Full text of Commercial and Financial Chronicle : March 18, 1948, Vol. 167, No. 4682

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BUS. ADM.
LIBRARY

AMR 2 o
J94g'
ESTABLISHED 1S39

Reg. U. S. Pat. Office

Volume 167

Number 4682

New

%

York, N. Y., Thursday, March 18, 1948

Truman Urges
CfiticalSituations inOur
Defense Program

Price 30 Cents

Economy

By WILSON WRIGHT*

By HOWARD T. LEWIS*

along

wiih

training, restoration of selective'

service, and
our
►

abroad.

Accuses

.

r

commercial bank capital in relation to assets and

^

Russia

we

having already destroyed in¬
dependence of series of nations.
President Harry S. Truman de¬

special address on Marc h
17, before a joint session of both
Houses of Congress, in which he
a

leiterated

"fooling ourselves" by enlarging profits

are

ment

at.

the

salary

Eu¬

have

in

number

increases

are

increases

tempo¬

of

Truman

f

o

on

here today to report to you
the critical nature of the situa¬
am

tion in

Europe, and to recommend

action

for

consideration.

your

Rapid changes are taking place
in Europe, -which affect our for¬
eign policy and our national se¬
curity.
There is an increasing
threat to nations which

ing to

maintain

ernment which

its citizens.

deeply

striv¬

of

gov¬

grants freedom to

The

United

States

with

concerned

(Continued

are

form

a

on

the

page

Wilson Wright

a

I

am

not

taking into consideration the ef¬
fect of increased tax rates. So we
can

ice

say that the price of the serv¬
of many salaried employees

has

been

1939,

is

increased by 50%

on

*From

a

At

page

26)

on

paper

at the

since

basis.

gross

a

(Continued

of Mr.

the

Wright,

27th Annual Business

Professional

Mens

University of Cincinnati,
nati, Ohio, Feb. 20, 1948.

Group
Cincin¬

R. H. Johnson & Co.
Established

-★

<e>

to

establish

settlement

or

to,L

down

which

of

two

paths

more

should

proceed.

:Kl
./

While the host

,

are

a Real Issue

should

otmce

busily engaged
avoiding all "dangerous" issues—we

6f course,

gestion to make.

have

a

sug¬

^

1

i

•

We make it in the belief that
most of those individuals

who

aspire to public office this year, like those who
public office and have held public office in the

bottom

sincerely desirous of serving the public.

We make it

at this

—

of

as

moment

many as

because

now

hold

rv

x.celle

t

e

at

are

following a
long estab¬
lished
tion
to

tradi¬

refer

sion,"

from

reasons

to

We refer to the Federal
income tax with its

"progressive", gradation

which the individual must
pay to
of Internal Revenue.

be

in¬

enor¬

of the amount

satisfy the Collector

are

many such

to the naked
eye.

(Continued

on

H. T. Lewis

deci¬

if

I

may

be

pardoned

those

fore

and
one

which

might

separated

have

those which

have

on

be¬

gone

to

are

more

the usual justification for

(Continued

for

And yet if

page

fol¬

than

arguing
28)

*An address by Professor
Lewis
before the Purchasing

Agents' As¬

We call attention to it not
because of any injustice
that the present system
may do to many private citizens

—although there

to

"the

as

of

year

low,

or

I

were

a

terested in the matter.

mously steep,

and

company

1948

past,

n

great many — appropriating a phrase.
should be, but still a great any one year can be

have immediate personal

us

I

there¬

fore, be i

<§f politicians fseeking

year
in their usual
rhi
maneuvering—meanwhile,

sociation of Salt Lake
March 9, 1948.

City, Utah,

injustices quite obvious

page

32)

7

State and

STATE

and

1927

Municipal

MUNICIPAL

Bonds

BONDS

-

■'

-

'

.

we

perhaps not quite

increase.

gross

■

As!: We

many

read

Lithographing Go.

remember, writers and speakers alike have des¬
ignated the year in which they were
speaking—whatever that year
happened to be—as "critical." We have, indeed, stood at the
"parting
of the ways" so
long that it would almost appear that we were there

decide

This is

a

can

a

tions where the management uses
standard
classification
systems.

and

Havana

Ever since I

rather than

1939

had
approxi¬
50% increase in the sal¬
aries paid in the
larger corpora¬

mately

sur-

42)

rates.

increase

since

1-

address

base

approximates
50%. We have

t'g

lows:
I

The

the
e n

sees more danger to
prosperity
from within than from adverse conditions abroad.

/

1939.

the

salary

service

P resid
President

in

selec-

The full

text

tax

price deflation and

■

corporations

restora¬
e

$17 billion. Says economic
beginning to show in our economy, and Fed¬
policy are adversely affecting business. Looks

EDITORIAL

a

The

tiv

of total of

out

of

and

law.

serious

chance to prepare

a

-——

been

made

com¬

of

Budget and
no

have

we

are

in¬

since

a

for

in which

which

creases

pulsory
mil¬
itary training
rary
tion

eral

7

esti¬

of

mates

enact¬
of

points out

$5 billion

strains and stresses

opportunity to
look

Pow¬
together

with

of

extent

going to discuss three critical factors or critical situations
which have been
developed in our economy and which are of
major
interest right now. First, I want to refer to the
disorganization which
has been developed in our
price system. Recently I have had dn

ropean
ers,

as

deposits. Holds
result of inven-

economist

year

ahead, both foreign and domestic, Harvard
recent corporate profits are exaggerated to

am

the

Western;

Holding 1948 is critical
for grave uncertainties

expansion.

I

his

" to

our

tory accounting, and foresees many businesses unable to finance
needs internally* Looks for end of commercial bank loan

plea for swift
aid

three most critical situations in

as

University

Editor, "Harvard Business Review"

(1) distortions of the price system and resulting false
profit enlargement; (2) approaching decline in new business
capital
investment, particularly-inequity securities, and (3) reduction in

of

livered

:

economy:

strengthening of

a

armed services both at home

and

Industrial economist lists

-

ERP,
military

universal

Professor of Marketing, Harvard

Staff Consultant, Council of Economic Advisers

urges

Copy

1948—A Critical Year!

Economist, Armstrong Cork Company

In address to Congress, he
immediate
passage
of

a

INVESTMENT SECURITIES

Hirsch & Co.
Members

New

York

Stock

25 Broad
HAnover

Chicago

Teletype NY 1-210

Cleveland

Geneva

Street, New York 5

BOSTON

St., New York 4, N. Y.

2-0600

64 Wall

Exchange

and other Exchanges

London

(Representative)

Troy

PHILADELPHIA

Albany

Buffalo

Syracuse

Harrisburg

New

Bond

For

TENN. GAS & TRANSMISSION

Banks,

Brokers

and

New York

SOLD

—

securities

BONDS & STOCKS

and

*

OF

THE

CITY

New

OF

NEW

YORK

INSTITUTIONAL INVESTMENTS

(Incorporated)
Established

Analysis

Street, New York 4, N. Y.

SUTRO BROS. & CO.
Est.

-• -

1899

Members

New

York Stock

Cincinnati

Chicago

Columbus

Denver
Toledo
Buffalo

120

CORPORATION

Exchange

Telephone REctor 2-7340

request

ira haupt&co.
Members New
and

40

Broadway, New York

upon

Dominion Securities

1896

CLEVELAND
New York

England

Public Service Co.

Corporate Securities

OTIS & CO.




NATIONAL BANK

Bought—Sold—Quoted

QUOTED

Tele. NY 1-809

.

Underwriters and
Distributors of Municipal

Gordon Graves & Co.

Tel. WHUehsIl 3-2840

,

Toronto

CANADIAN

;

30 Broad

1-395

Montreal

foreign

.

—

HAnover 2-0980

Dealers

■+■

BOUGHT

THE CHASE

Security Dealers Assn.

Bell Teletype NY

Dept. Teletype: NY 1-708

TEX. EASTERN TRANSMISSION

Common Stock

York

52 WILLIAM
ST., N. Y.

Springfield

Washington, D. C.

CO.

Members

OF NEW YORK

Scranton

Wilkes-Barre
Woonsocket

Bond Department

THE NATIONAL CITY BANK HART SMITH &

Exchange Place, New York 5, N.Y,
Bell

System Teletype NY 1-702-3

111

other

Exchange

Broadway, N. Y. 6

REctor 2-3100
Boston

York Stock

Principal Exchangee

Teletype NY 1-2708
Telephone: Enterprise 1820

I

(1206)

Earnings or Confidence

Portland

.

Bought—Sold—Quoted

'

Hanseatic

New York

Corporation
120

York 5
Teletype NY 1-583

Broadway, New

BArclay

7-5GG0

In the summer

approach-

in

v -

v

;■

^

give

tions, to esti¬
probable
supply and

New

120

cor¬

2-7815

For Reconstruction

and Development
2>/4%

due 7/15/57

3%

due 7/15/72

G.

Jr.

Lyle,

Teletype NY 1-2846

Dr.
an

American Time Corp.

Steel

Boston & Maine

Steel
Stubs

Clyde Porcelain

Electric Bd. & Share

Film "A"

General Aniline &

International Detrola
Kirby Lumber
Northern

Manufacturing
New England

Steel

to be followed

by

Trust
United Artists Theatre
United Piece Dye Works
U. S. Finishing com. & pfd.

tainties, they have

continued
busi¬

longer-term

active

Telecoin Corp.

of,

divi-

creased
e n

d

re¬

are

the

of

story

snepherd boy
who called,

"Wolf,

wolf!"

these

pre¬

dictions

Dr. Wm.

Edwards

are

fre¬

To

of
investors is justified. But the risk
of the economic wolf appearing
has

extent,

been

the

concern

reduced—not

in¬

creased—by .recent price develop¬
ments. While these developments
Established 1856

have

added

improved the

outlook for investors.

Healthy

types of steel, automobiles,, agri¬
cultural equipment, building ma¬
terials and chemicals; firm prices
for copper, lead, textiles and many
other products of industry; local
shortages of petroleum, natural

and wrought great damage.

this

soon

to

uncer-1

near-term

and electricity; all these con¬
trast with the surpluses that ac¬

gas

business readjust¬
ments. In common with investors,
businessmen generally have been
cautious. They are avoiding many
of the mistakes of the past, such
as

past

building

up

excessive inven¬

prices. The world's
goods continues great

tories at high
need for our

and v/ays are

Co.

We Maintain Active

Members

being found to fi-

Stock

York

Curb

Exchange

York

Exchange

Minn.

Chicago

Inc.

Exchange,

Commodity

Board

of

Trade

Cotton Exchange

New Orleans

And other Exchanges

N. Y. Cotton
NEW
CHICAGO

Exchange Bldg.

YORK 4, N. Y.
DETROIT

GENEVA,

PITTSBURGH

SWITZERLAND




& Ont.

Placer

Paper

4%

'90

Development

Gaumont-British
Scophony, Ltd.
British

Canadian Securities

115 BROADWAY

7

.

120

Exchange

Broadway, N. Y. 5
WOrth 4-3113

•

Bell Teletype NY

1-1227

Central States Elec. (Va.)
Com'mon

Detroit Int'l Bridge '

Aspinook Corp.

-

Hoving Corp.

Established 1923

stock prices

64

York Curb

Exchange

NEW YORK B

WALL ST.

HAnover 2-9470

Teletype NY 1-1140

Curb and Unlisted
Securities

large exports. Earnings and
dividends have not been appraised
nance

conservatively by investors in

any

peacetime year in recent dec¬

ades!

prolonged and extreme rise
commodity prices has

The
in

farm'

J ike

been

a

nomic body.

cancer

in

our

loseph McManus & Co.
Members

eco¬

There were only two

possible outcomes. Either the ail¬
ment would be cured while the
was

....

Exchange

New York 6

39 Broadway

Digby 4-3122

strong and
it would
continue until damage was done

economy

York Curb Exchange

Neio

Chicago Stock

Teletype NY 1-1610

still

could stand the strain, or

Southwest

beyond repair. We feel confident
that if the farm commodity price

adjustment

is

completed

Gas

now,

it will do more good than
harm, (2) it will remove one of
the most serious obstacles to real
(1)

Commonwealth
Gas

prosperity and (3) the economy
is strong
enough to absorb the
shock.
In one sense, the concern
expressed over recent

Producing

•

commodity

price developments may be comwith the nervousness a
parent would feel if a child were
undergoing an operation — even

pared

(Continued on page 40)

Troster,Curries Summers
Members
New

York Security Dealers

\

-

U,"':!

Ass'n

Teletype—NY 1-376-377-378

!

MARKETS;

Empire State Oil

Soya Corp.
Great Amer.

Indus.

U. S. Radiator,

Pfd.

Securities

Utah Southern Oil

EquityOil
•

Goodbody
Telephone BArclay 7-0100

/

•

Department

Department

Members N. Y. Stock

Pfd.

&

Members Baltimore Stock

Members New

FUNDS for

Rhodesian Selection

Co.

Brown

Cotton

York

New
New

Exchange

Marketa in U. S.

United Kingdom

Noranda Mines

Pfd,

Frank C. Masteison & Co.

ACTIVE

New

Com.

!

AA 4

/

was

centuated

&

National Financing

MilcMUCompuj

Earnings

the accompanying decline in

parisons with 1920-1921 v/hen the
World War I price boom "busted."
But most of the troubles leading
to that fiasco do not now appear
to exist.
Gray markets for many

pay¬

ments.

pear.

Security Dealers Assn.
Wall St., N. Y. 5
Hanover 2-4850
Bell Teletypes—NY 1-1126 & 1127

Members N. Y.

; :

inevitable that a sub¬
stantial
decline
in farm com¬
modity prices should invite com¬
It

porate earn¬
ings and
in¬

quently and long enough, they
will
ultimately
be
right.
The
wolf in the fable did finally ap¬

and.

EDWARDS .•f

Commodity Price Decline

cor-

repeated

Swasey

H. Hentz .&

Com.

:

so

high

a

level

If

Taca Airways

Merchants Distilling

.

<£-

minded of the

Time, Inc.

37

The Future of

Quite obviously,' earnings - can
either rise, fall, or remain roughly

Research for Manhattan Bond

.

Hosiery

Newspaper Machinery

American

recession is close at hand.
the spring of 1947, only

We

Title Guaranty &

Warner &

Wood

again set off a chorus of predictions that a serious business
Similar predictions were made in the summer of 1946 and again in

d

Punta Alegre Sugar

Taylor Wharton Iron &
Pacific Telecoin

Interstate

the

:

j—:

Pfd.

New York & Richmond Gas,

pros¬

on

.

"A"

,

have

ness,

Hood Chemical

Newmarket

by

because

commodity prices and

The decline in farm

Manufacturing

Manufacturing
R.R.

Bates

equally

pective earnings and the pros¬
pective value that investors can
be
expected to place on such
earnings.
V • '- '
' •' ;f-

Fund, Inc., and New York Stocks, Inc.
Edwards declares recent commodity price de clines have reduced rather than increased danger of
early depression. Maintains weakest spot in oar economy has been thereby removed, and longterm investment opportunities are now available.

Engineering

Baltimore Porcelain

The outlook for
common stocks, there¬

depends

fore,.

stock to know that

By WILLIAM F.

OLctualTWavkeXiS Qu

Artcraft

industrial

historical

branch offices 1

our

General Rayon

low points.

very

- v

'

vVice-President in Charge of

Aetna Standard

dropped to historically

ratios have

to

Huron Holding

historically
price-earnings

points,

high

"Wolf, Wolf!!"

New York 5, N. Y.

HAnover 2-8244

corporate'dollar

"

Pollock & to., inc.

20 Pine Street,

total

unchanged. The same is true for
end of price-earnings ratios, f However,
analysis, for it is only half com¬
the
science of market analysis,
1947 the country would be enjoy¬
plete and is all the more dangering
an
unparalleled
business insofar as it can be called a
our for the deception it provides.
ifcidnce, is one of probabilities,
/The two equally important vari¬ boom, the F. R. B. index would be
and it is on this basis that de¬
ables in the
ultimate prices of up to 192, and the Dow-Jones In¬
Starting
dustrial Stock Average would be parture must be taken.
securities that sell on other than
with earnings, is it probable that
earning roughly $19 a share. No
a yield basis are (1)
the earnings
during 1948 earnings will rise
one was beard to argue that ..be¬
including the dividends resulting
importantly? Considering that at
cause of the above data the Dowfrom these earnings, and (2) how
"'(Continued on'page 37)
Jones average would decline 15%
the market values these earnings
sold

Direct wires

earnings have risen to
very

NY 1-1557

HAnover 2-0700

New Orleans, La.- Birmingham, Ala,

happened, of course;

has

What

25 Broad

■

.

is that while

his'

:—

wm. e.

groups
most.

corporation will next year
earn $10
a share if he does not
know whether those earnings will
reach a conclusion that security
be valued in the market at five
prices are either too high or too
times or 15 times. Assuredly, few,
low. This approach, however, ap¬
if any, analysts were heard to say
pears to represent one of the timein May of 1946 that stocks should
honored booby traps in market
William

be

The International Bank

an

movies

drugs and cosmetics
45%, to mention a few
which have suffered the

51%,

down

the

-

the owner of a

porate profits,
and thereby

BROADWAY, NEW YORK 5
Tel. REctor

ultimate

down

York Stock Exchange

Members New

high, while Air Trans¬

port would be down 69%,

certainly of little value to

It is

and

of

basis

average.

the

from

price.

the'

on

mate

Exchange
York Curb Exchange

^
price

istudy. of earnings alone while the
equally important price earnings
jratios are treated almost entirely

eco¬

nomic condi¬

demand

rr—-

»_■

idevoted almost exclusively to

intensive
to

-

Quite obviously
earnings by themselves are of no
jsignificance without a price earn¬
ings ratio. Yet analytic efforts are

great

study

V

1

dividends in terms of a

Imarket

temp tation
to

1

•

ratio.
Reduced to a
formula you have, earn¬
ings times price earnings ration

of time

exists

Sj'y

[simple

ap¬

that Steiner, Rouse & Go.
:4V-"
St.f New York 4, N. Y.

therefore the market would go lower. It seems

-

..

earnings

outlook
any

Bought—Sold—Quoted

arguing that because of prospective high earn¬
same time, the Bears were arguing that earnings

—-———,

and

the mar¬

,ing

the

Members

past 18

of 1946 the Bulls were

ings the market must go higher;- At the
would shortly be sharply reduced arid

riod

tfew York Stock

Louisiana Securities

"neglected .child" in market analysis, although it has

confidence,-and

preciable pe¬

frfe PONNELL & CO.

Alabama &
v<V,

'■ :

....

principal factor to date in an entirely logical bear market. Asserts market during
months has been stalemated between very high level of earnings and low level of
henceforth a fall in earnings is far more probable than rise in confidence.
.

for

Bought—Sold—Quoted

y,;^srjf\j

been the

ket

Longchamps, Inc.

ratio is the

Lyle maintains price-earnings

Mr.
>:

hi-.

•/; - ./y;

WILLIAM G. LYLE, JR.
Clark, Dodge & Co. ■

••

V.:'

General Electric
Stock

;

■> '•

f

•

Common

Thursday, March 18, 1948

FINANCIAL CHRONTCLE

COMMERCIAL &

THE
2

& Co.
Principal Exchanges
NEW YORK 6, N. Y.
Teletype NY 1-672

Exchange and Other

James M. Toolan & Co.

SIEGEL & CO.
39 Broadway, N.

Y. 0

DIgby 4-2370

Teletype NY 1-1943

67 Wall Street, New York 5, N. Y.
Tel. HAnover 2-9335

Bell Tele. NY 1-2630'

Volume

167.

Number 4682

THE COMMERCIAL- &

INDEX
1

'

;

Articles
♦

V

,•

and

•

News

»

'

•

Critical

•'

•

for- united

Controlling the Marshall' Plan—Melchior Palyi_

4

_

_

interests4 adverse.

v

fails

to

Industry

securities

leadership should find

its

Tests for, representation

nucleus in

outlined!

these tests.

meet

First duties of
representative
seek relief from SEC and NASD
encroachments.

;

SPRING

a

Right now we are getting ourselves
in shape for the
1948 obsolete
buy-

NASD

body to

ng

At

dinner of the

recent

a

New York
Security Dealers
Association, Philip L. Carret; its President,
addressing that

6

——

"Must Have Risk Capital or Government
Ownership of
Industry"!—Richard W. Courts

The Heavy Industries and Their Securities—Alfred S. Rudd_

10

What Foreign Trade Means to Us—Arthur J. Wieland—_—

12

tional

The "IMF"—A Troubled Infant—Herbert

body to which all of

Rate

Problem—Beardsley Ruml

7

—

8

_____

M> Bratter.......

16

Restore Free Gold Market in United States!—Neil O'Donnell

17

What Banks Face in Mortgage

17

Lending—Joseph M. Dodge„

World Bank and ERP—John
J.:McCloy____

As

choice
ties

—

(Editorial)

Rights.

7\

$200 Million Ohio State Bonus Bonds Placed
Banks Participate in Loan to Belgium^.;

Market—_

on

18i

18

__~

Sai* Francisco

(Boxed)

;

y&tf

"Statistical" Dollars ---—A--—---—.-

I

Frank

■;

McLaughlin Deplores Government
Utilities-

-

Competition

23

precinct

24

_

Associates..

27

_

by SEC

YVemtz to Address Brooklyn Chapter of NACA
Reports

______

31

_

Regular Feature*
As We See It (Editorial)___—i——
Bank ana insurance Stocks^--!

were

are

effect^ that: from the

43

no

run US'

1_

...

and

proof, is
^

21'

—

•

Observations—A. Wilf red May i
.——2.
A
-#
5
Our Reporter's Report.
—1—___..!-_ ~....—-_r-- 47
Our Reporter- on Governmentsi
31
...

.

_

-—-

_

-

Security Offerings!.—
Public Utility Securities
1
Railroad

'_

than

rule,-

a

mere

the NASD when it

upon

can never

sion.

44!

-_-Li.-i—_'L^--'

place.

Missouri

Brevities

_—_

_—.

A

_

-

38
48"

*

-

_

10

-

Michigan Brevities

12

*

Connecticut

Brevities

Published

The

Twice

■

... —-

Weekly

COMMERCIAL

no

WILLIAM B.

CJ.

S.

Patent

DANA

Office

'

!, V:'

•

HERBERT D.

SEIBERT, Editor

WILLIAM DANA SEIBERT,

WILLIAM

...

D.

Bank

625.00

S25.U0

Thursday; March 18,

]

President!

Every Thursday IgeneraL
rertising

issue)

and

every

news

corporation*, news, bank
and city news,, etc,),

/•

-

Quotation

year/

Record—Monthly;

(Foreign

postage

Record

•

of

the

—

monopolistic

the

NASD

.

;

Bond & Mtge. Guan Co.
"

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We
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:•■•••

*:'•

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N. Y. Title & Mtge. Co.

•

Subscriptions
Possessions.

in

United

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Territories

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Union,

and

$35.00

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Members
per

year;




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QUOTEDv '

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Bulletin'

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on

t' 1

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•

Request

New York 5, N. Y.

Tel HA 2-8080"

.!''

Tele. NY 1-2425

Southern Production

Southwest Natural Gas

.

smelly

statutory
of

completely disqualifies it

on

page

Southwest Gas Producing
Commonwealth Gas.

United Public Utilities

(Com.)

if they

as

Edward A. Purcell & Co.

arrange-

Cain upon
from being'

Members New York Stock
Exchange
Members New York Curb Exchange

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York

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of

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representative of the securities industry.
; We will not go at length into the activities of
the Busi-

CERTIFICATES

Reentered- as second-clas,s. matter Pebru»ry 25, 1942, at the post office at Nev^
tYbrk, N. Y., ; under the Act of March
1879;

and

fluctuations in

ad-

(com¬

^

h

!

levies,

BOUGHT

TITLE COMPANY

clearings,

B.

Stratford'Pens
'► ' '

participated in by
underwriters, the outsiders

and

(Continued

3,

Copyright 1948 by William

margins

•

ment, in and. of itself, places the mark

Monthly;
(Foreign.postage extra.),

account

This

extra.)

4r Drapers'

^

profit

meager

being,treated from the monetary point of view just
were individual members of the
investing public.

,

cftfices:

Other'

11966

Hungerford Plastics*

wrongdoing

voluntary action

year.

'

exchange- remittances for for-;
iign subscriptions, and advertisements must
made in. New York funds.

135
S,
La» Sajle
St.,
111.
(Telephone: State 0613);
Gardens, London, E. C., Eng¬
land, c/o Edwards & Smith.
..

Chicago

asserts such

succeed when, the facade has its
baste in

to the members which

quotation;

.records,
gtate

and

Monday

market

—

per

be

A

St., New York 4, N. Y.

3-0272—Teletype NY

in

questionnaires, and its

Manager

1948'

said;

3 WHitehall

may not be
non-member dealer-brokers and

the* rate"of

"

plete statistical issue

$38.00

$42.00 per year,

Earnings

Note—On

'

RIGGS,. Business

Canada,

year.

per

' '

Publisher

&

and
per

Monthly

COMPANY, Publisher-

REctor 2-9570 to 9576

of;

Other; Countries,

"ft
J

.

25 Park Place, New York 8, N. Y.

;

Dominion

Commission

w:m|V WB

Members N. Y. Security Dealers
Assm.

25 Broad

•

small: way responsible for the

and- the

!

accrue

14

-—_

Other Publications

FINANCIAL CHRONICLE
Reg.

;j

,

and ■.?A

r

» w ■ m m M

1

an

statutory body organized pursuant to
the Maloney Amendment of the
Securities Act of 1934.; Al¬
though; it has been conveniently claimed that
membership in
this group is
voluntary; it is, nevertheless, generally known
and appreciated that
joining up is a bread-and-butter com¬
pulsion by reason of. the fact that certain financial benefits

!
•'•'

r

..

re-

The NASD is the

Tomorrow's Markets (Walter Whyte Says).
Washington and. You—.——i
l

,

It wilhbe

Sugar

.

.

The State of Trade and Industry,

*Not available this week.

U. S.

Warren Brothers "C"

brazen

was so

Unity in the securities industry,v
presenting
front, must be the product of wholly

24

■

Susquehanna Mills

same

V

24

Securities u„!_—

Lea-Fabrics
Punta Alegre Sugar

a

regulations' constitute
the cost and headache of
operations.

__

.

the

size of

profit control
v

43,

Securities Salesman's Corner__l___
Securities Now in Registrationi_.__.__L._i

operating out of the

_

______

Prospective

as we see

that Mr„ Carret lamentsi The
assessments that'it
its inquisitorial examination and

14

Bankers—.o,

it, to plague
price control.. How long is it since,

high -operating costs

-

20

rather

The- NASD5 is in

41

—

News About; Banks

Teletype N. Y. 1-714

spread! in and of itself
impropriety can or may be drawn and that
duty of proving any wrongdoing, that is, the burden of

has taken,

Bargeron—!

_____

Bell System

-

conclusions of

the

•

Mutual

and;

the defensive and ordered to make

on

terpretation

22

From Washington Ahead of the News—Carlisle
Indications of Business Activity..

1908

Broadway.

.•

tion.

Coming Events in the Investment* EieldL^—!__i——t—-—
8
Dealer-Broker Investment Recommendations--...— -8
ERP Hopes and Fears-...:
._i_—
18

NSTA Notes

puf

16

Business Man's Bookshelf--.—i—
Canadian Securitiesi.
i—

Established

Members W. Y. Security Dealers
Assni
REctor 2-4500—-120

generally understood.

16

—_----

—_—-

\

I

profit

meager

explana¬
In its decision
approving the by-passing of NASD mem¬
bership and'.declaring the "5% spread;
philosophy" an in¬

33

yVy;;'

——

of

J.K.Rice,Jr.&Co.

spreads exceeded 5%, NASD members

Corporate

on

—-

face

.

! The penal
provision of that interpretation
that even the SEC would not
go along with it.
called .that, where

Stock Brokers-

Two Broker-Dealer Licenses Rfcvoked

Texas Eastern Trans.
Corp.

!.,•••."/V.

comes to serve us

'

Louis Loss of SEC Addresses
Chicago

the

Finishing Com. & Pfd.

Tennessee Gas Trans, Co.

stagnant markets, bear¬

or

correlated aims of these
policemen

in

—w.—

—

23

J-,

Realty Values Inflated) Says Marcus Nadler.—

j

Memory,

t

falling
in

year.

Kingan Com. & Pfd.
U* Si

in all branches of the securities busi¬

costs

this

Dorset Fabrics(w*d.)

unity in representing the securi¬
utter folly.
:

have had to
operate in

anything

■

by a so-called "interpretation,!' the NASD forced;
upon an
unwillifig industry "the 5% spread'yardstick"!' Oh;
y;es, we
know this was
ultimately approved by the Securities and
Exchange. Commission but it deceived no one because the

23

Henry Heimann Says High 'Earnings- Represent" Only

1947, brokers-dealers

the NASD's,
attempts at

Exchange Changes Trading IIourSi__^.___—_ 22

Within5 the Practicalities, Too

nucleus of

a

ing high operating
margins.",' v/;-

Noble Berrien Recalls Birth of Republican Party—__

,

.*

ness

15

__.____i.__——

World Bank BOnds Made "Legals" in Virginia

in,

8

—

_______

as

industry would be

hours

STREET, NEW YORK
Telephone: WHitehall 4-6551

unfortunate: "foundation."

an

Mr.! Garret started his address with
this* significant ob¬
servation:- "While most businesses
enjoyed boom conditions

3

E. F. Hutton Proposes Organization to Defend Constitutional

Edward L. Bernays to Speak attNew School!——-

belong."'

us

buy

unity in the Na¬
Dealers, the quasi-official

Securities

2

99 WALL

we
hope to demonstrate^ the background; of the
literally teems with a record proving that its

NASD-

Slump—Roger W. Babsoni_-_.__-i_---r-r-—--22.
Exports,.Imports and'Dollars—A. M. Strong..;
25

,

We'll

'

19

the Securities Industry

of

Mr. Carret chose

The Recent

Collating,the Problems of

Association

The formula is:

season.

hanging from the chandelier, 2 hours,
"f
head
butting and 2 hours, of
hrcwing
coins
out
the
window.

group; said:. "It may be that the most
urgent need of our
business is a united front for the
study of our many pressing
problems. We have the foundation of such

The Interest

*

AND COMPANY

TRAINING!

6

_____

Market Research in Securities—William K. Beckers

True

vohintary association;

v

4

foj- Sound Industrial Future
1

in

3

B. S.

industry. Speeclr of NYSD
Suggested leadership, of NASD vetoed. Its

President examined.

2

Marshall Plan—A Snare and Delusion—William A. Robertson

—Gwilym A. Price..

front

2"

"Wolf,.Wolf"!—William:F. Edwards---——————

More Risk Capital as Incentive

Need

...—Cover

Confidence—William G. Lyle-, Jr

or

The Securities

Wright-——Cover

President'Truman* Urges Defense Program—.

Earnings

(1207)

»

-Covert

Situations in Our Economy—Wilson

CHRONICLE

Collating the Problems of

«Pa**

,

■'

,

1948—A Critical Year—Howard T. Lewis.

FINANCIAL

—

Worcester

Analysis available

C. E.

on

request

Unterberg & Co*

Members N.

Y.

Security Dealers Ass'n

61 Broadway, New York
6, N. Y;

Telephone BOwling Green 9-3565
Teletype NY 1>1606
iu

^

'

By william a. Robertson

V

PALYI

By MELCHIOR

of

Member

' ;

of Wisconsin

Professor, University

Thursday,. March 18, 1948

FINANCIAL, CHRONICLE

Marshall Flan—A Snare and Delusion

Controlling the Marshall Plan
Palyi points out basic ideas of ERP, and analyzes its defects
and shortcomings.
Sees gap in Europe's international balances

Plan

Marshall

attacks

Robertson

Mr.

Dr.

New

the

York

speculative

as

Bar

well

as

Says it will result in

useless.

as

commitment of U. S., and cites Britain's experience in Egypt and other countries as
an illustration that financial aid given them does
not win confidence of foreign nations. Sees severe
administrative difficulties in implementing plan, and predicts ERP will fail to prove a tonic and
permanent

widening, and claims it will be accentuated by using dollars for perCites Britain's position as example and holds

manent investment.

,

&

THE COMMERCIAL

(1208)

1

will not eliminate deficit in balance ?;■[
Says Europeans must work out own problems and
substitute our brains and responsibility for theirs.

V

of Old World.

resuscitator

promoting European production
of payments.

should not

we

(Marshall Plan) has a natural

The basic idea of the ERP

v

Europe imports a great deal more than it exports.
It
means to reduce this import surplus, to become financially
t

i

a

i

n

n

g

a

big

armament.

provide

we

the

Sixteen

Na¬

(includi n g
trizonal
Germany )
the

with

ne¬

food,

materials,
and equip¬

the

ment to build

their

up

u c

t i

years,

Paly!

to be¬
come
independent of American
aid. At any rate, their depend¬
ence
should be reduced by that
the

point where the ex¬
be fi¬
purely ;; commercial

of imports, if any, can

nanced

on

'■
That sounds simple and reason¬

terms.

j

This country, too,

able.

by

grew

?

the foreign capital
has absorbed in the

past has been yielding as a rule
very substantial profits to the in¬
vestor.
At present, there is no
prospect even of repayment. Also,
there is a significant difference in

quantities.
largest amount of net longterm capital outflow this country
has seen in any single year of the
The

buoyant inter-war period was less
than $1.5 billion in credits (and
Immigrants' remittances) in 1928.
Now, we are planning on a first
Marshall Plan installment of $4 or
$5 billion, to which over a billion

?in

private

tances

most

a

>

charities

and

remit¬

added, plus al¬
to feed the Ger-

should be
billion

Austrians, $570 -million
China, $1 to $1V2 billion by
way of Bretton Woods institutions,
an
extra $400 million or so to
Greece and Turkey, probably a
Marshall Plan for Latin America,
jnans and

To

etc., all in one year's time. Sooner
or

later, Europe will need addi¬

tional loans under the title of cur¬

bankruptcy,

in

concerns

as

at least as so nearly

insolvent

that ■-■without

implication

they can not hold their own. The
plan may be likened, perhaps, to
a
widely extended receivership,
or
series of receiverships
the

the

economic

tions'
up

of

Sixteen Na¬

program

in Paris last

drawn

September, and

/-Marshall-planning since.
Billions
of
dollars
will be at
all

of

According

course,

or

productive nature.
the State Depart¬
ment, "In the main,
European
production will supply the capital
equipment needed for" the expan¬
sion of farm and coal output, the
development of oil refining and
steel
capacity,
the
growth of
transport facilities, etc. American
assistance will gear production to
permit in due course the cutting
down of ,Europe's essential im¬
ports—unessentials are to be kept
out
by
the
prevailing straitjackets—and to increase its ex¬

projects of

ports.

a

to

■*

-

ceiver, and also to that of a banker
who is supplying the funds requi¬
site to
restore the concerns
in

receivership to solvency and suc¬
cess.
Viewed in this light, the

becomes a study in
receiverships on a very large scale.
whole picture

Speculative

production vprogress does
necessarily mean financial re¬
Since the war, European

utmost

The notion that

by

an

advance

,'

'

/

■

Overlooked
When seeking for some

(1)

When can we terminate
business

creditor,
whom

of

debtor

we

the

the

position of the man who had
caught the bear by the tail, and
then discovered to his consterna¬

imagination of many persons.

They have jumped to an unwar¬
ranted
conclusion, thinking that
there is a sound analogy between

Neither do
ourselves in the

usurers.

want sto find

,

more

and

more

affairs
badly managed. When

very

Pasha

urgent

was

bondholders

became Khedive

in

demand by foreign
that their govern¬

ments

intervene in some manner,

and

both themselves and
against her own folly. A
of Inquiry reported

guard

Egypt

Commission

bankruptcy was inevitable.
commissions
were
ap¬

that

Other

sonal danger. -

insolvent American cor¬
aiding an insolvent
European state. Such is not the
case; the differences
are great
and intricate.. First, there is the
overshadowing question of the
proper machinery of administra¬
and

.

1863, there began an ofgy- of
spending; money was used for
railroads, canals,' harbors, light¬
houses, palaces, etc.
Soon there

tion, that he could not relinquish
his hold without imminent per¬

an

became

Ismail

and

likely to regard us? We do not
want to find ourselves cursed as

we

•

interested in Egypt, whose

(2) How are the people
are seeking to benefit

as-heartless

;

After 1875, Frenchf and English

were

normal

and resume our

.<

and French

Bankers

...

capital

ing currents, two things should be
kept steadily
before our eyes;
whole

Loans by British

chart to

us over a sea beset with
such unknown reefs and conflict¬

guide

unconscionable screws, or viewed

aiding

every

follows:

Questions That Must Not Be

capital to those 16 countries of
Europe they may be set up in
business, seems to have captured

of

intention' "of

and

English statesman
of both parties; it lasted more
than
a
quarter ; of a century*
Greatly abridged, the story is as
nearly

it.

i-kT

Program

a

decided' wish

a little later,
questions of the
importance which precede

position?
;

ginning of Great Britain's connec¬
tion with Egyptian affairs. It be¬
gan
and continued -against the

this

explain

shall

States

T :T; Difficulties Inherent in so

spendthrift Khedive of Egypt, was
This was the be¬

anxious to sell.

but there are two

occupying a posi¬
tion somewhat akin to that of re¬
United

poration

But
not

assistance

external

of

hastened, in 1875, to
purchase the large block of canal
stock "which
Ismail Pasha, "the

tricate, and often very surprising
reaching far beyond anyth ng the
creditor ever contemplated.
We

be attained

:" f'

,

importance, the Administration

ramifications of foreign

The

of Egypt

Mr, Disraeli

money-lending are numerous, in¬

idealistic in the extreme.

This is

v:;K^0'V/

strated

very different from making loans
to
private concerns in regular
lines of business here in Amer¬

ica."

,

projected, thq English would have
none
of it.
But after it demon¬
its immense success and

Lands

be left to their own

■

When the Suez Canal was first

making of such extensive
loans to 16 debtors, each one ol
whom is a sovereign in itself, is

devices; world trade is to resume
as
in the past; our own foreign
commerce is to revive and expand.

tions

years? The objective is to
by "strings attached."
The strings consist in the specifi¬
cation of the uses to which the
dollars are to be put. That is the

more

imports and to repay the credits
as well as to raise us to a creditor
Of

to

are

y

The

accomplished,

'

England and Her "Occupation"

"

their feet for pur¬
general trade and com¬

When this is

merce.

abroad,

mentioned.

:

upon,

of

poses

arising

turn to one of
examples already

We

historical

the

Thorny Questions in Foreign

given.t6

assistance to be

The President views these 16 na¬

refed, ireand reequipped for four

Europe's disposal to import speci¬
fied commodities and to carry out

status.

difficulties

Europe is to be employed by the
16 favored nations in setting tnemselves

enor¬

contemplates

The Marshall Plan
that the

of money is an

in it.

cerned

political responsibility, preg¬
nant with ugly possibilities.
But
this article is concerned only with

Study in Receivership

A

1

sum

a

and misfortune for

ness

so

over

mous

-\

Europe:;
financial feet by being

importing capital that has been
put to such good use as to elimi¬
nate the need for further capital

this country

1-

vast

control

but leads to bitter¬
all con¬

business sense,

thoughtful

upon

The

Americans.

proposal

furbished

Dr. Melchior

posed

time to

as

them.'

itself

obtruded

to be staggering. The
raises a whole flock of
perplexing questions. This article
touches upon only one or two of
high

so

they

Production

Will
be brought; back on its

they are sup¬

cess

nearly

Coming back to the ERP:

-

pacities. In
4V4

.

basket.

same

The Paradox of

pro-

v e ca

,

particular, have thrown in

ada in

of us can
of a national debt so great

alarming, with taxatioi.<S>-

be

to

as

hence, at this rate,

have trebled the

may

re¬

tion, relief, rehabilitation, mod¬
ernization, and what have you,
not
counting the $3 billion or
more which other countries, Can¬

raw

d

for

$20 billion already sunk in post¬
war " reconstruction,
reorganiza¬

tions

cessary

.

A few years

and

way

self-sus~

and

stabilization

rency

lacks the

:

———

.

Therefore, let
us
step in in

astonishing communication. It

was an

16 foreign countries a sum so colossal that most

appeal scarcely estimate what it means—and this, too, in the face

Roughly, the,idea-is this:

imagination.

to American

of Dec. 19th last

President Truman's message

asks that there be handed, to

-all

•

pointed;

soon

financial experts took
her
affairs; foreign

Foreign
Three

Lessons

History;

From

<

Egypt dared not
soul her own.'

financial

her

charge

of

clerks and officeholders

abounded

: In
an attempt to estimate the
at Cairo and Alexandria, and grew
straining their
possibilities of the Marshall Plan,
apace.
Presently one Arabi Bey
resources
to
promote
"heavy"
history may be called in to assist
construction.
So much
so
that tion for so vast an outlay of public us in three different ways: First, headed a party of intense opposi¬
tion to foreigners. In 1882 a fleet
they have enhanced their shortage money. How will it be possible there is one chapter in the past
of
British
ironclads bombarded
problems, created paralyzing bot¬ to supervise so large and widely which gives us a full and instruc¬
the forts at Alexandria, and; an
tlenecks, discouraged incentives, extended an employment of cap¬ tive story of an attempt by a very
bureaucraticized their economies, ital in foreign lands, among coun¬ intelligent and enlightened nation English army won a victory on
land.
They professed to be sup¬
and distorted their foreign trade tries inhabited by people who do to supervise, over a considerable
patterns, < price and wage struc¬ not love us, and who (with one or period of time, the financial af¬ porting the authority of the Khe¬
tures.
The funds they received two exceptions) do not speak our fairs of another people who were dive against rebels.
from abroad were not just spent
Against every wish and inten¬
language/ who are naturally and in much the same condition as the
on "luxuries."
(Incidentally, even properly jealous of any outside or 16 countries in question. ; This tion of so sincere, high-minded,
tobacco and films may have a alien control, and whose whole story is to be gathered from a and liberal a Prime Minister as
attitude toward us since the close study, of
(Continued on page 32)
the relations between Mr. Gladstone, whose views were
of World' War I, has been that of England and Egypt for more than in harmony with those of nearly
a hardly veiled dislike for a "na¬
a
generation. Secondly, we have every other public man, neverthe¬

covery.

nations have been

■

own loans tc less, England reluctantly waged
World War I war in fact, though not in name.
The events of the summer of 1882
Thirdly, we may gather no small
Program
amount of useful information from cost England the friendship and
what has
happened during the, confidence of France and others
This question of administration
for the next quarter of a century.
wears a two-fold aspect.
First, as reorganization, under receivers, of
She was the real ruler of Egypt,
it affects our own politics;
sec¬ many of our great American rail¬
though she protested that she was
roads. v'h-;.-V-V
ondly, as it relates to the success¬
These considerations may lead only "occupying" the country; till
ful employment of our money and
such
time
as
she
could safely
influence in each one of the 16 us to conclude that the Marshall
withdraw altogether. Lord Salis¬
countries.
The first has already Plan contains no element of sound
bury, writing to Lord Lyons, said;

tion of

shopkeepers"?

lesson

the

Germany

Administration

Announcing

a

of

our

after

Two-Fold

"

DIRECT TRADING

WIRE TO

MM

CALIFORNIA

Markets and Quotations
PACIFIC COAST SECURITIES

"We shall be safer

Art Metal Construction

Std. Accident Stock &

■

W. E. BUTTON &
ESTABLISHED

1886

Company
Bought

leading exchanges

*

.

*Dayton, Ohio

Baltimore,

Lexington', Ky.




Md.

Trans.f v

<

Study on

Quoted /■

-

■-

Easton, Pa.

Material Prosperity
for Her the

But

Boston,

tion

Members N. Y, Stock Exchange

Mass.

Portland,

Me.

115 Broadway, New York
Tetanhnne BArelftv

7-0100

rs

*

;

and Other Principal Exchanges

; <" 105
»

West Adams St.. Chicago
-

I.

Teletvne NV t-072.

,

in

the

of

of

the

immense

and advance¬
wealth
accomplished
very able administra¬

progress

in

under

<

spite

in

ment

request

Did Not Win

Confidence of,;.

V.'Egyptians:•t;
material

tProspectus on request

Goodbody & Co.

CINCINNATI

Pa.

Sold

DEALERS

YORK

Philadelphia,

Rightsf

V

Exchange

UNDERWRITERS > BROKERS '

NEW

Texas Eastern

Central III. Pub. Serv.*

Members New York Stock
and other

CO.

as

Kendall Company

Buda

and more pow¬

wire-pullers than as os-r
tensible rulers."
!
»

erful

Detroit Harvester*

American Hardware

England's representative
Sir, Evelyn
Baring

Egypt.

(Lord Cromer), English rule was
disliked, and England herself was
not
popular.
She was simply

f

V (Continued on, page

,

Volume 167

Number 4682

.

COMMERCIAL

THE

FINANCIAL

&

CHRONICLE

(1209)

W. E. Hutton Installs
Steel

The

Calif.

Observations

Carloadings

W.

Commodity Price Index

By A. WILFRED MAY

Auto Production

Industry

Business

I

Failures

.

ERP'S PSYCHOLOGICAL DANGERS

-

Trading Wire

Hutton & Co., 14 Wall
Street, New York City, members
of the New York Stock Exchange
and
other
leading national ex¬
changes, announce the installation

Retail Trade

Food Price Index

and

,

.Now that the European Recovery Program seems safely depos¬
in the legislative "bag," the nation s most careful attention
should be devoted toward getting the maximum benefit from our

f

of

a

E.

direct

ited

A

fractional decrease in total
last, week stemming from a

Despite the

industrial'production

above that of the like week of
1947.
<
As in past weeks employment and
■

and

was

evident ibillions and avoiding the

Tnany pitfalls created by our financial effort.
Although the high-powered committees devoted
to getting the people behind the Marshall Plan
'
are disbanding, at least their equivalent in brains
and vigor snouid henceforth be devoted to clari¬
fying realistically its immediate and far-reaching
implications.

,•>•••.

v

payrolls held steady and high

in

higher output, it was noted, was the generally
adequate
supply of raw materials and skilled labor to meet current
needs., :
i In. the rubber industry some
large rubber manufacturing concerns
reduced
tire and tube
production schedules,, by. about 25%, the

:

/

it

was

understood,

partly

was

of other rubber
products

seasonal.

However, output

increased slightly.
; ,v
Lumber production in the week declined
nearly 3% to 186,793,192,423,000 board feet, while lumber shipments increased

♦

.

0,00 from
2% and
A

'•

new

orders by nearly 10%.

substantial

:

-

decline in

building activity during the week re¬
volume by 48%.
Total con¬
struction, it was noted, amounted to $95,996,000 and was 7% below
that of the
corresponding week a year ago.
■■: -i,-.,,
duced

civil

engineering

construction

i

:

The Soporific Danger

v

.

decrease

-;

;Primarily the

from the

merd extension

ticularly

if it be

When

the

of

danger

Consumers generally responded
favorably to the increased num¬
promotional sales and advertisements of
Spring merchandise.
Interest in Easter apparel also
improved somewhat; Retail volume
ber of

was
moderately above the levels of both the previous week and the
similar week of last year.
Shoppers continued to resist high-priced
goods and stressed quality.

dollar

volume

the period ended

on

of

wholesale

trade

Wednesday of last

declined

slightly during

week and order volume

was

generally somewhat above the level of the
corresponding week a year
ago. Many retailers continued to avoid
long-term commitments and
collections in some lines showed
signs of slowing up.
On Monday of the
coal miners was called

current week

a

strike

involving 400 000 soft

the question of pensions.
Approximately
360,000 bituminous coal miners of the
country are idle as a result of
the, dispute.

The

strike

of financial
be

generous—must

British

Loan

was

over

entirely unforeseen, since John L. Lewis,
President of the United Mine Workers
Union, at a press conference on
Friday, last, gave some inkling of the stoppage when he made the
statement that the coal
operators had "dishonored" their contract and
that the agreement
provided only that the coal diggers shall work
as long as they were "able and
willing."
:

i":"'

The combined force of higher
wage rates and the great demand
from
consumers, as well as from business, continued
to; push the
general price level of commodities
steadily higher, states the March
issue

of

the

"Business

Bulletin," published by La Salle Extension

University of Chicago.

The most general price indicator, that pre¬
pared by the United States Bureau of Labor Statistics, went
up to a
peak in the middle of January at 18%
higher than it was a year
previous, the "Bulletin" notes. It was within 2% of the

postwar peak
after World War I in
May, 1920. Food prices were higher than at
that high point but industrial
prices have not risen quite so much.
/ The
decline during the period since
January amounted to less
•

,

than

in

3% in this

general index, although it has been much
greater
individual commodities. The drop in grains amounted to
25%, and in a few items it was even greater. Some of the

many

over

decline

has

been

natural

a

reaction

from

the

rapid rises of recent
months, while part of it has been due to improved
supply and demand
relationships. Price adjustments of this kind, the paper
adds, can
help bring the economic system into better balance and
help stabilize
prosperity.
'

.V,:1"',
Personal incomes

*

.

*

maintained at

were

v;'.

..

a

'."■•.'•7'

record-breaking rate of

$210,800,000,000 for the month

of January compared with the
previous
high established in December, 1947 of $210,400,000,000.
For January the level was 11% above the like
period of 1947 and
7% higher than the 1947 average of
$196,800,000,000, the Commerce
Department revealed.
•

.

.

The

Financial

Chronicle)

Hardin

is

with

now

Edward

E.

Mathews Co., 155 Cliff Street.

effect

help—par¬
recognized.

arranged

two

not

soothed by our own Treasury officials'
meticulously careful expositions of its "guaran¬
tees," we thought we could enjoy at least a fiveyear breathing spell before adopting any further
measures for helping the British.
But now, be¬
fore

has passed, Britannia as well as the entire world
reasons lor

should

be

Atlantic

Abitibi Power &

half the scheduled period of the credit

even

A. Wilfred
,

:

May

Brown

tnis abortive result may be highly
controversial, but there
doubt that less complacency on both sides of the

Minnesota & Ontario Paper Co.

little

would

have at least postponed it.
But of far greater im¬
the London "Economist" and many other non-political
have been pointing out, the very existence of the
Loan "drug" obscured the urgency for
self-help as well as for many
missing steps of a broad constructive nature. The placing of Brit-

portance,

as

British observers

ain's an^ other countries' currencies
realistic basis has been only one of
have been neglected.

on some

kind of sound

such needed

many

or

HART SMITH & GO
52 WILLIAM ST., N. Y. 5

Bell

New York

LAMBORN
99

to

national WPA with the bait of the resulting stimulus
industrial activity,
*•.

to

our

domestic

political sphere,

as

well

&CO.,Inc.
STREET

SUGAR

*
;

me

m

WALL

must be careful to resist the
continue carelessly an inter¬

goes,
us

Toronto

NEW YORK 5, N. Y.

merely because the dollar pipeline is being reopened for business.
we
ourselves, as time
Song'of those.^tempting

1-395

Montreal

that

measures

"Economist" and freely quoted in this column of three weeks
ago.
Subsequently the dire exigencies have been most forthrightly stated
by Sir Stafford Cripps. These truths are not one iota less urgent now
And

HAnover 2-998H

Teletype NY

at least

Some of the attitudes and policies which
England must realisti¬
cally embrace on her home front have been clearly set forth in the

Siren

Paper Co.

Company

"A;:.

The

as

the

economic, all possibility
narcotic for glossing over

be foreclosed of giving the people a
crying need for consistent action in this climactic world crisis;
of letting wishfully-thinking people be satisfied with this token in
must

the

.

to

BURLINGTON, VT.—Atwood I

years ago,

not

was

(Special
v

'

soporific

a

political situation have fallen "on the rocks."

The

With Ed. E. Mathews Co.

_

:

•

many manufacturers were blessed with a sufficient volume of
orders to insure
high production for several months. An encouraging

factor

trading wire to Cali¬

fornia.

,

slight recession in manufacturing activity.
decline, the level of output continues somewhat

small

-

Production

Electric Output

State of Trade

5

Raw—Refined—Liquid

Exports—Imports—Futures

lieu

of a concrete and vigorous foreign policy which would
protect
legitimate interests and bring about a pattern of political stability.
We must not, like a father who thinks he has ducked his real parental
responsibilities to his son by the mere granting of a liberal spending
allowance, imagine that our dispensation of Marshall Plan largesse

DIgby

4-2727 '

our

excuses

it

us one

For

fiction
is

iota from the vast economic and political duties which

is, our burning duty to discharge.
example,

that

we

long under the

.surging all

must not be tempted to bask in the nostalgic
still fighting Hitler and Goebbels, when Hitler

we

are

earth of Berlin and the

Stalin-Molotov

team

is

Berlin and the balance of Europe.

The assumption
Scandinavia in the demo¬
line, in lieu of a definitive test of diplomatic strength directly
with Moscow, represents a danger that may be catastrophic.
that

our

over

financial gesture will hold

Italy

Kingwood Oil Co.
A

crude

has

had

over

the

oil

producer

continual

past

that

earnings

seven

years.

or

cratic

Market 2%-3^

,

Analysis Available
Production, Not Social Service, the Need
'

Likewise in the economic

sphere, we must now call quits on the ;
ideological dialectics, and at least from here on concentrate on the
need for production and more production, irrespective of whether
or not our debtors' economies are being administered
by capitalists or
socialists.

But at the

same

time let not currency management, indus¬

PETER MORGAN & CO.
31 Nassau Street

New York S, N. Y.

Tel. BA 7-5161

Tele NY 1-2078

try nationalization and other key policies < be set according to
ideological dreams in lieu of the concrete aim of self-support through
efficient production distributed competitively on the free market
place.

.

Higher farm income,
in New York and

new

veterans' bonus

payments—particularly

gain in unemployment insurance payments ac¬
counted for the January increase over the
December annual rate.
a

STEEL OUTPUT SCHEDULED AT HIGHEST
RATE
APRIL 2, 1945 WEEK

j;

■

y

SINCE
,•

If the coal strike is prolonged it will not
augur well for the steel
industry for within three weeks or so the steel ingot rate will
plum¬
met.
Some mills have good coal stocks but if i the
outlook darkens
in; the next week it will mean
sharp cutbacks in schedules to conserve
coat and thus prevent a steel shutdown with a

bang instead of

gradual deduction that could

a

be

stepped up sharply if things looked
better, according to "The Iron Age" national
metalworking weekly.
As usual the steel industry's
present misfortune will be used by
John L. Lewis to strengthen his hand at the
bargaining table. With a
sharp drop in steel output the nation's emotions can be
adequately
wrought up, the magazine points out, especially at a time when
demand

is heavy, the international situation is
tense and
duction at an all-time rate,
< ;
i
i
-

*

*

steel

were

still

pushing for deliveries

demand

or

order

volume.

gray market steel was still

Last week's

orders because
dence

of the

this week

immediate future

no

-

-

effect

decline

sharply visible this

change

or

Let

of making repayments for their existing borrowing thereof.'

not dollar-subsidization
:

i.,

.

(Continued

over

will

(Continued




suffer any setoack

the next many
on

page

...

no

eituer in

.

that

>

GUENTHER LAW

the economic

Incorporated

39)

'

Advertising

Time Inc.

*

••if

J.

Corp.

American Maize Products Co.

131 Cedar Street, New York 6

Bought—Sold—Quoted

The

Boston

Chicago.

for

FREDERIC H. HATCH A CO., INC.

drop in steel

,

fact

ALBERT FRANK-

i

evD

Established

1888

tne
MEMBERS N.

months.

33)

the

on page

Dravo

week.
a

obscure

regular

on

in demand

general note of caution, there is

that steel
or

most items.

on

Despite all the talk about the possibility of

t

Let not our dollar-subsidization gloss over the fact that price fix¬
ing policies, as a gesture against "inflation," have cut down agriculural and industrial production
throughout Western Europe—that
nroduction which is their only means of securing new dollar ex¬

•

crackup in the top gray steel market has had

♦

tailing an overpricing of Britain's exports and underpaying for hei
imports, is made possible through our dollar-exchange subsidies, and
not through the real valuation of the market place.

pro¬

Even with the unusual speed in
turning out steel, the in-,
dustrythis week is making little headway in
reducing its backlogs. A survey taken by "Iron Age"; district editors failed to
show any weak points in regular steel demand.

Customers

•

steel

Despite the fact that the pound may continue to be held at its
let us at least realize that such rigging, en¬

overvalued price of $4,

.1

63 Wall

Y.

SECURITY

Street, New York 5, N. Y.

DEALERS

ASSOCIATION

-■?

Bell Teletype NY 1-897

.

X

Philadelphia
San Francisco

; '■

6

Thursday, March 18, 1048'

FINANCIAL CHRONICLE

THE COMMERCIAL &

612:10 )

Market Research in Securities
*'/../
>'

'

'-.By 'WILLIAM K. BECKERS*

V. ;.'v

\!

Partner, Spencer Trask.& ,Co.

..

v-:/ vvr,(y

/'"/ i:

J

■

T,'Vice-Chairman, BoanLof Governors, New York Stock Exchange
*By GWILYM A. PRICE*

J iits adverse effect

Holding industry's willingness to proceed with post war expansion prevented depression after V?J Day,
Mr. Price sees that program threatened by failure of,new venture capital investment. .Says sources, of
venture capital are drying up, and hints\postwar expansion is mearing tend.
Stresses declining "wage
rate" paid to

capital, and

by removing doubfe taxation of'dividends rv

action be* taken'to boost

urges

and other

for annihilation of capital.

devised

taxes

indus-

tries. But

tainly

e>-

not

dict.]'
what

why

a

—

rapidly

they? .-.v,
Yes, in large part, they are
well-known and generally recog¬

pro¬

duction

totals

that

b y

nized.

in

V/A

money

the

practically everyone, who
wanted.a job found one.
of

-skip . over the question
everything connected
boom is healthy or to

whether

this

with

overseas

real point to be

The

liking.

is that we have had a

made here

that

bust;
*An

promised

the

of

instead

boom

promised collapse

the

address

by

at

Price

Mr.

Luncheon of the Cleveland Cham¬

of

ber

Commerce,

March 9,

1948.

O.,

Cleveland,

and live

use

This

covers

but

major

one

and essential

the jfilial

was

.feared would hap¬

and what actually has.hap-;
pened. It was a decision as nearly"
unanimous as anything of the kind
be; but it was not made by
single man, or a small;group of
men, sitting at a central spot and
drawing' up all-over plans for .a
nation's
guidance. On the con¬

can
a

deci¬
sions,
made
independently
by
many thousands of business men,

trary, it was many separate

throughout
added

in¬

up

mination

and,

—

board

.and

offices

in

the

.rooms

as

a

,

result,

a

economy

decision

a

national production

the

boosted

that

curve

earlier
sary

has

decision

made

full
employment,
benefits,
and J the
throwing out of work of several

ence

between

on

'

with

all

in

the: .way

million
For

men

and

the

and

path

that

the

at

of

end

liquid re¬
sufficient borrowing

with

the

time

since

1929,

and

owners

could see markets suf¬
ficiently broad and deep to justify
managers

building

and

improving

Maine

&

equipping

processes

RR.

and

Federal

Street, Boston

—with

with vast
It

its

own

chance.

a
a

colossal

funds

and

borrowings.

was

made

LOUISVItLE

decisive

the

dustry

difference

be-

^Empire

American Turf Ass'n

Southern

man's

Stromberg Carlson Co.

H. M. Byllesby & Company

BANKERS BOND CO:
V

Incorporated

PHILADELPHIA OFFICE

Floor, Kentucky Home Life Bldg.

1st

Long Distance 238-9

/

Stock Exchange Bldg. Phila. 2

LOUISVILLE 2, KENTUCKY

Telephone

Bell Tele. LS 186

Teletype

RIttenhouse 6-3717

conversation
or

from

lished

which he
The

said,

"Dear

Zenith

new

75

refuse

it. :I

I .do

to

sell it because

to

believe

not

should1" be

refuse

I

available—but

now

PH

"

as

hearing

a

sold,-

aid

should

be

It

salesman, /we

a

he

teat

sure

does

not

be

may

lit¬

mean

the

American

produce.

I

statement

was

not

so ma.iy

that, an important body
opinion, both public and Wash¬

years ago

cf

ington felt that sales effort should
be

reduced

and

largely and

very

in¬

the

can

public's

orders.

eve i

entirely to

"I

refer

when/ the

1930s

that

.

the

to

financial

$50. billion, community -and
the -nation ,at
additional expenditure by in¬
large were .suffering woeful <re¬
dustry during the next few years sults of the
many -excesses (not
desirable.

But his

simultaneous

confined:; to' Wall

suggestion, that the excess profits
tax be restored, leads me to be¬
lieve that if the (President

were

a

same

cow,

are

.be

on

pressure

luctant

to

pay

of

SEC

least

high

salesmanship in the^ell-

substantial

in

part.

-

There

selective distribution

sufficiently

uncer¬

are

of

course,

more.

that

was

much

too

the

had been much aggressive and not

com¬

their
main ingredient, wages. These un¬
certainties have to do not only
with what industry must pay for
its own expansion, but also the
prices at which the products. of
such expanded facilities must be
sold to markets increasingly re¬
and,

feeling of

of /the
been

in; and

ask

insured-.

to

And

have

thirdly,

when

we were talking a moment
about, conditions in 1929, we "
admitted that much of'the selling
in new securities was very aggres- -

ago.

five, but

we

in

cases

many

also said that it

was

the degree of

not

aggressiveness that did the harm
the

but

whit

injudicious selection
"to-be sold/ Loans

of
to'

was

'foreign

countries

for

building

boulevards, for example, as com¬
pared' to equitycapital;-for the
chemical industry.

|

Sale" Efforts Important and

Constructive

No—rit *:has

already

rs'ablished/ among

the

by

in

well

things,"
securities,

the

of

record

business

been

other

distribution

the

of

bonds, that:sales effort in

war

securities business is
constructive

and

an

the.

important

activity

in

our

it has recently

economy^} Indeed

become clear-that in the next

few/

the sale of equity securities
the most-important and

be

indispensable
our

single/function

economy;

itself

finds

the

For

confronted

in

countrywith

a

ingAofr securities,/and the feeling -disturbing Taclc,;pfv risk capital—
was ..unquestionably- justified,
at that is money that will go into

.

a

which

Street)

overcome.

based

of certainties and

to prices

Had

de-'

the volition of the pub-4

on

come

may

there

.

.can

to

years

public and

again he would be ex¬
pecting to get milk and beef¬
steak from the

lie

ing twenties.

farmer

another

their lives

had taken place during the boom¬

The

important fact estab- '
field—that the *

an

in

pended

confinea

be

mechanical/;execution of the

early

a

remark-'

eliminated

even

should

chance

a

din-

with

insurance companies had

the

securities, and that
operations of the financial

community,

casual

a

great
and
admirable insurance
protections in the United States'
would -never have taken place if

in the field of

the

know

we

of

result

business friend." Secondly/

a

Beckers

K.

William

be

to

of

as

Warner Company

The

rer-table

Beckers:

sell

can

tainties. Obvious uncertainties

Sterling Motor Truck

Co.

made of the customer's own voli¬

tion—the

single unit hearing aid that thou¬
sands ha.ve been waiting for is

part of the world's

what

best

can

bination

Nazareth Cement

Varnish

for

These doubts

Pittsburgh Rys. Co.
Reliance

some

hesitations

Gas

Consider II. Willett

Murphy Chair Company

Mr.

Right off the bat we re-[
a great many of the;
purchases of 1929 were'

neighbor,

Radio,in

but

into

well

industry

securities,

an

personai;lelter from Commander
MacDonald, President of Zenith

en¬

1945;

of'

removal

"the

.

foolish

a

expansion
process * will
continue
if
present doubts and

Central Louisiana Elec.

.American Air -Filter

since

the

from

m

Recently
I
received what

readily agree with President Tru¬

This

,

o

,r

wearing
earphone.

meet
all the latent and potential de-,
mands of our own people and, in

is

industry's willingness to
undertake and proceed with this
tremendous program of expansion
and modernization that, as I say,

10

Tele. BS 128

Tel. HUbbard 2-3790

tradition, busi¬

willing to take

was

scale

Walter J. Connolly & Co., Inc.

before

demands

and

It took that chance—on

false

keeps

f

e

iness field. But it

continue

must

addition,

ness

Traded in Round Lots

it

future

dis¬

production

the best American

24

plants

and products,

tribution,

Preferred

m

modernization

way

-

member that

erally that-sales effort.is not nec¬
essary gnd important, in any bus¬

long

plowing
back
profits
incurring new obligations. In

expanding

Prior

pride

largement of its production facili¬
ties. That expansion process has
a

effort

volition.

convinced

that only

ord

gone

4

proper/remedy for'

the

-condition

a

latest
:

Let us look first at-the"
thought -that the public should'
securities solely of its own

to its ability to proceed
and

such
sales

bought."/Well, .in view of-Com¬
Mac-Donald's-splendid rec¬

first

Boston

is

''

power,'that it could take the risk
of large-scale'building of plants
and buying of equipment. For the

BOSTON

•

apartment

tip.

buy

Single Threat, of Recession

as

telephone with the
is

*

•:

picture?

Today, the greatest single, threat
of recession is due to industry's
doubts

the

he. talks loud,
and I am sure

of sound and stable

prosperity../

in

man

•

—————

—

building takes
me
upstairs

most

promises

:

But

mander

Tir|t time since 1929,
business

vator

de¬

women.

had /sufficient

war

sources,

this

A

American

wheri the ele¬

to continue

are

we

<S>—

market

another—one which must be

made and acted upon now—a

day goes

a

cn

'our

to

companies. The result has
by that I do not receive.some advertising

that-

so

engaged

was

number of hearing aid

a

aids, '

neces¬

cision whether

its

up

banking firm

investment

our

about hearing

and up, that kept

millions in jobs
and off relief rolls. Logically, that

ago

:

;

of hearing aids, in the course of which T got on the

hardly
literature

seemed

was

years

survey

been that

should :go.

—

a

mailing list of

forward.

bust. .It made

decisive differ¬

Some
make

entire

the

gredient in substituting boom for
the

seeking capital; Urges corporations cooperate with bankers in fur•rushing information to investors.
-

which

country,
universal

deter¬
that American industry
to

American

It

h
all

factor, ;and That is ?my .subject
today. It is a subject that has had
too little attention, even though

the

-

supply, and topped
by
appeals
for
American

products.

it
our

and

wear

can

of wartime

Price

A.

Gwilym

an

employment halted simply by

us

eco¬

coupled with a large volume
savings and a bloated

in,

fact that

Let

:

tell you that there was

can

sumers

shortages and
labor difficul¬

and

in

freshman

a

huge

a

material

ties,

are

backlog of demand for
everything that 140 million con¬

only

increase

.Even

nomics

re¬

were

stricted

over

common

now

are

Or

knowledge.

national

income,

income well

national

billion

$200

a n d
rising

steadily

a

reasons

have 60 million employed

we

and

actually

happened

the

and

fact,

:tween what we
pen

easier after than

comes

the

before

of

on s

to pass.

come

Wisdom

few pre¬

were

that it still has

did not occur, and

cer¬

there

|

//plans of- some concerns have been curbed because equity securities J
//cannot be sold, and explains function of investment bankers in \
/ .investigating;; status of securities markets as well as corporations

r,'.t."/''■4

'Everyone .can easily remember the nearly universal predictions, before and'immedi¬
ately following V-J Day, that business would take a nosedive and that unemployment
would skyrocket. Some of the forecasters thought there might be a brief boom in the con¬
sumer

4

| [Prominent investment banker points out dearth of risk capital and
on corporate financial structure. Says ^expansion

(President, Westinghouse Electric Corporation

securities.

new

the

.-hectic/public

And

part

of

speculation

in

already issued securities had been

engendered .by
tomers'

"An

before

Time does

search

man

the

at,the artnual Economic Club Din-,

excited

cus¬
ner

who used to call you

address

by

Mr.

Beckers

the-Chemical Market Re¬
1

Association.

,'New

York

*

week

a

Since

have

ago

the

seen

an

corporation
debt

last night..
of

end

the

enormous

amount of

secured from

capital

in

financing,

,

we

war

some

ca^es

through the public sale of bonds,but more often through borrow¬

City, March 12, 1948.

(Continued on page 35)

equity or stock securities as dis-;
tinguished from debt securities.
This lack of equity capital was
the topic chosen by Senator Millikin, Chairman of "the Finance
Committee - of the -Senate, in the
principal address of the evening

*

73

ing from banks;or-insurance com¬

PHILADELPHIA

GA.

at

Hundreds

dollars

Portsmouth Steel

Corporation

Gruen Watch

t

„Data

1

on

Request

AND

Also

New

New York

LOCAL STOCKS

Stock Exchange$
Member o)

Street, Philadelphia 2
Los

Private Wire System between

,

Philadelphia, New York and Los Angeles




"

A. M. LAW & COMPANY

Angeles

Pittsburgh, Pa.
Hagerstown, Md.
N. Y. Telephone—WHitehall 3-7253

(Established

after

Established
L. D. 51

.

„

Teletype SPBG 17

RHODES-HAVERTY

"

BLDG.

Teletype AT 288

4

1894

"" V

ATLANTA

money

o£

has

into bricks and mortar,
into its more normal

the

supplying

But

Labor

no

Day

in'. September

1946,.;largely under the weight-of
rew security offerings, the coun¬

1892)

SPARTANBURG, S. C.

as

interest

jdfhlttillions-

borrowed

of

well

capital.

York Curb Exchange

1420 Walnut

as

•

of working
industrial econ¬
omy can, for very .long, continue
with a capital structure of over¬
hanging debt, and the time has
already come when -the necessary
base of ownership capital must be
[reestablished. But since the mar¬
ket suddenly broke on .the day

BONDS

Properties

York, Philadelphia and

Los Angeles

CORPORATE

Textile Securities

BUCKLEY BROTHERS
Members New

STATE AND MUNICIPAL BONDS

use-

Company

DuMont Laboratories

;

even gone

Southern

Central Illinois Public Service

attractive -low

panies
rates.

ATLANTA,

SPARTANBURG

1,

GEORGIA

Long Distance 108

try

has

gradually

to

awakened

(Continued on page 42)

*

Volume

167

Number 4682

THE COMMERCIAL

CHRONICLE

FINANCIAL

&

(1211)

1

E. F. Hutton

Proposes Organization "Must Have Risk Capital or Government Ownership
To Defend Constitutional
"Industry!"
Rights

Mr. E. F. Hutton of
Westbqry, L. I., Special Partner in E. F. Hut¬
ton & Co.,. members of
the New York Stock Exchange, has

an

By RICHARD W. COURTS*

proposed

organ.zation in the form of

Partner, Courts & Co., Atlanta, Ga.

a
"Foundation," and in support of the
written personal letters to 300 executives of
leading

movement has

Dus.ness

'**n ^ t°
:

<|
||

under

Speaking for investment Bankers Association, Southern investment banker

corporations urging them to participate
fight and watch over the people's ngnts

constitutional government.

our

The text of the

proposed preamble and platof the .organization, as suggested by Mr.
Hutton, follows:

jTrices* of investment stocks, and concludes unless

§t: form

we have more risk capital
ownership of American industry.

PREAMBLE

To perpetuate the

t

I
of the

proves.ons

Constitu-

tion of these United
States; to protect and defend
that Constitution against the assault of ail ant;
sundry, from within and without this nat.cn; tc

:f' d sseminate to the peoples of the world

standing

of

."."deepen

the

that

Hutton
,n

and

devotion to Constitutional
defy government by men and
restore government by law; to re-establish the
sovereignty of the several States; I, as an indi-*

_

F.

broaden

to

citizens'

.Government;
Edward

Constitution;

under¬

an

"

to

^ vidual Citizen! of this Republic do hereby, in the
sight of God ahd the embrace of!
Liberty, pledge myself to the pre¬
cepts and principles of
^.-.--Fottridation, Inc.
and in sacred honor will subscribe to
its
set

purposes

forth;:j

-...Vj :';.v

.

,.i V •;'

^';V^■;V-:Vplatform
r,V v-i:■;

.

V

r,',

i

i

-

-i'r-r^Foundation

-—- - -->• -—-

.

hereinafter
v '..
i

as

''V

u-.-;V;

With faith in God and determination to preserve the fundamental
liberties of this Republic, we demand:
(1) Government by law—not
by dictiim]
:
(2) Adherence to the Supreme law of the
land—the Constitution
,

■

.V

l

United States and its Bill of Rights.-. -;.V. c
A.-. v::"-\
Reclamation by the Congress of the
powers constitutionally
vested therein, and str'ct,
accountability to the people for the
performance of its duties.
-

(3)

'.U-£tvV

(4)

Renunciation
and

quasi

of

bureaucracy

with

its

judiciary, and resumption

administrative

of

organic laws enacted by the governed.
Restoration of state rights.

laws

under

government

the

(fl)
(6)

X--

v

!'•

"

v

•

•

Re-establishment of the free enterprise
system, and each and
,.rr :.
every the duties and privileges it imposes..
1/
(7X Reverence of the Constitution, and amendment thereof
only
as is therein
prescribed]
tr
'y.;M (8)'We join with Benjamin Hill, of Georgia:/."The Constitution
is my only client; its preservation
is'the .only, fee 1 ask."
(9) We solemnly dedicate ourselves to do whatsoever
in honor.
in
dignity, and in valor may be accomplished: to make each
-1 : and every American realize the sources of all
freedom, the
sanctity of his home, the dignity of his way of
life, and the
ooport"nitv of his children rests in the Constitution.
The text of Mr. Hutton's letter $
business

them

to

leaders

jo'n

him

in* which

and

arguments

he

set

requesting
project
epitomized the
in

the

in

forth

a

recent

rights

under

Constitutional gov¬
To me, it seems the only
alternative left for "We, the peo¬
ernment.

ple."

Weakness cannot cooperate,

newspaper broadside, entitled "Le¬

.vith

galized

cooperate. The active

Stealing,

the

Whittling

Away of Rights of "We the Peo¬
ple,' Without Public Protest" is
as
follows:
-

Henry Ford, II
Ford

Motor

1

-

-

[

Co.

Detroit. Mich.

the rights of the
bad men

<
.

it.

our

Courageous
country—not

men

the

chicken-hearted and weakh'ngs. J
not attempting to direct
your

am

actions.

It

is

rdllars

crumbling.
our

readings
ters

do

for
of

to

you

decide;

government!, are

The future liberties of

people

endangered. The
political thermome¬

are

of

not

"When

fall,

onesacrifice in

unpitted

by
an

struggle." VWe .are wit¬
nessing this beyond our shores.

Stealing," 'may be of interest to
you.
Courage developed America

-The

inactive.

You may have some

—not lack of

.can

usurping

unequal

The enclosed article,
"Legalized

save

are

combine, the good must
unite—else they will
one—an

Dear'Henry:

can

anything—only .strength

register truth.

thoughts

re¬

specting the following suggestion
to sell the
consuming public 50
mill-on shares of

the

—

Foundation, at

—

$1.00

each

$400.

N.o

to

up

400

shares

corporation-

such

as

___-.___.c__i-

could

for

society

or

its

member-

This

eliminates

be

only individuals:

the so-called concentrated wealth.

Such
the

a

movement would

attention

of

the

bring to

consuming

public what. .Liberty and the Bill
of Rights means to" them.
V
!
According to the polls,. there
.

The

morals

of

countrv

our

are

low, pollution of class relation¬
ship;- the trends are sweeping us
toward

liquidation

freedom;
the

of« personal

principles

results

of

abandoned,

warped

judgment

directing policies from Washing¬
ton:
expediency substituted for
truth; leaders of our labor justi¬
fying any action that gratifies
their lust for power. ; We are be¬
coming accustomed to dishonesty
in

s

only

ever

This

one person in five-who has
heard of the Bill of Rights;

of

our

fathers—we

Today it is
I

ing and

believe

se¬

millions

are

It

protect the liberties which
fast

risk

to

country.

greatest product and of

of "common good"; in schools and

tionally advertised products based

dignity- of individuals. Le¬
galized stealing seems to be the

order of the day, all of

the most depraved
trends known to

Today
orable

that

we

tion

to

we

men

are

a

group of hon¬
the idea

.nreject

should have

an

watch

the

over

organiza¬




people's

all

the

products

today by industry.
this

product

is

If

lost,

more

valuq
being sold
and

all

the

na¬

worth

kept sold!

selling?" Have

six

months

this?

in

which

to

do

marbles!

York

New

to
r

t

h

e

t

less

or

b i 1 i

a

business.
risk

sets,

B y

ever

repre¬

sents
in

the

times

share

a

Richard W. Courts

the

of

business

subject

of

business.

the

ital

is

the

to

hazards

Such

cap¬

represented

primarily by
stocks.
Risk capital on
reasonable
terms
is
no
longer
common

available

for

doubtful
know

small

for

of

risk

fact

Association.

Stock

large

business

business

and

business.

We

in

our

concerns

of

some

the

of

Exchange. For
the average an¬

shares

traded

the

year

so-called

normal

them

we

—

lion

shares

listed

it

cannot

Enterprising

the

Ex¬

are over

1,900

oir

change; today there

million shares listed.
has

Our country
rapidly and tremen¬
(American industry
has

grown

dously.
grown
to

A list

such

companies is given
accompanying table,

ever

It is called

more.

new

and

us

we

stantial

part of the requirements

The day-to-day trading in com¬
mon
stocks provides the market

for

place for

to finance this

v

new

issues of risk

rehabilitating

of the World.

major portion

a

We

attempting
great American in¬
dustry of 1948 with a public mar¬

secu¬

rities to
supply new capital to
industry. The size of that market
governs its ability to absorb new
issues. The principal public marke't place for risk securities is the

ket the

size of

be done.

are

1901.

It

just can't

,

Let's examine the disastrous ei'h

V

(Continued

page

on

offer

The

sup¬

Buckley Brothers

come

little

en¬

demand

risk
capital
has
grown
rapidly than the savings of

for
more

peo¬

ple.

With this great excess of de¬
mand, even capital that exists is

NEW YORK STOCK EXCHANGE

that

suiting

ness men

unprecedented

not

in

are

ANNOUNCE THE FORMATION OF

in

the

minds

and investors.

high

.

of

Buckley Securities Corporation

no

busi¬

It follows

TO

employment

AS

currently high tax collections
secure.

You

gentlemen
position — you

difficult

a

continue

must
of

de¬

necessities, there is

hat f present

are

securing

to

provide

ury.

drastically

but

penses,

above

whom

maintained

you

in

accomplished

all

sound

able condition.

cuts

must

and

The latter

by

UNDER

BUSINESS

WHOLESALERS
DIRECTION

THE

AND
OF

AS

EXECUTIVE

VICE

PRESIDENT

ex¬

business

collect

INVESTMENT

Mr. William L. Nolan

The task is simplified if the

government

AN

UNDERWRITERS.

means

for

the

CONDUCT

DEALERS

unprecedented reve¬
Government Treas¬

nues

from

EXCHANGE

EXCHANGE'

in

from

for

confidence

and

STOCK

STOCK

spite of present
profitable operations re-

highly
mand

LOS ANGELES

PHILADELPHIA

NEW YORK CURB EXCHANGE

not only timid but has no incen¬
tive under present tax laws. This
means

34)

men

businesses

can

couragement.

WITH

be

44 WALL

PRINCIPAL

OFFICE

AT

STREET, NEW YORK 5, N. Y.

profit¬
can

be
PHILADELPHIA 2

LOS ANGELES

changes in the
1420 WALNUT

STREET

530

W.

6TH

14

STREET

g-.*A statement by Mr. Courts be¬
fore the Senate Finance Commit¬

tee, Washington, D. C., March 10,
1948.''!

PATHE

INDUSTRIAL COMMON STOCKS

INDUSTRIES, INC.

Altorfer Brothers
•

,:A

detailed

brochure is

and
now

illustrated

Company

Arcady Farms Milling Company
Booth Fisheries Corporation

available to

Colorado Milling & Elevator Company

interested investment dealers
.

Foote Brothers Gear & Machine Corporation

and

Gisholt Machine

other

tions.

financial

institu¬

INDUSTRIES,
ferred

and

on

"RATHE

INC.,

common

<

MacWhyte Company
-

Inquiries invited

Company

Hart Carter Company

At

'

.

<

-

Rath Packing Company

Rockford Machine Tool

.

Company

Snap On Tools Corporation

pre¬

Uarco, Incorporated

stocks.

United Printers & Publishers, Incorporated

Viking Pump Company
BOUGHT

SOLD

^

—

,

■

QUOTED

COMSTOCK & CO.

AC. ALLYN«® COMPANY

CHICAGO 4, ILL.
231 So. La Salle St.

Dearborn

Teletype CG 955

oil

supply not only our own ab¬
requirements but a sub¬

normal

wishing
businesses, ,men with

small established
to

be

In

70 mil¬

not approaching

are

because

plied.
to start

1901,

1926. '

year

less than

were

part of the country that need risk

capital

on

less than the

was

in

traded

1901 there

some

year's earnings.

one

years

of all history and 60% of the

year

are

of

10

61% of 1932, the worst depression

sound

book

capitalizations

in

owner¬

ship

of

by the

companies are priced in the publicr market at only two to five

mean

that

out

stocks

shares

selling today at
values, in some
at or close to net quick as¬
attaching no value -whatso-,!
to physical properties.
The

entire

capital I
capital

shortage

borne

than

cases

-

existing

e

is

common

companies

and

expand

a

capital

the past

longer

Think it through!. The coun¬
try needs courageous men—not
weaklings—we are not playing
for

will

volume

Is it not

we

that

Exchange

This is the product which must
be resold to the
consuming public
and it must be

rates

;]

•

critical

when

on the free
enterprise system willfall—America is finished! ;

than

man;

need
to.

which

and dangerous

than

Our Bill of Rights is the

and

that

that

new

business

great

our

Bankers

nual

The

capital

1

start

to

are

repudiating
civilization; clergymen preaching
socialism—expropriation of prop¬
erty without consent in the name

'disappearing' in

Investment

put riskv capital into industry and
bring increased revenues to the

particularly

of

'litical onportumsm is

and

structure

tax

is

'job

our

people in these United States who
would welcome such a movement
to

the

Treasury.

curities..

;it for granted.
the auction block!

there

of

dis-

tributing

take
on

public places; sacrificing fun¬
damental legal principles for nor

colleges, teachers advocating col¬
lectivism,' ,denving
the
sanctity

Committee

Federal Taxation

the

My firm, Courts & Co., with 20 offices in the Southeast, is engaged primarily in underwrit-

product, our Bill of Rights,
given to us on a platter by
two-fisted, God-fearing fore¬

was

will have government

we

appearing before this Committee by your courtesy and at the request of the

am

Chairman

..

to

difficulties in ob¬

stresses

taining risk capital for industry because of present high income and capital gains taxes.. Pleads for
immediate 50% maximum limit on individual income tax rates, and points out lack of risk capital
is as vital concern to working men as to other classes. Says it is time to get alarmed because of low

Incorporated

1501

Chicago

New York

Boston

Milwaukee

Minneapolis

Omaha

8

THE COMMERGIAL

(1212)

CHRONICLE

FINANCIAL

&

The Interest Rate Problem

Dealer-Broker Investment

By BEARDSLEY RUML*
Chairman, R. II. Macy & Co., Inc.

.Y/'/'Y

Former Federal Reserve official, in a detailed

and careful analysis of the probhm of long-term interest
debt management and support of government bond prices, lists and answers

rates in relation to national

/

Contends there is no "natural rate" of interest and that public authorities are
willing and able to keep interest rates on government bonds low, even though full powers of credit
control by open market operations may be limited for indefinite period. Concludes good reasons exist
for supporting Federal interest rate program and urges cooperation with fiscal authorities.
In these anxious

all of

There is

us.

no

mic abstractions.
fiscal

days, taxes, the budget and the debt are matters of grave concern

<S>companies and other institutional
investors, debt in the hands of
thQ commercial banks, and debt

United

must
developed

be

in

that

is

world

has

at

not

that

not

been

sense

its old

of

levels
d

of prot i v i t y.

u c

This

ing

<

amount

in-.v•;■■■"■=

ce

fiscal

be

applied.
It also imposes major
problems
of
debt
management
that

fiscal proposals that
Just

budget

level of

new

has raised

taxes

and

1

unfamiliar problems,

and

new

high

the

as

any

.,

so

^Iso the size of the national debt
creates

situation for which

new

a

have

had

little; preparation.
Much thought and much experi¬

we

will

ence

have

an

we

debt

a

before

needed

be

we

policy in which

have complete confidence.

can

Problem of Debt Management

.The

big hew questions associ¬

ated

with

a

size

that

ours

that

these

has

relate

debt management.

•billion has

have to be
year

that

the

of

become

to

are

policies

of

A debt of $250

be managed

to

another,

or

way

debt

national

in

one

decisions

and

made several times a

based

are

more

for

possibilities of debt man¬
as a tool of fiscal policy

agement
arise

first from

the sheer size of

the debt and second from its com¬

composition.
If
the debt
small, the possibilities and

plex
were

necessities
would

be

cations

of

debt

management

the

size

obvious, but those in the com¬
position of the debt are generally
ignored.
are

The national debt consists of at
least four distinguishable kinds oi
debt:

debt

vate

individuals,

hands of

in

the

correlative

a

An

hands

of

pri¬

debt

in

the

savings banks, insurance

address

tax

policy in the maintenance of high
employment at stable price levels.

or

by

Mr. Ruml at
General Membership Meeting of
the Washington Board of Trade,
Washington, D. C., March 16, 1948!

The Interest Rate

Government

on

Bonds

that

Today, one of the great issues in
management of the public
debt is the question of the rate of
interest on long-term Government
securities.
The working out of
policies connected with this issue
Ameri¬
can
business life for years to
come, and therefore it ranks with

will affect every aspect of

the

other^gr-eat.issues of the day

as

one

wmch

on

informed

an

opinion on thd part of business
leaders is indispensable.
'
Before
giving
any
personal
views of my own as to what may
happen or as to what might be
desirable, I want to present some
of the major points that must be

thought

Y/.'Y

idea

some

about

we

eral whatever is "natural"

is in¬

bad.

moment's

A

"artificial"

distinction

a

Today

death

have

we

rate

an

ate would be much higher if we

did

take

not

sanitary measures
to reduce it. The length of time
required to get from New York
to Washington is "artificial." The
"natural",

tjme required would
muclj» lopger ♦, and tfre trip

be

In the economic

field, too, there

money

as

a

of

instead

The

use

of

of

use

barter

paper

against paying interest

on

aeposits

ground in our thinking.
It seems to me that there
six

is

principal subjects on which it
to have an opinion

necessary

if one

is going to

clusion
rates.

to

as

Let

me

to a con¬

come

long-term interest
list these six sub¬

First,

can

there be such a thing

"natural"

a

long-term

an

what

made

have

statements

public authorities
the subject; and how important
by

these statements?

are

authorities

powers

the

do

control

have7 to

the

long-term interest rate and what
limitations

the

are

/

these

on

nature,"

as

is the

working

condition

with

on

the

natural

a

intention

improvement

some

of
on

what otherwise would be the fact.
Let

then

not

us

with

confuse

the

"evil"

the

to

be

purposes

served

by

in¬
existing
are

start

our
thinking about control
long-term interest rates by
calling such controls artificial,
which they certainly are, and go¬
ing on to imply that they are evil
which they may or may not be. Y;
Let us recognize that as long as
we have a central banking system

lation, just
interest

an

dogpaw

as

have
that is artificial,

long will

so

rate

we

such it is neither good nor
"natural"'

A

n,"y

W<# 30< Pmr Share

Shore

Prospectus

,

TELUER &
Established 1931

42Br«.dw.y,MewYorM,H.l'BOwling Green

9-79




or

the

interest/ rate

UNDERWRITER
■

170

Steel

Bethlehem

in

—Memorandum

Broadway, New York 7, N. Y.
WOrth 2.1534-5-6-7

EVENTS

Guide"—
March

Pine

Twin

—

Public

Buckley

Service

April 13, 1948 (Chicago, 111.)

2, Pa.
available

are

Chicago
the Hotel La Salle.

Public

Illinois

Central

Service

April 19, 1948 (New York City)

O'Connor
Co, 135 South La Salle Street,
>

*

Chicago 3, 111.

Central Illinois Public Service—

Study — Goodbody
&
Co.,
115
Broadway, New York 6, N. Y.
Also available is a study on De¬

rate,.4 controlled
by the

determined

Public Utility Corpora¬

Central
tion

—

Memorandum

history and

agencies that have been created
handling our fiscal, monetary
and credit policies.

1948 (Dallas, Tex.)

ciation Convention.

outlook—Brailsford &
La Salle Street,

Corporation
—Memorandum—A. M. Kidder &
Petroleum

York 5.

New York.

public relations field, will speak
on "Public Relations" at the New
School
for Social
Research, 66
West
19

Craddock Terry Shoe Corpora¬
tion—Analysis—Strader, Taylor &

Harvester

De*roit

What then
powers

Public Authorities

are

the purposes

and

of the appropriate public

agencies

which have to

(Continued

on

page

do with

29)

Y

Bank
;•

;

Company—I

item—Goodbody & Co..
New York 6, N! Y-

Bernays, pioneer in

L.

Edward

Co.,- 1 Wall Street, New

^

Bernays to Speak /

Chicago 4, 111.
Cosden

;

market

on

12th

Mr.

Bernays

,

"Freedom of the
Abroad", given
by Milton D.

series,

in, the

Friday, March
/ Y
/
is guest lecturer

Street,

at 8:10 p.m. Y

Press at Home and
at

the

New

School

.Stewart, director of research, the
President's Committtee on Civil,

Rights. Y,

S

//•

;;

.

-.v

-

115 Broadway,

Baum
Electrol, Inc.—Analysis of man¬

York 4,
Also

oi

hydraulic

N. Y.

control

&

Hummer

Co.,

elected " a
Extension

was

director of the La Salle

■'/;>/Y> Y/!Yv>y: University.
analyses oi
Wellman Engi¬

Director

CHICAGO,

Y;

">\J?

available are

Foundation

Co.,

and Tennessee
Chemical.1
i-.'*

neering,
&

\-

a

ILL. — Harry V A.
Baum, a partner in the New York
Stock Exchange firm of Wayfte

/

Product*

!' With
.

(Snecial

Sides, Morse &
to The

Financial

General

Box

Company —Card

memorandum—Barclay Invest
ment Company;

39 South La Salle

Street, Chicago 3, 111.

Y

Co.

Chronicle) i

SACO, ME.—Laurence H.
Statements by

I

York

New

Stock Exchange.

South

Co./ 208

and powers of the public

for

(New York City)

Election

Annual

National Security Traders Asso¬

ufacturer

limits

Waldorf-Astoria Hotel.

May 10, 1948

Nov. 15-18,

troit Harvester.

equipment for aviation and indus¬
trial uses—Seligman, Lubetkin &
Co.,' Inc., 41 Broad Street, New

interest

Security Traders Association of
12th Annual Dinner at

New York
the

"natural", interest rate as unreal¬

within

of

Room

the

in

Dinner

As¬
and

Meeting

Annual

sociation

Portsmouth Steel, Gruen Watch
and DuMont Laboratories.

Dealers

Securities

Illinois

memoranda

on

Co.—Analysis—Doyle,

Traders Club

City Bond

Spring Party at the Nicollet Hotel,
Minneapolis.

Brothers

Street, Philadelphia

Walnut

(Minneapolis,

1948

18,

Minn.)

Street, New York 5, N. Y.
Illinois

Field

Investment

In

Light Co.
current issue

Saxton & Co., Inc., 70

Data

Wall

1

COMING

Hills Power &

Central

Co.,

Corporation—

appraisal — Kalb,
Voorhis & Co., 15 Broad Street,
New York 5, N. Y.
,fr
Black

&

Kidder

M.

Street, New York 5, N. Y.

Investment

Also

Trust

&

New York 5, N. Y.

Pine Street,

—

Bank

National

United Fruit Co.—Memorandum

istic, and to accept the fact that
we will continue to have an arti¬

purposes

LI Mi CHI

our

of

.,

York—Analysis
E. Unterberg & Co., 61 Broad¬
New York 6, N. Y.

—A.

randum—Stanley Heller & Co., 30

Research

in

international

ficial
★

- ;

co*

be obtained

Broker

underwriter.

Dealer or

-"ZXPS-i

m*y

from jrour

obtain**

way,

..

Corp.—Memo¬

business, political
arrangements.
Accordingly, I think it is sensible
to
dismiss the
possibility of a
and

be

Aviation

Co., Inc.* Peoples National
Building, Lynchburg, Va.
i

quences

mines, ltd.

.,r:

*

after fundamental
changes
in our monetary and
banking institutions, changes that
would have unpredictable conse¬

€/m

—C.

in

Hickey,

or

of

'

Company of New

result of mind and muscle

will

and

with powers of control and regu¬

powers?

Bendix

&

Illus¬

Street, New York 5, N. Y.
*

1420

—

operations

and

company.

■

"artificial"

Second:

"against

Clearly there: is nothing inher¬
ently wrong with an institution or
a
practice merely because it is
artificial.
In truth, the artificial

interest

rate?

been

time.

making

separately.

49 Wall

demand

have discovered from time to

we

are

&

industry—Vilas

Co.

Inc.

Industries,

activities

tail

the

of

developments

Week—Current

is

the power to
at the central

Service

Public

England

brochure describing in de¬

trated

medium of exchange
the

is

New

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

Public

Developments

G. A.

time generally ac¬

desirable.

5, N. Y.

5, N. Y.

Railroad

the

of New
Bissell &

Bank

City

120 Broadway, New York

Meeds,

Co., 1 Wall Street, New

of "Public Utility Stock

same

as

National

>

York—Circular—Laird,

vestors—Planned portfolio—G. H.

is at the

cepted

Y.

Pathe

is much that is artificial and that

rediscount

same

12 complete

Common Stock Program for In¬

York

&

York 5,

Wall Street, New

1

spiral

years,

would involve the expenditure of
much more energy.

certainly artificial;

the

Co.,

in

charts

bound Dook covering

Walker &

Special

M. Kidder

pany—Circular—A.

Street,

N.

922

—

—

Lindsay Light & Chemical Com¬

R. W. Press-

Co.,

Charts

from

prohibition

of

&

Co.

Oil

momentun of

—

68 William
New York 5, N. Y.

ty¬
The "natural" death

phoid fever.
*

consideration

show that such

is meaningless.

could exist only

„.v

prich

York 5,

survey—Peter Morgan & Co., 31
Nassau Street, New York 5, N. Y.

Re¬

—

mean

banks is artificial;, the

part

Strong

and

general business

trinsically good and that what¬
is "artificial" is intrinsically

rates.

.

y/j Offer:

Tel.

what

to

as

"natural" and "artificial" as
applied to interestY rates. Some
people seem to feel that in gen¬

evil.

40* per

herent vitality

Corpora¬

'Y

Kingwood
Pattern

Business

Recent

—

Colony

First

YYYYY YY;Y"\

Y.

N.

view of fundamentals reveals in¬

by

think

about when we
long-term interest

\Y,;Y,;v'\'/Y'/-;

—

tion, 52 Wall Street, New

and showing monthly highs,
Is There a "Natural" Interest•; lows, earnings, dividends, capi¬
talizations, and volume on virtu¬
Y'YY :Y Y;'Rate? ;YY///'/:YY*;U-/
ally every stock listed on the New
Our first
question was, "Can
York Stock and Curb Exchanges
there be such a thing as a 'natu¬
—single
copy
$l(L-yearly
(six
ral' long-term interest rate?"
issues) $50—F. W. Stephens, 15
To begin with, we must have
William Street, New York 5, N. Y.

and

Pro»P«c,UI

'Jrji

v

Then, even if we come to differ¬
ent conclusions, we will at least

tended

Prlc«

private securities?

on

bulletin

attrac¬

to Chas. A. Day & Co., Inc.,
Washington Street, Boston 8,

Mass.

ship between the interest rate on
long-term Federal obligations and

will

the

Fourth: ?what

gold

long-term

Fifth: what objections can be
;aised to existing policy? and
Sixth: what about the relation¬

199

ever

Third:1 what
*

of

The impli¬ jects in the form of questions and
of the debt then I will discuss each of them

negligible.

in

.herefore

and are these
short-term purposes?

policy;

have " covered

on

less explicit objectives.
The

of

kind

be con¬

can

realistic.

sidered

the

in

surmounted

be

must

and

to

the
purchasing
on

consequences

remaining in the hands of
die public. Debt management is

!'
must

measures

.classification

one

has

power

Beardsley Ruml

,

each classi¬
transference of

the

from

retire¬

the

from

sums

or

another

of ref-

e r e n

of

Jebt

an

unwholesome

which

no

global ag¬

issues,

refunding

fication

setting

frame

and

in

is

homogeneous

a

ment

disturb-

provides

funds

trust

therefore

gregate. Through the application
of surplus and through the terms

restored

even

Debt

agencies. 'The Na¬

Federal

tional

yIF*

yet

Federal

other

Reserve

Federal

the

by

Banks,

Sfc

in

and

peace

to

held

world

a

tive

to

Plastics

Hungerford

Possibilities—List

Appreciation

of securities which appear

practical value in discussing these subjects in terms of unreal econo¬
recognize that tax ?s, the budget and the debt, that is to say the

policies

the

/

We must

States,

a

It is understood that the firms mentioned will be pleased
to send interested parties the following literature:

Y

variety of questions.

a

of

Recommendations and Literature

'\YYyY\YY,:;,Y

:vYv

Thursday, March 18, 1948

i

Sta¬

& Co.,

ples is with Sides, Morse

Inc., 199 Washington

Street, Bos¬

ton, members of the

Boston Stock

Exchange.

•

'

-

Volume "167

Number 4682

THE COMMERCIAL

FINANCIAL

&

CHRONICLE

(1213).

New Issue

$200,000,000

'

■

.

State of Ohio

•

:

■

2% World War II Compensation Bonds
*

*j

.

Dated

April 15, 1948. Due semi-annually October 15, 1948—April

15, 1963,

shown below. Principal and interest (October 15, 1948
and semi-annually thereafter)
payable at the option of the holder at The National City Bank of New York in New
York

as

City, at The Northern Trust Company in Chicago and at The Ohio National Bank in Columbus, Ohio.
Coupon Bonds in denomination of $1,000, registerable as to principal only.
'
!

Interest

Exempt from Federal Income Taxes under Existing Statutes and Decisions

The constitution of the State of Ohio
provides

that these Bonds and the interest thereon

shall be exempt from all taxes levied

Eligible, in

opinion,

our

by the State

or any

|
income

as

taxing district thereof.

legal investments for Savings Banks and Trust Funds in New York,

as

Ohio, Massachusetts, Connecticut and certain other States.

AMOUNTS, MATURITIES AND PRICES
(Accrued interest

to

be added)

Prices

Amounts

Maturities

$5,750,000

Oct.

to

15, 1948

Prices

Yield

Amounts

.75%

Maturities

$6,350,000

Oct.

to

15, 1953

Yields

Yield

Amounts

1.40%

Maturities

Oct.

$7,015,000

Prices

or

15, 1958

1.80%

5,805,000

Apr. 15, 1949

.85

6,415,000

Apr. 15, 1954

1.50

7,085,000

Apr. 15, 1959

1.85

5,865,000

Oct.

15, 1949

.95

6,480,000

Oct.

15, 1954

1.55

7,155,000

Oct.

15, 1959

1.85

5,925,000

Apr. 15, 1950

1.00

6,545,000

Apr. 15; 1955

1.60

7,230,000

Apr. 15, 1960

1.90

5,980,000

Oct.

15, 1950

1.05

6,610,000

Oct.

15, 1955

1.65

7,300,000

Oct.

1.90

6,040,000

Apr. 15, 1951

1.15

6,675,000

Apr. 15, 1956

1.70

7,375,000

Apr. 15, 1961

1.95

6,100,000

Oct.

1.20

6,740,000

Oct.

15, 1956

1.70

7,450,030

Oct.

1.95

15, 1951

15, 1960

15, 1961

6,165,000

Apr. 15, 1952

1.25

6,810,000

Apr. 15, 1957

1.75

7,525,000

Apr. 15, 1962

100

6,225,000

Oct.

15, 1952

1.30

6,875,000

Oct.

15, 1957

1.75

7,600,000

Oct.

15, 1962

100

6,290,000

Apr. 15, 1953

1.35

6,945,000

Apr. 15, 1958

1.80

7,675,000

Apr. 15, 1963

100

The above Bonds
the

to

The National City Bank
Of NeW York

are

offered subject to prior sale, for delivery when, as and if issued and received by us and subject
approval of legality by Messrs. Chapman and Cutler, Chicago, Illinois, and by Messrs.
Bricker, Marburger, Evatt and Barton, Columbus, Ohio.

Bankers Trust Company

The Chase National Bank

First National Bank

J. P.

New York

Halsey,Stuart &Co. Inc.

TheNorthernTrust Company

Ripley & Co.

Guaranty Trust Company
;

Blyth & Co., Inc.

Lehman Brothers

Incorporated

Chicago

The First Boston

Chemical Bank & Trust Company

<)f NeW York

.

HarrisTrust andSayings Bank^ ContinentallllinoisNationalBankand Trust Company
of

Harriman

Morgan & Co.

Incorporated

The First National Bank of Chicago

Bankof America
N.

.

Corporation

Smith, Barney & Co.

;

T. & S. A.

C. J. Devine & Co.

,

INC.

Glore, Forgan & Co.

Goldman, Sachs & Co.

Equitable Securities Corporation
Braun, Bosworth & Co.

Kidder, Peabody 8: Co.

Merrill Lynch, Pierce, Fenner & Beane

McDonald & Co.

The Ohio

Incorporated

Field,Richards & Co.

Incorporated

First of Michigan Corporation

F. S.

Moseley & Co.

Otis & Co.

The First National Bank

The Philadelphia National Bank

(Incorporated)

"

'

American Trust Company

'

San

Hayden,Miller & Co.

Shields & Company

.

Estabrook & Co.

INC.

W.E.Hutton & Co.

Mercantile-Commerce Bank and Trust Company
v.'

Ryan, Sutherland & Co.
■'

Cincinnati

.

Seattle-First National Bank

'

•!

■

'

■

.

A. C.

Allyn and Company

Ball, Burge & Kraus

Bear, Stearns & Co.

Central Republic Company

Incorporated

Eastman, Dillon & Co.

The First Cleveland Corporation

Hemphill, Noyes & Co.

(Incorporated)

Hornblower & Weeks
j.'-/.

Seasongood & Mayer

Bacon, Stevenson & Co.

v

Lee Higginson Corporation
■

B.J.Van Ingen & Co.Inc.
Breed & Harrison,Inc.

-

Incorporated

Kean, Taylor & Co.

-

•

Sweney,Cartwright & .Co.

Adams, McEntee & Co.

Company

Geo. B.Gibbons & Company

Cincinnati

'

•

Weeden & Co.,Inc.

C. F. Childs and Company

The Illinois Company

' Prescott,HawIey, Shepard & Co.,Inc.

Roosevelt & Cross

Incorporated

J. A. White & Company

Dominick & Dominick

Incorporated

-

L. F. Rothschild & Co.

Incorporated

The Weil,Roth & Irving Co.

;

Hayden,Stone & Company

-

E. H. Rollins & Sons

'

v.

R.S.Dickson & Company

Incorporated

The Fifth Third Union Trust

Company

The National City Bank
of

Cleveland
^

Van Lahr,DolI &

Isphording,Inc.

Laidlaw & Co.

Incorporated

Incorporated

Commerce Union Bank
Nashville

Curtiss,House&Co.
-

,
.

S'roud &

Company

Incorporated

March

17, 1948.




«

Ginther &

;

•

William Blair & Company
.

Company

Kansas

Graham, Parsons & Co.

The Marine Trust Company
of

-

of Los

*

Whiting,Weeks & Stubbs

Robert Winthrop & Co.

"

*

Buffalo

vCommerce Trust Company
Kansas

Mo.

Reynolds & Co.

The Wisconsin Company
-

City,

Incorporated

-

r

Trust Company of Georgia

*

Angeles

City National Bank and Trust Company

-

f

/

G.H.Walker & Company '

SecurityrFirst National Bank

Incorporated

Alex. Brown & Sons

W.H. Morton & Co.

Merrill,Turben & Co.

>

.

Chas.E. Weigold & Co.

Eldredge & Co.

'

.

R.H.Moulton &

'

Hallgarten & Co.

(Incorporated)

Harris, Hall & Company

i

V

Drexel & Co.

Barr Brothers & Co.

Francisco

Provident Savings Bank & Trust Company i

.

Blair & Co., Inc.

Salomon Bros. & Hutzler

of Portland, Oregon

\

,

R. W. Pressprich & Co.

Stranahan, Harris & Company

"'
,

Fahey,Clark & Co.

Union Securities Corporation

Paine, Webber, Jackson & Curtis

Company
*

Phelps, Fenn & Co.

City, Mo.-

Schoellkopf,Hutton & Pomeroy,Inc.
%

Wood,Struthers & Co.

,

Stern Brothers & Co.

9

10

THE COMMERCIAL

(1214)

The Heavy

Missouri Brevities

Thursday, March 18, 1948-

Industries and Their Securities

Among

sby-Tegeler & Co.; A. G. Edwards '
& Sons;
Stern Brothers & Co.;
Friedman, Brokaw & Lesser; Hill
Brothers; Metropolitan St. Louis
Co.; Reinholdt & Gardner; I. M.
Edward D. Jones &
Co.,
and
Scherck, Richter Co.
Subscription warrants to the com¬
mon
stockholders
will
become
Simon & Co.;

3

after

void

(CST)

p.m.

of under¬

On March 4 a group

mand for their

preferred

cumulative
at

share)
dividends.
The

($100

par

accrued

per

product?.

present favorable

&

tion. /

imize fractional shares.

proposed

.

/

*

St.

Inc.,-

/./YY/yy/

little

as

markets

often within

and

preferred stockholders
their shares for

second

exchanging

ihe

4(4% preferred stock,
share-for-sliare basis, with

new
a

adjustment of $5.11 per

cash

a

each

in

slnare

expired at

case,

Bakeries

City)

and

ness

I spend

character¬

4% sinking fund deben¬
due
Feb. 1, 1963, were

tures

^ability

preferred stock will be applied,
to the extent of $5,352,165

4(4% bonds due March 1,
1962,
and
$1,800,000 of 4(/2%
sinking
fund
debentures due

of

(exclusive

redeem

-

ac-

stock, and the balance

added to

working capital.

Louis,

St.

dividend
30

reduced the quarterly
its capital stock to
from 40 cents,; payable
on

cents

April

1

March

18.

been

to
holders of record
The 40-cent rate had

including

and

since

paid

Century Electric Co., St. Louis,
for the quarter ended Dec

sales

31, 1947, totaled $6,092,499, com¬
pared with $4,313,842 in the corre¬
sponding period in 1946.

of
1946.
Herman Husch.
President, said that the company
expects to continue:, the 30-cent
rate through the remainder of the
current year. Net income for 1947
totaled $1,317,386,
equivalent to

July

of
in

$3.23 per share, against a net
$1,527,295, or $3.85 per share,

and

on

ac¬

Bell Telephone

debentures.

Stix,

of StroussMirshberg Co., Youngstown, O.,
vote

will

ing

stockholders

a

pany

March 29 on

approv¬

plan to merge that com¬

Stores Co.,

Department

May

with

10,

for

of

1948,

31,

Jan.

Fuller Co., St.
of $14,068,689

the

-

report¬

1947

of

$619,249

in

the

in

1946.

With Trowbridge & Co.

C. T. A.

Financial

BATTLE CREEK,

3%—1978

ald

E.

with

Nelson

of

industry cqn^pa rues,

have a few things in
First, they are all man¬

1929

to

..Fluctuations

1933,

when

gross

Demand

in

for

y// ''//yy:/.Products

of

now

as

rule, is

a

year-to-year

with other
This,
of
the fact that

case

industry.

stems from

course,

volume

is

chief

the

determinant:

profits for most of these com¬
panies and that changes in this*
factor
are
far
more
important
than, lor example, the influence
of

changing

commodity

Ihe

sizable

volving
fixed

than not,

total

bination, these
elements

justed
produce

because the markets for
their products are in other types
of
manufacturing
industry,
in

products,

agricultureand

transportation;

and

with

the

ultimate

con¬

the

"de¬

own

Mdreover, the

best customer.

penalty of changes in demand on

is

operations

company

exerted

rising

read¬

conform

Thus,

in

factor

operating
of profits

to

they
of

results

to

pronounced

a

benefit

the

cost!

be

cannot

to
volume...

leverage

in times of

volume

and
the reverse
when the trend is down, In. addi¬
tion. it is generally true in heavy
u s tr y
that manufacturing

ind

"direct";type,

quickly because &udden and un¬
predictable
reductions
in
new
business
generally
are
accom¬

depends in good measure- on

panied by cancellations of orders

so-called

not

sumer,
demand is
rived." rather than

of

beyond the control of the

in

Third, domestic capital

Rudd
before the Small Investors Forum,
:;:Part of

Columbia

City,

is. its.

industry

com¬

fixed

-

promptly

changing'

In

substantial

create

semi

of

sizable

a

costs.

in

often

more:

direct labor is
in

element

investments

Also,

assets.

heavy industry is accentuated by
the fact that, for many of these

heavy

prices*

most * part/ the nature oJ§
operations requires relatively
large
manufacturing
units,
in¬
For the

usually

hand.
The

a

lecture by Mr.

University,

New

York

are

maximum

demands,

that

production

normal.

rates

at

minimum,

a

study
cf the Federal Reserve Board in¬

business

volatile

I

to

meet

rather

than

Consequently,

is

borne

are

by

out

production.

industrial

of

a

business

peak,

we

find that in

times,

these

sharply

compete

goods

capital

dexes

geared

in their efforts to keep idle plant

fact

Starting with the post-World War

11, 1948.

March

capacities

extremely

for

MICH.—Ger¬

Bank Building.

a

which

producer.

Trowbridge & Co., Michigan

National

decade

industry companies,
subject to
greater

Finally, the violence of changes
in
demand
for the
products of

Chronicle)

Lansing is

that

product fell 45%, capi¬
brass, copper wire and tal. expenditures went off 77 %
aluminum,
(6)
railroad ..Conversely, from 1933 to 1937,
cars, locomotives, trackwork, and gross national, product rose 60%
parts, (7) ship construction and and capital expenditures tripled.
repair, (8) iron and steel in all While the 1930's probably are not
forms.
The
wide
diversity;; of completely typical, because de¬
products and markets represented pression conditions prevailed in
by the foregoing is self-evident. most years, they are nevertheless
indicative
of
the
volatility
of
Characteristics of Heavy
capital expenditures.
Industries

and

to The

in

as

factors

(Special

that

heavy!

dividend-paying capacity of

Reviewing the 1930's, it can be
concluded

question, how-t

be no

cm

that the earning power and;

companies engaged in the dis¬
tribution and
service: industries.

three months
$824,194, as against

period

•

There
ever,

to

ed sales for the last

same

business; horizon.

on

cf

appliances,

household

Second,

of

the

opinion;

his

in

if,

beginning to form

are

ufacturing companies, as opposed

with

$12,209,167 in the quarter ended
31, 1947.

Key Co., East St. Louis,

clouds

From

however,

ended

months

compared

purchasing

national

common.

Jan.

the

1948,

three

the

for

&

sales

prices.
Thus, the customer
easily persuaded to defer

be

can

,

branches

The heavy

The plan

St. Louis.

transfer on
assets of
Slrouss
Hirshberg for 148,000
May common shares, which are
provides

May

Baer

had

Louis,

rule, the products

for relatively long
life*'-and command relatively hign

rec¬

companies,j

particularly during the 1930's, for:
the most part clearly reflect these'
wide swings in the rates of theiri
operations.
As
a
result,
these?
companies usually are loosely re¬
ferred to as "prince or pauper."/
The
designation is not entirely
fair, and certainly should not be;
universally applied within a<
group which includes many com¬
panies with unbroken dividend
record? extending back for long/
periods.

product created, on aver¬
age, a change of roughly 25% in
domestic
capital
expenditures.

1946.

4 The

a

cable,

$100,000,000 additional

Co. to issue

As

dividend

industry

national

such

Feb. 16 authorized

Southwestern

the

ble.

designed

are

The earnings and
ords of heavy

change that is the

trial

Service

Public

Missouri

The

product

improve

or

goods.

change of about 10% in the gross

other forms of energy,

and

excluding

crued interest.

Commission

op¬

comparable gain of 52% over that"
year. It is readily apparent, how-:
ever, that normally the extent of
the swings in production of dur¬
able goods is two to three times:
as
great as those in non-clurable!

machinery, and equipment,
(5) fabricated non-ferrous metals

&

100.35%

By at

series

pone

unit

my

to

of

goodsj

in 1947 was 60% above 1940 nondurable goods showed a closely

radios, etc., (4) all types of indus¬

Co., Kansas
City, and Stix & Co., St. Louis,
participated on March 10 in the
public offering and sale of an
issue of Central Pacific Ry. Co.
first
mortgage
3% %
bonds,
Fitch

Barret;

in

definition, the
heavy industries include the mak¬
ers
of (1) agricultural tools and
equipment, (2) most building ma¬
terials, supplies and equipment,
C3)
apparatus
for
generating,
transmitting and controlling elecr
According to

trical

Consolidated Retail Stores, Inc.,

are

and

industry, agriculture
transportation.
by

'/J/y/Y/;

*

*

*

companies

chinery, tools and equipment used

first

to

whole is the fact that

a

large sums for
of their operations,

lower costs, or for the
replacement of worn-out or ob¬
solete equipment.
The very na¬
ture
of
the
products,
in most
cases, makes demand easily post¬

quality

suppliers to the makers of, or are
themselves the makers of the ma¬

1956-

\ crtied dividends) all outstanding
shares of both classes of 4(4 %

as

constituent

the

gage

on

p.m.

Rudd

the

group

business en-

of

mechanization

the

erations
S.

Alfred

feat¬

of

ure

for

or

principal
common

privately
by
Kidder,
Peabody & Co. with certain in¬
stitutions. The net proceeds are
to be used to refund the out¬
standing $2,142,000 first mort¬

This is not

relatively

tee exp.nnon

The

istics.

placed

March 9. The net
proceeds from the sale of the
100,000
shares
of
new
4(4%
2

y

$4,000,000 Inter¬
Corp.
(Kansas

of

issue

An

state

over

rela-

j terprises, farmers and others- to

a s
"

privilege offered to the holders
of the
4(4% cumulative pre¬
ferred
and
4U%
cumulative

a

surprising because, basically, they
arq/.-conditioned by the willing¬

financial

o

de range

jlively short period.
-

o r

generally
t

dome/tie expenditures for capital

'purposes tend to fluctuate

to

.

products

import-

paramount

is

•:a w

with the

mon

Thus, production of durable

of

are

in determining sales for. all.
a
matter of record that

It

com¬

others

—— ;<

——r

—

:

—

shortages in all lines of products.,

ar.ee

having
in

——

ment

into

eight or nine
sub-divisions,

Louis, for'the three months ended
Dec. 31, 1947, reported sales of
$11,307,240, as against $12,441,313
in the last three months of 1946.

defini¬

expenditures for plant and equip-

which

each

Industries,

Clinton

t~;:

-

.

com¬

divide

*

j

a

panies,

O.,

Warren,

and

As

of

group

'

iho:e wHch manufacture capital goods

as

general rule, it is applied tb the best of companies which manufacture the eapi-j
goods for our economy, as distinguished from the consumer goods.
As such, it covers a

tal

would

merger

as distinguished
instability of deHolds, however, heavy industries have been consistently profitable and have

industries

outlook, but cautions selectivity in purchase of their securities.

heterogeneous

The

!

"heavy industry" is a very loose one, and cne which defies precise

The term

investment
bankers
of
Cleveland, will
buy and sell
Strouss-Hirshberg stock to1 min¬

.

Exchange

goods, stresses the fluctuating nature of their earnings arising oul of

consumer

Co.,

Youngstown

publicly offered a new issue of
100,000 shares of Pet Milk Co.

4Vj%

be

II. Murch

Maynard

cash.

in

from

held.
paid

share

will

shares

Research Department, Shields & Co.,

sl" ' '

Mr. Rudd, charactering heavy

Eightfor
each

share

a

Hirshberg

-

,J

Members .New York Stock

and Newcastle, Pa.

New York; G. H.
Walker &
Co., St. Louis, and
lulieii Collins & Co., Chicago,

and

Strouss

Co.,

&

skock

of

tenths

Fractional

■

t

follows:

as

*

.

give the May company three
additional
stores
located
at

writers headed by Kidder, Pea-

body

issued

be

to

on

March 22.

•

j

By ALFRED S. RUDD*

the Missouri bankers participating in the underwriting
<if an issue of $6,084,000 4l/2% 15-year convertible sinking fund de¬
bentures due March 15, 1963, which The Laclede Gas Light Co. is
offering at par and accrued interest to its common stockholders of
record Marcn 8, 1948, are: Demp-$>
!.

CHRONICLE:

FINANCIAL

&

in

such

as

companies

for-

available

than

other

abnormal

the

This

present.-

competition

usually /takes
the
price competition, and is
responsible for the fact that in

form

of

the

Peitason Jenenbaum Co.
1

Berkshire Fine

BUILDING

LANDRETH

fell off

r

Long Bell Lumber

L. D. 240

Southwest Gas
Steel

Products

of

Producing

to

Stix: & Co.

Service

1932. durable

Bought

509 OLIVE

.
.

*

..

Sold

—

.

*

Members St. Louis Stock

".

common

SCHERCK, RICHTER COMPANY
t- :

Exchang*




In the

Bell
.

Teletype

SL 456

Louis

2,

Mo.

two years,

0225

L. D. 123

actively

J'V

too

V//V:.';

many

;

V

heavy

industry

,V/'

/

.' : \

•.

Consistently Profitable

Actually,

from the record we
that, prior to the 1930's, most
of heavy industry were

learn

branches

consistently
results

profitable,

fluctuated

over

aithougll
a

wide

During the 1930's, however,
showing was a sorry one.

range.
the

Even the best of the

heavy indus-r

try sub-divisions had

one

or

more

years

in the red during that dec¬

ade,

and

omitted

itous
for

sharply

dividends

Moreover,

following

decline

most

reduced
were

of

which

the

the

or

rule.

precip¬

culminated

these

companies in
1932, the ensuing recovery to 1937

was

mediocre.

Few

heavy in¬
durable' goods re¬
dustry lines in 1937 even closely
the greatest im¬
approached their 1929 profits, and
petus. The usual pattern was up¬
the great majority recovered only
set, to some degree, in 1946 and
(Continued on page 43)
1947 because of the war-created'
ceived

GarfielJ

St.

next

preparing for war, production of
rose 77% compared with
a
19% rise in non-durables.
In
1941 and during the war years, of
course,

Landreth Building

'•

The 1938 de¬

before the .country began

Quoted

durables

.

goods production

non-durables 51%.

STREET

ST.LOUISI.MO,
.

—

Thereafter

pression resulted in, a 36% drop
in production of durable goods,
and
a
decline of 10% in non-

St. Louis Public Service Class "A"

SECURITIES

63%.

69%

durables.
INVESTMENT

In the succeed¬

and. non-durables
only 25%
In the 1933-1937 re¬
covery, durables rose
200% and

Universal Match Company

Public

nc-i-durables

declined

Engineering

Chicago & Southern Airlines

Southwestern

only 5%.

ing upswing ending in 1929, prod¬
uction of durables rose 150% and

ST. LOUIS 2, MO.

Teletype—SL 486

products the average profit mar¬
gin is comparatively thin. J/V///v

ensuing decline in 1921. pro¬
of durable goods fell off
43% whereas non-durable goods

Spinning

Rockwell- Mfg.

all

duction

the

by

far

Volume

167

" Number

4682

THE COMMERCIAL

&

FINANCIAL

CHRONICLE

(1215)

HIGHLIGHTS OF 1947 OPERATIONS

Carbon
And
Subsidiaries
[TAKEN

At*the Year End

COMPARISONS

-

-

FROM

Fixed Assets

Earned

1947

(Less Reserves)!-.

as

1947-1946

$11,749,202

24,746,589

21,648,522
13,527,050

i

16,313,397

r

Whole

a

:

1946

$11,948,841

—i

Surplus—

For the Year

REPORT]

.

Net Current Assets——————
'

ANNUAL

;
.

Sales

—

—

L

-

Operating Profit--—
Other Income.—

$41,106,104

i

—_L

Capital Expenditures—
Net Profit After Taxes--^J-l__ir-_^i

V
"

Net Profit per

Dividends per

f-

<

•:

•

-,Y

CONSOLIDATED

-

v^'/YY

INCOME

SALES

•

OP

ATING

SALES

AND'

OTHER

EXPENSES'

-i

SELLING,: .ADMINISTRATIVE
'

■

ERAL

EXPENSES

OPERATING
OTHER

AND

.V.

Year

dividends.

and

loyalties.
,•;..

-.,.

:-y''

EARNED

$

Net profit

OTHER CHARGES:
•.

Interest

.

$

,......

on

Lo-.s

on

sale

.PROFIT

Dividends

...

UNITED

:

securities.

.

AND

9,321,7^5

.

t

93,233

.

PROVISION

FOREIGN

STATES

AND

INCOME

FOR

TAXES

ON

FOREIGN

...

*

,

>'•'/

.'(EARNED

...

...

133,255

.

UNITED

TAXES

$ 9,188,510

INTEREST

IN

of

2,825,000

EARNINGS.;......:..

v

,

TT:

$ 6,064,196

TOTAL

cost

'"'market value $1,045,445)....-..

.

.

•;

Inventories:

v.:•

materials;

book

over

value

21,001

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

31, .1947.

•

$16,313,397

LIABILITIES:

and

payable

accrued.*

United

States

income

r.;:?.v.:

••

$ 2,126,048

,.............

and

foreign

taxes

on

2,706,035

.....

in,process,

finished
>"/-■

cost

accounts

1-844,043
3,433,221

(less $33,720 reserve)

Y '• Raw

'^

products and supplies—at lower of cost or

Total

Current

Liabilities.

4,832,083

,

fi'itmarket

.

v.,.

.

Construction

supplies—at
•...

v•

Total

•

•Natural

'

''

■

i?&. i$3,721,001

materials

and

Current

Gas

701,276

Assets

$16,780,924

sha-es

Natural

580,000

$

INTEREST

IN

SUBSIDIARY

COMPANIES:

CY'YY
Company, of

cost:

TAXES

4,422,277

capital stock..
Company, Inc.,
capital
stock
(quoted
.YY market-price $3,145,054),., .;u... ...;.
Mi^Lsinpi
River
Fuel \ Corporation,
l-M,492 shaves capital stock
Other security investments
>(less $105,Interstate

FOR

MINORITY

Pipeline

America, 40,700

RESERVE

Y/'-ZYY/

cost.,......:..

INVESTMENTS—at
-•

21,001

iv/--f

■

Accounts

724,000

.V...

Accounts receivable

$

LIABILITIES

(quoted

-

1946............

SHEET

CURRENT
$ 7,357,383

S..Government obligations—at cost..
secu'dties—at

: /

......Y ...........Y...

SURPLUS

BALANCE

'YYY\Y/Y /!''

:/Y'I.Y.YY.:Y;;....

Marketable

of

excess

ASSETS'."^

-

31,

$16,313,397

.

7

;

subsidiary stock acquired...

December 31, 1947
ASSETS:

'

.

3,277,849
■'

31, 11947Y

SURPLUS—DECEMBER

of

53,413

Y

...

for

CONSOLIDATED

.

Y':; 'v

Y; :

■

CAPITAL SURPLUS—DECEMBER

299,314

value

",'Y

Share

ON

.........

.

PROFIT
(after
p. ovision
of
$2,646,901
depreciation, depletion; and amortization)'.':..;

:•■•: Cath.

book

over

SURPLUS—DECEMBER

DEDUCTION:

INCOME.

'NET

CURRENT

cost

v

CAPITAL

$ 6,363,510
•:MINORITY

$ 3,224,436
of

excess

''/Y/ vY:

,v

,

4,634

6,064,196

"V

;

of subsidiary stock acquired..........

,v

\ •

v,'

2,199

*

.

...

Capital

521,514

Gas

stock.:

861,084

.....

Surplus

757,593

142.957 .shares

V:

1,618,677

804,490

.

1,154,758

■

....

264 reserve)

:.

r....

NOTES,• 'ACCOUNTS"r-RECEIVABLE,
484 reserve)......
.,lvy.

:V

ETC.

FIXED

ASSETS—.at

Leys

reserves

-tion

and

depreciation,

PATENTS,! GOODWILL,
DEFERRED

deple-

CHARGES..

.

1,615,230 shares

.stock

3,042 shares

•,

Outstanding

39,693,755' * " 24,746,589

EARNED

1

.V;.;..

1,612,218 shares

SURPLUS.

:

$21,849,354
16,313,397

....

$45,193,511
...

\,

NOTATION—The

equivalent,

TO

•

net

BOARD

We

have

the''related
-.

/•

OF

DIRECTORS

CARBON
examined

COMPANY:
the

OF

The

U);

;

eonpo'iciated

consolidated, income

•ended,''and-(-except

for

,

;V:

and

of

the

COLUMBIAN

as of December
31, 1947, and
surplus accounts for. the-year therr

subsidiaries referred
the'systems of internal control and the

to

below),

we

also

In

us,

but

"-V
records
we

have

of

the.

Canadian

reviewed

their

thereon of other public accountants,
covers these statements.
'




we

considered

necessary- in

the

'

"

•"

Executive Offices:
41

EAST 42nd

>•

were

not

statements

and

our

opinion given

I

,

our

COMPANY

,

circumstances.1

and

opinion, the accompanying consolidated balance <sheet and
consolidated income and surplus accounts
(together with nota¬
tions) present fairly the consolidated position of COLUMBIAN
CARBON
solidated
with

AND

results

generally

sistent

in

all

SUBSIDIARIES

at

o£ their operations

accepted

material

accounting

respects with

December
for

the

"/ New York, N. Y.
{•
i eoruary, j.2, 1948.1 •
"

/ />"'■ 1-*V
*
/

that
v

.

COLUMBIAN CARBON BUILDING

STREET, New York 17, N. Y.

,

"

31,

1947,

and

the

con¬

year

ended, in conformity
applied on a basis con¬
the preceding year.

principles
of

;

which

l

•

subsidiaries!

financial

related

have

accounting procedures
a detailed';audit: of the 'transac¬
tion?;, have examined nr tested
accounting records of the companies and
?;other'- supporting evidence
by methods, at', times, and- to- the extent we
deemed appropriate.
v. Our
examination was made in accordance with
.generally
accepted., aud\tiug. standards rrand'-' included
all
procedures

by

reports

below

L

accounting

examined

baianee- sheet

certain

p reviewed,
•;■!r.bf. ihe • companies "and," withoutr making
1

of foreign subsidiaries, included at U. S. dollar
$491,744, of which $322,258 represents net current assets.

aggregate

.....CARBON COMPANY AND SUBSIDIARIES
i.'"*°

$45,193,511

assets

;■

THE

COLUMBIAN

38,162,751

588,330

'Y'

a i:

2,000,000 shares

Treasury

'""

yi\- <\

■i,

value:

S|30,653

ETC.; i...
.

par

Issued

$28,--" v"i:

.$64,440,344

amortization. .1:

STOCK—no

Authorized

2,842,979

vv-.d.;'-,:':./'''

CO~t.

for

CAPITAL

362,217

(less

:*..

;

$13,527,050

1947..

paid.

*

of

BEFORE

STATES

$

33,189

disposal of fixed assets:

Miscellaneous

/:

V

;.r.... «<•

Lots
v

for year ended December 31,

DEDUCTIONS:

761,005

Share of
..s

.

.

1945..

$19,591,246

611,652

1

•

31,

ACCOUNT

31r1947

$ 8,560,760

.,,.106,381

.

SURPLUS
December

SURPLUS—DECEMBER

42,972

_.

1-60

••

32,545,344

.V:;.'

and

:'i

Ended

3.29

ADDITION:

//5,021,1'86

•'

Interest

Miscellaneous

$41,106,104
a^-K* 'L'.

Y

3.76
2.00

.vr

CONSOLIDATED

GEN

.......

■'/-Rentes

.;.

v.

$27,524,158

PROFIT

INCOME:

_j.

QPER

V.

.;

6,846,196
905,199
5,649,732
5,307,861

6,064,196

ACCOUNT

V;U'..V.'"

COST

.
'

l,

Share-_'l____-____l-^^"
Share___j:_—____^-,_-._——•

Year Ended December 31, 1947

$34,363,005
,

761,005
6,091,541

—

.

Y

8,560,760

___

LESLIE, BANKS'& COMPANY
'•

11

2

THE COMMERCIAL

(1216)

What Foreign

Michigan Brevities
oit,

announces

of

.ease

■

.arch

asis

Of

$23.50

March 24.

l

for

1933

as

such

respect
to
Dck has become effective.
with

.aended

underwriting
roup, headed by The First Bos¬
ton Corporation,
all shares of
Through

an

tock not subscribed for
the

hased

tion

1947

warrants

the

*

holders

unnecessary

an

record

of

of 55 cents per

>orts that trading volume in Feb-"

share.

'

;

-

'

.

,

after Fed¬
eral income taxes, compared with
$107,331 for the year 1946.
All
arrearages on the preferred stock
have
been cleared up with the

Stoetzer, Faulkner & Co.

Smith

Bennett,

&

and

Co., both of

Detroit, in
February
offered
150,000 shares of common stock
(par $1) of Sherman Products,
Inc. of Royal
Oak at $2 per
share. Of the net

to

intended

for tooling

proceeds, it is
$55,650 to pay

use

costs for new prod¬

equipment, and
working
capital. Sherman Products, Inc.
is engaged in the business of
manufacturing farm equipment,
$5,000 for

ucts,

payment of another dividend of $2
per share on March 8, 1948.
On
the same date a distribution of 75

devices and accessories

for farm

tractors, including special trans¬
missions
and
power
take-off

v•;.*

$

.

Joseph,

Commission
covering
$150,000
6% deben¬
tures and 7,350 shares of $100
to

value

Consumers

The

;

Co.,

Power

515,000,000 to $20,000,000 new se¬
curities^ the nature of which re¬
mains to be determined.
.
? '
!'s
AA
:

J.

W.

Pressed

Leigh ton, President of
Metals of America, Inc.

company's annual report
"or the year 1947 stated that the
directors on March 27 will set the

common

at

sold

be

store

fackson, according to reports, may
be in the market this year with

Feb. 24 filed a letter
with the Secur¬

on

notification

of

ities and Exchange

par

stock, both

to associated

The proceeds are

owners.

cooperat¬

be used to finance

to

will

be

There

operations.

buying

ing

underwriting of the

no

securities.

also

reported

-

000,000 to $4,000,000 bonds.

the

in

payment of a 5%
dividend on the 268,750 out¬
the

date1 for
stock

standing shares of capital stock of
par value.
Scrip certificates
will be issued where less than 20
shares are held.
This stock divi¬
dend if sold on the market at $10
$1

share would equal a cash
dividend of 50 cents per share.
Cash distributions of 25 cents each
were
made on June 10 and Dec.

net per

10, last year.
*

Among
March

10

:■!

those
offering
on
an
issue of Central

Pacific Ry. Co.

of first mortgage

3%% bonds, series B, at

100.35%

and accrued interest were

ling,
of

Wat-

& Co. and First
Corporation.
The

Lerchen

Michigan

"

offering

was

atti¬

Malcolm

P.

Presi¬

Ferguson,

dent, in reviewing the highlights
of annual report of Bendix Avia¬
tion

the

for

Corp.

dom

troubles

J.

be

For¬

trade

eign

—

General
Motors
Corp.
offered
399,990
shares of Bendix Aviation Corp.
stock to the public at $28 per
share, through a group of un¬
shares,

The

derwriters.

repre¬

of the shares of

18 9%

senting

1948

(Continued

Individually

it

animal

alien

an

means

that

is

the

for

Time

—

it

Stock Exchange

all

States, including housing, in 1947

billion.

automobile
totalled
approximately $6 billion. In other
words, our export trade was as
great as the total of the building
and the automobile industry com¬
bined
surely an indication of
importance that no citizen,
no
businessman can ignore either in
$13

industry in that

The

same year

total

of

Gain of Foreign

The

Trade

figures, gigantic as
not tell the whole
Our goods, our machinery,
services, are bought by other

our

do

are,

countries because they need them
because

their

the

addition

productivity

standards of life.
able

be

thing

to

which

will

to

and
Then

export

need

we

of

these

labor will add to

our

to

enrich

their

they will

us—some¬

want—goods

and

our

economy.

-Surplus traded for surplus—each
side gaining in the trade and each

side

becoming
economically
stronger in the process.
we are

facing

the Marshall Plan..
confused

a

decision

Most of

'

•

Michigan Markets
639

Penobscot Building

Moreland & Co.
Member Detroit Stock

DETROIT 26, MICH.
,

Telephone

Teletype

Randolph 5625

DE 206




1051

Exchange

us

Penobscot Building

—

Lansing

—•

and

abroad

and

as

not

do

did

we

secure

they

cannot raise them¬
selves. Our dollars are to be made
on

the basis of

a

Muskegon

*An address

liqui-

by Mr. Wieland at

University of Toledo/Toledo,

of

lot

the

improve

the

poor

Indian, again we must produce
some
plan which increases that
Indian's productivity. As long as
he

plows

small bit of earth with
stick and grows just

a

crooked

a

enough food to keep himself and
family in a state of semi-

his

starvation, there is no possible^
legislation or slogans to
make him a consumer of world

way

goods

and there are too many
in the world irr

_

millions of people

this economic strata.

Extending Help on SelfLiquidating Basis

;

problem could be partially

The

extending financial and

technical

help

payment,

we

self-liquidat¬

a

on

but we hesitate to do
political situation
uncertain and we are afraid

ing basis,

produce—but collectively
our economy had been drained of
that wealth.
That is not Foreign

of the big

nomic status of millions of under¬

labor

or

pay" has been exploded and

is too

It is

a

bad wolf "communism."'

vicious circle—if we don't

something to improve the eco-»

do

people
around
the
in a left-handed
tilling the soil for the group

privileged
world,
way,

are,

we

brought down to understandable
by our present income tax
rates.
The v Government
"Toils

we

levels

and

country

is

spin." Its only,
income is from taxing your efforts
and mine—and in the end the bill

find

have

not neither does it

by you and by me.
separating the humani¬

is paid
I

tarian aspect

of feeding the hun¬

which is the privilege and the
responsibility of the strong and
well fed, from the economies of

gry,

foreign

loans.
If we are afraid
the huhgry makes us
religious or sentimental,

that feeding

sound

let's put it

then

protecting
the

from

our

the basis of

on

inevitable

the

village

omy

we

may

our

ene¬

can't solve the prob¬

by doing nothing.

Perhaps

attempting too

are

we

too wide a front. We
for democracy — true

much ;on

fought

democracy
believe

—

it

in

conviction.

consequently

and

with

But

a

you

deep

rooted

can't impose

democracy on a people who da
not realize
what it is and are

currently more interested in food
shelter. Democracy — a vol¬

and

politically
and
spiritually
can
come only when those people are
free economically — free from the
fear
of hunger
and want, free
from the fear of exploitation of

of nations cannot

the

by a few—free from the
injustice and oppression.

mass

fear of

the good of our own econ¬
we

loans

should' make

U.

to

foreign countries but we must do
it on the basis of a'long range
plan for improving the

receiving

the

cannot be cured by
best .can

only

loan.

world.
that

a

take

the

We

the
were

because,
not

leaders

Force
of

i

the

the deciding force
Nazism from the

a free people,4
visualize living in
as

world dominated by that type

q£

We
eliminated
the
Japanese who were engaged in a
(Continued on page 36)
A

ideology.

im¬

of the situ-

Deciding World

are

could

we

Poverty

A

eliminated

world

who

charity which

mediate suffering out

S.

We

basic eco¬

nomic situation of the people

at

we

secure
financed

untary association of people free

achieve that dubious prominence.
For

not

consequence

hungry and disordered

a

we

investments

structure of the

of life

way

own

the political

lem

.

am

fear. If we make

mies. But

'

Ohio, March 4, 1948.

the problem

at

this because the

are'

the

look

we

given this ' material away.
Individually we were paid for our

in

contemplates each recipient

available

When

of India and discuss how we must

solved by

have

The Marshall

the bills.

genuity.

1920's

the

in

world's in¬

the

offerings of

ing

goods

American

of

dollars

of

to

surplus that he can buy the tempt¬

.

.

what he consumes'
generate capital
wealth. It is only with this

sufficient

is

goods—the results of man's labor
payment. If we ship billions

of

-

DETROIT 26, MICH.
Bay City

.

_

His

consumes.

produces and

—in

by the verbiage and

pay

which

-

,

he

that

production must be increased so
that the margin between what he.

have been devastated by war can

.

the present time he
practically
the
same

At

amount

country for some $5 to $6
billion so that the' countriesf that

ment

those

But

country putting its internal house
in order financially and then re¬
ceiving from us that part of the
necessary funds for rehabilitation

Dividends.

''A

tivity.

produces

Trade, that is a Foreign Gift and
in the "giving" game we all pay.
The old theme "Let the Govern¬

in trend.

or

—we

Own Aid.

Oppose Double Taxation

we

this

.

unless at the same time

cars

figure out some way of in¬
creasing Mr. Chinaman's produc¬
we

to

Plan

Their

Established 1919

motor

world.
wonder how it differs from many
One family in a village could, not
other plans and schemes, all of live in
luxury while the rest of
which added up to the same result the
people starve, and one family

Come to

Brokers to

Good

help

to give all the

Chinaman's breast
shoes,' clothing and

every

the desire for

we are

borders

our

are

This

us

in

ing

expand¬ rehabilitate their productive facil¬
embrace a ities and earn their way out of the
greater area for trading, to give class of charitable institutions. We
us a
greater variety of choice of must realize that the Marshall
the products of the world, and to Plan, or a plan by any other name
enlarge the market for our prod¬ that contemplates shipping American products abroad, is a drain on
ucts.
i
J
the
standard
of
living of this
But what
does foreign trade
mean to
us? In 1947 our exports country unless we are prepared to
other products of labor
totalled about $19 billion and in accept
from
those
recipient
countries.
1948 it is estimated the figure will
We loan machinery and goods and
be over $18 billion. The value of
we
must be prepared to accept
all
construction
in
the
United
ing

on

Charles A. Parcells & Co.

helping hand. However,
that isolation is a

a

,

people of that nation. There is no'"
use of
our dreaming about incit¬

believe

we

words unless we can
plan for increasing the
productivity
of
the

a

individual

we

"Foreign" hni front of a the word
"Trade" or "Exchange" .does not

Today

47)

on page

if

tjieir need for a
of living, we are.

our

suggest

quite casual and indifferent in
evaluation of the necessity of

lending

on'

wasting

Europe, then we can

of

speak of some of the

we

standard

better

the

of

needs.

orate

and

have no dif¬ can, both financial and economic,
as some help now would be easier
ficulty in understanding the value
to finance than another war.
of an exchange of goods. Those of
us
who
work, are trading our
Implications of Marshall Plan*
services every day for what to us,
The
Marshall Plan
does not
is an equivalent — we think in
giving any nations
terms of money — but we really contemplate
abroad billions of dollars. The in¬
mean
things — things such as
tention as I understand the pl$h,
food, shelter, clothing, opportunity
credits in
and recreation. Putting the word is to make available
;

Operating results qf the reconver¬
sion year 1946 had shown a loss of
$12,615,046.,
27,

out

keep

can

we

can

sub-standard nations of the world

we

ally advantageous basis.

products of

Jan.

If

.

his

When

myth, that our destiny is linked
with that of the world, then it be¬

they
story.

On

for help.

hooves

$106,001,984 in
1946, and
$41,726,548 in the best pre-war
year.
The operating profit of $5,248,999 for 1947 compared with a
1936-1939
average
of $2,480,000.
with

come

and

ductivity high enough to provide
for

us

to

as
any
trade— should mean an
exchange of products on a mutu¬

Sept. 30, 1947, reported that sales,

royalties, and other operating in¬
come were $141,625,820 compared

only by making man's pro-;

our

shadows.

Wieland

it is to

and

wishing

be

cured

believe, in spite of two wars,

that

battling the
Arthur

must

still

ended

year

nations

want

Poverty

the bank-

retain
their political and economic free¬

—

oversubscribed.

Members Detroit

that

we are

world

the

of

ers

stance and are

was

that the
Michigan Gas Storage Co. may be
in the market this year with $3,is

It

bel-

of the sub¬

merely

St.

Inc.,

Grocers,

fact remains that

against for¬
eign trade. We
have lost sight

make

:Jt

Jji

'

Associated

par

tools.

the

cents per share was made on
common stock.

general

for

$185,850

$131,856

as-

.

and the end results cannot be measured at this time. The

or

.

ing February were: Detroit Edison V C. G. McDonald & Co., Detroit,
will underwrite the issue.
The
Co., G e r i t y - Michigan Corp.,
Xaiser-Frazer Corp., McClanahan
net proceeds will be used for
Oil Co., Peninsular Metal Prod¬
working capital.
ucts Co., Udylite Corp., Gar Wood
''.'/yy
*
$ ...
Industries,
Inc,
Wayne
Screw
Baxter Laundries Corp., Grand
Products Co., Masco Screw Prod¬
Rapids, reports that net profit foi
ucts Co. and Parke, Davis & Co.
the 52 weeks ended Dec. 27, 1947

about unfavorable and fa¬

ation.

volved,

tude either for

Federal Industries, Inc., De¬
totaled 221,398 shares, hav¬
troit, on Feb. 18 filed a letter of
ing a market value of $3,062,473, A notification with the Securities
as compared
with 228,055 shares,
and Exchange Commission cov¬
with a trading volume of $3,240,ering 300,000 shares of common
672 in January.
AAAA X
stock which are to be offered
The 10 most active stocks dur¬
publicly at par ($1 per share).

to

a

sume

ligerent

ruary

amounted

and

*'

\

.

The administration of the plan,
the politics that will become in-

that

must take

sides

:

j payable.

until

feel

we

*

$

*

The Detroit Stock Exchange re-

—

we

stock in 1947 received a tota

mon

our

away

The com-,

tion made on Feb. 20.

:'

ing

of I
the distribu¬

givgoods

our

trade is

—

balances,] dating loan which is definitely reabout

.,

IV

markets with cheap goods from

our

trade 3>

vorable

1948

11,

May

cents per share over

flooding

abroad, about taking bread out cf American workmen's mouths,

tc

1948

20,

May

amount of confusion in people's minds when foreign

We have heard discussions about

represents an increase

This

com¬

'

payable

stock,

135,288 to its surplus to policy¬
holders.
Vr
;r.\\
*

There is
mentioned.

has been declared on the common

will be enabled to add $3,-

pany

gold market, tariff reductions, elimination of cartels, and world-wide agreement among
free peoples on import and export practices. ■

of free

turn

cents per share

A dividend of 20

through

the

consecutive

according to Clarence D.
Blessed, President, After payment
of a $2.50 dividend on the class A
preferred stock, the balance rep¬
resents earnings of $1.70 per share
on the outstanding common stock.
year,

that after the expira¬

so

of

reflecting an

$467,865,

was

increase for the fourth

of warrants will be pur-

use

Walker & Co. for

Net income of

each
on

foreign trade, but also its great advan¬

our

of gains mutually cb'ained by each nation trading its surplus for the other's surplus. Up¬
holds Marshall Plan as protecting our way of life from consequence of hungry and disordered world,
but sees difficulties in expanding world trade because of pegged and unstable currencies.
Urges retage because

the^-

warrants to expire
A registration un-

Securities Act of

the

^r

.

•

on-

record

of

held

larch 10, such

share

share

new

one

shares

k

per

of not only the volume of

Mr. Wieland stresses importance

offering the new

mailed to all stockholders

10 warrants were

at

ares

Vice-President, Willys-Overland Motors, Inc.

Executive

capital stock, and on

authorized

the

in

shares

140,750

Trade Means To Us

By ARTHUR J. WIELAND*

V

President of Standard Accident Insurance Co., Dethat the stockholders on March 9 authorized an in-

H. Platts,

R.

Thursday, March 18, 1948

CHRONICLE

FINANCIAL

&

-

nil 'StiWkh

Volume

mm

167

11

•>.&&*

j.'toa^±j«^jfitWuietW rfwuiisaiH«wti*x<K«urtfW n tatftaw nwiuqwiAmewNM

Number 4682

THE COMMERCIAL

&

FINANCIAL .CHRONICLE

•'

",i'!

THE TEXAS
and

COMPANY

Subsidiary Companies

STATEMENTS OF CONSOLIDATED INCOME ACCOUNTS

STATEMENTS OF CONSOLIDATED EARNED SURPLUS ACCOUNT

For the Years Ended December
31, 1947 and 1946

For the Years Ended December 31, 1947 and 1946

1947

Cross Operating Income:
Net

Sales

1946

Earned Surplus

$801,426,897

10,278,170

$819,210,821

$586,537,210

I

Surplus Credits:
Balance of

.\.Y

of the

,

$422,925,634
17,913,983

in

advances

to

on

European

19,000,000

»—a

•

invest-

1

u

sub-

.

'

—

tax

5,504,747

1939

to

January 1,

7,689,997

$499,363,669

$119,503,468

$ 87,173,541

1947

1,259,563

.

Increase in

for contingencies

discount

and

$421,693 in

1946

"

:

received

from

...,

less related Federal income tax reduction.

•

18,000,000

•—

...

foreign
Net Profit

19,120,710

Year

for the

106,312,617

$

95,269,049
Deduct—Dividends Declared

and
on

Earned Surplus

amortization

funded debt.

of

discount

and

i........

......

$315,547,109

End

at

26,962,745

33,733,980

$370,112,561

Year

of

$281,813,129

ex¬

$

3,760,166

.....

charges

$

3,307,197

4,311,561

$

4,179,782

$134,312,617

interest

71,089,267

$397,075,306

8,095,508

Interest Charges:

pense

974,804

—

$290,762,689 5 $244,457,842

$138,624,178

Interest

•

I

non-subsidiary companies), patent and other
income, less miscellaneous charges...';,

Other

$263,432,646

premium,

expense,

applicable to $40,000,000 of 3% Debentures, due April 1, 1959, refunded in 1946,

and

—

.

■

reserve

Unamortized

•

.

etc.

Interest, dividend (including $14,065,893 in 1947

—

•

$290,762,689
Surplus Charges:

$699,707,353

Non-Operatinc Income (Net)

5,300,000

European

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

31,142,392

6,503,894

operations

and

subsidiaries, less applicable Federal income

21,876,913

35,230,524

from

arising out
N

loss

Net

28,400,162

Depreciation

for possible

reserve

Profit realized from the sale of certain

j

Depletion and leases surrendered

Income

$239,132,646

.

sidiaries

21,930,679

(amortization and

,

.

.

__

$607,642,094

(other than Federal income taxes)

Intangible development costs
dry holes)
./

\

.

expenses.',

1946

$281,813,129

..

for contingencies

reserve

of

ments

Costs, operating, selling and general
♦Taxes

Year.

of

war

Reversal

Operatinc Charges:

Becinninc

at

$576,259,040

17,783,924

,v

J

1947

:'

"...

Miscellaneous.

(1217)

$

91,089,267

•

551,395

STATEMENTS OF CONSOLIDATED CAPITAL SURPLUS ACCOUNT

872,585
.

$

V

,f

V

.

For the Years Ended December 31, 1947 and 1946

.

•

»

A

»

I

Provision

for

Federal Income Taxes.

Net Profit Carried

28,000,000

..........

Earned Surplus Account

to

'

V

1947

20,000,000
Capital Surplus

$106,312,617

....

$

71,089,267

addition,

paid

state and Federal gasoline and oil taxes

(or accrued)

to

taxing authorities in the

were
•

CONSOLIDATED BALANCE SHEETS

•;

;:;.

Current Assets:
Cash

•

■

■

;

(v.

$

securities, at

■-

v...

.» .v

108,535,081

cost

g

$

83,189,654

i

-

•

V:>' •<'

chandise, at

products

cost determined

and

on

;

1947

83,027,685

Notes

Accounts payable and accrued liabilities....

49,658,631

Provision for Federal income

'

<

129,444,146

$

105,133,515

25,688,275

Replacement

for

Under Agreements

of

.'.

'

s.
■

•

••••."

-

and

•

*

i
•

:

467,501,875

$

322,018,800

and

•$

4,055,805

current

$

145,227,326

y ■

.

^

-

$

.

*

493,718,999

$

For

long-term

benefits

78,740,545

under

employes' plans—exclud-

53,601,270

Total

•

-.




$

60,000,000
80,000,000
7,093,063

146,846,291

$

147,093,063

9,188,845

$

10,471,859

$

equipment

1,950,574

2,277,229

25,000,000

reserves

25,000,000

Capital Stock

5,577,529
$

$

and

Capital stock,

;i;: '

946,047,183

531,447,639

487,204,696

$

414,599,544

11,355,129

$

9,415,001

$

37,749,088

value $25—

-

$

336,527,400

$

281,116,500

k,

14,000,000 shares

outstanding: 1947—13,461,096
1946—11,244,660 shares

........

121,997,933

Total capital stock and
surplus......

916,432,473

$

77,669,213

370,112,561

.....

Earned surplus
-

$
$

$

Issued and

-

568,237,653

36,139,419

Surplus:

par

Capital surplus

«

'

liabilities

'

113,935,428

5,764,476

...,

current

foreign exchange fluctuations.

73,312,329

$1,115,344,831

£

60,000,000

90,991,480

6,846,291
$

....,

contingencies

shares;

plant and

$

258,216,272

140,545,215

—.

Less—Reserves for depreciation, amortization
and depletion ..................

properties,

103,721,227

80,000,000

.......

Authorized

K- -h-■:••••

$

debt....

For

441,404,355

66,368,625

$1,055,442,349

Net

16,866,990

Reserves (As authorized by the Board of
Directors):

•••.

164,659,682

270,304,489
,

Sales stations, facilities and
equipment

Deferred Charces

$

Debentures, due May 15, 1965........

For

$

terminals

Ships and marine equipment.

I

5,000,583

10,095,755

1947

'
:

.........

Oil pipe lines and tank farms.

-

1948 and

5,739,446

Equipment—at Cost:

Miscellaneous

14,433,393
54,690,514

.

liabilities......

Total long-term debt

$

,

Lands, leases, wells and equipment.;......

v

4,809,222.

82,695,939
*•

Lonc-Term Debt:

Other

••

Advances (Note 1)

Properties, Plant

•1. V

(less

6,120,311
2,

ing $1,590,000 included in

and

taxes

Treasury obligations held for
1947—$30,000,000; 1946

Total

above

Refineries

$

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

Certain U. S.

with

1946

18,530,045

Proper¬

Government Acencies

Investments

payable.

Dividend payable January

-

3%

'•••

S.

contracts

23/s% Debentures, due June 1, 1971

Special Deposits
ties

and

—$20,000,000)

the first-

assets

$ 77,669,213

payment of taxes:

Materials and supplies, at cost
current

—

$121,997,933

*'

mer-*

in, first-out method, which in the aggregate was lower than market..........

Total

44,328,720

,

Year

Current Liabilities:

■

U.
oil

of

$ 77,669,213

over

LIABILITIES

Inventories—
refined

........

End

at

1947

65,668,924

' *

120,644,719

and

thereof

$ 77,669,213

capital stock of

during

•

1946

Accounts and notes receivable, less reserve.,-

Crude

value

Year

for

•/»

1947

;

U. S. Government short-term

of

issued

DECEMBER 31, 1947 AND 1946

—

ASSETS
-

Company

Capital Surplus

$166,532,295 during 1947 and $148,550,487 during 1946.

'

Texas

par

of

amounts

Beginning

at

Add—-Excess of cash received
The

*In

1946

281,813,129

Liabilities

828.637,894

$

640,598,842

$1,115,344,831

Contingent

$

916,432,473

(Note 2).

The foregoing balance sheets and statements
are taken from the Annual
Report, dated March 16, 1948, to stockholders of The Texas Company, and
should be read in 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. A copy of- the report to stockholders
may be had upon application to the Company.
The said balance sheets,
statements, and report are not intended to constitute an offer, solicitation of
offer, representation, notice, advertisement, or any
form of a prospectus in
respect of any security of The Texas

Company."

:

,

—

13

14

(1218)

THE COMMERCIAL

f't

the

pointed out that the

pany

The

com¬

of

end

1946

$3.34

earned

pany

$4.0i

in, 1946.

$467,757/

operations

basis

current

a

ciation

charged

operations is
extent
years

to

the

based

to..

plus

rather

than

replacement cost.
placement

cost

large.

times

year,

respectively;-

THE SECURITY TRADERS ASSOCIATION

reported

earnings

ditions

Annual Dinner of the Security Traders Association of
^Te\y. York will .be held at .the Waldorf, Astoria ion Monday evening,
,

April -19,, 1948. Dinner tickets will

in

to

-•••-

*

For

the

be

-c

*

1947

plants

; i'o -v-

in

h-*F*...;;

' *

■;

Jan.

bonds

1948,

Power

Connecticut

*

'

•

'

*

reported

total

Britain reported net earnings of

of

$34,797,259
against
$31,383,065 the - pre ceding 12
months.
For
the
same
periods,
net income was $5,331,469 or
$3.37
revenue

.

share

per

the

on

the

1948

389,953

total

of

-

$444,883

and

re-

$3,236,703

of

kilowatt

hours

for

'

'

B.

Williams

Co. of Glaston¬

industrial

con¬

Dec.

$2.61

or

Boston, Mr. Nolan

graduate of Harvard and
School.

Suffolk Law

He

a

wa

31,
in

*Y;

*

-

,

'

1922.

.

'it

f'

•

t'

the

that

1947

year

i

Now With A. G.
BOSTON,

Woglom

MASS.—Malcolm

L

.

formerly

manager, o'

approximately

1946.

Sales

cr

$129,817

70^

8^

a

plant building

surplus

reserve.

the

at

year

was

$615,888 against $523,159 at the

Giving

effect

to

the

adjusted
based

earnings

on

the

new

;v/'

*

■ •;■

*

*

.

against $2,745,988 in
profit for the year was

$2,647,017

.

.

Rayon for

the year ended Dec. 31, 1947 were
1946.

Net

which
compared
with
for
the
preceding
12

$63,066
$223,749
months.

for the year ended
1947 showed net income

31,

$1,641,267
of

reserve

ment

of

after

$500,000

fixed

deducting a
for replace¬

assets.

This

com¬

with net income of $1,194,-

pares
a

Earnings per
share, adjusted to reflect the 2V-zyear

stock

ago.

split

stock dividend

and

the

Corp.

31,

for the

1947

Net

Operating

trading

was

a

A.

of

department

Co.,
G.

is

Co.,

&

Woglom

Ray¬

associated

now

Inc.,

49 Federal Street.

Dec.

year.

$392,560

against

&

of

revenue

England

phone

Company

for

ended

Dec.

1947

31,

the

Teie-

the

year

totalled

1
By-Laws Committee—Stanley Roggenburg, Roggenburg & Co.,
Chairman; Stanley C. Eaton, Bendix, Luitweiler & Co.; William K.
Porter, Hemphill, Noyes & Co.; Herbert T. Redmond, Frederick S.
Robinson & Co.; Harold B. Smith, Collin, Norton & Co.

Sports

V. E. Breeden

Headquarters

$573,107

SAN

V.
In their consolidated income

ac¬

count for the year

ended Dec. 31,
Mar lin-Rock well
Corp.

showed

$6,337,702

operating profit of
against $3,570,552 for

1946.

income

or

& Co.

E.

CALIF.—

FRANCISCO,

Breeden, whose election as

Vice-President
Staats Co., was

■

of

William

J.

•

.

Heaney,

&

Legislation—P.

Fred

Fox, P.

F.

Fox

&

Co.,

Chairman;

Murray L. Barysh, Ernst & Co.; Charles King, Charles King & Co.;
E. Land, Green, Ellis & Anderson; John F. Sammon, J. F.
Summon & Co.
*
'
'
'

Earl

R

recently reportec

-

■

Committee—Michael

;

Tax

In San Francisco

share in 1946.

.

Joseph McManus &
Co., Chairman; Richard F. Abbe, Richard F. Abbe Company; Chester
E. deWillers, C. E, de.Willers & Co.; John E. Kassebaum, Van Alstyne,
Noel & Co.; B. Winthrop Pizzini, B. W. Pizzini & Co., Inc.; Stanley
Roggenburg, Roggenburg & Co.; Walter F. Saunders, Dominion Se¬
curities Corp.; Harold B. Smith, Collin, Norton & Co.; Willis M.
Summers, Troster, Currie & Summers; Benjamin H. Van Keegan,
Frank C. Masterson & Co.; Wilbur R. Wittich, Maxwell, Marshall

or

were

New

Membership; Committee — Robert A.
Torpie, Merrill lynch,
Pierce,. Fenner & Beane, Chairman; Frank W. Aigeltinger, Aigeltinger, & Co.; Thomas J. Mullins, White, Weld & Co.

Reception

against

preceding

the

share,

a

$3.82

ended

$730,664

income

$2.62
cr

year

was

$1,020,725

1947,
Southern

the

with

Total income for Bristol Brass

100%

$2.05 for 1947
compared to $1.49 for 1946.

Auditing Committee—Otto Berwald, Berwald & Co., Chairman;
Jeremiah J; Fasano, J. B. Lang & Co.; Henry R. Schmidt, Pulis,
Dowling & Co.; Bertram A. Seligman, Ward & Co.

Go., Inc.
Malcolm L; Saunders

;

mond

account

come

Dec.

Bureau, Inc.; Louis Walker, National Quotation Bureau, Inc.

'

Committee — Lawrence Wren, Allen & Co., Chairman;
Burian, Strauss Bros., Inc.; Joseph J. Cabbie, Abraham &
Co.; Frank J. MeCali, Schwamm & Co.; Samuel Gronick, Gilbert J.
Postley & Co-; Gerald F. Kane, Luckhurst & Co., Inc.; Herman D.
Meyer, Stern & Co.; Theodore E. Plumridge, J. Arthur Warner &

"

Net sales of Hartford

share

Bearing Co. in their in¬

T. Geoffrey Horsfield, Wm. J. Mericka & Co.; Ronald A. Morton,
Publishing Co.; Herbert D. Seibert, Commercial & Finan¬
cial Chronicle.; Eliot H. Sharp, Investment Dealers Dig«st; Raymond
Trigger, Investment Dealers Digest; Graham Walker, National Quo¬
Blue^List

Arthur J.

Y/YY;; IN

199,000 shares

& Co., Chair¬

man;

-

of 1946.

would be $1.09 for 1947 against
$2.62 for the previous year.

Fafnir

Publicity Committee—Alfred F. Tisch, Fitzgerald

v

100%

per

Newburger, Loeb & Co.; Henry Oetjen, McGinnis, Bampton & Sellger; William T. Schmidt, Lgird, Bissell & Meeds; Thomas O. Shortell,
NCWborg & Co.; Theodore R. Young/Young, Aal & Golkin.

V;.;: Employment Committee—Willis M. Summers, Troster, Currie &
Snrnmeis, Chairman; T. Frank Mackc-ssy, Abbott, Procter & Paine;
Wilburi Rv Wittich, Maxwell, Marshall 8c Qo.
:
H

Earned

end

Ktenney & Powell; Allen F. Moore, H..

D. Raymond Kenney,

man;

mately 26% over 1946. During
the year, $350,000 was placed in
a

& Co.;

Hentz & Cov;, Elmer E. Myers, B. W. Pizzini & Co.; Soren D. Nielsen,

/ Municipal Committee—Harry J. Peiser, Ira Haupt & Co., Chair¬
Edward N. Ganser, First of Michigan Corp.; John H. Gertler,
Gertler, Stearns & Co.; James F; Musson/ B. J. Van Ingen & Co.;
Paris S. Russell, Jr., Glore, Forgan & Co,

share

share in
approxi¬

a

increased

E.

.

the

income

net

& Co.; George L. Collins, Geyer & Co.; Thomas Greenberg,
Unterberg & Co.; Wellington Hunter. Aetna Securities Corp.;
Charles H. Jann, Estabrook & Co.; James F. Kelly, Kidder, Peabody

C.

tation

-

-

—

Malcolm LiSaundersi

Saunders,

was

Dillon

v

share for 1946.

a

4-4970.

;

...

of

native

a

admitted to the Massachusetts Bai

against $15,506

stock dividend approved by the
stockholders pn Feb. 25, 1948,

for-1

A

is

*

ended

year

reported

was

for

'

1946.

874

active

was

Billings & Spencer Company it

bury,, showed operating income of
$456,113 for the year ended Dec.
31, 1947 against $989,844 the pre¬
ceding year. Net income for 1947
was
$281,237 against $587,781 for

ef

he

*

*

or

J.

an

pre-

At the annual meeting of

kilowatt houis the preceding Feb¬
'Si

the

over

'

ruary.
=!:

represented

34%

; • *• • •

-

February, 1948 amounted to 99,675,000 compared with 93,423,000

•

a

From

1936.

sultant.

year; • • • •• •'

the

For

spectively.
Sales

as

$59,-

1947, Scovill Manufacturing Com¬
pany of Waterbury reported con¬
solidated taefr income of $4,318,005
or
$3.31 a shaye on the common
after chai ges, taxes and preferred
dividends.
This
compares; with

revenue

$372,473

1946.

the

January of 1947. Net income

was

ceding

of

:g Yv:

January,

operating

which

increase

§3,226,970 against $2,933,145

was

for

month

this year

financial and

for
were >

$7.47
sales

Inc.,

Jlotel Reservations—Wellington Hunter, Aetna Securities Corp.,
Telephone COrtlandt 7-4400.
* Y
1
■
y
/
.

he 1 joined/,,Buckley

until

Brothers

with

compared

or

for

share

a

remained

and

until

^

1,305,066 shares in 1947, and
$5,C62,896 or $3.75 a share based
on 1,148,126 shares in 1946. Fixed
charges were covered 6.12 times
against 5.32 times.
c
the

$8.09

Consolidated

on

For

1947

year

$3,617,977

based

common

or

of

SEC

the

then

$4,534,360

Works

advisor

technical

■

with

Stanley

Co.,

&

•

New

The

Saxton

•-

to

•

Light &
operating

WHitehall

G. A.

,

Company authority to- issue $15,30-year
March 1, 1978.

Telephone

Barbier,

,

increase of

3%%

Reservations—Leslie

The standing committees appointed for the current year are as
corporation as executive Vice- follows: • *
*
President, • and j principal
office
Transportation Committee—Walter Saunders, Dominion Secur¬
will be in.New York, at 44 Wall
ities' Corp., Chairman;
Barney Nieman, Carl Marks & Co.; B.
Street, with branches in Philadel¬
Winthrop Pizzini, B. W. Pizzini & Co.,
phia and Los Angeles, Vy Y'
Veterans Committee—George A. Searight, Aetna Securities Corp.,
Mr. Nolan wag active in the in¬
vestment
banking
business foi Chairman; William H. Boggs, Kalb, Voorhis & Co.; Harry J. Hardy;
many
years
and while abroad Hardy & Hardy; Larry Lyons, Allen & Co.; Arthur Vare, Hourich
& Co.;. William Weiffenbach, Charles E. Quincey & Co.
studied European securities mar¬
kets and
practices. In 1934 theArrangements Committee—Arnold J. Wechsler, Ogden, Wechsler
joined the staff of the Securities & Co., Chairman; Leslie Barbier, G. A. Saxton & Co., Inc.; Philip
T. Barmonde, First Colony Corp.; D. Frederick Barton, Eastman,
and
Exchange: Commission
as

The;- Connecticut Public Utility
Commission has given the South¬
ern
New ' England
Telephone
000,000

.

Ticket

the

■V.

'?

and -invest

j

success.
As they naturally are desirous of taking care of members
first, .all, are urged to make dinner and -hotel reservations immedi¬
ately. Dressr will be strictly informal.
1

L. Nolan will direct the affairs o

were

*

*

Stbcl-

as underwriters
wholesalers and dealers. William

1947

or an

other

and

conduct

to

business

ment

.

31,

poration

annual
.

1946.

over

mature

ended

645,000

was

58,200

*

months

12

to

York

NeW

o

Exchanges announce the forma
tion of Buckley Securities Cor

telephones in service at the end of

maintain

t

the

nearly $20,.000,000. The number of

the company's plant and equip¬
ment in good condition.
t

the

$6.00.

Arnold Wechsler and his hard working arrangements
com^
have plans under way/1to make this party an outstanding

mittee

members

Brothers,

Buckley

the

re¬

would

order

maintain

be $12.50 per person, including,

all taxes.

sur¬

figured,

-

considerably
s m a 11 e r
than
shown. In view of this, a large
proportion of reported earnings
must be plowed back into'the
business

during

OF NEW YORK, INC.

The 12th

hV

Total gross 'expenditures for ad¬

-

current

If current
were

v.

to

..dividend rate of

costs prevailing many

on

ago

earned

was

to'-make withdrawals from

year's
a

the

/ Fixed charges
covered 3.35 times and 3.83

were

fourth quarter, it was necessary

on

dend

NSTA Notes

on

^gaipst

$560,872

against

preceding

While the divi¬

the yea? 1947.

of the fact that depre¬

share

a

Net income was ;

creased by 100,000 shares during

because

.

',:v

in¬

were

earnings of most com¬
panies today do not present a
true picture of the results of

ported

y.

st

500,000 shares outstanding

the

at

re¬

st

the capital stock in 1947

$7.28, respectively, after provision for taxes and preferred dividends.
During the year $2,992,09^.7 was^
?
used for
building program and
$40,827,907 . against $37,284,525
the
preceding year.
machinery
Earnings
costs,
and
commit¬
ments for the first half of 1948
per share for 1947 were $4.30
amount to $2,861,274. It. is hoped
against $7.42 for 1943, based on
that the new plant in Windsor
the average number of shares
will be ready by June or July.
outstanding during the year.
of

Thursday, March 18, 1948

The New Haven Water Com¬

Standard Screw Company reported consolidated earnings of $2,697,824 for the year ended Dec. 31, 1947. This compares with $2,073,805
for the preceding year. On a per share basis, earnings were $9.50 and

President

CHRONICLE

$1,780,661 or $5.25 a share the
previous -year.».-v./.:>;'A A /■ ? g ri Kp

Connecticut Brevities

The

FINANCIAL

&

Forum—-Richard F. Abbe, Richard F. Abbe Company,
Lester T.

Chairman;
Doyle, Hardy & Co.; Carl Stolle, G. A. Saxton & Co., Inc.

In the "Financial Chronicle," will

gross

Net

$9.98

a

$3,386,551
share for 1947 against
was

make

his

headquarters

firm's

San

Francisco

Sutter

Street.

in'-

E.

the

office,

111

iMls:SssirlffIka!@rs

"■'Y-w;

DSmpsey,

Edward

Moran

Dempsey

M.
&

Co.,

and

Co.,

&

Harkness,

Mason,

Paul

Yarrow,

Clement, Curtis & Company, all of
CHICAGO, ILL. — WiTam H.
Sills, Sills, Minton & Company,
Chicago, has been nominated for
President of the Illinois; Securities
'

Tifft Bkotiuers

Connecticut Securides

::

Members

New

York;;'and

Boston

Stock

Exchanges
Associate

Members

New

York

Curb

Exchange

PRIMARY MARKETS

S.

Primary Markets in
Statistical

Hartford

Information

Dealers Association to

and

Yantis

of

new

the
and

Connecticut Securities

Chas.W. Scranton & Co.
MEMBERS

NEW

YORK STOCK

Hartford

Hartford 7-2669

New York Canal 6-3662
^




will

officers to

succeed

head> the
be voted

s
on

F„

ate
at

organization's annual meeting
dinner April 13 in the Chi

of Hotel La Salle
James M. Dick, William H> Flencago

room

tye and Co., Aurora, is the nom¬

•

and

David

Heath & Co., Elgin.

Ralph
Davis

&

W.

Davis

Co.

is

L.

.

Heath,

-

of

Paul

nominated

for

H,
a

the board.

one-year vacancy on

Two With F. L. Putnam Co.
(Special

to

The

Financial

PORTLAND,

Chhonicle)

ME.—Gorham

Hoffses and Mark

D.

A. Means have

EXCHANGE

New

New Haven 6-0171
New London 2-4301

7-3191

and

Chicago;

Teletype'NH 194

.

Waterbury 3-3166
Danbury 5600

York:

BArclay
Bell

7-3542

System Teletype: IIF 365

become associated with F. L. Put¬

inee for Vice-President.

.Directors
year,

M.

nominated

for

two-

terms include O. G. Corns,. R.

Byllesby and -Company, Joseph

nam

&

Street.

Co.,
Both

Inc.,

97

were

with Paul & Co.,

Inc.

Exchange

previously
>

Volume

167

Number 4682

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(12191

$200 Iliws Ohio
State Bodies Bonds

Placed on-Market
Nationwide

syndicate

of

283

members headed by National

City

bank, ihe Bankers Trust Co.,
Chase National Bank and
Halsey,
*•.

Stuart & Co. Inc.

tyf-

vii.?

The National City Bank of New
York, Bankers Trust Company,
The
Chase
National
Bank
and

Halsey, Stuart & Co. Inc.; head a
nationwide banking group of 283
members

which

March

en

fered to the public
if-

V.,UL/U,wuv>

War

II

dated

a

wta'ld

2%

17

Omo

REPORTS

woriu

compensation

April 15,

bonds,
The bonds,

1948.

due

semi-annually from Oct. 15,
to April 15, 1963, are
priced
yield from .75% to 1.95%, for
bonds
maturing on and before
Oct. 15, 1931, and at a dollar
price
of par far ibond
maturing April
•15, 19G2, Oct. 15, 1962 and April
1948

1963.

for the

The

bid

group

ON

947
W

to

do,

COMPANY

issue of

new

or

PAPER

of¬

w

lUu.o IT

issue, designating the 2%
which

coupon,

interest

cost

1.^89%.

represents
to

the

net

a

State

of

Proceeds of the issue

will be applied to the
payment of
a
oonus
to
Ohio
veterans
of
.World War II.

Sales and Earnings at New High

The sale marks the first time
the State of Ohio has
entered the
market for funds
through the is¬

1947

1946

suance of

general obligation bonds
since 1922 when an issue of
$25,-

NET SALES ;

000,000 of adjusted
to 10-year 4% %

NET INCOME..

compensaaon

•1

sold

to distribute

bonds

issue of

new

Assets.*

mm

$200,000,000 of

2s is exempt from Federal
income
taxes and the constitution of the
State of Ohio provides that the

bonds and interest
be

exempt

from

by the State

or

on

all

them

taxes

and

trust

common

shall

000

acres

£*■

V

result

a

to over 1,800,acquisitions in Maine and

of

ELswil

stele*
Vd i&i

to

.

.

.

j"

.

tons;

Yoder
ager

with

Stock

Exchanges

leading Exchanges. Mr,
formerly

was

sales

man¬

for John R. Kauffmann & Co.
which

he

had

been

associ¬

ated for many years.

The

to

Financial .Chronic's)

SAN

FRANCISCO,
CALIF.—
George
W.
Bryan,
Thomas
L.
Little,
Donald
R.
and
Mayne,
William M. Witter have been add¬
ed

to

the

staff of

Dean

Witter &

Co., 45 Montgomery Street,
bers

of

the

New

York

^23,418,946.0()":
1,343,654.32

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

24,762,600.32

Charges

678,458.53

Federal and

Foreign Income,

Taxes

.

•

24,084,141.79

Provision for Federal and For¬

Have increased

StockholderS
W

eign Income Taxes.

9,325,458.19

now

Net Income Before Deduction of

Minority.Interests

...

/

14,758,683.60

Deduct Minority Interests in In¬

to over 13,000.

: Now total

over

mem¬

and

San

Francisco Stock Exchange.

127,358.11

Net Income

14,631,325.49

15,000.

■

THE FUT5JKE

has
OUR program of expansion and modernization carried on throughabove data.
these recent
goals
disclosed by the

years
now reached certain desired
as
Eacli unit has been
strengthened through careful plant modernization, instal¬
lation of new machines and the
acquisition or construction of new plants. It will
be our
policy to continue these practices in the future to the extent needed to
keep
our
Company abreast of its customers' requirements and to fulfill our

bility
Four With Dean Witter
'Special

.

120,445,637.30

come

Street, imembafs'of the New York
Louis

...

Income

Income

paper

Employees:

SAINT LOUIS, MO.—Ralph W.

.St.

Expenses.

Net Income Before Provision for

IfejO

Financial

and Fred A. Renick have
become -associated with A. G. Ed¬
wards & Sons, 409 North
Eighth

and

Income Credits

■"

Yoder

and other

Cost of Sales and

Operating Income I

production (all grades) now
506,255 tons;, multiwall bag production now
190,508
tons. Capacity of
Panelyte Plastics plant 25,000,000
pounds.' - *'

"

The

..

31,1947

Royalties and Rentals $143,864,583.30

stock Tesumed.

Production Increased: Pulp production

ft. W. Yder & Resiek
to

common

Gross

...

369,637

.Mil

Exchange .'Preferred and
Company listed June 16, 1947.

Holdings I Increased

as

kraft mill,

the State of Ohio.

("Special

Net Sales,

largest integrated operation of
pulp
to kraft paper
to multibags. Construction started on $6,000,000 Tacoma

timber
wall

constitutes the

(fw

ENDED DECEMBER

$130,000,000.

over

Mills arid

only outstanding bonded debt of

•Vif Ilia

to

Plants : Total increased ito 38. The
Pensacola "Kraft Center" is
nearing completion and
will be the world's

New

Ohio, Massachusetts, Con¬
necticut, and certain other states.

MfifSfi 0

INCOME FOR THE YEAR

Georgia.

York,

The current issue

shares of the

Timber

levied

in

Have, expanded

Dividend payments oh

any

funds

SUMMARY OF CONSOLIDATED

New York Stock

taxing dis¬
trict of the State.
They are elig¬
ible, in the opinion of the bankers,
as
legal investment for savings
banks

f 5,563,603

Year in Review—

veterans'of World Ward.
The

$82,782,186

14,631,325

were

bonus to Ohio

a

$143,864,583

.v

to our employees.
Our products and markets

responsi¬

diversified and we are
continuing the
development of new paper and plastic products. Multiwall
bags for old and new
customers are
being produced in larger volume in our own factories from kraft
are

more

paper of our own manufacture. All these factors
strengthened economic position for St. Regis.

are

contributing

to a

greatly

In

planning and carrying through the Company's expansion and
improvemeni
program, we have been prompted
by our firm confidence in the sound future of
the
pulp and; paper industry and the importance of its
place in the American
.

economy; 7

MacNaughton-

DIRECTORS

Greenawalt Adds
(Special

to

The

Financial

•

Chronicle)

W.

i

GRAND RAPIDS, MICH.—Merritt A. Reeves, -Jr, is now with

MacNaughton-Greenawalt & Co.,
Michigan Trust Building, mem¬
bers

.of

the

Detroit

Stock

J. H, Allen, rr M. F. Ford
>T. H. Cosford 1E.\R. Gay v

Ex¬

DeLong'

W.K.Dick

H. R. Lamb
'H.S.Lewis

R. B.

—f sr. mats
Maltby

C. B. Martin
A. D. Pace

230 PARK AVENUE, NEW YORK 17, N. Y.

J. A. Quintan

W. J. Dixon
H. E. Machold W. H. Versfelt
R. K. Ferguson C. R.
Mahaney G. W. Wattles

NEW YORK

•

CHICAGO

IN CANADA: S».

PRODUCTS: St. Regis "Tacoma" bleached and unbleached
sulphate pulp
and

Specialty Papers

.,.

.

.

.

•

BALTIMORE

♦

SAN FHANCISCO

Regis Paper Co. (Can.) Ltd., Montreal

Multiwall Bags and Bag-fllling Machines... Printing, Publication

Panelyte—the St. Regis Structural Laminated Plastic.

change.

With Pike Grain
*

& Sees. Co.

%%

■

(Special

;

to

The

LOUISIANA,

Financial

Chronicle)

MO. —Frank

C.

Haley 3rd has become associated
with the Pike Grain & Securities

Co., Mercantile Bank Building.




i

&

-CM-

-

J

13

16

THE COMMERCIAL

(1220)

tfalsey, Stuart Group

Stuart

Co.

&

and

Inc.

This Week

die

public

March

Louisiana

$10,000,000
Light
Co.

17
&

Power

.rst mortgage
ue

The "IMF"-A Troubled Infant
By HERBERT M. BRATTER

departure from international cooperation eyinced by
Bretton Woods Conference, Washingion observer points to French

Stressing

Bank Stocks

—

ssociated underwriters offered to

bonds, 3i/s% Series,
March 1, 1978 at 100.485% and

The

proposed

of Continental

mergers

York, added

Co.

indicating multilateral exchange system as

as

supported by International Monetary Fund has not been accom¬

with

Looks for devaluation of sterling, and concludes Inter ¬
"one legged table" of obvious instability.

plished.

little life to the bank stock market, and moveo.

a

imbroglio

currency

Trust

&

Bank

Chemical Bank & Trust, Co., and of F.fth Avenue Bank with Bank of
New

1948

Thursday, March 18,

CHRONICLE

By E. A. VAN DEUSEN

Light Go. Bonds
Halsey,

FINANCIAL

Bank and Insurance Stocks

Offers Louisiana Power
&

&

national Monetary Fund is

it up

approximately 3.0% above the 1947 year-end level, as measured
.ccrued interest.
Award of the. by the American Banker Index. However, this index is d storied by
londs was won by the group at
the 52.7% appreciation of Continental; it is also of interest that Fiftn
competitive
sale
on
a
bid of Avenue Bank, not included in the index,appreciated 44.1%. The
100.2912.
following table shows the individual market moves of 18 New York
C.ty bank stocks from Dec. 31, 1947 to March 12, 1948.
Net proceeds will be used to
finance in part the company'.s con¬
Dec. 31, '47
Mar. 12 '48
% Change
struction program and for other
25
2.9%
Bank of Manhattan
25%
'corporate purposes. The program
363
355
Bank of New York_______
+ 2.3
for 1948,
1949 and 1950 will re¬
39
Bankers Trust
39%
+ 1.3
quire expenditures estimated on
3.3
88%
Central Hanover
91%
the basis of present day cost at
37
+ 2.1
36V4
Chase National
$18,200,000.
No Change
41%
Chemical Bank & Trust-—
41%

Monetary Fund, an

WASHINGTON, March 17—The International

experiment in cooperation, completed its first year of operations on
Feb. 29.
Unlike its twin, the World Bank, the IMF was a case of

mothered by Wash¬

planned parenthood.
Sired by Lord Keynes and
ington
New«>
Dealers,
the complicated
Fund

para¬

~~

currency
negotia¬
has been negotiat¬

France

tions.

—

doxically is a
reactionary
in

institution

—

redemption

the Bonds range

100%

prices for
from 103.49% to

Commercial

Continental

special redemption
scaled from 100.49% to

while

prices

are

Corn

The

is

company

subsidiaries

of

one

Electric

of

i

New

portions of Louisiana,
Mississippi. It is

in

Arkansas

engaged,

National

and
as a

generation,

and

passengers,

ivities incidental

such

to

264

269

_

—

+

I61/3
49%

49

41

-

16%
39%

87%

851/2

39%

Trust

40%

—

National

—

—

S.

Herbert

Bratter

M.

2.0

OF 18

AVERAGE
*

OF 16

AVERAGE

—

—

The

39.0

37.9

Index

American Banker

opera¬

"Excluding Continental and

on

0.5%

+

it has sought
uncontrollable forces.

control

to

2.0%

be said that there existed
siderable

only two banks which have moved substant'ally, are Con¬
Fifth Avenue. On average, these 18 stocks have moved

5.0% during the period. However, when Continental and Fifth
are
eliminated, the remaining 16 stocks have declined, on
average, 0.5%. Of these 16, seven have appreciated, Chemical shows
no change,
and e:ght have declined. Maximum appreciation is the
+ 10.4% of Commercial and maximum decline is the —12.7% of

r

United States Trust.
Request

mon

Members

40

New

York

Stock

an

Price

Bank

of

Manhattan

Bank

cf

New

$32.24

3.9

1.56

456.06

77.8

1.80

4.6

1.6*3

50.25

1.67

% 121.46

75.5

1.60

4.4

1.57

43.52

83.3

413/4

1.80

4.3

1.45

43.26

96.5

2.00

4.9

1,295

5.1

*National
Public
U.

National
—

AVERAGE

']JL Y. Phone—REctor 2-4383

In

in harmony.

12.00

4.5

1.45

360.67

73.2

0.80

5.0

1.57

22.90

70.4

2.40

16%
49%

4.9

,

1.96

,

60.03

82.3

1.60

3.9

2.03

48.18

85.1

-

4.00

4.6

1.63

107.33

81.3

/

2.00

5.0

2.12

54.25

73.3

35.00

5.6

1.04

731.82

86.1

4.75%

—

been

trying

to

existing

multiple-rate

■

rather

the
of
a

franc

to

find

its

official rate

unsatisfied

very

aid

they have got
of

in

Bank

World

the

handing over

they will give
Ihe Bretton Woods program a fair

dollars.

They

say

trial, and if they do not get more
recognition they will ultimately
withdraw. Of the Fund, they com¬
plain that all it does is to think
up new restrictions and prohibi¬

already-

systems

And

tions.

allow

level

efforts

Bank's

the

to

get them to settle with American
it will

before

for the dollar

their

of

holders

stability, France has instituted
new

are

from the IMF and the slowness

and the

own

expected

and Bank as well.

with the small

bitter

To

moderate.

to open

soon

the United States,

on

up

The Latinos

French have
create in Paris

to make some

gang

and the Fund

the

system

Pan-American

the Latin Americans are

in the Fund,

threatens

81.4%

1.65

//.+/++/.;

was a

Bogota

Ihe

At

struggling with its reper¬
The
"temporary" ex¬

change

look

"Including City Bank Farmers Trust.

them

strongest resistance,

the

economic .conference

the franc.

issue there,

an

re¬

Latin American Dissatisfaction

cussions.

871/4
630

is

is

IMF

Yet this

between

the

met

quantitative

exceptions thereto-.
American delegation

notably from Latin America.

a

as

this

has

of

and

strictions

hardly two other coun¬
so much ought to
be

are

It still

18 Clinton St., Newark 2, N. J.
MArket 3-3430

ministration

which

issue

39%

Trust-—

Trust

S.

94.7

41

City

York

95.1

:

'

Manufacturers Tr.__
New

69.7

1,367.4*3

1.07

There

tries

58.12

2.10

6.2

264

Guaranty Trust
Trust-

payments, non-discriminatory ad¬

into

Anglo-

recent

place under
than
ITO's

rather

jurisdiction questions of restric¬
tion*! to safeguard the balance of

Imbroglio

over

Geneva and
has
sought

London,

conferences

Fund's

the

to

the

imbroglio

the

at

wherever possible to

alliances

reported

Anglo-French

Consider

58.81

1.83

2.80
80.00

551/4

National

tion

combina¬

new

Woods

Fiench

system

one-country-one-vote

Habana

77.6

4.4

the

of

The

in the Fund and in contrast

vote

international coopera¬
has gone with the wind.

tion"

large say .in the Fund.

a

war

about

strange

Belatedly,

"spirit

79.9%

41

Exchange

Irving

1891

1.72

4.00

Corn

J. S. Rippel & Co.

4.7%

36V4
-

and

the

which has

It is because of the large USA

being

Bre'ton

14.00

Commercial

Fjrst

Ratio

$1.20

the

swirled

Mkt-to
Bk. Val.

39

Chemical

SECURITIES

Bk. Val.

91%

Hanover

National

Chase

NEW JERSEY

31,

1947

1947

Yield

Rate

355

Trust

Bankers

Central

Dec.

Div. Earn.

Dividend

25%

York

No. Times

Annual

Asked

3-12-48

Teletype—NY 1-1248-49

tions.

major

the

Today

have

unfamiliar

are

Exchange

(L. A. Glbbs, Manager Trading Dept.)

such

created. Yet, although
it has been less than four years,
what the American delegation at

leading New York City stocks, also ratios to book values and the
Extent to which dividends were earned in 1947 by net operating
profits

were

enemy.

clouds

income

16

Telephone: BArclay 7-3500

Established

on

at least

though the possibilities of long-term apprec'ation should not
be ruled out. The following table shows current dividend yields of

BEOADWAY, NEW YORK 5, N. Y.
Bell

stocks, currently, is

But

the United Nations
then fighting a com¬

among

from

and

Bank,

ization that the American delega¬

Cynics there could

selfishness.

ican

allies

and

American Government,

in the International Trade Organ¬

lishness, or to the Latin Amer¬

Avenue

bas s,

Laird, Bissell * Meeds

Fund

con¬

a

point to the USSR's chur¬

nd did

fact that Chile had

to the

witnessed the "scenes"
created by France and that it is
a suitor for dollars both from the

just

of international

measure

collaboration.

The main attraction of bank

it could

At Bretton Woods in 1944

Fifth Avenue.

up

on

a

happy childhood. Launched
its own under an elaborate set

tinental and

Circular

having

The IMF has not been

surprised

simplify
tremely

of rules and powers

tions.

of New York

late

very

ac-

National City Bank

to

the

in

briefly

existed

have

+5.0%

+

—

by

Fund was pleasantly

the

circles

is

or

believed

1.3

—12.7

550

630

Trust

openly defied

been

Having
France,

existed

kets

3.4

+

inter¬

national/ex¬

0.8

—

system

exchange rates.

change
mar¬
which

3.9

stability
the

in

1.9

+

■

of order

Fund

the

when Chile agreed to
whhin a year its ex¬
complicated
multiplerate system.
The opening of this
prospect of improvement in one
small quarter is attributed in IMF

and

1.6

1920s.

istribution of natural gas; trans¬
of

ideal

+ 44.1

1,275

—

and

tae

deviating

embodied
of parities

relationships

the

from

in

means,

4.1

*

U.

public utility, in the
transmission,
pur¬

chase, sale and distribution of
lectricity,
purchase,
sale
and
portation

City

York

Public

+ 52.7
—

1,340

Trust

Manufacturers

coordinated and inter-connected

system

-

---

Light Corporation which make up

53

1,295

Avenue

National

Guaranty Trust
Irving Trust

&

24%

930

Fifth

four

Power

161/s
551/4

the Belgian

Irar.c, the guilder, etc.,

albeit
by untried

store,

+ 10.4

45%

Trust

&

Bank

Exchange

First

100%.

41

National

official rates, in terms of

new

it seeks to re¬

-

General

that

the sense

ing

the franc, for the lira,

defaulted

lend

to

bonds

them, they

view with undisguised annoyance.,

and the Portuguese escudo, plus
be
/ The ITO charter is a mighty
a
so-called free market which is
times by
: weak
instrument, compared with
in j all
senses.
Thus.
net operating earnings, alone, exclusive of security profits and recov+ notj free
the powers and sanctions given
France has openly acknowledged
eries.
Furthermore, they are selling at an average of 81.4% "of
the Fund at Bretton Woods. Des¬
that the franc's par value, which
book values as of Dec. 31, 1947. The book values, it is important tc
pite
its .specific
powers,
its
had been previously declared to
note, have been steadily increasing over the past 15 years.
?
weighted voting system, which

This table shows that choice New York City bank stocks can

bought,

For

banks, brokers & dealers only

Standard Accident

on average,

to yield 4.75% on dividends earned 1-.65

,

and

Stock

and

According to the record of the past 16 years, bank stocks, as a

Rights

group,

total

Baltimore Amer. Ins.
i-

they have been selling below book value since about mid-1946..

/

'

-f>

:

.

unrealistic.

But

vis-a-vis
its

the

WHOLESALE MARKETS

.

IN

France

was

greatly simplifies procedure, and
the
sanctions
inherent
in : its

has been

currencies

of

several-billion-dollar nestegg,
IMF nas been unable to get

some

to

plan

Belgian, Franco-Italian and other

Paul Revere Insurance

exchange,
in

! suited

NATIONAL BANK

City of New York Insurance

CEIER & CO.

Gibraltar Fire & Marine Ins.

/'*'///

Carolina Insurance

Kenya Colony and Uganda

new york 3:

%

67

WHirtMALL 3-0782

:

Homestead Fire Insurance

of INDIA. LIMITED

incorporated

'

Bankers

*it;

"Wall Street

Branches

BOSTON 9

CHICAGO 4

LOS ANGELES 14

210 West Seventh Street

FRAnkiin 7535

Mlchigah 2837

YUkon 6-2332

BS-297

CG-105

LA-1086

SF-573

PRIVATE

Telephone

HAnover

Teletype NY

York 4

2-2600

1-1017




26, Bishopsgato,
London, E. C.

action

WIRE

SYSTEM CONNECTING:

NEW YORK,

BOSTON, CHICAGO,

CLEVELAND, PHILADELPHIA, ST. LOUIS, LOS ANGELES, SAN FRANCISCO
TELEPHONES

TO: Hartford, Enterprise 6011

Providence,

Enterprise

7008

Portland, Enterprise 7008

Detroit,

ar¬

>

Enterprise 6066

the

is

Fund

advance

pre¬

ignored and reads about
by members in the

taken

newspapers.
on

Members seem ever;

the prowl for loopholes in the

Articles

of

Agreement, which

directors' meetings there
Subscribed Capital

Paid-Up
Reserve
The

not con-

because,

in

Russ Building

HUbbard 2-0650

30 Broad Street, New

Italian

sumably, the member did not un¬
derstand
its
obligations to the
Fund. In other cases the Fund is
plainly

the Government In

India, Burma, Ceylon, Kenya
Colony and Aden and Zanzibar

SAN FRANCISCO 4

231 S. LaSalle Street

to

Office!

Head

v:

NY 1-2873

10 Post Office Square

iAllen & Company

similar

the

or

rangement for the sale of foreign

BANK and INSURANCE STOCKS

New Brunswick Fire Insurance

its

authority accepted by some of its
Thg Fund has neediest members. Sometimes, as
deal with Franco- 'in the case of the Greek certificate,

'

J

the

neighbors.

lately had
•

Georgia Home Insurance

IMF,

the

unwilling to acknowledge a sim¬
ilar decline in the/franc's value
of

Nat'l Liberty Ins.
.

:

have sold below book value approximately one-third of, the
and above book value two-thirds of the time.
Recently,

time

by

accepted

Bank

Capital

£4,000,000
£2,000,000

tinuous

——£2,300,000

Fund

effort

every
description
of
exchange business
•:

weaken

to

effect rewrite by

is

and

and

also

•

Often the Fund has to arrange
hoc

consultations

on

on

ad

half-baked

undertaken

(Continued

in

reinterpretation.

conducts

banking

Trusteeships and Executorships

in

a con¬

page

47)

Volume

THE COMMERCIAL

Number 4662

167

&

FINANCIAL

CHRONICLE

What Banks Face in Mortgage

Restore Free Gold Market in V. S.!
By NEIL O'DONNELL*
;

v

L

by higher gold price,

:

minimum of
*

$35

ties, high appraisals, and

;

Treasury of all'gold offered at

ABA President outlines

:

immediate return to free gold market
on ownership of gold, but calls

in U. S. and removal of restrictions

for continuation of purchase by

ket revisions take place.
flated.

per ounce.

in an article on gold for the American'Mining Con¬
"Journal," I stated that the gold mining industry in the United
States and elsewhere was in the doldrums. The situation in February,

changes in bank mortgage lending and
more

risks, difficulties

Says lending has been

come

a

time of collection

the real

What is the cause of this

It

is the

and the

war

world-wide unrest created by the
The increase in costs has

war.

been

attributed

including the
had

war

to

things,
No doubt the
many

war.

effect

prices, but an
effort to pull the nation up by its
bootstraps
through
"controlled"
an

inflation

on

has had

greater

even

an

effect.

seems

drop in prices
that is un¬
dergoing "controlled" inflation.
in

an

no

economy

It is my

belief that prices will
back to the 1939-40 level

go

lar

practical
the

on

to

is

on

again.

The

is that

reason

This is

a

ligations in the form of veterans
our

enormous

the

police

debt, assumption of

duties

maintenance

of

of

Britain

another

and

armed

truce will call for such extensive
taxation

that

costs

of

supplies will not

both

labor

erty

The labor scarcity

by training

tion oi miners.

genera¬

The training of a

quire from 2 to 4
is

only be

generation of miners will

new

be

can

taxes;

appeared
net

to

income

be

a

prop¬

65%

has

of

to

Treasury's
manyfold —

Because of the ef¬

keep currencies at

(Continued

on

page

fixed

asset

an

65%

as

centages.

became larger per¬

Many

lost what little

continued

banks

an

ar-

*An

high

mortgage

interest.

time,

speaking,

bankers

from

their savings

50%

deposits

to
on

accrued

only

to

ity stagnation, from the false book
income, and from the unpaid tax

which
a

was

today.
direct

Changes in

destined to make them

great deal of trouble.

The

principal change in the sit¬

uation is that

have

now

a

lower
of

service,
lation

a

many

as

gross

income

one-quarter
interest

monthly

rate,

to

property

value,

expense

a

substantially greater

of administration and

address by Mr.

the

Eastern

and losses

This announcement is neither

operators

taken, from the liquid-

(Continued

on

page

and

students

of

commodity like

cotton, wheat
of

the

$75,000,000

the

have

costs

of

turers of most any
can

to

gone

the

up

as

manufac¬

commodity

He should

name.

copper,

lumber. His costs

or

production

have

The Pacific

Telephone and Telegraph Company

you

be entitled

Thirty Year 3%% Debentures due March 1, 1978

increase in the selling price

an

nor a solicitation of an offer to buy any of these
offer is made only by the Prospectus.

the

in

increase

an

price to be paid the gold miner.
standpoint of the miner,
a

offer to sell

to

From the

gold is

an

Debentures. The

in the view of most

is

of his

commodity, he reasons, like
any
other
manufacturers.
His
point is well taken, but—because
gold is the backbone of the world's
monetary
an

systems—he

finds

Interest

payable March 1 and September 1 in Xew York City

or

in San Francisco

that

entirely different set of condi¬

tions control gold production than
control production of other com¬

modities.

:

Opposition to

an

sistance to
of geld

an

Price 102%% and Accrued Interest

Increase in Price

There has been

,

organized

an

re¬

increase in the price

by our Treasury Depart¬
What has been the basis

ment.

of this resistance?

The
said
.

Treasury

an

in

the

Copies of the Prospectus may be obtained from only such of the undersigned as may
legally offer these Securities in compliance with the securities laws of the respective States.

has

price

in

the United States wculd be infla¬

tionary.
rected
"

Department

increase

A

to,

a

similar question di¬
responsible officer of

the International

elicited the
at

,

from

proaches.

same

slightly

from

the

different

We have had

production of

ap¬

the fur¬

sons

that

are not

our

BLYTH & CO., INC.

Incorporated

the real

Treasury

rea¬

Depart¬

ment follows the program

paper

O'Dcnnell

ing
Feb.

before

Association,
6, 1948.

KIDDER, PEABODY & CO.

SMITH, BARNEY &

CO.STONE &

Colorado

*




PIERCE, FENNER & BEANE

SECURITIES CORPORATION

it does

by

Denver,

LAZARD FRERES & CO.

MERRILL LYNCH,

UNION SECURITIES CORPORATION

presented

GOLDMAN, SACHS & CO.

*

LEHMAN BROTHERS

follow relative to gold.
*A

J

THE FIRST BOSTON CORPORATION

HARRIMAN RIPLEY & CO.

consumer

goods by gold mining. While these
reasons
may be good reasons, I

(feel that they

MORGAN STANLEY & CO.

Monetary Fund
answer, arrived

ther statement that too many men
and supplies are being diverted

Mr,
Min¬

Colo.,

March

17, 1048.

a

Dodge be¬ real lessons learned from this ex¬
much lower net return. Accurate
Regional Sav¬
perience, from the collection dif¬ costs will show a net return on
ings and Mortgage Conference of
investments
much
ABAt New York City, March 16, ficulties, from the foreclosures mortgage
fore

Increase in Price

problem

a

The first effect of these factors

re¬

seems

and

price inflation problem,

one.

The only solution that

long
to

expensive item, indeed. This
hidden cost, but a very real

be practical

a

re¬

an
a

one-

much larger loan in

and will

years

we

or

payments

is to create

were

Mortgage Loan

Situation

term

disposed

problems
It is about these that I will
liist comments.

my

third

were

advanced

not without its source of

dividends

Generally

be

the loans. Probably most
banks will not repeat many of
them.
But, we must not forget
that while the nature of the
prob¬
lems may have changed to some
degree, the mortgage account is

uncollectible

pay

but

to be most satisfied with the asset

1948.

43)

not

liquidity they had

low-cost,
that

the bank

of savings deposits in mort¬

gages quickly

from

At

em¬

building. They were no help in
meeting
depositor
withdrawals.
As deposits
declined, the 50 to

but

asset.

loaned

were

Undoubtedly there

the

been

most of it bad.

fort

of

they

arose

.

came as

Result of Program
result

adverse

when

their

generally

,

conditions

Then

what

thinking.

The

—

mortgages.

on

increased

and

of

the commercial and savings banks

program,

new

a

unpaid

in
*

happenings of the last few weeks
demonstrate the fallacy of such

we

re¬

and

form

the

•.

dividends from the return

dollar standard. The

a

•

liens

first

Joseph M. Dodge

the

back to

go

prewar
levels, even though
materially reduce our budget
quirements. ;',

cured

on

i gdepre¬

obsolescence

an effort
keep gold on a dollar standard
and thereby keep the world's cur¬

rencies

pay-

enis;.

disregarded

to

on

in the days when

was

drawals
stopped
interest
and
principal payments. Collection ef¬
forts sometimes led to state leg¬
islatures declaring debt morator¬
iums.
A
mortgage actually be¬

6%

neighborhood

Treasury has maintained

interest

costs,

That

com¬

ciation

statement of fact. The

administration

was.

to protect

m

dollar standard."

ob¬

our

past experience in mort¬

claims which had to

nored

the dol¬
standard, al¬

that gold

say

bankers thought it

our

stances which led to deposit with¬

principal

though it would be closer to the
truth

in¬

bank is not the self-adminis¬

the

interest;
discouraged

purposes

gold

many

a

barrassed to find that the circum¬

fort able

coin, unless in a museum,
is still the basic element in

is

mort¬

usual

"Although in most of the world
is growing up
without ever touching or seeing a
whole generation

for all

anything at all from

lected

recently relative to that matter:

gold

had learned

gage
loans
possible;
col¬

in the "Commercial and Fi¬

gold

mar-

are

and concludes probably

mad e<S>

the

all

nancial Chronicle" had this to say

a

we

time too

one

banks

;

.

Herbert M. Bratter, in an ar¬

ticle

that if

me

tering asset that at

.

and

to

structures; and from the stand¬
point of external convertibility

of the Problem

There will be

not

Mr.

terms and mortgage debts

easy

lending, it is that the mortgage investment account in

this country's monetary and credit

Solutions

soon

gage

■

cause

proper-

estate

slackening in mortgage lending.

Treasury Program
scarcity of skilled labor
and the other is tne mounting costThe Treasury program has been
of mining.
The scarcity of labor to maintain an artificially low
can be traced to
many things, but
price for gold, in terms of dollars.

One is the

likely to develop when substantial real

extremely

on

.

difficulties, foreclosures and sales of mortgage property. Looks for

gress

1948, is little changed from January, 1946,
difficulty?' There are two causes

are

*

because of overfinanced

warns,

Gives advice to banks in matter of protecting mortgage investments

there v;iH

A year ago

••

1

*

President, The Detroit Bank, Detroit

_

in gold mining have not been offset

proposes

Lending

President, American Bankers Association

Mining executive, asserting present price levels will be maintained,
costs

17

By JOSEPH M. DODGE*

Executive Vice-President, Idaho Maryland Mines Corporation

and because higher

(1221)

r

~

WHITE, WELD & CO.
-

■

38)

T

IS<1222)

Walter

By JOHN
In

many

Co.

&

lines of business today management is becoming
had better learn how to sell all over again.

it

iness

con¬

The

bonds

a

dozen so the

saying goes, but be

that as it

salesman
toward

W.

of the firm,
has been with
Ripley & Co., Inc.

Harriman
}

Banks

He told
and
inter¬
invest¬
securities sales¬
who go out and make the calls will find that people are most
receptive toward them. What this salesman discovered in this par¬
ticular instance was that his prospects were most familiar with the
company and therefore he was bringing something to their attention
that
more like an old friend rather than something new and for¬
bidding. Thisiciea is not new by any means, but it is true that going
after
customers is not only one of the best ways to increase sales
volume when conditions are such: as today, but it also brings new

Seven

activities.
new

polish up your rusty

of

•

Voorhis
cn

&

partnership of Kalb,
will be dissolved
and a new partner¬

Co.

March 31

ship will be formed as of April 1,
with offices at 25 Broad Street,
New York City. Partners will be
Kalb, Peter A. H. Voorhis,
Louis Orchin, William M. Thomas

John

and

Horace Silverstone,

acquire the New

York Curb Ex¬
ivas formerly a partner

the New

change,
in

Merrill

Gruss

& Co.

Pont

Other

members of

-

partners

"

were

&
all

Kalb, Voorhis & Co.

Virginia

life insurance

The bill now goes to
Tuck for s:gnatur& Such

statistics.

according to latest
International

bonds

Bank

are

legal for insurance
company investment in the seven
states having the largest totals of
qualified

as

New

including

admitted' assets,

46 Front

Street, New York 4,

Chicago

Unions were

ance

have

assets

vestments.




Mr.

*

in
.r

it

is strongly

felt in official and

London that it
unoffi¬ would be fatal if the United States
cial strikes.
The ensuing feeling were to seek to restrain, by means
of strings attached to ERP, Brit¬
of bitterness against the Unions
ain's ability to reduce the adverse
for their refusal to support the
unofficial
wage
demands,
and balance of payments. Judging by
the report quoted above and also
against the Labor Government for
by other advices, even now this is
their opposition to wage increases
not
adequately realized in the
might drive millions of industrial
United States.
For, although the
workmen into; the camp of the
report of the two Congressmen
British Communist Party.
who
investigated
conditions in
This
being the situation, the
Britain last year is couched in
government
is
gravely handi¬ most friendly terms, even they
capped in its effort to work out fail to realize the vital importance
by

expert

circles in

would be a crop of

there

Most measures;
effective would

Britain's salvation,

would

that

be

of

giving Britain every chance to
her ability of eliminating

recover

CONN.

Stock

recently

G.

—

onened

the

in

was

*

It

*.•«

assistance.

just1

formerly asso¬

*

R *

office.
»..»

Another

which is caus¬

» Jj

report

ing grave concern in

Britain is the

measures

in

minds

the

of

British official '
ill-fated prema¬

circles

with the

ture

convertibility

experiment

about half the "gap" which Britain was made to under¬
in the balance of payments as in¬ take largely through his influence,
dicated by the present extent of and with the dogmatic and rigid
the gold drain.
This means that application of the principle of
.in
spite
of
ERP far-reaching non-discrimination.. ;It is feared
measuresr will be 'called for in that, should the reports prove to
order to balance imports from ex¬ be well-founded, it would mean
cover

ports.

*

,

.

>

In

,

....

the circumstances

the report

Representatives Kunkel and
the United Kingdom,
extracts
from which have just
reached London, has caused con¬

of

that firm's Hartford
*

unpopularity

the
American

"gap" and dispensing with

equilibrium with¬ apparently well-informed forecast
that would en¬ that Mr. Clayton would be ap¬
undue political risk. Even if pointed to the post of ERP admin¬
His name is associated
Marshall Plan were to be istrator.

out any

Building,

Street.

Bailey

incur

now.

oniy

members

Co.,

the

passed without modification, how¬
ever,assistance expected under it
during the first year or so would;

H.
New
Exchange and other
'

for

political

tail

.

&

would
politi¬

wards restoring

ap¬

ciated with The First Boston Corp.

t

measures'

cally than they are now.

government's request
postponing
wage
demands

ing with the

in life insur¬

Hartford National Bank

,

necessary

then be any less dangerous

Timely and adequate Mar¬
shall aid would go some way to1-

bonds as legal in¬

bank

proved

N. Y.

4

the

and
decisions of the
in favor of comply¬

officially

$1 billiori or more

36 Pearl

f

the

there is no

to

office

San Francisco.

about-

if the official

even

such measures
middle of 1948 to
middle of 1949.
And
reason to suppose that
of

adoption

from about the

ford

leading exchanges, announce that
Lewis H. Bailey, Jr., is now as-'
sociated with the firm's Hartford

1913

the

riddled with Communists,

are

postponement of

would then be a

dangerous oppor¬

reason the government
necessity of continuous
not consider that it can af-^

York

Established

dis¬
-

does

HARTFORD,

BUREAU, Inc.

unpopular measures would have
to
be applied.
The only benefit
derived from the Marshall Plan

Virginia ranks
17th in admitted assets of life in¬
surance companies. All states with

consin and Illinois.

Walker

NATIONAL QUOTATION

^

later.

or

which

exhausted sooner
And then the risky and

become

necessarily be unpopular, and

Bailey in Hartford

For 35 Years

up

,

and un¬
net

increase

to

York, New Jersey, Massachusetts,
Connecticut. Pennsylvania, Wis¬

BJlt Walker Adds
Services

to' stir

.V

„

able

her gold reserve

on

would

provided by the
active pursuit of the recently announcechpolicy of stopping the in¬
crease
of wages.
Trades Unions

the

Over-the-Counter Quotation

elements

is

from ; shipping freights,
aid would only reduce the

ERP

tunity Would be

Virginia has 11 life insurance
companies, with total admitted
assets of well over $328 million,

and

Lynch, Pierce, Fenner

Beane.

•

.

qualification has been granted by
legislation in 26 states other than
Virginia. In some states legisla¬
tion is not required.

Ex¬

Co.

&

•

"Legals" in Va.

Governor

Gerald B. Nielsen.
Nielsen was previously with
du

coun¬

currency

earnings

excellent opportunity for Com¬

munist

;

companies.

and

I.

hard

the absence of an ade¬

she

drain

V

legal investment for

Partners will be Oscar

Francis

to

iard currency countries,

and," fac¬

delay or inadequacy
of Marshall aid necessitate a cu
in food rations it would provide
an

,

mines

so

sion^ Should-"

State Legislature
bill approving bo^ds
of the International Bank for Re¬
construction and Develooment, as

Benjamin Miller, John

Mr.

relation

less

Belgian National

The

S. Schafer,

Milton

of

context, may convey a false im¬
pression, but it is an impression

unpopular that the
government is seriously consider¬
ing the idea of reversing its deci¬

tories,'■is.

has passed a

York City.

change,

the First Na¬
tional Bank of Chicago.
•
The
credit is granted to the
National Bank of Belgium on se¬

Made

Schafer, Miller & Co., members
York Stock Exchange,
will be formed as .of April 1 with
offices at 15 Broad Street, New

Mr. Silverstone, a mem¬

Mensch.

of

York Stock Ex¬

membership

change
ber

who will

file ol

the rank and

senteeism .from.

Philadelplra

the

York;

New

World Bank Bonds 11

Y.

member of the

' '•

A much more

of the New

Meaney,

V

tries and

content.

Schafer, Miller & Co.

R.

among

Bank.

business.

Partnership

tent

endorsed by the

make the calls. If you have a natural
idea; something attractive to offer, and you know how to meet people
and do a real selling job, there is business to be had. But it takes
work today—this is not an order taker's paradise as far as concerns

fThe present

to

.

which conforms to earlier indi¬
affecting; the working classes, and
cations.
Y Y'YYvY; -Y '
any really serious attempt at low-,
Two of the main causes of the*
ering wages might produce such
effect, Y;V'v'.y Yy deficit in Britain's balance of pay¬
ments are the import surplus in
There is already much discon¬

curity of $50,000,000 in notes of
the Government of Belgium and

must see new people—and

New

.

Dr. Paul Einzig </;•

measures

National Bank* and

;.^xYYY'':;

To be Formed in N.

Any

,

"What do you think about .them?" New accounts
can be opened today—it is being done all over the country by sales¬
men who are not following the same old beaten paths every day. But

Kalb, Voorhis & Co.

Commu¬

obtaining the government's ^supporters
goods in the United States.
The against the high price of tobacco quate merchant fleet. The sugges- .
tions of Representatives Kunkel;
Export-Import Bank put up $32,- and should, in the absence of ERP
and Walters,
if adopted, would
000,000
and the private banks aid, tobacco supplies become ex¬
perpetuate these adverse factors,
supply the remaining $1-8,000,000. hausted, it would' give rise to
and would go a long way towards
The participating banks are Chase widespread bitterness against the
Likewise,- the sus¬ nullifying, in the long run, the
National, J. P. Morgan & Co. Inc., government.
beneficial effects of Marshall aid.
Guaranty. Trust, National
City, pension of • mid-week, s p or t ? Unless- Britain is able to reduce
and
Bank of America*1 National events, which was decided upon
Trust and Savings Association, all last year in order to reduce ab¬ •die trade deficit in relation to

different story—-they can't ask you
securities they bought from YOU are going up again—all

the securities

an

i t y

Export -Imiport
$50,000,000

she should

Belgium for purpose of

they can ask is,

you

American exports ill
countries, and that
abstain from building
ships which would compete with
the existing American merchant
fleet.
Quite poscibly the extracts,
divorced as they are from their
with

ing

drastic auster-,

Belgium

furnishing

lending

in

Bank

seeing new faces is a

when the

in

Britain should-

abstain from compet¬

hard currency

with

nists.

Export-Import

with

government's

people is that you become
equipment—you obtain the
necessary mental stimulation that alt salesmen need when you talk
to a new face.
You are on your toes instead of down on your heels.
If you hear some complaining, it will be about what the other sales¬
man sold—not what you sold. Do you ever wonder how much the
average investor would like to have someone new come in to see him
and tell him about the bright side of it for a change? If you stop
to. think about it, all that your own customers desire to do when you
call is to ask you about their paper losses. They want to know when
the securities they bought from you are going up again.
This they
have been asking for almost two years—and you have been giving
them the same answers. Meanwhile the entire rig-a-ma-jig is becom¬
But

the

that, in return,

Marshall aid,

,

be made to

an d
might

,

alliance

Seven private commercial banks
agreed "to participate with the

new

;

for

the suggestions

are

dis¬

cialists into

$50,000,000.

was

YY-'VYy,

join

Bank

men

and to you.

Participate in

Belgian Loan

He called in person to see purchasing agents, exec¬
utives. and the proprietors of some of these organizations.
them nis firm had made a very thorough study of the situation,
he found that most of the people he interviewed were not only
ested in talking with him, but they were also interested in
ment.
There is evidence in abundance today that

ing tiresome to them

which-

-

dis¬

to

seminate.

content,

u

side.

mis

underlying spirit. The two points"'
which are causing; grave concern...

the

m

m

easily «d rive
Lett-Wing So¬

lie went out cold.

see

o

nists

for many

The full text is not
yet available,
but the extracts^"
cabled over seem to indicate the

the

of

uneasiness

and

dismay

siderable
pn

would

k

a s

C

Jr.,

1 d,

years

very superior new products
during the past year. These
products have met with wide acceptance and approval by many of
the firms that have used them. He obtained a list of some of these
firms; also architects, builders and distributors who were in a position
to be familiar with the company in question and its products. He said

alert—you

t

^

.

resort

measures

*

facilitate

Fitz-

principal

nity today.
Thi^ company has several
which it has placed upon the market

more

Fitzgerald, Jr.

g e r a

levels
opportu¬

vitality and pep into your own
What happens when you

J.

o

which

se¬

Wal¬

J.

ter

t

'

might

have to

and

Canadian

curities.

here is one I picked up from a conversation with a
who is doing a fairly good job, despite the public's apathy
investment. He said he was seeing new faces. He selected a common
stock that had depreciated along with the rest of the market to
which indicate that it is a most attractive semi-investment
may,

ment

and

stocks,

.

,

dime

nicipals,

corporation

what it

a

in

deal.ing
h

in Czechoslovakia
(in favor of the Marshall Plan many former British
opponents of American financial assistance to Britain. For it is feared
that in the absence; of adequate and timely American aid the govern¬
converted

have

brokers,

ment

from

LONDON, ENGLAND.—The dramatic events

invest¬

act' as

m

nomic equilibrium and relieve-present British Government
entailing additional poLtical risks.

j

e

firm will

new

to

are

T'h

salvation. Says

timely and adequate Marshall aid would do much to restore eco-

South La Salle
Street.

has

in Czechoslovakia

coup

many

gravely handicapped in efforts to work out nation's

231

at

office

order
securities

munis!

from

7

although Communist

Britons in favor of Marshall Plan, because of cominfiltration into British trade unions, Labor Government is

converted

of

as

April

public-is beginning to pick and choose—no longer is
an
taker's paradise for many sales organizations. But in the
business we have been in a buyer's market for almost 21 months. In
order to sell securities today it takes ingenuity, ideas, follow through
2nd plenty of hard work. If those in industry are looking for harder
sledding when it comes to selling their products, and would like
have a few ideas of "what it takes," they might ask some of the sales¬
men in the stock and bond business for some pointers.
There is no
doubt that the men who are making a success of selling securities
today know how to sell when the going is tough. They have
Ideas

Dr. Einzig notes,-

a
securities bus¬

BUTTON

and Fears

By PAUL EINZIG

in

engage

scious that salesman

takes.

Shortly

ILL.—Walter Fitz¬ !
will be formed to I

CHICAGO,
gerald

ERP Hopes

Fitzgerald & Go.

To be Formed

Securities Salesman's Corner

,'Thursday, March 18, 1948-

FINANCIAL CHRONICLE"

COMMERCIAL &

THE

Walters* on

4 u

J't

< J

that for the sake

lief Britain

sacrifice

of temporary re¬

would be expected to

her

chances

achieving economic

through
salvation.

working

of

ever

independence
out her own

Volume 167

Number 4682

(1223).

19

existence long after the Marshall

World Bank and ERP
«/'.<••

By JOHN J. McCLOY*

President, International Bank

World Bank executive
Points out Bank

operation
giance to

Discusses proble

Urges immcdi

national government.

no

i
It is

ms

of ERP Administration and importance of cointernational administrative staff owing alle¬
ac'ion, backed up by full political and military

|

steps, if necessary

called upon to

who have travelled far and been

places, I wi sh it

were

possible for

talk

to

recovery

I

instinct

t

a n

sorb.
Once

on

feet, however,
my

——

am

bonds,

audience,

at

least

crowded

in

upon

us

so

instincts
to

my

of

the

Bank's

strength

apd independence.

are

routine

usual

and to tell you

restimulate

flow

the

j

And

Private

Government

Financing

ably

The Bank appears small now in

with

of

those

the

speech Churchill had

of his

mighty passages
preposition. In about 24
speech came back with

one
a

of

comment

no

as
other

it, but

substance

we
could approach a
of
the
world
situation

its

to

up

place

proper

one

look at the correction, roared

definite

his

rage,

period.

results, within
It

much easier if this

useful

All

would

we

would
were

need

to

be

the

do

a

patched

so

fice,

case.

a

would

immediately

and

Interest exempt^ in

Re¬

is the

(Continued

type

John

J.

McCloy

Develop¬
to

ment,

V

NEW

the opinion of counsel9 from all present Federal Income Tuxes

ISSUE

sug-

gest to you

how

wise

its

are

how

policies,

$14,000,000

worthy
objectives. When the Bank was

talented its staff, and how
its

first formed

it

considered

was

a

mighty institution with enormous
potentialities. It was never as big
as some of the headlines painted

|t but it

dinary both

as

Today,

pose.

;

Washington Toll Bridge Authority
r

so-called

dollar

or

in

shortages

public

in

the

are not
situations
is repaid or

'■'j!l

not complaining, however,

am
of lack

larger

Redeemable at the
or

out

of

,

;

,;/•

•

Bridge Revenue 3%% Bonds
from the Tacoma Narrows Bridge

revenues

option of the Authority

30 d^ys' published notice

upon

1, 1956, at 103and accrued interest if redeemed
years

;r

by lot from bridge

after completion of the bridge upon 30 days' published
1951

re¬

at

and

103

accrued interest if

/ y.:ff/2 of 1 % each four

;,

years

whole for refunding

as a

on

or

purposes at any

i; 19781

time

redeemed

on

notice,

revenues or

on any

on

prior to March 1, 1958, and at premiums

thereafter until March 1, 1974 and without premium thereafter.

Also redeemable at the option of the Authority in part

judgment,

my

•

'>■

declining Yz of 1% each four

:..

not only, in

covery

•

Due March

after March

agencies and these

directed to basic

sums

:.v> V:

:

Dated March 1, 1948

advent

The

of borrowers.

of these other

•»-

general ob¬

pot as long as very
jectives are attained.

/.Payable solely

'

many

money

"

Tacoma Narrows Toll

/

all

and

treasury

concerned

..

,-V.v.

parts of the world it would appear
that we
have
some
formidable

competitors in the recovery field,
this is particularly so when such
agencies derive their money from

V

•

(State of Washington)

tallied of to cover

up

whether

'■ .7'.,

to its size and pur¬
with new agencies

being set

the

':

something extraor¬

was

.

.

from unexpended proceeds of bonds

interest payment date,

on or

after March 1,

,

prior to March 1, 1954. and at premiums declining

or

thereafter until March 1, 1974, and without premium thereafter.

do not render ineffective the work
that the Bank may do but greatly

increase
fective

its

possibilities

operations.

for

ef¬

will

They

well. administered

tend

to

about

that

state

the

sooner

if

bring
of

economic

-equilibrium
or
near
equilibrium which will enable the
function

Bank to

in

its most

Principal and semi-annual interest (March 1 and September 1) payable at the principal office of National Bank of
Washington, Tacoma, Washington (Trustee),

the option of the holder at the principal office of the Fiscal

or at

Agent of the State of Washington in the City of New York (Chemical Bank & Trust Company). Coupon bonds in
$1,000 denomination registerable. at the office of the'State Treasurer of the State of Washington
or as

to both

principal and interest; IA

r'

*

' "•

as to

principal only

.

apr

field with more con¬
fidence and greater security. The
European
crisis
has
had •< the
tendency to educate the - public
better as to the appropriate func¬

propriate

Price 100 and accrued interest
The above bonds are*offered

tions of the Bank and to moderate
the transports with which

some of

initially hailed- in 1944. It is
that it is not

realized

balance

of

deficits of the world

nor

as

and if issued and delivered

to

us

and subject

to approval of all legal proceed¬

now

Copies of the Circular

and cannot

be the overall financer of the
cumulated

when,

ings by Messrs. Chapman and Cutler, Chicago, and the Hon. Smith Troy, Attorney General of the State of Washington.

the organization of the Bank was

'

ac¬

-

may

undersigned and others

as

be obtained in

State only from such of the

any

-

lawfully offer these securities in such State.

may

;

payment
is it the

financer of the accumulated fiveyear
can

plans of the world. It is, or
a continuing international

be,

/

//

Kuhn, Loeb & Co.

A. C. Allyn and Company
Incorporated

banking facility capable of financ¬

ing or rather assisting fo finance
economically strategic and pro¬
ductive projects throughout the

Stranahan, Harris & Co.

world

Lee Higginson Corporation.

v

where

the

local

efforts

justify, such assistance. It has real
flexibility and even if some piece
of financing cannot be termed a
i'project" in the strict sense, the
Bank

undertake

can

it

if

it

to investors for its capital, that is

I

of

venture

to

Bank's
say

strength and

that, by

this attachment

of

Bear, Stearns & Co.

John Nuveen & Co.

Stifel, Nicolaus & Co., Inc.

•

Equitable Securities Corporation
•

.

Pacific Northwest Company

•

' v

■'

:

7

v '

'-

■-

:

Blair & Co., Inc.
,/■

Eldredge & Co.

:

,i

Incorporated

Barcus, Kindred & Co.

Welsh, Davis and Company

is

shown that it is productive and
stimulating to trade and recovery.
If there is a limitation upon the
amount of capital it may. provide
because it is necessary to appeal

likewise the

Incorporated

Tripp & Co., Inc.

;

Stroud & Company
Incorporated
Incorporated"
f

.

Walter, Woody and Heimerdinger
M* B, Vick & Company-

Roosevelt & Cross, Inc.
-

•

,

Julien Collins & Company

„

1

c*

♦

•'

-

j

Dempsey & Company

Hickey & Company, Inc.

•

•

The First Cleveland Corporation

Murphey Favre, Inc.

ftfason-Hagan, Inc.

reason

the

Bank's

F. Brittain Kennedy & Co.

Martin, Burns & Corbett, Inc.

Hannaford& Talbot

activities to the necessity-of comv

*An address by Mr.

fore the

Overseas

McCloy be¬

Press

Club

America, New York City, March
16, 1948/
- * \ v
:
,

,




Ira Haupt&Co.

of
March. 18,1948

Wm. P. Harper & Son & Co.

of arrant
40)

page

on

construction
and

dis¬

note to the Foreign Of¬

"This

International
for

the

definite

struc¬

Bank

in

sentence. The Prime Minister took

of. the

ture

upon

Foreign Office purist had
neatly
encircled
the
offending
preposition and careted it back
a

about the cor¬

porate

prior
course

achieve

Marshall
a

wish

comments

hours the

closely
to

their

today with the certainty that the
application of definite rules would

of

Plan and it will continue

I

solution

vate

A Bridge Between

with

subjects.

pri¬
capital about the world, its
potentialities will compare favor¬
can

go

through

element

relation to the Marshall Plan but
if it can be, as it was designed to
be, the bridge between govern¬
ment and private financing, if it

attention

our

for

delivering it. In the

ended

partly
because
the
past few weeks have

direct

to

-

his

of the draft

this

to

events of the

to do nothing more

7

ab-. peting with other investing possibilities
in
the
capital
market,
there
lies perhaps
the greatest
my

and

here

i t $-

s

o

Office
to

member, partly be¬
not really attempting
a

'

t h

to

about the institution of

am

sell

ticularly important and inspiring
Speech, sent it .over to the Foreign

program.

the

repress

more

cause

me

passed

I

which I

'";Vj

What with the high sophistication which attends all writers

perform for it.

But

'

great pleasure and honor to be asked to attend this dinner even though I am now

a

has

proposed

part of European countries, and sugg ;sts an

on

j'

assistance to his organization in Marshall Plan.

ir

bridge between government and private financing, with its operations lim¬

as

ited to self-liquidating projects.
,

-

for Reconstruction and Development

detriment, but rath

no

sees

serves

be
to learn our
rules slavishly
from the scene. and. follow them completely.
The Bank's role iii the future, as
I am reminded and also com¬
in the past, will be to make pro¬ forted
by a story of Winston
ductive loans with good prospects Churchill which, as writers you
of repayment. Such loans will be may appreciate, if
you have not
the more possible if a broad base heard it too many times before. It
is given to the reestablishment of peems that Mr.
Churchill, after
a sound European economy by the
working on a draft of a par¬

Plan

20

Letter to the Editor

Now Bradberry & Co.

,

LOS
o

the

"irm

ANGELES,
death

name

CALIF.—Due
Davis, the

J.

of

Recalls Birth of

O.

of

Davis, Bradberry
!o., Inc., 049 South Olive Street,
been

\as

Thursday, March 18, 1948

CHRONICLE

FINANCIAL

&

THE COMMERCIAL

(1224)

changed

■<k Co., Inc.

Bradberry

to

By

HUNT

HENRY

Locking the Door BEFORE the Horse Is Stolen"

their

though
sound

RESEARCH

&

SECURITIES

may
be
purchase

selection

the

at

time

of

they hold on too long. Frequently
they won't sell merely because
they have a small loss. If they dc
sell, it is generally after some bac
news comes out and the "horse is
stolen."
;
^

CORPORATION

t» MOADWAY. NEW YORK 5. N. V.

executed at

were

Orders

t i

150,000 :dif-

last

vWith the above thought in mind

i

let

examine the elimination of

us

35

leading

investment manage¬
during the first quar¬

,

ment groups

WELLINGTON
FUND

^

JIMP

May,

$10,000.
Wage

earners

were

among

their

merous

A. Long which ap¬
in this; publication last
these companies': heaviest

lUi/rcTiuoT niMii

prospectus from

investment dealer
or

PHILADELPHIA

a

declined

have

2,

ago were

year

as

customers

executives.

han

nu¬

commission

•

exchange

:

>

Mutual

the

issue,

*

,

under its present authorship.
grateful to our advertisers
who have grown in number and

hope that readers of this column
increased

as

well.

-

truth than poetry

40%'

Amusement
'

L

Rubber

28

„

Rails

17

_____

interesting to note that
heaviest purchases of the&

It is also

the

companies during the first quarter
of 1947—over $3,000,000 worth—
Oil

the

in

were

year ago.

group

group—a

that is higher today than

it was a

sample of what
the mutual fund investor obtain0
is

at

a

of his

cost of about % of 1%

a

principal

"

per annum.

on

and the truth.

and
he
woebegone.;
disheart-i

travel-stained,
tired

looked

There

I

as

His clothes

and

to

came

:

the

me

ening thought of the great throng
had

instrumental

in¬

by a large portion of the
press of the country.
Democrats
Whigs and members of sundry
"splinter" parties derided these

ducing to come and hear Lincoln
the following Monday night. " Sun-'
day, the day before his address he
attended
Plymouth
Church
in
Brooklyn
and
heard
the
great

"fantastic fanatics."

tall, lanky mid-

Months later, a

joined their cause. He
not long in drawing a great

been

in

I

culed

...

:

Beecher."
When

Westerner

the

'

:

Monday night arrived and

committee escorted

the Astor House to

him from

Cooper Union,,

lawyer, fairly fresh from
Exams,

defending a
embezzling

was

accused

.

man

boots

my

of

$500,000 from his employer.
- The young lawyer's summation
concluded with "Your honor, my
client couldn't have stolen half a

Ii

$100,000.

million dollars—even

he wouldn't have hired z

he had,

lousy lawyer like me."

V

Notes:

-.V;:*;

' V'"'':■

.

The above

Bar

client

17

___

Merchandising

his

no

compro¬
what one

following in the immediate terri-

'

t

and

into

greeted the stranger.

Berrien

were

raid,-who
no
quarter

asked

mised

are

A trial

Noble

went

The "curious idealists" were iili-

year

More

-

un-

with

Said Mr. Bowen, in relating the
incident, "I found a very tall man
wearing a tall hat and carrying a
comical
looking carpetbag.
My
heart

acious

en

was

% Decline

■

i

t

believed to be right

Fund column is now in its second
We

d-fearing,

God-loving,

v" V-v :

this

With

the

190 shares of a $12

on

First anniversary

;.

rep¬

.

PA.

_

o

a n

■

It

American

'

present - stock

dock is $16.

lave

follows:

Repub1ic

af
*The

the

resented

.

more

to New York, all

'

G
-

compila¬

in amuse¬
ment, rubber, railroad, and mer¬
chandising shares.
As measured
by the "Dow," the stock market is
currently about 10% below its
February, 1947, high.
However,
from 'February,
1947, highs to
date, prices of the above groups
sales

A MUI UAL iNVtolMtNl rUNU
your

a

on

reported

tion. of Henry

peared

established 1928

A MIITIIAI

Based

1947.

ter of

above

income

29%

fer¬

prayer,

founded

Party,

V*

year.,

.

J V:

hymns

of

ance

vent

"

•

.

of less than $10,000

fncomes

and,

of

go

paid, to make an address
on Feb. 27,
1860. On a Saturday
before his scheduled address, the
homely
mid-Westerner
walked
into the office of Henry G. Bowen,
editor
of
the
"Independent,"
through whom arrangements for
the address had been made, and
j said, "This is Abraham Lincoln."
expenses

amid the sing^

ing

Late in 1859 he received an

tory.

invitation to

and the utter¬

71% of the firm's customers had

f

;

now

o n

4,566),

' *

from

came

<$>-

Ripon,

Wis.,, (popula-

an average com¬

ferent customers...

-

light of the deep and spontaneous repentance of a vast

small

then

town of

335,496 commodity transactions
mission of $15.09.

:'v

/

throng of American folk, expressed in the November, 1946, elections,
it might be well to become reminiscent.
. :
/
In the mid-1850's, a band of "curious idealists" gathered in the

(1) Selecting securities for purchase that appear attractively
priced or undervalued.
!
(2) Eliminating any portfolio security that appears overvalued
or deteriorating in quality.
——
——
887,865 separate security trans¬
The trouble with many invest¬
actions were completed on which
ors
who like to pick their own
income averaged $16.38.?individual securities is that
al¬

request front
yoor investment dealer, or from

the

In

management is twofold:

The function of mutual fund investment

upon

•

Editor, Commercial and Financial Chronicle:

<<i

NATIONAL

of

organization of the Republican Party at R.pon, Wis.

N

Prospectus

Republican Party

Noble Berrien writes "Chronicle" concerning 94th anniversary

■

/••••''.

■

Fund recently de¬
consecutive quar¬

Wellington

73rd

its

clared

/..•

■.

terly dividend, amounting to 200
share.-: '

a
:

.* •

■ ■

Securities & Research

National

•

revised its folder on
Street beats the "Dow" by Preferred Stock Series, currently
Corp.- has

Broad

92%

:

••

The Broad Street Investing

Cor¬

5%%

selling to return more than
-Distributors
Group .has

.pre-,

Seligman pared an interesting; study: called
"The
ABC
of Values in - Steel
Group, can point with .pride to an
Stocks."
\
.
.
exceptionally fine long term per-,
of

poration,

one

hugh w. long & co.

formance

record.

•58

the

value

'

.i

,

//ALL

StKfcET

MEW

tCRK

S.

N

Y

From

Jan.

1,

1930, to the end of 1947, the asset
of Broad Street, including
distributions from realized prof¬

its, has increased 40% while the
Dow-Jones Industrial Average de¬
clined

27%

"Broad' Street"

in

worth

was

1947,

eystone

in

the

at

ago

end of

which

had

depre¬

$730. It is also interest¬
note that had
"Broad
Street" retained its original port¬
folio intact through this 18-year

period, its asset value would have
had declined 26%, approximately
the same as the "Dow." Only six
issues of the 45 held on Jan. 1,

Certificate, of Participation

in

INVESTMENT FUNDS

1930, survived and appear in the

year-end portfolio of 54 issues.
Inrecent bulletin the. Broad

points out,
"Successful investing depends not
Street Investing Corp.

investing their capital

■.;

BONDS
(Series B1-B2-B3-B4)

Weekly Firm Changes - .i:.j
Exchange
following firm

The New York Stock
has announced the

"

changes:.
""

" ■

will retire

Donald F. Lippincott

from

partnership in Dixon & Co.
31.

March

on

from
&

partnership

Co.

on

Charles

March
W.

will retire
in Spiegelberg

31.

Jr.

Baker.

from partnership in Laird,
& Meeds on March 10.

re+ired

he

partnership in Lehman Bros,

Feb.

on

29.

-

„

,

*

White died on Mar. 9.
Transfer of the Exchange mem¬

Loomis L-

bership _of
to"

Wormser

the

late

Eugene

considered

will

be

Mr.

Geddes

above

will

is

School

the

Dow-Jones

the

Broad ^Street's

COMMON STOCKS
(Series S1-S2-S3-S4)

industrials."

ability: to better
this average by 92% since 1-1-30
is both noteworthy and basic.
.

men

misgivings, for getful of himself, mindful only of
what he had to sa.y. The bad mo¬
W. Nye, George Put¬ ment quickly passed.

in

James

eral

attendance as Gen¬

George
Bancroft,
Noah
Brooks, William' Cullen Bryant,
David Dudley Field were formid¬
able. In contrast to their ease and
nam,

on

25.

Mar.

continue

as

Prospectus from
your

-

local investment dealer or

She's

goes
see

Xke

Keystone Companyof Boston

The
50

Congress Street

Boston 9, Massachusetts




^

the

kind of woman that

through

life

demanding to

the manager.

"We the

individual floor broker.

feel the mental discomfort of

suit"

"store

new

a

and

the

his

acute

veople"\

Annual

Report of Merrill

Lynch, Pierce,: Fenner & Beane,
familiarly: known
as.J'We the

People," has the following inter¬
esting statistics about the firm's
business last year.

the

peculiar accent, which he had
from his Kentucky and
Illinois upbringing, and

derived

>

Southern

evident nervousness all
against him. - As Noah
Brooks looked at the audience and

his

Gam well & Co. Will Admit

William Luce

Definition

William
ted

to

as

speech was half over
Brooks changed, his mind

Noah

Luce will be admit¬

Stock

Exchange, on March 25. Mr.
who in the past was a
partner in Wainwright, Luce &
Luce,

will acquire the Ex¬
change membership
of William
W. Gamwell.
Mr; Gamwell. will
retire from the firm on March 27.
.

the

Even

skeptical; :Greeley

erful speech I ever
clared

was

"That's the most pow-i'

convinced.

heard!'f he'deThe

closed.'-

Lincoln

as

speech requiring about an hour to

deliver,

after

first few

the

mo¬

ments Lincoln discarded his man^

uscript and spoke to that very dis¬
tinguished audience as he would
have spoken in the court room; on
the rude backwoods platforin, or
to his

neighbors in a drug store or
in Springfield. : Al¬
at. Lincoln he said to himself, most instantly he had realized
'fOld fellow, you won't do; you're that under those broadcloth coats

Partner

Co., 40 Wall Street, New York
City, members of the New York

very

worked

partnership in Gamwell

Willetts,

,

Before the

,

about Lincoln, and said: "His face
lights with an inward fire.
He's
Sidney S.
M. Ge^des good grooming, Lincoln began to the greatest man since St. Paul!"

stood that Mr. Carhart will act as
an

the

must have had

such

physical pain as his new boots
only on the proper initial selection partner in Clark, Dodge & Co.
rubbing; the skin off.,his
Transfer of the Exchange mem¬ were
of stocks,
but constant and in¬
ankles.- One of the party inquired
formed supervision must be main¬ bership of Leland M. Kaiser to
if he were lame. When he began
tained. 'We know it is not often John G. Carhart will be consid¬
ered on March 25.
It is under¬ his address, his high-keyed voice
that the individual investor bet¬
ters

(Series K1-K2) '

in Ripon, Wis., where

was

,

PREFERRED STOCKS

House

conceived. The plaque at the entrance of the
structure bears this legend: "Birthplace of the Republican Party—In
this School House March 20, 1854, was held the first Mass Meeting in
this country that definitely and positively cut loose from old parties
and advocated a new party under the name Republican."

Bissell

Frederick L. Schuster withdrew
from

Pictured

Republican Party

M. 'Gottlieb

Harold

92% more than a $1,000

"Dow"

the

years

ing* to

Funds

.in

or

$1,400

18

ciated to

Custodian

i

the' same pe¬
investment of*$1,000

during

riod. rThus, ah

New York Stock Exchange

all

very

but you

well for the Wild West,
will never • 'go' down in

Hew York!"
.

■•<•. ~

-

serve

Abraham

-

the

starched
same

in that gathering/ But,

.

shirts

kind

were

of

beneath

throbbed

,•;

stained

Lincoln

man

and

grocery

-

_

beating,

hearts; > that
the. sweat-'

Illinois.

was

ster, on the platform, or
was a

.

a

oratorical trade

/No tricks of the,

could

-

in

no

trick¬

off.

;

He

ih deadly earnest, for¬

:

hickory. shorts i of

If he had

sometimes

rural
-

prophetic gift, as he
seemed

to

have,

must have felt that the wings

he

of

kJwMMWMW win***

Volume 167

Number 4682

destiny were beating above
head.. as he again walked
streets

THE COMMERCIAL

his

Sometimes

steeped

-

in

*

pro-'26,

News About Banks

to

the

ket.

NIW BRANCHES

NEW

gloom—straight to the White
House, to the Gettysburg
speech,

v'

The die

was

cast that
very

night at Cooper Union,/h,;.
,-w.
And, from the days at that little
/town of Ripon,
Wis./ when the
party

launched

was

000
.*<!-

At

a
JCAV' VW

^

.special

1

i*

Bank

meeting

r\!

of '

B

economically

and

two

of

the

three

billions

the

j

the

'

($300/100,000,000) and a
burden of
taxation, well nigh un¬

W. R. Burgess

Reviewing the past

the merits of
lican

56 years

functioning,

of 30 years of

mentation
.vote

of

a

the

.both,

branches,

overwhelming

it

and

being

a

to

Executive

government,

branch

of

•

to

succeed

elected
of

Mr.

of

part;
"Due

Rentschler;

member

a

Directors

New

the

of

The

our

It

would be well for the
Repub¬
lican Congress and the
forthcom¬

March 3
item

on

of

was

Mr;
noted

a

nrooosafs
not

was

civeo
eiveo I

was

difference in

tu" I

betore

reflected

feature

alone,

factors.

The

in

the

Bank

&

Trust

premium

a

separate

Company includes

of

furniture;.fixtures and

method

its first elected

President; by get¬
bfed-rock
taking
God into account in
governmental

ting- downto

stance of the
details

Board of

set

out

as

as

.

noted

11/

im

Directors,

appraisal,

the

actual
should

be

to the two

our;

of

amount of this latter item

in¬

r

-

March

a

guaranteed minimum of $250,000.
On
the
basis
of
the
proposed

proposals which were; made for
the disposal of its assets and busi¬
ness

affairs, as 'well - as in personal
lives, to the end that the terrific

are

the

approximately $277,000.;

in

transfer

of

to

New

was

fin

YorkTrUst

no

interests of the stockholders and
should be

De-

tential

New

VTbis\i proposaL

alro/ provides

difference

York

$135,000,

some

in

or

Gov*-

27

sideration
stofcks

for some time past-have been selling below their book value. Your
Trust, Company's stock on Dec. 31
1947, immediately prior to'any
negotiations for the purchase of

the

cents

posals

of
per

on

w

the

the Trust

time that the two pro-

hv

Board, the guarChemical aeainst loss on
your

ket value of

which

the

Government

New

ance.

York

stock has

your

oc-

negotiations.
- "If the
Chemical-agreement ;is

Bond

portfolio might be subject by reaof fluctuations iri the market,

son

was

ciurred sftice the inception of these

Government Bond

portfolio,
completely eliminated any hazard
to

Company's business,

selling at ^approximately $15 per
share
J/ook
value. The recent rise ^.the mar-

considered and passed

were

bv

upon

fo.

"Your Board also gave due conto
the fact that'" the
of New York City banks

.

;

"At the

proposal contained,

UnitedStates

of

proposal

share

The

of

favor

Trust's

submitted to them

their action.

approved, -it

will

result

in

cash

distributions
to
you, as stockCompany holders of the-Continental,-of an
such assur-' amount which, it is believed, will

Trust

As indicated

no

above;

on

Feb;i~ (Continued

on

page

24)

depression, lurking ahead, in the
present

generation

bravely - met,
wisely. %.• ■ ■ •
•

(Signed)

March 37,

dealt

v

••

*

be

with

•'-:-OV-y

NOBLE BERRIEN.

1948;

EDITOR'S
is

and

-

may-

•

)

This

is

under

no

solicitation of

^circumstances
offer

&n

to

to

buy,

be

construed 'as an-offering of-these

any of such

Debentures.

The

offer

Debentures?for sale,

or

Is • made only-by means of

as

an

buy,

offer to

the Offering

or as

a •

Prospectus.

/,'////V/,:•//;./

NOTE—Mr. Berrien

rethaed Financial Writer, tormerly Financial Editor of Atlanta
-"Constitution," and; also special
;writer ior the '-Wall Street Jour¬
A

nal," whom
Hamilton

the

late

termed

W«.

his

Peter

:i"Agricul-r

jtural /Economist."'his

written

monthlies
in

v

Mr.
Berrien
weeklies/ and

for

and

is

"Business

now

American Optical

engaged

Brokerage."

He

strongly feels the article herewith
points the
our

of

as

a

the

world

as

a

of

after

so

over,

failures by other approach.

many

\

Twenty Year 3Vts% Sinking Fund Debentures

;

means

achievement
.

Company

(A MASSACHUSETTS VOLUNTARY ASSOCIATION)

.

for

panacea

National ills, and

constructive

Peace

•

way

;

:

Dated March: 1; 1948

-

Due March 1, 1968

G. H. Chance Now- With /

First CaKfornia

Company

"
•

(Special- to

;

FRESNO,

!

*

Thb

Chance

CALIF.

has

with^ First

JPinamcul

Chkoniclkj

become

*

>

H.

associated

California

Bank of American

Gabe

—

V

Price 100.35% and accrued interest

Company,

Building. 7 Mr.

/ Chance has been conducting his
own
investment
business : in
.

-

Fresno under the firm
GvtH. Chance & Co. ••••"

name
-

-

of

/
s.::

j J y Buckley Brothers Adds
,

^

'Copies 0/ Lthe- Offering Prospectus may

be; obtained

from

i'i

only'

iwlhl'olfer thes* Debentures in compliance

(Special to Thb: Financial Chronicle)

witte the

securities

laws

the

of

respective

States.

LOS

ANGELES, CALIF.—Har¬
Fleming has been added
to the staff of Buckley
Brothers,
C.

vey

530 West Sixth Street.';/

•

"

'

Harriman

With Merrill Lynch Firm
/Special

LOS

to

The

Finantiai

Estabrook & Co.

•

ANGELES, CALIF;—Paul

M. Hornbecker is
rill

Chronicl*'

Ripley & Go.

Incorporated

-

now

with Mer¬

:

Lynch, - Pierce, - Fenner
Beane, 523 West Sixth Street.




&

March 16, 1948.

1

•"

\

j,

to

yot

position a
that time to give any such assur-t
ance/-After carefully considerirH

as-

the Trust

portfolio

issue." of

it was able

assurance

The

.

Company

the expenses to be incurred

the

that Chemical -wi!Make--over the

-1118/ the; stock- ernment investments: at amortized

page

•

Chemicr

toward this item

and then in turn offered to

addition, Chemical .undertakes

of

at

thereon.

Chemical

$500,000 over the
book value-, to be established by
joint committees of both banks.
In,

issued

Trust

'

to pay for

York,

York

that

positive

of

States

partment business up to $250,000
Assuming that the expenses in the
latter category should reach such
the reasons hereinafter stated:
.an
amount, the net total of the
"The proposal of the Chemical I two proposals would show a po-

page 1118.

New

New

proposal was finally approved by
Board on March 4, 1948 for

of

idealists"

the

United

favor

Board that it could make satisfac
tory arrangements for taking over
the lease of the principal office b'

your

equipment at fair value, with

Ripon, and from the great wis¬
dom and deep
religious fervor of

give

in

fact

the

|
determih

in the and' weighing
the foregoing a*
$60,000. The New York well as other factors, your Boarc
Trust Company offered to con- of
Directors
decided
that
the
tribute to these expenses $35,000, Chemical proposal was in the bes
sume

but1 also

In a letter under date of March
15 to the* stockholders of the Con
tinental Bank & Trust Company

may

ing factor
was

1

important

amount of

consideration

other

In

tribution

ih

endeavor to gain
inspiration from
the band of the
"curious

ing Chief Executive,, if
they

^Another

prices on the Closing Date.
;
"In regard to expenses, Chemical's proposal contemplates, a con-

to

says

afforded protec-

Govern-, your Trust Company at 30 Broa*.
ment investments would be valStreetr and so'relieve the Contiued at the average of the bid and nental of
any contingent liabilit

now

As

stockholders

in

Rentschler-on
in

importance.

assets.

•

premium

Trust

of the Board of the National

death

York

in the New York Trust proposal
aggregate $1,300,000 over the appraised value of recorded book

made, the
by

received

ascertainable."

two

Board

the

of

foew

The

pay

proposals the letter to the

continental

City Bank, and the other appoint¬
ments at the same time, appeared
in our March 11 issue,
page 1118;

months hence

seven

me; two

the

York

man

be

.hoped will be the fore-runner of
.a
Republican chosen as the head
.of, the

definitely

same

Bank

$200,000.

Company also offered to
for permanent fixtures up to,
but not over $50,000., These items

Trust

esti-t

contingencies; not

are

tion under-the Chemical
proposal
which could not be measured i ^
dollars. Assurance to stockholders '

asked market

-of

cause

Company.
Reference to the ap¬
pointment of Mr. Brady as Chair¬

Congress,
is

to
the

meeting, William Gage

City

of

of

tent

proposal.

to toe fact that the

National

Board

freedom-loving peopf

brought again into
majority - Republican

be

the

was

Democratic experi

be

now

that will

Brady, Jr., who was on March 9
appointed to the Chairmanship of

weighing

of Repub¬
merits

and

the

—

.has

—

td

approximately $25 per share.
It
is added that "this estimate is, of
course/ subject to adjustment be¬

of

late Gordon S
the.

can

basis

stockholders

-

Company,

,

by the New York

the

on

V

-

as

the other hand, offered a premium of $1,250,000. The value; of to the greatest
extent'possible o V
furniture and equipment: is - in-, a
guaranteed liquidating value for
eluded in this amount to the ex- said portfolio was of
the utmos.

Continental's shareholders, as
result of the acceptance of the
offer of the Chemical:
Bank, is

Rentschler. At
,

made

/

up

be paid for said portfolio is to be
made at a date in the future,'the

aggregate $1,390,appraisal value of

on

a

Trust

succeed

of

bearable.

Board

been

the

"The New York Trust

the

of

y

that

amount

elected

.Company

dollars,;

v

mates that

of

York;

Chairman

by

hundred

states

was

;

of

Bank

City

the people of the
United
with a debt increased

the Continental

26, 1948, this portmarket deprecia-

recorded book assets.

April 12

on

Trust Company./The letter of the
directors of the/Continental Bank

National

.New

saddled

nearly

of

/

had also

proposal

ge s s

Executive

the

;

have

States

t

Committee

adminis¬

which

xl

Chairman,

,

terrupted by three Democratic administrations—one of' which was
r.

meet

the-Chemicar Bank & Trust" Com-*
March 10, iW* pany/ i As previously
noted, on
,'/'R a n d o 1 ph' page -1012 of oeur March 4
issue, a

there has been fostered
the great¬
est material and
spiritual progress
enjoyed by any peoples of
any
government, of all time, only in¬

and

to

are

on

hymn singing, on,
through the Republican adminis¬
trations of
Lincoln, and succeed¬
ing
Republican administrations

able

holders

An
CSllfA
to rrrtfo on the sale flf its assets to
tO
vote
of its

City

Farmers Trust Company-of
York held

New

--7

r^Utr Ifa

the

of

the'

of

v

Directors

in said portfolio can
well as down, but your
Board felt that in a transaction of
the type herein involved, where
the determination of the
price to
go

a

proposal
over

1948, the depreciation in price

ment Bonds

amortized
costs of
These items in Chemi-

$613,000.
cal's

Board

Feb.

showed

21

was $613,000.
It is recognized that
the market price of the Govern-

tion /against

CAPITALIZATIONS

by de¬

vout prayer and

On

folio

second

inaugural—to
the preservation
of the
Union, the
freeing of the slaves, and, immor¬

tered,

Bankers

and

OFFICERS, ETC

REVISED

on

the Closing Date should be higher
than such book value, they will
then pay for the portfolio at mar-

CONSOLIDATIONS

unfathdm-

able

(1225)

book value, with the further
vision that if the market value

bometimes shining
gloriously and!

new'

CHRONICLE

the

.

tality.

FINANCIAL

in

quiet
Springfield.
Whether he knew
it,, or. not, his
road was J, clear, at
last.
It ran.

and

&

Ivlii.l

.J

'

Aj

it

-

*

-

*

^

I

^

.

•

.1

•

*

'

Thursday, March 18,

-

FINANCIAL CHRONICLE: ■ vr*

&

THE COMMERCIAL

(1226)

22

depend upon our
1

crast—all must join forces td

staggering recession, amounting to a major de¬
pression, is overdue, Mr. Babson holds it will not come in 1948.
Expects only a 5% decline in business in 1948, and points out,
since greater values exist in stock market than in any other field,
stock prices may even rise this summer.

cure

a

,

following the
"Babson-

upward.

you

been

chart,"
have

the

seen

business
set' all

kinds

of

In

the

of

Law

and

as

costs.

which

my

be

forecast

Babson

I

pfiees is

slide. Even if the remarkable rate

activity registered

of
not

1947, is

in

entirely duplicated this year,
average

ume.

/ "

,

.

;

will move
..high level.VI

power

along, at. a .very
that the national
,

forecast

estimated

billions

income

equal the $190
for 1947. The

for 1948 will about

individual tax bill may be some¬

what
eral

lower.

picture

Therefore, the gen¬

is

should

belows
well

suffer

above

Whether

wholesale

but

•

t

Commodity Prices

commodity

in

the

major

futures

market

marked

the

would

ible

on

may

commodity
well

have

turning point; but.it

be unwise to be too inflex¬

this score.

A serious crop

the

of

This daring

Russian

pene¬

English-speaking

idealistic

democratic

Stocks

merely

as an

but what has
statesmanship so car

dream,

alliance, the
effec¬

be

would

menace

combined

The

and

resources

political power of such a combi¬
nation would not only deter fur^

penetration but it
influence the waver¬
democracies to
present a
Russian

ther

would

ing

also

communistic in¬
virgin re¬
Canada, Africa, Aus¬

front

sterner

of

sources

to

vast

The

filtration.

India could then be
systematically developed by joint
U. S.-British capital, the economic
tralia,

and

of which could

consequences

conception has hith¬

erto been considered

lead

unparalleled era of world¬
wide prosperity and. foreign trade
activity.
"
1
to

an

.

.

the week the external
of the bond market was

During

offered

Nations

year.

.

orful,

•

Bacon in San Francisco
(Special

SAN
Kenneth

prices.

world will

the
to

for

us

.

help.

associated

become

has

Street,

& Co., 256

Montgom¬

of

member

the-San

and Los Angeles

Francisco

Ex¬

Stock

Mr. Geissler has been
active, as-an individual
broker.

of

peoples

Prior thereto he

continue to look
The weak will

was

with Irving

Lundborg & Co.

,

is

only

too

clear that

global idealistic attempts to
achieve world unity and economic

these

offer to sell

;' \

'

'-C

•

'•'

-

-

'

in

consequence

It is obvious

that

an

l" V

entirely

approach to the solution oi
the
democratic world's political
and economic problem is both es¬
sential and overdue. The belated
efforts
to
organize" the United

constructive

States of Europe are

fully adequate to meet

but are not

gravity of the present situa¬
however,. U. S. and Brit¬
ish statesmanship would comple¬
ment this preliminary action by
the * establishment
of a forma
the-

tion.'. If,

Staff of
Co., 25 Broad

Hirsch &

New

York

New

York

nounce

Street,

City;", members of the
Stock

Exchange, an¬
has re¬

that Arnold Denby

joined the firm in its ,main office
as a registered representative and
market

technician.' 'He:" has

cently been associated

re¬

with Kalb,

Voorhis & Co.

*vf' VVV.1:

•

...

**•'

•, '

^

'7V-.

' *. ;

San Francisco S. E.

SI0,000,000

Louisiana Power &

measures.

fresh

or a

AV

delay

fore

.

national dissention.

solicitation of an ojfer to buy these securities.
offering is made only by the Prospectus,

an

■

hungry

Stock

Francisco

San

with Bacon
ery

Chronicf>

Financial

than ever Exchange:

dominant

The

before.

The

to

FRANCISCO,' CALIF.—
D. Geissler, member of

change,

significant, more col¬

more

in presenting the bill ber
parliament can doubtlessly be
ascribed to indecision with regard
to its precise form and also to the
progress are not only fore-doomed
to dismal failure but also provide prior claims of the legislation in
with
the
austerity
the germinating grqund for inter¬ connection
it

Thus

Kenneth Geissler Wi

At any time

more

come

:
•

of

peoples of the world.

living
should

During 1948 America's role in
international drama will be¬

The
\,v^

in face pf the unmis¬

menace

to successful fruition.
An¬
proposal
on
the highest

union

the

v.'•

Europe

plane of bold statemanship is the

the

This announcement is not

:

other

International Outlook

prices' has

yet fully run its course, remains
to
be seen. The
recent drastic
slump

way

.

sulting in lower bond

inflation spiral in

the

of

States

tration, appears to be well on the

will

lective.

than 20%
which are

more

levels

parity.'

Wholesale

losses,

some

fall

not

current

this

for

ever,

buying power. Farm incomes may

possibly

takable

naturally be very se¬
in the stock
market there are certain groups
that have a more attractive out¬
look
than others.
In the bond
market
the
long-term trend is
towards "rising interest rates' re¬

plentiful

of

one

United

which now,

prices.

.

a

Russian

tively countered.

John I. Dunbar Staff

1-

.

Purchasing

cated

economic

and

tary

Richard Eckert Joins

decline should be
small.
In fact, we expect a 5%
decline in 1948 business volume
from the extremely high 1947 vol¬
the

associ¬

Cohu & Co., 634 South

with

to point1 out
the lessons of history. As a reme¬
dial measure he has long advo¬
war

mill —
Commonwealth mili¬

TT S.-British
U. C it? vif t oli

in its place?
The United section
—practicable only in a moderately active as a result of
world completely united and free continued Savings Banks' demand
from the many defects of human for
Canadian National Railway
nature—which has merely served issues. The internals after earlier
V
T. Donald O'Neil
f '
as the sounding-board for subver¬
strength
weakened slightly in
Spring Street.
He was formerly sive propaganda and the heated sympathy with a relapse in free
manager of the
trading depart¬ airing of international grievances. funds. The Canadian stock mar¬
many others will reach the wage
ment
for Morgan
& Co.
Prior The Bretton Woods schemes for kets rather-i exceptionally antici¬
reopening phase. Before the third thereto he was with M. H. Lewis currency
stabilization and the pated the decline in New York,
quarter of 1948 is reached, organ¬ & Co. and O'Neil & Co.
:1 7 #>3 promotion of world trade which but domestic as well as interna¬
ized workers of the nation may
have failed lamentably to attain
tional considerations provided the
have added a little more to their
any
of their avowed objectives. cause. The feared shelving of the
take-home pay—but
very^ little
The
Geneva
and Havana trade cost-aid bill for the relief of the
and in most industries nothing.
and tariff conventions, which so gold-mining
industry led to a
Inflation has passed the stock
far have resulted in agreements in sharp decline in the golds which
market by.
Greater value may
principle only. For example the previously had given every prom¬
(Special to The Financial Chronicle)
exist dollar-for-dollar in the stock
of the Geneva ise of leading a rally of the mar¬
LOS
ANGELES, •* CALIF.— implementation
market today than in any other Richard E. Eckert has become as¬ agreement in theory permits the ket in general. These fears, howr
part
of our economic system. sociated with John B. Dunbar & freeer flow of Canadian export: ever, may very well prove to be
to this country.
In actual prac¬ without foundation as the Federal
Thus, it would be only natural to Co., 634 South Spring Street.
He
expect that stocks would turn up was formerly with Dean Witter & tice, however, the operation of the Government had recently given
U. S. Customs Act almost com¬ serious consideration to the indus¬
during the summer or fall, due Co. and prior thereto was an of¬
to
purchases of these desiring ficer of First California Co., Inc. pletely nullifies the beneficial im¬ try's demands -for upward revi¬
sion of the gold subsidies.
The
income.
The stock market, how¬
plications of the Geneva pact.

of such a toboggan

the beginning

ated

primary
The first is
to obtain a third round of wage
increases to
offset advances in
the
cost
of living.
During the
next few months a great many
union contracts will expire and

the break

if

asked

often

in stock and commodity

kept in mind.

aims

-v

am

Donald O'Neil has become

Tl ously since the

—

Labor leaders have two

•

This, however, will not come

1948.

These major factors

Labor ant!

ry

gering recession—even amounting
to a major depression—is over¬
in

Chronicle)

CALIF.

theo¬

has for 40
A y ears
been
based it would appear that a stag¬

due.

Financial

unlikely to

are

advancing

of

result

a

Reaction upon

■

The

to

ANGELES,

drop, and probably will advance
further, should labor make a suc¬
cessful bid for increased wages

cordance with

Action

costs

Production

ac¬

inflated

despite

power,

rec¬

new

ords.

Rosrer

(Special

LOS

haSjCon-

stantly demonstrated the faculty
of inspired vision in viewing fu¬
ture events, has sought continu¬

level, at high wages, also spells
continued large public purchasing

curve

V>ioti-vvTr

/-v-P

student of history-

great

Winston Churchill—who

Cohu & Go, in L. A.

employment

domestic

Record

you

aggressive dicta¬

...

cturlant

cfron!'

That

•

.

harmony,

bulwark

failure, plus a third round of
wage , increases
could result in
commodity prices again turning

If

ever.

have

Throughout history the great advantage of the

will it serve as a
torships has always been the inability and unwillingness,of the free
against communism
democracies to unite during the periods of so-called peace. This glar¬
either abroad or at home,
h- ■ . •>
ing weakness has always been successfully exploited by the aspirants
to world domination.
■'
'
vA"'
and

for-*;

continue

By WILLIAM J. McKAY

long
health

as

■

Naturally, such feverish output cannot

above normal.

31%

robust

Only

economy.

se¬

vigorous^

a

this nation enjoys good

as

examine the prospects

us

maintain

and

healthy

for general business during the
remairider of 1948.
In any sucli consideration, it is necessary to real¬
ize that the average of business volume throughout the country is a
Let

Republicans and Ddmo-

trialists,

By ROGER W. BABSON

Though stating

strength. Man*

agement and labor, radicals and
conservatives, farmers and indus¬

The Recent

-i

•

>1948

CANADIAN BONDS

Changes Trading Hours
SAN

Light Company

GOVERNMENT

The

FRANCISCO,
CALIF.—
Francisco
Stock Ex¬

San

announced that upon the
adoption of Daylight Saving Tim'e
in
the
State
of California
on

change
-

First Mortgage

Bonds, VA% Series due 1978

PROVINCIAL

MUNICIPAL
Dated March

Due March

1, 1948

1, 1978

March

1948, the trading ses¬
notice will open
a.m.
There will be no

14,

sion until further

CORPORATION

at

8:00

change in the closing of

CANADIAN STOCKS
The

Prospectus

may

be obtained in

any

2:30 p.m.

daily and 11:00 a.m. on

Price 100.485% and accrued interest

Saturday.

Toronto Bond Traders
Hold Annual Dinner

State in which this announcement is circulated from only such

of the undersigned and other dealers as may lawfully ojfer these securities in such State.

TORONTO,

A. E. AMES & CO.
HALSEY, STUART &, CO. Inc.

ciation held

ONT.,

its annual dinner on

at

the

HORNBLOWER

&, WEEKS
='•

'

OflS &. CO.

'
•'"T

GREGORY & SON

'

(INCORPORATED)

BURR &. COMPANY, INC.
.

•-\V

'

V,

V

v,

■

,

TWO WALL STREET
NEW YORK 5,

N. Y.

HIRSCH &. CO.

March

12

Hotel.

INCORPORATED

C." Bruce

March 17,

1948




...

NY-1-1 045

of Com¬

addressed the gathering on
"Private Enterprise as I See It."

merce,

The
4-2400

King Edward
Hill, President

of the Canadian' Chamber

INCORPORATED

WORTH

CANADA—

Bond Traders Asso¬

The Toronto

were

Association's
most

being made up

prospectus.

invitations

unusual and amusing,

in the form of a

Volume 167

THE COMMERCIAL

Number 4682

"In

"The world is in the

midst of

CHRONICLE

businessmen, like many other
groups, did well statistically dur¬

by propaganda, misunderstanding, anger
and, fear. At no time has it been so important for
cool judgment, for an appeal to one's self for a
proper sense of justice, for a real- ..."
ization of conditions, material,

the

ing

no

years but that the
prosperity they enjoyed

other

better

nor

economic

Speaking before

loans,

groups."

s u

Francis I. die Poitfi & Co.

"Virtually everything we do
in connection with our foreign
relations
is. misunderstood by.

Tp Admit B. L Hewifl

some

motives

on

our

passionate
ous

in

suspected, our good
are condemned, and
side are apt to grow

our

fearful, overzealpassions or failing in
or

y

of

rt gage

savings bank¬
to

ers

I. du Pont & Co., 1 Wall

main¬

tain the flex¬

ibility of their
position
b y
investments

partnership as of April 1.
Mr.
Hewitt has been with the Lrm for

in government

bonds.

time as manager of the syn¬

some

1

p p

o

money,
and
he a d vised

Street, New York City, members
of the New York Stock Exchange,
will admit Charles L. Hewitt to

;

are

intentions
we

Our most generous

abroad.

m

I Francis

Regional

Savings and Mortgage

esta.te<§>—^—.
are increasing, and adopt a more

despite
.plentiful

the

political and spiritual, in other
parts, of,'the world, 7
77;^y7!

Eastern

'■

than for

worse

the

Conference of the American Bankers
Association in New York City
March 15, Dr. Marcus Nadler, Professor of Finance
of New York
University, urged bankers to exercise restraint and caution in making
real
on

war

artificial
was

23

Realty Values Inflated: Nadler
■

■that

inflamed

(1227)

this year of

political cam¬
paigns if votes are sought by a
rabble-rousing campaign against
ibusiness, it is well to remember

great crisis,

a

FINANCIAL

&

"Experience

,

dicate department.

shown

has

Dr. Marcus Nadler

liberal .attitude when prices are
declining and the cost of con¬
struction is decreasing; There is
no
shortage of mortgage money
at the present time, and none is
likely to develop in the foresee¬
able future.

Institutional lenders

have

merely become more careful.
"Although many savings banks
are
concerned over
their longterm government obligations, fear¬
ing that some time in the future
a material break
may occur, this
fear is not warranted.

authorities

tary

The mone¬

be

to

seem

set

,

that

fears.

our

W. Nelsen & Jas.

"In the midst of this turmoil, 7.

complicated by the distractions of an election cam¬
paign, it is important to express one's feelings on the
situation in moderate terms.
We should, I think,

Page

Wlfii HaeinaM

banks

than

(Special

i

to

SAN
Walter

The

Financial

Nelson

ChroniceI

CALIF.—

and

James

R.

Page have become associated with
Hannaford &

Not

only "in keeping with our sense of justice,"
but also in keeping with our sense of the practical¬

Street.

Talbot, 519 California

Mr. Nelson

investment

iown

Francisco.

Says High Earnings Represent Only "Statistical

Mr.

Page

in

-was

San
asso¬

ciated with Hill, Richards & Co.
and

Page, Hubbard & Asche.

•Boiiars"
(Special

7 LOS
firm

Co.

Unusual earnings of American industry are shown in "statistical
which must be discounted by about half to present

dollars"

a

true

•picture, Henry H. Heimann, Executive Manager of the National Asso¬
ciation of Credit Men, asserts in his "Monthly Business Review" for
March.

<♦>

Man-

Heimann

maintains,
•

that

sues.

borrow

learns

soon

is

it

it

its

to

a.

to

bu.y new ma¬
chinery or
equipment or
t

add

i t

o

s

Henrv

H.

Heimann

man-p o w e r.

the head of

as

business

due

its
analysis of
the
much
publicized
"unusual
earnings" by industry.
a

it

Financial

ANGELES,

name

has

told

careful

"It may be news to the 'busi¬
ness-smearing' evangelists that to
do the job that business faced in

The

Financial

the

realization

billions

its

of

announcement

,

$10 billion worth of
bonds and market¬

of business

isn't

"After business discovered that

man

or

savings during the last years,
despite huge dollar totals, was in¬

costs

more

adequate for its needs,

buy food.

second shock.

-through

common

in

its

business

stock

distribu¬

The public wasn't too. keen
common stock investment

a

in business

at this time.

criticism

of

With all

business

fresh taxation assaults

and

realizes

woman

to

maintain

Government than it

eral

'

as

small, is

prices

policy would therefore in¬

dicate that
more

savings banks become

cautious

in

their

lending

operations while real estate prices

mortgages without first

considering

quality,

is not

and

amortization.

are

particularly

interested

fighting

the

forces

Through

the

adoption

servative

of

extent

this

help prevent
in

aim

a

prices. They
by

of

a

con¬

par¬

can

commodities

is

greater

does to

cious

investment

of

their

%
•-

Due March 1, 1978

local

the

and

was




Price 10139% and accrued interest

The

j

Prospectus may be obtained in my 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.

state

tax

bills, you will find that our
people are paying $7 billion more
in taxes than they pay for their
food.

Bureaucracy

high not alone in
but

increasingly

comes

very

its original cost

so

in its upkeep,

77
OTIS & CO.

HALSEY, STUART & CO. INC.
L. F.

RQTHSCHILD & CO.

(INCORPORATED)

March 11, 1948.

GREGORY & SON
INCORPORATED

THE ILLINOIS COMPANY

WM. E. POLLOCK

.

than

supply and, above all, by

3
,

savings

when the demand for many

now,

First Mortgage Bonds, Series C due 1978
'

achieve

stimulating

Diego Gas & Electric Company
?7

to some

further in¬
can

offer to sell or a solicitation of an offer to buy these securities,
offering is made only by the Prospectus,

,

in.

inflation.

policy,

investment

ticularly in 1948, they

crease

carefully

Savings banks

an

The

-

Dated March 1,1948

to
no¬

soundness,

$10,000,000

San

cash

assets,

it

Fed¬

If in addition you take

account

into

that

the

perhaps the
and
of course it is the nearest
right. So business was
forced to get three-quarters of all thing to perpetuity mankind has
of the money it needed by boryet discovered.
" - • f

.public
*

it got its

It found it couldn't

an-interest

the

into

other

The

its

of

well

for

Sound

a

mirage that may vanish with the
setting business sun.

reserves that business
believe this partner's share would
during the war and' in be much less if business used
the
succeeding two years were thought and planning in demon¬
in adequate to do its peacetime
strating to the people working in
jK>b, so' business has had to borrow its shops just, how they were be¬
7 heavily to carry through these im¬ ing overcharged for government
service. I doubt that the average
provements.

about

as

housing has been met
of real estate begin
Too liberal lending by
institutional mortgagees not only
stimulates the upward swing of
real estate prices but also con¬
tributes to the inflationary forces
in
the
construction
industry.

Heithier Russell Now

up

tions.

in

of

"If it isn't enough to make you
securities,"' ; Mr.
Heimann stop, look, and listen, there is al¬
says.
"It also may be a shock to ways your insatiable, non-produc¬
know that business, the favorite
tive, absentee partner, the govern¬
"whipping boy' of some politicians, ment, which seems to be dissatis¬
is now expending some $20 bil¬ fied with a 30 to 40 % royalty on
lion a year to equip, -modernize your labors and is now -clamoring
and reconstruct its productive fa¬ for a larger share.
Of course I

"

mand
and

able

sell

invested

on

mortgagees must adopt a careful
policy. Otherwise they may suf¬
fer losses when the pent-up de¬

begin to wonder whether the sta¬

built

also

to decline.

This

have

could almost at any

converted

accounts and notes receivable, you
tistical wealth

and postwar era
thing it had to do to
finance its operations was to sell

cilities.

but

by the great scarcity
dwellings, it is evident that

of

Chronicle)

PASADENA, CALIF.—Kenneth
M. Payne, Jr. is with Pacific Com¬
pany
o{ California, First Trust
Building.

high break-even point,
begin to realize management
has no easy job ahead. If you add
to the effect of any drop in price
on
its approximately $42 billion
of inventory and possible loss on

first

than

be

you

conversion

government

months

its present ex¬

the

more

investments

determined

the

time—and

few

construction

houses, large

Company Adds

an.

the

.

the

been

to

last

assets which

be

continued,

of' their

&( Co.

(Special

"The

tably sound mortgages.
So long,
however, as real estate prices are
as inflated as at present, it would
industry
and
business activity in general. Since seem inadvisable for savings banks
real estate prices are highly in¬ to dispose of their long-term gov¬
flated
and
the' value of many ernment obligations and rush into

CALIF.—The

of Chester L. Noble &

Pacific

this policy. Such a development,
however, is not to be anticipated.
Evidence is accumulating that the
inflationary boom is gradually
coming to an end.

time

"can have a pro¬
found effect not only on the safety

a

in

volume of bank loans could alter

ler

Chroniclev

changed to Noble,
Thejre has been no
change in the partners of the firm.
Tulk

panied by a sharp increase in the

Dr.

of the largest, ceedingly

one

organizations

members in

for

The

whole,
therefore, j it With Ted Weiner & Co.
(Roecial to The Financial Chronicle)
blessing that business did
SAN
share generously in the prosper¬
FRANCISCO,
CALIF.—
ity, for had it not done so it could Heithier B. Russell has become
never meet its responsibilities to¬
associated with Ted Weiner & Co.,
day.
Indeed when you think of 41 Sutter Street. In the past he
the effect on earnings of a decline was with Bankamerica Company
in business—a decline inevitably and Mason Bros.
'
"On

seems

plant,

attempts

tVse high

hadn't «been
accounting for
out
in dividends 70% of what it made,

small addition

.

during

years

threatened

whenever

starts

if

added taxes if it failed to pay

•fifty-cent dol¬
lars

less

earning

op¬

with

erating

banks, insurance
through bond is¬
Business might have had to

owing
from
omprnies or

Mr.

agement,

—

to

received

on

savings,"

ings banks and other institutional
investors in mortgages," Dr. Nad¬

Now Noble, Tulk & Co.

Henry H. Heimann, Executive Manager of National Association of
Credit Men, warns current profits on dollar basis, represent only
7 >■ half prewar value.
Scores attacks on "unusual earnings."

convenience

and

return

on,

the larger portion of the demonstrated clearly that only are
the disposal of savings government bonds the
highest type
banks was invested in government of security available but also that
obligations. Now a shift, is taking they enjoy a marketability un¬
place into mortgages; and. to a rivalled by any other type of se¬
lesser extent, into high-grade cor¬ curity. Savings banks can there¬
porate obligations.
fore
'
look upon their long-term
"The investment policies of sav¬ government obligations as liquid

was

business

long-term government obligations,
and only a further serious increase
in prices of commodities accom¬

the war,
funds at

formerly
with
First
California
Company
and prior thereto conducted his

ities of life.

the

savings

maintaining the 21/i% rate

Nadler said.
"This attitude of depositors should
determine the investment policies
of
savings
banks.
The
banks
should be interested primarily in
investment in high-grade securi¬
ties and sound mortgages.
During

their

FRANCISCO,
A.

in

on

interested in safe¬

availability,

ty,

*

6 TaSBiot

calmly and prayerfully appraise the facts, so nearly
as we
can
judge them to be the facts, qnd then
search for a firm conclusion in keeping with our
sense of justice."-—Secretary of State Marshall.

are more

deposi¬

tors in

action because of

C. Marshall

George

& CO., INC.

a

the

judi¬
funds.

•

24

THE COMMERCIAL

(1228)

Thursday, March 18, 1948

CHRONICLE

FINANCIAL

&

the property needs
post-reorganization years
considerably modified.
When
these
preferred stocks
were
originally set up they at¬
tracted a considerable following
among investors seeking continu¬
ity of income and at least a rea¬
sonable degree of price stability,
expenditures

in

the

would

The status of the securities of those roads

that have undergone

was further worsened last week. Directors of Chicago,
Milwaukee, St. Paul & Pacific declared a dividend of $4 a share on
the 5% preferred stock instead of the prescribed rate of $5. This divi¬
dend is payable out of earnings t>—————
__
for the year 1947.
Last year a been too
conservative.
Inv any
single dividend of $2.50 a share event, it was generally considered
was
paid out of 1946 earnings, that with all of the safeguards
following payment early in the that had been set up througn cap¬
year of $5.00 from 1945 earnings. ital funds and sinking funds the

reorganization

initial

An

dividend

of

$5.00

-

a

share had'been paid in May
of earnings

out

1944

1944.

the effective date of the

was

reorganization
The erratic

1944

for

for

1946
Jan. 1,

plan.

timing of dividends

and

1945

unavoid¬

was

able

due to delays between
plah'c; effective date and its

summation

delivery

ana

securities.

new

The

of

the

payment of
out of
1946

$2.50 a share
earnings was perhaps

only
on

the
con¬

stockholders could look forward to

portion of the final
reported net income. This was
particularly true inasmuch as the
major

dividend, to make the payment
on
any odd date that suits their
fancy and in any number of ins alments.
They seem not to rea¬
,

lize,

consis¬

It

condition of the plant.

that after

so many years

felt

was

of heavy

assume even a

Middle

dates.

regular

same

Central

can

been

Earnings
fund,

last

in

were

Sound Power & Light shareholders ;
company suffers from subsidies and special privileges given to *
public power. Says there is no such thing as fair government
''YY
' ' competition.
\;yYv;'-V.'/

'

dend

requirement, amounting to
$5.93 a share. Also, the company

.

in

is

a

strong financial position
already made consider¬

McLaughlin, President of the Puget Sound Power & Light
able progress in reducing the con¬ Co., in a heart to heart talk with.his stockholders, contained in the
1947 annual report of the company, deplores the effect of what he
servative debt structure imposed
in
the
reorganization; through calls "unfair competition established by the government." Said Mr.
McLaughlin:
purchase and retirement of in¬
come bonds.
v;.:;;V \''Y V;Y~
Jv"To my way the prices of the materials and
of thinking it
upplies which it buys average
Failure to pay the full pre¬
;bout 75% higher than those of
is not proper
ferred dividend has more
has

and

a

Frank

for manage-

ing implications for St. Paul than

iment to

,t has for other of the reorganized
carriers.
No dividends may be
declared

or

paid

the

on

pictures for
the stock¬

common

stock unless the full annual divi¬

ored

col¬

holders

dend

of

$5.00

a

share

shall

have

been

1940.

paint

with

/

"It

is

Y'Y/ :;:p

■

.

important for,

very

fully appreciate that Puget is
faced with difficulties and uncer¬
tainties due to extensive subsi¬
to

dized

public

ordinary

either per¬

with

sonal

does rot have 1o cope.

ble, and it has been pointed to

simism

weakness in

a

ganizations,'

is

holders have
of

a

expressing

their

and

is

in

trust.

This

Dec.

voting

wishful

means

false

to

may be terminated
unanimous action of

by

dividend

is

paid

filed

reorganizations

to

set

up

were

conservative

the

protection

the

,

Before

Special
Amort.

$1.97

$1.29

quoted in the over-counter market
at about 14 V2.

1948

2.11

1.36

1949

2.21

1.41

electricity

1950

2.29

1.45

and

1951

2.50

2.13

1952

2.83

&

distributed"

"when

L.

The Company serves
to
24

at

communities at

318

and

wholesale

wholesale

retail

sells at

also

and

utilities

other

to

'

Earnings for 1947, so far as
indicated by the September fig¬

About 90% of

rural cooperatives.

electric, 8% gas and
miscellaneous. Capital struc¬
as
of Feb. 28, 1947 was ap¬

revenues

2%
ture

are

ing,^ and by the' setting
funds. These

up

funds'

which

many

interests

regardless

and

officers.-

is

It

your

money

which is at stake and we

would

be

traitorous

to

our

trus¬

teeship if-we did not do the things
which are necessary to best pre¬

of
are

serve your

income before

pi J *:•,
"When

people, includ¬

to

ing some security analysts, - who
believed that the Commission had

\

investment.;

;

1 Y;-'.-

.

Basic Problems V ■ r
a

YY

utility is not permitted

effectively;and

\

efficiently

June

30,

corresponding
Puget's funda¬
are
political

inception in dis¬

national:
have

and; state

beenenacted

period of years,; giving
subsidies and special

substantial

prvileges to public power." /;
"There is no such) thing as

of di¬

the personal ideologies

For instance

ended

the

their

a

rectors

,

were

have

cludes Mr.

%

to

3V4S

bonds

provide for construction funds

($3,000,000 first 3Vss due 1978
and $3 000.000 of 4.80% preferred).
This
would
appear
to make it

2% .Serial Stock___

$30.0
3.&;

50%

41/2% Pref. Stock._

10.0

17%

slightly difficult, at least for the
being, to earn $1.12 a share

16.4

27%

after

1971

due

Com. Stk.

shs.)

6%

(1,280,925

time

& surplus__

it
Totals

100%

$59.7

——

lic

Service

out

a

a

Commission

plant amortization. However,
as
though the present

looks

market price

memorandum on
the
company
prepared
by
Ira
Haupt & Co., the Wisconsin Pub¬
According to

pectation

is based on the ex¬

of

dividend

$1.12

a

rate, which would return a yield

with new-

of 7%%—about in line

"worked

issue

plan whereby the Company

yields.

News About Banks and Bankers
(Continued from page 21)
be

,

'■■■

j \
fair

more

-

than 50% above the mar-

;..;Y

4

On

March

4

McLaughlin. ; "Because

interbank

world's

most

modern wire communications sys¬

private

established

that

this

I

feel

facility

new

.will result in a closer relationship

tem linked 20 banks in 16 cities in
a

communication.

confident

;; Y

*

the

15

nationwide " network
by Bankers Trust

among

all of us and enable us to

serve

both our customers and each,

other

more

efficiently.

With the

pressing of a button I send this
Company, New Y.ork, which util¬
message to you with my warmest
izes
equipment
culminating ' 13
personal regards.'"
years of development by Western
Union engineers: According to the "'Mr. Colt was joined in the cere¬
announcement
from
the
trust monies and at the press inspection

streamlined to the point
push buttons re-route and
re-transmit me ssa gesi at- two

company,

where

competition,'Y con¬ switching centers in

government

has recently issued some
and preferred
stock

company
new

Millions

First mortgage

to be slightly below
the

appear

ures,

the official forecast. Moreover,

follows:

as

rates

difficulties

laws

their

high

domestic customers

for

averages

over

of

arriving at earnings available Tor
; tNe stock. "
;•'' /
' 4
vV
There

than

criminatory

serves

afforded

property
needs without additional financ¬

all deducted from

per

less

and

to; map out a program and
determine
a
policy; which best

rf additions and betterment funds
to take care of future

sinking

rate

8%

mental

proximately

•

kilowatt-hour was

age

After

Special

47% more and the aver¬

was

earn¬

greetings and welcome you into
use of Puget ket
price of your stock prevailing the family of banks that will use
customers for
this new and modern means 4of
just prior to these negotiations."

domestic

and

creditors try the creation

new

was

service.
annual

in the TVA area.

-

Further

1947,

of

result

months

12

the

vestment—to realistically and ob¬

periods.

on

definite

jectively appraise the company's
problems and its future outlook

common

normal

even

during

the

estimate of future

Amort.

problems of Puget

unprejudiced information and
facts so that they can intelligently
determine the value of their in-.

sonable assurance of earnings and
stocks

basic

Power's

.

and

capitalizations.
The Commission
repeatedly stressed the aim of
creating stock capitalizations
where they would be at least rea¬
dividends

average

dis¬

the

doing

responsibility of management to
be absolutely frank with its stock¬
holders—to give them unbiased

prefeired
for
three
successive
after Dec. 1, 1945.
supposed

of poor

the

from

"I conceive it to be the

years

Railroad

nor

on

shrink

"The

an

ings with the SEC, with the fol¬
lowing
estimated
results
per
share on the common stock:-

&

comparable situ¬

a

ation to that of Puget.

the good things and

dwell

agreeable.

the

on

is in

country

not

to

the voting trustees (an event dif¬
ficult to imagine) or if the full

$5,00

propriate but in fact misleading.
No
other electric utility in the

share wpre reported on
stock compared with

a

common

1947

utility

Therefore,

utility performance when-applied
to Puget are not in any way ap¬

are

to

the

yardsticks for judging

usual

the

impulse and desire of the average
individual is to be full of hope,

1, 1950. It

earlier

hopes.
natural

The

voting
runs

and

thinking

Frank McLaughlin

common
a

trust

to

nor

indulge in

disapproval.

All of the preferred

stock

pes¬

stockT

the

effective

deposited

as

or

reor¬

number of

that

no

mism

which

in
Ac¬

Year

competition

power

paid or provided for on the
preferred for the three immedi¬
ately preceding years, One trou¬

opti¬

you

Plant

$1.77, in the previous period.
Some
time
ago
the company

now

>

sweep¬

the

is

P.

Frank McLaughlin tells Puget

Y

of the divi¬

excess

has

West

dissolved, however,
distribution of Wisconsin

Preferred, the 7% Preferred and
to Middle* West Corp. Wisconsin

In Utilities

condone.

year, after a gen¬
additions and betteiment

erous

the

Light common stock
(virtually the sole asset of North
West) will now be made to pub¬
lic holders of the 7% Prior Lien

dividend, however, is morsTdiffior

$1.87

final plan was

ordered

and

the grounds that net income was

understand

North

Court.

Power

excusable

The latest failure lo declare the full

to

a

approved by the SEC and a Fed¬
eral

"

Utilities,

West

litigation proved

before

necessary

!

only nominally above that level.

cult

South

&

and considerable

'Special

a

Income'

quisition Adjustments and Plant
Adjustments until these items are
fully amortized." In the 12 months
ended Sept. 30, 1947 earnings of

the
of

"subordination,"

of

to

Net

amortize

to

order

stock. This raised the

in the recapitalization

as

50%
of

Reservation

well as

as

and

earnings

substantial

owned

preferred

common

paid on

;

,

of

question

when, and

if, regular dividends are

West

amounts
the'

West

through

Company

small measure

stature

investment

of

stocks

preferred

these

only

had

themselves

Middle

perhaps they do not care,

or

that

tently stressed the money spent
during trusteeship on the proper¬
ties and the* excellent
physical

railroads

Wisconsin Power & Light

Corporation controls Wisconsin Power & Light
the sub-holding company, North West Utilities
Company. Dissolution of the latter company was necessary in order
to complete the liquidation o~f the Middle West System under the
disappointed on both accounts. Utility
Holding
Company
Act.V
With some notable exceptions the This proved to be difficult, since would be permitted to earn 6%
directors of the newly reorganized North West had three classes of on the par value of its common
railroads
have
apparently felt preferred stock outstanding with stock, but any balance over this
free, .even when paying the full substantial dividend arrears, and amount would be divided 50% to

speculative at¬
tributes of a second grade com¬
mon stock. They have been sorely
the

than

rather

receiving in the form of dividends
the

be

and

York

New

Chicago to any other terminal

by Charles E. Da vies; Assistant
Vice-President, in charge of Pri¬
Wire
Services; Alexander

vate

Simon,> General* Manager
a n d
lower Manhat¬

Trescott A. Buell,

Superintendent, Western
The new'system, devel¬
manual handling after the original oped and installed by Western
30 cents per dollar .of gross rev* message has been transmitted by Union;- has been under construc¬
tion for the past six months and
enue.; private and public, power a teleprinter "sender-receiver"; at
cannot competitively co-exist. Ml the point of origin. In part the an¬ with it goes the establishment ot
a Chicago wire center of Bankers
is unrealistic; to talk about pre¬ nouncement also said:
Trust Company.
The latter twill
"Thei system, comprisingrnore
serving. private enterprise* in the
continue- to maintain its regular
than 5,000 circuit miles,; officially*,
electric" power field in a terri¬
cable department. The new - wire
placed in .operation on March 15;
tory where government -owned when SSloan Colt, President bf system is under the direction of
properties are operating at cpst, Bankers YTrUst * Company,: sent; the Banking Department. Y Y . 5Y
*Y. * YY
;
which cost has been artificially message:/Number 1/ to the heads; ^YYYYY''i:Y%
On March 17 plans for a merger
jreduced by subsidiesi and- where* of the^lO-other banks throughout
public power's large subsidies
special privileges, which; in
the case ofPuget amount to about

of

and

point in the nation, the new sys¬
tem does not require additional

tan

Union.

-

function because of unfair competion

mmqm

as

Guaranteed Stocks

established -by

is the

there

case

government,

with this company,

inevitably

results

serious

-

'\'r

consequences

to stockholders, em¬

of the Bank of New York and the

ployees and Customers alike.' Ex¬

Special Securities

all sorts: of.special, privileges and

tensive

preferences

subsidized

public

competition; has the effect of
ducing

earning

pany

capacity

to

maintain

new

New York 4, N. Y.
Telephone BOwling Green 9-6400

under

the

economy

existing

where the

foot

of

business

sta¬

inflationary

which




the company presently pays and

public;

the

'.co««Hrfiry^;^n sendingthe first

message,

"Mr! Colt pressed; buttons

the

cago

for. switching to western and

of

government are used to force

message

proprietary

message

the

expansion of its

business and
about
tax

bit by bit. to bring

the eventual demise

paying competitors."

of its

which

other

'and

directed

follows:;;-

"

*

Y';

y.

•

;.Y

"Officially opening our private
wire

system

I

send

you

will

-

vote

on

the

April 15.
John

of

the

proposal

Y'

.

C.' Traphagen,

Bank

of

New

on

President
York,

and

Colt John I. Downey, President of The

by Mr.
y-

were

the

to eastern terminals.. The

dispatched

Fifth Avenue Bank of New York

ratified by the respective
Chi-; boards of trustees and directors.
Stockholders of the two banks

message to

snowball> starts southwestern.- points,

rolling and the weight and power buttons here

1-1063
.

accorded

in the door in any field

its

capital.

wages

are

Once - government gets! which routed the

of

The situation becomes more acute

98 Broad Street

agencies;

com¬

financial

bility and to attract
CPAKAHTEED IAIHQAD STOCKS-BONDS

re¬

and

it difficult for - the

making

Teletype NY

power

cordial

Fifth Avenue Bank, made the

fol¬

lowing joint statement on March
10 with

the approval

of their re-

Volume 167

spective

THE COMMERCIAL

Number 4682

Boards

of

Trustees

sideration

Exports, Imports and Dollars

"A merger of the two banks has

tinformally agreed

The

upon.

York,

four

and

shares

of

Bank.

•nue

The

of

name

trade in 1948 may

York-Fifth

The

Board

of

Avenue

Trustees

be

composed of persons from the

re¬

Boards

of

Trustees

and

Directors. A formal merger agree¬
ment is being drafted and will be
submitted

within

the

few

next

days to the Boards of the two in¬
stitutions.

Holds unless we increase
entire foreign trade will deteriorate.

our

Upon approval it will

other business, depends upon two
basic factors—the need for the goods and the availability of money.
The first factor is very much in evidence.
There is an urgent need
throughout the world for our raw materials, industrial and farm
m a c hinery,3>
transportation This
has
certain
beneficial
« q
uipment, aspects. When a country is com¬
cons umers'
pelled to use its own gold and
International business, like any

and

dollars rather than use other peo¬

food stuffs.

to the stockholders of both bank,

and to the New York State Super¬

The

shortages

for

ways

intendent of Banks.

created

the

situation.

most

through

belfeved that this merger

"It is

York's

oldest

will

customers

be

both banks.
fices

in

of

midtown

heart

the

will

section

provide

offered

stitution.

and

personnel

m.

a.

not

and

certain

funds

devastated

of

for

our

of

The

DeCoursey

Fales,

President

of

before the

war

international busi¬

The Bank for Savings in the City
of New York, announces the ap¬

ness

pointment of William

eign nations purchased from

C. McCrea

Assistant Treasurer and Charles

F.

Chamberlain

Assistant

as

ices

Mr.

and

since

Chamberlain

1932

since

$

ft

J.

Gilpin,

1931.

.is

same

other business.

any

They sold
our

employ

as

the

on

and

used

goods and services.

They ex¬
panded their industries with their
own
capital and with American

formerly

private

Manager of the New York Clear¬

prewar

William

ing

died

House

New York

pin,

his

at

March

on

in

home

14.

Mr. Gil¬

native of this city, retired
1926,
after serving the Association for
49 years.
Entering the employ of
the Clearing House as a junior
clerk in 1877, he became assistant
manager in 1892 and manager in
1916.
At his death Mr. Gilpin was
87 years of age.
'
a

from the post as manager in

,

*

.

ft

%

V.

,

•'.f'-:'

''

The liquidation of the affairs of
the World Exchange Bank of New

has

York
New

been

completed b,y the
Superintendent
of

York

it

Banks,
March

3

the
/.•' sit.

of

•

Mr.

Queens

of
r

to

$7.1 billion

was

In

amounted

1947
to

$8.3 billion

a

billion.

total exports

$19.6 billion.

was

The

the

deficit of $8.1

our

Only
paid for through

imports, creating
for

Only

paid for through

imports, leaving
billion.

billion.

$15.2

a

total' export

two

years

lion. V

bil¬

I.

County-

Flushing,

Cross: ' heads

Long
-

the

The

largely covered

was

amounted

balance

financed

to
the

of

billion.

deficit

was

liquidation

the

by

$11

foreign gold and dollar
capital investments, and

of

assets,

remit¬

tances and other payments.

Company,- mort¬
correspondents,: *in

Jamaica, N. Y a•:
"

A

"Shop at. Home'ebmpaign,
sponsored by the Peninsula "Na¬

V*

ofi Cedarhurst, Long
Y.-- and "encompassiftg

tional

Bank

.Island,

.

N.

the five

communities—Cedarhurst,
Hewlett,: Inwood add

Lawrence,

•••

the

disequilibrium in our for¬
is largely caused by
pent up demand for goods

were

which'

Woodmere

the

b

a

rik

eign

trade

not

produced during the

by the reconstruction
needs, by the failure of foreign
countries: to correspondingly in¬

war

years,

their imports to us: and by

crease

considerable increase in prices.
The deficit may be reduced and
a

eventually eliminated by a reduc¬
in foreign purchases, an in¬

tion
<

serves, -.has

produced ("good .X*-

suits" in the first two months of
i

and

operation, according to to bank's

-

loan?

The drive will continue

.officer.

;

•

throughout

ih'

in

of foreign gold

use

assets,

increase in

an

and

gifts, andean increase
imports.
v

Most

nations have

^Simultaneously,/ the^ bank:
*

• nn-

•nouneed the drive in loeal neWs"

1-paper advertisements',11 released" a
*

;
-

>

news

6tory c<mtniniwg 5a statement

by*-/, the

President/

Machleid;

:■

Charles:V: J.

and " unveiled

-) outdoor: billboard:

a'large

tightening

1947 exports

tiveness of

This ten-color

An

;
•

*

,

♦

Hewlett/

shows

arteries

five *

'

-

in

one

word,

reading from

left to right, "Shop In the Five
Towns."

';

;:

.

:

.

The United States1 Depart¬
of

gold

measures.

use

reserves
was

.




&

Commerce

must

at

an

meeting

Trade

the same level

on

place
as

ex¬

ports and render active assistance
to

importers.
(2)

The

through
the

in

of

State

Foreign

our

promotion

of

im¬

ports.

should

educational

be

campaign

undertaken

by

every

foreign trade organization in the
U.

S.

to

stress

the

importance of

imports, particularly the stake of

and

other

and

nations

to

as

Our sales

depend

mainly

the supply of dollars abroad

it may be estimated that ap¬

proximately $19.5 billion will be

1948
and

to

foreign countries

for their

services in the U. S., as

ably

fol¬

imports will prob¬

to

amount

in

purchases of goods

lows: Our total

billion; the

$8.5

European Recovery Program and

•

(4)

Our government must sug¬

gest to other nations that'the
mal

and

lasting

to

way

nor¬

obtain

will

provide

remittances,
and

loans

dollars for their needs here is by

Bank

us

provide

same

promote

sales to them.

that

vigor

we

with

Foreign trade is

other

dependent

financial arrangements be¬

the

investments,
International
Fund

will

billion;

and

Monetary

about

$2

countries will probably use

and dollar reserves to

the extent of $2 billion.
of

our

of

goods and services

tween-

governments,

1,680

fected

-1

by

official

3,278

a

billion;

$7

about

private
by

and

their gold
now

5,055

1948

The total

imports

exports and

Huuvatha 1/eaJi/

areas—

—

forward

look

can

business in 1948.

a

upon

r

Latin-America

we

good

other government loans and grants

exporters in import trade.

our

Notwithstanding these obstacles
controls, our foreign business
is now one of our largest enter¬
prises.
1947 was a record year

available

(3) An

con¬

totally attributed

and

to

Department

assist

must

Service

upon

Total

and

is

af¬

unofficial

and

may,

fore, reach $28 billion.

there¬

:

$19,326

During

the

period of recon¬
struction many countries, particu¬
larly those in the European war

J&J

area, have been and are still in
need of assistance.
We have ex¬
tended

substantial

of the

end

template
billion

since

we

the
con¬

now

of

program

Western

substantial
tries.

aid

an

to

aid

and

war

$17

and

Europe

grants to other coun¬

The

which

sum

being asked

is

Congress

of

now

for

the

next

15.months, from April, 1948,
the end of June, 1949, is 9 bil¬
lion 333 million dollars,
as fol¬

to

lows:

European
Recovery
Pro¬
6.8; occupied areas,
1.4;

gram,

other

countries, including China,

1.133

million.

Foreign Aid Program
The

foreign
Let

part.

aid

us

granted

will

nations

in

and

so

of

by

on

our

hope that any aid
assist the recipient

their

reconstruction

will

feet

will

program

sacrifices

great

put them back on their
that after a given period

they will become independent and

self-sustaining.
not

Our country can¬
indefinitely to fi¬
export deficit by loans

continue

and

our

gifts.

We

cannot

The

dollar

foreign

manifested in 1947.

address by Mr.

sponsored

Strong
by World

Committee,
Indianapolis
Chamber of Commerce, Indian¬
apolis, Ind., March 16, 1948.

/#

overlook

the

simple
truth
that
trading
means
exchanging
value
for
value.

We

can

receive value for

New outfits for the

value only through increased

im¬
ports, and through sound invest¬

ments,

•

;

'

•

During the past fifty years, we
have concentrated on selling our
prod acts to
other ' nations.
We
have

paid little attention to im¬
a

ports and
up

our import trade grew
without assistance or encour¬

y As a matter of fact, we
have done our Utmost to discour¬

imports;

age

in the

Chicago
St. Paul

Milwaukee

•

same

Minneapolis

•

Butte

•

Spokane
•

*' /

Taeoma

lies Moines

•

Omaha

:Vu\ .'k
i\';' X c'y-'y
City • Sioux Falls

Sioux

sell here.

to

The

Seattle

Our overseas visi-i

mostly buyers. Very few

are

come

-

and 60 other stations

■'/

foreign trade activities of

Department of Commerce, as
well as of other government agen¬
our

cies,

are

needs.

zations
up

..

THE

Little attention is paid to

importers. There

are

in

the

United

States

set

And no Wonder! Coining will be '
:
brighter, handsomer coaches., .radio- '1
equipped Tip Top Tap ears . , *
diagonal-seating dining cars . * . : '
luxurious drawing room parlor:cars' .>
with, for the first time, .glass-roofed ;
/
Skytop Lounges.
• .? /' / Z
>
During 1948, The ^Milwaukee. /
Road will enlarge and re-equip its

'Hiawatha

geared to our exporters'

the needs of

i

'Milwaukee/ i
ROAD

fleet.

More

senger train cars will
service than on any
railroad. II.

new

pas¬

be placed in
other western

*

Sengstacken, Passenger
Manager, 808 Union Station, *
Chicago 6, Illinois.
'»

Traffic

to assist exporters; few assist

importers.

change;

we

This

situation

must

must give serious con¬

,

,

promoted our sales
to them.
Few foreign firms ad¬
vertise
their
products
in < the
manner as we

United States.

V

step ;
out with new
equipment. There'll V ;
he squeals of delight from; the;
Hiawatha tepee/
*
* v

Neither have other
us

few weeks the AM and PM

Twin Cities Hiawathas will

agement.

hundreds of foreign trade organi¬
"From

imports

be

cannot

con¬

to economic needs.

import trade can be accele¬
the following program:

ment

trade
These

trols and restrictions.

trols

by

(1)

free from foreign

are

our

$9,313

Asia

tors

w o m e n

"picketers" holding placards, each

bearing

our

indicates the ineffec¬
their

accelerated

countries

traffic

controls.

goods.

and

main

here by

world is still in great need of our

of

two

import

steps

Nevertheless, the volume of

poster, situated at the intersection
;

their

sterling

ing their sales to
taken

to curtail their purchases
4

Our
rated

141
trading countries and terri¬
tories, only eight small countries

the

countries been active in promot¬

World Needs Our Goods

T/v^Wh«^^,

the

dollar

our

The; 'campaign

1948.

-

in the

crease

other

nance

The

Cross

loan

gage

eventually deteriorate.

of foreign currencies, and
export-import controls.
Of the

promoting their sales to

follows:

Commonwealth

require

.

The deficit

as

_-i_-._-.__—

British

deficit

$19.4

was

that

Harold

pur¬

foreign

values

deficit of $11.3

In these two years such loans and

>: sit

the

Savings Bank
:

amounted

grants
!•<

Island.

exports of goods and services

on

Harold I. Cross has been elected
trustee

approximately equalled our
imports. The picture completely
changed after the war. In 1943

Banking

State

Department.

a

ices

by government grants and loans.

announced

was

by

investments.

During the
period,
1931-1940,
our
total exports in goods an?i serv¬

our

area

to

their goods and serv¬
the dollars to buy

us

y.

divided

were

we

25

For-,
us

;he extent of their ability to pay.

in

bank's

conducted

was

basis

Comptroller. Mr. McCrae has been
the

our

entire

our

be¬

Europe, excepting sterling

aspects

monetary

include unreported gold
investments.
These

(Amount in millions)
Area

our

goods for years to come.

foreign trade however, represent
a
cloudy picture. In the decade

turbed."

foreign countries amounted
This figure

does

'needs

demand

a

resources-

about $19 billion.

reconstruction

Strong

assure

areas

customer relations will not be dis¬

as

and

to

1947, the gold

dollar

short-term

created by the

the

a

by the combined in¬

.Present

At the end of June,
and

war years

broader base for business and per¬
mit the enlargement of the serv¬

ices

increase

However, these

evenly distributed.

not

are

of all

the

.to remedy
Foreign-owned

means

rather large.

assets

during

the

of

war

and

liquid assets in the United States
are

prod uction

financial

downtown
in

and

fa¬

cilities to

to

stockholders

of

industrial

The operation of of¬

the

district

advantageous

and

the

diversion

and

distinguished banking insti¬

tutions

is

unless

Accelerating Imports

ple's money, it will seriously look

goods

be submitted for final ratification

of two of New

It

that

Bank.

will

spective

purchases abroad,

our

imports.

abroad
will

trade

foreign trad3 will reach $28 billion.

the

merged institution will be Bank of
New

foreign controls, world needs our goods, and volume of foreign
equal that of past year. Estimates 1948 U. S.

and

stock of the merged bank for each
share of stock of The Fifth Ave-

to

apparent

chases

Strong points out, despite cloudy foreign monetary picture

Mr.

(1229)

considerably

Vice-President, American National Bank & Trust Co. of Chicago

share of stock of the Bank of

New

coming

By A. M. STRONG*

basis of merger will be one share
of stock in the merged bank for
one

CHRONICLE

and

Directors:
been

FINANCIAL

&

Chicago, Milwaukee, St.. Paul & Pacific Railroad

,

.

IV, March

26

before

existed

Three Critical Situations in
time

we

which

the

consider
have

been

differences

brought about

,

people
who live on fixed incomes and
those who derive their funds from
current effort.
The people who
live on fixed incomes are deeply
disturbed and are reluctant to
spend and invest of their money
of

the ^incomes

between

are

all

aware

that farm prices or
farm products

for

creased

much more

of

the

fact

the prices paid
have been in¬
than the prices

paid for the services of salaried
people, even wage-earners, and in
particular, say, the price paid in
the form of rent for the privilege

enough

.prices

which

would

billion; in other words, it is ^oi.ig
to
take
business
management

so

that

we

have

some

at

who use it l«>r ro e

Th.#

poses.

1

it

but thts situation

prices

I

11

*

riiiMig.

aie

•

u

!

he aggressive
dicta
tie

i

a-:

Hingness of the free

reason
a

creased by some

200% before the
to the fact

businessmen caught on

giving away their
equipment. I think it is
interesting to comment on the fact

that they were

that
to

our

catch

business managers began
on

to

the fact that they

in

ganization
th:s

kind

nessman

in

of

economy.
In
situation, a busi¬

our

a

would be well

keeping

warranted

eagle eye on the
goods in retail trade.

For, if retail trade is reduced sig¬
nificantly,' it means that large
numbers of people are deferring

their capital
expenditure for consumption; and,
equipment when the price of can- if
large numbers of people do that
ital
equipment had been only in the situation we are in now,

were

giving

away

doubled.

It costs at least

they pay and

enterprise management for plant
and
equipment, not. farm ma¬
chinery and equipment, but sim¬

remained,

that

its

we

only $2.2 billion left or
for addition to surplus.

an

movement of

twice as
we are
certainly going to have a
much
to replace capital equip¬
reduction of business activity and
ment today as it did to buy the
in trade
and will experience a
of occupying dwelling space. Con¬
capital equipment before the war; deflationary spiral of some kind
sider
the
present
price - value
and, although many of our ac¬ or other.
judgments or attitudes of the countants
say that machinery and
typical house owner, who invested
equipment which we buy today is
Business Capital Investment
his money in residential construc¬
more
productive than machinery
tion to be rented in the thirties,
The
second critical factor of
which we are consuming or using
when he considers the subject of
up,
nevertheless, the investor— major importance which I am
how much he pays for his food,
the man who puts his money into going to mention is the subject of
an auto or clothing today in rela¬
business investment. When I use
the hands of a manager—expects
tion to how much he receives for
the term
"business investment,"
the manager to obtain for him a
renting his house.
I refer to the investment of nonsum
of money or capital which
Now some may say
that the will buy as much in terms of agricultural business in plant and
farmer
did
not
make
enough
equipment which is not charged
goods and services as the money
money before the war and others
which
he
originally
invested. to expense in the current year.
may
also say that the landlord When we have experienced a di¬ Certain businessmen purchase
charged too high a rental before lution of the money supply, the dies, loose tools, and other items
of equipment which they amortize
the war, but I am not taking such
manager of a business must in¬
matters into consideration.
I am crease depreciation charges to re¬ in the course of one year. I am not
simply taking into consideration flect currency dilution, or other¬ going to call the purchase of this
the attitudes
of these people— wise he is giving the capital as¬ kind of asset "investment ".I am
these
individuals—in regard to sets owned
talking about the expenditure by
by the investors away.
the

we

,

capital

today.
We

me

think that we may be

doubling of the gross prices which
are paid for the services of people
who work on hourly wages. Then
again,

production has been large

1940,

approximately another $3

about $3 billion more than they creased.
ed peace. This
glar!
to
charged for in their depreciation
SlurUtc «f ft
*led by the-aspirapts
turning
have been mak.ng, because I am
to
obtain enough money to re¬
point in the rise in production anq
Please note that I
^
—
certain they don't know.
place plant and equipment or to
prices wh-ch might be proved to obtain
-x
<4 #'t romrPonwealth mili,
Last week I was discussing the
enough capital so that the that there is «
ke a temporary ceiling in the vol¬
in the aggregate
<» t^S 'ncmic alliance, the
owners of the enterprises will be
effects of the inflation in Germany
ume of production and a tempo¬
i
would be effecgetting funds equal'in exchange evidence of targe
on the accounting system witn a
rary high in prices.
I have also value to the funds which they in¬ accumulation tooay
German
economist, who
lived
sa.d that at this point in the in¬
1 ned resources and
vested. If we take another $3 bil¬ are invested in lite 1 - • o
through that experience. He saio
flationary process we niay ob¬
* Id »r of such a combi
lion dollars from the $5.2 billion panics and ®re
it was his opinion that the price
serve all manner of price disor¬
not <or.ly deter fur
of undistributed corporate proi- vestment, but thu ki-.rt * i i t
level in Germany had been in¬
tell

have had -aoout a

Our Economy

most businessmen today to
how much
profit they

defy

(Continued from first page)
same

deduct

rities

I

Thursday, Man). 1.1,

FINANCIAL 'CHRONICLE

&

THE COMMERCIAL

(1230)

18.

have

available

So, the $17 billion of corpora¬
profits which seemed to be

tion

exceptionally large, only pro¬
possibly $2 billion for ad¬
investment in new plant

so

vided

ditional
and

equipment

plus

the amount
deprecia¬

obtained from corrected

charges. These calculations
to the conclusion that cor¬

tion
lead

is not available bn

V«r I

» m

oenetration

rhortasf

uf

difference

the

that

roe,

-mia

,.j
|

i

•

■

*

v,

ty and foreign trade

$
to pay
f ?
they i ,il * * a*
urimtt
i
\
* t f.

i

other

ex

level

that

plant and equipment which we
experienced last year was
fi¬
nanced
from
internal
sources;

in

tain

the

jcnmtuie

<

nh rpt

the
of

sayings accumulated durinf
periods.^ But the souret
for the term loans i

war

funds

ending;

internal sources are no

tier

r\k>

ctive

th

equ tv

ran

Ut

cline

ki

well

Xew
as

York,

interna-

of the

jared

*

{or

^

Iff

reiie| ol th
led

the wa" a defie enev trt tie L*.. * '/
periods are being spent: and th*" able for immutnt in flf
%
equity markets are anything but equipment from the
reliable source of capital.

mar-

iratloos provided the

adequate; the savings of

a

slightly in
relapse in free

ixeepti&BslIy antici-

jtomt I H **•'• * t
recapitulate bv sa^» & f *
for

a

Canadian stock

••
ty

mm* * $

Railway

akered

'Bv dyi

as

a

result of

a

itemais after earlier

this

is evidence «>t

as

external

market was

National

1

.*

\At« }
M tj

of means.-

At

the

bond

dugs Banks" demand

*»,*-

$ m*,

the long-let..u

over

week
e

d

*

th?

prmlutlimt i«. d
fortunately, the
business

*

rnttj

it

which had been couraged t<» do
made by the banks in 1946 and thing Kit over
1947 and which the banks are no tion does not

from

*

bottom

term loans

longer making in large quantities:
from the sale of obligations; and

,

lleled

fried

their

from

er.tiia

of which could lead
era of world-

4t

.*

in

JJ"
*■

debtedue**,

from internal sources
of funds. It is apparent that the
level
of business investment in

equipment

it

developed bv joint
capita], the economic

*U

v

,

^»

anada.

t*

tV.Hen

192<M

they

^

Be

,f ... 1

busims r# wert sko i i
the

\

i

,

MuhajW >
depression in |VJ-t
was

communistic

to
>«

ton*.*.,i.
rowed
money
O »
wefca>t
many

*

porations probably cannot finance
a -continuation of the current low
level of investment in plant and

but

equities We do net h n • » * ifluence the wavpr
age of capital, bu» we ...» i $ Cies
to
present*

in ths

?

d

to

a

golds which

given-every promrally, of - the '.nar-

i a

oorMe sources of h.<rv>v t:-,F

These fears, how-

I

business is doficietirv in
ry
prove to be
in this country raised sums equal hands i t people v. ho m $ \i
laticss. £S the Federal
attitude on
In addition, we are fooling our¬
to 473/2% of the money which was their*money in .rquitit
.fcai resertlj given
their expenditures, their invest¬ selves once again by enlarging ply what we ordinarily think of used to purchase new plant and the prime ciuse * i u t* i'H ■
Induswhen we refer to factories, offices,
ments, and their incomes?
our
profits as a result of inven¬
equipment in the security mar¬ seems to tie fro* ftxMvf 4
Is for upward reviwarehouses,
machinery, kets. Now I am not talking about In consequence I
It may be observed that there tory accounting.
? >:
Out of the $17 stores,
etc.
•
grli -silisidies. The
are. great differences between dif¬
billion of corporate profits which
1928 or 1929 when from 63% to that it is probable th.*! ..4
..sentsng .the. bill beLast year business investment 80% of the money was raised by investment in
t
ferent raw material prices brought were reported for last year by
:SL% ess. ..doubtlessly be
the
about by the uneven rise in prices.
Department
of
Commerce, in plant and equipment probably means of security flotations: I am merit is going to
iedyv.4.
idecisi'O-15 with regard
somewhat low.
Now that talking about 1925. In 1947 the are some ex<roto*r,* t<*
Some raw materials are exceed¬
$5.2
billion of that $17 billion v/as
••>«* » : fe'ra and .slso to, the
ingly high relative to the prices consisted of what is called "inven-. sounds like a surprising statement new issues were equal to about merit { am talking
of tube legislation jn
of other raw materials as meas¬
tory revaluation." It is common because we frequently are told 30% of the money invested; and, over total or the
with .ibe
austerity '
ured by past relationships. In my accounting practice to calculate that business investment in plant in order to raise that amount of except or,«
<be
office we calculate the disparity the cost of production over a year and equipment was high. The in¬ new capital, the addition to the utilities,, the o f
i
y.f
between raw material prices on a
by taking the inventory at the vestment by farmers in agricul¬ supply of securities apparently i rid ust t y and w ■■ ie * f fc ■ $
monthly basis since before War I. beginning of the year, adding to tural machinery and equipment was enough to reduce prices in manager* <>| mrr.e of
One.of the factors which we use it the cost of things purchased was high^ and' apparently there the equity market.
goods &n 1
e t ":--e
in judging
whether or not the during the year, and subtracting was an enormous amount of loose ;; In 1925 an amount equal to ably an* c r e to
r e
e t
price system is unstable is the from that total the dollar value; tools and equipment bought in 4.7% of the national income was inereese V t r u
t.
!•; '
>
amount of difference that is being of inventories at the>end of the this country, so the total of busi¬ invested
in
new
securities; in and
25 Broad Street.
these are lodtotrl * m
' *
developed between different raw year, appraised at the lower of, ness investment, including farm
1947, despite the fact that we is¬
investment
and
investment
in
material prices. We use the prices cost or market price.
You may
' ,?< 0 » "Sty, ir-erabezs of the
sued so many securities that we Itiit obta tied b*
loose tools and equiprhent seemed
of such things as hides, scrap steel,
readily see that if inventory prices
increased
the
supply of thes? If .In ofh* r o. !* 0 ytrtrsL... Bxcbsiipe. sn•••* IrrssiS Derby has regrain, sugar, etc. At no time in at the end of the year are higher to be classifiable as "high." But relative to demand and pushed ex on re o n *# of *>■> ^
when t n.-e it U ts :! A t
this century has there been so
than inventory prices at the be¬ business investment of the type to the
im in its train office
price down, we issued new
I
refer was only about
much disparity between the prices ginning of the year, the calcula¬ which
p
securities equal to only 2.3% of ditfivuit t.»
53
tative and
of national income. In a
of different raw materials as is tion of net costs will be reduced 7.8%
the
national
income. This was
rddsn. He has reThe tUnlSrc
the case today. This is indicative by the amount by which prices well-balanced year, such as 1925
£2sdsxAbS with Kalb,
just about one-half of the rela¬
and I use this period because
of a maladjusted and
distorted paid were, increased. As a result
The .tf bif if *■« n! i
'n.
tionship of security issues to na¬
x
price system and the existence of of this procedure in accounting,; I think in 1925 we had not yet tional income which we experi¬ I W. dt
»
*1*
the excesses of the enced in 1925.
confused price-value judgments.
the Department of Commerce has developed
is tic-jog
vol- . * * a t
late
'20's—this kind of business
svxte n.
We
" #>
> *
The break which has occurred estimated that $5.2 billion of re¬
From these figures I would de¬
investment was about 10% of na¬
al«mt t*''e
r
» * ■
in farm prices is a first and im¬ ported earnings consisted of that
duce a number of things. First. I
tional income. So in 1947, despite
kind of profit.
In England man¬
. 1*
portant step in a readjustment of
would say that the effects of pro¬ sup? i *1. 'tt> t-roi
the fact that we thought that our
our price system.
menefarv, feufh- f it
A- <
The farm prices, agers would not be permitted to
call
that
a
profit.
Companies business investment was so high, gressive taxation in combination tual -mafftr «tf •
4 A at ■ *'
as a group, were the prices above
with the increase-in prices indi¬
we actually spent less of our na¬
all others which were most out which use Lifo accounting do not
f
t -•> #v. eecsto,
cate a situation in which people for m h
rs.us/scns - St :<ek PBut tional production for plant and in the middle and higher income of bus
t
..Tit
of line with what might be con¬ report that kind of profit.
tbst iipcn 3«e
sidered a stable relationship to there are enough companies who equipment, excluding farm invest¬
brackets
are
no
longer raving pill dip ot tic mU »t trr #4
feTlirrv
Time
1+ h-ai *
other prices.
It has been quite do report that" kind of profit to ment, of course, than was the case enough from their current income loial
in 1925 and a much lower amount
on
' - t vi
interesting to note that these, be¬ raise corporate earnings reported
to provide sufficient new capital great that thev t
than is the case when business in¬
tY?
$esest rates m
h*
ing the most extended prices, have by some $5.2 billion. Now that
to permit maintenance pf the cur¬
vestment really is high.
been the first to be reversed in kind of profit cannot be spent; it
' <
.Cper
rent rate of investment in plant Coiisequeeth. 1)4 >
be 00
Now I have an idea that we are
a
rather dramatic manner. Pos¬ cannot be paid out in dividends;
fKirste oifbtfutiot «
i e
and equipment. I would arrive at
it cannot be used for purchasing not going to continue this current
obis gat M o*
1
sibly the recent break in the price
8 A-Sri ««£»?*
this deduction by observing the
of agricultural products
is the capital equipment; uit cannot be level of business investment in trend of prices in the stock mar-| creased tn tlw1*
©J »-«."«!■ SSTWOfJ%
first harbinger
of a period in used for financing ■additional in¬ plant and equipment despite the ket. In addition one may use per¬ ers began to sell
which many prices will be read¬ ventories;' and it cannot be used fact that it has not been high sonal observation of what people in order to buy tie «Uiu4i relative to income.
Last year we
justed. In 1920 the break in the to finance accounts receivable.*
one
knows who have salaries of state ant
In fact, it cannot be used, and lit spent some $15 to $16 billion, as
^
price of agricultural products pre-r
more
than $5,000 per year are corWalKH i As a
It should be closely as we can tell. I doubt doing with the money which they eral
ceded the break in "the general really isn't profit.
isolated as a reserve but ordinar¬ if we spend that much in the year
forced to rum*1'it tie
price level by several months,
earn.
1948. In the first place,' as I said,
govemmrrtl oil
»l
■
and it would not be unique if we ily at isn't, with the result that
In addition, it is interesting to
businessmen have not been mak¬
numerous managers and investors
1 woot f ratv tl
were experiencing about the same
note that the progressive tax rate*
p.-cvi
Af'l
are
kidding themselves concern¬ ing
thonW-* hao# o-t tokon t'
as
much money as they
general kind of pattern this year.
which are being used to siphon
hs
c'~-cr
live; thrv.have
*>
We have a large number of ex¬ ing how much money they are thought. Last year, out of the $17
billion of corporate profits, $6.6 money from the hands of thos? tooucht was rtr«■»
tremely unstable prices today, and making, because the accounting
people who might invest in plant the m
takto i t *'■*■+>
the rapidity with which the rise systems which they are usmg are billion were spent in the form of
and equipment are also being used
not
adequate to cope with the dividends, leaving $10.4 billion. Of
w^nto I f * JHn --if
4
*
in agricultural nrices was reversed
to direct money into the hands of
eblv tn#1 lb" y# » v r
aA «. * * 5^3 the
is
most
significant of develop¬ kind of changes which are taking that $10.4 billion, $5.2 billion were
those
people who employ the
locked up in inventories by the
do *e little o'h* r f.
It
ments.
It is- indicative of price place in our price system due to
ifunds to enlarge the demand for
rise in
prices; so if we deduct
Inte***
r»*o-s
»■+ ir y*
instability as well as evidence of a dilution of our money supply.
r:Vi*f^rg,
that $5.2 billion, we would have 'consumption goods. In other
tfWti
i* l .?£
I have said that we have ex¬
price disparity.
ofa
the
money
or
income
$5.2 billion left. All corporate de¬ words,
SUbstoptath,
an
inflation of our
tn the trrm
Another result of the'disorgani- perienced
which used to be used to enlarge
preciation totalled
$4.8 billion;
We at t
to t i *
zation of our price system has money supply which has resulted
plant and capacity is now being
in an increase in prices; that the and, if we double the depreciation
fiscal
t-s •-«
f ibeen the confusion of the arith¬
diverted into the hands of people
combined increase in prices and on plant and equipment which

receive.

think the
their parts is toward

What

do

Fooling Ourselves On

you

Profits

.

:

>,In

1925,

incorporated

...

Hirsch & Co.

■

.

,

*4

—

tcisco Si E.

Trading Hoars
-,

>

-■-

ocd Titders

.

•

1

metic

of

business

accounting.




I

j
*

Nimbcr 4632

167

y^urn?

THE COMMERCIAL

In

Within the Practicalities, Too!
**T1

world is in the midst of

J

a

abroad.

motives are

that

we

side

our

on

passionate
ous

in

passions

our

if

sense

lut aKo in

keeping with

our sense

the

will

Hewitt

Charles

admit

L.

time

turmoil,

banks

With Hannaford

than

1

(Special

to The

SAN

our

A.

Nelson

of

CALIF.—

and' James

R.

Page have become associated with
Hannaford & Talbot, 519 California
Street.
with

Mr. Nelson

thereto

formerly

was

California

First

prior

Company

Mr.

his

conducted

business

investment

and Page,

Page

in

was

San
asso¬

:

•

Is

earning

been
out

added taxes if it failed to pay

lars *iu%»ever

in dividends 70%

it

it
seems a blessing that business did
share generously in the prosper¬
ity, for had it not done so it could
never meet its responsibilities to¬

to

it*

pi m,

attemntc

trv
<

to

lew

h i n

*ra-

e r y

its

to

can-not

H*«rv

•tbe

lieimann

b1

rm;v'

*'

its

industry

4

ll

hv

n.iy

i

•w-snnrarir ♦*

e\

the job v at

v'**

j

ti the 'busiangelists that to

to

€<>m

He

first

trr*kn

jon its approximately $42
of inventory and possible

hie

*-e

«*

J, m bufknem has had to borrow

through these im- ing
man

"After ou*trte*» discovered mai
AMcr
buriness discovered that

tsh^ k.

It found it couldn't

cn interest in its
through <on»Ttoii stock

Fed_

Um:

lor«T«l

Iff

w,

>

t

authorities seem to be set
maintaining the 2l/2% rate on

tary

Noble,

to

been

has

no

Change in the partners of the firm.

Pacific Company
(Special

The

to

Adds

Chronicle)

Financial

PASADENA, CALIF.—Kenneth
Jr. is with Pacific Com¬
pany
of California, First Trust

M. Payne,

Building.

SAN

The

Chronicle)

Financial

CALIF,

FRANCISCO,

Heithier

B.

Russell

become

has

associated with Ted Weiner & Co.,
41

Sutter

was

with

panied by a sharp increase in the

on

Dr.

banks
primarily in
high-grade securi¬

ties and sound mortgages.

During
the larger portion of. the
the disposal of savings

the war,
funds at

banks

invested in government

was

obligations. Now a shift is taking
place into mortgages; and, to a
lesser extent, into high-grade cor¬
porate obligations.
y
-

Street. In the past he
Bankamerica Company

of sav¬

ings banks and other institutional
investors in mortgages," Dr. Nad¬
ler

continued,

have

"can

a

pro¬

found effect not only on the safety
of their investments but also on

construction

the

industry

and

business activity in general. Since
real estate prices are highly in¬
flated

and

value

the

of

many

houses, large as well as small, is
determined by the great scarcity
of dwellings,
it is evident that
mortgagees must adopt a careful
policy. Otherwise they may suf¬
fer losses when the pent-up de¬
mand

this policy.

Such a development,
however, is not to be anticipated.
Evidence is accumulating that the

inflationary

gradually

is

boom

coming to

an end.
last
few

"The

;

months

government bonds the highest type
of security available but also that
they enjoy a marketability un¬
rivalled by any

other type of se¬
can there¬
upon
their long-term
government obligations as liquid

Saving's banks

curity.

look

fore

time

could almost at any

which

assets

be

converted

invested

be

in

assets,

estate

prices

.

but

also

tributes to the inflationary

in

So long,

real estate prices are
as inflated as at present, it would
seem inadvisable for savings banks v

however,

to

as

dispose of their long-term gov¬
obligations and rush into

ernment

mortgages without first carefully

considering
and

i

are

particularly

fighting

the

soundness,

quality,

amortization.

Savings banks

interested

forces

of

con¬

forces

construction;.; industry.
policy would therefore in¬

crease

this

in

aim

prices. They
by

can

Sound

dicate that savings banks
more

cautious

in

their

now,

become

commodities

lending

supply and, above all, by
cious

offer to sell or a solicitation of an offer to
offering is made only by the Prospectus.

is

greater

investment

of

;

• -

;

.

,

.

f

buy these securities.

^

%

3

'

Price 101.59%

;f

f/

business tax

bills, you wi

Hue March 1, 1978

atid accrued interest

ir.on-t;

more

_

the

nearest

peiitftpstkel

and

of

COUrse

was,3,™ ® ;

ihtee-quarters cf all
it nctxicd by bor-




Prospectus 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.

.

OTIS &, CO.

HALSEY, STUART & CO. INC.

.

it

is

..n,^
. ,

thing to perp
yet discovered.

y

mankind
mflnWind

has
has
,

L. F. ROTHSCHILD

&. CO.

GREGORY &, SON
INCORPORATED

(INCORPORATED)

THE

upkeep,

lit.;!,' S«# bu i«-ess wasi
So bu i- evs

to Mt

The

March 11, 1948.

ILLINOIS COMPANY

WM. E. POLLOCK & CO., INC.

than

their

Bonds, Series C due 1978

First Mortgage

1948

savings

when the demand for many

Diego Gas & Electric Company

if;

achieve

stimulating

$10,000,000 0

Dated March 1,

in.

inflation-

the

.

:

to
no->

real

of

The

V

cash

into

other

tably sound mortgages.

This announcement is not an

San

have

demonstrated clearly that only are

housing has

operations while real estate prices

and Mason Bros.'

alter

volume of bank loans could

been met Through the adoption of a con¬
estate begin servative investment policy, par¬
to decline. Too liberal lending by
institutional mortgagees not only ticularly in 1948, they can to som e
stimulates the upward swing of ^extent help prevent a further in¬
for

prices

real

With Ted Weiner & Co.
to

in

banks. ' The
in

only a further serious increase
prices of commodities accom¬

and

convenien.ee
received

return

and

Heithier Russell Now
(Snecial

on

be interested

investment

*

a material break
may occur, this
fe'ar is not warranted. The mone¬

distribu-

of Undress and^t increasingly so in its

w*

taxatKu ***utts

n

+hp

•

,

bi i'u

*4

.

people are ]pa;nav for their
keen | in taxe*L ^ian
comes
very
a i(**r nm stock investment I food.
Bureaucracy
•
..
ircM at this time. With all. high not alone in its original cost

kooul

r

:

vv~;—

costs more to
h| * to
cral Government^
buy food. If 1fVlf w and state
j into account th
that our

Tfic pL.txlic wasn't too

s.

changed
There

realizes that it

woman

careful.

more

"Although many savings banks
are
concerned
over
their longterm government obligations, fear¬
ing that some time in the future

overcharged for government
I doubt that the average
or

i3

Institutional lenders

service.

ih ttvinj;.!
during the last years,;
dollar totals, was InEquate lor its needs, it got its

bur

merely become

thought and planning in demon¬
strating to the people working m
its shops just how they were be¬

| i oven rents.

JJ-ll

future.

have

stop, look, and

Hcimann

Mr,

|fi

carry

able

■

futteeetmg two years were
adequate to do its peacetime

Lrauij to

There

long-term government obligations,

and

savings,"

savings

loss on
realization of its billions of
accounts and notes receivable, you

business faced in

trmr.s,*

decreasing.

are
con¬

shortage

no

the

listen, there is al¬
Ja.vx, |i »!*** trav be a shock to ways your insatiable, non-produc¬
know that tudress, the favorite tive, absentee partner, the govern¬
which seems to
flopping boy * of some politicians, ment,with a 30 to 40% be dissatis¬
fied
royalty on
js bow ex {sending some $20 bilhon a year to
equip, modernize your labors and is now clamoring
ft'wi rm*m1rta1 it*
productive fa- for a larger share. Of course 1
vihtiet The reserves that business believe this partner's share would
Jmill op during the war and in be much less if business used
hie

Co.'

and

thing-it

of

billion

.

'*

&

no easy

postwar era begin to wonder whether the sta¬
tistical wealth of business isn't a
had to do to
tmam* -Us emmtton* was to sell mirage that may vanish with the
'
bore than
billion worth of setting business sun.
£'*vt rrment
"If it isn't enough to make you
bonds
and marketthe

been

has

Tulk

begin to realize management
job ahead. If you add
the effect of any drop in price

you
has

"unusual

j»u* lici/ed
t

told

careful analysis of

a

modi

of the largest

one

ai.uuiiona

or-

m-ffrUus

M.

t r
,
^

the hvid of

*>«

therefore,

whole,

Indeed when you think of
the effect on earnings of a decline
in business—a decline inevitably
due in time—and its present exceedingly high break-even point,

or

adit

of what it made.

day.

or

>

accounting for

fifty-rent dol¬

small add.tio-1

Chronicle

Financial

'LOS ;ANGELES, CALIF.—The
name of Chester L. Noble &

Co.

that

hadn't

The

to

firm

learns

the

is

prices

cost

savings

"The investment policies

Now Noble, Tulk & Co.
(Special

the

in

should

Hubbard & Asche.

I

soon

"On

struction

when

the

and

deposi¬

determine the investment policies
Chronic*e)

Financial

FRANCISCO,

Walter

owing
from
ompanies or

a

shown

Nadler said.
"This attitude of depositors should

ciated with Hill, Richards & Co.

it

y.

interested in safe¬

are more

their

& Talbot ,;:^

banks,
insurance
through bond is¬
sues.
Business might have had ta
borrow less if during tlwse high

starts

has

availability,

ty;

Man¬

an

attitude

tors in

picture, Henry II. lieimann, Executive Manager of the National Asso¬
ciation of Credit Men, asserts in his "Monthly Business Reyiew'? for

for

liberal

declining

that

of justice,"

years

b

"Experience
Dr. Marcus Nadler

value. Scores attacks on* "unusual earnings." r

threatened

flex¬

bonds.

manager of the syn¬
dicate department.

Unuwa! earnings of American industry are shown in "statistical
dollars" *htth must be discounted by about half to present a true

v.ith

the

in government

as

r

it

—

more

a

likely to develop in the foresee¬

majn_

t0

investments

as of April
1,
Mr.
Hewitt has been with the f.rm for

Henry H. Heimaan, Executive Manager of National Association of
Creiit Mt*f warns current profits on dollar basis, represent only

crating

and

position

to

Cottars"

H eirnan n

of

ibility of their

partnership
some

Says High Earnings Represent Only"!

maintains

plentiful

—

increasing, and adopt

are

of mortgage money
at the present time, and none is

tain

Exchange,

land

Mr.

despite

savings bank-

f ]

of the New York Stock

own

agement,

estates—

he advised

■

ers

jFrancisco.

March.

real

loans,

groups."

Francis I. du Pont & Co., 1 Wall
Street, New York City, members

ities of life.

half pre war

Regional Savings and Mortgage
Bankers Association in New York City
March 15, Dr. Marcus Nadler, Professor of Finance of New York
University, urged bankers to exercise restraint and caution in making

r

of the practical¬

our sense

Eastern

on

than for

worse

the

the American

G. L. Hewitt

We should, I think,

tinfy "in keeping with

nor

before

of

money,

justice."—Secretary of State Marshall.

Sat

dur¬

Speaking

Conference

fears.

our

firm conclusion in keeping with

a

other

mortgage

calmly and prayerfully appraise the facts, so nearly
as we can judge them
to be the facts, and then
search for

many

statistically

economic

Realty Values Inflated: Nadler

remember

-

our

"in the midst of this

in moderate terms.

to

supply

ecnVacated by the distractions of an election camj« gn, it is important to express one's feelings on the
KtiuUn

well

better

no

other

failing in

or

cam¬

sought by a
campaign against

businessmen, like

was

are

action because of

C.

»

political

are

the war years but that the
artificial prosperity they enjoyed

apt to grow
fearful, overzeal-

or

votes

CHRONICLE

ing

good
condemned,;and

are

of

year

if

groups, did well

Our most generous ■

intentions

FINANCIAL

rabble-rousing
business, it is

great crisis

suspected,

this

paigns

by propaganda, misunderstanding, anger
tr.d t.ar. At no time has it been so important for
ct*l judgment for an appeal to one's self for a
proper sense of justice, for a real¬
ization lot conditions,
material,
poht.caf and spiritual, in other
paits of the world.
/V
'*Virtually everything we do
in connection with our
foreign
relations
is
misunderstood 'by
seme

&

a.

the

judi¬

funds.

24

THE COMMERCIAL

(1228)

needs

the property

expenditures

Thursday, March 18, 1948

CHRONICLE

FINANCIAL

&

post-reorganization years
would be considerably modified.
When
these
preferred stocks
were
originally set up they at¬
tracted a considerable following
n
among investors seeking continu¬
Wisconsin Power & Light
ity of income and at least .a rea¬
The status of the securities of those roads that have
undergone
Middle West Corporation controls Wisconsin
Power & Light
reorganization was further worsened last week. Directors of Chicago, sonable degree of price stability,
rather than
the speculative at¬ Company through the sub-holding company, North West Utilities
Milwaukee, St. Paul & Pacific declared a dividend of $4 a share on
tributes of a second grade com¬ Company. Dissolution of the latter company was necessary in order
the 5% preferred stock instead of the prescribed rate of
$5. This divi¬
mon stock. They have been sorely
dend is payable out of earnings ♦/
to complete the liquidation of the Middle West System under the
for the year 1947.
Holding Company Act.<&—Last year a been
too conservative.
In any disappointed on both accounts. Utility
would be permitted to earn
6%
single dividend of $2.50 a share event, it was generally considered With some notable exceptions the This proved to be difficult, since
on
the par value of its common
was
paid out of 1946 earnings, that with all of the safeguards directors of the newly reorganized North West had three classes of
railroads
have
apparently
felt preferred stock outstanding with stock, but any balance over this
that had been set
following payment
the

in

Public

Railroad Securities

early in the
of $5.00 from 1945 earnings.

year

initial

An

dividend

ital

$5.00 a
share had been paid in May 1946

receiving in the form of dividends
the major
portion of the final
reported net income. This was
particularly true inasmuch as the

out of earnings for 1944.
Jan. 1,
1944 was the effective date of the

reorganization
The erratic
for

1944

able

plan.

railroads

timing of dividends

and

due

1945

unavoid¬

was

securities.

only^ $2.50
earnings
on

The

payment

share

a

was

of

out

perhaps

condition of the plant.

that after

of

understand

additions

erous

fund,

in

were

and

gen¬

a

:

debt structure

in

the
reorganization
purchase and retirement
come bonds.
the

pay

of

full

more

No

dividends

of

thinking it

is

pre¬

not

proper

for manage¬

to

"It

is

important for

very

you

the.stockholders

tainties

ored

of

is

have

that

expressing

the

their

is

trust.

dividend

imagine)

if

the

false

The

on

supposed

to

set

capitalizations.

up

The

even

were

and

conservative

protection

the

funds.

These

all deducted from

funds

There

,

believed that the

to

out

map

their

personal ideologies

the

rectors

and

and

program

a

policy which best
interests regardless

a

of

officers./It

of di¬

is

your

money

which is at stake and

would

be

teeship if

of

which

traitorous

to

our

are

serve your

trus¬

did not do the things
necessary to best pre¬
investment.

?'When

people, includ-

-to

a

; and

efficiently

-

function because of unfair compe-

Commission had

as

GuaranteedStocks

established- by

is the

there

case

government,

with this company,

inevitably .results

consequences to

serious

stockholders,

tensive

Securities

subsidized

public

pany

earning

'

-

capacity

to

maintain

and

2f Breml Street

ST0CIS-10HM

The situation becomes

New York 4, N. Y.

under

Ttfephoni BOwllng Qreen 9-6400

the

economy

TWetype NY 1-1063




new

.

existing

of

com¬

financial

bility and to attract
GCAIAHTEE5 UHtOAD

nor

of poor service.

the

12

1947,

star

capital.

more

acute

inflationary

where the wages which

the company presently

months

47%

was

age

rate

pays

and

rates
For instance

less

ended

more

per

8%

than

the

customers

national

laws

have

period

a

political

are

criminatory

substantial

was

Puget's funda¬

their inception

which

in

and

been

of

state

giving
special

years,

subsidies

"There is

dis¬

enacted

and

prvileges to public power."
...

30,

corresponding

difficulties

have

-j

cludes Mr. McLaughlin.
of

public_ power's large subsidies

and

30

special
case

is

privileges, which tin

of Puget amount to abdut

cents

dollar of gross rev¬
private and public power
per

competitively co-exist.lit

unrealistic

to

talk

about

pre¬

serving private enterprise in the
electric ~ power field
tory where

properties
which

in

government
are

cost

terri¬

a
-

owned

operating at cost,

has

been

artificially

by subsidies, and where

preferences
agencies.

are

privileges and

accorded

its

foot

of

business; the

the door

in any

snowball

rolling and the weight and
of

government

the

expansion

business

and

about the
tax

public

Once government

in

and

28,

1947

ap¬

was

%

Stock__-

3.3

6%

10.0

17%

16.4

27%

$59.7

100%

shs.) & surplus.-.
Totals

According to

memorandum

a

1952

on

1.41

2.83

...

Earnings

for

1947, so far as
indicated by the September fig¬
ures, appear to be slightly below
the official forecast.

Moreover, the
has recently issued some
new
bonds
and preferred stock
to provide for construction funds
company

first

($3,000,000
50%

$30.0

3V8s

due

1978

and $3 000.000 of 4.80% preferred).
This

would

to

appear

it

make

slightly difficult, at least for the
time being, to earn $1.12 a share
after plant amortization. However,
it looks
as
though the present
market price is based on the ex¬

pectation

of

a

$1.12

dividend

prepared
by
Ira
Haupt & Co., the Wisconsin Pub¬

rate, which would return

a

yield

lic

of 7%%—about in line with

new-

company

Service

out

a

Commission

"worked

plan whereby the Company

issue

yields.

News About Banks and Bankers
(Continued from page 21)
be

more

than 50% above the

mar-

ket price of your stock
prevailing
just prior to these negotiations."
$

$

are

of

bit

used

its

to

gets

field
starts

power

force

proprietary

by bit to bring

eventual demise

paying competitors."

greetings
the

and

this

new

serve

by

network

Bankers

Trust

Company, New York, which util¬
izes

of

its

will result in

all of

both

other

a

this

According to the

from

the

trust

and enable us to

us

customers and each

our

efficiently. ; With the
button I send this

more

pressing of

company, streamlined to the point
where push buttons re-route and

point in the nation, the new sys¬
tem does mot require
additional
manual

•Mr. Colt

facility

new

a

culminating " 13 message to you with
development by Western personal regards.' " <

announcement

of

feel

I

closer relationship

equipment

years of

Union engineers.

means

that

among

established

modern

and

confident

a

nationwide

into

you

communication.

On March 15 the world's most
modern wire communications
sys¬
tem linked 20 banks in 16 cities in

private

welcome

family of banks that will use

interbank

He

such "thing as fair
:re-transmit messages at two
competition,"
con¬ '■
switching ■ centers in New York
"Because and
Chicago to any other terminal

no

government

the

2.13

—

aver¬

kilowatt-hour

in the TVA area;
mental

June

and the

domestic

for

averages

1.45

2.50

at

follows:

as

4V2% Pref. Stock

the

1.36

1951

sells

utilities

other

1971_

Serial

$1.29

2.11

2.29

Com. Stk. (1,280,925

of Puget

the average annual use of Puget
Power's domestic customers for

all sorts of specfaL

re¬

2%

/

1950

also

and

Feb.

of

$1.97

1948

and

cooperatives. About 90% of
are electric, 8% gas and
Capital struc¬

as

Amort.

1947

electricity

miscellaneous.

ture

Amort.

/

Year

retail

at

of high

result

reduced

* power

making it difficult for the

problems

the

em¬

competition has the effect of
ducing

basic

not

Ex¬

ployees and customers alike;

1

"The

to

proximately

After

Special

comparable situ¬

a

are

cannot•

utility is hot permitted

effectively

2%

ation to that of Puget.

enue,

Basic Problems

tion

i

we

we

are

income before

f. somc security analysts;, who

.

,

were many

in¬

is in

country

over

arriving at earnings available for
Stock/
■; •
,;:•
-

their

serves

future property
needs without additional financ¬

sinking

of

yardsticks for judging
utility performance when applied
to Puget are not in any way ap¬
propriate but in fact misleading.
No other electric utility in
the

and

determine

t't'i additions and
betterment funds
td"! take care of

up

value

the

the

Before

Special

2.21

revenues

competition
ordinary utility
cope. Therefore,

usual

and

afforded

ing,^ and by the setting

unprejudiced information and
so that they can intelligently

the

wholesale

rural

per

stock:

common

1949

communities

wholesale

results

*

power

which

realistically and'ob¬
jectively appraise the company's
problems and its future outlook

creditors" by the creation

new

was

.

vestment—to

periods.

Further

dis¬

,

.

determine

common

normal

the

facts

Commission

the

on

during

doing

"I conceive it to be the definite

sonable assurance of
earnings and

dividends

hopes.
natural

responsibility of management to
be absolutely frank with its stock¬
holders—to
give them unbiased

repeatedly stressed the aim of
creating stock capitalizations
Where they would be at
least rea¬

stocks

ahd

good things and

from

agreeable.

successive

1945.
reorganizations

the

on

shrink

to

years after Dec. 1,

•Railroad

dwell

to

the

three

to

impulse and desire of the average
individual is to be full of hope,

full

paid

or

is

for

thinking

common

in a
voting
voting trust runs to
1, 1950. It may be terminated
earlier by unanimous action of
the voting trustees (an event dif¬

prefei red

nor

wishful
Frank McLaughlin

deposited

$5.00

pes¬

indulge in

means

at

on

Preferred and

Corp. Wisconsin
distributed" is

"when

L.

318

subsi¬

extensive

to

does rot have to

opti¬
or

simism

This

to

due

public

sonal

Dec.

ficult

dized
with

mism

disapproval.

All of the preferred and
stock

col¬

with

either per¬

stock¬

effective

no

&

due

dend

ately preceding years. One trou¬
ble, and it has been pointed to as
a weakness
in a number of reor¬

the

to

stock

or paid
on the common
unless the full annual divi¬
of $5.00 a share
shall have
been paid or provided for on
the
preferred for the three immedi¬

share

West

earn¬

ings with the SEC, with the fol¬

(virtually the sole asset of North

Middle

on

company

of future

West) will now be made to pub¬
lic holders of the 7% Prior Lien

1940-

ment to paint
pictures for

be

higher

75%

the

ago

estimate

an

estimated

Millions
buys average
than those of First mortgage 3V4S
{

it

which

upplies

time

Some

lowing

24

-bout

stock

common

The Company serves

competition established by the government." Said Mr.
McLaughlin:*the prices of the materials and
"To my way

sweep¬

Light

reported

were

$1.77 in the previous period.

at about 14 V2.

declared

ganizations,

&

share

a

filed

quoted in the over-counter market

fully appreciate that Puget is
faced with difficulties and uncer¬

holders

dissolved, however,
distribution of Wisconsin

are

the common stock compared with

ordered
a

Plant

fully amortized." In the 12 months
ended Sept. 30, 1947 earnings of

final plan was $1.87

a

approved by the SEC and a Fed¬
eral Court. North West has now

P.

McLaughlin, President of the Puget Sound Power & Light
Co., in a heart to heart talk with his stockholders, contained in the
1947 annual report of the company, deplores the effect of what he
calls "unfair

before

necessary

to

Frank

in¬

may

Utilities,
considerable litigation proved

and

and

of Adjustments until these items

West

South

&

Central

Preferred, the 7%

competition.

imposed
through

"subordination," the quisition Adjustments

of

in the recapitalization

as

been

dates.

company

ing implications for St. Paul tnan
,lt has for other of 1he
reorganized
carriers.

if, regular dividends are paid on
regular

suffers from subsidies and special privileges given to
public power. Says there is no such thing as fair government

of the divi¬

excess

to

and

stature when,

investment

of

McLaughlin tells Puget Sound Power & Light shareholders

Frank

betteiment

able progress in
reducing the con¬

Failure

only assume even a small measure

In Utilities

condone.

or

after

ferred dividend has

can

'

diffi¬

more

already made consider¬

servative

stocks

preferred

these

that

Deplores Government Competition

level.

requirement, amounting to
$5.93 a share. Also, the company
is in a strong financial
position
has

same

question

Power

dend

and

felt

was

of heavy

lize, or perhaps they do not care,

of

common

arrears,

owned

West

amounts
the

and amount would be divided 50% to
substantial earnings and 50% to a 'Special
preferred as well as Reservation of Net Income' in
stock. This raised the order to amortize the Plant Ac¬

dividend

substantial
Middle

1946

The latest failure to declare the full

dividend, however, is
to

It

so many years

full

when paying the

even

dividend, to make the payment
on
any odd date that suits their
fancy and in any number of ins alments.
They seem not to rea¬

and

the grounds that net income was

Earnings last year,

consis¬

had

free,

excusable

only nominally above that

cult

themselves

tently stressed the money spent
during trusteeship on the proper¬
ties and the excellent physical

to

delays betwee i the
plan'c; effective date a#d its con¬
summation arid delivery of the
new

up througn cap¬
sinking funds the

funds and

stockholders could look forward to

of

Utility Securities

was

warmest

my
-

>

joined in the cere¬

monies and at the press

inspection
Assistant
Vice-President, in charge of Pri¬
vate
Wire
Services; ^ Alexander
Simon,
General
Manager
and
Trescott A.; Buell, lower Manhat¬
tan
Superintendent, Western
Union.
The new system, devel¬
by

Charles

handling after the original oped

E.

Da vies,

by- Western

installed

and

message has

been transmitted by
Union,5 has been under construe^
teleprinter "sender-receiver" at tion for the
past six months and
the point of origin. In
part the an¬ with its goes the establishment of
nouncement also said:
"*
/V;
a Chicago wire center of Bankers

a

■>"

"The

system, /comprising

more

Trust

will

Company-' The latter

than 5,000 circuit
miles, officially continue to maintain its regular
placed in operation on March 15 cable department: The new wire
when S. Sloan
Celt, President of system is under ;the direction of

Bankers

Trust

„

message 'Number

Company,
1'

of the 19 other banks

the country.

•

sent

to the heads

throughout

In sending the first

message, Mr. Colt pressed buttons
which routed the
message to Chi¬
cago for

switching to

southwestern

points,

buttons here

which

western and
and

other

directed

message to eastern terminals.
message

follows:

dispatched by
•"

system

Department.

V

On March 17 plans for a merger
of the Bank of New York and the

Fifth Avenue Bank of New
were

boards

of

by .the " respective
trustees and "directors.

Stockholders
will

vote

on

of

send

two banks
.proposal ;on

the

the

April 15.
John
The
Colt

of

the

John I.

C.

Traphagen,

Bank

of

New

our

private

you

cordial

President
York,

Downey, President

Fifth Avenue Bank,

I

York

/ratified

the

•

Officially opening
wire

Mr.

the Banking

.V.v./y-

made the

lowing joint statement on
10 with the

and

of The

fol¬

March

approval of their re-

THE COMMERCIAL

Number 4682

167

Volume

Boards" of Trustees and

spective

^Amerger

sideration

purchases abroad,

our

entire foreign trade

our

-

be¬

unless

increase
our

is

It

that

our

of foreign currencies, and
export-import "controls.
Of the
141
trading countries and terri-

values

we

pur¬

tories, only eight small countries
are free from foreign trade con¬

entire foreign

eventually deteriorate.
i'

'

Our

trols

Notwithstanding these obstacles
and

(1) The United States Depart¬

will deteriorate.

of

ment

Commerce

must

is

place

International business, like any other business, depends upon two imports' on the same level as ex¬
will be
ors the need for the goods and .the availability of money. ports and render active assistance
composed of persons from the re¬ mLS1CeThe first factor is
Board

Trustees

of

.

spective Boards of Trustees and
Directors. A formal merger agreement is being drafted and will be

throughout the world

(f q

areas

Strong

assure

goods for
The

-

years

and

needs

by the

to

years

for

to

of

our

come.

evenly distributed.

June, 1947, the gold
dollar

short-term

resources

foreign countries amounted

about $19 billion.
certain

and

funds

This figure

basis

as

war

international busi¬

the

same

other business.

follows:

as

any

.he extent of their

ices
our

and

us

on

ability to

v,1

Asia

their goods and serv¬
the dollars to buy

used

goods and services.

own

They ex¬

capital

American

with

and

investments. During the
prewar
period,
1931-1940.
our
total exports in goods and -.serv¬
private

ices

approximately equalled our
imports. The picture completely
changed after the war. In 1943
our exports of goods and services
amounted to $15.2 billion.
Only
$7.1 billion was paid for through

Mr. Gil¬

native of this city, retired
post as manager in 1926,
after serving the Association for
49 years. Entering the employ of
the Clearing House as a junior
clerk in 1877, he became assistant
manager in 1892 and manager in
1916.
At his death Mr. Gilpin was
a

from the

imports, leaving
billion.

1947

In

amounted

a

deficit of $8.1

our

total exports

Only

$19.6 billion.

to

$8.3 billion was paid for through

87 years of age.

imports, creating

a

total

The

billion.

The liquidation of the affairs of

■,

$9,313

ports.

should

,

•

■

.

two

im¬

5,055
1,680
3,278

we

nations

other

and it may be

1948

by

and

every

purchases of goods

services in the U. S., as fol¬

ably

importance of

imports, particularly the stake of

(4) Our government must sug¬
gest to other nations that the nor¬
mal

and

lasting

to

way

obtain

dollars for their needs here is by

with

us

same

promote

our

sales to them.

vigor

that

we

arrangements be¬

tween

governments,

fected

by

official

and

is

af¬

unofficial

and

billion;, thp

$8.5

European Recovery Program ancl

will

provide

and grants

billion;

$7

about

remittances, private investments,
loans

and

Bank

provide

International

the

by

and

$2

other countries will

our

1948

of goods

will

and

probably

use

and dollar reserves to

the extent of $2
of

Fund

billion;

Monetary

about

their gold

'

Foreign trade is now dependent
financial

imports will prob¬

to

amount

other government loans

exporters in import trade.

our

mainly

depend

foreign countries in

for their

lows: Our total

the

stress

as

estimated that ap¬

U.

S. to

to

Our sales

proximately $19.5 billion will be
available to

.

forward

the supply of dollars abroad

upon

campaign

undertaken

look

can

business in 1948.

a

foreign trade organization in the

——

Total

billion. The total

imports

exports and

and services may, there¬

fore, reach $28 billion.

$19,326

During

the

struction many

period of recon¬
countries, particu¬

tP/'j a

years

Hiawathaijewif

in the European war

larly those

area, have been and are still in
need of assistance.
We have ex¬

tended
end

war

and

we

Western

to

the

since
now

con¬

aid program of $17

template an
billion

aid

Substantial

of the

and

Europe

substantial

grants to other coun¬
The sum which
is now

tries.

being asked of Congress for the
15 months, from April, 1948,
the end of June, 1949, is 9 bil¬
lion 333 million dollars, as fol¬

next
to

lows:

European

Pro¬

Recovery

6.8; occupied areas, 1.4;
other countries, including China,

gram,

1.133

million.

deficit of $11.3
Foreign Aid Program

deficit

export

$19.4 bil¬
The foreign aid program will
lion.
Vv.
f. v
•'< require great sacrifices on our
The deficit was largely covered part.
Let us hope that any aid
New
York
Superintendent
of
by government grants and loans.- granted will assist the recipient
Banks, it
was
announced- on
in
their reconstruction
March 3 by the State Banking In these two years such loans and nations
grants amounted to $11 billion. and will put them back on their
Department.
■
' ■»:v, V
The balance of the deficit was feet so that after a given period
■:
•' 'if
financed
by
the liquidation of they will become independent and
Harold I. Cross has been elected
foreign gold and dollar assets? self-sustaining. Our country can¬
a trustee
of the * Queens County
capital investments, and remit¬ not continue indefinitely to fi¬
Savings Bank of Flushing,«Long
tances and other payments.
nance our export deficit by loans
Island.
Mr. > Cross " heads - the
gifts. We cannot overlook
The disequilibrium in our for¬ and
Harold I, Cross Company;V*mortthe
simple
truth that trading
gage
loan
correspondents,*. * in eign trade is largely caused by means
exchanging
value
for
the- pent up demand for goods
Jamaica,•-N.- Y.;.V*.
value.
We can receive value for
that were not produced during the
value only through increased im¬
war
years, by the reconstruction
A 1
'Shop.'at Home" 'compdign,
needs, by the failure of foreign ports, and through sound invest¬
sponsored by/the^^• PtriiiisiiM'Ra¬
ments.
for- the

the World Exchange Bank of New
York has been completed b,y the

"

educational

be

Foreign

our

promotion of
' *

(3) An

upon

v

Latin-America

pay.

panded their industries with their

1931.

through
the

State

the

Europe, excepting sterling
ll area

eign nations purchased from us to

They sold

in

of

promoting their sales to

(Amount in millions)
Area

assist

must

Service

and

good

For¬

conducted

was

gold

These

investments.

divided

were

Department

However, these

does .not include unreported

our

aspects

not

At the end of

devastated

demand

a

are

of all

the

reconstruction

monetary

before the
ness

Gilpin,
formerly
Manager of the New York Clear¬
ing House died at his home in
pin,

assets

and

of

Assistant

March 14.

m.

a.

J.

on

rather large.

foreign trade however, represent' British Commonwealth &
a
other sterling areas
cloudy picture. In the decade

Chamberlain since

New York

war

created

Comptroller. Mr, McCrae has been
in the bank's employ since 1932

William

fa¬

the

Assistant Treasurer and Charles

and Mr.

the

during

pointment of William C.. McCrea
as

other peo¬

use

ple's money, it will seriously look
for ways and means to remedy

prod uction

Fales, President of
Savings in the City
York, announces the ap¬

Chamberlain

and

are

of

cilities to

DeCoursey

F.

gold

own

situation. Foreign-owned
liquid assets in the United States

industrial

The Bank for

as

its

use

diversion

turbed."

of New

to

through the

Present personnel and
relations will not be dis¬
it

shortages

created

offered by the combined in¬

*

has
certain
beneficial
When a country is com¬

aspects.

The

controls, our foreign business
one of our largest enter¬
1947 was. a record year

now

prises.

to

importers.
(2)

dollars rather than

and

food stuffs.

war

to

hinery,^

goods

distinguished banking insti¬
will be advantageous to
customers
and stockholders of
both banks. The operation of of¬
fices in the downtown financial
district and in the heart of the
midtown section will provider
broader base for business and per¬
mit the enlargement of the serv¬

*

materials, industrial

raw

uipment,

The

urgent need
and farm

an

pelled

tutions

*

There is

consumers'

most

stitution.

our

transportation This

.

customer

for

m a c

submitted within the next few
days to the Boards of the two in¬
stitutions. Upon approval it will
be submitted for final ratificatior
to the stockholders of both bank,
and to the New York State Super¬
intendent of Banks.
"It is believed that this merger
of two of New York's oldest and

ices

much in evidence.

very

con¬

attributed

be totally

cannot

to economic needs.

import trade can be accele¬
by the following program:

rated

These

trols and restrictions.

1

Accelerating Imports

Bank.

Avenue

York-Fifth

New

,

1948 may

in

'

<•

our goods, and volume of
foreign
equal that of past year. Estimates 1948 U. S.
foreign trad2 will reach $28 billion. Holds unless we increase

trade

will

trade

monetary picture

foreign controls, world needs

merged bank for each
of The Fifth Ave¬
nue
Bank.
The name of the
Lprged institution will be Bank of

imports.

considerably

& Trust Co. of Chicago

^rj £^'ron^ P0'nts out, despite cloudy foreign
and

of stock

to

apparent

chases abroad

Vice-President, American National Bank

of the

share

coming

By A. M. STRONG*

will be one share
nf stock in the merged bank for
nne share of stock of the Bank of
New York,
and four shares of
of merger

ttnrk

CHRONICLE

Exports, Imports and Dollars

of the two banks has

informally agreed upon. The

hpen

basis

FINANCIAL

&

was

■

.

-

correspondingly in¬
During the past fifty years, we
and by
a considerable increase
in prices. have concentrated on selling our
the five
communities—Gedarhurst,
The deficit may be reduced and prod acts
to other nations. We
Da
wrence,'. He wlett,:Ih wbo'dt and
eventually eliminated by a reduc¬ have paid little attention to im¬
Woodmere
tion in foreign purchases, an in¬ ports and our import trade grew
serves, has produced *^6o(f Jre - crease in the use of foreign gold up without assistance or encour-*
suits" in the first
vtwo mnonths pf and dollar assets, an increase in agement, As a matter of fact, we
have done our utmost to discour¬
operation, according Ta>dhe bank's loans and gifts; and an increase
in our imports.
; <
i\. age imports. Neither have other
officers.The drivoAwill corViriue
countries been active in promot¬
throughout y1948;• - World Needs Our Goods
- i :
eaihf>ai|n
ing their sales to us in the same
theme;"Shop in the
Most, nations have, taken' steps manner as we promoted our sales
bad a
to them.
Few foreign firms ad¬
to curtail their purchases here by
A"triple>edged'^
vertise
their ' products in - the
Simultaneou^y;> dhe^Vrbank -^an¬ tightening their import controls. United States. Our overseas visi¬
countries

tional Bank of Cedarhufst, Bong
Island, N. Y.: ahd - encbrhpassirig

to

New outfits for the

..

their imports to us.

crease

v,"!1

Within

out

he
Chicago • Milwaukee
St.

Paper

advertisementSi VTele&?bd%

[Jews story* cbntaihing

hy

Nevertheless,

a

1947

wachleid^ -ard^

^tateh^nt

unvMled-J

a-Ylarge

goods.

two
«

main

traffic

e.wlett,v :* shows ..

,

arteries

and

in

Picketers" holding placards'; each
earing one -'word/ reading from
'

t

to

towns."

right, "Shop in the - Five
-■

-'v

•.

•




,

'
use

dollar

of

by foreign
manifested in 1947.

reserves '

gold

countries

five1~ w d m e;n

TThe
great need of our

accelerated

An

intersection

at the

■

the ineffec¬

their measures.

of

world is still in

outdoorbillboard.'\Thikteh-cblor
.Poster, situated

exports indicates

tiveness

thev;President;^;€haHes'f^.

the Volume of our

was

*From an

address by Mr.

meeting sponsored by World
Trade
Committee,
Indianapolis

apolis,

of

Commerce;

Ind., March 16,

come

The

,

foreiga trade

.

Bake • Spokane

Indian¬

1948.

few

,

Seattle
1

•

lien Moines •

Omaha

Sioux City • Sioux

the needs

of

up

to assist exporters;

importers.
change; we

set

few assist

situation must
must give serious con¬
This

-

*

'

;•

v

r

•

,

A

Little attention is

hundreds, of

5

»

time,-glass-roofed
" ;
■
' *'
During 1918, The Milwaukee
Road will enlarge and re- equip its
Hiawatha

exporters'

paid to
importers. There are
foreign trade organi-

i M

i

.■

with, for the first

Falls

and 60 other station*

.

Department of Commerce, as
well as of other government agen¬

needs.

step

equipment. There'll
squeals of/.aeligllt from7 the
new

Skytop Lounges.
?-s-

out

cies, are geared to our

with

And no wonder! Coming will be
brighter, handsomer coaches...radioequipped Tip Top Tap cars s v.
diagonal-seating dining cars.*,
luxurious drawing room parlor cara

Taeoma

activities of

Strong j zations in the United States

at

Chamber

mostly buyers* Very
to sell here.
,
/

tors are

few weeks the AM andPM

HiAwatha tepee,

Paul.* Minneapolis

; -

.

nounced thedrive:in'lb(^Fii&Wfe-

a

Twin Cities Hiawathas will

A

senger

THE

ROAD

cars

More

new

pas¬

will be placed in

on any other western
Sengstaeken, Passenger
Traffic Manager, 808 Union Station,
Chicago 6, Illinois.

service than

'Milwaukee!
^

train

fleet.

i

railroad. 11.

Chicago, Milwaukee, St. Paul & Pacific

Railroad

26

THE COMMERCIAL

(1230)

Thursday, March 18, 1948

CHRONICLE'

FINANCIAL

&

before
1940, we would
approximately another $3
billion; in other words, it is going

existed

Three Critical Situations in Our

deduct

Economy

who

it for consumption

use

.This

poses.

is

not

but this situation

pur¬

inflationary

is

in which

one

management prices are disorganized and in¬
creased.
about $3 billion more than they
so
that we have some reason to
much
same
time we have had aDout a tell me how
j have been
charged for in their depreciation
Shortage of Equities
mak.ng, because I am think that we may be at a turning to obtain enough money to re¬
doubling of the gross prices which I
certain they don't know.
point in the rise in production and
Please note that I have not said
are pain for the services of people
^
place plant and equipment or to
Last week I was discussing the prices wh.ch might be proved to
that there is a shortage of
who work on hourly wages. Then
capital
obtain enough capital so that the
be a temporary ceiling in the vol¬
in
the aggregate. One can
again, consider
the differences effects of the inflation in Germany
owners of the enterprises will be
find
ume of production and a tempo¬
evidence of large savings under
whjch have. been brought about on the accounting system witn a
getting funds equal in exchange
between
the incomes of people German
economist
who
lived rary high in prices. I have also value to the funds which they in¬ accumulation today. These sums
(Continued from first page)

live

who

fixed

on

incomes

defy most

and

live

it

and

deeply

are

reluctant

are

We

all

are

the

of

aware

that

prices paid

equipment.

doubled.

that

they

It costs at least twice as

to

capital equip¬
it did to buy the
capital equipment before the war;
much

as

although

and,

the

replace

today

ment

occupying dwelling space. Con¬
sider
the
present
price - value

of

of

the fact

to

on

were
giving away their capital
equipment when the price of cap¬
ital
equipment
had been only

paid for the services of salaried
people, even wage-earners, and in
particular, say, the price paid in
the form of rent for the privilege

attitudes

their
it is
the fact

think

I

on
business managers began

our

catch

to

products have been in¬
creased much more than the prices

or

to the fact

on

interesting to comment

fact

farm

judgments

caught

that they were giving away

capital

that farm prices or the

before the

by some 200%

bus.nessmen

today.

for

in

creased

to

invest of their money

and

He saio
opinion that the price
Germany had been in¬

his

was

level

who

people

incomes

fixed

on

disturbed

spend

The

effort.

today to
profit they

through that experience.

those who derive their funds from

current

businessmen

of

many

ac¬

our

production has been large enough

flationary
all

serve

process

in

kind

this

of

may

we

economy.V

our

situation,

a

ob¬

^

of price .disor¬

manner

ganization

busir

a

would be well warranted

nessman

keeping an eagle eye on the
movement of goods in retail trade.

in

For, if retail trade is reduced sig¬
nificantly,
it means that large
numbers of people are deferring
expenditure for consumption; and,
if large
in

the

numbers of people do that
situation we are in now,

certainly going to have a
reduction of business activity and
in trade and will experience a
are

we

spiral of some kind

deflationary
other.

or

countants say

this point in the in¬

sa.d that at

-.,.v. i

business

take

to

another $3 bil¬

vested. If we take-

the *$5.2 billion

from

dollars

lion

undistributed, corporate

of

remained,

that

its

prof¬

have

we

only $2.2 billion left or available
for addition to surplus. V

$17 billion of corpora¬
profits which seemed to be
so
exceptionally large, only pro¬
vided possibly $2 billion for ad¬
ditional investment in new plant
So, the

tion

equipment plus the amount
obtained from corrected deprecia¬
and

charges. These" calculations
to the conclusion that cor¬

tion

the hands of

tion to how much he receives for

renting his house.
Now

some

v

that

say
make

may

farmer ~ did

not

sum

before the war and others
say
that the landlord
charged too high a rental before
the war, but I am not taking such
matters into consideration.
I am
attitudes

the

these

the

these

of

individuals—in
What

attitude

they

which

prices

receive.

do

you

pay and
think the

of

other

different

use

raw

prices. We use the prices
as hides, scrap steel,
grain, sugar, etc. At no time in
this century has there been so
much disparity between the prices
things

different

of

as

is

This is indicative

the case today.

of

materials

raw

distorted
price system and the existence of
confused price-value judgments.
a

maladjusted

The

break

in farm

and

which

prices is

occurred

has

first and im¬

a

of
our price system. The farm prices,
as a group, were the prices above
portant step in a readjustment

all

others-which

out

most

were

of line with what might
sidered

be con¬
relationship to

stable

a

prices.
It has been quite
interesting to note that these, be¬
ing the most extended prices, have
other

been
a

the

first

be

to

dramatic

rather

reversed

manner.

in

Pos¬

sibly the recent break in the price
of agricultural
products is the
first harbinger of a
period in
which many

prices will be read¬
justed. In 1920 the break in the
price of agricultural products pre¬
ceded the break in the general
by

level

price

several

months,

Department
billion

that

from

cost

in agricultural Drices was reversed

is

develop¬

of

significant

indicative

instability as well
price disparity.

as

of

price

evidence of

been

metic

the

of

confusion
business

of

the

arith¬

accounting.




common

I

the end

of the

lower

the

at

market

or

dollar value

You

price.

of

may

readily see that if inventory prices
at the end of the year are higher
than inventory prices at the be¬
ginning of the year, the calcula¬
tion of net costs will be reduced
by the amount by which prices
paid were increased. As a result
of

not

am

procedure
that

estimated

in

$5.2 billion of re¬

ported earnings consisted of that
of profit. In England man¬

kind

"investment."

of asset

I

am

machinery,

warehouses,

stores,
etc.

from

by

business investment

year

the banks in

equipment bought in
this country, so the total of busi¬
ness
investment, including farm
investment

and

investment

in

loose tools and equipment seemed
to be classifiable as "high." But

income.

In

a

late

the

'20's—-this

investment

was

kind

of

the

of

excesses

business

about 10%

of

na¬

tional income. So in

funds

of

ending;

term

the

for

internal

loans

sources

i
no

are

adequate; the savings of the wa-

a

In

business
equal
to 47%% of the money which was
used to purchase new plant and
equipment in the security mar¬
kets. Now I am not talking about
incorporated

1925,

in this country

raised

when

sums

from

or

80%

of the money was raised by

1929

60%

to

In

1925

4.7%

5 amount.;■? equalto

an

of the national

invested

in

income

1947, despite the fact that
sued

so

to

price

we

demand

and

pushed

down, we issued new
equal to only 2.3% : of

the

national

just

about one-half

income.

This

tional

income

of

enced

in

which

1925.

From these

A \

.

the

we

experi¬

V

number

of

ment, of course, than

brackets
are
no -longer
saving
enough from their current income
to provide sufficient new
capital
to permit maintenance of the cur¬

by

some

$5.2

billion.

Now

that

it
cannot be paid out in dividends;
it cannot be used for purchasing
capital equipment; it cannot be
used for financing additional in¬
ventories; and it cannot be used

kind of profit cannot be spent;-

finance

to

In fact, it

really

receivable.

cannot be used, and it

profit.

isn't

isolated

are

accounts

as

a

reserve

It should

isn't,

but ordinar¬

with

managers

ing how much money they are
making, because the accounting
systems which they are us:ng are
not
adequate to cope with the
kind of changes which are taking
place,in our price system due to
dilution of our money supply.

a

have

perienced

said
an

that

we

inflation

have

of

ex¬

our

supply which has resulted
in an increase in prices; that the
combined increase in prices and
money

vestment

not

case

when business in¬

an

idea that

going to continue this

level

of

case

really is high.

Now I have

business

we

are

current

investment

in

a

with

the

cate

rent
and

a

increase" in prices

rate

of

people
and^higher income

investment

in plant
equipment. I would arrive at

this

deduction

by

observing the

equipment despite the

trend of prices in the

fact

it

ket. In addition

that

has

not

relative to income.

spent

some

been

high

Last year we

$15 to $16 billion,

as

one

sonal observation
one

indi¬

situation inAwhich

plant and

be closely

the result tha^t
and investors
kidding themselves concern¬

it

than is the

the

means.

this

for

equity capital, that there is
deficiency in the funds avail¬

a

knows

more

who

is

stock

deficiency

in saving in the
people who might invest

hands of
their

money in equities and that
the prime cause of this deficiency

to

seems

be

progressive taxation.
conclude-

In consequence, I would
that it is

probable that aggregate
in plant and equip¬

investment
ment is
are

going to be reduced. There
exceptions to this state¬

some

ment.

I

talking about the allthe aggregate. The
exceptions are the railroads, the
over

am

total

or

oil ' industry, steel
some others.
The
managers of some of the durable
goods and service industries prob¬
ably, are going to continue or even
increase their investment in plant
the

utilities,
industry

and

arid

equipment.

these

In

cases

some

industries in which cap¬

are

ital obtained by selling bonds can
used.
In other instances the

be

expansion is of such a return +v>pt
once it is started it is rather

when

difficult

to

The

The

stop.

■.

mar¬

may use per¬

of

what people
have salaries of

Banking Situation

third

critical factor

I will mention is
is

figures I would de¬

in the middle

was

not presage prosperity
long-term by any man¬

point I would like to
recapitulate by saying that there
is evidence of a pressing demand'

na¬

equipment, excluding farm invest¬
much lower amount

of

ner

rela¬

are

a

the

same

again. This situa¬

was

tionship of security- issues to

duce

in
is¬

securities that we
supply
of
these

many

increased: the
relative

was

securities;

new

there

in 1925 and

does

do exactly the

are

things. First, I
would say that the effects of
pro¬
gressive taxation in combination

report that .kind of profit to
corporate earnings reported

at¬

recession!

the

equity markets

1947, despite
not be permitted to the fact that we thought that our
call
that
a
profit.
Companies business investment was so high,
which use Lifo accounting do not we actually spent less of our na¬
report that kind of profit.
But tional production for plant and

raise

of

being spent;, and the- able for investment in plant and
are anything but equipment from the internal cor¬
reliable source of capital.'"T
" porate sources of funds, that there

periods

would

do

bottom

low

a

to

production
and
prices. Un¬
fortunately, the managers of our
business enterprises are being en¬

At

the

difficult

was

in

sayings accumulated during
war
periods.'; But the source

agers

enough companies who

the

tain

it

over

from

7.8%

national

that

over

securities

of

expenditure to such

level

tion

the

well-balanced year, such as 1925
and I use this period because
I think in 1925 we-had not yet

so

other

longer making in large quantities;
from the sale of obligations; and

business investment of the type to
which
I
refer
was
only about

—

of many
far in debt in

managers

businesses went

to

amount of loose

enormous

the

that

was

couraged

a

and

deep and protracted

a

thing all

means of security flotations; I am
low,
Now
that
talking about 1925. In 1947 the
surprising statement new issues were
equal to about
because
we
frequently are told
30% of the money invested; and,
that business investment in plant
in order to raise that amount of
and equipment was high. The in¬
new
capital, the addition to the
vestment by farmers in agricul¬
supply of securities * apparently
tural
machinery and equipment
was
enough to reduce prices iri
was
high and apparently there
the equity market.
'
*
was an

tools

had such

depression in 1930, 1931, and 1932

been

somewhat

sounds like

rowed
we

a

being developed in the

system".

We

which

s5tuation wh'ch

banking

heard

have

wurh

tightening of credit
supposedly brought about by the
monetary authorities. As an ac¬
about

tual

the

matter

the

fact,

of

demand

capital by the managers
of business enterprise and the
public officials of the state ana

for

new

local

has

governments

been so

great that they have bid up

inter*

capitalConsequently, the yields on cor;

est

rates

porate

in

order

obligations and

ernment

local gov¬

obligations have been in¬

creased to
ers

get

to

hold¬
bonds
the obligations o
governments and

the point where
began to sell government

in order to buy
state and local
•

than

$5,000 per year are corporations/ As a result, the Fed¬
if we spend that much in the
year doing with the money which they eral
Reserve
authorities
wer
1948. In the first
v-- ■!•-'.-.A.:.-■
place, as I said, earn.';-' ?•
forced to supoort the market or
businessmen have not been mak¬
In addition, it is
interesting to government obligations. Actually?
ing
as
much
money
as
they note that the progressive tax rates I would say that the reserve
thought. Last year, out of the $17 which are
being used to siphon tborities have not taken the init <h*
billion of corporate
profits, $6.6 money from the hands of those tive; they have done what toe
billion were spent in the form of
people who might invest in plant thought was necessary in viewJv
dividends, leaving $10.4 billion. Of and
equipment are also being used the action' taken by
p.Por)lenhthat $10.4 billion, $5.2 billion were
to direct money into the
hands of wanted to acquire capital. Pro,1
locked up in inventories
by the those
people
who
employ
the ably the Reserve authorities hav
rise in prices; so if we
deduct funds to
enlarge the demand for done little other than to Pr®ve.
that $5.2 billion, we would
have consumption
goods. In other interest rafes on government on
$5.2 billion left. All
corporate de¬ words,
the
from
being
increas
money
or
income ligations
preciation
totalled
$4.8
billion; which used
as

we

can

tell.

I

doubt

•

and, if
on

to be used to

we

plant

enlarge
being

double the depreciation

plant and

and

diverted into the hands of
people

equipment

which

•
?

businesses cannot use bor¬
money.
One reason why

many

J947 and which the banks are no

plant and equipment probably

was

not available for investment in
equities. We do not have a short¬
age of capital, but we do have a
shortage of equity capital. This
difference
is important because

is

1946 and

loans which had

term

made

1928

Last
in

accounting,
Department of Commerce has developed

this

the

I

Another result of the disorgani¬
zation of our price system has

at

appraised

year,

ily

It

It is

the

total

inventories

of

numerous

most

of

during the year, and subtracting

experiencing about the same
general kind of pattern this year.
We have a large number of ex¬
tremely unstable prices today, and
the rapidity with which the rise
is

last year by
Commerce,
that *17 billion
of

revaluation."

and it would not be unique if we
were

ments.

I

talking about the expenditure, by
enterprise management for plant
and
equipment, not farm ma¬
chinery and equipment, but sim¬
ply what we ordinarily think of
when we refer to factories, offices,

for

reported

were

practice to calculate
the cost of production over a year
by taking the inventory at the
beginning of the year, adding to
it the cost of things purchased

material
of such

tory accounting. Out of the $17
billion of corporate profits which

accounting

in judging whether or not the
price system is unstable is the
amount of difference that is being

between

again by enlarging
a result of inven¬

once

profits as

tory

monthly basis since before War I.

developed

fooling our¬

we are

$5.2

meas¬

we

addition,

consisted of what is called "inven¬

by past relationships. In my
office we calculate the disparity
between raw material prices on a
which

dilution, or other¬
giving the capital as¬
by the investors away.

the

ured

One «of the factors

one year.

kind

selves

exceed¬

as

of

course

he is

our

to the prices

materials

raw

in the

going to call the purchase of this

In

the uneven rise in prices.
are

which is not charged
to^ expense in the current year.
Certain businessmen purchase
dies, loose tools, and other items
of equipment which they amortize

equipment

currency

Fooling Ourselves On Profits

be observed that there
great differences between dif¬
ferent raw material prices brought
materials

depreciation charges to re¬

sets owned

It may

raw

a

use

"business

term

wise

to

are

Some

of

supply,

money

When I

investment,"
I refer to the investment of nonthe

flect

is toward
their expenditures, their invest¬
ments, and their incomes?

ingly high relative

the
business must in¬

the

manager
crease

their parts

on

about by

of

investment.

business

of agricultural business in plant and

terms

have experienced a di¬

we

lution

people—
regard

in

much

as

When

consideration

into

taking

buy

money

goods and services as the monev
which
he
originally
invested.

also

simply

of

will

the

enough

money
may

manager—expects
obtain for him a
or capital which

a

the manager to

■

com¬

panies and are available for in¬
vestment, but this kind of savings

the
1920s.
Consequently, when*
porations probably cannot finance they tried to pay off their in¬
debtedness, they had to reduce
a continuation of the current low
current
investment
and
level of investment in plant and .their

lead

that machinery and
equipment from internal sources
equipment which we buy today is
of funds. It is apparent that the
Business Capital Investment
more
productive than machinery
level of business investment
in
The
second
critical factor of
which we are consuming or using
when he considers the subject of
plant and equipment which we
major importance
which I am
the investor—
how much he pays for his food, up, nevertheless,
experienced
last year was
fi¬
the man who puts his money into going to mention is the subject of
an auto or clothing today in rela¬
nanced
from
internal
sources;

typical house owner, who invested
his money in residential construc¬
tion to be rented in the' thirties,

invested in life insurance

are

capacity is

now

substantially.

!*

We
fiscal

are

also being

operations

of

told how
®
the Fede

Number 4682

167

Volume

THE COMMERCIAL
I dont .th nk that
bank loans are

retard
further rise in prices,. hQlng«
nias- easy to obtain as
has
is deveioped from evi¬
generally been considered

mvernment can be used to
n,

id€a

that the Federal Treasury is
in more money than it is
oaving out.
In this way a cash

dence

taking

is being accumulated
which can be used to retre gov¬
ernment bonds, in order to re¬
duce something called "purchas¬
ing power."
Actually the excess
of government receipts represents
funds saved by taxpayers during
the past and enly to a minor ex¬
tent can be considered as a reduc¬
tion of current income available
for expenditure.
:
Those of us who a? individuals
or as managers pay large sums to
the Collector of Internal Revenue
during the first quarter save funds
for this purpose during $ prior
period. Taxpayers anticipate their
payments of cash to the govern¬
ment for taxes; and therefore, the
money which the government re¬

probable.

Therefore,

periencing,
peak of

the

at

we

are

ex¬

made

evident

have

an

terms

to inflation of

cor¬

of

when

already

we

unstable

situation

in

price relationships.

first quarter of the
which is m /excess of gov¬
ernment expenditure, is not money
year,

istakeo from consumption

which

during
.year
over

the

quarter of the

first

but has been* accumulated
a past period of/ time.
Of

bank reserves are reduced
when federal funds are shifted to

course

banks. But bank re¬
serves are not a present problem.
Actually there • isn't evidence- to
the Reserve

the conclus'cn that the
activities of either the

support

present

Reserve

Federal

Board

or

determinants of the

as

rise-in prices.' Apparently

end of a

that
of

in

line

Lord

the most important critical situa¬
tion in the credit system is the

with

Curzon

Wrote
would

that

torate

and
as

Egypt

.have been
■as

a

result

On the

•has

enlarged substantially
of the rise in prices.

other

not

hand, bank capital

been

Before

creased.

;not considered
•the

significantly
the war it

in¬
was

good practice for
of a commercial

managers

bank to permit the capital to be
-less than 10 or 11% of total- assets.
The

bank; examiners

•kind of

a

ratio

used

in

the

interest:

•of bank solvency.

was

raging,

unlawful

attack

prosecuted

ers,. ■ second

arose

i self

against

once

cates,

his

of

bondhold¬

bondholders,

of

stockholders

common

stockhold¬

too often discover that they have

rights at all.

no

tions

presence

of

Canal

terstate

of

defense.

negotia¬

occupy many years,
to the bandying about

lead

and

These

often

troops along the .line of
purposes

security¬

in the parent company—who

ers

the

for

and

preferred

ordinary

of British

Suez

different

mortgage

of 'junior

rights
and

showing

the

ana

of

those holding the stock or bonds
of leased lines, as well as
the

Abysrinia.

more

even

claims between the In¬

many

Commerce

Commission'

the United States District Courts,
the Circuit Courts of Appeal, and

Reflections Upon England's

sometimes

t

Egyptian Experience

preme

the United

Court

:

Spates

Su¬

from'

itself;

all

This piece pi

history is replete which courts instructions are sent
/lessons.
for^/Us back to the receiver. The whole
Americans at this particular time. proceeding is, a work of years.
The first is this: The impossibility
with

.valuable

encountered

-

by England in with¬

from

*■;

the

adventure

'

after she had made her
ment

in

Egypt.

England

"Agent"

earned

the

or

of

Representative in

Complex

and

a

very

serious

us.

/Marshall Plan Would

Augment

they

vastly

difficulties

augmented

During the war,
-th? rples were/changed by per-i uation with
mitting bankers to consider gov-, countries of

i-;

us

Our

Europe

be

under
sit¬

own

the

16

would

be

to

respect
v

would

for

Marshall Plan.

by

ex¬

are

President

blind

nation that acts as banker
supervisor over 16 other na¬
and also by anyone who

any

should be sent to act as

an

"Agent

the

pitfalls that lie
the Marshall
Plan fov he says in his message:
"Continued relationships must

not

to

the

across

path

of

maintained

be

organization

an

the

participating nations. The
requirements for each commodity

or

service
be

must

the

under

carefully

program

evaluated in
supplies

relation to United States

and domestic needs and to the

other

of

sources

Decisions

help.

can

reached

as

the

to

re¬

which

nations

be

must

best

means

of

supplying aid and the conditions
of aid for each country. Assist¬
ance must be
given to facilitate
the

transportation,,

procurement,

and efficient use of goods.

review

stant

the

over

use

of

our

aid

execution of agreements.

of

sults

the

program

evaluated

and

concerned

—

A

con¬

be maintained

must

and

to

all

President,

the

Congress, and the people.".
The
President
puts,
this

it

that

the

The re¬
must be

reported
the

calls

The

only answer

such

words,

review

the

over

use

to

as

some

from

receivership

a

these:

must

be

Georgia Central, 14 years.

the

of

risk
nothing in guessing
like England in Egypt, we,
would be enmeshed in Europe's
We

that,

tration
our

of

truth

for

is

an

this

than

present difficulties in Greece
Korea?
Unless the foreign

com¬

ffinal Outcome

The
But

all

the

when

the

guess

country but
cans

whom

We Ameri¬
most" hated,

unhappy

people on

shone.

We should

sun

be cursed by
we

the

be

and

the

We
any

our own.

would

despised

come?

concerning

should

end

no

themselves

find

parties

venture

would

condition

what

in

one

every

to whom

had ever advanced a dollar—

by every country we
had tried to assist. American im¬
denounced

perialism would be feared every¬
where.
Do the relations between
mortgagees
tween

between

lenders,

and

borrowers

be¬

mortgagors,

and

landlords and tenants, be¬

and

pawnbrokers

tween

their

clients afford us no ray of light on
what would be our own situation
in the eyes of

would

ity

the world? Not only
of dollars be

billions

our

that is
still,

enough.

bad

But

chance
for
leadership, every possibil¬
every

securing
international
a reorganized and re¬

for

standing in
forfeited

of

foreign

our

merce.

maintained

the

25 years.
awful price to pay

regaining

vitalized

of our aid and

the

This

for

political

unworthy

and

quarrels

con¬

execution of agreements." Could
there be asked any better illus¬

that

and Hartford lasted 12 years;

moral

"A

of

The Seaboard Air Line's
experience was nearly the same;
that of the New York, New Haven

gone;

his

The
emerged
some 14

years;

worse

of

suggest is

we

to look at some receiverships:
Rock Island RR. has just

so

comment here. All we do is to ask

attention

States'

United

the

Withdraw?

little

for

the

wreck

to

not

Could

When

United

the

with

Nations and with

of

stant

be encountered

is

himself

Truman

if

disturb,

whole plan of recovery.

hateful

self.

simple when contrasted

tions;

would have been

world

beyond

recovery.

To

imagine that it would be possible
for
us
to
become
international

money-lender

on

world-wide

a

scale, chaffering and bargaining
and quarelling with 16 nations of
Europe
for 25 years and then

General" in the foreign country.
Here are some of the questions

and

primarily by the
United States itself, and second¬

newspapers are

government

plumes still shining white, our
hands unblackened, and our repu¬

arily by her representative in the
debtor countries:
(1) The need

finding

tation

to

Difficulties for Us.

These

currency,

currency,

paper

the workings
But

are

and

This is

a

American receivership.

an

file very people whom sfie was
as isting
were the ones who de¬
thought for

in favor

for

standard

gold

a

close

hausting indeed
of

sometimes

with what would

tested her.

tariffs

forcibly

undying distrust and dislike of
Egyptian/people themselves,

the

American

an

Foreign Land

simply

could not escape from the weight
of those heavy Egyptian loans.

Secondly,

Difficulties

The

large in-

She

aggravated by finding
were

to

en¬

often con¬
veniently styled a "managed cur¬
rency." Every one of these ques¬
tions contains a headache in it¬

be¬

holders of receiver's certifi¬

ers,

When that passed, the old resent¬
ment

this,

holders: first mortgage bondhold¬

was ac¬

sovereign of

upon

interests

classes of creditors

1935,

Mussolini

After

owners.

conflicting claims

rights and

The only cessation from
such dislike occurred
during
when

when it is finally re¬

its

tween the

at last recognized
a

operation

the receiver must del ermine

cwn.

the

•ernment

turned to

kingdom, with

a

her

-this

to limit the loans

and:investments

of the lina

he

Egypt in 1914, when

was

economical

by

Asiastic
be misgoverned by

World War I

oFian

when

normal

cept :d because of military neces¬
sity. It was discontinued in 1922

ves

tate loans of the commercial banks

mit

well governed
by
The English protec¬

over

high

ible

page 4)

directly

taken

1890,

in

Europeans."

In recent years the com¬
mercial, agricultural, and Teal es-

.banks.

j

Asiatics-•■..than

drawing

<

is

be

while others sought an inconvert¬

view

"the

sooner

relationship between assets^and
capital in the commercial

.bank

the

would

nations

some

of

(Continued

tolerated, which fact

difficulties

protection
while others leaned strongly in
an opposite direction toward free
trade; that some were advocates

Snare

the

Federal Treasury are of much im¬

portance

management of a series of foreign
loans. Moreover, all of the fore¬
hanced and

balance

ceives in the

ing and well-high ujnsolvable dif¬
ficulties to be encountered in the

going

27

(1231)

CHRONICLE

constriction
These factors are being

of credit.

approximate

prices due

FINANCIAL

the money
supply, a crisis in
porate finance-and, a

prevent

This

&

faced

be

for close and intimate

supervision

by the creditor nation over near¬
ly

theY entire

revenue

of the
with a

news

suade
word
are

columns

of

some

of

our

sadly at fault, our

is at this very time
difficult to per¬
the Greeks to keep their
in return for the help we
it most

giving them; while in Korea
we
have spent so much

where

emerge

from

the

with our

mess

untarnished,

is to

go

day¬

world of hard,
coarse and brutal cynicism.
John Bassett Moore, in his work
dreaming

entitled

in

a

"International

Law

and

obligat'ons as being risk-t
Some Current Illusions" says at
money and afforded so much as¬
debtor, country, coupled
calculating the ratio of; En gland in her relations to/Egypt.;
•
Vctb;'Oh':extravagant budgets and sistance, American soldiers are p. 24:
earn'ng assets to capital. But dur¬ Onr loans are to go, not to Orien¬
"Of all the illusions a people
questionable
expenditures;
(2) cursed, and American goodwill is
ing recent months some bankers, tals like the Egyptians, who have
can cherish, the most extravagant
derided.
/:'■/■.■/Y/
The presence of some representa¬
•have learned that you can lose not been their own masters for a
and
illogical is the supposition
tive of the creditor nation at the
European Selfishness and
•money by
holding / government; thousand years, but to Europeans,
that, along with the progressive
Communist Hatred
;bonds. Not much money has.beep intensely jealous of the Great Re¬ capital and on the treasury board
degradation of its standards of
of the debtor, armed with ample
lost this way, but some investors,
j We
have
touched
upon
the conduct, there is to go a progres¬
public of the Western World, and powers of enforcement; (3) The
; are holding government bonds on,
sive increase in respect for law
mere fringe of the difficulties but
equally suspicious and resentful danger
of
complaint
by
one
•which they have a small loss. Fur- of
foreign' dictation.' When we debtor country against the cred¬ we have said enough to show the and morality."
The adoption of the Marshall
■thermore, it is entirely conceiv¬ loaned money to Germany after
itor nation, charging that favor¬ hopelessness of the Marshall Plan
able that at some time in the fu¬
1922, and under the Dawes plan, itism is being shown to another ever proving itself to be a tonic Plan spells the end of our role as
ture there
may be more loss. In our loans did little good to any
and resuscitator of the Old World. moral leader of a new world. This
debtor, thus creating hatred and
this circumstance it is interesting
Rather it should be likened to the is a side of the matter which has
one till we had our own repre¬
mistrust
among
the
15
other
to consider
some
of
the ' bank;
sentative
abroad, /the
late
S. debtor countries; (4) The infinite hydra which Hercules attacked been overlooked by some good
•ratios.
/
Christian people who have en¬
/;<
'Y
and which had nine heads; if one
Parker Gilbert. He acted as our
possibility of intensive and deepAt the end of 1947. commercials
head was cut off, two immediate¬ thusiastically endorsed the Plan
"Agent
General"
in •/ Germany/, jy'-Y .bidden
maneuvers
under¬
without 10 minutes of debate.
•bank capital in relation to total and
hist power to control waste ground, between the different ly grew in its place. If this seems
assets
anr overstatement,
let
us
give
apparently... amounted
to and folly in expenditures was a
debtors, ^among
themselves in close attention to what the Presi¬
•abnut 6%% of t,o*al assets. In June. real one. He could and did exer¬
order'to'circumvent and nullify
■1938, the capital of the commer¬ cise that power to check the Ger¬
dent himself says in his message
the plans and proposals of the
cial banks was equal to 11.9% of mans. Mr. Gilbert was not only a creditor; (5) The enormous diffi¬ for the President names a hydra
'total assets.
The ratio has been financier of
exceptional ability, culty and delicacy of determining which we have not as yet men¬
/reduced from 11.9% to 6.3%/ We
but was also blessed with tact and which one of the many applicants tioned.
CHICAGO, ILL.—Louis Loss of
also
"Political events in Europe and
may compare the June, 1936,
courtesy to a very great degree. for loans within a foreign coun¬
Washington, D. C.,.Chief Counsel
in the'rest of the world cannot be
fgure of n.1% with the 11.9%
of the Trading and Exchange Di¬
try, is to be the favored party,
Problems of an American
accurately foreseen. We must not
*-;n 1938 and 6.3% at the end of
vision of the SEC, addressed a
and whether any project at all is
Receiver
1947.
be blind to the fact that the Com¬
YYY/:YY
meeting of The Stock Brokers
proper for investment; (6) What
munists have
announced deter¬
The
It will conduce much to an un¬ would be the proper course to be
Associates of Chicago March 16,
relationship of bank capital
to the risk assets also is of
jnter- derstanding of the Marshall Plan followed by the/ creditor if it mined opposition to any effort to on the trading floor of the Chicago
' :
;'est- By risk assets I mean earning —otherwise called the European should become evident that the help Europe get back on its feet. Stock Exchange.
<assets less government obligations Relief Program—if we try to get
Mr. Loss' subject was "Brokermoney already advanced by the There will unquestionably be fur¬
•and cash. Commercial bank capi¬
Dealer
Relationship," and pre¬
before our minds some slight idea creditor was proving insufficient
ther incitements to strike, not for
tal in
sented
actual case material.
A
June, 1946, apparently was of just what will have to be done to accomplish the object which
about 26.3% of the total of ri^k in each of the 16 countries who
the purpose of redressing the le¬
question-and-answer period fol¬
the debtor nation was seeking to
assets. In
June, 1938, it was 26.4%. are to be benefited by our loans. achieve. This is well illustrated gitimate grievances of particular lowed the address.
/As closely as can be calculated, If we are right in likening the
by our English loan of three and groups but ,for the purpose of
the
percentage was only 20.5% role which the United States must one-half billion dollars.
It has bringing chaos, in the hope that it
Patten, Arnold Formed
^t the end of 1947. 'This statistic play to that of an American re¬
wholly failed to do for England
will pave the way for totalitarian
indicates that commercial bankers
PORTLAND,
MAINE—As
of
ceiver of a bankrupt railroad, let what she had hoped, and it is
are. in
April 1, Patten, Arnold & Co. will
many communities, nrobus
first get some notion of the nearly exhausted already.
Will control."
Of¬
These
are
words of wisdom, acquire Timberlake & Co.
'fh + coming to the,. conclusion problems which such a receiver->is Great Britain soon ask for an¬
mat
ficers will be Stanley H. Patten,
they cannot make too many called upon to solve. They are
other advance? If so, what is the which we ought to heed—they are
more loans.
President, and Oilman L. Arnold,
In this connection it
proper thing for the United States worthy of
is
many, and they are far from sim¬
our
most serious Jr., Treasurer. The firm will be
interesting to note that the rise
to do?
thought. They point to a danger located after April 1 at 477 Con; in
commercial credit has
been ple. First, the receiver must man¬
These
are
some
(but by no
gress Street.
flattened out significantly since age to put the property itself in
so great that it is powerful enough
means all) of the many perplex¬
the end of
last year. Consequently, first-class condition, so as to ad¬
.less

even

more

.difficult

than

that

of

.

in

.

..

.

*

-

•

Stock Brokers Assoc.

Of Chicago

Hear

'

•

•




-

*

/

28

(1232)

THE COMMERCIAL

FINANCIAL

&

the

1948—A Critical Year!
(Continued from first page)
that

the

in

year

which

r^LTSelv-eJ mi^
feel

on

now

well

be.

conditions

are

called the critical
year. 1
may not

we

that

base of 100 for the 1935-1939

a

the

wind.

Thursday, March 18, 1948

CHRONICLE
markets

security

"
the amounted to slightly less
billion
out_ of approximately'sf,

for

major portion of th'eir new capital.
Finally, by the end of 1948, the in¬
dustrial
productive capacity of
this country will be at least 50%

Repossessions are be¬

fisPr°/ course;,: taxes in^
1947'
is, of tS after

Th
This

a

verv

estimate, and applies to all kinri
In¬
of inventory. There am
ds
going on with these data? One stallment buying isr-showing a greater than.it was in 1939. This
latter fact may not, in and of itself, nificant things about" thi^0 nE*
may quarrel with the comparabil¬ trend that may well require new
is
that-even under . more
ity of .these figures, and raise all. credit controls. The business fail¬ be of too great importance in view
of the increase in population and accounting
sorts of questions as to the valid¬ ure rate is
methods, , confi^f
upward. Thus, failures
the resultant demand, but. it is may .still persist as to
the r»0i?
ity of almost any one of them. But from January to December, 1947
nevertheless
notable.
All : this sources of the profits earned I
such comments are more or less! totaled
3,476, three times as many
that
billions
of dollars a company, since these
besides the point when all * the* as in the corresponding period in means
spent for rehabilitation, in 1947 prof.ts are not always; as I havo
weather vanes point in the same 1946.
(Incidentally, the number of
and 1948 will not be spent in 1949; Jong argued they should
direction; From any standpoint of!
be sen!
failures,< though mott the:^ dollar
arated and- earmarked.
men,
Thus
money,
or
materials; last volume; in the San Francisco Fed¬ Surely it won't unless and until
the, general
economic
situation do not know just how laree ti,I
year was a good year for almost eral
Reserve Bank District ex¬
everybody. .•' n •• v
,'j• j ceeded those for any other district clarifies itself, which necessitates are. The other
And I ,suspect that with certain in the United Stales.) Retail trade finding some means either to fore¬
is
during a {)eri
reservations, 1948 will be a good last year, both in physical volume stall these decreases or to sup¬ of inflation, though these
year, too.
The recent survey by and in margin, was off from 1946, plant these monies, and the means do arise, almost inevitably tlW
But

average.

what

is

gained by

ginning to

occur

once

more.

reSm

,

h?JhCH? so are profits and
y foreboding. Prices

nigh, but
Jobs

money

are

wages.

are

plentiful; everybody
his

m

ex-

COll1r worher has

pocket; and the
goods people want to
buy are" be¬
steadily easier to secure.

coming

tft g?*S on,very much the
it always has in
as

and vso

long

same

times of peace
the strains and

as

stresses within the
economic struc-

lv„ thf Z"* V1?ible to the naked
■jyf ft® general public is usually
! °t, v?ry much alarmed. True
th^rta'nHatvafUe,,fe.eling abroad in
inL/t
a11 is not quite as
S®1' 'looks,:; There is concern'
«bout the
-t

i

,

invented

.

i^rtant t&

If "°!e

Pvffn TkI 1S Iually very imminent.

Z£Ll ?Sl threat.* of aIa™

are

Reject to heavy discount. During
the last
session of

Congress, noisy

prophets foretold the complet°
disorganization s of: business: that

"Fortune"
business

indicates

executives

that

most

believe

-

that

think

men

There

they

is still

a

beginning to* tighten up on!
credit, and some of them are
loaned up so close to the limit
that further expansion of their
credit is subject to severe limita¬
tions.

cant

important manufacturers did not'
make the profits last year that so
many others did. The movie in¬
dustry was generally off. Public
utilities did not do so well. Banks
are

capital

equipment and expansion
in 1948 as they did in 1947. The
housing program has a long way,
indeed, to go. The Federal budget
provides for an expenditure, ex¬
clusive

of

.

.mental

expenditures

.drastically

reduced,

.to week

were: "not

and

fome bf them were.

■

indicator

an

the

is

as

fact

also

if

From- week!

all

and >services.

lars

more

<

Sixteen billion dol¬

would

for veterans'

go

services and benefits.

Price floors)

million.
of

The world

dollars,

and

Plan

Marshall

is very

short
with the
provide them

Disposition

even

t to

under

All

assured that

destiny

depended

our

upon;

are

and can be

Harvard University for 1947 he' and make the most one can while
general trend, .so if behooves
said, "Casting our thoughts back a! the making is good. So any way;
to look;further.
:;

-us!

look at it, there seems to be
money to spend, goods to spend it

tion has been exposed.; But we'
Know now what

on;; and little desire to1 retrench^. :

'v % °f Increase
r''<■;• '
"i.'i:;«i"if .'iX-rjv£^v.?S',o/ Profits

Investment in

century

-that- there

most
-that

gers
1

were

-

solutions to

perplexing ; problems
none

of

the

the
•

and

terrifying dan¬

proved fatal to this republic.

^ ^ imagine- that if the

members of the
w

predecessors
could not know,;

ago

Harvard in

Governing Boards

are

Capital Equipment

two

or

three

1948,

a

Critical

Year?

Yet, in spite of all of this, I

to
re¬

my- earlier
statement that
1948 may be a good year; it may
also prove to be the critical year.;

peat

And if it be the critical year and
we

recognize it

should

also

132®; had foreseen sion.; For. I

be

par¬

more

Jones &

certain that it is

ness

as

to what the future

holds

particularly what we do this year and because of the indirect ef¬
changes in their own state and
that is going a long way toward;
nation in the next 100
fects upon employment and prices
years (not
determining what happens next of its curtailment As I indicated
to mention those in other
nations)
year, and for several years there¬ once
before in this " discussion,
they would have concluded that
after.. Economic strains
and
•there would be no place for Harbusiness spent last year something
stresses are beginning to show in
in the neighborhood of $15 to $16
TurdoH?iversity in the middle of the business structure. " Some of billion on its
the 20th century."
planned postwar
It is is well
the comparatively minor cracks I
plant
and
equipment program.
;tor us to keep this perspective and
this faith. Otherwise, instead of pass by—the slump in grains; for According to a recent McGrawexample, was welcomed by, yet Hill
meeting each day's problems with
analysis, it plans to spend
frightened, a great many people;'
energy and determination
even
nearly this amount again this year
It
offered
political
fodder
for —off
in a spirit of
perhaps 8%, or roughtly
desperation at times
those in need of such food, but it
—we
should give up in hopeless
$300 million. This would seem to
was
not serious
in
itself.
The
be a fairly safe forecast.
despair. In his report, President
Fiftycessation of government buying
Conant
seven
went
on
to recall
per cent of the companies
that
plus, the excellent crop reports interviewed indicated that they
President
Eliot
once
fejrnarked
from
this
country and abroad; would not cut their
that a good past was postively
budgeted fig¬
added to the-fact-that the market
ure for capital outlays down even
dangerous if it made one compla¬
was undoubtedly
top-heavy any¬
cent about the future.
■ ;
J way, was sufficient to cause the though wages went up 15 to 20%,
and 26% of the companies said
;■ >
Retrospect of 1947
' ) i readjustment that took place.
;.; that
they would; even increase
' And for us in this country, we
Especially important is the nec-t their
budget if wages went; up.
; may well look back upon 1947 as essity of not
overstressing at this But this does not tell the whole
being in many ways "a good past,'' time this particular readjustment
story. Sixty-four per cent of the
Employment stood above in grain and livestock, because .of
program for initial postwar re¬
million. Wage rates were dou¬ the
impossibility of forecasting habilitation is now
completed, and
bted prewar levels. Personal in¬ now the agricultural crop outlook by the end of
1948, that program
come ran around
$100 to $120 bil¬ for 1948. In Europe, 1947 was a will be
85% complete. Less than
lion. .Farmers' gross income was very bad crop year, but the presT
—

_

„

"

40%

about $30 billion, well
cash

what

income

try spent
ital
.

it

was

three

over

in

1939, and
up 20%. Indus¬
$16 billion for cap¬
Manufacturers made

was

some

outlays.
profits in most

far

cases

above

»those of 1946.. Individual holdings

winter- is

ent

far

Growing conditions
to

be

excellent

Hemisphere,

in

and

tless
are

the

tural

any

capital budget plans for 1949, and
reported of this 40%, 45% plan to
spend

Southern

less

than

in

1948.

Furthermore

huge

wheat according to the same
analysis'
country. the purchase of new plants and
bring agricul* equipment by

a

prices down.

A

decline

would

in

reduce

deposits, and government securi¬
ties) were close to $160 billion as
;

of the companies have

severe.

crop seems likely in this
All these tend to

;of liquid assets (current bank agricultural prices

purchasing • power * of. the
farmers, and if the decline were

against $46 billion in 1939.

manufacturing

panies

will

be

financed

com¬

in

the

current year out, of past and cur¬
rent earnings, and so far as these

severe

Federal

physical

Reserve

volume

Board

of

The

index

of

production

stood at 193 at the end of the year




the

a

expansion

and

rehabilitation

al¬

:
1947

^

-

.

-

other

straws

in

Railroads and

utilities

evey now must go to the banks

j

19391

Packers:»,\
;; 341
t J
Cudahy
—' 728:;'f:J

Hormel

33

Swift

115

statement,

corporations

that

"profits

reached

/ vj

an

I

do

not

there

high

profess
two

are

to

which

your

is

to

ers

bear

under

the

these

stances..

profits

themselves,

mated that
is,
m

1

Based

of

physical
figures

-a'

*-\

j",

,

Y

it-

»

depreciation is based

on

original

thereby
sum

as; a

<

certain

of

rising equipment 'costs, this sum
erf money is inadequate to replace
the
equipment when the time
.

comes

for such;

All

replacement.

to cover the excess of

the

replacement
original cost; some times
equipment is not replaced at

alL

But under conditions as they

cost over

existed in *■' 1947i

the major point
making held true, and re¬
quires a second deduction of some
I

am

from.: the

amount
as

commonly used;

profits figures
v •
'v
"•

Addj nS together the deductions
of

$12 billion, 30%
Administration

nearly

more

When

the

profit figure;at might

corporations

well

to, bear .a large
burden.,tn
' '

But the President and Congress
not the

only ones who

should
with

thesemet profit figures

Businessonanagement needs
these figures when*' it

watch

think

about

1949/;;

Companies,

be more
rosy than actual
of operations warrant. Some
its are illegitimate and

results
prof¬

antisocial,

and
are

given

some

companies?

undoubtedly

improperly charging items

to

effort either to
to avoid revealing

expenses♦ irr an

inventory)

from

The important fea¬
analysis is that when

ture of this

njay not have as much5 money as
they %think they have, and their
sales and profit projections may

avoid taxes

,

or.

sundry what their
earnings really were. Lahor leaders
need to watch these figures with
to

"Business

1948'

or

capital assets.

to

traffic

circum¬

a

measuring

projects 1946 and 1947 into 1948;
and even more so when it begins

the Departrecently esti¬

valuation

as an excosts, and
net income,

calculating

under stable conditions, the de¬
preciation charge almost automaucaUy makes provision- for the
retirement
and
replacement of

to

inventory profits (that
Profits solely from increases
dollar

in

pense

thusm

care.:

,.

ment of Commerce

and

life.

Depreciation is treated

use

First, concerning the size of the

•

equipment , is allocated to
spread over Uts estimated

are

some doubt
the wisdom of
manufactur¬

charging all that

will

s,i By an appro¬

v,ng a

priate charge-each year, the total
dollar
cost
of
capital

"

profit policy, there is
as

niift

on

share of the tax

matter of

a

based

original

of

like to direct
The first is that

as

been

uses a

things about them

is that

existing equipment '
traditionally
the original cost

Yet depreciation has

revise its estimates of the ability

commonly quoted. And

second

of most of the

low

as

the figure

fact

is

probably considerably less than

the

re

that the replacement cost of cani
tal equipment has gone up with
the general price
level,-and «
today well above the original cow

less.

actual realizable
profits
concerned, the amount earned

are

any

book profits due to
inventory valuation. This second
arises out of the
in

But

too

know.

'theSe is another allowance
made aside from

depreciation charges,
be true that the al¬
leged $17 billion profit after taxes

should

attention.

far

so

I

or

to

k
be

adjustment

quacy of the
it may.,well

of

all-time

Corporation profits
$17 billion after taxes."
Whether profits of these
magni¬
too

and

that, have, tb be made because

totaled

are

,;,-"ventory

,

the book nature of inventory prof¬
its and allowance for the inade¬

high in 1947.

tudes

frx
.to

.,

Depreciation

Equipment.

.

j

President; Truman
substantial grounds for

some

his

sold.

or

Inadequate

Overestimation. o| Profits 30 %
:

Evidently
has

"

100

•

Morrell

°n

are

over

i

Meat

this* yeaT.

.

there

56

'

■

Armour

of

But

f^
V

Railroads

.processed

thinking is subject to some
caution, of; course. Prices do not
always go up; some companies set
asiJe special depreciation charges
f?.'

33

;

ex!

of this

Tobacco:
R. J. Reynolds—J™...

enough, it could precipitate lotments are
concerned, they will amount
decline of prices all along the have been
exhausted by the end of

line.

'

J. I.

.

times

•

year

•Jw magnitude and the nature of
the

#

106 "

ticularly. The first of these is the Republic
c£__ '=••/
93
situation with, reference to, .invest¬
Chemicals: ?"?
^
ment in capital equipment.
This Monsanto '54
index is one always to be watched,
Union Carbide.-i32

inventory acquired at the
higher price level and to that
tent
merely, replace -inventor

money^ which, representing the
original cost, is also the amount
to. be replaced; However, under

22

Laughlih>_«_'

not only because of its volume;
such, then, it but because it constitutes some H: Farm Machinery: f
International
of deci¬ measure of the
judgment of busi¬ Deere-■ St Co.____C-l-.'41

as

the

am

call your attention

-

>.,..1047 over 1946 1

Bethlehem t-__ )•>::?

are

up

regarded

steexS'W

major

considerations to which I do want

our

a

There

:.y.£-

'"J.!;;

,

profit

new

COsV fbe investment is

:''

!

you

•

Profits

has

;"

few.

,.

Jiundred years or so we realize to
what hazards the life of this na¬

1947-8

of

this

of

bearing on my
next point, which has to do with
the disposition of profits earned in
1947 and 1948.
Quite recently 1!
glanced over the earnings of some4
DO large corporations for 1946 and
1947—earnings after taxes. It was
a most interesting list;
Forty out
of the 50 made more money in
1947 than they did in the preced¬
ing year. Let me mention just a

some
20 commodities!
'with purchasing power, exports in
placed under some. 140
1948, * especially inJ the light of
.whether or not some
particular: more ' without, further Congres¬ controls; may well - be 20 to 25 %
measure s were
passed -or
not sional action. The unions are cer¬ less than they were last year. And
.passed, the very names and sub¬ tainly not going to stand by and, the notable cut in tariff rates
see wages lowered without a fight.
jects of which were soon
forgot.
should stimulate imports and re¬
*! 'And, anyway, we have always And over and above all of these duce our favorable trade balance.
statistical data is the still.widely:
?It may be that these signs are only;
^ome out pretty well on Jhe whole i
In President Conant's
Annual Re-; prevalent bullish psychology and km the surface, perhaps
fhey don't
^ort to the Board of Overseers of the speculative desire to hang or* mean so much in- the face of. the;
we were

national

.

funds 4 These so-tcaRed
almost immediately tied

goods in¬
dustry, is. fast preparing, itself to
turn
out.
Remember, too, that
ERP now makes no provision for
the purchase of machine tools, and
the "Survey of Current Business'
for January says expenditures for
used plants and equipment for the
first quarter of 1948, indicate a
continued dwindling of the mag¬
nitude of expenditures for such
items.
Finally,;, for what it is
worth, private nonresidential con¬
struction dropped by some $169
million.
This may be as signifi¬

though profits were, gener¬
ally speaking, at bonanza levels, in year, they are most hesitant about
1947, they will be at least as good committing themselves on what*
in 1948 and nearly one-third of the future holds after that. Some
better.

do not

tremendous volume of

.

even

these;

represent freely. disnisah^

also must be found to absorb the

and- although large retailers are
talking about heavy sales volume
for the first six months of this

that private, residential, and pub¬
military expendi¬
Outlook for Export Trade
.would follow from a failure
lic
construction
increased.
The
to re- tures (four-fifths of the total), of
Another factor of even greater
time to weigh the consequences
$8 billion, and even though Con¬
importance to watch is our export
with
,We were threatened gress may not approve of all of it,
of these facts and to, formulate a
trade.
In 1947 exports from the
r? .
disaster « the
iait-Hartley Bill were passed, and the Federal Government will cer¬ United States exceeded $14 V2 bil¬ policy to deal with those conse¬
likewise if it didn't pass,. Total tainly be in the market, directly
lion, as compared with a wartime quences is in 1948 — a year for
-ruin was to be
: ,
expected if govern- and indirectly, for a lot of goods high in 1944 of $14 billion, $246 decision, a dangerous year.

.

prof^

.

might be
large un¬
satisfied demand for goods and a
Congress has promised to reduce great deal of money with which
taxes, and- somehow it is diffi-i to pay for them.
Manufacturers
cult to convince
ourselves that an-4 plan to spend almost as much for

increasing cost of living

wonlHnttnm'ghVWiSathat Russia
.would behave itself. But, after all

?

Jhat

all

and.

Number 4682

167

Volume

?a

of $40 billion is
$8 billion, or al¬
most as much as the
total cost

when the demand

care

the same

THE COMMERCIAL

large profits

made that because
:flve been made that

larger wage

government

spending

demands can also be met .Condress needs to watch these figures

fdhen

of

year

the

the

high

prewar

days, let him

con¬

sider the national debt.

This was
understand some¬
thing of these data when it dis¬ ^a?to17o$i56'673'365'697-75 on Jan.
30, 1948. Such a formidable array
cusses profits and prices and costs.
of
numerals
is
almost
beyond
Business management also needs
comprehension. To bring it down
to remember that to an increas¬
to
earth, the debt amounts to
ing extent a company's price and
about $1,770 for each
person in
profit policy, like its wage policy,
the

needs to

nublic

entirely its

longer

kno

country.

af-

own

By comparison, the
was $308 in 1939;
$240 in 1919, after World War I;
and $12 in 1913.
r
debt per capita

prices, even at the
cost of somewhat lower net profits
and the absorption- of some costs,
may be very smart,, not alone be¬
cause
these lower prices create
good will rather than inviting
Lower

fair.

.

It is

.

a matter of first
that the debt should

importance

not get out of hand in the future.

they

FINANCIAL
to

can

reassure

CHRONICLE

their

reelection.
The

1930s,, and

If any one wishes to
know why
his taxes have
climbed so
since

own

largest

the^Os n twice the averaSe of

corporate tax
"licv and the effects which that
ndlicy'is likely to have upon the
availability of new capital.
The
discusses

it

in

do what

&

Let

Foreign

I referred

a

each of

Situation

This is

a

'

subject

to

any

pressure

which

fess,

we

make.

can

too,

that

I

I

must

am

con¬

reluctantly

forced to the conclusion
that the
situation today is worse than it

has

been

at

war

came

to

that

Russia.
vakia

end.

an

cannot

we

time

any

The

I

get

am

the

afraid

along

with
Czechosla-

of

rape

will

since

be

attempted
in
Sweden, Norway, Italy,
and
France. It is an
atrocity;the seri¬
ousness

of

only

the

to

which

is

infamous

comparable
pact with

Hitler at Munich. There is

dead¬

a

planners.
Let

balanced national budgets. .v,
"All this ties in with current

suggested some

is, in many ways the more
serious danger lies within our own

problems of Federal spending and
tax reduction. A large Treasury

Budget and Tax Policy

country.

about the likely curtail¬
ment of capital expenditures dur¬
surplus is indicated for the pres¬
ing 1948, and something about ent fiscal year.,, Since we cannot
the danger.: of- -jumping to. con¬
always count on budget surpluses,
clusions regarding the amount of it is
certainly sound policy to re¬
profits actually earned in 1947. duce the debt substantially during
things

One other brief

comment on an¬

other large factor in,

I -.referred

situation.

like the

moment

a

thing either to read

easy

to

talk

about.

in it

interested

are

few

Too

"No

And

It is much less

go

increasing

on

expenditures

in

peace¬

one

wants-to cut essential

spending for national defense or
otherwise. But many things which

or

desirable

seem

make any

or

to

income

time.

people

attempt to understand it.

national

present.

Federal

concerning tax policy.
I want to
stress the importance of a study
It is not
of our Federal budget.
an

high

defensible

Truman's,' statement

Mr.

to

ago

periods-of

the business

to

tial.4

If

we

wish

that

or

actually be

group may not

so

this,

essen¬

substantial

tax

emphasize, too, that
citizens and as businessmen,
need

to

One of our leading cor¬
respondents has very truly said,
"Thoughtful men agree that the
dangers threatening this country
from within

its "are ' not

portance of the budget. Mr. ThurArnold

man

vard

months ago:

."Today

.

wrote

Business

few

a

;'„/"

i//

promise of rich rewards of more
recent years.1

.

out. There is
a

general accord that

a

basic essential for the economic

neither

to convince
ourselves, that
political government is only^ the

.

we

.find

need
but

Congress

to restore political

do it without vast

penditures.

Just

government
as

are

we

ex¬

pre¬

paring to return to normalcy, the
Marshall Plan destroys

hope
be put back

that government can
to its accustomed role.
ly we are

Project to

our

Reluctant¬

being forecd into a vast
furnish goods to starv¬

ing peoples.

"The

commitment

seems

too

overwhelming

to be possible of
accomplishment. Yet the fear of
Russian expansion has pushed us

jnto the position

of again being
the arsenal
of the democracies—
excent that it is
and

an

arsenal of food

production instead of weapons,

r*^course there is.a threat to

our

industrial and political organiza¬
tions, frozen as they are to the
tramework
0f
a
i9th century
WOWd.

In

ynanges
Pe

no

the

face,

coming

of

investments appear to

safe."

;

•

:;

Now, the

•

.

.

••

.-i"

--

•

President's budget, as

ubmitted amounted to something
Pver

k?

$37,700,000,000. For 1949, his
Pxceeds even this figure
billion. Of the 1948 figure,

fi£uTruman Points

out that five-

22. s of this

the

are

"costs- of

J1"'."16 effects

of war, and our
torts to prevent a future war."

.

.e

goes

on

r of

to say that anly 21%

°Ur • expenditures- finance the
t>nri-e^nrn^nt's broad programs for
a
welfare,..housing, education,
senoU
r
*ranstx>rtation. and
„

lies

country

problems.

biggest

our

Washington talks

trying
government to
its proper place .by . reducing gov¬
ernment expenditures and remov¬
ing government controls. Yet this
attempt cannot chide the fact that
only America is capable ofr re¬
storing economic order * in, the
world, and that business cannot
so

our.4 own

Within

one

temporal arm of vast business em¬
pires which follow the great prin¬
ciples of revealed economic truth.
And,

No Price Deflation?

■

ing

lot about the

a

for; anti-inflation measures,
it certainly does not want a

with the
what it is and
government spending what;.it. is:
So
we "may
well conclude that

general' price deflation
government ;debt

whether

we

it

like

not, prices

or

they
were in 1940.
In fact, pne of the
surest predictions one' can make
is that when prices start sliding in
will never go back to where

profits show

earnest and business
a

seriously,

tendency to contract

government—as far as it is
able—will promptly change
its
present policy and use its influ¬
ence to keep prices up. And it can
do this, in a variety of ways.
It
can
give its supnort to a third
round of wage demands; it can
reduce income taxes in order to
the

_

enable

consumers

to

have

more

ment the size and cost of which is
out of all

reason.

mination and
be

can

.

»

.

with.
clear that
not going to be

successfully

Unhappily, .lit

With deter¬

this situation

sense

dealt

seems

taxes to encourage

But

preventing

the moment,
These

I

decline would, for
achieved.
are in the hands of
a

things

the

Administration,

for one refuse

what either of them
for

unbalance

probably be

Congress and
and

•

elements in our
the immediate end

the various

economy.

of

the

accentuate

ther

among

one

to forecast

will do—save

thing—to play

politics and

i

tola
'

ay

administration.

i

a

o

But

we

add th-at this "only 21%




months

isn't

vital

before

the

House

or

the

courage

in

fight

nation

.

Eight

election

there

and in reason.

courage,

as a

.

.

the

in

White

Congress to make a

for

the safety of the

whole against the self¬

organized groups
'rights'." /In the same

ish insistence of

their

2 The

Cleveland

letin, Feb; 15, 1948.

Company

Trust

'/*

.

Bul¬

continuance of good business or

a

.

What should we

dual

finished goods down'

Are

we

exercising due

in the extension of credit to

care

customers?

Is

our

labor and per¬

we are underlings."
businessmen, suppose

that

in

already

happened or
what is to come. "The fault, dear
Brutus, lies not in the stars but in
ourselves that

Then,
we

as

assume

over-all

business

in

the United States drops off 20

to

25%

what

is

should

on

particular

our

business,1 and
important, what
it?

equally

do to get ready for

we

Clearly the

effect

the

same

all

businesses.

our

this

year, or in
What effect would that have

1949.
on

later

own

would

not

be

or

for

for all industries

let's

But

company

look

—what

at

would

as

we

in

put it?

can

reasonable

good shape

as

Are

we

bounds?

exer¬

Have

we

carefully scrutinized our account¬
ing practices, with proper regard
to
an
effective
application
of

budgeting, adequate and scientific
manufacturing cost control, and
control over selling and promo¬
tional

Unless we have
things, we are surelyThe time to*do them iO

expenses?
these

done

remiss.

1948—1949

be too late.

may

The Interest Kate Problem
(Continued from page 8)
the problem of the

long-term in¬

terest rate?1:-This

I

Our

first

concern

is

with

the

rate

on
long-term Federal obli¬
gations, since, although the prob¬
lems of long-term private loans
are related, they' are by no means
the; same.
It .is possible to take

Board

the

and

Federal

President

Reserve

Bank

of

of

the

New

York, material bearing directly on
the policies which are intended by
the

Government

sons

and

on

the

rea¬

why they have been adopted.

I have made

some

selections from

these

statements; and at the cost
of some time and at the risk of
a:

i

„4-

4u„

....

do in our

and

to reason?

cising conservatism in planning
capital expansion? Are we insist¬
ing that the sales organization
plans and estimates — keeps its
enthusiasm and its optimism with¬

has

vein, Mr. John S. Coleman, Presi¬
repeating what you may already
dent
of the Burroughs Adding
know, I wish to present these se¬
Machine Company, said recently,
lections as a group of statements
"Russia is not our principal ad¬
that are of exceptional import¬
versary. The opponent we have to
ance in estimating the outlook for
defeat is confusion in the minds
rates.
I should explain that these
of men."
'//"^ ■" '4
selections are not presented in the
•/ So, while we,are waiting for the
order -in which they appeared in
politicians to * decide , by. - what the
original statements, but I be¬
means
they can best insure for
lieve that they give a correct im¬
themselves the largest number of
pression of* the material from
votes, and while we.are>waiting which
they are drawn.
for the outcome of the conflict in.
/
President Truman, in his Eco¬
Europe, what are we to do about
nomic Report to the Congress, re¬
the business for which we are im¬
leased Jan. 14, 1948 included a
mediately responsible? There was
number
of
highly
significant
a wise philosopher once who. said
statements on long-term interest
■that we should plan .as though We
Here are several direct
were to live
forever,/but; act as policy.
quotations: "A decline has been
though we were going to die to¬
morrow.
Perhaps that remark is permitted in prices of bonds from
the premium prices to which they
applicable to our immediate prob¬ had risen.
No bonds, however,
lem.
.V-V
have been permitted to fall below
Recommendations
>
par and it is the declared purpose

busi¬ capacity of advising with top
continued management as to the business
expansion; it can relax the threat outlook, and of purchasing agents
of credit restrictions; it can speed responsible for our own depart¬
"4
up the foreign aid program. Any mental responsibilities?
one of these things—and certainly
First, as citizens, let us bring
what pressure to bear as we can
all of them combined—would un¬
doubtedly keep prices from falling by letters or otherwise, to get
as
soon
or as far as they might.
Congress and the Administration
True, such action would only de¬ to really do something with cour¬
lay the inevitable readjustment; age and such statesmanship as is
Let us urge that the
it might ultimately result in a possible.
budget be pared to necessities. No
more serious collapse than would
one wants to cut essential spend¬
otherwise come; it would still fur¬
ing for national defense or other¬
for goods, or reduce

money
ness

on

what

brings us to our
recovery of Europe is to meet and
second question, "What statements
master the domestic crises caused
have
been made by public au¬
by the alarming inflation coupled
thorities on the subject; and how
with a debt of unprecedented pro¬
important are these statements?"
portions and a Federal Govern¬

on

desperately try¬

we are

lafge/ as

as.

they appear, and the future fail's
to
hold for1 thoughtful men the

"Har¬

in " the

Review"

.

always

came

this particular date or on that one,
we should be equally prepared for

sonnel situation

from with¬

us

we

,

the''tendency toward*,rising
governmental expenditures " 2 V
This is particularly true if prof¬

public indifference to it is
a most disturbing thing, particu¬
larly in view of the current im¬
-

Then, regardless of

decided break

Congress nor the Administration
is entirely responsible either for

far»greater than

are

those that threaten

that

remember

as

long as it remained within man¬ reduction, furtherance of the debt these qualities are
from the statements made in re¬
used by those clothed with power
ageable limits,, it -really
didn't retirement
program, and assurance
cent weeks by President Truman,
make much difference. But those
and responsibility.";On the con¬
of a continuing sound budget po¬
the Secretary of the Treasury, the
days are past—today, it does affect
trary, their course promises to
sition, we must be prepared to
Chairman of the Federal Reserve
business in many, maiiy ways, and
continue "lacking / in
candor, in
halt
the

a

process

me

.

far I have

(whose interests

groups

whether

itself, and I have no thought of so! often appear uppermost), a decline. Do we have reasonable'
discussing it. International politics whether they be farmers, unions, liquid financial resources? Are we
may upset any forecast or
plans veterans, educators, or social keeping our inventories of in-

ly parallel between the origin, de¬
because actu¬ Historically, the world's most vir¬
and
policies of the
ulent inflation—those .ending in velopment,
ally in the long run, more goods
dominant group in Russia and the
will'be sold. This, even; though the complete wreckage of the
value of money—were accompa¬ history of the Nazis in Germany.
substantial sales can at the mo¬
Yet grave as this danger from
nied by a succession of badly un¬
ment be made at the higher price;
abroad
The

does not belong
the
specialized

of

one

happen to it?

29

in

criticism, but also

So

like to contribute less.

us

remind them that the citi¬

us

zenry as a whole

moment ago to the

situation abroad.

(1233)

to continue active

support of Gov¬
of

ernment bonds for the purpose

orderly and stable
level of longinterest rates.'/ "This policy

maintaining
market
term

at

a

an

low

the Federal Re¬
of the
traditional method of limiting in¬
does

serve

not permit

to make effective use

flationary movements in the econ¬

the

the

that

assured

are

war

which their Government
possesses to maintain the value-

power

of

their

bonds

will

exercised

be

wherever necessary."
The
most
explicit

statements

policy by the Secretary of the
Treasury are to be found in a
verbatim
transcript of a press
conference held by the Secretaryon

on

Jan.

22, 1948, reported in the

Jan.

24, 1948 issue of the Gold¬
smith Washington Service, United
States

Securities

Government

Bulletin. The following direct ex^f
tracts of the transcript from this
Bulletin

are

presented to give the

Secretary's attitude.
"Question; Mr. Secretary,
.

Government
there

&

the
again,!

on

market

is T considerable

among some

be

bond

feeling,

bankers that it would

in the anti-1

healthy thing

inflation ■ dri've toPrpcirlpnt'c drop;
let them FVn—
hplnw
TVip
below

The President's Eco¬
nomic Report seemed to indicate1
a subtle view to keep them at par.'
//"Answer:* We have no intention
of having them go below par ir*
our/thinking today.
T?
"Question: You carefully qualify^
that with
'in our thinking
to¬
nar

par.

day./' "

i:

..

""Answer:

Leave

that

off, then/
want to.
',/,
/ V
"Question:. You said you haver
no
intention of having them go
below par?
?
'
*
" • ;

if you

.

"Answer:
The

That is right."

Chairman of the Board

ot

Governors of the Federal Reserve

System, Marriner Eccles, on Nov.)
25, 1947, in a statement before the
Joint Committee on the Economic

Report and on Dec. 8, 1947 before
Banking and Currency

the House

Committee discussed Federal Re¬
serve

policy.

Several of his more
are* included'

important statements
in the following

quotations:

.

;

prospective
conditions, it is not only desirable'
"Under present and

but

essential that

the,established"

long-term market-"
able
Government
securities
be
maintained."
"The structure and '

2V2%

rate

on

level of interest rates on Govern-,
ment securities which the System

helps to maintain in the market
have
become the principal ex-<

omy."
"There have been pro¬
posals to solve this dilemma by pression of Federal Reserve policy,
abandoning the support policy. No
instead of the volume of purchases •
such change in policy should be
and sales."
''A moderate rise in *
considered. The financial world
yields on Government securities ,
should rest easy that the invest¬
will not prevent, and will only;.*
ment market will not be subjected
slightly restrain banks from sell¬
to the demoralization which swept
wise. But many things which seem
ing securities in order to make
over it in 1920."
"Affirmation of
loans.
An increase in rates large
to be desirable to this or that
a
policy of supporting the Gov¬
enough to exercise real restraint
group may not actually be essen¬
ernment bond market as a con¬
on banks would generally be tod
tial for anything except vote-get¬
tinuing program of the Govern¬
great or too abrupt to be consis¬
ting and log-rolling purposes. If
ment requires the use of the other
tent
with
the
maintenance
of *■
we
wish a balanced budget, a
and less dangerous methods to re¬
stable conditions in the market.'?
furtherance of debt reduction, and
strain inflationary bank credit."
"The
Treasury
would be con¬
a sound financial position, we must
"Such action .as may be taken will
fronted with a continuing puzzle
be prepared to halt this ever-ris¬
not involve withdrawing support
in all of its constantly recurrent »
ing tendency toward governmen¬
from the Government bond mar¬
refunding operations. It would be
tal expenditures. Then and or}|y
ket."
"The new bond buyers and
entirely at the mercy of unconthen can taxes be reduced with
millions of loyal Americans who
safety. Nor is this any time to cut
(Continued on page 30) /. *
enabled their country to finance
individual income taxes, much as

.

30

THE COMMERCIAL

(1234)

its

ernment

(Continued from page 29)
in

factors

the

market, if,

indeed, conditions did not become
confused and chaotic

so

moralize

to de¬

as

completely any refund¬

ing operations."
,

The

of

Bank

Allan

of

views

Sproul,

the Federal Reserve

President of

New

of

par¬

ticular interest at this time.

Mr.

York,

are

Sproul has established an enviable
reputation for expressing his in¬
dependent opinions, and occasion¬

ally they have differed in impor¬
tant respects from those of the
Treasury and of the Federal Re¬
As

Board.

serve

result of Mr.

a

expression
of
doubts as to the desirability of the
special reserve authority request¬
ed by the Board, there have been
Sproul's

recent

who have wondered whether

some

he is in

of

prices. 1 have selected
following direct quotations

the

his

from

remarks

Mid-

the

at

Winter meeting of the New York
State Bankers Association on Jan.

1948.
"We have a responsi¬
bility
for maintaining
general
stability in the market for Gov¬
26,

ernment

securities

shirked."

be

rates
have

the

to
an

"A

which

extent

cannot

in interest

rise

to
bor¬

necessary

appreciable effect

on

would threaten the entire

rowers

structure

of

interest

security

Government

rates

prices

and

can't treat the Government

secur-

ity market as we might a $50
million issue of the XYZ corpora¬
tion.

I

and

not

am

believer in

a

Government

more

more

controls,

certainly, but this is one control
would not try to let go,
voluntarily, under present circumstances."
"Why should we
support the Government security
which I

these

Reserve.

policy

Treasury surplus, a
surplus in the consolidated cash
budget which includes the net in¬
come
of
social
security
trust

make

up

what

the

is

my

Politically, this would be

popular measuie, since it would
reduce public expenditures on in¬

sense

<

our

minds

own

authorities

as

intend?

account, permit tax reduc¬
tion, and reduce the public debt
burden which is unpopular with

personal opinion that

own

think

I

believe

each

statement was a
carefully
thought out position deliberately
taken, and that taken together
they give an unusually clear for¬

that

ties that the Federal Reserve will

situation

as

de- 1 to

it has

veloped in the past month. Such a
new statement is
highly desirable
to assist

in our

us

Having

thinking.

to

come

some

.

|

the

Government

.

which

on

opinion

is

this:

"What

an

of Governmental authority
the application of a support

policy and what

the

practical
limitations of these powers?" This
is a very important and a very
complicated question. My impres¬
sion is, that many people may be
willing to concede that the Gov¬
ernment

and

has

are

is sincere,

concurred

eral

arise

from

fact

the

contraction.

credit

the

from

Government

powerful
control

in

by the several
agencies involved. But, nevertheiess, from a practical point of
view they believe that the policy

banks.

instruments

of ^credit
limits" its

therefore

and

but

at

t

■

suspicious—perhaps I should

Yet

full

an

of

power

choice

open

mar¬

ket

operations to restrict ' credit
say more cautious — iriSnds in- inflation.
Indeed, Mr. Sproul goes
terpret the vaguer portions of the so far as to state that the
present
market, and to that extent cir- language used
by the authorities rise of prices is so largely due to
cumscribe
our
powers, and our.; as a symptom of their own uncerspecific shortages, particularly of
actions to control the volume of
tainty, as evidence that the aufoods, that the use 1 of over-all
credit?'
"We can't bring about thorities
believe
that
unless
general
credit
controls
which
deflation by general credit action,
everything works out all right, would substantially reduce dis¬
in this situation, unless we bring
their powers
are
inadequate to posable income would be inap¬
about such an indiscriminate retheir declared policy. Accordingly,
propriate and dangerous under
duction in consumers' disposable "
'
•
it is :1
necessary
to examine the present conditions.
He does point
income as to threaten the kind of
powers at the disposal of the au¬
out that the success of the sup
disaster we are trying to avoid."
thorities in some detail, in order
port policy depends on coopera¬
"In my opinion we are doing as
to cOme to a conclusion as to their
tion with fiscal policy. As I see
it,'
much as a delicate situation will
strength and as to their limita¬ this means we should limit
public
allow toward
imposing reserve tions.
jj. 1
y.-\
expenditures
to
the
minimum
pressures." "The market was given
The support policy hinges on consistent with the efficient con¬
clearly to understand that the
one
simple action on the part of duct of public affairs, that tax
abrupt change in prices (on Dec:
the Federal Reserve,
namely, to reduction should be moderate in
24, 1947) did not represent a step
in retreat from a policy of sup¬ buy Federal securities at a price order to assure a balance for debt
set
by the Federal Reserve in retirement at high levels of enw
porting the Treasury bond mar¬
quantities offered by the public. ployment, that adequate meas¬
ket.
By word and action it was
We
must,
therefore, determine ures should be taken for the sale
also
made
clear
that, whereas
what factors are important in af¬ of Government savings bonds to
previously the Reserve System
had been a reluctant buyer, it fecting the ability of the Federal the public, and that careful han¬
Reserve to buy Government se¬ dling of export
surpluses should
would now buy Treasury bonds
curities at the Government's own be continued to reduce excessive
aggressively, at the new price
and badly timed demands on our:
price.
v
levels, in such amounts as might

disturbing

the

factors, perhaps

productive resources. With coop¬

that affect the power of the
System to implement a support
policy. These are, first, the legal

port policy will be greatly facili¬

There

be necessary to clear the market."

"Our support of the Government
bond market, thus far, has not re¬
duced
—we

our

supply

have

more

started.
if

a

of ammunition
than

And, if all

goes

when

we

well, and

substantial surplus of Treas¬

receipts
penditures is
ury

policy,
and

ties

as

we

shall

straint

bank

well

by fiscal
continue to sell

Government
to

as

upon

securi¬

buy them, and

continue

credit,

ex¬

assured

we #can

redeem

Treasury

over

the
while

to

place
expansion

re¬

maintain orderly conditions in the
Government security market."
These then

are

the

of high

expressions
to intent of

authority as
policy and as to the reason for
policy. The expressions differ in
emphasis, restraint and specificity,
and there

might be much discus¬
sion and difference of opinion as

and

financial

more

First,

the

law,

fiscal

and

mone¬

Government
amount of

securities

in

the

Govern¬

market, waiving their
of

powers

credit

-control

open

market operations,

first

making

this
on

it

sheer

will

express

recklessness?

Or

does

a

open market operations as com¬
pared with the greater importance

of

the

control

of

terest, rate?

the

These

long-term
are

by nearly

billion dollars the

one

income
to

paid by the Gov¬

the

holders

of

market operations, have they
same
time-opened the door
to becoming an affirmative factor

open

long-

at the

term debt. Although it is
hardly
conceivable that the present legal
limitation
would
be
restrictive,

nevertheless, if this should

for inflation?
and

prove

to be the case, a

requirements
gress

would

change in reserve
by action of Con¬
permit

the

be

purchased

by the

Federal

necessarily

so,

Redemptions and Deflation
First of all, the Federal Reserve

in
to
'

buying long bonds does hot add
available

long

the

credit

potentials

Treasury is

so

able

to

redeem Government securities

on

as

struggle for con¬
then, if over, take p'lacd

in the short-term and intermedi¬
ate market where the.

powers

of

be

the

more

Federal

monetary
Reserve

ihdependntly

ap-

y
confidence of the public
wop over, a pfefiod of time:
To win it will require both words
can be

be; me

in

and deeds—words oh
the part of
relevant ..agencies
to ;make

times

all

reserves

plain that: there- is. uniformity of
policy, and that any necessary
Qualify ing reservations apply only;

of

dangers

.

can

to situ itions that Cannot be
pres¬

enough to keep us from taking a
purely academic point of view on

of

serve

the

execution

relation

between

•

ently foreseen— deeds

^available

the part

on

the

Treasury and Federal Re¬
to show, unity of policy and
and.

funds and actual borrowing. The
initiative
for
credit
expansion

lingness to

must

be

and

such

a

complete wilexisting powers.

lieves

should

taken

by

the

can

term interest rate is here to

and

by

the

scrutinized

as

banks.

The mere availablility of
loanable funds in the banks does
not in itself put expendable funds
•■in the markets;

The

economic

support

policy

•

>

-

private

on

needed

a

af¬

of

tion

of

every

banker.

One
"Can
to

un¬

atten¬

Business¬

generally can show restraint
limiting their inventories to
their
operating " necessities and

more

better

efficient

capital
organized

,y
one

•-

of

-v.;

these

ever?"

-

co¬

operative measures will attain
the
success
that might be
hopefully'
expected of any one of them.

together, imperfect though
be, they provide strong
assisting measures for the Gov¬
each may

ernment's

support

Will Support

policy.

System

to

implement

policy

is the
confidence on

a

support

psychological, the

it

Earning assets which are

riskless

investment

highly regarded
more

Is

•

far

as

as

scarce.

.

become

they

-as

•

••

■

.

Purpose of Support Policy

•'Good?,
.
', in appraising- the- .firmness of
•\;

•■.

..

the support policy, we come
to our fourth question, "What
poses

Policy Succeed?

"

is:
the

payment of principal and interest
is concerned are likely to be more

But

taken

Federal Reserve afford

buy

banks. The real question
"Can the public aford to lose

a

thrift and restraint in
expenditure
no

the

public mind.
up, namely,

turns its bondsvover to the Federal
Reserve
to
keep—-perhaps - for¬

conceived and executed
savings
bond program
would not only sell
savings bonds to the public but

Probably

the

income which it gives up when

productive plant. A wisely

as-well;

in

easily cleared

the

construction

industry could quickly reduce the
cost of

occasional

creases the income of the Federal
Reserve Banks at no -expense to

postponable

investment. \ A

the

all the long-term bonds
that are offered to it by the pub¬
lic?"
Obviously yes, since the
purchase of long-term bonds by
the Reserve from the public is a
yery. profitable operation: it in¬

in

and

for

unanticipated require¬

doubt

ban be

men-

•postponing

the

authorities will be

ments.

banks

the present seriousness of

only

pressure of

have already started their own
campaign to bring an awareness

productivelending to the

stay,
continuing

adjustments,- and

powers of the

therefore

groups.'; The

point of
fiscal
policy,

propriate

fected by the amount of
coopera¬
tion which the authorities
receive
from

fixed

a

public
: long-term
private rates will make their ap¬

•

limitations
are

use

Once so-called "wise money" be-,
that the Cdntrolled long-

borrower

expansion

be

are

intended

to

be

next,
put-

serve t

by existing polity, and are these
long-term, or
short-term
pur¬
poses?"
If the purposes appear
to

be good

term

and

if they are

long-;

then it is more
the!: authorities will

purposes,

the

part of * the"
likely -that
market
that the
support policy hold to their
policies tenaciously,
will be successful. On
this factor
and less likely that these policies;,
I find
very little confidence
that will be reversed bv themselves
the policy will
succeed or in fact or
by their successors.
■'
,
that it can
sqeceed.
I will not
There seem to. be three main
.

attempt

Brmd

entire

privately owned marketable pub¬
lic debt, when, as and if
offered,

Not

probably not.

that the

trol Will

what

The fourth factor
affecting the
for, power >of
the
Federal Reserve
'

erately limited their powers* to
bring
about
deflation
through

arith¬

Federal

The

would

increase in bank

in

the

long-term

can

factor

that

short-term rates are lower
than
rates.
All
of
which

as

uncer¬

Federal'

exercise

prove

will

exaggerated. The ex¬
perience £>f the 1930's is still fresh

in¬

questions

to

rarely have to buy
long-term bond at par as long

a

;

be greatly

absolutely

judgment as to. the
lesser importance of unrestricted

$43 billions. This

some

support

is

have

which each man will answer
is about two-thirds of the market-1
himself.
'
able long-term debt
outstanding
If
the
authorities have delib¬
and its retirement would reduce

tary powers of the Federal Gov¬ 'to




requirements

point

authorities

without

factors

limitations

dramatic

the

sup¬

certain that all of the fiscal
pow¬
ers so desirable will
in-fact be in
hand when they are needed. Is

permit a net addition to holdings
by the Federal Reserve Banks of

ernment

the

legal

reserve

annual

use

four

policy, the

through

the support policy. Under
present

significance

tion to

full

closely.

other

the President

these

the

to

ment bond

community

examine

us

fiscal

that

chosen

institutions,

in the sin¬
cerity, desirability and practica¬
bility of the support policy. Let

the

of the New York Federal Reserve
Bank, together with determina¬

private

But

this,

fourth, the confidence of the

the

Reserve Board and

of

programs

to

dent, the Secretary of the Treas¬
ury, the Chairman of the Federal

tated.

limitations, second, economic con¬
siderations,
third,
cooperative

or

of this, that
phrasing. " Yet the
broad picture stands out clearly—
unanimity as to basic policy ob¬
jectives on the part of the Presi¬

eration of

more,

of

continuing to

four

are

in

ah

About two
confidence is

once

simple

a

Reserve

practical,

and

be

inflationary

•

,

is

metic

like the present when the danger
of inflation is in everyone's mind.

that

and

rates

outstanding

most

the

sufficient to give the policy realimplementation. Some of my

istic

made

And

years.

increase in Federal Reserve

credit

they
have decided to support the bond
market
at
the
cost
of
losing

be

pattern of rates?-

established in the support policy,

it

Reserve Credit

An

to

a

be

would

,

what

V

;

had

that

/..*

" Effect-of Increased

are

aware

the

.

quantities would
tainty.
• ■
'

that the authori¬

you

in

to

sale of savings
most helpful safe-

the

market

ties

well

is

the

irom the statements which I have

presented to

However, the authorities can
safely be patient. How long did
it take to establish-confidence

means

its

of

one

bring prosperity

out from behind the corner.

Sale of short-term securities to

other

In

too distant past
public offi¬
cials Tiave hoped to use
words in¬
stead of deeds to

the

to

; v'x.
the

;;

Obviously
bonds

available

funds

reserve

ability to fight inflation. It is clear
j

is too ambitious and that the powers
0f the Government are not

more

appraise. These

words, the support policy removes

support policy
not too vague,

a

to

look

would

Reserve

by this

not

possibilities in combination:
net sales of savings-bonds to the
public, sale of short-term securi¬
ties to the market, increase in

involving
the purchase of Government se¬
curities
when
and
as
offered,
limits and fndeed may restrict
seriously the familiar powers of
the Federal Reserve System to use
open market operations for gen¬

powers
in

Federal

surprised

been
as protective
insurance
against uncertainties undisclose V
They have forgotten that in
ouf

three

that the support policy,

the

are

a

limitations

ques¬

should have

we

out

on

the

are

confidence, surprised by

interpreted

The

What then?

of

impression that
the

the fact that the caution in
their
expressions of assurance has

out of Treas¬

be redeemed

surpluses.

ury

...

lack

economic

on

long"
oifv

November

have the

authorities

nevertheless true that the

It is

authorities to
support' policy are

difficult

more

I

presently pro¬

problem

no

Govern
implemented. Wao

be

1948?

support policy might require the
purchase of more securities than

Control

limitations

economic

of

of

It is evident

grounds.

public debt
public policy

Limitations

power

carry

bond

market, the next and third
tion

The
the

levels

will have a surplus available
redemption of securities.

offers

will

about stability in the
term money market if it
is
going
to
last
until

the

could

j

conclusion

reduction that
surplus in the

measures

confidence on th£
observers that the
policy of the

these

cares

And if inflationary pressures dis¬
>
appear, the official support policy

for it to be able to do so.

Economic

really the intent of
public policy with respect to sup¬
of

entire

the

purchase

to what is

port

ury

for

permit the Federal Reserve to

if it becomes agreed

Can Interest Rates Be Controlled?

as

beyond

any real

of

ment

reduction does not go

tax

periods

support

posed, and as long as there are
inflationary pressures, the Treas¬

of marketable Government

of

the

assess

that if

part

pro¬

no

purely political
grounds*
are far too short
to

on

reveal

a

of national income.

will be

or

are

be able to purchase under a govpolicy intentions. It ernmentally : sponsored
support
is to be hoped that a new state- 1
policy. To be more explicit, I feel
ment will be shortly
forthcoming it can be taken for granted that
—to clear up ambiguities and to the
legal powers will be provided

mulation

for
tax
jeopardize

would

legal limitations on the amount
securi¬

no

been

There have

posals

it is reasonable to

there

that

a

consolidated cash at present

most citizens.

It

These

having

funds.

terest

to

tion

on

a

important statements,
that they were re¬
sponsibly made?
Are they worth
studying as a means of trying to
the

and j. whidh

"We

could not be countenanced."

attain

Are these

in

sympathy with the policy'

support of long-term Govern¬

ment bond

to

objectives.

be carried through the 1948
ew

The redemption
depends

account.

own

of Government securities

The Interest Rate Problem
trolled

Thursday, March 18, 1943

FINANCIAL CHRONICLE
&

.

to

analyze the reasoning

except to report that I
find
prising lack of confidence.

people

think

a

sur¬

Some

the
policy can
through the months
heavy tax collections; that is
to April
1st, others that it
carried

be

of
up

may

purposes for the support policy.
The first is. to insure the orn
derlv

refinancing
reasonable,
predictable cost to. the tax¬
refunding

and

of the Federal debt at
and

payer..

is the

Included

in

this

purpose

development of stability or

THE

Number 4682

167

Volume

the basis for
bond
to be adequate for

nrice

and rate, as

W

continuing; savings
programs

ales

Ly.

emergency. • •

*

-

nnrtw u
portant because

it

solescence
tors.

vary consider-

Securities

seriously- the . market
of a Government
bond
was purchased -from the

the

outlook for ob¬

other

many
very

best

fac¬

prime

15

the

of

registrations

&

Co.,

revoked

will have

with

relatively small

a

will

be

determined

availability and demand

range

by

for

the

near-

of

two

By JOHN T. CHIPPENDALE, JB.

offices

at- 115

New York City, was
alleged fraudulent

transactions

The government securities markets recovered from the March 15

con¬

which

in
1945." The complaint
stated
that
Schroeder willfully
violated the anti-fraud provisions

riskless capital. If the spread be¬
tween Governments and
private

prime

squeeze without too much effort, with the better tone appa¬
rently due to a combination of events, among which was a mild "pre¬
paredness psychology".
It is felt in some quarters of the finan¬

money

.

cial

excessive,

securities

.

proceeds will

private

be

securities.

and

invested in

using the

account.

The

capital, and thereby to
to the confidence of

contribute

pro¬

vide

limitation

a

departure

from

on

too

wide

long-term

his

"nowhere
of the

customer,"
to

the

the purposes that the

These are

<

authorities have
stated as the
reasons why
they have adopted

The

.

Conclusion's

[ /'>

; /;•>■

V

also

SEC

broker-dealer

revoked

registration

There

that the

is

purposes
or

of

caprice

a

election year.

.

■

ther

Question five is: "What are the
objections to the support policy?"
The most frequent objection that

hears is that it is "ag'in na¬
ture." We have already dealt with
Qne

this criticism under
tion in

showing that

interest

rate

first ques¬

our

important to discuss the wisdom
anchthe powers of the authorities
who control it than it is to de¬
the

nounce

mined

rate

which'is deter*

simply because it is an ar¬

tificial rate.

far

As

in

as

the

authorities are

that there is
in¬
terest rates on Government bonds
controlled low rate on
should be kept low and steady,
Governments limits the amount
that long-term bonds will be pur¬
of private
capital available for
chased by the Federal Reserve' to
risky investment.
Such controls
a

modern

A

economy.

phisticated

is

objection

more

so¬

the
long-term
that

generally lower yields on
other¬

means

senior securities than might

wise be the case, and the investor
will not buy a security on which

-he knows he is taking a chance at

prevailing yields, preferring to
keep his cash idle rather than risk
a

capital loss.

As

a

result the in¬

stitutional investor replaces the
private

individual

in

the

capital

markets and the needs for equity-

capital at reasonable rates cannot
■be met. There may be something
to this
argument, but there are so

concerned

I believe

consensus

a

attain

that

long-term

this. purpose, '..even

though

ofv credit control by
open market operations may be
limited for an indefinite period.
As for the price at which sup¬

full

Halsey, Stuart Group
Offers San Diego Gas

& Electric Bond Issue

powers

port will be maintained, I would
not expect premium prices to be

paid by the Federal Reserve if
public
demand
for long-term
bonds should restore some pre¬
mium.
I would not expect large

premiums to occur without sales
long-term bonds by the Federal
Reserve to the market.
On the

of

Halsey,

Stuart

&

Co. Inc. and

associated underwriters on March

$10,000,000 San

offered

12

Diego

Gas & Electric Co. first mortgage

due 1978, 3%, at

series C

bonds,

101.39% and accrued interest. The
bonds

were

awarded to the group

proceeds from the sale of
will be used to retire
certain bank loans, the proceeds
of which Were used to finance in
Net

the

bonds

part its construction program, to
reimburse the company for cer¬

property expenditures here¬
made, and for further ad¬
ditions to its facilities.

tain

tofore

is engaged in pro¬
electric
energy
in San
Diego County, Calif., including the
City of San Diego, and in a portion
of the southern part of Orange
The company

viding

would expect sup¬ County; it also provides natural
jnany more important reasons for port to be "continued at or about and manufactured gas in the City
the scarcity of risk capital,; such
of San Diego and other commu¬
par indefinitely, both in time and
as
excessively high income taxes in amount.
I think that a sharp nities. This territory has enjoyed
and double taxation of corporate
growth
since 1940
break or a long slow retreat from remarkable
mcome, that the harmful effect of
nearly doubling in population,
the support policy can hardly be par to 85, 90 or even to 95 is not
in the picture.
If the Reserve and the anticipated decline in
decisive, if indeed, it is harmful
should
decide to set a penalty civilian population since the war

at all.

be

The opposite position might
taken, namely that the sunport

policy increases the availability of

support side, I

price slightly below par, say at
991/2—well, a retailer would still

Such action might
capital for business
in
that it
conceivably be taken if bonds are
eliminates the risks
of
severe
offered in very large quantities
ranges in long-term money costs.t
and it is felt that the seller should
.The support policy is also criti- be required to show a loss on his
by institutional investors books in order to get the advan¬
call that par.

...

who

desire

a
larger income
capital funds and who

.*neir

n°t

concerned

Prices

eady

the

securities

on

ate

place.

70% of the
operating rev¬
enue
was derived from
the sale
of electricity and about 30% from
the sale of gas. Its gross operating
revenue in 1947 amounted to $19,718,474 and its gross income, after
depreciation and all taxes other
1947,
company's
In

close

to

gross

support price..
for the support than Federal income taxes, was
$4,478,833; maximum annual in¬
program seem to me to be good
alterest requirements on all funded
reasons,* good- long-term reasons.

are

market

they

own.

However, the policy
not prevent the
yield on priv¬
securities from fanning out

tage of a
The

reasons

the
by
businessmen and by the public
c??vf. suPP°rt levels and the in- generally. We should impose vol¬
citutions may well search for
untary restraints on inflationary
igher yields in the

noes

<

on

about

has not taken

private marput at their

They justify cooperation with
fiscal authorities, by banks,

debt outstanding

ing total

after this financ¬

$904,000.

Philemon Dickinson

Dead

coupon

issues.

differences

be

what

« as new funds

are

disposal.




•

conduct and at
tinue to do

A good demand was also

...

.

.

.

opinion among money market

of

happen to the certificate rate. . . . Some
an offering of an 11 months
1V8%

may

.

.

.

.

.

of the belief that there will be

are

certificates

change in the

no

April 1, because there

is no cer¬

on

to whether the forces of inflation or deflation will
prominent in the not distant future. . . . The more

the

be

as

more

011

that is taken by the authorities before

time

in short-term rates, will

they make changes

broad

give them additional data on the

picture which will be most important in determining

economic

what will eventually be

the

course

of interest rates.

Whether the trend of commodity prices

.

.

and loans,

.

'which have

downward, is just a temporary condition that will be reversed
near future, can be answered only with the passage of time.

been

in the
.

"flash in the

A

.

.

trend" with

pan

a

quick reversal, would no

rates for

bring about greater restrictive measures and higher

doubt

offerings of certificates.

future

.

;.

FORECAST
•

continue to recede, com¬
business remains good, as
could be the case, there will most likely be no further changes in
interest rates by the monetary authorities.
, .
If economic conditions
should deteriorate more than has been anticipated in some quarters,
the chances would seem to be good that there might be an ease in
the money markets which could result in lower yields for Treasury
other

the

On

hand,

decline

prices

modity

if

loans

moderately

should

and

,

obligations.

.

■]/":(

.

.....

developments, not too
important changes are expected in interest rates, with the 1 Vs %
rate believed to be in vogue until at least June 1. ... It could be
that this talk about higher certificates rates is just another "Open
Mouth Operation" or "Trial Balloon" engineered by the powers
Until there is more

that be.

.

.

time to evaluate

.'/"/I;

BANK LOANS

prices since
Federal Re¬
serve System, from the start of the year, to March 3, showed a de¬
cline in commercial loans of $118,000,000 with the largest decrease
coming in the New York City district, followed by St. Louis and
Chicago.
The rest of the reserve areas reported gains with San
Francisco leading, followed by Cleveland and Richmond. . . . Real
estate loans during tlvs same period increased by $109,000,000 which
just about offset the decline in commercial borrowings. . . .
The San Francisco district again reported the largest gains,
followed by the Cleveland, New York, Richmond and Kansas
City areas.
Minor declines were shown by the Philadelphia
the trend of loans and commodity
year?
Reporting member banks of the

has been

What

the first of the

.

.

.

.

.

.

Minneapolis districts.

and

.

.

.

COMMODITIES

lot since the
Dow Jones
has declined
of the year
(made on Jan. 21) has been just under 15%. . . . What might be con¬
sidered enough decline in commodity prices, in order to blow a
large part of the froth off the inflation head, is a matter of much

gyrating all over the
with the trend on the defensive. . .
Commodity Futures Index, since the first of January,
more
than 11%, whereas the recession from the high
Commodity prices have been

first

of the year,

discussion

at

this time.

do

the

.

to be some agree¬
current levels should

However, there seems

substantial recession from
job pretty well. . ..

ment that a not too

'

i'&ivy

r:.: >■

NOTES

■

:■■■

^

v; •

.

,,

still is supposed to be
of the buying interest
in this issue is reported to be new money with a minor part
coming from switches out of other eligibles. . . . Savings banks
continue to be buyers of the ineligible bonds. . . . The State ot
Ohio issue, which went very well, took some of the buying in¬
terest away from the partially-exempts. . < . The 2s due Dec. 15,
1952-54 are still being bought by out-of-town banks.

good-sized buy order has been and
around for the 2Us due 1956-59
Most
A

Ghas. H. Drew & Go.

Philemon
Dickinson,
former
the same time con¬
business in an orderly senior partner in Charles D. Bar¬
Charles H. Drew & Co., 40 Wall
way with an orderly use of the
ney & Co., predecessor to Smith,
erest Spread Between Govern¬
Street, New York Qity, announce
credit facilities that a modern
Barney & Co., died in St. Mary's
ments and Private Securities
that Philip A. Knight and Sheldon
economy provides. ...Through such
Hospital, Palm Beach, Fla., at the S. Wells have been admitted to
come
at last to our sixth cooperation, we will be contribu age Of 73.
He retired from the general partnership in the firm.
th®sh?VWhat factors determine ing to the foundations of con¬
Mrs. Maria H. Drew has with¬
re*ati°n between the interest tinuing prosperity , in our own investment business several years
drawn from general partnership.
country and of coming prosperity
ago.
nhr 01?.^ong-term taxable Federal
Rations and that on private throughout the world.

,,

the way

ould like to have them, hence the switch into

interest rate

its bid of 100.8133.

on

It is indi¬

...

expenses

tainty yet

•

■

.-I;'

"natural"

a

inconceivable

is

artificial interest fate, it'is more

not paying

limited, if not entirely broken;
Others

.

to Support Policy I

Objections

!

•

to

seem
over

.

the

I think can

term purposes,

w

were

obligation on April 1, to be followed on June 1, with a (12 months)
1V4 % certificate.
They point out that inflationary forces will
continue to dominate and credit limiting measures as well as higher
interest rates will be used to combat these forces until they are fur¬

of the

of action, ral" long-term rate of interest for Commission cited, as offenses of
contend: long-term Government securities the firm, sale
of unregistered
are not long- is
unthinkable, and accordingly stock, fraudulent misrepresenta¬
that the policy that a purely "natural" rate of tions and the taking of secret
.-A, •
a
presidential interest for any securities is -im¬ profits.
mmmrnrn^;
■
;
possible as well. Therefore, since c.j
in
any
case we shall -have an

freedom

own

one

no

shorts

many

support levels.

non-banking institu¬

bought by

hold the view that there will be

,

their

that too

followers

policy, and why they ^ Having taken you through these May-Phinney Co. and denied the
have thereby limited their powers six questions, I suppose it is only application of the Washington Na¬
of operating freely - in. the Open fair to tell you where I come out.
tional Co., Inc., both of Seattle,
market. One may differ, with the Perhaps you, can guess without Wash.
Herbert R. May/cited by
authorities as to whether the pur¬ being told, but I might as well the SEC as the principal offender,
make my position clear.
■'"//'
organized and owns a 99% inter¬
poses are good enough to justify
the limits that they havefplaced
It is my opinion that a "natu¬ est in Washington National. The
but

being

were

PRO AND CON

the support

on

eligibles

longer-term higher

participation in the transaction.

'

The

.

noted for the longer partially exempts.

the

used

sent

"Schroeder

customer.

nnr

•;

these institutions

made

The risks of
personal account thus established,"
bility.
This
influence
of' the
the SEC said, "to trade actively
business are many indeed, but
support policy will be felt in
in a number of securities in addi¬
they should not be made need¬
sharply
decreasing
measure
as
tion to the Missouri Pacific 4s."
lessly greater by uncertainty as securities of
greater and greater
to the interest cost of long-term
Merlyn Gerber,
a
partner of
inherent risk are considered for
taxable Government securities.
Schroeder, was absolved of any
purchase by investors.
planning.

business

.

cated

reflected

were

end the uptrend in

would

tions, particularly the middle-term maturities*

The firm's books, the SEC

purchases

program

Others attribute the better demand for Treasuries

.

with certain of the ineligibles again moving above

to acquire the
own
personal

confirmations

were
a

sta¬

sum

for

.

.

.

rearmament

a

Buying lias been in evidence in almost all sections of the list

cific 4% General Mortgage bonds

the

.

BUYING

.

Governments will be sold by the
public to the Federal Reserve and

that

especially the eligible intermediates and longs to the belief that the
inflation spiral has about run its course.

$25,000 to purchase Missouri Pa¬

becomes

district

interest rates.

of the Securities Act
by receiving
an
advance from a customer of

bonds

Governments

on

broker-

for

securit.es

Reporter

March

on

the

started

spread

and

31

Exchange

The license of H. F. Schroe-

cerns.

der

support
third reason for the sup¬
policy, though not rigidly fixing contended,
policy is to give more stabil¬ the long-term rate for private se¬ that these
on
behalf
to the rates of'interest for
curities,: does nevertheless

private

and

revocation

Broadway,

The

ity

.The

show some variation
the spread of yield from
longterm governments. But the

position, namely that fluc¬
the long-term interest
will not be permitted to de-

port

pri¬

bonds, will

tuations in

precia e "

and

Even

Our

Licenses Revoked

stabil¬
on

in

other

Government.

can

(1235)

Two Broker-Dealer

capitalizatiori, the

interest and principal as they
due, and that intervening
market prices are at the bond¬
holders' risk. Whether this is true
or not, the Government takes the

which

is

CHRONICLE

long-

dealer

hpronve

value

the

FINANCIAL

sbly ..depending on the business
outlook, the character of a firm's

nav

rate

if

&

Commission announced

cnly the obligation ;to

ment has

thinking about

Government rate

vate securities

argued that the Govern-'

be

niv

-s question is im¬

in

even

ized, the long-term rate

The

fnd institution? that purchased
Government securities at par. It

that

see

term

•

second reason for the supnnrt policy is to provide a certainPJsure of equity for the. citizens.

we

COMMERCIAL

Admits Knight,

Wells

Geo. J. Gruner,

Of Lee

V. P.

Higginson

Higginson Corporation, 40
Wall Street, New York City, an¬
Lee

nounce

that

who has been

ration's
has been

George

J.

Gruner,

head of the corpo¬

department,
Vice-President.

municipal
elected

a

t>

'

.2

(1236)

THE COMMERCIAL

of Internal Revenue
us

interested in the subject — and we think all of
had better be interested
because of the effect that such
are

about

$36,000.

v

by prodigious effort he were again to double
the income on which he must pay Federal income taxes
—that is to

We

well

are

.aware

that much

larger amounts of

spent by the Federal Government

ernments for that matter

know, of

money

and all other gov¬
than should be the case. We

—

—

These

the

that if expenditures were reduced as they
should be, much less burdensome taxes would be
necessary.

which all of

us

would like

so

much to

see.

How many of us

really realize what is taking place
in this country? There was a day when a
Ford, a Rocke¬
feller, and a few dozen other individuals by extraor¬

or

more

a

Such individuals in

year.

some

"went back
seme

nomic life for

into

business.

us

the

business"

The result

—

was

a

richer

and

tion

of

to

result?

boost

The

and

exports.

result

rapid

is

a

deteriora¬

Europe's balances of pay¬

Britain's balance of payments

especially instructive. Labor

is

people?

In

one

sense,

a

they have been liquidated as ruth¬
lessly as Mr. Hitler and Mr. Stalin ever liquidated their
political enemies. And as incredible as it may seem, there
is a close resemblance of motives.
Generally speaking, in
this country at
any rate, it was made politically profitable
to "soak the rich" —and
they were accordingly "soaked,"
and still are
being "soaked." Franklin Roosevelt, one of
the most effective of the
popularizers of strange notions, did
his work well.
It is today almost
impossible to obtain a
hearing on this vital matter.
'
a

happens to the

million dollar income under

000

of

his

million

in income tax.
If he worked

•

|

man

goes

to

He has about
on

a

who must

pay

taxes

on

the

Federal

which of

course

remaining $160,000 to his State government.

Britain

strides

in

running
108%

has

balance

the
of

of

time, her
has grown

same

payments

Last year,

worse.

accounts—

all payments due to the
current

Americas,

payments

there¬

from—amounted

to

the

amount

and

dollar

That
>

is

gold

at

least

$4.1

by
re¬

first
so

Marshal"

to

as

deficits

reduce
the

with

Iron

even if all devoted to the
will not buy many common stocks or supply much
capital to American business.

military .and

penditures

abroad

similar

by

ex¬

about

$0.4

billion.
To

sterling

the figures refer to

will

from

the

mistic nature of these

underlying
assumptions, the crucial question

funds.

He
the merits

on

financed

by

shift

may

European proj¬
imports to be
ERP
dollars.
He

the

funds

from

one

It will be
to

an

extraordinary task
direct the economic

plan and

life

of

270 : million

Europeans,

whatever authority or instrumen¬

would unleash the same

shortages

inflations which are largely
responsible today for the progres¬
sive paralysis of Europe's balances
of payments. •
v<
*
Controlling the Marshall Plan
and

>

implies

controlling

mental

receiving

foreign
have

labor

and

end.

govern¬

To

reform

their

restore

Europeans

trade,

to

all

policies at the

their

would

fiscal

and

systems, banking pol¬
icies, foreign exchange techniques,
etc. To counteract the inflationary
monetary

effects

of

unprecedented capital-

projects, they would
painfully defla¬
Europe's
financial
self-reliance tionary antidotes. European labor
would have to be regimented.
than
^ the
preceding dollar out¬
What is the use of presenting
pours"1 have had,
Unfortunafelyr
there is nothing in that program the British mines with expensive
that would relieve the drain on coal-cutting machines, if the

expansion

have

more

in

success

restoring

Britain due to the claims and def¬
icits

the

of

of

rest

drained b.v

swallow

to

maintain

miners

or

their

raise

sterling daily 9 to 10% rate of absentee¬

the

Similarly, France and Hol¬
are

their respec¬

dispatch a

We would have to

ism?

Commissar

dictate

to

Europe

to

tive empires.

In the case of Hol¬
land, restoration of exports from

how much domestic bank credit it

the East Indies—with the net pro¬
ceeds to go to the Dutch—is an

should

essential

preliminary for

construction

any

In

program.

re¬

other

words,
the
European
Recover/
Program has to be broadened ihto
a

Global
be

labor
of

to

pay

thing to
and quite

production

$1.46 billion in '46).

ports and

eliminate

balances

of

the

pro¬
an¬

deficit

payments.

in

More

permitted

whether and when it is
to go on

its

work, at what rates
and
how
intensively,

has

strikes.
Solution

The
The

one

enjoy, what taxes it

levy, how many hours

Recovery Program if it is

Secondly, it is

the

is supposed to

made effective.

to

whole, The

United

of

of each and every
ect .that calls for

is whether the Marshall Plan will

mote

a

behind

recover

other

as

price

on

Kingdom alone accounted
last year for better than
one-half
of the gap:
$2*/2 billion

area

market

and that Germany
pretty soon.
However, disregarding the opti¬

to

be sure,

world

Curtain;

will

land

duced

$2 ¥2 billion in the

materials

area.

kept her commodity imports down
to 75% of the 1938
physical vol¬
ume, and in spite of having re¬

An

bureaucracy, will administer

disbursement

have

■

the dollar deficit in

Britain's international

her

is

to

Russia

raw

at

volume

pre-war

from bad to much

minus

great

which
(allegedly)

today

of

made

production,

output. But at the

the

But this amount of
money,
venture

ments.

an

invest¬

1946 she lost little over one bil¬
lion dollars "only."
This deterio¬
ration occurred in
spite of having

he

But, of course, this is not the wholk story, If this tax¬
payer happens to live in one of the States which also
levy
an income
tax, he must pay a very substantial part of his

purpose,

to

with

including the U. S. and
loans, have been de¬
pleted in a single year, while in

Government and six hours for himself each week.

1

it-

the July, 1947, level
permit the Wes
draw $6 to $7 billion worth o.

that

Canadian

could not and earn any such sums of money — he would
be working approximately 34 hours for the Federal

v

the

combined

meantime

sources,

Government

$160,000 left for his labors.
—

in

allegedly,

year,
their

overstrained

long-term

management.

But the yawning gap in Europe's tality is put in charge of the ERP.
Even assuming that the knowl¬
international balances is still wid¬
ening. For 1948, the 16 Nations' edge and foresight such a stagger¬
Paris conference estimated their ing job presupposes^is available:
the mere attempt at wholesale in¬
combined dollar-deficit at nearly
dustrialization on any such scale$8 billion.r They need such huge

stay put

which

existing law? Over $840,<•

40-hour week

regime to challenge
almignty trade urions.

year—provided that in the

billion.

.

What

Labor

a

own

area

economy

profit

cepted by the recipients.

presently in the attempt to

stop the tide of wage hikes, a dar¬
ing attempt, indeed, on the part o

dollar

of

the

nates

ogressively

fourth

overdose

for

cheapened
interest
rates.
This
"disinflationary'1- course
culmi¬

the foolish policy of p

capital goods. On the con¬
trary, it has burdened an alread^

of course,

sense

Management

substitute

project and country to another, or
may withhold them altogether un¬
less his policy advices j are ac¬

cer¬

able

v

will have to decide

tainly can not be charged with
having neglected spending on dur¬

eco¬

a

business-like

the

"persuading" the miners to longer
hours,
setting
limitations
on
domestic subsidies, and, reversing

amounts

Britain's Position

*

outstanding
business
executive
independent of the State Depart¬

(Continued from page 4)

the

at

is

motive, Congress is determined
to
implement the Marshall Plan
by
a

ments in relation to the Americas.

all.

What has become of all these

on

stop to ponder?

stimulating effect on production!)
Actually, too much rather than
too little capital has been diverted
in most European countries into
permanent- investment,
such as
houses and manufacturing plants,
merchant ships and new machines,
bridges and railroad equipment,
public utility installations, etc.
ksAIso, tremendous efforts have

continuous

Liquidated
financial

other

Conbolling the Marshall Plan

least

at

or

not better

we

sumption,

doubtless, wasted a part of their income in
ostentation and the gratification of
trifling personal
whims, but, if so, they did not remain very long in this
select cdmpany. Much the larger
part of these enormous
back into

country the economic envy of every

As

ment

And

in¬

stances,

incomes

who, by and large, have in the past

been made to compare imports at
the
expense
of domestic
con¬

dinary effort, and often assuming extraordinary risks,
were able to build their annual income
up to a million
dollars

men

implies

it.

;A Business-Like

globe.
Had

We concede that the reckless rate of
government
tures rather than tax reduction as such is
probably

the

are

this

made

course,

expendi¬
the most
vital, or at any rate one of the most vital, issues of the day.
Yet, despite all this, and partly because we believe that
the income tax schedules as
they now exist are in substantial
part responsible for fiscal profligacy, we suggest today that
tax reform,
particularly individual income tax reform, is a
sine qua non of a return to the sort of
lasting prosperity

he could add

way

Plan

dangerous experiment'
esne
cially so when it lacks the
control
and guidance of the
profit motivp
(on of
loss-fear)..;
Enthusiastic
planners might easily overdo

$14,000 to what is left after the Federal collector
is through with him!

Over-Spending
are

Well, in this

$200,000?

Marshall

very

another

5

fied itself rather than to
be cured
Forced industrialization
the

And if

system of taxation must inevitably have upon the economy
of the nation, and hence
upon the lives and the welfare of
every man, woman and child in this country.
;

So

such

^

—

a

country

inflationary 'conse

then the
disequilibrium
in foreign trade
may be intensi
quences,

permits him to keep from $24,000 to j

^

each individual

to restrain the

might double his income to $100,000 -by so;doing?
>
If he is successful he will raise the income the Collector

(Continued from first page)

We

•

of

already arduous toil in the hope that

and add hours to his
he

Thursday, March 18, 1945

CHRONICLE

FINANCIAL

&

solution

European

the

of

problem, if there is a solution, has
to.be found by reducing the prob¬
lem to
its
simplest ingredients.
What

we

are

up

against

is the

their
hole thai
sterling area- the expansion is undertaken in a deepens as we try to fill it.
income is sizable are extreme. That is
precisely the trouble.
money" reserves* and perfectly balanced fashion, new stead of planiting other peoples
To get into quite so unfortunate a
credit resources
Jhave to carry the disequilibria may be created. I! production, we have to devise a
predicament,
brunt of the entire
one has to
sterling com¬ is no use, as an example, to workable method that guarantees
pay taxes on a million dollars
income, but he
pound's dollar deficit.
"dieselize" Europe's railroads end that the gap, which threatens to
;
does not have to be nearly so economically productive
The point is, that instead of re¬ to motorize its
agriculture unless, swallow indefinitely billions 01
;
to be scratched pretty effectively off the list of
ducing the deficit, the American (a) sufficient fuel oil is
large
being our annual income and to
Is

this

an

extreme

case?

Of

All

course.

cases

where

(against

But Britain

production

per se means more

more

is the banker for the
her "hard

im¬

strains; and unles

contributors

-

and

made

must pay

financed

prices (a doubtful condition in
view of the World-wide oil short¬

to venture
capital. Take the man who i
taxes on $200,000 income. He finds his Fed¬
eral income tax bill
coming to the staggering total of
about $150,000, leaving him
with some $50,000 of his
$200,000 income. If he, too, happens to
live, or earn
bis income, in a State which takes a
substantial part of
the remainder in income
taxes, he is the worse off.

Canadian loans, have
merely
its vast increase. Small
wonder that they did not last the

four

years

for

which

they

were

age

available

and

the

at

reasonable

pending troubles in

even

more

by still

to strive to build their incomes

strenuous endeavor and
of risks which men of
smaller
more

by the assumption

income

can

not

to take.

A fact

,

i

.Iri-i

should
Pay

a

or

man

two is worth

with

$50,000 income

Federal income taxes


h


citing in this

assume

afford-;

connection.

Why

which he

must

upon

risks out of the

ordinary

our

own

financial stability*
T

.,

.

negative
issue: the approach
to^Eu¬

start

To
of the

on

the

Britain's exports have
last year, but her imports
increased more.
At least a net
$400 million have been devoted to

Arabia); and (b) that Europe will

rope's troubles—and to our

produce sufficient exportable sur¬
pluses to* pay for the huge quan

den involved—must not

expanding

expansion

British

investment

"loans"

have

evapo¬

rated last summer, and since Con¬

'■

ger

will be corrected.

intended.

American

important is the lack of incentive

J"es® individuals have

balances of payments, a

grown

tities of oil

it

of

will need.

steel

A

grsa

capacities,

as

within the sterling
We need not
area.:
Most another
example, is a dubious
stop at this high figure. He who must
important, her indebtedness to venture unless matched either by
pay a Federal income tax on $100,000 income has
only about that area constitutes a permanent a proportionate increare in avail¬
$36,000 left. Federal income taxes on an income of
$20,000 leakage in her financial reserves. able scrap or in expanding cokingleave the taxpayer
Note the Tact, too, that since the capacity. Both conditions are
roughly $13,000.
very

But

problem of filling the hole in

gress

has

granting

shown

fresh

reluctance

ones,

in

the Euro¬

of fufillment.

,

making serious progress
putting their houses in order.
Italy and France have made pain¬

tion does

to decrease the gap in its interna¬
tional accounts.
As a matter of

ful strides toward

fact, if the production expansion
overstrains the economic system
and calls for continued regimen¬

exchange

embarked

on

markets.
a

new

Britain

course

by

and'

Plan.
on

Still

less

can

we

global planning and

administration.
out

Its

own

Europe

embarK

autocratic
must worR-

problems and

not

mean

tation inside and

automatically

over

ican aid should

Amer¬

not mean

'

peans are

eign

proceed by way of planning
managing the whole suocontinent covered by the Marsha
not

substi¬
tuting our brains for theirs, no
J
The examples could be multi¬ our responsibility for their
°)vn,Lo
plied. What matters is the fact
Fortunately, there is a si^P1
that increasing Europe's produc¬ way open to control the aid we
doubtful

in

balancing their
budgets and normalizing their for¬

bui-

and can¬

provide—if aid we must—withou
meddlesome interference abroad.
What

we

should

be

interested 10

is, to repeat, Europe's balances 01
payments. Their status and change
can

the borders Vvice

be

of

gauged by the simple
checking periodically

de01

Number 4682

167

Volume

"hard money" reserves (in¬

their

credits from the U. S.).
decline of those re¬
serves are as sure an indicator
over period of time of the trend
in each
country's financial de¬
velopment as there can be devised.
^11 we have to do is to watch
those reserves to know whether
the respective positions improve
cluding

rise or

The

deteriorate.

or

Evidently, a continuous rice of

THE

COMMERCIAL & FINANCIAL CHRONICLE

The State of Trade and
(Continued from

UEed^^these'induItHM £fri0il

page

Industry

5)

anlgas lines>

seen

-t

EltP

(3)

S"86'

l'

No

are

rails,-repairs and general main-

?f?ble™s: (2> container industry
i autom°hlle demand stemming
with respect to
models and

rleman to-

Ifl/es nossfhihtiec
possibilities

wUies

33

A combined drop of 7.04 points in the two final days of the week
brought the March 9 ligure to 275.49. This represents a decline of

2.4% from the March 2 figure of 282.35. It compares
iow of 270.60 on Feb. 13, and it marks a rise of only

with the recent
4.6% above the

comparative 1947 level of 263.34.

as we!1 as other pipe

minor factoid
tending ,arger than ever before in history. Other
time the t?f He nntiln
1° keep a str0"g steel demand lor somewhere floilni etl
eS' are: (?> Demand from the railroads
tenance

(1237)

requirements;
from realistic

Leading grain markets experienced sharp reverses in the closing
days of the week. The decline was attributed in large measure to a
lack of confidence resulting from the

Europe and to disappointment
mill

announce

of the

allocations

on

PMA's re-entry into

month.

Another

disturbed political situation in

the failure of the government to
flour tendered last week as a result
over

absence of about a
improved wheat crop

the market after an

influence

the

was

greatly

new
better cars* f5)
nation's dollar deficit is a storm
prospect due to recent beneficial snow covering.
signal.
Instead of trying to fill
The drop in wheat wiped out all of the advances scored in
cJsts which wi11 start a flow of oiders for munia
bottomless barrel again and SS^lSUStnal building, and (6) general demand from
the tw o preceding weeks.:
again, our aid should be made
Corn showed considerable strength in early dealings but later
^ers of steel which is in no way sharply
conditional on a gradual improve¬ tailing off
weakened on profit-taking and selling induced by the fall in wheat
ment of the dollar (or gold) po¬
American Iron and Steel Institute announced on Monand other staples. Domestic demand for flour was very slow with
sition of the beneficiaries. Instead
Vyee, lhf.°Peratin8 rate of steel companies having
bakers taking only small lots for immediate or nearby shipment.
94% ot the steel-making capacity of the
of forcing production of one kind
industry will be 97.5%
Demand for lard was only fair. After an early show of strength prices
of capacity for the week
or another,
we should apply the
beginning March 15, 1948, an increase of
weakened in sympathy with the decline in other markets.
0.9 points, or 0.9%. This compares with
medicine where the ailment is lo¬
96.6% one week ago. A
Trends in livestock values were irregular. In the final trad¬
month ago the indicated rate was
cated, right at the balance of pay¬
92.5%.
a

dDa^sta^fnd0^

miscellaneous

•j

ments.

This

do

To

takes

so,

elaborate

no

machinery of administration,

su¬

lay down the rule as to the size
of the permissible deficit in the

international accounts of each in¬
dividual

which

country

we

are

supporting, with the proviso that
the gap has to narrow from year
to year.
If France's international
deficit

$2 billion

was

it
the

one

year,

operating

rate

msots and castings
1,667,300 tons

pervision, or management, no en¬
croaching upon the political and
economic autonomy of foreign na¬
tions.
All we have to do. is to

ing sessions prices fell sharply

week's

capacity
in

one

1940, the

FREIGHT

month

a

year

highest

ago,

and

ago

equivalent

against

as

to

1,757,400

tons

year.

ADVANCE

ELECTRIC PRODUCTION SLIGHTLY

loss

of

prime

asset (gold and dollars)

greater

than

the

amount—sanctions

liquid

turns out

permissible

should

be

im¬

posed by reducing proportionately
Marshall

the

Plan

benefits

to

with

control.

own

they are
beyond their

But after due allow¬

for the

ance

inherent difficulties

430,000 kwh.

were

Institute.

Although

less

must—to

cotton

and

reports to the effect that credits had

structions.
WHOLESALE

YEAR

CONTINUES

TRADE

LEVEL

AND

Extensive

output in the United States and Canada the past week.
Estimated output of cars and trucks in the United

OF

A

the past week

amounted to 114,888 units last week, "Ward's

TO

HOLD

AGO

them, without meddling in their
affairs, to correct their interstate

been

barriers

is

completed

this country

in

so

cars

far

and 275,837 trucks have

this

year

Adding Canadian production,

1,021,009 vehicles.

for

a

total

of

the aggregate

1,066,738.

promotional

and

favorable

sales of seasonal

interest.

consumer

mer¬

Retail volume

rose

moderately during the period ended on Wednesday of last week and

favorably with that of the corresponding week

according to Dun & Bradstreet, Inc., in its current review
continued to seek medium-priced merchandise

year ago,

trade.* Consumers

of

of good

states.

"Ward's" estimates that 745,172

advertising

attracted

continued to'compare
a

States and

This,compared with a revised total of
108,343 units in the preceding week and 105,496 units a year ago.
United States car output of 79,557 compares with 74,351 last
week, while truck completions were 29,525 compared with 28,490.

intrastate
politics
largely responsible)for

difficulty irt

traders reporting

securing sufficient quantities to meet requirements. Textile markets
remained quiet with; an easier price trend noted for some con¬

chandise

and

been arranged to
Mill buying of the staple con¬

finance shipment of cotton to Japan.
tinued limited in volume with some

SCHEDULES

OPERATING

force

of new-

speculative trading in commodities and the

on

Strength in the market early in the week was influenced by the
than expected decline in the mid-February
parity price for

RETAIL

Higher operating levels by Chevi-ajet and resumption of sched¬
ules by
Kaiser-Fraser accounted for the increase in automotive

Canada

we

Electric

turned out.

Automotive Report"

situation, there remains a
broad margin of possible im¬
provement,
depending on
their
own policies.
That should be the
prime objective of the Marshall

mainly attributed to fears of further delay

was

OUTPUT ADVANCES ON INCREASE IN

of the

plan

Edison

was

very

Plan—if

the

to

consecutive week that output exceeded the 5,000,000,000 kwh. figure.
The peak was reached in the week ended Jan.
24, 1948 when 5,436,-

AUTO

Of course,

factors

according

decrease of 7,954,000 kwh. when

compared with the pre¬
520,798,000 kwh., or 10.9% higher than in the
corresponding week of last year. The March 13 week was the 10th

How, the Europeans manage to
their respective "quotas" is

faced

a

ceding week, it

meet

their business.

kwh.,

was

decline

getting the European Recovery Program started, talk

ABOVE

;V

France.

641,000

as

unsettled political situation in Europe.

BELOW PRECEDING WEEK

this

the

The
in

taxes to be levied

met—if

say,

pronounced

was

Monday. A drop of almost 1 % cents per pound brought the New York
spot quotation to 33.98 cents, a loss of 75 points from the close of the
preceding week.

.

20% less in
next, or a deficit "quota" of $1.6
billion only.
If the quota is not

be*

Lack of manu.it has been during recent weeks.
Activity in domestic cotton markets increased last week as prices
prices trended lower in limited trading.

to move irregularly. Values which had shown a firming
tendency during most of the period, suffered a sharp reversal on

The amount of electrical energy distributed
by the electric light
and power industry for the week ended MaYch
13, 1948 was 5,284,-

should

Cocoa

facturer interest

continued

SLIGHTLY FOR WEEK

Loadings for the week ended March 6, 1948, totaled 792,571 cars
according to the Association of American Railroads. This was an in¬
crease
ot 1,482 cars, or 0.2% above the
preceding week. It repre¬
sented a decrease of 13,204 cars, or 1.6% below the
corresponding
week in 1947, but an increase of
6,382 cars, or 0.8% above the same
week in 1946.

under greatly increased supplies

at terminal markets.

1,741,200 tons last week,

1,686,900 tons, or 96.4% of the old
1,281,210 tons for the average week

prewar

LOADINGS

is

quality.

There

was

moderate

a

in

increase

the

demand

for

Easter

apparel with emphasis on medium-priced lines.

Spring suits, dresses and coats sold well with fancy
continuing to be popular. A slight decline

Women's

blouses and ballerina skirts
in

occurred

suits

buying of jewelry, though millinery and

the

handbags

requested. Men's lightweight worsted and gabardine
also sought and Spring coats sold well. The demand for

steadily

were

were

pajamas-and well-known brands of shoes was steady at a
the future, high level.
*
v
Consumer interest in. lawn and porch furniture increased con¬
according to this trade authority, since "order backlogs throughout
nomic systems, for the
flight of •t.10 industry are piled even higher than a year ago."
siderably in some areas with Spring cleaning and decorating supplies
capital
from
Europe,
and
the
attracting favorable attention. Good quality dining and bedroom
growing disequilibrium in its bal¬ BUSINESS FAILURES SHOW SLIGHT DECLINE
furniture continued to be in large demand and branded major ap¬
ances of
payments.
J
Commercial and industrial failures declined a little in the week pliances sold well. The dollar volume of hardware and paints in¬
Whether Europe's solvency can ending March 11, but continued to be twice as numerous as in the
creased moderately but a slight decline occurred in the buying of
be
which
the

are

yicious distortion of their

restored in

visible

a

future, is

But its defi¬
cits against the dollar world must
as

reduced, if only gradually, so
to reduce the intolerable drain

on

own
resources which an
export surplus of around $10 bil-

week last. yearv Dun & Bradstreet, Inc., reports 102
failing in the week ended March 14, against 113 the previous

comparable
concerns

week, and 51 and 17, respectively, in the like week of the two pre¬
ceding years. The current mortality level, however, is still only
about one-third that of the corresponding week of 1939;

our

hon

;

$5,000
a

or more, a

year

ago

by

8100,000 each.

a

decline from 93 last week but exceeded the 38
wide margin. In nine failures, losses exceeded

Small casualties involving liabilities under

$5,000

t

Bklyn. ^Gltapter, NACA
tiarporate Reports

On

meeting

Brooklyn Chapter, National

Retail

trade

had

the

service.

cial

most

';

-

;i-v

<

Pacific
the Middle At¬
Brooklyn, on Wednesday evening, lantic States,- followed by the. East North Central, and the New
March 24, William ,W. Werntz of England and South Atlantic states. '
V
louche, Niven, Bailey & Smart FOOD PRICE INDEX REVERSES COURSE FOLLOWING RISE
Association

to be

of

Cost

of

New

week's

The

Accountants

held at Michel's Restaurant,

States.

failures

The second

were

heavily

concentrated in the

largest number was reported in

York,- Certified "Public tv ; V OF WEEK AGO

Accountants,Ivwill,

be

the

guest

Expects of Corporation Reports."

Wiping out the rise of the previous week, the Dun & Bradstreet
wholesale food price index fell back nine cents from $6.70 on
March 2 to $6.61 on March 9, duplicating the six-month low recorded
on Feb. 24.
For three straight weeks the index has remained below
the level of the corresponding date a year ago, the current figure

A graduate
of .Yale University
and a member of the Connecticut

comparing with $6.70. last year, a drop of 1.3%.
Individual price changes showed three times as many

Bar

Lenten

I'

;■ V -v.

,

The

talk

subject

will

be

•

of: Mr,; Werntz's

'"What* Government

Association, Mr. I Werntz

formerly

was
Chief Accountant of the

Securities and Exchange Commis-

?on in which capacity he served
tor a
period of nine years. Prior
to

that time he

was

a

member of

there

and

HEAVY

faculty of Yale University
where he served as an instructor
of

accounting.

.

1

;

I

Raymond C. Morse, President of
the
Brooklyn. Chapter of the Na¬

drop
Dun

ants, will preside

over

the meet¬

ing.




After showing

the
a

selling

pressure

in
& Bradstreet, Inc.

tional Association of Cost Account¬
;

and

liquidation

index

a

steady to firmer trend for

about two weeks,

widest break since the

sharp setback of

suffered its

month ago.

large

demand,

consumers

coiw

were'plentiful

in the period ended on
estimated to be from 7 to 11%
above that of a year ago. Regional estimates exceeded those of
a
year ago by the following percentages: New England five to
nine, East and Northwest seven to II, South eight to 12, Middle
West six to 10, Southwest nine to 13, and Pacific Coast four to
for

volume

country

the

of last week

:

was

C-

eight.

;■

v.';.';"-'..'.

r.v'"' ' '

■'

wholesale centers slackened somewhat with
buyer attendance declining 9% for the week and 15% below the
corresponding .1947 level. There was a slight decrease in wholesale
volume during the week with total dollar volume of orders somewhat
exceeding that of the corresponding week a year ago. Collections in
some
lines were less prompt than in previous weeks with some
Activity

in

the

jobbers and distributors more cautious in granting credit.
Department store sales on a country-wide basis, as taken from
the Federal Reserve Board's index for the week ended March 6,
1948, increased by 4%

from the like period of last year.

This com¬
For

pared with an increase of 4% ''•••(revised) in the preceding week
the four weeks ended March 6, 1948, sales increased by 5% and

to date increased by

the year

6%.

•

:

-

-

-J ;.

.

- * /;

for

*,

trade last week suffered a setback
affected Spring buying and as a.
consequence, stores registered losses up to 10%, with the average
loss for the week set at 5%. Total volume tor the week was
also under that of the similar period of last year.
Here

to

due

in New York retail

bad

weather

which

According to the Federal Reserve Board's index, department store
City for the weekly period to March 6, 1948, in¬

sales in New York

creased

in agricultural com¬
in the closing days of the past week resulted in a severe
the daily wholesale commodity price index, compiled by

Heavy
modities

SHARPLY ON

in

goods declined slightly. Fresh vegetables
reasonably priced.
Retail

declines as

LIQUIDATION

were

specialties sold well with fish, poultry and dairy products
requests remained large, though the volume

Wednesday

were

COMMODITY PRICE INDEX OFF

the

meats

inexpensive cuts and meat substitutes.

canned

of

advances during the week. Moving lower were flour,
Wheat, corn, rye, oats, hams, lard, butter, cheese, sugar, cocoa, eggs,
steers, hogs and lambs.
On the up side were barley, beef, coffee,
cottonseed oil and potatoes.

speaker.;
\

to seek

in demand. Frozen food

failures,

■■■

fresh

While
tinued

with 41 concerns failing,
against 49 a week ago;-they were .oyer twice as numerous as last year.
Twenty-five manufacturers went out of business with loss to cred¬
itors, off slightly from last week's 31 but exceeding their 1947 total
of 21
by a small margin.
Wholesaling with nine had the fewest
casualties. The only increases appeared in construction and commer¬
.

accessories.
at a high level and the supply of most

Food volume was steady

numbered 18 against 20 in the preceding week and 13 a year ago.

•Wernlz to Address

At the
regular monthly

automobile supplies and

foods remained abundant.

Eighty-four of the week's 102 failures involved liabilities of

:

annually constitutes.

of the

,

A buyer's market for new automobiles is still far in

eco¬

extremely doubtful.
be

shirts,

a

2%

above

the

March

6,

1948, sales

by 5%.
*111
ance

increased 4% and for the year
L-V,..:, Vv.

year

closings this year occurred :n
they occurred In the previous week.

store

to date rose

Feb. 28 and Feb. 21, allow-,,
the Washington s Birthday
the woek ending Febuiaiy -8 when a*
'
v

using year ago comparisons for the weeks ending
be madr for the fact that in cities observing

should

holiday,
last

■

period last year. This compared with
preceding week. For the four weeks ended

same

decrease of 10%* in the

34

(1238)

THE COMMERCIAL

CHRONICLE

& -FINANCIAL

(Continued from
feet

7)

page

production

labor,

the

on

public market by re¬
capital financing. On
Jan. 2, 1948 Gulf Oil Corporation
cent

Capital or Government Ownership
of Industry!"
management,

among

capital

and

More

taxes.

risk

divided

are

production
means
profits to divide. Risk capi¬

more

common

stock sold at 75 xk on the
New York Stock
Exchange. Short¬

tal

new,

ly thereafter it became known the

increases

would

company

have

sell

to

269,050 shares of additional
stock.

mon

the

The

stock

60.

The

promptly
stock

new

2,-

price
declined

quoted at

58%.

This

capital, if it has to pay
it, then labor will
get either less or pay higher prices

to

while

Averages

8.50%.

It

ceived
stock

said

it

Feb.

Gulf

Jan.

on

Oil

2.

stock

product

panding

requirements

stock

'"markets

was

and

unable

to

ex¬

when

How

system to
recent fi¬

for

the

stocks

common

that

ings and
that

con¬

converted,

the

should

dreds of millions of risk
I can tell

the

company

find it necessary to
public markets for hun¬

you

market

stocks,

all

for

can

'is from

say

come

earn¬

depreciation,

$6 M to $7 billion

was

were

was

utter

produce
securi¬

markets; it won't take much

less

ties
of

such

panic

to

spread

investors,

among

to

functioning in orderly fash¬
only $1.8 billon per yegr
received

by the sale of

The

than

year

on

1/10

of

balance

one

billion per
from, the

came

public markets. From 1941 through
1946 there was no
capital on bal¬
ance provided
by the public mar¬
kets. War production was financed
by the Government. Do we want

men

structure and "the

resulting failure
to supply
the
Government to continue to
risk capital. An
emergency of this finance and ultimately own Amer¬
kind could mean just one
ican industry in peacetime? If so
thing—
the
government
by
necessity why have we fought to save
would have to step in and
supply Europe for Democracy—if so why
risk capital through the
purchase the Marshall Plan?
of

the

public

common

!, dustry.
ment

markets

stocks in American in-

This would

Regardless of what these econo¬
say,
business men know
they face the following facts; De¬
preciation reserves on old plant

govern¬

mists

ownership.

Lack

of

Risk

Vital
The
vital

mean

lack

of

concern

all classes.

Capital

of

values

Concern

capital is of
working men in

not

sufficient

plant is

only through increased
production and increased share in

pretty well worn; ttfat their needs
risk capital are
greater than
at any time in
history; that the

for

that production. ,The
profits from

*Book Val.

Market

Per

Issue-

3-4-48

Ry. Co.

Baldwin

Interstate Department
Stores,
Lockheed Aircraft Corp.—Mack Trucks, Inc

Department

Co., Inc
Stores

Texas

demand

for

risk

Assets Per

latest

this'is not practical in

election year.

Poll,

I disagree.

released

The

early- this

out.

income
going ir
Current editorials bear this
of

tax

A

structure

ir

created

wartime that t.axes 86.45%

of any

and

com¬

land. We

ing
v

cess

of

live

on

found

dustry

by

the

stocks.

mon

purchase

This

of

permit

It

makes

a

$50,000/

to

survive

the

of

own

sec

we

law

to

go

world.

This

expense

ownership#J> Is

want?

we

Let's make

decision.
Let's

/■;'
how

see

structure

the
the

rich

man

is

rich

man

has

accumulated
it.

The

farmer,

tax

not

The
The

on

present

affects

a

-0:?;/

individual.

being hurt.
quit. He has

wealth—he
little

the

can

live

the little
the garage

man,

laborer,

man, the carpenter, the plumber,
these little men who start in busi¬

breeds

ir

distrus/
in

the

providing
often padded

are

There

black

are

mar¬

kets and grey markets—there
individuals
accepting
cash

their

services

and

receipts

as

these
and

evasions
fantastic-'. figures;
rate

are

running at

to

50%,

submitted

surtax

based

bv

in

loss in

a

for

income

the

Treasury* to Congress
mean

are

returning

If

limited

were

estimates

on

not

taxable

tax

the

1947

revenue

i
tr

build—the
works

man

alone,

who

starts alone,
little, buys a

saves a

machine to increase his pro¬

new

duction,

then

employs two or
three men, these little men who
start
operating
proprietorships,
then

partnerships, building out of
earnings, knowing nothing about
corporate structure
there are
millions of them—there are some
—

3,700,000 tax returns of unincor¬
porated
some

businesses,

500,000

tions.-

It

and

returns

is these

of

little

only

corpora¬
men

who

bang—initiative

a

invest.

The

come, an

little

owner

little;, proprietor

in* industry, the
could -save tr

build his business.

people ate

are

generous

willing

1947

Fiscal Year

Approx.

Divi-

$17.11

Earns. Per Shr.

Yield

dend
v

%

to

gc

with their government,

they
in

The Americar

great ,and

a

peonle—thev
50-50

could be¬

man

not

are

time

of

thorities
reduce

felt

the
tp"v"

war

going
it

wise

wartime
on

taxing
to

three years

exce^s-

over,

isn't F

to ooioly the same reasoning
to the little proprietor and. to the
individual
who
owns
finances

operates and makes the

-corpora¬

tion

go?
Time is running, ' and
running rapidly. Today good men
are

unable

and

to accept

greater

greater

iobs

responsibilities

if

it

means

moving from their commu¬
nities because they cannot incur

the expenses of suc^

$6.00
1.00

40.84

29.80

2.75

2.00

,122.19

7.1

96.92

tNii

2.50

34.54

17.98

0.96

4.50

,

74.-34

13.46

101.63

54.95

10.07

3.65

fNil

47

80.55

57.59

50

1*12.50

57.83

51.97

"i*8.00

5.00

;

the




clining.
why

There

expense

of

run¬
year

power

those

sound

are

reasons

whatsoever

tax

no

should

exchanges of property
sale of capital assets. How¬

apply
and

to

if

ever,

the

retain

must

we-

rate

this

tax

long-term capital
gains should be promptly reduced
from 50% to 25%, resulting in
on

maximum

a

gain.,

where caoital

ferred
be

and

rate

posed

should

above

for

pro¬

would

reduction

pro¬

risk

capital,

serious impediment

remove

business. wouM

free flow

are de¬

reduced

The

.

of the

the law

in

gains taxes

incentive

would

12J/2%

now

often

eliminated.

vide

*o

of

tax

Loopholes

com¬

advantageous

often

now

titious

pres¬

lessen: the

would

owners;

taxes

of

instead

holder,

being frozen in the hands of
ent

the

encourage

investments in

op

into the hands of the most

merce

imposed on fic^

gains, and in my opinion
actually increase the reve¬

would

to the Treasury.

nue

Taxes

in

people

who

Proprietorships and

on

Partnerships
I

have

this

attempted

type

"hance

of

ings.

to

show that

has

business

build

to

of

out

Further,

chance to build

it

reserves

no

earn¬

has
no
for hard

times.
My own business, by necess'ty. has been a partnership for
23 years.
In the depress.on

some

of 1932
£0

we never

let

one

employee

account of the depression.
reserves to live on. Today

on

We had

have

we

built

splendid

their
if

in

men

are

life

have

to

know

came

close, offices

we
and,

The partners

employees.

all profits from

on

the

high individual
leaving no reserves

the

at

rates,

.business.

the

We

career.

depression

a

business
surtax

organization ot
and young
making that busi¬

an

young

who

women

We

have

a

are

I

11.7

3.00

6.0

.

29.89

25.77

1*4.50

1.50

50.89

34.87

3.77

2.10

6.6-

:

present

10.0

Tax

capital

bringing insignificant
the

on

the

understand

revenue
a

national
the

tax

economy

Treasury

partment has not made

t.r

decided

a

Pe~

nractme

.qL publishing revenues from this
tax.
Property cannot be sold .at

63.83

24.38

70

1*7.50

3.00

5.6

a

142.08

72.28

$11.66

5.00

7.1

—25% of the profit goes in capital

§For fiscal year
ending April 30, 1948.

nor

profit to

gains

tax,

go

into

meaning

new

the

practice to' continue
organization of young

fair

an

and young women when we
know full well that reserves can¬

men

gains

Treasury is having

effect

5.50

ment

to build

The

15

^Preliminary.

when

taxed

10.9

None
.

there is added incentive
the market is de¬

so

sell

are

Capital Gains

11.1

1*4.50

to

off

rates in excess of 50%.

4.2

2.00

28.06
24.55

nized,

cut

and

is

undue rise in

causes

sells stock held less than
loss is recog¬

man

would

19. 1947, reflecting
ofinternal
revenue

places wealth

of stocks
market

months his full

opimon

12.2

84.28

86

27.61

a

article of Jan.

4.5 v

31.60

If

six

ness

This

supply

When the market is de¬
clining this tax encourages sell¬
ing and accentuates a down-trend.

that

a

six

profit would

prices.

Ac¬

are

profit

After

rising

a

and

cording to the New York "Times"

moves.-

the

so

the

of

.taxes.

of the

into

limited

qu*'ckh

85%

in

25%

go,

most

as

go

Profit-Sharing/Pension Plan for
6.8% .honest. That amount is four timey employees, but under the law a
the amount brought to the Treas¬
V 5.1.
partner cannot participate. There
ury
7.7
by
maintaining
individual is neither incentive, sound judg¬

1.00

18

months

au¬

corporations—wit1"

the hands of unscrupulous

f §10.00

\

six

own¬

sell stocks held under

bu/

time

at

,

23.32

-

cannot

except

88-14

Our

war.

spokesmen, taxi:evasions
ning at over $4 billion

1947 Calendar

anr

again on the alert tr
ereate, to produce, to save an-Mr

nothing but the deter1-,
mination to work, sweat, save and' the

or

with

ingenuity,

with

ness

rising,

ers

still

government

accounts,

and wasted.

work

Government

that what

the market for common
stocks.
When the market is

coming

time

capital
accentuates fluctuation

in

can't

figure ways to escape
in spite of taxes—ir

Businesses

.

capital. That would-

to .our

ownership.,

gains tax

mass

the time he has
•the( Treasury of less
than $85C
living expenses thereM:
million/ about 2.2% of total reve¬
little left
to
go
into industry. nue;
No tax. expert could eveShould this country go into a de¬
convince me that this loss would
pression industry in emergency
not, immediately be more Hamight well have to go to Wash¬
made uo by men jumping to their
ington for help meaning an RFC
mean

hired management
and
not healthy
social order. The

means

they

untold

generally

unwilling to buy because unable
pay for it out of
earnings—

great

A

spend

finest

per -would

year, by
taxes and

supply

•—

experts

answers.

understand.

not

$200,000

or

extenl

signing returns that they do not

income of

an

the

or

difference

no

has

man

tax

citizens

trying

such class of people to

any

exist.

unsound
individuals can't
an

is

months

of

com¬

does

to

and

get

panies for which they worked and
became part owners. The present
structure

corporations increas¬

are

unwilling to sell the business and
pay the tax—young
management

taxes, but when thev

succeeded in becoming owners of
industry. Millions of little men
bought the shares of stock in com¬

tax

helping

know, "What will
Those who w.sh
to

be?"'

tax

retire from business

would

yers

not

the

vestor wants to

businessmen basing every move or

only sup¬
plied risk capital to industry but
provided private ownership of in¬
dustry.
The mechanic, the farm¬
er, the day laborer, the bus driver
always had hope of and often

Federal

not

ership being destroyed

into American in¬

way

see

debts

because

the amounts necessary to
and pay taxes. This excess
its

is

risk capital—we see private

work, ingenuity or luck, or
of all, had incomes in ex¬

some

income

as

Up to some 12 years ago our
Federal tax structure permitted a
class of people to exist who, by
hard

of

practice, unsound thinking
dishonesty
throughout the

sav¬

unavailable

house

changing an invest¬
invariably the in¬

the

50%

this

$51.87

"'/Estimated.

of

absentee

become
risk capital.

new

Whenever

question

normal

stocks, and place their
ings in banks and insurance

use

a

new

ment comes up,

taxes.

than

1947 f0r
have
a
tax
he had to

buy

than

$5,000—
unacquainted with com¬

are

to

1940"for

in

location where his
busi¬
ness takes him.
He had no
profit
in fact,
but pays $3,750 tax
01
fictitious
gain.
a

to

less

it

-if

even

$25,000

and is a danger to the
national welfare. It promotes ab¬

I

report.

$3,750

home in

a

sold
would

showed that the/majority 0;
people are not in favor of more

54

available

of

anybody

Share

40.56

ne

dollar

incomes

16.69

-

and

high.
A great part of these
savings are in the hands of people

ii_«

Co

immed ately.

so

bought

<pzo,u0u

with

16

Corp.

do

and

rate

surtax

year,

time

46

Inc.

shot-ih-the-

individual

say

Gallup

all-

23.96

37

•

50%,

an

cap¬

double-barrelled

a

56

United States Steel
Corp
From

at

over-all

one

Some

estates

large

32

Swift & Co

The

by

28

Douglas Aircraft Co., Inc
Dwight Manufacturing Co
Firestone Tire & Rubber Co..International Harvester Co

National

is

man

the

$10,000

in

on

31.78

13

Bendix Aviation Corp.__-

&

ital

the

$316.00

19

Locomotive Works

Montgomery Ward

that

negligible
loss is
permitted to
apply against ordinary income
If

the

to

demand

stocks in order to
pay
inheritance
taxes.
Some
economists say that savings are
at an all-time high, but the fact
is

S

only

credit of

arm to be given industry and in¬
dividual initiative is to limit the

common

Share

90

Avondale Mills-

*Net Quick

The

supply the
capital. Banks

another

created

demand

following

from the start.

a

public markets, namely the

selling

the

Individual Surtax Rates

to

VALUES, NET WORKING CAPITAL PER SHARE
Approx.

Fe

re¬

capital
expenditures
have
been small the past 12
years; that
the peacetime productive

creased

Atchison, Topeka & Santa

to

that

Real wages can be in¬

BOOK

are

place plants at present
high costs;

risk

to

is

suggest

business must be
25% betw
Even capital
lyW
idle has no incentive
to go intm
new business because
the income
is taxed away, and if
the
business
fails
new

maximum

risk

to furnish risk

new

requirements for

the next five years are
3% times
amount.
From 1931 to 1940

and
consumers.
It
could
mean
disastrous depression
resulting
from the present unworkable tax
of

these

a

from

remedies:

supply it.

There

$5,000,

about 1/12 of its present

securities.

fear

business

cannot

time in history have
markets faced such a

that

thing

the public

taxes

for

I

ness.

insurance companies, by law,

whether

In the post-war period 1922
when
our
Government

ion,

company should ever have to stop
construction. It won't take much
of this sort of

panic in

demand
and

out of the public mar¬

debt and when the public markets

public utility
if that, great

worse

Economists

1927

debt

capital—

per

no

public

task.
to

that it would smash

for

still

At

billion

billion

other

come

kets.

then

go to the

$14

reserves

the

must

this

$21

raised?

about

tinue its present trend so that the
above
debentures could not be
suppose

this

from the inside, that

market

should

In my opinion indus¬

can

be

year

was through
debenture
convertible
into
common
suppose

is

American in¬
dustry were not'$21 billion, they
were $4.7
billion; in 1939 $8 billion;
in the boom year 1929 $12% bil¬
lion. In the depression year 1932
the figure dropped to $1.2 billion.

nancing

Now

be maintained if American

ital expenditures of

investors,
employees and women
children, faced with ever-in¬
creasing
requirements,, has in¬

stock.

that this national gross prod¬
can

expenditure, but the under¬
taking is immense. 1 In 1938 cap¬

including

debt

economists

this

and

nearly $3 billion. Their

These

try is willing and needs to make

supply

trust accounts and small

its

that

five years.

American Telephone and
Telegraph Company, whose com¬
shares are widely owned
by

of

than

willing and able to
spend $21 billion per year for
capital expenditure for the next

mon

debt

of

industry

The

the

more

running in ex¬
figure, but it must

maintained.

say

the money on reasonable terms.

creased

or

be

must

after

haven't

business

supply and has no in¬
to go into small busi¬

ducement

willing to
longer have the

no

in

low

is

people

panies to

cess

offered, the public

were

funds

they

uct

new

at

the

debt

al gross product is

pulled

meet

on

risks

years to keep us out of a major
depression. At present the nation¬

The

earning at the highest rate
history. Gulfs high earnings
to

take

They

build

to

profits and they are unable to in¬
corporate because the" risk capital

running at the

are

mon

were

sufficient

be

American

$194

be

not

demand

national

the other oil stocks with
it,
this in spite of the fact that Gulf
Oil and
the entire
oil industry

were

of

billion per year for the next five

down

in

the

national

maintained

re¬

10 than the market

worth

in

examine

unprecedented
gross

$55 million less for its

was

decline

gradually

ought to know what they are talk¬
ing about tell me that with our

period only

that Gulf Oil

means

over

on

and

jobs.

Let's

common

same

for

the public markets for risk capital
in
the
future.
Economists who

means

high-grade companies

in the

necessities

out of

Dow-Jones

comprising

stocks of 30

declined

the

much

lor

of

that Gulf Oil stock declined about

22.43%

provides

chance

level of 1901; that the great mass

to get risk

stockholders at 51 to induce them
to take it.
By Feb. 10 the stock
was

business

more

too

offered to

was

into

efficient machinery,
production, profits and
better jobs. If business is unable

com¬

market

going

public markets

huit.

being

are

"Must Have Risk

Thursday, March 18, 1943

,

business

untried

be

not

built

hard times.

up

to

There

take care 0
millions 01

are

penalized because
operating as partners ros
rather than as corporations, yim
Federal tax structure shmirLP
such businesses

they

are

amended

immediately so that this

type of business can be
to

fare

as

well

as

a

permitted

corporation

Number 4632

Volume 167

rHF_COMMERCIAL

against and poss.bly knocked out
ox business
completely. Partners
and proprietors should share in

squarely at

pension trusts just as officers of
corp°rations' liiere is already a

es

well

may

that I am an alarmist.

"private ownership

P?

aiarmea

get

Dlv
ply

It is time

government

ft

finance

sound
serve

into panic.

ness

land

the

survive

to

to

and

ingenuity

able

are

More Risk

the

in

great-

all

a war-tax

with

structure,

slowing

|

form

for

of

the

national

and

economy,

along,with it destruction of

to

tional defense.

Capital

j

na¬

that in

sav

ferreu,

being

held

until

up

firm,

*

1

is,

long-

of

total

Tins

was

even

of-new

issues

familiar, taxes. To that
topic I shall return in a moment.
'

„

Sourcest of

1 ises

Venture

Capital

-;

Drymg Lp
There is One

major stum-

more

ture

capital

one-half
and

of

sources

drying
uncertainty as
are

whether

American

that

river

ven-

is

an

must

be

to

why it

to

and

can

it.

remove

I

not appear to

over-simplify
a
complicated situation; but I am
satisfied that if the right remedy
is applied to this
particular ail¬
ment, and soon enough, it will
help greatly in the relief of other
ills.

mony
merce

year,
of the

according

testi¬

to

Means

than

Committee, the capital

ex¬

half—$14% billion—went

for

additional plants and equipment;
$7 billion for
enlarged inventories
and $5 billion* to
carry increased
accounts receivable.

Where
come

did

from?

the

$26%

First

and

of

from retained
profits—over
$15 billion from the accumulation
of

last

$3

billion

and

this

same

expansion

which

are

out

able; $3%

billion

came

from bank

loans, most of it, naturally, of
short-term character; so $3% and
billion

new

make

$6%

corporate debt.

billion

of

That leaves

$4% billion described by the Sec¬
retary as "new issues." It is only
15% of the total for the year; but
there is a very large insect even
that small box of
ointment, and

here it is.
Of this last $43,4 billion of "new

issues,"
notes

74%

—

in

bonds

form

of

were

another

which makes the total of
billion.

stocks,

of

Only

which

26%

13%

new

and

debt,
debt

were

were




in

pre-

the

committed;

of

they

remain

two

year

as

in

tax

possible

New

probably will continue
plow back a portion of profits
capital

betterments,

•

this

is threatened in many cases

by higher
costs and
profit margins.
*
Until; now,
the

narrowed

said

,

and

I need not do

much needed,

sential

so

no

sorts

rates

the

capital.

to

paying

from

19

to

the average

stock

York

2% on his investment. With that
remnant, no doubt, he could then
pay the other taxes levied on him

Federal, state and

local gov-

only
then

*947 earnings. Is any more evias to why some m-

enterprise

tax-exempt bonds,
j whY some put their money into
j .savings accounts, why others buy

It has

established

of

but

banks,

or

and

common

That

venture

was

—

real

and

estate

anything, indeed,

stocks?
the

a

high degree of security,

j

return

the

What about the

many

companies

made?

Well,

business, even more than ' talking again of our own company
the old, must find venture capital;
because I know it best, our profits
new

must

is

a

able and t were high, in terms
chance that here ; But they represented

those

persuade

willing to take

a

chance worth taking.

such

distribution, if

businesses,

indus¬

new

channels,

and

and

the

country
Unless we

grew.

ing

restore that condition by giv¬
renewed incentive to saving

and

investment,

whole nation

our

will dry up just as the

sources

of

are

are too many for
rich; of course few of
really poor. According to

latest available figures, these
were
their
average
holdings in

nesses.

j

corporations:

you agree with me both as
diagnosis and remedy, I hope
you will do more than tell me so.

Prompt, concerted and nationwide
action is needed. Enlist your busi¬
ness
associates
and
your
stock¬

30

United States Steel

General

If

to

stock of three of the larg¬

common

est

of investments into improved
pro¬
ductive facilities and new busi¬

There

be

52

Motors

j holders; particularly, enlist

108

;

dends.

individuals, and others like them,
to add to their present stake or to

their

make

America's

initial

investment

future?

What

[not quite 7%

on

in

would

be most

likely to lead any of them
buy, say, five more shares of
AT&T, or 10 more of Steel, or five
or
ten
shares of some smaller,
perhaps utterly new and unknown
to

corporation?

it be

Would

a

re¬

ward that would
of

our

penalize the rest
people, or would it be in

their ultimate interest

as

well? Is

the solution

reasonab.ly simple; is
it fairly easy to apply?
,,

Eliminate Taxation of Dividends
think

is

there

satisfactory

a

employees and

any

zations

of dollars,

-a.^return of

sales; though

^

in¬

your

represent

for

which

this is

truly to their* benefit.

Urge this step

on your Congress¬
Senators, and upon

and your

man

the President and
we

to

are

labor organi¬
them—

have

his advisors. If
that

additional

$50 billion worth of industrial ex¬
pansion in the next .five years,
this

is

the

most

certain

to

way

bring it about.
There

is

rather

a

widespread

belief that the American

taxpayer,
early history was so
sturdy and vigorous in opposing
crippling and inequitable taxation,
has become punchdrunk and
help¬
who

in

less

from

years.

our

the

events

of

recent

I do not believe that; I do

believe

that

if

people

our

are

shown the dangers of this present

situation,
which

and

will

the/advantages
from

come

its

cure,

they are just as capable as ever
of fighting for their own'and the
country's welfare.
Has the spirit of venture and
enterprise died out among us? I

these questions. It do not believe that, either. I am
only, I think, to convinced rather that it requires
eliminate the present double tax¬ only the proper incentives to make
ation of dividends, and to provide it flourish as strongly as ever. Let
that dividends in the hands of the us provide those incentives. Let
stockholder shall be free of in¬ us give our people a worthwhile
come
tax liability. The existing goal, and they will reach it. ;
answer

is

all

to

necessary

I might
ethical
grounds; but its greatest fault is
that it stands firmly in the way
practice
even

inequitable;

is

question

it

on

of what this nation and its

facilities,

productive
and

people

of enlarged

lower costs

prices, higher living standards
continued full employment.

system,
as
Sumner
said, seemingly has
been devised for the annihilation
Our

tax

Slichter

of

has

capital.

however,

Certainly,
taxation

New

of

the

dividends

double

has

done

Chg. Exch. Member

CHICAGO, ILL.
tive

Committee

Stock
the

Exchange

election

to

—'

of

The Execu¬

the

Chicago
has announced
membership of

George C. Riley, President of Ed¬
ward Brockhaus & Co., Inc., of
Cincinnati, Ohio.
The Exchange
now

has

160 member firms.

With Blyth & Co.

The system has many

faults, and needs many improve¬
ments, but this is no time to at¬
tempt a discussion of all of them.

cash

stockholder got.

insur-

new

prospered

wages

the

I

companies, or foundations or security of his investment? What
institutions, or others who must; about the allegedly high profits so

The

them

r

ance

require

to

and

of

providers

Not

people,
say

large and es-1 fjence needed
our
national j dividuals buy

the

all

Pames have been selling at
S1*'_ seven or eight times

it must look for* salva¬

the

of
us

price at which
sold on the
Exchange last year,

Eyen

to

totaling

average

insurance

company,

Federal

was

commodities

than

country.

need most in the way

profits, either to spend or to
prospective lender,

tion

$1

that

pay

taxes

ranging

but let

exhibit to the
more

'

°f some of the best-known com-

to'

pro¬

their

than

more

part of
growth in earlier periods.
a

and

new

more

tries. For 75 years, more than 20%
of our national income went into

can

recognized

every-

related

needs

whose
to whom we

offer higher

wider

production is to be increased and

people

ernments. This shows how fictiti°^s are *be apparently
yields
common stocks, and why stocks

has

business—the/type
so

six

that represented a net return to
the stockholder of slightly over

by

practically

established

concern.

income

in

getting

pay

a

raise

share. Our stockholders

common

our

agements

thing I have

$1.25

first

to

collectors.

At

one, current profits;
other, new equity or venture
capital.
While corporate man-

into

a

of

been

order

oaid

we

50%. In that event, the
stockholder on the average kept
62% cents out of an original $2.10,
and a total of $1.47% went to the
dend

the

source

all

are

85%;

sources—the

to

i

this

essence

received

had

In

state

surtax

the recent past.

There

share.

85 cents

past profits,

future

to

products,

additional jobs created. The nation

have

$250 in divi¬

in

the

was

stockholders

and

which add fixed and prior charges
and which will not be so readily
near

have

who

research,

more

better

motion and

take-a-chance

American Tel. & Tel

out of borrowings, 'income tax paid on the $1.25 divi-

or

and

we

What is needed to induce these

past

That

years;

almost completely

now

poten-

-

about

true

$1.25, we first had to

remind you of the added difficul-

^

is

a

ties faced by the new and untried

more

specific

dividends

common

previous years.

year

and

postwar

of

if

corporations.

share.

;.%/'.

survey shows,
expansion by manufacnearing its end, we need
not [0ok beyond the figures I have
just
quoted.
Industry
cannot
hope to maintain its recent pace
as

those

need,

we

shall

the

west'nghouse is tiue in essence

of all

Nearing

End?

be

u'estinshouse

re-

were accounted
by increase in accounts pay¬

for

$10

and

Expansion

existing

turers is

billion
most

all,

/

If,

Secretary of Com¬

before the House Ways and

penditures of .American: corpora¬
tions total $26% billion.
More

in

Postwar

available in the

Last

$3

surplus

by

hard-to-get,

tools,

more

high

you,

fair

>

our

^

progress;

done

McGraw-

During

///,;%/%-

obstacle, and what

should

profits,

of

me

serves,

Is

made

.

to

panies'

be

I should like to talk about this

obstacle

prom-

accentu-

a

Like

as

offering
0fferjng to capital—to risk capital, "7 The
average
AT&T
common \
remember, the sort of capital that
stockholder received $270 in divigets no return if things go badly
jdends during the last year; US j
for a time, that may be completely
lost
if things turn permanently j Steel, $260; General Motors, $324.
1 The average Westinghouse comsour.
Let me take Westinghouse
mon
stockholder
owned
2C0
as
an
example; what is true of shares, and received

how

to

flow freely again.

last

|

once-mighty

can

further

1940.

venture capital.
Who
are
these

wag3 rate which business has been

Hill survey indicates that 84% of
the funds needed for capital programs will come from the com-

;

and I

uo,

still

] ated this year,/when

bling block, and that is one-half

Certainty that the

be

to

Let

'

ot

manufacturing industry, it

employees should know
wages for
capital are
necessary to the creation of jobs.
Industry needs more machines,

Shares

and common stockk ami
preferredrand common s qcks* and

that old

in

as

investment

The Wage Rate to Capital

represented

Deferred

Equally,

our profits
surplus in plants and inven¬
tories; like many of you, I im¬
agine, we have borrowed large
sums which we must
repay either
from future profits or from future

°nemore

striking in 1947 than in 1946, when

course,

What's

times

many

wages are necessary to create
for
their
products.

that

and

would

more

want?

high

before

ever

three

by

markets

have invested most of

venture capital, is one increase that is long-overdue; and it
wiH be *n the ultimate interest,
not just of the owners of this elusive venture capital, but of every-

risk capital.

or

What

more.

investor

our

saved

be invested.

can

times
as
much
in
wages
as
in
profits and dividends. Today, em¬
ployers generally understand that

Like yours,
high-priced.
break-even high

higher than

then

during its lifetime produce

cost of $4

Today,

than

us

help

or

owner

of

condition

for

tial

represented

just a
than 2% of the $26%

venture

new

41%

of

13%

is

and

before it

help is to be had? Ail life-giving capital have dried up
sorts, as I have said of Westing- I in recent years. On this point
What is wrong with them is that house stockholders; certainly all > American
history is clear; we
they are not high enough after sorts, in view of the fact that there have had general prosperity and
a
are
at least eight or ten
good living for all our people
the tax
collector has taken his
million^,
stockholders
in
the only when there was a free flow
bite. This wage increase, to the corporate

percentage

And that

yours,

—more

have

matter with such wages? ■'%/:
Just this, as all of you know.

corporate expansion for the year—only 2% that
may
be regarded as genuinely

stabilized.

are

Certzinly No.

more

billion

range prices can be quoted and
relied upon. Of. course, such
prices
cannot be quoted until
wages and

other costs

billion

little

industry alone we know of many
million dollars' worth of modern¬
ization and expansion which are

equal

an

common.

$434

electrical

our

and

were

Like

this

any

foot.

earned

someone

than re§l.
inventories are

8%

(Continued from page,6)

cept to

average over-all

square

Exchange last year was
6.3%. Twenty-five per cent of all
those stocks were
selling to yield

for Sound Industrial Future
not permit my going further into
this wsge-and-price question, ex¬

an

point

the New York

on

Every bit of that investment will

our

high, say some; too
Look at corporate profits in
1947;
more dollars than ever before.
Look at the prices on the exchanges; so low that the average
yield of all the dividend-paying
stocks

would be entirely

now required to create a
job
in manufacturing industry is $8,000 or more; a sum which must

Westingfine plants

numerous

apparent

Stock

Incentive

as

re-

If the nation wants this capital

common

V/%.

step

a

ment

profits

our

similar
plants cost $10 to $12 a square foot
to build and
equip. Like yours,
our
depreciation allowances are
too low, and make
profits more

provide
will

Such

be

a

Mighty
high, even.

markets, depossible change in the
government, destruction

of

which

to go to work, what wages
been offered to its owners?

a structure

demand

we must

in the interest of the wage-earner
or
salaried worker. Tne invest¬

at

create venture capital and cause
it to flow normally and productively again.

history

the

pression,

structure is leading

directly to the result that no class
of people can exist who bv hard
work

face

we

continue, then
Amercan! the inducements

econ¬

omy.

ago,

necessarv

to

of

mass

want

we

necessities could produce
panic in
the public securities

prac¬

alarmed

get

do

or

bilitics

respons

that

unsound

dishonest

time to

when the tax

effort

in

f°r tSel J500'000 additional

SS 0£3-£°a£iS "S
h/e utteriy
incse uueriynecessary ftin^re
things are

greatest opportunities. I
believe they are prepared to understand the necessity for change

through¬

their

even

is

It

tices.

in

forced

are

thinking and

est

and

It is time to get
tax structure

that individuals

is such

great

people know

the

when

alarmed

out

lne

throw busi¬

can

industry,

pro¬

house built

room

we

»"£">*

government ownershin?
government owneisnip/

policies of the Federal Re¬
System,, is destroying pub¬

lic markets that

what.

into

speed

were too low rather than
too high.
Just as, I am
sure, yours were.
Not many years

lTiiiiion

are to be Presei ved, and

3

gress of our

as

against leaner periods,

gove^nin^to'cSKct'^^ta
ks <***&% sssKStasyssss

ars

parent prosperity we are sitting
a
keg of powder, with a tax
structure which, coupled with un¬

T

11

If present levels

%

talt ^

pea^timetaxsirucfure mal8

on

labor.

,

enterprises
up
the
whole national

new

to

vestment, of insurance against the
larger risks taken, of building
surpius in good years to provide

°f pr0dUCtl0n and consumption
ixidiiiLdixitfu.} II Dj

sup!

thp
the

it
it,

wnen

r?nre«

nortantto labor

bring
existence,

large. By any rea¬
sonable standard of
security of in¬

io^rnmen?^ltVSm? f°r

capital and in increasing amounts
If individuals are
unable to

feel

to

only

three times

all business; it is

ownership of American industty." Industry must have risk

must
ceems
the public sity must., It seems to 3
parin<* our
markets are unable to supply risk paring our peacetime ta
[cap-tal to business earning at an' we must first decide
nil-time high.
It is time to get
alarmed when in the midst of ap¬ MOPI.
to

ploymenfis^maUer oTvhaV™'
n6"

35

(1239)

creased volume is expected to ac¬
celerate the profit
ratio, and our
1947 sales were five times those
of
1928, our profits were

capital be sought

eove'rn- ?es,f men or

or

CHKONICLE

cesslty' not 3USt t0 individual busi¬

ment

:

gentlemen

You

That venture

i

year

that the national issue
today
not
only the Marshall Plan,
Russia. Palestine and
Greece, it

ing with taxes on proprietors and
-partners.
It has great merit, de¬
serves full
exploration and con¬

sideration.

election

say

House, H.R. 5143, deal¬

bill in the

this

FINANCIAL

&

{Special

to

The

FRESNO,

Financial

CALIF.

Chronicle)

—

Ralph H.

has been added to
Blyth & Co., Inc.,
Rowell Building.
Rowland,
the

staff

Jr.
of

than any other single cause
to obstruct and prevent the most
more

desirable

utilization

of

capital.

Merrill

Lynch Co. Adds

(Special to The Financial Chronicle)
Certainly, too, elimination of this
SAN
tax
FRANCISCO,
CALIF.—
provision
would
do
more
than
anything else to promote Robert J. Woodruff is with Mer¬
Lynch,
Pierce,
Fenner
&
widespread investment, to reduce rill
corporate debt and fixed charges, Beane, 301 Montgomery Street.

Thursday, March 18, 1943

CHRONICLE

& FINANCIAL

COMMERCIAL

THE

(1240)

36

the "isms" can

What

Foreign Trade Means To Us
mula

globe. This great effort in Europe

day.
port

and Asia cost us over one

big show.

a

free people in war. Do
those

that

admit

now

the

demonstrated

have

We

might of
we

surely

ah entrance fee, we

as

must stay for the

same

solution for, or
peace? We can¬
haggle about the fine points

people have no
•will not fight, for
not

the demo*:
republicans while Rome
We cannot as a people per¬

of differences between
crats and,
bums.

mit

political expediency to

make

world.
We must project our funds, our
"know-how," and our technique
into the more backward countries

a

Some countries cannot

ex¬

import because their pro¬
are inadequate.
are
stymied in
entering the markets of the world
either as buyers or sellers because
or

billion. With, ductive facilities

'lives and over $300

that

million

the

broad

no

or

football of the ills of the

Other

their

countries

internal financial

is out of balance.
studied
tient.

structure

They must be

doctor studies his pa¬

as a

No doctor enters a

hospital
prescribes a tonsil operation
for all the patients.'
A specific
remedy must be found for a spe¬
cific
illness
and
that
goes
in
world economy«as well as in med¬
icine.
and

,

world, and by increasing
productivity—their output—
bring them up into suppliers and
consumers
of world goods. Our
only hope is a plan of action non-,
partisan but sound, which will
inspire hope and courage in a
fast despairing world. Our only
hope is a resurgence of world
trade on a high rate of turn-over,
with peoples everywhere back at
work producing so they can sell-

Effect of Tariffs
It is not particularly popular to

•of the

speak out in. favor of free trade

their

here

they can buy-rand in
enriching the econ¬
omy of their country and achiev^ing a better standard of living.
selling
that

so

process

Impediments to Foreign Trade
this

Before
that

several
world trade. It
possible to . me to
eliminate

must

we

impediments
does, not

be done I feel

can

to

seem

a high rate of turn-over
foreign trade when currencies
are all artifically "pegged" as to
their value, and even the basic
commodity — gold — is held in
political bondage. There must be
a free market for gold—the value

achieve
in

of

gold must be determined in the
places of the world and

market

in the United

How

States.

we
protect our standard of
living in the United States against
can

the

low

standards of most other

countries of the world if

allow

we

their

products to come into this
country without some kind of ar¬
tificial protection?
What a ter¬
rible condemnation of technology
and modern production methods
this feeling really is.
If we have
to

fear

of

most

the

poor

un¬

equipped countries of the world
today in competition with our
highly
specialized
system
of
manufacture in the United States*

have made a; serious economic
We can pay a man more

we

error.

affect

took

and

admit that we have made

best

a

dollars.

they were too expensive to
engender a mutually advantageous
trade. The franc has now been
cut adrift from government con¬
trols and it will seek its true
as

value. When this

happens French

again

will

moving

start
into

borders

the

across

other

countries.

Imports

police of the Russians duplicating
But, in the meantime,

their bondage.

into

France

re¬

were

they were un¬
able to sell they were unable to
buy.
When goods Start moving
out of France the foreign ex¬
change funds will be generated so
that France in turn once again can
enter

the

as

markets

world

the

of

buy the things she

so

badly

The restrictions in

needs.

other

words

stop the trade, and the
stoppage of trade then forces still
restrictions.

more

the

reverse

is

It

both

time

to

let

the

over

the

and

process

traders of the world take

job of

getting^ goods moving free

in

and "out

the

of

various

countries.

,

•

China

keeps books on a cur¬
rency that to all intents and pur¬
poses is worthless and must be
repudiated and a new monetary
..

basis

.hope

found

to

start

generation.

No, I think we have much more
to fear as a challenge to our way
of life and

in

a

China

before

the

process
,




:

of
i

standard of

our

living

stalemate in the flow of in¬

ternational trade.
We

are

afraid, for instance, of
sit

communism and
fed

into

of

man

economic

kind

of

wellwhat

would sell himself

bondage for

"ism."

an

our

wonder

and

concern

in

some

Armies

will

stop its spread for it is an
and jumps ahead of armies,
across borders, across mountains,
and takes seed only in ground
made fertile by poverty and de¬
spair or under compulsion.
In the old days it was possible
to keep the mass population prac^
ticaily helpless because they were
uninformed and
radio

changed
ago

years
new

idea

East

the

introduction

the

Middle

or

of

crooked

cross

sickle.

Let

we

have

bet¬

no

philosophy of life to offer—if
as a free people can find no
solution to the problems of the
world today—we -will
be faced

we

with
in

look at the home

world half free

a

slave.

to the hammer and

us

If

ter

half

and

Democracy cannot survive

that atmosphere and for self-

preservation we would be forced
to a dictatorship form of govern¬

performance of these new actors.
Thirty years ago the communist

ment.

party took over Russia and at the
same
time repudiated all debts
both external and internal. They
started in other words with a

and

with

has been

a

second

face—no

to

were

own

dismal failure

as an

or

economic

men, I do not believe
the ideology that our

needs—and

cause

these

countries

could
was

not

read.

difficult, and

travel

by the mass and education
through contact with others was

an

unheard

indicates her

We

lack

other
can

side

the medal.

of

as an

our

way

of

as a

this deficiency with
loan, not dollars,
that they can
in
the
United
so

here

machinery,

tools
and
'know-how" for the rehabilitation
their own internal economy.

We

with

the

an

agree¬

has

the right to
subject as I have
done without somewhere accept¬
one

no

orate all

over

a

ing the responsibility of making
some
suggestions—of answering
the
question,
"All right, what
would you do about it besides
talk?"
Some Recommendations
I would

like to offer

some con¬

crete

suggestions which I think
would help the situation. Some
work is being done on these va¬

If

bounties of nature there are
their
boundaries. These

ever

within

the

lifecolor

we

old

not have to

world

financed

be gifts—
us

when

were

starting our present de¬
velopment and secured by and
large a good return on their in¬

prejudices relating to race
and creed, and a way of mishan¬
dling our economy so that we face

.

with the order in
which these points are listed, and
do not indicate my estimate of
preference

their

real

position

on-

importance by their
the list. Here they

are:

(!) Abolish all cartels and the

split-up of the world into "areas
of influence."
Competition is a

necessary' adj unct to any mutu¬
advantageous trade pattern
the: world should be able to
buy where it can secure the best
bargains.
<
: -

ally
and

.

(2) Establish

^

free gold mar¬

a

"Market
Place" value of gold and the rela¬
tive values of foreign monies in
terms of that free gold price.
ket—so

know the

we

•

possible

(3) Remove insofar as

against the flow of
goods. Reducing tariffs is an idle
gesture if it is followed by import
quotas, exchange regulations and
all restrictions

other restrictive measures.

must

help them to greater
productivity
in
agriculture,
in
mining, in fact help them to ex¬
plore to the fullest extent what¬

inconsistencies

many

democratic

individual, and

of

be done there is still time

have

Then you get

intrigued

sound of your own voice and, as
everyone is polite and can't talk

We must

credits do
We

we

more

States,

to avoid World War III.
in

because

prosperous

purchase

must be ready to prove

we

the

are

but dollar credit

countries covered by their expan¬

this

high productivity per worker.

loans.

lack of constructive policy in the

sion,

of

must make up

progress

Russians demonstrate the

the

As

will its form.

cause
their productivity per ca¬
pita is too low and, consequently,
their capacity for an
equal ex¬
change falls below requirements
for a straight business deal.
We

faith

of

so

cannot be fully used to trade with
other areas and other nations be¬

and in her
own strength.
The recent "grab"
of
Czechoslovakia will frighten
and
sober many countries who
have been wondering whether the
propaganda from Russia was true.
own

under

than we consume.
These savings, this accumulation

fight with every ounce
of our financial, spiritual and eco¬
nomic strength.
Fortunately, in
the meantime, Russia by her ac¬
her

a

nation,

We must

in

goods

go back to the form and

us

produce

will follow

ure

ordeal.

rious points but it must be pushed

We

appeasement once and fail¬
a second attempt.

tried

get

forward aggressively and not al¬
lowed to peter, out.
I hold no

of

pro¬

exploitation.

for

areas

If

foreign trade as we
here in the United States see it
today. We are prosperous.because

ponents
of
those theories are
reaching out further and further
across their borders taking on
new

an

started,

va¬

function

brave new
the

for such

"free

no

to move into

are

areas

Let

ex¬

that this is

yet

the- other.

have changed and

result—utter

the

N0, ladies and gentle¬

periment.

world

agreed

way—you

shot—and

be

can

economic urgency, then the func¬
tion of international trade will

party to plague them—everything
their

First when

government
edict, and without the blessing of

rious

total failure. They-had

elections

no

on

and services

debt free economy-

a

speech.

a

knees are wobbling and you
wonder why you let yourself in

with

vantage

administration^

Of

years

with

even

There

Russia, as it will be
agencies ' following
expediency on one side against a
free people trading for mtual ad¬

thirty years of effort,, admitting
thereby to the world that their
thirty

it.

government

of

making

But

setup of the world and if that set¬
up changes the forms and func¬
tions of foreign trade must change

manipulations only this time they
are -internal
ones—taking away
own-people the fruits

for

your

able time.

Politics

What has all this political dis¬
cussion to do with foreign trade?

from their

didn't they?" are gone for
generations—if they ever
really existed.
There is at least one
penalty

back, the speaker has
Trade

a policy on gov¬
private loans which

(4) Formulate
ernment and

is predicated on a self-liquidating
basis. The end result should not
be

current

palliative to ease a

a

fundamental eco¬
is aimed at re¬
causes, necessitating

situation but a

nomic remedy that

moving

the

the loam

~

.

of

luxury. Today
village has its radio and in
evening the loud speaker is
telling the villagers the news of

(5) Secure

an

^

,

a

Far

extremely difficult be95% of the population of

Transportation

they

today. The simple days of Cal
Coolidge and "They hired the

are

agreement among
the free people of the world on
vestment.
;
:
a bust or boom area in our eco¬
We are the leaders of the world some fundamental policies oL.exnomic and social life.
But we
now and
have a great responsi¬ port and import practices—so the
have proved many things and w.e
rules ^of the game will not oe
bility to live up to all the pre¬
must get .the story of that proof
changed while traders are run¬
cepts
of
that
.high
position.
and pf our success placed boldly
uneducated.
The
ning from first to second base, in
Should we be afraid
commer¬
and proudly before the faces of
all that. Twenty
cially 'of a new highly indus¬ these include a provision against
all men everywhere. We have the

was

in

than

many

wrecked
war
to
Nazism.
and we
first act
now the
characters have changed from the
practically
itself
financially in a
eradicate the poison of
The stage has revolved
are again witnessing the
of the same play only

not

idea

different

money,

the world has

tions

Trade Stalemate

manner

stricted because

and

economy.

into the world markets

move

goods

our

Have Much to Fear From Foreign

.

much

were

the trick.

.

not

millions

underfed

of

trade"

We had

can partially finance
a hard
working group of human beings
if the plan is sound and
political

we

living in abject poverty in India
and Egypt, if they are led to be¬
lieve that a new idea will relieve

secret

of human efforts. If we are
afraid that the peasant working
on a hand loom can compete with
the - marvelous industrial empire
that
we
have built. up.- in thh
United States, we
have indeeja

goods and in, what, proportion and God of mass
production and that
at what
price, and when this he has feet of
clay.
We had best
basic factor is corrected, curren¬
admit that our standard of living
cies should be allowed to reach
is not due to the fact that our
their market value in terms of
individual men and women pro¬
that free gold, so that the medium
duce all out of proportion to a for¬
of exchange for exports has
a
eign counterpart, and that we
known value.
would be better off with the ox¬
France pegged the franc, at 119
cart and the hand press than we
to the dollar and then closed its
are with our modern automotive
eyes to a black market which put
transportation and the fabulous
a much higher evaluation on the
high speed presses that dominate
Officially

all deals for
export were at the rate of 119 and
at that rate French goods could

hordes

the

this highly indus-

over

trializedarea—we find the

Trade is something which stems
from the political apd economical

years ago.

uu:

uieuly ot "Sit cj0Wn
will bring it to
you " But

,

a day's labor physical plan that was completely
produces more. free of debt. - They had 150,000,000
He
produces
more
because, workers without rights, without
through human
ingenuity and vote,
offering
no
opposition.
machinery, we have substituted Thirty years later they again re¬
mechanical power for the drudg¬ pudiate their debts by currency

government edict. We peg passed the nadir of human effort.
the price of gold at $35 and ounce.
If we are afraid of the British
Should it be $20, $50, or $90? No
cdal miner who mines less than
one knows except that outside the
one-half the quantity of coal per
legal restrictions of the United
day than we are able to produce
States, and in some areas where in this
country per man, we had
gold can be traded,, the price is best
go back to the antiquated
as high as $90 an ounce. Let man
methods of 109

uu

we

Rumania, Bul¬
Hungaria, Yugoslavia and greed and corroding nationalism
Czechoslovakia have disappeared are left out of the equation.
"follow me and the world is yours behind the iron curtain. Finland
Present Foreign Trade Not
stands trembling on the brink,
—you have been exploited by the
■~i
Normal
The battle is now joined in Greece
capitalistic system, now join us in
What is a normal situation
and it will spread to other coun¬
in
taking over the world for the
tries. Turkey maintaining an army world trade?
Certainly not the
common man."
^'roaring twenties" after the World
of one million men is draining
her economy so that the standard War I, or the war years, 1940 to
Stopping Communism
We cannot and will not stop the of. living will fall to the point, of 1945, - or the three years since
World War II has ended. Actu¬
expansion of this creed of com¬ uncovering fertile ground for the
munism by conversation, debate seeds of a "new" doctrine. Syria ally, we have hot had a normal
or
government edict.
We, have and Palestine seething with con¬ year sinc^ the United States be¬
just
witnessed
the
death
of. flicting elements will prove rather came a debtor nation during the
Czechoslovakia as an independent easy prey for an organized ruth¬ first World War.
Perhaps we
democracy and its new birth as a less minority. The Moslem world need some new "sights, new yard¬
part, of the Russian orbit. Nine is somewhat insulated by religious sticks, some new ideas to substi¬
years
after Hitler marched in beliefs against communism—but tute for the old formulas that
with
his
goose-stepping hordes even this will not stand against worked when some of the factors
"other" side wins.

powers

man

ery

uaacu

and

garia,

of persuasion are on
the side of the forces which say
the

in this country for

because that

not by

decide whether he wants gold or

trade or not, to realize tne
on
his daily life if the

e.gn

overall for- f; the world. That voice coming out
palliative that can relieve of the air is a forceful factor for
situation the world faces to¬ good or for evil.
Unfortunately

There is

(Continued from page 12)
plan to industrialize and enslave
the whole eastern part
of the

promise but never

fulfill.. It behooves every man,
whether he is interested in for-

strength,
both
physical to lend

anywhere that
help and

trialized world?"

economic
a

and

quite

helping hand

man

reaches for outside

we cannot and must not

land

are

,

every

vidua!

the

We
of

freedom

important.
offer people an opportunity
life, which the pied pipers of

Canada,

States, Eng¬

are

our

best

"dumping"—or uneconomic prac¬
tices.

■

(6)

Inculcate

throughout
that

we

our

must

The

the

social

are

eliminated.

must
^

and financial
.

their

own

structure

(7) Repeat and believe

But all countries

undertake

the hard work
planning of putting

house in order.. We

can-

v.

knowledge

export in order o
that
imports ate

least
industri¬ import—and
alized, China. is at the bottom of .good for out economy.
the list of our customers if
loans

We have in this great country
ours a deep rooted belief that
the dignity of man and his indi*

re¬

of the United

and

customers.

of

can

contrary; as the two
highly industrialized areas

most

waiver at this crucial point.

Statistics prove

the

,

>

,

the fact

that an interchange of goods ana
services'' between the. nations o
the

world

snells

prosperity

ana

&

FINANCIAL

CHRONICLE

"octal unrest, political upheaval

Earnings

and war.

to accept in our
need for tariff—high
for a few at the ex-

SSon

economic

entire

of the

pense

This is a "touchy" subthe day will come when
voters will not accept: high prices
if thev result from tariff protec¬
tion when the outside world could
chip us their exportable surpluses
and take in return some of our
surplus goods.; -■ .
' V
v
structure.

Lt

ta

the

_,mtrv

but

could bring these things

If we

being and then : put into the
highways - of
unhampered trade
into

industry is operating at virtual
capacity, that inflation has priced
many

consumers

markets,

that

threatens

to

out

the

rise

of

cost

of

again,

"many
labor

that

in¬

ventory appreciation has played a
large part in 1947 profits
and
considering that supply and de¬
mand

are

closer

to

continually
coming
balance, it does not

to be

seem

the

present

lour

time,

hundred

corporations

in

by present price earnings ratios,
appears
far
more
logical.
The

in inventory values indi¬

i

cate

that

the

on

profit margins
prewar.

overall

being
very

basis

comparable to

are

However, This again is

deceiving because the

is

average

substantially bolstered by
high margins in a few in¬

dustries

such

pers,

while

such

as

as

textiles

good

a

and

many

pa¬

groups

steels, automobiles, farm

is' difficult to mention be¬
one can be accused of being

that
cause

unrealistic and paying too much
attention to ah idealistic aspect of
life. It does seem", • however, that
by this time man should realize
he does not live by-bread

that

business and prof¬

hlone and that

not the begin ning and the
end of man's purpose in life.
I

its

are

exporting

in

that

feel

we

must

export—our goods, yes—but also
our way of life, our hopes and our
belief in the future. It is not mar
ferial alone that will help the
need also to keep alive
the spiritual
and moral forces
without
which •' material
things
world,

we

economic

conclusion

a

few

of

will

it

lead

I urge everyone here tonight to
give deep thought and considera¬
tion to this problem of foreign
trade, not only as it affects your
individual life but its long range
effects on the future of the peace¬
ful world

want to leave to

we

children.

Nothing is

world of ours.

takes and.

our

in this

sure

We will make mis¬

will have to pay for

we

those mistakes.

But

one

thing is

and that is, that our greatest
mistake would be to sit calmly in
sure

well

fed

prosperity
do nothing about the chaotic

our

and

World outside

current

our

Foreign .' .trade1
deal

to

Toledo.

land alone

'Day have
lion.
this

borders.
means

At

great

Translated
that

mil¬
manpoweb

to

into

$66

out

one

of

four

people employed at Willys-Over¬
land are busily engaged in ful¬

filling the demands of the export
markets.

by the

Let

us

current

shortages in

not

be confused

situation,' where

this country make it

seem
unnecessary
to hold
our
production at high levels with ex¬
port volume. The current situa¬

tion is not normal and the
day
Will come when we will be
very

|lad that the people in Brazil,

oouth

Africa

«md want

glass and

and

need
our Jeep
products, our
the other locally manu¬

factured items.
t

of

would like to

Toledo

cross

International

Europe

;r

.

see

the

the
seas

highways

products
and the

in

'ever

heater abundance. I would like
t° see the
time when f.o.b. Toledo
18 a

signature known around the

Worlia signature that

with

have

discounted

of

present

appear

to

worst, and
judging from history, ratios are
not likely to decline further, The
far better possibilities
are
that
they will either remain relatively
unchanged or will gradually im¬
uncertainties

prove as present

resolved

returns to
would

are

investor, confidence

and

normal

more

levels.

therefore, • that

appear,

It
an

important rise for industrial se¬
curities during 1948 almost surely
will be stimulated, not by an in¬
crease in present very high earn¬

there

^. ^

for

industrialsecurities

likely

caused by

be

to

is

to

for

counted

qtr. 1946

~

161.7

showed that

4th

qtr. 1946

=

167.8

1st

qtr. 1947

rr

171.8

the

potential third

raises?

What

of

round

will

be

the
2nd

Government's tax and fiscal pol¬

icy?

Is there sufficient credit to
the

meet

demands

for

capital?

What will be the extent and scope
of the Marshall Plan?

What will

world

be" during

the

food

conditions

coming year?

How close

is

supply to over-balancing demand
at present prices? Time and space
permit discussion of these

the

which confront
-

other

many

problems

us.

indirectly
of a business

or

question

into the
recession

and what effect it would have on

business profits.

that

say

It seems safe to
economist or analyst

any

who claims to
all

to

these

know the answers

problems

fooling himself

is merely

his readers.

and

As has been

ly,

an

pointed out previous¬
important rise in profits

the economy as

whole, ap¬
pears improbable. Whether prof¬
its will remain steady or fall re¬
solves
merely
into a reasoned

for

* •

guess. ■
The

*

then

a

'

Historical

What

is

Background
the

outlook

for

price earnings ratios in the com¬
As has been noted pre¬
viously the p/e ratio on the Dow
industrial
stock average
has been close to historical low

Jones

between 9.8 and
8.5 for the year 1947. To find an
analogous low valuation on earn¬
ings one must return to 1923 when
the yearly average ratio was 8.3.
points, ranging

is

question

the

then

investor

so

becomes why
distrustful of

earnings, and has the bear
market been as illogical as many
current

be heard to claim.
place, how real is cur¬
rent earning power?
By general
analysts

can

In the first

agreement the present allowable
depletion and depreciation charges
totally inadequate and hence
tend to overstate real profits by

are

the

amount of their inadequacy.

22%

or over

before taxes

"

• •;

other

-

184.8

>

'

'vy-'yV;

words,

at

'/

maining
:: •

the* third

duce

one

unit of

a

product was

only

seven were

able

their

31

declines.

groups

either

held

suffered substantial

or

own

Groups which gave the

worst

performance

which

suffered

those

were

adverse

or

de¬

1939. This
the actual

clining earnings pictures, such as
air
transport,
apparels,
foods

physical amount of goods turned
by labor may be improving
and hence give rise to the talk

proprietary drugs and the motion

84.8%

higher than in
that although

means

out

about the

improving productivity

labor, the actual dollar cost to

get labor to turn out a given vol¬
of

ume

goods

On

is still rising.

this situation exists the
strong threat of the third round
of wage increases.

of

top

The rigidity and rise in the cost

the uncertainty in
margin picture raises
the question ol' break even points

of

labor,

the

and

profit

and

of

volume

how

much

would

of

a

drop

in

drastically reduce

eliminate profits entirely.
There is no way of giving an ac¬
curate
answer
to this question.
or

even

if' the comments of
business * executives can
be used as a
criterion, it is a
source
of much concern.
Some
idea of the rigidity of costs- and
of the leverage in the profits pic¬
ture can be gained from the fol¬

However,

lowing figures quoted from Stand¬
ards and Poor's.
During the pe¬
riod

from

the

second

quarter to

of 1937, indus¬
corporate profits fell from
to 31.4 or 75% while indus¬

the fourth quarter
trial
127.8

trial

19%

production
declined
while wholesale

and

only
com¬

modity prices fell only 4J/2%.
Certainly the break-even point

problem is not better today than
it was in 1937, and until proof is
offered to the contrary it must be

pictures.
Groups which moved
right with
the averages were
those whose earnings were good
but

long-term outlook for

whose

did not improve
warrant
higher
price earnings ratios than had
prevailed earlier in
the : year.
Representative of this category
were the coppers, tobaccos, auto¬
mobiles, papers and sugars. Groups
which: gained
on
the averages
with
the exception
of the oils
which appear to be in a category
by themselves, were for the most
part those where a longer period
of capacity demand
became in¬
creasingly probable and thus war-'
ranted
greater
ipvestor confi¬
dence.
In this group were the
those

earnings

sufficiently

to

steels, farm equipments,
fertilizers, coals, and heavy elec¬
trical equipments. Although earn¬
rayons,

ings in these industries may im¬
prove
modestly in the coming
year a? a

result of better material

and more effi¬
equipment, it is significant

supplies,
cient

to note that

noticeable
cided
vestor

to

new

or

a

their periods of most

market strength coin¬
great degree with in¬

recognition of their long-

term demand

prospects.

This was

particularly evident in the case of
the

Marshall

posal

Plan

stocks.

'Pro¬

°nest merchandise




-

tory profit?.

Morgan Stanley Offers
Pac. Tel. & Tel. Issue
Morgan Stanley & Co. headed a
nationwide group of underwriters'
that

offered

publicly

March

17

$75,000,000 Pacific Telephone and'
Telegraph Co. 30-Year 3%% de¬
due March
1, 1978 at
102%% and accrued interest. The

bentures

group

the deben-?
sale on its

awarded
competitive

was

tures

at

bid of 102.07999.

%

.

Net

;

proceeds will be used ' to
company's treasury,

reimburse the

in

with

accordance

orders, of

the

regulatory authorities of Califor-'
nia, Oregon and Washington, for
expenditures made for extensions,!
additions
and
improvements to!

Having so re-!
the com¬
pany will repay its then outstand¬
ing advances from American Tele¬
phone and Telegraph Company,
its parent, to the extent that such
net proceeds are sufficient there-"
for.
These advances are obtained
its telephone plant.
its

imbursed

in

treasury,

conformity with

an

established

practice of the company, which it
expects to continue, of borrowing
from its parent, as need therefor
arises, for general corporate pur¬
poses, including extensions, addi-r
tions
and
improvements to its!

and advances to
wholly-owned subsidiary, Bell
Telephone Co; of Nevada.
<
telephone plant

its

The
the

company,

now

engaged in

largest construction

program

history, sold $175,000,000 of
and some $32,600,000

in its

debentures

of common shares in
1947 in connection with

value

par

1946 and

program. Last year it spent
$195,000,000 for new construction
and expects that these expendi¬
tures will continue at a high level

this

during the next few years.
As of Dec. 31, 1947, the com-;and its subsidiary had 3,411,telephones., in
service and
were .furnishing
local service in
618 exchange areas. The company
serves
the states of California,-

pany

981

part of Idaho while its

northern

subsidiary serves Nevada.
34%
ice

the

and

Washington

Oregon,

About

of total telephones in serv¬

are

located in Los Angeles and

of this plan did not

warranted increased
fidence and

investor con¬

higher p/e ratios for

these groups. '

'

;

Conclusion

Latest available sta¬ portions.
In conclusion the market for the
on its mission
The point to remember at this
tistics for 1947 indicate that this
past 18 months has been caught
exchanging : goods for goods percentage again may. run as high juncture, however, is that none
of
the
above-mentioned condi¬ in an impasse between a very
and
creating a better standard of as 19%. Furthermore, in'addition
tions makes a decline in profits high level of earnings and a very
iving and a more secure life for to exaggerating the earnings pic¬
necessarily imminent, as so many
low level of investor psychology.
People everywhere in the world.
ture, profits of this nature tend have argued. These factors have
Bearing
in. mind
the original
•°-b.-Toledo—a slogan that rep¬ to distort true profit margins in all been in force a year or more,
yet because demand has exceeded equation of—earnings times price
resents the products of a free na- exactly the same manner they supply, earnings, far from falling, earnings ratio=market price, the
ion where the
dignity of man, distort profits, thereby lulling the have risen in the past 12 months.
only two logical possibilities at
is
hopes, his. aspirations are the unwary investor into the feeling These factors do, however, indi¬
the present time seem to be either
oundation of government and of that his
cate that earnings could disappear
company has control of overnight if ; total demand were a fall in earnings or a rise in*
to.
its costs, when actually they may
goes

fall-

a

imply
vicinity, and about 25% in San
suspected of being far worse. The higher earnings for these indus¬
Francisco and vicinity.
inescapeable conclusion would ap¬ tries, which were already operat¬
The new
debentures will be
pear to be that these high break¬
ing at practical capacity. It did,
redeemable at 105.75% prior to
even points, in combination with
inadequate
depreciation allow¬ however, imply a longer period March 1, 1953 ac'Vat prices de-'
for such earnings which in turn
ances, inventory profits, and re¬
creasing to 100%
>n and after

duced
profit margins in many
segments of industry leave earn¬
ings in a definitely vulnerable
one fifth of earnings
position to an' economic setback
resulted from inven¬ of more than fairly minor pro¬

Secondly, Department of Com¬
figures for 1946 show that

merce

qtr. 1947
-

leading

ing year?

The

In

•• •••

quarter rate the labor cost to pro¬

of

However, all these unknowns tie

directly

'•

V'

qtr. 1947 - 174.5

3rd
.;'.v

thesis. A break-down of 38 groups

to

.

much better chance of

rise.

improve their positions sig¬
nificantly in relation to the DowJones industrial average. The re¬

wage

: f
possible!
that, for the present, thereconclusion

falling market than that of miss¬
ing a worth while bull market

1947 can be ac¬
the basis of this

on

3rd

and

a

be?

times.

earnings than of a rise in con-!
fidence, and until some of the-'
many uncertainties in the present
picture are resolved, a far greater5
danger exists of being cauglit in a-

selectivity in the

,

re¬

inevitably higher costs

will5 shortly

in

fall in

a

sulting from increased rail rates

of the

times,

only

then is
is

but rather by.-a fall in the earn¬

V

three
The

not

manu¬

~

be¬

to

reason

valued at four to six

a rise in present very
price-earnings ratios. By the
same token, an important decline

V Much of the
market during

100:

little

these

earnings, which >
for the past year have been val¬
ued by investors as low as two-

ings themselves.

to

that

staggering'

international—and1

and

seems

lieve

almost

an

ings,. but by

Using 1939

What will be the impact

is

of uncertainties—economic,

political,

the valuations placed on earnings,

base period equal
V:

hand,

array

low

factured industries are as. follows.
as a

other

on
with

the

labor

of

all

aspect

ratios is that investors

the

faced

expressed

159.2

exports since VJ-

our

for

constructive

as

=

Willys-Over¬

amounted

means

a

If so,
deflation

a

per-unit-produced

cost

earnings,

qtr. 1946

and

;

into

us

the

current

2nd

spiral?

and

hope to the world.

reach

of real validity.
A
intangibles are: Has

the

do not

new

equation to

the inflation bubble burst?

alone will fail to bring a new day
a

Board, oil

ance

rent

low

crease

equipments,-chemicals, and elec¬
"know-how" of the ; United increase over 1947 and the
pos¬
trical equipments are
productive genius, sibility exists that
reporting
they may even margins in some cases
substan¬
our
credit facilities and give of decline to a
significant degree.
tially lower than prewar. In addi¬
these things freely to our less for¬
Just What will
happen to the
tion, these margins can be fur¬
tunate neighbors across the sea,
economy
in
the
coming
year
ther imperilled
by a continued
we could enter a period of pros¬
seems
beyond the scope of con¬ rise in
the price of raw materials
perity and good will never before clusive deductive analysis. One
and
labor.
This
is
particularly
thought possible. We could keep has but to refer to
ihe predictions
our own
industries turning over of a recession by some of the most true in industries which are not
in a position to passion all in¬
at a high rate and bring new hope,
highly reputed economists in the creases in
costs to the consumer.
new courage, new, faith to a fast
country over the past 18 months
Preliminary figures prepared : by
despairing world.; .This is what to realize that there are
simply the National Industrial Conferforeign trade can mean to us.
< too many unknowns in the cur¬
there is one general point

fidence,

With this fact in mind, the very
level of investor confidence

figures

relatively small drop in demand
could fall quite easily. Con¬

a

which have been
adjusted for in¬

a

good probability that
corporate earnings dur¬
1948 will show an important

reported
ing

At
from

we
have
vulnerable to

and

-t0 fal1 by any si"ifi-

-

States —our

I feel

37

ratios..'Earnings,

seen, are definitely

cant degree.

the

i

p/e

Confidence

or

Refuse

■

(1241)

is a forerunner to

of trade

„tin,i

THE .COMMERCIAL

Number 4682

167

Volume

March 1,

1973.

Following the sale of new
bentures,
talization

comprise

the
of

outstanding
the

company

6%

$100

per

preferred

cumulative, par value
and

share;

shares of common

2,787,577

stock, par value

$100 per share. In
wil

will

in funded

$325,000,000

debt; 820,000 shares of
stock,

de¬

capi¬

addition there

remain outstanding approxi¬

mately

$25,000,000

of

2%%

evidenced

by

American

Telephone

graph Company.

advances,

notes,

from

and

Tele¬

: '

38

(1242)

THE

a

ful

HI

success¬

trading.
sjs

Markets
Walter

s|c

Sji

,

By this time I think you've
gotten the idea.
#

*

*

than heretofore

Says—

ten

By WALTER WHYTE:

stocks

after

elimination

reduced to

now

last

of

-

week's

American

Policy of letting profits run Chain, American Brake Shoe
and cutting losses short still and
Briggs. As of this writing
holds up.
Trimming of list the list includes: Anaconda at
leaves
airplanes
as
prime 31V2-32V2; stop 29; Avco, 4holdings.
W2; stop 3V2; Bethlehem, 30-

asset—actually much less than the
average banker realizes.
.

monthly
payments on mortgage loans has
been a definitely constructive de-r
velopment. However, its advan¬
tages are partially offset by the

of

amount

the

value

of

the

takes

so

much

amortization

of

in

the

monthly

earlier

about

shortages;, in high material costs,
material shortages, and other ob¬
stacles. It certainly has not been
in the interest rate on money bor¬

Interest

the

years

has
strengthened
by eliminating the weak
ser
Industries, 21-22; stop 2f;
sisters.
It might be apropos
Lockheed 13-14; stop 15; G. L.
to point out here that in sell¬
Martin, 15-16; stop 12, and
ing stocks—long stocks—it is
United Aircraft, 23-24; stop
important that the poor ones
23.
be dropped. This is so obvious
Jji
:|;
i'fi
that readers may wonder why
list

-

You

mention it.

even

will

above has

that

note

the

large proportion
airplane stocks. When the
advice to buy was given it was
ous
is seldom followed.
If a
based entirely on * technical
man has two stocks, one with
performance. The possibility
paper profits, the other with
of war wasn't considered. It
paper losses, the chances are
didn't have
*

*

*

":.

,

of

«r The

is that the obvi¬

reason

if he's

faced

to sell

with

*

a

with-a

he'll

one

pick the one
The argument

profit.

a

is "I have

decision

loss, but if I hold

a

allowance

for

neighborhood
changes or other forms of exces¬
sive depreciation or obsolescence.
As

matter

a

only

fact, oft'Tongerprincipal payments

loans. / In

for

veterans

in the first five years will amount

to

others

only a little, over 2% of the
principal each year. This is not a
sharp

any

market

depreciation

values

of

in

the

the

on

risks

with the funds entrusted .to

In the last year,
any dangersthis have been multiplied

their

in
by the
rapid growth of the mortgage ac¬
count at a time when costs and
prices have been extremely: high

such

by depositors.

care

4 %'

are

less.:

cipal

Interest rates

?

4 %,/

is

advantage

The

have

been; extended rover

th*

and
mass

the

circumstances

gotten, and the entire atmosphere
easily become one of resist¬

can

ance
to payment;, There can
be
complications and delays 4n eoL
lecting. claims/tea complete rever¬
sal of the ease with, which the
guarantee
was.
originally
ob¬
tained.
Carelessness / iri making
,

and -sometimes
Monthly-payments oh prin¬ these
guaranteed loans
or

not

is

under which this was
encouraged
by the government will be for*

of the ap¬

unwarranted

take

not

that

It

"profit

gaurantee:

new

otherwise could

tect lenders who

the/properties
■■■

But

doing that, created a
deferred
claims
under

of /

total

construc¬
tion. • Loans are guaranteed or in¬
sured by, the government to pro¬
value

that

while

FHA.

Under

.

borrow 90%

can

praised

substantial protection against

securing the loans..

price.

concerned

possible

disservice to the

problem.

mediate

cases,

many

is

will
probably be charged with
having acted solely for their im¬

Loans

borrow

can

purchase

very

for

Terms

It

conceivable
that guaranteed loans can
become
claims against the
government i\
large numbers.
If
that shouli
happen, those who made the loan"

There have been extremely easy

terms

of

term loans the

Easy

u

this.

borrowers.

pruning process which
recommended here last

week

conditio

many of these loans will
turn out
to hav-9. been a

31; stop 30; Caterpillar Trac¬
of a long-term loan that the prin¬ rowed, or in a shortage of credit.
tor, 54-55; stop 52; Consoli¬
cipal reduction only approximates If it had been just a matter of
dated Vultee, 12-13; stop 12; what used to be considered a min¬ credit, there would have, been no
the
Douglas, 50-52; stop 50; Dres¬ imum depreciation, without any housing shortage.

The
was

I

larger

property.

favorable

that

eration to the final
position urde*
adverse conditions of
either the
borrower or the
guarantor /Cer¬
tainly the builder and the
loan
broker
will
be
little

costs,
low
work
output
restrictions, ' and ;/ worker

work

term

less

fact

an

only component of building
freely available at low cost.
The
source
of the trouble has
been
elsewhere.
It has been in higi
labor

the

The

the

of

of

the

and

obtaining

relative
mortgage to the

extension

under

credi.;

.

real problem

liquid capital, and credit has hem

The general adoption of

great

and

power
bean the

these loans
hav-i
adequate amount, been guaranteed has encoiira°H
of new building.
The public has too many lenders to make
loan,
never
before possessed so muc.i without giving any real
consid ¬
in

considered normal for this type 0*

payment

has

never

has been

,

Your list is

purchasing

(Continued from page 17) ;;

'

smaller

Whyte

Thursday, March 18,
ig4§

CHRONICLE

FINANCIAL

&

lot of Which may be in the

red, is not my idea of

Tomorrow's

COMMERCIAL

can

be

an

to

buy bad will and
trouble/ and an FHA loan can be
makes its own decision. I men¬
and thred decides:' CA1L this easy
an
extremely, ' teoubiesome, de^
credit has been; the jhajor factor
tion this because there is in¬
layed, and roundabout way to ac¬
the most substantial increase in in creating a market which has.
quire government bonds.
!
creasing crisis talk. Whether
mortgage totals in bank assets i produced higher and higher prices
it's justified or not the mar¬
■ 'The /Dorigre^
took-place at the wrong time. for homes and made it possible for any
large dollar amounts of these
ket will say in its own
way. 1 High prices lead to higher ap¬ more buyers to compete for: the claims with
pleasure. The bor¬
praisals, more risk, and - larger new homes available. ./There' has rowers with trouble
More next
loans will be
Thursday.
loans which rapidly use up lend¬ ; been nothing in this process to
unhappy. The Congress will not
ing power. Time may show, that help create real values in low-cos
blame the borrowers for obligat¬
Itfi':
.//■; —Walter Whyte
the
appraisals and S loans 11 made housing. - There is only high-cost
ing themselves on unrepayable
[The views expressed in this have not taken into account" the housing to be had at any price. /debts, and the borrowers will not
article do not
necessarily at any possibility of any reversal in the '.Liberal government guarantees blame
the Congress which invited
time coincide with those
of the levels of national income, busi¬ in the field of house loans, undei them to
take on large debts by
Chronicle. They are presented ps. ness i activity, building nosts, a:ncl conditiona? of«building\ shortages
calling them easy credit. Botfi
those of the author
total deposits.
only.] '
unquestionably / have been infla¬
will unjustly blame the maker or
If we consider the number of tionary.
Government credit pro¬
bolder of the loan; The lender
new dwelling
units started oVer grams are made effective by using will be
charged,with, carelessness
ithe( banks asthe prinbibal/sopree
the last several
years, we c^n .per¬
and may have ;his assets froze.!'
haps see what could happen..rim of the supply of credit. The pub¬
lic is J; urged -to use the credi* tinder; a 'moratorium. ' if/ nothing
on
1946 there were
671,000; in 1947,
worse/; happens to
him.In ar\V
Harriman Ripley & Co., Inc. and 850,000; and in 1948 it is estimated freely and the banks are urged to
bvent the lender is sure /to be the
Estabrook & Co. headed an under¬ that 950,000 new dwelling units supply it. - The large amount ■ of
one penalized.
I think these are
the / loan tunder, a /governinent
will
be started.:: This;
compares
writing group that offered pub¬
dangers we must recognize and
with 937,000 in the
1925; hti v guarantee* coupled with the much use
licly March 16 $10,000,000 Amepevery effort to avoid.
ican
Optical Co. 20-year 3V8% prewar period of highest'-hdme higher/ prices of homes, has re
suited in individual loans becom¬
Inflated Mortgage Debts 1 ,
sinking fund debentures, due building activity.
ing about twice as large as they
March 1, 1968 at 100.35% and ac¬
/In. addition,
Substantial Market Revisions.
we. must
always
used /to- be/^d
crued interest. The
;using: up lendabte bear in. mind that one of the in¬
company is a
Expected
1
funds that/ much more rapidly
Massachusetts Voluntary Associa¬
evitable results, of the large vol¬
?.>'■ I- suggest that
inevitabiy^at this As a result. of the use; of ..this ume of
tion with headquarters at Southconstruction; the present
rate supply will
begin to have some credit by private' borrowers in
bridge, Mass. Net proceeds Will be effect on
inflationary prices;"arid the much
demand. When /it-does,
large./ amounts* bank mortgage larger individual mortgages, is an,
applied by the company to the and
if that should be
coupled/with loan totals could not. be otherwise
payment of bank loans.
inflated debt which promises only
any kind of a recession—-no mate than
substantially increased.
The new debentures will be re¬
grief at some later date for the
ter how moderate—the
effect will ,i As, long as builders and buyers,
deemable at prices scaled from
immediately be,- felt in the area who are the producers and con¬ home investor and the economy as
103%% to par. They also will be of
a whble.
The financial devices bi
the overfinariced
properties on sumers of building, can obtain un¬
redeemable, through operation of which loans
easy credit have served only to
recently-have been limited svipplies -of liberal credit
the
sinking fund, beginning on made. The
make ■ the i present
inflationary
prices of properties re¬ and-use the proceeds to
March 1, 1951, at prices
compete problem worse * and : create addte
ranging flecting
present-day* costs ^un¬ for a limited supply of labor, ma¬
from 100.35% to par. The
tional problems for any day of
sinking doubtedly will be
subject to some terials/and homes, the pressures
fund is calculated to retire 75% of
to be.

The market

i

As

usual, the peak of mortgage
lending is at a time of extreme
prosperity and we may find that

longer terms of years* up to two

easy

way

-

f

long enough I'll make a
profit, or get out even. So if
I have to sell, I'll sell the one
with a profit."
/;:
on

.

If that argument seems far
fetched, remember I'm writ¬
ing from practical experience,
There is
block

some

that

kind of mental

people
from taking losses when losses
are sometimes
the only way
to profits.
There is an old
Street axiom, "Let your prof¬
its ride but Cut your losses
short," that few people follow..
When
chase

prevents

I

of

the

advised

list

a

>.

pur¬
stocks I

of

picked those I thought acted
better than the market at the
time.

As

days and weeks
gradual sifting
process began and the choices
of yesterday began acting like
passed

the

the discards of tomorrow. The
market doesn't wait for every¬

body to make
acts when

it

up

his mind. It
fit and the

sees

individual trader who
to be around for

more

wants

than

a

couple of cycles, has to act
quickly.
a

Sitting around with

portfolio of "good" stocks.

.

American Optical Debs.
Placed
Market

.

...

substantial

the

debentures prior to maturity.

American Optical
Co., the busi¬
ness of which was established
in

1833, ranks as one of the world's
largest
manufacturers
and
dis¬

tributors

of opthalmic and
optical
products. It also manufactures and

scientific

instruments,

industrial

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

14 Wall Street

Teletype NY 1-928

Private Wires to Principal Offices

San

Francisco

Monterey

—

safety equipment and
sun glasses.
The principal manu¬
facturing plant of the company
and

its subsidiaries

are

located at

—

Santa

Oakland

—

Fresno




Barbara

Sacramento

We
the

market

must

revisions.

remember; also

building business has

to

that

been the

in which inflation has
shown
itself to the greatest extent.
No

area

one

denies

housing
sulted

the

existence

Shortage, which

in

continued

stimulate

new

pressures

have had

of

pressures

a

re¬

to

some

ever

more
generous offers
credit.to those who need

easy

States and at
Belleville, Ont., and
Nicolet, Que., in Canada.

Sales of the company and its
subsidiaries amounted to
$57,395,693 in 1947 and net income for
that

totaled

year

new

$3,007,857./The

debentures

j only funded
although

a

constitute

debt of the

the

company,

Canadian

subsidiary
has outstanding $1,750,000 of seri¬
al

debentures.

Heath & Co.
fSpecial

to

ELGIN,
Griebel

Tower

to

The

Finanhal

ILL.
their

—

Adds
Chronkxe)

Heath

&

Co.,

staff.

Bldg., have added Melvin

rates, less and

less

down-payment,

-

and

longer

and

longer terms of payment has
been the easy and
popular answer.
had the effect of multi¬

This has

plying

the number of. possible
buyers in relation to the-limited
supply of new homes. It has cre¬
ated

a

reckoning.

maintain

present

and create/still

high prices
higher prices wil.

continue.:;;/,///',./ ./'•/
•

Certainly government-sponsored
programs designed to create large
of

amounts

easy

ing and other
when

the

credit for hous¬
at

purposes

time

a

'itself

government

is

building./: But the publicly pledged to attack

strange
Principally they have pro¬

results.

duced

of

has

Southbridge, Mass.; Cheektowaga, horries or other
living accommo¬
New York;
Brattleboro, Vt.; and dations. The
philosophy of lower
Putnam,
Conn,
in
the
United and lower
interest

New York 5, N. Y.

COrtlandt 7-4150

.

■

distributes

Pacific Coast

>

sellers' market and

a

buy¬

infla¬
tion should be the first
subjects of

modification, if there Is
government
inflation.

intention

to

real

power,
of

have been guaranteed.

this

many

pull

us

the

out of

a

a

mort¬

account lies in a :| realistic
view of the inflationary cost and

price

conditions,

the low down.

payments made by borrowers, and
the lending practices encouraged

by government guarantees. These
not

only affect the mortgage

it is made but also-'

Protection: of
,,;
;:

when

its after lite.
Mortgage

Investments

The form of action

which pro-;

tects the investment divides

un¬

mortgages naturally: into two parts—what if
done in the way of appraisal, se¬

used

process

things because

protection of the

Originally

was an instrument created in
the depths of depression.; But
now
at the time of our
greatest pros¬

perity it is " being
maximum;.'/Here is

basic

these

gage

i

of >purchasing
of dollars

ample »t>f

the

combat

1

billions

"

I* mention

•

.

any

In the years of our
greatest sup¬

ply

'

to

classic

devised

the
ex¬

to

condition of lit¬

lection, and terms when the moi gage is made and becomes a

ban

asset, and what is done after tn
in administering the mortgage 1 T
vestment account.
I Will empric size the latter.
#

,

•

The-first element of *t ,1s. ®
credit, financial
marking fear, panic prices/and no build¬ determine a I reasonable- and ap¬
up both costs and selling prices
ing being continued- and used to propriate maximum total of mo r
In effect, any one who could
gage loans-the bank should ca
y
build the
greatest
degree under ex¬
could also write his own ticket
in its assets. This is. an importaru
actly the opposite conditions.
;;;/ investment
on
the selling price and
policy decision
readily
It should be
apparent that when is based on the nature of the
find purchasers eager to
buy on these loans
are
mads under cir¬ nosit.s: ihp amount, quality,-3easy credit terms.

ers' competition which have been
the principal factors in

But,

of

course,

the

supply

of

tle money and

no

cumstances of great
optimism thsv
have
-in; .them seeds of trouble

Number 4682

167

Volume

THE

/hich'-protect® the bank's funda¬
mental soundness and liquidity

m^TndT'even

Sider

later

adverse conditions..
With this ceiling, it can be de¬
termined whether there will be a
Serve of mortgage credit avail¬

the future needs of the
customers. This", re¬
serve can exist from the differ¬
able lor

bank

local

Now

prompt

is

COMMERCIAL

'to eliminate ^
any

action

undesirable mortgage assets:
There have

been few problems
the mortgage
account over the
last 14 years
fails

CHRONICLE

loans to its conventional bor^ ™?.ls a Polity which
is well worth some
consideration.

(1243)

39

unless

to

Collating the Industiy's Problems
1'■!:</•

Time for Decline in
Mortgage

Lending

in

but,

FINANCIAL

and make fewer but better

Hmt

thp

&

,

ness

>

Due to the larger loans and the

history rapid increase

(Continued from page 3)

Conduct Committees of the NASD

onstrate now, how
tuted. Suffice it to

in number of mort-

like

an

nor

administrative

attempt to dem¬

body it is consti¬

repeat itself, probably.
say that its trial activities are so much
the present mort¬ there will again come aWof1 PgGS in the ,banks over the last like those of the SEC,
embracing—despite the Administra¬
collection
gage loan total and the maximum,
difficulties! mortgage!
vlahthe'hS*CUlarIy 1" o* tive Procedure Act—the functions of investigator, prosecuand sales of other i
yeaf the banks are gradually
and also from the liquidated prin¬ foreclosures,
tor, judge and jury, in the one group, that we deem the
real estate.
The logical aDnroach aPPr°uching a point where they
cipal of outstanding mortgages.
to this po-sibilitvifa
#®'-can5ot lend so freely. Their de- whole setup contrary to our best American traditions.
The objective is to be sure it is
Mr. Carret's basic
there. And, do not forget that the possible mortgage losses created" P°5lts are not §rowin§ as rapidly
argument that there is need for a
ouf of!hen Lcomgee
unde!
longer-term loan and the low
^ h3S ^ united front in the securities industry is elementary and
monthly payments will reduce the the. most favorable conditions.! | ?0 the banks Jbteh
sound.
His choice of a
What can be done to protect the
representative is unfortunate and
lunds available for reinvestment
nrinHnlp i P5ni)!,r!
deplorable.
''
'
"
from the payment of amortized quality, of the: mortgage account
propriate total of mortgage investl
Had he
principal. If a bank has been
suggested the organization of which he is Presi¬
the: ments in relation to their deposits
buying mortgages to fill, its port¬
fh.at in /rS vTrw years • of a know | and capital. No banker should let dent, the New York Security Dealers Association, as a
at
Y
Y
the early
folio. the setting of a' ceiling tota"
long- himself ^rift jn^0
a
condition
nucleus, we would be inclined to go along with him. How¬
will indicate just how far this term mortgage loan the monthlyj%here his local
customer
hnmp
ever, it was the old adage of not
seeing the forest for the
practice should be continued. , In
nf y^entS PridG ldtle reduction' buyer, who can make a reasonable
he -mortgage
trees.
too many cases local
bank cus¬

between

ence

r^ved

in danger of being de¬
nied credit when it will be more
advantageous to use it, became, o ;
over-purchases of loans 'inade
tomers are

elsewneie.

The

same

principle

should

be

applied
to
the
various
com¬
ponents of the mortgage account.
Usually these will be conventional
loans, FHA loans, and G. I. mort¬

Totals established for each

gages.

of these in turn

will act

ancing element within

portfolio.

gage
due

concentrations,
of

the

un¬

particularly

result in the

conventional

given

ences

under

housing program,
frozen

almost

the

exf]
bor¬

of

out

veterans

far has been

so

We

about

the

home

made
have

property

.

main-

the

Problems

lected.A and

every

other bor-

rowing relationship. The first obligation is to
the
deprotect
positors and stockholders but, in

assuming

addition

to

every;' usual protection has been obligation
provided

in

that all of

were carefully seproperly made and

even

mortgages

•

inherent

are

Unexpected
,

But,

after

they

became

a

bank

that

(against assuming

the

an

unrepayable
guarantor against
an

as^et, we still have the un¬
and
the
expected
'problems,
many
of unreasonable claims.
which result from the changing day's conditions this
of

have

we

Under
means

to¬

look¬

individual

ing beyond the mere status of the
Properties ma.y become borrower's income with relation to
law suits, estates or the mortgage
payment. It means
government
tax
claims,
among taking into consideration the total
other things.
The borrower may of all debts'and obligations and
have family trouble or business the Tact that the income may be
borrower.

The

problem

property taxes
is

one

payments

whether

kept

are

relatively

a

met in

of
easy

to date

up

usually

one,

of two ways.

The tax
in
the

included

are

the

mortgage payments, or an annual
tax search on the mortgage prop¬
erties discloses

unpaid taxes.

any

Action necessary to bring the

payments up to date then

tax
be

can

easily taken.

due

and

in

involved

which

trouble

him

for

circumstances

agreed-upon

combination

Any

payments:

difficult

it

makes

meet the

to

create

can

of

prob¬

a

What method has been

lem loan.

established

to

identify

a

problem

aboVe normal.

It is the effect of

the total debts against his income
and what may happen to that in¬
under1 less

come

tions

which

whether

he

favorable condi¬

will

uncollected

interest

his mortgages. He is sure to do
this because the interest is bank

I recommend the

determine

the mort
throughout
the

can

carry

payments
and, when it has been iden¬ gage
term of the loan.
tified. what is done about it?

loan

Every banker watches carefully
the

Test to Come

segregation of

on

income, out of which the expenses
and

dividends

are

paid.

The

er¬

in the past usually have been
connected with' special effort to

rors

Collect interest

and

little

corre¬

sponding effort to collect princi¬
pal.

If

there

at all with

was

difficulty

any

collections, the

money

•received usually was applied first
to the interest and second to the

principal.
process

Of

course,

which

this

should

be

is

a

com¬

pletely reversed.
If there is any
difficulty in collection' the pay¬
ment

should

be

all

problem loans from the normal

mortgage investments

of the bank.

this, and also some of my previous
comments, in our bank we main¬
tain a complete segregation of all
of
our
mortgages according to
their classification, which is car¬
ried all the way up

accrual of uncollected in¬

terest taken

into

earnings. This
maintains and protects the qual¬
ity of the asset, the bank's deposhors, and the bank's capital.

.The

generally
used
mortgages

present

Monthly

amortized

,

provide "an easy; method

for the

control and collection of
principal
Payments, it should be the same
process as that used in the con¬
trol and
collection
of interest.
Most banks accrue
the
interest

due

and

collect

tual, and

against

the

ac¬

measure the extent of

their interest
delinquency against
The size of this dif¬

the accrual.

ference

and its
growth
-the collection
problem. It

defines
is just

J3s necessary
°f

to have an accrual
principal payments due anfl
Measuring collections against
the

these accruals.

This is

a

check

on

•the

liquidity of the portfolio and
whether the contractual liquidity
.ts being maintained.
Everything
delated to present conditions and

Jhc terms
that,
the

Panker

of today's loans suggests
first

should

concern

be

the

of

whether

he

is

Promptly receiving the principal
Payments called for by the mort¬
gage
contract, and taking prompt
Action
and

on

principal payments due

unpaid.

The

borrower




who

real

estate

14 years

market.

of rising

The

.

to be

truly representative of

the securities

industry and is to present a united front in its
behalf must meet certain tests.
Among these are the follow¬
ing.^ (a) It must be a voluntary organization, one that is- not
imposed by the government and is not acting as a compul¬
sory auxiliary arm of any branch of the government, (b) It

to the general

the

situation

of

the

conditions

under

than exist today

borrowers

favorable

less

have existed
past years. If
there is a change and large num¬
bers of borrowers begin to get into
trouble, then we have failed in a
in

the

(these
FHA

are

conventional

mortgages,

gages,

loans),

veterans'

mort¬

or

immediate

foreclosures, and a liquida¬

count.

Any time

we

come

conclusion, for any reason

bankers

of

the

United

couraging

unsound

assumption

of

by

borrowers.

A

generally

econ¬

prosperous

to the omy requires a large volume of
what¬ building construction and
the

that \i we had -the money
instead of the loan we
would not make the loan, it is
transferred to the liquidation ac¬

ever,

of

want

banks

today

the

to

make

their

share

loans necessary
to
maintain a
high volume of
building activity. Even without
mortgage

the hands of taking into account

count and put into

are

unwise
private

and

debt

the

the existing
need about

liquidator for action, either to housing shortage we
it or recondition it to one million new homes a year as
standard. The test we apply is a a base for reasonably good busi¬
very simple*one, but effective. If ness conditions. But, the general
we: would - not
make the loan objective for everyone must be a
today, we take whatever steps are sound prosperity which can and
possible to get the money in place will extend over a long period of
of the loan, and we go to work on time. This can be -accomplished
it quickly.
only by giving full consideration
to the possible adverse longerIt has not been customary for
term
effect
of
present
credit
many banks to be concerned about
transactions. There will need to
actual costs and the actual net
be credit available not only for
return from their' mortgage in¬
the builders and home buyers, but
vestments but the existing low
for the producers and suppliers
rates of interest have stimulated
of home building materials. And
more effort
along this line. As I
a

eliminate

stated earlier, it is easy
a

more

favorable

to assume

net rate

than

this

actually exists. From a standpoint
of investment policy the increased
income now available on prime
securities tends
to make
mort¬

extend

rates,

■This,

gages,

at

present

interest

look less attractive. In many cases
the

differential

is

sb

considering the risks

need

to

be

on

a

the

borrower;

gives

full

protection to the bank depositor;
and does not contribute to price
inflation or speculation..
,

which

small that needs

involved and

will

credit

sound basis which does not over-

also

is the process
will serve the fundamental
of the greatest number and
I

believe,

tend to maintain a

perman¬

the loss of

ently sound and prosperous econ¬

bs

omy.

liquidity, the bank may
better off to buy prime secun-

none

of these tests.

appreciate NASD reactions. After all, the Securities
Acts were passed by the
Congress to meet a so-called emer¬
gency. The emergency seems to have passed. The conditions
in the securities

industry, so far as practices are concerned,
to be well in hand and, therefore, the reasons for
governmental regulation and control appear to have van¬
appear
ished.
In the

meantime, the NASD finds itself in

financial

position with substantial

members

having been

an

excellent

in its treasury, the

sums

than adequately assessed.

more

New
doubt Mr. Carret's

worlds must be,found to conquer and no

suggestion will be lovingly embraced.
Our duty is clear.
We must sound the warning.
Don't choose as a representative of the securities indus¬
try to solve its problems an organization which has
thrived by creating problems for that selfsame
industry.
,

As
tative

it,

see

we

one

of the first duties of

a

truly

;

represent

body will be to gain relief from the encroachments

which have been made upon

the activities of the securities
industry by the SEC and the NASD. Need more be said!

Observations
y*;

the

dis¬

for

The NASD meets

We

the

States

instruments

main

the

system of discipline must be] in the American tradition di¬
vorcing the judicial and prosecuting functions and giving
assurance of fair and
impartial trials with proper safeguards
concerning the presentation of evidence.

of

test

accounts.
The
general
ledger 'and supplementary book duty to them as well as: to
records divide the mortgages into bank and the guarantor. As
an
investment mortgage account largest
mortgage
lenders,
ledger

to tion
account.
Every
mortgage
the
principal and second to the which becomes a problem is trans¬
interest. There should be no con¬
ferred ' intq this liquidation ac¬

tinuing

We have had

give a practical illustration of good mortgage lending will be in

To

first

applied

,

Any organization that is

to protect the borrower

debt

circumstances

buying field.

principal.
We
j down payment and borrow on
these ^rooxtgages conventional
terms, cannot obtain
in a
peak mar- the credit which should be
freely
to
be concerned
available. Every
banker should
abuses, excessive bear in mind the need to

depreciation,
and
neighborhood tain a reserve of available mortchanges and obsolescences which gage credit for the local
mortgage'
may
destroy values much more borrowers who are the backbone'
rapidly than the prihcipal of the of his business.
must have no interest adverse to those of the securities in¬
mortgage is being reduced. The
In
the
administration
of
the
practical answer is periodic prop¬ mortgage loan account we must dustry.
(c) It must be free from all monopolistic practices
erty inspections.
and must not be the creature of
follow the same principles which
special privileges, (d) Its

bal¬

a

who, because of the prefer¬

rower

ket.

that

been

the mort¬

It will avoid

those which may

.elusion

as

ulso

know
have

status of

(Continued from

page 5)

debtors is continuing to deteriorate further, despite our
This was confirmed in Paris this week by French Foreign

our

past loans.

Minister Georges

Bidault, who laid a report
showing in detail the worsening of
organizational meetings-last summer and fall.
by-month deterioration should demolish the
rope's plight on Hitler and the last war, by
states

Let

before the 16 convening
their status since their

,47

This continuing monthhabitual blaming of Eu¬
some

quarters.

dollar-subsidization

not

delay our getting a correct report
on the actual state of Europe's food
supplies, concerning which there
has been complete confusion in the reporting from Secretary Mar¬
shall down. And let there be

requirements of

our

a more scientific round-up of the general
Western European friends.

Avoiding Operation Rat-IIole
But in the last

analysis, the Marshall Plan will merely be another
Operation Rat-Hole if we do not back it up with "what it takes" in
military power as well as dollars.
'
.

In

the

words

the

of

current

issue

of

"American

the

Outlook,"

(published in London), "From Korea to the Hindu Kush, from Abadan

to

Aberdeen,

the

political

and

to be called Western civilization

ists and capitalists alike—in

a

are

economic
now

systems of what used

huddling together—social-

last-minute attempt to plug the dyke.

A communist would say they look like a brave little Dutch

ported

by

a

few playmate urchins,

paid

by

their

Uncle

boy sup¬

Samuel

to

stand and stick their fingers in the leaky walls."

The Confused Movie Deal

Last

week's

"Movie

Deal"

arranged

by Eric

Johnston

of the Mction Picture Association of America, and J.
for

as

head

Harold Wilson

of Trade in London, is a timely reminder of the de¬
questions of policy which will, be continually coming up for

the Board

tailed

settlement.

While free trade decisions in

a

free market

are

to be most

highly commended, this compromise arranged with the approval of
the governments of both countries, whereby from 17 to 27 million
of England's precious loaned or donated dollars are to be remitted
for our Hollywood product, is difficult to reconcile with her other
austerity

measures

and defaults.

At the least, it represents but one

step of confused planning of a government that is half socialist
and half free (or perhaps one-eighth and seven-eighths, respectively).
While admittedly the amount involved is small in dollars, all

more

operations of the Program must be viewed in its marginal light; our
appropriation amounting only to 5% of the recipients' pro¬

entire

duction.

•

-

<

'

FINANCIAL

&

THE COMMERCIAL

certain, tired,' and fearful who
look again to the west for_ hope.
Bear in mixid that most officials

World Bank and ERP
itor, or of donor and donee, and

(Continued from page 19)
pedantry," the note ran, "up with
which I will not put." I am in¬
to

clined

think

there

that

are

rules in the book which will

many

have to be re-examined and even

before

defied
x

this

with

we

finished

are

world

of

matter

re¬

The imponderables are "so
great and the cross currents so
complex that I very much doubt
covery.

h<;

familiar

the

that

can1 be

rules

successfully applied to the ex¬
tremely fluid world situation that
we

face.

now

Foreign1 Currency
aid

and

on

the

of

end

further

now

under

the whole con¬
the scale under¬

the

since

the

war

contemplated

European- Recovery

Program is without precedent in
history. Its very size and gener¬

•if-

emanating from the ene¬
recovery seeking to ex¬
mistakes, to misrepresent

ganda
mies

of

ploit

motives, and generally to poison
people's minds against the pro¬
gram.

Unless

peopie in this country,
particularly people in
are to be the
recipients of the aid, understand
the difficulties of administration,
but

more

the countries which

also

dominant

the

world

has

power

own

There are none
on anything like

purpose.

of

I

this

scale- where the chief

is

face. Take

1

•)

that

hitherto ever been called upon to

■

osity provoke problems which no
economists
or
politicians
have
now

famous

problem of the counterpart

:i

shall hear much

we

and
about
are fin¬
—

more

it, I believe, before

we

refer to the use of local

ished. I

to be derived from sale

*)?

currency

■f/.

of goods received in the form of
grants from the United States. In
the case of, say, Italy if the pro¬

posed or rather talked of dollar
grants are forthcoming and are

■fi

converted
a
*

into

lire

free

at

rates

the total sum would compare

with
oustanding currency is¬
sue of the country.
If the United
States is to dispose of that many
lire, some objective group must
the entire

i'

and should control it. We have al¬

ready had the experience of the
dissipation of similar funds in the
*of

case

UNRRA

local

the

these

is

it

clear

control

over

proceeds of
invites inflationary

currency

grants

and

and

to exercise

that not

wasteful

other

tendency's

rebuild

to

that

is

self-interest, but the least
of

one

lightened
the pages
been

said of

be

can

all

too

economics

poses.

<

is to be ad¬
ministered in Washington is im¬
portant but how it is to be ad¬
ministered
in
Europe
is even
more
important.
We have al¬
ready
seen
some
encouraging
signs of European cooperation in
both the economic and political
field in Europe but it cannot be
too heavily emphasized that it is
upon the initiative and coopera¬
tion of the Europeans that suc¬
cessful progress of the program
primarily depends. I would urge
How

the

program

administration

This

brings

matter

of

to

me

the

Recovery Plan.
much of the type of
be

a

task-r-some

must

be

St'

man

say

statesman, that he
knowledge, that
he must have a distinguished rec¬
ord of administration behind him,
that he must be tactful, that he
must be realistic, that he must
be imaginaive. He must combine
the diligence of a bird dog with
the patience of Job. I doubt that
must have

I;

of

hear

needed
he must
businessman, some that the

this

he

r

You

a

wide

there is anyone who combines the

qualities which the job so ob¬
viously needs. Yet a man will one
day be selected and I venture to
say that whoever he may be and
with all his likely shortcomings,
given a substantial record of abil¬
ity and character he will somehow
get along and the task will be well

administered,

assuming

only

group of national representatives
who usually are unable to accom¬

have

too

bosses.

Many
things he can do and yet' many
-things are bound to occur over
which
have

the

many

administration

absolutely

no

control

will

and

of them may well determine
success or failure of the en¬

some

the

tire venture. What is important is
?

that the public as a whole and the

the Congress, and the re¬
cipients adopt a tolerant and un¬
derstanding attitude toward this
•supremely difficult task of ad¬
press,

ministration.

With

the

best

crudities

of operation, and frus¬
trations, all of which are present

the

formation

of

any

"hastily

erected agency, to say nothing of

the
one.

peculiar

difficulties

of

this

These difficulties will all be

superimposed

on

the

never

easy

relationship of debtor and cred¬




there

than

series

a

be

of

•

international

an

owing allegiance

po¬

to

staff

national

no

government but to the adminis¬
tration headed by a European di¬
rector
of
recognized independ¬

ability.

courage, and
director would not

ence,

must

on,

this

and

drawn

time

no

be

sition would enable him to

tion

with
his

and

the

leader.

With all its

particularly as

advertised defects,

With all
lions

as

to

serve

strengthen the economy. We -are
currently going through a period

though the prospects for success
were high and even though tins
was the only road that could lead

of

to restored health.

If farm

had

decline

been

farmers

had

ordinarily be accept¬

of

use

American

funds.

More

making ends meet, the
decline would only have accentu¬
ated a 'maladjustment and
de¬
stroyed an important market for
the products of industry. This was
part of the trouble during the
when

the

I

see

to move ahead.

But it

000

that

means

would

a

This

us

organization..

In

brief,

I

people for each
whose income would
directly. Net income of

person

suffer

to all that farm

commodity prices farmers for 1947 was 256% above
have been out of line on the high the average for the prewar years
side. As of early February, farm 1935-1939;
for the rest of the
commodity prices in general were population, 180%.
Suppose the
156%

above

prewar

non-farm
up

the

extent of the decline in farm com¬

average for the
1935-1939
while
wholesale prices were

modity prices brought them down

years

82%. This has forced the

age consumer to

spend

a

to

aver¬

level

a

years

dispro¬

as

portionate share of his income for

the

services.
unrest

It

has

added

to

labor

inflationary whirlwind which
threatened
lower

ultimate "bust."

an

level

of

farm

1 adjustment

a

in¬

increases

in

the

in¬

of the nonfarm

larger part of' the
population should more than com¬
pensate for the decrease in buying

A

serious

and

Sup¬

farm

brought into line with

smaller

power

commodity

prices could thus correct
ma

in

population.
That should strengthen the econ¬
omy.
The
increase
in
buying

has spearheaded the

and

prices.

increases

come were

food and has lessened his
buying
power
for
other
products and

come

other

are

that

pose

much above, prewar

as

should

of

the

power of the farm

to this point.

population,

up

The office worker,

to do this goes a

controlling

WHAT HAPPENED TO PRICES

a

(Jan. 31, 1948

os

compared with 1935-39)

side.

The

Time for Action

PRODUCTS

This

appeals

to

me

UP

a

par¬

ticularly good suggestion because
of

experience with such a
in the International
Bank,

my

staff

but the time has come when fur¬

ther

debate

or

discussion

as

to

method of operation \is less im¬
portant than action. The deadly

analogies pf the recent
us

news

leave

little time for diplomatic man¬

euvers,

little time to debate just

how much

is exactly needed for

demand

for

substantially above

previous

any.

For

peacetime
time to come

some

Europe will probably need con¬
siderably greater quantities of
food from

us tnan during prewar
although less than she re¬

years

ceived
during
the
past
Every indication is that the

year.

gov¬

ernment stands prepared to carry
out a policy of supporting farm

prices at levels which protect the
farmer's income. This background

justifies

confidence

that

are

we

with

a

cline

not

the view
threatened

farm commodity price de¬

which

point

in

now

will

a

beyond the
maladjust¬

another

important

go

correcting

of

ment.

There
aspect

is

of

this

Industry is

now

price adjustment.
in the midst of an

unfortunate third round of wage
increases.

The
past two years'
experience leaves lictle doubt but
that this will result in many price

to rise

the

156%

UP

82%

and, we hope more
the part of labor.

the

19%

no

cial system to

WHO GAINS

Population

(27 million people)
Agricultural
Income, 1947
was

$23 billion

256%°higher
than average
of 1935-39

is now

going-

banks have

in strong

are

positions.

Liqui

in the form
of
cash, bank deposits and g°v
ernment
securities
continue 0
increase.
Demand for goods m
savings of consumers

GAINS

.

it

adequate
reserves.
Tne commercial banks
have
additional
lending powf
and

from fhe decline in agricultural
prices

withstand the strain

which

The central

—

of
finan¬

reasonable doubt

ability of the nation's

through

WHO LOSES

consumers

restraint on

Investment Policy

.;

LOSES

thrown into an¬

frequently predicted "bust." In¬
stead, we are going through a pe¬
riod of caution on the part ol

There is

UP

stabilized
level, we

peak

January

damaging wave of inflation.
It could have culminated in the

STOCKS

,

prices con¬

even

or

business managers and

PRODUCTS

Force

as

to

as

the down¬

on

domestic

food continues

could have been

NON-FARM

Farm
and

much

so

other

FARM

broad-gauge economic basis, and
it would help to enlist the full
cooperation of European govern¬
ments and nationals.

prospeiity.

our

become out of line

at

opposition to the
within the European
countries, it
would increase the prospects that
on

way toward

There appears little risk that in
the near future, farm

tinued

believe

made

Their

long

increases for manufactured goods.

partisan
Marshall Plan

be

for

exchange
ability

goods and services.

Had farm commodity

it would tend to disarm

decisions | would

promising objective

the' factory laborer and the
farmer
could
more
readily

that of
decline in food prices
'period.
the cost of living

European

a

preS

to achieve.

reduce

at least four

for
one

is known

dwellers.

nonfarm

are

advantages in the

many

of

other wise
still remains the
first

our

prices will decline

Approximately 27,000,000 of our
people live on farms and 116,000,-

failed

economy

Loss

Benefit Than

(D.-J. Industrials)

establishment of such

opportune
recovery

commodity

relatively low
be&h having

trouble

1930's

com¬

adjustment that is
order to put out
sounder basis.
-

economy on a

prices before the recent

farm

a

over

concern

modity price
necessary
in

in full coopera¬

American

the

the

economic

this

and most

that agency, but the lat¬
would always have the final

say

but

the

Europe and its closer integration
today affords must not be missed

able to
ter

L

"Wolf, Wolf!!"
(Continued from page 2)

common

agency
recommendations there¬

fore would

position

our

a

endeavours of all the participants.
His organization, of course, would

have to operate

not

does

system

become

world

a

as

our

The

merely

the focal point for the

adequately

people who are un-

too many

for
the
American
mouthpiece
though
he
would
act
under its general directions. His
strong relatively independent po¬

as

constitutional

to

that

it said

heard

have

I

sta-ength
which

trumpet at the outset.

There

it halfheartedly.

brandish
are

is

the

certain note can be blown on

helped

is not only a mighty weap¬
it is the first one we have

agency

men

administering there will still be
irritating misunderstandings,

in

more

compromises. Rather it is
essential, in my judgment, that

he

does not receive too much advice
or

there

litical

whole

administration

the

for

the

of the

Europe

in

core

be set up an organization
is something more than a

which

plish
ERP Administration Problem

>

rope

and

should

ternational

it

blank.

ily frustrate the objectives of the
This is only one of

perplexing problems

that

the examples of en¬
self-interest of which
of history thus far have

•whose baneful effects could read¬

which this great adventure in in¬

is

it

enm

and

truly said that this is only a mat¬

that somewhere at the

entire grant.
the new and

be

former enemy alike to a

ter of

quently and severely

effort

friend

former

]>ol7ti7Ti

a

beenTesteV?r-

has

ithesU

but the fact re¬
mains that economic aid to Eu¬

position
where'they may vigorously com¬
pete with the donor. It may be

merely the

know

up in

system

foolish^

that other area of the world

sought to repress its competitors
and bend their economies to its

the

our history
to cause us t
? ®
politicians, as well as busi¬
tate to change it
nessmen
in Europe have some¬
Unde °
have
acted
with
thing more to fear today than
strength *5
can be made.
Grim events have
unison
in
real
loss of prestige, office, or profits.
emergenc es
occurred and if I may step out of
any rate we cam
It takes courage and hope to re¬
neither
it or allow it to
my role as head of an interna¬
sist. There was a Polish proverb
stultify
tional organization for a moment
W"le other proposals
in the "days when the Poles were
are
I would say that the day has ar¬
being oppressed by the czars and mg and while still more ominT"
rived for the United States to be
events wtend let
the kaisers of the time.
It was
us ttcfe
clear and prompt rather than over
that the best clear
"God is very high and France is
chance ?!
precise.
peace lies in the
far
away."
Such a philosophy
prompt economl'
One can truthfully say "that dol¬
recovery of Europe. It is
justified many compromises yet
imp*c
lars cannot save the world; that
it never completely prevailed no ant, however, that we get on
wto
it. To be sure the
many other things must also be more than it will today.
Great
United State
enlisted. There is such force be¬
must
stand
strong before t!
poweis of strength and resistance
hind the suggestion that political to
oppression remain in the world world today and it is
and
even
military steps
must and
suppose in this world
they can be mustered again
that yC
likewise be taken, or that this or in favor of
freedom, only no un¬ influence can reach far withZ

without,

generosity and good will
as I have said, a prece¬
dent in history, it may fail. His¬
tory .is full of examples where

they show

and

the first year's effort or how well
articulated
the
administration

mark of

In the first place
taken

count

we can

virulent and vigorous propa¬

submerge their own selfish in¬
terests, and above all keep in
mind that this adventure is a

Marshall Plan And

cept of

all the while I think
on a

Thursday, March 18,

CHRONICLE

Non-farm Population

total

(116

able prices.

mjl ionpeople)

exceeds

reason

supplies at

Possibly the

weakes

Non-agricultural

inflated level of farm

Income, 1947

prices and this may

u®
commodity
be on its v/a

toward correction.

Without

was

$175 billion
or

180% higher
than
of

average
1935-39

spot in

our economy

has been

^

imizing the near-term

ties,

we

beiieve

nun^

uncertain

investors

s^u

to a
advantage of the favorable PoS
bilities in the longer-term inveS

keep in mind and prepare

ment outlook.

Number 4682

Volume 167

THE COMMERCIAL

Indications
The

&

CHRONICLE

FINANCIAL

o! Current Business

following

statistical tabulations cover
production and other figures
shown in first column are
either for the week or month ended on that date,

AMERICAN IRON AND

Latest

Mar. 21

Previous

Month

Week

Ago

Mar. 21

1,757,400

96.6

1,741,200

January:
Slab

1,686,900

1,667,300

to stills—daily

Crude runs

average

ASSOCIATION

OF

Mar

—

(bbls.)

5,352,900

5,332,575

zinc

5,311,000

15,736,000

5,348,000
15,476,000

14,671,001

2,821,000

2/780,000

2,468,000

2,259,00C

7,554,000

7,963,000

7,870,000

5,477,00.

8,700,000

8,824,000

9,154,000

8,40o,00C

Mar

111,474,000

output,

all

grades

(tons
71,505

——

11,119,000

,

10,788.00C

74,795

68,011

173,337

67,562

59,705

57,630

——.—i—.—$22,631,977
58,196,738

$16,943,386

$9,574,920

85,237,545

33,754,580

36,557,839

28,408,783

16,180,879

36,812,071

56,116.492

25,195,312

50,506,031

36,996,411

25,293,550

of

—

period

Sputh

32,749,000

33,836,000

38,538,000

35,492,G0(

East

49,206,000

50,257,000

43,497,00v

South

———

792,571

791,089

747,394

Central

^

i

-

Central

—

—

-

Central

735,952

668,783

707,931

-

-

—

—

10,938,448

—

1—

Total
New

CONSTRUCTION,

ENGINEERING

RECORD:

NEWS

United

York

Outside

States

City

of

—

2,990,209

36,363,784

$308,085,440

$156,531,157

44,144,030

York City.

60,794.688

22/229,240

242,369,218

—

New

247,290,752

134,301,917

y

construction—

Total U. S.

Mar. 11

private construction

$95,996,000

*

Jar. 11

and

State

Aar. 11

$183,872,000

$103,332,00(

$133,534,000

municipal

Mar. 11

46,660,000
-

71,728.000

68,319,000

112,144,000

65,215,000

55.527,000

33,185,000

31.831.00C

56,617,000

32,030,000

ERAL RESERVE DISTRICT, FEDERAL RE¬
SERVE BANK OF N. Y. 1935-39 AVERAGE '

34,038,00(

30,254,000

DEPARTMENT, STORE SALES—SECOND FED-

69,294,001

43,336,000

19,082,000

construction

Public

2.207.00C

=100—Month
Sales

of

January:

Sales
COAL

(U.

OUTPUT

Bituminous

S.

BUREAU

OF

MINES): V

coal

and lignite (tons)
anthracite (tons)
(tons)—

Pennsylvania
Beehive coke

(average monthly), unadjusted——
(average daily), unadjusted

Sales

(average

Mar.

13.025.000

"12,925,000

11,350,000

12.807,00(

lar.

1,176.000

1,238.000

STORE

SALES

126,400

"132,400

INDEX—FEDERAL
AVERAGE=100

SYSTEM—1935-8!)

EDISON

ELECTRIC

127,60.

GRAY

IRON

CASTINGS

output

Mar.

265

"248

sale

For

producers'

Unfilled

FAILURES

(COMMERCIAL

STREET,

—

Mar. 13

AND

5,284,641

5,292,595

4,763,84:

5,384,945

&

AGE

Mar. 11

COMPOSITE

102

113

Finished

steel

(per

gross

(per

:

ton)

Mar.

:

9

3.23P40c

3.23940c

2.86354-

"3.19411c

9

$40.37

$40.37

$40.17

$33.1

For

Mar.

L

9

$39.75

$40.00

$40.50

$38.7.'

For

PRICES

(E.

M.

&

:

Mar. 10

St.

Louis)

21.200c

21.200c

21.200c

21.575c

21.425c

Mar. 10

at

21.725c

22.175-

94.000c

70.000

94.000c

94.000c

-Mar. 10

15.000c

15.000c

15.000c

15.000

Mar. 10

14.800c

14.800c

14.800c

14.800

Mar. 10

12.000c

12.000c

12.000c

HOTOK

I

at

end

at

U.

S.

Govt.

DAILY

Bonds

own

orders,

Mar. 16

100.73

Mar. 16

111.25

111.25

110.70

116.22

116.41

116.02

Aa

r

117.2i

Mar. 16

114.85

115.04

114.46

110.70

110.70

109.79

117.0*

103.64

103.64

103.47

(short

number

"

•

V a:

105.69

105.86

105.17

112.93

113.12

112.37

Mar. 16

115.24

115.24

114.85

U.

S.

Govt.

401,644

motor

Average

Mar. 16

...

I

2.45

2.45

Midland

PRICES

"II

3.10

3.10

3.13

2.84

2.83

2.85

NUMBER
TURE

Railroad Group
Public Utilities

2.91

2.90

Mar. i6

3.13

3.13

3.18

:

Group
Industrials Group

COMMODITY

INDEX

3.53

3.54

3.40

3.44

3.00

3.04

2.74

2.89

2.89

Feed

2.91

Cotton

crops

Oil-bearing
Livestock

2.61

Mar- 16

411.7

409.5

430.1

ASSOCIATION—WHOLESALE

COMMOD-

Foods
-

-Mar. 13

-

228.7

229.9

products

244.0

231.5

251.2

258.0

245.1

256.0

Mar. 13

319.7

324.3

300.6

Mar. 13

264.6

277.4

256.4

253.1

Livestock

Mar*

241.6

247.9

238.3

249.C

220.8

220.8

220.8

159.2

172.8

174.1

173.4

162.6

211.3

212.7

211.7

oils

and

Mar. 13

;
-

^or-

Fuels
.—

Miscellaneous
Textiles

commodities

—_

Ji*

Mar. 13

-Mar-

—

__

—-

Mar. 13

-

242.1

BuiiuL^^at^i":::;::i:::::i::::—^
-

Farm
All

—Mar. 1.5
Mar. 13

—

„

_

machinery
groups

Mar.

——-—-——

combined——

lV^a

!?
13
J

163.5

162.2

232.8

233.5

203.0

157.0

157.0

155.1

Month

137.7

137.7

143.0

143.0

138.1

138.1

137.2

214.8

217.0

214.7

199.1

Orders

Production
■v.

Percentage

of

Unfilled

(tons)

at—

—

——

489,364

AND

DRUG

INDEX—1986-36

REPORTER

PRICE

AVERAGE—100

'

Relief

169,597

222,730

237,292

Greek-Turkish

177,884

179,02F

Lend

Mar.

104

101

100

102

480,791

423,510

477,216

All

Mar-

PRICES—U. S. DEPT. OF LABOR—1920=100:

.

UNITED

146.4

147.2

147.3

commodities

•

159.2

163.8

181.8

187.1

Hides
1

and

leather

170.5

177.9

170.7

187.9

188.5

198.0

174.2

~"*/ror"

—

145.9

146.2

147.0

131.7

131.7

131.4

96.8

—

M

products—

Chemicals

195.5

172.2

{J

products-——

Textile products —__5——
Fuel and lighting materials
Metal and metal

Building

182.8

-—Mar.

—

allied

'

Hr.usefurnishings
Miscellaneous

M

products—;

M

goods

'

•

.Mar.

commodities

137.4

155.7

155.6

154.2

139.7

192.1

192.1

192.1

175.3

136.6

'

materials
and

12,600

9,600

135.3

134.3

143.7

137.7

,

Semi-manufactured articles
Manufactured products
All

<

—•—

1
"IIIII
'

commodities other than farm products-—--------All
commodities other than farm products and loons

•Revised

figure.




33,900

6,900

500

900

601,100

$254,683,352

$256,650,614

4,318,356

—i*

'

GROSS

DEBT DIRECT AND
<000'3 omitted)

balance-—-—

fund

debt II————a—

119.0

122.6

GOVT.

S.

TION—As

Total
at

face
any

STATUTORY
of • Feb.

■

Mar.

Mar.
Mar.
_,Mar.
.Mar.

DEBT
(000's

20

amount that may be

one

4,648,247

7,133,877

$250,364,996

$252,002,367

$254,472,064

v

2.170',*

2.154%

$261,605,941

2.066%

LIMITA¬
omitted):

outstanding

$275,000,000

256,573,665

261,418,229

78.841

76,948

187,711

$254,683,352

$256,650,614

$261,605,941

848,532

908,209

$253,840,059

$255,802,082

$260,697,732

$21,159,940

$19,197,918

$14,302,267

■

•

public debt——-—
Guaranteed obligations riot owned
Total gross

111.9

$275,000,000

843.292

—-

$275,000,000
254,604,511

time.———

Outstanding—•

Total
an

176.5

173.9

182.3

gross

teed

144.0

154.1

156.6

154.3

153.5

156.7

153.9

156.7

141.4

147.3

147.8

129.4

147.3

—

and guar———::
obli¬

public -debt

obligations

to^debt limitation

143.7

154.4

the

outstanding public debt

162.5

154.8

by

—J'.

Treasury

gations not subject
,

"1,100

126.1

119.4

u.

130.6

143.6

Special groups—
materials

/

.

Deduct—Other

Raw

300

148.7

—

——,

21,400

81.400

543,700

STATES

General

155.3

160.4

Foodsproducts

1.047,900

V,

->

Computed annual interest rate—————
>

$1,112,100

931,900
63,500

Program..—-——Aid

Lease

Imports.

Net

WHOLESALE

$1,099,800

.614,471

I

—

362.787

Army

GUARANTEED—As of Feb.

°IL, PAINT

35.771

493,309

Civilian Supply—-—I—-----—-rUNRRA Administration Program_——

•:/.

Mar.

————*-■

.——t——

88,136

omitted):

180,943

--

activity-——--

orders

123,907

97,143
32,982

/.V. /;../., V"').•;»

—

—BUREAU

'(000"s

foreign

—

—.—_—

130.125

110,970
37,154

COMMERCE)—

OF
w.

EXPORTS AND IMPORTS
OF
CENSUS—Month of Jan.

193.205

(tons)

264

206

—

tons)

255,552

(tons)

230

299

223

148,124

_———*:

(DEPT.

(short

277

300

Exports*
—:————
—:
—
Commercial: —•
Interim Aid
-k!.—

PAPERBOARD ASSOCIATION:

received

211

STATES

UNITED

j

NATIONAL

192

147

237

•(short tons)

126.3

319
£70

231

273

jj

For sale (short tons) ——For producers' own use (short tons)-—
Unfilled orders for sale at end of
month

133.7

379
313

218

eggs

v,

128.0

143.0

331

:

-——

December:

of

Shipments

154.f

137.6

278

147.P

232.8

334

328

————

CASTINGS

STEEL

211.1

163.5

Chemicals and drugs
Fertilizer materials
Fertilizers

and

products
Poultry and eggs

336.1

Grains

Fats

Farm products
Cotton —•

275

377

307

—

—

Dairy

321.4

203

320

adjusted—

Fruit

224.<

246

135

300

Truck crops

226.2

267

143

animals

Poultry

GROUPS—11)35-89=100:

390

333

——————

products.!

Meat

403.5

195

377

320

:

■

crops

and

185

366

248

—

—•—

Truck

318 '

374

—-

—

235

289

grain

245

322

261

—————

307
284

251

■

and hay—————

Tobacco

3.02

3 01

262

279

257

,

3.15

3.41

grain

Feed grain

f
FERTILIZER

IXY INDEX BY

£15,834,000

agricul-

OF

—

Seasonally

NATIONAL

DEPT.

S.

Dairy

.

MOODY'S

£38,470,000

1909-July, 1914= -100—As Of

products

Food

2.80

3.53

Mar. lb

-

-

£4,390,000

INDEX

—

136

farm

2.65

Mar. 16

•

—

1,273

GREAT BRITAIN—

FARMERS

BY

U.

—

August,

2.55

2.93

Mar. 16

izzzzzzzzz_

"1,449

February 15:

2.79

Mar. 16

_

I-II—IIIII—"II

99,818

1,355

Bank, Ltd.—Month of February—

RECEIVED

2.19

Mar. 16

'

zzzzzzzzzzzzzzzzzzzzrrrzzz

a

Baa

2.45

Mar- 16

-

~ I

246,605

"101,569

1—

—

Unadjusted—

Mar. 16

corporate

Aaa

Aa

347,696

"366,939

cars-

CAPITAL ISSUES IN

Crops
__

"469,957

95,231

coaches—-—

AVERAGES:

Bonds

MANU¬

120.8<

.

DAILY

267,661

305,058

trucks

NEW

118.2(

1

YIELD

206,510

Month of

—

motor

All
BOND

28,542

■

...

Number' of

112.7:

Mar. 16

Mar. 16

MOODY'S

35,784

202,408

vehicles.:

of

28,987

39,940

FROM

SALES

of

passenger

39,327

32,142

sale

for

(AUTOMOBILE
'

68,314

39,969

sale

-—

S.

:••./

.

72,111

33,715

for

month,

of

FACTORY

IN U.

636,0(f)

77,757

tons)

cancellation

end

2,979,658

44,042

-

use

394,780
i-

OF

—

of

110.3'

-Mar. 16

:

Group
Industrials Group

269,000

—

Number

120.0:

Mar. 16

A

Group

2,687,244

122.0

corporate

Utilities

2,782,236

(DEPT.

(DEPT.

—

VEHICLE

Total

104.6)

100.71

100.74

Baa

Public

514,415

458,579

—-———„————

January;

v

AVERAGES:

Aaa

Railroad

909,195

561,660

478,278

December:

of

tons)—

10.500-

Mar. 16

Average

1)020,239

587,933

December:

-

less

tons)

PLANTS

of

Number

PRICES

1,066,211

month

of

PRODUCTS

FACTURERS' ASSOCIATION)

,

MOODY'S BOND

206
234

—

tons)

(short

tons)

(short

21.225

.Mar. 10

1

r

(East

211

275,000

tons)

CASTINGS

(short

booked,

(short

QUOTATIONS):
-

228

COM¬

—

producers'

Unfilled

Electrolytic copper—
Domestic refinery at
Export refinery at
Straits tin (New York)
Lead '.New York)
at
Lead iSt. Louis)
at
Zinc

J.

sale

IRON

sale

Orders

METAL

for

WROUGHT

Shipments

Mar.

ton)

gross

"183

236

.

COMMERCE)—Month

(per lb.)—

Pig iron

Scrap steel

T

201

——

(short

use

Shipments (in pounds)

51

95

PRICES:

OF

tons)

MAI,1.FABLE

IRON

186
'

241

229

tons)
own

orders

(DEPT.

COMMERCE)—Mouth

BRAD-

INC

.

December:

tons)

(short

MAGNESIUM
OF

INDUSTRIAL)—DUN

of

(short

For

25'

240

INSTITUTE:

(in 000 lcwh.)

Month

Shipments

RESERVE

(short

Electric

408
'

1,053,001

Mar.

1,170,000
131,200

MERCE)
DEPARTMENT

192
240

—

^

416

<196

dally), seasonally adjusted
Stocks, unadjusted as of Jan. 31
Stocks seasonally adjusted as of Jan, 31

•

;

7,177,913

5,308,082

62,546,025

$286,513,248

-

.

ENGINEERING

CIVIL

16,528,716

5,693,485

65,176,659

-

805,771

722,851

&

————

Pacific

Mar.

DUN

—

CITIES

•

Division—

Atlantic
Atlantic

West

"III Marl

(tons)j,—

VALUATION

INC.—215

Mountain

of cars)

72,332

72,151

55,085

January:

England

Middle

RAILROADS:

(number of cars)
Revenue freight rec'd from connections (number

70,669

84,431

end

PERMIT

of

Geographical

48,114,000

Mar

at

BRADSTREET,
Month

New

Mar.

orders

BUILDING

104,358.00C

9,843,000

111,040,000
9,594,000

105,100,000

Mar

_

~

at

AMERICAN

lbs.)

4,874,000

freight loaded

Revenue

smelter

(tons of 2,000 lbs.)
at end of period (tons)

Unfilled

4,823,DOC

5,387,125
5,463,000

15,451,000

vlar*
III Mar".
~
^ar"
"
viar'
^j.'
lines—"

„

(bbls.)

Ago

'

2,000

Stock

Gasoline output (bbls.)
Kerosine output (bbls.)
Gas oil and distillate fuel oil output (bbls.)
Residual fuel oil output (bbls.)
Stocks at refineries, at bulk terminals, in transit and
in pipe
Finished and unfinished gasoline
(bbls.) at
Kerosine (bbls.) at
Gas oil and distillate fuel oil (bbls.) at
Residual fuel oil

Year

Month

Shipments

(bbls. of 42 gallons
each)

average

Previous

Month

AMERICAN ZINC INSTITUTE, INC.—Month of

INSTITUTE:

Crude oil output—daily

of that date):

are as

Latest

96.4

92.5

of

PETROLEUM

AMERICAN

month available (dates

or

of quotations,

cases

Ago

97.5

,,

in

or,

41

Activity

for the latest week

Year

Week

STEEL INSTITUTE:

Indicated steel operations (percent of capacity)
Equivalent to—
,
Steel ingots and castings produced (net tons)

(1245

Grand

total

Balance face
*

able

under

outstanding

—

—-

amount of obligations issuabove authority..—_ 1——

"Revised figures.

42

THE COMMERCIAL

(1246)

ifcbksc# in. their task; of

Market Research in Securities
counsellors,
the seriousness of the situation. not be sold on the proposed terms. who examine offering# fbrj both
The company, therefore, secured corporate and individual'"•in¬
Expansion plans of industry have
three-year credit line running vestors. They do not wish merely
in some instances already
been
curbed, and operations have been
reduced, because stock could not
readily be sold. In other cases,
expansion has proceeded, but ad¬
ditional
In

has

debt

his

incurred.

been

Millikin

Senator

speech

pointed out the important effect
which the decline in the availabil¬

ity

private

of

several

capital

risk

had

has

decades

over

the

on

efficiency of England's productive
We all know what have

capacity.

been the attendant social and po¬

Lack of risk capital

litical effects.

considered our
problem, if we

might even be
country's No. 1
did

all

not

1

the

cold

However, in
which we 'are

abroad.

lies

No.

that problem

realize
in

war

already engaged, the provision of

ample free capital may be the
first requirement for the survival
of

free

a

be

to

economy.

to $25 millions.

up

flow

risk

of

capital is due either to there being
insufficient

of

amount

such

A little later

and

managers

"told," and they want to know

the

well as

circumstances, as

adverse

the favorable ones.

Another

very

Electrochemical.

Hooker

the

In

established and

an

the

stockholders

before

knowledge of the company

ions with

4%

approximately 3%%

an

dividend
have

would

This

rate.

retired

issue

already
million

an

lave

tion.

all

we

know, has been

work

All

.

done, and

was

had

example,

orders for

in the

the

very

con¬

preliminary
our own

firm,

indications

of

entire participation
stock.
But the general

our

new

labor

"earn

This somewhat cor¬

the company.

responds to a pilot .plant opera¬

what is es¬

But in any case

talking to in¬

around the country,

investment managers

and

week-in

about

week-out

and

companies,

other

and

chemical

going

in

others do

firm and

vestors

type that

the

of

work

is

sential
our

justic^:'»

freedom and

| direct military attack-from

:

lv.

actively

all

; l

•:

i*

•

of

world.

.to .the

returned

not

!

aid stability

but peace

wars,

have

their knowledge of a company, we

particular in¬ in their desire to establish a just
vestment wants and needs. Thus, and honorable peace-, there would
investment houses learned some still
be
great * difficulties
of
;ime ago that a number of founda¬ achieving that goal. ,*> >
'< A •1 * * ;
tions
and
insurance
(companies
But the situation in the world
wanted
to
continue
to
get the today is not primarily theo result

stances.

This

Senator

Millikin

said
in

that

taxes

second

adequate
should

here

again take place.

may once

the

But

peace,

business

give

can

very

important help. And such proper
sales effort in the securities busi¬
is

today not founded on tips
high pressure, but on intelli¬
gent market research.
ness

and

this

At

which

the

of

market

It

in

that could

not

not be

make

sold.

goods

interest

out,

not

itself

merely

in

the

finding

customer's

want, but his real needs. And the
third step I think took place when
market research went back to the

,

production manager and began to
cooperate with him in the devel¬
opment

of

the

meet

Exactly

which

goods

consumer's

the

same

type

"and market research

day's

financial

merous

needs

sales

of

exists in to¬

community.

Nu¬

firms have established

search departments

ing

woulc

real

with

the

re¬

which, work¬

sales

departments

the true link between the ul

are

timate buyer of securities and the

corporations

which

require capi

tal funds.

In many firms custom
contact and company contact

er

under

are

the

direction

same

executives.

this

contact

In

our

between

of

the

firm

own

customers

and

chemical corporations
particular charge.

not

of offer¬

These and other instances
to

to

me

the flow

quate.

is

my

require

must also

has

news

still

hopes

market research. Let

When you open your newspaper
on

Tuesday

a

morning

advertisement that

has

sold

$100

redd

and

syndicate

a

million

of

duPont

3%%.

Preferred Stock you may
not realize this feat is not accom¬

plished for any company merely
by the company's going to a lead¬
ing wholesale investment house,
like Morgan, Stanley or First of
Boston, a couple of weeks before
the offering and saying that
they
would
firm

like

to

the

financial

get up a syndicate to sell

so

million dollars of securities.

many

In the first

sale

have

place the big whole¬

house does not sell the

rities.

It

ments

that

only make

can

will

investment

enable

houses

country who

are

arrange¬

the

all

secu¬

many

the

over

in contact with

the investing public to sell the
securities. And it has been demon¬

will, therefore, take

stances

in

-

the

under

today's in¬

practices, not to mention

regulations,

go out and sell these
securities with only three or four
weeks of
preparation, unless a

months, or more -usually
This foundation consists in
day-in
and
day-out
work

for

the

mar¬

curity business.
of the

The

very

names

companies cited will make

clear that the difficulties of

secur¬

ing risk capital in the forms de¬
sired do not result from any lack

which is

done

by the investment

houses in

studying, preferably a
first hand, the business fortunes
and

the

management

particular

company,

skills

and

of

then

a

in

acquainting the investment trusts
the large charitable foundations

of

the

but rather reflect the

dividual investors, with the back

quality in the securities offered,
lethargy of
the capital market.
During 1948, as fine a company
as

Monsanto

told

by

its

Chemical

had

investment

to

be

bankers

that the 250,000 shares of $4 pref¬
erence stock
which it had regis¬
tered

with

the

SEC




would

have

insurance

ground
pany.

and

companies, and in
trends

wants to

com

today the customer
be fully acquainted wit
as

of the business

hard

the

And

the demerits

There

of

are

well
or

today

headed

as

the merits

great

a

has

of

worse—has

to
'A

of events.

course

know

patient

of

the

attempts
nations

*

multitude

professional

of

invest-

tablish

^

the

of

find

to

basis far

peace

tion

and

demo¬

a

secure

agreement.

and

through negotia¬
Conference

which

departments

about

which

their

to

business.

Too

companies still feel that

many

inside tip

next

on

You

know

peace. ;

the

*

basis

a

permit-the
just

a

;■1

quar¬

ter's earnings for purposes of al¬

agreements

did

we

perfect (though

the good

obtain,

they

im¬
could

were,

tions to

his customers to make a have furnished the basis for a
just
play.
Nothing could be peace—if they had been
kept.
further from the practicalities of
But they were not kept.
today's financial world.
Even if
They have been persistently ig¬
we had such
ideas, it would sim¬ nored and violated by one nation.
ply not pay us to maintain re¬ ,->The
Congress is also familiar
search
departments,
headed by with the
developments concerning
Harvard
market

Business School

othej the United Nations.

or

Most of

the

personnel, for such pur¬ countries of the world
have joined
poses.
The very tax laws make
together in the United Nations in
such trading peanut business, for
an
attempt to build a world order
the small time
speculator, who based on law and not on
force.
alone could benefit from a quick
Most of the
members

gain, could not
commissions

pay

to

us

informed

an

about the

to

want

to

to

and the

What

layman

we
as

our

ar£ in¬

much

processes.,

.We

hear about

the. products
prospects for future Sales.

We want to know.gbout costs and

profit margins and new develop¬
ments.
We, incidentally, are in¬
terested in the quarterly sales and

honestly,

earnings, if they can be made
available, as part Of the general
picture and as guide posts to busi¬
trends.

But such information

is secondary
pose,

to the broader

pur¬

which is to give the ultimate

investor the

company's

understanding of his
workings
which
he

does not have time to

get for him¬

self.

'"'•'

Cooperate -V

With Bankers
Let

trial

me

assure

companies

you

that

well

and

-make -it

effective.

more

Obstructs

abuse
has

of

Nations

the

vetoed

for- 'action

veto.

little

a

constant

That

twenty-one
in

nation

proposals
over

two

close

that
of

Union

is

all.

hostilities,

and

stroyed.

not

its

Since

the

agents

the

de¬

the

independence
and
democratic character of a whole
series

of

nations

in

eastern

It is this ruthless

course

of

tion, and the clear design to
it to the remaining free

ac

ex¬
na¬

Europe, that have brought
the

critical

situation

in

Europe today.
indus¬
advised

The tragic death

lic

of

of the repub¬
Czechoslovakia has sent a

na¬

restore

sound

a

world

In presenting this pro¬
gram to the. Congress last Decem¬

ber,

emphasized

I

necessity

the

for speedy action.

Every event in
Europe since that day has under¬

lined

the great urgency for the
prompt adoption of this measure.

The Soviet Union and its satel¬
in

invited

were

to

cooperate

the

European Recovery Pro¬
gram.
They rejected the invita¬
tions More than that, they have
declared their violent hostility to
the program and are

aggressively

attempting to wreck it.
They

see

in it

maior obstacle

a

their designs to subjugate the
free community of Europe. They
to

do

the United States

not want

,to

They do not even
cooperating countries

help Europe.
want the

to

16

help themselves.

Against
Aggression

Must Afford Protection
Internal

External

and

While economic recovery

in Eu¬

measures tor
economic rehabilitation alone are

essential,

is

rope

enough. The free nations of
Europe realize that economic re¬
covery, if it is to succeed, must oe
afforded some measure of protec¬
not

and externa

movement

The

cooperation na

economic

ward

been followed by a
ward

the

face

their

to

movement

of

freedom.

At the

very

you,

.

A

moment I am a five nations ot

European community, in

signing

defense

mon

Brus

50-year agree™
cooperation anci c

a

for economic

against
has

great

for this

people, and

actin5^

terms of the charter

of the

A

Its significance goes

is

a

iar^p^ent

the ag
notable step m

the actual terms of

It

.

e

nnited

Nations.

itself.

>
.

afgief.nifi-

sig
agreement, w a
imposed by the decree of a
powerful neighbor.
was
free choice of independent g
ernments representing the w
action

This

their

-

self-protection
the growing menac

common

cance,

anu

central Europe.

about

and

war

are

Soviet

have

States has strongly

repair the devastation of

dressing

years.*

But

Europe.

aggression.,

by

organization, to

tion against internal

Work

for Peace

the** United

,

are

to

•;
Ope nation;-however, has per¬
sistently obstructed the work of

tions of
Should

support the

'earnestly

seek

One* Natioii

tend

Companies

and

stronger-and

,

ness

Nations

as

company's-business. We
the plants. We want
the

United*

learn

can

see

understand

want

enough in

compensate

coop¬

economy.

lowing

trained

are

supoorted the efforts of these

lites
we

But the record

as a monument to

of western

estab¬
.

obstacles

have encountered.
stands

on

visitor faith and integrity of the demo¬
trying cratic nations of the world. The

a

from Wall Street is merely
to get an

have

would

lishment of

in¬

get

must

we

after conference has been held in

war

which

joint

a

The United

'

sincere

nations

work for the economic restoration

with

"

field, the
self-help to

erating in the European Recovery
Program are meeting again to es¬

but

-

familiar

Congress is

You

sixteen

actively sought

prevent it.
The

peace

Way

economic

preservation of free institutions is
well under way.
In Paris, the

in the establishment

just and honorable

a

—even

arising out of the

perform the ; function
just been described if
the companies refuse to allow our
has

formation

and

restore conditions essential to the

only .refused

not

Under

the

movement for mutual'

war.

cannot

research

well-being

defense of their

common

:

.

In

different parts of the world. We
have tried to settle the questions

of the company.
a

,

which

improvement can, and
eventually I believe, must take
place. The investment community

terested in is to learn

field

picture is

Here

of

cannot,

years.

ket research works in today's se¬

corporation.

deal

houses

vestment

in¬

specific examples of how

my

other side of the

research efforts.

some

chemical

the

satisfactory sinking fund.

time and again 'that these

many

I

preferred stock, which

strated

substantial foundation for the dea
has been laid over a course of

Hpw Market Research Works

in any new

the

liberties.

which

is

on

ma¬

great

nation

cratic

how it works.

see

wanted

#

European Cooperation With ERP

It is chiefly due to the fact that
one

The

being done can be
through intelligent sales ef¬

done

no

So they needed and
substantial sinking funds

date.

difficulties

natural
a

to co-operate

in the

But granting all this, it is
I am sure, that much

fort based

have

securities which

on

turity

might have

as

fears

true,

than

rates

interest

in

the

follow

financial

bearing

and

the *

on

fear the adverse effect which a

rise

of

the

much

as

appears

page.

use

ligher yields which they could re¬
from
preferred stocks as
against bonds. But they had begun

yvould eventually redeem the en¬
tire
issue.
These needs,
passed
:>ack to the company, for example,

concede that the front¬

investor's

on

major tax and
changes, and we

economic

page

that

capital is inade¬
final
solution
will

The

other

specifically

prove

for

united

were

drawing closer together

are

for their economic

:

i;o

seem

of risk

probably

an

to

weight

the

had

market

the

if

Flow of Rich Capital Inadequate

A second

step seems to me to have taken
place when, market research be¬
gan

capital

raised

which

ings.

more

customer wanted so that the man¬

would

amount

rope

their

about

ceive

me

that originally market research
simply tried to find out what the
ufacturer

the

been

under

any

to

seems

equity
sunk

you

functions

research

field has assumed.

half

have

what

me' give

point let

conception

my

than

could

and

it did

as

sales effort* in the

proper

securities

capital

overlooked,

in

less

in¬

an

risk

of

be

is where

of

cause

flow

not

in war,

reduced

be

must

the creation of risk

order that

capital

the point which
made when he

was

which raised approxi¬
mately $2,750,000 for construction,

allies of World War II

men¬

encouraging

signs that the free nations of Eu¬

the

all

.with this growing

there have been

ace,*

Later, the company offered to its

if

even

•"

■-

Faced

fighting would not auto¬
matically settle the problems aris¬
ing out of the war. The re-estab¬
lishment- of peace after the fight¬
ing is over has always, been a dif¬
And

country.
The- methods
but the pattern is all too

clear. >•

the

of

that

vary;

We Vvere well- aware that the end

having any particular of¬
fering in mind at the time. And
while we thus attempt to increase ficult task.
earn

rebels

supported* by -the-Com¬

munisi-dominated neighbors. In
*| Italy, a determined and aggressive
Almost three years have elapsed effort is being made by a
Cornsince the end of the greatest of munist minority to take
control

this nation;^'

stockholders 134,000 shares of new
common,

'

is of vital

It

ment in

equity securities. A great
deal of emphasis has been placed
on the first of these tv/o circum¬

tn

(Continued from first page)

exists to take the risks of invest¬

capital which

willingness of the

laboratories

better jobs and
investor, steadier income

vival of freedom in those nations.

without

capital in existence or to an un¬

corporation!

and

with fewer risks.

market fell away, and so the plan
for issuing
$11 million of pre¬
ferred stock had to be canceled.

an

fli
con

and

more

the

to

The
achievement
of
such
a
thus be forced vtcr
all that is available about pear has been the great goal of

construction

as

plants

new

and

fortunes,

which,

,

real but minor stake 4n4ts

a

outstanding issue of $5
preferred stock and would also
rave given approximately $6 milions of equity capital for Hooker's
program

as part of a
help us in our

< shock - throughout ) the
civilized
importartcev'that^et'Lwetfldv#-Now^,--pressure ."-is ...being
act now in order to preserve*-'the:bought'•Jtd:::'bear oA*(Finland,
to
of a recommended security as a conditions under which' we can 'the-iazard of the entire Scandiachieve
lastingV>'peaee *■ based on * r aviaa-peninsula-Greece- is under
preliminary step, so that: they may

amounts.

substantial

or

\]

capital

company, directlv

efforts to obtain
capital
to
give the

funds

or

stockholder or pros¬

buy

will

they

from

exoer

Truman

longveoritihued

securities in any
One of the
of Hooker authorized a new cum¬
leading investment trusts, for ex¬
ulative preferred which was to be
offered in the amount of $11 mil- ample often buys a small amount
1947

of

summer

so

want to have

In most cases they

example

company—and

every

of

to Know

What Investor Wants

involving a
again a
good company—was that of

smaller

owners

structive

potential .difficulties 13 often re¬
duced if the

with

fee6h0iAy,-to

on

actual

of

effect

adverse

tne

know

^directly

pective stockholder knows what it

millions of stock money was even-

ually secured.

flourish

also

fears

We

long established

will pay

Biit-

well founded.

often

are

founded

about.

own

ence

timid^and^a^

Capital is

able.

all

pur

be ignorance and uncertainty, while

to

want

They

"sold."

be

to

the proposed financ¬
ing into a convertible issud, and
with this added attraction the $25

for

insufficient

ment

it revamped

siderable.

Causes of Insufficient Risk Capital

The

postponed because it could

is

investment
acquaintlng'the owners of risk capital with
the facts, both adverse and favor¬
with

cooperate

to

(Continued from page 6)

Thursday, March 18, 1945

CHRONICLE

FINANCIAL

&

THE COMMERCIAL

Number -4682:

167

Volume

& FINANCIAL

CHRONICLE

(1247)

unity in Europieffdr- /been unable to'maintain their au¬
protection- and preservation, of thorized; strength,through. typlun^ >
enlistments,
its civilization. This development tary
eVen^nihdhgh
such strength has been reduced to
deserves our full support. I am
(Continued from page 17)
confident that the United States the^very. minimum necessary to
Removal of the restriction on
,tiiicially high rate, most of the
will by appropriate^ meansi 40x7.. <meefc .ourr obligations- abroad and ••
is far below the minimum which countries were fearful of the value holding of gold by American cit¬
tend to the free riations the supof the currencies of their neigh¬
izens:
The holding of gold by
should always, be -available in the
oortv whiph the ^situation; requires;'
bors- As a result, they would not American citizens is in itself of
I am sure .that the. determination continental, United States.
no

direction of

Restore Fiee Gold Market in U. S.!

countries .of, Europe

free

the

nf

themselves will'J fcje^
by an equal determina¬

protect

to

ratched

part . tq . help .them to-,

tion on our

recent2}Hlvelopments

;in
present this nation #!tft
fundamental issues of vital.. im¬
portance.
1
•
' "• •
,V;>'

"The

Europe

Must Have^-Armecl

Forces

accept them.
only dollars

to

-

meetO'bhr

interna-

Woi^t;;;^spoo§lbUiti^

unless.. we
maintain pur armed forces,
it i:
of" vital importance, for example
that

keep

we

occupation

our

forces in, Germany until the peace
is;/secure, in Europe.

Must Be Made-

Clear
I

believe that we have reached

point at which the positmh-of
the United States: should he made

a

There is

no

conflict between the

requirements of selective service
fpr>.the regular forces and uniyer^

with

start

because

we

harve approximately two-thirds of
the world's supply. Dollars alone

are/insufficient in number to sup¬
port the world's trade. The dol¬
lars were sent to

us-

in

ever-in¬

creasing quantities until the rest
of

the. world's business began to

,

position of U.S.

to

scarce

^V^M^--R^spbhsib&lities..

They would -accept'
greater
gold.
Gold was holding of

or

stagnate for lack of
medium.

a

monetary

The world is faced with

eithey of two choices: (1) to consal^training tfor the reserve cOmv tinus^until we ha/d a world-wide
ponehts.
$elective
service
IS* ;^4fap.se, .or, (2) to establish a

free market for gold which would
unmistakably clear.
hecessary until the solid founda¬
The
principles ando.Tpurnoses tion- of universal training can be determine daily the actual value

expressed in the./-charter of the established- Selective service

of every currency and would en¬

importance than the
quantity of copper
or silver by a citizen.
However,
gold is not a commodity directly
a

comparable

to

silver

6r

copper

because it is the backbone of

our

currency system and the currency
.ystems of the world.

I qupte Mr. Walter E.
Spahr in
vis article in the Dec. 1, 1947 issue
of "Monetary Notes," published
by

The

Economists'

mittee,,

National

Com¬

Monetary Policy.
coin standard
vides the people with direct
^aid:

He

on

"A gold

,,

out

this great

require
tions.

purpose.

assistance

This will

other

to

na¬

that

&hd4 balanced

T also propose that the

hesitate.

to

There

is

some

risk involved dn. action—there air

is.

ways

But there is far

risk in failue to
if

•For

act.

more
*

,

shall
forces

of

freedom, justice 1 and
which, are represented by

peace

the United Nations

nations

of

the

free

the world.

Measures
I regard

and

it

Recommended
as

my

national issues.
to

!•,

act

wisely now, we
strengthen
the
powerful
we

sible means, a just arid honorable
basis for the settlement of inter¬

those

judgment,

measures

allegiance

strong

the

as

to

princi¬

pal means for international secure.

>fy ba:cd cn law, not on force. We
shall remain ready and anxious
to

join with all nations—I repeat
with all nations—in every possible
effort to reach international un¬

derstanding and agreement.

duty, there¬

which, in

Door

kot

offered

the

Treasury at $35

ounce.

nor-will it

never

ever

give support to the free; anddem*

which

be closed,

arguments for the pro¬
posals taken in order are:
Establishment of a free market
'or

newly

to the

mined

gold

in

the

United States would be a market
for all newly

mined gold, whether

of American origin or not.

chasers

would

haVe

the

Pur¬

right to

export to whatever country free¬
ly, although after securing an ex¬
port permit from the Treasury.
This would have a four-fold re¬

Immediately
currency

every

the

value of
be accu¬
What is more,

would

rately determined.
a

dsy-tq-day check would be kept
the value of every currency.

on

or any other nation
'Secondly, it would make available
genuinely cooperate to the
gold producer the premium
improve the,, solid- foundation of in preserving the peace.
: '
market now closed to,him by a
our own national strength.; :
At the same'time; we must not set of silly restrictions.
Thirdly,
I believe that we have learned
be confused about the central is- the establishment of convertibility
the importance
of .maintaining stie,J: which -confronts the^world
facfb*S*t6:g0ld for currency would
military strength as. a means of today,
7,
re-open, the arteries of trade, the
preventing warr; We ;6$ve .found
The; time has * come wheriMhe/ thirst essential to establishment of
that a sound
military . system, is free;nien; and women pf the worM^ Wftrld peace. Fourth, it would stop
necessary in time; of peace if we must face the threat to their lib¬
ther inflow of gold to the United
are to remain at
peace. Aggressors er
Staths and* start a better distribu¬
tysquarely and courageously.
m the
past, relying on our ap-j
^The^United States has • a tre¬ tion throughout the world.

will

:

parent

lack

of

fforc^' mendous responsibility to act ac¬
unwisely precijpitathd/ warf
Although they have been led'to cording to 4he. measure of our
destruction by their misconception power for good in' thp' world. We
have learned- that we must *eara
of our
strength we hav^ vpaid' a
the peace we seek just as we
terrible price for our unpreparedearned victory in war, not
by
ness.
wishful thinking, but by 'realistic
Universal training is the only
effort.
; -r-' ■■
feasible 'means
by
which
the
At no time in our-history has

mine the value of each currency,

could be true
a

further

capital goods

facture

of

ables.

in the face of

even

decline

in

the

manu¬

non-dur¬

consumers

Industry in this country
large sums for fur¬

needs to spend

ther replacement and expansion of

plant and equipment, and has the
for it. The need for
capital goods to rebuild war-torn

money to pay

abroad is obvious, and this

areas

country
most.

must

That

well

under

the

Program,

of financial

form

of.
be

source

may

orders

Recovery

other

some

the

be

need

into

or
as¬

I must hasten to add

that, while
prospects for the
heavy industry companies seem
favorable, there is need for very
the

over-all

careful selection within the group.

Despite the high rates of activity,
and profits, which have character¬
ized the group during the past
year or so, not all companies have
benefited. For example, many of
the

machine tool

The builders of

of the

year,

dollar, I would propose the
of gold coin upon the

basis

the

of

price

then

deter-*

The amount of gold to be issued
would

the

be

rate

ten

of

billion

two

dollars,

billions

a

at

year.

Tlie issuance of this amount would
remove 10 of

increase

in

the 18 billion dollars
paper

in

circulation

a

minimum

Since 1941.

Maintenance

of

fixed

price of $35 per ounce
would,, frankly, stabilize a mini¬
mum price for gold held by what¬
ever group and would guarantee
producers that minimum. It would
do

than

more

that—it

would

guarantee the value of purchasing

16 oillion dollars
held outside the United States.
power

of

the

The gold coin to be minted in
1049 should be a commemorative

coin, commemorating the discov¬
ery of gold in California, a for¬
tunate event which alone con¬
tributed more to the acquisition
of that empire we call the
than

"West"

other single event, an
event that is most certainly de¬
any

serving of being commemorated
fittingly by the United States.

railroad

had

locomotives

had

a

and some

a

cars

and

indifferent

an

downright;-poor'

year, in 1947; the former mainly
because of shortages of materials
and

mined.

builders

in 1947, finding it diffi¬
cult to compete with war surplus.

poor year

including the dollar. When a free
marekt has established the value
issuance

The

Soviet Union

oeratic nations of Europe ahd to

been closed,

per

V;

Arguments for the Proposals

sult.

Closed Against Soviet

The door has

my

best calculated to

are

our

the United Nations

fore, to recommend to the Con¬
gress

give

We shall continue

articles

gold act remain the same,
including the purchase of all gold

aims.

than

year

of the

,

There are -times in world, ^!^eaim^^^«.United/:States remain
history when it is far wiser to act' determined to seek, by every pos¬

citizens may own gold. Within a
a free market would deter¬

citizens owning gold.

It will

require an adequate.
military strength.
We must be prepared to pay the
we
take additional measures to
supplement
the
work ; Qf'Mhe- price of peace, or assuredly we
United Nations and to support its shall pay the price of war.

yet become a reality.
It is necessary, therefore,

our

from export
markets, should keep
the producers of capital gopds
active for some time ahead.
This

.

can

v

the part' of the

avid and continu¬

an

sistance.

.

on

plus

ing demand for

European

,

defiance

The combination of these influ¬
ences,

con¬

trol of the government's use and

Restoration to the people of the
Nations continue to rep¬ then be terminated and the regu¬ able the world's traders to resume
right to hold gold returns to them
their business.
resent our hope for the eventual lar forces may then be maintained
; v
control over the public
purse.
It
establishment of the-rule of law on a voluntary basis., ;
!
helps to do another thing—it helps
Proposals 7 >"
in« international affairsj The char¬
The
to re-establish that the govern¬
recomme n pat ions
I have
therefore, propose the estabter constitutes the basic expres¬
made represent the most urgent
ment is the servant of the people
listntentpf a free market for new¬
sion of the code of international
steps toward securing the peace
—rather than the reverse.
ly mined
gold- in the United
ethics to which this country is and
preventing war.
.You will note that I have not
States at once.
'
dedicated.
We* .cannot,* however,
if: We must be ready to take every
recommended
the
issuance
of
I further propose the remoVa1
close our eyes to the harsh ^fact
wi:e and necessary step to carry
of the restrictions upon American gold coin, but only that American
that
through
obstruction
and
nation, this great dream has not

"■

Outlook for Heavy Industries

translated

United

even

ulation has increased about 20%

/since 1930.

pro¬

abuse of the public purse."

43

the latter because of
for changing plants
to make diesel power rather than
steam.
In the steel industry, too,
while total capacity was operated
at 93% last year, electric furnaces
operated only at 74%, and pro¬
duction of
tool steels averaged
parts,

the necessity

only about 40%.
In

concluding, therefore, I want
mak¬

to stress the need for care in

ing security selections among, the
heavy industry companies. Also,
I would like to underline the fact

that because of the volatile char¬
of

acter

heavy

industry

product

demand, and the even more vola¬
tile pattern of earnings and div¬
idends,
the securities of these
companies, for the most part, have
a distinctly speculative flavor. Yet
it is equally true that, taking both

fields, as entities, the stocks of
capital goods producers in the

the

past have not shown materially
greater price changes over the
course of an entire cycle than the
stocks

of

consumers

goods

pro¬

ducers.

military

nave

civilian

components
of
our
unity among our people been so
armed forces, can be built
up to
vital as it is at the present time.
,

[he be
strength required if

to

prepared

Uur

ability

to

for

numbers of trained
of

we are
emergencies.

mobilize
men

large

in time

emergency could forestall fur

[are conflict
other

and, together with
policy,

measures of national

could

•

restore

world.

stability

to

the

.

The
adoption
of
universal
taming by the United States at
this

time would be unmistakable

evidence to all the world bT ^uf

Unity of purpose,

unity of ef¬

spirit are essen¬
accomplish the task before

fort and unity of
tial to
us.

•

■

/

■

Each of

us

'

.

■■

-

here in this chamber

responsibility.
critical,
and
the responsibilities of this
country are too vast, to permit
party struggles to weaken our in¬

The

And Their Securities
(Continued from page 10)
earnings records and, to a lesser
extent, increased dividends.
At the present time, when there
in
1938, heavy industry profits
quickly fell off sharply or were are increasing signs that at least
converted into deficits.
In most some of the non-durable goods in¬
companies,
dividends
promptly dustries have satisfied thd initial

large percentage. Again, with
the downturn in general business
a

were

fluence
<

-The

for

maintaining

peace.

American-people have the

cut or omitted.

The outbreak of war in Europe

today has a special

The world situation is too

Heavy Industries

1939, this country's preparation
and our involvement in
1941
produced" feverish activity

in

for war,

the heavy industry com¬
panies. However, after 1940 and
1941 these companies faded grad¬

among

ually under the impact of excess
political conprofits taxation, renegotiation and
sidejatipnjB will not affecte**^ the combination of price controls
strength for peace.
working together. They have the
afaiT1~ convinced that the decision right to assume th^t .we^ill join and steadily rising costs. The ini¬
1 the
American people, expressed
tial postwar year 1946 was marked
hands, wholeheartedly and with¬
rough
CongresS; to adopt
by a series of major handicaps in¬
out reservation, in our efforts to
niversal
training would be of
cluding the problems of reconver¬
rst
;
importance in giving courage preserve peace in the world.
sion, strikes in most industries,
0
With God's help we shall suc¬
every free government in the
rising costs and the continuation
World.
ceed.
*
of price controls on most products
untiLi-the closing weeks of the
Third, I recommend the tempoF: I- du Porit Go. Adds
year.
Ia vJ 947, however, heavy
[y. re-enactment of '■ selective
industry' enjoyed
its first full
(Special to The Financial CrtROtiifiiic)! •!/ «,
mlwe.- legislation in order to
a?n 0U1* armed forces at their
CHICAGO,
ILL. — Everett
F. postwar .year of uninterrupted
authorized strength.
production, and a definite im¬
Morgan, formerly with John J.
Our
provement in the price-cost re¬
armed
forces
lack
the O'Brien & Co., has become con¬
lationship.'
The result was a
a.,fuSsaiy men to maintain their nected with Francis I. du Pont & JwhOle series of new sales and
a uthorized
strength. They have Co.; 200 South La Salle Street.

determination

to back the will to

Peace witir the

right to assume that

of

most

the




1930's

and

the suc¬

of
productive machine

ceeding war period many parts
the

nation's

were

literally starved for replace¬

27, N. Y.—paper.
Trouble

Harold

M.

Spots
Groves

in

Taxation-

—

Princeton

deferred University Press for the Univer¬
maintenance piled up. Much old
sity of Cincinnati—Princeton Uni¬
or
obsolete
equipment,
capital
subjected to abnormal usage dur¬ versity Press, Princeton, N. J
ing the war, is having to be re¬ cloth—$2.00.
placed. It is the fact that, con¬
Whaling and Whale Oil During
sidered over-ail there was com¬
ment.

Huge amounts of

.

aMfu

Debits and Clearings Statistics:

Their Background and Interpreta¬
demand, demand tion—George Garvy —Board of
for the products of heavy indus¬ Governors of the Federal Reserve
try, generally speaking, is un¬ System, Washington, D. C.—paper.
abated. Despite their record pro¬
duction attainments" of the past 18
Inter-American Economic Re¬
months, these companies appar¬
lations, Problems and Prospects—
ently have not yet been able to
Richard F. Behrendt—Committee
satisfy more than a part of the on International Economic Policy,
accumulated demand. We should
405 West 117th Street, New York
not overlook the fact that during

flush of postwar

paratively
the

the
machine from

little addition to

nation's productive

early 1930's to the outbreak

of-the war,

yet the nation's pop-

War

II—Karl

Brandt—Food Research

Institute,

and

After

Stanford

World

University,

California—paper 50c.

Stanford,

9

44

Enterprises, Los Angeles, Calif.
Feb> 20 (letter of notification) 2,500 shares of capital '
stock ($1 par). No underwriter. For business operation.
All American

,

Industries, Inc., New York

Inc.,

New York

now

Proceeds—For

•

corporate

purposes.

spend about $5,325,000 for

has plans to

television facilities in New York, Los Angeles, Chicago
San Francisco and Detroit. Shares will be sold to "the

with which the

persons

cancelling $15,000 open account for;
machine tools. Price—$2 per share. Underwriters—R. A.
Keppler & Co., Inc. and Henry P. Rosenfeld & Co., New
York. To provide operating funds, etc. ;

agreements at Jan. 31, 1948, and to such other persons
as may be selected from time to time by the company."
•

American

Machinery Corp., Orlando, Fla.
(letter of notification) $295,000 10-year first
mortgage convertible 6% bonds, due 1958, and an unde¬
termined number of common shares (20c. par), to be
March

held

for

for

conversion

&

Co.,

York.

To

income

pay

stock

Angus Mines,
par).

600,000 shares of common capital stock ($1
Underwriter—James A. Robb, 70 Pine St., New

York.

Proceeds—To develop gold

shares ($10 par) non cumulative 6% ;
($10 par) non-voting common
Underwriters—To be sold through com¬

officers and employees to stockholders, employees
without underwriting.
Price—At par.
Proceeds—To retire indebtedness and for working capital.
Maine

Chemicals, Inc., Boulder, Colo.
(letter of notification) 146 shares of 6% con¬
vertible preferred stock and 438 shares (no par) common
stock, to be reserved for the exchange. Preferred to be

ferred and

sold at $100 each.

basis

•

Arapahoe

March

11

For operating capital.

ing.

■

•

.•

•

No underwrit¬
:>
■

each

Armstrong Furnace Co., Columbus, Ohio
24 (letter of notification) 2,500 shares of series B
5% cumulative preferred stock ($100 par).
No under¬
writer.
To increase working capital;

Ltd.,

Co.,

Santa Monica,

2

filed

convertible

par)

stock.

common

Buffalo.

Offering

bonds

will

be

publicly

of

and

bonds

the

offered

166,950
—

are

bonds.

by

shares

Auto

underwriter.
I

•

•

bonds

Proceeds
^ C

—

Corp., Charlotte, N. C.
(letter of notification) 6,000 shares of 5%%
cumulative preferred stock.
Price—$50 each.
Under¬
writers—Interstate Securities Corp., Charlotte, N._ C.;
Citizens Trust Co., Greenwood, S. C. and others.
For
working

•

capital and general corporate

V

Birtcher

-

Corp.,

Los

Angeles,

pur¬
.

'

par

value

common

expansion purposes.

stock

up

to Dec. 30,

1952.

For

No underwriting.

Black Hills Power &

Light Co., Rapid City, S. D.
notification) 19,900 shares common
($1 par).
Underwriter—Dillon, Read & Co. Inc. offered
for
subscription by common stockholders of record
March 11 at $15 per share. Rights expire 3 p.m.
(CST)

March

March
•

3

(letter of

22.

For

construction

and

to

reduce

bank

loans.

Broadway Department Store, Inc., Los Angeles

March

11

filed

80,000

shares of

cumulative

preferred
stock ($25 par).
Underwriter—Blyth & Co., Inc.
Inter¬
est rate and offering terms by amendment.
Proceeds—
To redeem $3,000,000 short-term bank loans
payable to
Security-First National Bank, Los Angeles. ,




County,

Yuma

.'v,

25

&

Sexton

Chicago,

Co.,

III.

(letter of notification)

1,500 shares of common
Underwriter—Swift, Henke & Co., Chicago.

($5 par).
Proceeds to

selling stockholders.

..

;■

(letter of

Dallas

(Texas)

Power &

Light Co.

(4/20)

Feb. 26 filed 68,250 shares of common (no par)

$4,000,000

1973. Underwrit¬
ing—Debentures to be offered competitively. Probable
bidders: Halsey, Stuart & Co. Inc.; The First Boston
Corp.; Blyth & Co., Inc.; Equitable Securities Corp.;
Harriman, Ripley & Co.; Glore, Forgan & Co., and W. C.
Langley & Co. (jointly). Offering—Debentures will be
offered publicly.
Stock will be offered present stock¬

Century Steel Corp., Hollydale, Calif.
10 filed 4,000 shares ($100 par) common. Under¬
Shares will be sold at par by directors.
Proceeds—To purchase rolling mill, equipment and for
working capital.

Co., Salt Lake City, Utah
shares ($1 par) common stock, of
which 400,000 are being sold for the company and 200,000 for the account of Claude Neon, Inc. Underwriting
—None.
Price—$2 a share. Proceeds—For equipment
purchase and general funds.

Challenger Airlines

March 1
:

•

filed 600,000

Channel

Wisconsin

Wing Aircraft Co.,

holders

tion program.

*

Rapids,

any

of its

•

Dynafiow

capital

•

of record

Inc.,

share for

Norfolk,

Va.

Underwriter—Hemphill, Noyes & Co., New York.

Offering—New

common

stockholders at rate of

stock

one

new

to

15

Solder Corp.,

be

offered

share for each

present

12^

now

11

Mining Co.j

capital stock.
•

For

Bidders—Morgan

Stanley

Corp.; Halsey, Stuart &

finance

a

construction

chase of the

debentures

program.

will

be

office, 61 Broadway, New York,

Co.

& Co.; The First
Inc.'Proceeds—To

Bids—Bids
received
up

to

at

11

for

pur¬

company's

a.m.

(EST)

March 23.
•

Comstock

Extension

Mining Co.,

Inc., Phoenix,

Arizona
Feb.

26 (letter of notification) 100,000 shares of
stock
($1 par). No underwriter. For mining development.

Consolidated
Maich

1

filed

Edison Co. of N. Y., Inc.
(3/25)
$57,382,600 of 3% convertible debentures

due 1963.

Convertible at the rate of

share

each

for

$25

of

debentures.

one

common

stock

Offering—Common

stockholders of record March 25 will be

given right to

Nev.

and

working

($1 par)
capital. No

Chicago, III.
par) preferred stock.
Offering—To be sold to employees and officers °f tbj*
company and its parent, Curtiss Candy Co.
Price—
per share. Proceeds—To be used for trucks in connec¬
26

tion

filed

with

the

Federal

Corp.,

15,000 shares

Curtiss'

Electric

($100

franchise method of

Products

Cole

loans

be

made

Industries, Inc.

distribution.

Co., Newark,

N. J-

par) common stock. Un¬
filed by amendment.
Proceeds—10
by the company- and a subsidiary*

Feb. 27 filed 150,000 shares ($1
repay

Columbia Gas & Electric Corp. (3/23)
Feb. 20 filed $45,000,000 of debentures, due 1973. Under¬
writers—To be determined under
competitive bidding.

machinery

Equipment Finance

derwriting—To

Price—By amendment. Proceeds—To buy machin¬
trade fixtures and equipment for new stores. Busi¬
ness—Grocery stores.

Searchlight,

underwriting.

ery,

Boston

Place? L. L
shares of capital
Underwriting—None. For
750

(letter of notification) 25,000 shares

held.

Probable

Price—

Larle

(letter of notification)

Elmona

March

Feb.

Stores,

v

.

working capital, etc.
of

■

Colonial

Expected about April 20.

stock/ Price—$25 per share.

March 16 filed 40,000 shares of 5% cumulative preferred
stock ($50 par), and 49,431 shares of common stock ($2 50

par).

•

March

com¬

March 23.
Unsubscribed portion will be taken up by Chilson New-,
berry Co., Inc., Kingston, N. Y.
General corporate purposes.

for each four held.
Proceeds—Construc¬

.

;

City Title Insurance Co., New York
Feb. 25 (letter of notification) 5,000 shares
stock. Price—$9. To be offered stockholders
Jan. 20 for subscription in ratio of one new
each six shares held.
Rights expire 3 p.m.

share

ployees, executives and management personnel.
$3.49 a share.
Proceeds—For working capital.

(letter of notification) 30,000 shares ($10 par).
To develop, obtain Civil Aeronautics
Authority approval, obtain military contracts and sub¬
or

new

Domestic Credit Corp., Chicago
Dec.'29 filed 150,000 shares ($1 par) Class A Common.
Underwriters—None.
Offering—To be offered to em¬

underwriter.

lease to other manufacturers aircraft

one

...

March 1
No

basis of

on

Price—Common stock. $60 a share.

Wisconsin

ponent parts covered by patents.

Calif.

March 9 (letter of notification) 2,500 shares of preferred
stock.
Price—$100 each.
Convertible into 35 shares of
no

Mines,

writing—None.

($1

Finance

poses.

Consolidated

Nov.

&
Co.,
offered to

March 10

additional

capital..

notification) 100,000 shares.
Under¬
writer—J. Bailery Gladden, Yuma, Ariz.
For the con¬
tinuance of the company's mining operations.

Doolittle

being

Unsubscribed

General corporate purposes.
•

Proceeds
Expected late

Cribben

Centroid

Feb.

stockholders at the rate of $1,500 of bonds for each 1,000
common stock held., The stock will be reserved

conversion

Underwriter—Kiddpr, Peabody & Co.
property additions and expenses.

Arizona

shares of

against

($1 par) common stock. Underwriter—P. W. Brooks &
Co., Inc., New York. Proceeds—To retire secured in¬
debtedness, finance inventories and supplement working

and repayment

25-year sinking fund debentures, due

Underwriter

The

—

Crampton Manufacturing Co. '.(4/1)
5 filed $600,000 first mortgage 5J/2% sinking fund

March 5

Co., Boston, Mass.
general mortgage and col¬

$556,500 4Ya%

trust

Feb.

Pro¬

bonds, due 1966, with warrants to purchase 60,000 shares

•

Fisheries

lateral

Price by amendment.

cumulative preferred

To expand facilities. Business—Local telephone service
in Southern California communities. * / ' *.•
~

Feb.

common

new

of bank loans.

—For

($20 par), 1947 scries. Underwriter—Paine, Web¬
ber, Jackson & Curtis, New York, and Mitchum, TuUy
Co., San Francisco. Price—$21 per share. Proceeds—

Coast

public. Common may be bought only by patrons and
Price—At face amount. Proceeds—For acqui¬
sition of additional office and plant facilities.

the

Light Co.
Nov. 21 filed 40,000 shares ($100 par) cumulative pre¬

&

Atlantic

of

common

members.

each pre¬
for

for

common

share

non-cumulative

4%

$1,000,000

filed

16

($25 par); $4,000,000 of 3V2% certificates of in¬
debtedness cumulative; and $1,000,000 of D/2% loan
certificates cumulative. No underwriting. Offering—To

this month.

March 15 filed 75.000 shares of 5%

No underwriting.

stock

Central Power &

stock

.

new

share held.

common

ferred.

Associated Telephone
California

of

one-tenth

and

Oct.

stockholders for subscription on the

ceeds—For construction

Feb.

•

share

ferred

•

common

one-half share

of

Calif.

Missouri

Under¬
writing—To be determined by competitive bidding. On
Dec. 3 only one bid, that of Blyth & Co., Inc. and
Kidder, Peabody & Co. was submitted and was rejected
by the company.
They bid $13.75, less $1.75 under¬
writing commission. Offering—To be offered to 6% pre¬

prospects.

Lynwood,

Cooperative Assoc., Kansas City, 1;

Consumers

Co.

Power

Corp.,

(letter of notification)—5,000 shares ($20 par)

plants and working capital.

two

160,000 shares ($10 par) common.

Nov. 10 filed

,

Products

Construction

preferred stock; 20,000 shares of Class A common stock
($1 par) and 20,000 shares of common stock, to be issued
to present stockholders as promotional stock.
PricePreferred par, class A common $10.
To be used for

70,643 shares

Central

12 filed

-

March 11

customers

and

Montreal, Canada

Ltd.,

and

Class B stock.

working capital.

Feb.

Md.

Hagerstown,

Corp.,

•

pany

and

taxes

Chemical

operating companies.

five natural gas

Dec. 29 filed 254,682

Underwriter—Gordon

bonds.

on

New

return for

Central

11

Graves

Proceeds—To be added to general funds for
purchase of additional capital, stock in the company's
operating subsidiaries.
Business—Holding company for
ley & Co.

invest¬

American- Die & Tool Co. for

will be issued to

ment in

had network affiliation

company

24

.

13, filed 250,000 shares common ($1 par) at pro¬
posed maximum offering price of $12.50 per share. Un¬
derwriters—None.

Co.; Halsey,'Stuart & Co. Inc.; The First
Proceeds—To redeem on May 1 at $105 a
share a total of 273,566 shares, of outstanding $5 cumula¬
tive preferred stock and to reimburse treasury for ex¬
pansion expenditures. ;
•
/
;
\ ■ '
&

Stanley

Boston Corp.

(letter of notification) 1,250 shares ($1 par)
.
common
stock.
Price — $8,75> each.
To - be . sold by ^
•
Consolidated Natural Gas Co., New York
Charles H. Brown and S. W. Brown, Jr.
Underwriter—
Mid-South Securities Co., Nashville, Tenn.
March 15 filed $30,000,000 of debentures, due 1968. Int
rate and price by amendment. Underwriters—To be de¬
Cameron Aero Engine Corp.
termined through competitive bidding. Probable bidders
Dec. 29 (letter of notification) 101,000 shares of common
include; White, Weld & Co. and Paine, Webber, Jackson
stock (par $1), of which 85,000 shares will be sold to
& Curtis (jointly); Dillion, Read & Co; Inc.; The First
the public; 8,500 shares will be* issued to underwriters ..
Boston Corp.; Halsey, Stuart & Co. Inc; Morgan Stan¬
as additional underwriting consideration and 7,500 shares
Feb.

Feb.

Company

debentures for

Rights will expire 3 p.m. (EST) April
15. Underwriting—Unsubscribed-debentures will be of¬
fered at competitive bidding. Probable bidders; Morgan
each share held.

Nashville,*.Tenn.

Productions, Inc.,

Brown Radio

writer—Herrick, Waddell & Co., New York.
Price by
amendment. Proceeds—To pay off indebtedness incurred
in the acquisition of the capital stock of A. D. Cook, Inc.,
Lawrenceburg, Ind. Indefinite.

Broadcasting'Co.,

subscribe for debentures in ratio of $5 of

5% cumulative preferred
stock (par $50) and 7,150 shares of common stock (par
$50)
Underwriting—None. Offering—Both issues will
be offered at $50 per share to, residents of Brockway.
Proceeds—Construction and purchase of new equipment.
5,000 shares of

filed

26

Feb.

Oct. 30 filed 100,000 shares ($1 par) common (name to
be changed to American Steel & Pump Corp.) Under¬

American

ISSUE

Glass Co., Inc.

(Pa.)

Brockway

Adanac

SINCE PREVIOUS

INDICATES ADDITIONS

•

•

in

Now

Securities

Thursday, March 18, 1943

CHRONICLE

& FINANCIAL

THE COMMERCIAL

(1248)

Volume

Number 4682

167

THE COMMERCIAL- &

FINANCIAL

and finance current branch store

Illinois

18,

Central RR

«

share for each three
are

;

Heme
Feb.

(EST)

Jan,

Debentures

Pref. and Common

April 20,

—Debentures

1548

shares of 6%

_^Bonds

Feb.

Angeles, Calif.

cumulative first

pre¬
■

Price—$100 per share.
Pro¬
Business: "Super ;

ceeds—To retire 7% preferred stock.
Markets" in Los
Angeles,

Riverside, Colton and San Ber¬

nardino County.

Florida Power Corp. (3/30)
////:,///':•/;
March 2 filed 40,000 shares
($100 par) cumulative pre-?
ferred stock and
110,000 shares ($7.50 par) common

Underwriters—Kidder, Peabody & Co. and Mer¬

mon

&

Beane.

one

new

share for each 10 held.

Construction expenditures.
•

Offering—Com¬

stockholders may purchase the new common stock

at the rate of

Flotill Products,

Inc., Stockton, Calif.

Underwriter

holders will

—

Floyd D. Cerf Co., Chicago.
$6.
Proceeds — Stock¬

sell

260,000 preferred shares and 250,000
common shares and
company 125,000 preferred shares
and 75,000 common
shares; The company's proceeds will
be used

for general

corporate purposes. Business—To¬
products, variety of fruits and vegetables.

mato
•

1441 Harvard
Corp., Washington, D. C.
March 1 (letter of
notification) 1,275 shares of capital
stock ($100
par).
No underwriter.
To pay the owner

of the

building for the value of the property.

Fraser Products Co., Detroit, Mich.
100,000 shares ($1 par) common.
Under¬
writers
Campbell, McCarty & Co., and Keane & Co..
both Detroit.
Price—$5.25 per share.
Proceeds—The
shares are
being sold by 14 stockholders who will re¬
ceive
proceeds.
Registration statement effective Jan. 16.
•
Frozen Pood Distributors, Inc., New Haven,
Get. 21 filed
—

/.

.■

Connecticut.

' C
/" '• ■-//
March 2 (letter of
notification) 1,000 shares Class "A
preferred stock ($50
par) and 1,250 shares Class A com¬
mon stock
($10 par).
No underwriter.
For working
capital.
-

,/v;

•

®Leo,,8ia Hardwood

Lumber Co./ Augusta, Ga.
/torch 11 filed 69,500 shares $1 convertible cumulative
Preferred stock (no par) and 10,425 shares of common
stock ($i
par).
Underwriter—Reynolds & Co.
Price
/tj atoendment. Proceeds — To selling stockholders—
t^quitable Securities Corp., A. C. Allyn & Co., Inc., and
ivrv

cement A. Evans
Mo
n,

& Co., Inc.)

®16rson (Paul) Institute, Inc., Las Vegas, Nev.
^ J1 (letter of notification) 8,000 shares of 6%

muiative preferred stock

($5 par) and 2,000 common
aJlres ($5).' To be offered in units of four preferred
«na one
common share at $25 per unit. For building and
°motion. No.underwriting.
Mo

^''Uing's Inc.,

Rffc'k J (letter
!
($10 par).

.

-

-

Providence, P. I. •
of. notification) 10,000 shares: common
To provide additional working capital




31,

1948.

Expected

V;

;•

-

about
:• -

/

on behalf of company and 38,785
Nalley, Chairman); 20,000 shares
employees, executives and directors

for account to Marcus

will

be

offered

to

and

35,367 shares are to be issued in acquisition bf all
publicly held stock or partnership interests in certain
subsidiary and affiliated companies.
North

Canadian

Canada
March

11

/

-

Oils

Limited, Calgary, Albertay

v"

1

-

filed

903,572 shares (no par) common stock.
Price—70 cen.ts each,
Underwriter—F. H. Winter & Co.,
New York.
Proceeds—875,000 shares being sold by
company and 28,572 by stockholders. Proceeds for pur¬
chase of property and drilling.
/

Bronze

filed

...

•

North

Inca

Gold

Mines,

Ltd.

March 10 filed 666,667 shares of common stock
(par $1).
Underwriter—Transamerica Mining Co., Ltd., Toronto.
-Proceeds for exploration and development.
/■/■ j
•

Nulco

Fabricators, San Francisco, Calif.
(letter of notification) 7,500 shares of 6^%
cumulative preferred stock (par
$10); $75,000 6% notes
due 1957 and 7,500 shares of common stock
($10 par).
Underwriter—Hannaford & Talbot, San Francisco, will
act as selling agents on best effort basis.
Price, par for
all issues.
To pay off secured loans, with any balance to
be used for working capital. •/',

(3/22)

March

5

.

Ocean

Downs

Racing Association, Inc.,

Berlin, Md.
Nov. 28 filed 34,900 shares ($10 par) common.
No un¬
derwriting.
Price — $10 a share. Proceeds—To build

trotting and

pacing

race

track

near

Ocean

City, Md.

Ohio Power Co., Canton, Ohio (3/31)
1
March 2 filed $40,000,000 first mortgage bonds, due 1978.
Underwriting—To be determined by competitive bid¬

,.

,

Kingston Products Corp., Kokomo, Ind.
notification) 14,618 shares common ($1
par).
Underwriter—Alison/& Co.,, Detroit. Proceeds
to selling stockholders.

March 5 (letter of

ding.

Probable bidders, Dillon, Reed & Co. Inc.; The
Corp.; Halsey, Stuart & Co. Inc.; Glore,
Forgan & Co.; Harriman Ripley & Co., and Stone &
Webster Securities Corp. (jointly). Proceeds—To be ap¬
plied toward the retirement of 6% gold debenture bonds,
First

,

La Vida Trout
19

common

common

$41,000,000 'March

publicly offered (25,000

11 filed

Feb.

325,000 shares of common stock

(par $1).

about

Nalley's Inc., Tacoma, Wash.
Jan. 15 filed 119,152 shares of common stock
(par $1.25).
Underwriters—Walston; Hoffman & Goodwin and Hart¬
ley, Rogers & Co. Offering—63,785 shares are to be

$5,000,000 first mortgage bonds due 1978.
Underwriters—To be determined through competitive
bidcYng. Probable bidders: Halsey, Stuart & Co. Inc.;
The First Boston Corp. and Blyth & Co., Inc. (jointly)7
Merrill
Lynch,, Pierce, - Fenner
&
Beane;
Lehman
Brothers, Bear, Stearns & Co. and Stern Bros. & Co.
(jointly); Shield & Co. and E. H. Rollins & Sons (joint¬
ly); Harriman Ripley & Co.; White, Weld & Co. and
Kidder, Peabody & Co. Proceeds—For construction and
other corporate purposes.
Bids—Bids for purchase of
the bonds will be received by the company at Room
2033, No. 2 Rector St., New York, up to noon (EST)
March 22.././/,/
■ /./■.s':-:
/?l./
</!;
/?;//////
■ v;

Proceeds—

//:•'';;//-

March 6 filed 385,000 shares of 60 cent convertible
pre¬
ferred stock (par $5) and

Price—preferred $10;

10

Kansas Gas & Electric Co.

($100 par). Underwriting—Officers, direc¬
tors and employees of the company will offer the stock

Fenner

■

Dec.

1

(Calif.)__

Fitzsimmons Stores, Ltd., Los

Lynch, Pierce,

to

April 5.

preferred. Price—$95 a share. Undewriter—Kenneth Van
Sickle, Inc., Emporia. For additional working capital. ^

ferred stock

rill

stock.

Kansas Soya Products Co.,
Inc., Emporia, Kans.
3 (letter of notification) 3,157 shares ($95 par)

:£\ k

-Bonds and Stock

Southern California Gas Co.

stock.

common

Co., New Castle, Pa.
150,000 shares ccmmon stock (par 500).
Higginson Corp.
Proceeds — Stock
being sold for account J. P. Flaherty, a stockholder.

Bonds

1948

Light Co

associates.

par)

Underwriter—Lee

Virginia Electric & Power Co.—

to friends and

($1

Smith,

Johnson

Nov.

Southern Counties Gas Co. of Calif

10,000

1,500,000 shares

Inc., Wilkinsburg, Pa.;>
(letter of notification) 200,000 shares of common
stock (par$l). Price—$1 per share. Underwriter—Ster¬
ling Graham Co., Pittsburgh. Purchase of products, etc.

Bonds

"

par)./

for bonds to be determined,

fered stockholders of record March 24
at $100 per share
a one-for-three basis.
Rights

I-Odoral,

April 6, 1948

I

(4/5)

on

March 8

Bonds

Mountain States Tel. & Tel. Co

Telep. & Teleg. Co.

expire April 26. Amer¬
Telephone & Telegraph Co. owns 73.35% of out¬
standing stock.
Proceeds—To repay advances from
American Telephone &
Telegraph Co. expected to amount

Barney, & Co., New York.
Price
"and interest rates by amendment. Proceeds—To
permit
consummation of the company's reorganization
plan.5
Expected at early date.

Bonds

(4/5)

bonds, due, 1969.

ican

1948

Michigan Consolidated.Gas Co

Feb. 2 filed

-

Sherbrooke,

5 filed

derwriter—

April 5, 1948

May 4,

filed

•

through competitive bidding. Probable
bidders:'Halsey,
Stuart & Co. Inc.;
Morgan Stanley & Co.; Harris, Hall &
Co. (Inc.) and Drexel & Co.
(jointly). Stock will be of¬

Power Co., Dubuque,
la.
$20,000,000 first mortgage bonds, due 1978;
$5,000,000 sinking fund debentures, due 1968 (to be
placed privately), and 1,500,000 shares ($3.50 par) com¬
mon stock
(only such amount to raise $3,635,500). Un¬

'

1948

Crampton Manufacturing Co

Dallas Power &

Ltd.,

current

($100

*:*" Interstate

-—-Bonds

,

30

Feb.

30, 1948

April 1,

Co.,

Underwriter—Paul E. Frechette, Hartford,
Conn., is the
,tT. S. authorized agent and principal underwriter. Price
—$1 each.
Proceeds—To construct milling plant and
purchase equipment. ■V/./'/1"''/.<;;
/";•/

"

March 31,

Asbestos

States

Underwriting—Underwriters

Quebec

,

Co

Ohio Power

Mountain

balance to further company's construc¬

International

___i.____Bonds and Debentures
March

loans and

common

of

March 5 filed $25,000,000
30-year debentures, due April
1, 1978, and 191,881 shares of capital stock

tion program.

-Equip. Trust Ctfs.
Bonds and Debentures

Florida Power Corp.——

share.

Telephone & Telegraph Co. of Virginia,

11

bank

Concord,
of

determined by competitive bidding.
Probable bidders,
Halsey, Stuart & Co. Inc.; Lehman
Brothers; Dillon, Read & Co. Inc.; Glore,
Forgan & Co.;
White, Weld & Co.; Harris, Hall & Co.
(Inc.). Proceeds
—Construction program, Expected, about
April 5.
y '

share; 85V3 shares
per

Inc.,

(xlelt£r of n°tification) 8,000 shares
-pa/).- No underwriter. For payment

Underwriters—To be

($50 minimum stated

$110.61

Exchange,

45

•

Michigan Consolidated Gas Co.
Feb. 26 filed $7,000,000 first
mortgage

Y.

(letter of notification) 57,600 shares capital
($5 par).. Underwriters/none. Of the proceeds
$150,000 will be used to reduce outstanding short-term

Chicago Milwaukee St. Paul & Pacific

Noon

N.

stock

29, 1948

Noon (CST)-__—
Electric Service Co
Utah Power & Light Co.

York,

Farmers'

Hampshire

indebtedness and
working capital.

Emporia, Va.

23, 1948

Texas

New

held, at $100 per
net asset value at

being offered at

25, 1948

March

Corp.,

($?5

-"/:/■'
(par 50).

Underwriting—None. Offering—11,571% shares
being offered pro rata to stockholders on basis of one

are

Consolidated Edison Co. of N. Y. Inc

,

Graham-Newman

v

Columbia Gas & Electric Corp.
11 a.m. (EST)
Debentures
Denver & Rio Grande Western_.Equip. Trust Ctfs.
Public Service Co. of N. H
Common Stock
March

New
27

value).

22, 1948

Gas & Electric Co., noon (EST)____._Bonds
Louisville Gas & Electric Co.;; ■.
"V
10:30 a.m. (CST)—
—--Bonds
West Penn Power Co.
Noon (EST)
iBonds and Preferred
March

/

March 11 filed
11,657 shares stock

Common

—

Merrimack

Mining-Co., Ltd., Spokane,

Washington

Kansas

,

Sceptre

Feb. 26 filed 250,000 shares of common stock
No underwriters.
For machines and supplies.

1948

Wilson-Jones Co.'
March

Golden

1948

19,

(1249)

No under¬

.

•

-———Equip. Trust Ctfs. '

March

operations.

writers.

NEW ISSUE CALENDAR
March

CHRONICLE

Club, Inc., Puente, Calif.

(letter of notification) 1,480 shares ($100 par)
stock. Price—Par. Underwriter—Fewel & Co.,

Long Beach, Calif.

Boston

due 2024, prepayment of $9,500,000 of notes floated for
/construction purposes, and $31 million to be deposited
with the corporate trustee under the mortgage secur¬

:

For accounts payable.

Legend Gold Mines, Ltd., Toronto, Canada
($1 par) common treasury
Underwriting — To be supplied by amendment
Price—50 cents a share. Proceeds—To develop mininf
June 27 filed 300,000 shares

ing its first mortgage bonds.

Expected about March 31»

/■.

stock.

properties.
Feb.

12

//

.•

Louisville

filed

:":*/•

Oklahoma

;

Co.

•

reimburse treasury for expense of property

Bids—Bids for purchase

stock. Unexchanged
for $1 par stock of Great Lakes Chemical Corp. on the
basis of one share of McClanahan common for each two
shares of Great Lakes Common. Offer will expire March
15

1948.

Pasadena, Calif.
27,788 shares (50c par) common. Under¬
writers—None; Offering—Shares are to be issued upon
exercise of common stock purchase warrants issued in
July 1945. Price—Two shares per warrant at $6 a share.
Market

Dec.

Basket,

30 filed

working capital.
Markley Corp., Plainville, Conn.
March 8 (letter of notification) 37,790 shares of common
K1 oar)
and 12,000 warrants for holders to purchase
a like number of shares at $6 per share.
Underwriter—
Coburn & Middlebrook, Hartford, Conn. To finance work
Proceeds—For additional

debts.
'
"
'
•
Marshall (John)
Insurance Co., Chicago
March 9 (letter of notification) .9,000 shares ($7 par)
common stock.
To be sold at $12 each. For general
working funds. No underwriting.

and discharge

,

.

15 filed

Pacific
Jan.

Mich.

260,000 shares ($1 par) capital
derwriters—None. Offering—Shares will be

construction

program.

100,000 shares of capital stock

Business—Insurance.

bonds will be

Dec. 30 filed

stock,

Co., Greenville, N. C*
($5 par).
Price—$15 each.
Underwriter—First Securities Corp.,
Durham, N. C.
Proceeds—General business purposes.

Proceeds—To pay $2,450,000 of short-term bank

McClanahan Oil Co., Grand Rapids,

/

Old North State Insurance

March

received up to 10:30 a.m. (CST)
March 22 at Room 1100, 231 So. La Salle St., Chicago.
of the

Co.

($100 par). Underwriters—To be determined under eompetitive bidding. Probable bidders: The First Boston

toward

Brothers and Blyth
'& Co., Inc. (jointly); the First Boston Corp.; Harriman,
Ripley & Co.; Glore, Forgan & Co.; Kidder, Peabody
Halsey, Stuart & Co. Inc.; Lehman

&

Electric

Corp.; Harriman, Ripley & Co.; Lehman Brothers and
Blyth & Co., Inc. (jointly). Proceeds—To be applied

bonds, due March 1, 1978. Underwriters—To be deter¬
mined through competitive bidding.
Probable bidders:

loans and to

&

Feb. 20 filed 65,000 shares of cumulative preferred

;•

(Ky.) Gas & Electric Co.. (3/22) '
$8,000,000 first and ; refunding mortgage

extensions and improvements.

Gas

and

Gas

filed

29

686,953

Underwriting—none.

Electric, San Francisco
shares ($25 par) common stock.
Offering—To be offered at par to

/holders of outstanding common stock of record Feb. 27
at the rate of

one

Proceeds—To finance

April 9.
•

Rights expire
construction program.

share for each 10 held.

"

a

Pacific

March

par)

Press, Inc., Los Angeles,
(letter of notification) 33,333

12

common

stock.

working capital
underwriting.
•

Pan

Feb: 27
stock

and

Price—$9 each.
general corporate

Calif.
shares of ($1
For additional

No

purposes.

,j

■

American

ij

Sulphur Co., Dallas, Texas
100,000 shares common

(letter of notification)

<100'par).

No underwriter.

For further advances

subsidiary corporation for prospect drilling and gen^
exploratory expenses of sulphur concessions m
Mexico, and for general corporate purposes.
to

eral

Pittsburgh Steel Co.
$6,500,000 of first mortgage bonds, due

Nov. 20 filed

1967»

& Co*
& Co. Price by amendment
Proceeds
To refund outstanding first mortgage bond*
Temporarily deferred.
' i
Underwriters—Kuhn, Loeb & Co.; A. G. Becker

Inc. and Hemphill, Noyes
—

"

viv

>

(Continued

on page

46)

-

;

♦.

/

J

j

Price—

shares common (lc par).

$1 per share. Not more than 100,000 shares will be of¬
employees and officers at 87^ cents per share.
Underwriter—Tellier & Co., New York. 'Proceeds—For

capital equipment and working funds.

around May 4.

199,627 shares ($10 par) common stock.
Underwriters—Kidder, Peabody & Co., and Blyth & Co.,
Feb.

filed

6

Inc., New York. Offering—To be offered present holders
at rate of one share for each 3 lh shares held. New Eng¬
land Public Service Co. will waive its rights to subscribe
to

Proceedsretire short-term loans. Ex¬

Price—By amendment.

shares.

141,101

Construction program and

pected, late this month.

Pyramid Life Insurance Co., Charlotte, N. C.

$2 per share.

($1 par), to be offered to stockholders at
No underwriter. For capital surplus.

Can.

Raleigh Red Lake Mines, Ltd., Toronto,

stock. Underwrite!
—Mark Daniels & Co., Toronto, Canada.«'Price—25 cents
a share in Canadian funds.
Proceeds—For exploration
and development of mining property.
Jan. 7 filed 460,000 shares of common

Reiter-Foster Oil Corp., New

York

180,000 shares (50c par)

(letter of notification)

Jan. 16

stock.
Price—80 cents.
Underwriter—Frank
W. Bennett & Co. For working capital.
common

,

%

Airlines Corp., Ithaca,

Robinson

N.*Y.

^

notification) 85,384 shares of common
stock (par $1). Of the total 75,384 shares will be offered
for subscription by stockholders on a share for share
basis at $3 per share. The additional 10,000 shares plus
any unsubscribed for by stockholders will be offered the
public at $4 per share. Underwriting—Company may
engage an underwriter to make the.general public offer¬
ing. Proceeds will be used for working capital, etc.
March 9 (letter of

•

Rumford

•

March

Printing

(letter

1

Concord, N.

Co.,

notification)

of

H.

shares common

3,000

No underwriters.
To refund mort¬
gage notes, for plant replacements and improvements
and for working capital.
stock

Inc., Middletown, Conn.

Safety Heat Elements

(letter of notification) 30,000 shares of common

stock

Price—$3.25 per share. Underwriter—
Boston. Proceeds to selling stock¬

(par 10£).

H. P. Carver Corp.,

holder.

Md.

Corp., Taneytown,

11,250 shares of common
Price—$20 per share. Underwriter—
& Co., Boston.
For equipment and working

Feb. 26
stock

(letter of notification)

Jackson

capital.

.</,'/\

'/""•• /■

Discount Corp. (4/1)
(letter of notification) $100,000 20-year subordi¬
debentures.
Price—$100,
Underwriting—None.

Schenectady
nated

Counties Gas Co.

General

(N. Y.)

corporate

American

Selected

;C

purposes.

Shares,

•

West

Southern

Oil

Nevada

shares of

/ March 1 filed 300,000

common

slock (par $2.50).

Proceeds for investment.

Southwestern

stock.

Underwriter-^Buckley Bros.

Proceeds to selling

stockholders.

vV","
Truck Corp., Albion, Mich.
80,000 shares of common stock (par $1).

Service Caster
Jan.

filed

30

&

Underwriters—Names to be filed by amendment.

Price

—$7.
Proceeds—Proceeds together with funds from
private sale of $600,000 of 4%% debentures and $250,000
of 6% subordinated debentures, will be used to pay
off indebtedness.

Shareholders'

March

16 filed

Trust

of

Boston

Ripley & Co., Inc.
proceeds to the trust will be $20 per share. Business—
A newly-formed diversified open-end investment com¬
pany.

Bell

Silver

Mines

Co., Denver

Feb. 26 filed 125,000 shares ($1 par) capital stock.

—-$2.50 each.
holders

on

Proceeds

a

—

Price

Offering—To be made to present stock¬
rata basis during first 10 days of sale.
Exploration work, working capital and in¬
pro

debtedness.

I

Electric

&

Gas

Dec. 2 filed 80;858 shares ($50 par) cumulative convert¬
ible

preferred and 404,293 shares ($4.50 par) common
687,293 shares reserved for conversion oi
preferred. Underwriter—Kidder, Peabody & Co., New
for sale, and

,

York. Offering—Shares initially will be offered for sub¬

scription by company's
ferred

basis.

on a

stockholders, the

common

1-for-10 basis and the

Unsubscribed

shares

will

common

be

on

offered

a

pre¬

publicly.

Price by amendment. Proceeds—Proceeds together with
other funds will be used to purchase all of the outstand¬

ing

common

of

South

Carolina

Power

Co.

from

the

Commonwealth & Southern Corp.
•

Southern

California

Gas

Co.,

Los

Angeles

(5/4)
March

16

due 1978.

filed

$15,000,000




undS

determined

phr

with details to be filed

by amendment. Proceeds—T0 bp
applied toward the payment of $4,000,000 of bank loa

| and toward construction

Tex.

Bids—Bids

expenses.

purchase of the bonds and preferred stock

(

!

for the

will be

re

ceived

by the company at Room-901, 50 Broad Strpot
New York, up to noon (EST) March 22..
1
.

••

Wilson-Jones Co.

1

cumu¬

,

I'Feb. 25 filed 32,937 shares of

j

>

—

•

.

(3/19)

.

t

.•

stock

common

(par $10)
offered for sub¬

preferred stock, ($10 ;par). Price—
j Underwriters—None. Offering—To be
Underwriters—White, Noble & Co., Detroit,
scription by stockholders of record March 19 in ratio oi
Hall & Co., Cincinnati. .To operate phar¬
j one new share for each eight shares held. Rights will exmaceutical division and for general corporate purposes.
J pire on or before April 30. Price—$12 per share. ProClair

and

Steak

S.

ceeds^—Plantand purchase of securities and

'n

Shake,- Inc.,-BlodwHiigton,1:
i sets
50eriremtilative conwe&$ble
>
participating .preferred stock, ($1 par) and ?J60,000
shares;(50c par) common stock, of which>40,0D0 will.be
sold and the remainder reserved for conversion. Under¬
Feb. 2 filed 40,000 shares of

*

-

,

&

I
I

.

Terminal

Refrigerating &
Washington, D. C.

Warehousing

Corp.,

•

\

.i

' j

T.

Prospective Offerings, j

Co., St. Louis, Mo., Price—$8 for the

preferred stock and $2.50 for,the common. This stock
is being offered 1 by stockholders'who are members of
the Belt family..
/■:

as-

/

.

-

'

-

.

i

writer—White

Chicago,
-

The

MilWJiuk€«, St.

Paul

&

Pacific

RR.'

(3/29):7^t-^-^^ --

;

? ceived before

{

has issued- iri'(rita%i6ns for bids to be ri-

company

(CST) March 29 for $2,640,000

noon

equi^-

j ment trust eertificates. Certificates will be dated April
Feb. 17 fried $700,000 4% 10-year first mortgage bonds \ 1, 1948, and -mature in 20 semi-annual instalments froin
due 1958/ Underwriter—Alex. Brown & Sons, Baltimore Oct. 1, 1948 to April 1, 1958.v/Probable bidders include:
Price—Par. Proceeds—To retire $635,000 of 4V2% first
Halsey, Stuart & Co.. In^;; Salomon Bros. & Hutzler.1
mortgage bonds due April 1, 1948.
Texas 'Electric

Service

Co.

"•::

■

/:

■

'

(3/29)

-•

;

—' —! :bii'

.

j
Denver & Rio Grande Western RR.' (3/23)
j The company has issued invitations for bids to be

Feb. 20 filed $5,000,000 first

f
re-

mortgage bonds, due 1978,
ceived March 23 for $4,530,000 in equipment trust certifand $5,000,000 of sinking fund debentures, due
1973.
Underwriters—To be determined by competitive bidding. > 4 icates, dated May 1, 1948, and maturing semi-annually
Probable bidders, Halsey. Stuart & Co.
Inc.; The First Vover a period of 15 years.-Probable;^bidders: Halsey,
Boston Corp.; Harriman, Ripley &
Co.; Blyth & Co., Inc.,v
^Stii&rt & Co. Inc.; Salomon Bros. & Hutzler; Harris, Hall
Kidder, Peabody & Co., and Smith, Barney & Co.
& Co. (Inc.); Harriman Ripley & Co. and Lehman Broth(jointly); Glore, Forgan, & >Co., and W. C. Langley &
.<

(jointly); White, Weld & Co.; Hemphill, Noyes &
Co., and Drexel & Co. (jointly). Proceeds—Finance con¬
struction program.
Expected about March 29.

.

;

(jointly); Kuhn, Loeb & Co. and Blyth & Co., Inc.

ers

(jointly).
•

Texas .'Power & Light Co.,
8 filed $7,000,000 sinking

Dallas, Tex.

March

Underwriting—To

be

fund

determined

debentures,

through

competitive

Feb.

27

(letter of

said

Co., Inc., Smith, Barney
Co. (jointly); Hemphill,

•

to bonds and stock

•

bonds and

40,000

shares

(no

For oil

stock.

be

sold

.It

position with respect
such that new money

said to be

was

:

later

this

and

yearn,

probable that bonds

sale
boads

that the stock

Probable bidders for

delayed until 1949.

if issued:

par)

drilling

developments.

The First Boston Corp.;

Halsey, Stuart &

Co.

Inc.; Dillon, Read & Co.; Coffin & Burr, Inc. and Spencer
Trask & Co.

;

equipment.

Illinois

on

(jointly).

&

Bros.

(3/29)

New York.

&

\

..

Valencia Fuel Co., Inc.,
Albuquerque, New Mex.
March 2 (letter of notification)
22.500 shares common

/No underwriter.

New

For oil

purposes.

plans

Jersey

:

drilling operations and
~

,,

tlin
100.99
flo

5

and

and interest.

ref.

etc.

Issim of

bonds, series F, due

Wkite, Weld ,& Co and

1978,

associates

Telephone

Salompn

Co.

$55,000,000 issue

a

will

issue

be

of

200,000

taken

at

New

$100

a

;

Board of
The

Jersey.

11

share by the

bidder,

/

,

announced

apply *°

its plan to

$9^"

and

oHel

Proceeds of the

them at competitive sale in
July.
will

be

used to

reimburse

the

th(

issue

issu'

Commission for authority to

,'000,000 of refunding mortgage 33-year bonds

treasury

capital ex

for

penditures already made, to retire bank loans inciirrec
in plant expansion and to finance future construction
Probable bidders:
'&
•

Co.

Inc.

Morgan Stanley & Co.; Halsey,
-V

Pennsylvania RR.

Bids
*

stock,

Americ^r

Probable

Halsey, Stuart & Co. Inc./ /

company

New York P. S.

„

compauy

New York Telephone Co. :

"•

March

'

of de¬
Public

shares of

additional

Telephone & Telegraph Co.. (parent).

& Power Co.
(4/6)
$11,753,800 convertible debentures due 1963.
Underwriter—Stone & Webster Securities
Corp., Boston
Offering—Offered for subscription by common stock¬

cir<?A^d^nFo°I c?nstructi°n expenditures,

to

^for debentures:

;

holders of record March 15 at rate of
$100 of debentures
for each 25 shares
held. Rights expire Aprils. Price—Par.

Bell

Commissioners
also

which

Virginia Electric

1st

will
Prob¬

The issue

Halsey, Stuart & Co. Inc.;

11 directors authorized

Utility

Feb. 17 filed

f0

.

March 18

Hutzler.

bentures subject to approval of the State

•

development

/

semi-annually Aug. 1, and Feb. 1, 1947-57.

March

filed

including construction.
Bids—Separate bids for
purchase of the securities will be received
by the
company up to noon (EST) March 29 at 2 Rector
Street,

coal

(3/18)

•

Light Co.

$3,000,000 first mortgage bonds, due 1973,
and $3,000,000 of
sinking fund debentures, due 1973^
Underwriting—To be determined by competitive bid¬
ding.
P.robable bidders include: Halsey, Stuart & Co.
Inc.; The First Boston Corp. and Blyth & Co., Inc.
(joint¬
ly); Kidder, Peabody & Co., Merrill Lynch, Pierce,
Fenner & Beane, R. W.
Pressprich & Co. and Equitable
Securities Corp. (jointly);
Smith, Barney & Co..and
Union Securities Corp.
(jointly); White, Weld & Co.;
Harriman Ripley & Co.
Proceeds—For corporate pur-

stock.

RR.

is asking for bids to be opened

able bidders include:

•

19

Power

Central

$4,997,000 equipment trust certificates.

mature

(letter of notification) 2,000,000 shares of com¬
(10d par).
No underwriter.
For mining operations
secure

•

The company

Tungsten Mining & Milling Co., Spokane, Wash.

Feb.

at

-

was

Trans-World

Utah

at

outstanding

probably would be raised equally between sale of new

Col.

No underwriters.

He

Qr; details of the financing are

available, but -company's present
-

Feb. 24

3V*% first mortgage bonds,

securites to finance :a

of

by Prentiss M. Brown, Chairmaii.

definite plans

no

would be

Denver,

Syndicate, Inc., Las Vegas, Nev.
March 9 (letter of
notification) 5,000 shares of common
stock.
Price—$100 each.
For offices and publicity. No
underwriting.
•

,

sale

the

Proceeds—For construction

notification)

non-assessable stock.

,and

announced

were

First Boston Corp., Hal¬

would

Topside Oil Corp.,

Edison -Co.

plans for

two-year expansion program estimated to cost $60,009,000

Ripley & Co., and F. S. Moseley & Co.

(jointly); Lehman Brothers.

16

due
1978.

(jointly); W. C. Langley
Co., and Glore, Forgan & Co. (jointly); White, Weld

& Co.; Harriman

Detroit

March

mortgage bonds, due

bidding. Probable bidders: The
sey, Stuart & Co. Inc., Blyth &
& Co. and Kidder,
Peabody &
Noyes & Co. and Drexel & Co.

$iu,000,im0 3

Underwriters—Names by competitive bidding.

be

$10 each.

l-for-2

*

Underwriters—To

convertible

lative

h'nJ

(no ban

stock.

the

Co.

(3/22)

ancfS

f poses,

South Carolina

Co.

#

500.000 shares of capital stock

(par $1).
Price—Net

Power

12,000,000

...

.Sperti Foods, Inc., Hoboken, N. J.
Feb. 26 (letter of notification) 30,000 shares 5%

and to

Underwriter—Harriman

•

bidding.
Probable bidder: Halsev
& Co. Inc. (bonds only); W. C.
Langley & Co.
!
First Boston Corp. (jointly); Lehman BrothersKiddi
Peabody & Co.; Smith Barney & Co. (preferred
onlVY
i Common stock will be offered under a subscription

(letter of notification) 25,000 Shares of common
stock to be offered to stockholders of record Feb. 16.
Underwriters, none. For construction.

mon

•

^

ln untfs

—-1
linH

competitive

\

Electric Service Co., Waco,

Penn

filed

20

common

Feb."9

.>•

11,400 shares of common

March 4 (letter of notification)

•

^

preS?

purposes.

Seminole Oil & Gas Corp., Dallas, Texas

No

Series M first mortgage
due March 1, 1978; 50,000 shares of Series B
'stock
($100 par) and about 2,000,000 shares

Las

Ltd.,

Industries,

Feb.

AVegas, Nev.
March 11 (letter of notification) 10,000 shares of common
stock >($1 par). Price—$1 each. To buy oil and gas leases.
No underwriting.

&

Inc.

Wa

(4/6)

of Calif.

Expected April 6.

1973, and $2,000,000 of first

"

Seattle

share- uf £acfr /at -$1.01 per unit.

one

$7,000,000 3V\% first mortgage bonds,;due
Underwriting—To be determined by competitive

including construction costs.

par).

(no

Feb. 26

of

Co.

Sanitary Products

Inc.,

(letter

,

Probable bidders: Blyth & Co., ,:Inc.; Halsey,
Stuart & Co. Inc.; The First Boston Corp. and Harris,
Hall & Co. (Inc.)
(jointly); W. C. Langley & Co. and
Glore, Forgan & Co. (jointly); White, Weld & Co. * Pro¬
ceeds—To reimburse treasury for 'capital expenditures,

($100 par).

Feb. 27

Separator,

of notification) 50,000 shares nrcfo
stock and 50,000 shares of common to be
e
offered in

bidding.

100,000 common shares

(letter of notification)

27

Feb.

Southern

*

"

-

25

Feb.

Feb. 26 filed
1978.

(3/23)

Co. of New Hampshire

Service

Public

•Western Seed

&

Expected

properties.

to 'expand

made

expenditures

fered to

jt

& Co. Inc.; Blyth

Stuart

Co., Inc.; Harris, Hall & Co. (Inc.); Merrill Lynch, Pierce,
Fenner & Beane.
Proceeds—To reimburse treasury for

N. Y.

Playboy Motor Car Corp., Tonawanda,
Feb. 13 filed 20 000,000

Halsey,

bidders:

Probable

(Continued from page 45)

Thursday,-March 48,
ig48

FINANCIAL 'CHRONICLE

&

THE COMMERCIAL

(1250)

46

for

the

purchase

(3/31)
of

•

•

$10,995,000

certificates wiU be received
up to noon
at office of

bidders:
Hutzler.

Stuar

^

Geo. H. Pabst, Jr.,

^

J

^

equipment trus
(EST)

Vice-President.

March 3

Probabl

Halsey, Stuart & Co. Inc.; Salomon Bros.

*

Number 4682

THE COMMERCIAL

Volume

&

FINANCIAL

CHRONICLE

that's

difference

a

cents

$30,000

(Continued from

example of rewriting of

an

As

interpretation, a

Articles by

French

will argue that, if its
is obviously overvalued
fid
it proposes what the Fund
Laids as cnlya partial devalua¬

member

atis'e it is

prestige

the

art

.Of the foremost
supporters of the Bretton Woods
idea only a few months ago in
effect thumbed its nose at the
Fund and United States efforts to
get it to abandon the proposed
^old-mining subsidy. - It made a
change in form, but not substance.

pounds
Sudden

of

The United

outline, in
the .gravity of

is

seller's

a

So long

market

devaluation

for

market

••

disappears,.

-

Britain

still musUexporyto ~live<:. Mean¬

while

the

inilation

drastic

freezing

of

in

wages, prices and profits, Whil6
there is talk of a capital levy or

Elbe wed and buffeted by forces

chief

authors

did

climate its

a

not

foresee

at

went

struction,

one

con¬

table of obvious

a

in¬

satisfactory

greeted

above

each,

lic

'

(Continued from page 12) ->.4;?

due 1978, offered

accrued

interest, by

a

follow this course." Current assets

The bonds, issued to finance con¬
struction
Toll

Co.,

Bearing

&

a

March

1,

equal to $4.45

748 for 1946, equal to $2.38 per
share on the stock - now^voutrt^

Sale.

given

approval

$300,000,000 fig¬

30-year

new

&

to
$12,000,000 of first mortgage
bonds,
$2,500,000
of
additional
stock and

common

50,000 shares of
preferred through com¬

par

petitive bidding.

-

namely

Virginia

£ Power

Co.,

&

and

Light

Co.,

Wood; Gundy Group to
Market $40 Million

Optical
of

were,

Co.'s
sold

course,

negotiated route, but the

of

anything approaching
vigorous competition.

lack of

a

segement of the Bell Sys¬
found
the
usual
banking

houses heading the groups

on

its

and

as

something

there

to

one

&

Jr.,

is

with

Shumaker,

group,

for

the

bid

same

bid, from

Kiser,

Inc.,

Circle

of

100.2763
The high
an
interest

State

The

to

Financial

Chronicle)

PORTLAND, ME. —George W.

a

coupon.

the

gave

(Special

surprise,

a

second

was

Yeaton

has

Hayden,

joined

Stone

&

the

staff

Co., 477

of

Con¬

gress Street.

cost basis of 1.9289%.

Reoffering

brought
tion
j

all

maturities

miums

the

of

hut

moving

up

of

to
a

pre¬

State

maturity

issue,

the similar

1.85% for

against

New

yield

to

selling

was

1.80%

10-year

the

NATIONAL SHIRT SHOPS

point.

Compared with the recent New
York

DIVIDEND NOTICES

shortest

the

Vi to %

of

issue

oversubscrip¬

quick

a

with

OF
The
No.

26

the
to

DELAWARE, INC.

Board of Directors has declared dividend
at the
rate of 20 cents per share on

Common

Stock,

stocKno.aers

Transfer

continued

field

corporate

capital

with

emission

of

Notice

the

lead

to

Is

new

steady

securities.

latest to

1948,
1948.

Board

of

lRte

& STATIONERY
CORPORATION

$.5()

given that a dividend at the
share on the issued and out¬
without par value of the Com¬

per

stock

mon

Western

of

Tablet

&

Stationery
on April

Corporation has been declared payable
10,
1948,
to the holders
of
record
shares at the close of business
E.

The

1st,

23rd,

closed.

be

Chairman of the

TABLET

hereby

standing shares

in search of

consequent

new

April

March

not

will

COLE.

WESTERN

Utilities

payable
record

01

books

SYLVAN

issue.

York

Definitely On The Way

H.

on

of
such
25, 1948.
Treasurer.

March

BACH,

join the parade

which has gone into registration
for

$30,000,000

of

de-

30-year

bentures designed for public of¬

fering. Proceeds will finance the
1948

requirements

its

of

pro¬

have

to

much

to sell

first

street

the same
their bids.

competitively $3,000,000 of
bonds,

mortgage

1978

due

CITY INVESTING COMPANY
25

for the

STREET,

BROAD

The
this
of

of

Board

$1,375

pany,

at

YORK 4,

NEW

this

of

Directors

N.

11,

Preferred

capital

WALLACE

102.07999

paid aggregated $348,560.

KEMP.

Treasurer.

company

UNITED

STATES

SMELTING

MINING

AND

REFINING

COMPANY

declared a quarterly
(87cents per share)
Capital Stock," and a
dividend of
fifty cents (50tf) per share
on the Common Capital
Stock, both payable
on
April
15,
1948 to stockholders of
record at the close of business March 23,
Directors

The

have

dividend of 1)4%
on
the
Preferred

1948.

.

FRANCIS FISKE,

■

March

Treasurer.

1948

12,

has

quarterly dividenc
the outstanding 5V2',

share

per

on

Preferred

Cumulative

Stock of

the com¬

r

Secretary.

EDWARD FRAHER,

.*K.ys

$75,000,000 of

standing. During 1947, dividends

M.

'//

Y.

1948

payable April 1, 1948 to holders of record
the close of business on March 23, 1948,

hid

group

of

dividend

day declared the regular

Series

as

successful

Machinery Corporation

this Corporation have de¬
of 37^0 per share on the
stock.
They have also de¬
clared a dividend of 621/ac per-share on the
Common capital stock.
The dividends on both
Preferred and Common stock are payable April
5, 1948, to stockholders of record at the close
of business March 16, 1948.
a

SEC has author¬

the

DIVIDEND NOTICES

were

up

in arriving at

Directors

'.J.,

March

thinking

been

The

$60,000,000.

which

certainly

competitors

United Shoe
clared

jected construction program of

arrayed against each other.
were only two

The

Chronicle)

Joins Hayden Stone Staff

serials,

year

of

a

syndicates in the field due to the
dimension
of
the
undertaking

>

Cohn

2% interest

a

15

And while there

pretty

Financial

INDIANAPOLIS, IND.—Roy H.

huge national syndicate paid

ized the Utah Power & Light Co.,

The-offering by this big West

were

The

Tower.

fully appreciative of this fact.

Meantime

Pacific Telephone

tem

to

be

no

is Consolidated Natural Gas Co.

offerings
were
marketed
through competitive bidding, and
certainly no one could complain

Coast

(Special

bonded

Thompson,

offered to

other

|

;-

has

debt,
or least had none until
now, and
bidders for jits huge veteran issue,
along with investors, appealed to

industrial

an

Power

debentures
via the

State

about

for

to

the

;

The

V

American

shown

share, compared-with $415j- 1

per

The

these

net profit for

1947 of $776,018,

Tacoma Narrows

mature

Bridge.

rows

according to C. W. Lighthall, its

President, haci

of the

Bridge,

1978, and are optionally redeem¬
able. They are payable solely out
of revenues from the Tacoma Nar¬

'

Ball

A.

and

has

,e,stA Penn Power Co.'s plan
sell

With Kiser, Cohn

.the American Optical

utilities,

syndi¬

by Kuhn, Loeb &
C. Allyn & Co., Inc.

managed

Co.

i f

new

investors.

cate

Sept. 30, 1947 amounted to $98,as against current liabil¬

week's

rounded out the fare

by Syndicate

further said: "Be¬ ; by Kuhn, Loeb & Co. and A. C.
cause of the Bendix corporation's
i
AUyn & Co. group at par.
strong financial position it has
Public offering is being made
been able to pay for all its post¬ i
war expansion and improvements
today of a new issue of $14,000,000
and is carrying
a
substantially Washington Toll Bridge Author¬
larger volume of business without ity 3%% bonds, at a price of par

263,595,

response

v4

Louisiana

Mr. Ferguson

Hoover

the

one

Electric

outstanding were the '
remainder of 500,000 shares ac¬

and

also

fund

& Shumaker

Co., and the other two for pub¬

working capital warrants the ex¬
pectation that it can continue to

Premiums

makes

mid-western
:-

.

debentures.

Bendix

Its present

the

judging

Three other issues of $10,000,-

] Issue of

rating

to

rate

investor

of

issues

new

Co.'s,, $75,000,000 of

$14 Million Bonds of

ganized in 1929.

influence

swelled as it was by the
Pacific
Telephone & Telegraph

stability. ~

Offered

Go

the State 100.577 for

no

ure,

It is

t'leg of' a tabled still under

quired by General Motors when
Bendix Aviation Corp. was or¬

or

Embracing the State of Ohio's
$200,000,000 of veteran bonus fi¬
nancing the total for the week

ing; against great odds.

Michigan Brevities

visible

offerings.

which

,;''»r

it cannot control, in

taken

were

that's

A

little

diminution

parent
interest

by:the,

id

the

upset

fon the high.grade bond market.
and certainly there was no ap¬

forced,loan.

v_;.:v.

to

exerted

immediately

government suppresses

by

It

close figuring.

of the State of Ohio's bonus bond

r,;Vl:
it

company,

•

message,

international

the

fringe of the

But

000

ities of $35,163,593..

special

a

served

Tst.

offers

-advantages;: but when the sell¬

er's

ingly although long an advocate
of a'passive Fund along the lines
of the "automatic" Keynes "Clear¬

at

President

investment

no

Kingdom, interest¬

resort to borrowings.

of

Truman to go before the Congress
and

Bretton Woods, the IMF is work¬

.<

decision

ulative

goods,

$3,000,000 of sinking
debentures, due 1973.

issue,

price
beyond question when
you cast your eye over the results

ations of other, .countries.

one

Britain's- Position

viC

Credit

and

more spec¬

there

and

$100

equity market and the

British

or

overall

the debentures

Ohio Bonds

situation

as

40

quickly and the books closed.

up

remaining

.

only

bond,

reoffering at 102.75 to yield

3.11%

IMF plenty of..work; for the
step
sure to be attended
by devalu¬

expected in an era when national
sovereignty is preferred' to the
disciplines 0f international organ¬
ization—it also has problems with
less
needy 'countries.
Canada,
which was

of

the

is

recalcitrant—as is to be

members

Reporter's

mar¬

sterling, which
is regarded as
inevitable, as Brit¬
ain's export competitors increase
their trade pressure, will give the

a

Fund' finds even needy

the

with

Devaluation

its duty as that of insisting
full and proper steps.:

If

On

That, London feared, would

nets
on

the Paris "free

over

havoc

step in the right diwhereas the Fund inter¬

recticn;

latterly

play

must agree be-

Fund

ihe

tion

has

ket."

miYrency

the

on

of

$1,000

which is mighty

Union,"

sought
the Fund's help not
only in the
shape of very welcome dollars but
morally in the 'contest with the

of members or jaits ac-

schemes

16)

page

ing

each

on

30-year debentures with a 3l4%

"'v.'"

Allied

'

«

-

;

s*

of

peacetime
aggregate
reaching $7,796,108 as compared
with
$5,898,144 for the year ended
Dec. 31, 1946, according to Ralph

Hubbart,'

President.

amounted

charges

to

cents

per

.

\

;Nov. 30,1947
or

that

of

1947

hie

Research

security

on

now

omic

record
ment

h>

March

March

24

'>

$

17;

to

■

J

holders

Union

of record March

Metal

Products

Cents, payable March
P* record March 16.

1948

semi-annual

a

25<f.

per

share

March
record

was

of

declared

the

on

the

the

on

pany,

com'

capital stock of the Com¬

May 17, 1948,

on

close of business

Company,

-

declared a regular
cash
dividend of
($1.00) per share

payable

15; and
50

31 to holders




and

share

directors

of

age

New York

an

capital stock of this Company
been declared payable

have

April 15, 1948 to stockholders
of record March 18, 1948.
EMERY N. LEONARD
Treasurer

v.

April 15, 1948.

E, E. DuVALL,

Secretary

REYNOLDS

March 12, 1948

METALS

Secretary

COMPANY
Reynolds Metals Building
Richmond 19, Virginia

Dividend Notice

PREFERRED DIVIDEND

large
Canadian
36, seeking wicer

COMMON DIVIDEND

The Electric Storage Battery
.

company

t

8, N. Y.

Quarterly Dividend
Board of Directors of The
Arundel Corporation has this day
declared 25 cents per share as the
i

The

quarterly dividend on the
par
value stock of the cor¬
poration issued and outstanding,
payable on and after April 1, 1948,
to
the stockholders of record on
the
corporation's
books at the
close of business March 22, 1948.
MARSHALL G. NORRIS,
regular

established over-thecounter
firm.
A salary and liberal
commission basis will be offered to
an
experienced man with desirable
contacts.
Complete facilities, statis¬
tical
departments^ etc.
Box K 318,
Financial
Chronicle, 25 Park Place,
Wanted

N. Y. 8.

by

old

The regular dividend of one dollar
thirty-seven and one-half cents
($1,375) a share on the outstanding

5i/2%

cumulative

convertible

ferred stock has been

190th Consecutive

Chronicle, 25 Park

TRADER

dividend

extra

dollar per share on the

one

:

years experience in
business surveys, econ¬

HELP WANTED

195

stockholders of record at the

to

payable
31, 1948, to stockholders of
at the close of business March

stock

mon

Dollar

One

meeting of the Board of Directors,
held this day, a quarterly dividend of
At

this day

has

COMMON DIVIDEND No. 287

Twelve

analysis,

of

Invest-

Co.

firm,

.

Co, 10 cents, payable April 1

holders
American

about

March JO.

,

*

board of

NO.

DIVIDEND

dividend of fifty cents per

of

Y.

Dividend No. 9

'The

analysis, and management. Formerly
in United States. Box J 318, The

The Peninsular Metal Products
Co. declared a dividend of 5
cents,?

Payable

The Garlock

Packing Company

Economist

Commercial & Financial
Pace,

*'■

COMPANY
New York 20, N.

resident

32,500,000.
<■

—

manager

opportunities.

backlog of orders in the
division or approximately
.

The of¬

UNITED FRUIT COMPANY
A

30 Rockefeller Plaza

20,1948.

investment

a

:

yield

to

interest,

Analyst

$3,897,^

improved,

is

there

NOTICES

R. M. Waples,

in the second half

and

CONSOLIDATED

Now

coupon.

share. Net

were

business

substantially

102.-

pay

SITUATION WANTED

U. Jacobs, President,

Y •
y,stated

hand

per

year

by

3.09%.

amounted to $138,-

22^4 cents

investment
headed

•

Net profit of
Superior Tool &
fDie Co. for the fiscal year ended

.444,

DIVIDEND

April

fering price will be 98.75 and ac¬

L

1 sales far the

of

Wood, Gundy & Co. Ltd.

crued
$

same

to

out
to

NATURAL GAS

April 15, 1948

banks

and

dealers

record March 12.
:1c

03999 for the

bid

The new deben¬

1965.

syndicate

large

share has been declared, payable
April 1, 1948 to stockholders of
sji

offered

15, 1962, at 100 and interest. The
financing is for refunding purooses and is being handled
by a

for the
The usual quar¬
40

15,

and be callable on and after

and Federal income taxes,

of

the

decimals

amount of Province of

tures will be dated

compared with $574,466

Preceding year.
terly dividend

issue of $40,000,000

also
five

runner-up,

carrying

Ontario 3% debentures, to mature

April

after

$924,281

the

principal

income

Net

Frost, Treasurer
Province of Ontario, an¬

nounces a new

The

coupon.

Hon. Leslie M.

Products

volume of sales of any
year in its
history, the

as

Ontario Debentures

-

Corp., Detroit;
in 1947
enjoyed the largest dollar
:

no

Secretary
March

16,

1948

\

The Directors have declared from the
Accumulated Surplus of the Company a

($.75) per
Stock, payable

dividend of seventy-five cents
share

on

the

Common

stockholders of record
close of business on March 16,

March 31, 1948, to
at

the

1948. Checks will be

mailed.

H. C. ALLAN,

Secretary and Treasurer

Philadelphia 32, March 5,1948

pre¬
declared for the

ending March 31, 1948, pay¬
able April 1, 1948, to holders of rec¬
ord at the close of business March 19,

quarter

1948.

0

A dividend of
a

share

on

twenty-five cents (25^)

the

outstanding common

stock has been declared

1,

payable April

1948, to holders of record at
March 19, 1948.

the

close of business

books will not be
closed.
Checks will be mailed by
Bank of the Manhattan Company.
The

transfer

o ALLYN DILLARD, Secretary
Dated, March 8, 1948.

.

-

THE COMMERCIAL

48 ' (1252)

Thursday, March 18,
1948

CHRONICLE

& FINANCIAL

direct, and

BUSINESS BUZZ

on

from the Nation's Capital

v

of

of

'assisted by 1,
sift, appropriation
rpJ
quests and thus to help reduce
staff

r

UMT

of

ton

in

as

subsidiary

the proposed

alliance.

words, these

were

h

it

ever

■I

security

military

■t

Western

"it

the

of

affairs.

as

ad¬

sentiment

lic

be

to

of events which

I

sjs

Thus

»I«

President

the

has

now

added proposed military coopera¬
tion to economic aid, via ERP; as
a
means of halting
the advance¬

ft

■!>'
ih

of

ment

Russian

a

hegemony

major

in peace

s;:'

>;s

This

8<

it is believed,

program,

is also attended with
siderable risks.
risks is

to

con¬

some

One of the first

that it may

Russians

step

along

needed

the

light

get

*

8:

with

it

as

possible

as

in

involved

>{t

something

about
is

Russia

must

be

United

to do it.

gress

big risk is that Con¬

will not go along with the
toto

in

program

The

President's

like

a

to
t

and

single

United

looks

program

designed
purpose
of

package

accomplish

showing

promptly.-

to

the

that

Russia

States

should Russia

the

to

means

continue

fight

her

en¬

«■*

>!'•

reaction

toward

be

The

affairs.
the

Capitol

Western

in

Europe
armed aggression.

that

beginning

the
and

aiding

pretty
be

Congress will

heavy

thinking.

deliberate,

incumbent

»!<

8:

8'.

There is, hence, a two-pronged
crisis ahead:

is

move

the

same

future,

whether

and

will

take

the

steps
new

feared

.:

8t

on

such

a

stepped

large commitment,

or

election

standing

PARTNERS

House

aid

why
com¬

into

the

unless

8*

8s

here

8*

is

;

that

candidate

Democratic

Senatorial

in

New Mexico,

Secre¬

for

the

nomina¬

will order

boost of 50 million bushels in

export

Europe,

goal

making

of

wheat

the

total

500

million

bushels

450

million

bushels.

goal

instead

%

of

Anderson

St., Philadelphia 9, Pa.

Clear thru-—Montgomery, Scott &
New York A

Foundry

unneces¬

hand,

when

such

Budget"

provide

a

spe¬

committee

advance

tips of

200

on

and

most

however,

is

only

refined

there is need for
is said not to be

in

that

needed.

in

area

A

exclusive

its

billions

industry
ment

Senator

suspended

well

as

limitation of $2 billion. Actual¬
ly, however, if RFC ever re¬

big scale it

on

a

so

because

Con¬

because of different

conditions,

eco¬

orders

it

lias

and be

,

Congress wanted it to

The

hill

to

8s

proposal

to

Senate bill
a

make

con¬

crimp in

in

lower the

a

future

meet

on

of
a

some

Senate
of

participation

causing

ESTABLISHED
Members
40

N.

Y.

1919

Ass'n

Security Dealers

H.A. 2-8780

Exchange PL, N. Y. 5
Teletype N. Y.

1-1397

1

the

Trading Markets:
Ralston Steel Car

Oregon Portland Cement
Riverside Cement A & B f
Spokane Portland Cement J

RFC

loans

may have the

slightly larger

tion of its small

HAnover 2-0050

the

ratio

65% from 75%,

effect

to be misled by the

tinuing RFC would put

case

future emergency.

liability
8s

reports that the

available in

got

is

should happen.

is easy

M.S.Wien&Co.

to

staff,

pro¬

said
that
there is neither the
refining ca¬
pacity for additional crude nor
the steel to put in wells if this

It

Soya CoVp.

liquidation.)

the agency as a
going concern.
Even its small volume of
business
would enable it to retain its

the govern¬

as

It

#

Tucker Corp.

of

engaging extensively in
industry financing. So would a

nomic

Wher¬

regulating oil

puzzled.

Finishing

from

gress,

ry's proposal that all state pro-:
be

Dorset Fabrics
U. S.

limitation of $1 billion, of
would
prevent
RFC

lending
is likely to do

,,

laws

England P. S.-Pfd.

Remington Arms

so

Incidentally,

duction

New

of,

do so.
readily adapt¬
able to heavy fuel oil or
gasoline.
!,■. Thus the Senate RFC continu¬
The pipeline would involve the
ance
bill actually would retain
biggest cost. • \

ration

of special interests.

course,

sumes

heating oil. Shale

is

to,
in

now

in

for the sake

do

outstand¬

participation with

additional

interested

economy

to $1 billion from

outstandings

old loans

Shale,
bet if

good

a

or

cuts

to Congres¬

on

groups

commercial banks. (The $1 billion

billion barrels, and according
industry estimates, 300 billion
barrels, of shale reserves in Colo¬

is

Would

them

pass

billion for

directly

it

or

bill

RFC's

present

development. There are ac¬
cording to government estimates,

be

cut

expenditure

RFC

to

Investment

10 Pest Office
propor¬

business loans

CO.

LERNER &

Securities

Square, Boston 9,

M»U-

Teletype

Telephone Hubbard 1990

BS

Teletype—NY 1-971

Empire Steel Corp.

Firm Trading
Markets

FOREIGN SECURITIES

Mills

Susquehanna

All Issues

—

Herbert H. Blizzard & Co.
123 South Broad

Pitts. Steel

all

economy,

countering

a few years at
volume,
since
the
agency's principal current func¬
tion is making business
loans, pri¬
marily to .small business, either

its

worsens

Pfd. & Common

business stays dull!

JJ

$1

Senate
to

H. & B. Amer. Mach.

you'll be seeing if

■

shortage

most immediate prospect

UNIONS!

—*

its

'

eye on shale.
"synthetics," shale of¬

South Shore Oil & Dev.

—that's the headline

,

8(

keep your

all the

for

Indiana Gas & Chemical

PICKETING

' 8-'

where

Affairs

from

carryover

crop.

could

explanation

become

the

Since the President has

be

tary Anderson, before he retires
to

tion

his domestic

that

Guessing

a

*

will

8«

China

its present authority of $2 billion.
Actually. RFC would not exhaust

will

Some are held by the Navy.
Many are privately owned. Shale
oil, according to informed sources, j
can just about be
developed now
at
present prices,
and with
a
i
pipeline to carry it to California,

they wrapped
all three together, the Adminis¬
tration would get China aid killed.

by the Administration.
*

one

the

as

wheat

rado.

package with the big foreign
military aid
Turkey
and
Greece.
They

and relatively daring step taken

forth

Mr.

necessary.
8«

ings in half,

of

to

some

It

agency's activities. One thing

re¬

bushels

for

aid authorization and
for

and

the

fers the

con¬

will

White

Foreign

tied

mittee

in the im¬

promptly to implement the

*

is

House

How fast and how

far Russia will

it

and

of

than

There
the

well."

very

be

Of

most chary of using the present

more

there is something of a
large gamble, it would appear, in
proposing a military alliance.
If
Congress does not' approve, the
Russians, it is feared, would take
this as a sign that the U. S. had
backed down and might act ac¬
cordingly.

do

do this, it is said,
cattle feeding prospects

next year,

at

late;

with

that

legally

If the fuel oil

Adminis¬

with

Thus,

Congress

the

continued

or

that

ed

doh't get along

which

Ad¬

held

was

Roosevelt

President

tinuing

they

would

Congress

latest

the

view

8(

mediate

of

tration has been appeasing Rus¬

sia,

understand

8:

But you can take it for grant¬

quickly enact it, and all of 'it, to
demonstrate thereby to Western
Europe that the United States will
back

will

"I

present

ministration offensive in foreign

«:

is that Congress shall

essence

seasoned

to

prospective

main

man

Can't say yet what the

other

"Little

could

lion

Truman.

croachments.

Its

an

Ad¬

1

when

equally widespread belief

that Mr. Truman is not the

States.

cated

show that nevertheless 150 mil¬

done

an

Congress de¬

a

is an Administration dedi¬

sional

time. There

some

the

On

cial

to

brought

Federal spending,

; there

8(

*

be

reduce

any

widespread belief

a

best

can

and

i

may

is

There

effici¬

when there is both

sary

'

.

Bud¬

and

economy

This

needed

grams.

Presidential

a

termined

to prepare for
war in case the grand alliance is
challenged. This means controls,
inflation, national defense produc¬
tion, and many other huge pro¬

that

is

much to

What is really

economy.

ministration

mobilizing military power so
only to mobilizing man¬
power.
Thus passed over for the
moment are all the vast possibili¬
are

study

do

about

far relates

which

small

no

Bureau,
like: the present,
is firmly directed toward

for

ties

sug¬

for

ency.

before coming face to face with
threat
of
war
with
the

the

A second

now

.

potential significance in another
important respect.
Its proposal

program

is

requests

itself

can

piomoting
»!«

it

which

predict.

induce the
their pro¬

up

of advancement to get

gram

far

over

The U. S. has never had
military alliance before
times.
*

Europe.

pub¬
have

as

one can

no

committee

•

then

would

the

Nevertheless,

to-

turn,

scheme,

about

ment

achieve

much

as

Any

supply; is useful.

Mr. Truman's message also is of

Wednesday.

h

possible

.

gauged, and in

here to the pact they signed on

I'li

pro¬

foreign

' on

not

the

gested, which aids the Congress
to
get background and judg¬

cam¬

how.it .would

particularly in
,

political

"turn

It-is

now

guess

the five
nations and

European

might

paign

foreign

new

to

oppo¬

should

hand,

the whole

gram

of

such additional countries

the

of

part

In other

informa

This is "a filie scheme for
op.
a time when the
Congress
is economy-minded and
the Administration is the

Congress reject, any. substantial

to

Spending

offer

;

*

4t

other

to

eration at

site.

steps which

called,

be

If Congress agrees

4:

the

On

military potential to

may

the

to

hour.

back up the guarantee, or what¬

V

wholly

which

on

at

some

standing Appropriations
commit,
tees,
suggestions
on
how to
achieve reductions.

presumably be¬
something of a man of the

comes

ably to give the U. S. the begin¬
a

tibn

""

:

look

.

requests and have

then Mr." Truman

the President proposed presum¬

ning of

4Jie
long advance

President and goes along,

viewed

were

sense

a

kite.

foreign

with the

observers here in Washing¬

by

almost

tied

be

to

for revival of the draft and en¬

actment

7

proposal

somebody
representative
Congress would have l\

of

thus now appear at first glance

the
unprecedented step of a
military alliance with Western
Europe as the device tb stop
Russia. The President's proposal

■\

——

evl

The idea of this

that

is.

,

to

penses

field, the President appeared to have struck
out with a course of proposing

uS

consist?]
Senators £$

of

Representatives,

A %Jw

WASHINGTON, March 17.—President Truman's foreign affairs
message to Congress yesterday has just about revolutionized the en¬
tire outlook in both the domestic and foreign fields. (See cover page
for full text of the President's address.—Editor.)
In the foreign

sev' J

Congress,

committee

a

proportion

*

sponsored;: by
for
a
"Little

Senators

A
gJ
xJL I vUv

*

pitfall to the
pendi„i

a

proposal

..

Bureau",

Behind-the-Scene Interpretations

smaller

*

There is

on

a

participation basis.

a

Philadelphia




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