Full text of Commercial and Financial Chronicle : March 22, 1951, Vol. 173, No. 4996

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ESTABLISHED 1S39

university
MICH

GAN

MAR 23

W51

BUSINESS M
H

New

Number 4996

Volume 173

EDITORIAL

We See It

The Business Outlook

Late in 1948, President Truman, in

preparing
the inaugural address which would usher in a
term in office which very few had supposed that
he would be selected to serve, is said to have felt
the need of some "stirring" new proposal which
would fire the imaginations of the voters after
of the "four freedoms" of his

manner

By WESLEY LINDOW*
Vice-President and Economist,

with reference to raw
and manpower
shortage, Mr. Lindow discusses inflation problem and
effectiveness of government controls. Expresses view
inflation problem will not go on forever, since expansion
of production and tapering-off of military program may
offset inflationary forces. Sees 1951 a year of transition,
and concludes we can carry large military program with

prede¬

difficulty was encountered^
so the
story goes, in hitting upon just the right
idea, but finally someone coined a set of phrases
which

appended at the President's insistence
three-point program, making it a four-point
program, and giving rise to what has ever since

were

been known

reduced strain

void.

students

most

be without

form and

even years have passed,
interpretations have been placed upon

the terse and

grandiloquent sentences of this part
of President Truman's 1949 inaugural address.
Some have said that the President really had
nothing very specific in mind at all, that what
he said was intended merely as a set of catch
phrases. However that may be, it has been evi¬
dent
way

that

ever

since

effort

has

to which the President has been

has

name-calling.

providing of jobs to meritorious politicians. People curse

been

eral,

specific

over

kinds of

credit,

Several months ago

the President appointed an
Development Advisory Board,"
whose function was to give substance to "Point
Four," and to integrate any ideas it might develop

(3) Regulatory functions, as for
example the supervision of transpor¬
tation and communication.

Wesley Lindow

"International

(4) Physical controls used in
riods to influence the

war

and emergency pe¬

of materials and manpower and

use

on prices and wages.
My assignment today is to review the economic situa-

put ceilings

into the needs and demands of the current inter¬

national

"emergency." This organization, whose
membership is the usual conglomerate supposedly
Continued on page 28
SECURITIES

MARKETS

*An

address

Mr.

Lindow

before

Meeting of the
York, March 21, 1951.

the Annual

Continued

NOW

porate securities

REGISTRATION

afforded
and potential undertakings in

BATES MFG. CO.

Commercial Chemical Development Ass'n, New

are

—

pro¬

Labor

Both have displayed a

particular^

lack

cases

of effectiveness

(to

of Mr. DiSalle's fum¬
bling with price edicts and hardshipand of the more or less shelved Mr. Symington's

Dr. Melchior Palyi

"research"

say

activities).

nothing

Maybe their real job consists in

minimizing the damage that the Washington setup might
do, permeated as it is by ward politics, skulduggery
and corruption.
Neither fish

nor

fowl is the name for this sort of dish.

Automobile
ithe next.
of 10%

prices are frozen one day and thawed out
Wages are under ceilings—with a "fifth round"

boosting thrown into the bargain, plus the door

opened for further hikes by way of job reclassifications
other

and

fringe

cost-of-living

Additional

benefits.

Continued

page

middlemen.

the

accuse Big Business
in gen¬
mobilization chief Wilson and
stabilization
director
Johnston, in

lamentable

general efforts to influence the

the

blame

groups

and

being

constantly

bosses

guaranteeing, and debt manage¬

trols

are

farm

Fiscal Policy,; including such
matters as spending, taxing, lending
(1)

volume of bank credit.

ACTIVE

The
cessors

and

continuously.

overall plan, no coordina¬

which

cies

great variety of ways, which

Monetary Policy, including
such matters as selective credit con¬

less

operation between regulatory agen¬

be conveniently summarized in
four broad groups:
:
>"

(2)

com¬

"overhauled."

and

turn

piecemeal policies, no logic
administering them, and no co¬

ment.

party and to

lent encouragement more or

there is

structure—enlarging and contracting

nonchalant attitude. The truth is that

You may remember

tion

who

plain about the public's selfish and

way

under

bureaucrats

the

special mush¬
room: "One side makes you smaller,
the other one taller."
The govern¬
ment mushroom affects the economic
—in

to give substance to "Point Four," an effort

which he

waste,

that the rabbit told Alice to eat some of a

As the months and

various

in top-level confusion,
political bickering, demagoguery, and
One positive accomplishment so far is the

Stabilization has bogged down
economic

time passes.

mushroom in Alice in Wonderland.

enlarge defense

production. Sees crisis within a crisis, and contends
merely a nominal improvement in East-West relations
may suffice to shake price structure.

in a great
ways—in fact, government is something like the

many

The real content of "Point Four" seemed at the
time

the inflationary credit expansion, but

Government impinges on economic matters

"Point Four."

Palyi, asserting there is no over-all plan, no co¬
of piecemeal policies, and no cooperation
between regulating agencies of the government, likens it
to a dish that is neither fish nor fowl. Says banks are
contends credit expansion must go on to

allocations, capital outlays

Dr.

made scapegoats in

After reviewing current situation

Considerable

cessor^

By DR. MELCHIOR PALYI

ordination

Irving Trust Company, New York City

materials,

Copy

Controls and Comparisons

Government Controls and

the

Price 35 Cents

York, N. Y., Thursday, March 22, 1951

page

dealers and investors in cor¬

Underwriters,

complete picture of the issues now registered with the SEC
our "Securities in Registration" Section, starting on page 42.
a

State and

BERKSHIRE FINE SPINNING
DEWEY

ALMY

Municipal

DWIGHT MFG. CO.
HOLLINGSWORTH

WHITNEY

KEYES FIBRE CO. CI. A & Com.

LUDLOW MFG. &
N. E. GAS &

Franklin Custodian Funds,

SALES

inc.

600 Branches

jApr.

A Mutual Fund

ELECTRIC CO.

across

REED-PRENTICE CORP.
SACO LOWELL SHOPS

Monthly Commercial Letter

WEST POINT MFG. CO.

upon request

duPont, Homsey & Co.
Members New

York

MASS.

BROADWAY, NEW YORK 5, N. Y.

Tel. WOrth 2-0115

Free

from

Prospectus
your

may

obtained
dealer or

investment

OF NEW YORK

Tele. BS 424

Tel. HAncock 6-8200

120

THE NATIONAL CITY BANK

& Boston Stock Exchs.

31 MILK STREET, BOSTON 9,

Tele. NY 1-315

FRANKLIN DISTRIBUTORS,
64 Wall Street, New

Inc.

York 5

Teletype: NY 1-708

Underwriters and
and

BOSTON

(all

Corporate Securities
Prospectus from authorized dealers

VANCE, SANDERS &. CO.

OTIS & CO.
Established

BOSTON

MEMBERS

Angeles

Cincinnati

Chicago
Columbus

Denver
Toledo

COMMON

Analysis

Issues)

Co.

DortPiiox Securities
Grporatioti

NEW YORK STOCK EXCH.

40 Exchange Place,
15 BROADWAY

New York

Dallas
Buffalo

'EW YORK

Portland General

♦—

CANADIAN DEPARTMENT

Goodbody

THE CITY OF NEW YORK

Company

CLEVELAND
Chicago

Los

1899

Electric Co.

ESTABLISHED 1891

(Incorporated)

Ill Devonshire Street

New York

Brown

NATIONAL BANK

BONDS & STOCKS

Bulolo Gold Dredging
Placer Development

THE CHASE

Portland, Ore. San Francisco Los Angeles

CANADIAN

of Canada

Bond Department

Agency: 20 Exchange PL

maintain active markets in

Internal Bonds

Distributors of Municipal

Neto York
Seattle

Dominion

Bond Fund

^Canadian Bank
ofGommme
Head Office: Toronto

Bond Dept.

Woe

Bonds

Canada

New York 5, N. Y<

105 W. ADAMS ST.

i-CHICAGO

WHitehall 4-8161

request

IRA HAUPT&CO.
Members New York Stock
and

111 Broadway,

Boston

Exchange

other Principal Exchanges

WOrth 4-6000

Teletype NY 1-702-3

upon

N. Y. 6

Teletype NY 1-2708

Telephones

Enterprise 1820

The Commercial and Financial Chronicle

(1222)

TRADING

MARKETS

The

Security I Like Best

American Research
and

A continuous forum in which,

Development

in the investment and

.Polaroid Corporation

they to be regarded,

are

Njw York Hanseatic

Webster

Stone

this

Specialists in

si d

How¬
b 1

r a

pONNELL & CO
Members

Exchange
Exchange

BROADWAY, NEW YORK 5
2-7815

"I'

my wife
when
I

important utility

I
Lester B. Robinson

man

esting to investigate just what
element prompted such a specific recom¬

stability.

mendation

Stone & Webster is not a

Moore Handiey Hardware Co.

thought it would be inter¬

Hence I

utility

and

faith

such

in this

not only on the part of

company,

itself, since divestment this investor, but also of the other
utility subsidiaries in 1937, 170,498 stockholders of this pro¬
but remains closely identified with
gressive California gas and elec¬
that industry. The Stone & Web¬ tric
utility company.
ster- Engineering Corporation,
a
Using
all
the
measurements
subsidiary, engages in design and
common
to
investors,
PG&E
construction work for practically
company

of its

Scott, Horner &
Mason, Inc.
Lynchburg, Va.

all

LD 33

types of industries with par¬
emphasis on electric utility

ticular

jiiiiiiiiiijiuwiiihiiiiiiiiiiiiiiiiiijii

companies. The Badger Co., an¬
subsidiary, concentrates its

other

activities in the highly specialized
field of process engineering and

Development,

construction, serving clients in the
pharmaceutical, petroleum, chem¬
ical and petro-chemical industries.

Limited
Marketable

Gold

Construction activities in all fields

Producing

LEAD—ZINC—TUNGSTEN—OIL
Trading market maintained
Analysis available on request

John R. Lewis, Inc.

& Webster Securities

ELiot 3040

vestment

prepared to make

Cor¬

PUERTO RICAN

(classed

•

Paul Frederick
& Company
70 Pine Street, New York 5
NY 1-2643

Chip"

its history

trace

can

predecessor
companies
back to the old gold rush days. It
has

its common
stock every year since 1918 and
the policy has been liberal, usual¬
ly $2 per share. This has meant a
yield of 12.90% at the 1942 low
of 15 Vz
to the present yield of
5.8% at the current price of $34
per share. The undepreciated his¬
torical cost of the physical pro¬
paid dividends

perties

approximates

now

billion

and

operational

ity have

its

attractiveness

is its

subsidiary, San
Salvador Development Co., own¬
ing an estimated 250 billion cubic
feet
of natural gas reserve
in
Texas.

The

around

own

tinental
about

company

electric¬

than doubled dur¬

ing the past ten years.
•Now, just who

Gas

8.7%

Pipe
of

Transmission.

of stock

the

Line

Co.

Tennessee

and
Gas

position,
cash

than

double

were no

current

current notes

amounts

also

million

one

its ever abun¬
orchards, its producing mines
and oil lands, its cattle country,
its steady growth of residential
—

area, and last but not least, the
gigantic industrial, manufacturing
and distributing areas of North¬

1950:

No. of

No. of Shs.

Stkhldrs.

Owned

Third} No
in

such

and

uuncy operates
widely diversified area

other

none

sibilities

has

PG&E farm sales

off

peak

greater pos¬

consistent

for

during the usual

other

season

ployees and serves 2,386,000
tomers. But these statistics

interesting
which

the

than

has

are

less

among

these Californians.*The local man¬

hundreds
of communities serviced is usually
a
member
of
Rotary, Kiwanis,
Lions, etc., and is quite active in

ager

civic

each

the

affairs.

tecting

fish, and

and

game

have contributed greatly
maintaining this inestimable
good will.
These facts plus the low rates
general
to

customers pay for gas and elec¬
tricity, acknowledged good service
and the willingness of the com¬
pany

who

contributes

this

as a

12,688

3,730,843

1,765

505,377

partner¬
proprie¬

torships
Charitable, fraternal

—_

or¬

dations

Banks,

859

203,735

729

777,595

investment cos.

Insurance

426

2.259.443

366

68,794

285

151,875

—170,498

19,721,680

companies—

institutions

TOTALS

ministrative staffs

vestment

analysis

PG&E

are

sound

finest

request

J. B. Maguire & Co., Inc.

of Securities Dealers Inc.

31 Milk Street, Boston 9, Mass. *
Tel. HUbbard 2-5500

Tele. BS 142

Portland, Me.

Enterprise 2904

Hartford, Conn.

Enterprise 6800

Open End Phone to New York Canal 6-1613

Norma Hoffmann Bearings

Corp.

National Research Corp.
Mexican Lt. & Pr. Co. Ltd.

Keyes Fibre Company
Boston Wharf Co.

Bought—Sold—Quoted

Ralph F. Carr & Co., Inc.
31 Milk Street, Boston 9
Tel. HUbbard 2-6442 Teletype BS 328

Pennsylvania Railroad
Philadelphia Electric Common
Penna. Power & Light Common
Foote Mineral

Central Electric & Gas
Central Public Utility 5^s
3

American Marietta A

the

Henry B.Warner Uo., Inc.
Members Phila.-Balto. Stock

Exchange

Phila. Telephone

Bell System Teletype

PEnnypacker 5-2857

PH 771

New York

City Tel.: BOwling Green 9-4818

Direct wire to Ames Emerich, Chicago

considered

are

field

have

and

tomer

idea of

customers

former

duced

successful cus¬
not requiring new
sign contracts. A

president
the

1914

BUY

customer

U. S.

SAVINGS

intro¬

ownership

BO N D S

financing,
since
widely copied throughout the U. S.
of

stock

favorable From

investment,

that year to 1941, PG&E
alone marketed $80,000,000 in pre¬

I am swayed even more by other ferred stock under this
plan,
The stock is presently
selling around 24, with 2,104,391 considerations and factors which i The public confidence in
shares outstanding. $2.00 dividend make this Company unique among is evidenced by the company's
major utilities, in America.
was paid in 1950; 75 cents in June
ability to raise nri
»,

payable.

AMERICAN
EXPRESS
Bought——Sold——Quoted

and
The

30 Broad St., New York, N. Y.
Phone HA 2-2600

—

Tel. NY 1-1017

same

dividend

can

ex¬

pected in 1951, giving a yield of
than 8%
at the present
price.
better

First:

You

discover

about the unusually
ment and

something

fine manage¬

employee morale of this

utility when you
PG&E serviceman.

talk with a
He,will pridefully point out to you that his
future earnings prospects and the company is considered the model
possibility of an even more liberal in the industry and that the skill
dividend policy in the foreseeable and technical knowledge of its
future, Stone & Webster would be engineers and operating, officials
a wise inclusion in
are
any investment
quite often "borrowed" by
portfolio.
foreign countries.
It

qAllen & Company

$1.25 year-end in December.

seems

that in view of

lions of dollars from the sale of
stocks and

bonds

finance

tue

largest postwar expansion of any
U.
Si utility — nearly $60(1,000,J

Over-the-Counter

Quotation Services
for 38 Years

000.

The Company is curr^+W
offering its common stockholders
of record March
to subscribe to

13, 1951 the rignc

one

National Quotation Bureau

additional share

Incorporated

of common stock in the ratio of 1

share for each

seven

then held.

Perhaps a better demonstration

Continued

page

)

123 South Broad St., Phila. 9, Pa.

including the

plan

Although the usual tools of in¬

available

Members Nat'l Assn.

initiated many revolutionary ideas
—

& security dealers—

Religious

of technical matters is in¬
timately acquainted with utility
financing. The operating and ad¬

edge

the

foun¬

Analysis

company's

favorable investment.
The management of PG&E is
tops. James Black, President, a
graduate engineer has been an

position

lege ana in addition id his knowl¬

fiduciaries—

Common
Bought—Sold—Quoted

to provide service to anyone
wants it, in no- small way

operating man since leaving col¬

maintenance

The

have preformed many pub¬
lic services like rescue work, pro¬

crews

3,021,o/5

guardians

Company, Inc.

will

good

built

been

cus¬

3,bi7,o^U

ganizations

branch offices

Notional

against the U. S. average of 58.8%.
The .company has
17,000 em¬

4,979,898

and

our

areas,

remains high, giving the company
an annual load factor of 63.8% as

4j,'/79

other

Mobile,Ala.
Direct wires to

growth.

40,b05

ships

4, N. Y.

NY 1-1557

ouier

68,996

tenancies-

Corporations,

HAnover 2-0700

New Orleans, La. - Birmingham, Ala.

California. /

Central

and

ern

Joint & otll.

Trustees,

Exchavae

Curb

Men stockholders

strong financial

ol Sept. 30, 1950, with

debt. There

Here is the breakdown

Women stockholders

As for the vital statistics, Stone
a

owners

ownership by class of in¬

•Educational institutions

& Webster was in

are

Class of Investor-

is believed

of Transcon¬

15%

$1.4

revenues

from the sale of gas and

non-current)

market value of $25,784,345

se¬

through

vestor as of December 31,

Investments carried at $8,-

investment

Blue

folio.

increases

ISSUES

income and

of PG&E?

had

banking

Sept. 30, 1950.
An
interesting factor in the
makeup of Stone & Webster that

firm markets in

WHitehall 4-1875

in steady

curity. For instance this "Western

activities.
At
present there are large unreal¬
ized profits in its securities port¬

301,033
are

poration, which is engaged in in¬

SEATTLE

operations

high level during the coming pe¬
riod, especially considering .the
necessity for many industrial com¬
panies to expand due to pressure
of government contracts in our
present defense economy.
Another
major
subsidiary
is
Stone

1006 SECOND AVENUE

Teletype SE 105

maintain

should

Stocks Worth $7 Per Share

would recommend itself to all in¬

terested

Exchange

York

New

and

York

New

but

dollars annually

that the death

in¬

and

dant

divisions,

construction

states

bill

tric

investor.
Although the would mean a considerably inspeculative in charac¬ creased investment on the part of
ter because of the cyclical nature him and his family in PG&E stock.
the

the

later

this

York Stock

Members

25)

discover another
significant point. The area ser¬
viced by this utility company is
not only huge (equivalent in ar<~a

com¬

stock."

Members New

25 Broad St.f New York

Second: When you study a map

are

service operations lend an

Dan River Mills

Gas

Steiner, Rouse & Co!

cf California you

average

dustrial

&
La.

higijuy diversified one. It includes
California's fabulously rich farm¬
ing valleys -r- one farmer's elec¬

learned

Orleans,

Pennsylvania),

mon

Candler Dobbs

Woolfolk

New

Webster

the

would

require-

How td Invest

Legacy —John

most

Electric

(Page

die

cific

meet

cash

vest

Sys¬

A—Bernard

Partner,

Shober,

Bought—S old—Q uoted

(Page 2)

Class

Shober,

she should in¬

our

Church

was

that

Stone

to Id

additional Pa¬

Placer

Stocks, G.ains, CoUon, oui

Prudent Advice

equity appre¬

American Furniture Co.

I overheard two

other,

ciation, we feel

the

Trading Markets

these

said

the

and

ments

JIHIIIIIIIIIIIlillSlllllIHIIIIilHIIIIIIH

men

in¬

money

vested

when

Louisiana Securities

Common

ric

in¬

trigued

Co.,

Seligmann,
General
Partner,
Seligmann & Co
Milwaukee,
Wis. (Page 24)

discussing the stock
Since my profession is

one

of return

tors

Tele. LY 83

Gas and Eiec

tems

gentlemen

naturally

thought, keep¬
ing
in mind
the major fac¬

Since 1917

REctor

(Page 2)

Francisco, Calif.

Electric Common

difficult, if market.
a security that of investment counselor

it is most

after con-

ever,

Rights & Scrip

Tel.

bears

and

Gas

The other day

previous arti¬

best for all in¬

vestors.

120

for

San Francisco, Calif.
Pacific

forum,

that would

Curb

Dobbs

York

—Lestjer B. Robinson, Counselor

LESTER B. ROBINSON

impossible,' to select

not

York

Partner,
City.

Candler

—

nor

City Counselor for Stocks, Grains, Cotton,

stated in

repeating,

New

New
Pacific

be,

Webster

and

Dobbs,

1920

cle

Stock

intended

not

are

Stone

sell the securities discussed.)

Alabama &

of experts

group

particular security.

and

Selections

International Hydro Electric

Teletype NY 1 -583

York

offer

CANDLER DOBBS

120 Broadway, New York 5

New

as an

Partner, Dobbs & Co., New York
Members of N. Y. S. E.

Corporation
BArclay 7-5660

different

Thursday, March 22, 1951

Week's

Participants

Their

advisory field from all sections of the country

(The articles contained in this forum

Central Public Utility V/ilSl

Established,

each week,

participate and give their reasons for favoring

Southern Production Co.

This
Forum

Established 1913

46 Front Street
CHICAGO

NewYork4,N.Y.
SAN FRANCISCO

Number 4996

.Volume 173

Controls

—Wesley

The events of recent

international

the

home,

have been

months, on

and

scene

of such a sur¬

prising and' ominous nature that
the

entire

the

collateral

over

■

the

has

reactions

course

these

sure

the

and

disciplines

and

re¬

check the expansion
strains which are being imposed
of the hostile powers who hold the
at an accelerated rate.
initiative. Inasmuch as the initia¬ *'
At the time of the Korean War
tive
on
the international scene
outbreak the economy of the coun¬
does not lie in our hands, such
try was still functioning at high
decisions will be more than or¬
speed. The forces of deferred de¬
dinarily arbitrary and therefore
mand
built up during the' war
even less than ordinarily subject
years had waned in many sectors,
to forecast.
Although the super¬
but the housing boom was being
structure of our economy will be
prolonged and intensified by the
composed of a flimsy structure of
forced draft of easy credit, and
spot judgments and arbitrary rul¬ record instalment
plan borrowing
ings, it will rest upon the solid was maintaining a terrific demand
foundation of a sustained produc¬
for household equipment and auto¬
tive
effort of great
magnitude
mobiles. Commodity prices, in gen¬
and, to that extent, the outlook,
eral, were firm with tendencies
so
far as it concerns production
towards strength in some areas,
find general activity in the econ¬
particularly where industry buy¬
omy, is favorable. So long as we
ing was in competition with gov¬
are
engaged in large scale re¬
ernment procurement of critical
armament there need be no fears
materials for stockpile. Commer¬
of unemployment or tendencies
cial bank loans had shown no rise
towards recession. Such a condi¬
for nearly nine months, but instal¬
tion is always characteristic of a
ment credit and long-term mortnation preparing for war or de¬
gage credit had been mounting to
fense.
"
the point where banking authori¬
The confident projection of high
ties were beginning to be appre¬
industrial activity for an indefi¬
hensive. The Cost of Living Index
nite period does not carry the as¬
had been virtually stationary for
surance of a state of well-being
a
year.
Inventories in the hands
and
improved
living standards of
manufacturers, wholesalers and
such as has been with us during
retailers had increased moderately
strength to

Is This

New

Planning

have!

Korea

>/■'.' r->

Circle Wire & Cable

River Brand Rice Mills

*Prospectus on request

Permit

Life

Stocks

J.F.Reilly&Co.

„

Investment

Insurance

-i

Members

Credit Controls

at All-Time High_____

National Bank Assets

Shortage Ahead, Says Calvin

.."'C

X'-■' ;T

Direct Wires

Philadelphia and Los Angeles

29
CX.

Business Man's

Industries

Cover

Harrisburg Steel

Stocks

Bookshelf

Continental

Securities

Canadian

Premium"—___

Dev. Res. Corp.

_____

__,

Singer, Bean

News—Carlisle Bargeron

Activity_______^

Indications of Business

Associated

Recommendations

Washington Ahead of the

Expresso Aero

Field

Guess?

Einzig—"Gold Selling at a
From

Copper & Steel

Dealer-Broker Investment
You

Coming Events in the Investment

Mutual Funds

—

the postwar years.
civilian
an

Production for

will be superseded to

use

indeterminable degree by pro¬

since the close of 1949, and merT
chandise of virtually

all types was

in free supply. In short, we ap¬
materials
peared to be going through the
used or final
phase of a post-war boom
consumed in the usual way, but
which had lasted for over four
also are built for the purpose of
years and was destined to be fol¬
destruction. Wars, and the prepa¬
lowed, probably before the year
ration for them, produce an illu¬
was out,
by a less fevered state
sion of prosperity, but the cost
of activity.
fastens itself upon the nation for
Korea Changed Picture
generations.
Inasmuch as production in the
The Korean episode marked the

duction

goods

armament
sumer

period is not for con¬

use,

the diversion of labor

and materials

NSTA Notes

Our

Reporter's Report

Our

Reporter

Prospective

of the

end

some

cold

war

and assured

intensification of

Continued

inevitably calls for

our

arma-

page

Governments..

Securities

;

Twice

interested in offerings of

High Grade Public Utility and Industrial

and

CHRONICLE

WILLIAM B.
25

c/o

Publishers

DANA COMPANY,

WILLIAM

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March 22, 1951

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25, 1942, at the post office at New
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Weekly

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COMMERCIAL

FINANCIAL

Analysis

Says)

land,

We are

Magnetic Recording Tape)

Washington and You

34
Published

(Manufacturers audiodiscs,

Industry

Tomorrow's Markets (Walter Whyte

The

Who?

Like Best

The State of Trade and

Audio Devices, Inc.

Securities Now in Registration.

The Security I

Salesman's Corner—.•____

Then and Now—Guess

Railroad Securities

Securities

Y.;5

Security Offerings

Utility

Public

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and Bankers'— ______

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Bullock

As We See It

Market

FHLB Notes on

Broadway, New York 6 X

Credit Restraint

of- Voluntary

Committee—Warns of Tighter

Incorporated

■

Hosp. Supply

Scandals vs. Teapot

9.:

;

■

Addresses

McCabe

Did

State

Common

Labor

24
I..-'/

York

New

Fomenting

Dome
:

Dairy Farming Prospects—Roger W. Babson

Berkeley Williams Discusses New Deal
;

Market—August Huber

W. E. Cole Views Rearming of West Germany as

WHitehall 4-6551

-•

American
*

Commercial Banking Problems Today—William G. F. Price.

Another

Controls Under Inefficient and Inadequate Government

Cattle and

A Conversation on the Stock

STREET, NEW YORK

War-Peace Economy

Valentine

WALL

Investment Problems of Savings Institutions—John W. Kress. _

■

Telephone:
'

—Julius Hirsch

-—Alan

wise to him and
of his junk.
buy what you

....

Stocks—Louis Stone
a

any

probably

Obsolete Securities Dept.

Nadler.

„__4

Inflation and Price Controls in

you're

buy

we'll

1-i-i

Era?—Harry D. Comer'

A Look at the Steel

from

To a very con¬
degree, the amount of

inflationary

But

Bond Prices

An Analysis of Economic Conditions—Marcus

—Thomas W. Phelps

other pressures
generated by the armament effort
ind ustrial,
will be determined by the reac¬
business and
tions of the American public to
financial
these
arbitrary
decisions
and
trends from
emergency policies, or to the lack
this time for¬
of them. To date, the reactions of
ward will not
the
American
public have fol¬
be determined
lowed simple but sometimes con¬
primarily by
flicting patterns. It remains to be
the
Thomas D. Sears
interplay
seen
whether these* patterns of
/of economic
behavior will persist in the diffi¬
'forces, but rather by the arbitrary
cult period which lies ahead or if
decisions taken by the government
they will change under the pres¬
in its efforts to build up military
The

won't

Friedman

.i---------

Industry Characteristics Important in Investment

population.

siderable

been changed.

and

restrictions

Witherspoon

because

during World War II.
existence of these re¬
and demands calls for

varying

produce

indefinite

future

very

strictions

business

outlook

the

The

economic

and

IS BLUE

Stock Marketr—Thomas D. Sears. __

—William

goods and services by the civilian
economy.
These restrictions take
various forms, with most of which
we are familiar as a result of ex¬

complexion of

THE GOON
Cover

____

Turmoil in Treasury Issues and Its Impact on

consumption of such

restricted

Lindow

Proposal for Revising Capital Gains Tax—Elisha M.

possibility of reaction.

perience

AMD COMPANY

Cover

—

provide basis for strong further rises

prices, and may even suggest

Comparisons—Melch;or Palyi

Inflation Impact Ended

inflation forces, both abstract
and contends, many of these forces have already

produced their effects on stock market. Holds deficit financing
in significant amount will probably be avoided unless war with
Russia develops, and, should international conditions improve,
some deflation may set in.
Concludes facts in current and pros¬
in stock

and

Page

Government Controls and the Business Outlook

Barbara, Calif.

Stock market analyst reviews

pective situation do not

llCHIfnSTflfl

Articles and Newt

By THOMAS D. SEARS
Investment Counsel, Santa

IN D E X

Inflation Impact Ended
On Stock Maiket

and concrete,

(1223)

The Commercial and Financial Chronicle

Bank

and

Note—On

the

rate

Record — Monthly,
(Foreign postage extra.)

Quotation

$30.00 per year.

account

of exchange,

the

fluctuations in

remittances for for¬

eign subscriptions and advertisements must
be made in New York funds.

THEODORE YOUNG
40

Exchange Place, New

WHitehall 4-2250

& CO.

York 5, N. Y.

Teletype NY 1-3236

The Commercial and Financial Chronicle

(1224)

Proposal for Revising
Capital Gains Tax
of capital gains, Mr. Friedand has been so
ruled by the courts and admitted in reports of the appropriate
House and Senate Committees. Analyzes Treasury's capital
gains statistics and concludes the graduated income tax, if
applied to capital gains, produces more revenue than present
capital gains rates. Proposes:
(1) segregation of capital

■;

tal

1936-37

the subsequent

loss

Capital

Gain

Not

Court decisions have
trust

Income—

•

ruled.

fund, capital gains may not
be paid
to a
ben eficiary

entitled to in¬

and cap¬

come

of twelve

con¬

Canada

and

Merrill, Turben & Go.

arising
disap¬

have

holding

period

will

Furthermore, frequent realizing
short capital gains would in¬
Treasury
receipts
frorri

taxes

taxes.

brokers'

and

in¬

Thos. A.

are

CLEVELAND, Ohio

increase in the number of pub¬
a wider market for

Melody has become associated
with Merrill, Turben & Co., Union
Commerce Building.
Mr. Melody

stocks formerly privately held.

conclusion has been defi¬

fThe

was

tax plained

Proposals

nitely arrived at that it is to the

Legislation

for

sistant

market

Elisha M. Friedman

taxpayer

has

must

But

pay.

inves-

tor

option.

have
paper profit and refuse to sell

may

because the capital gains tax rate
is too high or the holding period
too

long.
On capital gains, the
taxpayer does have an option. He
may be coaxed but cannot be com¬
pelled to realize gains

to pay

taxes.

Capital gain is utterly different
from

income.

the -capital

rise

veals

raise

gains tax

in income

mental

the

tax

confusion

because

and

re¬

The above basic

great merit of the present

law is that it produced revenue—

•

Aims

ficially admitted in reports of the

discarded

are
.

In short,

are

Short-term

shortened.

the

law

present

liner

transatlantic

;

capital now frozen and
by high rates would

III

Summary of Legislation on Capital

Gains
The "details
1913 in

'of

changes^ since

deductibility of
perplex¬

waves.

should

losses reveal the historic

crease

ity of Congress and even its fre¬

substantially.

Never

make

the

New

fol¬

Treasury

Analysis of Treasury Capital Gains
preferreds

Statistics

Those
will

familiar

want

with

BONDS

CONVERTIBLES

read

SPECULATION

INVESTMENT

PREFERREDS, by Sidney
Fried,
for
a
complete
its
analysis,
many new ideas, and a timely current
table
with

several

significant

hundred
data

convertibles

appended.

passing

unaware

them

until

highly-praised

the

opportunities
they read this

work.

Tax

Treasury
falls

if you are interested in
Appreciation +
Income + Safety, send $2 for

publishers, R. H. M. Associates,
Dept. C, 220 Fifth Avenue, New York
it N. Y., or send for free descriptive
folder.

are

increased.

clear.

This

The

can

ury

receipts in

of low rates

years

small

Treasury
of high fates.

years

receipts

Holding Period of at Least One

confuse

them.

subject capital gains to in¬

yielded
$76 million, but capital gains were

Verney Corp.

insignificant at the

27%

bracket

and faded away

sharply at higher
top bracket of
highest income produced a petty
pittance.

Rudolph Wurlitzer

The

rates.

tax

U. S. Thermo Control

But

Sanitary Products

long

The

lowest

ported

★

term

taxed at

were

Air Products
★

decline

capital
gains will surely result under the
proposed high rates.

(Com. & Pfd.)

★

similar

Maine Central R. R.

$30

capital

flat 15%

income

million

gains

in 1938.

bracket
and

the

re¬

top

bracket,

Analyses

also taxed at 15%, re¬
ported a rise to $60 million, in¬
stead of a fade-away to
$175,000.
Apparently a 15% rate does not

Request
■

discourage
and

does

taking
produce

capital

148 State St., Boston
9, Mass.

y •

Teletype BS 25$

N. Y, Telephone WOrth

4-5000

consider

from

principle.
1934

1937.-

proposal that the
rates should be graduated accord¬
ing to the length of the holding
period.

Suggested bases might be:
(a) up to 3 months, about 35%;
(b) 3 to 6 months, about 25%;
(c) 6 to 12 months, about 20%;
(d) 1 to 2 years, 15%; (e) 2 to 3

12^%; (f) 3 to 5 years,
(g)
over
5 years, about
7J/2%; (h) over 10 years, about
5%; „and less where
privately
owned businesses become public
companies. Such a low rate would
years,

10%;

increase
among

the

figures for
an

Treasury
any year

the

rev¬

present

the

it pleases and

analysis will easily again prove

that the graduated income tax ap¬

diffusion

desirable

the broad strata of the

(5)

Permit

forward

reasonable

carry¬

to 1929-32. Can

"...

■

;"'

Experience Justifies the Proposals
High

Rates

better

enable

(Special to The Financial Chronicle)
.

Produced

Revenue.

Prevented

Revenue.

Does Congress Wish This Result?

Calif.

PASADENA,
Foellmer is with

—

Frank

Quincy Cass As¬

sociates, First Trust Building.

With Atkinson, Jones

(Special to The Financial Chronicle)

PORTLAND,
Jones, Jr. is

Oreg.

—

June

associated with

now

Atkinson, Jones & Co., U. S. Bank
Building.

MEMBERS

MIDWEST STOCK EXCHANGE

our

American way

trophe?

Congress has a grave re¬
sponsibility. It can avert or create

such

crisis.

the facts most
action

only

porting

should

minutely and take

the

basis of sup¬

statistics.

Let

this

509 OLIVE

STREET

Congress

demand such data!

Finally,

Stix & Co.

examine

St. Louis l.Ho.

Congress

has

unique opportunity to clarify the
90-year-old

confusion

capital

gains dating back to the Civil War
and

to increase

holding

period

and

graduating

rates
near

from

substan¬

revenue

tially by reducing the
to

35%

Established

minimum

three

1856

months

longer

term

H. Hentz & Co.

to# somewhere

Members

10%.
York

New

John S. Green, Inc. Formed
(Special to The Financial Chronicle)

York

New

York

Chicago
—

John S.

New

Exchange

Curb

Exchange
Exchange

Exchange,
Board

Orleans
And

Stock

Cotton

Commodity

Green, Inc. has been formed with
.

will

of life survive another such catas¬

CLEVELAND, Ohio

losses.
VII

Ley-

another "boom and bust"—similar

peo¬

ple of family owned businesses
developed over long periods.

Low

Let

the

gains

abundant

enue.

Tel. CA. 7-0425

new

—

.;The brackets up to 6%

Simplex Paper

not

effect

However, please note that the
Also the Effects of High and Low. largest
revenues
were
received
Rates
When short-term gains at the lowest rate of tax as shown
were
taxed like income, for ex¬
in the tables and charts to be
ample, in 1938, low tax rates pro¬ presented. The Committee should

large capital gains but high
tax rates produced small "capital
gains.

Inquiries Invited

is
in

Stephenson,

Revenues will then in¬

—

Analysis Within One Year Shows

duced

couraged.

(4) Graduate Rates by Time—If * evitably decline. Is that the Treas¬
the tax should begin at the high •
ury intent?
unproductive rate of 37V2%, pro-;
The Treasury Proposals Are a
posed by the Treasury, it should "
Potential
Menace
If
they are
be graduated down to the produc¬
enacted into law, the country faces
tive rate of 10%.
Graduation by:
time

With Quincy Cass

Refuted.

was

an¬

to meet the need of investors and

The Treasury is Now Asking for

rates

revenue

proved by comparing large Treas¬

your copy

to the

Treasury

rateS

Receipts—

rises

revenue

reduced.

are

and

Treasury

correlation

Investors not familiar with convertibles
will

The Effect of Changes of Rates

CONVERTIBLE

the

•

Proposal

making

industry."

CONVERTIBLE

decker, said that "these expanded

,/•

Year and a Rate of
3714%—No
Treasury statistics will support the
come tax rates.
Treasury's proposal.
Indeed, all
statistics
will
surely
(2) Offset losses against segre- j Treasury
refute it.
Certainly, Treasury re¬
gated gains.
;
;
ceipts will decline as the holding
(3) Set a rate that produced,
period, is lengthened, for fewer
plentiful revenue in the past. Proturnovers are possible. Certainly,
ductive
long-term
rates
were
as
the rates are
raised, realizing
121/2%, over 18 months, from 1921-> of
gains will be discouraged and
1933, and 15% above 24 months,.
realizing of offsetting losses en¬
from 1938 to 1941.

income.

pri¬

nouncement, Webster S. Rutledge,

should in¬

•

direct

withstand

(1) Segregate capital gains from
Never

Oakland.

operations

IX,.
like

coast-to-coast

posed changes in rates and hold¬
revenue

Co.,

vate wire between New York and

President

lowing recommendations:

rates, in length of holding
and

the

Will

with

1945, on a six-months' hold¬
period the government col¬
lected $750 million. On the pro¬
ing period this

Leydecker

Franklin

Street, Oakland,
Calif., annuonce that the New
York stock exchange firm of Jo¬
seph McManus & Co., 39 Broad¬
way, New York City, will act as
their
New
York
correspondent,

ing

capital gains will be caught by a
short holding period but will be
is that it continues the historic
missed by a long holding period.
confusion
between
income
and
A
short tugboat
on
the ocean
capital gains.
y waves will pitch and roll.
A long
defect

The

quent reversals.

bonds

Stephenson,
1404

immobilized

Present

Stephenson, Leydecker

stocks.

and

Methods

and

should

and effect?

cause

periods
of¬

errors were

delusions

facts followed.

Jos. McManus Wire lo

value

companies

million in 1945 com¬
become liquid and seek out new
pared with a previous peak of Proposals—The aim of a revenue enterprise.
bill is to produce revenue. Every
$576 million in 1928 and $420 mil¬
lion in 1929. The present law also other aim is alien and irrelevant.
VIII
To
collect
capital
gains taxes
has the shortest holding period in
Estimates of Increased Revenue
abundantly,
the
holding
period
history—six months.
Is not this
In
$750

over

gul¬

lible acceptance of a popular fiscal
delusion.

The

rates

History of Legislative Perplexity

revenue

income.

The

advantage of the government from

of the Cleveland
'

manager

office.

of privately held
rarely collected and
standpoint to give some —In 1934, 21 years after income
generally only on the death of
tax
was
Except for relief on long-term gains."
introduced, the Vinson
proprietors. Besides, the Treasury
the capital'
report admitted that "a practical,
benefits because inheritance taxes
gains tax,
intelligent and just law has not are
simpler to administer on mar¬
every
tax is Merit and Defect of the Present yet been found." In 1951 it still
ketable stocks than on privately
i nevi ta b le.
has not been found, but it may be
Law
held

such

from

formerly for many years with
Boston Corporation as as¬

First

fees, (2) increase in transfer taxes,
and (3) increase in taxes on capi¬
tal gains.
Taxes on changes in

considerable loss of revenue.":

Thomas

—

pre¬

gains

capital

the

Melody

There would also be

lic issues and

Bankers from

revenue.

months

short

transfer

Britain, which is levying terrific
high rates on every conceivable
source

profits

paper

three

come

Socialist

permits

peared within twelve months.

even

holding

many trades as one
months. Statistics show

large

within

months

crease

capital gains tax in

possible.
three

When privately held companies
Holland, Belgium and France ex¬
to the House Committee become public and enjoy free mar¬
and that the result has been a in 1942 why these countries had kets, Treasury revenue should rise
from
material hindrance to business and no capital gains tax.
(1) taxes on underwriters'

vinced that transactions

vented

ital losses may
not be deduct¬

Committee

four times

capital gains and thereby stabilize

quotations are as fol¬

"The

lows:

are

the market.

little

Foreign Experience

Senators.

individual

Pertinent

trades

people.

There is

the

Thomas A. Melody With

profit taking, increase
check too rapid rise, en¬
courage buying at low prices and
thus lay the basis for subsequent

collapse with great

millions

That

revenue,

possible

made

But Is

Bill?

shorter the term, the more

period

that

Tax

encourage

1928-29 and in

thus

and

Revenue.

Thursday, March 22, 195f

Resulting Benefits—A low rate

capital gains

profit-taking by big
It helped to exaggerate

the market rise in

Aim

The

deterred

holders.

the

Effect of the Capi¬

Tax—The

Gains

tax

House and Senate Committees and

Erroneous Concept of Capital Gain

rates

the
revenue.
The p r e s e n't holding
period of six months is the short¬
est
in
history and the revenue
from capital gains is the largest in
history.
..
.
' .»
.

gains from income; (2) an offset of losses against segregated
^gains; (3) low tax rate, viz. 12%%;. (4) graduation of rates
by time; and (5) reasonable carry-forward of losses.

low

the

high rates of tax.

The Market

maintains capital gains is not income

produces Prevented

gains

The Holding Period—The shorter

In pointing out erroneous concept

man

revenue

the holding period, the greater

Consulting Economist, New York City

;

than in the

By ELISHA M. FRIEDMAN

capital

plied

Cotton

other

Inc.
Trade

Exchange

Exchanges

offices in the Fidelity Building to
engage in

Officers

dent;

the securities business.

are

John S.

George

Green, Presi¬
Green,

Short Holding Periods Produced President and Treasurer;
Revenue.
Long Holding Period^' R. Greefl, Secretary.

N. Y.

Cotton

Exchange Bldg.

NEW YORK 4,

N. Y.

ViceCHICAGO

and H.

DETROIT

GENEVA,

PITTSBURGH

SWITZERLAND

-Volume 173

Number 4996

N. Y. State to Permit
Steel

The

Production

Electric

;

Insurance Investm't

Output

State of Trade

Trade

Commodity Price
Food
Auto

and Industry.

Price

In Common Stocks

Index

Two similar bills

Business

Failures

The

York

production effort last week reflected
-a
fractional decline from the previous week, but total output
continued to be sharply above the level for the corresponding
period a year ago.
In the field of employment, over-all claims
for unemployment insurance for the latest recorded week revealed
no appreciable change from that of the prior period.

November

and

January, last,

some

decline in em¬

The

Bureau

stated

that

151

in the country it sur-

areas

out of each ten had some

re¬

Condon-Rabin

Bill, also permits

bought

New York
bill
(the
Bill) which would
permit life insurance companies,
organized or operating in New

was

defense materials. ■'

•

^ -"Vy.

y^y

the future trend, a majority of employers in
•nine out of every ten major areas estimated their employment
would rise.
They anticipated substantial expansion, mostly sea¬
Forecasting

sonal, by May.
•

installations

and

Increases were looked for in aircraft, military
in reactivated ordnance plants and government

arsenals, and in manufacturing and metal industries,

the Bureau

stated.

steel production dropped close
to a point, reacting adversely to railroad labor difficulties at the
Pittsburgh works of the'Jones & Laughlin Steel Corp. The mills
produced slightly less than 2,000,000 tons of steel.
On

conception of the confusion that is hampering

Some

the steel

asserts

involved
m

becoming increasingly
tangle .of government regulations.
Priorities are
steel

that

distribution

priorities, and the trade is rapidly attaining the
confusion which characterized conversion to allout armament and related production in the early days of World
War II.
Increasingly, hopes are pinned on adoption of a Con¬
trolled Materials Plan as the only means of averting serious dis¬
order in mill scheduling and shipping.
Control authorities are
driving to set up a CMP organization, but it appears unlikely
the plan can be made operative before July.

piling
stage

of high

Continued

page

The
Bill

text

reads

has become associated with us

domestic

life

acquire
stocks

loan

Union Commerce

EXCHANGE

Bldg.

Main

1-6800

Treasury's offer of

rate manifested in the

ex^|

2%% cbu^|
pon. And we do have the abandonment of
pegging at the former unrealisticaljy low: I
' ."4-.\ 77V ''^yy
interest rate.

Wilfred

May

Offsets to the Rising Yield

com¬

ing the
the

it has
19 of

tory thereof, if
tion is not

insurance company

national

or-'a

(a)

state

bank

such

articl
'

stock

common

shares for

a period of ten fiscal
preceding such date
of
acquisition by such insurer,
and
shall
have
earned,, during

years

such

period,

aggregate sum
applicable to dividends upon its
common stocks or shares, equal, at
least, to

valu
stock

par

value

stocks

during

outstanding
and

able.

Overall, to the institutional expert now feverishly

his intricate

slide-rule

projections

making

well as to the run-of-theContinued

page

We take

pleasure in announcing that

ALFRED MacGOWAN
4

now

our

associated with

in Xy-

Trading Department.

sue

Pulis, Dowling & Co.
Members New York Curb Exchange

such

(d)

injected

issued

were

common

are

25 BROAD STREET, NEW YORK 4,
Bell System

Tel. HAnover 2-6284

N. Y.7

Teletype NY 1-2012

in an act of congress
United States, entitled the

provided
of

the

"Securities Exchange Act of

1934,"J

June: sixth,
nineteery
hundred thirty-four, as amended.
approved

CLYDE C. PIERCE CORPORATION
announces

the

change of its name
to

such

"No

shall

invest

H. GEORGE GARRISON

Vice President

H. C. WELLBORN

Vice President

II. S. CARPENTER

Secretary-Treasurer
Assistant Treasurer

in personnel, location of

offices, telephones or teletype*

PIERCE-CARRISON CORPORATION
Investment Securities

Building

Telephones: 3-8621

P. O. Box 1557

LD47

stocks

and
or

1951

outstanding

exceed

Jacksonville 1, Fla.
Teletype: JK-181

Established 1922

any

OAKLAND, CALIFORNIA

amount

institution

total

one-tenth

institu¬
of

one

cent of the admitted assets of
such insurance company as of the

thirty-first day of December nexfr
preceding. The cost of any such
investment

common

stocks

pursuant to this subdivi¬

sion, when added to the aggregate
cost of all other such investments
in common stocks or shares then

such insurance company,

pursuant to this subdivision and
section eighty-two, shall not ex¬
ceed the lesser of three per cent
of the total admitted assets or
one-third of the

surplus of such

company

the

thirty-first day of December, next

preceding."

that

announce

common

such

McManus & Co.

Joseph

per

insurance
March 12,

of two per cent of the

held by

Barnett

other

shares,

No change

Stephenson, Leydecker &Co.

any

upon

excess

vested
President

PIERCE

company

loan

tion, nor shall the amount so in¬

OFFICERS:
CLYDE C. PIERCE

ROBERT J.

stocks

common

issued

PIERCE-CARRISON CORPORATION

insurance
in

into Government-Bondholding by virtue of
pegging. Not only is the great attractive¬
ness
of interest-bearing currency removed, but the props have,
been pulled from the fiscal and emotional assurance of a rigid
par-or-above price floor.
This insecurity also extends to the
market price to be relied on for the marketable five year Treasury
notes into which the new-"Investment Series 2%'s" are exchangebeing

pay1

registered on^
national securities exchange, as

stocks

V'J-

percentu

the

its

period,

and

the value upon whic

all

four

upon

of common
having no par

upon

stocks

yJ-,- y.X'y :

y y -y ' y;-

basjc, offset to the presumption of
advantageous Government Bond investing, is the uncertainty
second,

which

sum

case

then

annum

Treasury Bonds are being ;

100 billions of open-market

aggregate

although it gives the full-term holders
in yield, it must be remembered

increase

security is unmarketable excepting at a penalty, and .that
maturity that is longer by eight years. Incidentally, only

over

The

now

(b) all the obli
tions and preferred stock,'if any
of such institution are eligible a
this

coupon,

the abandonment of rigid

trust company,

under

„

ori

raised coupon-wise.

2%%

new

benefit

that the

solvent
existing un¬

terri^
such institu¬

conclusion thatj

bonds should per se entail
the revaluation of the competing investment media. First, regard¬

increased attractiveness of government

any

presaging higher fixed-interest yields carry-

But these factors

common

state, district,

any

CLEVELAND 14, OHIO

der the laws of the United States

(or

STOCK

otherwise

upon

institution, created

per

MIDWEST

7yy?ff

change of the Victory 2V2's into a

'■b/i*..

shares.

insurance

investan,

pany many

dividends

MEMBER

important offsets prohibiting the easy unqualified

stocks

Common

would have been sufficient to

MERRILL, TURBEN 6- CO

;

We assuredly do have the obvious and ?
long-withheld move toward a higher interest §

follows:

"13.

THOMAS A. MELODY

;

general investing policy.
7

relating to stock investments
life
insurance
investments

dividends

pleased to announce that

individual's^

money-market change on dhe

of
,

Condon-Rabin

are

1 •

behind closed doors.
77
What can be constructively analyzed now
is the specific proposition of a possible impact

years.

of the

investments

steel front, last week

the

industry and those dependent upon its output may be gleaned
from this week's issue of "Steel," the magazine of metalworking,
which

at least 21

r' '

Committe testimony

the

term of

of this measure
might be contested in the courts,
at
the
suggestion of Governor
Dewey an alternative bill was also
provided, which is similar to the
Condon-Rabin Bill, but eliminates
passage

provision regarding the privi¬
lege of companies to invest in
leaseholds haying an unexpired

•'

Board-Treasury policies for the handling of
assuredly have left a multitude of impon¬
derable effects as yet unfathomable by the
economist, the bond expert, and the investor.
They, even if not the Reserve officials them¬
selves, are still playing the situation by ear—a condition scarcely alleviated by the confine- *
ment of Chairman-designate Martin's Senate

; 7 The new Reserve
the Government debt

State, to invest, under re¬
strictions, in common stocks of
corporations as well as in lease¬
holds.
Because of the possibility
that the

Frank

♦

the

16,

passed

11:13 a.m.):—

[oil] stock, and make'my investments, on

restricted investm't in leaseholds.
March

THE SENATE

hunch, like betting on a roulette wheel. That's the way every.'
body invests.
,
No, they don't base their judgment on facts."

York

falling off in employment.

further noted that defense production still was of
s rather
minor importance compared with civilian goods production and services, even though there was a substantial increase
.between November and January in the flow of contracts for

•

Costello (New York, March 21,

Condon-Rabin

•

seven

BEFORE

PRONOUNCEMENT

INVESTMENT

CRIME INVESTIGATING COMMITTEE. By expert witness

strictions. One of these measures,

Legislature

Spring.

veyed,

stocks under certain

common

ployment took place, the Bureau of Employment Security asserted,
but added that it was only seasonal and an upturn can be expected
in the

The New Government Bond Market and the Investor

Legislature, one an alterna¬
which would per¬
mit life insurance companies to
invest up to 2% of assets in

nation's industrial

Between

passed by New

tive measure,

•

By A. WILFRED MAY

Index

Production

•

Carloadings
Retail

(1225)

The Commercial and Financial Chronicle

MEMBERS
New York Stock Exchange—New
y

York Curb Exchange

Midwest Stock Exchange
New York 6, N. Y.

39 Broadway
will act

their

NEW YORK CORRESPONDENT
with

COAST-TO-COAST
DIRECT PRIVATE WIRE
between

NEW YORK

and

OAKLAND

The Commercial and Financial Chronicle

(1226)

members

mere

From

Washington
Ahead of the News

It is

the

find

It is

fact.

tribute to

not

who

man

held

who is

soldier in the

some

affairs.

and

years,

It is doubtful

is not

one

the

found

himself

similar

1920.

make

that group has

position

right after

his mind which nomination he wants long

time

before

And I should think he would have

from

ure

deciding.

v-'-'v

•.

offer to

•

'■•••'

••

offering of these shares for sale,

buy,

any

of such shares.

v"...

,♦

is made only

by the Circular,

fig¬

this

say

yields to
level.

only ficti¬

A.'

decline

the

bond

mar¬

course, does not mean

bond prices

that lower

tighten credit, but that
the tightening of credit results in
lower bond prices. There has been
substantial

expansion

mercial, loans

com¬

of the

reporting, mem¬
ber banks during the past year or
more,
and other types of loans

banking system have expanded.
Hence, even without a shrinking
of the gold base, this demand for

the Eastern

seaboard; indeed, his nomination by the Republimight easily split the party in two. The Democrats would
likely adhere to him like flies.
<
;

both

credit

for and

the

;

•.

cause

will

somewhat

nat¬

greater

credit

structure

being

en¬

larged, thereby producing a two¬
fold pressure toward higher in¬

•

beseeching the General not to let them down, to remember
party that nurtured him, and the General trying to
sidestep
them, should be very funny, indeed. In the end I hope they capture
.;. v

of. the

scarcity
and,
therefore,
put
a
higher price upon money. How¬
ever, the base is shrinking while

the

him.

outside

accommodation

urally

unfolding picture of the next several months may be
something truly interesting to see and not without its comic as¬

Democrats—clamoring

inside..and

:•

the

solicitation

tious.

than

correlation

cans

:V;/

offer to buy,

The offering

bonds

let

to,

Democratic Action, intellectual pinks, big city political
machines,
grafters and crooks—all calling themselves

corporate

2.80%

ket, however, does presage a fur¬
ther tightening of credit. This, of

pects, though not calculated to add -to the General's appetite. The
spectacle of this heterogeneous crowd of CIO's, Americans for

the

yields

advance in the yield

higher

even

Such

the

professionals, the party mechanics. As of now, it would seem
that only an Eisenhower could
pull them out of the mire in which
it appears they have sunken
up to their necks. The enthusiasm for
him among the Republican
professionals is limited pretty much

point where he can't disguise his impatience with

that

stock

However, it cannot be
an

about

The

conglomeration operating under that banner, would seem to be in
for an awfully hard time.
They would be more in need of a glam¬
orous
General, more desperate for him. And I am speaking now

said

cause stock
advance from about 6%

Political Washington is pretty well convinced, more so than
it has been for a long time, that Truman will not seek another
term. With or without Truman next time, the Democrats or the

global

truly

decline

3.75%, will

devil

a
sharp rise
(a decline in bond

high-grade

conventions roll around.

said that

far the comparison goes but

With

(advance in stock prices) will be

the ensuing eight years his friend, Julius
Barnes, definitely convinced him that if he wanted to be President
he had better make up his mind to be a
Republican.
The point for the General in this, I
think, is that he had better

would be sending

internationalist,

same

Hoover

vention

To my mind, if there was no other
objection to his being
President, the fact that he is of the Big Brass at a time when one
of the most serious dangers
confronting this country is the Big
Brass' ascendancy in our
affairs, would be sufficient. This ascend¬
ancy is so pronounced, so serious, that it has alarmed a man like
Senator Wayne Morse, who is as internationalist as
any of them.
The benign General
Marshall, maybe because he is growing old,

practical.

V-;V modified.

•'

World War I. Both the Republicans and Democrats toyed with him
and he ended up by not
being seriously considered by either con¬

escapable that Eisenhower definitely belongs
with the'group that has held our destiny in its
our

or of

V It would be difficult to tell how

the

;

Herbert

position he did in that
full General, cannot take the

The General is in danger of being grabbed
being sought by both sides to the extent
his appeal for the working mechanics on either

that he will lose
side.

direct correlation is

in bond yields

prices)

•

break

loosely

joined that

stumbling block to
have, and you won't

ultimate

thinking crowd.

■Thi3 is not

decline in bond prices

forerunner of

der the present circumstances and
the
relationship
is
so

to his winning

in Washington politics who doesn't think he has these

anyone

market, but the rela¬
tionship between bond yields and
stock yields is so at variance un¬

doubt of that.

occasions
has been

in the stock

runs

people, but that doesn't
the man,

prices, and likely
contributing factor in a de¬

cline of 4.01 points on March 13 in
^ the Industrial Average. On a few

by the Democrats,

troops to Europe now had he not lent his name to the
undertaking. It is all very well for his friends to be whispering
that he has not always seen eye to eye with Truman or Acheson;
as an outstanding
leader, a man who is listened to and commands
respect when he talks, he has on no occasion intimated in the

to the

was

I say it is a paradox and reflects

the part of the

Of course, this very situation may be the
what Presidential aspirations the General may

any more

come

Republican.

decline in stock

is no
Eisenhower is of

aspirations- aplenty.

hands for

has

his pleasant smile, there is

way,

General Marshall, his mentor and pa¬
tron, would make no such claim. It seems in¬

slightest that he

thinking

discount it

ranks.

shambles of

Democrat

confused

responsibility for high taxes and the
living on General Eisenhower;

attitude that he has been but

The in¬

millions of voters want Eisenhower for President whether he

;

It has been suggested that this
sliding of bond prices presages a

our government

that.

gold's rightful posi¬

prove

to me that he must share some of the respon¬

war,

made

tion.

Anyway, it is not a full-scale war, and it is scarcely a
Washington that the military's prime objective in con-

However, all the poitical soundings out in the country, polls
by local newspapers, the word coming to members of Congress
whose business it is to keep their ears to the ground indicate that

cost of

procession of bond prices and of
tightening credit which will ulti¬

neither for the Korean adventure. But it seems

Bargeron

has

mately

tinuing the Korean affair is to accomplish rearmament.

sibility, either through the sins of omission or
commission, for the terrible debacle that has
come out .of the war that gave him his fame.

Carlisle

military

action."

the military has come to have on
small matter of concern, I can assure you
this crowd. He owes everything to them.

being thoroughly disillusioned about World War II, disgusted with
the handling of our foreign affairs, with the Korean adventure,
with the drafting of their boys to send again to Europe, with more
military spending, with high taxes and the
high cost of living—yet look to a man who is
inextricably tied in with this picture, as their
favorite deliverer. I wouldn't want to pin any
of

The

Senators.

mere

fluence

paradox that the American people are represented as

high

Congress,

Thursday, March 22, 1951

always had its arbitrary way in time of war; now it is showing no
restraint or modesty in its demands in time of, shall I say "police
secret

By CARLISLE BARGERON
•-

terest rates.

If interest rates then

advance, bond prices will decline.
.

Hence,

we have a manifestation
tightening credit through¬
economy by the current
decline in the bond markets.
of this

250,000 Shares

out

Turmoil in

Treasury Issues and
Its Impact on Bond Prices

The Anglo California National Bank
of San Francisco

Statistical and Research Dep't,
Newhard, Cook &
Members, New York Stock Exchange

($20 Par Value)

this

and

larger.

even

Co.

Subscription Price to Warrant Holders
$30

The several Underwriters named below intend

purchased by them,

prices

The
to

offer shares of Common

Stock, purchased or to be
Representative of the several
the exercise
acquisition of the shares pursuant to the
more fully set forth in the Circular.

be determined by Blyth it Co., Inc.,

Underwriters. Such offerings may include shares acquired
by the Underwriters through
of warrants purchased by them or in anticipation of the

Underwriting Agreement

tude

otherwise, all

December

Dean Witter & Co.

Merrill Lynch, Pierce, Fenner & Beane
Company

Brush, Slocumb & Co.
Davies & Mejia

J. Barth & Co.

Elworthy & Co.,
k,'

Raggio, Reed & Co.
William R. Staats Co.

]

Wulff, Hansen & Co.

Davis, Skaggs & Co.

Lawson, Levy & Williams

March

13,

1351

into

the

'■

Pflueger & Baerwald
Shuman, Agnew & Co.

Stewart, Scanlon & Co.

bond-

until

after

detail^

of ' this

were

a n no u

need.

But, even the
filling in of

support. The Victory 2%s (Decem¬

maturity)

Kaiser & Co.

declined

from

the

bid to about par, recov¬

ered

only slightly from that fig¬
then broke through the
mysterious 100 to close at 99 bid

ure,

and

March 13.

The

decline

market has

in the government
been rather sharp up

aii

inventory

and

other

causes.

just

economy at the

multi¬

Thus,

present stage

and

pressure upon

the price of money-rate securities.
The
turmoil
in
Treasuries
is

therefore,
a
long

only one development
chain of events which

will

the

mark

ment

natural

tightening

developr

credit

that has become

economy

accus¬

veloped since 1934, when gold be¬

tradition somewhere along
line.
As I have pointed out

bond

Witherspoon

will

its

creates

Hence,

the

gan

not

artificiality in
action

prodigious
last week $135 million
ferred

foreign

during the past
billion

has

America.

the

ignored

because

shrinks

the

credit in

our

leave

this

pace.

Only-

was

trans¬

and

year or more

left

the

$2.7

"haven"
is

not

loss

fundamental
economy.

the

that

fundamental

economics

nently

have

gold

base

Many

p2r-

refuse to believe in this func¬

tion

ping

not

abrogated

laws

been

obscured

gold, but the recent slip¬
in bond prices is only one

in this downhill

■

perma¬

but have

been

temporary

ex¬

John G.

White Director

On March

6, 1951, John G. White

was

elected to membership on the
directors

board

nance

Plan.

Budget Fi¬

sons

of the many steps

re¬

the

en¬

account,

This trend

Therefore, the

frightening,. but

pediencies.

de¬

contrary should be reassuring in

unexpected.
continues

and

turning toward "normalcy" should

only

Gold

existed

entering the United States in

vast quantities.

past two weeks has been far from

country at

quite unnatural easy

credit which has

fit'

econom¬

prices that cannot long

dure.

William

there

System has been using vast sums
to support government bonds in

entirely foreign to sound

not sufficient to firm the mar¬

As volume of busi¬

;

tomed to the

ics and

ket after the Federal Reserve Sys¬
tem withdrew its long established
ber

Reserve

many occasions, the support of
the government market has been

details

more
was

Federal

ex¬

change

in bond

prices that might be expected to
develop over the next few years.

the

mani¬

fested

time, but of greater
importance is the probability that

the

to the present

now

the

enlarged,

self, and in so feeding the en¬
larging demand for credit exerts

higher
market. U

it presages a lower trend

is where it tends to feed upon it¬

of this

stability

was

money

our

"holding of the Treasury's
hand," but this cannot go on in¬
definitely; there must be a break

gov¬

semblance

concludes

normalcy to

Until

caused

100 22/32

Henry F. Swift & Co.

1972-67

bond.*

ernment

Conrad, Bruce & Co.1

Calvin E. Duncan & Co.

30-year

market

E. F. Hutton &

2%s

unsettlement
in

Sutro&Co.

made

non-market¬

This

;

rates will restore

Treasury Department

2%%-

Blyth & Co., Inc.
Schwabacher & Co.

level of stock market and

a
proposal about two weeks ago
for the conversion of the June
and

able

Copies of the Circular may be obtained from the undersigned only by persons to
whom the undersigned may
legally off cr these securities under applicable securities laws.

long-term interest

per

finance

ket, due

not affect

will

greater demand for loans to

Commenting

may

extended

economy,

accelera'es

ness

on the unsettlement of the government bond mar¬
change in Treasury's price support policy, stock
market analyst sees in it a
probable decline in general bond
market and further
tightening of credit. Says development

to subscribe for these shares have been
issued by the Bank to holders of its Common Stock, which rights expire at
5 o'clock p.m., on April 9,1951, as more fully set forth in the Circular,

our

supply

money

commercial

for

loans

As the money supply is enlarged,
the volume of business will grow

even

Rights, evidenced by Subscription Warrants,

credit

other

throughout

By WILLIAM WITHERSPOON

Common Stock

our

ner

Chicago,

cles.

White is

Reynolds

part¬

Company,

and

members

York Stock

known

Mr.

the

New

Exchange, and is well
national

financial
-

•

cir¬
.

Number 4996

[Volume 173

rn wm

Chronicle

The Commercial and Financial

It is quite evi- of 1952, if there is no war in the tor of the economy will not conduring 1951 we will meantime, we may be in a posi- tinue to rise as it did during the
produce as many tion to produce as many civilian last few months,
automobiles
and
other
durable goods as we did during 1950 and
(5) Controls have already been
goods as we produced during 1950. at the same time be in a position imposed and if need be other conIt is quite clear that during 1951 to maintain our military might.
trols will be imposed, because one

bound to develop.

dent now that

Analysis of

not

Professor of Finance, New York

Assuming there will be

major

in 1951, Dr. Nadler con-

war

of business
(2) full employment, with more workers and more
pay; (3) gross national product along with expend¬

activity;
•overtime

able

consumer

will

expand.

the

before

group

the

one

and

hand

other

the ~

Rus¬

order to prevent

{

events

have

Unforeseen

erect

thing is certain, and that is, just
as we make sure that we can handie

all

international

they arise,

SS Ctms a^JSSas:
income does not increase
whose

•

United

the

unforeseen

inflation.

take place which can
temporary effect on busi-

States

that

and

fronted

may

able

during 1950.

that

there

United

problems as
must we make sure

inflation

States.

the

inflation

Serious

Events

some

sure,

the

nounced

he begins
"on

but holds danger

aggression.
Some

store for us,
with

holds

the future

sian

what

of businessmen to tell them

strong

bound

ever

generally stated.

great as

Ordinarily when a professional
comes

economy

not

homes

will wipe out the middle class, you
and me, and once the middle class,
increase, and when- more or less steady.
the
torch-bearer
of
supply of commodities
liberty,
is
There are many Americans liv¬
goes
down
and the supply of
wiped out, then the country is
ing on a pension, and many Amer¬
money in the hands of the people icans
will* live on the benefits of ready for great economic, political
and social changes.
increases, naturally it creates in- an insurance policy.
There are

large; and (4) retail trade,

income will be very

Lists strains

of inflation is not

economist

many

University

(1) there will be this year a high degree

eludes

will

as (2) Not everybody's income is
The protected by an escalator clause,
supply ot durable goods is bound Not everybody is a - farmer, the
to go down, and this decline in price
of whose product is prothe supply of durable goods comes tected by parity provisions of the
at a time when the disposable in- law.
There are many millions of
come in the hands of the people Americans
are
whose
incomes

NADLER*

By DR. MARCUS

Economic Conditions
V

&ble

with

pro¬

are

con¬

serious

are

therefore

convinced

that

will not have serious inflation.

all

probability, commodity
down, prices will rise by another few
they buy less on the market and points, maybe 5, maybe 10%, and
sooner or later, this is being felt
then in all probability commodityjj

the cost of living goes up

their

danger of

Inflation

No Runaway

purchasing

the

and, as

power goes

movement

commodity,

prices will level themselves out <:
will

and

stay

there

during

the;

tell prices.
period of the emergency.
you this—and what I say is based
(3)
Taxes have already in¬
I
probable I don't know — that the not
repeat, therefore, while we
only on experience but also creased,
and
in*
all
probability
Russians may endeavor to make a
cannot deny that there is a danger J
will
be
increased
more.
op study —the danger of inflation taxes
of inflation, while the forces of in- 1
peace effort. What has been called
is; not as great as most people be¬ Taxes, tend to siphon off excess
a peace scare may develop,; and lieve it to be. There is no need
flation operating in the economy ^
purchasing power.
are
the people.may say to themselves, for a runaway from the American
great, there is no need for a\
; (4) Already we have mild credit
"There won't be any war; what is dollar.
runaway from the dollar and there '
!

ness

activity. It is possible

—

how

the

same

time,

let

hand," and he
; o

injects
many

;"ifs,

and

whe'ns,"

that

you

awayf%

m o r e

confused

than

the use of buying? I already have

bethe

all the merchandise I need."
You and I know that retail trade
during the last few months! was
very large. You and I know that

were

you

fore.

the 6con-

end

restrictive

The

of inflation

type

most-

occurred

that has

You

measures.

are

fa¬

X, dealing
the construction Gf

miliar with Regulation

countries

with loans

the homes; Regulation W, dealing with

Europe cannot take place in
United
States,
and
this
is

not

need

chasing

power

decline

nessed. in

the

fear

that the pur¬

dollar will-

of the
extent

currencies

wit¬
other!

purchase of durable/goods. countries.
' '
•
omi'st
alBefore long, ordinary credit con¬
inventories in the hands of busi¬ Wishful thinking.
Labor will be in short supply.
w a vs right be- :
.The reasons for this statement, trol will be strengthened; it will
ness
people^ are very large.; The
Marcus Nadler
The demand for labor will be very
cause
he
can
be more difficult to obtain bank
briefly are these:
then
great. This in turn will lead not
say,
"I figures of the Department of Com¬
merce prove it.
*
(1) The productive capacity of credit; it will be more difficult to only to increases in wages,- but
told you so.".
•
You and I know that the vol¬ the United States is great and is borrow.
The
expansion
of
credit
Fortunately, or perhaps unfortu¬
Continued on page 18
ume of bank credit has increased
constantly increasing. By the end brought about by the private secnately, this time no guesswork is
rather considerably, that a great
needed.
No guesswork is needed
deal vof inventory has been accu¬
because, as ' the speakers men-1
1
s
is

the

tioned, the international situation
well

into

the

gram

the

mobilization

the

enters

government

with

mulated

picture.

It is

aid

the

credit.

pro¬

•

possible

bank

This is not

how probable I

—

don't know—that

peace

one

"Make sure that you
defense job," and for us
oldsters, I don't know what to
-

•

f+f■

-v

will

What

advise.

' !;;

- The- year
marked by a high

the

(2)

for

We will have full employwith more people working

overtime than since the war; more
married
will

women

now

unemployed

be gainfully employed; more

younger people and more
older
people will remain at work.
n)

national

The

inromp of the

country
the national
«

prod-

gross

expendable income ta thehands
of the people, is bound to be very

kinds

all

(4)

commodities

expand.

Blyth & Co., Inc.

order

Union Securities

W. C.

ditures during

;

1951 will also im¬

Carl M. Loeb,

Higginson Corporation ^ ' f

Paine, Webber, Jackson &
Central Republic

Ko?"

';i,

Bateman, Eichler

Curtis

Company

(Incorporated)

Hill Richards & Co.

period of

economy?"'
This

history.

something

Never

new

before

spent so much money
in peacetime to keep
*An address by Dr.
a

symposium

Frankfort

and

'garrison'

the

'iff';!-/.
in

our

have we
and effort
our

arms

Nadler delivered at

Seagram,

Browne-Vintners

Calvert,
Compa¬

nies, New York City, March 2, 1951.

ployment will be large, wages will
high and they will be increas¬
ing.
Overtime payments will be

Spencer Trask & Co.

made- This huSe purchasing power
m

the

hands

the

people

will

• /-.

Lester & Co.

Irving Lundborg & Co.

Shields & Company

Sutro & Co.

Wood, Struthers & Co.

Bear, Stearns & Co.

Hayden, Stone & Co.

F. S. Moseley

& Co.

Pacific Company

commodities, thereby imposing an¬

result

program,

the economy.
of

ceytain

the

March

rearmament

shortages

are

Harris, Hall & Company

Drexel & Co.

Clark, Dodge & Co.

(Incorporated)

Incorporated

Reynolds & Co.

create the demand for all kinds of

other strain

Incorporated

Davis, Skaggs & Co.

A. G. Becker & Co.

Rhoades & Co.

Blair, Rollins & Ce.

& Co.

Crowell, Weedon & Co.

develop in

W. E. Hutton & Co.

Hornblower & Weeks

Hemphill, Noyes, Graham, Parsons & Co

pose a

Lee

Hallgarten & Co.

Dominick & Dominick

Incorporated

capital expen¬

great strain on our economy.
The third strain will come from

Shuman, Agnew & Co.

Mitchum, Tully & Co.

Davies & Mejia

William R. Staats Co.
'

Company

Weeden & Co.

Schwabacher & Co.

Langley & Co.

material and labor.

Lehman Brothers

Securities Corporation

First California

Elworthy & Co.

the

noco

Stone & Webster

White, Weld & Co.

Walston, Hoffman & Goodwin

for
but at the
timeconsumption;
it creates
demand
forsame
raw

Glore, Forgan & Co.

Corporation

Brush, Slocumb & Co.

Ripley & Co.

Incorporated

Lazard FrSres & Co.

Kidder, Peabody & Co

Merrill Lynch, Pierce, Fenner & Beane

e<IuiPment is being manufactured,
there is as yet nothing available

question, "What will fortunately, some people are even
<(1X7Vici +
nnon^;»irt enmo r\f
poitinrtp
business be?" Ullf
but rotVlDr
spending some of their savings.
rather, "What
As I stated a moment ago, em¬
kind of pattern of business will
Unci

Goldman, Sachs & Co.

Harriman

Corporation

Eastman, Dillon & Co.

Smith, Barney & Co.

able to

this time the great demand on the part of
of the year, trying to look ahead the civilian population.
The sup-,
to what the future holds in store ply of money in the hands of the
for us, we don't ask ourselves so people is already very great. Unmuch

The First Boston

Dean Witter & Co.

maintain our standard of living
and at the same time to increase
our military might.
This requires billions of dollars
°f capital expenditure . in new
plants and equipment. While these
Plants are beinS erected and-the

and

therefore, at

Briefly,

;

been

Holders

$31 per share

drafting of our
train them to be

The rather large

The. volume of retail trade
continue high and to

Subscription Price to Warrant

increased

capacity

large.
is bound to

ahare

Copies of the Prospectus may be obtainedfrom any of the several under¬
writers only in States in which such underwriters are qualified to act as
dealers in securities and in which the Prospectus may legally be distributed.

degree of busi¬ young men to
The limit will be professional soldiers.
A great strain will be imposed
set Y)y the productive capacity of
the* country, the availability of on the economy because of the in¬
creased capital expenditures. Our
raw; materials and of. labor, Busi¬
aim is to increase our productive
ness will be indeed at a high level.
ment,

Common Stock

follows:

activity.

ness

economy

be labor;

will

pattern of busi¬

be?,; Briefly stated, the pat¬
tern of business will develop itself
Our

these:

1951

' V

•

Rights, evidenced by Subscription Warrants, to subscribe for these shares have
issued by the Company to holders of its Common Stock, which rights
expire April 4,1951, as morefully setforth in the Prospectus. ?

will be subjected
My analysis, therefore, is based to three strains, one coming from
the assumption that there will the
rearmament
program
which
be no war, and the conclusions will, mean an increased demand

(J)

• 1,419,562 Shares

Par Value $25 per

that I reach briefly are

Pacific Gas and Electric Company

ness

somewhat

Conclusions Reached

offer to buy, any of such shares.

The Pattern of Business

I would say,

get

offering of these shares for sale, or an offer to buy, or a solicitation of an
The offering is made only by the Prospectus.

scare

should
develop, temporarily we
analysis, I shall make
might have a moderate decline in
assumption, and that is
the volume of business, primarily
that there will be no war during
in the sales of soft goods; but, in
1951, and this assumption is basic
my humble opinion, even if this
because were; I to
assume
that
were to take place, it is bound to
there will be another global war
be only temporary in character. >
in 1951, my message to you would
A
rearmament
program
must
be entirely different. In that case
continue
and
in
all probability
I would say to you, the younger
will be accelerated. The rearma¬
gentlemen, "Go home, put .your
ment program1 will continue^ for
house in order and make ready
years to exercise a very powerful
to join the colors."
^ !
influence on business activity.
To the somewhat older people

In
only
[

20,1951.

of California

J. Barth & Co.

"(1228)

The Commercial and Financial Chronicle

Industry Characteristics Important
In Investment Planning
By THOMAS W. PHELPS*
Assistant to the Chairman, Socony-Vacuum
Oil Company, Inc.

Investment expert asserts investment characteristics of
stock

mon

industry's stability,
but also by management, quality and leverage. As leverage
factors, he cites uncontrollable wage costs as well as pyramided
capitalization.

States correct market timing,
elements into good

vestment

gets only $5,000

rest, or $6,000 an increase of 20%
over her former $5,000 share. And
if the earnings drop 50% to total
$5,000 Miss safety First still gets
her
$5,000 while Miss Take-aChance gets nothing.
That's one
kind of leverage. Its effect is to

and

assets of

business ahead of

other

certain

Dealer-Broker Investment
Recommendations and Literature
It is understood that the firms mentioned will he
to

Door¬

by manufacturing and sell¬

year

$1,000,000
worth
of
brass
Why do they make this business likely to be. On the other hand, ing
investing so hard? The diffi¬ the longer you can postpone buy¬ knobs. Suppose the corporation's
culty right here, I think, is that ing a product, and the farther wage bill is $500,000 a year, and
investment

any

characteristics

stock

alone

•

the
industry
it

try

leverage
fluctuate
than
of

come

had

seats

may

theory

food because

relatively

two

the average man

holes

wear

the

pairs of pants. The
that he then would

was

have to buy, and the wheels of in¬
dustry would pick up speed once

Thomas W.

soon

time

high

earnings

business

that the turn for the better would

indus¬

with

Clothing, for in¬
basically not quite so

is
a

you

be.

Phelps

more.

unstable in¬

Let's try to answer
time.

put

can

question

one

What makes

indus¬

have

the

matter how

talk of

some

travel to the

moon.

matter of fact, our company

got out a guidebook for the trip.
Here it is. Now as I understand

it,, there
That

air

means

the

moon.

that tourists must buy

the air they breathe there.
demand

is probably

Such

the steadiest

imagine. Even by breath¬
hard, no one can store up

we can

ing

enough

air to

than

few

the

last

himself

minutes.

price,

Regardless
would be very

need

off

fresh

air

have to wait

climates,
heat

lights, whether

du Pont &

suppose

that

the

knobs
and

number

same

sell for

other

$800,000.

expenses

door¬

If wages
cut 20%

are

from

reduced

the

$800,000 leaves

sales

though,

the

winter can't

turn

house

our

thing else.
in

such
But

There is

leverage

situation.

now

reason

force
fall

that for

suppose

another, it

one

im¬

proves

to cut wages

20%.

when prices
year's output of

The

doorknobs

sells

for

new

$800,000

in-*

stead of

$1,000,000. Other expenses
drop to $320,000, from $400,000.
But wages stay at $500,000, so the
is

other;

expenses

$820,000, compared with

income

total

$800,000. The corpora¬
That is leverage

tion loses $20,000.

with

and

oil,

matter how hard

be trying to avoid spending
money in other directions.
may

all

the

corporations

the doorknob

industry were simi¬
you might say that
of
the
industry
varied widely with changes in the
prices
of
doorknobs,
and
you
would be right.
But the reason

The
important thing in con¬
sidering the investment character¬

for

istics of major industries is to

imparted by uncontrollable
wage posts rather than anything to

why the earnings of
are

usually

some

see

indus¬

variable

the instability of that indus¬
try's earnings would be the lev¬
erage

do with doorknobs per se.

others, rather than to try to
You may think that I am split¬
to present no serious competition. memorize
any list of stable and ting hairs, but unless we see why
earners.
If
Even such a stable business as unstable
you
know the earnings of one industry are
selling air on the moon could be what makes an industry stable or more volatile than another we
upset
by bad
management,- of unstable, you can recognize when can't hope to foresee when an in¬
course, but in talking today about changing conditions may make a dustry's situation will get better
as

investment characteristics of vari¬

industries,

ous

assuming
good management throughout. It
we

are

would

be pointless to do other¬
wise because bad management can

wreck

normally unstable industry a or worse, and foresight is the only
steady earner for
a
period
of kind of vision that pays off in in¬
years, and vice versa.
War, for vesting.,,
•
example, may insure capacity op¬
In the case of both the beauty
erations

for

makers

steel

and

changes

heavy machinery, not only while
the fighting is on, but to fill de¬

moon,

ferred

business.

any

Aside

from

in the population of the
which presumably could be
anticipated, and in the absence of

government

competition

regulation,
should be
The

Lunair

our

model of

rate

business

stability.

demands

investing,

walks of

when

permitted

over.

in many other

life, rules

thinking but they

guide

may

should be

never

become

our

substitutes

shop and the doorknob factory
note
age

one

thing in

the

claims

business.

magnify

the

The

Lever¬

common:

is the result of setting

ferred

up pre¬

earnings of
tendency

falling off in earn¬
ings is exactly the same whether
those preferred claims belong to
bondholders, preferred stockhold¬
any

1
thing to such a for thought..
business on earth is, of
We
have
seen
course,
some
of
the ers or employees.
food and drink.
Anyone who has things that
make
an
In
one
industry
respect, and speaking
ever been
deprived of both for a stable; but what gives it leverage
solely from the point of view of
day
or
two
knows
that
they and why does leverage affect its investors, leverage due to uncon¬
should be listed in reverse order—
stability?
trollable wage costs is worse than
nearest

drink

and

food.

The.

something to drink is
postponable

but

need

not

less

for

The

only less
variable

than the need for food.

leverage due to

Leverage Factor

Suppose two girls own
dressing shop that earns

italization

hair-

pyramided cap¬
wages in such

because

circumstances

are

often

Water for
$10,000 ratchet
they
won't
go
down
and irrigating is some¬ a
year.
They share alike in the when prices fall, but they do rise
thing else again, but the business profits or-losses of the business.
promptly
when
prices
go
up.
o£ supplying drinking water is If the
profits of the business in¬ Occasionally you can buy that
probably
inherently
the
most crease 10%, each girl's share of kind
of
one-way
leverage
for
—

washing

stable in the world.

those
the

Elements of Stability and
*

50%,

Instability

sure

you

all

half.

are

thinking

ahead of me not only as to what
makes businesses stable but what
makes them unstable.

Obviously,

the

you

have to

less you

plies
the

regularly

are

use a

and

steadily
product, and the

able to build up sup¬
against future needs,

stable

the

business

furnishing that product to
*A
School
1901.

talk

for

Mr.

Social

you

increases
the

each

girl's

There is

10%.

business

drop

cut

leverage in that

yourself

through, the

medium

stock

Now suppose one
of the two
girls is the safety-first type. She
suggests to her partner that the
profits be divided on a new basis.

profits

when

the

year

Chance.
earn

rest

earned
go

Miss

any

one

Take-a-

If the business continues

$10,000

annually,
the
profits are divided exactly as be¬
fore. But if the
earnings rise 10%

—

First

the

times

sary

increased

are

when

Corporation,

100

bonds—

Broadway,

company

issue

that

feels

kind

Favorite

Fifty—Analysis showing the listed stocks most popu¬
professional management and the relative standing
of these stocks since 1947—Aigeltinger & Co.', 52 Wall Street,

lar with
„

New York

5, N., Y.

Free

Market—Study of its implication—C. F. Childs and Com¬
pany, 1 Wall Street, New York 5, N. Y.

Graphic Stocks—January issue contains large, clear reproduc¬
tions of

1,001 charts complete with dividend records for the
of 1950, showing monthly highs, lows, earnings,
capitalizations, volume on virtually every active stock on the
New York Stock and Curb Exchanges—single copy $10.00;

full

when

any

succeeds in

value.

group

yearly (6 revised issues) $50.00—special offer of three edi¬
tions of Graphic Stocks, 1924 through 1935; 1936 through 1947
and up-to-date current edition, all for $25.00—F. W. Stephens,
15 William Street, New York 5, N*. Y.
;
"Information Please!"—Brochure

explaining about put-and-call
options—Thomas, Haab & Botts, 50 Broadway, New York 4,

New York.
Natural

Gas

Distributing

nities in their

Companies—Discussion

opportu¬

stocks—Goodbody & Co., 115 Broad¬
New York 6, N. Y.

way,

Norway

—

common

Memorandum

—

Chemical

Bank

Trust

Co., *165

Over-the-Counter Index—Booklet

showing an up-to-date com¬
parison between the 30 listed industrial stocks used in the
Dow-Jones Averages and the 35 over-the-counter industrial
stocks used in the National Quotation Bureau Averages, both ■
as to yield and market performance over an 11-year
period—.#
National Quotation Bureau, Inc., 46 Front Street, New York V
4, New York.
Dividend Indicator—3

PDQ

turns
Box

5 pocket chart prefiguring re¬
stocks—$1.00—Thomas Pub. Co.,

dividend-paying
190, Batavia, N. Y.
on

Planning for Profits in the Stock Market—Discusses three basic

principles of correct investment procedure and outlines spe¬
cific plan of action for applying these to individual invest¬
ment programs on a week-to-week basis—Included with
each copy is a

current basic strength analysis of 440 leading
primary trend graph, showing present
actual trend of the market, and a complete analysis of the
market's
technical
position—$1.00—Dept.
4-A,
Investors
stocks and 43 groups,

Research

Company, Mihran Building, Santa Barbara, Calif.

Obviously
our

society

Portfolio Management—Three suggested
vestment

portfolios for the in¬
of $5,000 to meet varied needs—Francis I. du Pont

Co., 1 Wall Street, New York 5, N. Y.

Also available is

leaflet of market discussion.

Potential War Babies—Discussion of

four issues selling under

$1 per share—Olds & Company, 35 Montgomery Street, Jer¬

City 2, N. J.

sey

Shop Talk—Bulletin on developments in various stocks—Georgeson

& Co., 52 Wall Street, New York 5, N. Y.
*

*
V

Aetna Standard Engineering
&

ard

Allis

Company—Analysis—Moore, Leon¬

Lynch, Union Trust Building, Pittsburgh 19, Pa.

Chalmers

Manufacturing

Company

—

Analysis

—

Freeh-

ling, Meyerhoff & Co.", 120 So. La Salle Street, Chicago 3, 111.
Steels,. Limited—Analysis—L. S. Jackson & Company,
Limited, 132 St. James Street, W., Montreal, Que., Canada.

Atlas

Berry

Motors, Inc.—Analysis—Samuel

S. Cadwell Co., West-

port, Conn.
Berry Motors—Bulletin—Coffin, Betz &

Co., 123 South Broad

Street, Philadelphia 9, Pa.

Continued

page

Purolator Products
$3.33 earned 1950

vs.

Primary

28c

per

share in 1949

Markets

one¬

carving out for itself
participating preferred position
Continued on page 26
-

year

neces¬

bargain stock, its prospects
may
be so poor that even the
preferred claim on its earnings
may

New

5, N. Y.

good. The danger is that

sided

2M»s 1967-72 into 2%%

Treasury
Boston

common

All

York

participating

but shares with the

The first $5,000 earned in
any one
year is to go to Miss
Safety First.

of U.

Bulletin

preferred
stock
which benefits by its prior claim
on
earnings when times are bad

arrangement.

Phelps 9t the New
Research, March 14,

profits

Exchange, 11 Wall Street, New York 5, N. Y.
Exchange

Broadway, New York 15, N. Y.

vengeance.

Now

the

figure of

profit of $80,000.
That is down 20% just like every¬
a

Co., 1 Wall Street, New York 5, N. Y.

Stocks—Brochure discussing the case for bank stocks in¬

"Exchange"—Monthly magazine now issued in a streamlined
edition—10£ per copy or $1.00 per year—New York Stock

in
profits.
Now let's
that prices fall 20%, so

$100,000

stocks—Francis I.

cluding pertinent facts on 18 selected banks—Kidder, Peabody & Co., 17 Wall Street, New York 5, N. Y.

ex¬

from $1,000,000 sales leaves

old, rented or mortgaged. And larly situated,
automobiles won't run without gas the
earnings

than

payment,

air

inferior

long

When night comes

tries

for

down

postponed, no matter how long
delayed one's new home may be.

hard for anyone to economize on
his use of air. And second-hand
is

$900,000. Sub'racting $900,000
penses

total of wages and

try stable is continuity of steady to get it.
demand. Recently there has been
In
cold
As

The two expense figures total

000.

possible either to reduce the labor

You

buying rugs
and furniture longer than
dustry with low leverage.
clothes,
What makes an industry usually, and most of us can and
stable?
What gives it leverage? do postpone building a house until
at

that its other expenses total $400,-

days, when we still had busi¬ each, they now total $720,000.
ness depressions, it used to be said
Subtracting $720,000 expenses

elatively

stable

old

re¬

that

earnings
r

it, the

business

,you
can
buy
clothing farther
'ahead of your needs, and put off
.repurchases longer. Back in the

lever¬

age of various

sult

bound

stance,
steady

represents but

kinds. The

the

supplying that product to

not

its

unstable

de¬

are

termined

ahead you can stock up on

common

Stocks—Price record of selected bank

Bank

the

pleased

the following literature:

Company, 61 Broadway, New York 6, N. Y.

Bank

knobs Corporation makes $100,000

speculation.

send interested parties

Air Transport Industry—Analysis with particular reference to
United Airlines and Trans World Airlines, Inc.—E. F. Hutton

claims.

Suppose Consolidated

turn poor in¬

can

agreed, while
gets all the

Take-a-Chance

Miss

magnify business ups and downs.
In general it is the result of plac¬
ing certain claims on the earnings

a com¬

determined not only by its

are

$11,000, Miss Safety First

total

Thursday, March 22, 1951

.;;

Troster, Singer & Co.
Members:

Security Dealers Association

Trinity Place, New York 6, N. Y.

Telephone:

2-2400.

Teletype

Private

wires

1-376;

377;

378

Cleveland—Denver—Detroit—Philadelphia—Pittsburgh—St. Louis

dumber 4996

Volume .173

Is This

(1229)• 9

and Financial.
. < The
Chronicle
Commer

New Era?

damaging effects of
H> we have found it

build

our

defenses

possible World War III. And

By HARRY D.

COMER*

are

Paine, Webber, Jackson & Curtis
Members, New York Stock Exchange

Partner,

doing this under

(5) unprecedented inflationary bond
market; (6) a controlled economy, and (7) an irredeemable
paper currency. Points out also something new has been added
in stock market, and inflationary trends are causing an Era
of Distortion. Foresees long period of high production of near
food

boom

prices

causes or

Concludes,

proportions.

long

„

other
the

erates
than
a

another.
to

new

name

call
era,

Perhaps

rather

present

simply

the

would be

of forecasting when buying sprees
in
department
stores,
such as

has

the

been

dollars
inflation

stated

distorted

which

the Korean

statistics

All
are

several years. One distortion gen-

progressing

for civilian production will begin

to pinch somewhat harder

this country for years. The dis-

lows:

tortion must be somehow removed
before we can really know what
has been going on. The dollar

25%;

figures themselves are
rather than revealing.

descriptive

Era of Distor-

o-*

bince

about

■

-...

„

1933, when Roosevelt took

stepping

old emo"There's nothing new under the tions of joy and grief, love and
sun."
Nowadays, almost every- hate, fear and greed. Self-preserbody knows that that's not true, vation may continue to be the
There

heard

therefore

plenty

which of these emotions is upper-

the

atom

bomb

the

hy d r

o~g

over

billion. February and March will
both show

the past 20-odd years.

assuredly
us

How about

scientists,
bombs most

this earth,

penicillin, aureomy-

four months will -de-

113
-f-1458

4-170
4- 25

almost certain that some letdown
in consumer and business buying

-f

—

cin and terramycin—to

mention a
things under the
sun which man has produced
in
the technical laboratories?
*
few of the

cide whether 1951- is to witness a
general war. If nothing new develops soon, it would appear to be

210

seems to me mat tne saie assump
fol- tion that rearmament programs

something new for

are

to contend with

next three

the

these

$87,000,000,000 $270,000,000,000
Industrial production
*110
*225
National debt
$16,500,000,000 $257,000,000,000
Avg. hourly earnings, mfg.
$0.57
$1.54
Population
122,000,000
153,000,000
income

the

have

the conclusion that the

come to

Percent
increase

mind

Stalin's

observers

understand

Production civilian production. Our capacity
it

and

know

neither

workings

1929
-1951 (Estim.)-

National

claim

January,

there has been

I do not

stars

Versus

Figures

over

other

sun

t h

terior

Dollar

eains

international

Some

in-

the

than

1951

month; Decem-

Industrial stock prices
would
occur
in
the
next
few
198
191
most, which is swaying the mass
months. That tendency would be
^Federal Reserve Board.
mind, which one is receiving the
accentuated
if there
is a
real
most emphasis in a given period
The year 1929 is often thought double the net earnings accruing
of time.
...y
y ^y':.';
"peace movement."' However, I
of
as
typifying
a
big
boom
in
to
the
corporation
after
taxes,
Look into the field of music for
a moment. The standard piano has American business. Yet, stated in which totalled $834,000,000. Taxes think
some exag88 notes, the same old 88 notes, dollars, our national income this nearly equalled the total wage geration of the probable severity
Are we to conclude, therefore, year will be more than twice what bill, which was $1,809,000,000.
f the
near-term squeeze- on
that we
cannot have <any new h was in 1929. $270 billion versus
.
....
,
^
.,
music because there are no new $87 billion, a rise of 210%.
Outlook for Industrial
notes? Not at all. New musical
Average hourly earnings of
It is not always profitable to to produce is much larger than
compositions are being produced workers in manufacturing indus- attempt to'appraise the stock mar- was when World War II started,
continually. What makes a new tries now are $1.54 versus only 57 ket on the basis of the projected
Lookine still further ahead -it
composition of piano music? Yes cents m 1929 Up 170%, if we look trend of business. Particularly in
. .. —the same old 88 notes are used, only at the dollars.
time of war, or postwar, some
But the difference comes in new
Meanwhile, the population has very unhappy results have
is
combinations of notes, new se- expanded 25% (from 122 millions lowed such a practice. The market. for this country and our allies will
quences, new emphasis.
to 153 millions).
and business have frequently gone continue to expand. We are going.

bomb is hotter

But

is nothing

there

that

—

sure.

conclude

new

just one new
thing under
the sun. May-

for

same

mention

atom bomb

Harry D. Comer

the

in this field would be utterly
erroneous. So much depends upon

the

about

first law of nature, but to

all

have

tivated

that

saying

old

steadily

up.

than $2 billion per

who

are

In five months after
orders placed were less

Korea,

of distortion. Let us look at the
changes ifFh few general statistics

started, the value Of the dolDistortions

fol-

35%•, Nickel',

Aluminum,

35%, Defense orders

confusing

St4racut'of20%Copper

I have said that this is an age ber, $2.8 billion;. January, $4.4

office and the New Deal reflation
was

will begin or end

war

In April, cuts on use of materials

wide disparity in

investors need not worry
coming bear market.

many

example,

some

100 cents> i1; is now down around those which have developed since

22 cents.)

wage-price spiral, which has been
twisting so furiously these last

ever;

bond and stock yields exists,

For

are, of course,
misgivings. Publie psychology is very difficult to
predict. In fact, there is no method

index

distortion. It

accompanies

distortions.

viewpoint, there
grounds for

(In that period the Cost of Living
rose from 91 to, 182.) (If we
take the dollar in 1900 as equal to

system of

Inflation is itself

maintaining we are in a New Era, cites as evi¬
dence: (1) highest living cost on record; (2) lowest value
of consumers' dollars; (3) inordinately high taxes; (4) high¬

Mr. Comer, in

est

managed-money which adds
"oh.

lar has fallen 50%. This is based
on official data published by the
U. S. Bureau of Labor Statistics,

War
to
against a

World

necessary

New Era in

these

however,

America

same

the

national

years,

debt

has

opposite directions.

From

are

living in

this country-

playing

new

in
piece

era

a new

gone from 16.5 billion of dollars
to 257 billion, an expansion of

■

■'

■

Continued on page 00
: '' : - ■'

business

near-term

new

physical

the piano. Some of the prom- over 1400%.
.
■■■■-. ..c•
.„■
..
_
,•
such things as new dis- inent evidences of that fact are
Meanwhile industrial stock is not an ofcrmofjh* ,aT"
and
inventions in the the following, to name a few:
prices, on average, are still slightof such shaus.l he ofieungts made only by the
world. Some of these
(1) The cost-of-living is the ly below their 1929 high, also

have had

Il&m

theie

sure you

are

coveries

prospectus.

profound influence on
world.

economic

our

will all agree that

For

exam-

pie, the steam engine and the
application of power to machinery,
The
automobile. The telegraph,

The cotton gin.
Consider the wheel

The

telephone.

The

reaper.

This

itself.

have been the

said

invention

greatest single step

forward, mechanically, in the history of mankind.
To help evaluate the vast increase in technological efficiency
in industry, a "new era," to be
sure, consider the invention of the
spinning jenny in
1733. Some

years

dent

ago William Green, Presiof the AFL, made the fol-

man

"Today

statement:

lowing

one

with modern machinery can

women

as
much as 45,000
could with their spinning

wheels

two

accomplish

centuries

ago.

highest

record, in terms of dol-

measured in dollars,

lars.

(2)
Stated
the
other
way
around, the value of $1 in the
hands of the consumer is- the
lowest on record.
(3) The annual tax bill of the
typical American citizen exceeds
the annual cost for food.

General Motors

take the case of General Motors.
Last week a New York tabloid
paper carried this news item:
"General Motors today announced
(4) Yet, food prices are the net earnings of $834,044,039 durhighest in history.
hig 1950, the highest profit ever
(5) We have come through the reported by any corporation in
most inflationary bond market on I*1® world." I think that is very
record.
P°or publicity. Although the dol(6) We have a semi-managed or lar figures seem to support such
controlled economy.
a. statement, it is not very en(7) Domestically we are on a lightening and may even be mispaper-money standard.
a^ou^ everything at
(8) The XXII Amendment to GM is bigger now than it was
the
Constitution
was
recently in the past. Dollar volume of sales,
adopted. You all know that is the payrolls and taxes all made new
hlg}js last yearThere are *w0 principal ways in
been in effect 20 which dollar data (like GM s earn-

amendment limiting the tenure of

office

the

President.

By the end of the 1890s, people
looking back at a century of

450,000 Shares

For a specific illustration of

distortion in dollar comparisons,

this

amendment had
years ago, all subsequent history ings) can be adjusted to allow for
so
many marvels that even the might have been different. Much
changes in the value of money,
skilled engineers believed we had of our New.Era of recent years One way is to express the data in
come to the end of machine demight have.been avoided.
terms of a constant dollar. I will
velopment. Little did they dream
(9) In the stock market, some- ^Uh the
that before them lay an era m thing new has been added. We Wlttl tne level 01 stocK Pnceswhich machine progress would so have seen, and still see, yields on
Another useful way to elimfar outstrip that of the past that g00(j qUai'ity stocks about double inate the distortion in such dollar
the growth of a century would in the yield available on high-grade figures is simply to relate one set
many industries be telescoped into bonds That never happened before
of data to another in the same
a brief
10 years."
in times that passed as periods of year. Express dollar profits as a
There are plenty of new things general prosperity. I shall refer percentage of clollar sales in each
under the sun and it behooves us to these and other elements of year> and then compare the per-

Middle South Utilities, Inc.
Common Stock
without nominal or par

value

Price $18,125 per

Copies of the Prospectus may be obtained
writers

from any of the several under*
qualified to act as
legally be distributed.

only in States in which such underwriters are

dealers in securities and in which the Prospectus may

were

not to blind ourselves to the vast

inherent

potentialities

new

things and new eras.
Webster defines an "era" as: "A

period

during

time

this

new era

as we go

along.

Virtually all of'these and other

developments contributing to our
New
conditions have

present

which stemmed

directly

indirectly

condi- from war and inflation. Largetions, or the like, prevail." A New scale war always means destrucEra, therefore, would be a period tion of lives and property. There
during
which New
influences, is nothing new there. War usually
New
social conditions, and the causes inflation of the currency
certain J influences,

social

and

like, prevail.
When

dealing

the

with

social

sciences and man's reaction to his

environment maybe it is true that
"human

nature

never

Mavbe neonle will

changes."

alwavs be

ac-

■

talk

given

iecrsC ofVpaii°en
tis, at

Chicago',

Mr.

Comer

before

lowering

the

value

centages. Because the dollar factor is in both the numerator and

denominator of such ratios, the
distorting influence of inflation is
^ar^elled. When we do this with
GM s 1950 earnings, we find that
profits were only 11.1% on sales,
versus 12.6% in the prewar period
1936-40. In relation to sales, therefore, profits in 1950 were certainly
n°t the largest on record; they

were even below prewar,
Incidentally, it should be noted
that the government had a greater
another without an intervening financial interest in the prosperity
period of time long enough to per- of GM last year than did the

money. Nothing new there. But
never before in this country have
we had to pile one inflation on

correcting deflation to ocagain it is due, basically,

mit

cur.

Here

stockholders. GM President Wilson pointed out that "ascertain-

war. Long before able" taxes for 1950 totalled $1,had time to recover from the 536,000,000. That figure is almost

Blyth & Co., Inc.
Ilarriman Ripley &

Smith, Barney & Co.

Co.

Incorporated

Alex. Brown & Sons

American Securities Corporation

Francis I. duPont & Co.

A. M. Kidder & Co.

Ames, Emerich & Co., Inc.

Bacon, Whipple & Co.

Chas. W. Scranton & Co.

California

R. L. Day & Co.

Brooke & Co.

Hayden, Miller & Co.

Johnson, Lane, Space and

Co., Inc.

Mackall & Co.

Stern, Frank, Meyer & Fox

Branch, Cabell & Co.
E. M. Newton & Company

Wurts, Dulles & Co..*
»

•

Cohu & Co.
Goodwyn & Olds

A. E. Masten & Company

Wagenseller & Durst, Inc.

Richard W. Clarke Corporation
Scott & Stringfellow

Hill Richards & Co.

Baker, Watts & Co.

The First Cleveland Corporation

Crowell, Wccdon & Co.

Ja"k?one& Si to the factor of
ill., March 16, 1951.

F. S. Smithers & Co.

Clayton Securities Corporation

Brush, Slocumb & Co.

March 21, 1951.

Lester & Co.

Swiss American Corporation

McDonald & Company

Stern Brothers & Co.

Bateman, Eichler & Co.

Laird, Bissell & Meeds

The Illinois Company

Pacific Company of

Shuman/Agnew & Co.

Mason Brothers
Straus & Blosser

•10

(1230)

The Commercial and Financial

question remains

A Look at the Steel Stocks
Hornblower & Weeks

Members, New York

shares, and,
for any
1

steel stocks

relatively undervalued and

company

must

they represent equities in

grow.

•••:•;'

At current prices, off about 15%
ihe average from their January

highs, the leading steel stocks

variation

selling at only 4.7 times their 1950 present conditions of premium de-.
mand for steel will help to offset
earnings, and
the normally higher cost factors of
yielding 8.25%
on
the less efficient producers, and it
their cur¬
will not be surprising to see a
rent dividend
much better proiit realization on
rates. Assum¬
the
part I of
such
concerns
as
ing that they
do not stay at
Sharon, Allegheny Ludlum, Cruc¬
their

ible, and Pittsburgh.

present

levels, and

sumption

of the

case

highly volatile
steel

group,

steel
will

stocks

to a
"normal"
up

Louis

Stone

realization of
to

present

prejudging the question, it

Steel, for example,
17%

pretax

mar¬

of $150,000,000 will increase the 38% net
after tax by more than $1 a share
gin

earn-

ings and dividends, or they will
go down in reflection of declining
earnings and dividends. Without

sales volume

the

above

for 1951.

appears

fairly safe to say that 1951 earn¬
ings and dividends are not slated
for any major decline—and
they
may go up in some cases. ■">'
An

of Sharon

case

ratio

burgh

$9.56

projected

And in the

Steel

margin

15%

figure

of Pitts-

case

$130,000,000 volume will raise the
projected net by about $2 a share.
A 62% tax rate is used in arriv¬

ing

Earnings Projection

the

projections

net, for the

19.51

good reason that
The
accompanying
projection the 62% maximum under the pres(table I) of 1951 net per share for ent law
was reached by a number
13 leading steel
equities is based of companies in the second half
on a purely arithmetical
calcula¬ of
1950, and the average for all
tion—the 1950 second half net be¬
13 companies was 59%. Tax com-:
fore taxes has been doubled and
putadons for an interim period
taxes have been taken at the 62%
are
necessarily inexact, and the
maximum
rate
provided in the two retroactive
changes in rates
present law.
/
in the
not

very

last half of 1950 resulted in

The

projection

table

taken

course

realistic

estimate,

because

complicated adjustments;
indicated

far too many unknown factors
this stage to allow
any simple
rule of
thumb arithmetical

average

the

figures

turns

are

value to those who

are willing to
continuation of the pres¬
ent high rate of operations.
Ac¬
tually there will be considerable

assume a

variation

consolidated

re¬

What the

than

twice the 1950 second half
In this

connection, it is of interest

tors

least.

TABLE

present

1950
Net per sh.
"

Youngstown

48
43

Republic

•

___

____

stocks

4.12 y2
3.75

10.54

9.28

10.03

9.56

>/2

5.95
.

11.59

(ta¬

sets;-the-rated
each

company

market

ingot

industry

relation
S eel

economy.

raise

are schedcapacity to

total

Total

rated

13 companies is about 87

expansion

plans

calling

for

increase in this total to about

100

other

than

steel

capacity which
integrated steel

go to make up an

company—ore reserves,

coal, cok¬

ing plants, railroad facilities, ship¬
ping facilities, etc., etc. There are
no adequate figures on the present
day valuations of the leading com¬
panies; the book values, tabulated
in table IV, represent only an ac¬
counting
abstraction
based
on
original cost less allowed depre¬
,

ciation—if
the

over

based

depreciation

charges

last^O

years had been
present
replacement

costs, there probably wouldn't be
any book values left today,- but
actual

values

would

ill

astronomically higher than those
shown.

Question of Current Market Prices
Current

sent,

market

prices

repre¬

the

average, about 80%
book values, with considerable
on

variations

value,
low.

National
Jones

:___

Laughlin

Inland
Armco

Youngstown

individual

sells

40%

Pittsburgh

cases

above,

sells

'—7

book

40%

be¬

rated

14.92

H.89

3.00

16.63

1.80

level,

position
of

Allegheny
Crucible
Sharon

Pittsburgh

•_

Ratio to
Sales

the

grocery store or stationery
at anything like the same

All

the

from

the

industry is

over-expanded
relation to the needs

its

principal customers. Auto¬
mobile production in 1950 for ex¬
ample, was 80% above the 1939

60%

such conclusion.

capacity increased 58%
from 1914 through 1929 compared
with

the

increase of about 230% in

national

about 23%

income

and

in the population.

dollar

De¬

spite the ensuing depression,

ca¬

pacity continued to expand
through 1932.. when' it "reached
about

million

tons, and then,
eight years through
1940, expansion practically stopped
—the only eiglV-year period in
the history of the industry that
for

the

did

not

civilian

year

Steel

economy.

summary,
i\ would appear
that steel stocks at current prices
are

basically

undervalued r

terms of current earnings and current asset values they are obvious¬

ly cheap—in terms of their rela¬
tive position in an expanding na¬
tional economy, they represent the

equities in

basic industry which

must continue

to grow—in capac¬
production, in sales vol¬
ume, and in earnings.
y.v,

ity,

witness

at least

an
expansion of
Throughout the so-;

10%.

called New

Deal

period,

recovery

Blyth Group Offers

i
Com. Stk. of Middle
|

when all emphasis was placed on
panaceas

fcr increasing the

standard

living,

the

mass

average

South Utilities, Inc.

steel company execu ive was afraid
to turn around in his office with¬
out

government

less

plan

the

without

program

could be

permission,

kind

real

which

Blyth & Co., Inc. heads

expansion
there

improvement in

the whole nation's standard of liv¬

earnings.
f
foregoing considera¬

tunate

two-year

before

our

vestment

in¬

which

yesterday
(March 21) offered 450,000 shares

the'

group

stock

common

Middle

South

Utilities, Inc. at $18.12V2
share. The issue was awarded

steel capaci y was

ana

again expanded
steady rate of about

fairly

are

little

value

warning period operating
subsidiaries-x.are
Ar¬
into the war, kansas Power & Light Co., Louisi¬
.

entry

3 million tons

a year, rising from
81,619,000 tons at the end of 1939

Power & light Co., Mississip¬
& Light Co. and New
Orleans Public Service, Inc. and

Power

is estimated

will
HI

Steel

$1,096,620
512,691

National

353,376-

Inland

259,700

247,506

___,

Armco

190,060

Youngstown
Jones

$971,346

170,850

Laughlin

Allegheny
Wheeling

per Ton

33,900

'370,963

16.000

264,334

4,700

215,315

3,750

$28
r

178,590

9,000

4,193

21.434
11C.993

4,800

*47,668

900

50,552

66,972

1,800

14,233
13,128

1,500

4,008

_______

5.30

Sharon

37,966

Pittsburgh

22,809

Crucible

19,315

•

>
.

Total

Assets
U.

$449,338

244,976

15.2%

Republic!

142,995

537,820

113.915 "

22.1

73,594

15.1

Armco*

79.240

17.2

95,173
74,436

21.5
18.4

184.803

♦38,445

177,962

♦29,400

147,705

15,089

135,409

19,230

12,860

16.1

20.8 '

$2,556,366

Bethlehem!

17.0
,

steelt

$100,-

12.30

;

-■

Jones & Laughlin!
Youngstown! '____

$1,917,613

been

declared

$360,281

!SI,557,332

$64.15

1951,

93,389

718,257

74.89

28,204

326,642

58.18

305,465

29,357

National!

360.479

254.830

Inland!

Wheeling!

300,668
173,272

117,246

Crucible!

19,998

120,097

72.785

31.057

Pittsburgh!

78,170

10.2

53,540

12,037

Sharon!

72.466

47,147

67,900

52,659

10.3

Allegheny!

37.40

168,377

78,929

_____

!As of Dec. 31, 1949.
"As of Sept. 30,
tPreferred stock retired in
February, 1951.

1950.

!As

dividend

payable

stockholders

has

April
of

record

52.30

254,830

38,317

March 9, 1951.

203,965

188,377

81.57
•

223,963

com¬

53.10

273,286

11.5
14.2

276,108

273,286

362,954

and

Per

Equity

354.848

its

cents per

T, 1949, to and including
1950. A dividend of *30
share was paid on Jan.

Common

811,646

;

per

Pfd. Stock

496,093

381,896

i951

dividends

stock of 27 V2

Oct.

1,314,267
466,322
„

Surplus

quarterly
mon

cents

Net Capital

certain

Middle South Utilities, Inc.
paid

9.50

1,113

sys em and

utility

revenues of
the subsidiaries for the 12 months
ended Dec. 31, 1950 totaled

,1,072

37,303

286,273.

53
■

1952.

Mississippi. Operating

23
.

gether operate
electric utility

and

companies to¬
interconnected

properties
in
the
States of Arkansas, Louisiana and

cons'ruc¬

approximately

subsidiary

other

5b"

139,349

66,825

132,625

Mkt. Vahntic]

Ingot
Capacity

of Fixed Assets

Republic

The

Mkt. Valuation

of Common

Bethlehem

aggregate

$100,000,000 in 1951

-(COO's Gmitted)Mkt. Value

that the

In the next tion programs of these subsidiaries

95,505,000 in 1945.

TABLE

888,314

final figures not yet available.

from-the

43%

steel

present

current assets

487,451

118,009

27%

ihe

-(0001Taxes

444,299

the

tons

tions of current market
prices in
relation to current earnings and

6.39

Net before

461,377

capacity,
level, and

1929

certainly not in
,

assur¬

At the present lev¬
million tons of

104

1939

On the

ratio to assets and

2.50

1950

'403,997

Wheeling

♦Estimated;

abcrrt

anyone

4.00

Sales

1,439,822
—

of peace*

el- of

Bethlehem

Republic

program will
leave above 1929. Even the talked about
industry
greatly
over-ex-' level of 120 million tons at the
panded, with the armament pro¬ end of 1952 will not
necessarily
company's earn¬ gram approaching completion and be adequate—it almost certainly
the
civilian
economy
ing power, particularly in a pe¬
heading for will not be adequate if a ' con¬
riod of lessened demand, and of' a cyclical down turn? Sure—any-'
tinuing $50 billion a year arma¬
course
there is no consideration thing is possible, but there isn't ment
program is to be superim¬
in the figures of all the assets any basis in the figures for any
posed on an inflating $250 billion

payable March 31, 1951.
"Based on present quar¬
specials paid at 1950 year end.
JBefore giving effect

-(000)
$2,955,235

being raised to

level and 47% above
1929; 1950
building construction, in terms of
by the end of 1952.r new dwelling units
provided, was
ii possib'e that completion of 170%
above the 1939 and

million

Steel

increase

year

continue until there is real
ance

capacity,

million tons, with their announced

ton,

per

tabulations.

TABLE IV

the

capacity

totals about 104 million tons;

of these

shown, and the

valuation

1949 and 1950 is

million-.on a year rate
now,
and assets,
the
basic in response to the obvious need for
is the position of the an armament program that
must

present expansion plans

capacity

position that

the industry had failed to
meet
its social obligation to
expand; the

uled

TABLE II

the

ever-

figures in table III reflect, about 120 million tons, with most
what appears to be a. ridiculously of the increase being provided by
low market valuation of fixed as¬ the 13 companies included in the

4.50
»

5.89

9.74

with
an

The

declared

financing.

preferred

4.00

7.71

6.33

stock

6.95"

6.04

24 V2

terly rate plus extras

and

funded

HI).

$5.00

8.97

7.36

$10.84

7.28

•

25 y2

!2%

Rate*

3.25

35 y2

current

Dividend

?.25

39 V2

Indicated

7.14

Wheeling
______

1951

10.07

Jones

Laughlin.
Pittsburgh

case,

7.85

Crucible
&

each

12.13
■

Sharon

Allegheny

Projected

7.76

___

projections
vindication of

Net per sh.

$12.15

National
Armco
U.

debt
ble

for

accelerated,

to the govern¬

reversed

4,000,000-ton

now

allowing

moods

now

public
psychology —
given the facts as to the present

assets

and

concerned

not

pre¬

was

response

market's low appraisal of current

nation's

hood

the

some

Price

3-13-51

ment's

long-term basis is

Starting in 1949, the

shop

com¬

the current
earnings rate, after
adjustment for the particular fac¬

figure.

partly in

vest

earnings
question

and

1948.

expansion

that

Assuming
are

net

the in¬

changing

com¬

stock equity,

common

end of

superficial

this

ing at a greater than normal cost
during the war, and total capacity
was
only 96,121,000 tons at the

capacity production.
on

came

Earnings Indicate

panies.

ing ratios this year to a point
which should make their 1951
pre¬

___

each

the im¬

But

facilities

new

whole, it is true that ing. And as late as 1940, at the per
buying into any of the TNEC hearings in Washington, the to the group at competitive sale
leading steel companies today is steel industry was berated for on March 20.
getting his equity at a very large causing technological unemploy¬
Middle South Utilities, Inc. is a
discount from any common sense ment
by- too rapid an expansion holding
company
organized
on
appraisal of value—you couldn't of its mechanized plant. Beginning May
27, 1949 upon dissolution 'of
buy an interest in your neighbor¬ in 1940, as a result of the for¬ Electric Power & Light
Corp. Its

for each of the

average

1950 second half net before
taxes
companies will probably
be able to improve their
operat¬

Inland

over

vestment buyer with funds to in¬

steel

Inland

—some

Bethlehem

value

down

years,
use

rate

at only about the
same
retirement of obsolete fa¬
cilities, which had been kept go¬

prices

and the resultant pros¬

news

sumably

values
In

values.

stock

into

pects for a long or short period of

assets after deducting net current

62% in the second half, the actual
average of 51.3% for the full year

simple doubling of the

tax earnings somewhat

market

supports the assumption that the
62% maximum was reached in
individual the second
half, and there are only
results indi- —1———
"
minor variations from the overall

companies from the

book

connection, it may be help¬
present the figures on the

only 40% in the first
half, and the maximum rate was
was

the

among

cated by a

clear¬

of tax
liability is
by. the 51.3% overall
for the full year 1950.

Since the rate

ap¬

But

relationship

market

indication

there

are

proach.

economy,

smallest;

either go

war

averaging only $30 a ton against,
companies, shown in table II, an estimated
present
replacement
increase
of
several
percentage costs of about
$300 a ton, but fixed,
points in profit margins, on top assets
represent a good deal more*
of
a
further increase- in dollar
than
just rated ingot capacity.
sales
volume, will make for a
Finishing facilities rather thanconsiderable increase in the per
basic ingot capacity are often the
share
figures projected.
In the determinant of a

this is always
valid as¬

the

the net market valuation of fixed

low

In the case of the four

overall

steel

four

mediate future purely in response
to the public's evaluation of the

Consideration

present

actual

pany's

operating ratios

the

matter,

will

satisfactory
calculation of in¬

"value."

further,

latter

the different companies;

between

are

any

tical

not a

ful

••

are

relation

and

note, in table II, the consider¬

able

in guessing the future market ac¬
year's tion of the steel stocks—as a prac¬

One

position

total
on

to what these

worth.

given to the underlying
of the steel industry in

between

basic industry which must continue
to

and

attractive, since

are

for

vestment

leading steel

are

basis

basis of his study, concludes it appears fairly
say that 1951 earnings and dividends are not slated
major decline and may go up in some cases. Holds

safe to

earnings,

production,

Stock Exchange

Investment analyst presents data on

are

two or three years'
earnings for that matter, in a pe¬
riod
of
government
stimulated

By LOUIS STONE
:

earnings

...Thursday, March Chronicl
22, "1951

(Special to The Financial Chronicle)

38.10
-

55.43

Joins Daniel Reeves

BEVERLY

HILLS, Calif.—Mil¬

41,728

85.51

41,503

44.58

47,147

50.92

staff of Daniel Reeves &

52,659

31.91

South Beverly Drive, members of
the New York and Los
Angeles
Stock Exchanges.

Dec.

31,

1950.

ton

Russotto

has

joined

the

Co., 398

Number 4996

Volume 173

The Commercial and Financial Chronicle

(1231)

the

Inflation and Price Controls

War-Peace Economy

least

first

because it

Administration

following Korean outbuying, scare investment, and sudden business expansion financed by liquidation of savings yj
—was psychologically motivated and based, on-political mismanagement.: Predicts overhanging "peace scare"-will result ;v
in aprice plateau by next summer. Concludes for permanent
stabilization we need, not more controls, but rather a staunch
national will to halt steady dollar depreciation.
break-—resulting from

•;

Babylon

2200 B. C. and was used

Dr. Hirsch maintains inflationary rise

the

all

•

makes
the

by Leon

with

Baruch.

gave" the

power

Causes of the

Present Inflation?

There

inflation

have

rean

outbreak.

why

Ko¬

the

since

The

to invoke all three kinds of

large

question

have had this

puzz

ter

surer5'will1
win

surer

reme¬

our

dies.

The govern¬
ment's

own

they could

Should- belied
the

inflation,

caused the

have

month
also

was

with

reTeTence

for

the

"base

^ °aUSeS? wLt followed.-wis" a^prefof

the"

immediately before Korea we.wage increases, to which employa
boom, a pre-ipflationary ers freely consented. In fact emupswing, artificially created; by ,pi0yers often made the original
the action of the Administration, -suggestion for the wage increases,
then

and

outbreak

the

came

They know that

liari

demand listrator in the future would

May, 1942

on,

had

highest levela

reached.

ever

(1) According to the whole atti¬
tude

y:vT^Uy:y.,-; -\:y:-vyy

the

government, first to
lasting stability
important than the ex¬

bring about

was

ceiling, but

level

act

some

stabilized.

and wages were still

prac¬

tically always dangerous to try to
roll back prices and it has never
Price Regulation, called "General
been possible to roll back wages—
Max").
the more or less open friends of
From October 2, 1942 on, we
a
"mild inflation" are probably
had the full Baruch Plan (Eco¬
a
majority in business and labor
nomic Stabilization Act), but this
even
now.
*
was soon punctured by:
(2) The freeze at the highest
vy Exemption of military orders.
price level probably makes for a
excepted

(General

Maximum

somewholesalers
And

sales

retail

grew; fife-proof

caused

ing the dangerous initial period of

such

.changing import prices.

total

somewhat better compliance dur¬

Margin control for retailers and

year

them—

produc¬

150

not unwise

was

freeze prices at the

•

at-

n,*

^gt

I think it

and

30, 1942 on, we com¬
mandatory price

control

1942 to 1945

•

an excess

over suPPty through the following - tempt to reduce a wage rate arfactors: '
'
' -rived- at through collective barincrease
in" ;,Scare buying in 3 waves Vgainingv': Thus; these wage. inPf.
n
,•
-nJ (July — October — January) not creases, insofar as they were made
^ only by the Private Public, but to fortify more substantial price
v,
io
lofnnrt
also by business- Compared with increases, rendered such increases
wnoiesaie iooa
Turrn

ViQTm

price

our

•

Price Admin-

system in

than that tried from

farm prices

•

1946.
ible
had many voluntary

quasi-Baruch overall

period"

Feb.

October,

•

freezing the margins of re¬
at
their
highest level—
24, 1951.
must develop a more flex¬

tailers

and

basic non-farm

-y

From

before Korea and this

most

tion.

had;

since

that

increase ,in

the

show Korea, creating

figures

schedules—about

one
thing,were
it provided
that
prices
fixed
they

are

these by

pleted

ones

continuation of where

off

From Jan.

actually to encourage in-

was

fiation.

know

the

jaw

orarticaUv^the
^or
practically tne,when

—

business inventories. So

The bet-

one.

1950

December,

1949

billion;
amount

$52.7
same

left

present

(3) Or from a sharp expansion and overall freeze — and
then
In 1941 we
invest- added some unworkable ingrediments were unchanged from De- entSi The immediate effect of the agreements.
($127.2 billion). Bank loans rose

II and

and present price controls:

of credit? Total loans and

cember,

that

question

model of MPR 580 of World War

This is the picture of our past

President

•

holder in the future.

Bernard

bitter after¬

some

Then one month later, on Feb.
27, the Retail Ceiling Price Order
was
issued, following closely the

at¬

tractive, protecting the bond¬

price control—voluntary, selective
What Are the Real

tem, but with

one

military
They fol¬
"cost-plus" sys¬

exempt.

to make taste; renegotiation.

; way to do this is
^ saving again much

system.

immediately,

were

low the cherished

Congress

Almost
orders

future;

of all

the

reached.

better life in

deficiencies

This action froze prices and wages
at the highest level they had ever

provides

and

reduce demand—and

the Baruch system because it has
associated

for

means

the
If

profits

clear- recognition

the

out

productive ingenuity—which

King

around

pro¬

American incentive to insure

prices, wages; rents and fees
a' given period, which I call

been

by increasing

cautiously and
with due regard to the great

in World War II; and
third, the overall freezing of

cas

with the exception of farm
products not yet at parity (Gen¬
eral Ceiling Price Regulation)—

wages

with

If carried

Henderson

scare

chance to

duction;

system—

first tried by

was

Hammurabi

have

continued sharp rise:

If backed up

and then still others—the
which I have called the

system

Hammurabi-Henderson

and Industry in Germany,

Former Secretary of Commerce

prevent

need; selective, where
price is fixed, then an¬

one

other,

By DR. JULIUS HIRSCH*
Former Chief Consultant of U. S. Office of Price

Vol¬

untary, which helps most when it
is

but at least

existed

had

there

past

three kinds of price control:

then

and

individual

relief

producers

—

for

venture.

Big business must and will

at ply

against possible future .least 80,000 manufacturers got re¬

anyway—but

will

com¬

readily when it earns good
I9^. p-nriiic by PerhaPs $15-$16 billion at an rollbacks. We created for this the lief—ours was for a time a "relief profits. Big business is sharply
controlled by its customers and
1Jlof
Sjt tl- I ikcT. annual rate, and on top of the ad- new term "voluntary" wage in- economy."
trial prices 14% farm prices 16%, diti0nal
production
needed ., to creases. Increases of 10c an hour ry
Finally,
in many areas, the its own employes.
chemicals more than 25%, whole- cover these
sales, there took place ,0r even of 10% of the hourly black markets
Much
more
important: Small
disrupted controls
more

Hirsch

Julius
.

fale
textiles more than 25%, and
basic

ieast

50%.

the

commodity prices almos

absolutely

There

clear

picture of what really caused this
"inflation. The customary textbook
are:

reasons

(1) A deficit in the balance of
payments
'
i
(2) A'deficit in the Federal

budget (money printing).
(3) Oxerexpansion of credits.

inventory accumulation of at rate, for which eight months be- long

before they were officially and medium size business have no
$10 billion, or 16^% beyond.fore long and bitter strikes would ended.
serious
reason
not
to
comply,
corresponding months of last have
had
to
be
waged,
were
especially as large inventories are
How it Looks Now
in some areas already becoming
year.
,.
; ,
.
granted after less than five hours

investment

Scare

(2)

ings, cashing of E Bonds, dissolu-

;•

fact

had

cash deficit

This

billion

retical deficit of about $3
.

was

other funds

"borrowed" by Uncle Sam

against

■negotiable bonds (from one pocket
of the U. S. to the other).
In

spite of the Korean war we
$2 billion surplus in the

had

any

created

There are very good
for saying that even in
will

deficit

fiscal

spend the $71 ¥2

deficit

1952.

all

and

calendar

1950.

(which

P%
in

the

COuld

almost

have

not

10-

Rational
than
*

Did this inflation

been

terialized.

March

the

and

any

The

actual

before
on

23A%

12,

1951.

now

can

expect

Then

curtailment

restriction will

April.

actually ma-

To be

mature

nouncement

the

•-y'-y

.•■;.S-'/;V;■■■'^

April 1, 1966, inclusive*

as to payment of principal and dividends
by Seaboard Air Line Railroad Company

Priced

by endorsement

yield 2.00% to 2.90%, according to maturity

be
*As

cobalt,

premature
restrictions

$80,000 semi-annually October 1, 1951 to

guaranteed unconditionally

clamped

tin and nickel and

came

■

an*
on

fully provided in the Agreement, on and after April 1, 1956 the
maturing on or after April 1, 1962, will be subject to redemption
Company at any time prior to maturity either as a whole

Certificates
at

the election of the

in part,

amount

the date

in the inverse order of maturity, at an amount equal to the principal
thereof, plus, in each case, accrued and unpaid dividends thereon to
designated for redemption.

of these Certificates are subject to authorization by the Interstate Commerce Commission,
offering Circular may be obtained in any State in which this announcement is circulatedfrom only
of the undersigned and other dealers as may lawfully offer these securities in such State.

Issuance and sale
The

such

business credits and after this per-

haps

his

Defense

Production

Passed WaS a hybrld SOrt °£ thlnS'

HALSEY, STUART &. CO. Inc.
R. W. PRESSPRICH

&. CO.

McMASTER
March 16, 1951.

FREEMAN & COMPANY
HUTCHINSON &. CO.
"

trend toward uniform
Continued on page 33

Equipment Trust Certificates
(Philadelphia Plan)

announced

proclaimed from August on—yet
jn January we
were
producing
cars at the highest rate in history

trol

Research,

in wholesal¬

From

growing

Jan. 26, 1951, we made
overall freeze of prices and

Then,

ac-

'ddl'*wLMK? N,t Sent, £ Bill.'The law that Congress finally
Social

effectively. Thus

Administration

jng iong before

■■-y;:y

perhaps come

■

not much

Equipment Trust, Series J

annua, ^
of 1950)—it

half

second

complished

increased
an

the greatest tragi-comedy:
price control, called for by Mr.
-from the printing of new money Bernard Baruch in his testimony
—the European nightmare of the before Congress on July 27, 1950,
printing press? No—on Dec. 31, the success of which was treT950, we had exactly the same mendous.
amount of currency in circulation
President Truman himself had
as we had a year before.
not asked Congress for price conr-

and

ing.

Seaboard Air Line Railroad

s|ite

nrodljrtion

down

income will be much greater
in

not be able to prevent
further rise in the price level,

policy had been deliberdesigned to produce inflaof budget surplus
.
f j
and growjng

made

our

were

.„

ately

Even

until

however, only 25-30% in retailing,

got of real im¬
3 or 4 single price

scrap.

This is because

of Dec. 1, 1950.

' •'

$2,400,000

will not have a and each announcement made the
deficit -of $16%
billion as the headlines. While the total actual
President has stated, or even half impact of these cutbacks on the:
that much. Even if Congress votes economy was
still insignificant,
.not a penny of new taxes, our they contributed to the inflationdeficit may be as low as $5 or $6
ary wave, because one scare was
billion, and we will probably have pyramided on top of another,
1952,

others.

our

billion for

much smaller than forecast.

of schedules—for automobiles, hides,

that

All

Big business has at least 70% of
all industrial processing; it has,

inflation

automobile production was loudly

the

failed.

fair

almost exclusively

budget deficit. This inflation cannot have been caused by deficit

1952

"voluntary

Primarily

that; cuts in production were corn-

fiscal

unfriendly

tried

price" standards

We may

possible we will have a budget
surplus for the whole of fiscal
1951.
There
is no« actual
cash

-spending.

is conditional, but it portance

origin.

It is even

first half of fiscal 1951.

reasons

Wage

political mismanagement
an inflation

tion—in
of social security and

cumbersome.
'

largely be psychological

The theo¬

In the fiscal year 1950.
..

First

the Federal —classical proof that
believes
so, can y

budget—everybody
but

some¬

/Psychological -'

based

deficit

most

psychologically

States.

not

•

The Present Inflation is

(1) A deficit in the balance of
payments—does not apply to the
(2)

answer

have had

what reversed sequence:

Unproductive expenditures, /

United

tion of some business reserves.

us see:

This time

Control any Chance of Success?

A sudden business expansion, all this financed by less sav-

creating excess purchasing power..
Let

HI
Has Our Present Price and

alone.

(4)

0f negotiation.

— some
signs of a "flight from the dollar,"
and not in the stock exchange

(1232)

The Commercial and Financial
Chronicle

Investment Problems oi

location

courtesy
est

and

they

are

they receive

Confidence

Savings Institutions
"

Executive Vice-President,

Howard

■

partment

Savings Institution, Newark, N. J.

sell

income and less

aggressiveness on part of savings banks. Com¬
broadening the field of savings banks' investments.

more
on

The year 1951 promises to bring
many problems
of institutional

folios and

pendence
this

the

burdens

managers

investment

port¬

greatly increased de¬
of

as¬

The

the

becomes

with

which

run

the bank.

The

fense

trinsic

most

would

It should

effect

investment

times

of the

one

approach

our

Kress

ment

problems.

The determination of
John W.

ahead

dollar

our

properly

shirk

have

Congress
our

The

and

Federal

ap¬

added"

state

has been

competition for the sav¬
ings dollar, We talk quietly and
as

behind

closed

doors

the

are

rate

position to

interest to

liberal

grave

lations
"all

and

out"

higher

pay a

because

savers

investment

willingness

accordingly.

they

respon¬

invest¬

policy is bound to be influ¬

our

by a
assets, we'll

complaint

control

bankers.

will

Investments

helpful

prove

project

toward

this

has

the

recently been completed.
comprehensive appraisal
outstanding factors which

help to determine the quality
railroad

bonds.

The

making this study

purpose

was

of
in

factors

put to

the

agers are

the

right

invest

officers

not

point

the

primary

criteria

savings,

relied

weaknesses
that

conclusions

own

there is

the

one, or even

upon

to minimize the "and loan."

ing the future

factors,

use

plus

quality than

recent origin
savings banks to

existing

statutes.

sion

Such a provi¬
effect adopting the
"Prudent-Man" theory
is

respecting
opportunity
which, for
another, do not

bonds and affords
to

purchase

one

securities

reason

which

that

are

two, qual¬
be

can

relied

by themselves in determin¬
of

assurance

their

manage¬

consequently it is grati¬
our legislators and
su¬
have

provide

fit

seen

approval

to give
efforts to

our

maximum

income

for

greatly increased deposits.

previously been
strongly.

too

had

hesitate to tell the public about it
in very large savings letters and
We'll

con¬

certain percentage of sur¬
bonds not eligible under

pervisors

investment

ity

development of

much to

presently available.
A

ment and

insured against loss by a Govern¬
ment
agency.
And
they
don't

that

give greater indication

soundness

fying that

rapid growth

higher return

source:

mine what factors should

sidered

portfolios. The value of this study

have

guarantee

dency to lag behind fundamental

changes in
bond
quality.
Our
Committee
expects
to
make
a
study of this field and to deter¬

in the selection of bonds for their

You

was

regu¬

out

attributed

purchase

difficulties would later be avoided.
Ratings, like yields, have a ten¬

reliability of those qualify under the
statutory pro¬
investment
man¬
visions. It is difficult to
legislate
most apt to depend upon common sense and
good

allude.
be

over a
15-year period.
high grade rating at the time of

which

determine which quality
characteristics should be
used, and
which avoided, as it is to

can

fluctuations

actual test the

heard this morning of the growth
in savings funds held by Savings
and Loan Associations, to which I
Much of this

ratings by statistical services. As
by our railroad study,
ratings were shown to have wide

is always giving
consideration to methods

hope

end

our

Committee

careful

new

are

the nation

legislates
profession.

our

individual

Thursday, March 22, 1951

is, indicated

our

serving

for

cause

community, we shall lose
position to our competitiors.
and

dous

that

critical
are

important ■ efforts
in our
daily life. The influx into our fi¬
nancial economy of vast sums of
money is bound to have a tremen¬

prospect

every

value

essential.

de¬

inevitable.

seem

line

effort to em¬
occasion the
every
great need for preserving the in¬

makes

this

first

bankers'

the

duty, and
phasize
on

for

program

preservation of these savings

Government
national

national economy

our

like this be eliminated.

and

sibility

of your Division

"something

If it
for

government

upon

alert to the responsibility to serve

proval

added

place

heritage.

rely

gage loans

over

danger of a "third banking sys¬
savings of the
tem." I speak to you frankly and
American people are at stake in
about competitors who
this
tremendous
defense
effort. publicly

sets

income

would

diversification of

aggressive

are

going

our

institu¬

their

accumulated

invested
for

time

The

source

which

tures

best

for the future
preser¬

nor

vation

the

communities and

our

urges

aggressively

they operate.

Unless

Says this is required if savings banks are to meet
competition. Foresees no substantial rise in interest rates, and

ments

services

the

wherein

investments.

means

national
find

and

not

guarantees, pay excessive premi¬
ums and service charges for mort¬

ever-widening number
people
in
the
communities

liquidity in selection of

the

tions to

Discussing current problems relating to institutional investment
portfolios, executive of leading savings bank sees need for
on

would

and

houses

and

ways

Mortgage Division, ABA

emphasis

stores

mail-order

Chairman, Investments Committee of the Savings and

growth of

banking institution.

to solve the problem.

may

income

too,

management,

instances be the easiest

many

their deposits.

has much to do with the
any

way

strongly urge all banks to follow
the policies of metropolitan de¬

By JOHN W. KRESS*

"/.■

and

service

in the inter¬

New

Jersey, too, has been fortu¬

nate in another
respect. We have
for several years had the
oppor¬

tunity of investment in industrial
bonds
under
stringent require¬
ments.

While the

yields

and
fairly close to
bonds of comparable

low

are

government

safety.
enced by many factors: the turn¬
maturities, it
nowhere
with
complaints, Through the application of these has given us another outlet for
face
the
future over of deposits, depositors' de¬ get
various tests, in the light of exist¬ our funds
gripes
and
criticisms.
This
"sys¬
and an
realistically.
Since the termina¬ mands, the character of the banks'
opportunity for
tion of World War II, this country investments, the surplus and re¬ tem," which attracts a large vol¬ ing conditions, the road to better capital appreciation,
particularly
ume of savings funds
selection and safer experience is if the issues were
for
invest¬
has
seen
the
serve
condition
and
the
greatest housing
convertible. In¬
general
and

necessary

boom the world

has

known.

ever

Mutual

savings banks have been
able to greatly increase the total
of their mortgage portfolios to a

characteristics of the banks'
ices.

Mutual

service

savings

institutions

serv¬

banks

with

are

two

ment

goes

and the competition which
along with it, is here to stay.

can

es¬

be met and

hold

can

our

provided.
"Measurements
Bond

Quality"

will

Railroad

medium

maturities

industrial

bonds

with

large
fund
sinking
requirements- af¬
I commend it fords reasonable yields and an ad¬
be

position in the financial structure

vestment

available

in mortgages and, as a matter of
fact, Government bonds have been
sold to provide funds for invest¬
ment in mortgages. However, with

on or about
May 1.
by hard, aggressive work and by to your reading.
herence to a staggered
maturity
Investor confidence in railroad
program. Investment horizons are
provide convenient and safe facili¬ astutely investing our deposits. It
should be our duty to search our securities
was
severely
under¬ ever changing and it behooves us
ties to care for the community's
mined and in many instances not to consider
savings; and (2) a necessity to in¬ portfolios, to re-examine our poli¬
every available ave¬
vest those savings productively in cies, and to make alterations to fully restored during and after the nue of investment, consistent with
mortgages and in marketable and permit paying a maximum rate numerous bankruptcies of the 30s. safety and security.
while
maintaining sound
prin¬ Nevertheless, there are still some
It is logical to relate our
safe securities.
Although a sub¬
pres¬
excellent railroad bonds suitable ent
stantial part of the banks' invest¬ ciples.
position to the early years of

Regulation

ments

point where they
36%

most

to al¬

amount

total

The

assets.

trend

during the past three years
been to' invest new deposits

has

strictions

"X"

and

other

re¬

•

lessen pri¬

designed to

vate

housing, it is obvious that we
are
going to find it more and
more necessary to seek other out¬
lets for the investment of
funds.
In

discussion

deposits

the

during

invest¬

various

functions:

bility to

(1)

responsi¬
thrift and to

encourage

should

the

highest

grade obligations, it may

be that

liquidity /has
sized

and

counts

been

income

cordingly.
of

ment

savings

sential

over-empha¬
sacrificed

have

substantial number

the

need

ments

for

seems

short-term

invest¬

because
these regular payments of prin¬
cipal provide a steady inflow of
unnecessary

funds

difficulties

quired, for depositor needs.

goes

the

on,

present.

are

prone

for

reinvestment

Furthermore,

consider the problems of the past

undertaken by a bank

relatively unimportant, com¬
pared with present uncertainties.

stantial

This

comfortable

not

conditions

infer

not

that

present

real

the

aim

counts

one

or,

risk

can

re¬

which is not in

one

position. Basically,
the
investment ac¬

should

complement

another.

mortgage

If, for instance, the
account is substantial,

lowing the bank holidays of 1933,

seem

the years of the New Deal and of

bond

ber the

many

us remem¬

period preceding and fol¬

would

account

logical

should

that

announcement

that

the

invested

conditions

with
and

"reached

full

accord

respect to debt management

monetary

policies"

will

opinion, stabilize the

not,
gov¬

semi-war

involves

economy

ipdny factors it is difficult to de¬
termine to
tor

will

that

the

Congress

40 billion
our

what extent each fac¬

affect

vestments.

supply of in¬
have; knowledge

has

dollars,

yearly

appropriated

need

requirements, for

forward

for

and above

over

in the defense effort.
look

use

Banks may

the

continuing

probable

large

hold¬

ings of United States Government
securities and possibly to expand
them even further. In this situa¬

tion,

may

authorities

give

only hope that the

in
Washington who
financial destiny will
due regard to the need for

control

political

expediency

and that all unnecessary expendi-

*An address by Mr. Kress at the Sav¬
ings and Mortgage Conference, sponsored
by the American Bankers Association,
New York City, March 5, 1951.

provide

greater income return.
Interest

have

rates

tended

recent

years

due

come

further

petitive

race

payments

involved in

at
in

and

com¬

interest/dividend

nor

rates
The

long-term securi¬

exchange offer of non2%s for marketable

2V2S

affects

only

the

specialized

real

issue of whether the Federal

Reserve

System

would

creased

rates should be

much

ings and additions
reserves

permit,

higher rates.

established
as

that

equal
as

effective

that

Whole.

the

reve¬

prove

historical

record indicates.

One

important segment of this

last

closest

war

they

offer

the

parallel

to
our
present
semi-war economy. In those
years,
•

savings
10

deposits

15%

logical

have

similar

increase,

increased

annually.

that

assume

seems

will

period of

undoubtedly

from

deposit

consumer

goods will be in short supply. In
the year ahead
we
have much
progressive

work

cus¬

field of railroad bond

earn¬

surplus and
without having

unique in the

are

sibility and

we are

being

compen¬

security. Even in cases of bank¬ safety. We cannot afford to re¬
ruptcy, there were few defaults of lax, nor to rely
upon government
income and in only one of the 63
guarantees.
Let
us
be militant,
bankruptcies since 1886, did
let
us
be
a
aggressive and let us
principal default occur. Purchase meet this
challenge with courage
of this type security also permits and
determination.
the adoption of a
"staggered ma¬
turity policy" because of the issu¬
Two With Dean Witter ance
of equipments
serially. By

associated

with

credit

bank

and whether Treasury debt is ever
again to compete in the securities

market

equal terms with

cor¬

porate debt, remains unsettled. It
is our duty to be militant, to be
concerned

with

the

soundness

ketable

issues

that the

nate

the

unrestricted

will

continue

mar¬

low

Treasury will domi¬

market,

particularly

should the Administration achieve

corporations, due
materials, are

partly

unable

to
to

lack
ex¬

able
government and
corporate
issues would decline from
present

levels.
While

government

bonds

guaranteed

and

mort¬

It is

fairly well gages can easily provide an outlet
for all of the funds available for
depositors
are

much interested in convenience

respon¬

These securities

ties

most

the investment
policy dictated by
the need for increased
income to
pay

upon

the

protection

banks by

surplus

least

hopeful that it will
as

again to
be independent in all of its activi¬
ever

marketable

pand in their customary fashion.
strengthen our This would mean that new
j fi¬
taking advantage of in¬ nancing would be at a
minimum,
earnings to augment our supply of mortgages would
jbe
and
reserves.
Interest inadequate and
yields of market¬

propitious for

remaining to operating

nues/'at

New

of interest and bal¬

coverage

ance

established

legality, based

1951,
terest
ties.

and

increase,

for

are

least in
part to the growth
its goal of substantially reducing
mortgage investments, resulting in the number of
housing units. The
more
income and greater ability determination
to
maintain
low
to pay a higher return. It would
rates will be further strengthened
seem
most expedient not to be¬ if the war
effort continues and

our

eliminating

have

Class I railroads

corporate market in
increase appreciably in¬

interest rates

amount of other bonds to

the

investment and

ernment and

bank

formula

had

during World War II, only in risk-less securities.
If
our economy and to avoid domina¬
retrospect, the prob¬ the mortgage account is small, it
tion of capital markets for politi¬
lems which lie ahead of us may would be wise not
only to have cal
purposes.
The preponderance
not
seem
insurmountable.
The a substantial total of high grade
of evidence seems to indicate that
transition from a peacetime to a
bonds,
but., also
a
reasonable
ahd

for

Jersey

Board

investments, todian of the people's savings,
investor/' insurance
companies, which should command the inter¬ work to improve our portfolio and
pension funds, savings banks and est and attention of every banker, to derive the
greatest tangible
be
savings and loan associations. The is
equipment
trust
certificates. benefit from it.; It is our

re¬

having sub-;:

surplus and valuation

than

serves

investment problem, because they

indeed, but

ac¬

regularly amortized mortgages,

periods of the world's history, it
is a human failing to put particu¬
lar emphasis on
the investment
time

ac¬

Where investment

The

Treasury and the Federal Reserve

investment, such

medium

may

and

afforded

their record

the

investor

is proof of their

reinvesting current maturities
existing

funds

rate

interest,

the

peaks and valleys of the
money rate cycle. To be frozen in
average

long-term

money

obtain
would

position

rate

periods,

the highest
result

clines

when

changes

during low
in order to

market

values,

and
rates

money

the

favored

for

outlets

for

and
justifiably so, has been the public
utility industry.
Many high in¬
vestment quality issues are avail¬
able, generally of long maturities.
Our

problem

many

the

years,

purchase of

such bonds is to determine

rea¬

the

most

Jr.,

are

Co., 38 South

Avenue.

Los Robles

With Schwabacher Co.
(Special to The Financial
Chronicle)

SAN

FRANCISCO, CALIF. —
Charles W. Henderson is now con¬
600

with

Schwabacher &

Street, members of
the New York and San
Francisco
Stock Exchanges.

With

Eastman, Dillon

READING, Pa.—Eastman, Dil¬
lon & Co., Colonial Trust
Building,
members of the New York

and

determine
based
our

better

upon

all

command.

secured

the

Yields

issues,

factors

public
utility issues today fit into an ac¬
cepted pattern, predicated upon
on

Co.,

Market

comparable

and

Wells,

affiliated with Dean

now

Witter &

sonable return in comparison with

governments

income

ANGELES, CALIF.—Guer¬

don D. Smith and John B.

nected

investment

obtain

depositors, consistent with

(Special to The Financial
Chronicle)

de¬

our

LOS

rate of return,
substantial

occur.

One

for

and

prevailing
continually

sated

Exchanges,

announce that C. Rob¬

ert Walter has
with

Stock

Philadelphia-Baltimore Stock

them

sentative.

become associated

registered
-

"■

repre¬
«

i".
r

Volume 173

The Commercial and Financial Chronicle

Number 4996

widespread fallacy that to control a Pearl Harbor psychology—what
prices one had only to issue a few Messrs.
Henderson,
Bowles and
orders.1 Actually price control is Porter could not do; control the
If in 15 minutes I can answer one of the most complicated, deli- retail
price and quality of meat
either of those I shall not have cate and difficult aspects of eco- and
men's
clothing!
Yet there
died politically in vain.
,
,
nomic endeavor —a field really Were two of the items which both
Can our economy be stabilized? understood as a whole only by a
Congress and the public apparThat depends on what we mean by few
professional experts, and ently expected any understaffed
stabilization,
really understood in detail only stabilizer could roll back in price

Controls Under Inefficient
And

about the future of

government?

Inadequate Government
By ALAN H. VALENTINE*

Former Economic Stabilizer, Office of Defense Mobilization

Prominent educator, commenting on
L

his recent experiences

nomic controls

of eco¬
inefficient, inadequate and ineffective. Con-

bringing

our

na-

wholly under the

would

his faith is

and

reduce

incentive

personal

production;

Lippman wrote that even Mr.
Charles Wilson "seemed to accept
notion

the

prices

that

by the simple issuance of an

ou? staWUzine

your

other

hours

several

^toward deflation mciuamg
lYr cl-Tof increased tax revenue
fh

lican

fired

by
If,

President.

feel short¬

you

changed,
do

you

I feel?
A

nice

responsi-

n o

Stabilization

Price

the

for

ever

actions of the officers

words and
of

what-

bility

Valentine

have

know

Dr. Alan

ally I

relieved.

feel
„

■

how
think

of the

and

only

the most

after

effects

and

risk

not

impairing

are

credTt

^nore intelligent

re-

policies

increased

rates

interest

per-

'iSS

convince him to the contrary. Per-

way,

and

nrpqcUre-tides

Need Efficient

of inflation, and

our

excessive

Qff

draw

gov-

haps he did recognize the difficul- €rnment bonds Most of these retics and dangers of the course
anrLmeanwhile the
which he then approved, but did chin of.„gtate' drifts wjth the va-

but with more makes it difficult and perhaps imnoise
than efficiency, more dis- possible to achieve effective price
production, than to impose a regi¬
mentation
which
would
not
in agreement than unity, more cooks apd wage control. Parity protecthan consistency, more contumely tion of agriculture is one of these
any case hold down prices of most
than courage, more politics than hurdles, but there are others.
consumer goods about which the
:V;f'?Theri there are many areas of
complaints centered. Therefore I progress.
Whose fault is that? The fault our economy in which controls of
would not impose general controls
lies in many places and has a long prices and wages are for practical
until
government
took
certain
other deflationary steps (mostly history. I can suggest a few fac- reasons extremely difficult. How
still not taken) to help make con¬ tors, but I shall try to name no can one enforce price controls in
names!
'
many unorganized s m a 11 - u n i t
trols workable. My judgment may

inflation

Pwmlld

gtrictions

stabil-

Federal Govern-

ment
T,

Democratic

adjusted

conversation,

deflation; support.
spreading more fairly the
'
careful consideration.- I knew we and
could not in any case, for want of profit and the pain of our defense Faults in Defense Production Act
staff, arrest inflation for a month program—if that be stabilization ; * Another fault lies in the terms
it is desirable and possible
Are of the Defense Production Act,
or
two, and believed that during
we on our way to it?
I think we which by various conditions
that period it was better to endure
be

Repub¬

effort has t>een the
-

its relative freedom.
not feel he could afford to take
}- But instead* ble. I have always believed that
But if by stabilization we mean the risk of supporting a policy and
you
get' only free
enterprise
produces
best
;' a
private citi- when it is most free and that its; eliminating the extremes of booms a man so politically unacceptable,
and busts*; ameliorating the worst He had and has my sympathy and
zen, only ,an-* mechanism is delicate and should

order.

„fGovernment to take
be.*®j!"r®
on? fundamental

few specialists in government
business.
Last^week Walter

and

would right up to the eve of my resigstrait-jacket initiative and destroy nation, in which I endeavored to
impair,

officers, punches. One cannot compromise free; enterprise. If that be stabilbasic
economic judgment ization, I am against it, for the esspeak today they. one's
sence of our
economy is its flexithought they were, going to get. especially when it is supported by
the Economic Stabilizer. So did I. the wisest advisors one can assem- > bility; the merit of our system is
When in January

invited

could
framework; then our frozen by decree without takin*
economy cannot be stabilized, at any serious measures to stop the
least short of complete dictatorial inflation." If Mr. Wilson did acsocialism.
Such
regimentation cept that notion it was despite

misplaced, and his friendship is betrayed.

determined

strong, prompt and fundamental steps toward deflation. Con¬
cludes time has come for President to undertake major house- ;
upon,

democratic

arresting and freezing our productive organization within some pre-

patronage in Federal Administration and points out
faults in Defense Production Act, as well as failure to take

cleaning, since his loyalty is being imposed

mean

our

control of government; if we mean

demns

tional economy

Economic Stabilizer, criticizes Administration policies

(1233)

Second, what does that tell

{1J/io™arsob dev|staUng
Americans-*re lifted bv
or

by fear

our
iliertia

and

we
patriotism

no?mal selfif that hap- ;

—

then the difficulties

pens

fLbe

described
But

DromPtiy overcome

;nL

that

will still lack a ma•.4iu,.ACQPn«ai to effective stabiliza*
eyen

efficient Federal gov'

t
.

not

now

That essential we ao nqi
have. It cannot be quickly crea
or, recruited, for it is a mat
spmt and purpose as well.as tal.

One trouble has been an over- trades; how
can
one
enforce a ent and experience. ...
:
but events
emphasis in government circles, in wage freeze among thousands of
Some 50 years ago Henry- andj
first have not
press
circles and in the public tiny groups of unorganized work- Brooks Adams warned that Amerj
wishes though not my envy. May changed it. My judgment was not
mind, upon the price-c o n t r o 1 ers? In industries like motor cars ican
democracy might descent^
they succeed, or at least survive! shared by most of the powers in
aspects of economic stabilization.;or steel, when the units of man- from mediocrity to mediocrity un->
Washington. As prices rose it be¬
.Though relieved at my freedom,
This was natural and perhaps in- agement are large in size, few in til it became too mediocre to sur-.
came increasingly difficult for me,
I did not seek it. I took on the job
and for the President who sup¬ evitabje. Prices are of immediate number, law-abiding, socially re- vive. If they feared that in 19Q0,
of Economic Stabilizer aware of
concern to
the
public; prices are sponsible and very much in the what would they .think
its difficulties and dangers, and ported me, to resist the pressures news to the
press, price control public
eye, the
problem of en- quality of American politics and
of those whose opinions were sel¬
was
prepared to see it through.
can
provide legislators with an forcement is a minor one.
But society
today?
The problems
dom tempered by any knowledge
But any man not supported by
excuse
for not voting unpopular there are many other industries, which currently face our governof the complications of price regi¬
organized labor, or by the White
taxes or troublesome government each with thousands of small op- ment are more complicated and*
mentation and wage regulation—
House secretariat, or by the Demo¬
economies. This over-emphasis has era tors,
where that description difficult than ever in our history,
to
resist
the sincere and vocal
cratic National Committee needs
led to too little emphasis—and too does not apply, and where there is More than ever before we need
people
who
had
all
the
popular
to watch his step, and I was un¬
little action—upon other and more no medium for internal leadership many men of fine mind and char7
popular with all three. The Presi¬ arguments on their side—to resist basic deflationary measures abso- of external control. Mr. DiSalle acter in government, and an atmothose who cared more about pla¬
dent gave me support for some
lutely essential to stabilization.
has yet to demonstrate that he can sphere in government in which
weeks against heavy odds; and fi¬ cating the public than helping the
Allied with this error was the do—without rationing and without
Continued on page 30
public,
i1.,
•
k;
,;,7
,
J
,
nally gave me the distinction of
That was
an
economic issue,
being Washington's finest example
of what inventory accountants call though it became a political one.
But there was another. It was one
This is an announcement and is not to he construed as an offer to sell or as a solicitation of an offer to buy
Last In First Out.
My personal
I had been promised would not be
these securities. The offering is made only by the Prospectus.
regard for him remains.
allowed to impede my work. I was
There is nothing more unstable
forced to choose between being a
than the job of an Economic Sta¬
participant in large-scale partisan
bilizer. It is easy to talk stabiliza¬
150,000
patronage or of being a victim of
tion but not to stabilize; and it is
it.
I chose the latter; forced the
possible to appear to stabilize our
issue; and do not regret my choice.
economy but actually to impair it.
Perhaps it would have happened
But if one tries to act the econ¬
in any Administration; it did hap¬
omist and the statesman, he is
Common Stock pen in this one.
moving against the crowd. Per¬
There are few men more boring
(Par Value $4 per Share)
haps it is wiser to be like the

members of the Wage

have

Board, if

since

any.

Stabilization
They have my good

been

wrong,

February

of, the

American

than

demagogue of the French revolu¬

hearing

who,

tion,
hours

noise

the

riot

small

the

below, leapt from his bed
and announced to his lady: "There
street

people.

their leader;

I must follow them."
Paris has

its

leaders.

(

;

form*that

milder

kind

leadership is now called
"rolling with the punches." I am

that

glad

leaders

of our business
serving in Washing¬

some

now

his

figures
feated

all

and
fewv

winter

try not to be

Mariner either.

tion

tance.

brings

matters

too

are

the

defense program

our

men

like Charlie

Wilson, Bob Lovett and Bill Har¬
rison.

Hoping that

not the

praise is

kiss of death, I want you
that in my observation

know

one

of the finest jobs of

tion

produc¬

done

anywhere, and
against heavy odds, is being done
ever

crucial

criticism

owe

tant
one

are

issues too impor¬

compromise;

must

refuse

with

the

misadventures
lustrative. I

will

purely

il¬

<*An

address

Annual

Industries

March

by Dr. Valentine

Luncheon

the

Associated

Cleveland, Cleveland, Ohio,

1-4, 1951..

legally offer these securities in compliance with the securities laws of the respective states.

come

Union Securities Corporation

Harris, Hall & Company
.,\.j

(Incorporated)

•.

White,Weld & Co.
•

A. G. Becker £? Co.

Bacon, Whipple £? Co.

A. C. Allyn and Company
Incorporated

•

Paul H. Davis & Co.

Central Republic Company
(Incorporated)

Incorporated

Equitable Securities Corporation

(

Blunt Ellis & Simmons

bury Valen¬
tine, not to praise him.

Pacific Company

of California

Bateman, Eichler £? Co.

Two Considerations in Stabil- r
ization
I

want

time to
31st

of Common Stock

installment payment plan, which offering is not being underwritten.

needs our
support, with all

largeness of spirit and gen¬
erosity of judgment we can mus¬
ter, to that government and to a
President whose honesty and de¬
votion,
whose
difficulties
and
problems, we never can belittle.
Any further references to my own

sometimes

roll

Copies of the Prospectus may be obtained from only such of the Underwriters as may

personal

by General Harrison.
But there

employees uwder

impor¬

permit any of us the luxury of

support.

would be without

Corporation is also offering, by the Prospectus, an additional 25,000 shares

to certain

clarifica¬

some

of greater

times

The

cils of

know where

The

Ancient

What happened to

is unimportant—except to me

—unless

their continuance in the top coun¬

government. I do not

explaining how all he
more
good material.

tirades. Our government

our

Price $22 per

was

shall

the

need badly

are

pathetic than the de¬
coach who spends

destructive

you;

There

ton have learned how to "roll with

punches," for

tell

operation

football

needed

wants

recent

how much it hurt.

monopoly of such

who

about

Hospital Supply Corporation

First,
toward

two
are

give

efforts
succeeding,

why not?

Whiting,Weeks£?Stubbs

Rauscher, Pierce & Co., Inc.

government

stabilization

and if not

The Milwaukee Company

Johnston, Lemon 6? Co.
remaining

considerations.

March 20, 1951

(1234)

The Commercial and Financial Chronicle

With Otis in Denver
(Special

to The

DENVER,
Newlin is
&

Colo.

Barton

—

Co., First National

Bank

Bldg.

DESPITE
and

one

your

investment dealer,

NATIONAL
RESEARCH
120

has

from
from

SECURITIES

than

dent, member of the policy

stocks

which

preceded

the

curiteies

CORPORATION

BROADWAY, NEW YORK 5. N. Y.

to very liberal dividend

Technical

market

re¬

can

really begin at 40 for

Are Common Stocks

Too

lagged behind values
clares

while

trade

impact

always

bearish, but the longalways been bull¬
Facing today's uncertainties,

for'

active

the

Gross

dis¬

Group

due regard for
the

have

profits

tax

Price:, of

for

change

stock

corpora¬

+512%

prices:

"prospectus from ''

year.

45%

rate in

able

that

1951, but it is prob¬
Congress will increase

this, in addition to the excess
profits tax. Should this result in

PHILADELPHIA 2, PA.

combined rates averaging as
high

your

investment dealer

55%, the earnings cited above

would
of

nevertheless

the

1949

exceed

•

period

those

approxi¬

mately 11%.
On

Hare's

profits

these

states,

net

corporations

are

approximately
nual
i

eystone
1

Custodian

Certificates of Participation in

INVESTMENT FUNDS
investing their capital

Thus, barring a
depression, which

BONDS
(Series B1-B2-B3-B4)

PREFERRED STOCKS

severe

business

seems

unlikely,

and

despite the higher taxes an¬
ticipated in 1951, it appears to
Institutional Shares' sponsor that

(Series S1-S2-S3-S4)

Gross national product-:
Corporation profits bef. taxes

Corporation

Tke

may

be obtained from

Keystone Company
of Boston
50

price of their stocks.
In

the

opinion

the

sponsor,

the market may rest around
pres¬
ent levels or decline on
adverse
or

economic

news,,

profit-taking, but such
should

decline

temporary nature
and
thereafter
the
long-term
trend of stock prices should
again
be upward.

Boston 9, Massachusetts

odd

that

are

5,000

Securities

general

the

investment ad¬

Axe

Fund.

The

continues

Board

for

.The

member

the

policy committee

Corp. to join E. F. Hutton

common

35%

the

member

Stock

Exchange.

He will act
tional

the

general'

management of the Fund.
HARE'S

LTD.

special

HAS

report

prepared
the

"leverage" feature
Group Shares.

adviser to Na¬

Securities, with
in

San

York

his

14%

re¬

its

Francisco,

Mr. Chad wick will be
succeeded

by John A. Munro

Vice-Presi¬

Avia¬

The report is

New
'

New

York.
•-

•

tributors

dis-i

EASTERN WHOLESALE

Banks

suggest

to;

possible after the shares?,

March

yInvestment Registrations
]
CHEMICAL.' EUNDy New
York,'

16.

easily.be, the $25,000,000
Gas Industries

Fund

of the

page

may

over

representatives
men

and

reached

March

15, filed

statement

re¬

pros¬

sooner :,

with

the

registration

Securities

Exchange
Commision
covering
1,088,195 shares of capital stock.4
No underwriter.

over

"Selling investment
requires

Chairman

INVESTMENT

by
and

COMPANY

chief

serve

financial

contemplated

that

the

ties

Exchange

com¬

officer.

covering

will

par

1,500,000

value

common

a director of the
firm, the
largest single factor in the nation's

derwriting. y

investment company field, at the

JOHN

annual

York,

board

April

Thompson is

meeting in
24.

Chesapeake & Ohio Railway
&

finance

member

committee

stock.

LFWIS

Fund,

N evf

March 15, filed a registra¬

Exchange

Commission

cover-

ing 100,000 shares of capital stock.

the

Underwriter

and

Management

Lewis

Investment

Company, Inc.

sincerity,

judgment, sensitivity and under¬
well

the

competence possessed by
who

women

experience

have *

seasoned

maturity

American Business

men and

acquired

the

Shares, Inc.

bring,"

can

he said.
As proof that mature sales
rep¬
resentatives have the drive and;

Prospectus

upon request /

energy

narily
pointed

produce results ordi¬
associated with youth, he

during 1950.

Loud, Abbett & Co.
New York

—

Chicago

—

Atlanta

Los Angele*

EATON & HOWARD, investment
managers of Eaton & Howard Bal¬
anced Fund and Eaton and How¬
ard

Stock

Fund, have completed

publication
Books

the

both

1951

funds.

Year,

Detailed

data

pertaining to the objectives,
policies, management and records
the

Funds

comprise

the

of the Year Books

con¬

together

with charts which

graphically de¬
pict the growth and development
of the

Funds since their origins-:

tion.*
1951

'•

Year

Books

available

are

without obligation from

Eaton

Howard, 24 Federal Street, Bos¬
ton

10, Mass.

•

GROWTH COMPANIES, which
business as an open-end

Diversified Investment Company

Prospectus

may

be obtained from

investment dealer

your

local

The Parker

Corporation,
200 Berkeley St., Boston 16, Mass.
or

began

mutual fund

have set
the first

ation.

some

Aug. 1, last,

kind of

may

record for

five months of its oper¬

In that period not

single

$1
un¬

tion statement with the Securities

director

Commission
shares

company se¬

the

tration statement with the Securi¬

Company and

40,

Clark pointed out.

curities

Crabb,

made

was

Services, Inc., of the election of*
Harry C.-Thompson as Treasurer

the

numbers

women

Minneapolis

group's r nation¬
1,900 investment

head¬

business conditions and the
oper¬
ations of portfolio
companies lo¬
cated on the West Coast.

unusual

President of Investors Diversified

Mr.

investor

1,102

& Com¬

New

full

St.,

elected

+237%.

stocks

sales

pany,

have

America, Los Angeles and Wash-;
ington, on March 15 filed a regis¬

+111%
+

wide staff of

NATHANIEL S. CHADWICK has
resigned as Vice-President and a

Cor¬

distributors

odd

practically all
holdings, and it

lot

opportunity

pany's

+184%

tivities of the nation's largest
tail securities sales force.

tents

quarters

Congress Street

could

62%

profits after taxes

vestment shares

of National Securities &
Research

Prospectus

poration
for

Inc.,

and

York

out that Investors sales
should be sufficient to representatives over 40 were re¬
permit dividends to be fairly well sponsible. for more than 64% of
the company's total sales
maintained around present
pf 1311,rates,
though- these are unusually high 500,000" in face amount investment
in relation to the current market certificates and mutual funds in¬

(Series K.1-K2)

■i COMMON STOCKS

visers

earnings

war

double their an¬
dividend disbursements.

Axe & Co.

three additional shares.

pectus

Constant Dollars —1940 Base

standing

average,

the

than expected.

Prices

tax law provides for a

new

that the
shareholders voted to retain E. W.

available without obligation fromi
Hare's Ltd.,, 19 Rector

ferred

tax rate of 46% to
compensate for
the 38% rate which

The

two-thirds

ANNOUNCEMENT

Ploughed-back profits———

ing the first half of the

Fund, In¬

announced

of stock. The distribution will
give
the holder of 100 shares about

applied dur¬

Foundation

tion

limit

Percentage Changes January 1,
1940-January 1, 1950

their

computed at

President

corporated,

Trustees

Aug. 1, 1950.

V If 1951 is the big gas year that

+145%:

buying

Earnings for the last half of 1950
cases

Income

BARTON,

soon

figures

the

Dividends

in most

go ex-dividend

+107%

same

j
W.

Texas Fund will bej
Holcombe,
44
Wall:
New York, it was an-!
shareholders the rounding-out of Street,
nounced by Bradschamp & Com-*;
their foldings at a time most ad—
pany, Houston, Texas.
vantt.o~ous to them—namely as

+195%

net profits were 37% higher than
in the
comparable 1949 period.
were

offers dealers and their salesmen

of the dollar only accen¬

power

may

period

$11.03

his

This will result in

+ 283%

stocks_____

common

Mr. Thompson will make
headquarters in Minneapolis.

tuates the extent of the lag in

higher than for the
-third quarter of 1949 and,for the
nine-months'

of $483,991

cases

+416%';

the

54%

whole

product___

Adjusting these

tions for the third quarter of 1950
were

fund

The Fund reported total net as¬
sets

Earl

profits of leading

and

mutual

industry.

national

administration.

•

create

Ploughed-back profits.-...-—I—*-

various corporations.

Net

the varying effect

excess

that

Dividends

all-out wartime economy, with7

that

factors

ized in trust fund management and

the

tribution of realized capital gains
the form of additional shares

the

invest¬

Corporation profits bef. taxes
Corporation profits after taxes

companies, the sponsor
states, whose earnings should be':
comparatively favorable under

Money,"

publication

Percentage Changes January 1,
1940-January 1, 1950

strong

New "York

edition

banking circles. Throughout
banking career he has special¬

initial

shareholders
of
Gas
Industries
Fund will take the March 31 dis¬

de¬

Securities, Inc. Here, measured
in dollars, are the changes dur¬

peacetime, semi-wartime

the

of
its

industrialists

with

com¬

York

outstanding
scientists

retirement

of New York, he has
long been
prominently identified with New-

DAVID

over

matter

ament and

-or

summer

PRESENT INDICATIONS

have

ing the past decade in the basic

purpose

marked

its

responsibility

;

them,

current

firms

prices

measure

the

ment

of Institutional

The first

last

A former Vice-President of the
Chemical Bank & Trust
Company

association of four of the nation's

economic

wars.

primary

Dec. 31, 1950 as compared with
total net assets of
$256,000 or $9

values':

either

One Wall Street

you

tribution

the problem of management is to
direct its investments to stocks of

Established 1894

ac-

always followed a
consistent
pattern in connection with rearm¬

ish.

capa¬

has

CALVIN BULLOCK

stock

"Management

term trend has

Common

Shares comments that the market

investment dealer

and

men

Selling

High?;

how

sponsor

the

However, the stock market
never goes
through a period of de¬
cline, except for short intervals,

The

for

gain,
organization,

Diversified

ket.

your

Investors

less severity always occur
from time to time in a rising mar¬

ratios- characteristic

Companies, one of the
companies of its kind organ¬

•

life

Services, Inc., who supervises

all rising markets are present as
they are today, Hare's reports. -

Prospectus from

PRODUCTIVE

with inherent sales

manager

more or

the

Chairman

his

Growth
few

ized

Corp.

USEFUL,

yields.

reactions

Research

and

Se-

bilities," according to Grady Clark,
vice-president and general sales

mains at a price level still amply
justified by basic factors, such as
unusually low price ratios to earn¬
ings and book values, in addition

National

women

de¬

clines, the stock market today

capital

past

market

severe

committee

ment

directors themselves.

com¬

mittee and chairman of the invest¬

year's duration

June, 1949, well-

opinion of Hare's Ltd., one of the
few
uninflated segments of the
economy.
Unlike the overvalua¬
tion

request

one-half

selected stocks will remain, in the

SPETULmVEjjERIES
upon

RISE

from the lows of

NATIONAL

Prospectus

the

Thursday, March 22, 1951

mittee.

outstanding at the
year-end, 14.9% are owned by the

By ROBERT R. RICH
.

shareholder.

The Fund had 28,500 shares out¬
standing on Aug. 1 and 46,885 out¬
standing at the end of the year.

Mutual Funds

affiliated with Otis

now

presented for redemp¬

was

tion by any

Financial Chronicle)

F O U N D E O

19 2 5

Number 4996

Volume 173

The Commercial and Financial

about

Commercial Banking
Problems Today

effects of commercial bank loans

bank

bank loans have

risen

I would

ject

like to

down
(1)

.place

action.

What

when

makes

~
.

kind of
or

loan

buys

any

kind of

bond

Precisely

(2)

what is meant

when it is said

that

com¬

mercial

bank

ligations?

what

see

takes

banking

the

Excelsior Radio

The

Tele-

and

4sion Cp. here in Chicago, for ex¬

ample; enjoys an excellent credit

It arranges for

^landing.

quarter of

say, of a

loan,

million dol¬

whom

them?

Fictitious names are used,

system.
-

give?

How

should the matter be handled vis-

of course.

mortgage?

would

Largely because of this expan¬
the supply of

$5,000

checks,

say

your

per¬

verse

The

increase.

been

owe

Before

take

the record" to

brief look "at

see

what has been

outside of the banking
Physical production, asmeasured by the Federal Reserve^
Board's Index,
moved up from
around 200 to the presently esti-j
mated 220. Some confirmation off

happening in the past few months,
one
matter must be mentioned.

are

now

ready to see what

the

going on both in and
out of the banking system. We are
been

have

.towards

seen

'deposits

how

confine

going to

our

look to the

are

spending them has an im¬

takes
place businesswise. If we can lean
on
good old Excelsior just, once
more,
we
made previously one
portant

what

bearings on

in¬
creased by about $9 billion. This
•is a growth of nearly 20%. It oc¬
curred in eight months. The total
•now
outstanding is around/$54

•banks

our

accuracy

uct from 1949 to

when

have

country

reasonable

thisf

10% change in unit production is
given by a study of freight carloadings.- There is further con- f
firmation irr the fact that the in-«
crease in our gross national prod- j

-eight months since the tragedy in
created through the
medium of •Korea was forced upon us last
'/...
loans. The. attitude of the ultimate ■June.
4 The loans of all the commercial
recipients of these
deposits
We

system.

System?

has

overj

rapidly, let's see what was;

going

in Banking

creating

were

recipients were turning it

the

re¬

the decline.

What Is Going

the increase.

this.;
huge added volume of credit and

While

generally true when busi¬

demand bank*
turnover has.

consists of
Deposit

supply

balances.

When business is very
rate of deposit turn¬

the

tends

over

deposit

end by some $8
80% of the money,

year

billion. Nearly

drew $75,000
your

creased

average

turned over 15 times

have

active,

ness

in the country (demand
deposits, as adjusted, plus cur¬
rency
outside
banks)
had in¬
money

a-vis Excelsior? What are our ob¬

outside

world

—

practice,

making the
ioan, within the banking system
as a whole, and then in the busi¬
ness

creating

let

year, you

per annum.

place within the bank

any

bank
check
cur¬
especially under today's
•conditions? How much weight, in
are

rency

trace through a hy¬

will

bank would be anxious, to ob¬
should we

course

loan'figures continue to

sion of bank credit,

checking account. If, in the

sonal

which

give to the purpose, for which we

by banks.

now

one

maintain

balance

highly competitive field, and the

to all of us,

would

pothetical but typical loan trans¬

these four ques¬
actually takes
commercial bank

into

tions:

Let

sub¬

break our

you -

worth

Urges less civilian spending and

restriction of non-essential loans

idea

that

and I are in

tain. How much weight

only

banking situaLon sound.

same

any

10% and wholesale prices moved up
Igy^i-iSees possibility of further loan increase, but warns
banks have obligations not only to create credit for production
but^ also to- seek to maintain value of dollar, while keeping
has

tion

gent orders from the Signal Corps.

loans shows

consumer

be feverish.

that these words convey the

Remember now, you

business

One significant indicator of the
spend¬
ing is the rate at which bank de¬
posits turn over. Just to make

have wished to borrow to fill ur¬

and

signs of slowing down. The

some

(

anticipation of shortages
prices. It might

account

estate

attitude of people towards

higher

Excelsior

on an

determines.

woman

borrow

the rent

payment

sure

Points out since last June, commercial
increased $9 billion, or 20%, while produc-

orders..

tubes in

reserves, currency

enable it to

for existing
might
have
to
stockpile

-and/or

volume, and prices.
*

civilian
.wished

New York banking institution describes

Executive of prominent

borrow to

assemblies

complete

York

pay

Excelsior,

wished

PRICE*

By WILLIAM G. F.

Vice-President, Bank of the Manhattan Company, New

to make a downautomobile, or for
pretty much whatever the little

hypothetical case. Our
might
have

our

friend,

(1235)

Chronicle

the

1950 was

prices is eliminated.
In the period

■f

amining,

which we are ex-

substantial

very

Vk%,\
higher j
!
f

growth due to

in-

has
available on these are for the end of
December. In the last six months

crease

in business inventories

j
We postu¬ billion. No series of events in our
*
up,"? (3) Why When the note is delivered to the lated that the entire proceeds of •financial history has ever caused
.
is it important bank, the latter debits, "loans and
the loan would be used to pur¬ an approach to the present total
of 1950, business inventories in- I
that
we
dis¬ discounts"
$250,000 and credits
chase tubes. In practice, generally or to the expansion which pre¬
.creased by some $7% billion. The i
cuss
these Excelsior's checking account with
ceded
it.
In- the; spree
which
part would go for materials, part
increase was straight across the'
questions and the proceeds. For the moment the to
culminated in 1929, the total loans
pay salaries and wages, part to
board. Manufacturers, wholesalers, f
keep
abreast Chicago bank, has increased its
of all banks was short of $42 bil¬
buy equipment, part to pay taxes,
and retailers all added to their '
William G. F. Price
of them?
(4) deposits by $250,000. To simplify and so on for the manifold needs lion. The preceding expansion (to
stocks. Aggregate business inven- j
To
whom do our example, let us assume that
the extent of 25%) took some four
of the business..
..." •
*
tories stood at close to $62 billion \
we owe obligations and what are
Excelsior borrowed the "money?
years, not eight months. ,
I. In turn, suppliers would use the
at the end of the year. This repre- \
to pay for tubes purchased from
they?
;
: - .; ■ v
transferred deposits for much the ; About 70% of the recent in¬ sented a jump of nearly 15% since I
■f, Let me here make it explicitly the Radio Tube Co. of Camden,1
crease has taken place in loans to
same purposes. If the government
June. How much of this accumu- k
clear that any opinions expressed New Jersey.
'k
<. •
',4
business. The balance is repre¬
lation is represented by higher ?
got a part of the proceeds, it
Excelsior airmails its check for
:by me are my own. Thpse do not
would use them to pay Congress¬ sented by the growth in real es¬ prices and how much by more
necessarily represent the point of $250,000 on the Chicago bank to
men
or to buy
aeroplanes, or to tate loans and consumer loans, units is difficult to say. The guess :
view of the institution with which the Radio Tube Co. in Camden.
with the latter somewhat outstrip¬
here is that most, if not all, of it >
pay farmers or what not. the por¬
I have the privilege of being as¬ Radio Tube deposits the check in
tion received by labor might be ping the former. In the last three
Continued on page 36
sociated.
!'
its Camden bank, thus increasing
used to buy nylons or beer, or to or four months, the pace of real
,y; Now we are ready to have a go its deposits. This institution sends
-'loaned

lars with its fine Chicago bank.

occurred. The latest figures

unrealistic assumption.

•

first question.

our

Wnat actu¬

ally does take place when

com¬

check to the Federal Reserve

the

mercial bank makes any kind of
a loan
or invests in any kind of
a bond or mortgage?
Tne answer

ited

is that the

bank

creates

deposits.
These newly created deposits are
placed at the disposal of the bor¬
The

rowers..*

latter,

through

the

issuance of their checks, disburse

ihe funds thus created.

exceptions

do not bulk large

enough to war¬

rant, discussion here. "

{

This

concept

fact

must

commercial

The

kept in mind.

banks

the

are

only privately owned institutions
■to whom Congress or state legis¬
latures have granted the

privilege

of credit-deposit
creation.
Sav¬
ings banks, savings and loan asso¬
ciations, and life insurance com¬
.

Such

panies do not create credit.

organizations accumulate the

ings

businessesrent

sav¬

individuals

many

(the

residue

and

cur¬

production, not immediately

reserves

currently producing).
'* '•

the

From

acquired the
inept phrase.
•We speak, at times, of "lending
deposits." Unintentional though it
is, this language does not describe
Most

habit

what

viewpoint-of

den

While

lend

not

makes

loan.

deposits.. What
reserves."

it, "deposits" also
unfortunate description for
we

is ,an

demand

for

bank

lend is "Excess

are

balances

(and

probably
appreciable portion of time

balances too) in commercial banks.

"Bank

check

ing" would be
rate
i

currency
a

much

designation.

♦An

,.v

address

National

sponsored
mittee

outstand¬

more accu¬

by Mr. Price before the
Installment
Credit
Conference

of the

the Consumer Credit Com¬
American

Bankers Associa¬

tion, Chicago, 111., March

12,

1951.

•-

■/

the

bank

$15,000,000 Twenty-five Year 3% Debentures

the Cam¬
maintain, at the

must

bank

Due March 1,

1976

moment, a legal reserve
of 24% or $60,000. The remainder,
present

$190,000 is available, as "Excelsior

Price 99Vs%

investment, tem¬
porarily at least. Thus a second
end result of the Chicago loan is

Reserves,"

use

for

-'Mr

-f
J

They

reserves.

excess

stay "used up" until loans and/or
the commercial

249,600 Shares Common

securities held by

banking system are reduced net
by $250,000.
When this happens,

(Par Value $10

model,

per

Stock

Share)

just described

place in reverse.

In our

and Accrued Interest

$60,000 of the banking

system's

iption Price $20.50 per Share

have assumed

that when the Chicago bank made

reserves.

it had $250,000 in excess
Suppose it did not. Nev¬

ertheless, the bank felt obligated
to

extend the credit to its valued

Television
some

Radio

Excelsior

client—the

Co.

is usually
competitor bank

which is "in reserves"

iness.

There

are

and which

our

Bank

employ, to

increase

its

will

talk

about

Stockholders,

Prospectus.

Subscription

Prior to the expiration

the

terms

and conditions

Warrants expire

set

of the Subscription Warrants, the

of the Underwriters may

pursuant to

by its Common
forth in the
3 P.M., April 4, 1951.

offering these shares for subscription

subject

Representatives
and

offer shares of Common Stock at the prices

the terms and conditions set

forth in the Prospectus.

methods

four

Chicago

The Company is

good bus¬

the

which

and

There

friendly

actually takes place when a Is
diligently seeking

commercial

;We

have

using

the

newly created deposit,

^Creation of Bank Check Currency

securities
*. . - I .*'

loan.

increase Camden

the loan,

■

of such securities.

banking system, one end result of
the Chicago bank's loan to Excel¬

takes

to spend more than they are

he considered as an offering of these

or as a solicitatioyi of an offer to buy any
The offering is made only by the Prospectus.

extent of $250,000.

the process we have

-•

the

depleted

are

posal of other individuals and bus¬
inesses
(who currently wish or

•I

Its

made

which

bank

the

spent) and place them at the dis¬

need

for sale,

credit-deposit deposits by $250,000. Against this

creation is fundamental. One other

•basic

This advertisement is under no circumstances to

the item is
charged to the reserve account of
There

Chicago.

sior

its

Philadelphia Federal airmails the
check to the Federal Reserve Bank

The three

generalization

to. this

Philadelphia, to be cred¬
reserve account.
The

Bank in

could

reserves.

only

one

these, since it is the route yvhich
banks most commonly have fol¬

Copies of the Prospectus may be obtained in any State only from such of the
writers, including the undersigned, as may lawfully offer these securities

several Under-'
in such Statea

lowed for the last 17 or 18 years.
If the bank
it
of

were

"short reserved,"

would
a

probably sell ,a quarter
million of its government

securities through

increase, in
reserve

Let

dealer to. the

This would result in

Federal.

the

account.
us

raise

member

•

another

LEHMAN BROTHERS

bank's

question

March 22,1951.

SMITH, BARNEY & CO.

(1236)

The Commercial and Financial Chronicle

nounced
of

dent.

News About Banks

eral

and

aggregating 55 cents

for

devote

sev¬

post, Mr.

new

most

Outgoing Chairman of Federal Reserve tells newly constituted
Voluntary Credit Restraint Committee representing
banks, insurance companies and investment bankers, that

his

April

work

closely with

Assistant

Commander.

was

lin Street.

Mr.

Neubert has

and

initiative

three

voluntary curbs rests with private
Names of committee members listed.

success

financing institutions.

and

Lieutenant

The

13.

will

The newly constituted National
Voluntary Credit Restraint Committee, appointed by the Board of

dent,

Governors of the Federal Reserve

dent, Mercantile-Commerce Bank
& Trust Co., St. Louis, Mo.

been

cents

extra of 20

cents,

the dividends

per

and

total of $2.

declared

March

(which aggregate $3,410,000)
a share or
$3,100,000 will
paid by the bank and the re¬

50 cents
be

mainder

by City Bank
Trust Company. *

Farmers
,

which he

now

supervises. Mr. Wil¬

started his business

son

Trust

Officer, Park National Bank,
Newark, Ohio.

was

charge of management

for James

F. James & Sons, Inc.,
Montague St., Brooklyn. Mr.
Wilson served in the U. S. Army

193

with

the

rank

2nd

Lieutenant

the

Infantry. He attended the
George C. Johnson, President of
Institute
of
Banking
The Dime Savings Bank of Brook-' American
and has taken several extensions
Iyn, N. Y., announced on March 16

Insurance

Carroll

tional

Bank

opened

Accident Insurance Co.,

Thomas

York

branches

new

its

Caribbean
few

the

Chase

operations

during

area

months.

David

vestment

past

New

Rockefeller

York

branch

Home Builders Institute.
*

V..-.

Merger of The National Safety
Bank and Trust Company
York

with

the

of New

Chemical Bank

Trust Company of New York

was

approved on March 15 by stock¬
holders of both banks at special

meetings, and became effective

Monday, March 19.
This move
brings to a total of 18 Chemical
George N. Mauger

Everett J.

Livesey

Bank

Trust

Company's offices
in New York City.
Founded in
1824, the Chemical Bank has its
principal office at 165 Broadway.
The

main

office

National

Safety Bank and Trust Company
Broadway and 38th Street, will
be designated the
Broadway of¬
at

fice

The

other

offices

Chemical

are

three

Bank

newly

Trust.

acquired

at Seventh Avenue and

27th

Street, in Manhaftan; at Bos¬

ton

Road

and

174th

Street

and

167th Street at Jerome Avenue in
the

Bronx.

Chemical

Bank

part of
the

Chase

National

Caribbean
said in

bank.

Zone

the

since

1925

nental
more

corporations,
more
taking part in the

possible.

this

pro¬

initiated, at

necessary

drastic

types

compulsory restraint such
been

suggested

of
have

possible alter¬

natives."

conti¬

Mr.

and

are

voluntary methods when¬
is

invoke

since
1933*
Our
Caribbean branches which, in the
first instance served
primarily the
subsidiaries

expansion, it will not be

and

Juan

southern

"in

fective in restraining private credit

Panama, the Canal

Havana

that

out

gram which has been

statement issued by the
"We have had branches in

and

that

pro¬

the

role

then

emphasized

the

Federal

Re¬

which have been fostered in those

areas."

Production Act and the President's

economic

The Santurce Branch will

managed by Fred M. Ahles

der

serve

development

the

supervision

Brunner,* Second

Executive Order

un¬

Carl

ministration

branch

another

developed

delegating its ad¬
Board, is es¬

the

The

initiative

System

newly
Havana,

private financing

will

attend

committee

to assist in facilitating
operations of the program.

the

Cuba, in February. A new branch
Company, with the merger in
"Up to now," Mr. McCabe said,
Marianao, Cuba, is to be opened
effect, has combined deposits of
shortly.
"voluntary efforts on an individ¬
more
than
$1,500,000,000
and
sis
sj:
sis
ual basis have not been very suc¬
that at a meeting of the Board of total resources
ovqr $1,600,000,000.
E. Chester
Trustees of "The Dime" on that Under terms of the
Gersten, President of cessful, even though many indi¬
merger, stock¬
the

ments

following
were

new

made:

entered

appoint¬
N.

George

holders
ceive

National

quarter

The

Safety

re¬

the

employ of the merger plans appeared in our
"The Dime" on Nov. 1,
1931, as issues of February 15, page 737
general bookkeeper. On June 16, and March 1, page 922.
1939

was

appointed

Assistant

Comptroller, and

on Oct. 24, 1941
appointed Comptroller. Mr.
Mauger started his business career

was

with
and

the
was

American

Trading

affiliated with that

Co.

com¬

for

pany

which

over
30 years, during
time he served as
Manager

Stanley
Cannon
elected
the

tjf

Phillips, President of
Mills,
Inc.,
has
been
the Advisory Board of

Textile

Office

Chemical

Bank

York

announcement March

of their

Trust
320

Company

New

Broadway according
13

Tokyo (Japan) office for N. Baxter
Jackson, Chairman of
12 years.
Mr. Mauger is active in
the bank
Mr. Phillips is also a
the Savings Banks Auditors
and director of the Association
of Cot¬
Comptrollers Forum of the State ton

of New York

and

member of

the Controllers Institute of Amer¬
ica.
Mr.

Dime"

Livesey started with
in

1930

Bensonhurst
was

branch.

transferred

Department

the

clerk
In

the

"The
at

its

1935

Auditing

main

and in

office,

Textile Merchants and of The
First National Bank & Trust Co.

Montclair, N. J.

March

H.
the

Jackson

16 announced that Curt

Reisinger has been elected

Advisory Board of the

Square

Office

& Trust Co.
a

Mr.

director of

Mr.

Chemical

Times
Bank

Public

Reisinger is also

Anheuser-Busch, Inc.

•f

and
an¬

National

Bank

New

White,

Stein Brothers & Boyce, Phil¬

ner,

adelphia, Pa.
-

The
the

Committee

will

chairmanship

under

Oliver

Powell, member of the Board ot
Governors of the Federal Reserve

System.
The

National

Committee

will

designate subcommittees through¬
out the United States to be

able

for

consultation

avail¬

with

indi¬

vidual

financing institutions and
assist them in determining the

application

the

with

program

Partici¬

pation in the program is entirely
voluntary, but the Board of Gov¬
ernors

tee

the National

and

expressed

Commit¬

the

hope that all
financing institutions would join
in the program and4 cooperate in
making it effective. {
«
„

Two With Hamilton

(Special to The Financial Chronicle)

DENVER, Colo.
Birrell
are

and

now

—

Benjamin H.

Hershiel

McGraw

connected with Hamilton

Management Corp.,

Boston

Bldg.

United States National Bank Bldg.

President;

legal

Harold

gold

been

windows

placed
of

one

the

City

Branch, Park

States, in March 1933.
whole

United

taken

Act

from

the

have

under

the

greatly

use

that

say

continue
new

for

cur¬

for

credit

rise

program.

loopholes

the

will
even

There

those

given
at

coun¬

opportunity, will
spirit and intent of
and make it

suc¬

Members of the National Com¬
mittee appointed

gins is

now

with Eaton & Howard,

Inc., 24 Federal Street.

With Estabrook & Co.
(Special to The Financial Chronicle)

BOSTON, Mass. — Robert M.
Gary is with Estabrook & Co.. 15
State Street, members of the New
York and Boston Stock

Exchanges.

Joins
(Special

Georgeson Co.
The

Financial

Chronicle)

BOSTON,
Mass. — Ernest
T.
Gregory has become associated
with Georgeson & Co., 24 Federal
Street. He was recently connected
with Cooley & Co.

today include the

following:

(Special to The Financial Chronicle)

BOSTON, Mass.—Harry J. Wig¬

are

this

the

program
cess."

City.

With Eaton & Howard

who

looking for them, but I think

the

April 2, 1792, estab¬
mint, and authorized,
among others, the following coins:
Gold—Eagles (each of the value

who

look

private

National

cynics

try,

gold coins of their

This exhibit is made

coins

will

are

generation of
citizens who have

the

country.

The

together
halt

the financial leaders of this

new

States

seen

credit

tailed.

always

Thus there

lished

program, it is not too much
hope that the expansion of pri¬

under this

Gold coins

ordered
withdrawn
from
circulation by Executive order of
the
President
of
the
United

never

band

sanction

inevitably

were

ley is with Waddell & Reed, Inc.,

will really go to work on this

vate

has

coins

National

New York

displays

view

The

Avenue at 57th Street.'

able

ers

believed

the first private
traveling
of United States

Bank

"approach, groups
a community will

new

What

just

this

been the principal
weakness in
voluntary efforts to date. If lend¬

at Main Office has been advanced
to Assistant Cashier.
'

done

'shop¬
ping around' for loans which has

Beppler of the Credit Department

have

of institutions in

Chronicle)

statesmanlike job of holding down
in their own organizations.

institutions

loans
With

that

(Special to The Financial

DENVER. Colo.—Kermit G. Tur-

well Silver of the Public
Relations
Staff has been advanced from As¬
sistant
Vice-President to
Vice-

also

With Waddell & Reed

vidual

and

Trust Company of New
York, an¬
nounced on March 19 that Max¬

collection

August, 1940 was appointed
^
#
Assistant Secretary in
charge of
Central Hanover Bank
mortgage servicing.
In 1946 he Trust Company of New York

Hutzler,

Mauger, Vice-President; Everett J. Chemical Bank stock plus $32
Livesey, Comptroller, and Andrew cash for each share of National
D. Wilson, Assistant
Secretary. Mr. Safety Bank stock. References to
Mauger

Weld & Co., New York City.
William K. Barclay, Jr., part¬

insti¬

meetings

Trust

Andrew D. Wilson

day

Bros.

City.

rests

tutions of the country. Represen¬
tatives
of
the
Federal
Reserve

interest.

with

in David,

Vedado,

section

Solomon
York

lic

Republic of Panama, in November
and

sentially that of guarding the pub¬

Vice-President,

who is in charge of all Chase
op¬
erations
in
Puerto
Rico.
The

Chase opened

Bankers

respect to specific loans.

McCabe

System in this program, un¬
der the authority of the Defense

grams

Investment

the

the request of responsible leaders
of the financial community, is ef¬

San

pointed

ever

area," Mr. Rockefeller

the Republic of
in

Bank

welcoming

democracy like ours we prefer to
accomplish our objectives by re¬
liance

President,

Francis Kernan, partner,

address

McCabe

Benner,

Lee M.

\v;'

Committee members, retiring Re¬
serve Board Chairman Thomas B.

Santurce
represents
expansion program by

Nashville,

Limbert, Vice-President,
Blyth & Co., Inc., New York City,
under
■if
Rudolf Smutny, senior
partner,

Co., Wilmington, Del.

ance

banking, and life insur¬
for the first time in

ernor.

and Otto T.
Kreuser, Vice-Presi¬
University,
and Columbia University. He "is dents at the Chase Head Office in
active in the Brooklyn Real Estate New York, flew to Puerto, Rico
to be present at the
opening cere¬
Board, the Mortgage Bankers As¬
monies. "The opening of this new
sociation
and
the
Long Island
courses

Claude

Continental American Life Insur¬

Washington on March 14
the
chairmanship of Oliver S.
Powell, a Federal Reserve Gov¬

the

Oliver S. Powell

met

ance,

has

B. McCabe

System and comprising represen¬
tatives of commercial banking, in¬

was

March 17, in Sariturce,
a
surburb of San Juan, Puerto
Rico, bringing to four the number
on

added

Tenn.

New

Shanks,, President,

ica, Newark, N. J.
" ;
E.'.B. Stevenson, Jr., Executive
Vice-President, National Life and

branch of the Chase Na¬

new

Prudential Insurance Co. of Amer¬

Companies

George L. Harrison, Chairman,
New York Life Insurance
Co., New
York City.

Cashier of Sterling National Bank.

career

1932 with the Premier Realty Co.
Prior to his joining "The Dime,"

and

Everett D. Reese, President and

graduated from the American In¬ identified with the textile busi¬
stitute of Banking and the Gradu¬
ness throughout his entire career.
ate School of Banking of Rutgers
Central Hanover Bank and
University,
and
in
1949- 1950 Trust
Company also announced on
tional is paid at this time to make served as President of the Savings
March 20 the promotion of George
hp for the smaller payment in the Banks Auditors and Comptrollers B.
Moran
from
Assistant
Vicefirst quarter, when 45 cents was Forum of the State of New York.
President to Vice-President.
Mr.
p>aid.
It is the intention of the
Mr.
Wilson
entered
"The
Moran, who has been with Cen¬
directors to .continue the $2 an¬ Dime's"
employ in July, 1936. He tral Hanover since April 1, 1946,
nual rate, if conditions permit, by has been
employed in „the Real is at the'bank's Herald Square
payment of 50 cents per share in Estate Management
Department, Office. He Sterved as a Lieutenant
each of the last two quarters of the
Mortgage ; Servicing Depart¬ Colonel in the Army Air Forces
this year. In 1950 National City
ment, and the Mortgage Applica¬ during the last war. Before the
Bank paid regular quarterly divi¬ tion
and
Appraisal Department war
Mr. * Moran' was
Assistant
regular dividend rate at 50
cents per share per quarter, or $2
per annum.
The five cents addi¬

Bank

Co., Richmond, Va.

Kenton R. Cravens, Vice-Presl-

payment just declared establishes

State-Planters

Trust

the

dends

National

of the branches of the bank: 34th

Vice-President.

May 1 to share¬

business

will

Committee-Warns of Tighter Credit Controls

Advisory

bank

his

Voluntary Credit Restraint

Comp¬
Street, Herald Square and Church
1949,
Assistant Street. He
will make his office
During the years for the
present at the Church
1943-1946, Mr. Livesey served in Street
office, which is at 271
the U. S. Navy with the rank of
Church Street, corner of Frank¬

troller,

holders of The National City Bank
of
New
York of record
at the

appointed

was

declared March 20

were

will be paid

Branch

the

been

icing of the bank's business in the
textile and wearing apparel fields.
He

per

has

time to the development and serv¬

CAPITALIZATIONS

Dividends

the

years.

Neubert

Bankers

and

ETC.

McCabe Addresses

Vice-Presi¬

as a

Neubert

Committee

NEW BRANCHES

REVISED

Mr.

member

CONSOLIDATIONS

NEW OFFICERS,

March 20 the election

Henry Neubert

Thursday, March 22; 1951

Goodbody Co. Adds

Commercial

Banks

(Special

The

Financial

Chronicle)

Continued

page

George S. Moore, Vice-Presi¬
dent, The National City Bank, New
York City.
,

Carlisle

Davis,

Vice-Presi-

BOSTON, Mass.—Edwin F, Littlefield

has

been

staff of Goodbody

Street.

added

the

& Co., 50 State

Number 4996

Volume 173

The Commercial and Financial Chronicle

stocks higher.
a time, common
As the common stocks are attractive and
high can push dollar declines in value equities the earnings outlook to me points
prices higher
as
people
bid should advance."
to a
continuance of good diviagainst each other.
Also, private
Pessimist—"Maybe over a long dends./
There seem no good
industry
is * planning to
spend period of time that works out, but reason to sell stocks here."

cutbacks—at

government

A Conversation

The Stock Market
Co.

this,

Members, New York Stock Exchange

Mr. Huber records conversation between
ish

bear¬

individual, indicating opposite factors in stock market out¬
Concludes divergent views and opinions are

look.

of which markets

are

made" and this is

truly "stuff

billion

$18
on

ernment

bullish and

are

around $21 billion for new plants
and facilities this year, compared
with

Trask

incomes

when

By AUGUST HUBER
Spencer

(1237)

top

last

year.

All

accelerated

gov¬

spending,

bound

the

shows

record

doubtful.

inflation

this

even

period

caused

Pessimist—"My experience has

where

been that when the market is low

primarily by few

heavy government spending, there

also

bureaucratic concreate greater inflationary pres¬
trols and steadily heavier taxes,
sures."
Controls, restrictions, allocations,
Pessimist—"You are absolutely and all that sort of thing, proright, Joe, and we are going to gressively multiply and become
have what the economists like to offsetting factors against business
profits and dividends. The trend
are

many

found

can

base

buying,

and at a
high level in the market there are

always good

reasons not

that's why prices

suddenly,

it*should be.

reasons

which

change

has

never

the

Dow

are

been

Jones

not sell at 200

to sell-

Then,
There

high.

comes.^

year

that

yet

did

Industrials

under."

Pessimist—"Oh, Joe, don't you caU a 'full-economy.' Later this toward greater bureaucracy and
0ptimiste-"Yes, but there is
two
gentlemen chanced to
set think the fact that yields are so year
government spending for governmental control over the
aiways an exception—1951 may
themselves behind me and began relatively high, in itself, reflects d!r~f nse may account for around
economy is apt to lessen the confi- be
All I can say is that this
talking about the stock market, the uneasiness with which their £0% or more or our gross na¬
il e i n g more maintenance
is regarded?
The ]ilonal product.
On the other to n<hivesf in teWate^ bushes discussion has certainly opened
avest in private business my eyes f0 factors and possibilithan
vaguely present yield is measured against *laP<~' shortages for civilians may
which is becoming less private.
interested
i n the highest dividends ever disbe as bad as has been feared, This can be seen in Britain and ties { hadn>t realized bPefore:J
thought earlier that: the Dow
the
subject tributed.
Common < stock divi- Already there has been a very France where stock
prices are no. Jone* Industriais
might go to 300.
myself,
their dends vary over the years as substantial volume of anticipatory
discussion earnings fluctuate.
If we take ^uymg. Business inventories are f^7er
j° yet
^ luan
tbey
Jn Now, I'm convinced they will go
1947 and
the price levels in much
higher
than
that."
!/""•
soon
inter- average dividends over a few past more than $10 billion greater than
those
countries
have
advanced
- *
*
ested
me.
It years, the present yield is a bit „a year ago.
Probably more imvery
substantially. ; Meanwhilie, /
ss,^s
:^rea^ .^co^quickly
be- different.
A realistic approach Portant, people themselves have here
in the United States, we have w°rse than I had imagined., . A
came apparent
must take cognizance of the his- been stocking up on many things
seen the same thing at times.
In <dl?cilf^°n such as this brings out
that these fel- torical fact that corporate earnsoft goods and semi-durable
Sitting in the club one evening,

...

lows

not

were

in
complete
agreement—
one
being the

proverbial
— the

optimist

August Huber

pessimist—but

found

innocent

intotWinu

vote'd

and de-

listening -to
discussion

nivself to

market
marKet

their

aiscussion.

way

1940-1942, the
prices in
the

This

By June of 1948 the general price
level

the

110%

over

United

States

prices were
higher at that, time."
„

end ot the last war to increase

UT,

Optimist-— If

likely to be larger

the

relations-that

the

and

none

shooting

stops

breaks

out

about where I came

was

seemed

time

leave,

Like the two fellows I
10%! had been listening to, I was more
convinced of a few things myself.
yet any rate.

For

one,
divergent views and
0pini0n are truly the: "stuff" of

should

with our foreign,
is, with Russia-

suddenly clear
and

only

skies

in—it

was

1940,

January,

stock

OptimisL-"That kind of reason- the nation's productive capacity,
ing doesn>t make to° much sense Unless there is a full-scale war,
10
me* of
There
js aavailable
tremendous
the volume of
goods available for
volume
funds
for civilian
is

whieh
s0

Korea

elsewhere

«markets

iong

ke^

the

are

and

mad

there is a stoc^ mar_
controversy
between

buUs and bears will

g'0

on
And
currently
realized, the
regulations, restrictions and that is as it shouid beeln a hea,thy
Overall industrial production as
tax burdens may be lessened.
democracy where free opinions
measured by the FRB
is now
Pessimist—"Well, it seems to can be openly arrived at and exabout 218 (1935-39=100).
Only

stock purchase.

Pension
looks as though the stock market funds need higher income than
can
go only one way—and thats that afforded by bonds and pre«P"
v
ferreds;
then there
are
trust
common

years

level

use

certainly

Optimist— Well,

tplevi-

thp

that

turned off

soon

not

remember that y about $80
billion has been spent since the

of tranmitting themselves
eavesdropping to stock prices."

evitable

Son whic? I

in-

the

other

overall'JaJard:,ldeas which had not crysUnited talized in my mind before.: I had
States increased 30% and common jj1 y Ts,
°.u^ by \°"g P°shion.
stock prices declined about 40%. N°w Im going short.
-.

the

because they curthe future as in the past.
Also, gently need them, but because
that 1950 earnings will probably they are afraid the goods may not
mark a peak for some time to he available,-later ory if so, only
come.
Lower
earnings
create a* a higher price._This type of
doubts about future dividend buyillg can be at tbe e*Pense of
payments and these doubts have future sales volume.
Then we
g°°us

ings will continue to fluctuate in

than

that

may
be Joe, funds, insurance companies, and a relatively small portion thus me that if the war in Korea
personally, I'm looking for a the mutual open-end trusts which far is going to war work. It is should be negotiated and fighting
lower market/'
have been finding new security estimated that by the year-end cease, our preparedness program,
as
outlined, would nevertheless
Optimist
"What9 — How can buyers all over the country. This the production index may reach
continue as planned, because Rus¬
the market go down—corporate has all created new demands for 230-235.
Of this, perhaps 180 sia only understands
strength;.
earnings are at the highest rate common stocks/'
v
would still be 'for civilian-'goods,
in history.
Stocks certainly are
Pessimist—"The persistent buy- unless a full-scale
war breaks If we should modify our defense
~",J
plans it would be at least temcheap in relation to earnings."
~ ing from the sources you mention °utThlj would compare with porarily deflationary, particularly
Pessimist—"Those
earnings has indeed been a strong force
? ,2* .
y?Jftln
?oc
,
with all the anticipatory stocking
were
shown
last
year,
weren't in the market. Yet, at some point, fnd1Q^b
949 and
.5 back up of goods more recently by in¬
they?
It seems we now have the initial heavy common stock An 1949,
again,
incomes dustry and individuals. On the
higher normal and Surtaxes; an requirements to form the basis of
cr^as10n
other hand, if a full-scale war
excess profits tax is in force; price
a pension fund will have been
£? ?
should develop this would mean
restrictions are likely to be ap- acquired. Then the initial aggrescould start an en- a total war economy with all that

Pessimist—"That

but

pressed.

opinions

But,

with

men's

with their watches—
none goes exactly alike, yet each
believes his own.,
.
. . .
as

Andrews, Posner to

—-*A1-

rru

Admit Partners

d®

Tben

ta0 ?r
goods' ,the

™

government

plied more rigidly than the controls are .xercised on labor costs.

work with

Also, more government

profit margins than on

narrower

regular civilian lines

is in pros-

arising from plant conversions and an
pect, while some dislocations
absence

last

year's

ventory profits must

consideration.

large

in-

be taken into

wouldn't

think

they are going to help 1951 earn-

ings."
Optimist
overall net

—
"Oh, I grant that
profits will be down—

maybe 20% or so—but with many

at 4, 5, or 6 times
earnings, there is plenty of
room
for some earnings decline
and still keep stocks on the barfiain
counter"
'
e

stocks selling
1950

siveness may be lacking for the f°Fced savings plan deducting a
investment of
the
additional £®rri?ba
can
funds, as they accrue. If a down, government
can
trend is in force, fund managers,
thl^nn11
like most others with human
nnltcnnnS?»
tendencies, may pull back and iroA uie money suppiy.
wait, or at least, buy on a scaleOptimist—"Yes, but I still say
down. This can cushion a decline, that inflation as such should put
but would not, in itself, prevent

have been selling shares to many
people who never invested in
common stocks before. So long
as *be market trend is encouragm& such holders are not concerned. But, it is feared, should
market decline for a period

preserve

principal,

the

easily frightened if he sees the
value of his investment dwin-

change in the profit trend that is
disturbing. There is the fear that
once the trend is reversed, earn-

followThis tends to

ings may go still lower the
ing year, and so on.

lessen confidence among

and

investors

speculators alike which could
stocks selling at an

be reflected in
even

lower ratio to earnings."

but the earnin prospect, from
the way I look at it, should be
able to support very good dividends. The desire for higher income—as compared with the
Optimist—"Yes,

ings

that

meager

are

high grade bonds

—

level."

Such

com-

say,

still

think

and Timothy J. Reardon to partnership

the

yields

March 29.

Mr.

member of the N^w York

membership.

floor broker for some time.

offer to sell, nor a solicitation of offers to buy, any of

these shares.

is made only by the Prospectus.

River Brand Rice Mills, Inc
Common Stock
($3.50 Par Value)

selves to raise the cash to redeem
shares.

own

they

have

been

doing

recent

Price $14.50 per

some

selling at this level of the marketV
and are increasing their cash resources

some

extent."

„

7 a

■

;

Copies of the Prospectus may be obtained within any state from any
of the undersigned only by persons to whom the undersigned

w ca£

th« mark(fVg0 dow" very much
,lnS? ? ,!s 1°uncJ 0 Jp
worse. The dollar has been depP"atln®
^in buying power right
along.
The government will get
back into the red

legally distribute the Prospectus in such states.

when present

large appropriations become actual expenditures. Deficit finaneing later on will again increase
the
and

may

supply. Higher wages
overtime, full employment

money

more shifts will raise disposable consumer income even
though taxes on individuals will
be raised. A reduced supply of
available civilian goods—due to

Lee

Kidder, Peabody & Co.

Hayden, Stone & Co.
March

20,1951.

Higginson Corporation

A. C. Allyn
and Company
Incorporated

Reynolds & Co.

has

been active as an individual Curb

245,500 Shares

reports from these trusts indicate

r.irh

Exchange,- will acquire a Stock

their

Klee,

a member °* the Wew York Curk>
Exchange

Optimist—"Apart from all you

dling.
This could mean sellingof securities by the trusts them-

return on savings accounts and

should
keep stocks in good demand. After
all, many good stocks still yield
up to 6% and even 7%."
.
and

entail.

pletely regulated economy by the
government would not help the
stock market frpm this advanced

The offering

since

boy, but in looking back over the
years,
I find that the market
doesn't
usually. advance
when

declining, particularly after a substantial and sustained
advance.
It is probably
true that earnings could still be
substantial but so often it is the

This announcement is neither

aJld *be ass^ yalue of such trusts
a*s° be reduced m the process,
sucb
holdings may be liquidated
to
this type of small investor may be

are

would

The mutual open-end trusts

one.

Pessimist—"That may be so, my

earnings

that

Andrews, Posner & Rothschild,

60 Wall Street, New York City,
members of the New York Stock
Exchange, will admit Joseph Klee

Blair,Incorporated
Rollins & Co.
Shields & Company

(1238)

The Commercial and Financial Chronicle

Comptroller of Currency Preston,, Delano reports combined
at

year-end exceeded $97 billion

than year previous.
Rate

Increases

Acting with

patch

the

and

Carriers

commendable

interim

increase

freight rates, to become effective
less

not

than

notice

days'

dividend

and

prospects

banks
to

Last year the railroads reported
net

income, after charges and in¬

taxes, of $783 million
pared with $438 million a
come

earlier.

Part

The

for

the entire industry.

dis¬

Interstate

Commerce
Commission last week granted the

railroads

ings

com¬

Dec. 30,

than

$97

time high, it

assets

was

national

total of securities held

1950, amounted

billion, an alljust announced

the

figure

but

wes

Comptrol¬

the

been done
the

in the

eastern

larger

In these

railroads had

preceding case,
were
granted

roads

increases

percentage
roads

were

other

than

sections

the country.

and 1943) has railroad net income

topped

$700

showing
that

million.

should

1950

The

1951

better

than

with

even

higher

taxes.

lion

Earnings experiences in recent
have indicated plainly that

years

the

roads

eastern

are

greater relief than

southern carriers.

and

need

the western

are

con¬

siderable degree this is attributed
to

the

relatively

heavier

burden

the large eastern roads of ter¬
minal and handling costs which
on

not compensated for in inter-

are

territorial rate divisions.
western

southern

Also, the

sections

were

greater

than

those

southern

greater growth than has the highly
developed east. Thus, the traffic

slower

sult, the operating ratio dropped

potential has risen

sharply

to 76.0%

compared with 83.2% in

in the south and west than in the

January

1950.

east.

come

-more

In the recent decision the Com-

mission granted a 4%

increase in
freight rates in official, or eastern,
territory. In other territories, and
between other territories and the

east, the increase amounts to 2%.
There are, however, many excep¬
tions as well as limitations below
these

percentages for many

modities.
mated

that

amount

the

2.4%.

For

crease

the

east

the

estimated

net

West

which

year

earlier. Feb¬

increases

from

revenue

will

million

and

annual

basis.

$219

the

million

will

presum¬

poorer

flecting uneasiness
developments

Brainerd
President

H.
of

Whitbeck,
The

First

ViceBoston

Corporation in charge of the mu¬
nicipal bond department, and Emil

and

over

the

before in the
history of

ever

will

from

Our problem is, one, to
international communism

tendency

shift

one

the

and

task of the

*s n°t g°in& to be

manufacturer

an easy one.

defeat
whose

make with the other
powers, it is
unalterable aim of the Soviet
leaders to destroy the

shortage of Soft Goods
...

the

■

...

There is no likelihood
ny,
shortage
ft; goo*When^t
sPea* of soft goods I don t mean

world.

capitalistic
country in" the

every

■

„

Our prime

task, therefore, is to
strong, to be able to resist and

be
if

necessary to fight
H %initems in force from abroad.

Tes"m0an

g°ods J

soft

system

aggressive

all

The "second

stoitsupply

nTiWse, ^

problem is to keep
economy sound, to produce ds

our

much as

can

and, above all, to

military

rity

S«1Bfl113
hi
\ U°an Acreage
$19 011
billion

slightly

weie

and

$1,159

excess

deposits

billion,

banks

o i

were

15%,
since October. Postal savings deposits were $6 million and certided

nearly

cashiers'

and

checks

were

$1,714 billion.

plaee«

that

the

already

has

taken

the

soundness

expense

the

secu¬

economic,

country

would

loans

discounts

and

the

supply o{ food

United States

talk

know that the tax

the whole

burden will not be

imposed evenjy jn ^be entjre population — that
will

g0me

have

pay

s]->are than others, one may

fore

definitely reach the

sion

that

done

the

volume

the soft goods

thah

there-

conclu¬

all

their

sword

all of the menaces of

greater

this will do

cause

Therefore

keep
vent

our

economy

them
or

war.

second

our

for

rattling
task

is to

sound, to pre¬

inflation, to maintain

the in¬
business. tegrity of the United States
dollar.
Can we do it? Of course we can.
industry,

]Je volume of business done by

According to the

economic

mes-

mercial and

run

its full

question

any

reasonable

highly

recent
course

but

certainly
period rail¬
fully

favorable

re¬

earn¬

real
up
B. H.

J.
and

Whitbeck

Emil

ernment

securities

elected

were

rectors

annual

Mr.

the

department,
board

di¬

corporation

the

meeting of stockholders.
Whitbeck joined

Boston

Corporation

The First

1930, en¬
tered the municipal department in
1932

and

became head of the de¬

partment

1950.

Pattberg

has

been with First Boston since
1929 except for two
years of mili¬

been

the

war.

government

de¬

partment since 1937.
Both

Mr.

Pattberg

SECURITIES

Whitbeck
associated

are

firm's New York

xrjrfl

25 Broad Street

» ' ■ 0

New York 4, N. Y.

Telephone BOwling Green 9-6400
Members Nat'l Assn. Securities Deaiers, Inc.

Melniker

Mr.

with

the

office, 100 Broad¬

On
will

Admit

April 2 Aaron A. Melniker
be

nership

admitted

Company,

Jerome

Wall

limited part¬
Melniker

Street,

York

City, members of

York

Stock

Exchange.

$6,978 billion

period,

were

consumer

o£n shuOwed an increase of nearly

2%, while all other loans, including

loans

and

the

New
New

farmers,

dealers

brokers

others

and

for

the

of purchasing and carrying securities, and to banks, etc.,
amounted
to
$3,616 billion, an
purpose

increase

October

call.

10%

loans

total

30.11,

29.65

since

The

and

assets

discounts

30,
comparison

cember, 1949.

the

percentage

Dec.

Oct. 4 and

26.52

1950,
with

De-

Investments

cr^as

the

banks

1950,

obligations)
aggregated

which

Dec.

$35,692

j
a

ac{ivit

will

be>

civilian

consumption

smaller than it
as

far

necessary

curities of $7,331
billion, which
included obligations of States and

try first,
of

our

others

will

obtaining labor.
the

created

and

fight

pressure

not for the

coun¬

the

best

groups

country

as a

out only for what is
pockets. Great mili¬

are

own

tary effort such

the problem
In others there

rules

welfare of the
we

ability all

care

whole but

headaches

as we are making
requires sacrifices on every¬
body's part, not only on the part
now

the

businessmen, not only of

man

with

fixed income, but

also of the worker and the farmer.

regula-

work

together, above all
our way of life
is being
threatened, that it isn't- a
develop, but on the whole business question of more
profits or less
activity is bound to be at a very profits, but it is a question as to
high level.
whether
the
freedom
of
men
tions imposed by the government,
Certain dislocations are bound to

realize

that

3%,
Now, what conclusions can one should survive, then we will co¬
October, and $1,394 draw from all this? Our country operate together, we will have our
23%, more than held at is confronted by a dupl problem, military might, and we will keep
the previous year. The a
problem which is today greater our economy sound.

than in

billion,

$4,687

consider the

in their

Problems Ahead

the

the end of

much

problem will be in some
billion,- industries of obtaining materials,

nearly 37% of ,total assets, compared to 42% a
year
ago.
Other bonds, stocks and se-

The

last year.

will

$215 million,

was

that anybody need worry.

30,

were

country with
'48,

the possible exception of
1947,
'49 and
'50, and the standard

concerned, I don't believe who

than

subdivisions

your

But
the general business out-

were

believe

problem during 1951 is to in- living of the people
prior to 1947
^be pe0pie confidence in was
high indeed.
jbe purchasing power of the dolWe can have both
guns and but¬
lafj t0 persuade people not to run ter. Even though the butter
may
away from the dollar, to persuade be somewhat thinner
spread than
people to save perhaps more than before, even though we
may not
ever
before.
It is of the utmost be able to
buy a new car every
importance that individuals and year or a new
washing machine
unincorporated
businesses
who every year, our
productive capac¬
have about $200 billion of liquid
ity is increasing.
v.
assets at their disposal keen it and
More and more facilities will
don't spend it now when the sup- become
available during the year.
piy 0f commodities available for We need not fear inflation
if we

political

later on, we will have more com¬
modities available for civilian
copsumption than we had at any time
in the history of the

sbb

small decrease since

billion,

real

but a decrease of more
6% in the year.
These in-

that

not worry wbat your business will
b
what the volume of business

October,

was

bdieve

„rMf ina„otrv nped

Sentlemen in a great industry neea

iook

^n+1pTY,„„ in

United States Government obligations (including $3,600,000 guar-

vestments

Selected Situations at all Times

the

anteed
and

way.

$).

estate

was

Mr.

tary service during the

RAILROAD

loans to individuals of $5,669 bilPattberg

Pattberg, Jr., Vice-President
Manager of the U. S. Gov¬

has

Specialists in

industrial loans

billion, up 12% over the amount
three months previous. Loans on

rally

Com-

thP
dafp totalpd
*13 402
the reeent
recent pall
call date
totaled $id.4U2

weakness.

Whether the
has

jmo

than

upgrading of

defeat the forces of inflation.
For. us to achieve

reported at the end of 1949.

Re¬

slump

attempt at

moot

the

—

monetary

road stocks should more

flect

7.54% of

were

December, 1950, were the luxury and semi-luxury m- sage of the President, at the end
$29,277 billion, another all-time dustries, is bound to be very large., of 1951, only 18% of the gross
product of the country will be de¬
high, They were $2,109 billion, or Jf cannot be otherwise becaus
voted to the
nearly 8%, above the October fig-" * e fUP? ?u
18%!
money at .the d - From this defense effort
one may conclude that
ure, $4,606 billion, or 18.7% above Posal of the people is bound to.
during 1951, and, if condtiions do
the June 30 figure and $5,349 bil- urease and[the
not become
worse, during 1952 and
lion, or 22%, above the amount
g

market

appreciably. Later in the week,
however, a firmer tone was again
evidence.

which

Net

on
the news but it was
short¬
lived and before the day was over
stocks were being marked down

nervousness

deposits.

page

tfm/

end

rate

time.

over

displaying considerable

STon?

bonds, as well as un¬
certainty over foreign develop¬
ments, the market generally was
was

de-

Hpmand

wpfp

amounting to $9,135 billion

government

There

ficx„rp«

million

point of view the announcement
of the Commission order could not
come

ac¬

the nation.

workers

were

Derations

capital

industry to another, being attract- unalterable aim is to destroy our
ed primarily by higher wages or way of life, to
destroy the capital¬
jitter working conditions.
Over- istic system wherever it is.
It
time payments will increase. More makes
no
difference what type
green workers will be employed, agreement the Soviet Union
may

■

enc*

and

Total

$6,329

supply of dm able

Psychologically from

have

■

the

First Boston Elects

$194

Delano

The deposits of the banks at the

esti¬

between

run

pre«ton

Oct. 4,1950,

rlpnn^it

a hollow
in the
victory. I don't know
ought whether Stalin and his gang pray
ably not be so favorable due to the amount held in October. Deto be more than satisfactory.
at all, but if
they do pray, in all
strikes on the railroads themselves posits of the United State Governsince supply of durable goods
probability they pray to the spirit
but
subsequent
months
should ment, of $L905 blllion wereup
bound
decrease, since the of Lenin to send to the United
witness the resumption of sizable $84 niillion, or nearly 5%, smce
SUppiy 0f money; at the disposal States a good dose of
inflation, to
October; deposits of States
year-to-year earnings gains.
and,>0j
pe0pie js bound to increase - le^d to a sharp decline in the
pur¬
political subdivisions of $5,707 bilconsiderably, since in spite of all chasing power of the
dollar, be¬
lion showed an increase of $351

comparisons

ruary

true, it is calculated that

additional

lead

also

There
some

national banks

mates of 1951 traffic volume turn
out to be

will

re¬

Net operating in¬
of $77.7 million was
up $44.9

million from

in¬

and for the

Depending

but

than gross.

pace

only

3.0%, for
region 2.5%, for

the South 2.0%

also

were

Operating

will

average

increase

Pocahontas

1.9%.

com¬

Thus, it has been esti¬

expenses

last.

billion.

October when they
total

(including cash items

workers

nearly $90 billion, an increase of
been seriously hampered by coal over $5 billion since October, and
exceeded
strikes. Percentagewise the west¬
by $6 billion the amount
ern district was
next, followed by reported at the end of the previthe eastern district and with the* ous year. Included in the recent'
region

any

previous January on record. The
rise was largest in the Pocahontas
region which a year earlier had

$1,124

were

balances with

from

was

preferred

>-■ ■

started off the date of the
year
previous call, and
bang. Revenue^ for the were
$7 billion greater than the
opening month were well above total
reported by the 4,981 active
those of a year ago and, in fact,
banks as of Dec. 31, 1949. »
a

banks

Continued

ported by the
4,975 active

current

with

the country for many years have
been experiencing relatively

1
i

and

The

30,1950,

billion, which
7.07% of total deposits, were
nearly $2 million more than in

reserves

banks

Reserve

billion and

Dec.

stock.
Surplus
$2,925 billion, undivided prof¬
billion and capital re¬
serves $278
million, or a total of
its

less than the

$1,147 billion,

Federal

$11,421

amount

billion, including $15 mil¬

$4,327

the

over

$2,002

counts

stock

banks

was

October,

1949.

with

proceed¬
for

asked

nearly 3%

capital

of the

ber,

Cash

sharp climb
Delano.
The
was naturally due to the non-re¬
returns cov¬
curring retroactive mail payments.
ered the 4,965
an immediate increase of 6% (with
However, even if -the portion of
active national
certain
exceptions
and
limita¬ mail pay applicable to the period
banks
in
the
tions), and had expressed their prior to 1950 were eliminated it
intention of upping this request would still have left net income United States
and posses¬
to 10% following the recent wage
of $721
million.
The magnitude
sions. The as¬
settlement. As usual, the ICC did of these
figures is obvious when it
sets were more
not grant the full increases asked
is realized that only twice before
than
$5 bil¬
for by the carriers.
Also, as had since 1929 (the war peak in 1942
after March 12.

ings

for

lion

amounting

slightly above

was

reported

amount held at the end of Decem¬

Preston

rency

billion

$43

collection) of $11,246
total of $23,814
billion,
increase of $3,399 bil¬

billion,
showed

lion since October.
The
unimpaired

Deposits also increased by $6 billion.

ler of the Cur¬

year

the

total

$7 billion

Thursday, March 22, 1951

in process of

National Bank Assets at All-Time High
assets

...

/
-

Volume 173

Number *4996

The Commercial and Financial Chronicle'

(1239)

......

SOUTHERN RAILWAY COMPANY
Fifty-Seventh Annual Report for the Year Ended December 31, 1950
Attention, however, is again called to the decreasing

Richmond, Va., March 20, 1951.

Passenger Revenue, year by year,, attributable in large
To the

to the greatly increased buying and us® "of new
automobiles and to airplanes; buses and other
competing forms of passenger transportation.
A gratifying result of the Company's long-continued
program of mechanization,., Dieselization and improved
techniques of operation was attained in the control of
expense during the year. Total Operating Expenses in¬
creased to $168,557,964, an increase of only $2,119,361, or

part

Stockholders of

passenger

SOUTHERN RAILWAY COMPANY:
The

Board

the

affairs

submits

Directors

the

the following report

the

for

Company

year

ended

December

31, 1950, which is the annual report it is
contemplated formally to present to the stockholders of

the

Company at the annual meeting due to be held on
May 15, 1951.

1.27%,

freight

Foreword

compared with 1949, while Revenues and
substantially increased as has been

volume

shown above.

tragic

and

ironic

that

after

Country was

our

triumphant in the greatest war that had ever involved
jnankind, history has again, in ten short years, come "a
full

circle"; and that

serious effort to defend

again involved in another
system of life against power¬

This control of expense, in the face of continued in¬
flationary trends, is better reflected by the extraordinary
drop in the ratio of Transportation Expense to Operating

are

our

Revenues, which fell to 34.340 out of the operating dollar
in 1950 from

corresponding
portation, of 38.350 in 1949;
Operating Ratio, which is the
total Operating Expenses to

ful forces that would destroy it.
The following, quoted from Southern

Railway Com¬
pany's Annual Report issued March 25, 1941, is as ap¬
plicable to the present situation, as it was when it was
y "The United States is now undertaking the largest
defense preparation effort in its history, and the result

industrial activity

ment's exaction from

one

of the

most

essential

areas
...

for

major

increased traffic, now

Taxes and in other

Company by its economies was able to "bring down";
Railway Operating Income more than 33V3% of
the increase in gross revenues' over, those of 1949. ;;
The comparative ratios of the several subdivisions of
Operating Expenses, Taxes, and Equipment and Joint
Facility; Rents, expressed in the number of cents out of

1940.)

each dollar

"Thus, this program of equipment acquisition, together
maintenance and ad¬
and betterments, expanded of necessity during
the year 1940, to take care of the sudden upturn in de¬
fense and industrial activity, has put Southern in position
better than ever to say that it 'Serves the South,' and,
in addition, to vary its slogan for the emergency by say¬
ing also: 'The Southern Serves National Defense.'"

ofArevenue, were as follows:
3950

34.340

Transportation

ditions

Maintenance

Traffic

preparing in

1-1-

Way

12.710

Incidental Expense
Totals

1941 for the effort then

•*

17.580
1,740
2.970
0.920

Equipment

Expense.-

General Expense

Taxes

thus

Equipment and Joint Facility Rents—

.1949
38.350
14.380

19.170
1.990
3.340
0.990

70.260

78.220

14.650
1.780

3 0.410
1.090

before us; now after ten years, after the retirement of
Grand

$112,500,000 of Southern Railway System securities
Outstanding in the hands of.the public on January 1,

over

86.690

Totals
.•-V,;; J .: V. \

Joint Facility Rents,

patriotic preparation for defense and victory.

1949.

other corporate

mechanization

further

and

Net

Ton

miles

Average revenue per ton mile
Total

freight revenue

Number

Average

journey

1.5500
$201,940,658
v

3,183,960

passengers

197.51

(miles)

628,857,092

Passenger miles
Average
Total

13,031,314,554

revenue

passenger

per

passenger

revenue

2.6090

mile

$16,407,976

Net Income

showing of earnings, however, was aided by a

share on the Common Stock,
share in 1949.
I.

tinued, and there

was

215.13

}-..f A dividend of $1.00
March

Preferred

Stock

were

con¬

paid on the Common Stock, out

per

the Common was paid

15, 1951, out of the surplus net earnings of 1950.
Operations

177.20

690,716,630
2.6000

chanical tools, machines, the continued acquisition of
Diesel

with

locomotives

the

direct

and

omies

average revenue per

and

"cheaper"

net

operating earnings.
the year 1950, while progress in all these things

1950.

The

roads, still hauled a ton of freight a mile on the average
for a "penny and half," and continued to furnish the
most dependable,
form

mass

attributable

ways

their use,

the learning of better

to do the job, resulting in improved

greatly accelerated, the principal operating em¬
phasis was placed on the commitment to improve and
modernize the Company's freight yards, in order more

was

Company, along with the other American rail¬

reliable, indispensable and economical
transportation, which continues to be a

vital factor in the Country's safety.

December, 1950, the Company's affiliate, The Ala¬
the

for

Southern Railroad

construction

efficiently to handle the increasing defense traffic.
The Company's major improvements in Inman Yard
at Atlanta, Georgia,
were approaching completion at
an

Company, broke ground
and

new

ultra-modern

car-^

retarder

hump yard at Birmingham, Alabama, to cost
in the
neighborhood .of $9,000,000, from which the
owner
and the Company
(and all Southern Railway
System Companies) will benefit immeasurably in in-t
creased efficiency and economies, the Company to
pay

for

its

use

the

new

Work

has

been

facility through

steadily

charges.

proper

progress

also

new

freight facilities being installed by the Company's affil¬
iate, the New
Orleans
and
Northeastern
Railroad

Company,; in its Press Street Yard, in New Orleans,
Louisiana, the estimated cost of these new and efficient
improvements being approximately $2,000,000. I '
/.
The
program
of taking off unprofitable passenger
,

but

continued, not without opposition and difficulty,
estimated annual savings of over
$300,000

with

effected

during 1950.

Among the outstanding incidents of the year's opera¬
were recurrent work stoppages, due to strikes of
operating employees growing out of pending demands
for increased wages and changes in rules.
...
The Managment desires to take this opportunity to
express its appreciation of the effective aid during such
interruptions of service rendered by its supervisory
officials and volunteer personnel from all departments
tions

„

who

ably assisted' the Company in continuing to
as nearly as possible, its schedules and its

maintain,

service to the public.

■

Labor

Demands

Difficulties

increased

for

wages, and for changes in
organized employees and the carriers,
discussion during the entire year 1950, and,

labor rules by both
were

under

pending the procedures under the Railway Labor Act,
resulted
in the
several work
stoppages and strikes,

just referred to.

difficulties

These

culminated

;

the

seizure

-r
the

railroads, including all of Southern Railway System
companies, by the Government, and their operation
under the direction of the Secretary of the Army of the
United States, effective August 27, 1950.
y
The demands continue under negotiation and, when
settled, will result in increased wage costs to the Com¬
pany.

Freight

Rate

Increases

Seeking to compensate, in part, for increased cost of
labor and materials, the railroads in Ex Parte 175, filed
on January 16,
1951, an application with the Interstate
Commerce Commission, seeking a general increase in
freight rates of approximately 6%.; Hearings on the ap¬
plication are pending, and, if the increases are granted*
it is estimated they will produce some $11,000,000 an¬
nually to the Company in increased Freight Revenue.

During 1950 there were laid 18,557 tons of new rail,
as compared with 17,612 tons laid in 1949.
The cost of new rail was increased on December 1,

1950, to $80.64 per gross ton, f.o.b. mills, a
price for this indispensable commodity.

estimated

expenditure of $1,980,000.

new

high

New Equipment

Company received and put into
train cars, included in Southern
Railway Equipment Trust, Series "RR," financed in
1949; and the Company's, affiliates received 114 Dieselelectric locomotive units.
No additional equipment debt was incurred by the
During

the

1950,

service the 14 passenger

Company in 1950, its outstanding Equipment Trust
obligations having been reduced during the year by $9,-*
248,440, to a balance of $48,907,440, as compared with

$58,155,880 on December 31, 1949.

y.V

the Country's effort to
prepare itself for defense, there were ordered immedi¬
ately after hostilities started in Korea in June, 1950,
(a) 2000 all-steel box cars and (b) 100 units of Dieselelectric power; and the purchase of this new equipment,
the estimated cost of which is $27,750,000, will be fi¬
nanced in 1951. Deliveries are expected to begin early,

;i In order, however, to aid in

•

■

Including the locofnotives just

:•

•*'•••

V .*•

mentioned, the Com¬

its system affiliates and its subsidiaries,- have in
or on order 745 units of Diesel-electric power.

pany,

service

indirect econ¬

by the

year

bama Great

in that year.

These Reports have told, and re-told, year after year,
the story of increasingly productive installations of me-

$17,960,923

ton miles shown above, 14.47%, although the
ton mile actually decreased, despite
the fact that the 1949 freight rate increases partially
effective in that year were in effect during the entire

the

earnings for the year 1949, an aggre¬
gate of $3.00 per share at the rate of $0.75 per share
quarterly in March, June, September and December,
1950, as compared with $4.00 per share, paid in 1949, out
of the more ample earnings of 1948.

1949

The volume of freight business increased, as measured

compared with $6.86

of the surplus net

52,917,266
11,384,053,718
1.5690
$178,569,622
3,898,036

Dividends

therefrom, compared with 1949, were:

compared with

Income

1950

$239,906,392, an increase of $27,134,684, or
12.75% over the Operating Revenues in 1949.
The volume
of business handled and the receipts

215.10

hump yard in South-*

territory.

per

1950

revenue,

charges were covered 2.74 times in 1950, as com¬
pared with 1.91 times in 1949.
After a dividend of 5% on the Preferred Stock, the
balance of Net Income in 1950 was equivalent to $14.94
per

60,582,010

year's

Fixed

1950

(miles)

the
>

mately $5,357,500, which was added to Gross Revenue in
the month of December, 1950.

amounted to

Freight moved (tons)__
Average distance moved

ern

New Rail

This

Operating Statistics

——

large non-recurring item of back mail pay for the period
commencing February 19, 1947, amounting to approxi¬

cient and economical car-retarder

89.720

-''"fe:;

(after taxes and charges) amounted to
$22,400,042 for 1950, as compared with $11,914,308 for

Dieselization

The Revenues from Operation of the railroad in

■

there was left for fixed charges and
needs and for the owners, 13.310 out of

pared with those of 1949, as will be shown in the follow¬
ing report.

Year

10.280 in 1949.

of power, produced a steady improvement in the results
of operation, and in the earnings of the year, as com¬

The

dollar

each

Traffic, due to the defense effort and Government
spending, steadily accelerated during the year, par¬
ticularly during the last six months of 1950; and the
revenues therefrom, together with increasing economies
from

.0-'..

After Operating Expenses, Taxes, and Equipment and

1940, and after the investment already effected of over

$153,000,000 in additional new cars and Diesel-electric
power, together with facilities and additional equipment
how under construction and on order as defense projects,
Southern Railway Company and its affiliates comprising
Southern Railway System are better prepared than ever
before in their history, financially and physically, to
serve their Southern territory and the Country in their

derived

ville, Tennessee, at an authorized cost of approximately
$2,750,000, which when completed will be the most effi¬

into Net

With increased appropriations for

were

categories of uncontrollable expenses,

the

the beginnings of the System's Diesel-electric fleet, and
certain new passenger trains acquired by the System

self-supporting enterprise, nearly

dollar

Net Railway Operating Income (what is left out of
Operating Revenues after the deduction - of Operating
Expenses, Taxes, and Equipment and Joint Facility
Rents) amounted for 1950 to $31,933,359, an increase of
$10,069,539, or 46.06%, over the corresponding figure for
the previous year.. Thus, despite the huge increase in

rapidly developing from these defense activities, South¬
ern began, after the worst of the depression, to acquire
and put in service new and modern equipment . . ."
[v;
(Here were enumerated some 17,240 new freight cars,

to December 31,

each

•

"In timely preparation for the

of gross revenue, and were
equivalent to approximately $1,095 per employee, and to
over $27 per share of Common Stock.

South, served by Southern Railway Company
and its affiliated lines, because of its natural advantages,
such as its climate, favorable to all-year-round training
of recruits for the Army and Navy, its adequate trans¬
portation facilities, its labor supply, water-power and
coal, and all of its other resources, has been chosen by
as

out

150

"The

Work was undertaken and is now in
steady progress
to mechanize the Company's John Sevier Yard at Knox^

trains

Railway Tax Accruals, due principally to the increase
Federal taxes, consumed $35,138,494, an increase of
58.64%, as compared with 1949, and took, as the Govern¬

of all time.

nature

dollar

Of the devotion of billions of public moneys to defense

role in the National Defense Program

"C.T.," or Cost of Trans¬
and the decrease in1 the
percentage relationship of
Operating Revenues, and

which decreased from 78.220 out of the operating
in 1949, to 70.260 in the year under review.

drafted, exactly ten years ago:

has been the fastest expansion in its

of December 31,

service

handling

were

1950, the Diesel freight units in
80.30% of the System's gross

ton-miles, and Diesel-electric locomotives were
79.11% of the System's passenger car-miles.
-

Use

fixed
its

1950

of the Company's

moving
;

Financial Resources

addition to meeting all its current expenses
payments during the year, the Company
the following conspicuous items:

paid from

treasury

improvements to the property,
and Structures, and $11,214,210 for

(1) For capital
047 for Road

».

and
t

$9,096,Equip-

(1240)

The Commercial and Financial Chronicle
ADVERTISEMENT

Thursday, March 22, 1951

SOUTHERN RAILWAY (Continued)
'

ment,

aggregate of $20,310,257 for the year,
compared with $26,818,366 so expended in 1949;
',(2) For dividends, $6,894,600, being a decrease
$1,298,200 from the corresponding amount so paid

•»

ards embodied in the present Excess Profits Tax Law and
likelihood of early revision in that and the Income

Tax

increase with accuracy. Every available provision of law
relative to the calculation of the invested capital credit

the

1949'

;^V.

(3)

For

acquisition

for

and cancellation of $1,735,000
Company's Development and
General Mortgage Bonds,
$1,742,236;
*
'
./■ (4) For acquisition of approximately 4.6 miles of the
/.Buffalo, Union-Carolina Railroad, running from Union,
/ South Carolina, to Buffalo, South Carolina, $150,000;
principal

amount

and

the

For

amortization
\

■

Reference

was

ing

before

which

the

Company is

reduction

order

Funded

ment

try

The table

funded

Fixed

and

debt

the

1950

broad

attack

the

These complaints

acreage

con¬

until 1952.

These

cases

are
"

—

Leasehold

Trust

Includes

It. 1951.
7

■:

$12,474,000
-

Includes

sidiaries

V■

■;

$286,434,540

$297,418,980

January

The^

for

January

defined

the

acquired by the
", '' ,v\

1940.

of Bonds acquired

the

Company

'
Company or

by the

1940.

■

charges,

Interstate

its sub¬

Commission,

•

for

1951

has

Industrial

able for future financial

uses,

Mortgage Bonds maturing in 1956 (leaving
balance of $69;795,000 of that issue, which
aggregated

in 1940), and (b) $12,474,000 of the St.
Louis Division Bonds; acquired as of
January 1» 1951;
-i Since January 1, 1945, the
Company has also acquired
.or
retired securities of subsidiaries in the'
principal

$3,500,000, and has paid $3,000,000 with refto the winding up of the lease of The Atlantic
Danville, which had the effect of relieving the
Company of annual fixed \charges of $305,000; and
during the last few years the Company's System affili¬
ates have reduced debt in an aggregate-amount of over
and

plant

new

140,000 kilowatt

Dan

River

near

•

by the Company.

Preliminary counts in the ten
states of
Alabama, Florida, Georgia, Kentucky, Louisi¬
ana, Mississippi, North Carolina, South
Carolina, Tennes¬
see

and

Virginia

compared

3,378,200

maturity of its

funded debt

own

Northeastern Railroad Company,
one of the Company's
system affiliates, expects to retire
^ its
entire funded debt of
$7,195,000 at its maturity on
.January 1, 1952. //'/'/::
/-'■/:/
/•■//■- /.■■
The Company's
subsidiary, the New Orleans Terminal
Company, had outstanding as of December 31, 1950, $14,000,000 principal amount of First Mortgage 4% Bonds
of July 1, 1953, which are
guaranteed by the Company.
■

■

tons.

for

and

grain

under construction at

of 29,690,642 people
1940, an increase of

12.8%.

competition

South Carolina

when

the

$2.5

will have

million

plant

Chattanooga, Tennessee,

goes

'•

.....

the

Company
experiences
from
highways, from barge lines on

inland rivers and from coastwise
water service be¬
the East and ports of the
South Atlantic and
Gulf, was referred to in some detail in the Annual Re¬
tween

port

year

competition
current
more

here

say

diminished

intensified

was

became

Commerce

wise

Indeed,

year.

equipment

Interstate

Suffice

ago.

was

available.

Commission

this

the

and

For

that

during

example,

its

1950

the

Annual

Report, just released, makes this observation: "The rail share of the total
(freight traffic), fell from
.

68.6%

61.4%.

ton-miles

class

represented about

roads

1939

about 10%
crease

estimate

less

than

ton-miles in

indicates

and III motor
of the ton-miles

and

of rail

indicated

staff

II,

that

the

carriers, which
of

class

rail¬

1944, advanced to

1949, with

likely in the first half

further in¬

1950. The
revenues of these motor
carriers are
equivalent to 31% and 38% of rail
freight

inter-city freight
estimated
revenues

1948

and 1949,
respectively."
Competition from subsidized air lines

;

handling

pas¬

sengers, mail, express and high-class
freight traffic like¬
wise increased

during the

year.

HI.

Public Relations
?
The Management is aware that good,
constantly-im¬
proved service is the
keystone of good public relations.
Accordingly, the Management strives
continually to
provide that sort of service and

pany's affairs generally in

Company to

way

conduct

the

Com¬

that will enable

the

earn and

deserve the good will and
friendly
support and cooperation of its
employees and of all the
people it serves.
/
' •
,

Additionally, the Management realizes the
need for
humanizing the industry and takes
advantage of every

opportunity to do

Also, through media such as ad¬
vertisements, newspaper and magazine
articles, a com¬
pany magazine, specially
prepared material, and
personal
and written contact with
opinion makers and
community
leaders, the Management works
diligently to create an
atmosphere of understanding and
appreciation of what
the Company
is, what it does, what it
means to
the
economic life of the
South, and how it is
to

promote

even

so.

greater

growth

Southland.

endeavoring

and

progress

the

•-:*'

Likewise,, the textile industry of the South

ment

the

approximately 700,000

its phenomenal
is

the

expansion.

announcement

plant to be built

continues

High-lighting this develop¬
of

large

tract of 615

synthetic

acres

fiber

of land on

The Board
records, with deep regret,
August 27, 1950, of their esteemed
a

Director of the

the

death

colleague, Guy Ca:
Company for thirty-one years.

Company's lines in northern Alabama.
The production of
rayon yarn will be further increased

by 10 million pounds annually when
expansion

.revenue
agent's
voluminous
reports,
preparing
defenses arid conferring with the tax
authorities. How¬
ever, it is not yet possible to make a
definite forecast
as to the final disposition of the
claims.

lines in

now

under

construction

an
on

East

$8 million plant
the

Company's

Tennessee is completed.
—
.//A $3.5 million expansion of a cotton mill on the Com¬
pany's, lines in Virginia is now
underway.
It will
increase present facilities
and afford additional
space for

The

Board also records, with
deep regret, the death
December 30, 1950, of William J.
Wilkins, a Vice
dent of the

market

new

activity.

the

stand-

dollar

It is reported that within the
next two years the steelcapacity
in
the
Birmingham-Gadsden
and
Atlanta areas will be increased
by

Company by the Federal
government for the period
1941-1946, inclusive. The
Company has been engaged in analyzing and
studying

new

multi-million

making

•

.derables present in the situation,
among them

In preceding Reports there have
been mentioned the
substantial claims
for
additional* income ' and
excess
profits taxes made against the

Company's federal
ahead, the impon-

discovered

.////////I////// // //■///^■'/;/'//://;:///://.-' ///.

into operation sometime in 1951..
This plant will manu¬
facture feeds and other
grain products.
The defense effort will have
a
profound effect on
Southern industrial

and Future Years

/ While it is almost certain that the
tax burden will increase in the
years

recently

area.

Alabama, North Carolina

cancelled, as of
the date of this Report,
$1,789,000 of these Bonds, reduc¬
ing the amount outstanding to $12,211,000.
Liability for Past

announce¬

plant now under construction
on
the line of a
subsidiary in South Carolina for the
assembly of sewing machines is a welcome diversifica¬
tion of industry in that
State.
/
Grain farmers in
Tennessee, Kentucky, north Georgia,

now

/With the proceeds from the release of
surplus property,
, and
with certain of its treasury funds, the New Orleans
Terminal Company has acquired and

Federal Tax

Far-reaching in its industrial potentiality is

that

:://•://'/;-VV:;//

The New Orleans and

point

chemical plant is to be built on the Com¬
pany's lines in south Alabama to manufacture chlorine
and other products
from salt

1950, to be still further reduced by approx¬
imately $500,000 as of January 1, 1951, as shown above.
The Company has

during the year on a large
cellophane plant at Pisgah Forest, in Transylvania
County, North Carolina. The plant is scheduled to be in

ment that

cember 31,

until 1956.

give a figure
the 26,312,442 in

with

by the Company in Alabama, .this mill produced
during the year an excess over its designed
yearly capac-.
ity of 100,000 tons of
newsprint, and 50,000 tons of
bleached sulphate pulp.

increase.

company
in North
expenditure of $21 million

announced.

generating

trucks and buses

During the year there were 142 new
traffic-producing
plants located at points served by Southern
System. The
exparision of existing industries, as well as moderniza¬
tion/ and rehabilitation
programs, proceeded with in¬
creased momentum./There were 107 additions
made to
existing plants as compared with 66 such additions dur¬
ing the previous year. Also, there were established dur¬
ing the year 53 new large distribution
warehouses, the
purpose for which is to draw in carload traffic from
other
territories for subsequent sale throughout the South.
/ Construction was started

served

$6,284,000. " .
>
*
«
:
:
/The Company and its; System affiliates have thus, in
/ little more than ten years, reduced long-term debt in
the aggregate amount of over
$120,000,000;/and the
Company's net fixed charges, on an annual basis, have
been reduced from approximately
$16,500,000 as of De¬
cember 31, 1939, to
approximately $12,200,000 as of De^
.

Development

amount of

been

one

continuing

served

The

Agricultural

product which has existed since the
beginning of World
War II.
.
'
Early in the year, the first newsprint, made from south¬
ern pine rolled from
the paper-making machines of the
first newsprint -mill in the
Southeastern part of the
United States. Built at a cost of
$32 million at a

erence

and

full operation by
September, 1951. This eight-machine
plant will produce an estimated 33 million
pounds of
cellophane annually to help relieve the
shortage of this

$111,333,000

additional

continues

power

increase in the number of inhabitants
in Southern States

Company, were
31, 1950; and

and General

electric

expansion

Truck, Water and Air Competition

During the yfeahs 1937.to 1950, inclusive, the Company,
/has acquired, or retired from the hands, of the public
,'securfties Mid; debt whidh it was -obligated to service
having a face or par value of over $107,500,000, includ¬
ing (a) $41,538,000 principal amount of its Development

king in the territory

was

expected before 1952.

cotton-growirig states served

■

hearings before the Commission in this proceeding were
concluded on December
8, 1950. A final decision is not

.Reduction of Long /term Debt and Future Maturities

the

expansion of their facilities.
;1 ///;
'
/
V
course the most important asset of the South is its
people." Business follows population;
therefore, it i3
gratifying to note the Census of 1950 shows a

the north and the south and west;
Mention was also
made of the proposals advocated
by the northern carriers
which would affect the revenues of the
Company. The

annual basis,

Commerce

its sub¬

approximately $12,200,000 at
such charges payable to the
public are to be reduced by $498,960 annually as of
January 1, 1951, by reason of the 'acquisition of the
,St. Louis Division 4% Bonds. These Bonds are being
extended so as.to have this firstTmortgage issue avail-:

Draper,- North Carolina, was- put" in service
during the
year. Power companies all over the South continue the

In last year's Report reference was
made to the pend¬
ing controversy before the Interstate Commerce Com¬
mission involving divisions of
joint revenues between

December

1950,

grown

million

less income from securities of its leasehold estates owned

time cotton

one

steam-electric

Divisions

of Bonds

" /'

•',

The Company's net fixed

44,959,600"

58,155,880

during

Mississippi River.

Carolina, and

liability the Company has involved
Hearings on this
complaint have been concluded and on
February 1, 1951,
the presiding Examiner issued a
proposed report recom¬
mending the dismissal of the complaint.

the
Company's St. Louis Division Bonds
subsidiary of the Company as of January

•;

$9,415,000

sidiaries since

$9,563,000

since

"Includes

44,958,60048,907,440

foot addi¬

square

cotton

/r Of
——

acquired

were

$194,303,500

Obligations—

Totals

$192,568,500'

Estates...

Equipment

which

increasing.

Demand

$15.5

is approximately $728,000 and interest.

Funded DebC—l.————

bales

served by the
Company* farmers now practice diversi¬
fication. Because of more and better
pastures, and better
markets, the livestock and dairy industries continue to
grow. Soil conservation is being practiced more and
more,
and the mechanization of farms is
greatly

believed to be wholly with¬
'«
;/ ; /.
\
/

asserted

weather

Whereas at

another

amount

Dec. 31. 1949

8,746,307

compared with 1925.
production during the year, as a result of
reduction plus severe weevil
damage and un¬

west of the

complaint brought by the United States
against, this Company and several other
railroads, the
rates charged the Government on bauxite ore
during a
period subsequent to World War II were assailed.'

showed

Dec. 31, 1950

125,000

by the Company, was 26.5% under that of 1949. How¬
ever, this is not as serious to our
economy as was for¬
merly the case because the bulk of the crop is now

following comparison with 1949:
.

for

favorable

railroad rates charged the

estimates, is sought from the railroads of the coun¬
a whole.
It is impossible at this time to estimate

out merit.

Charges
end

Cotton

the

awarded

during 1950 increased its cotton consumption

by 96.1%

the amount the Company has involved. Extensive hear¬
ings have been held during the year and a final hearing
now scheduled for May
9, 1951. No decision is expected

maturing ob¬
the Board of

the year).

Debt

the South

Government during the war period.- Reparation
ranging
from two to three billion dollars,
according to Govern¬

Directors, and (b) cash of $18,971,569, as shown in the
balance sheet
(the latter being reducible '-by items
which were not cleared through the banks as of the
for

been

90.6% of the total consumption in the United
States, the
industry in the South maintained its dominant
position. It is interesting to note the textile
industry in

Government assails the reasonableness of freight charges

in United States Government securities in
/ the principal amount of $33,218,000, held in reserve for

close of business

'"/
-

party defendant, in which the

paid by it during World War II.

early in 1951 in

Consuming

year's Report to a series of
behalf of the United States pend¬
Interstate Commerce
Commission, to

stitute

further

invested close to $60

has

contract

tion to another cotton mill.

made in last

the

be installed

will

fifteen complaints on

subject

rayon

textile

the'acquisition of debt

million

new

weaving mill; construction is under way on
a 90,000
square foot plant to house 400-500 looms for the
weaving of synthetic fabrics; machinery is expected to

profits

y;'"/v-/-,'v/'/;/•/■"'//

ligations,

excess

facilities

emergency

The "Reparation" Cases

/ vestments

January 1, 1951, the $12,474,000 principal amount of
Company's St. Louis Division First Mortgage 4%
Bonds, outstanding in the hands of the public.
The Company had left on December 31, 1950: (a) In-

and

company will have

million.
a

be used to minimize the tax burden.

advance of $12,480,237 to the Company's
subsidiary, The National Investment Company, on De¬
cember 27, 1950, wherewith that company acquired-,as
..

regulated public utilities in computing

taxes

(5)

Law, render it impossible to forecast the amount of

completed, this

Presi

Company.

Conclusion

•

storage.

•

Other expansions
completed
Tayon plant Costing between

/ The

now

in process include

$15 and $20 million. When

Company, the Country

and the world face a situa
tion fraught with
danger and uncertainty; and in
sue
a time the

Company

can

only pledge itself

anew

to striv

Volume 173

Number 4996

•

(1241)

The Commercial and Financial Chronicle

•

SOUTHERN

RAILWAY

Farming Prospects

keep itself strong and efficient and to be prepared, as
always, to "Serve the South," and thereby, as far as it
is able, to preserve the American
way of life and the sys¬
tem of free
enterprise which have given our Country the
highest standard of living the world has known.

Mr. Babson maintains that though cattle prices

should remain
likely to cut profit
margins in 1951, thus increasing risk in stock cattle farming.
Sees also greater risks in dairying, due to higher feed costs.

The Management is again proud of, and grateful to, the
of

and

who have

women

loyally carried the burden

difficult but productive year.

-The changed

being felt in rural
areas
throughout
the
country.
Farm land values, which had been

President.

...

;

'-»

•

■

'•

•

RAILWAY

declining
gradually for

;
•

SOUTHERN

international situ¬

ation is already

ERNEST E. NORRIS,

COMPANY

■ ■
-

eve

Financial

Results for the Year

: V

„

Tne

■*.

mwenue ofl

The

cost

the property and of.

balance of———„

-$71,348,428

from

those

sources^..:

■

•

*3# 5-.

immediately

J after the Ko¬

includes

2,319,686

farm
Leaving
Other

income from railway operations of

income

stocks

derived

and

bonds

from

and

investments

miscellaneous

$31,933,359

Interest

total

income

funded

of...

debt

and

equipment

3,298,768

$35,481,854

$25,162,588

against

hedge

Roger W. Babson
3,548,495

land,; is

acceptable

items

was

Making

$21,863,820

...

that

land, and that
good

•'

4,276,575

i n

m a

ways
:

al¬

have

;•

fend almost

rean outbreak.

—

$24,183,506
<

jfc-

22,149,599

$36,209,934

Company, paid, to ether companies for ?
hire of equipment and use of joint facilities in excess
of/the
amount
received
bv
it

$46,333,105

35,138;494

The

downward

;

i ■,

'Ifi;

Mr,

/ J

^ 163,557,964 ' 166,438,603.

Leaving a balance from railroad operations of
Federal, state and -local taxes required-.
Leaving

§«§iR
'

of .maintaining

s, re¬

versed t h e i r

•

$239,906,392 $212,771,708

■V,;operating the railroad

...

.In 1949 v. :

month

In 1950

Company received from freight, passenger/;;
»nd miscellaneous operations-a total rev-

•*-.

inflation

trust

what; price
changes may
over the longer term.

It may not

other types

of crises.

be the very

best hedge, but in the

;

Resulting in

net income of__

long
13,081,812
$22,400,042

13,248,280

it should turn out to be

run

pretty good thing when cash is

worth little and when other values

$11,914,303

accordingly. However, I do
generally recommend that my
go out and buy a farm
with the idea of growing produce
or
feeding cattle or hogs to sell
commercially.
Farming today is
too specialized for any such hitor-miss approach. What I advo¬
cate is that every city family who
dip

not

readers

Financial Position at the End of the Year
On

;.V
^

The

■

„

Company had investments in
land, railroad tracks, terminal
facilities,
shops,
locomotives,
freight and passenger cars and

other fixed
Less:

property

December

31,1950

31,1949

Increase

Decrease

$664,002,773 $655,970,883

$8,031,895

Depreciation, amortization,

donations

insurance, capable
of sheltering and supporting them

quisition

117,993,546

109,965,994

8,027,552

$546,009,232 $546,004,889

$4,343

and

affiliated

other

Trusts

of
:•%

held

disbursed

delivery

will be well maintained over the

upen

Equip-

$64,303,534

1,078,752
■

Total

Investments......——

$10,900,514

equipment
V.;.

'■

—

'»

—-

,r,

$621,213,280 $611,387,175

*.$9,826,105

cial

deposits amounting to
temporary

investments

Government

Other

railroad

others

owed

companies
the

$22,128,513

$19,934,555

$2,193,958

31,205,381

27,262,262

3,543,119

Securities—

and

supplies

keeping
in

road

good

should result
in a continued high demand for
beef.
I do not anticipate that such
demand will be adversely affected,
to any substantial extent, by the
imposition of still higher individ¬

22,902,613

15,883,802

•Deferred

assets

and

17,101,611

13,523,005

3,578,606

unadjusted

debits, including items owed to
but

available

vet

not

the

Company

...

The Assets of the Company totaled

The

Company

owed

rials, supplies,

for

nies,

and

but

Taxes accrued but not

Operating

reserves

due

otherwise able man has
lost his shirt by plunging enthusi¬
astically into a dairy program
without giving sufficient thought
vto the possible consequences. The
principal problem in dairying, and
it is essentially the same in New
England, in the Mid-West or in
the Rockies, is the cost, of feeds.
These feed costs Usually, represent
.

eye

$32,887,148

$6,215,238

34,812,493

19,104,208

15,708,285

3,467,164

2,750,230

710,884

yet
The

3,782,776

472,436

due

total

and

credits

these

11,387,107

11.173,905

213,202

liabilities,

reserves

$69,704,317

buying replacements and

selling finished cattle at the most

opportune time profitwise.

who

readers

Those

the

total

cost

who, having had previous ex¬
as owners

wish

make

of farm land,
in new

purchases

act

land

will

advised

are

$23,320,045

items from

farm

Good

the total assets there remained,

the

capitalization

higher. Admittedly, this is not

$628,392,992 $624,096,368

$4,296,624

should

„

capitalization

the

consisted

pany

fol¬

lowing:
Funded

Debt, including bonds,
equipment trust obligations,
etc.

—

Preferred

Stock

Common

Stock

Farm income will be up,

1951.

After
tion

60,000,000

129,820,000

total capitalization of $431,295,940 $442,279,380

deducting
from

mained
•

vested

net

this

1950-

there

re¬

surplus,

largely

in-

the property,

$10,983,440

able

not

would

over-priced,
to

than

by late

still

well

advice

provided

H. C.

that

Gas

Pacific

Stockholders

of-— $197,097,052 $181,816,988

ductive

$15,280,064

ment

and

sound

invest¬

good land should con¬

tinue to have real value, no matter

the

Trust

each

seven

13, 1951.
shares

additional

New

office

Company.

Co.

New York, has joined
Chicago office, 135 South
La Salle Street, to head the in¬
vestment trust department, Myron
F. Ratcliffe, resident partner, hqs

The of¬

the firm's

group

announced.

Prior

Co., Inc., have agreed to pur¬
chase from the company all un¬
subscribed shares at the original

tion

Bache A &1

subscription price.

York.

from

Proceeds
common

sale

the

The

proposes

period, 1946-50 inclusive, the
company has spent $663,000,000 for
year

construction.

The

peak

its

Trust

Mr.

Co.;
in

Co.

New

graduate

served for

years

during the last

war.

&'>

in part, its
In the five-

construction program.

associa¬

his

of the
American Institute of Banking and

in the Army
;
1
*.

v'-;

•

•,

•' '»

In Inv. Business \

equal to such net

finance,

with the Public Na¬

was

tional Bank

funds of the com¬

company

amount

with

Deschere

stock will become a part

of the treasury

of the

April 4, 1951. A na¬
of approximately
underwriters, headed by Blyth

pany.

associated

was

York

Mr.

CHICAGO, 111. — Lawrence
Deschere, until recently with Bachei

and expires
tionwide

use

III

Lawrence Deschere
?;
With Bacbe in Chicago

rate of one

at the

for

;

/■

American Financial and Devel¬

•

opment Corporation for Israel is

engaging in

securities business
2 Park Avenue,
New York City.
''

from

offices

building activities was reached in.
1949, when $192,480,000 was spent.
In 1950
and

George Abbott Opens

$168,634,000 was expended,
estimated

that

similar
a

expenditures will be still further
reduced in

1951 to

service throughout the

company

year

the

now

of corporate
98th

year

securities

business from offices

630, Fifth

Avenue,

York

New

in its 46th

I. L. Bander

•

Opens
offices

Broadway, New York City,

conduct

securities

business.

Fred'k C. Bothwell Opens
GARDEN

existence

and

ick

operations

in¬

the

cluding predecessors.

at 1560

;

engaging

I. L. Bander has opened

engaged in supplying electric and

The

Abbott

City.

$130,000,000.

natural gas

George

approximately

ating revenues totaled $237,437,000.

land

Sylvester,

bond department of The Northern

value common stock of

company

left

Pro¬

Sylvester formerly

stocking and operating,
for emergencies.

Horace

with

subscription price of $31 per share,

200

and

Co.,

of $25 par

state

associated with the firm.

now

the second largest
public utility in the country from
the standpoint of total assets, are
being offered rights to subscribe
to an additional 1,419,562 shares
the

Co., 70 Pine Street, New

City, dealers in

municipal bonds, have announced

Offering Underwritten
By Blyfh & Co. Group
Electric

Sylvester, III

Joins Hail & Co.

Pacific Gas & Electric

tral California. In 1950, gross oper¬

cash

career

she has been affiliated with Nel¬

Hall &

major part of Northern and Cen¬

enough

Clovis

During her very successful

York

about 50% down

have

for proper

ahead,

that you can pay

$10,983,440

now

the

\ '

capitaliza-

assets

early childhood.
her; early education
High School, the
Fresno State College, and the Uni¬
versity of California at Berkeley.
She received

operating public utility company

is
$241,475,940 $252,459,380

better

community, having re¬

sided there since

through the first half and,
perhaps, beyond. For the year, it
should average some 15% above

Thus, if you can find a

the Fresno

least

good farm or good farm land that

and
Making

it, but you

;

Mrs. Masterson is well known in

Pacific Gas & Electric Co. is an

summer.

Com-

the

to buy

do much

will

you
The

time

best

the

increased

force of representatives.

production and largely son Douglass & Co., which later
profits.
/ y;
y.
became the First of California Co.;
you think you can ; control
Merrill Lynch, Pierce, Fenner &
feed costs, through a well-balanced
Beane, as one of their first women
feed
program,
which
includes account executives, and until her
careful management of your feed
present appointment was possibly
inventory, you can probably make the only woman Resident Manager
money in dairying.
But if you of a New York Stock Exchange
have grave doubts as to your abil¬ member firm.
^
ity to keep feed
costs within
The principal offices of the Hel¬
bounds, steer clear of such an ser Company are in San Francisco
operation.
Yet, I think farming and Los Angeles, Calif. ;..V;
/
generally will be profitable in

the

Company, net assets of—

order to accommodate

♦

for

They

area.

milk

determine

proceeds
have

now

wish to buy more

perience

promptly.
After deducting these

with

conditions,

local

locations
$93,024,362

v/as

in the face of such de¬

farm land and
4,255,212

liabilties,
including
to others, but not
adjusted

even

view to

Deferred
items

prices

clines, provided you keep a sharp

ment leased from other compa¬

nies

half

than

of record March

should re¬
levels, in¬
creased producing costs generally
may further cut profit margins in
1951, thus immeasurably increas¬
ing the risk in stock cattle farm¬
ing. Breeding herds that grow in
numbers
should
maintain their

equip¬

and

in. the key cities of this

considerably in dif¬

many an:

fer

main at relatively high

value

$39,102,386

—1_

road

$27,616,669

not

—

Depreciation

$721,417,354 $693,800,685

1,056,070

dividends

accrued

rents

due

yet

5,809,886

bal¬

to other railroad compa¬

interest,

6,865,956

mate¬

and

wages

ances

cattle

While

equipment

order———

have
acquired additional;: office
ferent sections of the country and ?
space in their present location in

new

Profits Possible

Lower

lor

necessary

1951.

7,018,311

and

Heavy employ¬

ment at high wages

rails, ties, bridge material and
other

ual income taxes in

Company
hand fuel,

The Company had

•

asking

months.

next six

1,078,752

The Company had cash and spe¬
And

epgaged
dairy farming

Trustees,

$75,204,048

ment

raising,

write

often

carried

vary

now

grain crops,
what I
think of the prospects for the com¬
ing year in these fields. In my
opinion, cattle prices generally

investments

proceeds

Profit'i margins

field.

certain

dairying

are

Sydonia

mento to Bakersfield.

and in producing large

companies

Unexpended

who

cattle

—

resigned

Although J. Henry Helser & Co.
Those readers now considering- have been located in Fresno for
going into dairying should think only a little over one year, they
twice
and then stop and think have met with such outstanding
again, even if they have had pre¬ success in the Valley that it is
vious experience in this very un¬ their intention to
open offices in

emergency.

Readers

In addition the Company had in¬
vestments in stocks, bonds and

notes

farm,

nance

and

grants, and ac¬
adjustment™

afford it should own a suste¬

can

Calif.

has

come

Dairy Farming Discussed

;

obligations, rents paid for leased railroads
and miscellaneous deductions totaled-

are

Respectfully submitted, by order of the Board,

B.
Resi¬
dent Manager of Francis L du Pont
& Co. to become Manager of the
Fresno office of J. Henry Helser
& Co., Inc., Investment Managers,
in the Fulton-Fresno Bldg.' She
will succeed her husband, John P.
Masterson, who has been promoted
to District Manager of the San
Joaquin Valley, covering.; Sacra¬
FRESNO,

Masterson

By ROGER W. BABSON

relatively high, rising production costs
men

Sydonia B. Masterson
With J. Henry Helser

Cattle and Daily

(Concluded)

ces

CITY, N. Y.—Freder¬

Bothwell

engaging

securities business from offi¬
at Cherry Valley

Apartments.

;£2

The Commercial and Financial Chronicle

(1242)

facilities to countries in receipt of Marshall Aid, a large number
of countries outside Western Europe remained qualified to draw

Gold Selling At a Piemium

are

under which

the

sale

gold at

make

extensive

The fact that

turned

the

sacrifices

also

two

private

cerned.

the whole world outside the United States is concerned.

the

of the world.

South Africa

the

rule

premium
tional

the

United States

continued

Monetary

South Africa
is

con¬

open

sale

unabated.

Fund

one

secret

the

gold

The

specifically

that

large

;

Dr.

Paul

existing restrictions

premium, or at any rate its further relaxation.
Public opinion in South Africa strongly resents the
restriction,
in view of the fact that the official dollar
price of gold has re¬
mained unchanged since 1934 in spite of the all-round
increase of

It is strongly felt that South Africa is entitled
for having to sell her staple export at
prewar prices while
the prices of her imports are
rising day
after day.
The least South Africans feel entitled to do is to sell
some

;

strong that, if South Africa

were

newly mined gold towards the free
requirements, she has to sell to the

lapse

unreasonable.

and

increasingly difficult
at

means

within

even

disposal:

offenders.

By persisting in its

the

pap

The

postponed

1951

adverse

any :

war

(Chief

from

criticism

are
-

has

Now

though

make,

may''be'.

that

Our Foreign Situation" in the
issue, of Jan. J.8]; and for such-

many

service

and

clarifying the
involved,: the- thanks. of
due hoth to

are

Mr.?

-to

"Chronicle"

'Weir,
for

and

permitting

the

nor

even

false

sight

for

".'Precisely!

however,

-one

causes

point

world

will

can¬

unless

the

Was

not

are

not

the

East

we,

and

This

Kremlin itself

Germany
ip

nor

fact, yet

then

act

and

not

division

eventual

civil

Then

Germany
war,

how

difficult it may be to confine that

world;

sia

who

come

and

Have

Poland?

defined—in

Dr.

disr

have,
therefore,
another
(spawned from the same

touch

off

World

War

III.

world

is
(or was)
to
Germany—to form a

war

neutralize

buffer

between

the two

giants.- There might

opposing
be (or

even

mits

defense but forbids

cept in

war

ex¬

invasion.

While,
grateful

therefore,
to

Dr.

Palyi

may

and

people

only

and wants the

agree

with his general thesis, the ques¬
tion:

"Are

Falling Into

His¬

tory's Greatest Trap?" cannot be
answered

immediately—until some

solution is found for
-

the. inevitable

Germany,

"civil"

explosion

occurs,
can

and

involving
the

know how that fire

be kept under control without

Russia

and

engulfing

world.

move"?
E.

COLE.

see

developing when Rus¬

is ready

with

Council

proposals for

been

forward

"World

W.
many

war

have

the next Russian

the

the Soviets intend.

Russians

potential fuse to the powder keg

war

^'Chronicle" of Jan. 25, last (p. 28),
how

and

bone, the simplest way to stop
fight is to remove the bone.

re¬

Palyi's words — "what we will
fight 'for," and "quit waiting for

•meant

be wasting
straining our

we may

And the surest way to remove this

repri¬

writer pointed out in detail in the

V-

then

notified Russia defi¬

considered

(indirect¬

"utmost

our

in Korea

this year

have been,) some arrangement like
most :the Swiss
Constitution which per¬

'// /-•

war.

slight inci¬
and

safe

East

the

without bringing

But

Will

Berlin

many

belief

•

necessary

when

Now when two dogs quarrel over

by Russia herself and mean bombs

neither Russia

anybody else seeks

strike

the

West

and Potsdam); and just as
Danzig and the Polish Corridor
inevitably
touched
off
World
War II, so might this divided Ger¬

and "The

dent,: miscalculations

ahead

fur¬
not

Yalta

nitely and categorically that any
move by East Germany or Poland

which-has led

engulf the

though

started by some

wars

disastrous conferences at Teheran,

the

they or
very serious error,

move

do.

can

the

versing our position that hrought
about; this situation with China?

this

to the present situation and which

war

(Have

the

resources

Korea

"No

unless

retaliation upon it."

our

seems to be
overlooked,
i.e., the necessity for removing one

threatens

states:

foolishness" in inviting Russia to

Dr. Palyi

.which still

of the main

some

And have

is,

15,
Can

If Russia knows she

sals?,

discussion.
There

Bomb

that it

issues

yesterday's

mistake^, or unless we by
utmost foolishness cause it to

the

for the

mean

armed and united Germany—with
Berlin as capital, of course.

beyond certain boundaries

makes

This is likewise true of Ernest T^v
Weir's article {"European Attitude

public

Bush

in recent years." ,
Kremlin will not

has

war

our power grows even

permitted

peace

article

only

the

are

that

ly)—before

"China" if

"Atomic

war

make

extended far -beyond the circular
tion of the "Chronicle" itself—dis¬

tinguished

read

economy as

ex¬

headlines, March

Vannevar

all-out

Germans

it—being
people to be

she will do

our

Polish

armies,

second

immediate future

otherwise, the vast major¬
in virtual agreement, an<jl

influence

the

have

into

now

proceed.

to move,

Ro-

'Mh

won't

rearma¬

temporarily

greater; and if she does not intend

what

boom, without provoking a war, she will
banished., not pass those bounds; no war will
will prove it corr occur/ This has been well shown

fears,
time

26.)

widespread

war

ity

•

LOUISIANA

criticism

(p. 3):

Dr.

been

Germany
(and Poland and Czechoslovakia)
be kind enough to wait until the
West is ready to rearm West Ger¬
many? If Russia intends to move,

Destroy Russia, So No War," and

of eminent people who have

have

::4he

Secretary and Treasurer; 1 Rector

global

runaway

-rect

F. Sanders,

because

Germany

Peace,"

"Chronicle"

fear of imminent

Now

ap¬

indeed.

...

article

cept to form
needed?

11,

are

UTILITIES.

that

bird of

has

been

intelligent

intention

Marshall

Czechoslovakian

peared in the "Chronicle" of Jan.

Whether

Street, New York 6, N. Y.

West

first

and

When

arming against Russia!) But no¬
body is fooled by the reasons
therefore, and Russia knows per¬
fectly well that the rearmament of

For

kossovsky- remodelled the

playing in the National Defense
Program
copies are available

act

war.

has

purpose

not go

the

States

world

and

increasing importance of the
Middle"South Area and the role
they

States

now

themselves

why Russia would force

United

starting

,-^-issu^ of March 8,

growth of the Middle South .System
companies, their contributions lo

SOUTH

the

"Are

.been fijom Dr.. Einzig in England

attractively printed

Harold

war, and

Trap?"

,responded.

and illustrated booklet include the

out

West German

has

far too

neutralized Germany.

Fi¬

other

scores

was

col¬

pointed

told them that their unpardonable
sin for half a century has been

We Falling Into History's Greatest

upon request to

and

appears to have ended, it
interesting to recall the great
change in contemporary national
thought' during
the
past
two

holders. Middle South Utilities, Inc.

The

might

fatherland into another

ment

./J-

inflation was wide¬
spread. Yet there has been scarce¬

organized as a public utility
holding company in May, 1949...
highlights of the year's operations

ther ruin for them.

nancial Chronicle:

.and

shown in this

Commercial

Now that the discussion

„

Report of the Company, which has
just been issued to our25,000 stock¬

revolt.

empire

nation—turning the Gerr
»,
bat^- yi

same

catapulted

place. Would have

Editor,

months.

operations of Middle South Utilities,
inc. is contained in the 1950 Annual

powerful incen¬

satellites
Soviet

tleground.

Cole, Clergyman and author, says question "Are We
Falling Into History's Greatest Trap?" cannot be answered
until some solution of the German
problem is found or the
inevitable civil explosion in Russia's satellite states takes

(

A record of the first full
year of

already behind the Iron

United

man

W. E.

ARKANSAS

of
defending
Western
Germany against the East, or of
enlisting the western part as an
ally against the eastern part, of

Fomenting Another Korea

strong position to enforce its rule
at present.
Its initial authority has been weakened
by the fact
that it did not play a very active
part in the solution of the dollar

The easing of the dollar
scarcity has also contributed towards
the weakening of the
authority of the Fund.
Even
though the
Fund suspended early in 1948 the
granting of further dollar

This

position

country where

their disposal to punish

such means at its

LETTER TO THE EDITOR:

very

indication that any such revision is
contemplated.

supplies.

add fuel to the fires

internally.

The

confronted

world, and that in the light of experience a
thorough revision of
the institution's rules and activities is
overdue.
So far there is no

oil

west which could

postwar

maneuvered into the preposterous

the practice of evasion.

problem, and by the growing volume of criticism against its
ut-of-date statutes.
Many influential critics argue that when
taese statutes were drafted in 1944 at Bretton
Woods, and even
when they were accepted
by the member governments in 1945-46,
it was impossible to foresee the
shape of things in the

re¬

another color and, I submit again,
is the key to the present situation.

price should be adapted to the changes in the world price
Fund will have every moral
right to expect the full
application of the rule.
Meanwhile, it must view with tolerance

withdrawing from the International Monetary Fund,'
a

the

States

Germany, however, is

rapid rise in commodity prices and the cost of
growing feeling that the official price of gold is

the

L-e latter alternative would be chosen without
much hesitation.
The Fund is not in

whole

with the choice between
abandoning or reducing the present pract ce of selling part of her output at a premium for "industrial"
purposes and

relieve
United

Curtain and be
tive

compensation

feeling is

the

w.ould

of unrest

needing

tl.eir gold on the free market without
restriction.
This

would

Caucasian

reassert

level

prices in general.

first,

turn

official

bombing the Soviet Union and her

Many

limit to the extent to which

the

this is correct regard¬

course

straint

attempt to enforce its increasingly unpopular rule, the Fund runs
the risk of undermining its own
authority. "It is high' time Tor
those responsible for its policies to realize that there are two
sides
to the question of gold sales at a premium.
If and when the

the

sale of gold at a

countries

destroy

time.

The Fund has

■

acquired

hoarding purposes. The government of the Union of South
is, however, profoundly dissatisfied with the present posithe removal of the

oil

the Far East.

the authorities have

:
was

Africa

the

the powder

are

could

ing the distant future, but for Rus¬
to move openly towards this

could

tends to become

Einzig

tion and insists

one

Here

which

sia

Given this feeling, the Fund's efforts
its authority against the evaders of the rule against
the sale of gold at a premium are doomed to failure.
If a law
comes
to be regarded as obsolete and unfair, its enforcement

;

the oil
Italy

get

the Middle East

premium was authorized for indus*•
trial purposes) found its way^o the free markets and
for

there is

dollar

Greece,

previously ("Chronicle," Jan. 25,
p. 28), Uncle Joe is not likely to
help Uncle Sam that way at this

unfair

names

proportion

and

she

living, there is

■/

newly mined South African gold (the sale of
which at

key

In view of the

Interna¬

of the chief offenders.

her

;

are

large proportion of her gold output in spite of the
get much higher prices by selling it in the
Sterling Area or in various soft currency countries in Europe,
that

fact

beginning of 1951 the evasion

against

Given

markets.

;

reason

brass

top

world."

change in the overall balance of the United States with the

dollars, and for this

;

Since

diversion

individual countries may of course continue to need gold in settle¬
balances with the Dollar Area, in spite of

some

interests

the

ment of their adverse

instances, the offenders were the governments
themselves, or, at any rate, they authorized
the

that

export surplus by means of gold shipments becomes
reduced.
Now that the export surplus has given
way to an import
surplus this consideration no longer prevails, at any rate as far

the sale of home-produced or im¬

encouraged

kegs

Hitherto,

because to the extent to which this is done the settlement of the

to prevent

and

will

and France.

the United States

American

she could afford to divert her

Indeed, in

problematic

consideration.

opinions about it

rest

premium.

the

fields of Iran and neutralize

relevant

Korean conflict. A number of member govern¬
ments have failed to take the necessary steps

sake

ail

that Russia's first attack
against Yugoslavia, Tur¬

agreed

newly mined gold into private hoards is against the public interest,

During the second half of 1950, temptation to
circumvent or disregard this rule increased
considerably as a result of the increase of
hoarding demand for gold following on the

ported gold at

the

for

balance of payments

adverse

could

there

member- countries.

"Nearly-

Now

need

for another World War now."

has

premium is not permitted in

"Chronicle"

11):'*...

to ensure its facilities after the termination of Marshall Aid.

while

Eng.—The International Monetary Fund has em¬
another effort to ensure a better observance of the rule

To quote Roger

the

March 1,1951 (p.

future assistance from the Fund.

doomed to failure.

Moreover, Western European countries,
too, considered it expedient to remain on the Fund's good books,

source

LONDON.
barked

Babson

that most countries have become less dependent on that potential
of assistance, they may feel that it is hardly worth their

Commenting on renewals of substantial premiums on gold in
free markets, despite opposition of International Monetary
Fund, Dr. Einzig defends South African attitude in favor of
higher gold prices. Reports general feeling in Europe that offi¬
cial price of gold is unfair and unreasonable, and efforts of
Monetary Fund to reassert its authority to stabilize its price

Thursday, March 22, 1951

the Middle East.

their respective quotas.

By PAUL EINZIG

oil of

P. O. Box 15,

March .16,

Orlando, Fla.

1951

V'f,'

Volume 173

Number 4996

;

„

(1243)

The Commercial and Financial Chronicle

COMPANY

TEXAS
and

23"

Subsidiary Companies

CONSOLIDATED STATEMENT OF INCOME AND

Company's 1950 Annual Report

From the

EMPLOYED IN THE BUSINESS

UNDISTRIBUTED EARNINGS

HIGHLIGHTS

For the, Years Ended December 31, 1950 and 1949

1950

1949

$1,248,502,334

$1,077,270,246

Average 5
Gross Income:

Prewar Years

1949

1950

Sales and services

1936-1940

...

Dividends, interest and other income

60,781,116

.........

Net income
Net income per

Cash dividends
Net worth per

Total

paid

per

share (end of year)

(end of year)

assets

....

......

Working capital (end of year)

...

149,071,743

132,743,159

10.82

9.62

6.50

81.91

Costs, operating, selling and general expenses
*Taxes (other than income taxes)

1.95

3.75

■'

Operating Charges:

3.41

........

830,117,530

981,946,072

....

34,273,822

31,838,351

33,640,663

32,915,353

50,864,957

46,136,901

Intangible development costs (amortization and

76.59

42.22

dry holes)

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

Depreciation

$619,313,270

$1,368,132,586

$1,448,712,495

...

v.!...

i...,

Depletion and leases surrendered
$

346,281,902

$ 36,081,632

38,766,810

$1,116,037,056

$1,309,283,450

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

$118,934,652

321,188,144

Interest Charges:

13,175,424

11,298,245

$1,112,023,759

954,183,559

197,259,691

161,853,497

3,760,164

•

Gross crude oil and condensate
Interest and amortizatii

69,375,022

114,513,076

122,487,476

produced (barrels)

debentures

e
•

1,150,174

1,627,784

Other interest charges
Net crude oil and condensate

102,904,483

produced (barrels)
Wells drilled in United

States

,V;

969

57,902,088

96,280,939

894

807

Provision

delivered by

pipe lines (barrels)

186,461,495

140,325,593

160,445,686

114,627,497

151,037,739

"97,826,252

Refinery

runs to

Number of

5,000

stills (barrels)

ocean-going vessels

••

Business

CONSOLIDATED BALANCE SHEEST

...

....I.

.v.

.••..........

.-.

U. S. Government short-term
notes

;

49,040,000

Provision

y"'/'.

dise, at cost determined
out

which

method,

lower

•

Year**

contracts

supplies, at cost

651,832,565

578,556,179

contingencies.

STOCKHOLDERS'

AND

EQUITY
1949

...

.-.

8,510,759

8,820,489*

payable

January 3,1950

Long-Term Debt*

176,888,114

165,291,070

V kv?..

101,905,941

90,655,486

(less U. S.

.......

13,781,757

.....

122,397,921

123,147,335

60,000,000

80,000,000

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

36,666,667

38,333,333

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

2,138,775

....

•

I; 9,449,919

12,420,905

......$

^ 23,719,956

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

.....$

22,070,163-

2Vt%

debentures,

due June 1, 1971

469,429,237' * $ 443,586,065

.......

165,551,703

.....

Pipe Line Company payable

approximately $1,600,000 annually with inter"

rates

of 2.6% to 2.9%

debt

Total long-term

......

1965

3% Debentures, due May 15,

est

Advances

for Federal income taxes

Other long-term

and

55,142,428

75,795,357

.....

Total current liabilities

Investments

500,955,448

578,556,179

......

•

'f',

the first-in, firstthe aggregate was
,

Total current assets

727,627,922

Notes of The Texas
-

633,698,607

the

1950—$40,000,000; "1949—$25,000,000)

90,868,884

Materials and

24,200,000

market

than

•

132,743,159

149,071,743

Treasury obligations held for payment of taxes:

t''

Vv,5.'. ,£..112,487,338;

Crude and refined oil products and merchan-

31; 1950 AND 1949

Dividend payable
Inventories—*

156,943,159

,.....

Accounts payable and accrued liabilities

73,250,834'

of •: :\A

reserve

" $1,000,000 in 1950; $850,000 in 1949

Year**

$25,000,000 appropriated as a reserve for

Notes and

104,718,904

•

Current Liabilities:

j$ ,94,680,039

securities, at cost...

receivable, less

1950

•

and

Accounts

t/:'

End

DECEMBER

—

-•••*

;

■'-r

LIABILITIES

191,871,743

1949

1950

Cash

Beginning

ASSETS

Vt.:V-j

'-♦In addition, state and Federal gasoline and oil taxes were paid or accrued in the amounts
$198,406,704 during 1950 and $186,159,305 during 1949.
♦♦Includes

4,910,338

Undistributed Earnings Employed in the

'30,400.

39,157

38,246

Average number of employes

Current Assets:

..,.."..

Year

for the

Deduct—Cash dividends declared

over

(end of year).

tons

gross

42,800,000

Undistributed Earnings Empgoyed in
Business

5,387,948

Income Taxes

for

Net Income

Crude oil and condensate

.'.

debt

1,795,444

178,805,442

180,128,777

13,728,027

5,901,918

169,708,531

Reserves:

Employes' pension plan
..........

2,929,123

1,892,648

Foreign exchange fluctuations ......;..

1,766,883

1,826,448

Incentive

Properties, Plant and Equipment—at
4

iV
'1

Cost:

,7.$

Producing..

Total

676,442,369

Pipe line ..."..'. .'77.'..............

117,594,832"

Manufacturing

396,626,750

Marine

376,190,338

89,242,289
171,384,561

190,162,510

** 6,392,558

;

par

stock

treasury

Additional amounts paid in
Undistributed earnings employed

6,236,183

.,,

$1,379,217,630

„

serve

•

properties, plant and equipment ..;$

Deferred Charges

for contingencies)

687,970,282

637,159,375

•

789,034,178

$ 742,058,255

24,697,377-.$

$1,448,712,495

344,940,600

133,103,357

■'»

651,832,565

578,556,179

$1,129,876,522

$1,056,600,136

Less—Capital stock held in treasury, at cost:

12,779,735

Contingent Liabilities (see page

133,103,357

in the business

22,633 shares in 1950; 10,000 shares in 1949..
'Net

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

depreciation, depletion and

amortization

344,940,600

below—

(including $25,000,000 appropriated as a re-

Less—Reserves for

9,621,014

value $25 each,

deducted

(20,000,000 shares authorized),

•

$1,477,004,460

capital stock issued and outstand¬

ing—13,797,624 shares,
including
.

...

18,424,033

Stockholders'Equity:

120,796,460

89,785,441

Marketing ..!,

.....$

reserves

$ 615,367,799
Par value of

..........

Other

compensation plan

$1,368,132,586

1,540,837

$1,055,984,874

$1,448,712,495

$1,368,132,586

14)

....

The foregoing
in

financial statements

are

taken from the 1950 Annual Report,

conjunction with such report which contains a

statements.

constitute

A copy of the report to

stockholders

dated March 19, 1951; to stockholders of The Texas Company, and should be read

Financial Review and the certificate of Messrs.
may

offer, solicitation of offer, representation,

notice, advertisement, or any

Arthur Andersen k Co., Auditors, accompanying the financial

Company. The said financial statements and report are not intended to
form of a prospectus in respect of any security of The Texas Company.

be had upon application to the

615,262

$1,128,335,685

The Commercial and Financial Chronicle

LETTER TO THE EDITOR:

into

JOHNSON

will do

Although there will be considerable variations in the showings
individual institutions, most banks should
report earnings
equal to or slightly higher than those for the comparable period

eral

of the

such

the economy

was being supported by the high level of
activity in the automobile and construction industries. The recov¬
ery from the adjustment period of 1949 had been rapid and inven¬
tories were being rebuilt to
carry on the favorable business being
experienced.
/
.-r
.
.

for example: as those

With

result that totals at

the

This is

over

are

the similar

there

consideration

this

higher

requirements currently in effect., Also a consider¬
funds have been placed in state
and municipal
securities but from the standpoint of size this total
is not particu¬
larly; large. Although deposits have shown some
gain during the
able

period the bulk of funds for loans and other
purposes has been
provided by selling U. S. Government securities.
The income from this
source, as a result of the foregoing, will
The decline,
however, should not be in direct relation
to the reduction in
holdings as higher interest rates should, in part,
offset the lower
security portfolios.
be

lower.

The impact of the decline in the
value of investments as a
result of the Federal Reserve
Board's action within the past few
months should be
relatively minor. One reason is that the hold¬
ings of New York City banks have been
primarily in short-term
securities.
However, profits from the sales of securities are ex¬
pected to show a decline relative to those of 1950.

Operating

and other expenses

higher. Increasing payroll charges
have been advancing in reflection of
the infla¬

tionary forces which

have been prevalent.
Insurance assessments as a result of
the

Lower Federal Deposit

legislation passed last
will, in part, offset the increase in
expenses, however.
Thus

year

large portion of the increase in gross
earnings will be
brought through to pre-tax income.
Taxes, of course, will be
higher and absorb most of the improvement from
operations. As
a

New York banks do not have
of around 10% in

excess

profits tax problem, a gain
pre-tax income will enable most of them
to
offset the higher
corporate and surtax rates
currently prevailing.
It is believed that this is a
resonable
possibility and expect some
of the banks to show an
improvement over last

year's earnings.

Possibly as a reflection of the current outlook for
operations
National City Bank on
Tuesday raised the quarterly dividend rate
to 50 cents'a share.
In addition an
irregular payment of 5 cents
was declared to
bring total payments this year,
including a pre¬
vious disbursement of 45

cents, to $1.00.

It is considered
significant that the management
rather than
wait until the end
of the year and declare
a 20-cent
extra, as was
done last year, took action at
this time and placed the stock on a
regular $2.00 annual rate.

will

National

Juuch?

United

subsidies,

Events"

hits

doles

the

nail

the

Missouri

citizens send it

battle

gang's

igth

trols

•*'

corn¬

piete answer to the $64 question. ;..
' That will abolish Federal con-

Committee, do and how
,

might be: -Abolish-the

cry

Amendment."

and

subsidies.

everlastingly,right.
<

-'Meanwhile, the Hoosier State

11;

vacuum

»ne.

Indiana

;;

.r;

chases

by the

Let's fall, in

■

than $900 000 000
in
pur-

never

o c a

•

••

•

when

Continued

and6other1^examples' o£°tMevery

.and

larceny that have been

mitted

individuals

missions of the

and

comcom-

present Adminis-

tration; when these conditions
tn

New

page

un l*e-

The

corded trans¬
shipyards involving

between

from

ted";

fers

Dealers

are

their

Security I Like Best

of the efficiency of this company York Curb at 18; 587,572 shares
a"d "S ,g°?d
wi",^ the r.fUl.tS of New E"gland E1*ctr*
°f a" election held recently m common stock on the New York
Riding, California, a city which Stock Exchange at 12 A, and 320,practically next door to the
Government's mighty Shasta Dam

000 shares of Eastern New York
Power

Company

stock

common

stock comback

is, i"Look at Teapot P°wer Plant. In 1949 that city which represents the total out'
j'
turned down an offer to buy pub- standing common stock of this

Dome "
So

let's

record

take

p
When

let

the

public oil

made public, largely

atp°Cnmmftw^^
fir
the

ff Mn»Sna"

RepubUcan

an?

mess

Admiihstration

h?? diol

endeavored

Iho

punish

the Builtv

Secretary

the

IflaS 1° iAoo0Ui

•

-n

Interior

Fall

J ™ uabinet in

March, 192o. Early the next year
Secretary of the Navy Den by resigned, and furthermore, President
Coolidge cot rid of Attornev Gen-

§u

t-T

eral

0*?ll0mey

Dougherty.

of
oi

Fall
ran

for

ana
and

The

oil
on

some

prosecution
dragged
araggea

men

restrictions

and

making,

etc.

note

that

Coolidge

instructed

the

Justice

rate

factors that add considerable

earnings
with

and

the

and

itc

vote

strength

Central

California,

rontinuouslv

exnandine

continuously expanding

industry
r;ac

service* territory

economic

Northern
with

and

population,

Pacific

Flpetrie Comnanv wins

Electric company wins my
as the

Security I Like Best.

"Giant

with

Eternal

BERNHARD F.

SELIGMANN

General Partner, Seligmann &
Company, Milwaukee, Wisconsin

very

International

the Senatorial Committee and also

Hydro Electric Systems

$2.00 Class A

ords

available

government

the

to assist i" its work!

Although
scandal

the

is
is

Teapot

admittedly
aamiueaiy

Dome

black
Diacic

mark, the Republican Administration did take action to clear
up the
mess.
That line of action is
quite
different from the action

part of

the Democratic

today to try to

their

sins

and

gressional

-ting

possession

from

get-

and

needed to

are

cover

many

files

government
which

Adminis-

keeping the Con-

Committees

the

records

make

lull

investigation of fraud, etc.
"The
to fire

President
a

crony,"

advisor,

and

snarled
as
+,

cocky

didn't
say

break

I'm

has

been

ways

say

current

value

per
for

term

alike.
a

Systems
hank„

leaves

wni?n

maves

tlve
Class

The

mentioned

$50

callable

previously.
$3.50 preferred is
sixty. Dividends have

par

accumulated
rears

since

presently

1933

sibilities in its
After

own right,

allowing

preferred

Systems

over

$2.0o

Class

tion.

This

for

the

ation but

the
liquidating value of

$23.70

System

has

since

selling

estimated

been

Class

value

and

17,
an

stock

liq¬
1941

opin¬
was

turned

was

been

taken

measures

toward

Power
a

common

were

bank loan of $9,500,000

obtained

order

redeem

tde.6% debentures of 1944 which

their

investment

However, during the period to-

reasonably
per share

value

shares^
Co.

the

January

situa"
simple to

the Class A Stock.

power

to the
company for cancella¬
It was not until
this past

sold and
was

relatively
arrive

that

Gatineau
Seligmann

other o£ these

from

per

currently
13.

liquida¬
tion; at that time 340,000 shares of

n g

un-

many
tions it is

$3.50

the above basis,

August that any definite
have

company
liquidation situ-

ar¬

$61.10

without

1 di

share,

Hydro

and

amount

thus giving this pre¬
liquidating
value
of
$111.10. It is currently selling for
86, thus affording interesting posper

trie

are

' +hp *o
r,,muia,
classes tne JM-OO cumuia
preferred shares and the

?•

ion

ity

the

two

when the SEC rendered

utn_

^i,duu,uuu

equity holders. These

rity to be In-

pubiic

Electric

$37 500 000

ternational

stock

Electric

«yaro

$9,000,000

owes

whirh

DanKS»

The

Elec-

approx-

Hvdro

lrJternall0nai

uidation

secu-

leaves

creditors and stockholders.

international
r.

believe

sucb

liabilities

imately $46,500,000 for the long-

public

sound

says

basis

price of $50

investments plus their
position with allowance for

and

law and if you

political favor-

conservative

reasonable

These
cash

about

and

legalized,"

should form
share

approximately

interest to the

out

in the

per

trader and the

assets

sue you

prob-

idends of $3.00 per share, coupled
with other favorable information,

Class A has

work

illegal.

al-

"In recent years

the enrichment of

ites

itT

saying,
isnt

thief, I'll

courts for libel."

just

One

will

did
any

boys

are

boss.

quote

whatever

Truman

their

the

Capitol

one

in chiselling

rate

just can't bear
says

ta^'shelhTw

the

upon

tration

A security with prospect of 65%

rec-

Committee

determine the

Earnings of over $4.50
share and regular annual div-

ferred

cooperated with the Committee in

making files and

weight to the '"vestment stature this stock.
of this company. Measured together with the sustained progress,
increasing revenues, substantial

Depart¬

closely the hearings conducted by

.r,

President

ment

security alone then must be

and good emPloyee relationship, for establishing
are

Furthermore, it is sig¬

Good management, unparalleled
diversification of .area served

long while, but it is clear It
is
thp
that the Coolidge Administration
Youth''
did not pull any punches in
going
nificant

This

abie value.

tape

after them.

company.,

with

a savings of $30,000
Preferring the proven

Vear>

fine service of PG&E to involving analyzed
wrongdoing themselves
in
government
red

evidence

♦t

lic P°wer' at
per

connection

look

sneak

expenses will be

the

people of Indiana

showing a way to dispose of unBERKELEY WILLIAMS
-wibeiamo.
worthy, selfish, grasping, spend- March 20, J 951,^
thrift politicians. It is in a state : Richmond 19, Va.

Berkeley Williams

reserve

amount

Congress

Commission

mentioned

Investments of the various banks, on the other
hand, are con¬
siderably lower than a year ago. Security holdings have been
liquidated to provide funds for the increases in loans and the

convicted

former member of the Democratic

•

d* b

"can

that

what

u •

•

expected to show

connection

r^riC
Commission

for

important

has

"serving notice

mentmay6 grow3when1 the seve-al
LLLatures realize that
^
«t { back from Wysh_
^ ag m*ch
^
citizens
*

indicted, brought
by fellow

was

and

compared
to these of the New. Dealers.

worth of ships

of the most important factors in current
operations
the ability of the banks to maintain
earnings
increases in taxes and higher expenses.

Another

were

increasing loan volume has been accompanied
by rising interest
rates. Thus earnings benifit not
only because of the larger volume
of loans but also
through a higher return.

gang

trial

ering ono hSS *boss andVhis . Attorney General,

the

period of 1950.

1950

of that

House

its head when it says: "What¬
ever the outcome of the rebellion

cube root of

General .that

one

accounts

despite

the current period with

Ohio

to the
Comptroller

Korea, the expansion of

end of this month

increases of around 30%-35%

and

into

of the

i:ng

„

was resumed.
The volume reached an unprecedented total
in the third and fourth quarters of the
year.

gains have continued

Republicans in spite of the fact
that their offenses were at the

were

loans

The

Indiana

that the

"Human

books

when

the outbreak of hostilities

Van

Legisla¬

coffers

arc
fed up with
and paternalism."

made in the first six months of the year was not
experienced.

the

expenditures.

Commission, whose
kept k> badly accord-

loans-during this-period followed the trend of business
steadily upward! Loan r volume: was maintained at a
high rate in the early months of* 1950 in reflection of the prevail¬
ing business conditions; The normal seasonal contraction usually
and moved

The

States

Maritime

Bank

the

"Whaley-Eaton." Understatement *n Indiana, the above development
Chronicleif there ever was one.
r
do?s suggest an explosive possiWhen scandals Of the New
Deal,
So the record shows that the

The general forces at work in the
banking field a year ago
have been augmented by events arising out of the Korean War
and the resulting buildup of
inflationary forces. In the early part
1950

Senator

Editor, "Commercial and Financial

of 1950.

Federal

passed a resolution

Hails Indiana's protest against wasteful Fed¬

same.

the

total."

Berkeley Williams points out Republican Administration in
Teapot Dome scandal took prompt action to clear-up mess
and punish guilty, but questions when Truman Administration

City bank earnings for the first quarter of 1951 to
favorably

State

addressing

and got back less than 5%

Versos Teapot Dome

be published in about ten
days are expected to compare
with those of a year ago.

ture, asserted: "Indiana taxpayers
poured more than $1,000,000,000

New Deal Scandals

This Week—Bank Stocks
New York

rebellion.

Ness,

Bank and Insurance Stocks
By

Thursday, March 22, 1951

...

common

is currently trading

had

Gatineau

stock
on

which

the New

outstanding.

final

settlement

tion,

income

from

remained

the

being

liquida-

acquired

Systems' subsidiaries at

the rate of approximately $2,500,000 annually, the balance of which
is

being applied

toward

increas-

Volume 173

Number 4996

ing the liquidating value of the bank,
Recent

developments emanating
Washington conferences in¬

dicate

that

the

$3.50 preferred
holders might accept six shares of
Gatineau Power for each share of

ing assets would be sold

that

qualify

would

System

there

couple

banks

rural

sound

the

utility

your area.

This

seems

because

asset

its

potential

value.

Under

circumstances, bar¬

any

ring market collapse, Internation¬
al

Hydro

Class

stock

interesting
with

Systems

Electric

appears

$2.00

and stable area, and

•

-a-v.;-

and regular return; you will cer¬
tainly get the best of management
and a measure of Federal regula¬
tion. You
trative

will

have

problems

adminis¬

lot of figures and ratios at you,
but a review of the enclosed leaf¬

23.

will

make

should further

estimates;

• 1

•> >,• Partner,
;

'•

give

you

Woolfoik & Shober,

New Orleans, La.

Prudent Advice

A Church

old; church
generous

properly

How to Invest

General Reinsurance Group

Legacy

How interesting to

has

hear that the

received

such

legacy.

That

invested,

should go a
long way to¬
wards
caring

amount,

the

old

building

and

for

the

Largest American multiple line market

dealing exclusively in Reinsurance
11

vi V>

adjoining
yard.
problem

grave

The
now

i-a

is how to

invest it.

This

General Reinsurance

North Star Reinsurance

Corporation

several

poses

difficulties. In
the first

there is

Financial Statement, December 31,

1950

dealer

Shober

in-

advise

you

the

resi¬

there

dent

that

Sec¬

matter.

ondly, it is natural

the

ASSETS

.ASSETS

Cash in Banks and Office

Investments:

Vestry must

ment

in the

dollar.

the

First, above all, you
on

diversity.

You

have enough to make several se¬

lections, which

you can

make for

accomplish
the same end by putting all the
money in one or more of the mu¬

yourself,

you

can

which you may
knowledge. This latter

tual funds, about

have

some

would be my

Cash in Banks and Office ...••••$

■VM

-iV

$20,005,510.82

....

15,560,997.97

United States Govern-

Bonds

$9,033,090.70

ment

Other Bonds.

....

6,899,965.81

Common Slocks

Cither Preferred Slocks

1,288,250.00

Mortgage Loans

Other Common Stocks

10,659,582.32

Total

54,414,306.92

Total.
Balances due from

(not

over

Ceding Companies
due) . . . v . .

90 days

Accrued Interest

.........

1,691,000.00

1,941,485.00

20,810,869.79

over

Ceding Companies
90 days due)
.... J\

Reserve for Claims and Claim

152,543.50

Other Admitted Assets

Reserve for

$25,484,953.49
7,737,951.00

Other Liabilities

3,450,184.02

•

213,689.43

•

"$24,605,436.31

Total Admitted Assets

Reserve for Claims and Claim

21,627,688.45

Policyholders

$ 2,351,402.00
13,834,048.00

Taxes and.,5

Other Liabilities

1,500,264.41

$1,300,000.00
.

5,619,771.90

6,919,771.90

Surplus to Policyholders
Total. ;

$58,300,776.96

Total.

....

Expenses

Reserve for Unearned Premiums

Surplus

16,627,688.45

•

Capital

$ 5,000,000.00

Surplus.

Surplus

63,987.17
.

Reserve for Commissions,

Commissions, Taxes and

Capital

1,322,551.87

LIABILITIES

Expenses
.

Accrued Interest \\

LIABILITIES

Reserve for Unearned Premiums

16,650.00

552,354.03
$58,300,776.96

Total Admitted Assets

Balances due from

(not
.

8,128,644.09

....

Preferred Stocks

North Star Reinsurance
.

2,164,388.05

Investments:

•
>

purchasing power of

insist

should

$ 3,181,572.51

■

....

Corporation Stock

is that the sum
bulk of
your endowment. I do not know
what else you have, other than a
few government bonds. That be¬
ing the case, I feel that this new
amount should be placed in equi¬
ties, especially in view of the in¬
flationary trends in clear view
before us, and the probabilities of
still further and continuing de¬
cline

Bonds

Other Bonds.

The assumption

-i

United States Govern

considered.

mentioned represents the

......

di¬

vergent and uninformed views of
your associates on the

1950

yours,

vestment
John

place,

being in a ru¬
ral community
such

$24,605,486.31

advice.

If you

prefer to select your own,
I suggest that you ask old Mr. X
If he will not let you have 20 or
25 shares of First National Bank
in your own

with

bank

town. It is a fine old
years
of successful

operation and an unbroken divi¬

These
about a few
stock which

dend record for many years.

bankers usually know
shares

they

can

tomer.

their

own

Bonds and stocks owned

are

valued in accordance with the

requirements of the National Association of Insurance Com¬
missioners. If bonds and stocks owned (other than stocks
of affiliates)

were

valued at December 31, 1950 market quo¬

tations, Surplus to Policyholders

would be $21,530,086.57.

Securities carried at $5,808,975.32 in the
are

deposited

above statement

required by law.

Bonds and stocks owned

are

valued in accordance with the

requirements of the National Association of Insurance Com¬
missioners. If bonds and stocks owned were valued at
December 31, 1950

market quotations, Surplus to Policy¬

holders would he $6,830,357.10.

Securities carried at $535,789.05 in the above statement
are

deposited

required by law.

supply to the right cus¬
First National is

The old

strongly entrenched in your coun¬
It has been a consistent money
and dividend payer for

ty.

Casualty

Fidelity

•

Fire

•

Inland Marine

maker

many years.

the

most

Your county is one
prosperous

and yet

stable and developing areas

Ocean Marine

Surety

in the

Earnings of the bank con¬
average
over
$10 per
share annually and the regular $4

State.

sistently

plus $2 is considered as sure as
anything in this uncertain world.
There are a couple of good young
men on the staff whom, of course,
know, and the President's son
quite able to carry on the
tradition. Talk to him about your

you

seems

problem.

For that matter, County

National ought be good, too.
course,

it is a younger and smaller

Having gone this far with two
Witb, F. L du Pont & Co.
Eric & Drevers, 115 Broadway*
the picture. The definite suggestions (I think
stock is said to have a high per¬ $2,000-$2,500 would be enough for
CHICAGO, III.—Francis I.' du New York City, members of the*
Pont
&
each
Co., 300 South La Salle
one) I still think any one
centage of local ownership. Some
New York Stock Exchange, will
of your associates may have some, of the top grade mutual funds Street, announce that Thomas F.
admit Thomas J. Brown to part¬
and good blocks are held by many should be used for the remainder Ford has become associated with
/'
of the better run mutual funds. I of the money.'You will get a fair them.
nership on April 2.
let will

JOHN B. SHOBER
*

»>

Eric & Drevers Admit

these

substantiate

head¬

office, 52 Wall Street.

possi-

relatively nearrterm

his

quarters at the firm's New York

bilities. The 1950 annual statement

£
*

Stoclc

Exchange, will admit Arthur W.
Sesselberg, member of the Ex¬
change, to partnership on March

situation

work-out

Auchincloss, Parker & Redpatb*

(1245)

members of the New York

the

for

Auchincloss, Parker Admit

future,
something always to consider in
small funds, with volunteer com¬
around you and all the part of mittees and changing control and
your State.
The current dividend the inevitable but not intentional
is $1.20, and the current market is negligence and inertia common, to
about 20. The stock is traded 011 all organizations such as yours.
the New York Stock Exchange.

toss

can

prosperous

healthy growth
in line with the growing devel¬
opment of the area it serves all

stock
serving
to be a de¬
I

should achieve

company

ments may

net

the

position in this would be
It pays a good
steady,, dependable return, serves

Another thoroughly good
is

,r ;I .

prudent and wise.

yours.

pendable investment.

be forthcoming within
one month,
and would consider¬
ably enhance the value of the

investment, especially for

need such

Investment Trust. These develop¬

Class

need think

ample

county, too. Stock in a good, wellrun
country bank should be a

preferred. Enough of the remain¬
the

but

there for two good banks and for

Class A stock.
from

The Commercial and Financial Chronicle

...

john

street,

new

york

(1246)

The Commercial and Financial Chronicle

T. Donald O'Neil Willi
Our

Wage n seller 6Darst

Reporter

Thursday, March 22, 1951

THEN and NOW...

Governments

■'

(Special to The Financial Chronicle)

LOS
ald

with

By JOHN T. CHIPPENDALE, JR.

ANGELES, Calif.—T. Don¬

O'Neil

has

become associated

Wagenseller

Durst,

Inc.,

GtXCSS Who?

If You Can't Turn

Page 28

The government market is in the process of
adjusting itself to
the new conditions which were created when Federal
gave up the

pegging of prices of Treasury obligations. So far the performance
in a comparatively free market has been
satisfactory. A base seems
to have

bonds.

been

established at about the

Whether this level will hold

99 level

the longest tap

somewhat lower prices will

have to be witnessed before another stabilization

area develops is
It does, however, seem as though
the fear psychology which was created
by concern as to what
might happen if prices broke the 100 level, has abated consider¬
ably. This is due in no small measure to the fact that many of the

purely

dire

matter of conjecture.

things that

rialized

The

predicted if prices broke par have not mate¬

were

far.

intermediate

and

longer

bank

issues

have

been

under

modest accumulation by out-of-town institutions.

Nonetheless, not
bonds have been obtained despite the wide price move¬
ments. The taps are being bought, sold and switched in moderate
amounts: The largest interest is in the exchangeable 2Vzs and
too many

much of this

626 South

not

Spring Street, members
Angeles Stock Ex¬
change. Mr. O'Neil was formerly
the

Los

with Cohu & Co. and
was

the

past

O'Neil &

.change recently instituted credit policies.
answer

prior thereto

of the trading de¬
for Morgan & Co. In
he was an officer of

manager

partment

buying is evidently for conversion

purposes.

The resignation of Chairman McCabe of the Federal Reserve
Board and the appointment of Martin to succeed him
may or may

T. Donald O'Neil

Co.

this

one.

Only time will give

■

Market Acts Favorably

The

government security market is being probed and tested
in an attempt to find where a new area of
stability in prices will
develop. The action thus far in a market which has been mainly
on its own has not been unfavorable.
Although quotations

dropped

not-too-heavy volume to the 99 level, and there have been only
breakthrough of the 100 level, the tone of
the market appears to be
improving. Because of the lack of offi¬
on

Schwarting Director of
:

;<a)

minor rallies since the

Albert Frank Agency

(B)

cial support, except in isolated
instances, there may be a tendency
prices to still go below levels established thus far. Nonethe¬
less, the attraction of long-term governments increases as quota¬

for

tions decline.

This recession in prices of the June and December
1967/72s has brought more than a passing interest in these
obliga¬
tions from insurance companies, savings banks and
pension funds.
Purchases of the conversion 2!/2S
by these institutions at
tions

below

2.80%)

100

gives

William

Schwarting

Schwarting,: Vice-

President of Albert Frank-Guenther

Law,

New York

Inc., 131 Cedar Street,
City, advertising agen¬

has been elected

cy,

the

company,

director of

announced.

was

the

June

and

take the 23/4s.

the

field

The

advertising.

new

December

of doing business in

way

(Special to The Financial Chronicle)

WEST LOS ANGELES, CALIF.

—Herman N. Fink is engaging in
a

securities business

at 10450

from

offices

Bainbridge Avenue.

the

and help, except

and

Positions of dealers
more

light and will

are

certainty in the

mar¬

ar<Vmaking

Investors
both scale and spot purchases in selected
issues and while this makes for intermittent
periods of stability it
does not give the market the
necessary fillip that is needed to

bring about the establishment of
history

trend.

In time and with

the free market movements, there will be
greater nimbleness among traders and investors
and this should make for an
on

active

U. S. TREASURY.

and

profitable Treasury market, even though the level of
prices could be lower than they have been in the
past.
.

Good

STATE
There

longs

MUNICIPAL

yields

Buying in Progress

are

well

certain

limited amounts.

SECURITIES

the

shorts

issues

This

the

indicates
attractive

are

seems

bank obligations since
for

there

September 2V2S.

the

buyers

enough to
case

satisfied

are

that

acquired in

particularly with the

growing interest in the market

1956/59s and

the

partially-exempts.

bonds, according to reports, has been easy to get,
even
during the days when prices were breaking sharply. It seems
as though
quotations on the longer eligible obligations were run
and

down

with

very

few of them

four

partials, after a sharp drop
being sought after, without too

concerned.

The 2%s

now appear

changing hands.

very

much

light volume,

& Co.
INCORPORATED

took

liquidity

shorts
15

Broad

Street

NEW YORK 5

WHitehall 3-1200

45 Milk Street

BOSTON 9
HAncock 6-6463

maturities.

The

eased

are

success

far

size

spot at the
one

term

market

might

these

bring

mo¬

must have

longs.

Despite the demand- for the

rates

somewhat, it is believed the'

monetary authorities will keep the" short market uncertain
to make reserve creation

again'

ending of official support by Federal

away from the

which has

The last

to be the limelights of the group;

ment, because in order to get and
keep liquidity
near-term

compared with 20% for the baker
his

materials'

raw

10%.

drop

other

prices*

the*

words,

company has to pay for its-,
materials in relation to the-;

more a
raw

companies

be faced not only by
large and rigid : wage
but
also
must
meet t large
claims oL. bondholders and

illustrations

preferred stockholders before the

resemblance

tuations in the

may

materials.

costs

spoke

stockholders

can

sit down

prices of those raw:

As you realized when I;

prices declining, 1 the ?
are hypothetical. Any.,
actual

costs

andL

margins of any bakers or'
to dinner. Some of you doubtless
butchers, either living or dead, is;
are
thinking of certain railroads purely coincidental.
" ;;
in this connection, and you are
The farther I get into this sub-f
on the right track.
|
/;> ject of investment characteristics,
Another important type of lev¬ of
major industries in relation to,
erage
is
found
in
industries planning
a
program,
the more^
where the value added by manu¬
complicated it becomes. I'm sure
facture is a relatively small part
you
all will agree to that.
My
of the selling price of the finished
plight reminds me of Mark Twain,
article. Companies in such indus¬ who had his heroine
disguise her¬
profit

difficult.

about

...

tries

extremely vulnerable to

are

self

fluctuations in the prices of their

products.

How does that leverage
Let's consider two purely

work?

hypothetical

companies.!

butchers beef.
the

butter,

used

20%

Let

eggs,

the

and

name was

that

flour

raw

materials falls

baked

10%,' if all

able

same,

sell

with

the

death

and

A wider

borrowings

fluctuating

from

the

near- *

Central

Banks, and this in turn could bring back the effectiveness
of the
discount rates, which
may be raised in the near future.

but

merely

consider

10%

reduction of

the

Let

buys a steer for
hopes to get for
and - that wages and

of what

meat,

other

costs
take
another. 10%,
leaving him 10% profit based on
then current prices. The
price of
steers drops 10%, and the price of
meat follows.

Our butcher has to

reprice his inventory.
T

Mary.
When
reciprocate the

•"

But

whether

many

Mark

10%

it—I

years

forgotten

she

some

gentle reader.

the

read

and

ago

Twain

doffed

her

At that point as

not.

may

the

said,

story
have,

details—;
give

You take

up,:
her and;

get her out if you can."
^

;

Stability of Industries

Because relative

mand for

" I
butcher.

remember

fied

suppose

80%
the

love

failed

disguise

higher cost

hoped-for earnings.
Now

with

in a fit of anger charged that
Mary, who, of course, still wasposing as a man, had seduced her.,
That too was a capital offense.,
Thus Mary found herself facing

materials, so his inventory
loss, assuming he cut prices im¬
mediately, would be really no loss
all

fell

ter

profit, his price will be cut by 2%.
That is just 20% of the profit he
hoped to make on the bread and

king's daughter who

royal affections, the king's daugh—

still

cake

Mary—attracted the at

price of his
product, the balance be¬

selling

other costs remain the
if

tention of the

Mary

ing fuel for his ovens, wages, de¬
preciation,
and: 10%
packaging
profit. Obviously, if the price of
his

for

the

account

While thus dis--

guished, his heroine—I think her

One

suppose

forbidden

were

penalty of death.

The other

sugar

baker

in order to go where

man

as a

women

raw

The short-term end of the
list is the favored

Aubrey G. Lanston

the

costs

of his hoped-for profits,-

of leverage.: selling price of its finished goods,/
in the more vulnerable it is to fluc¬

type

one

80%

relatively

finished

None of these

than

example,

the price of steers

drop in

subject to

are

bakes bread and cake.

signs that fear is lessening in the government mar¬
ket, and the fact that buying is coming into the intermediates and

and

offers.

doubt continue that way until there is
ket.

Many industries

common

else in¬

Various Elements of Leverage

prior

market,

everyone

when

them

making for sharper price movements and for wider spreads be¬
tween bid

—

limb.

For

hesitancy to

at intervals,

industry

It is evi¬

government

him

1967/72, and in the

have, there should be

that is, without official support

Herman N. Fink Opens

2V2S

[

page

volved in that industry is pushed
farther out toward the end of the

enough to be accepted by

tire

career

other types of monetary measures that will be used
by the powers

holders

from

Indnshy Characteristics Important
In Investment Planning

turned in for

are

that be in their efforts to break the forces of
inflation.
dent that the current offer is favorable

interest of keeping what

of financial

2%%

companies have
gotten behind the exchange in no uncertain way and their-recom¬
mendations to go along with the offer should have a
very favor¬
able effect upon owners of the
exchangeable bonds. The success
of the exchange of marketable
2V2S for the non-marketable, but
note convertible 2%s, will go a
long way towards determining the

Mr. Schwarting has spent his en¬
business

than

return

Although there are no more than talking estimates of how
successful the conversion of the last two maturities of the
ineligibles into the 2%% non-marketables is
likely to be, there is great
hope in the financial district that the offer will be very well taken.
Commercial banks, savings banks and insurance

¥
Win.

larger

Continued

quota¬
(about

obligations.

Jwm

■

the June and December 1967/72s that

the non-marketable
■

them

stability of de¬

product

can

be nulli-t

investmentwise by such lev¬

erage

factors

italizations
labor

and

pyramided

cap¬

uncontrollable

costs, it is dangerous to par¬

ticularize

about

the

investment

characteristics of major industries.
In

general, however, those indus*

tries

are

most stable

which meet

Volume 173

some

Number 4996

all

The Commercial and Financial Chronicle

of the following

should

Their products
currently.

(1)

the

(2) Their payroll should be low

the

manufacture

their

added

value

three

measure

help

condensed

flour,

petroleum,

cheese,

some

soap,

extreme

opposite

the

such

businesses

ture

are

the

manufac¬

tools,

elevators,

machine

sewing machines.

There are at least two consider¬
ations more important than any I
.

mentioned thus far

Lee

invest¬
major in¬

their

leading

that

March

for

public

the

an
on

Champion

and

Storage

Co.

Rice

Export

will
sale.

taking chances.

first distribution of the company's

developing

are

aggressively

products and

new

raw

the

proceeds of the

the

marks

public. The offering

was

the

investing

general

Acquired

La.

time

same

Following the

Inc.

rice

increased

milling

consoli¬

capacity

acquisition

was

the

over-sub¬

Jonesboro

Rice

Mill

material

sources

are

likely to

re¬

scribed and the books closed.

and net income

Jan.

sales

31,„ 1951,

474 and net income

$319,760.

Principal customers of the com¬
for packaged and bulk rice

boro, Ark., and certain properties

pany

of El Campo

include

Rice Milling Co., El

Tea

Campo, Texas.
The
rice

company's output of milled

sold

both

bulk

and

packaged form with particular em¬

National

gett,

Atlantic

Great

Co.,

The

Kroger

Pacific

Co.,

American

Stores

Co.,

Grand Union Co.

One
other is
the outlook for growth in the use
of the industry's products.
When I suggested the historical
approach to judging managements
and markets of leading industries,
I

and the

management

not

unaware

hindsight is

of the fact that

of value

when

only

the trend observed continues into

the .future* By the time it changes
and
we
become
aware
of
the

change,

deal

good

damage

have been done to our port-

may
5

folio.-

other

What

tests

may

facts from

annual report

our

apply?
Vital

Research

Without

into

going

whole

the

ment,

analyzing
which has been

ject of

many

..Question

manage¬

the

sub¬

books and even more
articles and speeches, I

numerous

1950 for General Time and
consolidated subsidiaries set

t iink the most important forecast i ig

indicator insofar
is

ment

research.

start

There,

digging,

too,

you

produced,^imounts paid to

the

explain

spies of oil products in this coun¬

roughly six times what
in 1920, but underv/rites the prospect that they will
continue to gain absolutely and
relatively over the years to come.
Only by constantly improving its
try

are

they

were

product
continue

any

able

industry

in these

forge ahead

SALES ancbEARNINGS
Sales for 1950

today's

that

fact

:k*,.

em-

5<X

spend about $100,000,000 a year on
research which not only goes far
(3

high

ployees, net profits and dividends
paid to shareholders.

discover
companies

oil

new

only iri$0es, but also in

■

units

interest

will

you

American

that

its

concerned

records not

manage¬

science is wiping out
so many of the lines that used'to
separate one industry from an¬

clays when

MARKET
Even during

CONDITIONS

General Time
toward

a new

were

appeared to be headed

based

pe$k in sales. With

charge in the world outlook
occurring at mj§l-year, demand for

bout the same price at which it

t(ie

years ago

its

years

tank

General Time's
engineering departments and research

laboratories have demoted the

THREE

much work,

the word with you.- For this pur¬

the distinction I have tried
to keep clear in my own mind is
that of timing. To an investor, as

pose,

12,798,061

11,922,197

Based

442,449

beginning

increased

volume of defense work is

anticipated, but due to defense

requirements and restrictions

Common Share....

»v%/

43.33*

38.90*

'%8.27*

5.22*

common

on use

probqmy faces

reduction in the future.

: -

shares,

giving effect to stock dividends declared
in December, 1948, 1949 and 1950.

unim¬

portant. To a speculator, timing is
always of major importance. Some
of the very characteristics, in fact
of

most

the

characteristics

that

WESTCLOX DIVISION, LA SAllE-PERU, ILL.

detract from the investment qual¬

industry,

actually en¬
hance its speculative
potentiali¬
ties if one's timing is right.
<
ity

won't
some

may

that in the hope that you
blame me for giving you

rules
some

investment

day deter

profitable speculation.
.1

you

have talked too long

but the importance

investment

which

from

109 LAFAYETTE STREET, NEW

YORK 13, N. Y.

STROMBERG TIME CORPORATION, NEW YORK,

HAYDON

MANUFACTURING

already,
of

our

major industries changes with the

WESTERN CLOCK COMPANY, LTD., PETERBOROUGH,

GENERAL TIME CORPORATION

of the various

characteristics

SETH THOMAS CLOCKS DIVISION, THOMASTON, CONN.

ONT.

/I say

materia0, production of civilian goods

;

Share....
*

are

fruit and production contracts
being secu0d. A substantially

the meaning of the

word, timing is relatively
,/

3,291,838

activities

to bear

$31,740,110 $34,600,324

3,806,472 v 2,471,352
14,115.538

Earnings Per Common

Mrs.

Myles,
our moderator, has discussed some
of the varied interpretations of

services. These

1948

Book Value Per

Throughout our discussion/ I
been keeping in mind the
."investment."

I|.,..

Working Capital..

.have

understand

GLANCE
1949

major

portion of their facilities to important
development projects for the armed

are

Net Income.....

AT A

Sales........ 137.,020,517

gallons did back in 1925.

word

YEARS

1950

measured by any standard, as three

In recent months

that two gallons
that goes into your

will do

now

number of shares.

DEFENSE
V/.VV

ago

of the product

same

products further increased to a

notwithstanding

fact that today's gasoline is
much better than the gasoline

the

degree well beyond productive capacity.

point of view is that'gasoline (be¬
fore taxes) currently is selling at
<

Share in 1950
in 1949

witk:$5.22

the sudden

thing that could be said about the
oil industry
from an investor's

sold 25

per common

$8.27 compared

$3,806,472,

0)49 earnings.

54%increase over

Earnings

the fi0t half of the year,

1949.

over

Net income amounted to

Sometimes I think the best

other.

totaled $37,020,517,

increase

Copies of the 1950 annual report are available

on request.

First

Stores, Francis H. Leg-

acteristics of major industries.
i;

and

operating revenues were $11,758,-

Co.,-Jones-

con¬

nection with the investment char¬

ended

1950,

For the six months

$775,716.

was

31,

operating revenues

$21,282,973

were

Elevator
Champion

and

For the

ended July

year

and

industry
markets.

export

sales and

the

were

major supplier of rice

brewing

Bureaucrats, generally

transaction

the

net

speaking, do not get that way by

The

the

selling stockholders who

receive

It is also

about

sale

holdings

Rice

fiscal

share: The offering comprises

group of

Southern

Inc., Pfeffer Rice Mill¬

Eunice,

dation

advantage in fields which

formed in 1946 to

the

Under

"River."

and

these the company also distributes
natural brown rice and wild rice.

Memphis, and Champion Rice

Co.,

portion

con¬

phasis

Tvlills,

stock at $14.50

common

certain

Mills, Inc.,
a

Industries that

distributor

ing Co., Inc., Houston, Tex.; Cham¬
pion
Rice
Mills
of Tennessee,

245,500 shares of River Brand Rice
per

cut

which

group

offered

was

Sales Co.,

Brand

Higginson Corp. headed

governments operate at least dis¬
are

River

underwriting

rule,

the

Lee

industries.

proves

largest

consolidate

Rice Mills Stock

socialized

have

the

sumption,

Higginson Group

Offers

operation. How can
that?
History will

which

and dried.

furniture, clocks and watches and

have

come

may

some—the history of those

exception

lertilizer and chemical.
,

"Carolina"

last.

packaged rice for household

Logic, I think, may help us more.
Generally speaking, and the de¬
velopment of the atom bomb is the

chewing gum, liquor,
milk, ice cream and

cigarette,

on packaged sales under its
nationally advertised brand names,

and

dustry will be its susceptibility of

under
include the

headings

day

The company, one of the largest

domestic producers of milled rice

most important

the

government

Businesses which qualify

the

When

you'll no
longer have investment problems.

the
over,

into

country

own

our

countries

rll

of the political ten¬

ment characteristic of a

they should own

future,

when

material sources,;

raw

some

dencies

{relative to the value of their
products, or their sales.
(3) Their payroll should be low
to

some

jecting

consumed

relative

Judging by the experience main free till
other nations, and pro¬ they're
taken

times.

cri¬

teria:

(1247)

N. Y.

COMPANY, TORRINGTON, CONN.

and

(1248)

The Commercial and Financial Chronicle

base-metal and gold issues were
notably weak but the Western oils
led

Canadian Securities

moved

Federated

against the

depressions,
cince

the

also, especially
Keynesian man¬
that financial au¬

aged money,
thorities
invariably

act

opportune, moments
deavors

correct

trends. Also it
.

in¬

their

en¬

Here's the
of the two

take

appropriate
with any reversal of

action to cope
the U. S. economic trend.

1951

version

angels appearing

26.

page

As it begins to appear,

the pos¬
sibility of the approaching end of

undesirable

characteristic

prepared

the U.

boom

can

now

seri¬

of human nature that considerable

ously considered. Despite the con¬
.reluctance is usually displayed in ditions that still
apparently favor
bringing to a halt an era of in¬ the continuance of higher prices
flationary prosperity. Furthermore and the persistent fears of possible
lindue
respect
is
paid - to
the -future shortages, there
evidence
-of
official
statistics incipient indications of

are

long list of incredible things that have actually been said,
or done of late
years. A few passages extracted from vari-t
ous sections of the
report are well worth reproducing for
the purpose of emphasizing the nature of the
underlying!,
philosophy of this most remarkable document.
For example:'
•.
V/
:•

.which, dealing only with the past, -to liquidate inflated inventories.
can be a
deceiving guide to the -Credit curbs in view of their de¬
course of the future. For
layed action will shortly operate
this reason it is only too
easy to will all the greater effect. In the
crack down belatedly on a trend meantime the tremendous
poten¬
that
has
practically ceased to tial of U. S. productive capacity

'economic

exist.

now

The

closely the present
situation is analyzed, the greater
the impression is gained that once
-again resort is being made to
heroic

measures to

dition

that

was

combat

the

for

both

"guns

and

F. W.

Stephens

Pizzinl

"This Board

being

are

(A) Florence W. Stephens, F. W.
increasingly weighted on the side
of production. On the other hand Stephens Co., 15 William Street,
New York 5, N. Y.
with inventories at a
«
dangerously
high level and consumer demand
(B) B. Winthrop Pizzini, B. W.
largely satiated, the stage would Pizzini &
Co., Inc., 25
Broad
appear to be set for a period of Street, New York
4, N. Y.
/

con¬

point

appears sufficient to provide

adequately

butter." Thus the scales

correcting itself. It might also be
fairly observed that the prelim¬
inary steps taken, in the form of
jmanipulation of the rate of in¬

deflation.

These calculations would be up¬

FHLB Notes

Market

terest in conjunction with failure
to curb effectively the undesirable

set

growth of

issue of $60,000,000 Fed¬
an imminent
prospect. In its aberal Home Loan Banks 2% con¬
sence, production, strongly stim¬
solidated
notes,
series
G-1951,
ulated by war preparations will
non-callable, was offered to the
become an

consumer credit, have
only to add to inflationary

served

While

pressures.

prospects were
indefinite continuance

high for an
higher prices, possessors of al¬

ready

inflated

encouraged

ther when it
credit

inventories

restrictions

longer

war

to be

appears

increasingly potent de¬
flationary force. Coming at a time
when

the

monetary

authorities

fur¬

have rudely shocked
any remain¬

announced that

ing inflationary psychology, this
might prove to be the determining

extend

was

were

by the outbreak of all-out

but this

still

would

im¬

posed, not immediately, but at a
future date. .Similarly the con¬
sumer
buying spree was further

factor in the reversal of the U. S.
economic trend.

stimulated

fore

result of efforts to

beat the deadlines of the
proposed

restrictions.
These half-hearted and belated
endeavors to check the
mounting
tide of inflation were duplicated

It will not be

surprising there¬
history repeat
itself. Measures always
belatedly
adopted to correct an economic
to

trend

direction

one

variably

have

discarded

in¬

almost

in Canada, but there the situation
was less confused. There was
no

immediately in order to combat
the contrary trend. As
previously
mentioned
both
the
U.
S.
and

open confliction of views between

Canadian economies

official

stage

bodi|s responsible for fi-

rancial and credit policies. In ad¬
dition, in view of the relatively
few lending institutions in
the

Dominion,
simple to

was

comparatively

dynamic

Consequently if
applied

any

economic

Progress in

policy

such

cases

achieved by the

ensure
effective coop¬
eration in enforcing stricter con¬
ditions for new loans. Still harsher
terms for consumer

couragement of private enterprise
and the confident
employment of
risk capital. Ill-timed

row

measures,

borrowing are
contemplated and thus there

little

fear

consumer

that

inventory and

excesses

in Canada will

row

approach the U. S. levels.
However as the Dominion econ-

involve
cate

especially

en¬

deflationary
when they

tinkering with the

deli¬

mechanism of bond markets

with

all

eral

for

which

notes,

Provincial

they

de¬

were

week

section
at

was

business
of

the

bonds,
of

measure

Canadian
sumed

which

The

their

was
un¬

produced

weakness

dollar.

rally

Stocks

the

after

subsequently
recent

bond

standstill.

only activity in the internals
switching from recorded to

earlier

Municipal

the

external

market

Loan

Smith,
dated

Banks

fiscal

April

through

agent.

The

1951

and

priced

are

at par. A nationwide
group of se¬
curities dealers will participate in

the

financing.

The above

connection

offering

with

was

made in

the

maturity on
195f>of $85,000,000 out¬

April 2,
standing series D-1951 1%%

con¬

solidated notes. The Federal Home
Loan Banks will retire

$25,000,000,

approximately

30%,

the

% % notes from current cash

ceeds

re¬

The balance of the l3/4%

notes will be retired

from

through

today's

pro¬

offering

notes.

Upon completion of the financ¬

ing

and

series

the

D-1951

consolidated
Federal

retirement

the

notes, outstanding
obligations
of
the

Home

Loan

Banks

forces in

will

decline.

re¬

The

Clyde

—

announces

the

change of its name to PierceCarrison Corporation. Officers are
Clyde C. Pierce, President; H.
George Carrison and H. C. Well¬
born, Vice-Presidents; H. S. Car¬
penter, Secretary-Treasurer; and
Robert J. Pierce, Assistant Treas¬
urer. There will be no
change in

personnel, telephones

(Specia' to The Financial Chronicle)

SECURITIES

CANADIAN STOCKS

Jones

with

was

oil

A. E. Ames & Co.

quotations
any industrial, mining or
security, consult us.
We

can

help

And

you.

New York 5, N.Y.

jMlilner,

Members:
The Toronto Stock
Exchange

1-1045

The Investment Dealers' Association

of Canada
Fifty Contiresfl Street
Boston 9, Mass.

associated

California

Company,

formerly with Jones, Cosgrove
George R. Miller & Co.

rials.

330

Bay St. Toronto, Canada

Hamilton

Brantford

Sudbury

Windsor

Brampton

means

relentless

war on

disease.

means

;

"Our concept

of economic development also includes
training in democracy to enable all of the people to taker
active part in public affairs; to have the
right of trial by
jury, the right to work, the right to self-organization, to;
strike, to vote, as well as steady progress toward freedom
from want."

/:'•••;

Five-year plans, and how many? The Board probably
has not yet got down to such details, but there's still time.
Here is how current

"What

are

the

thinking

•

goes:

gravest difficulties confronting eachv
overcome them?
What *

the available

"How
so

can

the over-all

that the maximum

use

job be spread

the years*

over

is made of all available

resources

and

priority is given to those projects which make the!
greatest contribution to expanded production and defense? /
"These

questions must be answered if the

nomical and effective

use

most

tives has

eco¬

is to be made of available

The time for vagueness in administrative

sources.

re-J

objec-;

passed.

Simply to allocate United States funds;
something 'worthwhile' is not good enough.

for

"Whatever

undertaken

And

should

aimed

over-!

again:

"The Board wishes to
rent

international

emphasize that, although

cur-*

tensions

give special urgency to bur*
recommendations, the world-wide task of economic devel¬
opment would still remain to be done even if there were.
threat of aggression.

nations
and

peace

can

is not

one

The problem of constructing av
of preserving an existing order •

work

building a new structure in which all
together, exchanging their skills/labor,

capital to mutual benefit.
"The

field

essential

task

might be described
forget the past and to get

With Paul Rudolph
(Special to The Financial Chronicle)

CALIF.

resources in the
country itself, from the
States, from other nations?

United

in the world but of
I.

has

FRANCISCO,

these

It also

lasting

joined
the
staff
of
Standard Investment Co. of Cali¬
fornia, 87 South Lake Avenue.

SAN

what

improved educational opportunities, land and other re¬
forms, where people want them, fair and rising labor;
standards, a living wage, full participation in the benefits
accruing from increased wealth or income, the removal
of discrimination based on race, color,
nationality, religious
belief, caste, or sex.

With Standard In v. Co.
PASADENA, CALIF.—Byron

Two Wall Street

become

& Co. and

Pesin

these

involved in "strengthening the econ¬
regions? Well, a good deal more than
might be supposed. Let the Board explain:
v
"Economic
development means much more than;
merely increasing the production of food and raw mate¬
omies"

Glenn

(Special to The Financial Chronicle)

INCORPORATED

WORTH 4-2400

—

112 South Los Robles Avenue. He

SERVICE
For information

First

has

tion."

•

result

coming specific problems, with targets of accomplishment*
clearly set forth within set time limits."

Joins First Calif. Co.

CANADA

pov¬

teletype.

Corporation

PASADENA, CALIF.

hunger,

findings, the Advisory Board
feels that strengthening the economies of the underdevel-*
oped regions and an improvement of their living levels/
must be considered a vital part of our defense mobiliza-/

are

Pierce-Garrison Corp.
Corporation

economic offensive to root out

country and what is required to

Firm Name Now

Pierce

erty, illiteracy and disease., Only by working together in J .
common interest can we produce the
necessary increase';
in foods, raw materials and manufactures.,
'

have been reduced to $523,000,000.

JACKSONVILLE, Fla.

recorded

Government

21, by the Fed¬

maturing Oct. 15. 1951,

During

CANADIAN BONDS

Home

Everett

signed.
the

March

their

widespread rami¬
fications, can only defeat the pur¬
poses

public

the side of controlled

new

sources.
a

development.
bias is to be

inflation.
best

still at

are

should be
can

recent

see

also recognizes that to achieve
lasting1
security and well-being in the world we must join,

peace,

"As

;

representing various elements in the population, early last
week came forward with a report which, if accepted at
face value, gives "Point Four" a substance and a signif¬
icance which can scarcely leave any thoughtful mind at
ease.
The general idea apparently is the application of
the New Deal, the Fair Deal, Santa Claus Economics, the
managed economy notion and all the rest to the so-called
free world under the general theory of our "manifest
des-4
tiny" to manage and to support the economies of all peo¬
ples outside the Kremlin orbit.
'
-:
Some of the paragraphs of this report (with which the
President finds himself "impressed") would be
quite in¬
credible in other circumstances and* in the absence of the;

now

desire

As We See It

general trend

that of its great southern neigh¬
bor, the Canadian authorities must

but

era

intimately related

Thursday, March 22, 1953,

Continued from first page

exceptionally active trading.

Did You GUESS?
is

omy

Petroleums

By WILLIAM J. McKAY
Economic
history
not
only
demonstrates that booms provoke

of
as

statesmanship in this whole
one of finding the means to
with the future.

"... The whole current economic
pattern
—

of under-'

developed regions could be revolutionized through

James P. Begley is now connected
with Paul C. Rudolph and
Co., 749

sistent investment flow from the

Market Street.

world of three billion dollars

a con-^
Western industrialized

year,

less than l%,: of the

Volume 173

Number 4996

The Commercial and Financial Chronicle

hours per week were only 40.1,
although they have since climbed'

countries

national incomes of the United States and the
of Western

Europe."

about 41.6

1951.

which is entitled "Partners in Progress,"
itself with such vague generalizations as these—though, of course, even when it gets
somewhat nearer to earth it is not always very specific.
The report,

means

"does not, of course, content
-

It would add to

and

worse,

such matters
as these, but here is a summary of proposed outlays for
some fairly early period—some of the items being recur-

pect the Board to be greatly concerned with

;
.

both

penalty rates for

over¬

time

also

because

the normal increase

Of course, one can hardly ex-

-What will all this cost?

inflationary,

because of
and

laborers
pro¬

Chase,

has

new

reached

of the

New

York

LOS
W.

ANGELES, Calif.

MacKusick

ciated

Co.,

Stock

with

has

the

Los

change.

—

become

John
asso¬

Miller & Co.,
Street, member

Revel

650 South Spring

Exchange, will be formed as of
April 2 with offices at 120 Broad¬

Angeles

Stock

formerly

was

Ex¬

with

Partners will be Philip G.
Walston, Hoffman & Goodwin and!
Volpe, who will acquire the Ex¬
Gross, Rogers & Co.
change membership of Charles K.
Dickson, Michael Chase, Joseph
H. Meyer, and Harold Barnett. Mr.
Morgan Co. Adds Two '
Volpe is a partner in Bendix,

way.

(Special to The Financial Chronicle)

Luitweiler & Co.

LOS

in productiv¬

time when labor

Barnett

Meyer,

members

New

ity per man-hour. We suggest that
it might not be wise to count on
this increase at

(Special to The Financial Chronicle)

NYSE Firm Forming

Expanding man-hours as a
of solving labor shortages

essentially

Joins Revel Miller

Chase, Meyer, Barnett

portionate increase in output dur¬
ing overtime. Organized labor, in
insisting that straight time hourly
rates must keep pace with the
cost of living, provide assurance
that lengthened hours will be in¬
flationary.
Another potential
source of greater labor output is

governmental organizations. The
authors apparently have learned nothing from the history
of the Reconstruction Finance Corporation. Various types
of subsidies, and other devices now all too familiar, are
suggested to bribe business to do what is wanted. And so
the labyrinth of economic semi-totalitarianism grows.
wasteful

the beginning

probably do not contribute

already large collection of ineffective,

our

(1249)

Fruehling

McKelvy Partners

dall

PITTSBURGH,
&

Pa. —McKelvy

ANGELES, Calif.—Walter
Stanley

and

have

become

Ran¬
witSi

affiliated

Morgan & Co., 634 South Spring

Company, Union Trust Build¬
members of the New York Street, members of the Los An¬

peak in bar¬

ing,

scarcity,

and

rent year

after

United

gaining

year:
Economic

Overseas

States

Adminis-

V tration

Private

$500,000,000

investments

:•

will

shifting from

and

duction."

productive

existing

based

power

particularly during the period of
to

peace

war

pro¬

admit

William

ling was formerly with Mitchum^

McKelvy

Co." and Wagenseller

Reginald R. Church to part¬ Tully &

nership

geles Stock Exchange. Mr. Frueh¬

Pittsburgh Stock Exchanges,

Durst, Inc.

April 1st.

facilities abroad to produce critical mate¬

;•

rial

urgently needed now

2,000,000,000

capital for general investment abroad 1,000,000,000
Proposed
new
International
Development

Private

Authority, in which all free countries would
participate, for constructing foreign public
works (United States share $200,000,000)__
Fpnds of the Export-Import Bank to be ear¬
marked,, to. underwrite new foreign debt
obligations purchased by United States in'

ir.
*

'vt. v
i

«*

v-.

vestors, in the

■

sum

affiliate

the

Reconstruction
issue

created
Bank

for

Development, ^ would

International

and

100,000,000

International Finance Corp., to be
an

500,000,000

-J
' f"'

non-voting stock to member countries

and make loans in local and foreign curren-

cies

private

enterprise.1

United

States

would subscribe $150,000,000. of its author¬
ized capital of-_

f'
r

400,000,000

i
'
*

$4,500,000,000

Evidently, Point Four is attaining manhood!

Labor

formidable than in

conditions

1940, because defense

are

program

already tight labor situation, and labor force
increasing less rapidly than population. Foresees more
women in industry.

superimposed
is

the

Under

Shortage Ahead!

Calvin Bullock organization points out present
more

caption "The Labor

Force," the March 15 number of
"Perspective," a house organ is¬

1950

averaged

three

available,

the

The study, which contains a num¬

reduction

pertinent statistical tabula¬
notes

sources

manpower

are

for the

into

•advances

omy. -

the

result,

civilian industries

tually
omy,

losses

suffer

the

States

defense

econ¬

nonessential

are

certain

The

•

increased participation by
recent unofficial sta¬

even¬

tistics

rearmament

econ¬

female

that

suggest
workers

influx

The
ever

were

after the

able to

for

intelligent mobi-

beginning of

increase our output

greater participation in the labor

force

means

additional

the

time

same

that

men

For the Years Ended December 31, 1950

and 1949.

time when

the article states. "We do not sug¬

and material resources were

gest that an adequate rearmament

the

war

expanding

material supply.

raw

1949

1950

Net

Sales, Royalties, and Rentals

Cost of Sales

and Expenses

Operating Income
Credits

Income

not fully utilized under peacetime
conditions."
For example,
"un¬

and

employment averaged over 8 mil¬

problems that

defense

achieved.

economy

cannot

$154,789,186

$127,335,591

$134,376,511

$118,719,146

$ 20,412,675

8,616,445

992,916

1,362,283

Gross Income

$ 21,774,958

9,609,361

Income

1,626,088

1,512,833

$ 20,148,870

8,066,528

8,525,126

2,588,325

11.623.744

5,478,203

752,105

798,575

3,619,500

3,102,428

out

imposition of a rearmament boom
"Not all the factors relating to
on
top of peacetime production labor supply are as discouraging
"was possible largely because we as those that we have
mentioned,"
entered

of future

CONSOLIDATED INCOME

pressures

provide incentives. During allwar a
sense of urgency
and
we produced guns."
A reason for motives of patriotic self-sacrifice
"the
miracle of production
at¬ are of inestimable help in expand¬
tained in the last war" was that
ing participation rates. Under the
expansion of defense and civilian present emergency reliance must
employment was then "relatively be placed in large part on selfish
easy." • It was "relatively easy," monetary incentives. The infla¬
the study explains, because supertionary implications are obvious."
butter

SUMMARY
v

need is "greater now than

before

the second World, War "When we

with confidence in future demand and assurance

compares

that

material

industry—meeting diversified requirements

peace—St. Regis plants, factories and people are producing and

is already under

deserves," the lization plans to conserve man¬
the currently power," the review states. "Fur¬
available and potential labor force
thermore, the need to encourage
with

raw

board, bags and plastics will continue to be available.

! way," according to the study.

Asserting the problem of a labor
shortage "has received far less
than

war

major hope of "getting ade¬

women, and

emphasis
analysis

paper,

quate additions to the labor force

manpower

the analysis declares.

Company's pulp,

Serving important segments of American
for

basic

seedlings planted by St. Regis each year are insurance that

The

study says: (1) a
perhaps 500,000 or

the "United

confront

Planting slash pine seedlings by machine in an open area,.

the labor shortage

To help meet

more
in unemployment,
(2) the
increasing annual
increase
in
population,
scarcity of labor as a whole, and and (3) an increase in the particishortages of skilled labor which pation of the population in pro¬
may reach bottleneck proportions, ductive endeavors.

that

Future

•

force.".

by Calvin Bullock, 1 Wall
Street, New York 5, N. Y., ana¬
lyzes the present labor situation.

tions,

slightly

only

than 3% of the civilian labor

sued

ber of

For the

Charges
Federal

Net Income Before Provision for

and

Income.......

Provision for Federal and

Foreign Taxes

Net

Foreign Taxes

Income

Preferred Stock

Dividends Paid
Common Stock

But the urgency of the
we

face should be

14.6% of the civil¬ recognized."
force; in 1944 the num¬
"One source of additional manber of persons employed in ci¬ hours,"
the survey says, "is a
vilian and defense production had lengthening of the work day and
lion in 1940, or
ian labor

expanded by about 6V2
'

million.'''

"Today;the situation is differ¬

ent," the review says, for "unem¬

the work week.

hours

Average weekly

manufacturing,

for

peak of 45.2 in 1944.

Under

ployment in the last five months peak peacetime prosperity in 1948

230

ex¬

ample, increased from 38.1 in 1940
to

ST. REGIS
Offices in

PARK AVENUE,

PAPER
....

COMPANY
'

♦

■

NEW YORK 17, N. Y.

Principal Cities—In Canada; St. Regis Paper Co. (Can.)

Ltd., Montreal

' \

••

(1250)

The Commercial and Financial Chronicle

Continued

from

page

man

Thursday, March 22, 1951.

Very often
ties

for

and

for

and

ties

find

could

nuisance

realize

even

I had to

to
for

And

almost

that

"stock

out

anything

brokers

and

STOCK RIGHTS

that

wait

but

Soon

A. T.

Possibly some one
else may have thought of them
otherwise, but it just never came
to my mind that they might offer
an
opportunity for obtaining new
Here

idea

The

Detroit

firm

Allen

Co.

Pacific Gas & Elec.

Kendrick.

management of

Several times

West Penn Elec.

the past I have given you some of
his ideas that have proven profit¬

able, and here is another

Some of these expire and will be¬

reproduced in to¬
day's column gives you the whole
story. Offer people service, show
them

glad

are

Call

handling

charge

these

for

personally

and

ex¬

downward

offended

by them?

satisfied
men

long

of the results of this ad¬

Federal

Congress¬

officers do

noth¬

One

lady

into the

came

burned

What About Future of Democratic

Government?

office

Court

Telephones

St.

tion:

9876-9877

•;

does

the

current

state

"right" in her hand.

She said, "I

don't

would

ment?

know

corner

what

done if it hadn't been for
—I

was

from

have

L. Clark Brown Is

youp ad

fireplace,

membered

had

where

thrown

certificates for

tion.

Partner in

re¬

one

rights.

some

Rohrbaugh

WASHINGTON, D.

C.—Austin
Rohrbaugh, member of the
ment. You know how these com¬
Washington, D.
C.
Stock
Ex¬
panies are doing now-a-days. They change, has admitted L. Clark
send
you
all kinds of printed Brown to partnership in Rohr¬
papers through the mails. Then I baugh & Co., Union Trust Build¬
remembered that possibly this was
ing. Mr. Brown was formerly a
what you were advertising in the
partner in Brown, Goodwyn &
I

thought they

papers

and

piece of

were an advertise¬

found

this

Could

one

Co.

checked and found out that it

was.

paper.

those

rights?"

Allen

burned

Olds
Union

check

don't think
to

for

this

the

proceeds.

This

Company.

People

are

the

York

City, to engage in the

curities

asking for

call

upon

them.

phoning and

se¬

business.

Others

such as this leads to

are

tele¬

Scott

business

from

Hugh

securities

offices

Fort

Pos¬

idea

After

political

even

(Special to The Financial Chronicle)

for your own organization?

GAINESVILLE, Ga.
P.

Whelchel, Jr. is

—

now

impropri¬
improper to the
—

doubly

though that
frightening!

vision and political
whom

any

proud

cabinet

which

rank

even

advised

are

ingratiate themselves at regular

intervals with certain members of
the White House staff is an inef¬
A

government

sands

which

thou¬

Federal

employees are
strongly influenced by fear they
their jobs

their

pro¬

they offend the party
political watchdogs in their de¬
partment or agency is an ineffi¬
cient government.
A government in

which, in

de¬

emergency,
top
officials
pursue various courses in matters
of
crucial
financial,
economic,
and

policy is

manpower

inefficient government.
A government which leaders of
business and professions hesitate
even

national

gency, because of the

emer¬

frustrations,

inefficient

govern¬

ment.

Prompt Wire Service

To
•

Western

SPOKANE

•

Markets

DENVER

•

LAKE

leading

Senators and other public servants
are

SALT

ties,

CITY

crucial
year,
investigating
propriety and even the integ¬
rity of other public servants is an

government.

government

sands of Federal

ernment
an

thou¬

is to

serve

gov¬

the people is

inefficient government.

It is

said that

democratic

ernment must be in

some

gov¬

respects

cies I

have

described

not

de¬

rive from

democracy; are not in¬
herent in its working or essential
to its welfare.
So I conclude that

BROADWAY

Tel.: WHitehall 3-6700
1

—

New

other

York

government

inefficient is inadequate to

Exchange
Exchanges

Are

approaching that stage? There
always been some men of
third-rate ability in our govern¬
ment, and our nation has survived
have

N. Y.

Teletype NY 1-1856

but

them.

But never,

I suggest, have

itself

end

too

emergency.

loyalty

good

na¬

latp, if it is not too late.

Alfred McGewan With

Pulis, Bowling Co.

long at the trough. That pat¬
has become an excuse for
creation
of *a
government

ronage

within

government.

Our

official

government is
by an honest, well-inten¬
industrious and likeable

headed

tioned,

President.
But

there

ment,

second

nominally

President
which

but

govern¬

headed

with
be

can

the

activities

only

vaguely
That government is largely

aware.

unofficial

its

standing,

anon¬

Alfred

in its membership, under¬

Alfred

J. McGowan

McGowan

has
become
operations, undefined
with
the trading de¬
in its functions, and nebulous in associated
its actual leadership, with few rec¬ partment of Pulis, Dowling & Co.,
25 Broad Street, New York City.
ords, few scruples and little or no
in

cover

its

Mr.

McGowan

has

recently been
of-public responsibility.
associated with Seligman, LubetNominally a creature of the

sense

Democratic
in

National

practice

Committee,
to

appears

kin

that

pursuit

of personal

power

Halsey, Stuart Group
Offers Equip. Tr. Glfs.

personal wealth. Perhaps no single
knows all that is said and

person

of this nameless

name

government, but
doubt

perhaps

let there be
influence!
There

its

complete record of its
membership or of itsplans, its prom¬

ises

and

its
of

some

its power.

proscribed
us

honorable

hint at

even

illegality, for these

any

victims,

learn to feel

soon

I do not

suggest

that this obscure and irresponsible

danger to the defense
effort, and if long endured could
power

become

has

come

traces

upon

and

Such

ment had

plain

leaders of

long

cerned

with

about

though legal,
from
our

must

govern¬

can

one

ex¬

willingness to
public servants
are

to be

not

uncon¬

actions

are

which,
highly improper?
are

not

remote

discussion of stabilizing
for they are major

which

overcome.

Sound economics

partisan politics simply do not
Even

not

successfullly

Charles Wilson

organize

oversee our

legally constituted

according to
secured

are
-

by
railroad

gauge

estimated

cost

not

less than $3,216,000.
Other members of the

offering

group are R. W. Pressprich & Co.;
Freeman
&
Co., and McMaster

Hutchinson & Co.

New York Stock

Exchange
Weekly Firm Changes >

The New York Stock

one

man

can

government.

Exchange

has announced the following firm

changes:
On

will

March

29th

consider

the

proposal

Thomas J. Brown act
on

the

Francis

floor of the
G.

Interest

•

Exchange

Exchange for

Lauro.

the

that

alternate

•

late

Bowling
Bruns in Bruns, Nordeman & Co.,
ceased

Feb.

28.

Leon

Ruth

partnership
March

retired

Doolittle

from

Co.

our

Arthur L. Niles

stabil¬

Arthur L.
ment

Niles, retired invest¬

broker

and for many years

one.

member of the New York Stock

repudiate

and demolish this second

official

standard

equipment

Only

2.90%,

can¬

ization if he must also cope with
an undercover government as well
a

The certificates
new

stabilizers

our

mix.

names.

economy,

hazards

and

our

actions

factors

offered

maturity.

complacent about

their

These

from

political ethics

apparent

annually Oct. 1, 1951 to April 1,
1966, inclusive, at prices to yield

little too tol¬

How else

own.

satisfied

revealing

some

become

little too

Commission

familiar

some

of mediocre

erant

govern¬

March

$2,400,000 of Seaboard Air Line
RR. 2%% equipment trust certifi¬
cates, series J, maturing semi¬

situation could not exist

unless the

their

free

menace

The Fulbright

Halsey, Stuart & Co. Inc. and
associates

all, all

are

I merely

men.

Co.

include

not officially connected with
committee, who are primarily

men

production and

"Too mediocre to survive."

NEW YORK 5,

our

times.

Stock

Principal

let

was

political parties cannot
patronage. But pat¬
has become not a means

clearly illegal, and

inefficient; that that is the price
democracy. But the inefficien¬

and

reverse.

and

life

the

Members

not

ture blind him to the fact that
his

political machine which has been

and

which

employees have

forgotten that the function of

1915

national

without

the

J. A. HOGLE & CO.

of this contagion is
whenever and wherebe got away with. We

can

ronage

obliged to spend much time,

inefficient

ESTABLISHED

ever

ment.

A government in which

FOR BROKERS AND DEALERS

must

cannot, of course, have democratic
government without political par¬

but

defeats, compromises and personal
lacerations they know they must

with Courts & Co.

emergency, must recog¬
situation as one aspect

this

that

but

heart

done in the

clared

endure, is

LOS ANGELES

The

ymous

government
of

integrity, with

should

man

to associate.

William to join,

associated

political mo¬
trend would have

That

patronage

that

gladly recognize
Washington
does
contain
men exceptional in ability,

many

corrup¬

suggest

reported

acted

them

all, let

that

labor

With Courts & Co.

friendly rela¬

find

conducting

—

Sanders Manor 1.

service

tionships and builds business.
can

Tenn.

coming into

sibly

you

KNOXVILLE,

paper.

representative to

Offering

makes

suggest the

even

any

not

the

will lose

Hugh Scott in Knoxville

running

local

some are

office.

motions

writing to Allen & Co.

and

who

men

offices at 527 Fifth Avenue, New

major house-cleaning. They

loyalty is being imposed upon, his
faith
is
being
misplaced,
his
augmented. The
friendship is being betrayed by
moral ground on which contempo¬
some whom he has
thought to be
rary Washington now rests is so his friends.
They are no friends
low that mists of contagion can
of his or of the nation.
In their
rise quickly and spread far.
own
ways they are saboteurs of

Stephen W. Hopkins has opened ficient government.

investor is going

day

not

eties have seemed

the

financial problem.

every

their

Trust

officer

Stephen Hopkins in N. Y.

forget them the next time she

has

was

many

They had the lady make out an
affidavit, and they were able to
sell them and present her with
their

and

possibility of

ready to toss out the ashes

the

those

stock

nize
of

trend

difficult

been

What

affairs in Washington tell us about
the future of democratic govern¬

rality.

live

Securities
This brings me to my final ques¬

began long
Administration,

thus inherited

Mr. Truman

;

Company

Investment

mediocre

not reversed

Are we, also,
our

ing actually illegal?

Allen &

they know the time has
for the President to under¬

example, which leaders of or¬
ganized labor have gained since
1932 been balanced by an added
sense
of responsibility
on
their
part for the welfare of all Amer¬
Surely our President fails to our defense
program.
icans? Indeed, does the American realize how many and how large
Only the President can act now,
people any longer even expect to are the spots on the fabric of his and
by his action lift his Adminis¬
see Washington set an example of
Federal mantle.
If he did realize,
tration
from
moral
mediocrity.
high-mindedness?
Is our public surely he would act.
Only the President can act now.
now so inured to improprieties of
If he does not, the people can act
The Evils of Patronage
public conduct that it is no longer

our

tele¬

the

our

one.

some

with

exercised

phone for information.

vertisement.
1

assist

without

services.

to do something
might otherwise wish

unless

immediately. We shall be

rights

would do for them; and
make your offer friendly, courte¬
ous, and as short as possible. Here
some

sold

easy way

which they
/

worthless

come

The

one.

before the present

Were

for

have

Orlando, Fla., under

direction and
L.

Edison

flourished

gains of the 1930's, for

ample, accompanied by compara¬
ble improvements in standards of
public propriety? Has the power,

that

character of its leaders?

our
man

lenders

admire his loyalty to his
support-,
openly or
ers;
they like his good nature.
more generally accepted and
But he, who has himself declared;
loyally defended. This toler¬ a national

been

ance

money

people,
come

such third-rate standards and ob¬

jectives

Has it increased pro¬
portionately in the wisdom and

social

Lorillard Co.

office

the

Armco Steel

worked:

and power.

Expire

securi¬

dealers.

customers.

work happily and effec¬
As the task of our govern¬
ment has enlarged so has its size.
It has multiplied in numbers, cost
can

tively.

the

one

own temple.
That man is
the President of the United
States.
If I do not
misjudge the American

take

they

level

from his

Inadequate Government

have opportuni¬

don't

years

rights"

JOHN BUTTON

increasing our business,
securing new customers,

they exist.

Controls Under Inefficient

the

morality; only

drive

can

Securities Salesman's Corner

raise

can

political

and

Only

un¬

Exchange,
Hrtmo

one

passed
ntrp

away
R1.

his

Volume

Number 4996

173

Continued

from first

page

the effects

ahead

Act."

want
in

raw

to consider what s
materials, capital,

of the military

review

program

and stockpiling programs to make

of materials in

case

problem.' Finally, I will conclude allocate
the remaining limited
a note on business trends in
supplies to civilian users on some
and

Raw

imports must be expanded if pos-

general shortageof Jaw- materials

materials.

over

impossible to

allocating

satisfaction

goods to the
of the people

scarce

all

help?

comfoi table, in other cases,

ders

the

desperate;

I believe

snortage of raw

tnis general

tnat

materials has been the single most

inflationary

important

hor"
h'§her Prlces by government pur- weI1 that the greater the lengths
bor- chase contracts to encourage marginal

done todav and

War began.

Another

the more cumbersome the machinery becomes. The people in this

is to

ease

Prices of raw materials were areas. The outstanding effort in
tending upward in 1950 even be- thisresnect felte use ofcertiffore Korea. After the outbreak of tnis
ls
use
icates of necessity
to give more
.hostilities, these upward move¬ rapid depreciation
to approved
ments were intensified.
projects. This is a very important
The Bureau o'f Labor Statistics
method of helping industry to ex¬
•spot index of market prices for 16 pand. Not only is there a sizable
•sensi.ive commodities rose by 11% tax
saving, but a supply of taxwithin one month after Korea. The
free dollars is made available for
;climb continued so that eight and various

outside

should

that

are

squeeze

projects are
when these
completed I expect to see total
and

process

investment

business

assuming,

such

Many

now

show

full-scale war peak levels.

Now

come

financial

to the question
to

resources

the

Among

60%.

almost

was

i-ri C?nS'

»c Cj0;cf?o?

the

after Korea

•one-half months

required in this emergency period.

of capital. Business investment in
probably

The answer to this question in-

volves a

hit

try to see all the

high this year under

new

i-»rirvt

-35%, lead 50%, hides 50/0, prm
cloth 55%, shellac 60,%, cottseed oil 70 j0, lard 70%,. rosi
iwool-.ops
105%>
bJr'apand
ni talsilk 15%, rubber 150%
low 205%.
Tin is up about 75%
.now but only two weeks ago had
been up 140% over last June.
J
These are
dramatic price in-creases.
Most commodities moved

Corporate capital purposes.
47% corporate tax rate,

With

great

many

factors

Continued oh page

the

dollars

depreciation

whicb

through the
account

comes on

undistributed

profits

the 77%

With

after taxes.

amortization

Accelerated
a

helpful thing to many

very

companies,

for

but

the

nine

largely

been

stimulated

ex¬

pectations with regard to the de¬
fense program but they were also
fmade more serious by the fact that

long-run ten¬
for raw material capacity
behind finished goods ca¬

has been

there
dency
to

lag

pacity.
In

some

creased

cases,

our raw

have not inmaterial facilities
we.

peaks reached back in
"the 1920's. This is true of some of
from

-the
;

the

nonferrous1

metals,

notably
In others

though

presumably

Coming back now to the role of
have

discussed

the

first-

have

$2,625,862,

$74,465,686,

enlargement of available sup-

"The

sh a re. Net earn i ngs i n J949 we re

per comm on

$2.51 per common share. Net sales

the

military

program

and stock¬

piling programs-are appropriate tothe whole supply situation. It goes
without

or a

49% gain

the $49,754,531 reported for 1949.

over

Company's nation-wide physical operating position

saying that-essential needs.

now

seasoned, yet

founded—management is mature and

well

sidetracked.

does

have made the past

;

always, fired with enthusiasm. To those men

and women who

twenty-five years such a success, we

dedi-

•

•»

•

' 'f

of accomplishment/'

cate this statement

should be met first and I am notsuggesting in any way that they
be

in 1950 totalled

plies. The second part of the gov¬
ernment's role is. to assure that%

R. S. Rheem,

seem

CHART OF SALES AT

President

in this area. The
essential
requirements

of urgency even

cent years

Aluminum capacity has
been
multiplied fourfold in the
last decade, but civilian
use of
aluminum is being cut back onethird because of inadequate supplies As you know, there are also
some severe shortages in the case
of
certain
industrial chemicals
even though as a whole industrial
chemical capacity has tripled in

period

urgent of the essential needs could
be postponed at times and stockpiling programs could be made
very flexible. As one example, it
made a great deal of sense when
the government stopped stockpiling tin after the price had gone
altogether too high,

The third part of the government's role in raw materials conthe last decade.
cerns the allocation of supplies
With this general background of which are left after essential needs
tight raw material supplies it was are met. If supplies cannot be inno wonder
that the new defense creased enough to take care of all
program contributed to such dra- requirements, then the problem is
matic price rises in raw materials, to allocate them where they will
There .was not only the business do the most good.
This includes
demand for commodities but the outright
prohibition on certain
government itself further com- end-uses, and percentage cut-back
pounded the problem by' its ambi- limitations geared to some base
tious stockpiling programs.
period. These action's may be
In this situation, I believe that helped considerably by selective
the government has three major credit controls designed to restrain
functions in the field of raw ma- spending in important areas,
terials: The first function is to
At this point I would like to
take every possible means to en- turn for a moment to the problems

INTERVALS

YEAR

though that there must be degrees

lead, and zinc.
various
increased capacity in re¬
ought to be catalogued by degree
but not enough to sat¬
of urgency and
with an eye to
isfy demands. Steel capacity, for
statistics on total supply, require¬
example, has been enlarged more
ments of our allies, civilian rethat one-quarter since 1940, but
manufacturing output as a whole quirements, price movements, and
has
almost doubled during this other factors.
Perhaps the. less

copper,
we

dends, to $4.75

part of the three-way role—i. e.,
the

equal after preferred divi¬

history—net earnings were $4,862,593,

government in the field of mate¬
I

profitable in the Company's

"Operations in 1950 were the most

the smaller.

even

RHEEM MANUFACTURING COMPANY

The greater

now,
on

lower after the emergency period. _
rials,

COMFORT APPLIANCES

Annual Report

future.

the most important

Highlights of the 1950

may
•

STEEL SHIPPING

CONTAINERS, HOME

are

debt

fact of life „in the last
months.
These fears have

■

equivalent to $4.34 as
compared with the $1.00 after tax.

larg

and the Consumers Price the
depreciation
.Index has gone up about 7%.
it must be later
Throughout the economic struc¬ tax
rates
will
ture shortages and fears of short-

bSen

AIRCRAFT PRODUCTS

Profits tax rate, depreciation dol-

.began,

'ages have

□ ORDNANCE AND

excess

is not an un¬
qualified blessing, however. Every
'very much slower. The BLS allcompany' should remember that
-commodity
index has gone up
accelerated
depreciation
creates
-about 17% in the eight and onewhat might be described as a tax
'half months since the Korean War

^economic

(Millions)

lent to $1>89 as compared with the
^

SALES

NET

equiv-

are

EARNINGS FOR 1950

CONSOLIDATED

POSITION

CONSOLIDATED FINANCIAL
December 31,1950

INCOME:

CURRENT ASSETS:

Cash

...

Marketable securities.
Accounts

receivable (net)

$ 3,564,556
69,266

Net sales

........

Cost of

goods sold.
Selling, general and

$5,276,646
5,504,983

...

1,297,120

payable
income (estimated).

Other

Total current liabilities

...

PROPERTY, PLANT AND EQUIPMENT
PREPAID

EXCESS

(Net)

ITEMS

LONG TERM INDEBTEDNESS TO

BANK

OF ASSETS OVER LIABILITIES

Represented by:
4'/z% preferred stock ($100 par).

16,258,321
241,463

...

$29,713,104
5,000,000

$24,713,104

Common stock.($1 par).

Excess of amounts received over par

$ 2,369,900
1,000,000

Federal taxes

preferred and common stocks issued
gains, net, from other transactions
in capital stocks of the Company .
.
.
Earnings retained for use in the business

$24,713,104

copy

;

of the Report write the Company at 570

.$59,256,947

5,087,648

101,633

5,355,000

69,801,228
....

$ 4,862,593

PAID: '

DIVIDENDS

Preferred stock

Common stock

109,6-13
1,900,000
2,009,643

Other

1950

charges and credits (net)

ADDITION TO EARNINGS

USE

THE

BUSINESS

THE

54.301

2,907,251

RETAINED FOR

7,938.654

BUSINESS

RETAINED FOR

1,955,342

RETAINED FOR

........

FOR PAST YEARS

EARNINGS

10,497,299
10,845,905

cUts

X9SSt,EARNINGS.

USE

and

$74,663,821

income

(estimated).

EARNINGS

value

For

Interest

Total

administrative expenses.

$12,078,749

$11,901,355
1,311,965

WORKING CAPITAL

INVESTMENTS, ETC.

COSTS:

DEDUCT-CURRENT LIABILITIES:

$74,465,686
198,135

Total income

10,719,483

Total current assets

Federal taxes

Miscellaneous

9,626,799

Inventories.......

Accounts

joh

turn to the' matter

Now let

'rise

de¬

clining tendency from the earlier

the plant and equipment will

program,

01 cerMI

tne

resPeet

Those

skins.

thick

course,

taken.

Capital

government work have to develop

certain

laws in

the tax

en-

materials

raw

they: (a) con¬

defense

of whether business will- have the

nrobablv will be

important way to

output

courage

the

taken to achieve fairness,

expanded.

factor

the United Stales since the Korean

tribute

breaks out.

being

This

producers.

greatest

the

materials—always

raw

meSlv T L°r„ S'UbS^dy „Payments th.r°Ugh amount IfI"!
t

the test of whether

•

passed

How can the government concerned. It is simply a question
One approach is to provide 0f trvine to do it with the least

?b,le

projects for the time
pinch has been sur- being will generally have to meet

bound to be exceptions. However,
I would like to stress the thought
that a year from now we may have

the job

program.

Business

(b) contribute significantly to
extent. Now we must learn to live the output of basic necessities, in¬
within our current production and cluding, of course, the all-impor¬
imports. A year from now our tant industrial raw materials. If
resources will be greater and some
I.
^ey do not meet these tests, proj¬
large increases in capacity of raw ects for busjness investment in
materials will be in sight. I am plant and equiment will generally
generalizing here, and there are not be permitted to be under¬

,,,

controls

facilities must be made larger and

Material*

defense

because we were living off accumulated stocks to a considerable

making decisions regarding direct

To increase supplies, production

run.

although

time,

The

pinch.

My impression is that these
are high in the considections of the government people

developments sensible basis,

possible

longer

some

turn out that the next year or so
will bG the year of the worst

directives

with
1951

for

ness

in the

Congress

segments of business and with due
regard to the needs of new busi-

Then I shall make them fit the realities of the supply
remarks on the inflation situation. The third function is to

few

In the

the national policy of encouraging
expansion of productive facilities.
Some non-essential business plans
will not be carried through, howmay ever, because of the needs of the

dulging in Bronx cheers.
The problem of raw material
shortages is likely to be with us

the greatest

make

problems before in-

sides to their

that

says

the

short supply, the President is di- prisingly slow in coming largely

and manpower.
a

Defense

The
1950

particular reference to large available supplies. The sec- rected by the Act to see that a
of government controls, ond is to undertake a continuous fajr sbare js made available to all

with

First, I

Act
sense

possible contribution toward
achieving the objectives of this

the

encouraged

The Business Outlook
...

that small business enterprises be

Government Controls and
..

business.

small

Production
"It

tion

(1251)

The Commercial and Financial Chronicle

USE IN THE BUSINESS

$10,845.90o

DECEMBER 31, 1950

depreciation of plant and equip¬
charged to earnings, $990,246.

Provision for
ment

Lexington Ave., New York 22, or Richmond,

California

in-

The Commercial and Financial Chronicle

(1252)

Thursday, March 22, 1951

<»

Continued

jrom

rather than full-time

work

time

page

jobs.

Millions of housewives with
children * in school can do parttime work, and especially with the
smaller companies which can tap
the
local
neighborhoods
effec¬

Government Controls and
The Bnsiness Ontlook

tively.
the

whole,

the manpower

eluding corporate profits, corpora¬ $2 billion from the amortization
tion taxation, and government pol¬ of mortgages and other loans. Be¬
icies on several matters.
yond this they may provide fur¬
ther credits through the liquida¬
Generally speaking, corporate
tion of government securities. In
capital problems are not likely to
be severe in the present emer¬ addition, the banks will provide
credit to legitimate borrowers and
gency period. There will be cases
have ample resources to do so,
of great difficulty, I am sure, but
even if bank lending is tightened
these
wiH
represent

exceptions

the rule.

rather than

controls

Direct

down
it

spending to

capital

neces¬

projects, and thereby make

sary

easier

capital where

obtain

Businessmen

actually required. That is to say,
the elimination of non-essential

directly.. in

finance

great many ways, such as: (1)
government purchase contracts to
buy the total output of a new or
expanded plant, (2) prepayments
en government contracts,
(3) di¬

short supplies of raw materials.
shall probably find that the

labor supply is fairly adequate for

needs, short of full-scale
the

pinch would
Perhaps

the

war

I also want to mention here the

ling inflationary
fearful

are

They

pressures.

that

°'

•.

matter

increasing

sible

some

which

pinched.

are

ply will be adequate for the needs

war

week

work-week

of the industries

Some indus¬

much

the

peak

and I think that

the

increase

further in

tries worked

Manpower

work¬

It should certainly be pos¬

week.

that you will find the credit sup¬

business.

the

50 hours

during

the

few hours

would be both feasible

now

and very helpful.

It also

gating, as of June 30, 1950, about
$44 billion. These funds could
have

been

seems

for

used

spending

fective in the interests of control¬

labor.

the

year).
War

Compare

II when the

Government

took

almost

This is

corporations held real difference in degree, which
an unprecedented amount of cash
suggests that
this
country can
and government securities, aggre¬
carry the present program without

not been available.

will be in certain classes of skilled

ginning

addition,

again

feelings about credit con¬
They want them to be ef¬

mixed
trols.

worst

pinch in the manpower situation

are

they will be too
projects,should clear the field for effective, however, and prevent
the
proper credit from being avail¬
the necessary projects.
The government will also affect able to them. On balance, I think
business

half of total production.

extreme.

pared

trial loans made by banks.

leeway in drawing on
people than we have in drawing

which

total national product
(as com¬
with one-tenth at the be¬

our

Federal

eral Government in the
aggregate
will be taking about one-sixth of

this with World

materials bottleneck. We have

was

gages, bank loans, etc. Only $2V2
billion of the total came from ex¬

bound to have

hold

should

various ways.

The remainder

sources.

covered by financial sources, such
as new issues of
securities, mort¬

pansion of commercial and indus¬

far

our

ating

the

raw

met from internal oper¬

year were

I do not view
bottleneck with the

degree of seriousness

same

and, as I noted earlier, approxi¬ ties too are probably
being exag~,
mately two-thirds of total cor¬ gerated.
porate requirements for funds last
By the end of the year the Fed¬

corporate

if bank

even

much dislocation.

very

Now let's look beyond 1951.
If
can
avoid all-out war, and

loans had I think
in

the

our

the

present situation, short¬
ages of raw materials continue to

plish this,

represent

gram

tant

of our most impor¬

one

inflationary, factors. The

gov¬

look

present programs

right direction to
then

forward

of $50 to $60 billion

for several years.

are

accom¬

may have to
military pro¬

year

Meanwhile,

ernment's program to increase

our

the productive capacity will continue
supply of raw materials is a vital to grow for we have an enormous
approach to controlling inflation¬ facility for economic growth. Our
ary forces. While this will neces¬ technical
"know-how" all along
sarily be a slow acting program, the line is so great that we can
it should be pushed to the utmost.
improve and enlarge our capacity
Meanwhile, prices of ra\tf mate¬ in a most remarkable way. As we
rials need not continue to sky¬
grow we can carry a large
rocket

military

the

government

uses

physical controls to keep demand

program with less and less strain.
Some
of
the
controls
can
be

it would be desirable to in line with
supply. The proper dropped from time to time.. The
the law requiring pre¬ allocation of materials in short burden of taxes can be
government financing,
(4)
lessened
serious
bottleneck.
Government mium pay after 40 hours of work. supply can be coupled with
pro¬ as production and national income
government guarantee of loans,
programs to direct the use of man¬ That was a depression idea which hibitions on end use and other re¬
rise.
(5) renegotiation of profits, (6)
we

which

rect

come

represents

that

manpower,

potentially

change

and (7)
taxation.
These
complicated matters and it is

certificates

ere

necessity,

corporate

new

going to take time before they are
all worked out.

likely to be cooperative.
Small business particularly is to
is

promoted as

I believe that businessmen

sible.

fice of Defense Mobilization.
We have been

lion.

Government officials
are glad to know what these prob¬
lems are so that they can work
toward early solutions. The presr
game.

this afternoon

top

government administrators illus¬
trates the willingness to cooperate
with businessmen to solve mutual

problems.
Corporations

are

probably going

to be able to finance
of

their

rec¬
em¬

reached.

lems and raise questions early in

here

Inflation Problem

Now let

ployed and the 59 million figure

ruary

ence

setting new
number of people

ords in the

should think through their prob¬
the

in the fight
be¬
organized labor and the Of¬

turn

brief

straints

his

Everyone

of in¬

use

materials

for

non¬

large part

from

outlays

to assume that the inflation
prob¬
lem will go on and on forever.

Conclusion

to have

internal

Unemployment in Feb¬
stood at just under 2V2 mil¬

larly since the outbreak of
Korea.

Obviously,

war

there

are

great many factors involved, both
governmental and private, so gen¬

few

comments

the

business

year

1951 is going to be

transition.

The

military

year

The normal annual growth in the
labor for£e of about 700,000 and

reduction

some

will

meet

unemployment

part

these

needs.

place with the blessing of the gov¬
ernment.

(2)

Agricultural

support

pro¬

than many people expected. The
warehouses are bulging with in¬
ventories

people

grams.

are

many
lines.
Some
beginning to talk about

business picture because of exces¬
sive inventories.
For my part, I

in inventories, and growth
of receivables (exclusive of addi¬

the

tions

inter-corporate receiv¬
ables, cash and government secur¬
ity holdings).
To finance these
requirements undistributed profits

the

provided $13 billion and current
depreciation allowances provided
$7 billion, making $20 billion in
all
from
internal
operating
sources.
My estimates indicate

rates to the

creases

two-thirds
ments

for

these internal funds

Now

provide better than
corporate require¬

labor

force.

with

compare

These

37%

figures

and

89%

peak

of World War II.
We
could increase our labor force
by

theoretical

5-6

applying

This

million

the

peak

persons

wartime

February figures.
not likely to actually

sources

•.

grams

(8)

business.

State and local government

spending in
though this

excess
was

poses.

shifts out of

some

less

Treasury and the Federal
come

agreement- regarding
the
conflict between public debt man¬

some

agement

and

monetary

controls.

The agreement is designed to
give
the Federal Reserve more control
over

shifts. The number of work¬
in construction, for

verse

Reserve System have also

interest rates and

bank

re¬

serves.

ers

example,

iy4

million

higher than
As construction is

years ago.

cut

back,

made
are

engaged
8

many

available.

now

five

than

bal¬

five

(9)

Wartime

growth

public

chasing

inflation

ago.

Some

the

quate"

ruption.

would

funds

The

period.
The insurance companies will
have about $4 billion of new assets

taken

which

getting

the

it needs

in this

invest each year plus another

great

small

companies

reservoirs
as

Some peo¬

"excessive" money

can

manpower

monetary

much.

very

lieve

that

these

have

large extent

since

riod.

they try to tap the great crowd of
people who are available for part-

dous

action.

Korea

even

This

Indeed, I be¬
price

occurred

had not increased

particularly if

group,

increases

could have been stopped by "ade¬

external

culty

on an

price

doubt

have

power earlier.

ple have been blaming the whole

reductions ought to be possible in
this area without too much dis¬

I do not believe that

will

the storm.

ian

accelerated

cut-backs

larger.
of

pace, and
will become

believe

inventory

civil¬
pain¬

that

weakness

the

will

There

are

also

unemployment

able

one

the

let

taper

program

wouldn't want to relax
ness

the

off.

our aware¬

Russian

problem for
minute, but I think our confi¬

dence

tantly. I

already

bound
am

passed

impor¬

grow

hopeful that
the

have

darkest

mo¬

ments of the Russian threat. Eveu
if I

can

carry a

wrong, I reiterate that we

large military program

with less and

less

strain

time

passes.

Olaf Fennekohl Opens
Olaf
a

Fennekohl is

engaging in

securities business from

215

East

86th

offices

Street,

New

City.

worries to¬

day that the transition from civil¬

spot

also

may

military

York
some

the

over

Moreover, as we build up our
military and productive strength,

By the third quarter of this year
military contracts will be flowing
at

inflationary
get

and

local

business weakness. These difficul¬

H. O. Hartley Opens
CALDWELL,

IDAHO —Hardy

Hartley is conducting

a secur¬

ities business from offices at 1023

Cleveland Boulevard.

other lenders.

diffi¬

so,

the lull before

difficulties.

once

banks, insurance companies, and

supply and an "unnecessary" ex¬
workers will be pansion of bank loans. It has even
been
said that practically all of
Similarly, there

years

This is

these

the

by a Federal cash surplus ian production to a higher military
of $13 billion in the last five cal¬
program will bring with it heavy

serious

Even

business

hump in 1951.

anced

now

about 10 million persons
in trade compared with

million

discount

indefinite

pressures

taxes—al¬

funds for business, we run into the essential
jobs to meet manpower
Then after the Korean War be¬
question of government credit pol-. requirements. This should not be
gan, still another new and vital
icies. A new voluntary program too
difficult, speaking in general factor was added, namely, the
to restrain lending by the various
terms, because many of the non- severe shortage of raw materials
classes of lenders is just getting
manufacturing industries have in¬ which I mentioned earlier. Natur¬
tinder way.
This is designed to creased
their
employment tre¬ ally the sharp price increases in
facilitate credit for desirable pur¬
mendously in recent years and raw materials caused much appre¬
poses and to restrict it for un¬
presumably would not be pinched hension since the dollar had al¬
necessary
and speculative pur¬ too greatly if there were some re¬
ready lost a great amount of pur¬
The

machine

(10) Active loan expansion by

present circumstances.
extensive

weakness

quickly fade.

debt leaving individuals and busi¬
nesses
with more
liquid assets
than ever before.

reasonable

would

(7) The record expansion pro¬ talk

haps 2 to 3 million is

estimate of the probable increase
in the labor force this
year under

impending

fully

endar years.

There will therefore have to be

external

consumers.

out, however, unless we are
engaged in a full-scale war. Per¬

work

funds.
to

this mat¬

productive

We shall probably be able

passes.

of without

program

inexorably growing day by day
and month by month.
We know that many more peo¬
Military
eralizations are dangerous.
spending will more than double
ple are going to be needed for the
I would like to give you a list
during the year, reaching an an¬
military services and for military
of ten important inflationary fac¬ nual
rate
of
production. The President's last
something in the
tors for the last five years just to
economic report said that, in round
neighborhood of $45 or $50 billion
show the variety:
by the end of 1951.
numbers, perhaps 5 million more
r;
(1) The various "rounds" of in¬
Up to now cut-backs in civilian
people will be needed for these
purposes by the end of this year. creases in wage rates which took production have been less harsh

funds, including both Also some part-time workers can
(3) The housing program of the
profits and current be shifted to full-time jobs.
government with mortgage, guar¬
antees and subsidies, and public
The labor force, of
depreciation allowances. Last year
course, will
these sources provided about two- also be increased as more women works generally.
thirds of the total corporate re¬ go into the factories and some
(4) Foreign aid programs in¬
quirements for funds. That is, in older persons come out of retire¬ volving buying in this country.
1950 corporations required about ment to work.
Government payments to
(5)
At present, only
$28 billion to cover their expendi¬ about 32% of all women over 14 veterans.
tures on plant and equipment, in¬ and 83% of all men over 14 are in
(6) Postwar "catching up" by

will probably

Our

likely to provide the answer to
closing I would like to make the
inflation
problem
as
time

In
a

quite optimistic

ter.

undistributed

1951

tendency these day3

supply.

operating

that in

There is

essential purposes to hold demand
re¬

about what caused

idea

own

seems

raw

within the limits of

view of the nature of the inflation

problem.

regarding the

dustrial

competition is for February of this year was the prices to rise in this country in situation as a whole in 1951 and to carry along with whatever mili¬
the postwar period, and particu¬
possible trends thereafter.
The tary program is
much as pos¬ highest February employment ever
necessary
and

be encouraged and
to

is not consistent with today's in¬
flationary environment.

embroiled

are

tween

whole, government atti¬

On the

tude

power to, some extent will emerge
time passes, but right now these

increases
to

bank

very

credit

during the

pe¬

NSTA

SECURITY TRADERS

internal

financial

resources

ASSOCIATION

NEW YORK

Security Traders Association of New York (STANY) Bowling
League standings as of March 16 are as follows:
TEAM—

Burian (Capt.),

(Capt.), Casper, Valentine, M. Meyer, H. Frankel 10

Goodman
Hunter

Manson, King, Voccoli, G. Montanyne

(Capt.), Lytle, Reid, Kruge, Swenson

(Capt.), Demaye, O'Connor, Whiting, Workmeister 10
Kumm (Capt.), Weseman, Tisch, Strauss, Jacobs
10

Leone

H. Meyer

8 10

Danadio

(Capt.), Krasowich, Nieman, Pollack, Gavin
(Capt.), Smith, Farrell, A. Frankel, La Pato
Bean (Capt.), Kaiser, Growney, Gronick, Rappa
Mewing (Capt.), Klein, Flanagan, Manney, Ghegan
Serlen (Capt.), Gersten, Gold, Krumholz, Young
Abe

•

Won Lost

Greenberg (Capt.), Sullivan, Stein, Wechsler, Siegel„

Krisam

American business has tremen¬

Notes

(Capt.), Bradley, Montanyne, Weissman, Gannon

7 11
7

6 12

Strauss, (Strauss Bros.) had high game of 202.
High series of 576 went to George Leone (Leone & Pollack).

r-,yj

(1253)

Commercial and Financial Chronicle

Number 4996 V. /The

Volume 173
}

Continued from page

to the ultimate form of

ulations

mittee I
in

Inflation and Price Controls

Man's

Wai-Peace Economy

Company, Inc.,

"excise tax

scare

war

new

and chain
"inventory scare" should threaten.
Then, indeed, we might have a
system of accounting"—and these
temporary "near-stabilization," a
Charity: Biblical and Political— are only the very large ones—
of
price
and
wage
have to hand over to the local "plateau"
Hussell J.

330

■

West

department

Those

Street, New York

42nd

which

stores

18, N. Y.—cloth—$5.50.

use

the

Clinchy—The Founda¬

tion for Economic Education, Inc.,

OPS

Irvington-on-Hudson, New York—
Paper — Single copies free of

one

charge; quantity prices

request.

their

office

for movement, by

"markups"

Business

before Korea and then

year

istration

summer.
as

the

must

it, while the small store does'
envisage two
so only for one day, Feb. 24, 1951.
The big corporation has to mark* emergency:
after

the Admin¬

well

time

same

kinds

different

peopl©

shrewdest among the young

important

The

inflation-minded.

become

they are, the quicker this/
happens. The older people hate

younger

—

the

countries

and more on Europe have brought
prices
down.
The chasing cartels, but nothing has
industry lines, some commodity
"peace scare" may well slow down come of it up to now.
"rollbacks" and "rollforwards."
the
expansion of our civilian econ¬
Some
"Rollbacks" — The
new
Business Statistics
John R. "margin ceiling" for retailers con¬ omy. If, at the same time, defense
orders will gain momentum, this
Can We Indeed Stabilize
Riggleman and Ira N. Frisbee— tains an implied threat of a roll¬
will take up some civilian slack, if
the Dollar?
back for large-scale retailers:
McGraw-Hill Book

i.i

international com-

asked: At what point

strategic

price schedules for more

Bookshelf,

was

depreciation of a currency
highly desirable
commodities in foreign do people begin to understand
that it is no longer a question of
are being bought up by
prices, but of shrinking
eager purchasers and are disap¬ rising
pearing behind the Iron Curtain. money values. My answer was:
There has been some discussion When a currency falls to or below
about the advisability of setting half of its original gold value.
some
this rule holds good: Th©
up international government pur¬ Then
In the meantime,

Business

Once

price reg¬

which will govern them.

the

see

work

their

lives

dwindling into the hands of infla¬
who see that a
This is ultimately a question of tion-profiteers
going on
the real will of the nation. It is monkey business is
which is making the purchasing
not a question of the form of con¬
power of every
dollar honestly
trols.
earned and saved disappear.
I have my doubts whether we
The greater the weight pulled
have in the United States today
by the older age groups in our
a majority
willing to stop the play
country, the greater will be the
with the dollar, or whether we
resistance against the "easy way
have not perhaps a majority who
out" for every administration tw
would rather have a continuing
make more employment by rob¬

The
one
if we should be
commodity on which it ex¬
"mild inflation" of the sort Mr.
World War III—
bing a part of the population.
the percentage markups plunged into
Keyserling has been engineering.
As soon as an active majority of
;
vard
Business
School,
Soldiers since June 24 and has to' "ex¬ would bring a mobilization of per¬
Up to now, more and more our people really wills it, we will
Field, Boston 63, Mass.—Cloth— plain" this. Subsequent action by haps 14 million" persons, annual
groups have tried to protect them¬ achieve stabilization.
war costs of perhaps $150 billion
$3.00. -■
•; /. •- OPS may or may not follow.
• ' '
'
•;
selves against loss through shrink¬
Now the OPS announces that in present purchasing power, cut¬
Farmand—Jubilee issue of the
most manufacturers
will be re¬ backs in civilian consumption by ing purchasing power:
Rutter & Co. to Admit
The farmer by his "parity."
t\ oldest business journal in Scandi- quested to roll their prices back perhaps 16-20%, a work-week of
Rutter
&
i Eiavia—Special international sec- to pre-Korean levels plus costs for 48 hours and manpower regula¬
Co.,. 20
Exchange
The
worker
by cost-of-living
<t. tion—"Farmand,"
Oslo, Norway.
direct materials and direct labor tion.
(escalator) and productivity Place, New York City, members
of
the
New
York
Stock
Exchange,,
The other—the Charles Wilson
(Manufacturers' Margin Ceiling).
clauses in his wage contract.
Internal Financial Stability in
will admit to partnership April
0
This may bring about inequi¬ Plan of a "plateau of prepared¬
The owner of real estate mort¬
Member Countries
Organization
2nd
Halsey S. Downer, Joseph O.
where
overhead costs and ness"—might mean an expendi¬ gages and the great mass of other
for European Economic Coopera¬ ties
of $150 billion in two
Rutter,
Richard Wallower andl
to debtors.
those for indirect labor have risen. ture

Cumulative

Voting

tors—Charles

Direc-

for

Williams—Har-

—

every

ceeded

...

J-

—

tion—Columbia
2960

University Press,

Broadway,

York

New

27,

in which this new mar¬

cases

three

then

and

years

relative

the standstill, a "plateau" from which
OPS to develop again the vigorous
Investment
&
Speculation
in proposes that no such increase progress of our civilian economy.
Convertible Bonds & P'referreds— may exceed 10% of the highest
IV
Sidney Fried—R. H. M. Associates, pre-Korean price or 5% of the
Controls and the Businessman
Dept. C, 220 Fifth Avenue, New "base period" ceiling price. But

■

gin figuring might increase
present ceiling price, the

N. Y.—Paper—$1.50.

t
c
v

»;York

1, N. Y.—$2.00 (or free derequest).

,b scriptive folder on

Navy and the Industrial Mobili¬

sation

War

World

II,

The—

Robert
H.
Connery,
Princeton
University Press, Princeton, N. J.
«^Cloth—$6.00.

there is

doubt that relief will

given where necessary. At the
of the old OPA many times

end

its. As

10,000 firms had received relief.
in more and

ber

This would' bring us,

controls

last war
killed neither enterprise
the

During

failures

prof¬

business

con¬

Stock

Market

—

Discusses

three

basic principles of correct investment procedure and outlines spe-

cific

plan of action for applying

these

■<

investment

individual

programs

basis—included with each copy is
a

current

analysis
stocks
and
43
trend graph,

strength

leading
primary

440

groups,
(...

basic

showing present actual trend of-

the

of 1%.

of living

that

element

other

The

increase

5%; at the retail
of 2Vz to 3%; in the cost

counter

week-to-week

mean

level

may

is wages.
regulations issued so far
have been a great disappointment
to
the
rank and file of labor.
help roll prices forward
The wage

Wages were at first frozen

1951—the general increase
of wages since Korea has certainly
alysis of the
been
smaller
than that of the
position — $1.00 — Dept. 4-A, In¬
vestors Research Company, Mih- price level. The concessions which
followed
in February—the
new
can Building, Santa Barbara, Calif.
"little steel" formula — allowed
y ;V
Rates of Return Class I Line- for a 10% wage increase over the
Haul
Railways
of the
United level of January, 1950 and left un¬
States 1921-1948—An Analysis and touched "fringe" benefits (health,
Appraisal Embodying a Compari¬ welfare and pension plans) and, up
son With Other Industries Regu¬
to June 30, 1951, already existing
the

market,

complete an¬
market's technical

and

Jan. 26,

you

lated and Unregulated—Sidney L.

"escalator"

Miller, Virgil D. Cover and Others
«—University of Pittsburgh Press,

clauses.

Pittsburgh, Pa.—Cloth.

The union leaders withdrew

Dealers

America"—1951

edition

North

placed by cost-plus thinking, the
more so if the new "back to preKorea"

policy of the OPS should

assume

real importance.

uses

Canada
•

—

the

United

Fabrikoid

States

—

Seibert & Co., Inc., 25

and

Herbert D.

Park Place,

New York 7, N. Y.—$10.00.
Toward

■■i*

Worker

Security:

the

"labor revolt." But it will pass.

will

result

The

for

coming con¬

ironing out "inequi¬

add another
the wage level.

etc.

The

some

the wage level.

I would estimate that

cessions

may

impact

the price level

Role of Management—Chamber of
Commerce of the United States,

should not be overrated. In Amer¬

Washington 6, D. C.—Paper—25c.

ican
a

Transportation Industries, The—
1889-1946—A

manufacturing

industries

one-fifth

of total costs.

Study

of
Output,
So, in spite of further increases
Productivity—
to be expected in farm prices and
Barger—National Bureau

Employment
Harold

whole, wages account for one-

fourth

and

the hopes of our Price
Research, Inc., 1819
Stabilizers, Johnston and DiSalle,
Broadway, New York 23, N. Y.—
may not be unfounded.
We may
Cloth—$4.00.
indeed reach a state of quasi-sta-

wages,

Economic

Statistical

Yearbook

1950—(1950 XVII 3)

—

1949-

Columbia

University Press, 2960 Broadway,
New York 27, N. Y.—Cloth—$6.00.

bility by

summer

The
The

have

who

must

Sullivan

With Bos worth,

Chronicle)

(Special to The Financial

yields of

protect themselves and their fam¬
ilies.

Co., 660 Seventeenth

who

and

DENVER,

mortgages,

depend

and those
life insurance to

Street.

1951.

Peace

Scare

COMPANY

RAILROAD

SUMMARY OF 19S0 ANNUAL

REPORT
i

Year

INCOME:

Increase

From

transportation of freight, passengers,

From

other

sources

—

1949

over

1950

•

V)'

$40$,541,896

*45,833,879

*411,228,558

*47,452,899

$360,550,650

*38,655,126

dividends,

interest,

1,619,030

probably not so much

installment

Total

LA-

income___

EXPENDITURES:

630,520

*306,191,473

*39,285,646

*15,037,080

*8,167,253

financing in¬

by banks and

loans

35,640,823

rents and miscellaneous services—

Interest,

sales but more so for

stitutions.

keep

Therefore,

credit

your

lines alive; advise your

clients and

friends

the

other

business

same.

Defense work will be given

facilities

financing

special

and

price

controls:

wage

"cost-plus"
thinking
needed,
for

also,
when
claims).
Prepare
reduction

(and
relief

devices,

labor-saving

number of pat¬

of the

terns, replacement of scarce ma¬
terials
and—rather
important—

all

areas

ness

management

raw

strategic

and

1949.

Operating
because

expenses

revenue-

changed fundamentally (and this
will not be affected by a peace
scare). Buying is becoming much
more difficult and much more im¬

portant than selling. The purchas¬

high pri¬

ority over the otherwise

caused industrial
839,922,583 more

1950

were

1949, due

$31,218,294 higher than in 1949

and increased

larger traffic volume

over

expenditures for main¬

tenance.

return

The

net

of the

investment

transportation

public

over

was

3.3H7o—an

property devoted
improvement of 0.61 points

Company in

1949.

improvements undertaken during 1950 included the new
Pier at Baltimore, Md., new double track tunnel on thebetween Grafton and Clarksburg, W. Va„
and Centralized
Traffic Control between Grafton and Parkersburg, W. Va„
174 addi¬
tional Diesel locomotive units, 13 new sleeping cars, 2 Diesel rail motor
Major

cars,

Ore

line

and 10 motor coaches were

acquired.

already

has

ing end is now getting

following outbreak of w*ar in Korea
result freight revenue was

As a
Passenger

increased 8362,611
largely to military personnel moving unsleeping cars.

main

materials, busi¬

scarce

Developments
than

Import

good labor relations.
other

other

production to rise.

Prepare all materials for the com¬

ing

improvements, sinking funds, and

For

and

done in the last war.

For

INCOME:

NET

easier depreciation terms; as

share
ferred stock November 20, 1950,
holders of record December 1,
declared on the Preferred stock
A

of $4.00

dividend

per

was

declared on the Company's Pre¬

payable December 22, 1950,
1350. 'It was the first full
for any year since 1931.

to stock¬

dividend

System interest-bearing debt, including equipment obli¬
reduced $6,275,063 during 1950, in the period 1941-1950

Outstanding
gations,

was

System debt was

reduced $32,118,763.

all-over¬
R. B. White,

ruling sales organization.
Importers, who are often

badly

happier turn, of events in needed for scarce materials, have
been too long left in the dark as
more hopeful views

Korea and the

AND OHIO

THE BALTIMORE

Credit controls are bound to be

tightened,

Colo. —J.
Wallace
Coxhead, Jr., has become asso¬
ciated with Bosworth, Sullivan Ss

bonds

tractors.

was

ties,"
The

dissatisfied.

greatly

from

concessions

time.

who

those

fixed incomes

and other
the free market are partly

government guarantees for your¬
selves and also for your subcon¬

Wage Stabili¬
zation Board. This has been called

plete directory of stock and bond

those

dollar,

secur¬

replaced by quota systems and by

also

com¬

been

of those who

hedging

Commodity

their

houses

"productivity"

and

members

"Security

saved

live

expense

dollar,

will have to study the new

authorities, their way of thinking
and acting.
Market thinking is partly re¬

Labor

own

have

sooner

would'
farm

areas,

omy"

times, maintain their

ity at the

All

Muller.

associated with the firm for some

11,000
mere 810

"cost-plus econ¬ in 1936-39 and 1941 to a
later to be fol¬ in 1945; while profits before taxes
lowed by a "relief economy."
nearly trebled between 1939 and
Some "Rollforwards"—Two ele¬ 1945 Mrid, even after deduction of
PDQ
Dividend Indicator—3x5
wartime
taxation, were
ments may roll the official prices heavy
pocket chart prefiguring returns
forward: Farm prices which have twice as high in 1945 as in 1939.
on
dividend paying stocks—$1.00
Controls do, however, introduce
not yet reached the "parity" level
—Thomas Pub. Co., Box 190, Banew rules and devices in business,
can continue to move upward. The
tavia, N. Y.
effect of this should, however, not' such as:
In addition to—and sometimes,
If all farm
Planning for Profits in the be. over-estimated.
instead of—studying the markets,
prices were to reach parity, it
more

ary

will, during inflation¬

about

declined from

cerns

nor

matter of fact, the num¬

Carl
All these

President

;,i i

(1254)

The Commercial and Financial Chronicle

Continued

from

page

Thursday, March 22, 1951

the following Prices has advanced 36% since
(4) Productive capacity for all
iast June. This extraordinary ad- types of goods has been enormousfl) ThaA we will not become vance reflects the wild scramble ly increased in the
past five years
^nUppH in an all-out war during by speculators and industrialists and is headed for another
gre^t
the next two vears
for raw materials. This Index con- expansion in 1951 and 1952. Inonly

course,

premises:

Inflation Impact Ended
On Stock Market
rment

effort.

This

ried with it

assurance

economy of
the country
have the benefit of rather

increased

expenditures

would
arms

which

would

wards

cushioning the anticipated

decline

long

ket

sharply

for

confident and enthusias-

same

tic attitude toward the stock

that

last

autumn.

to-

way

had

C(1,rp

duction
far

production for civilian
The Korean incident re-kindled
From that time, the
principal the manufacturer's demand for
question with respect to the busi- raw materials and the consumer s
ness
outlook,
the
inflationary appetite for durable goods. During
trend, and the international pros- July and August, there was spirpect as well, has been whether ited bidding for commodities
by
the
aggression in Korea would industry and feverish
buying of
spread and involve us in a
major household
equipment,
automowar.
Following the breakout from biles, etc., by individuals against
the Pusan perimeter
and, indeed, the possibility of later shortages,
until
late
November, there ap- The buying fever quited down in
peared to be a good chance that the autumn months
but broke out
the conflict would be
minor and again when the Chinese entered
localized.
Under
such
ciicum- the conflict.
believe

that

was

the

some

reason

economy

dise

people,

major

was

not

proportions

but

would

sizable

enough to underwrite a
continuation of the industrial and

business boom. The
investing public in general
appeared to look
upon the Korean
development as
of

one

into

series

which
the

over

not hurt

call for

call

would

badly, would

excess

the other incon-

full

Inferentially,

there

moderate

of the
atmosphere of the "sellers
markets" with its
companion piece
--rich corporation
earnings and

liberal dividends.

Part of the uri-

certainty regarding the extent of
our
active military
involvement

has been resolved in

into

the

Korean
our

War.

China

An
tax law has been

excess

considerable

restraints

posed

and

Price

controls

effect

and

have
in

are

have

controlled

materials

spite

these

investing

has

sugmay

they

values

They
with

have

the

not

fact

for

the

present

against

that

the

basis

what lies

some

ground-

measurement

economic
of

etc.

for

ago

and

preceding the
It also

affords

conjecture

ahead for

the economy

commodity

Such estimates

prices,

can

made,

Prod,

adj

Durable

Non-Durable

Dept. Store Sales Index
Mfg. Sales
Mfgr. New Orders.:.

All

Inventories

Money Supply (Mils,

Currency plus
Commercial

Mortgage

Spot
*

Prod.

Wholesale
Retail
4

BLS
Dow

180,000

13,904

18,120

+36.0%

4,342

4,595

5,280

+14.3%

______

10,890

11,667

13,478

.(Mils, of $)

*8,975

(Mils, of $)

t21,551

*9,960

$21,865

—

am ent

390.9

533.5

233

247

286

151.2

155.9

182.2

184.4

185.7

198.4

56.04

57.54

64.15

165.5

Averages—

r
'

Federal

Reserve

+36.0%

are

Bulletin.

j-4.

aggregate

starts

there

war,

will

not

months, consumers have anticipated future needs for durable

prices

upon

but

major hardships.
(6)
During
the
past

cannot

seven

goods to a great degree. This will
However, there is, as a result relieve later pressure, and the
strictures, bound to be payment of loans and instalment

these

•

IVi

Iivxm*, ovv 1JLV.I

vuv

ouo~

individuals

tcaac

170.2

6.8%

178.4

4.8%

223.46

255.10

+14.0%

54.72

88.65

+62.0%

2.57%

2.61%

2.66%

6.28%

6;17%

6.32%

months.

current

tax

ace

crea

1,1s

That

wars

are

inflationary

ment

creates

an.

arma-

unbalance

be-

the.

purcbasing power, known as
inflationary gap,> in o.her

annromnnf68Thp words, a shortage of goods; and
th^ percentage
nercentaee 01
of erSs (b) they cal1 for deficit financing,
sr(?ss

fact That

tne

•

n™

goods has been at

12<7

level

reSulting in permanent expansion
ot the money supply.

(5) That ownershiP of Pr0Perty

vs
o

and

common

stocks

affords

pro-

suggests st*onfflvnthat^individuaTs tection for caPital against the denhliS J»f
clining value of money.
antfrin^Ln
That earnings and dividends

hnv? hn.iJbtrpnnirprn^i $<j

higher nrices

tion

that

will

q,.L

shortages

fr0m Property

both

futoe

date

purchasinS

there

figures
ar

beliefs
.

this

^ertod

all

■

relatively

experience

but

ire ciarification:

ot^on so much as

gov-

actually

the

future

purchasing power
funds, but if prices have
been driven up sharply by invesr

of capital

tor demand before the feared in,flation takes place, the protection

may

apparent

than real

The 14% rise in the Dow Jones
Industrial Stock Average from the

rather high pre-Korean levels has
certainly anticipated

portion of

ihe inflation which lies ahead. To

$100

per

explicit, Standard Oil at
share-affords

less

prcf-

^ection than it did at $70 per share
-

ment

* Protection of the purchas0f

power

mcome

equities

must

by investbe meas¬

by setting the earnings and

earning

date

can
be charged wholly -ation after years of Price rises and
against non-government partici- -dollar cheapening does not please
pa ti on in the markets
However'- the electorate^ Congressional mail

although government spending has
been

direct

demand

factor
for

the

goods ' the

are
contemplated has led to inventory accumulation and forward

buying by all.

;

a dread of riod.
level The
during
the emergency pehigh
power

Commodity

present wculd

inflationary.
:

power stems from anticipation-, of

future needs. As such, they
not be considered

cam-

representing

is and has been heavily weighted la normal level. There is every ir^
with protests against price rises, dication- that corporation earning
Congressional leaders are definite-.power during 1950 was considerly impressed. '''Good politics"- at ably higher than can be expected
appear to be anti-

— •. ^

(3) The Administration has al-

ready sponsored and written

into

Markets

while the economy
under the burden of

operating
profits

excess

taxes» low profit margins on government contracts, and price con-

jaw one iarge tax
bill, and set up ^r°isimpact of this concentrated another for passage currently. The
Earnings to Decline
buying upon the sensitive presence of a national
emergency
Higher tax schedules now in
commodity markets has been se- makes extension of the tax burden force will reduce earnings by some
vere.
As
shown
in
the
table,<#a much smaller political hurdle 10% to 20% for the average corMoody's Index of Spot Commodity than is ordinarily the case.
poration. Under the Mills Plan,
.

The

months.

released.

are

-(9) TheoreticaUy, the ownership
of property or common stocks af.fords protection against shrinkagp

Although
an
LS bycuuslightly in excess of its
inflationary the past two or three years is, in
—o—
—
spending.
Furthermore,
on
balance-P°licy find& favor with the public -large part, the product,.of accu!—
there has been no resort to boi- .after a prolonged period of de- mulated needs arising out of thfe
rowing. Therefore, the rise in sales Passion or. deflation, its continu- war years. Present high earning

wave

trols

ured

the * country

a markedly
higher price level whenever con-

relatively

unprece-

activity, the

Principles
are

which would call for

(.1} The. Administration's atti- dividend levels prevailing at the
tude 011 flscal matters has Prob" time of .purchase against the proably not been based upon a love-spective earnings and dividend

in-

sh^w thit
of

wen_IOunded
^

government

power of one s income'

Offsetting
Th

least, this has th

sDc+dine

or equities rise as

the dollar declines and protect the

imnW'

Reaction

of Commerce Survey
months.

will

;tween sWPPJy of g°ods and (pub-

spending by

P+ rf

supply

money,

these-attitudes

because (a) manufacture of

That

continue.
■

a snarp rise

Persona^ incofmeri?l?
aTrpdit stan
sianapoi

increases.

^3^

vanishing point—-and

1S ln

from
ma

in-

sharply down-

months and have

knowledge that huge expenditures
•

54.31

from U. S.
Dept.

the

increased

+11.7%

200.20

recent

reached
.

frorn

have slanted

ward

not

+15.7%

+16.0%
-

•

of Current Business.

to restrain the

serve

been

•.

Stocks

ernment cash income has

$16,412
$16,101--'

Prices

figures not indicated otherwise

during

+15.5%.

Bonds

HSource:

the

facture will

dented sales and

•„

346.7

Industrials

All

The

4.4%

1926=100

Consumers

extensive

come

15.5%

172,400
13,359

Rails

200

173.030

(Moody)..

Employees

is. amount

one

any

period when personal
are diverted into the reduction of
debt to
uiueuL
iu
the
ne
detriment
ueuunciit

7.7%

1910-14=100

count,

be expected to stifle them entire-

+13.0%

59,119

Moody's Yields—
AA

51,186

Living Index—

Jones

+17.0%

195

49,588

1935-39= -100

Factory

268

181

(Mils, of $)
of $)—

Average Weekly Wage ip $—
Cost

220

231

+17.0%
+23.0%

Expendi-

this

price controls and the allocation
of materials into armament manu-pressure

say

of ihe past, a

Commodity

Fajm

195

176

+21.0%

Commodity Prices—
<

180

360

d^tr butg

draftTuoon

21,809
23,515

1!Treasury Cash Receipts

by another 5%. The imposition

records

wfcfJrhiuint*

case.

296

...—

ihe

always been the

18,649

<101

considered

time

same

of general traae.

203

293

banks)
banks)

from

19.097

tures—
Receipts
Expenditures

latest

16,083

<101

Credit

16,009

Loans

ule would of course be changed,
(5a) The volume of goods available for civilian consumption in

other words, the

6-1-50

2-1-51

6-1-50

of $)

Deposits

Credit

Instalment
4

■.

(Mils, of 8)

'-(Mils.

uuuuun

% change
..

Ind.

stand-

earnings

•

1-1-50

Index

$7 billion

any

bv
heavv dratts upon the
by heavy
tne savings

position

year

weeks

profits,

ness

maintained

work their way
through to the finished goods price

that the terrific rise in sales

following table

figures provides

In by way of industrial
activity, busi-

way.

would

; V?®Jri
production
and

asked

Trends in National
Economy

FRB

the

come

much, when,
kind, and how permanent,

some

developments, the

public

sense

Korean outbreak.

materials

its

that

work

plan regulating the flow of critical

Immedi-

achieved.

value

'show

and

inflation

concerned

our

im-

put

In any event, the
of

prospect,

been

new

production of

in terrific volume.

arms

inventory level of nearly $60 bil-

the questions of how

profits

been

*mP,hfsis
"p0" \he creation of
facilities for future

lion

over

months.

seven

the

evidence

people.

many

been

now

pqjt on the books,

Credit

6-8%VTh® e°st of livi?f' as

obsoleie

become

Rather they place

lfi*

with

material.

and

before needed.

what

weapons which could

accumulate

personal
ncome
some
squeeze on individual and' contracts will siphon off considerborrowing against the
businesg profits
>
in th* mnnthc
able hnvin*
buying power in
future.
The
the months
velocity
of
money ■bm
'proiUband merchant demand to build into come. :\FvV''r
''V.'
ventories. Bank credit rose alarm- turnover has risen by 25%. Com¬
Current Economic Premises
(7) The increased productive caingly, wage demands increased mercial bank loans have expanded
It
is
sinr*
probably a
last
Tun*
hv
anH
th*
J"
ct mistake to
w at- .pcniicy
parity will
win
yiuviuc
provide
picvi/y
uueiai
pretty
liberal;
and the public became
increasingV
oLiL
JinS tempt to draw hard and fast con- quantities of all but the most critr
ly aware of the mounting spec er
Iv annrnvima^iW
fhp Sp in fn" clusions from such a set of facts> ical materials for consumer as
of inflation which they in large
i loans
Li L"
fancies and emotions as currently. well as armament use within two
The ratio of
to
part were and are doing their best ventones.
the dollar value of all goods and prevail on the economic, political. years. .If for some reason war
to create.
an(j international scene. One susshould
OllUUIU
cease to
1
be an immediate
There can be little doubt that services produced by our ——
economy
pects tbat some 0f tbe convictions threat, such
is the highest since
capacity could become
the psychology of inflation—which
u
•
u, 1
beld widely now have been ar- burdensome.
' '■; means
different things to many
m^t credit has also risen by over rjved at because they provide a- (8) Deficit
financing in signifidifferent people — has played a 15 ,o during the period and mortcomforting
answer.
They
have
cant
amount
will
probably
be
major part in price movements of gage creaJt nas gainea oy ii/0. been
basecj consciously or uncon- avoided
unless war with Russia
stocks, commodities and real prop- Savings deposits, according to Fedsome
or
all of the develops.
eral Reserve figures, have shown sciousiy on
Economists, agree that
erty in recent months. Upon the
following premises:
it is
entirely possible to come
record, there can be some question
fnSn
That
ours is a spendthrift within
si
ce
last
June
and tne
striking distance of a budgr
as
to whether, in the hiinds of
casn-in^ 01 r Administration with little regard et balance without crippling the
many people, high profits, high savings bonds has exceeded sales.
for budget balance and a record of
economy.
If this should be the
Beyond this, the Federal Reserve
wages and dividends are nobsynonfigures measuring liquid savings jnfiati0nary policies.
casev then there will be no large
ymous with inflation.
Also, there
^2) That it has no stomach for and permanent increase in the
by
gest that fear
have obscured

and

under

only

has'been must eventually

goods than it has consumed

the wire," government buying to
build stockpiles and manufacturers

accelerated scale than
originally thought. Our losses
have been rather
heavy in men

wholesale

stockpile of

tempted to go along with ihe esti- much as was available in 1947 and
economy has produced during the mate
°* the Price Stabilization. 1948. Some lines will be shorter
last few months considerably more chief—that living costs may rise than
others, but unless Russia

impact
buying to get "under

consumer

itself

much

the

prices spurted

rearmament effort
much
larger and

will

advanced

retail

structure. It is apparent that there
wil1 bave to be some further rise the period which lies ahead,
aft^r
in living costs and retail prices allowance for the armament effort
before a stabilization area is. on the basis of present plans, will

amounling to well
in

burdensome.

manufacturing levels. Commodity

unpleasant

by the entry of Red

know that

demand

have

advance

whereas

mately 4.8%. Although there is a ate production will be for replacefair chance that numerous com- ment in the field, for training
modities may recede from present needs, and the rearmament of Eufantastic levels, some of the in- rope.. Should war with Russia
creases ih basic commodity prices come at an early date, this sched-

the production of goods

ards other than those current, an

Federal del;icits, upward pressure upon commodity prices and a continuation

way

public quickly translated itself in-

addition to business inventories

Prices

16.9%,

ured by the Bureau of Labor Statistics, has increased by approxi-

(not

neak

figures show that there

be-

the part of the

June

ail

This avid antici-

patory demand

last

all-time

have also risen to surpass
previous records
Despite this
the

all

never

thp

about

•

not

profits tax, for

impedimenta
be

not

resources,

very

war.

would

all

levels

now

':of

in this country has expanded by
13 <7 to a new all time high Sales

us
an

venient

would

our

price controls,
scale

actions

might lead us,

which

all

police

commitments

world

condition
upon

our

are

fore witnessed.

Trends

Economic

levels

hpinur

late 1948)

types of equipment and merchan-

this

country would not be too
severely
dislocated and that we could
plan
on
having both "guns and butter."
In other
words, the armament effort, as envisaged in the minds of
most

suspension

acUvitv
y'

The figures in the accompanying.
table show that from the high pro-.

sales

peaceful

Price Index has shown

use.

stances, there

involving

Post-Korea

Retail

settled

£JLmPnt

Rliv:nfr

Impact of Scare Buyi

rot

mar-

moderate amount of inflation
an exceedingly pleasant thing,

tains a good many commodities creased productive facilities prowhich do not figure importantly vide the best solution for an mm llving costs. Some of them are flation gap.
regarded as critical materials in
(5) Present plans do not call for
the war ef:°rt*
The Wholesale the early manufacture of a great

differ-

with the Soviet and satellites

will

means

the

car-

the promise that the

existing'serious

(2) That
ences

•

Volume 173

the

Number 4996

The Commercial and Financial Chronicle

...

speed-up in tax payments in¬
payment of five years'
during the next four years,

and

will

cash

outlay by corporations. Fur¬

call

for

additional

the

boom

and

eling out under contrals it is not
likely that, the large inventory

ment

boom,

profits ot ihe year 1950 will recur.
It is. estimated that as much as

mand for stocks may be as

10% of reported earnings in 1950

boom-time earnings and dividends

for

ther, with commodity prices lev¬

the

average

company

from inventory profits.
-Dividends
recorded

peak for

With

come.

arose

f.i;'

some

for

needs

capital increased and

permanent.of 10 units

the

response

much
of

inflation,

Perhaps this attitude is right, but
economic

our

time to
working

similar

with

The

outlays for
unlikely

fact

history

spotted

popular delusions,
that lower earnings

Education

protection

inroads

Branch3

dollars), half-eagles on March 11. He would have been
serving in that
and. quarter-eagles., Silver—Dol- 76 years of age in April. Accord- canacitv until January 1948 when
lars, half-dollars, quarter-dollars, ing
to
the
Newark
"Evening he was aDnointed to his present
dimes and half-dimes. This was News" he had been President of position as Director of
the first attempt of any nation to the bank since Jan, 14, 1944 and for the F&D and its affiliate the
adopt by law a bimetallic standard had
been
Vice-President
from American Bonding Company of
with free and unlimited coinage 1929 to 1944. He had been a direc- Baltimore
of both metals, each having full tor of the institution since it was
*
*
*
power as legal tender. Coinage of organized in 1909.
1
As of Feb 9 the Union National
silver was begun in 1794, and of
,
*
*
•
Bank of Charlotte, N. C., increased
gold in 1795.
its capital from $500,000 to $700,-

attraction

for

urge

the

against

present pre-arma-

are

This suggests that the de-

nature.

doubtless

1950

and

!,i
*
*
.Rutherford Hubbard has been
elected to the Board of Trustees of
the Broadway Savings Bank of
New York it is announced by
Thomas Riggs Cox, President of
.loans to finance them, the physi- the bank. Mr. Hubbard Js Vice-

probably dividends too are in
that dividend policy will be liber¬ .prospect for an indefinite period.
alized. The regular dividend rates Temporarily at least, in the presof most
major companies seem ence of increasing tax and credit
reasonably secure, but a duplica¬ structures as well as high invention of the rich extra dividends of tories' and
over-expanded
bank
expansion

rising,

late

1950

is not

reasonable

ex¬

pectancy.^
;In conclusion, one may say that
although
inflationary, fears, and
speculations have been dominant
...

the

price movements

SaSsfeaxuftaes
ssrtSlsss News About Banks and Bankers - SatS
t0 Ues Mo*nes a™ in marcn, luau

volves the
taxes

(1255)

cal

setting

tionary

even

Should

otherwise.
rholoev

com¬

cool

and
ana

come
come,

somewhat defla-- Presidentjand Secretary of
if emotionally it is Bowm^f^ Forshay, Inc.

inflation
the

The
the

inter
inter*-

r»i

banks

Through

$125,000

the

stock,

new

the Union National Bank of Pasa-

stock

dividend

Market

Street

Na-

dena, Calif., has raised its
from $300,000 to

capital

$400,000, the en-

tional Bank of Shamoken, Pa., in- larged amount having been made

-«P1-ailSthf
Marine Midland

($50,000)

*
*

Byrne,

psy-

month*

mightif
might *11

it
it

Under date of Feb. 13 the Upper ftnft A. rpq1]ltiJf- f' m +he sale
Darby National Bank, of Upper
f
nf np!, ctnrk
Darby, Pa., increased its capital
'
to the extent of $62,500 by a stock
Through a stock dividend of
dividend, raising it from $687,500
$50,000, and the sale of a like
to $750,000.
,
V
amount

°fwestern
Se+Ven fr0m
creased
its capital as of Feb' 15 effective Feb. 21.
$125,000 to $250,000.

modities, real property and com¬ national situation grows no more New York were announced on
Af
+upir
QrmilQi
meeting
nn
With Investors Div.
stocks during the past seven acute, there could readily develop
vMarch 13 by President Charles
l4
ofthe
(Special to The Financial Chronicle)
months, and are sail - a potent a more considered attitude toward h. Diefendorf of the Marine Mid- Jr.
srocKnoiaers or xne
force, there is statistical ground common stock values.
^
land Corporation at Buffalo N Y
L ! y
OAKLAND- Calif. — Fenwick
f<?r believing that the inflation has
The
ine toregoing
foregoing analysis
analysis aoes
does not
not it
it was notea
noted in
Buffalo' "Eve'in the
tne tfunaio
uveu
t directors>
The latter Smith has joined the staff of Inbeen self-induced and that the po¬
provide a, reason for disturbing nmg News
of March 13, from subsequently
cllVJL110Mfl,, re-elected all
Qn .Mho
of the vestors Diversified Services, Inc*
tential inflation may have been
long-term investment positions in which we also quote:
over-estimated.' The rise in prices
well
selected ;•common
stocks.
"Under the plan, the Power CRy ^iti™
He was formerly with Renault &
and
in
industrial
activity ^ and Neither does it seek 4o- obscure Trust-Company of Niagara Falls,
A
Siv Mutant Co. and Davies & Mejia.
mon

M^ch

stockholder^

Company of
Maryland' ot Baltimore' re-elected

sales
the

since

last

product

but

have

beem

scarcity

which

might have been and still

County National Bank &
Trust Company of Lockport, First

are'in

evidence.j it does point up

Trust-' 'Company

minimize :the inflationary forces^ Niagara

gti
.

Tonawanda,

193Q

has

Gardner

' with

connected

and

Hill Richards Adds

F&D

the

(special to tke financial chronicle)

have consumed and

;of,

produced

scarcity* We
in the aggregate

not

fears:

than

June-has

„

the surplus has found its way

ino

'^^^briU^since^U^^une6has Tonawanda*^mriS^la^T?S Assistant Manager of its

business warehouse stockpiles and
reserves where it will be available

disOTunSd

much

^oo
near

dol

more
™

Albion

Companv

lib-pLmnv

Medina

and

urin

agency
LOS ANGELES, Calif—Edward
dePartmen*. Pri<>r to his appoint- T. Cronin, Russell C. Crozier, Paul
ment to the latter position in H. Desbrow, Raleigh F. Lewis, and
July> 1950> he had been ManaSer Chas. M. Montgomery have been

tm
Wn
Trii«f
Priceto t he TWarinA
eT
p
y
0f the company's branch office in added to the staff of Hill, Richindus- Buffalo. y.Svrarme N Y He also was asso- ards & Co
621
South Spring
To finance this wave of antici¬
trial stocks are no longer unsualiy
"The name of the latter will be
was asso
a
•
•
a
-a
i
s
Tvrari.,^
n*™
ciated with the company's branch Street, members of the Los Angepatory demand, savings have been i
and m many individual cases c anS
reduced and borrowing has rock¬
vrp
v"k Th~ in Detroit from 1945 to 1948. Mr. les and San Francisco Stock Exarc
high. Yields are liberal but pany of Western New York. The R „
joined the F&D in Novem. changes.
eted
thereby creating a charge are more
likely to decline than other
six
banks
will
become
J J
against future income.
Such
a
rise from this point. These facts branch offices of Marine Trust.
charge will reduce the size of ex¬ do not
provide a very strong back«Mr. Diefendorf stressed the in- Continued jrom page 5
> .
pendable- personal funds in the
ground for further rises in price creased facilities available to defuture and serve to diminish de¬
and suggest the distinct possibility positors of any of the 51 offices
mand.
Should
inflationary psy¬ of a reaction. It does not appear
110W operated by the seven banks,
chology cool, the materials and to be the time for the
average in- He
pointed out that the comgoods * purchased
on
borrowed
veslor to expand, stock
holdings. bined capital, surplus and undifundi for inventory will be bur¬
Buying reserves will probably en- vided profits on Feb. 28 were
mill buyer and holder, a radical change to an atmosphere of

for future

consumption.

see

the

future.

earnings ratios for average

ards & Lo" b21- bout-ft

byracuse'N'Y* He als0

Observations...

densome.
In

aggregate, the govern¬
has not contributed materi¬

urably-and,
not

been

balance,

borrower.

has

come

American

Hospital
Supply Stock Offered

has

Whatever

money

sup¬

barring

more,

in bank loans.

rise

good

ury's

all-out

securities

Further¬

borrowing throughout
the rearmament period may not
be large.
If the Federal budget
on

net

cash

basis

$4 milliomt>f balance

deficits

financed

are

months

has

now

ive.

beginning

Price^ control

established
the

war

some

to
^

shows
years such

years

that

for

restraints

prices'well in check. As a
matter of fact, price controls have
held

been in effect for four weeks now

in that time, there has been
advance in the sensitive com¬

and,
no

modity

index

"futures"

and

prices

Market

Reaction

Emotion appears to have played

a'large

part

demand

for

of - the
provide

in the public's avid
stocks just

it has

Jamestown,

Jamestown, N. Y., now has a cap-

consisting

$1,000,000,

of
$6.66% each. Before the enlarge150,000 shares of the par value

the

corporation

and

offering

HouIton Trust company of

The company HouKon> Maine, now in its. 46th
25,000 shares of
year_ has joined the Federal Re_
certain of its emr serve System, bringing to 326 the

stock to

Fifst (Boston) District.

'"'v

ment

plan.

•

zation

Ross G. Wheaton Joins

direct

Bache in Kansas City
(Special to The Financial Chronicle)

'KANSAS

CITY,

has

with Bache
Avenue.

ties

associated

with

formerly

was

Co.

for

many

King

now

Merritt

—

in serving the

customers, said

the

Executive

of the

institution,

Joy,

• recejve

the

Federal

banks

Reserve

includes

all

made
the

District,

New

The Status of E,

53 %

.Melvin H.

the

Citizens

National

Bank

Trust Co. of Caldwell, N. J.,

died-

offset should be particularly

penalty to pre-maturity cashers-in, but in the case of the Savings
Bonds the discount is fixed and known at all times, while in the
new

2%'s it is uncertain (despite

the now widely assumed loss of

out"
unlike the E's, give
if the limitation to
a 2-point penalty on the new 2%'s is assumed.
But this limitation
to 2 points discount on the new "liquidating" short-term openmarket issue is a wholly unreliable premise. Further discouraging m
abandonment of the Savings Bond issues are the many other im,ponderables entering into the comparison, surely involve complex- ;
ities far outside the understanding of the 50-80 millions of Savings
Bond buyers running the gamut from chiropodist to nurse girl.
To other holders or prospective buyers of fixed-interest in- ,7
vestments, as savings bank accounts and corporation bonds, as
well as preferred stocks, the removal of stability and liquidity at
a fixed
price through the unpegging, also, offsets the advantage
conferred by the new issue's higher yield, and leaves the competi:
constant and

points from the sale of the "in and

exact 2

5-year notes). It is true that the F's and G's,
a lower yield over their term
(of 12 years)

tive situation unchanged.

Impact

the Stock Market

question of possible impact on the market for common
stocks, so many factors are more important than the competition
from a rise in Government Bond yield of %% or so, as to render

On the

inconsequential. Surely such elements as expectations
earnings, inventories, war-and-peace prospects, inflation-and-deflation, and New York State's prospective eligibilizing

it wholly

about taxes,

equities for life insurance

competition from

companies, will far outweigh the

bond-yield rise of 1/4%-coupled-with-price-

the value and market price

unstabilization, as

determinants of

equity shares.
And

the effect

the increased bond yield on other

competing with common
large mutual life

down the line

the

at 2.87%.

Even a pre-tax yield rise

saver-investor

now

conclusion

enjoying

Industrial Average.

must be that if the Federal-Treasury

at all on

"new

victory," as thus far evidenced,
competing media in the market, they will

policy," "truce," or "hard-money

stem purely

of V4%

result in little attraction
6.42% from the leaaing

of all its investments, would

stocks in the Dow Jones

has any effect

media

negligible. A
has just reported its 1950

stocks will likewise be

insurance company

investment income

Our

Courter, President of

F, and G Bonds

influential in discouraging
switches by prospective Series E. F, and G Savings Bondholders.
Both the new 2%'s and the Savings Bonds presumably entail a
This

Eng¬

County,

uncertainty off¬

fixed price.

Conn.

Thomas L.

Inc.,

Fairfield

except

eligible

privileges

other

has replaced the^ confident reliance

In summary, the accompanying
sets the slightly higher yield advantage.
*

to
„■

with

Co.,

to its strength, facili¬

resources

of Houlton

available

gains

and

Houlton bank is now

land

associated

West Huron Street.

access

Vice-President

which

With King Merritt
'PONTIAC, Mich.

nation

the

Edward

First

;■■■'

Salaske

and

needs

1000 Baltimore

Harris,' Upham
yeais'

Mo.—Ross

become

Through

the bank joins forces

action

with the central banking organi¬

Wheaton

tVis

(Special to The Financial Chronicle)

Probable

Bank

The

paid fot?under an instalment pay-

the indices of
have shown a

rpoderate decline.

Federal regulatory bodies,

are

confusion

uncertainty and
on

The plans are subject to the
stockholders and the State and

number of member banks in the

effect¬

record

(Inc.)

Corp.

;York.

ployees at $20.25 per share, to be

are

has ..been

the

four

also

common

ftom out industrial production by
the fourth quarter of this year.

autumn

corporate purposes

occurred

buying is almost as
large as the 16% bite which-re¬
armament
is
expected
to
take

and

Co.

subsidiaries, and supply funds for

ticipatory

summer

Securities

proceeds from the sale, rep-

facilities

and

;The credit restrictions imposed

Company of Western New York as
of the 40 largest among the

one

corporation's ment on Jan. 15, the capital was
estimated $660,000
consisting
of
132,000
$500,000 for expansion of physical shares, par, $5 each,

since last June in response-to an¬

last

the

with

of the underwriting.

business,

not grow appreciably wider.
The- 13%
increase in industrial

which

jsjiares of common
value, at $22 per

Harris, Hall &

Union

expansion

may

production

the

l^senting new financing, will ap- ital

velopment, has actually been with
number

par

March

ply to the retirorrient of $1,600,000
of bank loans, incurred to finance

with apprehension as a future de¬

Net

non-

deposit
volume
would
proposed Marine Trust

"This
rank

than 14,000 commercial
banks m the U. S. It would be the
111., largest in the state outside New

public distribution of

150,000

managers

which has been generally - viewed

for

and

bank sources, there need be no
significant Jrrcrease in the .money
supply. In shocMhe inflation gap

made

sale

share.

$3
and the

from

was

stock,

within

comes

$535,918,382.

by The American Hos-

pital Supply Corp., Evanston,

there
the Treas¬
war,

prospect that

first

The

ply has been the direct result of
the

for $35,970,237, deposits totaled $484.456,540 and the combined assets
were

meas¬

opportunities

use.

ally to this increased demand. Its
expenditures have not risen

increase

better

counter

the

ment

from psychological roots!

(1256)

The Commercial and Financial Chronicle

Continued

from

page

deposits

Commercial Banking

Today

science

that

twinge

con¬

have un¬
part, no
matter how small,
in what has
been
going
on.
In
June,
the
Wholesale Commodity Price In¬

wittingly

might

played

some

(3)

relation

loans

The

relation of

loans

this

put
is

This

funds?
Since the picture of bank earn¬

Not

against

the

measured

This

put

figure

for

about 18%,

was

another

substantial

1950

similar

1949, the growth
If

dollars.

current

indication

disparity

the

which

has

been developing between produc¬
tion and prices.

; i

Let

Sum

covered before
second of

will

our

concern

the

ground

proceed to the

four questions. That
itself with precisely

what is meant when it is said that
0. bank is

"loaned up." When com¬
mercial banks make loans or buy

bonds,
tions,

with

unimportant

they

recipients

create

excep¬

deposits. The
new
deposits

these

Spend them. Since last June,
mercial bank

loans

com¬

in the United

Btates have increased

$9 bil¬

over

lion—about 20%. Physical pro¬
duction has grown by around 10%.
Wholesale prices have moved

by about 16J/2%. Each of
liberty to draw his own
sions

is at

conclu¬

to whether this

$9 billion
of added spending power has gone
only into increased production or

Whether, in part, it has been
of

the

sures

great many
on prices.

upward

one

pres¬

When; Is

others

outside

Having disposed of our first
question, let us now take up the
second

one.

Precisely

what

meant when it is said that

such

means, of course,
bank has no excess

reserves.

Furthermore,

means

that management either cannot
or,
what
is more1 likely,
does not
it
judicious to
generate

deem

fresh

Under

reserves.

conditions

today, the banking system is able
to increase

its

own

its

will.

almost

reserves

For

any

institution

to determine the wisdom of
doing
co under a
given set of circum-

ctances,

entirely different
matter. Without boring you with
the detail, suffice it to
say that

the

How

present position of the

com¬

JReserve Banks warrants the con¬
clusion that about $40 billion of
additional

On June

than

could

reserves

banks'

occur.

cufficient

such expansion in
private credit is apt

did

not

exercise

self-restraint,

super¬

visory and/or central banking au¬
thorities would and should step
in.
We can take it for
granted that
the ability of the System to multi¬
ply reserves is practically with¬
out limit at this time.
Now let

consider

management

the
of

when

problem
any

the

specific

in-

with the necessity for

tial adjustment in its

confronted
a

substan¬

reserve

two

little

the

commercial

risk

asests

just under five times capital
—4.9
to
be
exact.
Today the
figure stands not far away from
6 to 1. The high point for this ratio
were

the last 50 years was 6.2

over

1920. In 1929 it

the

upgrade here too.

begin

cutting

prices.

addition

the

there

course,

strong

This

other

volume

truth

are

influences

bank

not blind

must

part which

play in

the process.
The

down

spokesmen

many

feel

seem

goals

with

substantial

attained

They

cern

utmost

one

the

con¬

United

friends

our

price

country
business

its

production

our

the

our

are

every

States and to
If

and

determine

health.

abroad.

high

not

enough and if it is not strate¬
gically balanced, we and our allies
be in

could
the

precarious position.
goals in this direc¬

proper

are

achieved only at a grossly

inflated

price level, the ultimate
know

disastrous.

prices,

now

will

measured

have about

1939
a

cent dollar. We do not want to

It is

coddled

us—that

level,

whole

because

and

order

living

arbitrary
prepare to defend
of life? Which is

way

important

us—that

continue

get

ticular

cut

beef

you

the

par¬

which

become accustomed, or that
people in service are fully and
completely provided for? Their
the

best

being disrupted.
At worst, many will be shattered
are

lost. What of it if

living is reduced?
The

is to

second

owe

to it that

see

everything
to

within

maintain

the

play

times, is that
tant

tend

Let

also

endeavor

daily.

that

remember

some

It may be argued soundly that
supervisory authorities and the

the credit-creating mechanism, we

The

public

must

will again be civilians. What kind
of a dollar do we want them to

have

much

come

attach

too

significance

these

two

relationships. This may be true,
clearly it is the quality of the

for

risk asset portfolio which is of
prime importance. Since the pub¬
lic (that is, those who watch the

figures)

have

cannot

access

sufficient information to make
up
its own mind on this
score,

judgment

agement's

influenced

its

some

the bank's published
Whatever bank man¬

judgment may be,
cognizant of this pub¬

own

it must be
lic opinion.

There

part intelligently in operating

our

understand

works.

theory,

two ways for a bank,

improve

either

these ratios. In the first
one, keep
loans down and, at the same

time,
keep deposits up. This is a tough
enough trick for any individual

banks.

solution

The

not

With respect to the risk-assets-

have

for

gone

How

proper? Would
been

better

production

For

reasons

raising additional

here,
banking

equitable basis is not

Broadly, when

man¬

agement decides it wishes to
its

risk-asset

recourse

but

loans. Those of
line"

may

are
or

de¬

ratio, it has

reduce

"on

the

not like this,

larly if we
departmental

not

discussion

particu¬

responsible for
branch earnings.

On the other
hand, what else is
there for management to do?
Let's tie together the
answers
to

our

second question. A bank is

"loaned

up" when

short

else.

his

posi¬ such

limitations

expansion

are

put on
by the loans-to-

country

free

must live with

custodianship

Bank's

ex¬

over

our

for

Obligations
fourth

our

ligations and what
course

owe

run

course

and

final
ob¬

they?

damned

will.

shouldn't.

The

expected

our

per¬

borrower
know

tell them

that they understand, the vast
majority of our citizens will want

to cooperate

with—not to impede
us

resolve to fulfill

intellectual

our

integrity

minds

our

that

the

mention of them suffices.

mere

Today we have three other sets
obligations. The first of these

is to the
now

men

women

who

are

part in

it to them to do

owe

This

it, when they need it. Credit will

channels

those

our

part of this job.

responsibility to

who

made

can

produce

needed. Bank loans for

during

poses

reached
This

what
war

World

peak

includes

loans

see

available

$3Y2

essential
creased

War

billion.

made

both

will

enjoy—

terse summary of

Uncle

was

nieces; and looking on, over
shoulder,
was
Uncle
Joe
smugly puffing on his underslung
pipe. The captions:
My Country 'tis of Me

For Me I Sing.
Let

our

proving

that picture to be untrue. Let us
do our part regardless of whether
not

ance

be.

feel

that the perform¬
is what it should

others

Let

us
by thought, by word,
by deed, live the hymn that

and

has made

country truly great:

our

My Country 'tis of Thee
Sweet Land of

Liberty

Of Thee I Sing.

;

"'vvr\''

Adams-Fastnow Adds
(Special

LOS

to The

Financial Chronicle)

ANGELES,

Little

has

been

Calif.—Waldo
added

the

staff of Adams-Fastnow

Company,
215 West Seventh Street, members
of
the
Los
Angeles Stock Ex¬
change.

With

Barbour, Smith

LOS ANGELES,
H.

Wilson

now

Calif.—Donald
affiliated

with

Barbour, Smith & Company, 621
South Flower Street,

members of

the Los Angeles Stock Exchange,

With Quincy Cass
(Special to The Financial Chronicle)

LOS ANGELES, Calif.—Noel G.
LeMay has become connected with

Quincy Cass Associates, 523 West
Sixth Street, members of the Los
Angeles Stock Exchange.

Edgerton, Wykoff Adds
"

(Special to The Financial Chronicle)

LOS
ton

ANGELES, Calif.—AtherMessmore
are

now

and

Patrick

associated

with

Edgerton,
Wykoff
&
Co.,
618
South Spring Street, members of
Los Angeles Stock Exchange.

the

Mr.

Messmore

with Fewel & Co.

was

previously

Mr. Sheedy was

with Dean Witter & Co.

increase in spend¬

Fewel Adds to Staff

■

additon

tends

in¬

constructive.

are

channels

price

(Special to The Financial Chronicle)

level

and/or

non¬

in¬

LOS ANGELES, Calif.—William
Earle has been added to the

staff

of Fewel & Co., 453 South
Spring Street, members of the Los
Angeles Stock Exchange.

is harmful.

Joins Oscar F. Kraft

(5)

Of the $9 billion of added
since Korea, some appre¬
ciable part has undoubtedly in¬
loans

creased

other

sures.
,

in and out of the

the

questions—an

(4) Increased production in

pur¬

corner

shaking his head sadly at
performance of his nephews

Sheedy

production and/or prices.
(3) During this emergency, in¬
in production in essential

creases

cartoonist's observa¬

crease

providing them with

required

tell

power.

(2)

Increases commercial bank

loans create

ing

discussion?

(1)

resolve

your

I present

may

what they need, where they need
be

experience which

who will be in the armed

services. We
our

and

Let

fire

cross

our

the

brim,

None- of

his

the

borrower.

grained

Sam

the

obligation

him the truth, as we see it.
Before I am submitted to

the
obligation
to
husband and enhance their capi¬
tal.
These
thoughts are so in¬

cigar,

the picture,
the group,

resolve not to

sonnel the

stockholders

long

"Housewives."

escaped

in such
situations to the government. Let
us

and

were

member

tion. Off in the

responsibility

bank.

obligation to run a fair
And, of course, we owe our

the

suit * represented
With 'traditional

market basket heaped to the

I don't

know

functioning of our banking and
monetary systems. We can, be. We
have the obligation of understand¬
ing it so well that we can explain
to
a
"layman" in nontechnical
language the implications of what

pass

owe

safe

are

way.

average

safe bank. Of

constructive

final

was

government

it that

can

double-breasted,

vest

"Politicians"

"Farmers."

(Special to The Financial Chronicle)

—the nation. Let

checked
The

regulation."
We

figure
in - the
keenly pressed
"Management."

decline the loan,
shoulders, and blame it

our

depositors the

community the

tag

can

"another

asked

not in the national

are

he proposes to do. If

owe

are

our

course we owe our

that

almost limitless amounts.

shrug

ob¬

ourselves, if to

man

question. To whom do

been

thoughts.

ated

have

conscience. The state

own

ercises

Practical

increased

but which

loans which

interest. We

cannot

answer

gener¬

the

The

the

will

and

many

must

The position -today of
commercial banks and of the
Federal Reserve System is such
that fresh reserves can be
reserves.

the

country have

could

im¬

car¬

ried

we owe

been

believe

its

firing

the

third, with pitchfork in hand,

intellectual

by shifting credit instead of
increasing it? These questions we

bank. Of

our

for

pur¬

tained

ernments,
or
capital stock.
to

proper

our

off

obligation

germane

the

much

and/or securities, other than gov¬
more

loans and how much of mine

your

obligation to

selling

un¬

place. How much

to-capitai ratio, this may be bet¬
tered
either by reducing loans
by

has

nanciers." A second wearing over¬
alls
was
called
"Labor."
The

-r'.-.:-\

Lastly

sextette

singing
obviously false note. One
in
striped pants and
morning coat was labeled "Fi¬

interrupted

make

Now

of Raising Additional
Banking Capital

lives?

their

have

taken

want.

Question

pick

literate maga¬

was a

back to when those who can,

again

have

latter, clearly, is

ease.

service

rises, which might not otherwise

this

doubtedly helped our country to
vitally needed produc¬

people, each

one

come

women

tion. Some of it has undoubtedly
hurt our country through price

increase

one

cial

through

and

the obligation of
integrity to would-be
borrowers. Our citizens, with few
exceptions, want to do the right
thing, especially when the coun¬
try needs their help. You and I

Some

power.

system

banking
whole, generally, it is
impossible ' — that is, without
deficit financing by the Federal
government through the commer¬

think

$9 billion of added spending

some

bank to perform. For the
as a

thoroughly how

must

to the probable end results of our
day-by-day decisions. Since Korea,
we
have,
between
us,
created

poses?

are

day the world tension will
men

our

character

forget, at
play an impor¬

part in this

zines. There

familiar to warrant repe¬

What

long ago, I saw a cartoon

one

our

value

are

too

"V Loan" pro¬ V

„

and

obligation

responsibility is to
we

power

standard

our

civilian population. This

our

Not

have

lives at

rowers.

some

see

discuss

that

important

standard of

our

faces

country

our

maintained

tition.

important that

when

danger? Which is

the dollar. The arguments for this

questions and keep abreast

them

living. Since when do citizens

50-

cheapened further.

these

the
pro¬

present standard

our

ones:

available

(b) To do our part in stabil¬
izing the value of the dollar.

inter¬

continuing

our

make

duction.

civilian

have,

\ credit needed for defense

$55

necessary to voice. They tell us
that we can achieve our defense

our

production

level

(a)

part, I am getting fed
the
assurances
which

with

signifi¬

determining the level

in addition to

loans?
For

de¬

(7) All of these facts point

added volume of

top of the present

the

halt to loan

three obligations which

of these United States need to be

5.6'. The trend

was

wise

tion and in

consequences

30,

suggest

expansion.

de¬

for

sums

certain.

ratios

sirability of calling

ference with

terest.

June

called

determining the
amount and the nature of produc¬

the

one

to-capital

again

billion outstanding, or should

and

tion

crease

field

factors

cant

Developments in the risk-assetto-capital ratio are of intense in¬

easy.

X know that

mine—is

not go.

always

and

these

upwards. There is some point
beyond which management will

creased bank deposits. The
present
volume is about $150 billion.
you

deposits were offset
by loans. Today, this figure stands
at close to 40%. The trend is still

on an

etitution

treas¬

total

capital

As practical bankers,

look

30, 1950,

30%

today

are

largely

support about $275 billion of in¬

bank

Corporate

brought into being. At present re¬
quirements, these reserves would

the

respects?

mercial banks and of the Federal

credit.

Technically it

that

discuss

Whether
on

create—you in your field and

relationships.

com¬

mercial bank is "loaned
up"?

that

clear. It

substantial

credit

subjects

the volume of credit which

many

statements.

Bank "Loaned Up"?

important

keenly interested in the loans-todeposits and risk-asset-to-capital

degree
,

will not

only bank management but

1949, if measured in constant dol¬
lars. When the annual rate for the
quarter

should

answer

to mention but one group,
gross national product
keep close tabs on banking figures
by some *71/2%
over —specific as well as general.

increased

fourth

plus

urers,

1950

our

will

superimpose

keep abreast of them? If we
have laid our foundation soundly,

keep abreast of these matters be¬

splurge of
about 16y2% in eight months. This
ks really moving rapidly inj the
wrong direction. Mention has al¬
ready been made of the fact that

discuss these

available.

credit

supply such amounts, it is too
early to say.

and

cause

attempt to discuss it here.

183.

and

you

fense

(so-called "risk" assets) to capital

able

information

billion

will be called

Tnat

securities other than governments

ings is another story,

not

Our third and penultimate ques¬
tion is: why is it important that

the

dex stood at 157. The latest avail¬
robust

furnish

(1) What will be the effect
earnings?

have

commitments

sharply since last June

are

$4y2

Thursday, March 22, 1951

tional
welfare,
sharply
rising
loans-to-deposits and risk-assets-

at the crest, an

was,

moved

Influence of Volume of Credit

fellow—have done quite a job of
fouying since Korea.
It is when we look specifically

(2)
The
deposits?

There

grams.

its ratios is to reduce its loans.

tion. Management must keep three
basic factors in mind:

could

risk-asset-to-

historically high levels.
Substantially, the only feasible
way for any institution to improve

fis due to the price level. The pub¬
lic —- you and I and the other

lus

the

additional

and

Problems

Gt the price situation that some of

and

capital ratios. Both of these have

inflationary

<Special to The Financial Chronicle)

LOS

pres¬

(6) Wholly apart from the

na¬

ANGELES, Calif.—Charles

Dager is with Oscar F.* Kraft

Co., 530 West Sixth Street.

Volume 173

Number 4996

The Commercial and Financial Chronicle

(1257)

ratio is

stead of

higher than for most integrated holding companies, which
an investment angle.

is of interest from

Public

By OWEN ELY

payout 68%.

Credit Expansion
If

Middle

$1.89

South

the

operation, and
of

slightly

and

11%

Utilities

$1.27

transit.

The

expansion continues,,
it now does contra-seasonally,
raising the volume of bank de¬
posits at the annual rate of $3
billion or more, the banks' tail

has

company

transit
The four

disposed

(extensive rural

areas in

one
a

Mississippi, Arkansas and Louisiana.

Principal agricultural products in the area are cotton, sugar
rice, tung nuts, soy beans, fruits and vegetables.
There
are
also livestock, poultry and dairy cattle, as well as timber
-.lands.
In addition to extensive natural gas and oil reserves,

mineral resources include coal, lignite, sulphur, salt, bauxite,
limestone, mercury, lead, zinc, manganese, marble, silica, dolomite
and ceramic clays.

Among the principal industries served by the system are
building materials, cold storage and packing plants, cotton gins,
cotton oil milling and refining,
pipe-lines, pulp and paper plants,
food and food products, oil drilling, pumping and refining, textile
mills, mining and alumina processing.

There

also important defense

South

•

are

Utilities

has

contract

sell

also

;

1,000,000 workers whose con-

power.

tracts include the escalator clause

posed

Motors'

General

011

those

consumer

the

may

be expected

direct control front

tate the

the

companies

now

composing the Middle South

System is indicated by the following pro forma figures in millions
of dollars:
x

' X

•

Net from
Operations

$100.3

$18.5

$11.6

96.4

17.5

10.7

89.8

15.4

1950__.
1949

1948

fL X

Parent Co. Equity
in Net Income

Revenues

Year

and IMal-allocations

1947____

78.6

1946

70.9

it should be if the root of the

ySuch statistics of growth, together with the aluminum load
and requirements of the atomic energy establishments, explain
why Middle South's current KWH sales are running about 34%
over last year compared with
about 16% for all utilities. They
also explain the reason for the tremendous expansion program
of Middle South facilities.
According to present plans system
capacity by the end of 1953 will have increased to
of which only 28% was in service in 1946.
Based

the current outlook, President

i Middle South
the

offset

can

increase

Dixon estimates that

make enough additional earnings in 1951 to
in the Federal tax rate from 42% to 47%.

After adjustment for the increased

1,700,000 KW,

number of shares this would
$1.30 for the parent

consolidated earnings of about $1.75, and

mean

However, the first two months have been running
the budgeted estimates and if these gains continue,
could probably absorb a 50% Federal tax rate with¬
out any reduction in the $1.75 forecast.
Since every 1% change
in the tax rate means about 4 cents on the stock, this would
mean that the
company's pre-tax earnings would be higher by
an
amount equivalent to 32c a share.
Even if Congress should
follow the Administration's recommendation and make the tax

company.
better

rate

55%

that

the

1951*, President Dixon is confident
dividend rate could be maintained. The current

the

for

$1.20

full

year

approximately
$8 million, will furnish construction capital to Arkansas Power &
Light. The system construction program. will cost an estimated
-$48 million this year and $51 million in 1952. New money needs
will approximate $25 million for this year, and next year may
be somewhat larger. The remaining $17 million for 1951 will be
/ raised by selling senior issues of the subsidiaries. The parent
company might again issue some common stock next year, but
the amount would probably not exceed the present moderate
"'.amount which represents an increase of only 8% in the number
stock

offering,

which

may

yield

the

company

•

[

shares.

the

Subsidiaries:
Debt
/1
v.-

proceeds of the current sale
system capitalization would be approximately as
estimated

Including

——-

Preferred

Stocks

Minority Interest

of stock,
follows:

Millions Percentage
$194
57%
28
8
2
1

Common

gibles

Stock

Equity, net of intan-

(6,050,000 shares)
:

...

116
$340

34
100%

railroads

The

in-

were

by the Stabilizers to order

freight

and

often

are

ernment's

common stock equity (pro forma)
compared with 30% at the end of 1945. The

Including intangibles the

be 35.3% as

the

between

resulted—for

the

compromise

faces.

The

time

which

being—in
saves

both

government offered

the

but

cars,

regulations

mark-up

abstruse that the gov-

lawyers have dif-

own

2%% Victory bonds in their portfolios.

Evidently, insurance

panies and savings banks
fered an incentive to sit

com-

are
on

ofthat

their holdings until maturity rather than to dump them

part 0f

in the lap of

the Federal Reserve

(which is what constitutes "debt-

ficulty in disentangling them. And

monetization").

is
subject to
periodic reshuffling,
generating uncertainty and more

the

confusion.

ury^on, ^o?ihl%stituUoXv

the

entire

system

controls

scapegoats are the banks
credit expansion sup-

The

whose

posedly has brought about the inflationary wave and keeps it ris-

ing,

the story goes.

is that:

The truth

That

jooked

Federal

™

victory for
the

interest

convert the

new

2%%s into !Vz%

In other words, the

5-year paper.

raising of the rate, which is

nom-

fnal anyway, is deflected into the

short-term market where it does

banks have to loan if
True, the support was withthey do not want to lose out to drawn from the bond market (for
competitors such as insurance a few days). Nothing happened;
comnanies. savines
asso-v+mncaptionc
and
thp
transactions
dwindled
and
the
savings and
and loan
loan asso
companies,
ciations; and that:
long-term Victory bonds slipped

(b), the financial institutions of
type merely act rationally
by protecting their earning power
in
the
face
of
unprecedented
peace-time spending by the govevery

all 'ndmatmns

government spends
wildly and promises to do more
of it for a long time to come, and

port would come in force again,
md bond prices would be pegged.

the

whpn

nrnmi<5pq

\vefl

consumer

must protect

a|e that the gSup-

Which is what the replacement of

businessman as Chairman of the
Reserve Board by a Treasury representative
means*
the
interest
themselves reseniauve means, ine mieresi
short-

create

ages—then
ages
tnen business
business as
as wei

as
as

the

advance buying.
The banks
follow the clarion call of supply
by

demand,

the

unabated.

;•

Crisis Within the Crisis

But all queries and tribulation!)

jer?iCifl5

nature. It is all predicated on tho

international

crisis.

What

turns out—as this

has

writer, for one,
emphasizing since last

been

July—that Korea is not the opening
shot

World

War

III?

If,

for

example, China should be willing
to accept the status quo on the*
38th parallel? If the spring passes
and

shows

Russia

invaHin(J Tl1PftnP

desire

for

v„«ftciawia

£ anvthiSJrJii
?w t ^
a

piacfof

the ohonv

TmerVencv

P^ce °t tne Pnony emergency.

Indeed, if Russia stays put, if
will become increasingly difficult
to sel1 Americans—and Eurpoeana,
even more so — on an alleged
emergency that refuses to ma-*
terialize. Even its shadow mighf
begin fading out.
TIlat explains the split person-*
ality,

to speak, displayed by tho
of Washington:

the contradictory policies which
vaciIlate between threatening
with sharper controls and offering
cne "relief" after another from tho
existing ones. Of course, the brass)
hats keep crying Wolf, Wolf. Bug
as of late, the signs of relaxation

™ t]le«2

•

J
IZ
P°rtant stockpiling, the growing
resistance

Congress

fure

against

anQth|r kraw

par hp it frnm

a«nmp

murt stay virtually fixed.

thai

Pe^e
bre^
Peace^ bi eak out. But it would
iaKe. mucn less than that — a
nominal
improvement In EastWest relations, such as at th&
mav

rnnfpvpnpp

mnv

rate will be held; bond prices
carried

they have to if
The idea of the monetary authey want to stay in business. But thorities is, presumably, that it is
by doing so, they create new im- better to do something nominal in
petus and provide new means for the right direction than not to do
spending. It's a vicious circle.
anything. Maybe they hope for
Paradoxically, the public is be- psychological effects: the banks
ing assured that by June controls may mistake the fireworks for
will
"work" —when
"security" sharp-shooting and might stop
and

continues

slightly below par (100). The fact
d
{L a sense ™™as?n5
that no one rushed to sell; fearing tendln S di^
that they may fall further, shows SDreadi'ng throush Washinetni?
that no one expects anything like ConsS
that to happen. But if they do,
reJ'sl:a"ce '

ernment and the consumer.
When

5®,jCrH51:
field in which

construction

boom

rfoallatest policy moves

not matter.

■

Reserve*

the

(a)

excess ve

i
,

n^7n

s^ckn/linl
? nvof^

hs'

bought households, andI by specHow

Y inrp

fhan

?pmnnrJS

!hlln?S
can^^06]^ hp ptn^tpH ^fhPn
L4rwhen the
nf

thk

fh»

^at^n ^nuaWafen^^ hi |3

of lending. We beg to remain skepti- ff"
f
t .tb !»
instead of the cal. Anyhow, the Federal Reserve
on' and *he government itself
present less than 10%. As of late, is to be congratulated for having creates the basic scarcities whic&
the trend in Washington seems in fought
courageously against the underlie the inflationary psyswallow 18%

supposedly will

the national output

to relax

directions:

two

alio-

(priorities actually stymie
industrial and municipal pur-

cations

chasers
for

statistics

and by.toward

tape); and to concen-

profit

regimentation

—

regulating the margin of wholesale

and

retail

with generous

can

farm

other
be

Big Boss and for having undertaken the first step, if only a very
short one, toward the ultimate

bureaucratic requests freedom of the capital market—

nonexistent

similar red

■O would

royal

precise $19 billion new issue of non-marprofits, ketable 2%%' long-term bonds to
Imports - are put under domestic institutions (other than commerceilings—at which they cannot be cial banks) in exchange for the

trate

Parent Company:

battle

Federal Reserve and the Treasury

definition

than

the company

The

f
f

Potions' hands, credit restraints
have to be veiy stringent to ho
effective. But they are lax, es-

industry
without
of permissible

upon

Prices

$2% greater than for the U. S.
:

partially at least, but no practical
allocation procedure is developed.
Contract renegotiation is imposed

7.2

etc. Electric energy output gained
for the U. S. and the gain in bank deposits was

100%

scarce

12.7

27%,'farm marketing 29%,
vs.

Consumption of matesupply is cut back,

meat.

13.1

The gain in retail sales (over
the U. S increase) ranged between 64 and 73%. Mineral output
in the area was 168% greater (in rate of gain), forest products
203%

for

■*

...

con?1u?1.®r, mojale- Also, given,
tiie availability of huge liquid reserv®s in the consumers and cor-

ical minds, the content of which
seems to be subject to cyclical
fluctuations. Instead, public discussion centers around the interunnecessarily high prices est rate problem,

equipment makers received steel
allocations for 72,<600 pieces only.

effective buying income 66%.

and

moder--

enlarging the industrial apparatus)
for defense and for maintaining^

told to its symptoms.
production, but
But new taxes are not urged
no orders to produce follow. Busiany longer as they were only a
ness
and the public are admon- few weeks ago. The budget defiished against inventory accumu- cit has lost for the moment much
lation while recurrent announce- of its fearful impact on the polit-

124,000

gains reflected the industrial renaissance of the south.

These

and

credit

patient

defense

for

duced

During the decade 1940-49 per capita income in the Middle South
area increased 51% faster than for the United States as a whole,

have;

real difficulties go deeper,,
r<or
g',. credit expansion
must^ go1 on for the benefit ox

6vil is to toe attacked rather than

9.3
7.5

loans

result,

Machine tool plants are

gear

rials in

011

"in-

Allocations

formed to provide for the cooperative building of a huge defense

Growth

mortgage
visible

ate ones only. Homeopathic doses)

„

All that

„

sible for

•

by new regula¬
far, /'restrictions" im-'*

brought

"orderly inflation"—to be mollidustrial statesmanship"?) but not fied,
presumably, by subsidies
to the vast majority of employees, which will feed the inflation.
The cost of living is to be held
down, but farm prices are supMonetary Control
ported if not actually
boosted,
Monetary control — controlling
though on the average they are the pocketbooks—is right not in
well above parity levels.
the foreground of interest, which

joined with four other utility companies in the recent cre¬
ation of Electric Energy,
Inc., a privately financed company

; power plant to supply about half of the electric energy requirements of a new project of the Atomic Energy Commission near
Paducah, Kentucky.

twisted

activities in the area. Middle
up to 100,000 KW firm
power to the TVA for use primarily by the Atomic Energy project * ments of forthcoming ceilings and
at Oak Ridge, Tennessee.
The system will also supply power to
rationing incite them to stockpile
the flying schools, ordnance plants, and other defense establish¬
in a hurry. The artificial stimuments which are being reactivated in the area.
Middle South has
lus to fill the lockers is respon-

tions.

k0nuXLa„rlt0
blT forthcuom,ng t0 labor m the face of pressure group of monetary control merely irrithe
(remember

cane,

will

page

Controls and Comparisons

some

in New Orleans.
well-integrated system, serve
population of nearly 4 million in some 1,690 communities and

from first

1950,

73% electric, 16% natural gas,

were

properties, and now has only the
operating subsidiaries, which form

Continued

the first full year of
company basis.
The revenues

for

parent

$100 million

over

earnings

consolidated

reported
stock

common

credit

Middle South Utilities, Inc.
of

supporting Mr. Truman's

re-election chances.

Middle South recently raised its dividend rate from $1.10 to
$1.20. Based on the new rate and the recent price on the Stock
Exchange of I8V4, the yield is 6.6%. Using the pro forma share
earnings of $1.75, the price-earnings ratio is 10.4 and the dividend

Utility Securities

mark-ups,

tentionally)

the

Webb Richards Joins

Wulff-Hansen & Co.

(perhaps unin-

gold

standard!

Unfortunately, the prospects for

(Special

SAN

to The Financial

FRANCISCO,

Chronicle)

CALIF.

about

1
—

further steps are practically nil. Webb Richards has become assoclReserve Board missed the ated with Wulff, Hansen & Co,t

but The

boat: as the "Chicago Tribune" Russ Building. Mr. Richards waa
has pointed out, it inflated reck- formerly with Denault & Co. and
the prices of lessly in 1947-48 which would prior thereto was a partner ia

loopholes.

words,

done

restoring

chology

nothing much

products, raw materials

and have been the time to deflate

in- Pearson-Richards & Co.

(1258)

The Commercial and Financial Chronicle

react

to, implying that such
points would be pur¬

Continued from page 9

chase levels.

tioned

Markets

and

Followed

Is This

the

where I thought they
would be attractive.
Up to
this writing only one stock,
American Car and Foundry,
got
within
the
prescribed
area—the figure was 31 to 33;

New Era?

Whyte

Says—
By WALTER WHYTE:
For the*past few weeks I've

been away

trying to get rid of
bugs the doctors called

some

virus infections.

the

actual

week covered

during

would

leave

This doesn't

The doctor's

it,

they,
I could

me,

again become a normal
growing boy. The next time
such a treatment is prescribed
I'll suggest the doctor take it
once

himself.
*

sis

Some

mean

any event, last week's
column didn't run, which was

well. The
market, as if you didn't know,
gave a tired sigh, turned over
on its side and then
proceeded
to fall out of bed.

The

to be

going

emphasize that I

buying that'll take them

article

fensive

time

host

other

views
do

not

coincide

Chronicle.

"reasons."
*

necessarily
with

They

this

the break I don't know.

Outlook for Debt
_

I don't

those

is that
at

break

least

three

quarter

VluW

actly

these columns.

ing bear market
market!

Financial

Mass.

the

reaction of about 10

points on
the Dow averages was imme¬
diately ahead, though I didn't
a

bear

Newcomb

there will be

The

Financial

Mass.
is

with

boost

the reaction

that

the

shrieks

bear

market

all-out

sizable

With Rockwell-Gould
N. Y. — Samuel D.
Garthwaite has become affiliated
with
Rockwell-Gould

Co.,

Inc.,

159-167 Lake Street.

base

for

strong

money

Field
&

Townsend, Dabney

with

William

—

Townsend, Dabney

of the New York and Boston Stock

flation.

Members
New

New

York

San
»

York

Stock

Exchange
Curb Exchange
(Associate)

Francisco

14 Wall Street

COrtlandt

7-4150

Private Wires to

San

Stock Exchange

Chicago Board of Trade

12%. The vast

Barbara

the

is represented by
deposits in banks. Since

1946, the velocity of these deposits, however, has jumjed from
about 16 times

times,

rise

year

of
a

to about 23

40%.

over

main

This

cause

the

Moreover, it is a force that
pretty much beyond the direct

years.
is

The

inventory situation is, I be-

lieve, much less important than is
generally
rise

thought.

the

past

Much

year

the

has

are

only about 5%

wholesalers

•

Mich.

with

John

—

Charles

two

bined

Par-

Co., Penobscot Building,

view

As
in

com-

only 8%. These
rise

and production

period.

retailers

surely

the

higher
Stocks of

ago.

and

are

shrinks

Exchanges.

years

are

creases

CALL

Per 100

OPTIONS

Shares Plus Tax

both

civilian
some

in-

moderate,

@51% 6

mos.

$525.00

@49

mos.

487.50

Grt. North. Pf.
@50% 6
Pepsi Cola... @12% 10
Param'nt Pict. @25% 6

mos.

525.00

mos.

175.00

mos.

225.00

Mesabi Iron.. @ 9

mos.

112.50

Kaiser-Frazer @ 8
Utd. Merch'ts @17%

mos.

187.50

Republic Steel @47%

5
5

mos.

225.00

Std. Oil N. J.

@104%

Subject to prior sale

Explanatory pamphlet

mos.

112.50

625.00

price change
on

reauest

THOMAS, HAAB & BOTTS
Members Put & Calls Brokers & Dealers

Association, Inc.

Broadway, N. Y.

4, Tel. BO 9-8470

deflation.

cure

the

fhat

the

for

cure

continue

rant

preventing

fjon.

real

lines,

these

in¬

wage

handy.

rates

find

widespread

they

are

for

labor,

agreement

going to stay

up.

that

High

been frozen into

the economy. It is
politically necessary to keep them high.

More and

people

are com-

ing to believe that high prices are
here to stay. Much of the boost of
recent

years

permanent. I

with
such

that
a

inclined to agree
conclusion. If correct,
am

development would, of it¬

self, constitute
Since
cans

the

new

early

era.

throat is

sore

Their

and

rave

controlling

1900s,

Ameri-

have studied business
cycles,
to fit current de-

velopments

into

patterns

the

past. Always in past deflation has
followed inflation. This time it

splits

and

stocks

about

each

infla-

Jones

however,

worry,
Deflation

deflation.

too

lot

what

trouble.

Volume

Over the

Businessf

longer-term,

that

prices

high.

both

results

lies

high

large
you

profits

before

how

say,

about

the

research
&

are

ard

& Poor's

data.

noted,
earnings

however, that in 1950
after taxes, for all
corporations
combined,
entered
a
new
era,
now

what

and

scary

will

Meanwhile,

that nothing furdone

until

all-out

July.
is

war

avoided (and it looks more like
peace), higher taxes may be omitted or delayed,
*

before

can

make

intepretation of such data,
imperative, in this new era
inflation, to make allowance for

distortion

caused

First, > let's

by the de¬

adjust < stock

prices

for the

chasing-power of money. Accord¬
ing to their data, the 1929 dollar

ft appears

ther

for

cause

higher can that ceiling be raised?
probably not very much. At this
hme

Anyhow,

the

important

things

can

worth

now

this

about 67

cents.

work

out

their

1929

really

highs.

far

A rise

Secondly,

let's consider earn¬
dividends and ' the
yields

ings,

available

stocks in

relation to

priced at only about 7 times

+ors

must

correlated

terms

Is the Market

Now?

lower

this

year,

they would

ratio

same

turns

are

now

high, in terms

years

That statement is based

ago.

Stand¬

ard & Poor's weekly index of 365
industrials. The high this year of
191.4 compares with the 1929 all-

time

peak of 197.7. (Base
equals 1933-39 average.)
From

that

these

figures

further rise

provide a new
high in the industrials,
in

statements, of

terms

dollars.

100

the

course, are

current

1929

level

1929

dollars,
the

measure

most
we

nearly

have

The

ship

stock-bond

now

the

top

could be

know,

Standard

the

increases

Poor's

yield relation¬

like the situation

and

bull

1942,- than
market

brought in line, of
a

course,

rise in bond yields, or

fall in dividend
yields, or a com¬
bination of the two.

scientific

and trend of the stock market. As
you

dollars. A

stocks. This distorted
relationship

but

position

prevailing in 1932

repre-

the

1929

a number of
in regular rates.
'

Bond

Standard & Poor's indexes
sent

have been

term's

re¬

twice

more than 10% or
15% in the
aggregate. Already this year there

than

not

1951

and

dividend

conservative estimate of dividends
for 1951 i$ that
they will be down

by either

dollars

in 1929.

yield of 3.1% provided when

position is measured in terms of
measured

But

stocks reached their all-time 1929

seen

historical

The

know.

only 3V2%

would

These

important,

1929,

than 21

before stocks would be selling at

the

now

earn¬

need to be cut in half

Industrial stock prices this year
reached the highest level
since
or

are

versus a multiple of 18 times
earnings in 1929. Earnings will be

•

Where

yields. Industrials

ings,

the

dollars-without-distortion.

43%

would be needed, in real value to
equal those former highs.
-

earnings after taxes, and the abilfty 0f companies to pay dividends,
earnings and dividends
must be properly related to stock
priCes. And all three of these fac-

below

bond

Then both

basis, industrial stock prices

for investors to keep in mind are

said

ceiling of 62% on
earnings.
How much

cheaper dollars.
tax

corporate

have

change in the dollar. We
do this by using the govern¬
ment's official index of the pur¬

have

stop-look-listen attitude.

cline in the dollar.

measured

much

to
approximately their all-time
high level. That might be some¬

all-out

should

the
>

interpretations.;

the

that

method

and. gives

very high,, and may go somewhat higher, especially if we have
war.

net
used

together.

shows

Poor's-

accurate

statistics

figures

sound

corporate earnings

difficulty

the

superior

But,

Tax rates

;

weight

that, on the basis of dollar valua¬
tions, industrials have returned

taxes?
Taxes

Now to get back to the position
of the market as
gauged by Stand¬

remain

multiply

you

the

putting

my con-

production

going

are

When

failing

due

one of the Dowindustrials. The main

vastly

Dollar

error

every

Careful

since,

ever

source

Standard

office

the

and

Democrats in

was

and have tried

cause

case

turn out to be

may

can

turned the Republicans out of office in 1932. inflation has
kept the

same

production

sensible fashion. The
Dow people use one share of each
stock in
computing their average.
Standard & Poor's index includes

be-heading. The politicians will

prices

rates in the

wage rates have

Pure Oil

....

•

Gen'I Motors.

Monterey—Oakland—Sacramento
Fresno—Santa Rosa

supply

(Special to The Financial Chronicle)

SPECIAL

5, N. Y.
Teletype NY 1-928

Principal Offices

bulk

ventories in distribution channels
will come in

New York

Francisco—-Santa

in-

1946,
the
total
money supply has increased only

than

west Stock

Schwabacher & Co.

get

recovery from the
1949
liquidation. Holdings of manufac-

DETROIT,

inflation

the

Since

very

Pacific Coast Exchanges

trying to
"hedged" against

This

the

enterprise. Perhaps the real

But,

business

faulty method of Dow-Jones
adjusting to allow for stock

mean

people

error

taxes.

,of

the

market

this

ways

the

factor is the velocity of turnover

conduct

example

outstand¬

threat against our system of free

are

process

that

system

controls

prices by high production you get
a very high figure for total sales
in dollars. Large dollar sales al-

money—the speed with which

top.

almost 50%. This is

Such

is only part of the cause of
rising
prices.- Another very important

Joins Charles Parcells

Naumes

the adoption of

controls.

of money and credit available

1929

works out at

method.

viction

large vol-

their

Dow-Jones

higher general price

all know,

•

reach

the

Outlook for Prices

been

members of the Detroit and Mid¬

Executed

value

control of the money-managers.

Tyson, 30 State Street, members

cells

Orders

the

Percentagewise that

measuring

expecting

resumption of inflation in recent

With

Securities

for

reason

—

broadened

BasiQally, this

further decline in

turers

Pacific Coast

inflation.

distorting
over-riding the business

ing

savings,

m,,the

inflation

(if any) of the politician,
however, that is much like saying

increase in

any

banking structure

latter

Anticipating such a reaction
gave a list of stocks and
where I thought they would

part of

prices would need to rise back to
381, or an advance of 125 Dow

All history shows that continued
anc* persistent inflation leads to

for

stringent

very

the total debt will turn
up

demand

and

war

were

mind

have

controls, including forced

about

Exchanges.

here.

was

Edward

you saw

with

possi-

rise,
gap between Treas-

long

Habitual followers of this
average
would
naturally
conclude
that

cycle itself.

between

the debt. Unless

themselves

ELMIRA,

BOSTON, Mass.

alarm

Chronicle)

Angier

—

(Special to The Financial Chronicle)

Well,

ui^ income and outgo, resulting in
a

money

market.

and

Mathews Co., 53 State Street.

time,

same

consider it the start of

(Special

BOSTON,

bull

any

however, I wrote here that

Chuonicle)

Robert

—

somewhere

high

below the 1929 peak of 381.

way

undermining of society. Al-v large an error to be dismissed
ready in this country inflation is lightly. It is the sort of mistake

future rise in the debt

level

ume

With E. E. Mathews Co.

of
column

of March 8 I disclaimed any
inside knowledge of any pend¬

prepared for the

know,

average reached a 1951
of only about 256, which is a

by subsequent his-

see

refer

this

how

now

forecasts

and

it passes from hand to hand in the

ago, a
wasn't
ex¬

In my

over one-

dollars.

rather

°ur de^ense program, and forcing

As you

with R. II. Johnson &

now

slightly

trillion

Co., 70 State Street.

secret to readers

The

BOSTON,
Hill is

now

one-third and one-half a trillion.
As
defense
expenditures

the

weeks

which

situation

indicated

was

And

The actual fact

care.

(Special

eral debt is

are

market valuation

stock

to the indica¬
tions given by the Dow-Jones in¬
dustrial
average.
As you

points

Now
or

know

such

proven

all

You

tory.

any

With R. H. Johnson
,

omitted.

About the only exceptions are the
prices of bonds and other fixed
income securities.

Whether some, all or none
of these were responsible for

near-boom

erroneous

presented
of the author only.]

those

expressed

the

moment

ployed, corporate earnings evaporating
and
dividends
cut
or

Practically everything measured
in dollars is going to get
bigger.

bility of

that there'll be another burst

\The

going to be* of boom
proportions.

all

fact, it is

budgetary requirements,

happen
from here. I suspect, however,

sale of U. S. Gov¬
ernments; a Russian peace of¬

robust—in

I want to

below par

other

don't know what will

must

reasons

and

for goods

guided by.

about five points, followed by
current in the another reaction that will
board rooms were, an immi¬
carry them under last week's
nent cease fire in Korea; a lows.

popular

demand

this score, so far as investors are
So^ Jn
the Fall of 1946,
the
concerned, should be only tem^^Fo p h efs were sfire that it
porary. Over the foreseeabl«!^ftt*v heralded iat drastic deflation of our
ture, the total business voiume is economy,
with millions r unem-

that the

escaped their
support ranges by fractions;
others were way above them.
But by
and large the list
which appeared here in the
March 8th issue, is still the
one

changes in total
of

stocks

probably just

looks like a double dose of inflation, and a very big double dose,
at that. By all that was good and
holy to the believers in cyclical

:'fi

outstanding.

313A.

was

according

1926, this method
adjusts
for
stock

issues included.
Hence, for investors as a whole
(that
we
are
justified in stating that
is, military plus civilian)
will patterns,
a
big
deflation
was
their dollar fortunes are now
very
keep our industrial plant as a bound to occur after
the; last close to the highest on record.*
whole operating at neiifeqapacity World War. When the stock marHere I would Hire-to digress a*
for a long time.
Any worries* Qn^ket underwent a^drop of 20% or-

was

uncomfortable

and produce the

money

the total

the

reaction potentials are now
that a rough sea
out of the market.
It means
voyage
would .be just the
that you'll have to bide your
thing.
Apparently heaving
time and wait a little longer.
seas would make the virus so

theory

to spend

necessary goods to discourage any
attack from abroad. I believe that

since

automatically

low

stock

dividends and stock splits. The net
result is that the indexes reflect

ranges

Walter

each

the number of shares

All in all, I men¬
stocks

Thursday, March 22, 1951

weights

reaction

Tomorrow's

any

yields are
important

now

firming,

narrowing

spread between stocks and
bonds on that score seems out of

the

question.

committed

The
a

government

virtually

per-

Number 4996'

Volume 173

.*.

The Commercial and Financial

(1259)

Chronicle

Continued from page 5
of low interest to the shrivelling dollar. That June, however, t feel that worries
over
the possibility of any im¬
debt-management leaves only two-thirds of 1 % per
portant let-down in general busi¬
program from collapsing.
year to be attributable to such
ness activity will have been pretty
The
recent
publicity about factors as:.
V
* ■
well eliminated. Barring all-out
settling the squabble between the
(1) long-term growth and plant

manent

policy

rates to

keep its

The State of Trade and

Federal Reserve and the Treasury

the

and

rates

interest

over

ernment bond market has

gov-

(2)

not ma-

' (3)

changed this long-term
program. Inflation is too comfortable, politically. It postpones or
covers

labor.

growth

population

the

and

an 0ther influences.

(5)

is the easy way.

This is

era.

new

little, but, by and large, they
going to be good for the foreseeable
future,
in my opinion.
dip

when

the

logical
will

Time

rather

than

dollars.

required

resolved. But, so

and bonds to be

long

the disparity of yields is
in favor of stocks, in-

widely

vestors need not worry very

;

about
~

the

feature

Another

much

market in stocks..

bear

stock

general position deserves
attention here. I refer to the psy-

market's
•

Several

1929-32. They

sold

themselves on

the idea that

£rnme'nt

been

have

bonds

™1o ^L^Tpar

Thirdly, railroad stocks which

had sparked the whole advance
since Korea, had climbed 60% and
ran into trouble just under their
see
that they learned a fal1946 highs. (This statement is
lacious lesson.
True, bonds are based on Standard & Poor's index
; more secure under a gold standard,
of railroads.) If you look at Dowwhen the value of the dollar is Jones railroad average you get the
:
appreciating. However, we have false impression that the railroads
been operating on a paper, standhad hurdled Jheir old 1946 barard since the early Thirties, and
rie**. (In fact, the D-J rails this
the dollar has been depreciating,
year crossed 90 versus the 1946
Investors are only beginning to
high of 68.31, an apparent clearunlearn the lesson that bonds are
ance of more than 30%.) The
superior to stocks as storers of truth, however, is that the rails
value under a paper-money reas a group had run into a rather
gime.
'
' A
! difficult supply area, calling for a
only had held bonds dur-

if they

ing this period they

would have

'fared much better. Now, of course,

...»we

opportunities

prices.

the

make
atopic

new

investors
discovery
that
to

suDGrior

rpallv

arp

bonds

im,ocfArc

additional

enough

shall have a truly new

reaction or a period of "consolida..
„
^
t
t
it

^11'

rumblings of
>eace" ahead in Korea began to
fin&lly,

And

insurance

£*« fancy paper profits in a

iTe^lre'howtgnewintere";

Add these ingredients together

funds,

pension

stors ar

inv

tv,PaP

we"

^ tnTroi S

bound to grow, as
from the general public.

seems

sources
as

and you get a satisfactory basis
for the current reaction. I admit,

has

ness

didn>t'come

Looking

1951 Versus 1916

pl* W y

sooner.

little further ahead,

want to sug-

I can only give by present impressiori, which is subject to change as

gest another avenue of approach
which leads to the conclusion that

events unfold. I believe that this
setback will be held to modest

priced if

proportions—probably less than

Before I take up

the near-term

outlook for stocks, I

equities are reasonably
cheap,

downright

not

from

the

long-term point of view.

long,

the

Consider

i from

1916

1951.

War

World

period
1916, the

35-year

bull

In
market

was

raging. American stock prices had
than doubled following the

of
of

nearly

industrial
advanced

downtrend

a;)0 n°wnt enclAll bull markets are subject to
corrective reactions on the way
up. Some bull markets have had
35 years, we find that several reactions as large as 10%
stocks as a group have or more. So far in this bull maronly 24%, after allow- ket we have had only one reac-

Europe
1914. Measuring from the top
this bull market to date, a span

outbreak

of hostilities in

ing for the shrinkage in the value
of the dollar.
(Before such ad-

justment, the rise was 174%.) That
is less than 1% per year. In other
words, practically the entire rise
in dollar prices of stocks over this
35-year period can be explained
as an error of measurement, due

drop of last Summer,
Earlier in this talk I referred
to the possibility of a near-term
squeeze on civilian" production,
That may be a factor in the pres-

ent setback of stocks. Before: many
weeks, and probably by May or
I
—EPT

"50

Wheeling

Steel

Youngstown
National

Bethlehem

Exemption—

Dividend

$7.60
7.80

$6.25

$3.00
3.50
3.00

4.90
7.75
*

—

A—17%

normal and surtax, as

B—55%

normal and surtax, as proposed.

v 6.65
4.15
6.45

4.10

now.

TABLE

considerable

have

but
of

will

they

provide

not

Attractive

listed

will offer

Price

Oil

Standard

remain

ment

the

Retail

Stores and

following
attractive:

erated

Coal

(called

Variety Chains)
be

may

Allied

mentioned

Stores; Fed¬

Stores;

Department

Inter¬
Kress;

G. C. Murphy.

and

With Consolidated Inv.

(Special

SAN

to The Financial Chronicle)

FRANCISCO,

Shurtleff have

ated

CALIF.

become associ¬

Consolidated

with

—

and Clarence

A. Arnold

Stephen

Invest¬

ments, Inc., Russ Building.

With Marache Sims
(Special to The Financial Chronicle)

•

— Rich¬
affiliated
with Marache Sims & Co., 634
South Spring Street, members of
the Los Angeles Stock Exchange.

ANGELES, Calif

LOS

ard L.

Thompson is

now

With Pacific Coast Sees.
(Special to The Financial Chronicle)

ANGELES, Calif. —Allen
has joined the staff of
Pacific Coast Securities Co., 634
Shaw

merly with Hill Richards & Co.
and Maxwell, Marshall & Co.

Wagenseller & Durst Add
ANGELES, Calif. — Carl
has been added to the

Kane

staff of Wagenseller
626 South

1.40

21%

6.4

change.

He was for¬

South Spring Street.

the

& Durst, Inc.,

Spring Street, members

Los

Angeles

Stock

Ex¬

year,

"Ward's"

predicted.

Year-to-date

railroad

freight rate advances ranging from 2%

by the Interstate Commerce Commission,
March 27, pending hearings on the roads' plea for a

boost in freight rates to offset climbing costs.
will be allowed to raise their rates by 4%,
the West and South will go up 2%.
Freight
moving between the three regions will be subject to a 2% hike,
being the first freight rate advance granted the railroads since
August, 1949.
This increase will add about $205,000,000 to their

elec¬

(Depart¬

January-June total of 3,766,470 cars and

authorized

permanent

while

railroads

tariffs

yearly revenues.

Steel Output

Trade

were

Eastern

California

Department Stores;

state

estimated second-quarter forecasts, output during
of 1951 is likely to reach 3,900,000 vehicles,

manufacturers totals 1,641,500 vehicles, 19%
1,377,000 units produced during the like period of

the

effective

outstanding candidates for

the

which netted about 1,800 vehicles in the

Interim

long-term growth.
In

Ford

1950, it said.

hedge against peace-or-war. Phar¬
maceuticals and synthetic fibres

5.5
5.3

Powers

above

period

wartime) repre¬
the best speculative

about

sent

for

output

very

during

$29
45%

Niagara Mohawk

and

surpassing the record
trucks
produced last

(N. J.).

issues

Television

$1.60
Cleveland Electric Illuminating
2.40

Commonwealth Edison

continued to match the indepen¬
week-to-week stability in schedule, "Ward's" reported.

Based upon

(Special to The Financial Chronicle)

% Yield

iV-:-'."-''-

suppliers^ "Ward's" added.

these

some

Pacific

Texas

and Standard Oil

week,

again this week, and overtime
Kaiser-Frazer, it said.
However, Dodge operations were curtailed for two days and
Packard lost several hours on Tuesday of last week because of
parts shortages resulting from labor trouble at their principal

those

Chicago & Northwestern.

Oil,

Institute.

previous period, was a possibility
was in prospect again at Nash and

rails, these are favored ex¬
amples:' Rock Island, Seaboard,
oils:

the problems confronting the steel in¬

Steel

Motors

General

are

slight drop in output of cars and trucks last

noted.

the agency

selected * issues
appeal.

new

producers

"Ward's Automotive Reports," United States
plants are currently showing a stability in operations not seen
since well back into last year.
The past week's volume repre¬
sented the third consecutive week uniformity was .maintained,

read j ustment,c

Dividend

was a

according

but

ap¬

supply

run

extensive advances. After

Consequently,

the first six months

into
market following

the

first-come-first-served basis and are

cases.

all

and

Iron

There

much

yield,

Oils—Both

and

have

groups

placing

proceed.

American

II.

Table

Rails

for

the

dustry, output of steel in February was the largest for that month
on
record despite difficulties attending the switchmen's strike.
The total for the month was 7,762,000 net tons, according to the

hedge against further infla¬

Notwithstanding

peal for those who want income,

tion.

Saturday work at Ford,

are

some

dents

LOS
^

how to

(14) and Trans World
Airlines (24) are well worth con¬
sidering.

Price

American

Utilities

adds,

to whether they can live up to their original obli¬
gations on the directive programs for May under such ratings
notwithstanding an increase in DO-rated minimum mill tonnage
set-asides.
Some mills are reported seeking legal advice as to

LOS

TABLE

DO-ratings

extended

long-term
propositions. United Airlines (28),
appeal

hitherto took precedence in mill scheduling second to
special direc¬

quandary

speculations,

,•

tion of that extent—the Korean

tives.
far

substantially.

grown

have

but

the Korean reaction of last year
which amounted to about 15% in

^X^fLp^nTft ft* ulntl
^}}ne ^
!i+Lr tha^ +h^ hpltnn]n^f i'

Yet

ago.

years

These are, of course,

that T ean't evnlain whv

however

now

they

meanwhile the air transport busi¬

tronics

ready

these are
prices

five

commanded

confusion,

for

cause

DO-rated orders and an ever-increasing number of

current

below

far

Now that the

major

programs

present and

Most

available

under

Leading Air Lines offer attrac¬

stocks

notes.

of stocks seem

groups

favored

tive

Secondly, credit restrictions and

mid-December

market

approached for setting

zine

most, if not all, allocation programs on a DO-rated basis.
Set
up under approval of the National Production Authority, these

prospective conditions. The Steels
are
an
outstanding group, with

to, the

thought they had learned a lesson as a result of the great bear

line

One

patter of 1 * the government's fight against in¬
vestment security. J* the years flati(m haye gained hea*dlines in
olnW confidence
?V1
^in ™^r.mnn
theirement
wa^ of increased margin re1930s,
common
the imp0sition 0f sostocks
long-term investments called con^rols oy^ wa
and
at
very low level. Investors
and thi
week s0*e
was

into

are

occurred between
and mid-January.

particularly

chology of investors

them

several reasons for
promise of active demand for their
adopting a "trading" attitude toproducts for a long period. Of
ward stocks over the near future,
course,
most of the steel stocks
in the first place, a reaction of
are targets for excess profits taxes.
fair proportions has been overdue
Yet good dividends can apparently
since mid-January of this year, be earned in most cases with
You will remember that the soearnings at or below the EPT ex¬
called "year-end" rally was of emption. Several appealing issues
super-dimensions. An advance of in this
category are shown in
about twice the average size had
Table I.
There

■

outlook,
for this

long-term

cash

Favored Stock Groups

Near-Term Outlook •

course,

up May rolling schedules, the maga¬
deadline, March 15, has been passed,
they are more perplexed than ever.
They don't know where
they stand as to available supplies.
Neither do their customers,
especially those seeking unrated tonnage.

of stockholders
continue to keep

paper

But perhaps

distortion between stocks

era

new

outcome.

the

'that

due

their paper profits where they are

to these latter bullish factors..

"That leaves higher stock prices as

resumed

rather likely that

seems

prefer

attention will be paid

some

Industry

priorities, many needing clarification in relation
to others, last week threw steelmakers into a dither as the dead¬
Mounting

vast majority

will

Dividends, as we have said, may a greater new era lies before us,

„are

stocks

course.

wider markets,

problems. It

many

technological advances,
increased productivity

(4)

I look for the broad advance

war,

expansion

terially

;

Scheduled This Week At Second

Highest Level On Record
A healthy gray market is flourising under government pricing
regulations, according to "The Iron Age," national metalworking
weekly. Fantastic steel prices (two to four times those charged
by regular producers) never were illegal. But they were con¬
sidered unethical, and were subject to scrutiny, investigation and
remedial action by government and industry. Now these prices
indirectly have official government sanction because the pricing
regulations permit steel to be sold for prices received during the
base period Dec. 19 to Jan. 25.
Regular mill steel is subject to a voluntary agreement signed
by steel producers. But gray market operators are controlled only
by the general pricing regulations. All the gray market operator
has to do is prove that he hasn't raised his prices above what he

period. For those who printed price lists
hard .at all.
In spite of this unexpected legal status the number of curb¬
stone brokers is shrinking, but those remaining are as active as
ever.
Offerings and tonnage are increasing in heavy consuming
areas checked by "The Iron Age."
Just how big a factor the graymarket is today depends on whom you talk to.
Steel producers think the amount of high-priced steei being
offered is much less than six months ago. They cite (1) close con¬
trol on steel shipped, (2) smaller amounts delivered to nondefense
customers, and (3) customer commitments to let mills buy back
excess tonnage.
Complaints of their products showing up in the
gray market are declining.
,
Steel consumers who have been buying gray market steel to
keep their plants going, paint a different picture. They say (1)
offerings and tonnage have increased during the past month, (2)
minimum inventory regulations effective April 1 may add fuel
to the fire, (3) foreign steel is a growing factor.

charged during that base
or kept records, this isn't

Consumers

and producers agree on one

noticeable develop¬

with top steel company officials have
just about vanished, this trade paper observes.
Here's how important loreign steel has become to some con¬
sumers, this trade authority points out:
A large manufacturer of
road building equipment is keeping output high by buying foreign
carbon plate and semifinished steel.
Over half their 40.900-ton
ment:

Alleged connexions

monthly

requirements come from

England, Germany, Holland,

Their imports range from mild steel to 4,550
carbon forging grades.
Theyr also get 400 tons of alloy plates
monthly from France and 200 from England. They deal directly
with foreign mills, foreign representatives making their contacts.

France and

This

is pulling

Japan.

week there

are

all the strings

more indications that the government
together in preparation for a controlled

Continued

on page

The Commercial and Financial Chronicle

*'>*

(1260)

Continued

from

page

higher for the week, while corn and oats finished moder¬
ately lower. Strength in wheat reflected the resumption of buying
of cash wheat by the Commodity Credit Corporation, reports of
increased flour exports and unfavorable weather conditions in
some of the growing areas.

rye were

The Slate of Trade and Industry
Allotment programs are now assigned DO numbers
method of certifying. A meeting of the
force discussed new programs which will take a deeper

There

was

materials plan.

able

instead

Although country offerings of corn remained on a limited
basis, the market displayed a heavy undertone. Weakness in the
yellow cereal was attributed to fears that ceilings might be im¬
posed on hogs in the near future, expectations of a substantial
increase in acreage this year, and the absence of any heavy ship¬
ping demand. Activity on the Chicago Board of Trade declined
last week. Total sales of grain futures were 214,155,000 bushels,
or a daily average of 35,700,000
bushels, the latter comparing with
45,700,000 the previous week, and 30,500,000 a year ago.

the previous

steel task

further reducing the free market, con¬

bite out of June shipments,
cludes "The Iron

Age."
Steel Institute announced this week

and

American Iron

The

companies having 93% of the steelwill be 101.1% of capacity
for the week beginning March 19, 1951, based on the industry's
Increased capacity of Jan. 1, compared to a rate of 100.1% a week
ago, or an increase of 1 point.
Scheduled steel output the current week represents the second
highest level on record. This week's operating rate is equivalent to
2,021,000 tons of steel ingots and castings for the entire industry,
compared to 2,001,000 a week ago. A month ago the rate was 99.5%
and production yielded 1,989,000 tons; a year ago it stood at 95.5%
of the old capacity and amounted to 1,820,500 tons.
that the operating rate of steel

making capacity for the entire industry

war

Loriilard Debentures
Offered

from Korea.

news

Export flour business showed
Domestic trade in flour

some

improvement last week.

slow except for some scattered activity

was

in bakery flours at mid-week. Cocoa futures were easier under
sporadic liquidation; the actual market remained tight with prices
holding at ceilings. Coffee developed a weaker tone in both the

futures and spot markets.

Prices in primary coffee markets con¬

tinued firm.

by Bankers-

Stockholders Receive

liquidation at times due to continued favor¬

some

Thursday, Marrfr22, 1953,

...

Rights for Add'l Shs.
A group of underwriters headed
by Lehman Brothers and Smith
Barney & Co., is offering today

(March 22) $15,000,000 of 25-year
3% debentures, due March 1,1976,
of

Loriilard

Co., at a price of
plus accrued interest. Si¬
multaneously the company is of¬
fering to its common stockholders,
249,600 shares of its common stock
for subscription at $20.50
per share.
99Vs%

This

offering also is being under¬

written by the same group.
The net proceeds to be received

by the company from the sale of
Domestic

Rises to Highest Level Since
Week of February 17

Electric Output

electrical

amount

The

energy

raw
sugar prices finished slightly
higher than a
reflecting strength in the world sugar market which has

week ago,

been

distributed by the electric

1951, was
6,903,264,000 kwh., according to the Edison Electric

advancing steadily

Lard

was

announcement of

estimated

and

Institute.
The

total

current

above that of the

108,747,000 kwh.

was

reported for the corresponding

of the output

excess

period two

Carloadings Decline 4.6% Under Preceding Week
Loadings of

revenue

freight for the week ended March 10,

1951, totaled 749.627 cars, according to the Association of American
Railroads, representing a decrease of 36,240 cars, or 4.6% below the

preceding week.

represented an increase of 41,716 cars, or
5.9% above the corresponding week in 1950, and an increase of
The

total

week's

ceiling on hog prices soon. Hog values
slightly for the week. Cattle were steady and strong,
while wooled lambs again rose to new highs for all time.

Combined motor vehicle

production in the United States and

Canada the past week, according to "Ward's Automotive Reports,"
totaled 178,303 units, compared with the previous week's total of

180,577 (revised) units and 134,453 units a year ago.
Total output for the current week was made up of 136,433
cars and 31,125 trucks built in the United
States and a total of
8,045 cars and 2,700 trucks built in Canada.
For the United States alone, Jotal output was 167,553 units,
against last week's revised total of 169,352 units, and in the like
week of last year 128,056. Canadian output in the week totaled
10,745 units, compared with 10,725 units a week ago and 6,397 units
'

spot quotation at New York closed firm

year ago.

the ceiling

level of 46.06^ a pound, up 71 points over Jan. 26 picture of 45.35
cents.
AH futures were strong at the re-opening but the more

distant

large

months

first-hand
due to

turned

crop

somewhat

easier on the expectation of a
In textile markets, a slight increase in
was noted.
Print cloths were in tight supply

season.

trading

heavy demands by the armed forces.

second-hand

sales

occurred

A moderate volume

cloths

Trade Volume Reflects Resistance to

of Prices

Declines Slightly in Latest Week

Trading in domestic cotton markets was resumed last Thurs¬
day after a suspension lasting almost six weeks.

40,301 cars, or 5.7% above the comparable period of 1949.
Auto Output

down

The

years ago.

and prices declined sharply on the
rollback in prices of shortening and salad oil

the expectation

were

previous week, 887,937,000 kwh., or 14.8% above the total output
for the week ended March 18, 1950, and 1,407,495,000 kwh. in

under pressure

light and power industry for the week ended March 17,
at

in recent weeks.

broadcloths.

and

Upward Trend

corresponding period in 1950, Dun & Bradstreet,

Inc. reports in its latest summary of trade.

While there

two

issues are to be applied
payment at maturity of the
company's 5% gold bonds, due

to the

Aug. 1, 1951, outstanding in the
of

amount

$6,195,450; also, to the

reduction of short-term loans pay¬
able to
banks, which aggregate

$23,700,000

The debentures

fit of

retire $350,000
each

have

the bene¬

sinking fund sufficient

March

the

debentures

from

1954

1975. The sinking fund redemption

price is

100%.

The sinking fund
approximately 51% of
prior to maturity.
7

will retire

the issue

The additional

being

offered

stockholders

record at 3 p.m. on March

stock is

common

(Wednesday)

Despite Near Approach of Easter

Country-wide spending was almost uncnanged in the period
ended on Wednesday of the past week, despite the
proximity of
Easter; the aggregate retail .dollar volume was noticeably above
the level for the

the

21, 1951

rate

one

share at $20.50 per share for each
nine shares of
of

record.

3 p.m. on

common

The

stock held

rights

expire

April 4, 1951,

were many

pre-holiday promotions, the general failure to respond to them
was attributed to consumer resistance to the
upward price adjust¬
ments in
The

sales

some

were

COMING
apparel

rose

very

substantially above those of

Children's

wear

slightly
a

last

week;

dollar

EVENTS

earlier.

year

was

uppermost in the interest of many shop¬
in keeping with traditional Easter buying patterns/There

pers,
was

lines.

buying

Investment

Field

slight increase in the purchasing of dresses; the past week's
was very slightly above the low level of recent weeks.

sales total

Business Failures Reach Highest Level

Coats

in Five-Week Period
Commercial
ended March

and

industrial failures

from

153

rose

185

the

preceding week,
street, Inc. notes. Although at the highest level
casualties remained slightly below the comparable
and 1949 when 203 and 210 occurred, respectively.
down 38% from the 298 recorded in the similar
war

the week

Dun & Brad-

in five weeks,
weeks of 1950

Failures
week

v/ere
pre¬

purchased

were

was

among casualties with

ceeded by 1 their number a year ago.
Retail trade accounted principally

for the rise in business
mortality during the week. Meanwhile, slight increases appeared
In manufacturing and commercial service, but wholesaling was

Both retailing and

unchanged, and construction declined.
mercial service had

failures than

year ago;

com¬

other industry

and trade groups

had fewer failures than in 1950.
Geographically, weekly increases occurred in seven of the
nine major geographic regions; Middle Atlantic casualties rose to
60 from 55, those in the Pacific States climbed to 43 from 27, and
in the New England States to 24 from 14. The only declines during
the week occurred in the East North Central and South Atlantic
States where failures

were

down to 30 and 11,

respectively. More

businesses succumbed than last year in both the New England and
Atlantic

States, while East South Central and Mountain
steady. Other regions reported drops from the
1950 levels; these declines were moderate except for a 36% drop
held

in the Pacific States.

there
uce

also

was

and

some

Ups and downs balanced each other last week and the whole¬
sale food price index, compiled by Dun & Bradstreet,
Inc., for
March 13 held unchanged at the previous level of $7.27. This repre¬
sents a rise of 22.0% over the pre-Korea figure of $5.96. It compares
with $5.81 on the corresponding date a year ago, or a gain of 25.1%
The index represents the sum total of the price per
pound
of 31

foods

general

use

and its chief function is to

show the

general trend of food prices at the wholesale level.

Wholesale Commodity Price Index Extends
Downward Movement
Trends
last week.

irregular in the principal commodity markets
The daily wholesale
commodity price index, compiled
were

by Dun & Bradstreet, Inc., extended its downward movement to
close at 323.65
and

March 13. This

compared with

324.00

corresponding date last
a

was

week

the lowest since late
ago,

and

January,
with 249.45 on the

year.

Grain prices fluctuated
unevenly over a fairly wide range as
of uncertainties and conflicting influences. Wheat and

result

limited

demand

scattered

localities.

year ago.

disinclined

Security Traders Association of
New York Annual Dinner

the

Waldorf-Astoria Hotel.

May 18, 1951 (Baltimore, Md.)

lines of canned goods.
for macaroni

April 13, 1951 (New York City)

buy meat;

slight lowering of the sales levels for fresh prod¬

products and dairy products

Baltimore

Security Traders As¬

sociation annual Spring outing at
the Country Club of Maryland.

rose

somewhat.

May 30, 1951

(Dallas, Tex.)

Slightly less house-furnishings were bought last week than
during the week before; over-all dollar volume, however, was
noticeably above the level for the similar week in 1950. Especially

Memorial Day outing.

popular with

June 11-14, 1951 (Jasper Park,

and

shoppers
floor-coverings.

were

The interest in large
television sets generally

some

lines

furniture, draperies,

appliances, electrical goods, radios, and

declined, except
The demand for housewares and
gift-wear

in
was

isolated

vicinities,

nearly unchanged.

Total retail dollar volume in the
period ended on Wednesday
was estimated to be from 13 to
17% above a year ago.
Regional estimates varied from the levels of a year ago by these
of last week

percentages;

+17;

Dallas

Bond

Club

annual

Canada)
Dealers Associa¬

Investment

tion

Canada

Convention

Jasper Park Lodge.
June 15, 1951

(Philadelphia, Pa.>

Investment Traders Associatiois

Philadelphia

Summer

Outing

and Dinner at the Manufacturer®

New England,

Midwest

East, and Northwest +11 to +15; South +13
+14 to +18; Southwest and Pacific Coast

Golf and

Country Club, Oreland>

Pa.

+ 16 to +20.
There was a slight dip in order volume for the nation
last
week; the total dollar volume of wholesale orders was appreciably
above the level for the comparable week
a year ago.
The slight
decrease from the week before reflected
price uncertainties for
certain commodities

Food Price Index Levels Off

moderately above the level of

The demand

increase took place

liabilities of $5,000 or more, which rose to 149 from 114 in the pre¬
vious week but did not reach last year's total of 173. Small failures,
those with liabilities under $5,000, dipped to 36 from 39 and ex¬

casualties

suits

Many housewives continued

1939.
All of the week's

Middle

and

Requests for footwear and accessories increased sorpewhat.
There was a slight decrease in the amount of
food bought for
consumption during the week; the over-all dollar volume of that

inventories.

The

centers

noticeably

was

of that of

well

number

the over-stocked condition of
many

buyers attending various wholesale
below that of last week and about half

year ago.

Department store sales

countrywide basis,

taken from

depart¬

registered

advance of 22%.

Twin City

Security Traders As¬
Outing ("Opera¬
tion Fishbite") at Gull Lake.
sociation Annual

June 26,

like week of last year.

1951

Securities
Detroit

20% compared to the

(Detroit, Mich.)

Traders

and

Association

Michigan summer

outing at the Plum Hollow Coun¬
try Club.
Sept. 30, 1951 (Coronado Beach,
Calif.)
National

Retail buying for Easter the past week was brisk
with depart¬
ment store sales registering a gain of 15 to

(Minneapolis,

Minn.)

of
on

the Federal Reserve Board's index for the week
ended March 10,
1951, advanced 20% from the like neriod of last year. This com¬
pared with an increase of 18% in the previous week and 20% for
the four weeks ended March
10, 1951. For the year to date
ment store sales

June 22-24, 1951

Security

Traders As¬

sociation Convention opens at
ronado

Co¬

Hotel.

Oct. 12, 1951

(Dallas, Tex.)

According to the Federal Reserve Board's index, department
store sales in New York
City for the v/eekly period of March 10,
1951, advanced 21% from the like period of last year. In the

umbus

ceding week

Nov. 25-30, 1951

Dallas

Bond

Club

annual Col¬

Day outing.

pre¬

increase of 14%

week of 1950.

For

of 20%

was

crease

year to
year.

was registered above the similar
the four weeks ended March
10, 1951, an in¬

recorded

over that of a year,
ago, and for the
date, volume advanced 21% from the like period of last

(Hollywood

Beach, Fla.)
Investment Bankers Association
Annual

Convention at the Holly¬

wood Beach Hotel.

Number 4996

Volume 173

The Commercial and Financial

Chronicle

statistical tabulations

The following

Indications of Current

latest week

week

Business Activity
AMERICAN

AND

IRON

Indicated

operations

steel

INSTITUTE:

STEEL

(percent of capacity)

Mar. 25

(net tons)

Mar. 25

Equivalent to—
Bteel

castings

and

ingots

that date,

Latest

Month

Year

Week

Ago

101.1

100.1

2,021,000

2,001,000

1,989,000

(bbls. of 42

average

stills —daily

runs

average

(bbls.)

output

(bbls.)
i
Gas, oil, and distillate fuel oil output (bbls.)
Residual fuel oil output (bbls.)
;
Btocks at refineries, at bulk terminals, in transit and in pipe lines—
Finished and unfinished gasoline (bbls.) at
Mar.
Kerosene

output

(bbls.)

Kerosene

Year

Month

Ago

5,134,336

4,654,058
4,316,493
202,375

4,327,383

234,838

156,264

135,190

120,877

for castings produced
February—

7,762,000

*8,843,167

6,793,243

Shipments of steel products, iucluding alloy
and stainless (net tons)—Month of Jan.—

6,904,688

6,432,776

5,482,691

—

Month

For

January:

Total

Gas, oil,

and distillate fuel oil (bbls.) at

Residual

fuel oil

6,596,000
20,489,000

4,826,950

gas

Natural

gas

therms)
sales (M therms)
sales

4,743,234

gas

therms)

sales (M therms)

5,314,000

17,608,000

2,559,000
9,420,000

2,429,000

9,499,000

9,714,000

8,210,000

139,056,000

138,209,000

46,022,000

12,794,000
47,560,000

133,134,000
14,693,000

135,284,000

12,802.000

53,065,000

46,575,000

38,224,000

*38,068,000

40,206,000

44,544,000

9,249,000

Mar. 10

ingots and steel

Steel

tons)—Month

(net

6,250,000

domestic

lons

(number of cars)
Revenue freight received from connections (number of

cars)

785,867

749,627
725,881

Mar. 10
Mar. 10

freight loaded

Revenue

742,544

(bbls.

42 gal¬

gasoline

output

bbls.)

587,388

192,981,000
176,725,000

170,465,000
155,754,000

17,236,000

16,251,000

14,681,000

(bbls.)

output

imports

—

RECORD:

construction

Private

•„

construction

Public

municipal

and

State

—

Federal

(U.

OUTPUT

COAL

Bituminous

Mar. 15
Mar. 15
Mar. 15
Mar. 15

$220,851,000

Mar. 15

12,040,000

81,105,000

69,065,000

(tons)
(tons)

lignite

Mar. 10

Mar. 10
Mar. 10

162,322,000

$213,207,000
146,597,000

94,143,000

66,610,000

60,772,000
33,371,000

58,394,000

$256,465^000

$258,885,000
163,899,000
94,986,000
57,393,000
37,593,000

139,746,000

S. BUREAU OF MINES):

and

coal

Pennsylvania anthracite
Beehive coke (tons)

stocks

Increase—all

ENGINEERING NEWS-

*11,145,000

8,445,000

13,482,000

529,000

693,000

866,000

1,202,000

*148,500

137,100

19,400

*288

273

253

AND

(COMMERCIAL

INDUSTRIAL)

—

DUN

& BRAD-

153

185

Mar. 15

INC.

STREET,

Pig iron

(per lb.)

.Mar. 13

Scrap steel (per gross ton).

4.131c

3.837c

$52.69

$46.38

$43.00

$27.92

.Mar. 13

tin

Mar. 14

York)

(New

Mar. 14
Mar. 14

at_^

(New York)

Lead (St. Louis) at

(East St. Louis)

Zinc

6,780

9,070

39,032,000

50,950,000

3,532,000

*4,199,000

602,700

*703,100

*12,145,000
2,581,000
38,000

Feb.

$369,000,000

$356,000,000

$257,000,000-

Mar. 14

24.200c

18.200c

24.425c

18.425c

24.425c

134.000c

162.000c

183.000c

75.500c

17.000c

10.500c

16.800c

10.300c

17.500c

9.925c

BANK OF NEW YORK—

(000's omitted)

FOR MODERATE
LARGE CITIES—

INDEX
FAMILIES IN

li):i5-l«)4!>=J00 —Adjusted

15:

Jan.

items—

All

foods

products

bakery

and

products

Dairy

and

Clothing

196.0

177.7

169.0

265.5

253.8

217.9

202.6

194.0

134.3

191.5

249.4

152.3

214.1

203.9

204.8

340.6

327.5

299.3

171.5

158.5

135.3

185.6

184.9

173.9

158.5

195.5

185.0

133.2

132.9

129.4

143.3

142.8

140.0

———

oils

and

Sugar

163.6

216.3

185.4

—

Beverages
Fats

178.8

221.9

and vegetables—

Fruits

181.5

—

sweets

———

—

——

——-—

:•

AVERAGES:

MOODY'S BOND PRICES DAILY
U.

S. Government

Average

———Mar. 20
—Mar. 20

Bonds

corporate—.

Aaa

Mar. 20

99.61

99.60

101.26

113.50

114.08

116.02

117.00

117.60

116.22

116.61
113.50

112336
1

Baa

Mar.
Mar.
Mar.
Mar.

Railroad Group
Public Utilities

Group

;

Industrials Group

;

Fuel, electricity and refrigerator———_
Gas and electricity
fuels

Other

116.22

202.3

201.7

193.X

152.0

351.5

145.3

207.4

203.2

164.7

162.1

160.6

155.1

.82,912

*86,961

80,750

101,199

110,144

94,033

99,630

108,128

112,773

59,324

54,883

326

*362

239

261

277

22 4

13,038,000
7,241,000

*13,029,000
*7,198,000

5,797,000

*5,831,000

11,504,009
5,961,000
5,543,000

121.25

118.80

120.02

House

115.43

115.82

Miscellaneous

furnishings

—
—

—

108.70

110.52

111.44

112.93

111.62

113.50

114.08

115.63

117.20

116.61

117.00

119.20

120.22

month of February:
production in U. S. A.—
(tons of 2,000 pounds)—

COPPER INSTITUTE—For

Copper
Crude

2,000 pounds)

(tons of

Refined

Deliveries to customers—

MOODY'S BOND YIELD DAILY
U.

Average

'•

Aaa

.!■'

AVERAGES:

Mar. 20
Mar. 20
Mar. 20

Government Bonds

corporate

Mar. 20
Mar. 20
Mar. 20
Mar. 20
—Mar. 20
Mar. 20

Baa

•

Railroad

Public Utilities

Group

.___

Industrials Group

MOODY'S

Group
———_

.Mar. 20

COMMODITY INDEX.

2.52

2.40

2.26

2.98

2.95

2.85

2.84

2.80

2.77

2.66

2.59

2.84

2.82

2.71

2.65

3.03

2.5)8

2.88

2.86

3.25

3.22

3.T6

3.24

3.14

3.09

3.01

3.08

2.98

2.95

2.87

2.79

;

2.82

2.80

2.69

2.64

523.2

522.8

532.5

355.5

Refined

copper

2,000

(tons

pounds)
stocks at end of
pounds)—.

(tons of 2,000

U. S. A.

SYSTEM—(1985-29

SERVE

for seasonal variation..
Without seasonl adjustment
Adjusted

PAYROLLS—U. S. DEBT.
SERIES—Month of

LABOR—REVISED

December:

manufacturing

All

ASSOCIATION:

Production (tons)
Percentage of activity
Unfilled

Mar.
_-Mar.
Mar.
—Mar.

——.4——

orders (tons)

—

10
10
10
10

254,539

345,004

226,546

219,528

249,472

245,830

237,247

191,702

106

105

104

759,490

758,562

748,012

395,211

(production workers)—_

goods
Nondurable goods

Employment indexes—
All manufacturing

PAINT AND DRUG
AVERAGE—100

REPORTER PRICE INDEX—1926-36

Mar. 16

154.1

152.9

121.9

140.4

415.1

329.3

15,"65,000
8,701,000
7,064,000

*15,758,000
*3,658,000
*7,100,000

14,031.000
7,303,000
6,728,000

£9,923,000

£28,089,000

£9,690,000

$1,366,817

$1,411,125

$953,059

manufac¬

number of employees in

turing industries—
manufacturing

All

Durable

goods.

Nondurable goods

TRANSACTIONS FOR THE ODD-LOT ACCOUNT OF ODDDEALERS AND SPECIALISTS ON THE N. Y. STOCK
EXCHANGE—SECURITIES EXCHANGE COMMISSION:

159.0

424.9

indexes—
manufacturing

All

154.7

159.2

Payroll

Estimated

OIL,

77,472

Average^lOO)

February:

EMPLOYMENT AND

-•

SALES (FEDERAL RE¬

DEPARTMENT STORE
Month

—

period

Durable

NATIONAL PAPERBOARD
Orders received (tons)

96.7

97.2

96.8

—

Ice

119.82

110.15

109.06

108.52

20
20
20
20

„•

103.22

,212

OUTSTANDING—FED¬

PRICE

INCOME

tons)

(net

tons)

(net

PAPER

RESERVE

ERAL

All

24.200C

Mar. 14

refinery

Export
Lead

8,503

(tons)

Meats

Electrolytic copper—
Domestic relinery at
Straits

76,446

82,037
52,941

(net tons)

ignite

anthracite

coke

Beehive

QUOTATIONS):

(E. & M. J.

69,020

72,770

February...—

coal and

Cereals

METAL PRICES

69,948

*72,068

February:

Pennsylvania

208

165

$52.69

4.131c

Mar. 13

;

(per gross ton).

*80,937

(BUREAU OF MINES)—Month

COAL OUTPUT

COMPOSITE PRICES:

Finished steel

70,285
64,784
11,117"

—

(NEW) IN THE
UNITED STATES—DUN & BRADSTliEET,

CONSUMER
IRON AGE

215,453,000
119,305,000

BUSINESS INCORPORATIONS

COMMERCIAL

FAILURES

*214,936,000
*4,773,000

(tons of

all grades

lbs.) i
(tons of 2,000 lbs.)
Stocks at end of period (tons)
Unfilled orders at end of period

6,015,327

6,905,223

6,794,517

6,903,264

Mar. 17

kwh.)

(in 000

(bbls.)

smelter outDut,

zinc

output

120,229,000

export,

2,000

Bituminous

Electric

244,930,000

—

February:
Slab

8,216,000

9,980,000

304

INSTITUTE:

13,746,000

15,041,000
10,642,000

AMERICAN ZINC INSTITUTE. INC.—Month of

INC.—Month of

EDISON ELECTRIC

30,000

*12,736,000

Shipments

142,500

RESERVE SYS¬
_Mar. 10

SALES INDEX—FEDERAL
TEM—1935-39 AVERAGE—100
STORE

DEPARTMENT

5,000

13,992,000

—

(bbls.)

ENGINEERING CONSTRUCTION

5,000

16,438,000

output

oil

Crude

177,276,000

194,517,000
oil

crude

(bbls.)
(bbls.)
Refined
products imports
(bbls.)
Indicated consumption domestic and

707,911

573,163
533,534

INSTITUTE—Month

production

each)

Domestic

Benzol

AMERICAN RAILROADS:

ASSOCIATION OF

230,897

December:

Total

Natural

Total

3,975,609

INSTITUTE:

PETROLEUM

AMERICAN

14,407,000

STEEL

AND

IRON

AMERICAN

6,338,000

Mar. 10

5,861,250
20,069,000

2,730,000

6,016,350

3,043,000
9,717,000
9,630,000

20,368,000

Mar. 10

(bbls.)

6,047,150
116,366,000

Mar. 10
Mar. 10
Mar. 10
Mar. 10
Mar. 10
Mar. 10

gallons each)
Gasoline

CIVIL

of that date:

are as

PETROLEUM

AMERICAN

Crude

either for the

Latest

Mixed gas
Crude

of quotations,

ASSOCIATION

Manufactured

INSTITUTE:
oil and condensate output — daily

cases

are

Month

1,820,500

or,

GAS

AMERICAN

95.5

99.5

production and other figures for the

cover

Dates shown in first column

month available.

month ended

(1261) 41

" ' :

STOCK

LOT

Odd-lot sales by dealers
Number of

orders

Mar, 3
Mar. 3
Mar. 3

Number of shares—

value

Odd-lot purchases by

dealers (customers' sales)—
total sales

of orders—Customers'
Customers' short sales

Number

Customers'
;

Number of

other

sales-.—

shares—Total sales

Customers'

short

sales

Customers'

other

sales

—

value

Dollar

MIDLAND

(customers' purchases)—

Dollar

NEW CAPITAL

-Mar.
Mar.
-Mar.
Mar.
Mar.
Mar.
Mar,

Mar.

3
3
3

3
3

3
3
3
3

Round-lot sales by dealers—
Number of

shares—Total sales

Short

sales

Other

sales

—-Mar.
—Mar.

—

Round-lot purchases by
Number of shares

dealers—

Mar.

31,129

33,069

48,568

27,345

971,729

873,386

1.467,109

808,763

$42,241,308

$37,903,344

$66,494,809

$32,879,477

31,448

29,026

43,360

27,718

449

273

330

113

30,999

863,406

28,753
814,516

16,107

10,144

43,030

27,605
782,446

847,299

804,372

$35,253,907

$33,621,857

$51,166,009

$27,697,212

244,690

337,440

246,820

2~4~4~690

337~440

246,820

242,870

366,450

778,368

SERIES

290,040

548,210

272,720

U. S. DEPT. OF LABOR—

—

1.926=100:
All

Mar. 13

commodities

Farm

Livestock

—Mar. 13
Mar. 13
Mar. 13
Mar. 13
Mar. 13

products

Grains

.—
—

Foods
Meats

commodities other than farm and
products
and lighting materials
Metals and metal products
Building, materialsChemicals and allied products

All

foods—

Textile

Fuel

•Revised figure,

—.
.

llncludes 507,000 barrels of foreign

crude runs.

Mar. 13
Mar. 13
Mar. 13
Mar. 13
Mar. 13
Mar. 13
.

—

STOCK EXCHANGE—As of Feb.
omitted):
carrying margin accounts—
Total of customers' net debit balances
Credit extended to customers
Cash on hand and in banks in U. S
Total of customers' free credit balancesMarket value of listed shares.—.——
Market value of listed bonds
——
Member borrowings on U. S. Govt, issues.a._
(000's

firms

Member borrowings on

97,397

114,104

47,269

411,646

404,297

306,130

952,827

947,966

669,089

100,245,611
115,801,060

99.339,824

116,164,521

132,425

178,396

78,638,810
127,777,273
87,576

629,107

665,423

554,966

$927,930,231
645,421.522

$657,044,949

other collateral

EARNINGS — CLASS I ROADS
OF AMERICAN RRS.) —

RAILROAD

Month

January:

operating revenues
operating expenses
Operating ratio-per centTotal

—

Total

—

Taxes

WHOLESALE PRICES NEW

LTD.—Month of Feb

(ASSOCIATION
'

242,870

4,078

BANK,

BRITAIN-

YORK

NEW

Member

1,258,027
12,610
1,245,417

ISSUES IN GREAT

railway

Net

income

69.55%

546,660,531
83.20%

121,000,000

$64,077,602
32,796,003
13,500,000

$36,780,600

$13,481,200

20,360

20,170

12,199

39,219

20,256

12,871

11,068

9,911

9,282)

$109,414,627
operating income before charges
77,690,911
after charges (est.)
——
56,000,000
—

——-

Net

$848,/28,726
645-^6,272

——-

$154,803,205
113.318.982

152.6

183.4

183.5

183.4

203.0

202.3

203.4

189.1

187.5

195.5

165.5

RECT

AND

268.4

266.9

271.1

201.0

188.0

188.9

190.1

155.5

272.0

273.8

277.5

213.5

159.8

TREASURY MARKET
U.

sales

Net
Net

——r;

171.8

170.8

185.1

182.8

181.8

137.2

139.0

138.6

137.5

131.8

189.3

190.7

188.7

168.3

Production (short

227.2

226.9

226.7

194.3

Shipments

146.9

148.7

147.2

116.0

Stocks at

OXIDE

-—---

—

purchases—

146.0

ZINC

TRANSACTIONS IN DI¬
SECURITIES

GUARANTEED

A.—Month of February:

(BUREAU OF MINES)

$261,227,500

Month

of January:

tons)
(short tons)
end of month (short tons)--—

*Revised.

.'(Decrease—All stocks (bbls.).

The Commercial and Financial Chronicle

(1262)

•

Now in

Securities

Registration

Thursday, March 22, 1951

INDICATES

ADDITIONS

SINCE PREVIOUS ISSUE
VI

Aihambra

Gold

Mines

Corp., Hollywood, Calif.
80,000 shares of common stock. Price—At
share). Underwriter—None. Proceeds—For
further development of mine and for working capital. J
Nov.

par

filed

($1

per

•

Alhambra-Shumway Mines, Inc.
March 7 (letter of notification) 300,000 shares of common
stock (par 10 cents), to be offered to stockholders only.
Price—5 cents per share. Underwriter—None. Proceeds
—To pay corporate expenses and obligations.
Office—
681 Market St., San Francisco 5, Calif.
Alliance Tire

Rubber

Co., Berlin, N. H.
Jan. 25 filed 144,151 shares of $5 cumulative convertible
preference stock (no par) and 144,151 shares of $3 cumu¬
lative second preference stock (no par), together with
voting trust certificates representing the same, offered
in exchange for 144,151 shares of $6 cumulative convertible preferred stock on basis of one share of each
class of preference stock for each share of $6 preferred
stock; offer expires March 26 unless extended.
Georgeson
& Co.
soliciting exchanges.
Statement effective

stock

speculation). Underwriter—None. Proceeds—

filed

Mills Corp. (3/28)
shares of convertible

tires and other rubber products.

equipment.

offered in units of
of

common

one

stock.

Proceeds—To

acquire plant, to pay
Expected after the

indebtedness and for working capital.
middle of the month.
American Gas & Electric Co.

(3/29)

Underwriters—To be

Probable

securities

The

filed

Development Corp.,

106,420 shares of

common stock
(par $1).
Price—$25 per share. Underwriters—Harriman Ripley &
Co., Inc., and Estabrook & Co. as joint managers. Pro¬

ceeds—To
•

make

•

Incorporated, New Orleans, La.

stock

(par 50 cents) to be sold in units of

one

one common share.
Price—$10.50 per unit
and 50 cents per share for common stock.
Underwriter—
Woolfolk & Shober,

Inc., New Orleans, La.- Proceeds—

For

working capital.

Orleans

Office—513 Carondelet Bldg., New

12, La.

Black, Sivalls & Bryson, Inc., Kansas City, Mo.
March 15 filed 120,000 shares of common stock
(par $1),
to

offered for

at rate of

$12.50

one

subscription by

share for

share.

per

eacn

common

stockholders

three shares held.

Underwriter—F.

•

Bluhill Foods,

Inc., Denver, Colo.
(letter of notification) 450 shares of common
stock (par $100), to be offered
to, stockholders only.
Price—$50 per share. Underwriter—None. Proceeds—
For general funds.
Office—711 South Broadway, Den¬
8

9, Colo.

;

Bristol

Silver

ver

March 2

;

'■;/■/■
Mines

Co., Salt Lake City, Utah
(letter of notification) 1,633,124 shares of com¬

stock

mon

being offered for subscription by stockholders
of record March
15, 1951, at rate of one share for each
two shares held
(with an oversubscription privilege);
rights to expire on or about April 28.
Price—At par
(10

cents

For

Lake

per

15 filed

share).

development; of
City 1, Utah.

Underwriter—None.
Office—218

ore.

Felt

Proceeds—

Bldg.,

Salt

■

Underwriter—None.

■

'/'»

'-'C

■

14 filed

900,000 shares of

common

stock

(par $1)

offered

York.

"as a speculation."
Price — 50 cents per
Underwriter—Willis E. Burnside & Co.', Inc., New
Proceeds—To take up option and develop prop¬

•

stock.

Insurance Underwriters (Utah)
(letter of notification) 10,000 shares of capital
Price
At par $10 (per share).
Underwriter—
—

Proceeds
For additional capital and surplus to
qualify a stock insurance company owned by the com¬
pany. Office—255 East Broadway, Salt Lake City, Utah. /

Colorado

Central

Power

all

offices

maximum

March

held

expire

April

None.

Proceeds—Fori

1951

with

rate

one

•

construction./program.
So. Broadway, Engiewood, Calif.

Cigar Corp., New York

of 7,000

shares of

common^

stock,

basis of 11 shares of Consoli¬

Bates

stock.

Exchange offer to

Statement effective March 2.

stock

(par 7%

cents).

Price—15

cents

per

com¬

share.

Co., New York. Proceeds—For
exploration and development of uranium and vanadium
mining

properties.

City, Utah.
scribed.

Office

—

Offering—Made

522
on

Pelt
March

Bldg.,
15

Price—At

Salt

and

par

Proceeds—For

($20

per

share).

construction

Under-

program.

i-.

17, N. C.

V.iit

Distillers Products Corp.
,r:i
(letter of notification) 340,000 shares of com-; r

Duggan's

Oct.

mon

stock

(par 10c).

Price—75 cents

per

Under- ,;

share.

vj# >■

•

Duncan Coffee

Co., Houston, Tex.
class A convertible com-,
stock (par $2.50). Price—To be supplied by amend-

March 20 filed 150,000 shares of
mon

ment.

Underwriters—Neuhaus & Co., Houston, Tex., and

Dewar, Robertson & Pancoast, San Antonio, Tex. Proceeds—To H. M. and C. W. Duncan, President and VicePresident, respectively, who are the two selling stock-^'
...

holders.

^Electronic

Computer Corp., Brooklyn, N. Y. r
(letter of notification) 90,000 shares of class B
non-voting common stock (par $1). Price—$3 per share.
Feb.

Underwriters—Pioneer

Enterprises,

Inc.,

Bluefield, W.'
Proceeds V

Va., and G. H. Hecht of Washington 5, D. C.
—To provide working capital.

;

Securities

Corp., Philadelphia, Pa.
Feb. 26 (letter of notification) 200,000 shares of capital
stock (par 1 cent).
Price—50 cents per share.' Under¬
writer—Corporation itself. Proceeds—For working capi- *
tal and expansion program. Office—1520 Locust Street,
Philadelphia, Pa.
;
Food

Lake

oversub¬

]

Pr°|fj

First

Consolidated Uranium Mines, Inc.
(letter of notification) 1,000,000 shares of

Underwriter—Tellier

Co., Jersey City, N. J. Proceeds—To pay
balance of purchase price for building ($20,000) and for
working capital.

Engineering Corp., Pasadena, Cal.

writer—Olds &

(letter of notification) 11^ shares of common
stock (par $1) to be issued upon exercise of stock
option.
Price—100/115ths of $5 per share. Proceeds—For work¬

stock

stockholders of record March 30, 1951,

share for each 10 shares held; rights to

■

for

common

Helicopters, Inc.
V tP
(letter of notification) 10,000 shares of capita}
Price—$5 per share. Underwriter—None.

New Pork

(4/4)

—

one

' "

ceeds—For the design, construction, test and sale ox
helicopters, for research in the rotary wing field and
for other corporate purposes. Office—545 Fifth Avenue,

supplied by amend¬
ment.
Underwriter—Eastman, Dillon & Co., New York.
Proceeds
To prepay short-term bank loans and for
working capital.
^ '
Consolidated

Doman

stock.

Office—

March 9 filed 50,000 shares of cumulative
preferred
series of 1951 (no par). Price—To be

March

;

March 14

share for each 8.2

an
oversubscription privilege; rights
Price—$14 per share.
Underwriter—

Consolidated

common

basis of

writers—None.

record

mon

Detroit Edison Co. (3/30)
March 1 filed 850,000 shares of
offered to

;

Co.

stock

•

filed

expire April 26.

(letter of notification) 19,037 shares of common
(par $5)
offered to common stockholders of

•

]

—

Feb. 28

3470

Proceeds—For investments.

anticipated contributions not to exceed $240,000.

March 7

(par $1) to be issued in connection with member^/
ships in the stock purchase plan for employees involving /

Citizens

March

dated

Private Wires

<;.•

stock

expire April 30.

Chicago

Chicago.]

Deep Rock Oil Corp., Tulsa, Okla.

March

erties.

standing Bates shares)

Cleveland

Swift, Henke Co. of

•

Paul W. Heasley, the holder of the option,
will sell 50 of the shares through
Hopkins, Harbach &
Co., Los Angeles, Calif., and retain the other 50 shares.

San Francisco

and

without underwriting, and the remaining 10,000
shares^
are
to be issued in exchange for 10 patented mining;
;j
claims in the Hunter Mining District.

Petroleums, Ltd., Toronto, Canada

Co., Inc., New York
220,000 shares of capital stock (par 10 cents),
offered in exchange for 200,000 shares of common stock
of Bates Manufacturing Co.
(Consolidated now owns
51,400 shares, or approximately 13% of the 391,500 out¬

Philadelphia

Co.

in¬

ing capital.

Pittsburgh

Day Mines, Inc., Wallace, Ida.
'
'Feb. 21 (letter of notification) 58,425 shares of common'1
stock (par 10 cents), of which 48,425 shares are to be
publicly offered at $4 per share by the escrow-agent,

Price—

Proceeds5—For

Consolidated Textile

Boston

N'oves

Proceeds—To selling stockholder.

—None.

Dec. 27 filed

New York.

Co., Chicago, III.

(letter of notification) 1,000 shares of commoD
(par $5). Price—$5.50 per share. Underwriters— ti

David

each

■;

Fund, Inc., New York
'
1,088,195 shares of capital stock.
''//

Chevron

share.

Price—

S. Yantis & Co., Inc.,

Chicago, 111. Proceeds—To a\quire stock of Zenite Metal
Corp.
March

Chemical

None.

•

share of preferred for

i!'

Sexton

reserved for

are

March

preferred and

com¬

per

share.

common

vestment.

•

Jan. 8 (letter of notification) 19,397 shares of
6% cumu¬
lative preferred stock (par
$10) and 58,940 shares of
common

Cribben &
Feb.

111.

l/25th of

At the market,

Price—At par ($5 per share). Underwriter—Con¬
tinental Corp., Tulsa, Okla.
Proceeds—To purchase oil
B.

Louisiana

and

common

Price—$1.75

share. Underwriter
—None/ Proceeds—To purchase additional, gas and
oil]
royalties. Office—740 Wilson Bldg., Dallas, Tex.

March

stock.

and gas properties.

stock (par $1).

mon

filed

Corp., Tulsa, Okla.
(letter of notification) 48,046 shares of capital

Continental Royalty Co*, Dallas, Tex.
8 (letter of notification) 171,428 shares of

stock

•

Atlantic Oil
Nov.

•

March

(letter of notification) 450 shares of class B
Price—At par ($10 per share). Under¬
writer—None. Proceeds—For working capital.
stock.

common

basis of 11 shares for each

investments in certain enterprises.

Arizona Cheese & Cattle Co.,
Yuma, Ariz.

March

100)

offered in exchange for shares of common stock of Gulf
Service Co., Inc., on basis of 4/10ths of a share

Boston, Mass.
Feb.

Airways, Inc., New York
123,640 shares of com¬
being offered to common stock¬

The
remaining 35,497 common
Crossett Lumber Co., Crossett, Ark.
Al
possible future issuance and sale
Feb. 16 (letter of notification) an unspecified number of*
by the company to holders of common stock then out¬
j,
/ shares of common stock
(par $5) to raise approximately^
standing. Underwriter—None. Purpose—To acquire not '
less than 429,600 shares (80%) of Gulf common stock.
,$300,000. Price—$21.50 per share. Underwriter—Equit-vr
able Securities Corp. of Nashville, Tenn.
Statement effective March 12.
Proceeds—Forjp
'//VAAAA.'AA'/YAv
working capital.
::c
/
/ "
Chanslor & Lyon-Palace Corp., San Francisco
Culver Corp., Chicago, III.
(4/10)
Feb. 6 (letter of notification) 11,111 shares of
jl
capital
Oct. 23 filed 132,182 shares of common stock (par $5) A
stock (par $5).
Price—At market (estimated at $9 per
of which 4,818 shares are to be offered to stockholders
share).
Underwriter—Hooker &1 Fay, San-Francisco,
and 127,364 shares to Dublic. Price — To stockholders ar>
;
Calif.
Proceeds—To six selling stockholders.
Office—
I$5 and to public at about $6.75 per share. Underwriter'
730 Polk Street, San Francisco) Calif.

(EST) on March 29,
company's office, 30 Church Street, New York 8, N. Y.
Research

Gulf

Bids—To be received up to 11 a.m.

American

Electric Co., Geneva, III.
!V
(letter of notification) $300,000 of 6% sinking)/
fund debentures due Dec. 1, 1975 (to be issued in
units*.,
of $100, $500 and $1,000 each). Price—91% of
principal).r
amount.
Underwriter—Boettcher
&
Co., Chicago, 111.
Proceeds—To retire indebtedness and for working capi-, v
tal. Office—715 Hamilton St., Geneva, 111.

Public

operating subsidiaries as part of the Sys¬
tem's plan for financing its large construction program.
at

(par

Continental

Electric Co., Inc.
250,297 shares of common stock (par $10)
and 21,480 shares of 4.5% preferred stock (par $100), of
which the preferred stock and 214,800 shares are to be

Jan.

First

Services, Inc., 20 Pine Street,
Registration statement effective

March 2

(letter of notification)

Central

determined

bidders:

writers—Sills, Fairman & Harris, Inc., Chicago, and
Gearhart, Kinnard & Otis, Inc., New York. Proceeds—
working capital and general corporate purposes. 1

held; rights to expire March 31. Underwriter
—Sterling, Grace & Co., New York, up to an aggregate
price of $150,000. Proceeds—For working capital.

by competitive
Boston Corp.;
Union Securities Corp.; Dillon, Read & Co. Inc.; with
bidders
to
name
compensation
following company's
naming of price.
Proceeds—To be invested in equity

bidding.

For

100 shares

1951, on the basis of one share for each 15 shares
held, together with an oversubscription privilege; rights
to expire April 17.
Price—To be supplied by amend¬
ment.

mon

Eastern

holders of record March 5

30,

Commonwealth

Car-Nar-Var Corp., Brazil, Ind.
(letter of notification) 150,000 shares of com-/
(voting) stock (par $1). Price—$2 per share. Under¬

March

sale of "Tintair."

and

stock

mon

Feb. 28 filed 339,674 shares of common stock (par
$10),
to be offered to common stockholders on or about March

York

Continental

California
March

Proceeds—To?-1

and

Production

Dairy Products Corp., N. Y.
300,000 shares of preferred stock (par $4)
300,000 shares of common stock (par 10 cents) to be
16 filed

(jointly).

March 14.

both of New York.

and

& Co.

bonds, to repay $8,000,000 of bank loans and for 1951 construction program.
Bids—To be opened at 11 a.m. (EST) on March 27, at
New

share of preferred and one share
Price—$5 per unit.
Underwriters—
Emanuel, Deetjen & Co. and Barrett Herrick & Co., Inc.,

American

Co. and Glore, Forgan

office

Bymart, Inc., New York
Feb. 28 filed 5,000 shares of 5% cumulative preferred'
stock
(par $100) and 50,000 shares of common stock *■,
(par $1) to be offered "as a speculation," in units of
one share of preferred and
10 shares of common stock.
Price—$200 per unit. Underwriter—None; Proceeds—
to repay bank loans and purchase equipment. Business—

Feb.

filed

with

Harriman Ripley & Co., Inc. and The Firsts
Corp. (jointly); White, Weld & Co. and Shields*;
Co.* (jointly); Morgan Stanley & Co.; W. C. Langley,;

preference

Proceeds—For additions and improvements to plant

Statement effective March 9.

(jointly);
&

(par $100). Price—To be supplied by amendment.
Peabody
&
Co.,
New
York.

Underwriter—Kidder,

through private channels.

(3/27)

Boston

300,000

To construct and equip a modern tire and rubber plant
in the State of Israel Business—Plans manufacture of

Offering—To be made

Co.

redeem $5,300,000 of first mortgage

Burlington

fered

Power

$40,000,000 of first mortgage bonds, due
interest not. exceeding 2%% and maturing j
not earlier than 1981.
Underwriters—To be determined),
by competitive bidding. Probable bidders: Halsey, Stuart *
& Co., Inc.; Kuhn, Loeb & Co. and Union Securities Corpjr.

Co., Ltd.
March

1981,

Feb. 1 filed 28,770 shares of class A common stock (par
Israeli pounds). Price—$50.40 per share (to be of¬
a

Feb.

Feb. 21.

five

Consumers

Brown

Machinery & Chemical Corp. (4/10)
sinking fund deben¬
15, 1976.
Price—Plus coupon rate, to

March 14 filed $25,000,000 of 25-year
tures

due

March

]
t

Number 4996

rolume 173

Jersey Central Power

le filed by amendment. Underwriters—Kidder, Peak>dy & Co., New York, and Mitchum, Tully & Co., San
rancisco, Calif. Proceeds—For new construction and
ther general

(1263)

The Commercial and Financial Chronicle

NEW ISSUE CALENDAR

corporate purposes.

March

Forming Machine Co. of America, Inc.
(letter of notification) 450 shares of common
;tock (par $1), to be offered to common stockholders
Vlarch 16

Jones & Laughlin Steel
.

about March

record

ach

five

basis of

share for

(with an oversubscription

shares held

privi-"

March

Price
Proceeds—For
Street, Bound

share.
Underwriter—None.
capital.
Office—18 Hamilton

per

orking
rook,. NV< J.

March

3th

St., Columbus, Ga.

Great Northern Ry. noon
Sinclair

Valentine

Equip. Tr. Ctfs.

(EST)

Common

March

ferred, together with proceeds to be
sale of 350,000 additional common

Common

Washington Gas Light Co

(EST)--Com.

a.m.

arch 9

March

debentures due 1961 and 35,000 shares of common stock

Detroit

'par 10 cents) offered in uints of a $1,000 debenture and
00 shares of stock. Price—$1,000 per unit. Underwriter

Common

North

American

March

1951

March

Common

Rapid Film Technique, Inc

Proceeds—For investment.

Corp., Nashville, Tenn.
.March 5 (letter of notification) 7,500 shares of common
Istock (par $1) to be issued to The G. Edwin Smith Shoe
Co. in exchange for capital stock of The Nisley Co.
Underwriter
None, but it is expected that Smith,

Granite

Common

a.m.

Shoe firm. Offering—Expected latter part of

•

April 4,

159,142 shares of class B common stock
Price — To be filed by amendment. Under¬

Consolidated

(par $1).
writer—Glore,

Forgan & Co., New York. Proceeds—4
For working capital and general corporate purposes.
Offering—Deferred indefinitely.
•

Gottscho
15

Vanity

•

(Adolph),

Oklahoma

Gas

April

Plywood, Inc.

____^
f-

Granite City Steel

Common

1951

March
stock

1951

;

•'

-V:

../■

Debentures
•

•

Bros., Inc., the

April 10, 1951
Culver Corp.
Food

Debentures

Machinery & Chemical Corp

Mountain States Power Co. 10:30 a.m.

(CST)__Com.

right to expire on March 31. Unsubscribed
offered publjcly.
Price—$45 per share.

share held;

(CST)___Bonds

Underwriter

April 16, 1951
Public

Bay,Drop Forge Co., Green Bay, Wis.
$200,000 of first mort¬
gage 5% serial bonds due annually Feb. 1, 1952 to Feb. 1,
1961, inclusive. Price—At par and accrued interest. Un¬

Service Co. of

—

Proceeds

None.

—

convert to

equipment and for expansion program.
Arch Street, Kittanning, Pa.

Bonds

Oklahoma

Co., Kittanning, Pa.

(letter of notification) 6,021 shares of capital
stock (par $25) being offered, first to stockholders of
record Feb. 24 at rate of 223/1000ths of a share for each
15

Feb.

.....Common

a.m.

selling stockholder.

Kittanning Telephone

.___

Mountain States Power Co. 11

(Calif.)

of notification)

Kingsburg Cotton Oil Co., Kingsburg, Calif.
1 (letter of notification) 6,000 shares of capital
(par $1). Price—$5.25 per share. Underwriter—
Fewel & Co., Los Angeles, Calif. Proceeds—To Fewel

.Common

■

Kingsburg

Office

—

dial
208

Green

Feb.

Proceeds—To

derwriter—None.

pay

debt

•

mulative

April 24, 1951

May

(no liar).
competitive Ad¬

March 21 filed 200,000 shares of common stock
Underwriters—To

determined

& Beane and Lehman Brothers

Securities

ter

June

•arid general

corporat purposes.

April. V-/. v

July 17,

V"-'

v"''"•

of notification) 34,320 shares of class A
'common 'stock
(par $1). Price—$5 per share. Under¬
writers—Company itself in New York, and Jackson &
March 14 (letter

Co., Boston, Mass. Proceeds—For partial financing of
anticipated military contracts and for acquisition of new
-manufacturing facilities.
Office—80 Wall Street, New
•Fork 5, N.

Hamilton

'Oct.

stock

Insurance

Co.,

Philadelphia

(letter of notification) 64,000 shares of capital
$5). Price—$4.50 per share. Underwriter—

(par

Jenks, Kirkland & Grubbs, Philadelphia, Pa. Proceeds—
'To increase capital and surplus in order to offer addi¬
tional

lines

of insurance,

liability coverage.

and

including automobile casualty

Financing indefinitely delayed.

(4/3):'*
March 19 filed 20,000 shares of $2.50 cumulative pre¬
ferred stock (no par). Price—To be suppiled by amend¬
ment.
Underwriter—Paine, Webber, Jackson & Curtis
and Stone & Webster Securities Corp.
Proceeds-^-For
Indiana

new

Associated Telephone Corp.

Inter-County Telephone & Telegraph Co. 'fT
March 12 (letter of notification) 3,000 shares of 5% cu¬
mulative preferred stock, series B. Price—At par ($25
share).

Underwriter — Florida

Securities Co., St.

H. W. Freeman & Co., Ft. Myers,
Fla.—Proceeds—For general corporate purposes.
Petersburg, Fla., and

•

Inter-Mountain Telephone .Co., Bristol, Tenn.

March 16 filed 142,500 shares of common stock (par $10)
to
on

offered for subscription by common

basis of one share for each two shares

To be supplied by amendment.

Co^, Atlanta, Ga.

stockholders
held. Price—

Underwriter—Courts &

Proceeds—To reduce Indebtedness.

Calif.

preferred stock (par

stockholder.

Bonds

March

(letter of

...Preferred

Stanley S. Langendorf,
•

Fund, Inc., New York
shares of capital stock.
Underwriter—Lewis Management Co.,

Lewis

(John H.)

Lithium Corp.

Price—At

the

Los Angeles, Cal.

1,500,000 shares of common stock (par$l).
Underwriter—None. Proceeds—

market.

For investment.
•

Israel
19

filed

stock.
None.

Proceeds—For corporate
&

Metrick,

purposes

and the pur¬

(steel) for resale. Office—Care
320 Broadway, New York, N.

of
Y.

Jerry Fairbanks, Inc., Hollywood, Calif.
of notification) 193,000 shares of common

Feb. 16 (letter
stock

Price—$1.50 per share. Underwriter—
York. Proceeds—For production of
pictures for theatrical and television purposes
working capital.

(par $1).

D. Gleich Co., New
motion
and for

stock

(letter of

per share).
Louis Mo.;

Underwriters—Peltason, Tenenbaum Co., St.
Chicago, 111. Proceeds—To
Minneapolis, Minn., the selling stock¬

and Riter & Co.,

Karl M. Leute of
holder.

Lone Star

Steel Co., Dallas, Tex.

(4/2)

unspecified number of shares of com¬
(par $1) to be offered to first common stock¬

March 8 filed an
mon

stock

Price—To be supplied

writers—Dallas Rupe &

(letter of notification) 15,000 shares of common
Price—At par ($10 per share).
Underwriter—

Efrein

of America, Inc.
notification) 12,500 shares of common
(par$l). Price—At market (approximately $6.87^

Feb. 28

holders.

chase of merchandise

selling stockholder.

Lithium Corp.

Israel Steel Corp.

Jan. 2

of America, Inc.

borne, the

$500,000,000

Inc., New

(letter of notification) 1,000 shares of common
stock (par $1). Price — $6.75 per share. Underwriter —Riter & Co., Chicago, 111. Proceeds—To Willis W. Os¬

Feb.

(State of)

"Independence Issue"
bonds, in two types, viz: 15-year 31/2% dollar coupon
bonds due May 1, 1966; and 12-year dollar savings bonds
to be dated the first day of the month in which issued
and to have a maturity value of 150% of par. Price—At
100% of principal amount. Underwriter—American Fi¬
nancial & Development Corp. for Israel.
Proceeds—P^or
economic development of the State of Israel.
OfficeAuthorized agent is located at 11 East 70th St., New
March

Price—At

Proceeds—For investment.

York.

Investment Co. of America,

Underwriter—
Proceeds—To
the selling stockholder.
«

March 15 filed 100,000

Bonds

market.

•

notification) 816 shares of common

(par $1). Price—$25.25 per share.
First California Co., San Francisco, Calif.
stock

1951

York, N. Y.

construction, etc.

•c

per

Power

March 15 filed

Fire

share.

September 11, 1951
Alabama

notification) 1,053 shares of $1.80 cu¬
$25). Price—$30.62V2 per
Underwriter—First California Co., San Francisco, •
Proceeds—To Stanley S. Langendorf, the selling

mulative

1951

Mississippi Power Co

Gyrodyne Co. of America, Inc.

stockholder.

March 9 (letter of

Georgia Power Co

construction
Offering—Expected in
new

the selling

1951

.....Common

(jointly); Stone & Webs¬

Proceeds—For

Corp.

Telegift, Inc.

Merrill Lynch, Pierce, Fenner

Probable bidders:

ding.

Bonds

Monongahela Power Co

Gulf States Utilities Co.

Langendorf United

March 8 (letter of

Equip. Trust Ctfs.

Illinois Central RR.__

for

and

Bakeries, Inc.
notification) 1,500 shares of $1.80 cu¬
preferred stock (par $25). Price—$30.62V2 per
share. Underwriter—Walston, Hoffman & Goodwin, San
Francisco, Calif. Proceeds—To Stanley S. Langendorf,
•

April 19, 1951

(letter of notification)

working capital.

•

Preferred
Debs. & Common

Electric

•

Co. (4/3)
March '14 filed 248,600 shares of common stock (par
$12.50) to be offered for subscription by common stock¬
holders of record about April 3 on basis of one share for
each four shares held; rights to expire on April 17. Price
-^'To be supplied by amendment. Underwriters — The
First Boston Corp. and Merrill Lynch, Pierce, Fenner &
Beane, both of New York. Proceeds—For expansioliiitrogram.
V/
.

Cotton Oil Co.
42,187 shares of common
stock (par $1), being offered to common stockholders
of record March 10 on basis of one share for each 10
shares held; rights to expire on April 20. Price—$4.25
per share.
Underwriter—None. Proceeds—To construct
cotton gin. Address—P. O. Box 277, Kingsburg, Calif.
•

March 8 (letter

1951

Fair Mills, Inc.____

Inc.,

;

•.

Littleton, Colo.

(EST)__Bonds

Cigar Corp

April

(letter of notification)

capital.'** ■"

Preferred

Thompson Products, Inc

Hillside, N. J.
12,000 shares of com¬
mon stock (no par).
Price—$10 per share. Underwriter
^-None.' Proceeds—For new equipment and working
March

(EST)_ ..Equip. Tr. Ctfs.

Co.

filed

Kanarado Mining &

March 9 (letter of

Common

(EST)

a.m.

Worcester County Electric Co. noon

Distilleries

Glenmore
Dec.

stock, together with other corporate funds, to
$40,000,000 in serial notes issued on Feb. 1, 1951,
connection with expansion program. Expected week
of

Development Co.
notification) 200,000 shares of common
stock. Price—At par ($1 per share). Underwriter—None.
Proceeds—For working capital. Office—500 Sumner St.,

Bonds

(EST)_____

Tennessee Gas Transmission Co.*

early in April.

11:30

Southern Pacific Cor noon

behalf of the Smith
this month

Co.

(par

of March 26.

Preferred

—

Southern

Laughlin Steel Corp. (3/26-31)
1,000,000 shares of common stock

filed

retire

Telephone Corp

Potomac Edison Co.

$10). Price—To be supplied by amendment Underwriter
First Boston Corp., New York. Proceeds—From

1951

City Steel Co

Indiana Associated

Barney & Co., New York, will make a secondary offer¬

Proceeds—For investment.

—The

sale

April 3,

Shoe

ing of aforementioned

Jones &

Preferred

March 14.

Fund, Inc., N. Y.
filed 25,000 shares of capital stock (par $1).
market (about $30.22 per share). Underwriter

Price—At

Telegraph Co.__Com.

Acceptance Corp

Lone Star Steel Co

received from the

Johnston Mutual

•

—None.

Trust, Boston, Mass.
March 19 filed 75,000 trust shares. Price—At the market

General

Co._

April 2,

Investors

.Underwriter—None.

Edison

1951

30,

Mountain States Telephone &

i—Gearhart, Kinnard & Otis, Inc., Inc., New York; Pro¬
ceeds—For working capital. Being placed privately.
General

Statement effective

March 27.

General

Appliance Corp., Springfield, Mass.
(letter of notification) $50,000 of 6% convertible

(3/27)

shares to General
Public Utilities Corp., the parent, will be used for new
construction.
Bids—To be received until noon (EST)

1951

29,

American Gas & Electric Co. 11

■>

Preference

Burlington Mills Corp

—

& Light Co.

of cumulative preferred stock

petitive bidding. Probable bidders include Glore, Forgan
& Co.; Kidder, Peabody & Co.; Merrill Lynch, Pierce,
Fenner & Beane and White, Weld & Co. (jointly); The
First Boston Corp.; Union Securities Corp. and Salomon
Bros. & Hutzler (jointly). Proceeds—From sale of pre¬

1951

28,

Securities

Underwriters—To be determined by com¬

(par $100).

Light Co. of Columbus (Ga.)
(letter of notification) $250,000 of 6% cumulaive preferred stock to be offered for subscription by
'ommon stockholders.
Price
At par ($50 per share),'
nderwriter—None.
Proceeds—From sale of stock, to¬

Insurance Co.,
Office—107—

Jersey Central Power
Feb. 21 filed 40,000 shares

Bonds & Pfd.

Gas

gage bonds to Northwestern Mutual Life
,o expand natural gas distribution system.

Bonds

(EST)

a.m.

(EST)

"arch 9

$750,000 mort¬

Common

Jersey Central Power & Light Co.

•

gether wtih proceeds from private sale of

Common

1951

27,

Co. (jointly); Equitable

The First Boston Corp.; Otis & Co., Salomon
Bros. & Hutzler; Harriman Ripley & Co., Inc.; Kidder,
Peabody & Co.; Glore, Forgan & Co. Proceeds—For ex¬
pansion program.
Bids—To be received by company
at 67 Broad Street, New York, N. Y., until noon (EST)
on March 27.
Statement effective March 14.
Corp.;

Corp

Consumers Power Co. 11

noon

& Co. and Shields &

1951

26,

New Hampshire Fire Insurance Co

April 14); rights expire on April 4.

ege good to

-$100

one

(3/27)

$1,500,000 first mortgage bonds due in 1981r
Underwriters—To be determined by competitive bidding
Probable bidders: Halsey, Stuart & Co. Inc.; White, Weld
Feb. 21 filed

& Light Co.

Boston, Mass.; and
Proceeds—To amount to
& Co.,

by amendment. Under¬

Son, Dallas, Texas;

Estabrook

Straus & Blosser, Chicago, 111.
$6,000,000, to reimburse com¬

% first mortgage bonds.
Ohio
March 13 (letter of notification) 6,705 shares of common
stock (no par), to be offered to common stockholders '
at the rate of one share for each 10 shares held. Price—
$20 per share. Underwriter—None. Proceeds—For work¬
ing capital. Office—203 West Ninth St., Lorain, Ohio.
pany
•

for redemption

Lorain Telephone

Co., Lorain,

Continued

on page

{

The Commercial and Financial Chronicle

(1264)

•

Continued from page 43
Lorillard

(P.)

Co., New York

expire April 4.
Price—$20.50 per
writers—Lehman Brothers and Smith,

Under¬
& Co.,

share.

Barney

Oklahoma Gas

Proceeds—To reduce bank loans.
'

1951

at rate of

ccock (par

$100). Price—At market. Underwriter—Stillman, Maynard & Co., New York. Proceeds—To selling
Metal Products Mfg. Co. Inc.
12 (letter of
notification) 25,000 shares of class A

Underwriter—None.

construction

Proceeds—For

Pacific Gas

$500 and $1,000 each). Underwriter—The Ohio Company,
Columbus, Ohio. Proceeds—To retire notes and purchase
equipment. Office—70 West Park St., Grove City, Ohio.

Electric Co.

tive

Moore-Handley Hardware Co., Inc.

March

Price—$28

per

For further

development of Israel industry.

Office—27 South 20th St., Birmingham, Ala.

Morton Oil Co., Casper, Wyo.
Feb. 21 (letter of
notification) 100,000 shares of common
stock (par 10 cents). Price—60 cents
per share. Under¬

writer—Lasser Bros., New York.
E. Kay, the selling stockholder.
Mountain
March

States

Power

Proceeds—To Gordon

Co.

bank

loans

and

for

new

construction.

Bids—To

record

Co., Inc.; Merrill Lynch,
Beane; Lehman Brothers; A. C. Allyn
Bear, Stearns & Co. (jointly). Proceeds—To

Fierce, Finner

Bids—

111.,

April 10.

v;:

Mountain States Telephone &
Telegraph Co.
(3/30)
March 9 filed 215,709 shares of
capital stock to be offered
to common stockholders of record
March 30 in ratio of
one share for each five
shares held. Price—At par
($100
per share); rights expected to
expire on April 30. Un¬
derwriter— None.
Proceeds—To
repay
advances
to
American Telephone &
Telegraph Co., the parent, and
£or general corporate
purposes.
•

Murphy Ranch Mutual Water Co., Whittier, Cal.
March 9 (letter of
notification) 40 shares of common
etock. Price—$9.18
per share. Underwriter—Perry-Mon-

ohand Realty Co., who sold the land.
Proceeds—To Mur¬
phy Ranch Land & Development Co. Address—Box
31,
Whittier, Calif. ...-V
Finch

Co., Minneapolis,

Underwriter—None.

Minn.

per

Proceeds

—

share.

For

National Gypsum Co.,
Buffalo, N. Y.
March 14 filed 68,652 shares of
common stock
to be offered in

^National for

one

share of Mortar.

Underwriters—None.

New Hampshire Electric Co.
Jan. 25 filed 15,000 shares of
$4.50 cumulative preferred
stock (par $100) and
140,000 shares of common stock
(no par).'Of the latter, 129,367 shares are to be
offered
for subscription
by common stockholders of New
Eng¬
land Gas & Electric Association
(parent) at rate of one
New Hampshire share for each
12 New England common
shares held. Underwriter—To
be determined
by com¬
petition biddnig. Probable bidders:
The First Boston

Corp.; Kidder, Peabody & Co.

and White, Weld & Co.
Lehman Brothers; Harriman
Ripley & Co.,
(latter for preferred
only).
Proceeds—To retire
$2,425,000 of 2%% bonds and the remainder to
retire
4%% preferred stock of New
England. Statement effec¬
tive March 6.
Bids—No bids were received for
either
issue on March 20.

(jointly);

Inc.

New Hampshire Fire
Insurance Co. (3/26)
.March 5 filed 75,000 shares of
capital stock (par $10) to
-toe offered to stockholders of
record March
26, 1951 at
rate of one share for each
four shares
held; rights will
expire on April 10, 1951.
Price—To be supplied
by
amendment.

•

basis of

five

shares for each

Bldg.,

Santa

Barbara,

Calif.

Underwriter—The First Boston
Corp., New

Proceeds—To increase capital and
surplus.
North American
Acceptance

Corp.

(4/2)

March 20 (letter of
notification) 15,000 shares of 60-cent
cumulative convertible preferred
stock (par $5).
Price
—$10 per share. Underwriter—Michael

Inc., Providence, R. I.

Investment Co.,

Proceeds—For working capital.

...

Mining Co.,

(letter of notification)

stock (no par)

mon

•

(letter of notification) 5,000 shares of commc
(par $10) being offered to stockholders of record

March

(with

basis of

one

share for each 10 shares hel

oversubscription

Price—$20

Proceeds—To

Address—P.

rights expire o$
Underwriter—None^

privilege);

per

share.

provide additional capital and
Box 1199, Columbia, S. C.

surplus:

9VU1II
SUIIC
Wl allium
mmvs
biM.
South
State
Uranium
Mines
Ltd.

\vauaua;
(Canada)
of capital stock. Price—At
par ($1 per share). Underwriter-Optionee—Robert Irwir*
Martin of Toronto. Proceeds—For commissions, explora¬
tion and development expenses, and working capital,-.,^

Nov. 30 filed 560,000 shares

Southern Co.

Milling Co., Las Vegas, Nev.
Price—At

($1 per share). Underwriter—None. Proceeds—To
purchase machinery and equipment, to construct a mill
in Mexico and for general corporate purposes.

Pepsi-Cola

Bottling Co. of Washington,

D. C.,

Inc.

Feb. 20

(letter of notification) 50,000 shares of common
(par 10 cents). Price—40 cents per share. Under¬

stock

writer—Ferris

Washington, D. C. Proceeds—To
go to Samuel Schwartzman, the selling stockholder.
Co.,

Piedmont Natural

Feb.

filed

rate of

Co., Inc.

100,000 shares of

to be offered to
at

Gas

common

stock

(par $1)

stockholders of record March 19

share for each 2V2

shares held; rights to
Price—$4.50 per share.
Underwriter
—White, Weld & Co., New York. Proceeds—To construct
one

expire March 30.

and

operate six lateral pipe lines.

•

Pigeon Hole Parking, Inc., Spokane, Wash.
Feb. 16 (letter of notification) 300,000 shares of common
stock. Price—At par ($1 per share). Underwriter—None.
Proceeds

—
For working
Bldg., Spokane, Wash.

•

capital.

Plywood, Inc., Detroit, Mich.

Office

—;

718

Peyton

(4/9-14)

March 15 filed $1,500,000 of 6% sinking fund

debentures,

supplied by amendment. Underwriters—H. M.
Byllesby & Co., Inc., Chicago, 111., and P. W. Brooks &
Co., Inc., New York. Proceeds—To erect plant and install
equipment. Offering—Expected week of April 9.
Edison Co.

Probable

filed

$10,000,000 first mortgage and collateral

trust bonds due April 1, 1981. Underwriter—To be deter¬
mined by competitive bidding. Probable bidders:

Halsey,

Stuart

Co.

Inc.; W. C. Langley & Co. and The First

Boston Corp. (jointly); Kidder, Peabody & Co. and Alex
Brown & Sons (jointly);

Bros. & Hutzler; Harriman Ripley & Co.,
Inc., and Union
Securities Corp. (jointly); Lehman

Brothers; Equitable

stock to West Penn Electric Co.

common

(parent) for
$4,000,000, will be used for expansion program. Offering
—Expected at 11 a.m. (EST) on April 3.
Public

Service Co. of Oklahoma

March 12 filed

(4/16)
$10,000,000 of first mortgage bonds, series

C, due April 1, 1981. Underwriters—To be determined
by competitive bidding. Probable bidders: Halsey, Stuart
& Co.

Inc.; Glore, Forgan & Co.; White, Weld & Co. and
Shields & Co. (jointly); The First Boston
Corp.; Kuhn,
Loeb & Co. and Union Securities Corp.
(jointly); Salo¬
mon Bros. &
Hutzler; Harriman Ripley & Co., Inc. Pro¬
ceeds—For
ed

new

construction.

received

April

Bids—Tentatively expect¬
16.

Rapid Film Technique, Inc., N. Y. (4/2)
(letter of notification) 60,000 shares of common
stock (par 100). Price, $1 per share. Underwriter—Jacquin, Stanley & Co., New York. Proceeds—To reduce
loans, for improvements, new equipment and working
capital.
March 8

Seaboard
March 1
common

Container Corp.
(letter of notification) 12,000 shares of class A

stock

(par $1).

Price—$5.50

per

share.

writer—Barrett Herrick & Co., New York.
—To

Frederic

Under¬

Proceeds—

Mann, President, who is the selling

stockholder.

Shenango

Valley Water Co.

March 9 (letter of notification)
lative preferred stock (par

2,150 shares of 5% cumu¬
$100). Price^-$105 per share

bidding,

Morgan Stanley & Co., Kidder," Pea*-

Beahl

(jointly); Union Securities Corp. and Equitable Secufrl^
ties Corp. (jointly); Blyth & Co., Inc.; Lehman
Brothers^
Harriman Ripley &
Co., Inc. Proceeds—To purchase
common
stock of the following subsidiaries—Alabama
Power Co., Georgia Power Co., Gulf Power Co. and
Mississippi Co.—who will use the funds for construction

Bids—Expected to be

expenses.

opened at

11:30 a." M

April 3 at company's office, 20 Pine St.;
York, N. Y.
V; '
-'y
•

Nev(r

Standard-Thomson Corp.

March

shares of

(letter of notification)
common

stock

(par $1).

approximately 13,7£G
Price—At the market

(approximately $7 per share). Underwriters—Lee Hi|ginson Corp., Carreau & Co. and Reich & Co., New Yoi$;,
Proceeds—To four selling stockholders.
;
,

State Bond &

Mortgage Co., New Ulm, Minn. T
Feb. 5 filed $1,500,000 of accumulative savings certifi¬
cates, series 1207-A at $95.76 per $100 principal amount
and $15,000,000 of accumulative savings certificates, s6~
ries 1217-A at $85.68 per $100 principal amount. Under¬
writer—None.

Business—Investment.

;

Detroit, Mich.
notification) 100,000 shares of 6%
(convertible
stock (par $1) share-for share) now :oi-

Superdraulic Corp.,
Feb.

(letter

non-cumulative convertible preferred stock

into

common

fered.

common

•

Price—At

stockholders.

par

($1",

Proceeds—For working|
Office—14256 Wyoming Ave., Detroit, Mich.f
Underwriter—None.

capital.

Telegift, Inc., New York (5/1)
20 (letter of notification) 60,000 shares of cofa-

March
mon

stock

(par $1).

Underwriter
a "Gif t£the Telegift Service,

Price—$2 per share.

Proceeds—To

—None.

establish

and

operate

by-Wire" service to be known as
and for operating capital.
Office—40 East 49th Street,
New York 17, N. Y.

Securities Corp.; Drexel & Co. Proceeds—From sale of

bonds, together with proceeds from sale of 200,000 shares

bidders:

body & Co. and Merrill Lynch, Pierce, Fenner &

share).

(4/3)

shares of common stock (par $5K

Underwriters—To be determined by competitive

series A, due April 1, 1963 (with 7-year warrants to pur¬
chase 150,000 shares of common stock attached). Price
—To

(4/3)

March 2 filed 1,000,000

(EST)

•

Glore, Forgan & Co.; Salomon

(par $1)

exchange for 22,884 shares of National
Supply Co. stock in ratio of three shares of

Buckle

Co., New York (3/28)
16,599 shares of com¬
to be offered to common stockhold
ers of record March
28, 1951, at rate of one share f
each ten shares held; rights to expire April 18, 1951
Price—$15 per share. Underwriter—None. fProcecdf
For working capital. Office—611 West 129th Street, N<
York 27, N. Y.
•
•
•
I
•
'
March

April 15.

par

March 2
common

working capital.
Office—1750 Hennepin Ave.,
Minneapolis, Minn.

York.

American

Potomac

Jan. 11 (letter of
notification) 12,137 shares of
stock (par $10). Price—At not
exceeding $20

Mortar &

Proceeds—

Jan. 24 filed 200,000 shares of common stock.

repay bank loans and for expansion
program.
To be received at
company's office in Chicago,
to 10:30 a.m.
(CST) on

Nash

March

Bank

Pan

& Co. and

Underwriter—None.

eight held; rights to expire on April 6.
Price—20 cents
per share.
Underwriter—Burnham & Co., New York.
Proceeds—For working capital, etc.
Office—First Na¬

opened at 11 a.m. (CST) on April 10 at
company's office
in Chicago, 111.
•

Mountain States Power Co. (4/10)
March 7 filed 150,000 shares of common
stock (par $7.25).
Underwriters—To be determined by competitive bidding.
Probable bidders: Blyth &

share for each fiv

Wallace, Idaho
.©1,
March 9 (letter of notification) 161,875 shares of commo
stock.
Price—60 cents per share.
Underwriter—None
Proceeds—To six selling stockholders. Address—Box 469
Wallace, Idaho.

filed

$5,500,000 of first mortgage bonds due
April 1, 1981. Underwriters—To be determined by com¬
petitive bidding. Probable bidders: Halsey, Stuart & Co.
Inc.; Blyth & Co., Inc.; Kidder, Peabody & Co.; Merrill
JLynch, Pierce, Fenner & Beane.
Proceeds—To repay

one

assessable

tional

(4/10)

share.

Stendel Oil Corp., Santa Barbara,. Cal.
(letter of notification) 1,212,200 shares of non¬
stock (par $1) being offered to stockholders

March 5

22, N. Y.

Silver

stock

(par $25).f

Palmer

■

basis of

Feb. 28

Palestine Economic Corp., New York
15 filed 200,000 shares of common stock

general corporate

(with

South Carolina Insurance Co., Columbia, S. C.

purposes.

•

13.

Feb.

•

held

Sinclair & Valentine

March 8 (letter of notification)
30,000 shares of common
gtock (par $1) to be offered to employees under
employ¬
—

pro¬

1,419,562 additional shares of common
stock (par $25) being offered to common stockholders
of record on March 13, 1951, on the basis of one share
for each seven shares held (with an oversubscription
privilege); rights to expire on April 4, 1951.
Price—
$31 per share. Underwriter — Blyth & Co., Inc., New
York. Proceeds—To be applied toward new construction,i
estimated to cost $130,000,000 in 1951.
Statement effec¬

•
Midcontinent Chemical Co., Grove City, Ohio
Harch 13 (letter of notification) $150,000 of 5%% secured
debentures due March 15, 1963 (in denominations of

York

filed

March

gram.

Feb.

stockholder

being offered to common

100)

(par

record

10 shares held, with

121,009 shares and plans to purchase any of
the remaining 94,371 shares not subscribed for by other
stockholders.
Price—To be supplied
by amendment.

voting common stock (par $1). Price—$5 per share.
Underwriter—James T. DeWitt & Co., Washington, D. C.
Proceeds—For organizational expenses and working cap¬
ital. Office—Wolfe and Jackson Sts., Fredericksburg, Va.

■;

share for each

New York.
notification) 13,214 shares of commo

oversubscription privilege); rights to ex
pire on March 30. Price—$10 per share. Underwriter
None. Proceeds—For working capital and used for gen
eral corporate purposes. Office—781 Fifth Avenue, Ne

purchase

stockholder.

•

one

oversubscription privilege; rights are to expire
April 24.
Standard Gas & Electric Co. is entitled

Proceed

Sherneth Corp.,
March 7 (letter of
of

notification) 4,800 shares of common

(4/5)

Electric Co.

Thursday, March 22, 195

repaying short-term debt and for construction pro
gram.
Office—100 Shenango Avenue, Sharon, Pa.

stock

March 5 filed 215,380 shares of common stock (par $10)
to be offered to common stockholders of record April 5,

Maine Central RR.
Feb. 12 (letter of

Proceeds—To Forrest Parrott, the
Office—Petroleum Bldg., Oklahoma

For

None.

—

selling stockholder.
City, Okla.

Underwriter—None.

and accrued dividends.

com¬

Price—At not exceeding 50 cents per share.

Underwrtier

held; rights

Feb.

Producers, Inc., Oklahoma City, Okla.
(letter of notification) 100,000 shares of

stock.

mon

Feb. 28 filed
249,600 shares of common stock (par $10) to
be offered to common stockholders of record March 21
at rate of one share for each nine shares then

ISiew York.

Oil

March

Tennessee Gas

Transmission Co.

(4/3)

cumulative preferred
stock (par $100) and 400,000 shares of common stock
(par $5). Price—To be supplied by amendment." Under¬
writers—Stone & Webster Securities Corp. and White,
March

Weld &
and

for

filed

100,000

Co., New York. Proceeds—To repay bank loam
expansion of pipeline.

Thompson Products, Inc. (4/4)
14 filed $15,000,000 of 20-year debentures

March

duej

April 1, 1971. Price—To be supplied by amendment,
Underwriters—Smith, Barney & Co. and Shields & Co.,

McDonald & Co., Cleveland, O,
bank loans and for general corpo¬

both of New York, and
Proceeds—To

repay

rate purposes..

Thompson Products, Inc. (4/4)
/
^
131,190 shares of common stock (par $5)
offered common
stockholders of record about

March 14 filed
to

on basis of one new share for each eight held;
rights to expire on April 17. Price—To be supplied by
Underwriters — Smith, Barney & Co. and

April 3

amendment.

Shields & Co., New York, and

McDonald & Co., Cleve¬

land, O. Proceeds—For working capital and general cor¬

porate purposes.
•

Vandersee

March 9

Engineering Co., Houston, Texas

(letter of notification) 25,000 shares of 7%

mulative non-convertible preferred stock

cu-|

(par $10) a£d

25,000 shares of common stock (par $1) to be offered hi
one preferred and one common share.
Prices-.]
per unit.
Underwriter—None. Proceeds—For wc

units of

$11

ing capital.

Office—4101 San Jacinto, Houston, Tex.

(1265)

Number 4996

Volume 173

The Commercial

Reading, Pa. (4/4)

Vanity Fair Mills, Inc.,

LV,

?rice—To

200,000 shares of common
supplied by amendment.

Smith, Barney & Co.,
3arney, President,

New York.

Feb

stock (par $5).

Proceeds—To John E.

new

3%%

$10.60
proposal
sold publicly.
of

basis

under

stockholder.

the selling

(issuable

stock

Underwriter—

preferred
in exchange for 6% preferred stock on
of new preferred for each old share,
to split company into two units) may
unexchanged

announced

(jointly); Dillon, Read & Co. Inc.: The First
Boston Corp.; Blyth & Co., Inc.; Morgan Stanley & Ce.
Proceeds—To finance construction program. Offering—.
Curtis

son

Expected late in April.
Rio Grande Western RR.

Denver &

Wilkes-Barre, Pa.
Tan. 30 (letter of notification) not to exceed 30,000 shares
if*common stock (par 50 cents).
Price — At market
/about $3 per share). Underwriter—Straus & Blosser,
Chicago, 111. Proceeds—To John A. Roberts, Chairman
if'the Board, who is the selling stockholder.
Iron Works,

Vulcan

Light Co.
Feb. 6 it was reported that the company will sell $8,000,000 additional first mortgage bonds, probably in late
summer or early fall. Underwriters—To be determined
by competitive bidding. Probable bidders: Halsey, Stuart

—

To be

D. C.

For

Proceeds—To repay short-term

Jan. 29, it was

320,000

shares of

common

March 8, with an oversubscription
to expire March 26.
Unsubscribed
shares to be offered to employees of companies in the
West Penn Electric System.
Price—$27 per share. Un¬
derwriters—Harriman Ripley & Co., Inc. and associates
were on March 7 awarded the underwriting of this issue.
^Proceeds—To purchase additional equity securities of

fen

held

Byers

Co. and The
21.

(letter

Automatic Telephone Co.
of notification) 7,000 shares of common

(R. I.)

stockholders of record March 7,
$vith rights to expire on March 27. Of these shares,
A,435% are to be subscribed for by New England Tele¬
phone & Telegraph Co. Price—At par ($25 per share).
^Underwriter — None. Proceeds — To repay short term
loans and for plant improvements. Office—38 Main St.,

tive

Prospective
Offerings
(9/11)

/and sale

of $10,000,000 first

writers—To be determined by

competitive bidding. Prob¬

able bidders: Halsey, Stuart & Co. Inc.; Morgan Stanley
& Co.; Blyth & Co., Inc.; Harriman Ripley & Co., Inc.;
Shields & Co. and Salomon Bros. & Hutzler (jointly);
>E)rexel & Co.; Union Securities Corp. and Equitable Se-•eUrities Corp. (jointly); Kidder, Peabody & Co.; The
«First Boston Corp.; Lehman Brothers. Proceeds—For ex¬
'

be
line

England to supply certain markets in
^Massachusetts, Rhode Island, Connecticut and New Jer¬
sey,; which, it is estimated, will cost $30,477,800.
It is
planned to finance the project through sale of 20-year
&bonds (with interest to be about 3%%, equal to 75% of

isystem in New

sale of common stock in an amount equal
! to 25% to be offered first to stockholders. Traditional
.underwriter: Dillon, Read & Co. Inc., New York.
its capital and

■J." -Appalachian Electric Power Co.
.Feb. 5 it was stated the company plans to issue and sell
cabout $18,000,000 of first mortgage bonds in May or
June. Underwriters—To be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
Kuhn, Loeb & Co. and Unicn Securities Corp. (jointly);
.

^.The First Boston Corp.; Harriman Ripley & Co., Inc.
^Proceeds—For property expansion and improvements,
.*pn which company may expend up to $90,000,000 during
'"the next three years.
'
'
\
[7
Arkansas Louisiana Gas Co.
.Feb. 1 it was announced company plans issuance and
gale of $27,500,000 new first mortgage 3% bonds, the pro¬
ceeds to be used to repay bank loans ($20,125,000 at
Nov. 30, 1949), to retire $3,500,000 funded debt incurred
in 1950 and for construction program. The sale of these
.

by SEC of Arkansas
itself into two new
^companies. Probable bidders: Halsey, Stuart & Co. Inc.;
r First Boston Corp. and Lazard Freres & Co. (jointly);
■''.Union Securities Corp.; Smith, Barney & Co.;'Equitable
Securities Corp.'

offered in
stock, plus com¬
Blyth & Co., Inc.,

ities

Foote Mineral Co.

N. C.

stated company plans

to file with

SEC

tration—Scheduled for April 4.

expansion program.

Granite City Steel Co.

& Co.; Kuhn, Loeb & Co.;
Lehman Brothers; Merrill
Lynch, Pierce, Fenner & Beane and White, Weld & Co.
(jointly). Probable bidders for common stock, in event
Inc.; Morgan, Stanley
Bros. & Hutzler;

Salomon

competitive bidding: Morgan Stanley & Co.; Goldman,
Sachs & Co. and Union Securities Corp. (jointly); Mer¬

Lynch, Pierce, Fenner & Beane; Lehman
& Co. and R. W. Pressprich & Co.
Proceeds will be used for expansion program.
rill

Shields

Columbus &

Southern Ohio Electric

shares and
share to
$6,000,000.
Traditional underwriter: Merrill Lynch, Pierce, Fenner
& Beane, New York. Proceeds will be used for expansion.
ing proposed 2-for-l split-up of 497,201
change in par value from no par to $12.50 per
be voted upon March 12. It is planned to raise

;

Great Northern Ry.

received up to noon

purchase from the company, at
New York 5, N. Y., of $10,740^000

the

Brothers;
(jointly).

Co.

J. B. Poston,

plan, among other things, provides for
104,094 shares of new common stock (par $10)

& Co.,
& Co.
Boston Corp. Proceeds—For expan¬

This

(jointly); The First

underwriters, subject

to the right of
stockholders to subscribe for the new

sion program.

•

Commonwealth Edison Co.

& Co.

was

announced

the company

Proceeds are to be used

loans

Co.,

and for

stock issue,

Co.

Underwriters—To be determined through
competitive bidding. Probable bidders: Halsey, Stuart

debentures.

..tjsL-T

Boston, Mass. Proceeds—To
working capital.

retire bank

may

sell se¬

(jointly); Equitable

Securi¬

probable bidders may

White, Weld & Co.
ties Corp.; Union Securities
Co. and

been

from

Ave.,

formulated.

N. Y.

purchase of 5,000

preferred stock (no par

Salomon Bros. &

Ripley & Co., Inc.

Harrison-Rye Realty Corp.,

invited for

event of preferred
be Kidder, Peabody <5s

Corp. and

(jointly); Harriman
definite plans have not as yet

.Hutzler

Bids are

reported company contemplates issuance
between $50,000,000 and $60,000,000 of" convertible

stockholders will on

it was reported that this company
curities "for new money" this year. In

9 it was

announced that

Gulf Power Co.

1967.

Consolidated Natural Gas

it was

Feb. 6,

Jan.

nam

—

mortgage bonds due

through

present preferred
shares.

authorizing the issuance and sale to
common stockholders of 60,000 shares of common stock
(no par). Price—$5 per share. Underwriter—F. L. Put¬

York, Inc.

Commission for
authority to issue and sell $25,000,000 of first and re¬
funding mortgage bonds, series G, due, 1981. Under¬
writers
To be determined by competitive bidding.
Probable bidders: Halsey, Stuart & Co. Inc.; Morgan
Stanley & Co.; First Boston Corp. Proceeds—To redeem
like amount of Westchester Lighting Co. 3V2% general

April 4 vote

for construction program.

Consolidated Edison Co. of New
March 13 applied to New York P. S.

filed.
sale of

Greenwich Gas Co.

March

contemplates
$181,000,000 additional financing through the sale of
securities. Neither the nature nor the time of the new
financing has been determined. Probable bidders for
bonds or debentures: Halsey, Stuart & Co. Inc.; The
First Boston Corp.; Glore, Forgan & Co.; Morgan Stanley
it

Vt.

Mountain Power Corp., Montpelier,
amendment to plan for reorganization was

Green
Feb. 23

itive, probable bidders may include Dillon, Read
Inc.; Lehman Brothers and Kidder, Peabody

(3/28)

(EST) on March 28 for
Room 905, 2 Wall St,
equipment trust cer¬
tificates to be dated April 1, 1951 and to mature semi¬
annually from Oct. 1, 1951 to April 1, 1966, inclusive.
Probable bidders: Halsey, Stuart & Co. Inc.; Salomon
Bros. & Hutzler; Wood, Struthers & Co.

Bids will be

Chairman and President, announced
company contemplates issuance and sale of additional
common stock during the first half of 1951.
If compet¬

Jan.

plans to offer
stockholders follow¬

announced that company

additional common stock to common

reported that corporation may issue and
sell $35,000,000 of new securities in the Spring or early
summer. Probable bidders for debentures: Halsey, Stuart

Feb. 19,

26 it was

Jan.

Inc.

it was

& Co.

Georgia Power Co. (6/5)
8 it was reported company may

issue and sell
bonds. Underwriters—
To be determined by competitive bidding. Probable bid¬
ders:
Halsey, Stuart & Co. Inc.; Morgan Stanley & Co.;
Drexel & Co.; Lehman Brothers; Harriman Ripley &
Co. Inc.; Shields & Co. and Salomon Bros. & Hutzler
(jointly); Blyth & Co., Inc. and Kidder, Peabody & Co.
(jointly); The First Boston Corp.; Kuhn, Loeb & Co.;
Union Securities Corp. and Equitable Securities Corp*,
(jointly). Proceeds—For construction program. Bids—
Tentatively expected to be opened on June 5. Regis¬

Jan.

$20,000,000 of new first mortgage

shares held and then
second preferred noncallable stock (par $100). Price—To be supplied later.
Underwriter—Dillon, Read & Co. Inc., New York.
Proceeds—To redeem and retire present preferred stocks

authorized!

300,000 shares to provide
for the payment of a 200% stock dividend on the 57,995
outstanding shares, par $2.50. G. H. Chambers, VicePresident, stated that the company is committed to a
policy of expansion. "This," he said, "will require more
money, and the directors later this year may seek some
form of new capital."
Traditional underwriter—Estabrook & Co., New York. Expected this Spring.
.
stock from 100,000 to

common

preferred for each 35 common
probably in exchange for 7%

Dec.

approved an increase in

Feb. 15 stockholders

registration covering $100,000,000 of new
convertible preferred stock (par $100) and $100,000,000
of new debentures. The preferred would first be offered
to common stockholders for subscription on basis of six

debt and for

Securities Corp. • Probable under¬
stock. Kidder, Peabody & Co. and!
Fenner & Beane.

Merrill Lynch, Pierce,

March 22 a

Union

Corp.;

writers for common

of America

Columbia Gas System,

contemplates issuance

C, bonds is contingent upon approval
".Natural Gas Corp.'s plan to split

March 13 it was

and funded

mortgage bonds. Under¬

pansion program.
Bids—Tentatively expected to
ppened on Sept. 11. Registration—About Aug. 10.
Algonquin Gas Transmission Co.
Feb. 27 FPC authorized company to construct a pipe

refinance its 7% cumula¬
stock (par $100), about

$7.50) from 1,600,000 to

authorized preferred-stock (par

Lynch, Pierce, Fenner & Beane (jointly); Salomon Bros*
& Hutzler; Harriman Ripley & Co., Inc.; Equitable Secur¬

Celanese Corp.

announced common stockholders will vote
proposal to increase the authorized com¬

stock (par

and the

revealed that the com¬

Corp., Charlotte,

2,500,000 shares
$100) from 120,000 to 250,000 shares. 'Underwriters for preferred stock
to be determined by competitive bidding. Probable bid¬
ders may include Kidder, Peabody & Co. and Merrill

mon

fourth amended application was filed with the
SEC for authority to build a natural gas pipeline system
to serve certain areas in North and South Carolina. Esti¬
mated cost of the proposed facilities is $3,595,295, to be
financed by the sale^of first mortgage bonds and the
issuance of junior securities. Underwriters may include
R. S. Dickson & Co., Charlotte, N. C.

April 3.

Alabama Power Co.
Ifeb. 6, it was stated that company

March 29

& Co.

Carolina Natural Gas

Electric Co. (4/3)
of first mortgage bonds,
Mterch 5 filed $12,000,000
sbries B, due March 1, 1981. Underwriters—May be de¬
termined by competitive bidding.
Probable bidders:
Halsey,Stuart & Co. Inc.; Lehman Brothers; Merrill
Lynch, Pierce, Fenner & Beane; Kidder, Peabody & Co.;
The First Boston Corp.; Harriman Ripley & Co. Inc.
-Proceeds—To repay bank loans and advances and for
iiew construction.
Bids—Expected at noon (EST) on

President, announced that com¬
$32,000,000 of securities to aid in

exchange a new convertible preferred
mon stock.
Company being advised by

Feb. 20

Power Corp.

Florida

(A. M.) Co.

and Fahnestock

it was reported to be contemplating new financ*
Underwriter—Glore, Forgan & Co., Chicago, 111.
~

ing.

redeemable

Worcester County

Englander, Inc.
Feb. 19,

Feb. 13 it was

Rains, President,

Expected in May.

ceeds—For construction program.

50,000 shares outstanding. These shares are
at 110 and accrued dividends. Holders may be

£tock being offered to

Westerly, R. I.

stockholders will on
to increase the authorized
from 100,000 to 150,000

is considering a plan to
participating preferred

pany

Stuart & Co. Inc.; Morgan Stanley & Co.; Stone &
Securities Corp.; The First Boston Corp. Pro¬

sey,

Edison Co.

25 L. F.

Jan.

4wo of its subsidiaries—Monongahela Power
Potomac Edison Co. Statement effective Feb.

Feb. 27

stock, $75 per share. Underwriters—For bonds to be de¬
termined by competitive bidding. Probable bidders: Hal¬

construction program, which, it estimated,
will cost $65,300,000 through 1954. He added that no
common stock financing is planned until 1955.

privilege;'rights

Westerly

financing its

ftock
(no on
par)thebeing
its stockholders
for each
subcription
basisoffered
of onetoadditional
share for

April 1, 1981, and not exceeding 126,255 additional •
stock to common stockholders at rate
one new share for each
10 shares held. Price—For

Webster

announced that the

plans to issue

pany

issuance and sale of $35,000.refunding mortgage 30-year bonds

shares of common

J. V. Toner,

30,

Jan.

' "

due

Smith, Barney & Co.

and

Boston

Co.
additional

000 of new first and

financing was handled
private placement through Union Securities Corp.

•

Feb. 27 directors approved

Previous preferred stock

shares.

1993.

Duke Power Co.

April 10 vote on a proposal
cumulative preferred stock

share).

filed

Jan. 1,

City Electric Co.

Atlantic

orth, Texas. Proceeds —
selling stockholder.

West Penn Electric

funds, to redeem $35,000,000 of 3%-4% first mortgage
bonds, series A, due Jan. 1, 1993, and $8,666,900 of Den¬
ver
& Salt Lake income mortgage 3%-4% bonds, du©

tentative plans call for the raising
of about $2,250,000 through an offer of additional com¬
mon stock on a l-for-10 basis held around May or June.
Probable underwriter: Union Securities Corp. Proceeds
will be used to pay, in part, construction expenditures,
which, it is estimated, will total about $5,400,000 in 1951.

construction program.

Underwriter—To be determined

bonds.

mortgage

by competitive bidding. Probable bidders: Halsey, Stuart
& Co. Inc.; Morgan Stanley & Co.; Kuhn, Loeb & Cos.
Proceeds—From sale of new bonds, together with other

City Electric Co.

Atlantic

Underwriter—Barron McCulloch, Ft.
§* }ck (no par). Price
— AtTotheWillis
market
(estimated theat
H. Thompson,

Jan.

first

reported to be considering is«j
May, of about $40,000,00$

and sale, probably in

suance

Jan. 15 it was stated

Chicago, III.
notification) 6,000 shares of common
stock (par $1). Price—$16.25 per share. Underwriters—
F. Eberstadt & Co., Inc., New York, and Shillinglaw,
Bolger & Co., Chicago, 111. — Proceeds —To Herman
Biechele, the selling stockholder.
9i i Welex Jet Services, Inc., Ft. Worth, Tex.
parch 13 (letter of notification) 2,000 shares of common

Feb. 20 the company was

000,000 in 1951.

March 9 (letter of

4.50 per

Securities Corp. and

(jointly); Union Securities Corp.;
First Boston Corp.; White, Weld & Co. Proceeds—
construction program, estimated to cost about $20,-

The

Webster-Chicago Corp.,

•

(jointly); Equitable

Central Republic Co.

supplied by amendment. Underwriters—Corp., New York, and Johnston, Lemon

Co., Washington,

debt and for

and Stone & Webster

Lehman Brothers

Inc.;

Securities Corp.

The First Boston
6

Co.

Co. (3/28)
of common stock (no par),
5b be offered to common stockholders of record March 27,
1951 on basis of one share for each five shares held;
rights to expire April 11 will be mailed on March 28.
Washington Gas Light
122,400 shares

March 8 filed

Price

Power &

Arkansas

Paine, Webber, Jack¬

Inc.; White, Weld & Co. and

& Co.

Natural Gas Corp.

Arkansas
March 12 filed

and Financial Chronicle

But

■

shares of class A

value) of the above company

Hotel, Inc., 42nd St. and Lexingtoa
New York 17, N. Y. ■
Continued on page 46
Commodore

—

The Commercial and Financial Chronicle

(1266)

Continued from page

Idaho Power Co.

it was reported that this company will raise $18,500,000 through sale of securities this year. It is believed
that this financing will be through sale of mortgage
bonds and preferred stock. Bond financing may be pri¬
Feb. 6,

vate, while preferred stock may be underwritten by
Wegener & Daly Corp., Boise, Idaho. Proceeds would go
toward expansion program, which, it is estimated, will

parent, will be used for property additions and improve¬
ments by Monongahela and its subsidiaries. Offering—

Tentatively expected

Illinois Central

RR.

Feb. 16 company

(4/19)

13, it was reported company expected to raise $6,800,000 through the sale of equipment trust certificates.
Bids—Tentatively scheduled to be received on April 19
Probable bidders: Halsey, Stuart & Co. Inc.; Harriman

Ripley & Co., Inc. and Lehman Brothers (jointly); Har¬

(Inc.); Salomon Bros. & Hutzler; The

First Boston Corp.

City Power & Light Co.

Kansas

Feb. 7, Harry B.

Munsell, President, announced company
money through the
sale of nefw securities, including from $5,000,000 to $8,000,000 preferred stock, and the remainder common
Probable bidders for preferred stock:

bonds.

stock and

Glore, Forgan & Co. and W. C. Langley & Co. (jointly);

Smith, Barney & Co.; The First Boston Corp.; White,
& Co., Shields & Co. and Central Republic Co.
(jointly); Harriman Ripley & Co., Inc.; Salomon Bros. &
Hutzler and Merrill Lynch, Pierce, Fenner & Beane
Weld

(jointly); Union Securities Corp. and Stern Bros. & Co.
(jointly). Probable bidders for common stock: Lehman
Brothers; Glore, Forgan & Co.; Harriman Ripley & Co.,
Inc.

Kansas-Nebraska Natural Gas Co.,
Feb.

Inc.

15, it was announced that company plans to raise

ing expected before April 1, 1951.
National

133,812 shares of common stock (par $5) at $15 per
(the latter to common stockholders). The bond
financing early last year was placed privately through
Central Republic Co. (Inc.), Chicago, 111. The proceeds
are to be used for the company's expansion program.
Laclede Gas Co.
Jan.

30, R. W. Otto, President, stated it appears likely
the company will sell additional mortgage bonds
time this year to finance its 1951 construction re¬

some

quirements. During the current fiscal year, he said,
about $10,000,000 may be spent for new construction, ol
which more than $4,000,000 had been spent up to Dec.
31, 1950. It was also stated that the company is giving
serious consideration to early refinancing of its out¬
standing $19,000,000 3^2%

bonds due Feb. 1, 1965, and

March

sought FPC authority to construct
pipeline, at an estimated cost of $1,500,000, to be financed by issuance and sale of first mort¬

gage

bonds.

;

Power Co.
was estimated that $32,000,000 of new financing
required prior to Dec. 31, 1952 (including the
$12,000,000 of bonds filed with SEC). Between 70,000 to
80,000 shares of preferred stock may be initially offered.
Probable bidders: Harriman Ripley & Co. Inc.; Lehman
Brothers; Kidder, Peabody & Co.; First Boston Corp.;
Merrill Lynch, Pierce, Fenner & Beane: W. C. Langley
& Co. Proceeds to be used to repay

New

and

struct

natural

Pipe Line Co., Cleveland, Ohio

authorized this company to acquire, con¬

operate

gas

Financing

pipeline facilities which will carry

into northeastern Ohio for the first time.
plan includes the issuance
and sale oi

$1,075,000 in bonds to Stranahan, Harris & Co., Inc.,
Toledo, O., $225,000 in preferred stock and $150,000 in
stock.

common

Jersey Power & Light Co.

19 it

Long Island Lighting Co.

financing

construction.

offered to stockholders.

These

will

first

How much stock will be issued

determined. Probable bidders may in¬
Langley & Co.; Kidder, Peabody & Co.;

has not yet been

clude

Smith, Barney & Co.
•

Medusa

March

authorized

common

shares.

000

277,583

Portland

stockholders

Cement Co.
were

to vote

increasing the

stock (no par) from 250,000 to 500,-

Although

immediate

issuance

issue and

and

unissued shares is planned, the company may
capital in connection with its expansion

which, it is estimated, will cost $500,000.

Merritt-Chapman & Scott Corp.
March 13 it
2

was

announced stockholders will vote April

increasing authorized

common

stock from 500,000

(no par) to 1,000,000 shares (par $12.50). The
management says "no issuance of any additional shares
is now contemplated."

Mississippi Power Co. (7/17)
Feb. 6, it was reported that this company contemplates
the issuance and sale of $4,000,000 of preferred stock
(par $100). Underwriters—To be determined by competi¬
bidding. Probable bidders: W. C. Langley & Co.,

tive

Glore, Forgan & Co. and Sterne, Agee & Leach (jointly);
Blyth & Co., Inc.; The First Boston Corp.; Kidder, Peabody & Co. and White, Weld & Co. (jointly); Lehman
Brothers; Union Securities Corp. and Equitable Securi¬
ties Corp. (jointly); Merrill Lynch, Pierce, Fenner &
Beane.
Proceeds—For
construction
program.
Bids—
Tentatively expected to be received on July 17. Regis¬
tration—Scheduled

for

June

15.

Monongahela Power Co.

(4/24)
authority to issue and sell
$10,000,000 of first mortgage bonds due April 1, 1981.

March 12 applied to SEC for

Underwriters—To be determined by competitive bidding.
Probable bidders: Halsey, Stuart & Co. Inc.; Equitable
Securities

Corp.; W. C. Langley & Co. and The First
Boston Corp. (jointly); Union Securities Corp. and Salo¬

Sharon Steel
29

the

ilmit

Proceeds

—

For

1951

construction program.

New
Feb.

23,

York, Chicago & St. Louis RR.
announced that stockholders will vote
authorizing a new issue of cumulative pre-,

it was

March 29

stock which may be offered in exchange for the
present $36,056,700 of $6 preferred stock. Probable bid¬

ferred

Blyth & Co., Inc.; Smith, Barney & Co.

Ohio

Edison

Corp.

annual

announced

was

the

meeting March 22 to increase the debl
to $30,000,000 and to increase

company

present, the company has 925,863 shares outstanding
company's expansion plan, recently announced, wil
sharply increase ingot capacity, pig iron and coke outpu

The

and

finishing facilities.

are

•

Southern

completed

The additions and improvement,
the next five years.

over

Pacific

Co.

(4/3)

Bids will be received up to noon
the purchase from the company,

(EST) on April 3 fo
165 Broadway, Ne~
York 6, N. Y., of $12,000,000 equipment trust certifi
cates, series EE, to mature in 15 equal annual instal
Probable bidders

menxs.

Halsey, Stuart & Co. Inc.; Salo
Ripley & Co. Inc. an

& Hutzler; Harriman
Lehman Brothers (jointly).
Bros.

mon

Texas

was

SEC

Probable

Eastern

Transmission

Corp.

common

stock:

Lehman

Brothers

Ohio Match Co.

March

April 3

authorizing an issue of 100,000 shares of pre¬
stock (par $10), in addition to splitting up the

was

reported

that

stockholders

will

vote

common

stock

company was authorized to construct facilitie
will increase the daily capacity of its system b

which

cubic

This

feet to approximately 1,206,500,00
project, it is estimated will cost $96,
305,118, and includes approximately 791 miles of pipelin
extending from a connection with United Gas Corp.'
system near Kosciusko, Miss., through Alabama, Ten
nessee, Kentucky,, and Ohio to a connection with Texa
feet.

Eastern's existing system near Connellsville,. Pa.
Th
company's financing program includes the sale of $78,000,000 first mortgage bonds (to be placed privately), the

replacing of

a $10,000,000 bank loan with a new ban
$20,000,000, and the sale of $45,000,000 of pre
stock, $20,000,000 of which already has been sold

loan

ferred

Traditional underwriter for
& Co.

United

Feb. 27 it

and

Gas &

was

Electric

Corp.

Co.

announced

company

Goldman, Sachs & Co.

(jointly); The First Boston

;/ ■/':'

Pipe Line Co., Shreveport, La.

Feb. 27 FPC authorized company to carry out an expan¬
sion program, which will include construction of approx¬

imately 1,000 miles of pipeline, at a total estimated cost
of $111,861,749.
Company will finance construction by
borrowing $150,000,000 from its parent, United Gas Corp.
(which see above).
,

Utah
March

Power &
it

Light Co.

announced

company during 1951 pro¬
issue and sell 200,000 shares of common stock
and estimated $10,000,000 of first mortgage bonds. Under¬
writers—To be determined by competitive bidding. Prob¬
able bidders: (1) For bonds: Halsey, Stuart & Co. Inc.;
was

poses

Kidder,

Peabody & Co.; Lehman Brothers, and Bear,
Co. (jointly); White, Weld & Co.; Salomon
Hutzler; First Boston Corp., and Blyth & Co.,
Inc. (jointly); Union Securities Corp., and Smith, Bar¬
ney & Co. (jointly); and (2) for stock: Blyth & Co. Inc.;
W. C. Langley & Co., and Glore, Forgan & Co. (jointly);
Stearns
Bros.

Union Securities

ly);

Lehman

Fenner

Oklahoma

Gas

plans to issue $145,000,000 debt securities and will loan the proceeds, to¬
gether with other funds,
to its subsidiary,5 United
Gas Pipe Line Co. a total of $150,000,000 to be used fo:
the latter's construction program. Probable bidders fo
bonds: Halsey, Stuart & Co. Inc.; Dillon, Read & Co. Inc.;
Equitable Securities Corp.; Harriman Ripley & Co. Inc.

Kidder,

5-for-l basis.

preferred stock: Dillon, Read

Inc., New York.

United Gas

announced company

bidders for

465,700,000

Co.

Bear, Stearns & Co. (jointly); First Boston Corp.,
Lazard Freres & Co., Union Securities Corp. and Wertheim & Co. (jointly); Glore, Forgan & Co. and White,
Weld & Co.
(jointly); Merrill Lynch, Pierce, Fenner
& Beane and Kidder, Peabody & Co. (jointly); Morgan
Stanley & Co. Proceeds—For expansion program. BidsExpected to be received in April or May.

ferred

Feb.

Corp.

plans shortly to file
registration statement covering 150,000
shares of preferred stock (par $100) to be sold at com¬
petitive bidding and 436,224 shares of common stock
(par $8) to be offered for subscription by common stock¬
holders.
Probable bidders for preferred stock: Morgan
Stanley & Co.; Lehman Brothers and Bear, Stearns &
Co. (jointly); W. C. Langley & Co., Glore, Forgan & Co.
and White, Weld & Co. (jointly); The First Boston Corp.
with the

authorized capital stock to 2,500,600 from 1,000,000 shares

White, Weld & Co. (jointly); Salomon Bros.

Expected late Summer and early Fall.

•

Thursday, March 22, 195

that as a preliminary to fl
nancing some phases of the corporation's $49,000,00(
expansion program, stockholders will be asked to vote

Co. and

& Hutzler.

the

need additional

program,

reported that company tentatively plans

was

and

Jan. 31, Edward F. Barrett, President, said an increase
in the number of common shares is in prospect to assist
in

bank loans and for

sell $2,500,000 of preferred stock to public
$1,500,000 of common stock to General Public Util¬
ities Corp., parent.
Underwriters—For preferred to be
determined by competitive bidding.
Probable bidders:
Drexel & Co., Kuhn, Loeb & Co., and Lehman Brothers
(jointly); W. C. Langley & Co.; Smith, Barney & Co.
and Union Securities Corp. (jointly); Kidder, Peabody
to

■

will

Feb. 28 it

FPC

/■>

New England

Co.; White, Weld & Co.; Lehman Brothers and Merrill
Lynch, Pierce, Fenner & Beane (jointly).

•

Halsey, Stuart & Co. Inc.; Blyth & Co., Inc. and Smith
Barney & Co. (jointly); The First Boston Corp.; Lehmar
Brothers; Kidder, Peabody & Co.; Harris, Hall & Co
(Inc.); Glore, Forgan & Co. and W. C. Langley & Co
(jointly).

Jan. 24 it

ders:

Lake Shore

Coldwater,

company

$6,500,000 3V2% bonds due Dec. 1, 1965, through the is¬
suance of possibly $28,000,000 of new bonds. Probable
bidders: Halsey, Stuart & Co. Inc.; Goldman, Sachs &

Feb.

Michigan,

about 76.7 miles of

Feb.

and

Michigan

stock

Co.

Utilities

construction program.

(no par) at $105 per share plus accrued dividends

Co.

applied to the FPC for authority to ac¬

$4,200,000 through the sale of debentures or first mort¬
gage bonds in the spring of 1951 (this is in addition to
recent sale of 10,950 shares of $5 cumulative preferred

that

Utilities

•:

needed is estimated at about $7,000,000." Probable bid¬
ders for a reported issue of
$15,000,000 new bonds are

April 24, with SEC registration

quire natural gas facilities of three companies operating
in Montana and Wyoming and to construct additional
facilities, estimated to cost $5,864,094. In connection"
therewith, and the proposed funding of $5,800,000 shortterm bank loans, it is planed to issue and.sell common
stock, preferred stock and mortgage bonds for a total
of $11,500,000. Traditional underwriters are Blyth & Co.,
Inc. and Merrill Lynch, Pierce, Fenner & Beane. Financ¬

expects to raise $15,000,000 of new

•'

Jan.

Montana-Dakota

Feb.

ris, Hall & Co.

March 23.

$23,000,000 for 1951.

cost nearly

Bros & Hutzler

(jointly); Lehman Brothers; Kidder,
Peabody & Co. and White, Weld & Co. (jointly); Merrill
Lynch, Pierce, Fenner & Beane; Glore, Forgan & Co.;
/Harriman Ripley & Co., Inc. Proceeds—From sale of
bonds together with proceeds ($4,000,000) from proposed
sale of 615,400 common shares to West Penn Electric Co.,
mon

■

Corp., and Smith, Barney & Co. (joint¬
& Bear, Stearns & Co. (jointly);

Bros.

Peabody
&

loans and

Beane
to

& Co., and Merrill Lynch, Pierce,
(jointly). Proceeds — To repay bank

provide additional construction funds.

Dec. 20 D. S. Kennedy, President, said company is con¬

sidering refunding outstanding $6,500,000 5V4% cumu¬
lative preferred stock (par $100) with an equal amount
of preferred stock with a lower dividend rate and may
issue additional

common

stock

(par $10) provided

mar¬

ket conditions warrant such action, to finance construc¬
tion program. Probable underwriters: Lehman Brothers;

Smith, Barney & Co.; Harriman Ripley & Co. Inc.

Virginia Electric & Power Co.
March 6 directors announced tentative plans for the sale
of approximately 450,000 shares of additional common
stock to common stockholders at rate of one new share
for

each

market

10
and

shares
other

Webster Securities
struction

program.

held.

Price—To

conditions.

determined

Underwriter

—

Stone

Corp., New York. Proceeds—For
Offering

—

by
&

con¬

Tentatively planned for

June.

Pennsylvania Electric Co.
Feb. 16 it

was reported company plans to issue and sell
$3,000,000 of first mortgage bonds, $2,500,000 of preferred
stock and $2,500,000 of common stock (latter to General
Public Utilities Corp., parent). Underwriter—To be de¬
termined by competitive bidding. Probable bidders for
bonds: Halsey, Stuart & Co. Inc.; Kidder, Peabody &
Co.;
Merrill Lynch, Pierce, Fenner & Beane; Union Securities
Corp. and White, Weld & Co. (jointly); Equitable Secur¬
ities Corp.; The First Boston Corp.; Kuhn, Loeb & Co.,

Warner-Hudnut, Inc.
March 3

it was announced company plans issuance and
public of 300,000 new shares of common stock
(par $1).
An additional undetermined number of new
common
shares may be sold for the account of the
sale

Estate

of Gustavus

Pheiffer.

Price—To be supplied

later.

Underwriter—F. Eberstadt & Co., Inc., New York.
Proceeds—To retire bank loans and for working capital.

Lehman Brothers and Drexel & Co.

(jointly); Harriman
Ripley & Co., Inc. Probable bidders for preferred stock:
W. C. Langley & Co. and Glore, Forgan & Co.
(jointly);
Kuhn, Loeb & Co.; Smith, Barney & Co.; Kidder, Pea¬
body & Co.;

For
or

1951

Harriman, Ripley & Co., Inc. Proceeds—
program. Expected late Summer

construction

early Fall.
Public

Service Co.

Colorado

Nov. 1, J. E. Loiseau, President, announced that "it will
be necessary to raise additional funds for construction
purposes

in the second quarter of

1951.

The

amount

Washington Gas Light Co.

March 8 it was announced that company may issue ap¬
proximately $9,000,000 of bonds or obtain bank loans (or
some
combination thereof) during 1951 and apply the
proceeds toward its construction program. Probable bid¬
ders for bonds: Halsey, Stuart & Co. Inc.; Blyth & Co.,
Inc.; Smith, Barney & Co. and White, Weld & Co. (joint¬
ly); W. C. Langley & Co. and The First Boston Corp.
(jointly). (See also registration of 122,400 shares of com¬
mon stock under "Securities in Registration" in a pre¬
ceding column.)

Number 4996

Volume 173

(1267)

Financial Chronicle

The Commercial and

the

and

Continued

from page 8

has

Dealer-Broker Investment
Bliss

Corp^Memorandum—J. F. Reilly & Co., 61
Broadway, New York 6, N. Y.
.

Voorhis &

Co.—Circular—Kalb,
Co., 25 Broad Street-, New York 5, N. Y.
Machine

Adding

Sutter

Carlisle
New

»_

»- *'<

....

1 Wall Street,

& Co.,

Corporation—Analysis—Cohu
York 5, N. Y.
v..

'*'t slit*, ;\.

• -

■

-F

Company—Analysis—Hayden,
Co.-, 25 Broad Street, New York 4, N. Y.

Stone

Railroads—Analysis—H. Hentz & Co., 60 Beaver

Street,

New York

4, N. Y.

Co.—Review—Schmidt, Poole & Co., 123 South

Company—Report—New York Hanseatic Corporation,

Fresnillo

120 Broadway,

New York 5," N. Y.

General American Transportation

burger & Co., 1342 Walnut
R.

Hoe

Home

Corp.—Memorandum—New-

—

Aetna

Corp.,

Securities

Ill

Curtis, 25 Broad Street, New York 4, N. Y. Also
available is an analytical study of the Marine Midland Corp.

.u.i

Investment

Fried—R.

.—Sidney

•

Avenue, New York 1, N.
on request).

M. Associates, Dept. C, 220 Fifth
Y.—$2.00 (or free descriptive folder
Co.,

-Mi-

**5
id

McGraw Electric

of first full year of opera¬
report—Harold F. Sanders, Secretary

Middle South Utilities, Inc.—Record
tions

1*1!

,■

Company—Analysis—Walston, Hoffman &
Goodwin, 35 Wall Street, New York 5, N. Y. Also available
* is an analysis of Chain Belt Company.

National
31

•

Street, Boston 9, Mass.
Railways

Development,

Placer

1006 Second Avenue,

J,;

Ltd.—Analysis—John
Seattle 4, Wash.

111

Inc.,

Lewis,

R.
...

Co.—Analysis—Ira
Broadway, New York 6, N. Y.
General

Portland

York 5, N. Y.

Electric

Haupt

& Co.,

Co.—Memorandum—Harrison & Co., Union Trust
Bldg., Cincinnati 2, Ohio.

Co.

Cement Company

Riverside

—

Card memorandum

—

Lerner &

Co., 10 Post Office Square, Boston 9, Mass. Also available is
a memorandum on Gear Grinding Machine Co. and on Seneca
Falls Machine Co.

Wurlitzer Co.—Analysis—Raymond

Rudolph

& Co., 148 State
Verney
Central

Street, Boston 9, Mass. Also available are analyses of
Corp., Simplex Paper, U. S. Thermo Control, Maine
Railroad, Sanitary Products and Air Products.
John B. Stetson
pany,

for

Webster—Memorandum—Hirsch
Street, New York 4, N. Y.

Struthers
44

Wall

Co.,

Corporation—Bulletin—Terry
Street, New York 5, N. Y.

Wells

Bank

Union

Co.,

Disney

Pumo & Machinery—Review—Ira
Broadway, New York 6, N. Y.

Wortliington
Ill

Haupt & Co.,

116 West Ocean Ave.

California,

winners

the

Jones

& Laughlin

negotiated
shares of

Steel Corp.'s

for

deal

million
stock is

common

new

With Waddell & Reed
(Special to The Financial Chronicle)

LONG

Even

due

though
McC.

certainly the steel companies
are turning every available wheel
the selection of in an effort to get out production
Martin, Assistant for defense and other require¬

with

DIVIDEND NOTICES

March

Chairman of the Fed¬ permit the company to pay off
eral
Reserve
Board, seemed to
prior obligations in the form of
suggest a victory for the Treasury
$40,000,000 of serial notes incurred
in the current struggle over in¬
to finance expansion. Other cor¬
terest rates, the market appeared
porate
funds will be
used as
inclined to take its cue from what
needed in the redemption.
has happened, rather than from
what this appointment might fore¬

Two With Waddel! & Reed

the future.

(Special to The Financial

Getting Out From Under
still

are

BEVERLY

inclined

with quickly in the
case of issues brought out in
the
midst of the adjustment in the
over

Treasury market.

^
At

drew P.

Chronicle)

Calif.—An¬

HILLS,

Hill and Ansley S. Terry

day,

per

dell

with Wad-

8943

Inc.,

Reed,

299

declared

close of business March 21,

the

com¬

Company,

March 31, 1951, to
ord

the

payable
stockholders of rec¬

the

stock

mon

quarterly dividend of

was

1951.

H. B. Pierce, Secretary
'

LEHIGH

COAL CORPORATION

VALLEY

March

Its

Directors

Board

The
has

this

15,

1951.

Corporation

today declared a dividend of $355,510.35 on
$3.
Non-Cumulative First Preferred Stock,

1951,: to stockholders of record

payable

April

of such

stock

at the close of business on March

26, 1951, this dividend being equivalent to
$1,599 per share.
■.
H.

have become affiliated

1951

14,

COMMON DIVIDEND No.

meeting of the Board of Directors,

will 25$

•'>

Secretary

"-i:''

about

FOUNTAIN,
&

Treasurer.

Wilshire

Boulevard.

"pulled
the
string" on three more recent of¬
ferings early this week and let the
Banking

The Garlock
Packing Company

held this

Proceeds from this offering

Floyd

Calif.

but

Secretary of the Treasury, as suc^ ments.
cessor to Thomas B. McCabe who

to get

Waddell & Reed, Inc.,

market

reach

—

associated

BEACH,

Robinson

groups

DIVIDEND NOTICE

securities involved shift for them¬
selves.

All worked down appreci¬

ably from their original offering

prices.
2%s

Co.'s

Borden

out

brought

interest settled back
around a 98(4 bid 99 asked level,
while
Southern
California
2%s,
and

par

brought

out

101.34,

yield

2.80%, slipped back to 98(4 bid
98(4 offered or around a 2.95%
basis.
The
small
New England
wise

Co.

issue,

backed

102.129

off

2%s,

also
from

the

like¬
initial

Southern
Edison

fraternity is await¬

Tuesday's sale of $40,-

4.48%

PREFERENCE
4.56%

coupon

company

"ceiling"

fixed

the

has
on

278%
this one and
set

minimum

maturity

set forth above. This issue went

registration

Feb. 23

last

STOCK

capital

NO. 12

The Board of Directors

KEMP.

Treasurer.

authorized the payment

of the

following quarterly dividends:
50

cents

Common

per

Plywood
Corporation

has

the

Stock;

For
the quarter ended January 31,
1951, a
cash dividend of 35c per share on the out-.
standing common stock of this corporation has
been

cents

per

the

Preference Stock, 4.48% Con¬

1951.

1951,

12,
at

was

Y.,

March

13,

Secretary.

1951.

Wichita River Oil

are pay¬

Corporation
Dividend JNo. 20

Checks will be mailed

p. c.

the

from the Company's office b
Los Angeles, April 30, 19b 1.
I

OTTINGER,

SIMON

York,

4.56% Con¬

The above dividends

1951.

dividend of 10-%, payable April
declared to stcckho'ders of record
March 30, 1951.

stock

the close of business

New

payable April 12, 1951, to stock¬
the close of business March

declared

holders of record at

30,

able April 30, 1951, to stock¬
holders of record April 5,

RED

United States

CONVERTIBLE SERIES

DIVIDEND

28(4 cents Per
Preference Stock,

CROSS

capital

SERIES

vertible Series;

Your

hale,

Treasurer

(30$) per share
April 16, 1951 on the Common
Stock ot the Corpora ion, to stockholders of record at the close of business
March 30, 1951.
Joseph F, Martin,
Secretary and Treasurer

dividend of Thirty cents

will be paid on

Crpital

must carry on

•

de¬

dividend

Common

Also

have

DIVIDEND NO. 16

first mortgage

bonds, 30-year ma¬
turity, for a real idea of how
thinking with regard to price and
yield may have been revised.

Corporation

cents per share on the

STOCK

CONVERTIBLE

000,000 of Consumers Power Co.'s

The

this

WALLACE

PREFERENCE

ing

Machinery Corporation

stock.
They have also de¬
of 62'/2 cents per share on
stock.
The dividends on
both Preferred and Common stock are payable
May 1, 1951, to stockholders of record at the
close of business April 3, 1951.
Preferred

the

DIVIDEND NO. 165

Power the Test

Shoe

Directors' of.

clared a dividend of 37(2
clared

COMMON

The banking

United
The

Company

dividends

price.

Consumers

California

vertible Series.

Cleveland 14, Ohio.

BEACH, Calif.—Rene S.

Smith is with Pacific Company of

Broad

Mass.

preferred stock,
paying 100.279

new

of¬

Street.

top

appeal to investors under the new

into

Productions—Analytical brochure—Butler, Moser
& Co., 44 Wall Street, New York 5, N. Y.
Welex Jet Services, Inc.—Bulletin—Rotan, Mosle and Moreland, 806 Rusk Avenue, Houston 2, Texas.
Western Union—Comprehensive analysis of the stock as an
investment—Lamont & Company, 89 State Street, Boston,
Wal

for

bids

Co.
re¬
its 40,000

Second

(Special to The Financial Chronicle)

next week,
grade corporates probably on Tuesday.
inclined to be easier and seeking
Current market conditions may
a yield basis that would make
it not be all that could be desired,
with

ment

Company,

Commerce—Memorandum—Prescott

Guardian Building,

Street, Philadelphia 2, Pa.

Stone
-Vi

sale.

Meantime, the seasoned market
in the grip of adjust¬

has

Company—Analysis—H. M. Byllesby and Com¬

Inc., 1500 Chestnut

put

sidiary companies which were

Richardson
i

Power

East

5354

LONG

Power

America—Bulletin—Joseph Faroll & Co.,
Broadway, New York 6, N. Y.

Radio Corporation of

engaging

With Pacific Co.

the

large, at least one com¬ for a $4.24 dividend rate, and reNew England Gas & Electric offering at 102(4 with satisfactory
Association, failed to bring out one response reported.
bid for blocks of preferred and
common stocks of one of its sub¬
Big Stock Deal Due

Mexico—Memorandum—Sutiro Bros.

Co., 120 Broadway, .New

fices

are

business from

and

Inc.—Analysis—J. B. Maguire & Co., Inc.,

Company,

Milk

National

'>if:
i' •/

Utilities, Inc., 2 Rector Street,

6, N. Y.

Monsanto Chemical

>;r

annual

1950

New York

Treasurer, Middle South

and

securities

absorbed quickly.

competition for new issues

Underwriters

Chicago 3, 111.

that

understood

was

Pennsylvania

225 E.

Company—Analysis—William Blair & Com¬

135 South La Salle Street,

pany,

18(4
stock

brought out this week was keen, with

is a discus¬

Street, Milwaukee 2, Wis. Also available
sion of investment hedges for dollar erosion.

•Mason

paying

group

share. The other bids all
and on reoffering at

five

shadow for

Inc.—Analysis—Loewi

Laboratories,

Lakeside

Preferreds

Speculation in Convertible Bonds &

450,000

BEACH, Calif.—Fred T.

and Jennie L. Kelly

close,

ceived

resigned

Company—Analytical study—Paine, Webber,

Insurance

$17,545

that

William

Jackson &

while

block

winning

the

were

current

the

measure

order of things.

;

Broadway, New York 6, N. Y.

(jlt> f

-i

* *

Street, Philadelphia 7, Pa.

Co.— Memorandum

that

marked dis¬

for its

bids

with

deal of nervous¬

position to remain on the sidelines
for the present.
a

(Special to The Financial Chronicle)

LONG

shares of additional common stock

continued

Street, Philadelphia 9, Pa.

Broad

■*c!'

good

in the air and a

ness

52 Wall Street, New York 5, N. Y.

Foote Mineral

Refining

Co.—Memorandum—Auchincloss, Parker & Redpath,

Flintkote

there

pany,

Products

five

completion is not yet clearly ap¬

Veeder-Root.

Eastern

i-tf '

not the task is near

with

are

Reed, Inc.

In Investment Business

itself.
Middle South Utilities Inc. drew

temper of things, it develops

Whether

position

"adjustment" in the
Treasury obligations.

Power—Memorandum—Chas._ W*. Scranton
& Co., 209 Church Street, New Haven 7, Conn. Also -available
are
descriptive data on American Hardware, Connecticut
Power, Landers, Frary & Clark, Hartford Electric Light and

Corn

BOSTON, Mass.—C. Edwin Dar¬
Waddell &

market in all
have been quite satisfactory, ac¬
is still engaged in the
cording
to
reports
despite the
process of "shaking itself down"
to the level required by the recent poor behavior of the stock market
investment

The

Wi#- Waddell & Reed

nell and Ernest V. Talbot

its phases

Connecticut Light &
.

issues

debt

new

Olive Street.

(Special to The Financial Chronicle)

companies financing via the equity
route this week. And the results

parent, but the fact remains

Company^Analysis—Elworthy & Co.,
Street, San Francisco 4, Calif. ••

California Water Service
Ill

dearth

The

Buffalo-Eclipse

Burroughs

Tibbe & Co., 506

conditions.

has left the market wide open to

Louis—Special Memorandum
on
capital stock available to insurance companies and in¬
vestment trusts wishing to consider an investment in a midwestern bank stock—Edward D. Jones & Co., 300 North
Fourth Street, St. Louis 2, Mo.

LOUIS, Mo.—Helen H. Jen¬
joined the staff of A. A.

kins has

Two

of St.

Bank

National

ST.

Equities to the Fore

South La Salle Street,

Boatmen's

but marketing

test under the changed

■A4,,

wiv

terms

of this issue looms as the first real

Inc.—Analysis—Sincere and Company, 231
Chicago 4, 111.

Laughlin,

"j. 'O'

ideas

(Special to The Financial Chronicle)

will see

company

remains to be seen,

Recommendations and Literature

the

revise its

With A. A. Tibbe & Co.

meantime.

in the

Whether
fit

marketwise

change

big

come

March 16, 1951

„

MtcIi 20,

1951.

The Commercial and Financial Chronicle

(1268)

Thursday, March 22, .1951

of finding the

BUSINESS BUZZ

used," the C of C report observed.
<:

Washington...
Behind-the-Scene Interpretations

from the Nation's Capital

xJL f

-y*

HOPE CO.

JL 1/ IM/

It is anticipated in most quarters that part of the price for
placating that ageing mistress of

toward

inflation,

the

vocates of

lic credit

of financing

means

segment

industrial expansion program.

and

(3)

that

there shall be

the same time
rapid expansion

possible of industrial capacity

produce those products essen-

tial to

the

When

civilian

economy.

Stuart

Symington,
Chairman of the National Security
Resources Board, was top dog in
the mobilization program, there
reached all-around

was

determination that

ing

should

definite

to
to

private financfor the ab-

provide

solute maximum of this industrial

banks

contracts

•

particular it

determined

was

that there should be

new

"De-

fense Plant Corp" created in this
war
if it could be helped
(and

are

dragging

the

delay

assignees

under

should

un-

essential

civilian

production

ca-

pacity expansion.
A part of this deal was that the

tax amortization necessity certifshould be given liberally

icates

for defense and

ing

production

also

defense

support-

facilities.

was

direct

and

gov-

construction. In
even
some sources in Congress and the
Administration friendly to the
White House, there is a worry that
ernment

™kich would be
stopped
by the
Federal Rese.r.Ye1 vlc^orV over the Treasury
Wl11 be promoted by direct gov*n

ernment loans,

agreed that the V-loan pro-

cedure under

ment

which the procure-

agencies

guarantee

banks

There is little inclination to
quarrel with the appraisal that so

through the Federal Reserve Sys-

far

tem, should be utilized for facili-

servative

Democrats and

ties

licans

far

financing

nancing

war

There

are

well

for

fi-

production contracts,
now

complaints that

since Charles E. Wilson took over,
the Defense Production Administration under his guidance is get-

the

House

coalition

Repub-

chalked

has

con-

exceeding its leaders'

record far

expectations in the only purpose
?or which .he so-called coalition
1S ,.us? UA \
y.. in stoPPUfg
ra^ical Administration proposals,

persnickety

Not

about

necessity
certificates. It is seeing less and

reported

responsible

quarters

that firms which already have got

necessity certificates supposedly
approved, are finding roadlocks
put in their path by DPA.

the

thority

the

House

re-

bottle

au-

legislation,
and this already has borne fruit
in the pigeon-holing of the pro¬
posal to provide two million tons
of wheat
The

TRADER

outset

stored the Rules Committee's

free

House

gift for India.

restored

the

"peril

point" provisions of the Reciprocal

WANTED

Trade

Agreements

killed

the

Act.

President's

also

project

get permission to reorganize

gov¬

ernment agencies subject to a 15-

18-day

Congressional

LOS

testimonial

and

volunteer

own

ANGELES,

they
com¬

views.)

Calif—J.

for

Hold

— Boy!
Ropesl"

Fast

First

California

South

Spring Street.

Congress that

damage in¬
surance, IF there is a serious pros¬
pect of bombing of the U. S., par¬
ticularly atomic bombing, is a
war

big subject indeed.

very

During the "lame duck" session
of

undertook
for

Manila

'the

about

lion.

Philippines

amounts

The

revive

move

Damage Corp.,

the

based

was

War

War III might be as much of a
picnic insurancewise as World War

compensation

in¬

liability gained consider¬
backing, and since there was

not

time

consider

this

added

subject, the legislation
dropped,
and
was
passed

was

neither House.
At

Brent

the

present time

Spence

(D.,

Chairman

Ky.)

the

House Banking Committee is tak¬

During World War II the gov¬
more than $245
million in premiums on war dam¬
ernment collected

age

insurance, and paid out under

those policies only $1,274,000,

cording to
on

this

one

ac¬

idea

that

"War

Damage

complication was sug¬
gested by the workmen's com¬
pensation
liability
insurers.
If
there
develops atomic bombing
with the killing or injuring of

workers, these car¬
riers might be bankrupt, so asked
for re-insurance.

attacked
there

any

would

arise

were

to be

extensive

this report pointed

only

part of the

story. In the Philippines the U. S.

Claybaugh & Co.

Members

Philadelphia-Baltimore

Stock
N.

Exchange

Security Dealers Association

way

52 Wall street New York 5, N. Y.

damage
indemnity problem of herculean
proportions, with the value of
real and personal property in the
a

war

For

aggregating something like
$400 to $500 billion.
"A

study of the catastrophic

tentialities of loss leads

quick conclusion that it simply is
not feasible for

even

the Federal

government to contract in advance
to

pay

The

indemnity for

British

shows

war

comes

losses.

experience, however,

that,

the

once

sufficiently

public

alarmed,

that

some

feasibility

kind

It then becomes

SUGGEST

RIVERSIDE CEMENT CO.
CLASS B

(common) STOCK

leading producer of

fast-growing

cement

Southern

California.

Analysis of this Company and
review of the

try available

Cement Indus¬

request.

the

fore¬

indemnity

be¬

plan must be established in advance.

Large Appreciation Potential

po¬

one

question

Blair F.

Tel.: HAnover 2-7064 Tele: NY 1-2177

Actually if the U. S.

closed and the conclusion follows

was

We Invite Inquiries

thousands of

Indemnity," published by the U. S.
However,

A. M. I., Inc.

World

Chamber of Commerce.

out, this

Co., Inc.,

Street.

II. The first

of the best studies

subject,

418 Locust

the

subconscious

workmen's

with Barrett Herrick &

E.
are

billion, while Congress
appropriated only $400 mil¬

able

Homer

—

the effort to include re-insurance

surance

LOUIS, Mo.

Corry and Eugene M. Strunk

than 50% of the city. The
report estimated that total damage

mittees moved to revive the War

agency.

and

647

has

Corporation,
an
RFC
In the Senate, however,

damage

war

indemnities

make

alone the destruction amounted to

November-December, both the
House and Senate Banking com¬
Damage

Company,

(Special to The Financial Chronicle)

ST.

question

Selling about

$12.25

LERNER & CO.
Investment

Securities

10 Post Office Square, Boston 9, Mass.
Tel. HUbbard 2-1990

"veto,"
MM 11 U -'''

a time for Congress ef¬
fectively to stop this reorganiza¬

OVER-THE-COUNTER HOUSE

pledges

given to

Two With Barrett Herrick

"Twenty-four hours without moving, Boss?

too short

LONG ESTABLISHED

these

Kraus, Jr. has joined the staff of

the

even

local sales
agency, such as a

With First California

opponents ex- ing the attitude that he won't
pected the House to throw down bring this subject up in his com¬
less reason than under Syming- the modified defense housing pro¬ mittee until after the Senate has
acted. The Senate Committee, so
ton for allowing "related" facili- gram.
This was the first time
ties to get much. It is looking since the public housing program far as can be learned, shows no
more
and
more
closely at the was temporarily
stopped,
that eagerness to start going on this
postwar utility of the prospective either House has even temporarily subject. So in its broadest aspects,
war
or
war-related facility and voted down a major housing bill; war damage insurance for prop-<
consequently allowing less and It is also the first time in known erty generally will be left on ice
while, with
action
only
on
less of the cost of the facility to history that either House has re- a
marine and aircraft war risk in¬
come under the advantage of acfused to rub the Aladdin lamp of
surance.
celerated amortization. It is even easier FHA financing,
ting

asking them

(Special to The Financial Chronicle)

What

ernment lending

lenders

subscribers

the "Chronicle's"

contractors,

institutional

dertake the greatest possible share
of the financing of both war and

are

and may or may not coincide with

war

ultimately it probably couldn't be
helped) and that bank and other

carriers

(This column is intended to re¬
flect the "behind the scene" inter¬
pretation from the nation's Capital

All of this seems to indicate that
there is definitely shaping up a
de-emphasis upon private lending
and a new emphasis upon gov-

their employees.

newsboy

mittees to follow up.

against those

later years make

deduction

businesses to get them

their

pick

contingently
liable for certain claims which
the government itself might in
war

aggre¬

pledge to buy another bond at

will

not

are

payroll

employees

bank. The carrier boys will then

getting approved the legislation
spelling out in certain terms that

expansion. Government financing
would
provide
for
only
the
minimum.

V-loans

because

sign

some

mendous monetary inflation,
either via the government bond
or the hank loan,
Finally,

the

with

million

going this fall to distribute forms

This will, of course diminish the
capacity of the banks to take part
in financing the tremendous industrial expansion which the Administration is determined to put
across, even if it promotes a tre-

bottom

join

Second,

form of^ a variation of the
Eccles plan
of 1945-47 for a
that (1) production of war goods special and additional secondary
must
go
forward
with utmost reserve of governments and/or
speed, that (2) capacity to pro- vault cash.
goods shall be expanded,

the small

objectives of the Administration
remain
unchanged

war

businesses

gate

Reserve

The basic

duce

wrinkles

plan.
enlisting local organizations of
the civic-minded to canvass all

to Congress by all Administration
camps. This probably will take

the

Federal

the

defense

It is

System, is that higher reserve re¬
quirements will be recommended

private credit and pub-

considerable

ad-

between

surface

the

small

WASHINGTON, D. C. — There
rumblings of an undercover
fight slowly
working
its
way
are

new

savings bond
drive of the Treasury this
year.
First, the Treasury is going to
try, to organize some 2V2 million

Hold Fast

%/ f\Tt ■

IU/

There will be two

"h.

tion if allowed by law.

Finally, the House almost but
quite succeeded in blocking

Allied Electric
FIRM TRADING MARKETS

not

MODEST

the

CLIENTELE

plan to put RFC
single administrator, as

PREFERRED

under
a

FOREIGN

SECURITIES

to later action intended to kill off

RFC

entirely.

Salary & Profit Sharing

Congress,
Our

staff

ment.

Replies

fidence.
Financial
New

knows

York

Box

held
K

this

322

Chronicle,

advertise¬

strictest

con¬

Commercial

Park

Place,

rushed

which

revive

last

the

year

war damage
insurance,
showing every disposition this

year

The

slow

underlying

request

FOREIGN SECURITIES SPECIALISTS

World War

II form of

Prospectus

f!ARL MARKS & HO. INC.

■

Products

prelude

the

reason

50 BROAD STREET...NEW YORK 4, N. Y.

Hill, Thompson & Co., Inc.

TEL. HANOVER 2-0050... TELETYPE: NY 1-971

Trading

subject.

is that it is

percolating down into the minds

Department

70 WALL STREET, H. Y. 5
*

-f.

-a

Tel.

WHitehall

4-4540

Full text of Commercial and Financial Chronicle : March 22, 1951, Vol. 173, No. 4996

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