

8

177.6

181.4

uns.

figure.
■%




•»»

•#

*,•

#

* „•#.

-»

a

j*

js

jr-as

9

■
-a.

>•
»

«
*>

••

'L
»
»

*«

i

«

vr

-nf,

,

i
<* .}» .-Ml

$8,758,000

-

Total

AND

$1,092,000
545,788

$275,000,000

$275,000,000

$275,000,000

252,620,408

254,604,511

35,758

78,841

$252,747,393

$252,656,167

$254,683,352

785,345

790,679

843,292

$251,962,047

$251,865,487

$253,840,059

23,134,512

21,159,940

IMPORTS-

CENSUS—Month of January:

OF

.

.

.

at

face

amount that may be

time

one

any

outstanding

—

Outstanding—
Total

gross

Guaranteed

public debt
obligations

not owned

the

by

Treasury
Total

public debt and guaranteed
obligations __1——
LiDeduct—Other outstanding public debt ofoligross

1

V;

debt limitation-

216.2
234.4

Balance

183.0

under

.

$1,283,700
721,700

252,721,282

EXPORTS

$1,085,100
589,300

Grand

...

$177,355,550

«

$1,750,000

•

220.0

•» T

58,000,000

14,000,000

i

STATES

190.5

^ -m -**■

,

41,297,152
19,000,000

33,244,420:

!

207.3

^

•-

615,855,516
82.03
$79;004,455

SECURITIES

GUARANTEED

./.gationS hot subject -to

Special Indexes—

$81.604936
64,661,939

A.—Month of February:

.

-

$67,629,077

(000's omitted):

155.6

201.5

131.5

$750,734,787

80.43

—

—_

purchases

130.9

.

.

-

648,741,565

U. S. GOVT. STATUTORY DEBT LIMITATION
—As of Feb. 28 (000's omitted):

.

.Mar.

$806,553,949

$730,686*347'
616,269.017

TRANSACTIONS IN DI¬

'

SERIES—U.

47,790

480,791

140.4

139.0

(est.)

charges

sales

UNITED

—

2,879,238

26,110

after

AND

U.

OF

•2,930,220
•55,005

84.34

'j—

BUREAU

♦OIL

*—

income

220,321

79

JMar.

January:
i.
L—

J.—1

Net

164,620

♦Percentage of activity

of,

:

Net

135,542

30,567

(ASSOC.

-~k
1
railway operating income before charges

178,515

5

:

;

70,361

157,639

•36,504

55,141-

—

ROADS

operating revenues
operating expenses
Operating ratio—per. cent

RECT

_.i_M.ar.

(tons)

I

CLASS

•51,318
•152,116

2,925,798

—

tons)——

Total

157,814

(tons)

received

'Production

50,668
151,267
36,997

Total

Taxes

in

—

RRS.)—Month

AMER.

OF

metals

recoverable

tons)

short

(in

—

States:

TREASURY MARKET

National paperboard

MINES)

OF

Copper (in short tons)
Gold
(in fine ounces)—

172.8

190.1

'Metals

IBuilding

L_

December:

of

production

the

228.6

167.3

(BUREAU

OUTPUT

Mine

241.6

235.9!

Mar. 12

:

236.2

Mar. 12
Mar. 12

11

commodities

Textiles

All

242.1

223.4

Mar. 12

Livestock
Fuels

-

154.5

236.3

Mar. 12

-

Grains

f

156.7

236.9

Mar. 12

products

'Miscellaneous

RE¬

February:

of

Month

226.2

155.3f

Mar. 12

oils

Cotton

'Farm

212.8

Mar. 12

Mar. 12

and

93.1

COMMOD¬

Foods
Fats

131.2

198.6

Refined copper stocks at end

Adjusted

GROUPS—1935-3!)==!00;

BY

174.6

138.4

183.4

192.1

154.0

S.

Without

FERTILIZER

•NATIONAL

191.3

209.3

196.5

SERVE SYSTEM)—(1935-39

INDEX.

129.5

95.3

201.9
;"

154.1

——

(tons

Refined

Month

COMMODITY

IMOODY'S

115.9

137.8

191.8

.

1—

Deliveries to

3.01

Mar. 15

119.5

•

CHOPPER INSTITUTE—For month of February:
Copper production in U. S. A.—

2.84

-Mar. 15

,

2.38

-Mar. 15

U. S, Government Bonds
Aaa

200.4

139.0

fuels

Miscellaneous
'

173.0

95.5

and refrigerators
electricity

and

Housefumishings
^MOODY'S BOND YIELD DAILY AVERAGES:

184.4

138.2

.

Ice

115.24

117.20

117.20

207.8 <•

196.5

—

electricity

Gas

105.86

Mar. 15

.

208.3

173.4

—

Fuel,

192.3

119.7

sweets

Rent

103.64

203.0
213.6

174.7

Clothing

110.70

104.83

112.19

.Mar. 15

Baa

237.5

199.2

217.3

208.7

-

oils

and

Sugar

116.22

.Mar. 15

Aaa

and

Fats

172.7

205.2

vegetables

Beverages

100.73

113.12

and

209.7
v

241.3

196,0
209.6

Fruits
-Mar. 15

170.2

235.9

products

Eggs

••

AVERAGES:

Government Bonds

bakery products

168.8

171.4
205.0

170.5

Meats

'

.Mar. 15

U. S.

170.9
204.8

—

and

Dairy
f

15:

:

Cereals

12.000c

,4

CITIES

LARGE

foods

All

MODERATE

FOR

IN

items

All

14.800c

17.500c

FAMILIES

1935-1989=100—As of Jan.

21.600c

103.000c

9

.Mar.

!f

23.425c
103.000c

"

INDEX

PRICE

INCOME

21.200c

23.200c

9

.Mar.

♦MOODY'S

23.200c

total
face

outstanding
amount

above

of obligation

_

issuable

•Revised figures.

.

23,037,952

authority—
..

,

,

t

Volume

169

Number 4786

THE

COMMERCIAL

Blundering NASD

FINANCIAL

CHRONICLE

(1209)

for the doldrums in which the
securities business

causes

The

&

finds itself.

*

By placing

now

,!

\

.

limitation

on discounts and
participations
non-members, and creating this schism
compelling financial need in a bread-and-butter
in the
industry, thus preventing the fullest service to the
way, that outsiders will be incapable of resisting.
public, and by limiting spreads in the face of a
continuing
It is true that
many have joined up to prevent a sub¬ rise in the cost of doing business, the NASD has
spiked the
stantial loss of
earnings. That, however, is not the Ameri¬ possibility of the widest cooperation in the
industry to ac¬
can
way.
quire adequate statistical data and to serve its customers.
We wonder how
long other organizations in industry
The NASD appears to be intent
upon proving to the
characterized by such comfortable arrangements of
special securities field that the working man is not
worthy of his
privilege would be permitted to continue!
hire.
»,''•<
•

(Continued from

such

page

3)

a

between members and

a

„

-

•

On

top of all this, the securities business is faced with

The whole

the

effrontery which asserts that membership in the NASD
wholly voluntary. The facts belie this false assertion

is

which is the sheerest

Here, again,

The NASD is

immediately deleted from the
made

statute

books

and

its

in

Congressional hearing.

a

The real

Resting on a foundation of special monopolistic privi¬ out the
Maloney Act would' do
lege; contrary to public interest and the interest of investors,
thoroughly.
is only one of the
major NASD blunders.
We

to

come

If there

is

another, the NASD price control

maneuvers.

thing that has hurt the securities
business more
"5% spread philosophy and yard¬
stick" imposed
by the NASD as an interpretation, we have
not

exercising

price fixing by fiat, by

interpretation rather than

a

rule which it

to circumvent the vote of the

The cost of

really
membership.

was,

an

never

taken into consideration. '
Of
to hew

the "5%

course

spread philosophy" does not apply
issues, but it does relate to secondary markets with

disastrous effects
over-the-counter

on

securities of small

As

a

deterred

the flotation of

market

the

are

"The

IS

THE

section

of

TIME

THIS

the

Maloney Act
15A(i) (1), which reads: "The rules of
ciation may provide that

member, broker

that

fees, and

or

new

it,

so

So he becomes
counter

low he is obliged to take
sour on

securities

a-

or

if there is, the

big principal loss.

his investment dealer and

generally, and

as

on

time goes

over-the-

on

it will

largely close the capital markets to small business.

%

bearing on this condi¬
tion, particularly in small issues which are mostly sold as a
any

speculation.
r
In the case of original common stock issues, it was
per¬
fectly normal during past decades for small companies to pay

from 15% to 25% for
money and the same holds true

The

Vandenberg Amendment, which simplifies the
flotation of securities issues up to
$300,000 by making
unnecessary the expense of a full SEC registration, was
help small business, but because of the im¬

pediment of the NASD's "5% spread philosophy" the
purpose of this amendment is being largely stymied.
In this

country of ours, we have been raised under a free
enterprise system which taught us that in barter and in sale
the fixing of prices was a matter between the seller and the
customer. The giving of
adequate and attentive service was
and is always considered a matter of
sagacity fitting well
.

;

/.

'

special
frequently need for comprehensive
that investors may be
properly informed.
a

There is

statistical studies

so

Where small business is
concerned, the 5% spread limi¬
tation

obviously makes such comprehensive statistical studies
impossible. The result is that business, the. public, and in¬
vestors,

are

all adversely affected.

At the door of the NASD

proved

to

be

very

trial

production
third in the first

in fact

when

more

the

sharp—indus¬

falling
seven

by

one-

should




some

a

program

in

its

concep¬

potentially more far-reach¬
ing in the scope of its' influence

than

the

socialization

of

key

It is

demands as expressed in

market

places and substitute
judgments of govern¬

officials
it

to

as

would

what

have.

can

the

mean

the

In due
of

end

be

Jacksonville Beach to

deleted

is

Issue Revenue Glfs.

asso¬

Florida unit

to

borrow $1,650,000

for expansion of 4
The regular

utility systems

meeting of the City

of

Jacksonville
Beach,
unanimously passed at its
meeting on March 7, the third and
final meeting of three
governing

about 30%

was

nificant

There

that could be

that

y.v

■>

hoped for would be

government

until

recovery

the

and

disbursements

was

launched in 1939.
the

private

greatly exceed

sector

authorized

period.

In

demon¬
govern¬

postpone
indefi¬

an

any

case,
time is required to reach the
of actual disbursement.

practical pos¬
sibility of expansion in the public
any

much
stage

Starting from a high level The Spence Bill Would Establish
Controlled Society
production, employ¬

sector.

of

works

undertakings for

nite

well

may

The vol¬

year.

blue-printed is likely to ♦ be

such

The sheer-volume of contraction
in

public

a

limited in view of the
strated reluctance of the
ment in good times to

sig¬
war

p r o gr am

of

ume

in the

was no

a

national

ment, and income such as pre¬
vailed in 1948, a 30% slump would

Council's

of the primary

analysis,

December,
the

Joint

time

some

prepared

is

As

indicated

at

the

beginning

in i would vest in the President of the

made available to
Committee of Congress
in

j United States the power to formu! late
national production requireafter I ments in line with his conceptions

January;, and

conducting hearings this Commit¬ as to what is necessary for the
tee must submit a report mot later
people's welfare.
The President
than

the

first

of

March

for

the

shall'

"determine

approximately

guidance of various congressional
committees having jurisdiction
over one or another
phase of eco¬
nomic policy.
Before these com¬

necessary and feasible to
the supply within a

increase

sonable

He

mittees

de¬

contract

comprehensive

research

could

liberations

be

gram

and

and

program

be

complete
a

their

co-ordinated

pro¬

achieved—assuming
achieved

at

it

all—several

months would have elapsed. Mean¬
while
a
deep depression could

have developed.
The only types
can

be

taken

expedition

the

quantity goals to which it is
specified

fic

or

period
with

of time."

private

rea¬
may

industry,

laboratories, and scienti¬
educational institutions for

research

or
development related
improved utilization of des¬
ignated materials or facilities, on

to the

such

terms

and

conditions

as

the

President

action

of

with

that

may

deems
necessary.
He
make loans to private indus¬

considerable

try
(particularly small or inde¬
for
which pendent enterprises) or to state
authority has hith¬ | and local governments for the ex¬
granted. As a practical pansion of capacity and produc¬
are

been

action

authorized to proceed to have the
certificates validated.

Wainwright, Ramsey & Lancas¬
ter, Consultants on Municipal Fi¬
nance, New York City,
made a
financial survey and
analysis, has
the financing program,

prepared

and will assist the
city in the com¬
pletion of the financing plans.
„

It is expected that the
major
part of the certificates authorized
by the City Council will be of¬

fered

as

soon

approved

the validation is

as

and

the

legal

details

completed.

G. I. T. Financial

Corp.
Privately %

Sells Pfafi.

C. I. T. Financial

Corp. March 16

announced

the sale to Prudential
Insurance Co. of America and the

Metropolitan Life Insurance Co.
of 200,000 shares of
$4 cumula¬
tive

preference

share

for

stock

total

a

of

at

$100

a

$20,000,000.

The

Prudential Insurance Co. has
purchased 150,000 shares and Met¬

ropolitan Life 50,000 shares of the
issue.
The
on

transaction

March

16,

was

1949,

completed

and

the

pro¬

ceeds increase corisolidated
capital
and surplus of C. I. T. Financial

Corp. to

more

than $168,000,000.

C. I. T. Financial Corp. now has

outstanding $50,000,000 of $4 cu¬
mulative preference stock,
having
sold 300,000 shares at $100 a
share,
for a total of $30,000,000, on June

1, 1948. The corporation thus hascompleted the issuance of the en¬
tire

amount

preference

of

500,000

stock

shares

previously

od
au¬

thorized by stockholders.

those

congressional
erto

ordinances for the proposed
$1,650,000 revenue certificates for the
improvement and expansion of the
city's utility systems; the City At¬
torney, William A. Stanly, was

Employment?

60 billion dollars

shrinkage in industrial

production

matter

lay

Such

course

months and

rapid than in 1929-30

first 12 months.

achieved
we

D. Clark, "is not afraid to take
the
final step" and become a
producer.

private enterprise.

AMENDMENT.

(Continued from page 4)

could

■

Now, in the securities field, service deserves

commendation.

deems

private enterprise proved
(recalcitrant would pre¬
sumably be the word) the Presi^
dent, according to Adviser John

people need and

1

.

he

as

if

ment

of this address, the new full em¬
today.
Many small industrial, electric light and power, and tele¬ quickly reduce the rate of flow ployment measure as embodied in
of
money
income by something
phone companies (most now are integral parts of the AT&T)
| the Spence bill is primarily conlike $60 billion a year.
j cerned with the long-term develgot their start or expanded and added to the prosperity of
The
program
as
a
whole
is opment of the economy in line
the country despite the traditional cost to them for
obtain¬ faced with an insuperable diffi¬ I with national economic
goals for¬
culty with respect to timing. The mulated by the government.
ing the necessary capital via the securities markets.
It

into this system.

private
operation of

self it may reasonably be assumed

on

Maintain Fall

preparedness

It would be deceptive to claim that the intrinsic value
of the underlying securities had

intended to

and

with

property,

.

.

facilities

the

authorized to acquire real

other

therefor the

might
be
on
a
substantially
The net effect is that in
many cases when an investor by as much as 38% in a year. The greater scale; it is hardly conceiv¬
buys stock in a small new issue he is left holding the bag recession became a genuine de¬ able that they could rapidly be in¬
pression. The rate of decline was creased by as much
because he finds there is no market for
as 40 or 50 or

price is

for

by

Can the Government

holds true of other

dealers that would step into the breach if the
original
underwriter and selling group did not elect to do so.

bid

and

plant

contracts

plants.®) this end the Presi¬

dent is

Council

issues to the extent

same

into

Fla.,

and overhead and therefore do

secondary markets in
formerly the case. The

such

except at the same prices, for the same
the same terms and conditions as
are by
such member accorded to the
general public."
commission

.

existing

individuals

the

registered securities

a

tate

enter

member thereof shall deal with
any non-

no

dealer

or

President may also contract with
private
companies
to
construct
new plants or
expand or rehabili¬

consumer

support practices that

FOR

deferred

Finally, the

in the elimination of the
guidance
of economic
activity afforded

dealt in.

philosophy underwriters are
taking mark-ups consonant with their

expenses

NOW

repay
such pay¬

or

essentially totali¬
tarian., It would inevitably result

generally where the bulk of the

companies

not make
was

on

result of the 5%
from

heavy selling
that

issues and

new

not

or

principal of the loan

ments may be reduced
in whole or in part.

industries.

work to the detriment of the small
fellow.

in order

doing business—the profit motif—was

and

special monopolistic privileges.*

any

Intelligent finance will
of

means

Wiping

job most neatly

Congress should also prevent the NASD from dic¬
tating the extent of spreads in the sale of securities.

discovered it.
Here is back door

the

on

tion is

In the meantime, and as
temporary relief, at least,
legislators should forthwith prevent the NASD from

all

any one
than the

even

•

is in the abolition of the NASD.

cure

conditions to

interest

reluctant

because of fear of
reprisals, would not disclose the facts

impossible.

the

economic

current

pay

that

impossible.

OPA in the investment

an

na¬

tion-wide

contract and operate the plants it¬

Price control in

field, and its
operations have beeh so deleterious/keeping the securities
industry in such a constant state of fear, that its members,

Congressional concern, then and in that
special monopolistic privilege, so harmful to
both the public and the securities
business, should be

event this

recurrence

look to Congress.

the securities field must be made

matter of

a

we must

dent

finds that a person who has
received financial assistance is un¬
able because of unfavorable

necessary.
While the Act does not
express¬
ly authorize the government to

time, by its action, is almost
continually disproving this.

interest and the interest of investors and small business
is

wails for immediate correction.

mess

The NASD clamors that its existence is
in the public
interest and, at the same

camouflage.

If Congress is at all mindful of the welfare of the
people from whom its authority stems, if the public

sloppy

41

would

have

to

be

along the lines pursued

without effect in

1937.

The

most

tion—on

tions

as

essary.

such

terms

and

condi¬

the President deems

nec¬

And whenever the Presi¬

Harriet Holther in D. C.
WASHINGTON, D. C —Harriet
Holther is engaging in a securities
business from offices at 1734 K
Street, N. W.

42

(1210)

THE

COMMERCIAL

a

find ourselves confronted.

growing skepticism

cult to determine.

there is

or

not is diffi¬

It must be

admitted, of course, that
anything of the sort, but
always so obscured by the in¬

clear evidence of

no

the situation is

now

as

so many
groups or elements in the popula¬
they be fed liberally from the public trough,
and the various means for so
feeding them have been
so
intricately and so cleverly intertwined with popular
notions of preventing depressions, that it is
very diffi¬
cult to appraise the current state of the
public mind.

to

There

would

politicians

seem

Higher Taxes

in the street realizes

man

the

situation.

At

result of the

a

time

some

certainly have to face
as

by the tax collector that

there is little

war

other

or

of

sort

some

we

dr;astic

and of the New Deal

inflationary props which tend to hold the
situation up can be effected without severe con¬

more

holds

only if such removal is accompanied by aban¬

sequences

to be

so

squeezed

donment

of

of

much

the

New

Deal

private initiative in check.

which

nonsense

This

latter

fact

now

is

one

them.

Possibly employees have reached a point which the rank and file should be reminded of day by day,
where they are afraid to have the
big, bad corporations and unless its simple truth can be made apparent to the
iplastered with another excess profits tax, or a correspond¬ general public the consequences may be too serious to con¬
ing increase in income taxes, lest they find it increasingly template.
difficult to
not

get jobs.

easily determined, but it does

Tax and tax"

to the late
a

The precise facts about all this

least of

tions

Harry Hopkins has lost

some

of its potency

electing and electing and electing,

making

feasible

more

a

program

or

Thanks

as

at the

of spending and

spending and spending.
There is likewise

some

evidence to support the no¬

But

tion that the public

generally is no longer very keen
about increasing its load of debt, at least not at the

>

State

and

nence

have

remains

debt.

municipal level.

be

to

be

The extent

Deal

which should

The time has

available

for

come

for this pur¬

in sentimental

nonsense

serious thought.

some

So far discussion has centered about the rate of
Faced with

real and substantial

a

might

or

might not be what it

home

of

also

becoming at the State and municipal level. And in
all these matters the rise of
large scale unemployment
could very quickly alter the attitude of the man in the
«

Evidence

to

roost"

to espouse

be

termed

finance

followers

of

men

followers, and others hardly

Professor

Hansen, that public

be employed to "iron out" the business
cycle,
so-called, and leave us in a state of perpetual prosperity,
but

we

can

are

quite certain in

our own

structure of ideas rests
upon

able than the

more

no

depend¬

shifting sands. The current trend of thinking,

superficial

.guide, is in

minds that this whole

foundations

appearances

a

may

be accepted

as

a

reliable

direction opposite at most points to what the

Hansens would advise, and for this

we

but the fact is that the
popular attitude in this ohe phase
of the current situation is not

deciding.

Nor is what appears to be
to

higher taxes

consistent

vious, of

or

strengthening aversion
larger debt by any means always

with

other

course,

that

attitudes.
no

In general, it is obhigher taxes and no increase

It

be

for the

concern

pathological propor¬
Unfortunately, in economic

matters,
"hot"

Americans
extremes. We

we

"cold";

or

either black
"between"

or

for

are

prone

are

either

everything

is

white—there is

no

of

most

us.

As

people, our economic glasses
alternately
colored
either
brightest rose or the deepest s
of

a

are

evening, let us
to get the color out of our glas
long enough to get a clear vie
of

what

changed

the

some

wish

outlays are being demanded, demanded in
by the same individuals who do not

instances
to

have their taxes increased and

reluctant

to

see

are

public debt rise further.

apparently

As often

as

of inflation to the January,
February and March fears of de¬

flation.

the other element in the population for
the more politic term of this day has it,

benefits from government.

The so-called compensatory

spending theory is often evoked for the




purpose

of ob¬

when

they don't know themselves!
Parenthetically, may I point out

that

does not have to believe

one

Keynes is the fountainhead of all
economic

virtue to recognize the
controlling effect of gov¬

almost

ernment actions

overall

ent

level.

conclude

the

The

"Boom"
It

Honeymoon
clear

Over

;

How

anyone

that

decline of disastrous

a

dominant role of

ment in business

looking

Or,

my compre¬

have

business¬

some

become

so

accustomed

the

to

heady wine of continuous
expansion that they feel they can¬
exist

not

without

of them

many

Unfortu¬

it.

correct

are

Because their

atmosphere of inflation, they will
be

unable to

of

the

to

that

me

and

tion, the expansion of

consump¬

seem

end or, at

to have

come

to

an

least, leveled off.

than

ated.

While

is

generally

appreci¬

loans, discounts, and
of commercial banks

year,

we

must

the life insurance

tual
and

savings
loan

not

overlook

companies,

banks

and

associations,

creased their credit to

mu¬

savings

which

bitter test

real

competition which is
now
developing.
But that does
not mean that efficient producers
and

merchandisers

the test with

will

not

pass

In addition to the

probable end
of
credit
expansion,
prices
in
most lines are pointing downward.
This

means

in¬

private bor¬

ceeded
The

the end of "free rides."
suc¬

inventory problems.
pent-up
demand
of
much has been made, has

by
great

which

so

largely come to an end. In short,
the
productive capacity of the
country has been so greatly ex¬
panded that the production
of
goods iS^now about in balance with
the supply of money—that is, of
demand deposits and currency. All of this means that the warborn

about

causes
run

„

of

their

inflation
course

govern¬

stream

come

taxes if not

In addition, the
municipalities will bor¬

states and

billions

several

row

Control

huge

$55 billions in

some

more.

of

dollars.

of the

disposition of such
is bound to have funda¬

sums

mental effects

the economy.;

on

Along these lines, the insistent
demand of the Administration for
additional
restrictive
legislation
giving the President almost war¬
time powers over the ebonomy of
the country, merits close analysis.

Under current conditions and -bus¬

iness outlook, there is clearly no
need for additional anti-inflation

It

paradoxical for

seems

President

to

demand

inflation

fight

when

powers

deflation

hand.
a

reason

for the

all, the President
competent econo¬
Let us speculate on

some

the motivation

back of this

seem¬

ing paradox.
The Impact of Government

Expenditures
The

tion

reasonable

mcst

is

that

the

explana¬

Administration

contemplates materially increased
expenditures.
Such expenditures
might be for defense, at home and
abroad, for support of agricul¬
tural

prices,

tives.

or

From

a

for social objec¬
political stand¬

strong case can be made
for almost/7unlimited expenditures

point,

a

for any one
For

of these three.

considerably in¬
creased expenditures for defense,
especially for military lend-lease,
example,

would not encounter serious oppo¬
Such
the

increase

aluminum
ferrous

expenditures would
for

demand

steel,

other

non-

metals, and certain

com¬

and

modities which

the

are

in short sup¬

ply, or in which demand and
supply have achieved a precarious
balance.
Clearly, this would tend
to

renew

the forces of inflation.

By the same token, if the Ad¬
ministration is preparing to ask
the Congress

indefnitely to main¬
supports at 90%
of parity, billions of - dollars of
increased expenditure will be in¬
tain

price

crop

evitable in the coming fiscal year.

flying colors!

Inventory "profits" have been

The powerful support

ment

meet the

our

activity.
ahead,
Federal,

state and local government agen¬
cies in 1949 will take from tHe In¬

sition.

that

presume

the

seems

greatest

boom

$1.5

holding the
present level of credit inevitably
means that business activity will
can

business activ¬

on

which we : "en¬
joyed"
during
1947
and
1948
should be ample evidence of the
power of the government to post¬
pone economic reckoning. In fact,
the
entire
economic pattern
of
those two years bears witness to
ity.

credit and

$5 billion was in mortgage
credit, both Of which categories
have, a direct and powerful effect
on prices.
In view of regulation W and the
high prices of real estate, and
especially the stiffer attitude of
lenders, we cannot expect a sim¬
ilar expansion of credit in 1949.
In fact, it seems likely that we
shall just about maintain the pres¬

nately,

this, that

as

than

more

consumer

the

what

request—after

growth has been in the hothouse

the

or

that
in

was

in their conclusion.

Well, what has happened?

mortgages
increased only $3.5 billion during

or,

billion

men

fears

not, the real drive behind these demands for greater
expenditures derives its strength from the desire of

largesse

membered

and

And, certainly, I can't
they are going to -do

Congress.
know

some

I

November

given our
economy by credit expansion in
1948 was a much bigger factor in
postponing a business readjust¬

actual

Administration

the

of

does have

hension.

This

blue.

enhanced

in

because
activity and the move¬
ment of - prices are to such a lafge
extent determined by the actions

mic advisers!

portions is beyond

practice can be consistent
only with expenditures which are not increased. But

indebtedness

tentative than .in the past

business

There must be

some

experience

tion—all

in

estimates these days are even more

every

$9 billion!W(Of this
total expansion, it should be re¬
rowers

longest
business
honeymoon in American History
has finally 'come to an end. The
catching-up period, of which you
have heard so much, is over in
nearly all lines. The expansion of
v credit, the expansion of produc¬

enough, hot nearly enough

to prove

tions!

duly grateful,

are

time.

one

reach

of course,

his

at

lively

a

not

and

the

future distinguishes man from the
other animals, such concern should

change in the attitude of the public toward increased taxa¬
or
larger debt burdens is not nearly enough. We are,

tion

familiar enough with the notions of such

to

seems

While

Required

But however all this
may be, the fact is that a mere

Professor Hansen

of

part of their
thinking that there is no escape
from such an economic visitation,
and that the only thing we can do
is "prepare for the worst"!

street.

More

commission

last 30 years are bound to "come

to be in process

seems

and

future

is daily becoming more evident on

(Continued from first page)

omission

the reaction of the voter

probable

have always been,
necessarily, highly tentative.' Such

to

Neither Boom Nor Depression
In the Offing

the

developments

the

deficit which would have to be financed
by substantial

-

be

away

of

business activity.
of
probable

Estimates

powers.

what the popular attitude is or
corresponding increase in national

additional public borrowing,

v

New

have been frittered

or worse.

the perma¬

or

seen

about

reducing that debt.

if

the

of this

would

to

into being

come

to

resources

pose

change—if change it really is—can not be
determined with any great degree of accuracy, and it

as

(Unfortunate incidental condi¬

some

and are taking their toll.
boondoggling and to much
that was said during the |hey-day of the crack-pots in
Washington, the term "public works" came to take on
a
queer significance. Today, however, The' real needs
of any community wishing to lead a civilized life have
for so long been neglected that very large public ex¬
penditures are required to keep us a .going concern.

that the "tax and

part of the well-publicized assertion attributed

of

means

appear

But meanwhile

are

indications

for

Removal of the

fully than has
fully "soaked"

more

already

are

such great influ¬
in short, you must now ldok
to the future, more than the past,

,

a

current

longer exercise

trend of

the

rather def¬ have the basic causes of the condition remedied,- and this
higher taxes—which at least some of the type of surgery must be of what the surgeon calls the
to share. The curse of higher taxes, more¬ "radical type"—that is,
Thoroughgoing and all embracing.
to have developed

appear

been supposed that the rich
of

for

nonsense
which preceded it.
That readjustment may be
relatively mild and short-lived or it may be severe and
prolonged, depending in large part upon how long it is
postponed and in part by the willingness of the people to

does not seem to be easily removed by half-veiled
attempts to "soak the rich" for the extra income. It may

out

of

almost

readjustment

over,

be that the

the needs

shall

,

inite aversion to

time

having to do with rates of taxation or borrow¬
ing, although it may be strengthened by programs contrary

tion that

to

is

in prospect

sistence of

Aversion

it

public to understand that any
threat of depression which
may exist at present has deeper
roots and is not
likely to be removed—for more than a
relatively short period at any event—by anything that is

Whether there is

regards all this

as

really desired for other

programs

Readjustment Inevitable

)

But

Thursday, March 17, 1949

,,

■'

...

CHRONICLE

ence;

reasons.

(Continued from first page)

;

we

FINANCIAL

taining support for

As We See It
which

&

have

and

no

Moreover, price support at such a

great

level
would
cause
quantities of agricultural

high

modities

be

to

either

com¬
stored or

shipped abroad without direct payr
ment, which would reduce the
supply available to American con¬
sumers and thus directly contrib*ute to inflationary pressures.
As for the

increased
and

only

other

possibility of sharply
expenditures for relief
social

safeguard

is

purposes,

our

the

Congress.
The Administration
has already
proposed a vast enlargement of
the
area
of
government
social
benefits.
In the campaign—and
since—the

determination

of

the

Volume 169

Number 4786

Administration
(Permitted

in

to

far

go .as

as

expanaing

ment services of

i

governsocial character

a

was

made quite clear.
So rar, hiere is no

i

dence

tnat

the

direct

evi¬

Administration

intends

sharply to increase ex¬
penditures, but the possibilities
inherent
in
military
spending,
agricultural

-

spending

spending

social

ana

not be overlooked
"lor one instant. > If sharply increased spending is
going to be
! the
policy of the Federal Government,

..

'

must

•we..should

would

have

to

be
au¬

that

mean

with

reckon

possibility of the renewal of

the iorces of inflation.
-

,-If

'■

this

rationalization

probable

the

of

motivation

underlying
the requests for further govern¬

ment

icies to

controls

is

the

conditions

isted- before
volume
the

trade

will

tend

conditions

those years.
A depression,

Without

a

little

commodity prices, in the
cost of living, or in wages!
It
; would serve notice, that the gov-

a

relaxation

ment in

in

even

or

a

severe

tial decrease in the disposable in¬
come of individuals, a serious de¬

a

downward

any

the

drastic reduction in the

move¬

want

to

prevailed

of payment and a substan¬

means

policy would unmistakably
indicate the Administration does

'

return

business reaction, in the next few
months
is
out of
the question.

not

,

to

which

means

a

the

will not drop

level, the methods
doing business and the terms of

which

*

ex¬

prewar

Such

:

which

Although

1942.

of business

correct—and, of
course, it may not be; in fact, I
hope it isn't—the economic implications are indeed far-reaching.

/

This being the

case, it behooves businessmen to
readjust their psychology and pol¬

of

will

in the disposable income of

crease

flation

take

cannot

immediate
will
of

place.

In the

I see nothing
materially reduce the
payment; on the con¬
future,

if unemployment increases

trary,

the prospect is for

more,

of

of

some

the

Fed¬

present

plans

maintain

to

buyers'

markets

accompanied

the return of competition.

by

competition will inevitably lead to
greater efficiency on the part of
both management and labor. High
cost producers will be

the

but

inherit

low

their

.

which, in
for

cost

the

my

eliminated,

producers

volume.

opinion,
of

will

All

of

augurs well

the

country.
It is exactly what we all hoped
for in the long, painful spiral be¬
economy

tween prices and wages, and now

that

it

is

here

for

reason

I

do

putting

have

categorically stated

numerable

on

in¬

dices prove that the prices of most

ma¬

chines,

disassociated employees
employers and oftentimes
both from the product.
from

occasions that the

prices of manufactured goods are
too high, although the price in¬

bigger

on

To the employee the job became
a

paycheck, nothing

more. Wages
and work loads became standard¬

ized.

Incentive pay

systems be¬
form of speed¬

manufactured

goods
are
lower came
regarded as a
today than the prices of agricul¬
up.
Firings for inefficiency be¬
tural
products, when compared came
fewer as workers sought pro¬
with prewar price levels.
tection in Union rules. Unemploy¬
-The actions of the Congress and
ment
compensation reduced the
the Administration on additional
penalty of disemployment.
The
.

credit and economic controls war¬

result is that among the rank and
rantyour most serious attention. file of
workers, extra awards don't

Such actions and the debates

ac¬

companying the legislation will
not only exercise a considerable
influence on the pattern of busi¬
ness, but also will indicate clearly
the
of economy which is
type

being evolved in this great coun¬
try of ours.
"Looking away from Washington
a
moment, the business pat¬
tern
is developing as expected.
for

Conversion of sellers' markets in¬

buyers' markets is continuing.
General
commodity
prices
are
to

tending to recede, sales in many
are declining, and unemploy¬

lines

Nevertheless,

increasing.

is

ment

economic forces are
strong enough to maintain a satis¬
factory level of business during
underlying

the next 12-to 18 months

(whether

the Administration resorts to spe¬

not), although
both prices and employment may
cial

measures

somewhat

be

or

lower.

call forth extra effort.

ing

performances

The 19th

feeling of

many

bus¬

inessmen because of the decline in
current orders and the melting of

the

backlog of past orders is un¬

justified.
result

Such

of

pessimism

short

a

is

the
Too

memory.

businessmen have forgotten
what "good" business was like in
those "ancient" prewar times when
many

competition
headache.
ber

is

the

was

thirties

taking

a

24-hour-a-day

Those who

place

can

know

is

the

remem¬

that

what

return

production and distribution to
mal

seasonal

patterns.

return of the buyers'

except

Century had

to

a

a power¬

ful, self-justifying social dynamic:
Profits. The
made good.

who made money

man

But

tioning profits.

now

we're ques¬

And the result is

that many persons, who might be

willing to risk their funds in
mon

and

stocks, throw
what

com¬

their hands
the use?
They
up

What's

say:

seek

Ogden

Vv.

Mills

used

see

With

of

nor¬

the

market, it is




million

-.V-y"

r":

and

newcomers

the

timidity is illogical.
to

with

stockholders

on

The

preferred

provided

to

or

the

the|m.

Now, however,

we

period

a

is

amass a

one

fortune these days

through capital gains.

make

rates

If you

killing, the tax collector
only 25%.
a

Security

may

when

be

en¬

earnings

companies may de¬

cide to provide that

common

money themselves.

They

to

stock

may

try

get states to permit them to in¬

vest

modest

some

But

that

would

centration

of

proportion
the

to

presses

When it
surance

around

day

itself
comes

in
to

salesmen

life

insurance.

selling, life in¬
run rings

have

securities salesmen. To¬

life

insurance

premiums
amount to
$6.6 billion a year.
That constitutes 75% of all sav¬
ings in 1948. And that explains

why insurance companies are con¬
stantly on the prowl for new in¬
vestments—why they make longterm
loans, or buy bond issues
outright, or take large blocks of
bonds
when
they - consider the
price is right. The insurance com¬
panies today represent great con-

had

the

on

Still

at Harvard, Yale

man

Princeton

his

in

power

insurance

companies. And it would also cut
your usefulness and impor¬

into

tance

in

curities.

the

distribution

of

se¬

Insurance

companies
the kind of assistance
individual investors need in

don't need
that

purchasing securities.

a

Exchange!
Business

the

withdrawals from

industry,
of

the

merchandising

comes

under the

substantial

business.

3,200 brokers and dealers
registered with the SEC. The
total net capital is about $800,000,000. Half that

capital was in firms
with memberships
on
the New
York Stock Exchange. To my way
of thinking, an industry that size
cannot

afford to go groping its
not knowing where it's going
hoping for the best. If any of

way,

but

going into a new busi¬
ness, you'd undoubtedly insist on
a
study of the potential for the
business.
How many potential

Securities Market Now

customers

new

Where will

there?

are

come

from?

Will

be able to get a continuous
supply of merchandise to sell?

you

And, above
know,
how

all, you'd want to
permanent is this
Is the function you'd

business?

perform essential?
You

specialize in knowing

men

about other people's business. You
have
statisticians, analysts, and

economists who know the trends
in utility
formance

and

I'd

entire

is

constituted

structure

market

has

of

the

securities

been

The

edge

For

Foundation

for

have-nots?

the business?
More Effort at Selling, Less at

Trading
Let's

find

how

out

day?
Ought
more time to selling,
trading? Are commissions

to devote

less to

tion

of

wider distribu¬

spur

securities?

and

more

sales

more

another.

all

sell

have

when

The

their

the

profes¬

systems.

Dow-Jones

average hits this level, buy when
it hits that level. Or
they use the

formula method. As
Dow-Jones
back

a

result, the

industrials
and

range—less

forth

than

over

have
a

30

20%—for

two and one-half years.

The future of the

security busi¬
ness depends
entirely on how in¬
telligently the men in the busi¬
adapt themselves to this

new

effort

into

open-end

and

over-the-counter

And

it's

days to

investment

goes

trusts

securities.

barely

possible that in
because the over-

come,

the-counter

incentive

market

for

offers

more

sales

efforts, that
corporations may regard listing on
a registered
exchange as a liabil¬
ity instead of a stamp of success,
of

having arrived.
As

I

three

First,
the

it,

see

need to know

we

things:
what

provide

try at

the

is

securities

function

markets—do

of

they

flow of capital to indus¬
optimum rate?

a

an

Second,

will

there

tinued demand for

be

con¬

a

capital in

new

the United States?

Third, is the security industry
organization; as now set up, best
constituted

to

meet

the

needs

of

the

future—reaching the investor,
supplying the necessary capital to
business?

Until

know the

we

answers

to

those questions, we're pretty much
like Pavlov's rat—banging away
at the same door in the same old

And instead of taking care
future, we'll be supinely
letting the future take care of us.
way.

of

the

Malsey, Stuart Group
Offers Wabash Equips.
An

underwriting group headed

by Halsey, Stuart & Co. Inc. and

and

of

up

the

over-the-counter
the

determine

rela¬

Otis

March

&

10

addditional study, perhaps an
enlargement of the U, of P. study,
is in order; a broad examination
an

the

entire

function
Do

of

the

se¬

provide new capital
industry?
Who are their cus¬

tomers?
tomers

do,

the
to

Where

middle

Can

will

new

from—the

come

class,

common

cus¬

well-to-

or

equipment

trust,

social

for

persons

What

is

of

small

the

likely de¬
Will cor¬
porations want new money? If
the demand for capital is likely
to drop, if the security business
will be confined largely to trad¬
ing in old issues, then obviously
means.

mand for

new

capital?

it's due for further retrenchment.
And

some

get out.

more

of you

series

ought to

:

Pavlov, the great Russian scien¬
tist, once tried an experiment with
rats. He had three doors, one of
which opened, two of which were
locked. He put some food behind

B,

2y4% equipment trust certificates,
due

March-

clusive.
ture

1,

1950

1950

to

ing

1960

call

on

which

to

1964
after

The certificates

subject

to

ma¬

inclusive,

1959,

while those

and

in¬

1964,

to

Certificates

non-callable,

be

come

award

Wabash

are

matur¬

subject

are

March

every¬

stocks

in the lower-in¬

persons

the

won

$3,165,000

the securi¬

markets

for

RR.

Co.

of

tion to the listed markets. 1 think

were

to

1, 1954.

re-offered,

authorization

instalment of

one

salesman

A

$2,000 automobile will
get a commission of $100. But the
total commission on $2,000 worth
of ATT is only $7.50. No wonder
a

ments

the swing along after the
professionals stop playing footy
carry

keep
days a

a

plan, the certificates

the

to

six

open

hours

important

need

we

nomic structure, perhaps common
stocks
may
be suitable invest¬

that

Can

reexamine your own theories,
beliefs, and preconceptions about

you

stock

doesn't

ness

political

get anywhere is
public isn't in there to

perhaps

point

world in which investors

a

the

are

groups?
After
all,
with
security and old-age pen¬
sions becoming part of our eco¬

market

moved

tion in

including R. W. Pressprich & Co.

banks,

and the insurance companies. One

They

too.

indirectly I'm

door? Have

new

and guts to re¬
analyze and rediscover your func¬
energy

sylvania

trusts,

with

put

markets—to

sold

sionals

the

you

$100,000 for a
study at the University of Penn¬

body?

the

that

know

Merrill

has

ment

that

question for you
Can; the
securities

consider:

Advancement of Financial Knowl¬

changed. It's
largely a professional market. The
big buyers and sellers are invest¬
counsel, investment
trust departments of

ought to get into?

son

to

for worse,

or

in it too.

ty

today,

the

your

like

better

curities markets.

Professional
is

to

the

business find the

you were

customers

banging

t

here's

sufficient to

Substantial

a

or

on

are

of

As

So

we

set

eye

kept

didn't learn. And he beat himself

adjusted

of

con¬

rat

week, five

stocks.

common

add

the

to death.

Many
getting

rare.

time

earnings, the sales per¬
quite so luscious, when
of
Montgomery Ward
the amount of retained
earnings and
Sears, the earning power of
will be reduced by
competition, duPont and Allied
Chemical. But
and when insurance
companies—
don't know
whether your
if they are to make additional you
own business is a
buy or a short
loans—will want to see some com¬
sale. Ypu ought to. Is it the kind
mon
stock backing. Conceivably,
of business you ought to stay
in;
the insurance
won't be

reason

The quest for security, the un¬
willingness
to
take
risks,
ex¬

are

hard

a

But

liquidity is. Do
the exchanges

the

way

as

About

earnings have been high. Corpo¬
rations held

tering

a

door.

his head away against the door he
had been accustomed to open. He

youngsters to follow through and
become junior and then senior
partners. Yet in the '20s, the well-

involuntarily. Postwar

—

have

head

stock. So far, such fi¬
nancing has been semi-automatic.
money

Today

result, firms are
dropping out of the business be¬
cause they can't make a
go of it,
firms

jump against
and get the

door, put the food behind another

regarded

are

•

it,

tioned to that, Pavlov locked that

a

of securities still

common

The

As

Soon the rat dis¬

could
open

food. After the rat became condi¬

who sells

4-

.

shares

heaven.

he

door,

by

crook!) It's

a

frequent.

were

any

to

simplicity of taxexempts." Put your money in mu¬
nicipals and be done with it. Yet

was

door.

covered

that

43

mil¬

the New York Stock Ex¬

on

Despite

try to finance

call "The sweet

Feeling

Unjustified

days

change

ashes"!

and

their reserves in

For

The uneasy

—

few.

very

The Switch to Life Insurance

Business

Uneasy

There isn't

the spur of punishment for failure
nor of unusual
gains for outstand¬

a

come

world in

"sackcloth

Future of the Si jcurities Market

tion to smaller bits

who has

honestly unless he inherited it.
then, of course, it follows

seat

not

on

'

regarded in Washington as
calamities,
In sharp contrast, the
Administration and its advisers

man

And

Keener

(Continued 1 rom page 7)
trends and ultimate consequences.
However, since I am in Detroit, ience and necessity issued by some centrations of money power, of
let me sound a special word of State official; the only way of get¬ investment power.
warning. The.Administration and ting a job is through a State or¬
The
insurance companies are
its i. advisers
make
a
clear-cut ganization.
worried
by their own
success.
But
•; distinction between the prices of
political philosophy
They own 30% of all railroad
isn't
agricultural
products
and
the going to make profits attractive bonds outstanding; 70% of all the
prices of manufactured goods. The to the average worker. You can't utility bonds. They have been fi¬
recent market declines in wheat,
eat freedom. The worker believes nancing the postwar expansion of
corn, and other agricultural com¬
in the system that provides secur¬
industry by buying debt—helping
modities—-which merely canceled ity.
He believes in strong unions business go into debt. But debt is
a
part of the sharp increases of and a friendly government.
The only a sound investment—of in¬
the war and postwar period, and profit system let him
surance
company calibre—if it is
down; dur¬
thus brought agricultural prices ing the depression. And the profit liberally
cushioned
by
equity
into sounder alignment with the motive, which drove businesses to capital. So, ultimately, the insur¬
prices of manufactured goods— greater size and reduced produc¬ ance companies will expect indus¬
were

a

lion dollars couldn't have

the

high level of business
regardless of economic

; activity

notion that

a

f'";.

the

(A lot of people have the

which customers of in¬
In conclusion, we are not wit¬
longer
are
nessing a repetition of 1920. What vestment firms no
is taking place is: (1) A realign¬ handed down from father to son,
ment of prices which rose sharp¬ with a natural increase. They have
(o be dug out, rediscovered.
ly with those which did not have
The history is painful. Back in
such a rise; (2) and a quickening
of the conversion from sellers' to 1929, four and five million share

'

ernment

—as

it

the open

world in which profits
profits—have fallen into disa

that his father

eeficit

ore

leaders,

come.

budget

m

world—a world of powerful labor

serious de¬

a

(1211)

where he wants it.

and

the Treasury

restrictions.

credit

Neither do I foresee

CHRONICLE

increase
sharply.
In most
lines, the consumer is once more
king and expects to get what he
wants, when he wants it, and

will

cash

once

Reserve

FINANCIAL

esteem.

the

undertaken^ by
thorities.
Tins

eral

&

individuals; on the contrary, as I
intimated earlier, there is a rea¬
sonable prospect that the governernment may take actions which
will increase the disposable in¬

unbalanced

financing

the

longer necessary to hoard in¬
ventory for supply protection; nor
to accumulate large quantities of
goods because of tear that prices

no

to

obviously

Will! be

'

THE " COMMERCIAL

by

the

ICC, at prices to yield from 1.40%
to

2.65%, according to maturity.
Issued

under

a

the

Philadelphia
are

the first

proposed issue of

$9,690,000 trust certificates, series
B. The

aggregate principal amount

of certificates

be

secured

being issued

standard-gauge
ment

than

estimated

railroad
cost

to

to

equip¬
less

not

$12,154,249; 12 diesel-electric

freight

locomotives;

electric

passenger

nine

are

by the following new

diesel-electric

six

diesel-

locomotives;
switching

lo¬

comotives; and 20 passenger train
cars.

;

,1

44

(1212)

THE

COMMERCIAL

Securities
•
•

Alaska

March

Airlines, Inc., Anchorage, Alaska
(letter of notification) 20,000 shares ($1

4

stock.

common

Price, about $4.25

—R. H. Johnson

per

Proceeds to

& Co.

Class

Now
($25c par).

in

A

and

share

one

CHRONICLE

of

Class

PREVIOUS

B

at

$15

ISSUE

share of

one

lative

unit.

per

S. Warren & Co., Washington, D. C.

For general funds of
company.

and surplus of American Lloyds,
ualty insurance company.

a

fire

and

of

stock

common

purchased

and

company

will issue

March

•

reimburse

American

from

common stock.
Price—20 cents per share.
Underwriter
Batkin & Co., New York. To repair and renovate mine
of company and to exercise option to purchase
processing
mill and move and erect such mill on the

company's

•property and for working capital.
California-Pacific

Co.,

San

Francisco,

11

Photographic Industries,

Engineering Co. (4/4)
(letter of notification) 500,000 shares of

Bros.

mon

•

&

off

pay

Hutzler.

Proceeds—For

lateral

trust

50,000 shares of 5V2% cumulative con¬
vertible ($20 par) preferred stock.
Underwriters—First
California Co. heads a group of nine
underwriting firms.
Proceeds—To pay off short-term bank indebtedness and
for the company's expansion
program.

.

Capital City Boating Corp., Washington, D. C.
Jan. 4 (letter of notification) 50,000 shares
($2 par) 6%
non-cumulative preferred stock.
Price, $3 per share.
Underwriter—Lawrence R. Shepherd & Co., Washing¬
ton, D. C. To operate company, purchase an excursion

Power Co., Guifport, Miss.
$2,000,000 30-year first mortgage bonds.
Underwriters—Names to be determined through com¬
petitive bidding. Probable bidders: Halsey, Stuart & Co.
Inc.; Kidder, Peabody & Co.; Equitable Securities Corp.;
Otis & Co.; Shields & Co.; The First Boston
Corp.;

and

bonds.

Underwriters—Names to be deter¬

construction

and

to

reimburse

the

for

company

past expenditures. Bids—Bids for purchase of bonds will
be received at Room
a.m.

(EST)

1208, 250 Stuart Street, Boston,

up

March 22.

Corp., Springfield, Mass.
28 (letter of notification)
5,471 shares of common
capital stock.
Underwriter—D. J. St. Germain & Co.,

Springfield, Ohio.
Formula

March

10

Loeb, Rhoades & Co.

of the

company and

Price—$2.50

Additional working capital.

Fund

filed

of

100,000

Boston

shares of

beneficial

interest

in

the Fund.

Corp., Philadelphia.
Improvements,
working capital. Expected this month.

Frontier Refining Co.,
Denver, Colo.
filed $600,000 5% first
mortgage bonds,/series

boat and invest in the securities of other
transportation
or amusement
companies.

1949, $150,000 of 5%% debentures, due March 1, 1954,
cumulative preferred stock ($100
Underwriters—Peters, Writer & Christensen, Inc.,
and Sidlo, Simons, Roberts &
Co., Denver, Colo. Pro¬

Centra! Hudson Gas & Electric
Corp. (4/5)
March 3 filed 20,000 shares of cumulative
preferred stock.

bank loans and for other
purposes
sion of facilities.

Underwriters—Names to be determined

by competitive

bidding. Probable bidders include Union Securities
Corp.; W. C. Langley & Co.; Shields & Co. Proceeds—
Payments

on

outstanding

short-term

notes.

iabout April 5.
Central

:

Oklahoma

Expected

Oil

Corp. (3/21)
March 4 (letter of notification) 299,500 shares (10c par)
common.
Price—$1 per share. Underwriter—Henry P.
Rosenfeld Co., New York.
For expenses and working
capital.

Industries,

Mountain States Telephone &
Telegraph Co.

stock

(par 100).

one

non-

68,000 shares of
Underwriter—De Witt Invest¬

Co., 910 West St., Wilmington, Del.

in units of

To be offered

share of each.

Building of factory, install¬
ing machinery, working capital.
i
Citizens Credit Corp.,
Washington, D. C.
Jan. 3 (letter of notification) 2,200 shares of Class A
common

added

to

general

funds

to

retire

including the

current

March

23

may

share for each three shares held

one

Rights

will

7

Underwriters

April

26.

at

—

Names to be

at

office of Commonwealth & Southern
Corp.
(N. Y.), 20 Pine Street, New York, up to 11 a.m.
(EST)

stock, ($12.50 par) and 2,200 shares of Class B

share.
ad¬
Telegraph Co.
per

repay

Murphy Chair Co., Owensboro, Ky.
Feb. 14

(letter of notification) 1,000 shares of common.
per share.
Underwriter—J. J. B. Hilliard

Price—$1,125
& Son.

New England Tel. &
Telegraph Co. (3/23)
Feb. 18 filed $35,000,000 25-year debentures. Underwrite
ers—Names to be determined through
competitive bid¬

ding. Probable bidders: Morgan Stanley & Co; Halsey,
Proceeds—To redeem on June 1, 1949,
principal amount $35,000,000 first mortgage 35-

Stuart & Co. Inc.
at their

5% bonds, series A, due June 1, 1952. Bids—Bids
purchase of debentures will be received at Room

year

2315—195

Broadway, New York,

up to

11:30

a.m.

(EST)

March 23.

Nielsen Television Corp., New York
Feb. 24 (letter of notification) 4,000 share of 6% cumula¬
tive non-convertible preferred stock
(par $25) and 10,000
shares of

common

units of

$25,625
•

stock (par 250).

Co., New York.

Underwriter—Charles

Offering—To be offered in

preferred share and,2% common shares at
unit. Capital requirements.

one

per

Noranda Oil

Corp.

March 7 (letter of notification) 81,084 shares of common
stock (no par). Underwriter—C. K. Pistell &
Co., Inc.,
and associates.
Price—$1V8 per share.

Corporate

pur¬

poses.

Northern Natural Gas
9

filed

be

of record March 30 at
five

held.

struction

offered
rate

to

of

common-

one

com¬

stockholders

share for each

new

Underwriting—None..

and

Ohio

'

Co., Omaha, Neb.
($10 par)

406,000 additional shares

Offered—To

mon.

Proceeds—For
replenish working capital.

to

Public

Service

Co.

con¬

(4/5)

Feb. 23 filed
and

$10,000,000 first mortgage bonds, due 1979,
1,000,000 shares ($5 par) common stock of which

Cities

Service

Co.

would

sell

638,160

company 361,840 shares.
Underwriters
determined
through
competitive

23

shares

Horwood
Dec. 27
stock.

Lake

Gold

Mines

Warshoff & Co.,
Newark,?N.
mining properties.
,./

J.

For

Hotelevision, Inc., L. I. City

—

Names

to

for

construction

temporary bank loan.
sale of Ohio stock

tures

due

development of

1958.

to

and

Cities

to reduce

would

its

repay

a

$3,000,000
from

proceeds

use

outstanding 5% deben¬

Expected about April 5.

y

(3/21)

>

mm

Un¬

I

s'

Inc., New York.

Price—$3
distribute
March

per
a

share.

Proceeds—To develop, exploit and
innovation.
Expected
about

television

10.

Illinois

CO

Power

Company (3/29)
200,000 shares ($50 par) cumulative pre¬
ferred stock. Underwriters—Names to be determined
by
competitive bidding. Probable bidders include Blyth &
Co., Inc.; The First Boston Corp.; W. E. Hutton & Co.
Co., Inc.; The First Boston Corp.; W. E. Hutton & Co.;
March 2 filed

Boston

Philadelphia

Pittsburgh

San Francisco

Private Wires to all




offices

Chicago

Cleveland

Merrill

Lynch, Pierce, Fenner &

Beane.

Proceeds—To

pay off about $10,000,000 of short-term bank loans.
pected about March 29.

be

bidding.
Probable
Halsey, Stuart & Co. Inc. (bonds only); Blyth
& Co., Inc.
(both); Merrill Lynch, Pierce, Fenner &
Beane and Kidder
Peabody & Co. (jointly on stock);
Otis & Co. (bonds); Salomon Bros. & Hutzler
(bonds);
Lehman Brothers
(bonds). Proceeds—Ohio would use
proceeds

Corp.

(letter of notification) 100,000 shares of capital
Price—$1 per share.
Underwriter—Charles W.

Nov. 3 filed 160,000 shares ($1
par) class A stock.
derwriter — Cantor, Fitzgerald & Co.,

New York

the

and

bidders:

(3/22)
filed $8,500,000 314%
sinking fund debentures,
due March
1, 1969, and 61,510 shares (no par) common
stock.
Underwriters—Paine, Webber, Jackson & Curtis
and Harriman Ripley &
Co., Inc. Proceeds—To expand
facilities of company's Mobile,
Ala., mills."
Feb.

$100

Proceeds—To

from
American
Telephone &
(parent) and for general corporate purposes.

March

(3/22)
mortgage bonds.
determined through com¬

petitive bidding. Probable bidders: Equitable Securities
Corp.; Halsey, Stuart & Co. Inc.; Otis & Co.; Kidder, Pea¬
body & Co.; Union Securities Corp.; Proceeds—For con¬
struction. Bids—Bids for purchase of bonds will be re¬
ceived

expire

vances

expan¬

Gulf Power Co.,
Pensacola, Fla.
Feb. 18 filed $2,500,000
30-year first
<

jj

($100 par).
Offering—Stockholders of record
subscribe to the shares in the ratio of

Underwriting—None.

Hollingsworth & Whitney Co.

Inc., West Chester, Pa.

March 7 (letter of notification)
(68,000 shares of 6%
cumulative preferred stock (par $4) and
ment

par).

March 22.

Chace

common

and 5,000 shares of 7%

be

equipment,

March 4 filed 241,101 shares of capital stock

H. Drew &

March 7

ceeds—To

20,000 shares on behalf of others.
share.
Underwriter—BuckleySecuri¬

per

ties

,

of

Proceeds—For construc¬

;

'

Montgomery Chiropractic Hospital, Inc.,
Norristown, Pa.
Jan. 31 (letter of notification) 90,000 shares of common
stock (par $1), of which 70,000 will be offered in
behatf

for

First Springfield

•

filed

short-term

through competitive bidding. Probable bidders:
Halsey, Stuart & Co. Inc.; Blyth & Co. Inc.; White, Weld
& Co. and Kidder,
Peabody & Co. (jointly).
Proceeds

11:30

11

Carl M.

common

construction

Block

(letter of

Mississippi

tion.

Feb.

filed

•

!

mined

—For

28

March

Inc.,

borrowings obtained from its
parent Texas Utilities Co. Expected about March 28.
Eastern Gas and Fuel Associates
(3/22)
Feb. 18 filed $12,000,000
25-year first mortgage and col¬

to

California

,

March

Utilities

determined

(3/28)
Feb. 24 filed $10,000,000 first
mortgage bonds, due 1979.
Underwriters—To be determined through
competitive
bidding. Probable bidders: Halsey, Stuart & Co.
Inc.,
Kidder, Peabody & Co., Blyth & Co., Inc. and Merrill
Lynch, Pierce, Fenner & Beane (jointly); The First Bos¬
ton Corp; Equitable Securities
Corp.; Harriman Ripley
& Co.; Union Securities
Corp.; Lehman Brothers; Salo¬

•

•

Consolidated

to

Mining Co., Tonopah, Nev.
(letter of notification) 1,500,000 shares (5c par)

be

Dallas Power & Light Co.

Tele¬

Bradshaw

to

Worth, Texas

(parent).

Blackbelt Elevator & Feed Co.,
Selma, Ala.
.March 10 (letter of notification) 2,106 shares of common
stock. Price, $100 per share. No underwriter. To construct grain elevator.

Underwriters—Names

March 9 (letter of notification)
20,000 shares of common
(par $1). Price, par. No underwriter.
For operating
expenses and for drilling and
completing a test well.

treasury for past outlays.

advances

Edison Co., Chicago, III.
$50,000,000 sinking fnd deoentures, due

Proceeds—For working capital, construction costs.

Jan. 28

•

of

filed

1999.

market

& Supply Co., Wilmington, Del.
notification) 20,000 shares of capital
stock,-of which 12,000 shares will be sold to public at
$10 per share; remainder go to officers. Underwriter—.
John K. Walters & Co., Inc.,
Wilmington, Del. For new
equipment, merchandise, land, goods and chattels.

stock (par 50c).
Price par.
Underwriter—William C.
Hitchman Co., New York. For
equipment and expenses.
•
Crader Oil Co., Inc., Fort

Ltd., Santa Monica,

common

share). Proceeds to National Magazines,

per

Mack's

Feb.

Continental

Telephone Co. of Pennsylvania .
a
March 11 filed $25,000,000 25-year
debentures, due April
15, 1974. Underwriters—Names to be determined through
competitive bidding. Probable bidders: Morgan Stanley
-& Co.;
Halsey, Stuart .& Co. Inc.*; The First Boston
•Corp.; White, Weld & Co. and Union Securities Corp.
(jointly). Expected in April. Proceeds—To be applied
repayment

of

(letter of notification) 175,000 shares ($1 par)
common, of which 100,000 shares will be sold at
$1.50
per share and the remainder at
$2 per share.

Bell

phone & Telegraph Co.

construction

March 9

10 filed 100,000 shares of cumulative preferred
($20 par) 5% 1947 series. Underwriters—Paine,
Webber, Jackson & Curtis, Stone & Webster Securities
Corp. and Mitchum, Tully & Co. Proceeds—For con¬
to

finance

Tacoma, Wash.

March

Oct. 8

1,

& Co.

-stock

and

and

purposes.

through competitive bidding. Probable bidders: Halsey,
Stuart & Co.
Inc.; The First Boston Corp.; Glore, Forgan

& Co., Inc., and First Securities
Proceeds—For working capital.

Associated Telephone Co.,
California <

toward

16

April

a

(letter of notification) 15,000 shares of
$1).
Underwriting—None.
Price,

(par

(about $1.25

$1,600,000 due the War

Commonwealth

cas¬

Underwriters—Leason

•

Administration

stock held.

Co., Chicago.

struction

to

•

purchase warrant for each 3V2 shares
With each share of preferred

share.

per

Inc.

other corporate

purchase warrant en¬
titling the holder to buy 80/100 of a share of the com¬
pany's ($1 par) common stock on or before Dec. 31, 1950.

•

pay

Assets

115,315 shares ($10 par) 5Vfe% cumulative
convertible preferred stock.
Offering — To be offered
Initially for sale to stockholders at the rate of one pre¬
ferred

stock

prepay

filed

1

Price—$102

Liberty Magazine, Inc., New York

March 9

$7,250,000 of bank loans, to

Argus, Inc., Ann Arbor, Mich.
Nov.

•

mortgage and collateral

Lloyds, Dallas, Texas
,
(letter of notification) 394 underwriters units
at $500 per unit. No underwriter. To
intfease guaranty

fund

(3/29)

trust 15-year sinking fund 4%
bonds, due 1964. Under¬
writer—Allen & Co., New York. Proceeds—To

7

preferred stock.

property improvements.

Colorado Fuel & Iron Corp.
March 2 filed $11,000,000 first

American

•

March

(no par)

Underwriters—Cruttenden & Co. and The First Trust Co,
of Lincoln, Neb. To discharge indebtedness and
pay for

Allen

Industries, Inc., Detroit, Mich.
Feb. 28 (letter of notification) not in excess of 6,000
shares of common ($1 par). Price—$8 per share. Under¬
writer—Baker, Simonds & Co., Detroit. Proceeds to sell¬
ing stockholder.

Thursday, March 17, 1949

Registration

SINCE

To be sold in units of

Underwriter—Emory

selling stockholders.

FINANCIAL

INDICATES ADDITIONS
common

par)
Underwriter

share.

&

Jed

Voiiiv

eml>*rS
BROKERS

SWk
Cvuc

DEALERS

Ex¬

Kansas-Nebraska Natural Gas Co., Inc.
March 3 (letter of
notification) 2,900 shares of $5 cumu-

York

UNDERWRITERS
v

EOS

•vol1

*C.O

Volume

COMMERCIAL

THE

Number 4786

169

&

FINANCIAL

CHRONICLE

State Bond and

Mortgage Co., New Ulm, Minn.
$10,000,000 of accumulative savings certifi¬
Underwriter—None.
Price—$85.68
Proceeds—For investment.

Feb. 28 filed

NEW ISSUE CALENDAR

per

$29

curities Corp., New York.

Eastern Gas & Fuel

opment of

Sylvania Electric Products Inc. (3/22)
,
March 8 filed 250,000 shares (no par) common stock.
Underwriters—Paine, Webber, Jackson & Curtis; White,
Weld & Co.; Lee Higginson Corp.; Estabrook & Co. and
Merrill Lynch, Pierce, Fenner & Beane.
Proceeds—To
expand facilities for making cathode ray television tubes.

Associates,

(EST)

Gulf Power

(EST)

Bonds

Hollingsworth & Whitney Co._

Debs. & Common

Scovill

Co., 11

a.m.

Southern Pacific Co., Noon

March

Common

Tennessee

23, 1949

Central

Feb.

25, 1949
____Equip. Trust Ctfs.

March 28,

March

,

Insurance

Bonds

Corp. (Dallas); Elder & Co.; Strader Taylor & Co.; Bullington-Schas & Co.; Fisher Hawes & Co.; Underwood,

•

Proceeds—For account of Hamilton Na¬

benefit of

a

trust.

Texas-Alberta

Oilfields, Inc., New York
(letter of notification) 297,000 shares of com¬
(par 100). Underwriters—Company contem¬
plates sale of stock both directly and through security
dealers.
Price—$1 per share.
Engaging in geological
and geophysical exploration for oil and natural gas, etc.

29, 1949

stock

mon

Chicago Milw. St. Paul & Pac. RR._-Equip. Tr.Ctfs.
Bonds
Preferred

March
Pacific

Equip. Trust Ctfs.

April 4, 1949

Engineering

a

savings and stock bonus, plan.
-

25

Bonds & Common

1949
Bonds

filed

common

held.

Pacific

Gas

Proceeds—For construction.

&

Electric

(par $25).

Offering—Offered

of

Feb. 25 at the rate of

held.

one

share for each

new

Rights expire April 8.

ceeds—For

stockholders

to

par

record

10 shares

Underwriting—None.

Pro¬

Lighting Corp.

(3/23-24)

Underwriter—Blyth

stock.

&

New

March 9

stock

Co.,

Inc.

be

to be
offered

offered to trade accounts; 27,500
on

behalf

of

a

stockholder

at

$3

share and 10,000 options at 10 per share.
Under¬
writer—Willis E. Burnside & Co., Inc., New York.
For
working capital and payment of taxes.
per

E.

common

Burnside

Price—$1,625 per share.

will be used to

& Co., Inc.,
Company's proceeds

discharge accounts payable and for work¬

Playboy Motor Car Corp., Tonawanda, N. Y.
1,000,000 shares of class A 20-cent prefer¬
ential dividend series ($3 par) common stock and 1,000,000 shares of class B (50 par) common stock.
Under¬
writer—Aetna Securities Corp., New York. Offering—To
foe offered in units of one share each.
Price—$31/2 per
unit.- Proceeds—For purchase of equipment and working

United

•

•

States

Tin

Corp., Seattle, Wash.
37,500 shares of non¬
Price, $2 per share. No underwriter.
working capital.
8

(letter of notification)

Universal

Haberdashery Depts., Inc., New York
(letter of notification) 1,000 shares of class B

(par $20). Price, par. Manufacturing .of patented
Haberdashery Depts., etc.

•

Utah

Power &

Light Co., Salt Lake City, Utah
March 15 filed $3,000,000 first mortgage bonds, due 1979.
Underwriters—Names to be determined through com¬
petitive bidding. Probable bidders:
Lehman Brothers
and Bear, Stearns & Co. (jointly); Halsey, Stuart & Co.
Inc.; White, Weld & Co.; Harriman Ripley & Co., Inc.;
Salomon Bros. & Hutzler; The First Boston Corp.; Blyth
&

Co., Inc.; Otis & Co.

poses,
9

Proceeds—For corporate
including construction.
'

pur¬

Virginia

(Minn.) Hotel Company
March 11 (letter of notification) 250 shares of common
and 250 shares of preferred.
Price (both issues), par
($100).

No underwriter.

Plow Co., Batavia, N. Y.
(letter of notification) 40,000 shares of common
stock (par $1).
Price—$2.50 per share. Underwriter—
None. Proceeds to selling stockholder.

March 14

drill test wells.

March

,

Rainbow Mining Company, inc., Pueblo, Coio.
March 10 (letter of notification) 150,000 shares of com¬
.

For

voting stock (par $1).

Price,

par.

No underwriter.

purchase and development of mining properties.
Scovill Manufacturing Co.

(3/22)

March 2 filed 49,850 shares ($100 par) cumulative pre¬
ferred stock.
Offering—To be offered for subscription

by common stockholders of record March 22 on basis of
new share for each 24 common shares held.
Rights

one

would expire April 6. Underwriter—Morgan Stanley &
Co. will purchase unsubscribed shares. Proceeds—To re¬

duce bank loans.
Southern

States

Iron

Roofing

Co.,

Savannah,.

-Georgia
5 -,:i;;
Feb. 21 filed 30,000 shares ($1 par) common stock, to be
sold at $10 per share on behalf.,of three stockholders.
Underwriting—None.




March 21.

•

Williston Fireplace Co., Seattle,

stock

11

(letter of notification)

(par $100).

Price, par.
velop and acquire agencies.
9

Wash.

100 shares of

No underwriter.

common

To de¬

West Coast

Telephone Co., Everett, Wash.
35,000 shares ($20 par) common stock.
Underwriter—Blyth & Co., Inc.
Proceeds—To defray
part of the cost of construction of additions and better¬
ments of the company and its subsidiary, West Coast
Telephone Co. of California.
March

9

filed

Western Oil

Fields, Inc., Denver, Colo.
(letter of notification) 1,000,000 shares (lc par)
Price, 10 cents per share.
Underwriter —
John G. Perry & Co., Inc., Denver, Colo. To drill a well
and acquire additional properties.
Jan.

5

common.

Wichman

com¬

petitively $6,000,000 first mortgage bonds, series A, due
1971.
Probable bidders: Halse.y, Stuart & Co. Inc., White,
Weld & Co. and Kidder, Peabody & Co. (jointly); The
First Boston Corp.; Salomon Bros. & Hutzler.
%
v
American Telephone & Telegraph Co.
April 20 the stockholders will vote on authorizing
issue
to

of

convertible

is

not

to

a new

debentures to

be

offered

The amount is to

stockholders.

bear

be

determined later

exceed

shares

$100

of. convertible
On

the

pro

rata

debentures
basis

of the

outstanding at Feb. 15, 1949, t!^e
approximately $391,000,000.
be
dated June 20,
1949, and will

would

interest

at

a

rate

of

not

more than
3woujd
20, 1964, and would be con¬
T» stock at a conversion price or

mature not later than June

vertible into A. T. &

prices not exceeding $150

per

share.

Arkansas Power & Light Co.

April 13 stockholders will be asked to
and

ance

fund

sale

approve the issu¬
public bidding of $8,300,000 sinking
the proceeds to be used to finance

at

debentures,

part of the company's construction program. Probable
bidders: Halsey, Stuart & Co. Inc., White, Weld &
Co.,
The First
Webster

Boston Corp.,

Securities

Lehman Brothers and Stone &

Corp.

(jointly); Equitable Securities

Corp.
®

*

California

Oregon Power Co.

company's annual report states that new offerings
corporate securities by it can be expected some time
during the second half of 1949. Any such sale, according
to A. S. Cummings, President* "will be based
upon the
company's needs, its ability to adequately service and
the determination to maintain at all times

properly balanced capital structure."

Philippine Mindanao Development
Co., Cebu City, Philippine Islands
Jan. 5 filed 2,000,000 shares of voting capital stock, one
centavb par value. Price—25 cents per share (U. S. cur¬

a

conservative

'

•

(Mass.)

Electric Light Co.
Feb. 24 company asked SEC authority to sell
$2,750,000
25-year notes, series A, due 1974, through competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
Harriman

Ripley & Co.; The First Boston Corp.; Kidder„
Peabody & Co.; Otis & Co. For the purpose of funding
presently outstanding borrowings.
•

Chicago Milwaukee St. Paul & Pacific RR.
(3/29)

The

company has issued invitations for bids to be re¬
ceived March 29 for the sale of $6,060,000 equipment trust
certificates series HH, to be dated April 1, 1949 and to

mature in 30 semi-annual instalments of

$202,000 Oct. 1,
1, 1964. Probable bidders; Halsey, Stuart
Inc.; Salomon Bros. &'Hutzler; Harriman Ripley
& Co., and Lehman Brothers; The First Boston
Corp.;
Harris, Hall & Co. (Inc.).
1949

&

to April

Co.

•

C.

I. T.

Financial

Corp.

March 14 company

plans early registration of $50,000,000
10-year debentures, with Dillon, Read & Co., Inc., Kubn,

Loeb
®

To construct hotel.

Wiard

Oil & Development Co.,
Albuquerque, New Mex.
March 9 (letter of notification) 19,000 shares ( $10 par)
common.
Price, $11.50 per share. No underwriter. To
Progresso

mon

1901—60 Broadway,

Prospective

Universal

•

capital.

•

Room

Alabama Gas Corp., Birmingham, Ala.
March 4 company asked SEC permission to sell

Cambridge

ing capital.

Dec. 29 filed

•

at

to ll':3(r&4ju (EST)

of

Underwriter—Willis

March 8

Pepsi-Cola Bottling Co. of Wash., D. C.
Dec. 21 (letter of notification) 31,500 shares (100 par)
common
stock to be sold to public at $3 per share;

shares

be received

up

The

York

(letter of notification) 46,500 shares of

(par 500), of which 41,500 shares will be sold in
5,000 shares in behalf of stock¬

stock

40,000

Mfg. Corp.,

behalf of company and

For

par)
Pro¬

ceeds—For construction.

shares to

States Television &

assessable common.

March 4 filed 100,000 shares of $4.50 cumulative (no

preferred

United

March

extensions, additions, etc.

Pacific

•

filed

New York.

Jan. 28 filed 754,038 shares of common stock

at

(Ariz.) Gas, Electric Light & Power Co.
66,000 shares ($10 par) common stock.
Underwriters—Blyth & Co., Inc. and The First Boston
Proceeds-—For construction.
Corp.

holder.

Co.

purposes.

16

Standard

Gas & Electric Co., parent, plans—if the Commission permits—to subscribe for 50,002 shares of the proposed issue.

Underwriter—None.

To pay

Tucson

March

Electric Co.

share for each 10 shares of

York,

Debentures
common

Foods, Inc., Sherman, Texas
Nov. 26 filed 200,000 shares of common stock (par $2.50)
of which 80,000 will be sold by the company and 120,000
shares by certain stockholders. Underwriter—Rauscher,
Pierce & Co., Inc., Dallas, Texas. Proceeds—For general

89,000 shares ($20 par) common stock.
Offerings—To be offered for subscription by stockholders.
The subscription offer will be made on the basis of one
new

of aVgroup of dealers which will solicit sub¬
scriptions. Proceeds—To reimburse the/company's treas¬
for capital expenditures. Bids—Bids for purchase
managers

ury

amount of the issue would be

,

Tucker's

Mrs.

Preferred

•

Feb.

Underwrit¬

one share for each 10 shares
held, plus additional
shares not takbn by subscription by other
stockholders.
Lehman Brothers and Robert W. Baird
are
co-

six shares of stock held.

corporate

Oklahoma Gas &

bonds, due 1979,

stock.

rate of

of

Triplex Corp. of America, Chicago, III.
(letter of notification) 5,000 shares of
stock:
Price—$10 per share; No* underwriter.
obligations and improve working capital.

April 5, 1949

Public Service Electric & Gas Co.__.

(3/21)

sold at competitive bidding.
Prob¬
include Halsey, Stuart & Co. Inc.; Equitable
Securities Corp.; Lehman Brothers and Salomon Bros.
& Hutzler (jointly); Merrill
Lynch, Pierce, Fenner &
Beane; Union [Securities Corp.; The First Boston Corp.;
Blyth & Co.,
(inc.; Glore, Forgan & Co. Stock will be
offered to existing holders of record March
22, at the

number

March 10

...Common

Central Hudson Gas & Electric Corp

May 5,

common

for each

is¬
No under¬

•

Co

Ohio Public Service Co

266,093 shares ($10 par)

but

writer.

Continental

Co.

ers—Bonds will.be

sued,, under

30, 1949

RR

Power

Thermoid Co., Trenton, N. J.
March 10 filed 60,000 shares of common stock to be
•

Missouri

Electric

Feb. 14 filed $10,000,000 first mortgage
and

of bonds will

Co., Knoxville,

March 9

Illinois Power Co

Wisconsin

New

tional Bank, Knoxville, for

Colorado Fuel & Iron Corp

Co., Pittsburgh
Sept. 28 filed 200,000 shares (no par) common stock.
Underwriter—Hemphill, Noyes & Co., New York. Price,
by amendment.
Proceeds—Will go to selling stockhold¬
ers.
Offering postponed.

28

Neuhaus & Co.

1949

Dallas Power & Light Co

-

(Edwin L.)

capital stock.

Preferred

RR

Wiegand

(letter of notification) 10,000 shares (no par)
To be offered at $8.50 per share.
Under¬
writers—Miihous, Martin & Co.; Stein Bros. & Boyce;
Marx & Co.; J. C. Bradford & Co.; Equitable Securities

Debentures

Lighting Corp

Illinois

Odin

Tennessee

New England Tel. & Tel. Co.,
11:30 a.m. (EST)

March

business.

Taylorcraft, Inc., Conway, Pa.
March 15 (letter of notification)- 15,137 shares of com¬
mon stock
(par $10). Price, par. Underwriting—None.
Developing and expanding facilities.

(EST)__Equip. Tr. Ctfs.

Sylvania Electric Products Inc

ing, exploration and repayment of loans.

able bidders

•

Preferred

Manufacturing Co

Pacific

Devel¬

Price—$2 per share.

Bonds

22, 1949

rency). Underwriter—F. T. Andrews & Co. Proceeds—
provide funds for plant construction, diamond drill¬

.

Market Stores Corp., New York
(letter of notification) 140,000 shares of com¬
stock (par 100).
Underwriter—First Guardian Se¬
7

Bonds

March

a.m.

mon

45

To

Super

March

-Class A Stock

Wisconsin Electric Power Co.,
11:30 a.m. (EST)_

To be

share.

per

•

.^..Common

Hotelevision, Inc.

Corp., Cleveland, Ohio
.
(letter of notification) 1,000 shares ($5 par)
sold to Wm. J. Mericka & Co., Inc., at

10

common.

21, 1949

Oklahoma Oil Corp

1217-A.

Stouffer

March

Ry._——-Equip. Trust Ctfs.

March

11:30

unit.

•

March 17, 1949
St. Louis-San Francisco

Centra!

series

cate

(1213)

Co.

&

and Lehman

Detroit

Edison

Brothers

as

underwriters.

Co.

March 15 stockholders voted to increase authorized capi¬
tal

stock from

10,000,000 to 15,000,000 shares (par $20).
taken so that company will have avail¬
issue not only enough stock for the probable
conversion into capital stock of the recent issue of
$46,641,400 of debentures, but also that it may have stock
available for sale, if necessary, to carry on the $150,000,000 plant expansion program.

This action
able

9

was

for

East

March

Tennessee

15 reported

Natural

Gas

Co.

has plans under considera¬
tion for sale of about $10,000,000 bonds. The issue will
finance construction of a natural gas pipeline to the Oak
Ridge atomic energy project. It is thought that the bonds
will be sold directly to institutional investors.
White),
Weld & Co. and F. S. Moseley & Co. of New York, Eldeir
& Co. of Chattanooga and Equitable Securities Corp. of
Nashville, are said to be arranging the transaction.
,
company

Ex-Cell-O Corp.
April 14 stockholders will vote

on

increasing authorized

from

500,000 shares to 1,000,000 shares. Com¬
pany does not plan issuance of additional stock at this
time. Traditional underwriter, Baker, Simonds & Co.
<

common

.

(Continued

on page

46)

1

46

stocKiioiucrs

at

March

and

to

arrange

from

increase

increasing author¬

Pacific

Missouri

stock from 25,000 shares to 100,000 shares,

■I

RR.

Company will receive bias1 at its office, Room 2117—105

'Broadway,
•

series

&

Idaho

•

March

16

officials

•

estimated that expansion

»

(3/25)

Halsey, Stuart & Co. Inc.; Otis & Co. (Inc.); Lehman
Bros.;-Blyth &• Co., Inc.; Equitable Securities Corp. For
stock: W. C. Langley & Co., Shields & Co. and White,
Wdd & Co. (jointly).

Oklahoma

in

Proceeds

sell

in

Direct

this

will
an

Effective

Electric & Gas Corp.,
own

share-

lolders by General

meet today

to

to

with company officials

over the data contained in
registration.

go

the

This operation, as in

the case
of other telephone issues—it is
indicated, will
the

bring bids from

aggregations led by the two

banking firms which have been
it out tooth-and-nail
for such business since the ad¬
fighting

vent of competitive bidding.




P.

Commission

S.

Public Utili¬
Corp., are finding that direct
approach is the answer.
At least that is the experience
of

around

to

this

in

contacting

telephone

reached

he has

call

seems

to

a

work

own

experience he

that

the

dealer

has

when

by phone invariably re¬
being reminded that
copy of the contract that

upon
a

the

compa¬

nies

making up the vast Bell
System will have floated approxi¬
mately $551,000,000, almost en¬
tirely of new capital, if present
plans are carried through.
;
This would

suggest busy times

ahead for the underwriting fra¬

but

ternity,

latter's

the

from

point of view the foregoing fig¬
ures

are

sive

as

not

nearly

they

impres¬
* at first

as

appear

glance.

By far the bulk of this financ¬

holders.
The
will

observed

marks,

season

now

and

the

start

a

new

of

at

bentures

the
on

issue
to

holders
meeting

company's

be

a

annual

proposal to

on

cre¬

convertible de¬
to

offered

share¬

holders in the ratio of $100 of the
new

issue for each six shares held.

This

"you can tell it to me easier."
Between

vote

next month
ate

000,000

the

®

Western

wise

authorized

and

shares

(par

company

•

This

could
or

foot

up

to

thereabouts

$391,-

and

on

is being

to

400,000

taken to

place

in position ot sell the stocks when market
favorable.

are

Traditional

underwriters:

con¬

Harris,

(Inc.) and First Trust Co. of Lincoln, Neb.

March

ized

y

14 stockholders authorized an increase in author¬

common

stock

from

500,000 to 750,000 shares

(par

$1) and approved proposal to waive preemptive right to
subscribe to additional

additional shares
additional

of

^hares. Company

working capital.

past performance

York

shares

Telephone

of

new

common

allure for the bank¬

no

offer

proposes to

publicly, the proceeds to be used for

Co.'s projected issue of one mil¬
lion

300,000 shares

action

Wilcox-Gay Corp.

New

carries

Inc.

increasing authorized

on

from

common

$10).

point

since it would be taken by
American
Telephone & Tele¬

ers,

the

operation

most successful

fraction of the total
go unsubscribed.
Like¬

a

$12,000,000 of
Proceeds would be used to re¬

Light & Telephone Co.,

a

might

the New York

issue

to

preferred from 200,000 shares to 250,000 shares (par $25)

basis

only

authority

for

Hall & Co.

in several

on

the

was

cost

a

basis
7;;;..^

years.

The group which acquired the
issue fixed a reoffering price Of
100.70

for

9.96%,

an

and

indicated

among

yield of

dealer circles

initial demand, on that basis, was

reported

bit

a

on

the

slow side.

graph which owns all but direc¬
tors'

qualifying shares.

Forcing Competition
There

Bell

The

Telephone
Co.
of
Pennsylvania is scheduled to enter
the market during April with an
offering of $25,000,000 debentures.
This will be a sealed bid project.

tomac

are

indications

Electric Power

,

that

Po¬

Co.'s plans

to market

$37,000 000 of new 20debentures by direct place¬

year

ment,

encounter

may

a

challenge.

-

Reports
Columbia Gas 3s

Five

parent

Co.;

&

(jointly).

April 8 stockholders will vote

(5/10)

is

better."

his

Summer

Weld

$9,993,000 general mortgage 4% bonds due 2004
plant construction. Probable bidders include:
Morgan Stanley & Co.; Halsey, Stuart & Co. Inc.; Mer¬
rill Lynch, Pierce, Fenner & Beane; and Kidder, Peabody
& Co. (jointly); Shields & Co. and White, Weld & Co.
(jointly); Blyth & Co.; Lehman Brothers, Harriman Rip¬
ley & Co. and Union Securities Corp. (jointly).

privately to three institutional in¬

dealers

bard them with contracts but

In

the

White

deem
and

Co.

ing will be more or less direct,
by-passing the investment banker
and going directly to American
the country. According
&
Telegraph share¬
banker "you can bom- : Telephone

of their number who

one

engaged

for

30-year mortgage bonds.

Halsey, Stuart & Co. Inc., The First Boston
Morgan Stanley & Co., Kuhn, Loeb & Co. and
Lehman Brothers (jointly). Bids expected to be opened
May 10.

ties

scheduled

200,000

Power

bidders:

W. C. Langley & Co.

Corp.,

are

being offered**to its

Competitive bidding is expected

Probable

Westchester Lighting Co.
March 16 company filed a petition with

prior lien bonds, to pay off bank loans and finance com¬
pany's construction and expansion program.
Probable

instance

Contact

York State.

are

Electric

1.

•

ditions

working on the
job of rounding up subscriptions
for the 880,000 shares of New

bidders

future

near

debentures

the

retire, June 1 next,

Those who

tive

the

Potomac

equivalent amount of first mort¬
gage 5s maturing in 1952.

Prospec¬

Electric Co.

bidders:

be used to

debentures.

&

Public Service Electric & Gas Co.

contemplates offering 784,235 shares
of unissued common stock for subscription for pro rata
by common stockholders in the ratio of one new share

$35,000,000

Gas

April 18 stockholders will vote on authorizing the issu¬
ance of $75,000,000 first and refunding mortgage bonds.
Proceeds from the sale will be used in part to retire

company

The New England Telephone &

bonds.

and

~

approved plans for sale of $20,000,000

Corp.; Stone & Webster Securities
Corp.; Halsey, Stuart & Co. Inc.; Glore, Forgan & Co.

vestors.

Liggett & Myers Tobacco Co.

Telegraph Co. will consider bids
next Wednesday on an issue of

directors

^

are

st^ck were

Securities

sell

being formed to bid
for a probable offering by company of $10,000,000 in new
money bonds. Offering expected late in March or early
in April.
Groups likely to compete include: Halsey,
Stuart & Co. Inc.; White, Weld & Co.; Glore, Forgan &
Co.; Equitable Securities Corp.; Blyth & Co., Inc.; Union
Securities Corp.; The First Boston Corp.

8

18

capi¬

shares to 7,000,000

2,000,000

of Dec. 31, 1948.

as

1st & ref. mtge.

when Halsey, Stuart & Co. Inc., formed an investment
banking group to consider a bidding proposal for the is¬
sue.
The company March 8 told the Public Utilities Com¬
mission of the District of Columbia that it planned to

Kansas Power & Light Co.

March

additional

an

Virginia Electric & Power Co.
Feb.

efforts probably will be made to have
company's proposed $37,000,000 new 20-year debentures
thrown open to competitive bidding. This was indicated

that company may borrow up to $150,-

banking groups

outstanding

March 11 reported

increasing authorized

000,000. At same meeting stockholders will vote on in¬
creasing authorized common stock from 2,500,000 shares
to 3,500,000 shares.
Probable underwriter if securities
sold: The First Boston Corp.

Feb. 15 reported

by

A total of 4,928.597 shares of common

Union

•

Laugh!in Stee! Corp.
so

stock

shares.

shares of Oklahoma
common
it now owns, plus any shares purchased through
rights to be offered by Oklahoma to its stockholders to
purchase 89,000 shares. (Standard will have right to sub¬
scribe for 50,002 shares). Probable bidders include: Mer¬
rill Lynch, Pierce, Fenner & Beane; The First Boston
Corp.; Lehman Brothers; Goldman, Sachs & Co.; Harri¬
man Ripley & Co.; Smith, Barney & Co.; Otis & Co.

present stockholders, in the ratio of one hew share
10 shares held.
Probable bidders for bonds:

indebtedness

tal

June

to

would be offered for subscription by

on

Sun Gil Co.

®

7

March 10 Standard Gas & Electric Co. stated it proposes

each

&

(jointly); Lehman Brothers; .The

Weld & Co.

First Boston Corp.

around

•

.

Jones

j White,

Morgan Stanley & Co.;Kuhn, Loeb & Co.

P. S. Commis¬
sion for permission to issue $8,000,000 first mortgage
bonds and 107,226- shares of additional common stock.

April 26 stockholders will vote

:
•

company

have in mind the maintenance of a sound financial
structure. Probable bidders: Halsey, Stuart & Co. Inc.;

Indianapolis Power & Light Co.

the

12

ways

March 1 company has asked the Indiana

for

,

Corp.

March 15 stockholders voted to increase authorized

company

new common

i

Niagara Hudson Power Corp.
March 2 at hearing before SEC on proposed merger of
system, Earle J. Machold, President, testified that cash
budget requirements for construction purposes through
1951 would be about $105,000,000. In 1949, $40,000,000 is
to be financed by mortgage debt; Later financing, Mr.
Machold stated, would be difficult to predict at this time,
but in any future financing the management would al¬

ceived March 25 tor the purchase of $6,360,000 in

The

Gas

&

corpora-

first mortgage bonds* and
$4,000,000 in new preferred stock. Proceeds from the
bonds would retire the company's short-term indebtedness and provide funds required for expansion. Proceeds
from preferred stock would be used by company to carry
cut its plan of recapitalization. Probable bidders on
bonds: Halsey, Stuart & Co. Inc.; The First Boston Corp.;
Harriman Ripley & Co.; Kidder, Peabody & Co.; Otjs
& Co. On preferred: W. C. Langley & Co.; Kidder, Pea¬
body & Co.; Stone & Webster Securities Corp." arid

•

has issued invitations for bids to be re¬
equip¬
ment certificates series CC. Bidders at the sale may sub¬
mit alternate proposals for l-to-10 year certificates and
for l-to-15-ye.r certificates.
Probable bidders: Halsey,
Stuart & Co. Inc.; Harriman Ripley & Co. and Lehman
Brothers (jointly); Harris Hall & Co. (Inc.); The First
Boston Corp.; Salomon Bros. & Hutzler.
The

Electric

Corp.

tion to issue $2,750,800 30-year

>

(3/30)

ly); Blyth & Co. Inc. and Smith, Barney & Co. (jointly).

Blyth & Co., Inc.

Illinois Central RR.

•

State

York

Edison

| Jan. 28 New York P. S. Commission authorized

expects to finance its construction
program in part through the sale of 160,000 shares of
preferred stock (par $25) later this year, probably before
July 1. Probable bidders: Harriman Ripley & Co. Inc.;
The First Boston Corp. and Glore,' Forgan & Co. (joint¬
March

five years calls for expenditures total¬
ing $50,000,000.
Company's present plans call for the
raising of up to $23,000,000 this year to meet the 1949
expenditures, through the sale of 200,000 common shares
(par $20), 100,000 shares of preferred stock (par $100)
and not exceeding $12,000,000 of bonds. Probable bidders

program for next

for securities include

New

Island

Staten

held.

Hutzler; Harris, Hall & Co. (Inc.); Harriman Ripley
Co. and Lehman Brothers (jointly); White, Weld & Co.

&

Power Co.
company

bidders: Halsey, Stuart & Co. Ine., The First
Corp., Harriman Ripley & Co. and Lehman
(jointly);-Salomon Bros. & Hutzler.
| :

Brothers

ment trust

underwriter: Estabrook & Co.

AA,

New York, up to noon (EST), March 22,.
of $15,900,000 equipment trust certificate^
due in 10 or 15 equal annual instalments. ^

Probable

I Boston

plans sale of $4,250,000 equip¬
certificates, probably about March 30. Prob¬
able bidders: Halsey, Stuart & Co. Inc.; Salomon Bros.

$2.50. Disposition of additional shares not decided
upon.
No financing said to be imminent. Traditional

sale

the

for

Feb. 25 reported company

par

(3/22)

Southern Pacific Co.

!.

stock¬

holders in ratio of one new share for each 10 shares

Co.

Peabody. & Co

i

The

(par $1).

1,100*000 shares to 1,200*000 shares

additional stock will be offered for subscription by

Proceeds fqr

Traditional underwriter, Kidder,
:
j

construction purposes.

•

stock

common

planned to offer common stockholders this spring
shares of common stock in an amount suf-

is

ficient- to net approximately $2,000,000.

(

;

voted to

stockholders

23

authorized

2,021,460 shares to 3,021,460 share£.

stock from

additional

Minneapolis Gas Co.

Feb.

increase

to

voted

stockholders

12

common

j.

.

Electric & Gas Co.

South Carolina

•

It

•

for the sale of the additional stock.

on

ler; Harris, Hall & Co. (Inc.).

i

Michigan Consolidated Gas Co.
March 9 reported company is planning sale of $14,000,000
in new bonds and $7,000,000 in .preferred stock in late
spring or early summer. Probable bidders: White, Weld
& Co. and Salomon Bros. & Hutzler (jointly); Glore, For¬
gan & Co. and W. C. Langley & Co. (jointly); Lehman
Bros.; Harris, Hall & Co. (Inc.); Halsey, Stuart & Co.
Inc. (bonds only); Harriman Ripley & Co., Inc.; Dillon,
Read & Co.; First Boston Corp.

which mature next Dec. 31, would have to
be paid from earnings, which would mean restricted
cash dividends on the shares. Directors have no plans

stockholders will vote

|

plans to. split its common
new; financing of

company

one

March

bank loans,

common

reported

Lehman Brothers.

position to obtain additional workings capital through
sale of new stock. If it does not do so the $10,000,000 of

ized

ders: Halsey, Stuart & Co. Inc., Harriman Ripley & Cq>.(
land Lehman Brothers (jointly); Salomon Bros. & Hutz-

$5,000,000 to $7,000*000. Details have not been completed. !
Traditional underwriters: Goldman, Sachs & Co. and. i

a

29

9

two' for

stock

increasing the author¬
ized common stock from 300,000 to 600,000 shares which,
since 284,984 snares are now outstanding, would provide
315,016 for issue or sale. The management explained
that when market conditions are favorable it should be

March

'.

-

Merck & Co.

Wheeler Corp.

Mineral

i „

^

bids to be re»-;

,

determined.

been

March 28 stockholders will vote on

Foote

(3/17)

has issued invitations lor

company

duce

Kidder, Peabody & Co.; Merrill Lynch, Pierce,.Fenner &

at present

The

1949,

17,

The purpose of the proposed financing is to re¬ 'f ceived March 17 for the purchase of $4,260,000 l-to-15?-,
temporary bank loans required to finance leaf to¬ j year equipment trust certificates.
Proceeds from th<e
bacco inventories and "to maintain a conservative capital /proposed offering will finance for the road not mode
than 75% of the cost of new equipment Probable bidj-i
structure."
Decision on underwriting has not as yet

meeting March 31

annual

Beane.

in

Louis-San Francisco Ry.

St.

r

Thursday, March

month.

t..eir

amendments to the certificate of
reincorporation to provide for increasing the authorized
preferred stock from 80,000 to 120,000 shares; increasing
the authorized common stock from 1,210,000 to 1,600,000
shares and restricting the issuance of additional in¬
debtedness maturing more than 12 months, or additional
shares of preferred stock unless after such issuance the
aggregate amount thereof shall be less than 75% of the
total capitalization. Traditional underwriters of stocks:

Foster

A registration statement cov¬

ering the proposed offering will be filed with SEC this

will consider proposed

•

'

CHRONICLE

FINANCIAL

&

for each four shares held.

(Continued from page 45)
Florida Power Corp.
The

COMMERCIAL

THE

(1214)

entered

groups

least

.

bids

for

Columbia's Gas System's $20,000,000 of

new

25-year debentures this

week, with the issue going to the
group which bid 100.057 for a 3%
coupon.

7

rate,
a

a

ranged

:J 02.1127 down to

101.781. From

current

that

at-

banking syndicate has

one

been formed to bid for the issue
and

that

demand

aggregation

Securities

Commission

change
throw

this

the

issue

open

will
Ex¬

and

action

for

to

com¬

petition.

Other bids, all fixing

interest

are

a

3'/8%
from

minimum of

company

stand¬

It

was

indicated that the

com¬

pany

had virtually worked out

deal

whereby

were

ready to absorb the issue.

three"

a

institutions

Volume

Number

169

COMMERCIAL

THE

4786

Morgan Stanley Group

CHRONICLE

of the 1949

funds for completion
program.

Offers Columbia Gas

880,000 Com. Shares

The

;The initial step
tion

System 3% Debentures
Stanley & Co. headed

Morgan

in the distribu¬

of

880,000 shares of common
stock (par $25) of New York State
Electric & Gas Corp., now owned

investment ' banking

an

16

group

which offered to the public March

of

issue

new

a

of

$20,000,000

by. General Public Utilities Corp.,1 3% debentures, due 1974, of The
Columbia Gas System, Inc.
was taken March 14 with the of¬
The

fering by the parent
its

stockholders

New York State

to

company

shares

of

the

of

utility.

.G. P. U. has completed arrange¬
ments with The First Boston

Brothers,

issue

Merrill

and

Fenner &

&

Beane to

act

as

of

of. securities

a

nationwide

group

subscriptions

for

sell

and

$11,725,000 the

in

will

be

System's

used

the

subscribe for such shares
a-

share

on

the basis of

at

$41

share

one

for

G. P. U.

each

10

tional

shares

3 p.m., April 11,

Proceeds

will

Columbia

oil

An annual fund of

1, 1973.

$650,000 commencing in 1953 is
designed to retire approximately
68% of the issue prior to maturity.

System, through
its operating
subsidiaries dis¬
tributes and sells natural gas in
Gas

industrial

For

wholesale

at

public utilities for "resale.
Prin¬
cipal marketing territory includes
large aTeas in Pennsylvania, Ohio
West

and

Virginia.

ton of the total

operating

served

at

An interconnected
tem

an

of

As. of

Dec.

common

DIVIDEND

The
on

man

to

contact

General

mission

plus

dealers,

Must

travel

have

banks

and

expenses.

♦

*

*

s>

A

pany

to

SALESMAN

in

20

1 d.

firm.'

"Commercial

Chronicle,"

securities

At

STRAUSS, Treasurer.

firm

in

St.

per

share

Florida

New York 8.

St.

stockholders of rec¬
business March 18,

ital

of

Stock

The dividend

15,

March

Bank

Building

Petersburg, Florida

Board

The

1949, to stock¬
31, 1949. The

payable April 1, 1949 to

declared 25 cents per

issued
on

the

the

of

The

business March 21, 1949.

remain open.

MILTON L. SELBY. Secretary.

Reynolds Metals Building
Richmond 19, Virginia

pay¬

business

of

books
March

the

at
22,

1949.

The

regular

thirty-seven

($1,375)

Secretary
March

15, 1949.

COMMON STOCK DIVIDEND
56th Consecutive

PREFERRED DIVIDEND
COMMON DIVIDEND

and after April 1, 1949,
stockholders of record on

MARSHALL G. NORRIS,

51/2%

a

cumulative

convertible

pre¬

company

information

for

on

your

the

look to

books will not
be

ALLYN

The

directors

also declared

a

April 10,1949 to stockholders of record'
March 24, 1949.
'
A. E. WEIDMAN

of

Treasurer

February 24,1949

DILLARD, Secretary

1949

company.
The Directors

have

declared from the

Accumulated Surplus of the Company a
,

I dilrvHHOfiraph

dividend of seventy-five cents ($.75) pe:

Service

share

We

have

a

metal

stencil

in

our

at

graph

Department

for

investment

every

on

the

alphabetically

by

States

stockholders of record

the close of business

March 15,

on

1949. Checks will be mailed.

banking and brokerage firm in the country,
arranged

Stock, payable

Common

March 31,1949, to

Addresso-

H.

C. ALLAN,

Secretary and Treasurer

and

Philadelphia 32, March 4, 1949

Cities, and within the Cities by firm names.
This list is revised daily and offers you the

WARD

^iiiiimiiituiiintnimiuiuniiuiiiniiiuuiQiiuaiaiii!

most

up-to-the-minute

Our charge for

V"';

service

available.

COMPANY

BAKING

The Board of Directors has declared the following

addressing envelopes for the

complete list (United States or Canada) is

New

England Gas

PREFERRED

dividends:

DIVIDEND—

$5.00 per thousand.

and Electric Association
All

addressing completed within 24 hours.
COMMON DIVIDEND

We

can

also supply the list

labels at

a

on

gummed roll

quarterly
cents

dividend

(20^)

per

COMMON SHARES

ciation

Herbert D. Seibert &. Co., Inc.
Publishers of "Security Dealers of North

25 Park Place




REctor 2-9570

America"

New York 7

to

of twenty

share

on

quarterly dividend of $ 1.37V2

Stock

NO. 8

The Trustees have declared a

small additional charge.

The

the

of the Asso¬

payable April 15, 1949
of

business

March

31,

1949.
H. C.

MOORE, JR., Treasurer

quarterly dividend of 25 cents

iinuMMnnutiQ

a

share

L. T.

on

on

the Preferred

the Common Stock

Melly, Treasurer

WARDS

TIP-TOP
BREAD

March 9, 1949.

share

payable April 1, 1949 to holders of record March 21, 1949.

shareholders of record at the

close

a

payable April 1,1949 to holders of record March 21,1949.

COMMON DIVIDEND—
A

475 Fifth Ave., New York
March 10,1949

regular

quarterly dividend of 65 cents a share
on Convertible .Preferred Stock, payable

be closed.

mailed by Bank
Manhattan Company.
will

Dated, March 10,

Quarterly Dividend

Quarterly Payment

7th Consecutive

of twenty-five

The transfer
Checks

194th Consecutive

April 10, 1949, to
1949.

PREFERRED STOCK DIVIDEND

1949.

cents (25if)
a
share on the outstanding common
stock has been declared payable April
1, 1949, to holders of record at the
close of business March 23, 1949.

Annual Report to the Investment

Stock payable

stockholders of record March 24,

quarter

A dividend

The Electric storage Battery

Board

mon

dividend of one dollar
and
one-half
cents
share on the outstanding

has been declared for
ending March 31, 1949,
payable April 1, 1949, to holders of
record at the close of business March

the

Quarterly Payment

of Directors of Seaboard
Finance Co. declared a regular quarterly
dividend of 45 cents a share on Com¬
The

stock

ferred

23,

them

V

.

COMPANY

has this day
share as the

outstanding,

and

corporation's

close

Investors

is

stockholders of record at the close of

REYNOLDS

Directors

of

Corporation

Arundel

to

Country.

of $ 1.2 5 per share

METALS

National

able

the

the 5 % Preferred

on

rate

MABYUNO

tion

of

the

March 4, 1949.

BALTIMORE

regular quarterly dividend, on the
par value stock of the corpora¬

Houses

share

at

ATKINSON, Treasurer

w.

e.

per

arid

Com¬

this

record

of

of 25c

rate

Stock is

the Cap¬

payable April

the

business March 21,1949.

regular quarterly divi¬
per share has
on

at

is

payable April 1, 1949 to
stockholders of record at the close of

dend of 754

no

Mail your

% Preferred Stocks.
The dividend on the Common

and

COMPANY
A

of Safeway

March 4,1949
declared quarterly dividends on the
Company's $5 Par Value Common and

Stores* Incorporated, on

H. B. Pierce, Secretary

^CORPORATION^

FLORIDA SECURITIES COMPANY
601

Stock Dividends
The Board of Directors

ARUNDEL)

and

ies confidential.

Place,

the

of

stock

s

in all

issues

Treasurer

Preferred and Common

dividend of

on the cpm^
Company, payable

March 8, 1949.

Investment Trusts. All inquir¬

D-l,

of Directors,

declared

was

stock transfer books will

Peters¬

KEMP,

M.

Safeway Stores, Incorporated

DIVIDEND No. 291

a

holders

Florida—dealing

1949.

March 9, 1949

COMMON

been declared

well-established

Over-the-Counter

Financial

25'Park

represent

burg,

Seeks

Box

&-

busi

1949.
OTTO W.

15,

Packing Company

Dividend Notice

Over-

connection with N. Y. Stock

exchange

of

close

WANTED
To

e

the

at

dividends on both Preferred
payable April 5, 1949, to
at the close of business

record

of

WALLACE

pany,

AVAILABLE

f i

April 20,

record

of

de- '
the

The Garlock

LION OIL

the

Machinery

Corporation have
37V2c per share on

of

The

stock.

Stock is

»

been

stockholders

ness

the-Counter

all

on

has

Treasurer.

this

dividend

a

capital

5

dividend of fifty cents (50c) per
outstanding stock of the Com¬
declared payable April 30, 194C

quarterly

share

24.

BACH,

and Common stock are

ord at the close of

25 Park Place, New York 8

TRADER

Treasurer

Dividend No. 179

Box G 317,

experience

FOX,

SUPERHEATER, INC.

Com¬

SITUATION WANTED

.years'

M.

SAMUEL

of

Directors

clared

1949.

car.

H.

Preferred capital stock. They have also declared"
a
dividend of 62 '.'2c per share on the Common

17, .1949

COMBUSTION ENGINEERING-

experi¬

Stationery

&

Corporation
The

close

March 31, 1949, to

securities

March

on

Shoe

United

declared
0
per
share

March

25^

contracts

WANTED

with

corporations.

business,

cents

System in the Appalachian fields

Commercial & Financial Chronicle

listed

15

of

Capital Shares of the Corporation pay¬
31, 1949, to stockholders of record
of business March 18, 1949.

the
the

dis¬

CONTACT MAN
Young

close of business
E.

SHARES

has

Directors

dividend

substantial

long-term

Tablet

Western

I

March

DIVIDEND NOTICES

ence

of

stockholders

of

P.ublic Utilities Corp;

With

at

CAPITAL

ON

of

Board

semi-annual

meeting of the Board
held this day, a quarterly

under

Stock

Corporation has been declared, payable on April
11, 1949, to holders of record of such shares

CORPORATION

available to the

gas reserves were

STATIONERY

hereby given that a dividend at the
rate of $.50 per share on the issued and out¬
standing shares without par value of the Com¬

unit, the Sys¬

1948,

31,

&

is

at the

mon

HELP

Notice

mon

& UTILITIES

tribution and field gathering lines.

addi¬

common

CORPORATION

charges, appli-

GENERAL REALTY

by the

transmission,

gas

13,452,874 shares of

WESTERN TABLET

DIVIDEND NOTICES

operates approximately 31,500

miles

ex¬

Sys¬

DIVIDEND NOTICES

of $120,142,433

System is around 7,000,000.

with

$61,900.-

and

and

consolidated

total

revenues

and income before

The popula-

area

Gas

stock.

reported

other

to

Columbia

1948, Columbia Gas System,

Inc.,

Gas is

customers.

com¬

gasoline

operations.

1,214 communities to more than
1,000,000 residential, commercial
and

also"conducts

pany

The

to

Giving effect to this financing
the
corporation will have out¬
standing $158,500,000 of debentures

connection with

In

utility business the

and

1949.

to

go

1948,

involve

will

estimated

by the sale of additional

ferable subscription warrants ex¬
pire at

March

$24,400,000 must be raised

stock held. Trans¬

common

prices decreasing to 100 on or after

construction

It is estimated that

of New York State Electric & Gas
common

1949

of

close

entitled to

are

October,

connection

which

penditures
000.

business March 10

28, 1950 and thereafter at

Kansas.
gas

March

in

stock

program

at

its

cable

area

47

Oklahoma tem, Inc., of $17,903,433.

Louisiana,

Electric

General Public Utilities' stock¬

holders of record

company

realized from the sale of additional

and Gas company.
;

subject

able

the

the

the common' stock of the

the sale together

Proceeds from

common

solicit

on

are

will

which

dealers

the

to

bidding

competitive

at

dealer
with

managers

maturity.

to

awarded

was

ap¬

March 15.

Pierce,

Lynch,

2.96%

yield

Feb.

to

also' sold

Corp.,

Wertheim

interest to

proximately
The

priced at 100.70

were

accrued

and

group

Lehman
Co.

debentures

Texas,

redemption at 104.35 on or prior

to

Of Et. Y, State Electric

in
and

debentures

new

(1215)

provide from the southwest producing

to

debentures

and

stock

G. P. U. Offers Holders

FINANCIAL

&

City

WARDS

TIP-TOP
CAKES

48

(1216)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, March 17, 1949
On

BUSINESS BUZZ

the

law-

other

on..

hand, if the final

provides

White House

ization

of

/■

achieve

fl

jljL M tsxJL

from the Nation's Capital

JL CrUr

proposed

of

reorgan¬

be vetoed by either
Congress singly, then

the President's

Beliini)-the-Scene Interpretations

a

may

House

that
scheme

negligible.
would

actual

capacity to

reorganization

Most

stand

chance

a

wilF

'

be

reorganizations
of

being
:
V

overturned by a single House.
As

•

WASHINGTON, D. C.—There
for governmental

action

two

are

facets to the outlook

new

can

to

"cure^'

(2)

Congress

inclined to

seems

general admonition to the

a

Federal

Trade

please

refrain

Commission

itors

to

doing any¬
thing more about upsetting busi¬
ness
pricing practices involving
freight absorption, at least until
the Supreme Court has once more
passed upon the subject in the
pending
"rigid ' steel
conduit"

hectic
in

T

'-j

the

Cement

(

conditions

deal

legality

of

of

worry

system.

U.

the

f.o.b.

strict
did

as

and

S.

pricing

industry generally

reassured by the

Commission's
not

all

but
•

"assurances"

only bad

hart,

ones.

time

this

launched

through

bad

ipal

•

are

tions

subcommit¬

Committee

a

ings which drummed up sentim#ht for doing
something
to
counter the

potentially devastating

effect of the Cement

case

inter¬

as

Federal

Federal

pricing practices.

eral

With

the

election,

the "Capehart
committee"
passed
to
the
of
Senator
Ed
chairmanship
Johnson of
Chairman

the

full

tributions
the

a

harmful.

be
In

the

,

bill

for
eral

had any

actions

new

pricing
the

a

period
to

of

a.
no

business

except

obviously

.

launch

against

systems

same

•

where

were

Likewise

the

House

Judiciary

broad definitions.

It

looks

tentatively

kind

some

slated

to

of
be

a

J

a

For

such

"moral"

pervisory
public

ness

the

sense

will

that

about

pricing

prosecuting
practices

and

an

the bank
a

member

the prosecutors.




Washington is

reason

that

/

a

greater

as

capri¬

There is
the

bill

also

a

a

local

Under the

who

are

that

with

Commission

on

the

of

Organ¬

the

Government

having

of

Defunct and

will

be

prestige,

in

any

It will include

the

many

of

about

news

way.

of schemes for

reorgan¬

particu¬

assuming that

empowers

What the Hoover Commission

or

is purely advisory.

not

may

outline

actually will be done.
sible

much

of

he will

that

pres¬

tige and backing as possible, by
giving
the
reasoning
of
the
Hoover
own

Commission

schemes,

so

far

behind
as

that

Hoover

the

It is

findings

Commission

of

may

It

what

dissolved

and

pos¬

the

have

under

the

Elec¬

The 1949

lished

edition, which is pub¬

by Thomas Skinner & Co.

(Publishers) Ltd., Gresham House,
Old

Broad

St.,

London,

E.C.

in mind, with respect to any
important detail, in the way of
plans for reorganizing.

Congress is considering legisla¬
tion empowering the President to
initiate reorganizations which will

effective

unless

Council of the London

Stock Ex¬

change, costs $30 for both
(duty paid)
Canada.

the

Copies of the Year-

niay also be purchased from

same

New

volymes

in the United States

firm

at

111

Broadway,

York, N. Y.

legislation

Ralston Steel Car

Oregon Portland Cement
Riverside Cement A & B

Spokane Portland Cement

both

houses jointly disapprove of them
within 60 days. If the reorganiza¬

through in
this form, the President will ac¬
quire a very considerable initia¬
goes

LERNER & CO.
Invesment Securities

10 Post Office

Square, Boston 9, Mass.

Telephone Hubbard 1990 Teletype BS 69

tive in this matter.

;

HAnover 2-0050

Teletype—NY 1-971

Hill, Thompson & Co., Inc.

Firm Trading Markets

NEW

FOREIGN SECURITIES

YORK

5

Executive & Underwriting Offices

All Issues

70

WALL

STREET

Tel. WHitehall 4-4540

feature of
FOREIGN SECURITIES

ex¬

existing act, if

housing authority offended

,

50 Broad Street

SPECIALISTS

Trading Department

;

120

New York 4, N. Y.

BROADWAY

Tel. REctor 2-2020

AFFILIATE: CARL MARKS & CO. Inc. CHICAGO

J

2,

England, under the sanction of the

Trading Markets:

However, no one as yet pro¬
fesses to know what the President

tion

the final details of

companies nationalized

his

relevant.

become

1949,

second

they are

has

is because,

initiate

may

as

July,
the

tricity Act, 1947.

and

proposes,

in

with

Register

Companies

volume of the Official Year-Book.

Book

borrow

published

simultaneously

lar plan of reorganization which

President

Other

a

'

large

Exchange,, etc.,
published in earlier
been reinstated and

fARL MARKS & p.p. INC.
new

contrasting with the

isting public housing act, enacted
in 1937.

follows

ex¬

guarantee.

press

brokers

in the first volume.

than

cept for the absence of the

busi¬

the

issues.

they may underwrite these is¬
sues/ They will be equivalent to
Federal or municipal issues, ex¬

be

other

ization of the Executive Branch

de-

2%.

welter

proposes

to

banks

of the outlines

some

particular plan of reorganiza¬

Hoover

housing

public

the President
plans for reorganiza¬
tion, concrete plans likely to be
put
into
operation
will
come
chiefly from the White House.
to

toward

municipal

the

It

su¬

purely

any

going.

Congress

proj¬

consented

amount

in

published in

Exchanges, the Provin¬

has

reorganization plans.

appeals to him after the idea for

public

the

That

however,

attitude

housing,

be

The 1949 edition of the

upon

do

hibition against lending to or in¬
vesting in any one creditor or

the

gressional ire. That may be an
effective restraining
influence

the

contribu¬

the

influence

hand, the Presi¬
dent is
most
likely to propose
what appeals to him, and what

if

ization.

officials, in

and

issuer

notice that it may run into Con¬

bill

the primary factor
affecting what actually does de¬
velop in the way of concrete plans
for
reorganization is what the
President later m&y propose
in

the

Banks may invest in them With¬
out regard to the standard pro¬

they

ciously, is in effect served with

upon

reduce

Federal

reason

Federal

government, if it gets too enthu¬
siastic

to

10% of their capital funds. And
moratorium

new

Government,

contribution.

subsidizes

national

other hand, the effect
in

the

plans for reorganizing the Federal

amendments giving these bonds
the same investment status with

is

although it
the FTC and the D of

a

In

necessary.

that

to

of

was

editions

the

note, is that the Federal

service, if

moratorium,

On the

local

Under

well under

to the amount of the debt

up

girl in here?"

housing authority tion
has
been
kicked
around
something nasty like among
his
advisers.
Many
of
packing a public housing develop¬ these advisers will have a stake
ment full of deserving Republi¬
in a reorganization, either in
pro¬
cans, then PHA would not cut off
tecting the bureau they work for
the debt service, but would take
or
in
acquiring
functions
and
over the project but keep the debt
activities from another bureau.
a

should

Govern¬

important,

Government

adopted.

lay off a lot of cases
might otherwise play with.

of

is

officials

though

to

doubt.

actual

On

debt

facto Federal guarantee will sell

v;'/

What

heavily upon the seeming
immunit}' from prosecution
of
cause

the

tion..

very

such

a

confident

of

of

long

so

the

important

suggesting

these

of

one

bonds, tax exempt and with

earned $10,000 a
operating costs—if it
inclination to do so—that

of

Business
generally is not expected to rely

may

rate

a

Federal

go

a

President Truman, and hence in

as the
service
could be removed, there might be

for

prop

For this

under¬

off

darlings, but

main

service

project

non-partisan

"moratorium"

to

above

amount

*

as

were

contribu¬

at

annual

would

pricing systems under the

on

same

the

$10,000

ect

committee reported out a similar
bill with a "moratorium" on ac¬
tions

the

year

con¬

spiratorial and against the pub¬
lic interest.

Bridge¬

would

annual

years

4l/z%

partment

years

the

not need to make the

may

If

for

40

Actually

reporting out a bill, in effect
telling the FTC and Justice De¬
of

If

borrow

little

cut

ever

terest charges and amortization.

entire

couple

by

more

with

of

Fed¬

This would be ample, or
than ample, to cover in¬

ment

intention

The

undertakes

in annual con¬
exactly equivalent to

make

think I have

an

remote possibility that PHA

a

would

for

antitrust laws, asserted its un¬
questioned
jurisdiction,
but

apparent

unlike

tions

Senate

Judiciary committee, which ac¬
tually has jurisdiction over the
subject of amendments to the

the

they

was

Government
to

S. Public

Housing Admin¬
istration, PHA could cut off the
annual contributions.
Actually it

$1,000,000
housing project, the Fed¬

a

list

appears

the U.

backed fully by the

to

you

fi¬

obliga¬

exempt,

illustrate:

take

the

to

"Now, Honeybunch, what makes

chip

undertake

,

meantime

the

port Housing Authority

designed to legalize price absorp¬
tion except where it was adjudged
to

em¬

service.

debt
To

committee.

Senator Johnson introduced

The

Since these

Government.
to

sections

included

be

members of the London Stock Ex¬

which

issues.

Government

contract

Colorado, who is also
of

is

municipality,

purposes

mines

and

to

are

July, 1949.

munic¬

or

bonds

face

tax

com¬

cial Brokers' Stock

hand, although the
obligations of a municipal instru¬
mentality, they are to all intents
and

trusts

second volume

most

On the other

preted by the FTC upon industry
;

local

issue

a

preceding edi¬

exception of

change, the Associated & Provin¬

project.

totally

are

series of hear¬

of

with the

cial Stock

their

on

the sections of

ment

public

authority

to

the

nance

tee of the Senate Interstate Com¬
merce

the

pending
a

housing

containing
1,577
contains the special chap¬
general information, etc., &nd

which

up.

the

printed in Great Britain,

mercial, industrial, etc., financial
trusts, land and property, invest¬

public

companies

effect

set

now

powered

CapeRepublican,

a

as

housing bill,

Senator

Indiana

an

in

all

commercial

insurance

Under

that

were

and

Stock

volume,

tions

bill,
th'ey hit the

the

the

Yea r-Book#

released

ters.

clearance
as

of

in its 75th year, has just
in
this
country.

now

been

volume

Official

pages,

pending

Thus

become

law

Federal Trade

basing points

About

will

not

was

and

prevailing

important, supporters of public
housing, if the scheme becomes

system,

business,

another

many

banks

basing
point
Steel
adopted

any

made and

:I:

the

first

The

Exchange

This
#

under

market..!

the

over

Official Year-Book Out

up

Congress.

housing and slum
just about as fast

great

views.)

own

London Stock Exch.

right in its
forecasts,
the
private
financial
system will gobble up municipal
housing authority bonds to be is¬

a

"Chronicle's"

the

(b)

conjure

now

ing points in that particular in¬
developed

and may or may not coincide with

proof against the

sued

business

and

area,

could

cision outlawing the use of bas¬

stance,

re¬

flect the "behind the scene" inter¬
pretation from the nation's Capital

If the government is

de¬

case

it

•J:

and if possible until Con¬
gress gets a
chance to consider
new legislation next year.
After

same

if

formula

a

the

(This column is intended to

demagogues, that it could not get
such legislation passed under the

case,

v

the

even

such

chance

formula

in

that

from

and

reorganization tends to
diminish.

whereby busi¬
ness
can
legitmately
absorb
freight
charges
and
adjust
its
prices to meet those of compet¬

about it.

adopt

of

any

ceptable

the

dimin¬

the

the

get around to doing something

by

goes

broader

legist
In
apparent
bringing forth the morato¬
antitrust onus against the use of rium on
price practice prosecu¬
freight absorption
or
basing tions, the Congress is by that ac¬
points, and piously expresses the tion tacitly admitting (a) that it
hope that maybe in 1950 Congress cannot this year work out an ac¬
lation

week

.popularity

ishes

with

respect to price absorption as a result
of recent maneuvers,
already taken or in prospect, on this subject.
(1) Congress has said, in effect, that it doesn't see a chance of

getting through in 1949

each

President's