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,o\o^
ESTABLISHED 1S39
Reg. U. S. Pat. Office
Number 4684
167
Volume
Should Pound
New
PHILIP CORTNEY*
By
Inflation in
Major Obstacles to the Financing
Of a Perpetual Business Boom
Be
Chairman of the Board, The
Vice-President, Bank of the Manhattan Company
Cortney
i not
i
is
There
United States for a
the
in terms; of dollars,
mainly from the oppo-
pound
toming
:
is that
and
in the midst of
we are
the
second
is
that
trols should be
that foreign exchange control be¬
gets domestic controls which are
and enterprise,
stifling initiative
(Continued
on
27)
page
*Summary
of
by
address
Mr.
of
the
at a
luncheon
Canadian
section
of the
national
Chamber
Montreal,
Que.,
n,
level
t i
Shield*
Murray
is
o n
the
feasible
only
antidote
to
a
1948.
N:
V
any
versely affects
We
ton,
the hazard
enhance
more
in
of
We
war.
wish
confident that such will prove to
that
could feel
we
be the
At
case.
any
rate, this whole program of "getting tough" on the radio,
on the rostrum,
in the press, and in other similar ways is
all of the part i
ipating
c
countries.
Trade is ham-
pered
and
distort'e d
the
and
tries
avoiding
are
pre-
vented
or
prosperity
We do not have
unless
employment
full
at
for
there
Mr. Shields be¬
Management
York
City,
American
New
not
are
the passions, of the
altogether clear and certain, but
arouse
is this difference:, The people
make the decision
to
the
rate attempting to
rank and file
individuals
(Continued on page 34)
*An address by
any
ex¬
by
penditures
March 19,
+.
'
■
».
•'
as
to
war or peace.
of Russia do not
They
are
think and what to do—and, apparently,
and do
they
as
a
gathering
sponsored
by the
Department
to
make
plans for new Savings Bank Drive,
Washington, D. C., March 18,1948.
told what
they think
on page
32)
State and
1948.
Municipal
STATE
Lithographing Go.
Aldrich
bidden. The hazard originating from
are
(Continued
"
f
W.
Treasury
Havana
L
W.
from
a
Association,
'
af¬
coun-J
fected
Both problems—
dangerous business. It is all too reminiscent of President1 making their'full contribution to
depression and of
Roosevelt's famous "quarantine" speech, which started off the recovery program.
being adequately prepared—have
Financial and monetary stabil¬
important financial implications. a similar sort of campaign (though, of course, much less
ity is not easy to attain.
Internal
That this is the case we can be
pointed) prior even to the outbreak of war in Europe in 1939.;
(Continued on page 22)
sure for the experience we have
Admittedly, the Kremlin has long been engaged in
had with business cycles in this
"'■An address by Mr. Aldrich at
similar tactics. Its motives for arousing the passions, or
country shows that:
;
\
of
fore
r
,
sixteen
nation ad-
one
A Hazardous Course
.
business slump.
Inter¬
16,
March
of
one
e*
bility
for
highproduc-
h
nations. Insta¬
less
o
Commerce,
of
t
any-
element
and
(1)
Cortney
e e
declaied, must
can only hope that the Administration in
Washing-*
in its efforts to win support for universal military
in military
training, the European Recovery Plan proposals, and what¬
strength ever else it has in the back of its
mind, does not materially
gifts, ex¬
change con¬
pound sterling
allowed to find freely its real eco¬
nomic level.
Their contention is
t i
u c
vital
we
the
and
removed
the
Comm i 11
EDITORIAL
produce is the
on
Cortney
as
capacity to
Britain to live
Philip
^stability,
at a
full pro-
than
Great
perpetually
■
..
In the
counte¬
thing
who
that
want
\
each
d
the
unless
r,
running
.! j 1 r ""
be achieved in
nance
faire
contend
is
-i I '
!
■
••
'
; ■
report of the Committee of European Economic Co-opera¬
tion, signed by the 16 nations which attended the Paris Conference,
the statement appears that the success of the recovery program de¬
pends on internal economic, financial and monetary stability. Such
i-P
to
are
school,
boom
Upholds provision in ERP
equal in amount
goods and services granted.
Act freezing local currency in special accounts
this, ill afford
(1)
of
business
domestic
time, such
ferent lines of
laissez
The first
incredibly serious international crisis
an
the
We can,
takes two dif-*
those
;
of exchange.
rates, and realistic rates
tax barriers. /
out of gas.
against; the
pegged pound
There
deflation, and
capital invest-
new
begin with the consideration of two over-riding factors.
This campaign
attack:
banker, stressing importance of monetary
Europe, cannot check inflation, but it must be accompanied
by budgetary surpluses, restriction of private credit expansion, i
establishment of free markets, flexible and decontrolled interest '
(1) restrictive credit policy of Federal Reserve;
nents
of
the
Marshall Plan.
r
,
despite:
for
Any realistic discussion of the economic outlook must, I think,
the
devaluation of
Chase National Bank of New York
as
to value of
be retained.
campaign - in
a
faces unexampled opportunity
(2) artificially low interest rates; and (3) high
i
value of dollar
stage is not yet set for substantial
argues
asserts nation
ment
Europe
noted in
Mr. Shields
| and gradually abandonment of
j British exchange controls is pref- j
erable. Sees fall in U. S. prices v
aiding Britain and urges gold '
Copy
factor in European recovery and cooperation, outlines
basic causes of inflation. Says increased production alone, already
stability
contends time is
ripe-for pound devaluation;
York
New
Prominent
'
By MURRAY SHIELDS*
■
a
By WINTHROP W. ALDRICH*
President, Coty, Inc.
Mr
Price 30 Cents
York, N. Y., Thursday, March 25, 1948
and
R. H. Johnson & Co.
1927
Established
INVESTMENT
MUNICIPAL
Bonds
BONDS
•>
SECURITIES
Bond Department
Hirsch & Co.
Members New York
Stock
Exchange
and other Exchanges
25 Broad
Chicago
Teletype NY 1-210
Cleveland
Geneva
Albany
London
New York 5
THE NATIONAL CITY BANK HART SMITH & CO.
Members
PHILADELPHIA
Syracuse
BOSTON
Troy
St., New York 4, N. Y.
HAnover 2-0600
64 Wall Street,
OF NEW YORK
Buffalo
Scranton
Harrisburg
Wilkes-Barre
Woonsocket
Springfield
Washington, D. C.
52
York
Bond Dept. Teletype:
NY 1*708
THE
CHASE
Security Dealers Assn.
WILLIAM ST., N. Y.
Bell Teletype "NY
New York
HAnorer 2-0980
1-395
Montreal
Toronto
NATIONAL BANK
OF
THE
CITY OF NEW YORK
(Representative)
For
Banks,
We
an
Analyzed and Appraised
on
request
Gordon Graves & Co.
Street, New York 4, N. Y.
<
Tele. NT 1-809
maintain
active trading
CANADIAN
National Gas &
Electric Company
State of
securities
market in
*
Ohio
Common
OTIS & CO.
(Incorporated)
Established 1899
CLEVELAND
Denver
Columbus Toledo Buffalo
New York
Cincinnati
•
Chicago
Stock
Bought——Soldi—Quoted
Compensation Bonds
INSTITUTIONAL INVESTMENTS
Tel. WHiteMl 3-2340
Dealers
foreign
PORTFOLIOS
Information
Brokers and
BONDS & STOCKS
BANK
30 Broad
New
Dominion Securities
SUTRO BROS. & CO.
Est.
Members New
120
Grpoeahom
1896.
York Stock Exchange
40
Exchange Place, New York
Members New York Stock
and
S,N.Y,
Broadway, New York
Telephone REctor
2-7340
ira haupt &co.
111
other
REctor 2-3100
Bell System
Teletype NY 1-702-3
Boston
Exchange
Principal Exchangee
Broadway, N. Y. 6
Teletype NY 1-2700
Telephone: Enterprise 1620 "
2
(1310)
THE COMMERCIAL
& Power
Cv. 3l/z,
President, United States Steel Corporation
Mr.
or
New York Hanseatic
Corporation
Teletype
NY
attacks
The
ment."
and
h
Bought—-Sold-*-Quoted
nation
so
well
for
150
years,
would
estab¬
Members
New
New
120
York Stock
York Curb
lish
Exchange
Exchange
here
a
that which
S
Where,
re¬
there
cently gripped
Tel. REctor 2-7815
and
2>/t%
cil
due 7/15 57
address by Mr. Fairless at
of
due
Chamber
Com¬
Vice-President
Teletype NY 1-2846
Commenting
Aetna Standard Engineering
American Time Corp.
Artcraft Manufacturing
vestor
Hood Chemical
n
#4 nil
n
and
and
Kirby Lumber
Newmarket Manufacturing
This
on
-
Pacific Telecoin
Time, Inc.
United Artists Theatre
United Piece Dye Works
U. S. Finishing com. & pfd.
Taca Airways
each- decline.
on
Warner & Swasey
sive
Members N. Y. Security Dealers Assn.
37 Wall
St., N. Y. 5
Hanover 2-4850
Bell Teletypes—NY 1-1126 & 1127
built
change
fac¬
industries.
to
the
into
up
the
dispensable.
boom.
same
a
ct
those
clined that
in
a
we
bear
ing.
further
Alden
Such
declines
technical
market action
a
H. Hentz & Co.
Ik.
>
proper
learned
in
a
trend
new
papers
v/ere
a
set
not in
R.
Wells
in
the
of
are
interesting, but
taint of the amateur when
The
a
each
record
clearly.
1929
demonstrates
this
Did the various services
see
five year
seen? In
1932?
In
1932
was
a
inflationary boom fore¬
1937
anticipated?
was
At
no
the
collapse
Exchange
Noranda Mines
Exchange
United Kingdom 4 %
Brown Co.
Inc.
Trade
Exchange
Exchanges
Exchange Bldg.
N. Y.
Minn. & Ont.
Placer
Paper
PITTSBURGH
36)
page
tt
Detroit Int'l
.
(Va.)
Bridge
Aspinook Corp.
t
Hoving Corp.
Frank C. Masterson & Co.
.
•
'
.
"
next
Established 1923
Members New
64 WALL
York
Curb
ST.
Exchange
NEW
Teletype NY 1-1140
YORK
B
HAnover 2-9470
Curb and Unlisted
Securities
>
i
economic
phase
been
cor¬
rectly: interpreted
by majority
opinion.
So recent an
example
as
the
generally erroneous busi¬
ness,
commodity and stock
forecast for
general
the
1947
proves
Joseph McManus & Co.
Members
market
Canadian Securities
Department
39 Broadway
business opinion reflects
status or recent
past
»•
Telephone BArclay 7-0100
Exchange
-
New York 6
Teletype NY 1-1610
.
tee
equipment
..success,
doesn't
aroid
because
skepticism is easy,
-of essentials is
guaran¬
although
■
Primary Markets
knowledge
a
probably the
rarest
certain.
One basic fact of
economic life
that
management with more
than average success
in earning
profits for the stockholders
will
Troster,Currie&Summers
is
(Continued on-page
40)
)!
-
,
r.
<
v
:
v*
Members
New York Security Dealers Ass'n
Teletype—NY 1-376-377-378
'90
Soya Corp.
Great Amer. Indus.
Scophony, Ltd.
Utah Southern Oil
U
Securities
Department
S.
Radiator, Pfd.
Equity Oil
•
Exchange and Other Principal Exchanges
NEW YORK 6, N. Y.
Teletype NY
it/
Empire State Oil
Goodbody & Co.
115 BROADWAY
.
Digby 4-3122
essentials.
This
British
■
York Curb
New
Chicago Stock Exchange
that the
current
only.
Gaumont-British
Development
Members N. Y. Stock
DETROIT
Common
,
Rhodesian Selection
Exchange
GENEVA, SWITZERLAND
on
Central States Elec.
that the
years
ACTIVE MARKETS!
We Maintain Active Markets
in U. S. FUNDS for
Curb
YORK 4,
Teletype NY 1-1227
•
.*
time has the
Stock
NEW
'
5
given time, but higher or lower form
of
knowledge. However,
according to those analyses.
.Without
both factors- '.failure
is
in
in
factors
wrong.
Otherwise
the
market
would not be where it is at
any
off¬
analyses
to the domi¬
involved
must
be
as
York
N. Y. Cotton
Exchange
all
York
other
Bell
provisions in¬
have right well
We
recent
(Continued
•
and
giving them
weight is the most
of
nant
with
consider¬
able
-
...
probability of a
or the other. The
of
financial
to
has,' however,
traveled
straight line, adding with
Established 1856
And
o
Company
Broadway, N. Y.
WOrth 4-3113
The equipment
necessary to an
analytical- prob¬ accurate interpretation
of the fu¬
lems.
For instance, it is obivous ture must
include thorough
skep¬
that the general opinion of statis¬ ticism of
prevailing comment, and
tical services, market letters, and am.
ability to get at
in¬
so
one way
difficult
could
s
*
picture
their
of
prove
the
circumstances
The
set
to
during this indeter¬
minate phase or at least not con¬
sidered important. Selecting these
For 18 months the stock
market
of
welfare
120
wartime make such
in¬
either way must come from
good case
for a resumpo n
of
the
have
Exchange,
The
&
Members Baltimore Stock
present disinterest characterizes the investor
of circumstances that
t i
f
At
establishment
pushed too far.
Board
Financing
Pfd.
r
tors, could be
are
SremeoniCompan^
Chicago
&
people in peacetime calls for
just that. The crucial demands of
.
month
together
market
Commodity
Pfd.
our
which
......
market.
technical
also
Merchants Distilling
Telecoin Corp.
CHICAGO
the
Co., Inc., Boston
vn
a
Title Guaranty & Trust
New Orleans Cotton
Com.
Mitchell
anc
rightful position in
affairs, must be equipped
with a full quota of strong, well
Organized, efficient and progres¬
Average declined to 163.12 on Oct. 9, 1946, 163.55 on Nov
May 17, 1947, and 165.65 on Feb. 10, J1948. J Volume of
trading grew
with other
Taylor Wharton Iron & Steel
Cotton
her head
her
world
General Manager,
&
dullness
the
York
&
without saying
goes
security prices.
progessively smaller
International Detrola
New
Com.
American National
on
22, 1946, 163.21
General Aniline & Film "A"
New
Gas, Pfd.
Hosiery
Wood Newspaper
Machinery
Interstate
The Dow-Jones Industrial
Clyde Porcelain Steel
Electric Bd. & Share Stubs
New
maintain
everything.
cradle
ideal
an
J. H. Goddard
\
Manufacturing
Boston & Maine R.R.
"i:
New York & Richmond
national income and concludes in¬
look forward to solid
profits which tempt him to invest
money.' Looks for high levels for
can
Baltimore Porcelain Steel
Members
units in
as
Holding
General Rayon "A"
dearth of equity capital despite $100 billion increase
in money
supply, Mr. Wells lays
blame to present tax system and lack of
investor confidence in
corporation management.
Says infla¬
tion has caused
widespread dissipation of large part of existing
capital, which must be replenished
and enlarged, and, for this
reason, management will again seek to
promote interests of investor in
order to attract capital.
Sees need of restoring investors' share of
ftctualTWafkets Qu
Northern New England
Punta Alegre Sugar
Huron
V
By ALDEN RICE WELLS
,
Bates
do
branch offices
our
that the United States of America
spires men and women to accom¬
plishment nor is it readily com¬
Street, New York 5, N. Y.
HAnover 2-8244
Surely
It
Capital Malnutrition in Stock Market
WM. E. POLLOCK & CO., INC.
20 Pine
of
to
grave" is not
Akron, O., March 17, 1948.
7/15/72
operating
if she is to hold up
rights and looks to the
"Security from the
County Safety Coun¬
Akron
merce,
3%
personal
government
':'An
Direct wires to
be said of groups oi
may
pursuits.
is
1-1557
effort to excel.
an
individuals
spirit of the individual American
has not yet deteriorated to the
point at which he foresakes all
govern-
the Summit
in
NY
La.-Birmingham, Ala.
disciplined
the
and
arm
vidual
self-reliance,
opportunity to
the
or
system,
a
intelligent thinking?
times referred to
by its advocates
"a strong centralized
as
Development
New Orleans,
trainee
the
use
Exchange
St., New York 4, N. Y
HAnover 2-0700
What has been said of the indi¬
advance by dint of hard work and
in Soviet
vogue
Russia. In the most pleasant terms
available, this system is some¬
For Reconstruction
a
in such
place for
ambition,
Benjamin F. Fairlest
Germany and
Italy, or is still in
The International Bank
Members New York -Stock
,
system akin to
BROADWAY, NEW YORK
to
Bought—Sold—Quoted
25 Broad
production, regulated wages and various fields of our nation-wide
employment, controlled prices, al¬ activity. We refer here particu¬
location of products, are definitely
larly to industry, for it falls to the
not the earmarks of a competitive
lot' of many of us, in a country of
industry, a free people, or a rep¬ the size and importance of our-Own,
resentative republic.
to be concerned with industrial
ap¬
proximately
McDonnell &(b.
mind
dicta¬
a
chance
the
his
and
Securities
Steiner, Rouse & Co.
patible with the idea of independ¬
ence.
It is a poor exchange foi
you
appointees upon all
citizens.
Except
in
periods of
grave
national
crisis,
planned
of
this
Request
needs
what
right
tor
served
the
it
imposition of the will of
philosowhich
y
have
Call
choose,
it leads through the paths of eco¬
nomic dependence to political de¬
pendence and eventually to the
backs upon
methods
3%s, 1963
on
.
economic
the
p
Prospectus
Louisiana
Says
and paints out its advantages.
economy,
vigor is handicapped by heavy taxes, insufficient
hearing and reading much about free competitive economy for quite a
by the arguments, efforts, and measures
quite a differen t order of things, namely, a planned economy
turning their
Virginia Elec. & Power
Deb.
competitive
number of years, because we have been confronted
of those who
profess belief in
1-583
planners,
Con v.
free
on
any
We have been
Broadway, New York 5
7-5660
condemns
replacement, and drying up of sources of equity capital. Denies steel
other great industry is making "fantastic profits," and defends recent prxe increase in crude
steel.
Says chief causes of inflation are high rale of government expenditures add.ng to money sup¬
ply, anj remedy is to bring production into balance with demand.
Bought—Sold—Quoted
BArclay
Fairless
efforts of private industry to
expand and maintain
allowances for depreciation and
,
Common
120
Alabama &
By BENJAMIN F. FAIRLESS*
1963
Standard Railway
Equipment
Thursday, March 25,
1943
CHRONICLE
FINANCIAL
Problems Conf r on ting Industry
Virginia Electric
Rights &
&
SIECSEL & CO.
39
Broadway, N.
1-672
,
Y. 6
DIgby 4-2370
Teletype NY 1-1942
,
James M. Toolan & Co.
67 Wall
Street, New York 5, N.Y.
Tel. HAnover 2-9335
Bell Tele. NY
1-2630
"
Number 4684
TBE COMMERCIAL
Volume
&
FINANCIAL
CHRONICLE
INDEX
Articles
and
News
Obstacles to Financing a Perpetual Business
Major
Shields
—Murray
Should
„
Cover
By JOHN DUTTON
—
4
_
Jarvis___
can
fact, there
are
6
13
:
.
14
Inflation Tide Going Out!—Hans Neisser
-
15
_
Pessimistic Wall Street—Whitman C. Haff
16
Is—Emil Sehram
18
for Labor Productivity—John C. Davis!:.
_20
a;
Tax
Reduction—Roger W. Babson
The
Community's Role in Labor Relations
!ook
'
•
ZZ
.
_.
Table Issued far Determining Return on Fixed Interest and
6
■y;
Financing Through Preemptive Rights_________„__10
__
Sarnoff Endorses ERP Objectives
___
Robert E. Wilson Sees Petroleum Demands Met by
____L
Federal Reserve Board Studies Higher Cost of
Suit
Capifcal_____l 21
Export-Import Bank Grants Egyptian Loan
With
Unanimous Approval of Creditors
FIC Banks Place Debentures
•
-
7
38
Bill
J, P. Hall Urges Free Gold Market.,
>£ 40 {
40
Crops 47
47
External Bonds
-
the
Regular Features
As We See It
Bank
(Editorial)
Canadian
Securities
._
Coming Events in the Investment Field
Dealer-Broker
Investment
Indications of Business Activity..—_____—
Mutual Funds
I
News About Banks and Bankers
I
L
:
-
15
7 .;
41.
16 *
24-
Observations—A. Wilfred May..--—
Governments
en
----
Railroad Securities
—
35
l_
14
—
CI
Securities Salesman's Corner...-
—-L
Securities Now in Registration
44
___________ 5
38
----
The State of Trade and industry
Washington
and
See article
Published
(Walter Whyte Says)—
You
on
Twiee
Reg.
WILLIAM
u.
B.
S.
Patent
DANA
25 park
place,
HERBERT
D.
WILLIAM
,WILLIAM
Office
New York 8,
N.
Y.
President
0
ni.
Wlw*.
c/o
etc.).
°ffices: 135 S. La Salle ' St.,
J11, telephone: State 0613);
Edwards
Copyright
1948
&
London,
*rv6octe^e^
York
m
E.
C.„
Eng-
Smith.
by William B. Dana
Company,
.
Slons.
rate
of
Rates
'
$35.00
us
who
are
in the securities business?
.1
■,;
1908
2-4500—120
Bell System
Broadway
Teletype N. Y. 1-714
Lea Fabrics
Punta
Alegre Sugar i:
Susquehanna Mills
U. S.
Sugar
Warren Brothers "C"
DUNNE&CO.
•
Members N. Y. Security
25 Broad
Dealers Assn.
St., New York 4, N. Y.
WHitehall 3-0272—Teletype NY 1-9SC
securities as upon real es¬
-..
are they a less riskless
securities?—we' doubt it.
They
.
of
investment
than
White's Auto
on
.
fluctuations in
.for. .for¬
exchange, remittances
—where does he think it is
Stores, Inc.
BOUGHT
—
SOLD
—
QUOTED
FIRST COLONY
CORPORATION
52 Wall St.
New York 5,
Tel. HA 2-8080
N. Y.
Tele. NY 1-2425
LAMBORN & CO.,Inc.
99
WALL
STREET
NEW YORK 5, N. Y.
What I would like to know is
come from—the printing
going to
SUGAR
press?
This isn't
funny—it is a deadly serious business. This
is something the various existing associations in our industry
could get to work on right now if they really wanted to do
something constructive for their business and their country.
The NASD and the SEC won't help the securities industry
Raw—Refined—Liquid
Exports—Imports—Futuret
DIgby 4-2727
must
(Continued under "Securities Salesman's Corner, page 26)
We
per
year;
S.
of
in
are
interested in offerings of
The Public National Bank
CERTIFICATES
Bond &
Mtge. Guar. Co.
High Grade Public Utility and Industrial
Lawyers Mortgage Co.
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.
& Trust Company
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Members
ln United States, U.
Territories and Members
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account of>the
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eign subscriptions and advertisements
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year.
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Manager
March 25, 1948
Inni Pers' °ardens„
year.
per
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of
Dominion
Weekly
COMMERCIAL
the compelling
opportunity to buy income producing real-estate
margin. You're right
.
where does that lead
try during the next five years.
3.
page
FINANCIAL CHRONICLE
and
48
L
Other
The
5
29
46
Prospective Security Offerings.t
Public Utility Securities.—
L
Tomorrow's Markets
were
were in the past and are not today at the inflated
prices which prevail—yet you can obtain 65 % of the market
value of commodities for loan purposes but you must put
up 75%' cash if you desire to.invest in stocks. Why this dis¬
crimination against securities?
Could it be that our New
Deal officials in the Federal Reserve, the Treasury Depart¬
ment and the Securities and Exchange Commission believe
it is still good politics to hog-tie Wall Street? Do they still
believe they can put a rope around the neck of the millions
of people who own stocks and bonds in this country without
finally choking off completely the flow of venture capital
into industry? They have almost killed this vital supply of
•venture capital as it is—do they want absolute socialism in
this.country? Mr. Truman himself recently prated about the
need for something like $50 billions of new capital in indus¬
.
Tennessee Gas Trans. Co.
never
8
—
(w.d.)
Finishing Com. & Pfd.
Texas Eastern Trans. Corp.
at least attractive on the surface.
was
form
Recommendations..-.-—
Einzig—How British Dollars Are Wasted—_______
From Washington Ahead of the News—Carlisle Bargeron
Our Reporter
completed
20
8
—
U. S.
you can say
19
__7
Kingan Com. & Pfd.
Dorset Fabrics
to your customers
want to talk about investment. But more
same
tate?
-Cover
__
Stocks--
and Insurance
that he had heard of
me
basis if we could offer them on a'financing parity'that is
competitive with other forms of investment? Why not un¬
freeze securities and restore their collateral value? Why not
47
—
4-6551
evening while
Can you imagine how attractive certain common stocks
would be that are now selling orusuch a generous-*income
v
.
Pregel Brothers Report Success With Radioactivity on
011
told
other
93
•.
Our Objectives and Resources (Boxed)
Chile Announces New Plan
25 %
those of
:
Senate Approves Railroad Reorganization
The
STREET, NEW YORK
Telephone: WHitehall
was an
on a
•
\
/
99 WALL
control
Here
24 v
^___:^_
Peru's Second Exchange Offer Has Not Met
something
ments that could be
Dutch G3vernment___ 29
List of Dollar Issues Requisitioned by
It is
>why this proposition
22...-
—
.
point
in
laws, and other governmental regulations re¬
garding rental property, the very enticing financing arrange¬
Underwriting Firms Enter Denials in Government
Monopoly
sen¬
,
rent
19
___________
—__
a
.important is the thought behind what this investor was try¬
ing to do. Despite the hazards and restrictions imposed by
Herbert F. Milligan Proposes European Reserve System____ 18 ;
Private Enterprise
—
too
ALMOST
as
the next time
you
17 J
__
r_
nearly
kind of talk.
--10
_
ours
I couldn't help but remember that remark. It is a good
one—because; it is the truth. Everybody understands .that
,
Shields & Co. Booklet Cites Advantageous Results
"Chronicle? Honors Miss E. F. Kelly
friend of
...
of them.
were
IF YOU CAN'T PUT IT TO WORK WHY HAVE IT?"
"
-
Dividend Securities
a
piece of real estate. There is
be applied to the
security business
several
we
sible to bid for obsoletes!
good after I investigated it as it did on the
surface. After all, I've
got one idea and that is MONEY IS
ONLY GOOD FOR WHAT IT WILL EARN FOR YOU, AND
'
—Theodore W. Kheel__2_____i
When
owners
piece of rental property that he could purchase for $28,000.
iThe cash down payment involved an immediate
outlay of
'approximately $8,000, and the balance on mortgage at a 5%
rate and a 3% amortization. Suffice to
say he did not buy it,
because after
investigation the purported gross income of
$2,000 per annum, although appearing large on the. .surface,
was more than offset
by the high charges for heating the
property and other possible involvements. After a detailed
summary of the pros and cons of the matter my friend said
to me, "You
know, I was disappointed that this deal didn't
8
Railroad Securities
open
a
>
10
Deadly Parallel—H. Bertram Smith____
about how
Comma
—
to
a
visiting at his home this friend
v
7
Effect of Management on
—Patrick B. McGinnis.
little story
a
investment in
an
;in it which
SEC and the Dealer-Broker—Louis Loss
The Outlook
This is
6.
Stock Market Pessimism!
REMEMBER
of securities
i
made
Money Market?—Raymond Rodgers_
What Wall Street
be appealed to by those interested in securities business
up former traditional financing and banking facilities to
4
—
Current Investment Prospects—Edward P. Rubin
The
!
3
and the Economic Picture
Salesmanship Essential to Distribute Securities?
A
restrictions and other impediments as discrimination
against securities in investment field, Mr. Dulton urges Congressmen
2
—Douglas Laird
Tne
Citing margin
,
!
D. Mooney
No Grounds for
—N. Leonard
Is
I
2
Participation in European Recovery
World Price Trends
A. W. Zelomek
AND COMPANY
Cover
Confronting Industry—Benjamin F. Fairless___v_I_
Capital Malnutrition in Stock Market—Alden Rice Wells.^i
Why Discrimination Against Securities—John Dutton_;
—James
Against Securities?
[
Boom
Pound Be Devalued?—Philip Cortney_
American
[\mmm
"
Cover
Problems
Whose
Discrimination
Pjyre
Europe—'Wmthrop W. Aldrich,.___________
Inflation in
.
Albany
♦
Boston
-
-
-
Glens Falls
York Curb Exchange
Tel.: FINancial 2330
•
Teletype—NY 1-5
;
...
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Tel.:
Members New
135 S. La Salle St., Chicago 3
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request
on
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Unterberg & Co.
Members N.
Y. Security
61 Broadway,
Dealers Ass'n
New York 6, N. Y.
Telephone BOwling Green 9-3565
Teletype NY 1-1666
"i
4
(1312)
COMMERCIAL &
1
1
''
'
'
'
By JAMES D. MOONEY*
...
President and
,
\
World Price Trends and the
Economic Picture
,
^
^
Thursday, March 25, 1943
CHRONICLE
FINANCIAL
American Participation in European Recovery
\
"
■
THE
Chairman of the Board, Willys-Overland Motors, Inc.
Leading industrialist
urges aid in European recovery based on acceptance of fact that only real threat
of the world is aggressive, belligerent Russia.
Says trend toward Staiism should be arrested
to peace
basis
as
By A. W. ZELOMEK*
for
European recovery, and world should return to honest monetary practices and free ex¬
change rates. Urges enlisting skilled management outside field of bureaucracy in administration of
Commenting on effects of war scare and war preparation on price
trends, Mr. Zelomek holds, though war. is not imminent, defense
spending may lead to temporary higher prices. Says chance of
ultimate gradual readjustment from postwar inflation is
growing
smaller, and concludes too much is being produced at too high a
Economic problems, as you gentlemen
very will know, resolve themselves very quickly
practical problems of production and distribution; however, these economic
problems
lie generally in the fields of food, clothing, shelter, fuel
may
more,
prob¬
lems
in
field
practical obser¬
European recovery and
fcome
suggestions for American
participation in European recov¬
tne
vations
resolve
m m e
into
diately
have had many years of experiencef in the production and
distribution :'i of i automobiles
in
of
production
distribu¬
tion, the prao
.
whatever
might
we
Europe, but.r wantJto make it
quite clearf that i. haven't - any
quick or ready br Smart answers
means
sider
about
problems j. over=
feeding
D.
lames
or
Mooney
keeping them
f
agree
from
I
;;
say
that
now
taken
your
considerable
risk
ahead.
asking an engineer like me, or
to discuss these problems. We
spent
such
lives
our
production
and
in
I think
solving
ing that
distribution
problems,
and
to
exclude
from
me
like
men
taking
deeply, to take
of
skin
our
off
in
providing the solutions for eco¬
problems,: particularly if
We
nomic
are
they lie in the international field.
The
peans
gineers
the
and
be
that
en¬
all right for making
country needs engineers
are
war—the
for
to
seems
mass
production of
planes and guns and
with
equipment
how to
the
technical
and
We
ammu¬
are
»
ready to help them with
portation
tenance
put their distribution
of
in the
weapons
the
warfare
mass
itself
expresses
destruction
systems in
or
fi
the supply of raw materials
nance
spite of the fact that the engineer,
by training and temperament, is
more at home in these construc¬
tion
So much for what
to do.
An
Identification
For
-
of
we
are
ready
,/r:of
Help
;//;/
Now, I want to identify some
the principles and conditions
under
duction and
distribution, than he
is in the field of war.
world. ■v:.
•
aside by the politicians and
satellites,
and
lustful
men
mumblers
of
abracadabras.
to
your
for
their
power
ideological
1 >
Accordingly, I
grateful
am very
Europe,
officers who have asked
*An address by Mr.
Mooney be¬
Society of Tool Engineers,
fore the
Cleveland, Ohio, March 18, 1948.
or
First,
\
shoved
which
should
have
v
?i
Compromise will be
benefit
to
contract
Picture Tax
of material
PATHE because of the
we
obligation to
an
own
...
to
Second, it is about time for us
drop the use of such thread¬
bare
ideological terms as Com¬
munism, Fascism, and Socialism-,
deal
power
;|The British Motion
do,
Americans
we
oldfashioned, homely, way of put¬
ting this is, "Charity begins at
home.-'
-v
:i;;
and
INDUSTRIES, INC.
we
country's longterm enlightened self-interest. An
situation
PATHE
that
right and
our
help
other part of the
anything
assume
a
guard
any
in
should
we
for
us
with
in
politics.
to
the
international
terms
It
of
is
practical
about
time
play ball with the vari¬
countries and political power
who have
shown
their
readiness to play ball with us.
ous
a
natural
of my second point that
reestablish
France
Rank
powers.
Our working with the Brit¬
and
French
to
fit
of
Western
reestablish
Europe
British Isles.
Organization
and
and
;
details
The
frame,
signed for
as
you
peace.
is de¬
see,
It is based
agreement
are
in
.
:
I trend,
L the; big
minds
now
at
what
on
.
to
corollary
American peace and the
of the world today is ag¬
own
gressive, belligerent Russia.
;
•
Next, I. want to make to
recommendation;;in, the
economics
for
you a
field: of
European
and
This recommen¬
world
recovery.
dation again will be aimed at in¬
suring world peace,
based
on
value
of
tensions
Wars
and
be
recognition of the
relieving the economic
throughout
and
will
the
the
revolutions
world.
caused
are
principally by hungry bellies.
Before pitching into this rec¬
ommendation, I want to remind
that most of the countries in
Europe, and as a matter of
you
most
of
fact,
the
countries
in
the
world, are operating their econo¬
mies, their production and dis¬
tribution
schemes, their uses of
with a high degree of
money,
state control.
You
Communism
Socialism
cism,
or
or
New
to your mood.
call
may
or
•
ideological
beating the drums
shortly after World
our occu-
Fas¬
Dealism, according
.
The
it
(Continued
on
boys,
for
War
page
V,
;
began
Statism
I,
and
31) :
o
;
the
present
on
There
have
is
Zelomek
W.
A.
doubt
no
that
it will
accompanied this time by drastic
controls? Will the pickup in psy¬
chology be followed by another
and
more
or
events it
the
serious letdown
three months?
within
major in¬
a
spending, push
top-heavy business trend
again for an indefinite
up¬
ward
iron
riod?
.
These
that
must investigate.
we
■
Quoted
no
from
one,
down, knows the
the
I
answers.
say
this because I know you are
going
to be listening to news commen¬
tators,
and
going to be
confidentia1
are
you
sorts
reports.
And in all
will be reading whal
of these you
might be called
rf view
Be
—
of
September.
military point
a
ready for
•;
by
;
war
v
~
7
Now, at this point we must stop
and
begin
to
make
our
own
As I
guesses.
it.
see
must
we
ourselves two questions.
one
is fundamental:
Is
ask
The first
im¬
war
minent?
We
;;•;(•
are
dealing with guess¬
but that is no reason we
work,
must
forsake
this
at
logic.
question,
Let
look
us
step
one
at
a
time.
First,
will
Russia?
ask
believe, is to
United
war
J
it.- We have
to
tells*
that
States
or
question,
tradition
which
'*nnn,
that
answer
national
our
declare
we
To
us
enters
draw
upon
the
wars
onlv after the most serious
provo¬
cations,
direct
involving
attacks
shipping,
more
outposts
or
less
or
United
on
States
other
ter¬
ritory
There is ro one man in
the United States that can
declare
war
on
a
foreign
power.
will
United
abroad—in
will lead
Italv.
to war?
that extreme
Let
us
in
are
.
.
.
.
.
,
our
It
is
this talk to
not
dwell
is
a
formed
person
that
us as¬
men,'perhaps
military
repeat:
War is
not
and
imminent.
Actually, however, the
to
the
answers
economic
questions posed
depend less on this pros¬
pect than on another.
I believe
I am
being accurate and realistic
when I express the view that war
between the United States and
Russia is not imminent. But that
does
com^
not
will
we
necessarily
enlarge
our defense
It does not necessarily
that the trend of business
mean
activity
will
follow
peacetime course.
It
years
assume
that
normal
a
not
does
necessarily mean that the pickup
in many
markets, evident since
the President's
address, will last
for
only
not
month
a
necessarily
that
you
safe
are
previous
your
come
Let
gentlemen,
continuing
in
policies
tion, which in most
It does
two.
or
mean,
of
opera¬
had be¬
cases
very conservative.
us examine these possibili¬
ties in
little greater detail.
a
It is best to start with the
the
and
tance
of
facts
facts,
greatest impor¬
these:
are
(1) Our armaments and foreign
program is already an enormous
one.
It
full
year.
has
been
for
least
at
a
Federal
expenditures
defense and foreign aid have
been, and still are, running at a
for
rate
about
of
$17
billion
year.
a
(2) Nevertheless, with this pro¬
gram in full blast, a distinct soft¬
ening in prices and business ac¬
tivity has been
in progress since
beginning of the year.
facts are significant.
I
believe
they justify a definite
the
Those
^
conclusion
pects.
That
lows:
"
conclusion
war
for
scare
some
fol¬
'
has been
Be¬
crystal^
the price
in the gradual orocess
an
\
time.
President's talk
lized these fears,
was
pros¬
as
,
The present
the
is
'
"
developing
fore
business
about
deflationary trend.
10
that
mean
not
spending.
justing from
than
us
subject of
the position
ignore,
can
now.
now
the
on
that my own organization
gives it
a
great deal of consideration.
I
a
Let
the
anyone
But I assure you that
question that no well in¬
fight
war
does
of Russia.:
mand, who believe with sincere
conviction
that
it
is
better
to
*
behind
on
How
out
curtain.
ex¬
assume
possibility. Let
that there
men,
States
for
incident
an
goes
earlier
I wish I could promise
you p
definite, accurate answer.
Bui
simple honesty compels me to
reading all
Washington
Imminent
Gentlemen, I assure you
great deal of information
from behind the iron
a
comes
pe¬
the questions that
are
what
curtain?
know?
it
Or will the
anticipates,
in defense
crease
many
our
Sold
know
rary? Or must we prepare for
another year or more of inflation,
two
Not
may think it preposterous
that I should make such
state¬
ments
about Russia;
How do I
strong effect on
some
But will this be tempo¬
a
prices.
sume
request.
this
You
'|y:;;■;
ample—create
Bought
War
from
brochure, available
con¬
to
ment;
p
Secondly,
COMMON STOCK (W. A. 1.1.)
answer
the
.
vel
jw i11 change
.
Arrest the Trend Toward
Statism
the
for
expect war; believes in
fact, that
war can be
avoided for an indefi¬
nite period.
■
'" '
'
'
-
extent
this latest de-
President and Secretary Marshall
power politics,
and on
recognition of the obvious
fact that the only real threat to
that
and
foreseeable fu¬
ture, is a categorical no. Russia
is not ready for
war; does not
■
the moment is
how; and
deep
viction,
m
the
Wisconsin Power &
Light
contained
same
as - asking
whether Russia
will attack the United States.
:.Again
we4are .guessing.; BuLl
believe firmly, with a
year's
bus i n .e s s
forces
this
;
importance in
this
point out that
Eagle
concerning
the
pate in European recovery.
of PATHE
INDUSTRIES, INC.
Further
than its usual
and
affronted nation treat it as
such?
That, of course,- is almost the
.
So much for the political frame
within which we should
partici¬
between The J. Arthur
Films, division
pro¬
within
*
V Lion
In
German production for the bene¬
groups
Third, it is
their
hegemony of Western
ish
Principles
problems,
these; economic
problems, these problems of pro¬
engineer has been
the
peace
huge reconstruction problems
that present**
themselves, and in
The
to
our
the
..
ish
production facilities.
But when peace
comes, the en¬
gineer is shoved aside, in spite of
coher¬
and military strength.
Our working with the Brit¬
they need in Europe to feed their
even
r e
o
practical
supply
the
of
enemy's army and navy, and
his civilian
population.
highway trans¬
equipment in order to
better physical condition.
We are ready to
military operations, where
modern
in
these
their railroad and
m
business
(c)
knoyr-
tion facilities.
ships
political
duction
to supply Euro¬
machinery and
reconstruct their produc¬
have
It is plain that the political factor,
foreign
I.
...
trend.
(d)
nition.
The country also needs
engineers for the 'use and main¬
field of
lot
a
the
Empire to reconstruct
ready to feed the hun¬
gry of Europe.We are ready
idea
4
comfortable
own
dur¬
logi¬
words, the road to peace lies
following direction:
(a) Our maintaining our own
production and military strength.
(b) Our assisting our tradition¬
al ally, England, and the British
ready in America
are
and
A._
other
hides, in order to contribute gen¬
erously to European recovery.
you
hand
a
we
sacrifice
-1
in the
begin by agree¬
can
we
to
but during the past
twenty years it has become fash¬
ionable
Ready to Help
peace
years
enough
only a week ago.
domestic, will
iour
of these Western Powers.
ence
'■
We Are
you,
have
\
'
timely meeting. The current war scare will
change the
markets, at least temporarily, and it is
neces¬
sary to check and recheck .viewpoints that seemed reasonable
a
question:"
military strength of the Western
Powers
This is
recent trend in many
longer
any
cally follows the course of our
effectively encouraging the de¬
velopment of the production and
,
in
afford
Fourth, the toad to
ing the next several
should guide our
European recovery.
;
I My purpose tonight, then, is to
identify
these
principles
as
a
officers guide to the difficult road that lies
selves.
to
The. Road to PeaceV:'
v
principles that
participation in
freezing to death, or encour¬
aging them to get up from the
slough of despond and help them¬
have
able
support of such foolish ideor
logical ventures.-?y\-J V - ■'■ *
there.
certain
on
f
the
On
the
other^ ihahd^teithe lightv of this
same
experience,; I; do think it
about time; for us - Americans to
starvi n.g
people,
be
to
■-
doing
whether
•
taxpayer is much too "busted"
can
to the infinite variety of compli¬
cated VpoUtical
arid • economic
con¬
overseas,
be maintained only from a stra¬
tegic military standpoint, and not
at all for the purposes of ideol¬
ogy, like making the Germans or
Japanese democratic; The Amerir
;
•
price, and "we will not be safe until situation has been corrected."
forces
they are to
be
considered
in
Europe or in the Far East, should
I
;
and
tical,
pation
on
ery.
problems
for
some
.
themselves
i
to make
me
international
s
Further
transportation.
or
eco¬
nomic
and
Fairchild Publications
aid program.
into
Statistical Bureau, Inc.,
Economist, International
trend
of ad¬
inflationary to a
This was the
basic pattern.
these
men, in a burst of sincere
patriotism, create an incident in¬
COMSTOCK & CO.
Members:
CHICAGO 4, ILL.
231 So. La Salle
St.
Dearborn
Teletype CG
955
225
1501
|
EAST
PHONES—Daly
MASON
rrlUNto—Daly 5392
5392
tended
Chicago Stock Exchange
ST.
Chicago:
Chi
State 0933
MILWAUKEE
to
cause
war.
Will
the
A
distorted,
(2)
Teletype
MI
488
*An address, by Mr. Zelomek
before the Purchasing
Agents Association of Connecticut.;
Bridge-
port, Conn., March 23, 1948.
New
Pattern
Now the basic pattern has been
by what
or
partially
concealed,
businessmen believe, or
fear, will uapijen aa a result ot
win
happen as
the international pattern. I do not
icqi.
,
.
(Continued
on
page
24)
Number 4684
167
Volume
THE
The
Steel
and
&
FINANCIAL
Carloadings
►.
■
Production
Business Failures
THE
^
IN
over-all
WHICH
were
at
:
'
"
the'
In fact the present
la
preceding'
The
in the mines
tions
Monday last week declined the past week to about
2,500 000 tons
the National Coal Association reported. The week
prior to the strike
production was placed at 13,314,000 tons.
Reviewing the week's developments the
on
Association noted that
their activities and
bulletin
The
blast
also
furnaces
reported
that
a
tion
•
ban
walkout
reporting companies did not give detailed figures
plies.
not
In the meat
packing industry a strike of 100,000 workers at 140
meat packing houses throughout the
country cut meat production in
half, it was reported.
.■.a;.?v..,
■
Figures
record
on industrial employment for the month of
February
decline of 275,000 workers, the Bureau of
Labor Statistics
In the month of January 42,700,000 workers were
a
reports.
in
employed
non-farming jobs in the United States.
Lower employment
>
attributed by the Bureau to the
was
weather with construction workers and
auto workers
counting for most of those laid off.
•
severe
in Detroit
ac¬
.V.
Notwithstanding February's price uncertainties there were no
significant signs of weakness in employment
according to the Bureau.
early March pre-Easter expansion in textile and
apparel indus¬
tries raised
employment to record levels in these fields.
In
*
A
slight rise in retail dollar volume resulted from the increased
interest in Spring and Easter promotions. The dollar vol¬
consumer
of
ume
consumer
purchasing
slightly above
Many shoppers
corresponding week a year ago.
displays of Easter novelties and
on
of
the
attracted
were
V:-.
.•
volume
decreased
Wednesday of last week, but
of the similar
week of
■
level
to
confectionery and orders for flowers
increased somewhat.
Wholesale dollar
ended
the
was
1947.
v
'A'
slightly during the
was
period
were
Buyers
con¬
.
public
STRIKE
coal
current
to
according to "The
Steel firms
week
Iron
coal
and
serious
than
either
the
Age," national metalworking weekly in its
steel industry.
are
not last
impasse
the
has
tempers
of
overshadowed
coal
the
operators and
coming-steel wage
Mr. Lewis indicate a
bitter tussle.
By the time steel and labor sit down at the bargaining
table around
April 6, oulput may be sagging sharply. But since steel
labor has a
no-strike 'clause and because it believes it will get a
moderate
increase, negotiations
hour. Each side
will
have
•stand, but
steel
labor
will
ity adds.
*
j
are
expected to last until the 11th
arguments in favor of its
voluminous
not
„■
strike
in
New
this year,
this trade author¬
;
\
1
A close check
of the gray
\v':
■
I'"-
:;'v/'
The Blasphemy Is Now Routine
'
noted
by this observer in long-hand)
Somehow
plausible
:V'
page
ST., N. Y. 8
Bell
HAnover 2-C980
Teletype NY 1-305
Montreal
Toronto
^
justified
than
the
Kingwood Oil Co.
A
crude
has
Mr. Hitler seemed
also because the German's appeal for Lebensraum
had
more
oil
had
producer
continual
the
over
past
that
earnings
seven
years.
Market 2%-3%
Analysis Available
PETER MORGAN A CO.
31 Nassau
Street
-
Tel. BA 7-5161
New York 5, N. Y.
Tele NY 1-2078
more
Pie -puLLoatum
current
clearly fantastic ravings
Gromyko—possibly because the recognizedly intelligent Gro¬
myko obviously cannot believe the line he is repeating; and possibly
plausi¬
ffeooy
New
m
far/« Anrh
128-oy.
bility than do the territory-bursting Kremlin's masochistic charges.
•.
Presumption of Wallace's Sanity Increased
/
**
An
ancillary benefit to Mr. Wallace from the Soviet delegate's
performance is that they somewhat free our former Vice-President
from the plausible charges of insanity which have
recently been
brought against him; since we must realize that his bewildering
all not been his
33)
wi«n
dend*
A
i<.-yeai
coverage or
and' Price Range*
T*UVt-VtA»
This interim print
of
CYCLI
Ina
GRAPHS
Indivldua
own
loud-speaker in the UN's Council Chamber.
;'-V"
/'
'/ '
"
♦
r."
*
*
t',V
#
"
■
The nerversion of the UN and the futility of our position reflect
general diplomatic weaknesses which are being increasingly re¬
vealed as endemic to those Powers operating under the really demo¬
cratic form of government.
.
Thev
trav
the
tire
the
prewar,
time
and
nor
cyclicu
for
en
war
postwa
neriod *ince I93fc.
0FEER
Sent
U
fceior
SECURITIES
lU Milk
RtSEAi.CH
COR. ORATtOi
Strot, Bo.ton t, M.U.
,
policy, democratic governments
of publicity
fish-bowl
stocks
swings
Apiil 6 for folio CF-325 (thereafter $4).
the
their foreign
operating in
a
and responsibility
to their electorate, cannot
The prime example* of course; is President
afford to make mistakes.
Truman's grand error of last November
Offer:
y/t
)
in his decision to effect the
on page
44)
dogpaw
{
'('
GOLD
Time Inc.
Dravo
Even in
the coal
price
Corp.
NUNES, ITD.
40* P«r share
Mf>v
be
obtained
American Maize Products Co.
the
»
.
undersigned
-rBought—Sold-:—Quoted
TELLIER &
EitabiUhed 1931
FREDERIC H. HATCH t CO., IHC.
Established
MEMBERS
63
N.
Y.
SECURITY
Wall Street, New York 5,
N. Y.
«
1888
DEALERS
ASSOCIATION
<i
500 largest an
most
active
liste
PRE-PUBLLAfiON
t A Democratic Nation in the United Nations
In
contain
chart*
the
;
r
t
fcarmngs, Divi¬
through Mar. Si
MlO*
fantasies,, but a uni¬
form line simultaneously delivered in different places and
languages,
and no matter how irrelevant to the Marshall Plan, Czecho-Slovakia;
or America's Presidency, rent control, civil
rights, or tax policy.
In
fact, it is no exaggeration to say that it is sometimes surprising to
identify Gromyko instead of Wallace as the individual behind the
more.
(Continued on
52 WILLIAM
<
people have given the steel voluntary allocation plan is
the steel industry has had since its ears have been
battered on other matters.
But, concludes "The Iron Age," the oil;
s
Paper Co.
HART SMITH & CO
of Mr.
news
'
Minnesota & Ontario
were
the broadcast propaganda of
and
^plement
the
'
^
that Chile in asking for
an
explanation of the Czecho-Slovakian events was "dirty, slander¬
ous, utterly lying, purely demagogic" and acting as "the puppet of
Wall Street
rpronounced 'Vail Street-a' by Mr. Gromyko in his
untranslated Russian version of his 110-minute
diatribe]"; that the
Western Powers are "tuberculous
blackmailers"; that the United
States is a nation of "cowboys, bribers,
doormen, and taxi-drivers'"
that our foreign-policy-making government officials are
"liars, using
propaganda from the garbage-can of Goebbels"; that (a la the
Wallace-mouthed line) the poor people of Prague were barely able
<o forestall a
Rightist coup which had made Czech officials the
"agents of Wall Street sharks—an institution for war profits and
boundless greed."
r
T
Since the supply of coke has been a bottleneck
tov the use of >
greater steel ingot capacity the coal impasse has threatened for
the time
being the full use of the industry's capacity.
' The cold
shoulder which the freight car industry and the farm
best
Paper Co.
Company
proceedings
■
use
Brown
by
Possibly the significant high-spot of this week's Security Coun¬
was the routine ruling by Dr. Tsiang, as its President,
that the Soviet and Ukranian representatives' degrading
epithets
against theif fellow-men "did not go below the standard one expects
'to hear in the Security Council"!
Some of these expressions in 1948 diplomacy-from-the-East
(as
cil
strike, high prices prevalent a month ago are out the window.
I'
There are this week no signs that inventories of steel customers
are of a
size to frighten anyone. In most cases "Iron Age" editors
nd that
steel customers could
Abitibi Power &
dis-
New York
market bears out an>"Iron Age" report
sOf two weeks
ago that the super market was cracked up.
the face
of anticipated further steel shortages because of
.
of
line
(Continued
Steel sales offices in all districts covered by "The Iron Age"
show that pressure is. on for steel deliveries. It is also clear that
there have been no
signs of a leveling off in the regular steel
market.
breadth
of
cover
"Delegate" Gromyko and his assistants!
;-v
.
a
an agreement ceremoniously signed this week, the United
the butt of their attacks has actually
agreed to put up the
even more beautifui and efficient facilities
right
York City for the transmission of the Communist
'
The
talks
more
keeping output up this week in the hope that the
long, but there have been no indications this
that the miners would be back in the
pits soon, the magazine
tieup will
states.
far
government realizes.
The apathy of those who are
be interested in the country's economy is misleading,
current report on the
coal
is
the
or
supposed
strike
unprecedented
tribution under
misstatements have after
The
physical attendance) the UN gives
an
as
booked for most
STEEL OUTPUT SCHEDULED AT LOWER RATE
DUE TO
„
Co.'s
main
office,
14
Wa1
Street, * New York City, will b
changed to Worth 4-3200.
Ti
telephone number of their corpo
rate trading department has bet
changed to Worth 4-3626.
somewhat above the level
Moderate orders
types of merchandise with current deliveries
requested.
tinued to be cautious and stressed
quality.
COAL
&
na-
$65 million to erect
to
their coal sup¬
March 29th, the tele¬
of Smith, Barney
number
fact, under
States
prepared
major scale since
on
Effective
is obvious
authenticity and legit¬
imacy. From 1937-1944 the Hitler-Goebbels team presumably footed
some expenses for its
diatribings from the Berlin Sportpalast. The
present Communists' propagandists in contrast, are
getting the use
of a
sounding-board which is more effective and "on the house."
In
on
was
propaganda
r
Monday of this week the Commerce
Department announced
date, the American Iron & Steel Institute stated it
1o say how scon the coal dearth would
be felt on a
keep the
now
•
phone
of
club-women in
A. Wilfred May
all exports of bituminous coal effective at 12.01
a.m. on Mon¬
day and the Office of Defense
Transportation, effective at the same
time, ordered passenger service on trains using
coal-burning loco¬
motives to be cut by 25%.
Directing attention to the slight effect of the coal
a
to
Telephone Numbers
the
Kremlin's
own
blasphemous and
propaganda. Through its press and radio
facilities (not to speak of the school children and
" it added
small amount."
very
On
least
But it
Smith, Barney Has New
obscene
ployees because of the lack of coal traffic and that there
is some
talk of the Secretary of. the Interior
trying to find some method of
allocating what coal may be available,
"is
speaking terms.
Griswold, Vice President,
Reeves, Secretary,
to the Soviet Union, far from ,signifying a
opportunity for the pooling of ideas, it is
merely a fine rostrum for the public dissemina¬
are
course
at
National
big
are
"which, of
frequently made that it
device
a
the
Securities Dealers,
the election of E.
Uhat
industry bulletin of the
beginning to curtail
being shut down
railroads are
laying off' em¬
steel companies
some
some
on
as
of
Locust
at¬
"new look" of the Secur¬
apologia has been
served
of
W.
—E.
1531
directors of the firm.
as
ity Council creates strong doubt in this observer
as. to the net gain from continuance of the Or¬
ganization's proceedings under its present set-up.
has
following the walkout
5
and Samuel K.
OPPONENT
collapse is surprising even to those non-wishfully
thinking realists who viewed with alarm its
founding at the San Francisco Conference.
reduced last week bv
level of
OUR
the Security Council these days reveals vividly and clearly
em
March
above the
ARM
WORDS
Inc.,
members
announce
Judson
WAR OF
the tragic extent of the deterioration of
internationahrelationships. As
far as the UN itself is
concerned, the speed of that body's resultant
strike whiclr involved nearly hah of the nation's soft
coal miners
output of bituminous coal for the week ended
The
WE
Inc.,
UNITED NATIONS, LAKE
SUCCESS, N. Y.—A few hours'
tendance
ployment and payrolls were sustained at a high level There
noticeable increase in labor-management disputes in some
industries
but strike shutdowns had little effect on total
output
ustnes.
Bituminous coal production schedules
COLD
Co.,
Association
By A. WILFRED MAY
Auto
lines, but
&
Street,
Price Index
Food Price
Index
Total industrial pYoduetion showed
signs of tapering off in the
week just passed, though output of most goods
held slightly above
the level prevailing m the similar week of 1947
Scattered lay-offs were reported in some
week.
Bituminous coal production
Shober
Commodity
Industry
amounted to 13,300,000 tons, 2%
PHILADELPHIA, PA.
Observations
i
Retail Trade
-
S
(1313)
Shober Elects Directors
■
•
CHRONICLE
Production
Electric Output
,
State of Trade
COMMERCIAL
v
Bell Teletype NY 1-897
Broadway, New
CO.
YoA 4, H.Y.
6
(1314)
THE
COMMERCIAL
&
FINANCIAL
Whose Money Market?
CHRONICLE
No Grounds for
^
By RAYMOND RODGERS*
Professor of Banking, New
I
In
York
"
University
describing evolution
1
of money market, Prof.
Rodgers stresses influence on its status exerted
by mone- *
Says policy of credit control amounts to
of lower bond
steering'a ship between Scylla
prices and Charybdis of higher com
p
tary authorities in
I
'
«
•
I
V
'
•
'
'
'
'
I'
day
%';
bankers
many
the mental attitude of
a
to recent
vigorous, healthy
promptly becomes
he
man
>
Asserting nation has been wearing dark glasses, and
pessimism has
been overdone, Mr. Jarvis lists various
underlying factors in busi¬
ness
picture,. which indicate fundamentals; are healthier
•
£
developments reminds me 01
a
slight heart attack and
''
For the past 18 or more months the
nation has been
wearing dark
glasses. Fears of a price collapse such as followed
World War
I; the
high break-even point in industry incident to
increased
costs, 'par¬
ticularly wages; burdensome and inept
taxes; an advancing
pattern
of
mone
As
long
he didn't know that he had
as
a
of the
market.
its
and
Raymond
Rodger*
was
to
was
a
bankers.
clear idea
a
meant
money
Cabin,
by
market.
the
Most
in
*An
at
the
address
the
by
Annual
Graduate
American
tion,
New
Prof.
a
of
City,
1948.
Associa¬
20,
faded
and
in¬
transactions
But
even
market
money
on
then,
still
was
the
something quite apart
ordinary
it
had
become
larger
and
more
ket, it
by
was
.some
still
mar¬
thought of,
bankers,
even
sort of
as a
ex¬
Money
of
an
or
*
.
'
moved
was
an
enormous
credit,
into
the
unfailing
volume
which
would
be
security
as
issues,
practical
a
could
course
York
market
was
already
a
money
well-beaten
It was but another and a
short step for the
government, as
practical
he
matter,
to
take
over
market.
money
Throughout
World War II," the
Treasury and
the government
monetary author¬
ities
little
dominated
B
Boston
&
the
&
Maine
Dan River Mills
Federal Street, Boston
10
Tele. LY 83
un¬
what
it
wanted
money market rates,
with
without any
"doubting
Thomases"
so convinced of
the abso¬
lute character of
government conftrol that
Lynchburg, Va.
CLEVELAND
the.
became
Scott, Horner &
Mason, Inc.
Tele. BS 128
and
the most skeptical
die-hard£
the
government
could
dp
erstwhile
Waller J. Connolly & Co., Inc.
Tel. HUbbard
2-3790
borrowed
difficulty whatsoever. Many of the
Bassett Furniture Ind.
RR.
Traded in Round Lots
24
even
exactly
Preferred
they
cribe
soon
economic
began to
as¬
powersof
aij
omnipotent character to the
moneymarket
It
managers.
(Continued
on
LD 33
became
page
a
39)
PHILADELPHIA
Harshaw Chemical
Gruen Watch
Richardson
Company
Dealers In
Data
on
1
CAROLINA
'
"
pearances, let
field, Richards
|
j
Union Com. Bldg.
!'
CLEVELAND
& Co.
Union Cent.
Bldg„-
CINCINNATI
Tele. CV 174
.
Tele. CI ISO-.""'
1420 Walnut St.
44 Wall Street
Philadelphia 2
PEnnypacker 5-5976
Private
Philadelphia,
New York 5
WHitehall 3-7253
Wire
System between
New
York
and
Los
LOUISVILLE
me
underlying factors
piqture.
itself
Empire
Southern
vAmai^aLio
?u,Lemar^able
their pay-load
have
ers
standard
Co.
BANKERS BOND ^
Incorporated
Floor, Kentucky Home Life
Bldg.
LOUISVILLE 2, KENTUCKY
1st
Bell Tele. LS 186
the
retrospect,
reverse.
My word of caution is,
therefore
do not be
engulfed in the wave
t;0f pessimism now
sweeping the
country*
are
I:
some
in the
'
'
Table Issued for
(
making
duce
RICHMOND, VIRGINIA
Bell System
,
P
•
has prepared an unique yield reference table which makes available at a glance the
current re-
com-
^
k
point.
tVG
GnG
*urn
Steel
is
3.15% to
sub¬
And
so
Combined
on
throughout.
with-these
—
.
various
positive
industry correctives is a
continuing large backlog of de¬
mand
for
heavy goods arising
from war shortages and a
credit
situation
in
which
no
ment
of speculation
cerned.
large ele¬
is to
be
dis¬
prices,
has
increase
since
rates
number,
placed
120.
The
Teletype: RH
83
&
84
3-9137
Angeles
or
coupons
and
by the grow-
on
of
unusual
rates
securities
new
under
-
rates
as
4.32%,
4.48%,
5.45%,, etc.
4.88%,
"
W. C. Knef & Co. Formed;
N. Y. Curb Member Firm
W.
the
C.
Knef
New
&
Co., members of
York
Curb
Exchange,
non-agri-' has been formed with offices at
cultural products
being about half 25 Broad
Street, New York City,
the
percentage figure for World
to engage in the securities busi¬
War I.
Productivity of the worker ness.
in
war'
Partners
has commenced to
increase; while
Taft-Hartley Act has put some
stability into labor relationships,
the
despite
and
threatened
there.
Lastly,
strikes
here
legislators
being awakened to the
paral¬
on
our
of
certain tax prac¬
business expansion and
Knef and
Curb
Mr.
Horowitz
active
as
partner
& Co.
,
in
was
Mr.
Knef was
Herbert
/I-;
,
.
E.
Sterling Motor Truck
H. M.
Co.
;
Company
talk
by Mr. Jarvis at the
regular quarterly meeting of the
Association of Customers'
Brokers,
New York
City, March 17, 1948.
(Suecial
to
The
Financial
MIAMI BEACH,
Byllesby & Company
PHILADELPHIA OFFICE
Stock
Exchange Bldg. Phila. 2
Telephone
Teletype
Rlttenhouse 6-3717
PH
73
Co.
olive:
Immediate
TWX
Sp-43
on
A.M., Pac.
Execution
FLA.—Howard
J. Doehla is with Atwill and Com¬
pany,
605 Lincoln Road.
;
of
Orders
or
Quotes* call
Floor of
Exchange from 10:45 to 11:30
Std.
Time:
Sp-82
at
other
hours.
street
St. Louis
I.Moe
STANDARD
c
_
Members St. Louis Stock
Bzcbang*
.
SECURITIES CORPORATION
Members- Standard
Brokers
—
Stock
Dealers
%
Chronicle)
SPOKANE, WASH*
INVESTMENT SECURITIES
509
Stern
■
NORTHWEST MINING SECURITIES
&
for¬
individual
an
Curb floor broker.
a
C.
both
Joy iM.
and
members,
Shelaie.
merly
William
are
Michael Horowitz,
With Atwill & Co.
'::A
For
Stix
1-
competitive b i d d i n g. Standard
yield books, for instance, do not
carry
the yields on such fixed
ability in holding
the
to
need created
a
inS
thereby easing the
shortages of many proc¬
60
yield table lists 61 different
dividend
fills
dividend
or
carrying ? rates
from
8% and selling at prices
ranging, from
page
coming into
greater supply,
material
fixed interest
011
securities
Merchandis¬
largely eliminated
costs.
essors.
rC~
year
*
action to ameliorate
this situation
CRAIGIE&CO.
Telephone
Pittsburgh Rys. Co.
have
of
year
the
war
inventories.
The
picture
producers
are
herculean efforts to re¬
motion
.
Warner
Long Distance 238-9
a
opportunity,
pianning for a happier and more
profitable future, rather than
the
surface ap-
mJiL ffr Ticfr
Gas
Stromberg Carlson
m
in
may,
proved
one
-q
Nazareth Cement
Murphy Chair Company
Varnish
I 1948
Central Louisiana Elec.
?
American Turf Ass'n
Reliance
generally -supposed,
suggesting
if pessimism
becomes overdone in tke securities markets
m!nyn!av0ra?e'
If
w
*
Consider H. Willett
results in 1949.
i
For
ST. LOUIS
American Air Filter
are
see
is Nature's
great
aJq
tices
■F. W.-
;
in
that
New
who
point out
results
brief, it seems to me that the
fundamentals are healthier
than
or less at the
vortex
nationwide activity,
be
unduly influenced by
of
way
being
is
more
this
yzing effect
BUCKLEY SECURITIES
CORPORATION
in the Street
we
always
are
MUNICIPAL BONDS
Request
r,
Exchange and
Curb Exchange.
just before the
NORTH and SOUTH
DuMont Laboratories
*—
e
Furthermore, business
VIRGINIA—WEST VIRGINIA
1
t
the
over
do
In
American
a r o m e
the
of Tom
and I
feel
efforts will
not
not expect
too
our
I
doing should
x
Stock
Lest
of
b
great
prices
New York
down
RICHMOND, VA.
Portsmouth Steel Corporation
Central Illinois Public Service
of
shown unusual
llllllllllllllllllllllllllltlllllimillllll.
Drackett
psychological
borrowed
believably low rates which were
established, eventually convinced
that
Trading Markets
American Furniture Co.
Prior
were
amounts
lllllllllllillilllllllllllllillllllllllllll!
the
point,,
existing n
•
•
r>
thing, time, Determining Return on
physician. Fixed
Int. or Div. Securities
The busmess
picture, for instance,
borrowing was relatively if
Union
securities
surveyed
industry by industry, I
used, in World War II
Corporation,
bill65
BroadwpVj New York 6, N. Y.\
and billions
completely
money market. In sharp contrast
with other wars in
which shortterm
through the money market, at inr
credibly low rates. The enormous
LYNCHBURG
by
reflected
in
Committee
leadership
in
case
a Presidential
year,
but the
groundwork which we
°
L1S
i
a
vain.
1948,
look Ahas Peen
,,
one.
to which
BOSTON
,
,
in
much
and
xu-
i
,
government
the
for¬
Natural-
i
N.Leonard Jarvis
matter,
permanent, capital basis. '
When World War II descended
on us from the
Jap
to
be
fluencing fac¬
tors.
The great
work per¬
Tax
our
confident that
tion—
a
by
Meek is
many
others
have been in¬
a
path
u
these
bor¬
bombers,' the
i t
s
rowed
at
extremely low shortterm rates and
which, by the sim¬
ple
device
of
a
succession
of
on
to
political
financial
and
funds,
lions
limited to those who
eign
source
of
formed
under the able
credit
acute
an
money
Treasury discovered
clusive financial circle, admission
was
with
expansion and
gov¬
;——
be seen.
may
controls
designed
,
^
The
com¬
bined
.
thirties, the Federal
ernment
a
as
important than the London
of
March
character
run of commerical bank activities. Even
after
the
Banking
Bankers
York
of
market like the
accumulated
growing scale.
from
Rodgers
Reunion
School
esoteric
money market
viewed
the ~ conclusion
and
impor¬
e s
limit
/
In the
that here
dividuals, as well as more and
bankers, began to participate
ponder
reached
its
to
in
<?-
„
at
r
Market
hardly
operations
as
Government
market.
more
the
meaning of the term
and
Federal
money
were
.
other
The
existence.
money
wealth
as
bankers who did take the
time to
quickly
the
.
lates.
Topsy in Uncle Tom's
short-term
"jes
growed."
Its
sup¬
be placed,
posedly
market
money
the
with
its
apathy
fictional
mystery, even
Very few bankers had
term,
country.
transactions, involving milat
extremely low interest
lions
thousands of
fact, they
functions
tance, the
long
what
In
general
history
to
the
.
•
had
five
or
Despite widespread ignorance Of
great
as
in
conscious of
ex¬
the
banks
to the
themselves
cern
this
shorten his
days.
ago as
four
result was that the
rank and file
of American bankers did
not con¬
over-solici¬
tude to cloud
runs,
concern
other
xtremely
so
of
preserve
the
was
large New York City banks
was of no immediate
and
direct
heart-con¬
scious and
Not
market
money
and thus
it,
he
becomes
istence
the
private
anything
his entire
.
that
than is
generally supposed.
1
of 50 who suffers
<«>-
about
permits
llayden, Stone & Co.
president, Association of Customers' Brokers
,
^
•
money market
confirmed hypochondriac.
a
worry
about it. After
it is too late
e
By N. LEONARD JARVIS*
v
-
didn't
to do
".Y:
money
The reaction of
heart,
'
recent years.
modify prices, thus indicating conflicting character
market pressures. Holds, when deflation
sets in,
problem will be reversed so as
to
keep government bond prices down and
commodity prices up. Sees trend of Federal Reserve to
acquisition of long-term bonds while
reducing hold ng of. short-term issues. Concludes
price level has
reached peak.
of present
Stock
Market Pessimism!
<
1
^
^
'
Thursday, March 25,
1943
Exchange: of .Spokane
—
Peyton Building,
Underwriters
Spokane
-V
Branches at
Kellogg, Idaho and Yakima, Wn.
167- Number 4684
Volume
From
THE COMMERCIAL
Is
Washington
A head
Democrats
disposed
of, this far in
i
not only of the nominating convention, but next November's
election, the agitation will now center largely around the Republican
nominee.
Ordinarily you woidd think this agitation would be con¬
advance
fined
the t-
to
—*
mean
which
would
tional
make
it
hot
enough,
but
.
:been
indulging and
the
least
change in the personnel that has
wing
other
Deal
the
of
party's candi¬
-
is of vital
trol
the
the hardest job
licans
the Re¬
on
In
that
seemed
the
of
of
whether
was
have
a
To
like
men
and
the
ever
Henderson,
Sam
to
Tommy
•
Rosenman,
will
and
the
border
bands
mark
to
who
will
of the New
meant,
■it,
arm
Nations
and
Repub¬
"save
something
Deal," and by that is
something for them.
save
Eisenhower
was
•
They knew little
their
'
and
man.
less
cared
about any political philosophy he
may
have.
ington
He is
with
that
crowd
the past 15
of the Wash¬
one
ruled
for
They have
years.
ru*
has
him,
nlaved golf with him,
highballs and dined with
They were all a part of the
sipped
him.
hush
and
hush
doings,
of the
gay,
adventurous
period.
war
"
They have quite
They have all had
and
been
free
school
tie.
much
a
fun
so
easy-going and
frankly I shall
so
that
care¬
miss
them after, next January.
Anyway, the crowd of which
Eisenhower has been a part, fig¬
ured and not unreasonably, that
they
could
over
once
completely take him
Republicans nom¬
the
inated him.
What
could
be
party ties, should turn to them as
the nucleus of his administration?
The
erals"
?
to
one
Senator
now
the~"Lib-
whom
intend
now
is
give the
to
Arthur
Vanden¬
berg.
This man is to get a Willkie-like build up in the next sev¬
eral
Republican
whom
have
the
to fear.
come
It
one
regulars
He is
weeks.
is
v
strange
when
European
a
this
feel
about the Vandenberg
is
a
Republican.
way
boom.
He
There is not the
'slightest trace of the Left in -him.
What
them; in fact, what
annoys
makes
boom,
is
indignant about his
them
from
its
the
,
It
is
not
towards
It
his
on
is
It
second
the
I ime in his life, and, in my opin-
decided that the easier course
on,
to
was
Being
a
go^along with the pack.
man of ability he has
of that pack and
risen to the top
acclaim and prestige
would not have attained
enjoyed
an
he
that
statesmanship to which the in¬
of
lot
»
office once,
He wanted the
it now.
really doesn't want
which pos¬
laziness
the
Because
still with him and
associated
"big" men and
many
so
that he has even
world statesmen
cynical of the high
become
ors
bestowing.
He has
hon¬
people are credited
the
that
with
he has
and
of
much
so
seen
international states¬
of the
is
man
easier
the
take
to
him
sessed
course
V
.
frequently said private^
comes
couldn't make a cam-,
against his old Senate
friend,
Harry Truman.
couldn't
Truman
against him.
That
hind
'
y J,
,
those/mostly be¬
boom
pamby campaign
discussed,
issues
make / one
*
is what
his
Certainly
crowd,
and
is
not
Republicanism at all.
based
domestic
grounded
on
his
attitude
on
the
assumption that his election would
iiri the customary manner
after
the
cut
to
house.
crystal ball, ouija
I just wish
use.
sible,
at
or
least
it
were
easier,
without
securities
pos¬
sell
to
getting
in¬
so
in market
volved
prophecy.
asked to give a title to
was
talk tonight and I chose "Is
Salesmanship Essential to Dis¬
tribute Securities?"
My answer
to this
2/es.
question is a most emphatic
.
I'm
;he
going
to
prove
this
with the same
campaign is over.
This
extremely, annoying
Republicans who want
by
crisis
and
the gov¬
to
clean
The
usual
as
I have indi¬
it necessary to use
methods?
Why
was
unusual
securities?
of
buyers
for such
is simple;
answer
such
risks
quality
and
of
very
C3S,
ment
unlimited
almost
has
re¬
it
methods used
of the methods
would
have
put
other distributor or sponsor
behind the eight ball.
any
'
Here
are
just
a
methods employed to
few of the
sell E., F. &
G; bonds to the masses:
(1) Uncontrolled newspaper
:
and
advertising.
radio
worth of
free advertising paid for by banks,
firms,
and
turing companies as
manufac¬
patriotic con¬
tributions,
d
(3)
Bank account
(4); Payroll
made
a
monthly de¬
deductions—almost
condition of employment
by many
the
Well,
it just isn't, regardless of what
anyone may think.
People buy
securities because they feel opti¬
mistic
be
from
exempt
about
the
outlook
for
employers.
it is simple, frighteningly
me
the important thing to you
me
cogs
as
machinery
of
in the important
security distribu¬
inclined
it
what
still a coun¬
try committed to free enterprise.
This
we are
that
means
our
great
cor¬
porations so terribly important
our
peace
to
time and war time econ¬
the average
man for additional capital.
It also
means that the almost equally im¬
omies
to
look
must
portant new ventures are expected
to find their capital in free mar¬
kets
supported by the savings
and salaries of Amer¬
citizens who belicc in the
ican
the point,
but I do want to make it very
clear that I believe that salesman¬
Msvbe I've belabored
distribute se¬
kind. I know that
ship is essential to
curities of any
if
goods
only
services
or
because
is
and
omy
sold
made a
were
someone
our
domestic
econ¬
losses to those who
free enterprise sys¬
cause
finance
our
tem.
What Is Salesmanship?
What is salesmanship and what
makes it tick; whether it
you
involves
refrigera¬
place, let me
bonds
or
first
the
In
tors?
that every salesman
buyer is a human be-
every
ing: so salesmanship represents a
relationship between human be¬
ings. I suppose there are count¬
less definitions of salesmanship
could
I
but.
the
give
few myself,
best is that
a
like
I
one
"salesmanship consists of making
a
successful appeal to the mind
or
to the heartThe
the
sents
reasoning
mind repre¬
power
of the
human being and the heart repre¬
his
sents
emotions.
Do
not
The best sale is one based upon
reason
but
more
made on emotion.
purchases
It
out
Bond rallies and
WE
only of
being is
emotional.
individual
action
the average human
Furthermore,
may
be based on reason but mass
action is always emotional.
investment
business
In the
usually
we
sell to individuals, not groups, sc
(Continued on page 28)
ANNOUNCE WITH PLEASURE
R.
auctions;
meetings were fre¬
quently pepped up with' bands
and radio and stage stars.
Mer¬
sales
auctioned
off to the largest buyers of bonds
Sometimes these big public buyers
liquidated their bonds promptly
after receiving them.
They had
accomplished the purpose of in¬
HAS
PAGE MASON
JOINED
OUR
REGISTERED
THAT
7
ORGANIZATION AS
REPRESENTATIVE
chandise or favors were
fluencing others to
buy.
(7) Still another method was
for radio prizes, veterans bonuses
THAYER, BAKER &
1237
COMMERCIAL
TRUST
are
seems to me
10% ration?*! and 90%
folders point¬
the advantages
buying U. S. bonds.
ing
ever
that there is no other
appeal; it is either to reason or
emotion, or a combination of both.
forget
that
American Way.
our
government;
further to hurt
and
tion.
Presumably
in
confidence
and
is
reflect a lack of
socialistically
a
fear of
doing and might do
Prices
simple.
(5) Direct mail
advertising
beautifully prepared and illus¬
trated booklets and
the
and the country.
company
remind
from wages
(2) Millions of dollars
inveslment
back to the securities
is it?—and why
What
it
should
tising devices were employed to
sell
these—safest of all bonds.
and
sell
the greatest de¬
history of man¬
necessity of salesmanship?
the maximum of sales and adver¬
experience in the sale of se¬
to
But to get
business.
government
merely illustrates that
All this
effort
curities have I witnessed such di¬
powers
costs was not discussed.
This
used
and
sources
refer to bonds of the United
Government. Never in all
some
see
the
kind.
To
developed, and, like
other seller of goods or serv-
in the same position, the an¬
swer
lay in a strong advertising
and sales campaign. The govern¬
]
the soundest,
or
in
gel,
advertising,
relation to earnings and dividends.
States
my
will
the
ket had to be
supply of bonds was
greatly in excess ot the possible
demand
by
regular
customers.
Slew customers or clients had to
safest,
and best security in all the world
sell
to
tombstone
to
all
and
Fire
America
in
any
vest and the
securities is to remind you of the
used
desire
us
be found—a tremendous new mar¬
much money to in¬
available to
it and is not hampered and haras¬
can move on to some of the more
sed
by bureaus within its own
interesting conditions and rules
that have an important bearing body. The bonds are sold on the
on our degree of success as. sales¬
safety of the dollar itself and the
men.
compounding of interest. The de¬
My proof that salesmanship i<? clining value of the bonds in terms
of purchasing power and living
essential in
the distribution of
quantity
its
Like¬
wise. they dispose of securities
when they lose confidence in the
company or in general conditions.
Many
cannot
understand
why
stock? are selling so cheaply in
so
just
lave
quickly and very easily; then we
with none of the
especially the
out the nonsense,
ernment
a
board/ or forecasting system that
is sufficiently dependable for us
(6)
is, of course,
to- those
heard of
never
these
foreign policy,'and
to
affairs.
strictly
could not the bonds be distributed
namby
want—a
question
rightfully
bonds are as
safe and desirable
hese
made
have
are
the firing
on
salesmen
if these
purposely complicate their selling
am
ductions.
ly that he
the
up,
job with the art of prophecy. I've
laugh question, yet
Presidential
his
over
now
but he
Now
comes
men
standard.
living
pression
Why Salesmanship Is Necessary
sale of a security. The
character of the security is beyond
imagine he will secretly
boom.
to
which
among
who
number
a
automobiles, radios, refrigerators,
washing machines, bath rooms,
and
other evidences
of a high
and you
vements
going
reasons
down
still in force.
are
to aid the
lifted him.
I
fact, I
has versity of devices
propaganda
ternationalist
a
laughs to
high pinnacle
the
about
himself
to
inci¬
and,
ones;
few of these methods
a
cated, why
—I
I imagine he
otherwise.
Liberal-internationalist jovial comraderie in Washington
intelligentsia
based
source.
went
country
war
important
always a little
bit amazed
and even
dismayed
that so many securities salesmen
about
-
paign
;,
the ' Republican
regulars " should
this
orces
nto
»
the,
disillusioned
in the mass and political
people
with
Presumably, the general is
ride
pretty
became
He
he
other methods em¬
were
dentally,
my
more
likely than that Eisenhower find¬
ing himself suddenly in the Pres¬
idency and with no Republican
out.
it.
ponsored
completely
In
be.
the
when
work
would
easier
than
are
I
that he believed the United
or
m o
...
has
Marshall Plan, has any logic about
and
tell what their
that
feeling
of
There
future price
Douglas Laird
he
that
seriously
depth
any
them .apart,
their objective is to get a
lican
himself, tells friends
has completely lost his
he
that
they have to have identifying
the point
he,
doubt
I
instances, so
many
Wallace
the
10
Lib¬
Liberal
so-called
in
Vandenberg's
grown to
It might be said,
too. that his cynicism, developed
in his newspaper career, has im¬
measurably increased.
Corcoran,
it
so-called
time
partisanship.
Porter,
Paul
these
of
group runs,
close
that
Leon
everything. The deter¬
mean
mination
erals
like
men
that
Since
where
be an in¬
situation.
lubability has
what¬
do will be
than passing in¬
more
But
Walter
(
Byrd,
Republicans
of slightly
terest.
Senators
Harry
1
compensation
recognition.
any
much
too
most
ties
the
Repub¬
Presidency
part of their propa¬
line
not
of
greatest
the
without
be¬
sell securi¬
is
America
salesmen—the
ployed but I have mentioned the
to
much
a
living.
millions of dollars worth of bonds
much
id-
the
I
and
nation in the world for
lieve that it is
con¬
ganda that this would
;
-
investment
sincerely
the
was
to
have few
done by invest¬
ment dealers and salesmen, who
sold hundreds and hundreds of
magnificent job
problems
of
the
;;
clinched
tolerable
George
the
usu-
year,
to
Senate
captured
and it
(8) Last and not least
one's door, we
great companies
lower standard of
path
beaten
would
War bonds.
recognizing
managers.
publicans' hands will be to name
man.
a
shift in admin¬
a
their
own
but
cause
along well with the Senate
?ardless
Republicans nominate. Until midJune
in
Democrats
concern
whom
Dealers
New
would
Democrats.
having gone completely out
the
to
he got
own
be
He
sought the Republican
in
1949, one of his
talking points was that
greatest
ing their
to
—
be paid in
and salary bonuses to
just
enough
nomination
of their elect¬
Bargeron
securi¬
ties,
istrations.
matter
but£
little
about
When he
The
know
very
vqfy v tolerant
ally accompanies
;
party.
the window, ,it
I
Republicans might
.minimum of disturbance that
Democratic
date
I started selling, and just 28 years ago after getting through
I, I began selling securities. I am probably more interested in salesman¬
ship, however, than I am in securities. I have never been an analyst, a trader, or a broker.
years ago
the
man
nominate.
among
the New
'.
fi-
and
agling
i
-
"■
Thirty-five
with WGrid War
have
we
are
ment
v
which
going been riding the gravy train.
It is
;to. find just Uelt that Vandenberg would make
a. b. out
as , ewer changes in the outer Wash¬
much excite¬ ington
Bureaucracy
than
any
you
.
Carlisle
,
—
in
spree
7
Holding salesmanship is essential to distribution, even in case of U. S. Government bonds, Mr. Laird
points out function of selling is to create desire to buy, the greatest factor in maintaining business activ¬
ity under free enterprise system. Defines salesmanship as "making a successful appeal to the mind and
the heart," and asserts, without proper salesmanship, the finest product could be outsold by inferior
competitors.
Urges salesmen to consider clients' welfare ahead of their own earnings, and concludes,
in salesmanship, there is no substitute for work.
;
change in the interna¬
no
(1315)
Salesmanship Essential to Distribute Securities?
r:
Republicans
CHRONICLE
By DOUGLAS LAIRD
of the News
having been definitely
FINANCIAL
Vice-President, National Securities & Research Corporation
By CARLISLE BARGERON
The
&
BUILDING.
RITTENHOUSE
COMPANY
PHILADELPHIA
6-0254
2,
PA.
8
(1316)
THE COMMERCIAL
The
SEC
the
and
CHRONICLE
FINANCIAL
&
Broker-Dealer
Dealer-Broker Investment
By LOUIS LOSS*
Chief Counsel, Trading and
SEC official
Hughes
Securities and Exchange
Recommendations and Literature
Commission
doctrines in Charles
Hughes & Co. case, together with more recent Arleen W.
affecting the duties and disclosures of dealers and brokers. Says Commission in Arleen
re7isws
case,
W. Hughes
Exchange Division,
decided that
case
It is understood that the firms
to
a
Business
general applicability, and the SEC is "not burying the market disclosure rule with one hand and digging
it up with the other." Contends Oxford Case
signifies that only consideration of all circumstances can
determine whether transaction falls in a principal o r in agency
category, and each transaction must be
judged separately.
couple of weeks
/
gives
Charts
Advises brokers-dealers consult with SEC.
.likely would have been developed
happens
I
to
say
relates
marily
ihis
I
d i
s-
r
Louis
applies
than 'it
of beans
cans
I
However,
we
tent
ases" which
extent
they
trade
When brokers
with
necessarily
on
each
rely to
newsworthy. What I shall try to
today, therefore, is to trace
briefly the history of the several
Commitments by word
ioctrines
are
do
which
the
Commission
v^as developed with reference
a
to
broker-dealer and
summarize their present status. I
want to emphasize that I am not
Here
to preach or moralize, but
only to expound. I realize that it
may be ju«t as hard to tell the
difference between preaching and
as it sometimes is to
expounding
determine whether
but I
self to
a
broker
as
my¬
for you.
of
a
It
a double impor¬
is not merely a matter
firm's
so
conducting its busi¬
ness that it will not fall
afoul of
the SEC and risk
possible revoca¬
tion
or
injunctive or criminal
proceedings. If that
were
the only
by
Instances
ored
they are strictly
they should be.
as
The
of mouth
fact
is,
however,
that
law
of agency does not and can¬
not make any exceptions in favor
if the securities business.
Quit?
he
contrary,
the
law
thing to do.
The
hon¬
more
se¬
rious problem from the
point of
view of the
respectable and sound
members of the
industry is that
a violation of one of
these doctlines may give rise to a
lawsuit
by a customer seeking either rerission of his contract or
Within
there
cr
the
damages.
couple of years
past
have
been
a
number
of
urt
decisions to the effect that
Violation of the Securities Ex¬
change Act or some rule there¬
under creates a civil
though there is
sion for
He
person
even
a private lawsuit under
particular
section
or
Which has been violated.
well to know these
to remember them.
rule
So it i
principles
an
of
nany
I
that I
to
am
you
radical.
"—
going to try to relate
is not
particularly
here
you
or
by Mr. Loss before
Stock Brokers'
Associates of Chi¬
cago and the Chicago Stock Ex¬
change, Chicago,
1948.
111.,
March
16,
to
the
current
even
a
to
the
current
that does not bear such
is
a
to
would
the
The
made
it
plain
trine
fact
at
that
the
47
own
The
Congress
legislatures of
as
law.
common
very
dealer
well
as
holds
all the
hits
necessary to pas^
special laws in the securities field
unique
i
of the
lized
this
as
lustaining
of
Stats
early
the
se¬
The
United
until
is
the
market
perfectly
of 100%
free
or
of
re-*
the Duker
"fraud"
case
used
as
Act
that
not
was
law
common
in
limited
concepts
but
trary to the plain rules of
honesty."
to
firm called Duker &
Duker.
"in¬
doctrine
con¬
Hughes
mentioned
was
in
the
elaborated
number
of
in
a
the
Charles
five
beginning
years
Hughes
ago.
&
That
Co.
case
went
case
the fact that the Commission
had
handed down its most recent
opin¬
all the way to the
of the United
ion
fused to review the
opinion of the
Circuit Court of
Appeals. In that
in
general field a few
The firm involved was
Arleen W.
as
E.
W.
should
not
be
earlier
&
with
rent
1943
is
by
the
of
one
of
those
in this field
firms of the
an
odder
same
an
in
omission
by the Circuit
fact
York,
"When
coin¬
market
New
strange
of
the
leading
"the
should involve
name.
It is
of
cur¬
16
to
about
25%, and
Appeals unan¬
and
a
to' state
a
material
fraudulent
device."
nothing
price,"
natural
was
the
said
court
implication
about
stated,
in
was
I
that the price asked
(Continued
was
on page
30)
.
close
.
Hungerford Plasties Corporation
—
Current
data
—
First
tronic
New York.
common
on
Elec¬
of
Forming Corporation.
Kingwood
Oil
Co. — Special
survey—Peter Morgan & Co., 31
Nassau Street, New York 5, N. Y.
National
City
Bank
of
New
York—Circular—Laird, Bissell &
Meeds, 120'Broadway, New York
5, N.Y.
Yields of 5%%, 6%, and More—
List of 60
Corporation
America,
District Theatres Corporation,
Princess Vogue Shops, and Metal
to
Securities Corpora¬
tion, 65 Broadway, New York 6,
Colony
Corporation, 52 Wall Street, New
York 5, N. Y.
List of
stocks in wide¬
New
England
Public
Service
ly diversified industries with high
yield—Estabrook & Co., 15 State
Street, Boston 9, Mass.
Co.—Analysis—Ira Haupt & Co.,
Ill Broadway, New York
6, N. Y.
Yield Tables—Table of true taxfree yields on discount
municipal
formation—Otis
Ohio
bonds.under present Federal Cap¬
ital Gain Tax
Law—Scott, Horner
&
Mason,
Inc.,
P.
O.
Box
1060,
Lynchburg, Va.
*
Bendix Aviation
Corp.—Memo¬
randum—Stanley Heller & Co., 30
Pine Street, New York
5, N. Y.
Boeing
Airplane
Company —
Special report—Walston, Hoffman
&
Goodwin,
265
Montgomery
Street, San Francisco 4, Calif. "
Also
available
are
special
re¬
Columbia River Packers
Association and Grinnell
on
Corpo¬
&
Co., Terminal
Tower, Cleveland 13, Ohio.
Oregon-Portland
Cement
Co.—
Up-to-date circular for dealers—
&
Co.,
*
Incorpo¬
rated, 63 Wall Street, New York
5, New York.
ports
Compensation Bonds—In¬
Lerner
*
American News
Company—Bul¬
letin—Bond & Goodwin,
10
Office
Post
Square, Boston 9, Mass.
Pathe
Industries,
Inc.
—
Illus¬
trated brochure describing in de¬
tail
activities
and
operations of
& Co., 231
Comstock
company.
South La Salle Street,
Illinois.
/
Public
Chicago 4,
•
National
Bank
&
Trust
Company of New York—Analysis
—C. E. Unterberg & Co., 61
way,
Broad¬
New York 6, N. Y.
St.
Louis-San
Francisco
Rail¬
Company—Circular—Vilas &
way
Hickey, 49 Wall Street, New York
5, New York.
Building, Charlotte 2, N. C.
Also available is an analysis of
Missouri Pacific.
ration.
Shellmar
>-
Central
Co.
—
Illinois
Data
—
Public
Service
Buckley Securities
Corporation, 1420 Walnut Street
Philadelphia 2, Pa.
Also
on
available
are
memoranda
Products
Corporation
—Analysis—G. H. Walker & Co.,
1
Wall
Street, New York 5, N. Y.
Also available is
cular
Public
on
a
detailed cir¬
Service Company
of Indiana, Inc.
Portsmouth Steel, Gruen Watch
and DuMont
Laboratories.
COMING
Central Illinois Public Service—
Study
Goodbody
&
Co.,
Broadway, New York 6, N. Y.
—
■Also available is
a
Clinton
Machine
study
on
115
EVENTS
In
De¬
Company
—
Circular—Coffin, Betz & Sullivan,
123 South Broad
Street, Philadel¬
phia 9, Pa.
Investment
Field
April 13, 1948 (Chicago, 111.)
Illinois Securities Dealers
As¬
sociation
and
Dinner
in
Annual
the
Meeting
Chicago
Room
of
the Hotel La Salle.
the
untutored minds of the
purchasers
even
coincidence, in view
the
from
re¬
—
and
California.
year—Stanley Heller & Co.,
Street, New York 5, N. Y.
imously ' held that the failure to troit'Harvester.
reveal those
mark-ups was- "both
in
Appeals
cidences that two
cases
Commission
which
over
ranged
averaging
the Circuit Court of
the
involving
Charles
Co., Inc., which was
and affirmed
Court
mark-ups
market
50%,
case
Hughes
confused
the
case
Hughes, doing business
Hughes & Co., out in
Springs.
This
case
Company
analysis — Dempsey-Tegeler
Co.,
210
West
Seventh Street, Los Angeles
14,
Determine Return on
Fixed Interest or Dividend Secu¬
Supreme Court
States,
this
weeks ago.
Insurance
Summary
and
cases
finally affirmed on judicial re¬
view, as I have already stated, in
the
Cases
at
The
then repeated
by the
Commission and
common
substantial
Doctrines
as
doctrine, since the first
in which the
Commission ap¬
plied it back in 1939 related to a
,
Twin
I
Some of you will recall this
state's
cludes all deceitful practices
—
to
lated to the current market of
$5
notwithstanding that he will suf¬
fer a loss.
the State of New York
specifically
held 22 years ago that the term
Martin
Stocks
some¬
reasonably
in
constitutionality
the first state blue
sky
laws, and the Court of Appeals of
one
he
it
for him without
disclosure to sell
it at a price not
recog-
1917
as
$20,
a
,
Home
.
in
Atchison, Topeka and Santa Fe
Conversely, if he buys Railway
Company—Memorandum
a
security at $10 and is unlucky
—A. M. Kidder &
Co., 1 Wall
enough to stay with it until the
Street, New York 5, N. Y.
market falls to $5, it is
fraudulent
something of
Supreme
animal.
dourt
to
on
If
Digest"—
Co., 225 > East Mason
Street, Milwaukee 2, Wis.
the
developments
Financial
Loewi; &
rities—Union
relation
security at $10 and
a
take his profit
what more.
it
demonstrates in itself that the
curities business is
buys
of
—
and
ness
Also brief memoranda
Table
he
con-
Hamischfeger
Corporation
Analysis in current issue of "Busi;
30 Pine
con¬
lemDoraneous with his sale.
the
and
states,
—
New York 6, N. Y.
way,
industry—Vilas & Hickey,
Street, New York 5, N. Y.
rent
price
substantially
Corporation
on
growth situation
—Joseph Faroll & Co., 29 Broad¬
stocks with ap¬
proximate price, dividends paid in
1947, and price range for the cur¬
a
has
purchase is
Developments
Representative
a
that
Fedder-Quigan
44 representative
breach of the dealer's implied
representation and works a fraud
on the customer.
Just as that doc¬
prefer
latter.
Bank
1, Mo.
Memorandum
'
mar¬
a
St. Louis
Curb
49 Wall
market.
when
Railroad
the
dealer at arm's length
represents
and
Week—Current
price not reasonably
a
Corpora¬
National
Employees Credit Corporation
—Analysis—Taussig, Day & Com¬
pany, Inc., 316 North Eighth
St.,
Research Corporation
Street, Boston 9, Mass.
fraud¬
ulent
(t
*An address
i
laws
dealer to sell securities to
a
Stock
141 Milk
was a
securities
Inc.—Analysis
Securities
Commercial
spiral
Securities
'
\
nothing
to
do
with
when Federal and State securities agency or brokerage law, it like¬
wise
has
nothing to
do
with
laws speak of fraud
they are not
limiting the amount of the dealer's
necessarily
limited
to
action
profit, except of course where his
which would be considered
have
decided
new
In great measure it
very
the
trary. Therefore, charging
suppose at the moment
resemblance
a
Colorado
think it is worth
stressing at
the start that most of
the doctrine
for
proceeding that it
under
—
liability in
specific provi¬
no
'
ket unless he discloses to the
chat the securities business is not
&
favor of the
injured
:by
essentially
talk to try to
is
Hughes case had its
1939, when the Com¬
able relation
recognizes
have deemed
and agree is the
decent and
It
hangs out his shingle that he will
deal fairly with the
public. It is
an element of that
implied repre¬
sentation, the theory goes, that
his prices will bear some reason¬
the
ternity could put their minds at
e£se. For, as the late
Judge Healy
oftce said,
people can be pretty
orable
vocation
fraud
impliedly
hon¬
a great majority of the
members of the investment fra¬
they will not get into trouble
the Commission so long as
they do what most of them know
in
in
6 for folio CF-325 in
special prepublication offer (thereafter $4)—
the
mission for the first time held in
the course of a broker-dealer re¬
that
and in most
no means rare,
problem,
with
since
nothing to do with any
agency obligation. The theory is
foreign countries of any
importance in the financial world,
sure
genesis
charts
wartime and postwar period
1936—send $3 before April
war,
will
between
of my
forestall that confusion.
first
922
—
represented
cases.
the purpose
related
courts
The story has
tance.
two
—
Cycli-Graphs—500 graphs with
12-year;, coverage
of
earnings
dividends and price ranges
through March 31
portraying
cyclical swings for the entire pre¬
just don't
however,
Mills,
we
This has
developed by the finan¬
community over many years.
although I
putting the mosaic together
We
confusion
doctrines
fidence
is act¬
honestly want to limit
that
add
probably not help to resolve the
twin
cial
dealer,
a
to
surname,
customer at
con¬
quite like the business of selling
groceries or automobiles
firm
a
or
great
a
mutual trust and
a
common
tion,
Exchanges
—single copy $10—yearly
(six
issues) $50—F. W. Stephens, 15
William Street, New York 5, N.Y.
show them any special favors. The
The
or
other,
hasten
securities business.
ex¬
the badges of the
are
legal fraternity.
something
you
an
formal contracts with all
on
sible.
give
is
industry
the attendant caveats and "where¬
in¬
all
are
rely to too great
dealers
the duties of
York
have mo
prejudice against the
family name Hughes and certainly
10 prejudice against ladies in the
these
say,
this
suppose
securities
ladies., I
River
—Interstate
and showing monthly highs,
lows, earnings, dividends, capi¬
talizations, and volume on virtu¬
ally every stock listed on the New
relatively few representatives
of the fair sex in this business,
rhat both these firms were run by
inevitable
to
houses
shall I
or,
—
the
terested, I take it, in the problems
the securities
industry as a
Whole, and I was anxious, if pos¬
as
mem¬
less
no
does to
ioes not
Loss
of
ing
say
industry
oecause
problems uner the auspices of this organiza¬
to
it
commodities.
over-
tion.
good
I
common
securities
counter
-
securities
the
principal,
propriety
talking
the
than
law.
occasionally
agency
surprised to find that, when
law
says
that an
gent owes certain duties to his
about
about
of
.he
a
little
SEC.
an
Dan
—
Street, New
years,
the
if
even
been
ieem
was
turbed
of
because
bers
mar¬
counter
ket.
ld-fashioned
t he-
-
courts
is nothing more
crtne
pri¬
the
to
over
the
never
rhe fact is that much of the doc-
am
about
by
had
jiiere
of
most
what
the
time
in
It
that
Report
—
bound book covering 12 complete
3>-
me
day.
Outlook
mentioned will be pleased
parties the following literaturei
Building, Charlotte 2, N. C.
ago
rhy theme to¬
interested
Stern & Co., 25 Broad
York 4, N. Y.
the Commission handed down an opinion in a broker-dealer
revocation
proceeding which is the latest in a series of cases over the past few years
that have
gradually blocked out the duties of a broker-dealer to his customer. That
case
send
firm which is acting
as an agent or fiduciary for customer is under
much stricter obligation "than
merely to refrain from taking excessive mark-ups over current market,"
and "must disclose
fully the nature and extent of its adverse interest." Holds no disclosure rule has
A
Thursday, March 25, 1948
Continental
Can
Company
—
Summary and opinion—E. F. Hutton
&
Company, 61 Broadway,
New York 6, N. Y.
April 19, 1948 (New York City)
Security Traders Association of
New York 12th Annual Dinner at
the
Waldorf-Astoria Hotel.
Volume
167 " Number 4684
THE COMMERCIAL
&
FINANCIAL
CHRONICLE
(1317)
Communism will wipe out
hold dear: God,
we
family,
all
coun-
liberty and possessions. Life
ery,
insurance
policies will become
worthless
will be empty.
Savings accounts
will be seized.
Property will be
confiscated.
The
Nature insists that
keep it
protect
Only
public
his fellow
VIVE
OR
make it
public opinion—that's
will
on
must
*
•
v
political system de¬
s
signed to
former serfs of
govern
than
cattle,
moves
guardians
our
of
industrial.
activities—they should act
such
and
assume
!
an
over
personal liberty
falls. The
•
weak¬
adminis-
trustees,
the monies in
no
the entire earth. Wherever that
shadow falls, all
the
not
their responsi¬
and
trators,
as
better
save
republic. They
our
of Com¬
Russia, considering all people
is
protect the free¬
to
the
are
_
a
can
—
assume
doms of
munism,
It
lings. Industrial leadership
11
Rights.
shadow
men
country
tion and Bill of
giant
SUR¬
platform of silence.
a
privileges of the Constitu¬
The
NOT
—
people to decide this
bilities
,
|
chicken-hearted and
the
daily
NOT TO
—
v
COMMUNISM.
our
your
understood.
express
•"
man
Courageous
job! The Press should make
Liberty
his
question. It cannot be done
rights.
your
possible. Create the
should
reach
may
AMERICANISM
-
for the
so, you
opinion
be free in
man
ONE SYSTEM
conduct its affairs, must
must
he
TWO —WILL
The Press, to remain in
be free! To
that
ANY STATE!
business and have the right
to
creates
people—
highest position and be of service
of business.
out
feed the
to
ONLY GOD CAN DO THAT!
to
will be
press
the harvest
order
Churches
scrap paper.
make the seed which
can
9
people become slaves;
gangsters
rule.'
»
_
,
assertive
position respecting
public questions, just
Press
must assume
the
as
their
re-
sponsibilities to continue
free press.
>
a
t
Russia wants America—
The American
,
that's the great prize.
refer to
The basic issue
facing
AMERICANISM
The U. S. A.
One system, not two,
and Answer
•
than
—
The U. S. S. R.
will gain strength—only
have under
people
more
Does
security,
or
Constitution and Bill
Liberty and Freedom
... or does it
of Rights
his own
U.
the right to
•
and to
go
OUR PRESS CAN HELP
—Whether the dictates
Constitutional Liberty and
does it abolish
trial by jury, or does it
labor. IN THE
A., THE PEOPLE
is
THE PEOPLE
DECIDE:
of the Kremlin are
Freedom
Y/v
more important t an
is owned be¬
own
they
money
out of
have
saved
the greatest
earned by any
people. All because of the
private enterprise
free and
system
made possible by
is invincible—?
free world is desirable—
or a
and Justice are not
preferable
We in America
_■
?
spiritual
as
well
as
the material
become
cannot
thing
—
assertive,
will survive! Weak¬
co-operate
with
only strength
any¬
can
co¬
operate.
Uncle Sam
"Think of
say:
tions
the sake of
a
aspira¬
them aside for
put
—
your coun¬
Political
first!
try
properly
can
free America!"
abolish Nature, the
handmaiden of God. No
PLEASE—Every
person
who
feels that
this statement has
merit,
that it is
press
see
in
your
in the
run
city. Get your
the in¬
friends to help finance
sertion,
sign
your
name
scientist
or
and re-run by
of citizens.** I cannot
sign: "Endorsed
a
group
do it all. Liberty is not
private
property — there are those,
however, who are attempting
to
make
it
THEIR
property.
private
»
hand
hand. No country—no gov¬
ernment can
,
believe in the
side of life. They must go
in
,
this country
capitalist.
a
people
do
in
LIBERTY.
Communistic
—
THE GOV¬
America
can
will only tell
but they must be told
would
ship
make
.
,
—Whether the voice of one man
—Whether Liberty
can
Everyone
r
a
the
and
INCLUDING
the right to labor at what wexhoose,
we please, freedom of speech, tervg
o
into business, the right to own t e
y
homes—?
—Whether
S.
own
includ¬
OWN EVERYTHING
• Will Communism give us
to vote as
—
people
earnings ever
abolish justice?
money
their
:
Does Communism give
freedom
everything
the
people
you
—TELL THEM! If such leader¬
ness
cause
freedom of religion, or
them why,
It
earth.
on
Every bit of property our
take it away?
churches?
t.c
the right to achieve
Communism give man
anything if
capitalistic
completely capital-
nation
is tic
on
Pages.
profits;
ERNMENT!
our
Does Communism give
•
we are a
profits the people
abolish such things?
•
for
war
the only
ing
Should Ask
These On the Front
Questions Such As
mongers,
as war
monopoly. Russia today is
owns
ONE will survive.
Public Opinion, It
Does Communism give any
we
also that
COMMUNISM
or
or
Because Our Press Forms
creating
today is just this:
us
us
They
E. F. HUTTON
WESTBURY
LONG
ISLAND
10
(1318)
THE COMMERCIAL
curity
This Week—Insurance Stocks
a table of 1947 earnings for 21
representa¬
companies. These have been recalculated
per share basis, and adjusted for
changes in premium reserve
equity and for Federal income taxes, from the
weekly bulletins of
Alfred M. Best Co., Inc. All fig-®
:
tive
on
stock
fire
present
ores
for parent
are
orations; at
possible
company
cific Fire and St. Paul F.
op-
later date it will be
a
to
present
Thirteen
consolidated
For comparative
purposes, and
in order that the trend of the
past
three years may be
the
in
It
figures
be
six of the
net
viz.:
observed
21
that
companies
reported
that
out
within
net
be
Springfield, as \c?m
checking against the
by
seen
dividend
rate
shown
the
ly
all
companies
near¬
shown'
has
period.
year
are
Boston,
Pacific,
Net
Inv.
writing
Earnings
$
experience
when
Total
Net
Net'
Oper..
writing
Earnings
$
Inv.
Net
Total
Under-
,
Net Oper.
,1947
$
Inc..
writing
2.10
2.00
4.10
2.19
—3.03
0.85
0.05
3.72
4.71
—0.79
4.02
4.84
—9.44
•4.60
—0.98
2.12
—1.09
1.03
2.31
0.79
2.28
3.12
—0.09
2.99
3.10
0.15
Continental Ins.
3.25
3.24
—2.21
1.03
2.49
1.25
3.03
2,58
1.55
2.74
0.94
3.15
2.90
1.52
Fire
Association-—-
3.29
—0.42
2.89
3.69
—1.05
Franklin Fire
1.40
0.40
1.45
1.49
1.26
0.17
1.35
Hanover
1.61
Hairtford Fire
Home
.
3.73
__
Insurance—^-
1.33
1.75
6.13
3.8Q
1.48
1.41.
fell
3.50
4
that
3.25
—0.48
2.67
2.20
would, win the
4.16
—0.96
3,06
2.50
0.42
1.54
—1.13
0.41
1.00
war, rule'the world, dominate in¬
ternational trade. Today Germany
1.20
is
/
.
.
.
;
1.52-
1.42
—0.34
1.09
0.99
2.09
—2.20
0.13
1.20
,,6.96
4.11
0.90
4.76
2.50
qur'courage and
1.75
0.80
2.14
1.20
dence in ultimate
4.73,.
4.44
—1.08
3.18
3.00
0.51
2.84
—7.74
-4.90
2.00
—0.53
1.69 ■>" *
0.05
<:
the- time
'By
regained
had
we
had
confi¬
some
St. Paul F. & M
3.02
1.64
3.75
3.18
0.97
4.04
3.23
Security, New Haven
tSpringfield F. & M.
1.94
4.95
1.71
2.00
victory, we still
sold' stocks on the theory .that
labor and taxes and price controls
would make rt impossible for our
corporations to make a decent
profit. But most of them did make
good profits, even if not as sen¬
—0.05
1.65
1.62
—1.76
—0.52
1.73
—1.55
0.28
1.40
sational
5.78
—1.63
4.15
1.88
—1.00
U.S. Fire
0.88
2.65
0.68
2.81
.1.90
3.27
—0.53
2.67
2.00
.
Ins. Co. No. America
3.74
1.38
4.53
4.07
.1.42
National Fire
2.33
—1.20
1.13
2.50
—1.99
North
River___
-
1.16
Phoenix Insurance—
——
0.46
1.26
1.25
0.68
1.79
1.42
6.08
Pacific
—8.51
—2.52
6.01
1.39
6.90
6.60
3.41
0.65
3.73
3.58
—0.54
3.04
3.74
.
r
6.07
3.95.
9.98
2.85
„
2.17
4.75'
'
*1,000,000 shares in 1947; 750,000 shares, 1945 and 1946.
1945 and 1946.
$25 par shares,
t(Springfield
P.
&
v.
M.)
700,000
0.86
1.00
0.75
7.35
5.00
—0.86
2.80
3.00
;
$10
in
shares
par
1947;
as
When
in World War I.
the
war
predicted
us
was
over,
8,000,000
some
unem¬
ployed by the Spring of 1946. In¬
stead, we had a labor shortage and
200,000
successful strikes for
Booklet Recommends Plan For
Financing
Through Preemptive Rights
Eugene P. Barry, partner of Shields & Co., has a revised study, giv¬
ing a plan whereby underwriters buying rights during
period of
offering to stockholders, sell the security underwritten at price close
to market level.
of
,
The
Also includes
common
of 65 "standby" offerings
stock from 1943
through 1948.
a
summary
flotation
of stock issues with
preemptive rights is on a
sounder basis today as a result of the new
method whereby the under¬
.
writers, during the subscription period, buy and exercise
rights and
reoffer the securities
market,
a c cording to a
study
issued
by Shields &
immediately at prices in line, with
plan
"standby"
similar
issued
Shields
ing
&
entitled
With
f
Eugene P. Barry
Preemptive
Rights,"
and
written by Eugene P.
Barry,
partner of the firm.
edition includes
safeguard¬
firms
against
underwriting
in
"standby"
such
during the
as
of
many
summer
In
the
year
since
the
new
method has been
used, the booklet
Stock Issues
were
undertaking. financing
and fall of 1937 and
again in 1946.
"The
o
fur¬
of the plan as a
reducing the cost to cor¬
commitments
are
Financing
of
them suffered
cur¬
one
recommends
substantial: losses
a
last
the
rent
common
adoption
porations
year's study
and
of
through 1948.
of this character and of
year ago.
Both
booklet
means
by
Company
1943
ther
a
book¬
let
offerings
The
first
was
*
Stock from
Company. The
presented in
the prevailing
®
<
a
The revised
summary of 65
points
out,
"underwriters have
gained much valuable experience
in the application of its
principles.Its soundness has been- demon¬
strated
on
numerous
occasionsand in at least
one
instance its
offering which, under the old
National City Bank
NATIONAL BANK
of New York
of INDIA, LIMITED
Bankers
to the Government
in
Kenya Colony and Uganda
Head
Circular
on
Request
Members New York Stock Exchange
120
BROADWAY, NEW YORK 6, N. Y
Telephone: BArclay 7-3500
BeU Teletype—NY
1-1248-49
(L. A. CUbbs. Manager Trarilnsr TV»nt
26,
stock
Branches
In
India,
Burma,
Colony and Aden and Zanzibar
Subscribed Capital
Paid-Up Capital
Reserve
The
Ceylon,
Fund
"The new method," it is
pointed
out, "answers the principal objec¬
tion
to-the
for
Trusteeships and Executorships
undertaken
which
system
is
immobilized
a
mitted
and
the
at
mercy, of
a
security prices
difficult, if not impos¬
sharp
break
which
is
in
sible to foresee. At the
it preserves intact the
and
equip-
not
"normal" price-earnings
pay
ratios for the non-recurrent
same
earn¬
ings arising from wartime back¬
By
late
Jones
for goods.
1946,
after
Industrial
Stock
Dow-
Average
address by Mr.
Rubin be¬
fore La Salle Street
cago,.
time,
to
make
up..
their-
minds and decide" whether to sell
or exercise their
rights.".
•
Women, Chi¬
111., March 24, 1948. ;
;
Dorsey Brown With
Mackubin, Legg & Co.
BALTIMORE,
Brown, member
MD.—J.
"Chronicle" Honors
honor
of the Baltimore
in
Miss
who has
Co.,
Street,
is
York
now
Legg
associated
&
members
Stock
Co.,
of
22
the
Exchange.
to
"FRESNO,
Brown
is
The
Financial
CALIF. —Alexander
Walston,
now
associated
Hoffman
&
Bank
America
was
of
Building.
formerly with G.
& Co.
-with
Goodwin,
H.
He
Chance
felicitate
Elizabeth
Fox
of continuous service
of. this,
on
and
Kelly
just completed fifty
years
the edi-
more
than
a
newspaper.
Miss Kelly and William
Delancey Riggs have each rounded
out
full
a
half
"Chronicle's"
Chronicle)
"Chronicle's"
to
.
With Walstoiu Hoffman
(SDeolal
the
Room
Chicago Stock Exchanges, and.
torial/staff
formerly principal of J. Dorsey
century old
Brown &
Mackubin,
■
right
century
in
service ", within
the
a
week of each other.
Mr. Riggs, for the
staff, present¬
ed Miss Kelly with a
handsome
keepsake to
commemorate the
oc¬
casion.
They
cipients
were
also
the
happy
re¬
of anniversary cheques
from the Publisher and President
of the
publishing company.
so
far,
.
•
^
was that
[•, i'., •
,.
4
,
has
been
of
sources
have
made
against
a
back¬
of l.unusually /.extensive
ground
our
information.
newspapers
and magazines and
well informed
so
Never
and
radios
books kept us
to
as
what
was
happening in other parts of the
world.
Never have
communication
facts
vided
our
so
more
had
we
of; statistical
able today.,
of
<
result
of
with
with
country and
freely avail¬
'V--.; '4 • •; 4
long
series
the
of
inade4
when'
ade¬
imusually
quate presentation of the facts
which to base,
is
to
be¬
wealth
a
judgments
our
confronted
Never
this
of
demonstrations
quacies
pro¬
information
respect to our own
its industries, as is
The
or
experts
such
of
the
us
promptly,
interpret those facts.
fore have
means
brought
with
us
on
those-judgments,
kind of national investor
psy¬
chosis.
None
of
the old rules
a
to
seem
times,
apply.
Wrong
so
many
hate to try again. A bit
by continuous frustra¬
tion, the investor tends to sit on
we
stupified
what he has and not
budge, or put
everything in cash and forget the
whole
^
Equally
mess.
stupified,
many investment advisers tend to
sit in their offices and
not
budge,
either themselves
or
their clients.
Another result of the
apparent
repeated failures of statistical and
adoption
tion
as
judgment is widespread
of
charts
of market
ac¬
the sole reliable guide to
there been
policy.
a
has
.-Never
time when
so
many
neople paid so much attention to
"what the charts are
saying." This
not
all
bad,
methods
useful.
Friday, the Editorial, Busi¬
and Composing Room staffs
assembled
and
very few concepts
influenced investment
by
any
of
analysis
means.
of
trends by means of charts of stock
market
performance
are
very
MissE. F. Kelly
.Editorial
its
This almost continuous series of
errors,
in. investment judgment
is
ness
Dorsey
that!
Many
Last
J.
the
made
the
investment
i!:An
has
;
economic
the
right of the
stockholders
New
of
expenditures
plant
more
machinery of logs of demand
period of ten days to three
weeks while their capital is com*
"■»
conducts
every
description
banking and exchange business
also
old
that the distribution
the underwriters is
Kenya
Bank
peacetime *
still
..
with
£4,000,000
£2,000,000
£2,300,000
for
'
rights or both, without ment.
purchasing rights for the purposs
By mid-1946 we<had convinced
of exercising them and (
making a ourselves that we had two or
distribution prior to the* expira¬ three
years of prosperity ahead,
tion date. Formerly the securities that
earnings and dividends and
generally were pffered only at the stock prices would rise. We failed
issue price.
to realize that
investors would
Light
Bishopsgate,
dented
or
London, E. C.
>
Laird, Bissell & Meeds
Office:
stockholders, exercise these rights war) that we could outproduce
and, from time to time prior to any tendency, toward price infla¬
their expiration, sell the
Yet we have had a price
security tion.
being underwritten at a ptice inflation, and business was so
to
close
the
prevailing market short on productive capacity we
level. The plan differs from the have been witnessing
unprece¬
use
was; responsible for the success of
an
higher wags,
At War's end, we had a
system, would have been doomed rates.
to failure."
•large body of opinion that our
Under the new
plan, it is-ex* national capacity to produce was
so. great
plained, underwriters buy rights
(especially because of the
during the period of offering to huge additions to plant during the
older method in that
formerly the
underwriters merely stabilized the
following
"There'll Always Be An
England"
—and now we're not so
sure of
basic
of
of
has
■
has proved
Edward P. Rubin
Germany
prostrate.
Subse¬
thinking in the past 10
years, and
con¬
that
2.00
:4
depression
no
One
May,
we
depression
1921.
Instead, we have had
rising
business,
earnings, divi¬
dends and employment.
France
cluded
of
appearance.
2.-32
.
2.97.
1.64
It
from
in
1940,
1.00
2.20
'
2.25
far,
2.98
4.05
—0.69
0.77
3.65
s
0.25
0.20
—0.58
.
1.80
•
that
witness
such.
After
50
we
beginning of that depression. So
2.91
,3.65
..
—1.17
Gre^t American,
from
$
—2.73
far
was
dend
Earnings
1.75
-
"phony."
Divi'
4.50
Fidelity-Phenix
a
to
precipitous
decided
us
postwar
been predicted that the
three months would
we
w
a
quently, each three months it has
the
-
have
similar
af¬
ter the fall of
war
*
must
a
stalemate
decided
Agricultural
___
dropped
a
points, many of
war
Poland,
American EquitableBoston Insurance
__
had
true.
reached
eventu¬
its normally profit¬
resumes
""
in
<S>-
<
"
$
2.34
justified
1916.
never
When the
able status.
Inc.
.
$
0.10
be
to
proved
in¬
of
-1947-
Under¬
$
ally
Se¬
Net
Net Oper.
2.26
would
creases
number
a
underwriting
1946Total
Under-
Inv.
seems
f
.
a
The only exceptions
Aetna,
In
it
.if
When war broke out in 1939, we jumped To the conclusion
that
profits available to American industry would bb'as sensational
as
that
Net
,
Inc.
.
,
1914
column.
in
v
ment
except
pany,
*
More ■often than not, the concepts which have dominated invest¬
thinking in the. past 10 years have proved erroneous.
investment income for each comJ
This
1945Net
♦Aetna
point
well
were
'
President, Selected American Shares, IncV y
favorable and unfavorable aspects of investment
situation, Mr. Rubin concludes it is improbable we are facing a
depression of the severity of 1921. Contends, with rearmament,
we are likely to have further extension of business boom.
Holds
bear market for stockholders is almost over, and long-term trend is
working in stockholders' favor.
Sees coming months providing
opportunities for long-term investment.
'
fact the margin is so
substantial in numerous instances
Net investment income of
American
;
to
proper
„TT¥il
P. RUBIN* *
After reviewing
last
only
Equitable, Conti¬
nental, Hartford Fire, Home, Pa-
.
is
It
dividends
underwriting profits in 1947, steady uptrend through the three-
'■
„
tal, Hartford, Homeland St. Paul
shown
accompanying table.
will
M.
un¬
■
By EDWARD
.
capital by 40% from $5,000,000
$7,000,000.
to
Vv.'
■
'
Fire & Marine.
also
are
its
in both years. " Only four com¬
panies show underwriting profits
for all three years, viz: Continen¬
studied, 1945
1946
&
showed
;"7>:
words, Springfield effectuated a
2y2-for-l split and also increased
derwriting profits in 1945 and
194-3, though not the identical list
earnings.
and
companies
Current Investment
Aetna
200,000 shares at $25 par; in other
insurance
a
ThursdayMarch 25, 1948
CHRONICLE
Springfield.
In the
and
Springfield,
however, there is some distortion
due to capital changes.
Aetna's 1947 figures are on the,
basis of 1,000,000 shares compared
with 750,000 shares in 1945 and
1946. Springfield's are on 700,000
shares at $10 par, compared with
By E. A. VAN DEUSEN
we
FINANCIAL
and
of
case
Bank and Insurance Stocks
This week
&
Some of them have been'
successfully employed
over long
periods of time. But
adoption of
market charts as the sole criterion
of
investment judgment and in¬
vestment
action is defeatism. It
begins only after other, seemingly
more
rational,
processes
have
failed.";
•It
is
'
not
defeatist in
our
■
■[.
to
become
economic and in¬
necessary
vestment thinking
despite the ex¬
perience of the past 10
years. Not
everybody made, all the mistakes
that we have
mentioned.11 A very
sizeable number
their
advisors
of
investors and
succeeded
in
cor¬
rectly appraising a good portion
of
the
problems
which
arose.
They have enjoyed a good income,
and
some
profit.
We shall
to make
an
attempt this evening
appraisal of the
(Continued
on
page 42)
eco-
;
Volume
167 -Number 4684
THE
COMMERCIAL. &
FINANCIAL
CHRONICLE
(1319)
r'v^.'
kS9"
fSE ONE
Annual Report
holders
to
Vw
Penn Mutual published its first financial statement, it was of
VV particular interest to
comparatively few citizens. Philadelphians, that
TVTHEN
■
.
year,
the
absorbed in such things
were
The Company still maintained
;
of its 379
V—div'
as
the treaty of
with Mexico,
peace
discovery of gold in California and their first reading of Vanity Fair.
security
policies
were
glad
a
little office
to
Walnut Street and the
on
owners
have
assets
"
Contracts now
r"r- c.ct £ "
grown to
r
During the past
'
year, new
ing to $273,626,'959,
**'
-
•'"
'
,'
^
*
..
*
1
-
v
' '
,:
'
•
''
'''
opportunity to
greater
t
p. i c r. c t
1 D'E e C 7
tr-
'x
•
'
C',"[
'
-
'
,"
"
•
,
grown to
be
1.
,
of the coun¬
one
{^4*1
m
try's leading financial institutions—a mutual Company, with $2,540,947,422
to an even
rciEc;
? c r. c c s
"»~r.c c.t
business alone totaled 52,605 policies, amount¬
of life insurance in force. In the century ahead, Penn Mutual looks
.
r-
' *
$1,126,019,097 and 701,566 life insurance
In the century just passed, Penn Mutual has
/
n c ci n c c
r
1
the financial security of Penn Mutual policyholders.
protect
f
cn rcr. c
know that the institution protecting their
.
•i-
,
J
■'CCcrcrr'"
was
Today those
Q
c c p c c
r. t
in sound financial position, with assets of almost $35,000. But
that-was 1848.
1
''V.;
'
P B 9 P W'
,
Lp B D Q
serve
forward
and protect American families.
PENN MUTUAL S 100th ANNUAL STATEMENT
In accordance with'the
requirements of its Charter, this Company publishes the following statement which presents the
'
of this report will be sent upon request.
>
principal features of its HUNDREDTH ANNUAL REPORT to policyholders. A
STATEMENT
INCOME
OF
SURPLUS' RESERVE
AND
For the Year Ended December 31, 1947
Your
Company's income during the
^
'
assets
Cash
sisted of:
v
'V
December 31, 1947
"
year con¬
'
,
CONDITION
FINANCIAL
OF
STATEMENT
,
.
copy
hand and in banks
on
.
^
.
8,175,274.34
t
Bonds: (See Note A)
.„■■■
.
United States Government (See Note B) . ....
Canadian Government, direct and guaranteed....
.
Insurance
premiums, annuity deposits, divi¬
Company to accumulate
policy proceeds left with"
the Company for future distribution under
v 1107,902.343.39
options of settlement
dends left with the
at
State, county and municipal .
Railroad, including equipments.
interest, and
Investment
Public
and
Net
of real estate (other
ipeluding $95,370,67 for
.
.
,
.
\
.
Public
gain from sale or other disposition
.
.
.
10,917,574.36
132,128,617.90
178,695,599.50
.
•
•
.....
utility
.
.
.
'
'-
.
9,787,780.00
„
.......
.
.
2,245,380.00
886,424,736.50
Note A)
i
....
141,732,314.68
.
Insurance
31,445,639.11
.
.
.
......
.
Railroad
less expenses
than home office)
real estate taxes
v
.
Stocks, preferred and guaranteed: (See
values of investments,,
$1,596,185.88 in
•
Industrial and miscellaneous.
consisting of interest,
of
income
dividends and rents, less net decrease
.'.
.:»
utility
$404,977,119.48
17,973,510.58
1,000,000.00'
28,371,715.00
•
Industrial and miscellaneous
41,464,875.00
of
2,066,335.40,
Mortgages:
'
60,202.10
Other income
City
,
110,403,470.73
............
Farm
-
.
...
,
.
.
.
.
v
Made
holders and beneficiaries amounting to.
-
.
<
Home office property
61,303,627.22
*•
.............
.
12,880,420.14
the policy reserves"
and accumulated dividend fund amounting
l.oans ta
Interest
49,726,434.72
:
V •
.•
operations for the year, in¬
cluding $1,561,081.46 for Federal and
State taxes, licenses and insurance depart-,
.
rents
Paid the cost of
t.
■
■••
fees
ment
16,532,142.53
1947,
Company's net income was
your
January 1,1947, the surplus reserve, for
holders and available tor mortality and
and other contingencies,
amounted to
.
.
6,987,164.18
.
.
yet
•
.
»
. ...
-
provide
reserves which with future premiums and interest earnings
for the payment of benefits as they fall due under the policies in
Policy
53,193,578.48
Dividends left
67,105,894.01
.13,204,495.07
$1,126,019,097.03
•
;
liabilities.
.
investment fluctuations
<
bonds, mortgages and loans on policies; and
real estate ...............
13,912,315.53
...
the protection of policy.
on
on
Total Admitted Assets
127,562,204.47
For the year
due and accrued
due and accrued
43,073,473.74
policies of the Company.
on
of collection from policyholders and premiums
due within current policy year, for whicn fhll statutory policy
reserves have been set up; and miscellaneous assets ,
.
.
.......
.
not
t
At
policyholders
Premiums due and in process
.
.....
■
5,706,498.55
6,662,216,19
<
.
'Made normal increases in
to
*
A'
511,705.40
<•
•
Acquired in satisfaction of mortgage indebtedness
policy •benefits to policy-,
payments, of
estate:
Held for investment
'
■
■
113,868,658.06
Real
During the year your Company: •- '
i
3,465,187.33
_
$141,474,520.00
force
< 968,720,542.31
.
and Interest
by policyholders with the Company at interest,
,
credited thereon
.
.
.
...
.
• <
,-
♦
•
•
♦
•
•
•
Board of Trustees provided
payable to policyholders on policy anniversaries during 1948
(This amount is distributed from savings in mortality, expenses, etc., and
from interest earnings in excess of amount required for policy reserves)
of dividends to policyholders,
Policy claims in process of settlement
.
, . . • - * •
• •
Premiums, interest and rents paid in advance; accrued taxes; dividends to
68,851,365.95
Dividends
From the above, your
for:
The payment
-.Hi.y."„"CT.,ri'»J''ri„e'94«.m'h.
and miscellaneous liabilities
Further additions to
amountof.
...
.
»
w
v
1,067,496,988.23
500,000.00
•
Surplus funds:
Reserve for mortgages
surplus
reserve at
December 31,1947, amounted to
$55,403.894.01
Unrealized
appreciation
.
,
on
....
BOARD
of
TRUSTEES
available for
and other
WHRRTON. PEPPER
CLINTON F. McCORD
GEO ROE
RUSH
LEONARD T. BEALE
WILLIAM I. SCHAFFER
KOBERI T. MrtHTACKEN
JOHN A. S't'EVENSON*
PHB.IP C. STAPLES
MARTIN W.
THOMAS S. GATES
WILLIAM
JAMES E.
WALTER
CHARLES R.
W. BODINE
COWEN
EDWARD E.
D. FULLER
CHARLES E.
BKINLEY
ROBERTS
ADAM
HARRY C. CARR
ALVIN C. EURICII
EARL G. HARRISON
HENRY B. BHYANS
WILLIAM C. HUNNEMAN, JR
.
.
2,500,000.00
.
616,214.79
of policyholders and
mortality and investment fluctuations
contingencies.
.......
.
55,405,894.01
<
.
•
58,522,108.80
ISAAC W.
Total Liabilities and
MALCOLM
CLEMENT
SHIPLEY
BROWN
NOTE A—Bond* and ilockt arc
Surplus Funds
.
.
.
.
valued in the above ((element at
.
STEVENSON, President
amortiaed or other valuei pre«ribed by National
NOTE
B—United'stalea
C-^'stati^'ofTina^iaVuJrdition and the related Statement of Income end Surplui Reaerve are
Government bondi
carried at $260,000 in the above ((element are on
prepared in accordance with aocounlini
principlee applied by the Ineurance Dep.rlme.it of 1
MUTUAL
LIFE
$1,126,019,097.03
NOTE
JOHN E. BIEHWIRTH
GEORGE E. ALLEN
JOHN A.
WM.^LTON KURTZ
.
stocks and no/i-amortizable
Surplus reserve for the protection
BENJAMIN
14,341,021.66
•
policy reserves, in the
11,700,000.00
So that the
4,384,058.31
operating expenses;
policyholders in course of payment; bills for current
lhmooooo
11,200,000.00
INSURANCE COMPANY
FOUNDED
1847*INDEPENDENCE
RACK Cf V0UC iNOiPiHDENCI
STANDS fnt KNX
SQUARE*PHILADELPHIA
-
-L
defmait with
ennaylvania.
12
(1320)
THE COMMERCIAL
ADVERTISEMENT
&
CHRONICLE
FINANCIAL
Thursday, March 25, 1943
ADVERTISEMENT
ADVERTISEMENT
SOUTHERN RAILWAY COMPANY
Fifty-Fourih Annual'Report for the Year Ended December 31,1947
Richmond, Virginia, March 23, 1948.
Net Income
Net
To the Stockholders of
amounted
SOUTHERN RAILWAY COMPANY:
The
of
Board
the
of
Directors
for
submits
the following report
Company for the year ended De¬
affairs of the
May 18, 1948.
amount
The
Company spent the year 1947, like everyone in
Country wnose rate of income was fixed and whose
expense
in
organization
work
and
as
of
constantly increasing.
To stay
flood of inflation requires, for an
well
as
ingenuity; and the
to
account
follow
of
the
Sharply rising costs were offset to some extent by
economies, the acquisition of new Diesel power,
by continued improvements in operational and me¬
techniques. The Company transported its great¬
portation
The Revenue from
•
Revenues of $212,041,109 for 1946.
The
volume
of
business
and
therefrom, compared with the previous
the
receipts
year, were:
1947
Freight moved (tons)
Average distance moved
Ton
Total
revenue
freight
Number
of
passengers
Average Journey
Passenger miles
Average revenue
Total
passenger
(miles)————
1,524,760,826
2.2200
$33,842,343
2.2350
$20,866,952
revenue
As
just shown, Freight Revenue increased to
$186,185,803, as compared with $164 126,085 for
1946, an increase
of 13.44%. This
increase is attributable to the increase
in freight rates
granted by the Interstate Commerce
Commission in Ex Parte
162, effective January 1, 1947,
whereunder these rates were increased an
average of
approximately 17.60%; and to an interim
emergency in¬
crease granted
by the Interstate Commerce Commission
in Ex Parte
166, effective October 13, 1947, as herein¬
after referred to.
1
Passenger Revenue aggregated
$20,866,952, a decline
from the already
greatly decreased Passenger
Revenue of 1946, which
aggregated $33,842,343; thus the
of 38.34%
Passenger Revenue for 1947
of
the
all
time
high
was
war-time
only about one-third
Passenger Revenue
$59 270,726 for the year 1944.
of
0.07%.
Railway Tax Accruals aggregated
$24,898,426,
crease of
about
50%
Taxes took
revenue, and were
income
Net
an in¬
the
corresponding Accruals
110 out of each dollar of gross
over
over
more
than double the
Company's net
(after taxes and
charges).
Railway Operating Income, which is what
of gross revenue
after
and equipment and
1947
to
10.69%,
$21,375,013,
over
While such
is left
paying operating expenses, taxes
joint facility rents, amounted for
an
increase
of
$2,063,867,
or
the corresponding
figure for 1946.
of
increase in Net Railway
Operating In¬
come, in a year of
rising costs, is somewhat
gratifying,
it is illustrative of
the huge increase in
expense to con¬
sider
that
an
in
the year 1940,
$105,905 000, the Company had
Income of
of
$21,457,000;
$222,833,000,
most
exactly
tween
with
a
Net
gross
revenues
Railway Operating
while in 1947, with gross
revenues
Net Railway Operating
Income
the same,
namely,
pre-war
and
$21,375,000.
post-war
of
periods,
was
Thus
al¬
be¬
the
Company's
expenses and taxes have
increased to the extent
of over
$1<K) 000,000 a
year, as measured by the
The
comparative
resulting net.
ratios
of
the
Operating Expenses, and taxes,
of cents out of
each
dollar of
several categories of
expressed in the number
revenue, were
of Equipment
Expense
Expense
Incidental Expense
Traffic
———
General
—
as
follows:
9il*
i'o20
i.'i80
7LO40
"ilSS
11.17c
Grand Totals
opiating expenses,
88.210
taxes
and equipment
and
amounted to 2.200 for
charges and other corpo-
facility rents (which latter
1947), there was left for fixed
the owners,
9.590 out of each dollar of
revenue, as compared with 9.110 in
1946.
and
were
1945,
100
ballast
January 1, 1948, the Company had
covered
144
hopper
1,000
cars,
50-ton
the
manufacturers to
(c)
86 units of Diesel
of
all
which, except possibly the
expected
,are
To
,
to
be
delivered
in
1948.
an
of
are
units
With
well
of
November 1,
1947,
December 3,
supplemental petition, dated
filed with the Commission
seeking
Southern
166
a
an
coke),
increases
and
interim increase of 20%
13,
Company, which
of
the
again,
(3)
Paid
States
at
an
(4)
Had
left
principal
taxes, payable
(the
through
.
acquired by the
cost
to
the
in
latter
the
aggregating $6 894,600, the same as in 1946.
31, 1947: (a) U. S. Savings Notes In
of
$21,000,000, as reserves against 1947
1948, and for other future corporate and ma¬
December
on
amount
turity needs, and
sheet
was
aggregate
dividends
the
(b)
cash of
$33,132,213,
of
as
the
close
of
shown
as
being reducible by items
banks
which
business
the balance
in
not
were
for
the
another
(200 per ton on coal and
coke),
January 5, 1948, superseding the October
13,
interim increase. The over-all
end
of
1947
Dec. 31, lg47
Funded Debt
Leasehold
Dec. 31, 1946
$194,650,500
52,819,600!
34,663,760
Equipment Trust Obligations
$194,650,500
$282,133,860
Estates
•
$286,589,482
52,840,600a
,
Totals
'
5
_
39,098,382
Includes
$9,189,000 of
its subsidiaries
2
since
Bonds
$8,841,000
its subsidiaries since
of
Bonds
January 1,
The
acquired
by the
Company
by the
Company
January 1, 1940.
Includes
■
acquired
1940.
Company's net fixed charges,
on
an
action
of
the
Commerce
Commission in the year 1947
demonstrates that it real¬
izes full well the
necessity of prompt coordination be¬
tween the income of the carriers and their
rising costs.
income
by
the
Company,
December
were
approximately
$12,000,000
31,. 1947.
at
II.
Industrial and Agricultural
Development
In the expansion
and
diversification
of
the manufac¬
turing activities of the. South
during the last ten years,
the Company has
enjoyed a steadily and correspondingly
of all classes
of freight traffic.
is set forth in the
following figures:
Classes
Manufactured
Year 1947
Products,
including
also all less than
carload freight
Products of Mines
Products of Forest
;
It is estimated that, based on the
expected traffic for
1948, the interim freight rate
increases, together with
or
defined by the Interstate
Commerce Commission, less
from securities of
its leasehold estates owned
as
growth
Interstate
or
.
annual basis,
increasing volume
forthright
showed
1946:
increase
January 5, 1948, as compared with
rates in
effect January 1, 1947, is estimated at
17.9%.
The proceeding is still
pending and it is expected that
it will result in permanent
increases, over and above the
two interim increases.
The
cleared
year).
Funded Debt and Fixed
Charges
The table of funded debt at
the
the following comparison with
be¬
effective
average
United
participants of $40,202,482.
and
interterritorially
1947, and
.
Used $1,230,374 in the purchase
of the Company's proportion
stock of The Pullman
the
railroads
41%;
per ton on coal and
October
Resources ;
was
the West 31%.
partial relief, the Commission
granted in Ex Parte
interim increase of 10%
(100
effective
Company's Financial
.
within
the East 41%
East and the South
tween the South and
As
1947,
territory of 31%; within
interterritorially between the
territory 31%
within Western
additional
power.
(2)
of
conductors and train¬
made retroactive to
a
the Company feels that a
equipment program is fairly
(1) Expended Treasury cash for
capital improvements to the
$5,858,933 for road and $13,476,534 for
equipment, an
aggregate of $19,335,467, as compared with a
total of $12,880,949
so expended in
1946.
=
and
September 5, 1947,
September 1st, which
to
new
property,
ma¬
sought increases in the rates within the
South of
28%,
38%, and interterritorially between the
East and the South 38%; within
Western territory an
increase of 28% and
interterritorially between the South
and the West 28%.
was
Company's
concluded, except for the acquisition of
within the East
which
the
the
,
paying running expenses, taxes payable
during
the year and fixed
charges the Company used its cash,
as to larger items
only, as follows:
filed
Following the wage award
acquisitions,
Use in 1947 of the
15% and between Western and
Eastern territories 25%.
men,
(to
After
25%; within Western ter¬
15%, between Southern and Western territories
of
these
phase of its post-war
tween the East and the South
petition was
following the wage increase
The total
$65,000,000.
was
amended
425
including that of its
System lines) will have cost
approximately $98,000,000,
of which cost it will have
paid in cash from its Treasury
designated Ex Parte 166,
sought increases within Southern
territory of 15%,
within Eastern
territory 25%, and
interterritorially be¬
An
Southern
service
132
as
For the period
1940-1948, inclusive,
acquisitions of new equipment (not
Diesel
Commission for an increase in rates
charges predicated on increased costs of
wages and
ritory
in
the Broth¬
Commerce
petition, which
operated
power,
have
power
excess
Emergency Board.
July 3, 1947, the railroads petitioned the Interstate
The
will
Company and its affiliates) is $52,100,000.
On
terials.
Companies
2,000 H.P. to 6,000 H.P., and 8 road switchers.
approximate cost of all of this Diesel
an
Enginemen and the
Switchmen's Union of America refused to
accept a sim¬
ilar increase, and have voted
to strike, resulting in the
appointment by the President of the United
an
System
of Diesel
switching loco¬
motives, 6 small Diesel-electric two-car passenger trains,
94 road passenger and
freight locomotives, ranging from
upon
$13,700,000.
The Brotherhood of Locomotive
Engineers,
erhood of Locomotive Firemen and
order,
Company
delivered,
Railway
some
on
on
When the Diesel power now on order for
the
its affiliated lines has been
operating groups (Conduc¬
These increases amounted to
15M>0
estimated to cost the
Company
including additional payroll taxes, in
cars
cost, the Company issued,
and
Trainmen).
hour and
4,000 of the above freight
of their
train cars,
passenger
15, 1948, $10,680 000 par value of Southern
Equipment Trust 2Vs%
Certificates, Series
"NN," which were sold on an interest cost basis of 2.28.
awarded to two of the
annual basis,
of
Railway
September 1, 1947, further wage increases were
awarded after long
handling, under the Railway Labor
Act, to all the organized employees, except to five
oper¬
ating groups. Effective November 1, 1947, wage increases
tors and
was
and
V
of March
as
As of
were
finance
i
3,000
power;;
to the extent of 75%
annual basis about $20,000,000.
an
and
by the inability
get into production);
*
retroactive
wage increases, effective January 1, 1946, cost the Com¬
on
order:
on
hoppers
cars, a total of 4,144 freight train cars;
(bi 88 new streamlined passenger cars
(delivery of which
expected in 1947 but which has been deferred
Wage and Freight Rate Increases
pany
}
laid 36,313
were
steel sheathed box
;
7.78c
moj
in
ordered
-
shown in the Annual Report for
1946,
effective
2
increase of about $6,200,-
a net
,
cars
As of
An active program of taking off side and branch line
15.510
1.760
Taxes, to
year.
delivered 1,000 automobile box
600 gondolas* 487 steel sheathed
cars, a total of 2;187 freight1
cars, and 87 units of Diesel power.
.
;
- ;
(approximately 2 additional
1947,
18.650
a
box
miles having been
1947), laying heavier rail and tie plates, and
mechanizing every possible facility, within the limits of
obtaining the necessary supplies, was continued and en¬
As
the
net
New Equipment
Stock, payable in quarterly
unprofitable passenger trains was prosecuted with
favorable results, and is
continuously being urged
the regulatory bodies having
jurisdiction.
It results
would
revenue
tons of new rail;
and orders for 1948 have been placed for
31,500 tons.
in
4101({
2.990
.
Taxes
rate needs and
1947
trestles
1946
Totals
.
of
1947) will
year
$14 000,000.
some
increases in
products.
(some of
costs
part of the
1947
over
estimated
During 1947 there
continued/
1
increased
of
a
New Rail
,
38-8O0
14.290
18.190
1.750
Maintenance
joint
were
$5,858,933, as compared with the substantially similar
$6,037,548 so expended in 1946.
>
1
continuing program of the reconstruction and repair
rolling stock, and of buildings and bridges, filling
1947
Transportation
Maintenance of Way
the
cars
States
Even with
constantly mounting costs of materials and
supplies, fuel and wages, total
Operating Expenses for
the year
aggregated
$171,673,513, as compared with
$171,791,729 for 1946, a decrease of
lor 1946.
000
the Preferred Stock, and of $3.00
on
the Common
on
pas¬
Compa'ny approximately $10,000,000 increased gross on
an annual basis, which
in turn would be reduced, after
172.60
933,631,924
mile
passenger
that
items
effective for
increase 1948 costs
the
The
231.91
167.71
;
per
conspicuous
were
hanced.
14,462,103,633
14,449,343,889
1.287f>
1.1360
$186,185,803
$164,126,085
5,567,060
8,834,069
revenue___.
to
and
These
which
amount of
62,306,399
218.97
ton mile..
per
1946
66,045,102
(miles)
miles
Average
share
filled
handled
1947,
and
by the increased wages just referred to, and
by
further drastic increases which have occurred in the
cost
of coal, Diesel fuel oil and iron and steel
Federal Income
Dividends of 5%
to
high, and
Operating
in
rates
express
reduced
year
Despite the constantly increasing cost of labor and
materials, the property was well maintained and ended
the year in a high state of
efficiency.
:
Capital expenditures on roadway for 1947 amounted
.
a new "peace-time"
of 5.09% over the
increase
an
the
(a)
Operation of the railroad in 1947
$222,833,436,
Income
Operations
The Year 1947
Operating Statistics
representing
Non-operating
installments,
I.
amounted to
of
of car-loads and ton-miles with
compared with 1946. of 2.210 in its Trans¬
Ratio, and of 3.980 in its Operating Ratio.
with
1940.
per
est peace-time
aggregate
as
1947
Dividends
'
chanical
decrease,
of
pay,
produce
During 1947 there
enforced
a
$9,252,270
that, while
seen
will
approximately $24,000,000
additional gross revenue to the Company, before
taxes.
These prospective increases, however, will be
sharply
charges were covered 1.93 times in 1947, as
compared with 1.73 times in 1946.
After dividends of 5% on the Preferred
Stock, the
balance of Net Income in 1947 was
equivalent to $6.85
per share on the
Common Stock, as compared with
$4.81 in 1946.
accomplishments of another difficult post-war year will
show the endeavor
by the Company to exemplify these
qualities.
and
comparing the results
mail
in
increases
fares,
senger
1947
Fixed
individual, steadfastness, hard
an
for
1947, exceeded by $4,540,689 the corresponding earnings
was
rising
a
charges)
compared with
reduction of fixed charges effected since
1940, it is inter¬
esting to note that the Net Income, after charges, for
Foreword
of
as
certain
and
1947's gross revenue
was
over
$100,000,000 greater than the gross in 1949,
the Net Railway Operating Income of tne two
years was
substantially the same.
However, owing to a larger
31, 1947, which is the annual report it is contem¬
formally to present to the stockholders of the
Company at the annual meeting due to be held on
basis
taxes
$11,892,761,
1940, it has been
plated
afloat
to
(after
1946.
Again,
cember
the
Income
Products of
Products
of
Agriculture_____"l~l
Animals
T.___
Tons
Year 1938
This
Increase
Tons
22 420 470
9,595,421
30,684'll2
13,828,096
122%
7 182 186
2.966,683
142%
5,244 529
3,282.328
60%
513,805
388,369
32%
66,045.102
30,060,897
120%
134%
Totals
Number 4684
167
Volume
THE COMMERCIAL
&
FINANCIAL
CHRONIC! .R
(1321)
evidence of the South's uniform
develooment
along all lines of economic endeavor; and
that,'more
Pnd more, Southern industry draws its raw
materials
from farms forests and mines in the South.
During 1947, 320 new manufacturing plants
were lo¬
cated at points served by Southern Railway
System
This is
new
Due
long held
a
textile industry, and in 1947, mills in the cotton
growing
States consumed 8,370,213 bales, or
88%, of the total
cotton consumed
in the United States.
Incidentally,
Southern Railway Company handled the
equivalent
The rayon
industry's capacity to produce
is estimated
and Staple
to
well
of
v
a
increased by 15% in the
next two years. Contributing to this
increase will be two
new rayon plants on the
Company's
and
Carolina
in
one
lines,
Tennessee,
both
of
Cotton
going
in South
which started
one
a
$30,000 000
Memphis, Tennessee.
With
the
farming,
steady
farmers
efforts along
and the
As
an
the
and
more
better
livestock, fruits
The
Company's fortune is indissolubly linked with
the
prosperity of the South. It enters the
year
1948 confident that
it has the best
territory in the Country
to work
in, and that the South will
go ever forward
to a greater
future.
into existence.
and
paper industry in
healthy growth; and two
mill
and
the
•
other
the
of
land
at
The
of the
in the year just ended.
Company
received from
and
miscellaneous
of
cost
total
a
Leaving
balance of_—
a
on
Leaving
Other
and
.i,
derived
bonds
from
and
investments
miscellaneous
Interest
total
on
income
and
funded
as
ery
my
hypothesis, this imag¬
citizen
y
common
3
1940.
!
fact
had
the
chance
stocks in
1921,
1932
I don't have to belabor
that
if
he
had
The
had
the
ever
human
a
deductions
I
the
event,
is
that
courageous
were
a
so
real
of
a
lifetime."
low
5
how
these
my
own
very,
experience,
very
few
opportunities,
did
and
I
$1,625,522
10,401,541
of
5,846,189
2,611,231
2,467,581
.<■;
but
3,513,276
$9,252,270
1
comparison,
perceiving.
I
1921,
that
and
missed
dozen
cogent
continued
to
work for commissions all
through
the New Deal, instead of retiring
live in
to
leisure.
By this time, I
in
another crack at
securities at
a
them
that's
all
I
were
was!
just
came
Came
—
again,
once
this
Wasn't I
1939-40.
the
-doldrums;
good
selling * close
my
if the
time
man
a
Of
I
of
course
Nobody
wanted stocks; the market was
were
get
throwing
By God!
intelligence and guts?
I
I
purchasing sound
asked
couldn't miss.
Would
man
discount, when
overboard?
it opportunity
old
was an
middle 30's.
my
of
J
I
of
the
in
securities
to their
book
'
—
■'
'
'
:
of
$7,634 490
1—
;
f;'
re-
assets
$588,098,263
' J.,
;
$587,507,583
'
$590,680
Com¬
following:
including bonds,
*
obligations,
Stock
;
„
60,000,000
$4,434,622
60,000,000
,129,820,000
-
129,820,000
of $419,134,260
$423,568,882
,
total
a
capitalization
deducting
from
mained
vested
net
a
in
this
assets
there
value;
railroad
bonds
....
$4,434,622
could
That's
the
new
amazing
be
reasons.
part
of
tale of woe—each time the
different,
they cloaked
are
but,
my
lack of faith in an
my
reasons
that time,
cowardice and
at
of
armor
plau¬
dan¬
was a
to the whole economic struc¬
ger
of
the
markets
taxes
were
and
world, the security
regulated to death,
F.
D.
R.
killing
business, the railroads
finished, and on and on.
were
American
were
Again
they
arguments,
they were
good,
were
only,
sound
unfortunately,
100%
again, being by
.
,
chain
on
12%
a
And
wet.
now a
so,
real antique
.
people sell
out
to
protect
had
my
we
out of
any one of a thousand
still
they sell.
in 1948.
I
can
But what of
earnings,
employment,
huge
production and, in
in
10
points
whole
of
period.
Communism
world.
this
is
the
Of
14% return basis.
I
turn, and
can
buy
a
a
can
on
buy
a
basic in¬
lows
of
on
a
9%
a
the
stealing
to
buy
quite
yet.
threatening
is
the
not
top
world.
re¬
little
Vk times earnings.
I
great department store
be
election
atom
issue
Maybe
this
course, having
T am begging,
European
an
Palestine
flight railroad stock
unbelievable
some
lesson.
my
steel
the world
Enor¬
dividends,
dustries, a seemingly insatiable
demand, are all present. On the
other hand, stock prices are with¬
about
in
reasons, but
in 1948?
me
mous
vast
buy the third biggest and richest
company
com¬
\
*
bankruptcy
might be just around the
sagacity.
are
their
commitments, others sell
boredom, people sell
sheer fright, others sell
for
Of sheer
Well,
not
other
modity
and
And here
I
Nobody wants stock?
(except a very few really astute
investors).
Europe sells,
some
borrowing
and cravens who
if
statistician, T
examples.
securities.
Relations
Boards,
income taxes, etc., instead of being
able to
quit and laugh at the
had
and,
give several hundred
fair
a
O.P.A.,
morons
basis
even
learned
world of
.
$5,025,302
could
—at least in the eyes of the army
—I spent the war sweating over
Labor
-
■.
were
whole list of
a
>
of—.. $168,964,003 $163,938,701
that I hocked
shirt to buy stocks. Not me!
my
—
in-
property,
I wish I could
say
I had
"
re-
largely
surplus,
the
T~
capitalize-
had for peanuts.
By then.
$161,800,828
i
\
Stock
ture
so
$169,435,318
capitalization
11 =
.
about
and
2,787,017
$22,159,418
$11,892,761
era,
—
16,563,201
—-a.—$2,29.314,260 $233,748,882
sible stupidity. Nazism
wrong
2,806,146
2,848.272
12,907,148
man's
an
there
trust
Common
After
v.
Debt,
Preferred
r
You
-a
96,155,584
13.776,184.'
was—j..
Company, net
etc.
1932?
98,961,730
not
items from
assets
the
i
,
liabilities,
reserves
for
143^650
road
including
others,
capitalization
tion
from
with
so
opportunity in
1921, as then I had not had enough
experience to warrant my seizing
a
chance to become rich, which,
I won't count the
at, out of
$36,212,921
16,247,730
...
equipment
$19,311,146
12,995,528
through
Sure!
contemporaries
humble self, can¬
instantly recognize
-
total
the
The
$23,753,185"
$21,375,013
etc., etc. The argu¬
ments were prefect except for one
little thing—they were completely
the afterwards so obvious "chance
and
and
$37,838,443
projects—....
these
and
end of
nking
my
to
of
world
depres¬
consumption being
dwarfed by man's production, the
not
see
not
about
lived
incredible that most of us,
including
actual
gained
sions,
ivery to buy during those peri5,
when only the most clear
ing, he would have found
had
arguments
how
after
patent
seems
of
cowardice
..
pattern
of
4,447,039
guessed it, I
went yellow and rationalized
my
fears
the
in
—
justified in
dom
and
due
amortiza¬
deducting these
Funded
totaled
lack
opening.
•
After
railroads
net income of—
But how
Co.
repeating
yet
due
adjusted
total
credits
7
4,886,483
should have benefited by the wis¬
doubts
|
*
and
———...
pany consisted of the
eauipment trust
was
o en over
years
I have heard the quasitragic plaint, "if only a chance
like that would come again!"
to
not
not
liabilities,
171,791,729
$24,888,289
debt and
miscellaneous
Resulting in
^
v.'y.
$26,261,496
of—
obligations, rents paid for leased
trebled his capital
during the so-called years of discretion through
ich he has
lived.
<8>
21
,
balances
and
defense
due
Making
a
of equity securities, to have doubled
•
of
items
$40,247,380
16,491,195
U
Making
few astute investors.
know
♦
companies,
but
but
tion
items
was
In the life of
a U.
S. citizen of seme wealth, who has managed
reach the
ripe old age of 50, there have been a few opportunities
a^s0
and
reserves
mained,
income from railway
operations of
an
income
"stocks
Says 1948 presents deadly parallel,
cheap, but because of renewed fears and uncertain¬
probably false but
lerally accepted truism that
n
attains horse-sense at the
age
accrued
accrued
equipment
The
24,898,426
Company paid to other companies for
hire of equipment and use of
joint facilities
in excess of the
amount received
by it from
those sources ______
pessimism.
the
for materials,
dividends
and
$51,159,922
of
The
Security analyst points out lost opportunities for profitable accumu¬
lation of stocks in last tv/o
decades, merely because of unfounded
faking
the
v;
States
Members, New York Stock Exchange
him, through the purchase
to
to
Company
railroad
interest,
rents
In 1946
»
,„7w.
By H. BERTRAM SMITH
a
the
Reserve for depreciation
171,673,513
Leaving a balance from railroad
operations
Federal, state and local taxes required-
Deadly Parallel
ties, nobody wants them, except
of
wages
other
Taxes
$222,833,435 $212,041,109
was—__
for
are
good
rev¬
maintaining the property and of
THE STOCK MARKET TODAY AND
YESTER-YEAR
and stocks
$8,225,170
in
unadjusted
available
Company owed
yet
freight, passenger
operations
C
excess
867,568
for
necessary
______
of
operating the railroad
.
and
6,989,375
'
.
order of the Board,
In 1947
enue
The
daily capacity of 350 ,tons of newsprint.
This will be the
second newsprint plant in the
South, but
the first plant iri
the Southeast to manufacture
newsprint
from Southern
pine, more than 100,000 acres of timberland
having been purchased for this purpose.
Including
woodsmen, the Newsprint Company will employ around
2,000 persons.
;
;
' :
•; V,v
'
The iron and steel
industry in the South had its
largest volume of
production during the year.
Fears,
7,856,943
"
1
supplies,
Financial Results for the Year
Childersburg,
Smith &
1,338,450
hand fuel,
on
totaled
and
deeply appreciative
paper
Partner, Zuckerman,
16,950,994
and
Company—.
and
yet
Assets
The
SOUTHERN RAILWAY COMPANY
a
A
2,217,696
—$757,533,581 $749,308,411
assets
.
not
The
con¬
Alabama, by the Coosa River
Newsprint Company,
which it is
proposed to erect a $32,000,000 pulp and
mill, with
14,688,783
_
road and equipment
Deferred
newsprint production were
brightened during the year
by the purchase of 615
acres
6,660,000
16,906,479
Notes
companies
the
in
order
but
President.
The pulp
United
$5,005,74.
27,660,000
to
investments
,
pulp-board box plant, went in'o
operation
during the year, while others in the
territory
in
$31,672,213
21,000,000
and
Company
ERNEST E. NORRIS,
a
expect to go into
production in 1948.
Prospects for substantial increase
$36,677,954
cash
amounting
supplies
Operating
territory is continuing its
mills, one a pulp and paper
new
$8,132,611
debits, including items owed
to
Respectfully submitted, by
11,667,8$
$651,347,046
15,612,544
owed
Deferred
\
management is
work of the
personnel
11,667,851
—
$659,479,661
Company had
good
for
becoming in¬
industries.
of
had
railroad
other
it, and is fully cognizant of its
duty to
property, without
investment the- enterprise could
not have come
of
Georgia, Florida, Alabama,
Mississippi, Louisiana and
Texas, the principal producing State
being Mississippi,with a
a
dis¬
Government
keeping
and
example of
supply for
be
pay a fair relurn to the
owners of the
whose
1,215,205
rails, ties, bridge material and
Thus
diversified farming, the
production
tung nuts, from which is extracted
tung oil used in
the paint industry, is
reported as 66,700 tons in
1917,
compared with 16,350 tons in 1942
an increase of over
300%. Production of
tung nuts is confined to the States
of
to
______—
deposits
S.
Other
60,243,498
"MM",
delivery
upon
temporary
U.
.
,
Equip¬
Trustees,
Company
And
progress and
of
.
Investments
The
the
Company rededicates itself to its
mission,
adequately "to serve the South"; and it
reiterates its
desire to deal
fairly and kindly with the men and women
of
creasingly important as a source
tinuing and expanding number of
Total
The
work
of
and
"LL"
equipment
records.' with1
The
production of 28,000 tons in 1947.
The forests of the Southern
States are
by
bursed
Conclusion
the
•
Board
com¬
61,458,703
held
scientific
bonds
investments
proceeds
$18,585,261
had
affiliated
other
Trusts
'
at
mechanization
applied
-
...
at
ment
cotton, textile machinery, food
processing,
peanut oil and other
oil-bearing crops, and
stocks,
of
and
carried
as
or
Decrease
property
Company
in
notes
others
who
in
and
benefiting
fixed
the
panies
of the
Increase
$598,020,958 $579,435,697
addition
and
as
deep regret, the'death on
11, 1947, of their esteemed
colleague, Gerrish H.
Milliken.
v
territory are expanding their
diversified lines, notably in
dairying
more
raising of
vegetables.
growth
fundamental
other
investments
June
;
in
in
In
special
The
pickers
plant
of' both
and
cars
of
industrial
31,1946
investments
railroad tracks,
ter¬
facilities, shops, locomofreight and
passenger
tives,
colleges and uni¬
are
had
land,
minal
Unexpended
Southern agriculture and
industry
result
Company
in
On
December
31, 1947
The
many other lines of
practical usefulness. The scientists
of the
South are
developing processes which will mean
new uses for
the products of the soil and
of the mine.
Kentucky.
farming in the cotton growing States
is under¬
change. Past the experimental
stage, the first
cotton
active
connected with Southern
m
and
assembly-line production of mechanical
is scheduled for 1948
by a new
as
of
foundations financed by Southern
capital,
those
research
Tobacco and its manufacture
continue as a great indus¬
try in the territory; of the more than two
billion pounds
of tobacco produced in the United
States during
1947,
89.5% was grown in the States served
by Southern Rail¬
way System lines, and more than
90% of the cigarettes
made in the Country are
manufactured in the States of
Carolina, Virginia
On
December
being expanded.
was
number
wood, paint,
construction during the year.
Production in both of these
plants is expected to begin sometime
during 1948.
Similarly, the national production of
nylon will be
substantially increased when the
large plant now in
course of construction on one
of the
Company's lines in
Tennessee is completed.
.;
North
steam,
versities, and those operated
by instrumentalities
Federal Government.
rayon yarn
be
and
research
mills
in the cotton growing States.
plants in the
area, and the capacity of older
capital; and the continuing industrial
develop¬
ment is
bringing about a growing emphasis on
scientific
research.
Every sizable industry is interested in re¬
search, and there are a
dominant position in the
5,600,000 bales, or 67%. of the total consumption
by
SOUTHERN RAILWAY
COMPANY
Financial Position at the end of
the Year
The South's
economic development
is based primarily
on its
natural
resources, including its climate, its
labor,
and its
made to 112 previously existing plants.
The South has
power
plants, both hydro
assembly
and distribution of numerous commodities, and
additions
were
increased
industrial activity
throughout the
1947, Southern peacetime demand for
electric
rapidly. Construction was started on several
power grew
41
large warehouses were established for the
to
South in
new
13
ADVERTISEMENT
bomb,
might
I
corner,
year,
what
and
the
ignite
the
should
stall
a
longer—"this time it might
different."
How
dumb
'/•
can
a
man
be?
~
11
(1322)
THE COMMERCIAL
&
Thursday, March 25, 1948
FINANCIAL r CHRONICLE
Effect of Management on
Railroad Securities
By PATRICK B. McGINNIS*
Stock Exchange,
Members New York
Partner, McGinnis, Bampton & Sellger,
After
Missouri
describing railroad developments and method* of analysis since World War I, Mr. McG.nnis,
in reviewing 24
leading railroads, holds there seems to be unconscious desire of tailroad management
to spend all the
money they take in, so that net in come, derived from operating revenues, has declined
from 17%% in 1927 to 8.4% in 1947. Lays high operating ratio to increased car hire costs and in-,
creased payroll and other taxes* Contends a rail road's management has a lot to da with its relative
Pacific
securities have been attracting considerable
reflecting the filing of a number of proposed reor¬
ganization plans, and the start of Interstate Commerce Commission
hearings. The proposal getting the greatest attention, and presumably
having the greatest support, is i
*
*
that filed by Alleghany Corpora- 000 and total debt would be
$476,hcn.
Although
has 276,000. The fixed interest debt
Alleghany
fairly recently disposed of its en¬ would be $33,840,000 larger than
tire holdings of bonds in the sys¬ that originally
proposed by the
interest recently,
it
tem
i
<
still
the
The
holds
Missouri
sizable
a
Pacific
block
common.
plan
is an effort to salvage
equity for that stock.
same
The
was
plan
filed
by
modification
a
Alleghany
of
earlier
an
Commission
would
be
tween the
433,889
corporation and the in¬
group.
While it may
quarters there
in these
obviously go¬
ing to be serious objections to it
are
from other groups.
For one thing,
it is apparent that holders of the
New
Orleans,
first
Texas
&
Mexico
mortgage bonds will be dis¬
from
1,500,803
"A"
and
shares,
all
of
to
There
mission.
Preferred
dividend
five
Also, the serial S^s, secured by
Orleans, Texas & Mexico
slock, will hardly
be satisfied
New
with $500
bonds
in senior
and
4,/2% income
$1,029.37 in unsecured
any
and
lem"
far
roads
by
The
plan
1,
fixed
would
1943.
and
As of
be
effective
jjan. 1,
1948,
interest in
contingent
used
the
"new
all
not
are
all
only
what the
more
idea
of
had
hind
that
equipment
"railroad
than
we
back
in
we
problems"
since
that
the
they
roads
Patrick B. McGinnis
started
building
100 years ago.
over a
remember any stretch
good
rail¬
al
I can't
did when
as
4s.:dv^vy.!.■
of 10 .years
The
Depression
urtil the
back to the
beginning- of railroads
But the shock wasn't
the
bonds
another
—when
didn't have
in
also
financial "problem."
So don't let the fact
it is difficult to
of
fact,
set¬
how any
tlement of this claim can be made
see
Supreme Court rules on
inter-company claim of Mis¬
souri Pacific against New Orleans,
Texas & Mexico.
Arguments on
thitf
claim
heard
by
claim
the
is
nated
have
it
already
high
court.
disallowed
will
If
Missouri
the
subordi¬
or
naturally add
stantially to the
pledged collateral.
The
been
value
sub¬
the
first
Pacific
of
first mortgage 4s, and $650
senior income 4V2S.
The first
new
in
.mortgage allocation would be di¬
vided about equally between three
different series,
maturing at
vear
intervals.
cific
general
in
the
4s
and
4s
9 825
ferred.
The
junior,
The old
would
5V2S
would
preferred would
old
would
common
from
various
accorded
new
the
security
treatment
receive
they
stock.
receive
new common
one-fifth share of
Aside
10-
Pa¬
get $1,000
new common
half share of
the
Missouri
unsecured, income
shares of new pre¬
43.31 shares of
a
The
$5,600,000.
to
amount
There
would
be
accruals to
sinking funds bringing
requirements
well
above
total
$105 million.
As of the end of last
the three system companies
year
had
net
working
capital
$64 million.
of
and
refunding mortgage bonds would
get an average of $25 in cash, $730
in
would
while
;
R.
Page Mason With
Thayer, Baker & Go.
PHILADELPHIA, PA.—Thayer,
Baker &
Co., Investment Bankers,
Commercial Trust Building, Phil¬
adelphia,
that
R.
years
Pa.,
have ' announced
Page
well
Mason,
known in
for
many
New
York,
Philadelphia
and
Boston
invest¬
ment
has
become
associ¬
circles,
ated with them
as
registered
objections
groups
to
individually
million,
considerably
ferred
the
is
valued
common
Under the
plan the
new
at
pre¬
only $40 and
at $36 a share.
Alleghany plan, fixed
interest debt would
be
Page
resentative.
Mr.
Mason
Mason
merly with Allen & Co. and
recently
director
was
relations for
for¬
more
of
Luckhurst
public
Bonds
&
Co. in
City.
(Special
WEST
Howard
to
The
Financial
PALM
S.
Chronicle)
BEACH,
FLA.—
HuffmanJ has
Special Securities
ken Co., Guaranty Building.
was
formerly
with
He
Southeastern
With T.
(Special
RAILROAD STOCKS BONDS
Broad Street
New York 4, N. Y.
Telephone BOwling Green 9-6400
to
Nelson
The
DAYTONA
tor
A.
O'Rourke
Financial
Chronicle)
the "Street"
in
T.
Nelson
O'Rourke, Inc., 356 South Beach
Street.
anc
Pacific, the
the Union Pacific, and
O., these six do 40%. of
the railroad business, year in and
year out, in this country.
if ;
Last
year
these six railroads
look
in
$3,368,000,000 out of a
.otal Class I gross of $8 884,000,000.
Atchison,
the
&
B.
Analysis of
was
the
Railroad
Now, I expand the list a little
bit, but not up to the 131. I ex¬
panded those six railroads up to
railroad business.
24
col¬
I arrived at this
number, by taking those rail¬
roads that did at least
lions of
business
$100 mil¬
a
last year.
From
all my comments are
both in averages and
on,
1938.
confined,
totals, to
24
virtually
railroads
are
in
25
Companies
now
securities.
That's
when
railroads.
the
These
Atchison;
24
At¬
lantic
I
bonds,
trader
and
retrospect,
road
9
were
so-called
a
know that
to
study
j
was
railroad
that
traded
we
basis,
is
they
and
about
as
are
challenge
good
is.r
one
another.
as
not!
you
students,
old
to take the equipments
that were offered this week
and
tell me the amount of cash
de¬
the
challenge
tell
of
equipment
amortization
me
anyone
how
in the
long
Revenue Bureau
against
schedule;
or
Or, I
room
the
to
Internal
the Interstate
Commission allows a
railroad to depreciate a
Diesel; or
how much the
equipment
costs, if
you
have
to
pay
some
amortization out of "net
of
the
re¬
years
picture
waited
nine
rates;
credit collapsed
again, and hasn't
So
much since
there
are
in
now
and rates
the
are
are
so
railroad
that
five
time.
periods.
1948 where wages
again, to some
extent, equal. Now we are wait¬
ing for uncertainties; at least, a
war
if
you
are
are
problems.
;
\
The Effect of Management
-r
Railroad
■
looking
dollars
particular
at
all
that
prices for
reason:
those
the
I
keep
billions
railroads took
of
in
because
wages,
of
these
high
high prices for
material, or is it an apparent, per¬
haps unconscious desire, of about
50% -of
railroad
management
to
spend all the money they take in?
mean, has ever an analysis of
management
been
made?
Isn't
there something
apparently
I
with
wrong
50%
of
when
over a
duce
and
owners?
our
management
long period they pro¬
nothing to their
give
If
there
is,
of
course,
that's going to affect railroad
se¬
income"; curities, unfavorably.
*An address by Mr.
McGinnis at
the
tically
endless
depression;
and
1947, which is to some extent un¬
fair, because for the full year the
Interstate
was
still
ing
Commerce
that
a
In
in
Commission
little slow in recogniz¬
between
gap
and
rates
SV.V■
wages. ;
1927, these 24 railroads took
$4,300,000,000.
ment
controls
or
Now,
Manage¬
control
should
problems—maintenance
ment,
maintenance
and
There are in this
country 13 i
Class I railroads.
Now, if you start
of
equip¬
of
way.
Their operating ability is reflected
in
the
cost
of
transportation.
take
cost
last year.
They took in $8,884,000,000 last year—and they wind
up with "peanuts." I mean, is that
all
two
of
which was not the
of the depression or
Maintenance
on
Securities
chose the title of this address
one
year
was
peak
the best year, but we might say it
was a fair year
during the prac¬
road
I
foi
1937,
the
over
periods:
the amount spent for maintenance
going to study
securities, assume that
going to have railroad
you
railroad
boom;
once
economy.
So
before
worst
Commission
recovered
widely
different
year
1927, which
The
industry; the Interstate Com¬
result
new,
railroad
three
the
the great spread be¬
came
merce1
railroad
mortgage bonds in 1926 to 1930?
Then you knew the yields and the
maturities. You are trading equip¬
ment bonds of railroads
today on
somewhat the same
the
at
months to raise
We
we
way
06 1945,
Then
its sell¬
you
them
tween wages and rates in the rail¬
-
on
refund
or
looked wonderful.
1922.
BEACH, FLA.—Vic¬
Lundy is with
does
Then
Southern
24, doing in 1947, 76% of all the
came
coupons, so that they
established their credit.
At
end
en¬
Commerce
Securities Corp.
Central
management
of
preciation
been
great
lower
concerned,
time, earn¬
yield
sue
added to the staff of Wm. S. Bee-
1-1063
were
other words, in 1928 if
.vou
the maturity and the
But
New York
so
securities
period was
railroad credit
enough bonds
railroad knowledge in 1928
the fact that I knew
the
manner
was
-
great.
was
next
of
road
concerned
securities, but do you realize to¬
day that you're trading railroad
equipments in somewhat the same
$227,348,-
Guaranteed Stocks
Teletype NY
to
came
railroad
I
25
stocks
very prosperous
foolish
a
Joins Wm, S. Beeken Staff
GUARANTEED
were
ings were good and railroads
joyed high credit.
In
R.
Period
impossible to find buyers for rail¬
rail¬
student of railroad bond values,
roughly
only about $59
that originally set
up by the Commission.
However,
the
actual
proposed
increase
in capitalization is
In the
railroad
was a
railroad
or
railroad
From 1938 to 1940 it
and, generally speaking, so far as
knew
above
greater.
contemporary
railroad bonds
as
cn
mon at $100 a
share. Press releases
point to the fact that the new pro¬
shock
always
York
>
In
capitalization of $560,480,224, tak¬
ing the no-par "A" and "B" com¬
$619
the
tically knew the yield
ing price,
old
Interstate
Commerce
Commission plan called for a total
million
The
on
are
v"vr
.
again to high prices.
lapse
every bond' on. the
"Pink Sheet," every railroad bond
the Stock Exchange, and
prac¬
of
The
is
in
maturity
the
1937
hack
—
the
and
year,
business.
does about
Coast
Line; Baltimore &
Ohio; C. & O.; St. Paul; Chicago
started
going
around
road problem.
making Northwestern; Rock Island; C. B.
~
■
speeches.
I toured this country Q; Erie; Great Northern; Illinois
It was the period 1916 to 1922.
many/many times trying to find Central;- Louisville &
Nashville;
As you all know, the government
buyers for railroad reorganization Missouri Pacific; New York Cen¬
took over the railroads
during the securities.
tral; New Haven; Northern Paci¬
war and
gave them back to their
Then the war came
along, and fic; Norfolk & Western; Pennsyl¬
private owners in terrible shape,
produced a considerable amount vania; Friscp;
Reading; Seaoard;
after the war.
In addition,
the of income for the
railroads.
Al¬ Southern
Pacific; Southern Rail¬
railroads suffered from the money
most
all
of the
reorganizations way and Union Pacific.
panic in 1920 and 1921.
^ . /
went through.
Most of the "bor¬
I decided that it might be well
The period 1922 to
1930, as far derlines"
were
able
to
retire to
examine
was
it is pretty
capitalization
railroad
a
World War I presented the first
phase
My
well agreed
among railroad analysts that the
plan is, in its entirety, impractical."
posed
we
sion,
"problem"
a
rep-
receive
"Street," or
knowledge in reading
my
y;.V.
The next period was the depres¬
the
that they
discourage you
in further study of the situation.
are
I
common.
personal his¬
my
is
the
comes
after
the
of
used to say
4s were ai
Norfolk & Western gener¬
from
matter
a
be¬
"—-
of the business.
New
general
roughly $25 in cash to be paid to
first
and
refunding
mortgage
As
value
security
we
—going back in
tory to 1922 in
4s.
Pennsylvania
1928, and seriously, thai
Island
Rock
day
ana
walkin?
and looking like
look."
You
have
nc
the aggregate amount of $97,820,000
would
have
accrued.
The
income
"yield
the
you're
when
that
street
the- "new
are con-
is
know
you
down .the
and
alike
"
year
40%
10%.
maturity"
have
women
country,
about
close to 9%
so
d,
all
adopting the "new look," it's
thing to do. I am trying to
tell you that railroad equipments
rail-
c e r n e
look,"
do
the
"prob¬
as
this
in
"sound facetious, but it is
~
study the problem in a little bit
more
general way. Six railroads
are
hear that
you
such wide increase in fixed
contingent interest charges.
Jan.
railroad
word
more
may
like
problem. If
only about $700,000. It is hardly
likely that the ICC would allow
as
I
phases of
the
important, how
equipment is neces¬
more
sary.
securities
re¬
targe system blanket mortgage
that proposed in the plan.
much
are
in my opinion
Under the Alleghany plan fixed
charges would amount to $8,773,C00, just about $1,500,000 larger
than those of the ICC plan. Con¬
tingent interest would be $10,820,000, or nearly $3,500,000 high¬
er than contemplated by the Com¬
quirements would be reduced
~~
even
or,
securities.
2,-
inclined to accept a part of such a
his:ory
rary
class
one
*
asking your President tonight
GI group getting together and
a
of railroad
shares
"B")
was
result of
$57,717,000
($100
par)
to
$43,363,000 ($1 par but taken at
$40) while common would be in¬
(combined
leading to nation-
as,
'/
about this club. I find that it was formed as a
studying the securities business and its allied
problems; and I think it might be well to relate to you my conception of the contempo¬
debt
$123,593,000.
from
creased
stitutional
total
by
I
stockholders
alized railroads.
v
Preferred stock would be reduced
proposal, not presented officially,
represented as a compromise be¬
Lave considerable support
while
upped
financial position, and decries withholding of divi l~nd oaymenis to
the
and
transportation
large share of rail¬
gross.
Simply
spends
'
because
lot of
a
railroad
main¬
tenance, doesn't necessarily mean
that the railroad is spending it
economically. The tendency is to
in
spend
nue.
a
money
relation
011
togross
reve¬
Good management cap
money more
spend
efficiently than bad
management. Likewise, the make¬
of
the
train, the number of
carries, the number, of
miles, etc. have a lot to do
with transportation
efficiency^
up
tons
it
train
The
"net
railway operating in¬
come" is the
operating
amount left after
expenses,
taxes
debit hire of equipment, and
facilities.
take in
so
all
and
joint
As you know, railroads
much money, then have
operating and transportation ex¬
penses, and general expenses. The
ratio
of
operating expenses to
gross revenues is called "the oper¬
ating ratio." It is used as a test.
meeting of to study them all, you will
get It shouldn't be used as conclusive¬
the Boston Investment
Club, Bos¬ discouraged. I don't
study all of ly as it is, because it does not inton, Mass., March 16, 1948.
them.
I break it
down, so I can
(Continued on page 38)
the
regular
monthly
Number 4684
167
Volume
THE COMMERCIAL
The Inflation Tide
Going Out!
price rise due to
rronetarv
(1323)
My are more people achieving
Member Graduate Faculty, New School for Social
Research
Political economist maintains postwar inflationary tendencies
which
received new impetus in second half of 1947, are now
decisively
abating. - Cites (1) termination ofi reconversion
activities, which is
bringing private investment, plant construction, and
inventories
closer to rates of personal and business*
savings; and (2) d-cline
of foreign demand financed by American
subsidies.
An inflation is a substantial
FINANCIAL CHRONICLE
'■mm-.
By HANS NEISSER
•
&
MORE SECURITY
through
nmn
which typically, though not inevitably, creates a
further mice
rise. In this sense we have lived in an
inflationary state since ion
ihf*
and particularly in the years alter the war.
A
1
And yet the 'A5m'
economic
policy
sion
m
■
the
of
ernment
been
a
Gov¬
has
policy
nent.
huge
apt rather to
further
than
by
in
take
to
are
end
and
near
shall
have
Hans
unemploy¬
postwar
acter
we
from
the
central
times
hyper-inflation
the
If these
might fully
European
control
of
not
the
of
deficit
rationing.
inflation which
war
since
1945
ing Americans,
experiencing
now;
there
been independent forces at
The
had
and
tion; the subsequent
have
pen
work.
system in which the money
credit
conti¬
volume
is
fixed, they
Continued
on
page
and
u
attitude
towards
reserve at
gap" in the balance of
payments has
in the
would take years
at once
:V
natureof
a
force ma¬
jeure against
•which
11
is
of
this respect, life insurance
/
bargain protection for the future.
fatal¬
the
The
ably,
for
it
Dr. Paul
Einzif
responsibility for the dollar
and its
threatening conse*
Quences. And the
leading mem¬
bers of the
Opposition
competent, ,ineffioent
credit
are
too in-;
and indolent
serious attempt to dis¬
this attitude of
irrespon¬
a
sible fatalism.
■
■
A
tive
Members
known
es
as
of
the Active
Committee,
omissions
of
Parliament
Backbench¬
to make good the
the
so-called
"Sha¬
dow-Cabinet" consisting of former
conservative ; Ministers, a body
which
be
may
the
More
following
Government's
A
in
facts
owards the .Government's
pointing
respon¬
solve the inflation
to
are
oper¬
more
this
problem,
first of all deal with this excessive
of money
in
we
supply
banking system.
our
It is useless to try to control
rationing,
when the
bank
prices through
through increased production,
or
creation of money
credit
goes
on
Inflation
source
be
if enough
interest and
It is
like
hand while the other hand
one
can
in the form of
uncontrolled.
pours1 on additional fuel.
#
,
restrained'at its
primary
citizens, motivated by self-
recognition'of the need for
pre¬
serving the economic strength of the nation,
known to those who represent them in
THOMAS I.
policies
Congress.
PARKINSON, President
5—SEND FOR THIS FREE BROCHURE!—i
I
^
,
helping fami¬
This
The
is
annual report
security since 1859.
people purchased
total
force
failure
or
freeze
something like
-Vv,-v;
Unjustified sacrifices in the
of
direct
dollar
losses
interested in
protection through
dress
of
now
your
Equitable Society's I
for' 1947. If you are I
receiving
request
a
copy,
393
to
ad- I
Seventh |
resources
I
of The
Equitable Society increased
use
,
:
Assets
v-::;V
:
.
.•
.$
(including $5,926,627 on
deposit with public authorities)
Bonds....
i.....
v
Vs
appears; to
I........
........
!
Stocks
i
I
••
•
*
#
»•!
I
Common Stocks.
ed
Real Estate.
large extent for the pur¬
chase of exportable goods which
very
otherwise be
against
currencies.
It
available for
payment in hard
is true, no export
license is required
(Continued
is discouraged
on page
44)
of this
Is being mailed
report
each Equitable
to
.
%
•
.
■
J homes I. 1 arkinson, president
1 l '*
,
Reserves, Other Liabilities and Surplus
■ ■■
„137,561,7;55
-
Reserves for
Policy and Contract
Liabilities.
2,270,114,161
Loans
on
536,779,788
74,859,971
Reserve for Taxes
7,499,000
Miscellaneous Liabilities
8,533,865
•
117,560,786
Society's Policies
and
Rentals
Total Admitted Assets
In accordance with the
'
stocks
for
1948
Dividends
to
Policyholders.................
Total Reserves and Other
56,001,338
y
Liabilities
$4,265,096,877
are
Surplus Funds:
33,429,134
Due
Accrued and Other Assets
'
Provision
54,698,145
Premiums Receivable
Interest
25,384,623
*
.$4,118,202,703
Premiums Paid in Advance
3,028,912
Mortgage Loans.
would
A copy
policyholder.
Preferred and Guaranteed
be
sterling balances can be used
York Stale
1,298,974,268
•
Other Bonds......
;
high.
United States Government
Loopholes in the exchange
Government
j-
■
sterling for multilat¬
'
a new
DECEMBER 31, 1947
; >
„■
I
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
oblivious of the fact that unfund¬
export
I
I
A ddress:.
City and State:.
A Mutual Company incorporated under the Laws of Neu-
control.
a
York. |
'
exports
eral purposes.
to
New
1,
protection, the
$322,400,000 to $4,505,000,000,
(4) Unjustifiable sacrifices for
sake of enabling other coun¬
The
York
I
safeguards the Equitable family of
In line with this increase in
the
f (5)
New
Name:.
$11,944,000,000 of insurance in
Bonds
to
Avenue,
policyholders.
British goods.-'
tries
before. New
or
earned
interest
lies build
sum¬
JJ. Passive
arouse
and their beneficiaries—has been
The
licenses are granted for export
the nickname
Frontbenchers' Com¬ against payment in unfunded ster¬
mittee."
Determined efforts are ling balances, and the production
made by a
goods for which no export
few backbenchers1 to of
has
non-profit institution
Cash.
;
praiseworthy effort'is made,,
however, by a group of Conserva¬
we
make their demand for sound
monetary
solely in the interests of its policyholders
leading-' to
dollar losses, for the sake of re¬
gaining ; traditional markets for
drain
to make
ated
in
*
unrequited
} m p 1 i e s an
■nimuni t y
from
;
facts
under
fund
(3)
form
admir¬
If
Equitable Life Assurance Society of the
United States—a
everyone.
of inflation
source
$1,170,000,000.
These
ments.
Government's
books
paid for today is
EQUITABLE FAMILY GROWS
(2) Unduly liberal releases of
sterling for conversion or for the
financing of unrequited exports in
the
provisional funding
agree¬
lit-
suits
normal purchasing power. In
a more
:
half of the old sterling balances of
about £3,500,000,000.
avail,
This
ism
time when the dollar has
of
enemy
primary
to
productivity.
credit in our commercial banking system,
reflecting unsound national monetary policies.
come,'
insurance issued amounted to
to
increase
e
you or your
policy will
ever
headings:
(1) The
to
relatively
a
your
payments repre-
consumption into
investment, where they help
fighting fire with
sibility for aggravating the dollar
imports
exports
ac¬
of security that is provided
drain.
the
exertions
and
It
life insurance policy.
a
likelihood, at
regained
way.
of self-denial and saving to
Moreover, the benefits which
in all
drain
pace.
through
other
Equitable policies last year than
marized
Government's
cut
alarming
an
spendable dollars
your
family will receive from
to be regarded as some-
come
thing
of
cumulate the amount
42)
dollar
of
from
non-
country is the excessive supply of money and
dollar been less for
buy. What would hap¬
that can't be obtained in
any
Contends
the
The
security
are
loopholes in British exchange control.
LONDON, ENG.—There is a tendency among British politicians
experts to adopt a fatalistic
£ 3s depleting Britain's gold
your
With your very first premium
you receive
immediate protection—a
guarantee of
there
.
diverted
increase the nation's industrial
must
V'/
purposes.
channels
moment
Never has the
taxes.
you
you put more
funds
sent
,
things
ana
;,'V- By PAUL EINZIG
Dr. Einzig notes fatalistic attitude of British
toward continuous
dollar drain and blames liberal
policyc of government officials in
allow-ng sterling to be exchanged: into dollars.' Says old sterling
balances should be funded and soft
currency countries should not
be allowed to use
inflationary, since premium
in life insurance?
:
sterling for multilateral
if
of
power
of the
are,
How British Dollars Are Wasted
live
think¬
period of inflation—of
a
to
'
INFLATION
purchase life insurance is
to
Inflation is the
living in
are
purchasing
most
are
tion cannot be
explained in terms
of rational
theory alone; wages
are not
any longer determined in
a
a
Money used
of their
more
purchased, amounted
FIGHTING
year.
we now
so many
investing
are
high prices and high
.infla¬
wage
You
■
created the profit infla¬
war
why
were
$280,685,000.
fact
one
in terms of yourself:
have
and
reasons
dollars in life insurance. Think for
But it
we
times, this
to fulfill the purposes
upon
f°r which they
account for the record volume of
provide additional
only the delayed effect of
experienced
normal
But the conditions under which
mitigated by
price
is
have learned to
fear
terrible* experience of
whole
years
some
this
—
were
payments last year from policies
called
were
us are
Equitable life insurance purchased last
The infla¬
of
measures
char¬
threatens the economic life of al¬
most
times.
war
particularly
be
Europe
after
the
first
War,
or
which
today
World
a
econ¬
been for
inflation, it is certainly
the
SECURITYisfor goal all of
our families and for that
Benefit
ourselves
striving to attain.
huge government
deficit of
state of equilibrium?
of
of
tionary effect
fol¬
lowed by a breakdown as in
1921,
or will the American
economy set¬
tle down to a more
harmonious
not
end
the
and
The fact that the
prophets
If this is
the
These forces have
grown out of
first
inflationary step repre¬
sented by the
Neisser
soon
ever, not mislead us. It is a serious
problem:
Will
the
inflationary
•
since
by the Treasury, the Ameri¬
tary authorities.
we
of
exercised
ever
pres¬
omy, largely outside of the
control
of the government
and the mone¬
is
of depression have been
wrong in
the preceding
years, should, how¬
boom
deflationary
monetary expansion in the
depression
ment.
than
economy still shows all the
symptoms of an
inflation, we have
to look for
other strong forces of
there, but
they will not
last
long.
Their
a
can
m s—
they
deficit,
this
almost two years
its place has been
taken
government surplus.
Since
spite of the
1946
inflationary
sym p
as
inflations in a
government
sure
the
seriously
had its
origin
scale
and
ago
One
not
did
large
deticit vanished
stifle
to
inflation.
Though it
nave most
-
Contingency Reserve for Group
Life Insurance.............
27,440,181
Unassigned Funds (Surplus)..
and
$4,504,971,753
Total Reserves
7,129,000
232,745,876
....$4,504,971,753
requirementsof law, all bonds subject to amortization are stated at their amortized value, and all other bonds and
valued at the market quotations furnished by the National Association of Insurance Commissioners.
15
16
(1324)
With
THE COMMERCIAL
Farwell
has
ILL. —Francis
been
added
to
Farwell, Chapman
the
C.
impossible to accom¬
plish with large amounts of other
securities
ment
Time
For
upon
investment dealer,
NATIONAL
RESEARCH
120
request from
or
from
SECURITIES
&
CORPORATION
BROADWAY, NEW YORK 5, N. Y.
the
HENRY
will
we
_
-
—
VM
11^
V
practically impossible
most
cogent
investor
in.
pick the exact bottom
ket
to
make
though there
your investment deafer
or
hundred
a
for
who
of the
ran
that
common
would
stocks
sell
2,
PA.
at
some
three
or
an
at
However, in order
Fundamental
"dollar
is essential to invest in
that
follows
the
security that is
a
the
as
market
diversified
the
shares
stock
common
contain
to
may
asset
a
Prospectus from your Investment Dealer or
a
covenant
that
is
hard
to
beat.
upon
providing for
demand,
these
be converted into cash at
net
value
very
(in a few cases, less
small fee) as of the date
nized securities dealer in
precisely
the same manner
employed in dis-
rep-
esentatives and dealer
organiza¬
tion have hung up a sales
record
with
Affiliated
Fund
in
recent
vears
com¬
their
hey are tendered. This may be
accomplished through any recog¬
Shoot At
Lord, Abbett, its wholesale
repurchase
at
liquidating
Situation critical; restore draft.
^
must
open-end
investment
com¬
panies with which we are familiar
Truman's Speech in Four Words
Record
1940 provides that these
all
mu¬
oosing of
ketable
The
Market Seen Low?
Things Seemed Im¬
portant," issued by Selected In¬
vestments Company
of Chicago,
the
following
"Market
any
other readily
stocks
or
mar¬
bonds.
The
superior feature to be emphasized
is the ability to obtain
promptly
IOS
NEW YORK
ANC.Illt
on
\V
f
-
*
\
-
.,o
.
•
V-
•
ruir.rtr.
? \,vv> v.-1 A vv, V. • i •.'s-.Va'-
^|
ill!
THE LORDABBETl GROUP
.
,
lit
the
October
1946
low,
this
and
time the Dow-Jones Rails not
only
held above their May 1947
low,
but also held above the December
1947 low, which was higher than
May. Also noteworthy:
stand 'on the banks of
filled with ducks, and
them a crust of bread, not
you
stream,
within
all
but
one
sight
that crust
struggle to get
ward;
the
lasted
only 22
12
bear
years
1919-21
bear
months;
markets
of
market
9
the
the
of
past
ended in 22 months
50
less.
or
Average duration of the 12 bear
markets
was
you
as
you
walk
However, when all your
have gone and you stop
crusts
the ducks
any more,
attention
more
to
in the market today.
tells
Of INVESTMENT COMPANIES
Prospectus
such
and
that
else
and
beheves
the
is
tells
someone
that
he
such
and
case
someone
tells some-;
person
else, etel
It then
spreads
like wildfire that someone "who
one
should
the know"
in
be
with
the ,result
loses
a
said- it,?,
market
There is
entire
the
mistic
that the
certain amount of public
following.
country
remarks
no place in
where pessi¬
travel
can
faster
than in Wall Street.
Is
pessimism being overdone in
Wall
Street
today?^ There is but
little doubt
about it, and, unfor¬
within the industry it¬
self, in this writer's opinion.
In
face of all this, however, the mar¬
ket seems to be acting very well
by refusing to break away from
tunately,
resistance
established
of
view
points
the
foreign situation
bearish predictions mentioned
and
Lord, Abbett has issued a new
folder
called
"Opportunities in
time
Preferred Stocks."
ignore
the
stocks
are
in
letters.
market
the
public
At
the
same
to entire y
seem
fact
that many good
selling for only two
to five times earnings. Only a few
years
"The
request
end
investment
Boston."
Lord, Abbett & Co.
incorporated
—
& Co. of Bos¬
a
new
open-
The
G.
Trust
Peabody
if a stock was selling
ago,
ten times earnings, it was consid¬
ered
exceedingly attractive.
^
will
be
dis¬
Chase, Inc.,
Gardner
will
Frederick
Los Angeles
a very
Macaulay,
eco¬
nomics adviser to National Securi¬
ties & Research Corp.,
was
and business
country
in
this
writer's
opinion,. ]ust as
much, if not more, pessimism m
Wall
Street
Street's
"PUSH
is
there
as
OUT
THE
outside-
should
motto
BLUES
GET INTO THE BLACK."
recently
Dr.
Macaulay,
been bearish since
who
has
July 1946,
now
was
beginning
to
show
certain lines.
in
With Leedy,
(Special
to
The
ORLANDO,
Wheeler
Wheeler Co.
Chronicle)
Financial
FLA.—Howard
is
Wheeler & Alleman, Inc.,
IN
Florida
BONDS
(Series B1-B2-B3-B4)
yeorrjf*
PREFERRED STOCKS
PUTNAM
COMMON STOCKS
(Series S1-S2-S3-S4)
INVESTORS MUTUAL,
INC.
.
FUND
Dividend Notice
The
Board
of
Directors
of
Investors
or
Mutual,
Inc.
has
declared
a
quarterly
dividend of twelve cents per share pay¬
Tke
Keystone Company
of Boston
able
Prospectus
your
50
Congress Street
Boston 9, Massachusetts
THE
may
local investment dealer,
PARKER
on
be obtained from
Prospectus upon request
on
April
record
as
..
21,
of
1948,
March
to shareholders
31,
1948.
E. E. CRABB, President
or
CORPORATION
ONE COURT STREET. BOSTON
8, MASS.
Principal Underwriter and
Putnam
50
Fund
Distributor*, Inc.
State St., Boston
Investment Manager
INVESTORS SYNDICATE
Minneapolis, Minnesofa
J-
Leedy,
with
now
Bank Building.
(Series K1-K2)
be:
AND
reversed his position on the stock
that
SHARES OF CAPITAL STOCK OF
at record rates
booming all over tne
with the stock market
production
Wall
read¬
believes that the defense program
Will more than take up the slack
INVESTMENT FUNDS
he remember when industrial
can
entirely ignoring it. There is also,
Securities & Research
Views,"
Never, in this writer's opinion,
be
able institutional type piece.
market.
New Orleans
to
company
by John P.
8W-
.
Chicago
Aviation
"Shareholders' Trust of
as
tributed
Dr.
—-
in
interesting reading.:,.
Ilarriman Ripley
ton are launching
of "National
t
Look'
Corp. just published its first issue
Ti
New York
'New
National
upon
Certificates of Participation in
Prospectus from
local investment dealer
A
A pessimist
that
someone
that
in
be Chairman of its board.
Custodian
your
pay
you.
somewhat similar situation exists
its
only 19 months."
Notes
will
and will
follow
along.
we are now
in the twenty-second month since
the stock market started down¬
while
Stock Fund
mm
investing their capital
If
,
a
'
^
| Union Preferred
,..;f
5
note in the latest down¬
some
known
Funds
been
are
makes
S. N=Y.
eystone
have
(and probably most are) bearish
But
tht'O»»O*AH0
STWIH
technicians
There
to
in
too
Prospects" issued ! by Hare's Ltd.
following dollar sales figures
HUGHW. LONG & CO.
48 WALL
comment is made:
seems
happening
thoughts.
no
"These
ten¬
thought
pessimists with exaggerated
throwing
shares) offer the optimum ward stock price dive, the Dowliquidity.
The
Investment Jones Industrials for the second
Company Act passed by Congress time so far held slightly • above
liquidating value with¬
in seven days after
they are ten¬
dered. However, as the shares of
tual fund.
A
Optimum in Liquidity
shares
of
a
That
is
Wall Street today.
even
push
what
in
,
in
certain to fol¬
as
But American
labor leaders today might
Has
panies
a
Sound economics in 1856—sound
of life "
about
throw
classes suffer."
(trust
sure
security
market,
both
There is no single
down and* up.
low
Investors Inc.
to make
prospers;
good thing too far, if they haven'
<
be
"the
as
exaggerate
to
the evils
many
always be. found that
high, the country
when they are low, all
already.
in
ideal time
averaging" works, it
the
of all articles,
consumers
"pessimism"
dency
evil
economics in 1948.
Not
Webster's dictionary defines the
word
when wages are
Congratulations,
Co., Atlanta, recently wrote in
"The Southern Banker" in
part
as
follows: "Shares of. Open-end
Mutual Investment Companies
averaging."
that
pe¬
Harry.
or
market ignoring business boom.
it will
and
Street today,
Wall
within, and is not shared on out¬
side. Sees for first time stock
1948
vs.
pessimism is being
argues
and this pessimism comes from
Ninety-two years ago, in 1856,
Robert Owen, the famous English
economist, wrote as follows:
because of their numbers, are
1948
same
1856
greatest
Howard S. McNair of Courts &
Thus the present
years.
and
The
above present levels
time during the next two
would appear to be
to start "dollar
year!
these
make
available to the small investor."
In
prices well
PHILADELPHIA
ahead of the
last
of
Writer
overdone in
units low in cost is to make them
but air.
predict
will
months
initial value at any
The
inclination
to
The
largest tonnage item in
making steel is not iron or coal
mar¬
purchases even
tens of thousands
100
323%
Believe It
will
day awaiting that buying» point.
Furthermore, we expect that 99
of
the first two
portfolio
a
be given an
level desired.
ought to be more
dreaded by a manufacturer than
low wages of labor—the laborers,
•
Associated with Ward & Co.,
New York City
of securities and may
"No
15,300,000
Leon
of investors with
surplus cash to¬
economists
2,200,000
3,500,000
8,600,000
—
riod
his
are
$1,500,000
Furthermore, according to a re¬
Lord, Abbett bulletin, sales
cent
comes
There are many
people today
who think that the stock market
will see lower levels over the
next
few months, but there is not one
prospectus from
1943
.
to build up an estate
under pres¬
ent tax laws.
works, provided,
k MUM INVESTMENT FUND
fractional interests in
C. HAFF
By WHITMAN
prices for trust shares
bearing on their quality.
shares
merely represent
no
These
Averaging"
'
.
of course, that the market
back again.
established 1928
have
define
argument in
favor of "dollar
averaging" is that
the lower the market
goes, the
better the plan
FUND
194756
Start "Dollar
to
uninitiated,
Wall Stieet
Govern¬
S.
U.
except
bonds.
"Low unit
HUNT
"dollar averaging" as the
regular investment of the same
amount of
money, preferably month¬
ly, in the same security. Such a
program, if carried on for a period
of years, enables the
investor to make his
largest purchases, as meas¬
ured by the number of
shares he<£
acquires, when the market is low,
"Affiliated," a common stock fund
and his smallest
purchases when with
leverage, speak for themthe market is
high. Dollar aver- selves:
aging also encourages thrift as it
Sales of
necessitates steady
saving, without
Year:
Affiliated Fund
which it is
The
WELLINGTON
Pessimistic
ficult if not
By
Prospectus
unit price for, any num¬
This would be dif¬
same
ber of shares.
& Co.,
TRUST FUNDS
Thursday, March 25, 1948
CHRONICLE
the
208 South La Salle
Street, mem¬
bers of the New York
and Chi¬
cago Stock Exchanges.
your
FINANCIAL
Farwell, Chapman
CHICAGO,
staff of
&
Number 4684
167
Volume
THE
COMMERCIAL
Chairman of Committee on Eurooe of tk. it
International Chamber of Commerce, he sets fm-fk
of
tial to success
,
(1) soeed-
program:
aid; and (3) skill „f
C>\
e
Economic Re¬
covery,
with
special
referto the
ence
Senate Eco¬
nomic
Coop
eration
11
a
of
Bill, to
members
calls
for
can
to
high
other
govern¬
on
"2.
must
i?" ,o£ America,
committees report on
of
two
;
•;
ment officials
-me
of
Eu¬
barriers
promptly. In others,
circumstances may post¬
attainment
The
of
currencies
stabilized
freely
rates.
tion
this
ob¬
of
and
Europe
must
be
interchangeable
as
trade
States
To
loans
proper
tion
and
time.
free
exchanges
are
realistic
necessary
Until
at
stabiliza¬
convertibility
of
achieved the recip¬
ient countries will not be
able to
and
build up their external trade. As
in
coun¬
the
of
case
the
removal
of
the
Bill
relating to
roving ambassador.
convertibility of curren¬
cies cannot be realized all
at once.
called
Considerably
lation to the
however
more
progress
can
be
Administrator
the
David
Gen.
ment
"These
two
unity
barriers
vertible
to
elements
the
—
trade
of
eco¬
reduction
and
of stable and
the
ican
of
currencies—must,
Joins
con¬
be¬
we
S.
has
become
He
& Co.,
provisions of Section
was
formerly with
deciding
succeed
will
factors
Hornblower & Weeks.
on
which
whether the
(1)
are
the
ERP
ts
speed
with which the
Program gets into
operation, (2) the extent to which
Europe helps itself, and (3) the
skill with which the United States
its
administers
part
of
the
pro¬
gram."
While
expressing
approval
of
I. I ON
both relief and recovery provisions
of the Bill, the committee pointed
out that ERP is not
a
enjoy the prin¬
individual liberty, free
BALANCE SHEET- DECEMBER 31, 1947
institutions and genuine indepen¬
dence it needs political as well as
ASSETS
security," says the re¬
port. "Europe and the rest of the
must
they
have
confidence
devote
can
their
Cash
.
of
energies
is
Lea*
indispensable
sided
one,
attack
producing
the
on
decent
a
problem
port to the
trade
disruption of* normal
East
centers
culture
West
in
the
side
dition
the
Russia
West
the
and
struggle exists, and that
to hold
(lower
a
we
until
the
to
way
East
cost
and supplies
(cost
or
and
Not
Solve
in
succeeds
AND
$16,712,993.87
$
\
for depreciation,
Prepaid rental
Prepaid
made
from
possible,
of
full dis¬
European production
degree
tial
for
of
see
only
it,
by
the
economic
the
fund
payment
one
in¬
cluded in current liabilities
450,000.00
5,ISO,000.00
RESERVES FOR CONTINGENCIES
82,021.36
Capital stock—
or
par
v'"*■
'•
value:
»;
Sharon
Authorized
on
taxes
1,170,355
20,663,888.26
and
$12,444,91 1.69
1,220
24,399.60
1,171,575
leased properties... $
insurance,
3,000,000
Reserved fur issue
$12,469,31 1.29
919,367.51
other
449,990.03
rentals
Will
an
Total Aaaeta
1,481,843.55
112,486.01
$39,348,196.40
*
NOTE: Under the terms of the
is not available for
Earned surplus
(see note)
14,263,293.73
Total Liabilities
26,732,605.02
$39,348,196.40
Indenture securing the 3)4% Sinking Fund
success
unity
of
For llie
years
ended December 31st:
1947
Amount
'
profit before capital extinguishments
Net income after
*
plan
$1 5,044,767.17
and taxes on income,
Amount
'
i...
1
3,965,779.08
outstanding at the end of the year—194?, 1,170,355 (after 2 for 1 stock split July 10, 1947);
,
December 31, 1947, the Company had no subsidiares, the
The income for the current year
2,022,026.00
7,991,287.33
share are based on the number of shares
3,238,408.62
3,621,294.73
and State taxes on income
v,'.
Per Share*
$9,226,213.70
3,432,185.11
all charges
The amounts per
1946, 585,157.
1946
Per Share*
■
extinguishments.
Provision for Federal
1947.
essen¬
the
$2,210,340.64 of the earned surplus at December 31, 1947,
CONDENSED EARNINGS STATEMENT
NOTE: At
minimum
Debentures Due 1959,
dividend.
eco¬
nomic unification of
Europe.
we
$ 7,383,570.02
>
$39,455,169.30
de¬
18,791,281.04
Recovery
increasing
investments
opinion the problem
solved
by sinking
Issued and outstanding.-,
in
and without discrimination. In our
of
,,,«,
$ 5,600,000.00
Leas—Bonds to be retired within
former wholly-owned subsidiary having been merged with the Company
is represented on a consolidated basis.
•
450,000.00
jjq % Sinking Fund Debentures, Due
f
DEFERRED CHARGES:
Net
"As
489,470.72
133,665.70
pletion and amortization
Provision for capital
tribution
•
■:£
CAPITAL STOCK AND SURPLUS:
355,805.02
and advances
Property, plant and equipment (cost).
each other and in the rest of the
be
A
ADVANCES:
recipient countries
sell their production among
be
226,348.75
.
Leas—Reserves
world.
can
5,717,545.97
The
must
2,707,982.57
:v
/
1959
1,723,398.48
substantially the industrial ca¬
pacity of the recipient nations," it
says, "there is still the problem of
moving the goods tc the con¬
Private
'
•
Problems
"Even if the European
sumers;
*'
year
Without nominal
West
creased production alone will not
solve Europe's economic problems.
Program
\
con¬
life of officer*
FIXED ASSETS:
is
The report emphasized that in¬
abroad
3
Other deferred charges
Increased Production Alone
'f '
sinking fund payment due
LONG-TERM DEBT:
or
value)
on
.
1,969,330.98
230,225.02
'y Other investments
want
together
live
one
3,927,763.15
89,212.27
of
„
2,002,393.00
(Cost)
peace."
must
less)
Security investments
traditional friends on
our
side
find
or
products (cost).
INVESTMENTS
insoluble
and
must'
inevitably
lead to war. We do say that the
our
(market
;
1,705,379.22
Total Current Aaseta
the minds and
allegiances of men.
We do not say that the struggle
between
j
4
year
the
of
ideological struggle
going on for the control of
now
$
Tax
■
Funded debt
within
Cash value of insurance
trade
Western
of
on
*
•'
West,
and
I
Total Current Liabilities
Merchandise
Material
Treasury
Savings Notes (redemption value).
»
150,000.00
States
•
notes
(at market)
Ammonia
essential for the United States to
do everything possible to hold the
and
for doubtful
309,750.77
$ 4,710,375.57
.....
Leas—United
'
$ 4,077,763.15
Refined oil products
of
brought on by the ideological
struggle. The report stated, "It is
great
596,836.73
Reserve
Crude oil
called by the re¬
between
Taxes accrued
$ 3,480,926.42
market)
was
152,646.60
.•
receivable.
and accounts
world."
Attention
•
Inventories:
peaceful
and
—
$ 3,915,836.68
-
.
.
'
and accounts receivable.
Total
part, and an
of. a
many-
one
notes and accounts
notes
payable
Payrolls and interest accrued..
I
Other
external
program
Accounts
(redemption
Trade
aggression.
The Recovery Program alone will
not give them this security. But
the
securities
Notes and accounts receivable:
well
or
$ 6,688,689.40
States
vallte)
being without
the danger of having their work
destroyed
by
internal
political
disorder
LIABILITIES
CURRENT LIABILITIES:
•
•
United
that
toward producing goods and serv¬
ices
and
toward' an
improved
standard
■
CURRENT ASSETS:
economic
world
OIL C DM PA NY
panacea.
If Europe is to
ciples of
Paul
Inc., and in the past with
said:
"The
connected
Draper, Sears & Co. of Bos¬
ton.
specific recommendations
the Senate Bill were:
The
Drake
with
Two
"(1)
Chronicle)
PORTLAND, MAINE —George
Their attainment is
prerequisite
to the success of the
program."
of
Amer¬
Draper, Sears Staff
(Special to The Financial
March 13, ana
will determine
should
estab¬
freely
lieve, be prime objectives of the
European Recovery Program.
on
without adding to the
taxpayer's burden."
Senate
oassed
re¬
way.
objectives
Sarnoff
so-
His
"(2) The provisions
aid
is
relating to
supported
by the
guarantees of private
strong internal efforts. It should
invest¬
be the policy of the
ment.
Increasing the 5% limit to
European re¬
covery administration to further a
substantially
higher
figure
this program in
every practicable would
stimulate private invest¬
report
the
the
external
endorsed
of
17
be clarified.
made, than is com¬
monly supposed, if the
necessary
this, stabiliza¬ lishment
be
may
at
8
and free
nomic
dollar,
achieve
the
sible date of trade
barriers in the
form of
tariffs, export and import
recipient
eliminating these
United
substantial and
progres¬
sive reduction at the
earliest pos¬
movement
outside
barriers to trade, the
stabilization
between each other and with the
"1. A
the free
countries
between
of the recipient
substantial progress
be
made
conditions:
persons among the
as
many
the
pone
Chamber
realization
and
be made
special
Congress quotas, and other impediments to
and
In
toward
rrm
the
CHRONICLE
jective.
th?. c°mmittee
tnropea
and
countries
°PeaB **"'!
rnl ern,?honal
Europe
rope.
!
es«en-
of
them
ociates of
c
aSJactors
ad'ministrXn
Brigadier General David Sarnoff rh*i
Europe of the United States Associates of
of Commerce and President of the Radio
announced the submission last week of the
tries
"
.
FINANCIAL
(1325)
Sarnoff Endorses ERP Objective
As
&
as
of March 15,
/
*
18
(1326)
THE COMMERCIAL
&
FINANCIAL
Thursday, .March 25, 1948
CHRONICLE
•
•
'*,v
Letter to the Editor
''"'
•
\eyfy-'
•
What Wall Street Is
,
By EMIL SCHRAM*
„
"
''% .-Y
\
President, New York Stock Exchange
'
,
r
^
.» "
^
v
Deploring misconceptions of "Wall Street," Mr. Schram defines it as "an evolved spontaneous
ice station to bring together those who accumulate
capital and those who know how to put it to
ductive use."
not
;
pro-
j,
,Y
Milligan, Assistant Vice President of Marine Midland
Herbert F.
Ascribes dearth of venture capital
to high taxation, and contends a free economy does
willing to risk funds in promising undertakings. Holds organized
markets indispensable to private enterprise, and
capitalism impossible without freedom.
unless people
progress
securities
serv-
Trust
Company of Binghamtou, N. Y., and Chairman of Educational >
Committee of New York State Bankers Association says a European
Reserve System similar to our own, aided bjr U; S, gold and ne\y Y
monetary unit, would do much to restore European economy.;
'
are
If, in what I
am now going to say, you detect a large measure of
special pleading, I
disarm you by admitting it. I am sure that you have some interest in the,
subject I intend to discuss. I represent an institution around which storms of controversy Editor, Commercial and Financial Chronicle:
shall attempt to
have
blown,
many,
many
times.
more
suggestive name. "Wall
Street," as the term often is used,
really means much more than a
narrow thoroughfare on the south¬
ern
end
of
Manhattan
Island,
a
This
institution
often has been
the
object
unfair
I
of
attack.
would
less than
did
if
not
say
did
executives,
that,
occasions,
mostly in the
Street"
not
Emil
and
thought,
that
the
change is
may still think,
York
Stock
Ex¬
New
No
•
in
It is
wealth,"
"absentee
ownership,"
"economic feudalism," "frenzied
communities
conceived
often enough.
us
.
If you will
the years has evolved
over
service
spontaneous
capital' and
those
ac¬
who
know how to put it to productive
use.
Money
accumulated
is
you
worthless both
to
partly
inherited and partly in¬
stilled by things one has heard
or read.
It is, all too frequently,
a
prejudice planted by the pas¬
sion of others, rather than a con¬
viction resulting from one's own
investigations
and
independent
inquiries.
Sometimes
hard-working
Wall
I
unit
in
the
functions
and
almost
the nation.
like
caste,
Or, shall
V
social
finds
are.
I think you will see
how necessary the financial com¬
munity is to the smooth opera¬
tion of our free economy.
every communitv in
Among the executives,
men
and
women
all
of
oc¬
cupational origins.
The fathers of the present
part¬
of the New York Stock Ex¬
ners
change firms, for instance,
dairymen, ranchers, - wheat
I
At the outset, permit to say that
this vague section called "Wall
Street" should have a
cotton
mers,
better, and
operators,
planters,
steel
newspapermen,
address by Mr.
Schram at
Washington University, St. Louis,
Mo., March 22, 1948.
this
announcement
is
y.yy'yy,!';.'■
teachers,
mill
were
textile
workers,
college professors,
retail
store
owners,
engineers,
miners,
country bankers, traveling sales¬
an
offer
la
s,
n-r-
so
highly
a
bad
name
are
distant
no
'
lars
outlined,
In
counter¬
wonder
away
if
American
small
you
ever
stopped
of the large
life.
No
individual,
group of individuals, has
sufficient
resources
to provide the
funds to equip this
country with
telephones, to establish a new
automobile
company,
to
build
large steel mills, or to establish
a
in
to
sell
or
solicitation
a
of
an
mercantile' chain, *
Do you realize how many
peo¬
registered owners of Amer¬
Telephone Company capital
stock?. Something over 723,000.
are
ican
How many shareholders- of Gen¬
eral Motors?
430,000.
Of United
the
great
"merry-go-round,"
that
learned
this nation
tem,
and
year
basic
the
al¬
need
stabilizer
a
as
was
Banking Sys¬
1914.
that
recent
as
the
as
v
Before
for 'a
(Continued
on
page
26)
offer to buy these securities.
System,
Reserve
Backing
had to have the awful
we
panics of 1873. 1893,1907 anel
since
1914
have
we
had
even
serious
economic dips, but they could and
probably would have been
if
we
of
a
worse
learned the values
had not
co-ordinated money and cred¬
A
banker, to
architect,
look
back
me
is
economic
an
should be; and if
or
the
over
lives
of
we
such
George F. Baker, John D.
Rockefeller, The Mellon Brothers
men
as
and
several
shall
leaders,
other
great bankers,
as
financial
of what they built
that;
see
some
way
of
a
banking system
made it possible for us to finance
a war for ourselves and our
allies
a
as
succesful end never dreamed
possible.
;
y
our nation
ha$ been
gold bullion standard, and to¬
day we are still buying gold, all of
which, if not sterilized, is
adding
$12,000,000
on a
West Penn Power
fuel
Company
Mortgage Bonds, Series M, 3%
''..Y
v;
•
•
•:
•
,
•
to
some
our
of
us
mutilated
inflation fire.
feel that
we
our
currency
is still the most sought
While
have sadly
system, it
after cur¬
in the world.
rency
tem
V:
$3
see a
Sys¬
created; capitalized with from
billion to $5 billion of our
sterile
Pi 7ce 101.19% and accrued interest %
of
the
in any State in
undersigned and other dealers
as
lohich
may
gold
matched
lawfully offer these securities
with
the
people's economy in Eu¬
based, of course, on the cir¬
of;the credit and cur¬
rency. Add to this a 10% or 15%
culation
requirement
reserve
member
HORNBLOWER &, WEEKS
in
such
State.
does for
a
serious
accident
Incorporated
.
donated
current
system—& Eu¬
dollar,, or franc—to be
agreed upon, which woulcf give
all people and business in
Europe
OTIS
&. CO.
FIRST OF MICHIGAN
CORPORATION
a new
1948.
unit with which to
values—a
by
all
has
standard
European
restore
been
so
even
if
or
a
operation
he
not
took
only
from
would
all
the
of
one
person,
still
lose
his
patient, but he might also lose the
donor. .vyy I.;;.v :;■);/.p..
y There
is great fear of Com¬
munism among us—it is
spreading
and I feel we who are
in the
banking business have
to
well
as
draw the
as
little fault
sit
help.
and
;
y
it for
say
oppor¬
a
new
Eu¬
we
and
can
find
if generals,
olhers clo
back
an
responsibility
plans for
ropean economy,
and
a
politicians
when
us
we
little
do
or
to
yvyyvyy
We know that associations have
committees
made
of
up
bankers
who have been in the business 40
and
The
more.
fought by
War
was
young men and won
by
young men—so as a banker of on¬
ly 19
experience and lots of
years
reading
of
•■
history,.
I
welcome
comment and criticism of this sug¬
gestion.
^HERBERT F. MILLIGAN,
Binghamton, N. Y.
March 24,1948
i;;Mr.
'
Milligan is Asst. Viee-Pres.
Marine
Midland
of
Co.
Trust
Binghamton, N. Y., and Bingham¬
ton
Chairman,
mittee,
Educational Com¬
New York
Bankers
State
Association.—Editor.
Pendergast I Elected 1
Pres. of Paul & Go., Inc.
PA.
—
At
meetings held March 3, Ralph E.
Pendergast was elected President,
of Paul & Co.,
Inc.,,1528 Walnut
Street, in addition to the office
of Treasurer which he
M.
elected
dent and
rector.
and
previously
Abbott Pendergast was
to
serve
Vice-Presi¬
as
Director; and Ira Jewell
Jr.,
was
elected di¬
William
as
L.
President
William E.
Canady re¬
Director
and
Hansen
as
Assis¬
tant
Secretary. Other officers and
directors remain unchanged. ;
Paul & Co. has closed its branch
offices, but is continuing its busi¬
ness
from its main office in Phila¬
measure delphia., J I'
measure used
people. : This
confidence
which
lacking and in
opinion, will continue for
time,
in
use
.
and
blood
signed
B.
System as we do in
the Federal Reserve System. The
next
development .should ! be a
might
March 24,
part
have
patient who has had
transfusion,
the
E. R.
you
when he administers a transfu¬
sion. It he didn't
repair and close
the
wound
before
giving- the
Williams,
ropean
INC.
(Incorporated >
STROUD & COMPANY
the
on
and
With such a plan, we would be
doing for the economically sick
European countries what a doctor
subscribing to the Corpo¬
ration and becoming members of
only such
banks
rebuilding of the economy of
Europe.
held.
standard
&, CO.
as
rope.
gold paid .in by
the participating European coun¬
tries, and with all banking insti¬
of
amount
same
this announcement is
circulated from
HALSEY, STUART
mem¬
28.5 times as much
credit
as
tutions
The Prospectus may be obtained
the
support
the
to
PHILADELPHIA
Therefore. I would like to
European Reserve Banking
Due March 1, 1978
"v
much
years
it system.
to
'
learned of the'need
we
Federal
Since 1933,
•-•/•
and issued currency to
ber banks—this could
tunity
we
,
rode
the Federal Reserve
nationwide
ple
country, generation
own
'
corporation, the giant corporation,
or
is not the proper
generation
few
It is
to tell you what the
to think of the place
in
as
ways
financial community does and, so
as is possible, in a few min¬
utes, how it does it.
I
countries
trying to catch a hole} cn a
ring of the rainbow, and I think
many will agree with me that a
Street
Street, I want to get as far
platitudes as possible.
purpose
the
far
so
our
after
describing the work, of Wall
from
my
rebuild
to
economic
Wall
estrictions
generations, so: to my way of
thinking, to give billions of dol¬
,
of
other
many
have been the order in Europe for
simply outgrew them.
have
Work
and
history. starting place.
They
In
Milligan
r
be¬
parts.
modern
F.
Herbert
industrialized.
The country
The offering is made only by the Prospectus.
holes.
Supposing, -, for
example,
we
getysuch a system set up
wit a a $10 billio n gold
reserve
could
the
of
First
present
of
cation
There was a time, years
when a few men did wield
came
far¬
newsdealers,
not
eus-
the
full
so
of
in the
This
o m
guages, lack
of freedom in
in
far
technicians and clerks who make
up the financial community, one
values
*An
some¬
financial
a
The personnel of Wall
Street is^drawn from every State
and
ery, I
shall try to tell you, as
briefly as possible, what Wall
^Street is and explain what its
economic
women
Nothing could be farther from
machin¬
different
t
into
further money or credit to
the truth.
country's
n-
trigue, misun¬
derstandings,
name
of
i
dollars
of
system which is
transportation
that
and
men
the Untouchables?
say
to
persons
gold'
credits,
silver,
The days of Jay Gould, Jim Fiske
and others who gave Wall Street
and
constitute
Street
of
think
the Brahmans of India.
As President of the New York
Stock Exchange, which is a most
financial and investment
owner
oeople
in
thing
currency,
lions
financial
and communi-
Street puts money to work.
the
I-
-important
to the
society until it is put to work.
Wall
asked
were
cated, and before the nation
station
origin
stop to examine the
of any prejudice, I think
will admit that it often is
Complicated
a
great power; but that was before
the country became so big, before
the economy became so compli¬
No one copied it
prototype.
It is not
of
legislation.
Wall
some
cumulate
>
mental.
European
■'y.;
ago,
Street
Wall
a
at
If I
funda¬
so
me
knowledge,
the
"■
—■
country, I would not know where
enterprise
bring together those who
hurled
as
is
llttll
to
of
center
m,*-
e
which
property
the financial
free
or
to
been
the
control
powerful
as
have
and
truth.
tainly,
terms
Street
nerve
b 1
to begin.
result
Street
Wall
basic
p r o
a
the ten most
blueprint.
after
the
.-v-y
and the prosperity of the nation.
Nothing could be farther from the
towns and, at
piece of economic
finance," "gambling," and
"living
on
other people's
money." Cer¬
these
interest
machinery essential to
one
a
think
the
on
few powerful men,
perhaps/a score or two, make
joint decisions in their own self-
system.
symbol for "predatory
a
social
capitalistic
a
or
has touched
v:\",7
not
are
about world financial
affairs, cure-all formulas, economic plans and commerce by nation¬
ally and internationally famous people; no one, to my
as
one
a
time,
same
interests"
and
cities
our
the
Schram
Some of you
have
Some
place where
corporation
lawyers
efficient staffs.
"Wall
a
of
to
attack.
lawyers,
and million¬
generation to
a
constant infu¬
sion of new blood keeps the sys¬
tem strong and virile.
New
is not just a place.
"Vested
passed on from
another.
Only
Street" is all of the Main Streets
been
vulnerable
fair
in
area
and
stockbrokers
as
aires.
group of persons.
It is not
state of mind.
Rather, "Wall
a
East, to say,
I am
appy
has
their
and
on
it
small
a
preachers
men,
well
York City, and more than a group
of brokers, bankers, corporation
can¬
I
than
more
be
y
While much is being written and spoken
<§>-
a
we pump many
my
long
bil-
With C. E. Abbett & Co.
(Special
LOS
to
The..Financial
Chronicle)
ANGELES, CALIF.—John
staff of C. E. Abbett & Co., 3277
T. Newton has been added to the
Wilshire Boulevard.
Number 4684
167
Volume
THE COMMERCIAL
& FINANCIAL
CHRONICLE
pipe lines, it is having to use ex- •
pensive tank car shipments at a.
rate of about 15,000 barrels.a day
to supplement the
pipe line de¬
Sees
<—*—■—«-
U, i^SKESSSJS* -
-
*
Vinf-met the demand
the
The
ucts
the pinch
S t at e s
Group of the
tral
^prepared, and. is
.in
in
s.tuation is still tight.
The
March 23.
great
problem
faced by the
How
for petroleum products in
described
what
for
not
in}
products.
,
the
!to
panying table.
what
say
shall
is
a
and
for
it
is
industry,
free economy,
class -of
benefit
there
While
supplying
which believes in
Dr. Robt. E. Wilson
from
customers
its
products,
it
in
business.
were
tivities.
In
involved in such ac¬
1947
the ' company
over
of
average
80%.
audience
wells, about 70
wildcats, costing an
about $200,000 each.
Dr.
to
Wilson
38.8
prospective oil supplies.
Many
companies have reached the limit
priation
23.6
Residual fuel-y
34.6
24.0
in the
cessful
Others
30.0
11.8
mers
31.0%
14.0%
In explaining how the oil sup¬
plies had been stepped up to an
unprecedented degree in spite of
Total
/
__
The increase
in
consumption,
though slightly below the nation¬
wide average for 1947 over 1941
was
in
above the nationwide average
the
comparison
with
1947
of
1946.
Consumption Greatly Increased
The
-
difficulties,
turned to
a
Dr.
Wilson
description of the op¬
erations of Standard Oil Co. (Ind.)
a
good
burners
since
unsuc¬
The
Indiana
about
it
as
duces
its
2V2
was
now
times
in
for
ture
refineries,
Increased
from coal,
should
reckless
incentives,
nent shortages
markable
research is
tie the Industry
not
venture
be
into
but public
used
for
of competition
take
a
future
Capital Requirements
are
Dr. Wilson stressed the
industry
is
free
growing
enterprise,
their
"which
chance
the
past
record
shows
clearly merit."
primarily, Dr. Wilson
said, the pronounced development
in
was
of all
use
types of oil-consum¬
ing devices and equipment.
senger
more
cars- are
numerous
This is under
Pas¬
no
circumstances to be construed as an
offering of these securities for sate, of as an offer to buy, or as a
somewhat
now
than
they
solicitation
were
of
an
offer to buy,
any
the Prospectus.
of such securities. The-' offer is made only by means of
1
?
before and during the war. Busses
and trucks are much more nu¬
merous, and all types of automo¬
tive vehicles are
being driven
more
are
NEW ISSUE
miles -per
roads
year.
The rail¬
rapidly dieselizing their
~
$20,000,000
:
locomotive equipment.
Of 2,10(
locomotives ordered last year 96%
diesels. The commercial air¬
planes are flying larger planes
were
more, miles
than
in
the
period, and the peacetime
tions of military aircraft
more
extensive than
periods of peace.
The
growth has
in
been
INTERSTATE POWER COMPANY
prewai
Y\ >;A Y-
First
are fai
earllei
of
;
heating
oil
burners
and
space
ing kerosene.
tions
in
for
central
heaters
.
Plus accrued interest
totaled
of
annual
Y YYY;.
Y;-YV
Y;v
■
■'
i
Y Y Y7Y-
due 1978 {•
.
Y
102.72%
date of delivery.
from January 1, 1948 to
.
pre¬
installa¬
555,039 Shares
Common Stock
was
building up in the Mid¬
west, said Dr. Wilson, that a^ea
Was still
having to overcome some
special
.handicaps as to supplies.
There was little
refinery construc¬
tion in the Midwest
during the
war.; Such
construction
was
limited
regulations
(Par Value $3.50 per share)
Price $7.35 per
share
by
government
at
coastal
products could be
except
where
available
for
shipment
Likewise there
construction of addi¬
abroad by water.
Was
little
tional. pipe lines into the Midwest,
which is
Comes of the
Y Yas
may
Prosvectus may be
obtained from such of the several
legally offer these securities
practically dependent on
of transportation for
its
supply of crude oil.
While construction was stagnant
■ ••
830*000
mand
that
Price
.
'/
While this land of postwar de-
readily
; v'Y»Y
Y ■'; Y
Mortgage Bonds, 3%% Series,
tions.
points
V
the nation, which was
average
sharply
Y YY■.
burn¬
approximately five times the
war
YY
Oil-burner installa¬
1947
throughout
■
;
particu¬
larly noticeable, however, in the
case
YY'\YY:
opera¬
underwriters, including the undersigned,
in compliance with the securities laws
the respective States.
form
during the
production
in
the
war,
area
crude
was
Smith, Barney & Co.
ail
Kidder,Peabody&Co.
de¬
clining. Due to gradual exhaus¬
tion of the
Michigan and Illinois
fields there has been a drop of
*50,000 barrels a day in Midwest
crude production as
against that
Prevailing in the latter part of
1941.
Midwest
of these handicaps tb^
was
the first area to
.
March
Midwest Feels .Pinch
Because
Eastman, Dillon &
feel
Co.
Stone & Webster
25,
1948
-
-■
Merrill Lynch, Pierce, Fenner & Beane
Y
Lee Higginson Corporation
Securities Corporation.
'
E'H-S!!i»L&S°nS
White, Weld& Co.
can
problem if they
allowed
are
solve lis
in research, technology,
and will solve the
capital requirements of the indus¬
try, which will probably total
close to, $3 billion in 1948. He
to
The real hope of . the
problems.
large-scale
and
which
instead of the re¬
gains the oil
i$ recording through the give and
production.
pro¬
half of
over
oil
of
funds
crude
1940, but still
far been ex¬
in red t&pe, and bring about
reductions in output and perma¬
desirable in the field of manufac¬
he
producing
much
as
only a little
needs
tion of oil.
company,
is
out,
ruin
quite ready for synthetic produc¬
government
pointed
so
perienced to take control. Govern¬
ment control, he felt sure, would
up
operation of
exploration for oil can be.
i ■
r
The
heaters.
space
ficulties that have
Except for this development, Dr.
Wilson said, the industry is not
companies'
American
of
and
sure
vantage of the very moderate dif¬
the enormous gas reserves
available in the Hugoton field.
expro¬
properties had shown how
:n
marked slow¬
way to have and per¬
petuate shortages, rationing, and
other problems, he declared, would
be to let the government take ad¬
one
A
gas.
cooperation
a
ing down in the installation of oil
gasoline
natural
public
conservation and
a yeai
research activities, the speakei
of
because
example
marketing operations
continued
oil
One major current develop¬
ment is in the field of production
its have also greatly increased. It is
primar¬ operating a total of approximately
ily in the Middle West. He said 7,900 wells.-(Although it is also
that
the company's subsidiaries operating 14,000 miles of trunk
as
get
said.
his
petroleum supply in 1943.
the increase in
for
reason
demand
many
take on.\
as to
crude
from
62.6
can
on
of his attempts to find new
would be failures. Ex¬
115.5
they
of
the
Wilson
Dr.
increase of about 7%
an
Whether this would be enough to
meet demand depends largely on
spending about $9 million
reserves
fuels
—
out
80%
_____
custo¬
in
its subsidiaries are
involving the certainty that 70 to
Distillate
oil
foresaw
improve proc¬
products so
Standard and
bureaucrat would dare take risks
Kerosene
number of fuel
growing demand.
Looking forward,
synthetically
from
subsidiary is at
present proceeding with plans foi
a
large plant at Garden City.
Kansas, to manufacture gasoline
perience in Mexico
of the facts about
to
value
utmost
happen if wildcatting for oil were
under
government
control.
No
of oil burners,
8.7%
effort
and
esses
imagine what would
oil
18.8%
asked
independently operated by
businessmen, the company
its
In
Of the wildcats nearly 70% proved
to be dry holes, but the average
of such failures for the industry
was
all
purposes.
800
including all potential purchasers
Gasoline
should borrow, so a continuation
of
good earnings and
plowing
back
about two-thirds
of
such
operating only a small number oi
stations
primarily for training
in order to keep
Several thousand
1946
over
profits in the business is necessaiy
if the industry is to keep up with
small
reserves
Increase
1947
over
a
That
that it is hardly fair to stock¬
holders to dilute their interest by
stations
dealer
The
consumers.
new
1941
1947
in
of
Increase
Midwest Since 1941 and 1946
Product
involved
below
offering new shares or rights.
Manjr companies are approaching
the limit of what they feel they
to discover more than this amount
simple position it can
position, and the one
adopted by the Standard Oil of
.'Indiana, is to advise the public,
Consumption in Ihe 'take.
in
Increase
nearly
of crude and he
was
selling far
are
so
barges
are
drilled
Dr. Wilson
said,
impossible to heat the
is
jmeet*other pressing demands
accom¬
gross of
and
trucks,
stocks
their book value, and still farther
below their true intrinsic values,
throughout the Middle West. With
its marketing subsidiaries it op¬
erates
some
4,500 bulk supply
plants, that furnish 'products tt
31,000 dealer stations as well as
direct to farmers and quantify
of which were
it
{petroleum
showed by use; ;,
V
oil
cars,
exploration, leasing, and drilling
people
has
jhomes of all America with oil
was^
figures
-
experience
a
84,000,000 barrels
demonstrated,
Wilson
of
winter's
produced in 1947
■that
the
industry
better off
now
to
regard
heating oil supplies
|than the East Coast, though the
go,
C h i c a
the
-nto
lunch eon
meeting
and to take steps to
it. As the result it
went
winter somewhat better
overcome
Investment
Bankers Asso¬
ciation at then:
with respect to
petro¬
products
leum
tank
transport
Middl^West du ing^e ^nter ju^ past as a major achievement on the part of the oil
toldUthe' Cen-'
Wilson, Chairman of the Board of Standard Oil Company (Indiana )
the
pointed out that heavy taxation
drying up the sources of equity
capital, with the result that most
distributes prod¬
lake tankers,
company
by
19
is
liveries.
"
Dr.
(1327)
which
they
-
20
(1328)
THE COMMERCIAL
&
The Outlook for Labor Productivity
Canadian Securities
By JOHN C. DAVIS*
Economist, President's Council of Economic Advisers
.
,
..
Decrying attempts in peacetime to increase production by wartime methods, government economist
holds we may
expect about 3% annual increase in production in next three years and 2% annual
average thereafter. Holds increase in workers' productivity is likely to be offset
by shorter hours, and
sees
need, in advancing workers' productivity, for substantial improvement of managerial techniques
and abandonment of restrictive practices by both labor and
management.
By WILLIAM J. McKAY
rriL.
to
There
work,
other
is
them
to
only three
A
our
can
t i
a n
c
these
of
that
the
output
in
relation
labor
of
hours)
the
proportion of
John C. Ravis
the population
at work. In relation to our
pop¬
ulation the present labor force is
probably as large as is desirable.
During the war we expanded em¬
in
expended
abolishing unemployment, but by
drawing older people,
women,
It
people into
is
that
•
the
(man-
producing
Labor productivity is
result of a number of
factors.
In
diligence, alertness, and
telligence of workers has no
effect upon
that
mean
productivity.. It does
labor
productivity
the
is
should
attempt,
vious
in
ployee
those
and
capital—that is, improvements in
technology. At any one time or
during a short space of time, labor
direct
re¬
operations;
resources and materials avail¬
able;
(3)
the
the working
skill
and
effort
force, and. (4)
in
of
man¬
em¬
effort must automatically
be geared to the flow of the ma¬
terials
as
when working on a
conveyor.
Since
output
upon
of power
are
where
cases
increase in the
use
For
often
unable to do much to affect their
own individual
output. This is ob¬
the economy as a
(2)
labor
different
employees
reason,
long-run, clearly
the most important has been the
sult of: (1) the rate of
doubtful, how¬
very
we
the joint
his
the
ployment, not only by virtually
productivity is also the
young
to
input
that total output.
in¬
in
concerned
are
we
total
Product)
cannot
an
force.
the
efforts of individual workers.
level,
the
amount
crease
ever,
the
output of goods
and service (called Gross National
means
expect
and
of
that
This is not to say
determined in large measure by a
number of factors other than the
with
increasing
We
man-
has decreased.
national
we
output?
,
way
plant has been increased relative
to the man-hours expended. At the
three
basic
of
and
output
input. At the plant level, an
in
labor
productivity
means
i p ate
each
between
the
as
increase
productivity.
from
productivity
labor
ratio
way
What
do this. One
we can
of
number
a
them
efforts
not
to
of
factors—most
related
to
produce—it
assumed that
ity
man-hour for
whole depends
per
a
be
drop in productiv¬
that
means
workers'
cannot
workers
are
sol¬
diering on the job. Nor it is neces¬
sarily true that an increase in pro¬
ductivity
caused
is
partially
harder
by
or
work
wholly
on
the
agerial efficiency. In addition, if part of employees. A decline in
peacetime, to increase production
output
is
measured
in
productivity can reflect a drop in
money
by these methods.
terms rather than
in physical the quality of management; an in¬
Likewise, the hours now being quantities,' productivity is also the crease can result from installation
worked per week are as
high as result of changes in the type and of better equipment. A determin¬
is desirable in a
peacetime econ¬ relative quantities of goods
ation of the effect of worker ef¬
pro¬
omy.
There is every reason to duced.
fort
on
productivity must rest
expect the long-run decline in
upon careful and intensive inves¬
There
are many
hours to
continue rather than to
expect
the
work
week
to
be
lengthened. Unless greater output
is
secured
as
a
productivity,
sacrificing
goals that
result of
are
It
generally accepted
The
"productivity
in
labor
that
is
efficiently.
a
productivity,
we
more
Technically,
This
Overall,
year
to
changes reflect neither credit
discredit
on
management
or
employees.
They cannot profit¬
ably be analyzed for this purpose.
While
the
considerable
measurement
of
work
in
productivity
changes in the past has been done
by both the government (mainly
Bureau
of
Agricultural Eco¬
private
research
and not rest upon
was
in
position of appa¬
a
rently impregnable financial and
economic strength. It was not rer
markable, therefore, that the Ca¬
authorities were then in¬
view the situation with
not
an
cffer to sell
solicitation of an
offer to
offering is made only by the Prospectus.
or
a
buy
these
on
as
construc-
page
37)
Prairie
the
fields,
Provinces',
and the enormous coal
Alberta
and
deposits in
British
Columbia.
Furthermore
although Canada has
lagged in hydro-electric de¬
velopments, there still exist al¬
never
unlimited
for still greater
production
complacency.
Canada in consequence was in the
danger of relapsing into a state
of
of comfortable inertia.
ous
high
a
of
degree
Then
came
European economic crises and the
world-wide U. S. dollar shortage
now
severe
tion.
on the Do¬
exchange posi¬
impact
foreign
-
-
•„
With characteristic resolution to
stand
her
on
c-schewed the
feet
own
Canada
of easy expe¬
course
and
chose instead , the
policy of retrenchment and
looked towards a more vigorous
development
of
.domestic
re
sources.
No longer could Canada
diency
harder
depend on the time-honored ex¬
change triangle whereby the pro¬
ceeds of exports of primary products to Britain and Europe could
for manufactured goods and
inherent
defects
labor
world.
of
of
turning
history has
so
high-grade external bonds
prices were inclined to ease.
minion
hand
internals
displayed
sympathy
with
free funds.
As the tourist
this
continue
Canadian
cent
to
improve.
too easy
as
a
by
the
of
paper
Golds
Western
oil
the
announcement
Stern
&
New
Hitherto it has been only
to obtain convenient sup¬
York
New
the
also
were
Imperial
concerning
domestic oil pro¬
on
Co., 25 Broad Street,
City, member of the
York
nounces
Stock Exchange, an¬
that Thomas G. Campbell,
railroad consultant and author of
plies of
to
led
issues.
Thomas G. Campbell
Now With Stern & Co. ^
moulding of her
for
rally
concentration
can con¬
promise
re¬
duction.
control.
high
free
stocks after their
industrial
O i 1
even a casual re¬
of the domestic possibilities
out
season
disconcerting decline staged
strong
a
destiny and
holds
other
likely
to
result
view
the
on
and
Do¬
firmer tone in
the strength of
firm
the
by
a
and
on
are
periods of trial and tribulation.
During the week there was a
ilackening
of
the
demand
for
recovered
centrate
cir¬
the market for
funds and internal bonds is
policy in
the past could never' follow an
independent line, but was dictated
by developments in Britain and
this country. As a result the Do¬
minion's
economic
growth was
primarily determined by events
own
in the
now
adverse
maturities,
economic
own
of
the
the great eras of virile nations
almost
invariably preceded
the
Now, however, Canada
over
good account and as
often demonstrated,
and
outside its
all
Thus Canada is
process
system had long been widely rec¬
ognized but its successful opera¬
tion over a long period obscured
the latent, dangers. Consequently
Canadian
steady influx
a
from
the
luxury articles imported from this
country.
The
vigor-
approaches and in consequence of
absence
of
imminent bond
be converted into U. S. dollars to
pay
attracting
skilled
cumstances to
..
a
Canadian Immigration
policy
a
result of which Canada is
as
minion's
re¬
light metals, paper and plastics.
Another
encouraging develop¬
che cold douche of the British and
with its
unutilized
ment is the institution of
exploit the known min¬
eral wealth of the Dominion. Now
that necessity drives, serious con-
CANADIAN BONDS
Thomas G. Campbell
^
"
.
Kansas Gas and Electric
.
' t •
.
•
;
''
many research
GOVERNMENT
Company
reports of railroad
securities, lias become associated
with
PROVINCIAL
them.
recently
Stock
MUNICIPAL
Mortgage Bonds, 3Vs% Series due 1978
Dated March 1, 1948
the
of
securities.
$5,000,000
.
is being given to
Quebec-Labrador iron
oil
a
serves
made
(Continued
in
most
of the
economy, such
physi¬
dis-
clined to
future.
workers
the
blessing
nadian
dustrial
Conference Board
and
the National Bureau of
Economic
as
vast
the
the Do¬
At the close of the war
nomics)
and
agencies (mainly, the National In¬
The
First
the future,
continue to rise without
increase in productivity. We
can
hours have declined, and
cal effort demanded of
March
is
of
a
A young and growing country lavishly endowed with
coal, oil, steel and manu¬
Research), the basic information
factured goods from south of the
ing at high levels of productivity
on^ past changes is still spotty
border, and to ignore the exist¬
We should not view labor pro¬ being largely confined to manu¬ ence of
the Dominion's own ex¬
ductivity as
synonomous
with facturing, to agriculture, and to
traordinary
wealth
of
natural
selected
labor effort on the job.
non-manufacturing in¬ resources.
Labor
Thus
until
recently
productivity has risen as weekly dustries. Some major components only spasmodic efforts have been
of Minne¬
announcement
econ¬
employment and high
production is. an economy operat¬
previ¬
we should ex-
Minn.,
The output of the
maximum
than
Conference, University
nor
worker at
general, is likely to prove
work'fo? the^^ater °pos^bil^to Utderation
cannot assume that an
economy of
mean
*An address by Mr. Davis at
the
6th Annual
Industrial Relations
sota, Minneapolis,
18, 1948.
year
if
level.
per
the
an
increase
an
the plant
output
the Bureau of Labor Statistics
and
omy
given expenditure of labor
producing
ously.
By
thht
of
output.
in¬
crease" means that
some one fac¬
tor of production
is being used
more
assumed
tigation
man-hour there will be no increase
in productivity if the
number of
man-hours increases as much as
Meaning of Productivity
term
sometimes
course,
is not necessarily true.
Since productivity is output per
desirable.
The
is
output increases, labor productiv¬
ity has also increased. This, of
toward
progress
misconceptions
the
meaning of the
term "labor productivity." - It is
often used to mean "production."
greater
we get the increase
by
as
regarding
weakness bi;t as a consequence of
the achievements of the past.
minion
press
is
increase,
to
whereby
ways
goods and
is for more people
which has been adopted, not
austerity urogram
of the world in
dSe
^
work
longer.
third
are
anfor
Pnmrlian
^uU °f in"erMl
a
Interest in labor productivity stems
largely from the desire to improve our standard of
To increase our national well-being, it is necessary to produce more
living.
services.
Thursday, March 25, 1948
CHRONICLE
FINANCIAL
Mr.
head
of
Campbell
the
New
was
York
Exchange firm bearing his
name.
,
CORPORATION
j
Due March
Price
1, 1978
101.25 %and
accrued interest
Cincinnati Municipal
Bond Dealers Outing
CANADIAN STOCKS
CINCINNATI, OHIO—The Mu¬
nicipal
Bond
Cincinnati
The Prospectus
the
may
be obtained in
any
State
the undersigned and such other
dealers
as
in
which
may
this
announcement
is
circulated
only from
lawfully offer these securities in such
State.
A. E. AMES & CO.
Dealers
has
set
Group
day for their Annual Spring
Party.
It
will
be
held
Kenwood Country Club,
INCORPORATED
of
25th as
May
at
the
and be¬
sides the usual dinner there will
TWO WALL STREET
HALSEY, STUART
March
24,
1948.
&. CO. Inc.
be
NEW YORK 5,
of-town guests
N. Y.
'
WORTH 4-2400
NY-1-1045
golf, baseball and tennis. Outare
invited.
ther information
may be
from C. A.
Fur¬
obtained
Richards, Field, Rich¬
ards
&
Co., Secretary of the or¬
ganization.
Number 4684
167
Volume
THE
By ROGER W. BABSON
COMMERCIAL
and makes practical suggestion Treasury notify
through advertisements on how to compute their
prices,
higher interest
taxes.
reduction with
the
ev
President Truman and his immediate friends. The diffi¬
culty seems to be that all hands have forgotten what is best for the
country and are just playing politics. Everybody with whom I talk
ception of
that it
agrees
is
possible
to
reduce greatly
the
Govern-
e
m
t
n
e
x-
penses.
This
would
———
and
other
save
t
p a
a
x
^?y.Yery Practical
stray
tion
if
the
Government
the
of every
receive a letter
owner
should
but
the
If
now on
Govern¬
the same, it
would be a real help in reducing
the so-called inflation. ';
v
of
Every Senator and Representa¬
has
tive, however,
friends in the
tives and
service.
ment
certain
Hence,
rela¬
Govern¬
although
Congressmen will agree
impress
it
to their
comes
friends and
own
relatives, it is a horse of another
color.
Perhaps the only practical
for putting a million Govern¬
ment employees back to earning
an, honest
living would be by
change
a
Administration.
of
but
Republican Adminis¬
a-new
tration might do so very gleefully!
I
have
work
on
munity
A
of
Lower
just
Taxes
been
doing
trying to help
get houses for
house
for
which
this
would
then
house
for
have
com¬
veterans.
veterans
had
paying $12,000 for. When analyz¬
ing the increase, I find that wages
about 50% and that
up
bricklayers, carpenters and
are not giving an honest
day's work today even at the
higher wages. The increase in the
cost of materials varies greatly.
Cement, for instance, has gone up
in most sections
only 10%, while
lumber has gone up 175%.
many
painters
The greatest increase is in con¬
nection
taxes.
Before
builders'
war
with
taxes
the
amounted
very
to
little, while today Federal,
State and other taxes amount to
over
half
The
same
of
the
costs.
applies
to
everybody involved in the prepa¬
;
in
with¬
money
same
Some
such
and
building
increase
handling
resources
would
no
reduction
the
more
money
a
can
whereby
reduce taxes,
thereby reducing prices,
*he
same
which
time
collect
President
the
Truman
and
at
money
says
is
required for defense. Of the many
suggested
solutions
I
have re¬
ceived, I
should like to relay one
from
M. Glass, accountant
authority of Frostproof,
John
®nd
tax
Fla..
*
V
It is fair to
the
holdings.
that 90% of
people in this country are
honest.
Yet, the Government is
Probably losing $5 billion
a year
Horn ignorance in
making out of
tax returns
by small businessmen
increase
The
in
cess
of
amounts
and
has
been
needed
as
bank
the thirties
during the period
financing.
for
a
prospects of interes
further upward
trends and
Regard¬
ing this, the article states:
;
"If the high levels of demand
and production generally prevail¬
ing in the past year are main¬
The ob¬
such
for
the
the market.
on
money
early
growing at an accel¬
particularly
rise
of
outside
to
their
if prices
lated
this
cut
out
'
,
.
resources
.
>
(Part of
a
earnings and earned depre¬
allowances,
in
order
and
equipment,
(Continued
inventories and
page 35)
on
Illinois Central
Ridgway, Newsome
John
C.
New
Newsome,
York
Equipment Trust, Series Y
member of
Exchange,
Stock
will be admitted to
in Ridgway & Co.,
120 Broadway, New York City,
members of the Exchange, and the
April 1
partnership
on
firm's
name
Ridgway,
will
be
changed
Equipment Trust
2V4%
Certificates
(Philadelphia Plan)
to
To
mature
Newsome & Co. Mr.
recently been acting
'
y
-
: n
•
.
- :
semi-annually $263,000 on each August 1 and February
1948 to August 1, 1957, inclusive.
1,
from August 1,
Newsome has
an
as
individual
broker.
partner in
floor
Prior thereto he was a
To be unconditionally
as to payment of principal and
by Illinois Central Railroad Company.
guaranteed
dividends by endorsement
;
Kalb, Voorhis & Co.
Certificates are to be issued under an Agreement to be dated as of August 1,1947, which
provide for the issuance of $1 1,360,000 principal amount of Certificates to be secured
by new standard-gauge railroad equipment estimated to cost not less than $14,214,609.
These
John W.
Stephens With
Sullivan Company
fi.fi will
KANS.
Sullivan
Union National Bank
Building, announces the associa¬
tion with it of John W. Stephens,
WICHITA,
to
Company,
1.25
1-40
1948
August
February 1949
mitted
to
Co.
1955
2.40
February 1956
2.45
1956
2.50
August
1.75
February 1957
1.85
2.25
February 1951
1953
February 1954
2.20
1950
August
August
1954
2.30
August
August
Issuance and sale
Circular
circulated from
2.525
2.55
subject to authorization by the Interstate Commerce Commission.
be obtained in any State in which this announcement ts
only such of the undersigned and other dealers as may
may
lawfully offer these securities in
HALSEY, STUART A
A. G.
PRESSPRICH & CO.
R. W.
1957
of these Certificates are
The Offering
such State>
CO. INC.
OTIS &. CO.
BECKER &. CO.
(INCORPORATED)
INCORPORATED
On
WILLIAM
BLAIR &
limited partnership.
COMPANY
JULIEN COLLINS &.
Staff of T. C.
BURLINGTON,
Henderson
IOWA
—
Carl
Kleinkopf has become associ¬
ated with T. C. Henderson & Co.
of Des Moines as resident man¬
in Burlington.
Mr. Klein¬
kopf was formerly President and
MULLANEY, ROSS &.
j
To be dated August 1,
principaJ.
Klemkopf
which is now dissolved.
&
Co.,
1947.
March 19, 1948.
FREEMAN & COMPANY
COMPANY
COMPANY
NoUed^mable prior
ager
of
August
2.15
.
the firm's
Carl H. Kleinkopf Joins
•jvooeurer
February 1955
1952
August
to Shean,
2.352
1.95%
2.05.
February 1953
February 1950
March
the same date,
Charles G. Raymond will be ad¬
&
February 1952
be added)
L50
1.65
1949
August
from partnership in
Jewett & Shean, 1 Wall Street,
New York City, members of the
New York Stock and Curb Ex¬
Earle
1951
2.10
Earle & Co.
changes. On April 1st
name will be changed
August
FIRST OF
to
finance further additions to plant
$11,360,000)
proposed issue of not exceeding
rep¬
accumu¬
$4,997,000
it to
mail
and
will
financing,' in addition
which he needs.
money
rates
substantial volume
by current and
ciation
long-term
money
Businesses
internal
resented
weeks of
in
continue.
still require a
rates. The increase
in rates of longer-term Federal
securities began somewhat later
and was interrupted for a period
of
and
recent
will
market obli¬
the lead in the upward movement
when the de¬
credit
and
capital
were
purchase longer-term secur¬
in
1948. Highgrade corporate obligations took
the
"After mid-1947,
mands
tained
demands.
should rise further, it seems prob¬
able that the forces underlying
make loans
to
gations at both short- and longterm
rose
almost steadily from
the late summer of 1947 through
in
factor
order
in
"Rates
consequence
a
to
ities
credit, however, has been in ex¬
in
H.
-
assume
or
31 will retire
for defense.
plan
to
John Newsonte Partner
the
the
to
desire and, at the
we
Edward H. Jewett, Jr. on
•
We all should heartily get behand President Truman in his de¬
Hence, we need
the Government
and
ing to inflationary developments.
alike and hurt
war
Reserve
Congress¬
To Be Shean,
Army, Navy and Aircraft
mand for
permit
am.
rat^s, the Federal Reserve Board
and
its
economists
appear
to
term Governments to the Federal
as
production
meet additional demands for cash
of
Appropriations ;
in
increases
purposes
any
heavy
hope every reader of this column
In
levels
the
ducement for banks to sell short-
private bank credithas prob¬
ably been necessary to facilitate
new
formerly field representative for
build¬ Hugh W. Long & Company. Mr.
ing materials. As a result,, of the Stephens will act as consultant
$6,000 increase in costs, at least on the selection of investment
$3,000 goes to Uncle Sam. This programs, portfolio analysis and
shows " the great "importance of financing problems.
V
getting taxes reduced.
ration
expansion
nonmarket-
time, enable the President to
have the
I
above
ject of the recent shift in policy
of was to diminish further the in¬
supplying
borrowed funds at relatively low
rates of interest and in contribut¬
get
to
fields, and the deficiency
expansion.
funds
he
$6,000 than he is now
have,gone
bring
This plan would enable tax¬
payers
rise
has been financed by bank credit
campaign. It would
a
taxes which
As
established during the depression
foreign
are
better
a
more
treat everyone
one.
local
some
my
Moreover,
sum.
would
his Congressman.
being charged $12,000 today could
have been built ten years ago for
half
them of
warn
anyone.
in such
man
will
Need
•
all taxpayers what
cally repugnant to
way
Democrats hate to fire Democrats;
the mails, to
use
There should be nothing politi¬
ciple that the expenses of govern¬
when
as
This
hurting
Government
short-term
on
securities
of
he
of
bank loans
as
mortgages, and on
tion taken by the Federal Reserve equity funds also exhibited firm¬
System and the Treasury to let ing tendencies."
in these
what
the
estate
larger capital
several billions
out
debt, such
sense
upon
penalties.
real
rates
and
various forms
able
and recovery years of
they should do and
in prin¬
ment should be reduced, yet
well
as
on
the
and maintained
should deduct and what he should
pers,
spe¬
"The demands for new funds by
businesses, individuals, State and
governments,
and
by
the<
Following a sharp rise
24, these rates were agaii.
stabilized by official action. Rates,
rates was the ac¬
general rise in
System
of
Dec.
on
ply of savings seeking investment
payroll; could be employed pay. The Government should buy
produce more goods or aid in advertising space in the newspa¬
marketing
markets. A
contributing to
factor
cial
au¬
purchases
Reserve
borrowers have exceeded the sup¬
once
ment
the
fiscal and monetary
December
Treasury.
pre¬
the 1942-1946 pe¬
war
financing domi¬
during
when
and
market
open
Federal
in
forcefully,
very
had
relationships—that
—
November
explaining, simply,
three months
prices.
ac¬
the cost of credit.
instance,
filling station
lowering
people
should
annually on
publicity, it could get back $5 bil¬
by
excess
thorities to reduce the availability
of bank reserves and to increase
money. For
and
the
the supply
of
nated the money
suggestion is
lion in
pro¬
in
Rates rose
the levels—and away from
above
riod
million
duction
of this
in
rate, there was a general
Another basic factor has been
$100
n-
——
erated
pre¬
of
savings available for investment,
correctly by accountants.
spend
creasing
Babson
cause
Increasing Government Income
that
to-
from^
vailed
go
i
risen
levels
.kinds
but it
way
low
porations have their returns made
yers'
wards
have
rise in interest rates.
would
long
generally
extremely
prevailing. The primary
change has been the
persistent and strong demand for
money,
Roger
"Since the
rates
viously
the
a
a
leading article on changes
capital since the end of the war. According to the article:
spring of 1946 the cost of credit and capital has been increasing and interest
.» individuals. :
Some
is undoubtedly lost
through
dishonest returns, but most cor¬
not
only
to
The March issue of the "Federal Reserve Bulletin" contains
in the cost of credit and
the
money
out
Cost of Capital
rates, and holds, because of inadequate Federal Reserve authority, an orderly and stable market for
securities can be preserved only by voluntary restraint of lenders and borrowers.
>:
Apparently everybody is interested in tax
CHRONICLE
Federal Reserve Board analyzes rise in short-term and long-term interest rates since
Spring of 1946,
as well as
higher cost of equity capital. Predicts rising future demand for credit and
all tax-
payers
7
FINANCIAL
Reserve Board Studies Higher
!
Mr. Babson holds government expenses can be reduced and income
increased even with tax reduction. Says high taxes are increasing
;/
&
%
THE ILLINOIS COMPANY
MICHIGAN CORPORATION
ALFRED O'GARA & CO.
F. S. YANTIS
&, CO.
INCORPORATED
g^tact^^in^l^^Vnom^nation^orilloOor reg^sterabie a9°to
22
(1330)
THE COMMERCIAL
The
The
Community's Role
their
Labor official describes New York City administration's
technique
settling disputes. Maintains generalizing about labor relations
dangerously confusing, and every situation must be treated on
labor
Observation
But I
that
have han¬
we
dled
bas¬
was
the
of
problems
the indus¬
teach
closely dependent
The
and the issues
be
settled.
this
on.
experience I
scrupulously
Theodore W.
Kheel
avoid
any
the
generalities
about
"the
trouble
with management or labor-'
being
labor
this, that
though I
forth
the
or
other
thing,, al¬
prepared
am
to.
hold
what I think is wrong in
on
any particular situation.
.
■' •;
■
Observation No. 2: In New York
City
each
of
one
dependent
for
our
else.
is
us
We
vitally
existence
on
in
the
demonstration of
had
concrete
interdepen-
our
of
how
it
works
is
has
no
perform,. we are not
We are quick to
company or union that
a
don't believe that
a
Of
essary.
ment that
strike that
strike is
course
a
strike
can
a
avoided
is
not
many
the expansion of private
credits.. To
adjust foreign ex¬
change rates ;to realistic levels,
price controls, rationing and sub¬
for
sidies need to be eliminated.
agreed,
posed
Europe.
They
and
and should
enough.
ation
or
an
as
firms
Division,
will intervene when it
that a labor dispute might
investment
IBA
and
file
banking;;
answers/to/
monopoly charges, made by
jeopardize the health, welfare or
safety of the people of our city.
{
circumstances to be construed
no
offer
to
shares.
buy,
or
as
a
solicitation
tice
Department,
and
missal of
Jus-j
ask
dis¬
an
of?
offering of these shares for sale,
an
offen to
The offer is made only by means-of
buy,
any
of
the
such
tion of
the Prospectus. J
NEW ISSUE
Investment
Bankers
America, which
Associa¬
on
Oct. 3,
1947,
were
brought by
charged
in
a
suit
the Department of
Justice with conspiracy to create
March 24, 1948
monopoly in the nation's securi¬
ties business, filed individual an¬
swers denying the charges.
a
50,000 Shares
.
In
,
their
firms
the
answers
denied
each
plus of purchasing power relative
to available goods.
During war¬
time,
the
flood
of
purchasing
dammed
price
ing
West Perm Power
of
the
of
the
46
a
government's
complaint and requested that the
Jiistice Department specify acts,
with
times
and
places, alleged to
have been in violation of the anti¬
!
the
definite,
untrue
ond
uncertain.
They pointed out that the securL
Cumulative, Par Value $100 Per Share
ties
of
business
the
under
was
Securities
Commission
and
and
control
Exchange
the
NASD,
all their acts were subject to
ulation and scrutiny.
The
Price $101,205 per share
answers
and
reg¬
cedure for purchase of securities
through negotiation or in competive bidding and pointed out risks
plus accrued dividend from March 1, 1948
which investment bankers take in
connection with their business.
\
The
Copies
of
writers
ers
the
Prospectus
be
may
obtained
from
only in States in which such underwriters
in
securities
and
in
which
such
are
Prospectus
The First Boston
Harriman Ripley & Co.
any
of
qualified
ihay
legally
Pressprich & Co.
The Wisconsin
Chaplin & Company
deal¬
MacGregor, Inc.
Reynolds & Co.
includedMorgan Stanley & Co.;
Kuhn, Loeb & Co.; Union Securi¬
Corp.; Stone & Webster Se¬
curities Corp.; Dillon, Head & Co
;
Kidder, Peabody & Co.; Blyth &
Co.;. The
First
Boston
Corp.;
ties
Estabrook & Co.
The Milwaukee
•
Forgan & Co.; Goldman,
Sachs & Co.; Lehman
Bros.; Har¬
riman Ripley & Co.,
Inc.; Drexel
& Co.; White, Weld &
Co.; Smith,
Earney & Co.; Harris, Hall & Co.,
and Eastman, Dillon & Co. " ;
Grubbs, Scott & Company
<•
McDonald & Company
LOS
,
Starkweather & Co.
ot
*.<
**'
joined the staff
Richards & Co., 448
,
Fahey, Clark & Co.
In this
J. J. B. Hilliard & Son
Kenney-Powell Teletype
Kenney & Powell, 25 Broad
Street, New York City, announce
installation of
a
^
Bell
the
pledged them¬
vigorous produc¬
expansion which
envisaged by 1951 is similar in
that achieved by
the United States in the mobiliza¬
tion years from
higher
levels
tivity
are
pressures
The
defL
To
1940 to
of
1944.
As
productive
ac¬
reached; inflationary
arising from a lack of
degree of
cfiective,
condition
a
tion, in
provide
of little avail, if
are
price
controls
of
lead
suppressed
achieved
success
wages - cease
to
real incentive, goods
produced for the uncontrolled
are
markets and income is spent lav-
isly
recreation
on
ment.
late
and
amuse¬
If
econ¬
controls
The longer
!
more
they distort the
economy from the
shape.,.it. would assume under a
free price system, The greater the
^orii?:m-lc
^ n' -?e m?le
fmult is the transition from
controlled to
nomic
free, market.
a
a
Eco¬
controls should be used to
ineffective, price con¬
rationing serve to stimu¬
ease
creation
the
kets.
market
economic
such controls continue, the
infia-j
which
free
a
internal
(must be eliminated.
to
any
establish
omy,
milieu, price and ration-
ing controls
trolled to free markets and not to
of
black
mar¬
The remedy for postwar in¬
lies not in reliance upon
rationing or price controls but
rather in the twofold action of inr
creasing production and reducing
the quantity of
purchasing
power.
the
As measured
,
The
removal
external
internal
of-
and
ccntrols " will
duction targets. The price systemfunction freely and costs and
can
Not
ance.
tion
be
tion
in
will
be
Eyrope has shown marked
useful
Britain, which was as fully
to war production as
other belligerent, is now pro¬
ducing and exporting a larger
con¬
can
against the situa¬
recov¬
from
permit
Western Europe to unify its pro¬
tion at the end of the
war, civilian
over most of Western
production
transition
frustrate that transition.
flation
be brought into bal¬
only will total produc¬
stimulated, but produc¬
many diverse
forms
its
directed
the
most
Alone
Can¬
into
channels.
ery. -
converted
Increased
of
However,
goods
the
than
need
to
in
1938.
increase
exports is-so urgent that the do¬
mestic market is still
tioned.
ers,
as
than
In
in
1938,
considerably
goods.
severely
ra¬
British¬
have less food
less clothing and
fewer
household
consequence,
whole,
a
Industrial
production
in
France, the Netherlands, Norway
and
Sweden is either
equal to or
exceeds that of 1938.
Only on the
Western zones of
Germany is
duction
far
below
the
such
and
key items
coal,
as
stedl
has had
a
re¬
effect on the production
of Western
Europe as a whole and
of the major factors
above prewar
must
if
satisfac¬
tory, recovery is to take place.
Of
great
promise
in
the
of
Germany
are
System .the
in
creases
purchasing
power,
the
which in-
to
reduce
the
chasing
power and to restore con¬
total
volume
of
pur¬
fidence in the various currencies.
Of
necessity, • the
taken
must
to be
origin in
measures
find
their
■
■
: ;
;
'
-
poli¬
i.■*::
The
checking of inflation is es¬
sentially av domestic matter .and
nations
and
must
have
the
corrective
measures.
eign stabilization loans
nature of
The
courage
willingness to take the nec¬
essary
are
For¬
in the
palliatives and not cures.
nations
of
Western Europe
have pledged themselves to carry
out
nate
The communique issued
by
conference declared that the
participating countries,
Measures must;
also be taken to curb further in¬
eco¬
decisions reached at the six-power
conference recently held in "Lon¬
don.
infla¬
check
to
pressures.
stabilization
programs
spirit of determination,
nomic reconstruction of the
West¬
zones
sufficient
tionary
internal monetary and fiscal
chemicals,
levels, which it
be
not
one
increase
cies.
tarding
one
would
deny the
production in
Western Europe, this in itself, al¬
though of vital importance, will
no
to
pre¬
deficiency in Ger¬
production, centered as it is
man
on
still
While
need
pro¬
levels. The
war
Production
not Check Inflation
any
ern
Teletype, NY 1-528.
p.
Chronicle)
ANGELES, CALIF.—Rob-/
Pearson,
to
by the European Recovery Proprice increases, brought about by | gram depends upon the reestabthe pent-up purchasing power of
j Lshment of a free market econthe war and by postwar increases omy, throughout Western
Europe.
Joins Pearson Richards Staff
rising considerably
(Special to The
the
production
preventing production there from
Singer, Deane & Scribner
The
in
stage is set for rapid
The
has been
Company
South Hill Street.
Curtiss, House & Co.
McJunkin, Patton & Co.
'£<■ r*fr
answers
ert W. Brown has
Putnam & Co.
Arthurs, Lestrange & Klima
Glover &
as
distributed.
filed
Financial
Incorporated
Company
Company
Moore, Leonard & Lynch
R. S. Dickson & Company
The Ohio
be
Spencer Trask & Co.
William Blair &
Company
to act
under-
which
Clore,
Drexel & Co.
Baker, Weeks & Harden
several
Corporation
Incorporated
R. W.
the
firms
is
productivity is rela
cient.
quantity
described the pro¬
production.
goods will tend to subside.
and
Progress of European Recovery
in each case,
complaint vague,: in¬
of
participating
general scale to
non-pro¬
tively low,
defendants,
termed
4.20% Preferred Stock, Series B
,
The
functions
Recovery
conference
very
tive effort.
The
extravagant employ-
Labor
levels
nations
prices
trust laws.
••I
into
primary
European
selves
the psychological situation
changes and becomes favorable to
inflationary price increases.
No
longer moved by patriotic fervor,
.the
popular* mood
alters
and
diverted
life
including the Western zones of
Germany, help; itself to achieve
16
riod,
are
economic
Pro¬
is to provide food, raw ma¬
terials, fuel and machinery in
order
to
help Western Europe,
Paris
In the postwar pe¬
by
controls.
the
to
peoples of Europe.
the
of
the
high
temporarily
and
ration¬
be
may
is put into
this indus¬
can
gram
and
causes
eco¬
Only
Germany
the free
of
exhibits the same: basic character¬
istics.
Jt gives evidence of a sur-'
trols and
accused
charges in turn, and asked for
dismissal
basic
same
delegates
the
Primary Functions of ERP
in money and credit.
case.
18, the 17 leading se¬
underwriting firms and
curities
as
the
from
the
coordinate
workshop make its complete
of
inflation arises
all countries
In
taken,
to
contribution
Causes of Inflation
Basic
ment.
Seventeen
be
production
War.
World
community
Prompt action
peoples.
Western
the situa-
was
first
the
after
demo¬
Germany in the
One
On March
This is under
which indeed
case,
Ger¬
basis
a
a
trial
are
the
Netherlands.
constitutes
a
special
Germany
of
full
and
ductive and
as
extremes
these
between
Belgium;
funds
Enter Denials
if
pronounced
Greece, Turkey, Italy and France.
In
Western
nomic. policies of the three West¬
ern
zones,
in such matters as
trade, customs and the free move¬
ment of persons and goods,
least in Swit¬
They
in
are
of
establishing
participation
should
Scandinavia.
most
been
have
the
of free
strength
of
inflationary
forces varies greatly over Western
zerland
of
and
cratic
The
power
nec¬
state¬
mere
on
we
Underwriting Firms
Mayor, through the
The
the
reconstruction
budgets
governmental
inflation,
We
from
Division
we
follows.
strike.
a
start
to
any
eluded the United States,
Britain,
France and
Benelux, had agreed
on the
necessity of the economic
and
checked
be
must
must be balanced and restraint im¬
in
strike is necessary
no
the
since
tell
Division.
our
Division
belief
real
a
feels it must have
be
Very briefly
appears
everyone
deals
do is exempli¬
can
work
to
inevitability of
the
strategy
community in
disputes in this city and
But
afraid to say so.
the. settlement of certain
community
lead
can
and
thing about their settlement; What
fied
a
premise that
have found secondly that we (that
is the community) can do some¬
the
that
in
We have recognized in the first
place, that all of us have a vital
in
whether
it for strategic reasons
they believe it, the fact
gloomy prophecies of. that
the
are.
which
3
to indicate
they are not
reasons,
strike.
sometimes
say
sort
adjustment of labor disputes.
stake
i
No.
with the role of the
that
say
strategic
Of
inevitable.
because
is
Community's Role
observation
other-
One
they
Observation No. 3: That leads to
n g
sweep
.
all
we
j
of
or
thing, namely, how
one
us
'(
-v
afraid
the
they went on strike.
Of
course, that strike hurt. But it did
tries; the peo¬
ple invloved,
to
they
is
to the other side that
when
to
as
Based
that
dif¬
—
ferent
knew
even
for
in
the
tugboat strike in
Very few people in this city
aftiy
from
others
1946.
tugboat em¬
ployees were organized in a union.
But they found out very quickly
ically differ¬
ent
dence
4:
No.
strike
a
course,
and every one^
of the disputes
■',
/
v
,
grows out of this exr
Frequently, we hear it
said by company or union officials
attest that each
can
'
perience.
so
labor situation and another.
one
■
observation
relations and
merely confuses one's thinking on the problems
management.
Of course, there are great similarities
and
between
'
Strike Is Necessary
No
individual merits.
Observation No. 1: You can't generalize about labor
of
the
I
inflation
city resolve foreign exchange rates adjusted to
the interest realistic levels. To check internal
controversy
Europe
(Continued from first page)
city to help the company
press.,
for
attempting to do
Inflation in
Cit
to
in
people of this city. The
whole procedure is conducted ih
a
goldfish bowl, fully revealed t6
the people of this city through the
of
Director, National War Labor Board
its
the
in
and the union of this
By THEODORE W. KHEEL
is
sides
both
generally appoint
committee of outstanding leader
Director, Division of Labor Relations of the City of New York
Executive
of
Hall and will
In Labor Relations
Former
Mayor will invite the repre-r
sentatives
Thursday, March 25, 1948
CHRONICLE
FINANCIAL
&
calls
budget
on
in
a
to elimi¬
to restrict
and, once
been
achieved,
deficits,
banks of issue
stabilization
has
to make their currencies convert¬
ible as, defined -in the Articles of
Agreement
Monetary
rates
in
of
of
the
Fund
at
International
appropriate
exchange.
Various methods have been used
Western Europe to check in-
THE'COMMERCIAL
stabilize currencies,
countries the methods
involved the "blocking"
and to
unn
„
Number 4634
167
Volume
<?ome
^ J have
UJ substantial
r
operation part of the
nurchasmg
wartime oet'icit iinancing. it pro¬
basis for a firm mone¬
vides the
will not have
poncy but
tary
last-
unless current budget¬
deficits are eliminated, unless
bank credit expansion for- unessental purposes is discouraged
and savings are encouraged. Mon¬
ins success
ary
existing liquid
not reduce
do
1%%
made
income.
rate
to
reduce
the
governments should
remove subsidies
on
Chancellor
project
courage
raise
and
currency in
commensurate
with
lar to that
provided
eign
Act
Aid
purposes
1947.
be
may
agreed
participating
by the For¬
of
used
for
to
for
between
country
Administrator,
the
the
and
latter
the
acting
consultation with the Nat:onal
Advisory Council,
and
could
be
used, for
example, to immobilize
local currencies
with the central
and
to
retire
the
debt.
national
by
deposits
may
these
spe¬
to
amount
-
a
very substantial
proportion of the
local money
supply and could
very
effect.
use
ex¬
important anti-infla¬
However, the
made
of
the
par¬
a
ceal
They
rot be used
as
a
balanced budget
budgetary
,
should
substitute
or
deficits.
to
con¬
They
be used not to
supplant
but to
assist each nation with its
own
In
n°t
anti-inflationary
case
program,
the special
deposits are
needed to combat inflation but
are used
to stimulate the
produc¬
tion of raw
mateHals in short supPly in the
United States or to
defray
local costs of those
capital
Projects which are
approved by
the
International Bank, the use
should be
such
snd
as
to
Restriction
of Private
en¬
Credits
In the
combatting of inflation¬
ary pressures
it is not
enough to
reduce the
public debt, either by
of
the
(Special
to
The
Financial
has
formed
with
J.
offices
Street,
to
T.
at
engage
is
under
no
buy,
&
South
as
a
in
(Special
be
construed
of
as
offer
cn
an
offering
to.buy,
only by
means
of
of
any
of the
to
The
Financial
Chronicle)
affiliated
now
with
Clark
Co., Langford Building.
these
such
debentures
debentures.
for
sale,
The
or
offer
is
as
an
offer
to
made
Prospectus.
NEW ISSUE
March
I
25, 1948
$45,000,000
Columbia Gas & Electric
Corporation
3t4% Debentures Due 1973
Dated
basic
April 1, 1948
Due
April 1, 1973
re¬
industries
as
a
means
Price 101.25% and accrued interest
as
of
Copies
In
stimulation
rates
need
for
of
must
is
savings.;
damage
be
resolution
Chamber
of
recently
that
rates of interest
Commerce
very
not
are
low
makes
the
monetary
manage¬
difficult since it
more
of
one
the
instruments,
useful in the past
proved
influencing economic develop¬
Bear, Stearns & Co.
Treasuries
other
and
mone¬
tary authorities begin to think in
terms of flexible and not rigid
Just
Exchange
Western
as
should
tions
terest rates,
begin
so
Needed
Rates
European na¬
think
of
the
several
qualified to act
may
legally
be
underas
Ladenburg, Thalmann & Co.
A. C.
Al!yn and Company
Wertheim & Co.
Hallgarten & Co.
Lee Higginson Corporation
Incorporated
Blair &
Co., Inc.
Coffin & Burr
Dick & Merle-Smith
Phelps, Fenn & Co.
'
Hornblower & Weeks
R. W. Pressprich
Incorporated
Baker, Weeks & Harden
Estabrook & Co.
Graham, Parsons & Co.
Laurence M. Marks & Co.
Alex. Brown & Sons
Reynolds & Co.
Gregory & Son
William Blair &
•
Weeden & Co.
in¬
Schoelikopf, Hutton & Pomeroy, Inc.
Company
Auchincloss, Parker & Redpath
Company
The Ohio Company
Kean, Taylor & Co.
Burr &
Incorporated
Juiien Collins &
G.H. Walker & Co.
R. L.
Cooley & Company
E. W. Clark & Co.
Company, Inc.
R. S. Dickson &
Day & Co.
Rigid exchange
rates can prove very unrealistic
and greatly hamper economic re¬
covery.
The
recent
action
of
France in
establishing
Company
E. M. Newton & Company
Mackubin, Legg & Company
A. M. Kidder & Co.
Stein Bros. &
■
Ball, Burge & Kraus
Riter & Co.
Thomas & Company
Minsch, Monell & Co.
Schwabacher & Co.
Swiss American Corporation
Fahey, Clark & Co.
Mullaney, Ross & Company
Boyce
Boettcher and Company
Clement A. Evans & Company
Heller, Bruce & Co.
;
The Robinson-Humphrey Company
Wurts, Dulles & Co.
Baker, Watts & Co.
Bosworth, Sullivan & Company
Farwell, Chapman & Co.
J. M. Dain & Company
The First Cleveland Corporation
Incorporated
Granbery, Marache & Co.
Ira Haupt & Co.
A. E. Masten & Company
Johnston, Lemon & Co.
Nashville Securities
McJunkin, Patton & Co.
Reinholdt & Gardner
William R. Staats Co.
Company
Peters, Writer & Christensen, Inc.
Starkweather & Co.
Stifel, Nicolaus & Company
Incorporated
a
Geo. G.
Walter Stokes & Company
Applegate
Caldwell, Phillips Co.
Byrd Brothers
J. C. Bradford & Co.
Biddle, Whelen & Co.
Chace, Whiteside, Warren & Sears
:
Chaplin & Company
Incorporated
free mar¬
ket in certain currencies and also
C. C.
gold market is an important
and necessary step towards the es¬
Davenport & Co,;
Collings and Company, Inc.
.
Courts & Co.
S. K. Cunningham & Co., Inc.
Curtiss, House & Co.
free
tablishment
of
-
more
f
of
will
exchange.
induce
Company
Incorporated
The Illinois
rates.
exchange
& Co.
they should think
in terms of flexible and not rigid
rates
deal'
distributed.
in
rigid
to
terms of flexible and not
a
any
are
Prospectus
Salomon Bros. & Hutzler
interest rates.
Flexible
from
underwriters
such
Eastman, Dillon & Co.
L. F. Rothschild & Co.
The Council recommended
ment.
which
The First Boston Corporation
•
necessar¬
ily innocuous. In fact, the Council
continued, the perpetuation of low
that
in
Incorporated
on
national
for
and
•
declared
ment
securities
I '■
The
monetary
policy, the Council of the Inter¬
rates
■
There
war.
to
satisified.
a
in
ers
obtained
such
in
repaired,
obsolete capital equipment to re¬
place, and housing needs to be
In
be
may
higher savings in rela¬
than before the
war
Prospectus
be
tion to national income is greater
now
the
free market
a
interest
of
ivrilers only in States in which
tourists
realistic
This
to
action
come
to
•-
Foster & Marshall
Kay, Richards & Co.
Pacific Northwest
Company
Grubbs, Scott & Company
Kirkpatrick-Pettis Company
Mason, Moran & Co.
Perrin, West & Winslow, Inc.
4f.
'
Johnson, Lane, Space and Co., Inc.
E. W. & R. C. Miller & Co.
Rand & Co.
Schmidt, Poole & Co.
France, will stimulate French ex¬
ports,. will promote a dishoarding
of
gold
enable
within
the
France.
French
It will
Government
to ascertain the real worth of the
franc
and
thus
to
determine
a
Scott & Stringfellow
Stix & Co.
Wheelock & Cummins, Inc.
Harold E. Wood & Company
an
Kleinkopf & Co.
MIAMI, FLA.—John S. Hill is
securities
a
Mr. Swartz was previ¬
ously with Barcus, Kindred & Co.
solicitation
Ex¬
formerly
was
With Clark Davis Co.
Co.
Vine
business.
circumstances to
or
mem¬
Stock
chronicle)
Swartz
801
Chicago
He
officer of
URBANA, ILL.—John T. Swartz
expansion,
endeavor¬
strengthen
not to
impair the private
terprise system.
J. T. Swartz & Co. Formed
restric¬
Committee,
are
deposits
be
integrated with the
credit control and debt
manage¬
ment policies
of each nation.
bers
change.
the
in the restriction of credit and
the
which
countries
Building, Davenport,* Iowa,
channels.
fi-
allowed to play their historic role
removes
In certain
cial
for
This
specu¬
the
'These
only
useful
Thus,
considerable
a
suasion
economy,
a
grants of goods
and services au¬
thorized by the Administrator of
Economic Cooperation Admin¬
istration. .This procedure is simi¬
should
credit
BURLINGTON, IOWA—Leo C.
Snyder
has
become
associated
with Quail & Co., Davenport Bank
agricultural
Exchequer to
Issues
market.
money
VandenMarshall
the
ticular
should
private
and
Role of Interest Rates
deposit, local
amount
most
interest
suasion.
banks
such
Moral
bill
place, in
tionary
tion of
industrial
production and direct it into the
markets,
the
Snyder Now With
Quail & Co., Davenport
of
agriculture, coal and steel.
program. The
participating coun¬
tries are to
agree to
a
budgetary surpluses,
checking pri¬
checking private credit expansion,
however, needs to be supplement¬
An important
means of checks
ed
by
a
generally
restrictive
ing inflationary pressures in the
credit policy on the part of central
participating nations of Western banks and
by a tightening of the
Europe is
ert
of free
Anti-Inflation Plan
introduced by Senator
berg to implement the
late
inflation, namely,
establishment
stabilization
weap¬
of
the
gives
to
ance
determination.
Certainly
there should be no
thought of
tax reduction as :
long as infla¬
tionary pressures persist.
bank
the
the
and
23
Leo C.
currencies will themselves stimu¬
participating
turn, directly or indirectly, in in¬
creasing exports or in reducing
imports or is of special import¬
respects
present French Government
has shown commendable
in
the
outlays on buildings, plant
machinery except where the
and
the
the
flation
nations of Western
Europe will be
in a position
to take decisive ac¬
tion to correct
war.
issued
of
Capital
age
postwar
incomes have increased with
great
rapidity throughout Western Eu¬
In these various
rope.
in
envis¬
ing in their loan policy to discour¬
and should be devised to reach the
contained
aid
adoption of realistic rates
exchange. The checking of in¬
an
commercial
deposits
American
aged in "The
Economic Coopera¬
tion Act of 1948"
expansion has led to
memorandum
the
an
of
nacing of, personal consumption
expenditures. In line with a recent
to temper the
b.oom, which vis a
leading characteristic of inflation,
special
the
the commercial banks
to
general economic and finan-
consumption
ERP
With
attempt has been
adjust the lending opefa-
should be directed
L
and the
tion of the
franc.
(1331)
discount
discourage borrowings for
hesitate
and
whole,
Europe has
to
means
lative operations
consump¬
whose
CHRONICLE
for the final
devalua¬
:ial
policy of the Government.
Commercial banks have tended to
tion goods and, wherever
possible,
reduce
expenditures.
Taxes
groups,
Na¬
the
the
woria
of moral
-ions of
to
agrarian
of
use
Britain,
-he
process
not
to
the
anti-inflationary
credit
.hade to
budgetary surplus,
a
a
use
xh
sys¬
of inflation which led to the great
wartime expansion in
purchasing
power.
To achieve
as
vate
-he
-
of the
an
Unwillingness
;ates
- bank 'notes
and
decline.
Deflation
will
deposits
thus is the reverse
little
as
On
Western
tne In fee
public
the banking
rate
contrast to that
To the extent that the pub¬
debt.
lic debt held by
tem is reduced,
valid
Present practice in
this regard
stands in marked
stabilized unless budgets
are balanced.
In fact, to check
inflation, a budget surplus is nec¬
essary in order to absorb current
and
1946,
3 V2 %.
on.
be
income
to
however,
All European experience points
to the fact
that currencies can
not
November,
tional Bank of
Belgium has raised
its discount
rate, bringing it from
assets but
current
ac¬
the
received
iince
etary purges block a certain por¬
tion of
currencies
or
FINANCIAL
restricted. The
European nations
have devoted
considerable thought
inflation.
They
to this
will have the
problem and have
necessary raw ma¬
experi¬
mented with
terials to expand
various methods to
production. They
curtail private
will be able to
take those meas¬
credit expansion.
In some
ures which
instances the method
experience has proved
used
has
been increases
in the dis- necessary to combat both
open
couht rate.
On three
occasions and suppressed
excess
resulting from
power
through
surplus
sale of prod¬
from the
United
States under the
European Recov¬
ery
Program. In
addition, the
growth in
private credits must
be
ucts
^nnlv relerred to as a monetary
Sirge and first used by Belgium
L October, 1944, removes by a
maior
cal
quired
portions of tne
This action, com-
supply-
money
? budgetary
I
•
&
Sutro & Co.
Townsend, Dabney and Tyson
Woodard-Elwood & Co.
Yarnall&Co.
Davis
♦
24
(1332)
THE COMMERCIAL
The
NEW BRANCHES *
Export-Import
nounced
Bankers
and
REVISED
CHRONICLE
March
on
Bank
19
Economic Picture
an¬
credit of
a
(Continued from
$5,600,000 in favor of the Societe
Egyptienne d'Engrais et d'lndus-
CAPITALIZATIONS
that
say
tries
18, page 1228, plans for
of
the
Bank
Fifth
the
of
Avenue
York were ratified
ive
boards
rectors.
of
of
the
on
di¬
completion
proposal
John C.
will
New
York
become Chairman
Executive
John I.
Fifth
of
the
head
the
Old
Sherwood
Street
Van
bank.
and
and
Fifth
combined
C.
the
Frissell
directing
Avenue
office
institution.
its
Al¬
Simmonds, Jr., who has
recently in charge of the
lived
commer¬
the
in
most
in
men
for
post
of
President.
name
The
of
the
stitution
York
will
and
be
Bank
Fifth
agreement
Bank
of
in¬
merged
of
Avenue.
provides
that
New York.
Upon
Limited
the
merger
have
total
completion
combined
bank
of
resources
of
ap¬
proximately $450 million.
The
Bahk
founded
in
of
New
1784; it
organized ut
York
was
nnd William
ander
was
named
President
Seton, Cashier.
Alex¬
Hamilton,
inal directors
one of the orig¬
played'the most ac¬
tive role, it is
stated, in the bank's
their
a
week
these
in
It
that
women
the
transformed
was
into
tivities
became
1931
it opened a branch at
of
banks
the
bank
for
the
Bank
of
*
*
Irving Trust
York
New
York
and
Madi¬
of
New
the promotion of
announces
to
Vice-President
and his appointment as head of its
branch office on West 48th Street
Rockefeller
He
Irving
started
ment
Plaza.
the
and
in
from
in
has
Mr.
of age joined
following
Yale
the
that
Credit
been
Atter¬
a
his
year,
Depart¬
member
of
loaning staff at the main of¬
fice for
more than 10 years
except
for nearly four years in the
Army
of the United States in which he
was
a
Captain.
*
*
*
dent
of
The
New
York
Savings
it
dent of the Bank.
the
was
in
Also,
first financial institu¬
America to use "Trust
Britain
and
Jan. 1, 1953.
Assurances
Egyptian Government that
will
make
the
necessary
ex¬
Chemical
Export-Import
Construction
Corpo¬
Building, New
ra, Empire State
York, has been engaged
Fertilizer
by
the
Company for the design
supervision of this project.
Mr.
Martin
said
that
the
cium nitrate fertilizer to
duced
is
expected
to
cal¬
be
ingly,
Bank,
at
8th
Avenue
(Continued
Mr.
on
and
14th
Armstrong
page
be
to
that
separate
present
basic
from
scares
The
one.
It
the
its
completion is of great
interest in that country.
senior
Gilbert,
32)
formerly
industrial
analyst
with
Co. and previously
Manufacturers
Trust
Goodbody &
with
the
Co., has joined the research staff
of Investors
vestment
tal
Management Co., in¬
advisors
Investors, Inc.,
to
a
Fundamen¬
major invest¬
ment company.
In
his
two
decades
of
Wall
Street experience Mr. Gilbert has
specialized in the investment an¬
of
institutional
accounts
insurance company port¬
folios and college funds.
As one
as
of the organizers and
present sec¬
retary
vestors
been
on
of
of
the
Committee
America
quoted
in
has
now
the
been
a
dis¬
period
of
hanging
afraid,
time
It
risk,
I
becomes greater
The chance of
that
passes.
ultimate
the
he
forward
over
is
a
am
as
an
gradual
readjustment
from postwar inflation to postwar
is growing
normal
I
•
know
as
a
that
group
purchasing agents
going to be as
are
realistic about present disturbing
cross-currents as they were before
about the changing pattern of the
business trend.
Some
items
little
a
will
more
of
In¬
Instead
of
holding
stocks
and commitments down to a min¬
imum
working
basis,
will
you
have to step them up by.another
30 to 60 days. This addition does
not ignore later risks.
It is
My
subject
"World
Circumstances
Trend s."
forced
time
the
on
I had
to
me
was
spend
Price
have
considerable
immediate situation.
planned originally to discuss
rather
thoroughly
some of
the do¬
know' that
that
and
I
will
you
comments
some
cut
you
them
often
touch first
public
press
tic
to
on
price
trend.
still
these
on
want
factors,
will forgive
the bone.
I
me
Let
if
me
of the domes¬
some
7;:"$7,500,000
one
Political
Factors
One of the
political factors that
will affect this year's commodity
price trend is the farm support
law, which provides a floor under
a wide variety of farm
products.
the
so-called Steagall com¬
are the object of
modities, which
orices for farm commodities
aver¬
higher than prospective
port levels. ~ Although there
sup¬
spot
age
decline
some
has
already,
prices of most farm commodities
still vulnerable.
are
Agricultural
support
has
both
favorable and
unfavorable impli¬
It will prevent any price
cations.
decline in this section of the price
structure from being as precipi¬
tous
and
damaging to
as
and
processors
21.
From
it
as
growers
in 1920-
was
the
viewpoint of the
public,
however,
it
means that a longer period will be
required before the squeeze on
consuming
purchasing
The
tion
less
which
to
the
elec¬
influence
may
has
is relieved.
power
extent
psychology
importance for
direct
price movements but nevertheless
deserves
fore
consideration.
some
less there is
Un¬
sudden change be¬
a
election time, current trends
rather
definitely
that
indicate
there will be
Republican Presi¬
whole, this should
stimulating to business psy¬
be
On
a
Accompanied by war
it will further distort the
scares,
normal
cause
the
pattern; but it will
change in the basic
any
nomic distortions that
not
eco¬
at the
were
bottom of recent uncertainties.
Demand,
way or another
by
When
make
can
they have
as
these
excess
each dollar of reserves
loans
factor
at
is
heavy
the
the
government
reserves;
be ex¬
can
moment, therefore,
ownership of
bank
is
Unless the
willing to let the
bond
he
market go to pot, these can
sold to provide almost unlim¬
ited
credit that is
is
so
The
reserves.
amount
of
potentially available
tremendous that it defies the
imagination.
commentators have em¬
phasized
this
point beyond all
others. They have applied it di¬
rectly to the commodity price sit¬
uation and reached the
conclusion
that inflation stilf has a
to
run.
long dis¬
They have ignored
entirely the fact that this supply
ot credit is only a
potential sup¬
ply; that banks do not make loans
merely because it is possible to
make
them; and that purchasing
agents
merely
do
of
changes
not
because
buy
it
is
commodities
possible
to
obtain credit.
Two years ago, or
even
a
year
in
consumption,
when
measured
ultimate
only
When de¬
slowly.
mand is measured in terms of new
orders, however, there
are
marked
fluctuations reflecting the change
in
psychology.
There
left
are
the
on
very
few commodities
It is no
longer worthwhile to argue about
the relative
strength or weakness
in such industries as textiles, be¬
scarcity list.
cause
recent developments have
clearly revealed the weaknesses.
Developments of the last few
days, however, have revived fears
of
scarcity, buying in some mar¬
kets has been stepped up, and the
price
structure is stronger now
than it was
early last week. This
is
a
factor
nized.
Many
tance
terms
as
panded, roughlyinto $6 of new
deposits.
The most inflationary
government securities.
defense
Supply-Demand Factors
long
Minneapolis-Honeywell Regulator Company
March 24,1948.
of
is
much
a
spending than has yet occurred.
Monetary Factors
banks
Corporation
change
is
factors.
they make loans
they create deposits against which
can be drawn.
Commercial
Union Securities
is
rather
chology,
world
checks
oj record only.
No
there
expansion
con¬
factor
deflationary,
unless
greater
tance to the
has
New Issue
This announcement
appears as a matter
monetary
reverse.
indicated
dent,
Ihe banks.
offered jor sale.
the
mestic and international develop¬
ments that are of basic impor¬
field.
are not
than
mere¬
ly a recognition that the.>nearby
patterp has again been distorted.
created in
placed privately and
cerned, the
mildly
now
been
smaller,.
As you know, most of the
money
in business transactions is
were
deposits.
So far as commodities are
temporary wartime support, will
receive help through the end of
the year.
At the moment, spot
risk
a
operations.
used
These securities
debt
Even
subjects related to the financial
2.85% Debentures, Due March 15, 1963
and
deflation has again been deferred.
But so long as it is deferred,, it
etc.
Investors. Management
A.
of
liberally—most metals, stockoile
items, ERP items, some textiles
Robt. Gilbert Joins
Robert
follow
pattern
and
again,
however,
has been slowed to
retirement by
the Treasury is having an effect
walk,
rumor,
may
following inflation is
one.
torted
At the moment,
normally would
fact
series of
a
the
than, it
deflation
pro¬
relieve
serious shortage of fertilizer which
now exists in
Egypt and, accord¬
national
credit.
its expansion
is
have been given to
Bank.
alysis
Street, New York announced that
the Board of Trustees has elected
Edwin F. Armstrong Vice-Presi¬
tion
it
Great
,.
Richard L. Maloney, Jr., Presi¬
Clearing House Association list.
It is added that the Bank
of New
York is the oldest bank
in Amer¬
ica using its
name.
on
$20,000,000,
equipment to be
change available to meet interest
and principal payments when due
such
the
original
last
of the
in
events
to
*
Company
Vice-President
at
difficult
purchased
impor¬
shown
on
that there will be many exaggera¬
tions, that it will be much more
of the
more
restriction of credit
I
have to be purchased
Frank M. Atterholt from Assistant
Trust
Company, operating under
charter of the trust
company
but
retaining its No. 1 on the
ac¬
short period.
a
The rate of interest is 3^2% and
the loan is to be repaid in six
$19,000,000
some
Avenue and 73rd Street.
son
1928
public control
state, In 1922
business
important
In 1890 the bank bought the
prop¬
erty at 530 Fifth Avenue, and in
the
the
a
more
graduation
merged with the New York Life
Insurance and Trust
Company to
was
district the bank's commercial
early history.
chartering the bank, this, it is
having been the first step
bank
plant
The total esti¬
Egypt.
with
much
was
plainly that the voluntary
by banks has
been surprisingly effective.
There
is still a large volume of actual
regret very much that these
have
developed as they
have.
I regret very much that
this is an election year. Questions
of
pure
domestic politics imply
neighborhood gradually
ernor
toward
serve
fertilizer*
of the project will be
cost
about
and
years
said,
to
founded."
As
mated
sent
envelopes
was
the
holt, who is 41
In 1791 the Gov¬
of New York
signed a bill
drove
and
with
the bills.
were
of checks.
markets
footmen
pay
the
banking
women
women
15 that year.
McDougall
of
most
Street; the
a
meeting on March
The capital of $500,000, consisted of 1,000 shares of
$500
each.
General
Alexander
neighborhood,
front of the
these
was
actually
families
use
to
by charter to 25 persons, the new
Board of Trustees will be selected
from the present boards of the
banks.
did
their
of
an¬
experi¬
an
prominent
the
Wall
in
that the
be
official
an
Once
Bank.
As to
nitrate
sion factor
markets, will have to be
up by something more
tangible if those markets are to
stay strong.
It will have to be
followed up by something more
tangible if the sagging tendency
in general business activity is to
be deferred again for more than
United States engineering services
to be used for the erection of a
Suez, Egypt.
I believe this credit expan¬
tant that it is right now.
Develop¬
ments of the last 60
days have
many
Bank, stated that the credit is
purchase of equipment and
calcium
too
is
4)
page
ago,
The war scare, which is
to stimulate buying in
followed
lor the
rear
It
has
early to
pattern
approximately equal semi-annual
instalments, the first of which is
payable on July 1, 1950, and the
44th
Philip
made Pres¬
was
unaccustomed to the
New
Avenue
surviving charter will
in
at
For while many of the na¬
tion's
banking department, is slated
will
was
named Cashier.
was
formation
cial
the
Fifth
nouncement says:
"The venture was
ment.
two
House,,
Volkenburgh
been Vice-President of the Bank
of New York since 1941 and'more
the
Bank
Downey, President of The ident, John H. Sherwood was
Bank, will be the elected Vice-President, and A. S.
of The
bert
The
Avenue
in
1875, having had its
inception in the basement of the
Chief
merged
Fifth
man¬
Avenue
Vice-Chairman
of
The
founded
1931,
and
as
guaranty of continuity of
agement.
merger
since
board
a
Straphagen, President of
of
Bank
the
of
ihe
the
basic
the
altered.
that.
enough
McC. Martin, Jr., Chair¬
of the Board of Directors of
man
in
they
This, it is observed affords
occur.
will be taken by the stockholders
of the two banks
on
April 15.
Upon
Under
vacancies
New
and
William
unique.
it, trustees are
elected for life, with power to fill
by the respect¬
trustees
Action
is
York
Bank
Chimiques (Egyptian Ferti¬
and
Chemical
Industries,
Ltd.) of Cairo, Egypt.
In announcing this
credit, Mr.
Company"
merger
and
a
New
say
as part of its title. It is
pointed out that the bank's charter
issue of March
our
been
lizer
As noted in
Thursday, March 25, 1948
World Price Trends and the
Grants
CONSOLIDATIONS
OFFICERS, ETC.
FINANCIAL
Export-Import Bank
Egyptian Loan
News About Banks
NEW
&
that
be
must
For the time
recog¬
being at least,
the position of the seller has been
strengthened.
Even
in
the
metals
field, how¬
ever, the position had been show¬
ing signs of weakness.
mobile
only
industry
consumers
was
The auto¬
the
industry
about
goods
that could
expect to hold its
consumption
up
to
steel
current,
or
somewhat
sonable
pliances
higher, levels for a rea¬
length of time. Small ap¬
ran
into
trouble
many
months ago and major appliances
had begun to
slip.
Volume of toy
production will probably be lower
than last year.
It had seemed
tarts
industries, tomultitude of small
these
that
likely
Number 4684
167
Volume
with a
"suppliers, would use a little
from now on, gather
little more> as they were
estimating a few months ago.
Despite the fact that many of
steel
'ess
THE COMMERCIAL & FINANCIAL CHRONICLE
lessT7stirtrp« a,br°ad
orice
pace
food
a
tl an
wU1 have
ff£ects 011 the
fiom now
Wi
level
supplies,
unless
weather
hf be
^unfavorable from
will
mUch
were
a
w°rld
World
on
year
now
recognize
a
is
on
this fact.
many items had
practical minimum, and should
be
now
stepped
up
remain
unchanged.
have complained covery m many
much- is being produced at too
these for some time behmrwJ^1
a^ough falling high a price. Unit volume, for an
have been shortages in a relative
5lnal goals> nas never- increasing number of items, has
theless made
progress.
The sup¬
sense only. In addition to the new
We will not be
ply-demand situation is nearer a been declining.
manufacturers, established proc¬
safe until this situation has been
balance
than it was
year
essors were operating at a phe¬
ago.
corrected, and the longer the cornomenally high peacetime rate, Furthermore, speculative buying
t
by many private foreign
concerns
Shortages were marginal rather
general. Stocks were rising
the line.
than
all along
Without the war scare, I believe
found that the
first postwar recession in business
activity had already begun. There
is no doubt that declining unit
have
would
we
being reflected back
to the manufacturing level for an
increasing number of items.
It
seems to me doubtful that private
investment
in new plant and
volume was
equipment will be as heavy this
year as it was last year, unless
industrial mobilization is actually
It had seemed doubt¬
ful that the building and construc¬
carried out.
tion industries would show a fur¬
ther increase this year, even on a
basis, in
view
of high
buiiding costs and less favorable
being
is
It
might pay
there
to recall that
us
decline
a
was
production
similar
a
would not be
15
7V2 %
April
in
and
see no reason
decline
this
time
that
decline of
a
to .25%
provide
in production would
real test for some con¬
a
of their earning ability unnew and
higher break¬
cerns
the
dei
points.
even
made
even
This test would
difficult
more
Commodity
existing
profits
cttributed
tion.
to
as
last
year
were
inventory apprecia¬
If this is replaced by inven¬
losses, and if physical activ¬
ity is also declining, it is plain
that a considerable degree of fi¬
tory
nancial
stringency and a rather
showing
for
profits
in
c'jsmal
sections
some
of
industry should
be expected.j
developments have un¬
doubtedly delayed this test. But
by delaying it, they have probably
made it
a
difficult
more
it comes.
;
Foreign
when
one
rial
tate
to
that
say
v
I would hesi¬
this
prices.
importance
political
various
impacts
more
.
ments from the United States will
have an effect on
supply here as
well as
imports into this country.
Economic
conditions
abroad
what
:
various sorts may prevent
we
used
GW of trade.
the
to
call
Here
things to be
Inflationary
normal
a
are
a
few of
considered.
generalities^can
be
made
^bcut inflation abroad. This has
heen
a
wartime
velopment
ihi
in
ing
"
and
and
it
Prerequisite to
Ff rt
safe
to
and
sort of fi-
any
economic
There is
stabiliza¬
doubt
no
that
Success
the
played by the United States
does
not
imply
that
the
v/iii attemP* to combat inflation
I
successful. France will
u
probably provide
n-ting test
also
on
the
most inter¬
case, with Great Brit¬
playing
Nevertheless,
an
I
important role.
the in-
believe
settle¬
and
there
will
be
other
full-scale
a
on
If
it
it will be
drastic restric¬
Speculation of
by
tions and controls.
that
type
would
street—all
should
mobili¬
comes,
accompanied
scares.
risk
be
a
and
one-way
profit.
no
Offer)
an
Notice
Holders of Dollar Bonds of the
to
Chile 6% External Sinking Fund Bonds, dated February 1,
the nature of the
product.
less production is limited to
Un¬
few
a
high price in controlled
areas has always in the
past been
followed by increased
production
areas,
a
in other
commodity cartel must be ap¬
praised on its own merits. Gen¬
erally speaking, they
be able
may
the normal effects ol
overcome
supply and demand relations tem¬
porarily,
when the situation is
or
the situation
far,
has
Chile
Chile External Loan
Republic
of
Chile External Loan Sinking Fund 6% Bonds, dated
Republic
of
Chile External Loan Sinking Fund 6% Bonds, dated May 1,
The attempt, led by the United
a freer basis
trade, has not made too much
States, to return to
countries
Many
progress.
will
principle, but their ac¬
dominated by the pres¬
in
tions
are
sures
of the moment.
Generalities
Here again
should
the
Nevertheless
be
countries
foreign
with
of
Chile Guaranteed Sinking Fund 6%% Bonds of 1926,
trade,' particularly
twofold:
(a)
with
results
The
Mortgage Bank of Chile Guaranteed
increased
re¬
quests for United States aid, and
(b) restrictions cn exchange and
movements.
merchandise
of United
The trend
become
been
downward
quarter
second
of
last
decline will probably
The
year.
States net
has
the
since
,
during the
sharper
even
early second quarter of this year.
When ERP funds are authorized
there should
but from a
placed,
orders
and
recovery,
some
level.
price stimulating factor,
demands in the Um'ted
States
market
As
a
have
probably
passed their peak. As competitive
conditions return, foreign sellers
will continue to aim at the United
States market for their exports.
mortgage Bank of Chile Guaranteed Five Year
of
currencies will have
devalued sharply.
Such
Most foreign
be
ever,
that
Great Britain, how¬
will put off this
long
as
as
devaluation
possible.
It is a threat
have
as
will
be
to
reckoned
will come
much warn¬
with, however, and it
quickly and without
*
ing.
"
Conclusions
My summing up
Until
a
few
,
^
,,
will be brief.
days ago, a reces¬
sion in business
activity had been
deflationary path.
The international
set
up
which
crisis has now
important cross-currents,
have
already
begun to
modify
operating
this
pattern.
policies
will
Foreign Bond¬
Council, Inc., representatives of the
debt readjustment
new
Current
have
to
rate of
the
regard thereto will be made at a later date.
The Foreign
Bondholders Protective Council, Inc.,
has reviewed the
proposed debt readjustment plan pro¬
posed by the Chilean Government, and upon
tion
of
formal
offer
the
recommend
will
holders of dollar bonds.
Due to the effect of
it
favorably
to
of the Re¬
in 1931, to sus¬
pend service payments on the above issues. This sus¬
pension of service continued until the adoption in 1935
of Law 5580, under which the external funded debt has
public, it was necessary, commencing
posed
new
dollar debt
The substance of the pro¬
since 1936.
been serviced
readjustment plan for the external funded
is set forth below. Similar readjustment
agreed upon for the external funded
pounds sterling and Swiss francs.
plans have been
debt in
Under the
proposed
holders of outstanding
plan for the dollar debt,
new
dollar bonds will be entitled to
exchange them for an equal
January 1, 1994, which will be
obligations of the Republic. Interest on the
the direct
new
principal amount of new
bonds will accrue from
lowing rates for the years
January 1, 1948 at the fol¬
U/2%
1949 and
1950.
2
.
21/2%
3
During the years 1948 to
dollar bonds will share
funded debt in all
fund for this
amount in
to
...
.
a
The
annual
amount equal
outstanding at Decem¬
exchange rates. Such
applied semi-annually to the amortization
bonds of the external
sented to the new plan at
least
a
proportionate amount
amortization fund.
Commencing January 1,
1954 the Republic will pay
total service in the amount
of 4% of the aggregate prin¬
dollar bonds issued and outstand¬
ing at December 31, 1953. If under an extension of the
offer, additional new bonds should be issued under the
cipal amount of new
of the service shall be increased in
the corresponding proportion. There will be provided
for amortization of the new dollar bonds annually com¬
plan, the amount
1954 the difference between the
total service requirements on such basis and the annual
interest requirements on the new dollar bonds at the
mencing January 1,
plan to the outstanding dollar
interest, amortization or otherwise,
as to
extend such more favorable
Republic will
treatment to
all the holders of the new dollar bonds.
Republic will also agree that if at any time after
January 1, 1948 any lien or other
created
any
on
copper,
iodine
or
charge should be
nitrate revenues to secure
external debt, the new dollar bonds shall ipso facto
share in such lien or charge
creditors of the
The
pari
passu
with
any
other
Republic.
Republic will offer to bondholders compensation
bearing certificates for any
in the form of non-interest
loss of interest which
to non-assent or
they
have suffered owing
may
of
late assent to Law 5580. In the case
bonds assented late under
Law 5580, the interest cer¬
holders who tendered
tificates will be issuable to the
5580. In {he
such bonds for assent under Law
of
case
bonds, the interest certificates will be
non-assented
issuable to the holders
of such bonds who exchange
such bonds under the new plan.
new
on
bonds assenting to the new plan that are
3V2 years prior to the year of such assent,
The
/
dollar bonds for
June 30, 1951. This
be extended by the Republic.
Republic will preserve the rights to interest
and amortization of the
to
v .'
••
.
bonds will remain open until
offer may
total external funded debt in an
funded debt payable in
any currency by the purchase of bonds when quoted
below par, otherwise by drawings at par; provided that
there will be applied to the amortization of bonds as¬
of the
offered through the new
bonds, either
the
after
1948 treatment more favorable than is
1,
January
;■
%
31, 1947, converted at current
of any-
of such loans or bonds ex¬
The offer to exchange outstanding
general amortization
dollars of $2,531,000 being an
fund is to be
that if the holders of any
1953, inclusive, the new
currencies in
loans outstanding in
provided
changed therefor should be accorded at any time
will be cancelled.
with other bonds of the external
1% of the total of such debt
ber
■
the right to apply additional
reserves
the amortization of bonds.
As regards the Chilean external
%
1951, 1952 and 1953.....
dollar bonds when quoted below
pounds sterling and Swiss francs, it will be
dated 3 to
■0:.^ 1948
new
Republic
Coupons
indicated:
Such fund will be applied to
per annum.
amounts to
then
*
the world-wide depression and
drastically curtailed exchange position
the
comple¬
by necessary legislative* and other
measures,
dated
;
otherwise by drawings at par.
The
proval of the Chilean Congress and a definite announce¬
ment with
3%
purchase of
par,
plan for the above
plan is subject to the ap¬
This readjustment
issues.
•'
.
External Sinking Fund Bonds of 1330, dated May 1, 1930
Following recent negotiations with the
a
.
7% External Sinking Fund Bonds, dated January 2, 1928
Santiago, Chile, Twenty-One-Year
1954 and thereafter,
closely associated
direct effect
the United States price level.
to
v •
City of santiago 7%
This factor is
on
6% Agricultural Notes of 1926, dated December 31, 1926
Thirty-Ojne-Year 7% External Sinking Fund Bonds, Series A,
September 1, 1929
Devaluation
with trade and has a
7
Sinking Fund 6% Bonds of 1928, dated April 30, 1928
dollar bonds maturing
foreign
,
Sinking Fund 6% Bonds of 1929, dated May 1, 1929
the
have
"'-v.,';
:
dated June 30, 1926
Mortgage Bank of Chile Guaranteed
balance
adverse
an
States.
avoided.
majority
find them¬
great
64/2% Bonds, dated June 30, 1925
Mortgage Bank
offer of
been
Bonds, Guaranteed Loan of 1915, dated December 8, 1915
Chile Guaranteed Sinking Fund
Republic of Chile wish to announce the basis of an
Trade Restrictions
of
#
1930
of
holders Protective
selves
March 1, 1929
Mortgage Bank
by the large demand.
of
Sinking Fund 6% Bonds, dated September 1, 1928
Water Company of Valparaiso 6%
city
items
agree
■
Railway Refunding Sinking Fund 6% External Bonds, dated January 1, 1928
of
of
Foreign producers of
as
wool, tin, cocoa,
etc., have been able to obtain a
price even higher than warranted
of
:
,
1927
Republic
been
unusual.
such
Octobei* 1, 1926
Republic
Chilean Consolidated Municipal Loan
unusual.
So
Sinking Fund Bonds, dated
areas.
Each international agreement or
to
Following Loans:
Twenty-year 7% External Loan Sinking Fund Bonds, dated November 1, 1922
of
of
■untries in this direction,
his
scare,
that
difficult
more
in
are
i,:LC<?nnecti.°n with European re-, developing. The price trend was
rfs forcing the hands of some shifting from an inflationary to
f
its
put off by the war
it is quite probable
Republic
on
say
^ ^as no*
ended. NeverJS' many countries are adopt¬
deflationary policies. This is
ancial
tion
postwar de¬
is
But
war.
ment has been
Chile 6% External
countries
Trends Abroad
zation.
for
removed.
are
separating fact
Republic of Chile
those
as
war
will
though government restric¬
tions of
speculate
country
Chile
affect the competitive
position of
foreign buyers in world markets,
even
changed by the war scare,
changed unless
actually begins to
that it will not be
mobilize
of
will be
But I do not believe you
the
of
have
beer;
surprising.
0 Purchasing agent can afford to
ignore the
foreign situation. Ship¬
sudden and
ever.
of
lower
more
than
been
Republic
tension, but there is
doubt that
rumor
Republic
be
no
from
interna¬
has increased in times of
the
problem
if
just how
you
commodity
cartels, however, depends greatly
exports
Developments
-
the
tional agreements and
.
.
Foreign developments have al¬
ways been important, either di¬
rectly or indirectly, to the United
States price level.
cartels such
before
cases being resumed.
The
effects will be to reduce the
range
of fluctuation in some
raw mate¬
United
.
Recent
uncertainties
Your
only be guessing
tell
many
the
it prob¬
About 30% of cor¬
ably would be.
porate
time,
same
I
to
(This Announcement is not
and Interna¬
tional Agreements
wholesale price level were declin¬
ing at the.
afraid that you may be left
for some time before
am
dangling
of
be
if
I
Commodity Cartels
considerably greater.
is plain
And it
of
between
July last year. I can
why
,
increasingly bv
imports and
control
foreign exchange.
dollar
tendencies in other fields.
curbed
stricter
dis¬
more
long
would
tried
Too
of shortages,
off the
it will be put off.
I feel certain
that this basic difficulty has not
by 30 to 60
Nevertheless certain basic prob¬
lems
put
these
I
days.
than they
Industrial re¬
Western Euro-
is
turbing it will be.
greater
ago.
consumers
these
rection
Coverage of
been reduced to
bondholders who have assented
Law 5580 and who do not assent to
the
that the
new
plan.
It is expected
This announcement is not an offer.
proposed plan will be submitted promptly to
the Chilean
Congress in order to obtain the enabling
legislation for operation of the plan as soon as prac¬
1948.
ticable in
Further announcements with regard
plan will be made in due course.
to
the
\
The following statement has been authorized by
new
:;<
*
*
Foreign Bondholders Protective
United States to be
*
*
.
Council, Inc., of the
plan of
Republic of Chile for adjustment of its dollar bonds
offers material improvements,
the
.
included in this announcement:
"The Council considers that the proposed
the
"
the
bonds
prospect.
greater
a
service
on
When the Republic makes a formal offer on
completion of the necessary
mal measures, the
by dollar
including
than at present or otherwise in
legislation and other for¬
Council will recommend acceptance
bondholders."
Jorge Alessandri
Minister of Finance of the Republic of Chile
New York,
N. Y., March 24, 1948.
.vm
26
THE COMMERCIAL
(1334)
&
Thursday, March 25, 1948
CHRONICLE
FINANCIAL
What Wall Street Is
Securities Salesman9s Corner
(Continued from page 18) ,
States Steel?
243,000. Of Stand¬
ard
By JOHN DUTTON
WHY DISCRIMINATION
Oil
New
out
Jersey?
170,000.
the
on
000
(Continued from page 3)
stockholders.
be
extended
Wall
to obtain lower
The
list
raises
woulc^have been $21,000 instead of $8,000.
Well how about it?
Do
have
we
issue to take before
an
money
listed
each
MILLION
PEOPLE
WHO
OWN
AND
the
bonds
is your issue
P. S.
And
are
(some) builders able to obtain all the
in
they desire to erect homes for veterans
swamp-lands, without necessary sanitation facili¬
New
policy?
surance
for
these
loans
which
have
sively
generous basis?
alize the financial
been
made
upon
an
exces¬
Our politicians seem to liber¬
machinery of the country when and
where it
can
ballot box/
produce the maximum reaction at the
through-their insurance
companies,
Halsey, Stuart Offers
Kansas Gas & El. Bonds
Halsey, Stuart & Co. Inc. pub¬
licly offered March 24 $5,000,000
Kansas Gas and Electric Co. first
mortgage bonds, 3y8% Series due
March 1, 1978 at 101.25% and ac¬
crued interest.
The bonds were
at competitive sale
on
a
received
by
present
facilities
and
for
the total
104.25% to
special
redemption
scaled from 101.28% to
100%.
/
t
Kansas Gas and Electric
Co. is
and sale of electric
power and
W. L. May New With
Kean, Taylor & Co.
Kean, Taylor & Co., 14 Wall
Street, New York City, members
of the New York Stock and Curb
with the firm in the stock
depart¬
ment.
(Special
LOS
erett
to
The
Financial
ANGELES,
J.
McGovern
Chronicle)
CALIF.—Ev¬
is
now
con¬
nected
with Gross, Rogers &
Co.,
458 South Spring Street, members
of
the
Los
Angeles
Stock
CONSOLIDATED
(Soecial
to
The
Financial
Chronicle)
now
with Wagenseller
f
&
Durst, Inc., 626 South Soring
Street, members of the Los Ange¬
les Stock Exchange.
GOLD
CANON
MINING
OIL
OIL
1
&
'
&
MILLING
COMPANY
GAS
MACKINNIE OIL & DRILLING COMPANY
GOLD
MINES
Simpson <S- Company
California Building, Denver
2, Colorado
Telephone KEystone 3101
safety
and
bonds—or in life insurance.
Government agencies and
rations
corpo¬
sell
bonds,
which
are
merely evidences of debt, both to
tions
with
ent
of
investors
a
institu¬
to
to
invest money
minimum of risk. At pres¬
there
is
this type
country is
small
over
and
seeking
adequate
an
of
prosperous
investors
living
The
and
have
many
surplus
a
expenses.
,
•;
Capital
kind
capital,
of capital
is
"risk money"
or
invested in ownership of
a
corporation, usually in common
stocks and preferred stocks. While
—money
small
investors
stocks at times,
buy
the hope of a
a
Because high incomes
are
heav¬
ily taxed, there is, at present, a
shortage of this type of capital.
Wealthy people, who formerly
supplied it, have little surplus
after taxes,
living expenses and
other obligations.
As a result, just now bonds are
high and stocks are not in great
demand. ; This
is
situation, since
it
Bell Teletype DN 157
all
the
shares
In
listed
our
be better for the investment busi¬
and
ness,
turnover
would
for
investors,
if
the
faster. Our members
was
make
into
into
cash
or
put
securities
that
have met the
listing requirements
Exchange. Investors as a
rule do not put their money into
the
of
securities
there is
unless
they
know
market where
a
that
they
may
without delay, at the best
prices. Transactions on
this
Exchange are immediately
made public for all to see. This is
accomplished through some 2,300
tickers throughout the nation, and
sell,
available
is
published
tables
of
our
in
daily
The amount of trad¬
ing and the prices are a matter of
public' record.
The
process
of
newspapers.
providing capital for industry and
business
requires
that
as
the
on
such
York
%'
•
Organized
market
a
New
Exchange.
Stock
'
Securities Markets
Indispensable
In
free economy such as ours,
a
more
and
money,
highly
business
within
a
narrower
investment
are
survive and
to
tion
of
Such
nationalization could
a
ily merge into
I
if the nationaliza¬
industry is to be avoided.
eas¬
police state.
a
talking
am
people
range.
specialized
indispensable. They
necessary if free enterprise is
are
price changes probably would be
$
•
to you
young
of all kinds of
possessed
-
You
be
may
in
manner
interested
which
the
in
New
the
York
emotions, all variety of plans, all
types of ambition. Because you
Stock
ycung
and
happened
to
century,
part of
critical
Exchange
brings
buyers
together. A man in
Joplin, Mo., may go to his bank
tomorrow morning and give an
sellers
order
to
sell
Joseph Lead
100
shares
common
of
probably won't have
but it will telephone
er,
St.
stock.' The
bank
a
buy¬
to
an
office of the New York Stock Ex¬
firm
change
business
sale.
with
and
The
which
offer
order
the
will
it
does
stock
be
for
relayed
you
a
You have
arts
sciences.
and
sive
stock.
same
In
matter of
a
few
a
material
your
the
New
York
Stock
Ex¬
change meet the investment or¬
to buy and sell, and there
the opinions, the emotions, the
hopes and fears of investors all
the United States and in for¬
over
eign countries
are
reflected.
has
been
concerned, than the
preceded it.
tinue.
has
better
far.as creature comforts
so
deal is consummated.
On
Mankind
strides, in the conquest
things. Each succes¬
generation
off,
are
minutes, or less, according to the
quickness of communications, the
-
a
of history.
era
choice but to live in
no
other
an
destined to be
are
world-shaking events.
The past century has been a
period of far-reaching and ex¬
ceedingly rapid progress in the
made great
Exchange. There, an¬
firm, with an office in, let
Seattle, Wash., will have
order to buy 100 shares of the
women
time of
a
of
say,
young
have been born to
live your active lives in the last
three quarters of the twentieth
York Stock
us
and
men
promptly to the floor of the New
tunately,
one
which
This progress, unfor¬
does
have
not
to
con¬
It may cease—and cease in
life-time;
•This progress has had
a
price.
It has made modern life extreme¬
ly
complicated.
portation,
Efficient
communications,
easy
dissemination
trans¬
cfevelopmeht
the
of
the
all
of
wider
kinds
of
knowledge, millions of machines,
the growth of the
Listing Requirements
Before the New York Stock Ex¬
population, the
concentration of life in huge
cities
short, the industrial revolu¬
—in
change accepts a security for list¬
ing, the company meets certain
tion and the delicate division and
rigid and well-defined qualifica¬
tions.
I need not go into all of
sulted
them
here.
One
there must be
of
a
of
them
is
that
sufficient number
shareholders to indicate
a
sub¬
stantial market interest in the
se¬
curity; another is that comprehen¬
sive
financial statements must be
made
public
statements
annually, earnings
quarterly,
and
that
other pertinent
out
which the
information, with¬
investor could not
subdivision
labor
of
from
it—has
which
made
re¬
each
life decreaSingly isolated and in¬
creasingly intertwined with every
other
life.
munity,
No
family,
of
no
com¬
the na¬
nation is eco¬
segment
no
tional
life, and no
nomically and socially independ¬
ent
except
at
the
cost
of
advantages in the industrial
those
revo¬
lution has brought us.
This
interdependence, this liv¬
a
We
do
not
mend"
any
not progress unless there is
money
people
who
are
willing to risk their funds in
promising enterprises and under¬
takings. At present I
considerable
,cash
healthy judge the value of the stock, must ing so close together with the weal
encourages cor¬ be made conveniently available. and woe of the individual so de¬
not
seeking additional fundfc
in debt rather than to seek
equitv capital through the sale of
additional
shares.
There is
an
a
securities
their
organized securities markets and
to go
from
speculators may turn
their
once.
porations
available
and
a
common
large risk in
good return.
assume
,
vestors
information
Exchange as
"gambling" institution will be
surprised at these figures. I'll be
perfectly frank with you; it would
although usually
is able and
machinery because it pro¬
vides a ready market where in¬
financial
hands.
Exchange
essential part of our invest¬
an
ment
the
ders
other
venture
supply
since the
money,
alarming
shortage
of
"venture
capital," and a free economy does
Established /929
B. E.
seek
high
liquidity, are satisfied with a mod¬
erate yield. They put their
money
in a savings bank or in
govern¬
ANGELES, CALIF.—John
S. Weller is
KINNEY-COASTAL
UNITED
v.!
two kinds of capital,
income brackets who
LOS
is¬
Millions of small invest¬
who
ors,
With Wagenseller & Durst
willing to
■
KUTZ
Ex¬
bond
sparingly, the big source of risk
money is the man in the higher
PRIMARY TRADING MARKETS
CRESSON
are
in
.
two broad classifications which
overlap.
Gross, Rogers Co. Adds
en¬
comprises most of the
southeastern portion of Kansas in an
larea covering
approximately 6,000
\\
.
Venture
change.
company
There
or
invested
V:
=•_
private
an
territory served by the
sues.
ment
operating public utility principally
engaged in the generation, pur¬
chase, transmission, distribution,
ergy. The
received by the
Exchanges, announce that Winston
The company Lewis May has become associated
the Bonds range from
are
revenues
company.
mately
$14,350,000
(including
$740,000 expended in 1947).
General redemption prices of
prices
small
largest city in Kansas, has an esti¬
population of 160,370 and
provides approximately
50% of
1950, inclusive, may require ag¬
gregate expenditures of approxi¬
while
very
other
corporate purposes.
contemplates that its construction
program
for the years 1948 to
100%
a
mated
the
company will be applied to the
construction of new facilities and
the extension and
improvement of
and
section of Missouri adjacent to the
Kansas state line.
Wichita, the
bid of 100.7199.
The ^proceeds
miles,
square
The New York Stock
is
the New York Stock
and
policy¬
ers
the
invest
is
institutions.
rather
bonds,
capital
by investment bank¬
to the investing public and to
a
through
or
new
principally through the sale
of securities
People who mistakenly think of
from
transactions negotiated by invest¬
ment bankers.
In those cases, it
holders.
awarded
issues
of
hands
this
Street
bought entire bond
investment houses,
is possible that millions of
'\r
■
,
Wall
these
biggest
trading day in 1947, only 1/ 10th
of
1% of all the stocks listed,
changed hands. This means that
at the highest daily rate of activ
'ty in the past 12 months, it would
take
833
sessions, or about 23/i
years to make our listings change
Last year the life
to
in
turnover
wa_
But,
company.
raised
Last year only abou.
and
14%
shacks they build livable, and money, after paying dividends to
charge fabulous prices for something that the govern¬ policyholders, death benefits and
expenses, was invested in bonds,
ment can't resell at 50% or less of the amount
they —much of it in corporation bonds.
are
In many
charging, and Federal guarantees stand behind
cases, insurance com¬
came
of
trade.
changed
ties to make the
paper
panies
rate
stocks
sent
of
the
on
amazingly slow, show¬
ing that most Americans who bu>
invest¬
Roughly half
listed
Exchange
than $199,000,000,000.
The
insurance companies of the United
States collected some $6 bilLon in
premiums.
shares
securities is
you know anyone
who >ia«: a life in¬
town
vonr
York
issu¬
Stock
York
more
Well, do
m
Federal funds
town who
my
ment!"
There
gentlemen!
why
from
to
different
390
some
and
New
Source of Wall Street Capital
money
of
than
anyone
FOURTEEN
companies
At the end of February, 1948
total
market
value
of
all
ers.
Where does Wall Street get the
capital?, You say, "I never knew
BUY STOCKS AND BONDS IN THIS COUNTRY?
rights—that is the
right of a
Stockholder to subscribe for addi¬
tional
securities offered
by his
Ex¬
the
on
than one kind of stock
more
tions
$8,000.
THE
in
some
outstanding (a common and one
more preferreds), we provide £
market
for
approximately l,40t
different issues.
In addition, we
have in our trading list about 900
different bond issues, the obliga¬
employee of General Motors
Congress of the United States? Is business dying in Wall
anything be done to make it better? When is our
government going to CEASE DISCRIMINATING AGAINST
Since
are
or
the
Street—can
corpora¬
corporations
traded
and
change.
foi
of .approxi¬
shares
1,000
mately
have
American
of
These
tions.
market
auction
an
shares
the
U. S. Steel with about $6,300 and
with around
through the Exchange by the ex¬
ercise
and
sale
of
subscription
encourage
The New York Stock Exchange
provides
the
to
An Auction Market
could
endlessly.
Street
trying
tal.
Pacific
margin requirements on stocks and bonds—
to provide many millions of jobs.
they will only hinder and throw every obstacle in the way Do you know how much money
of progress such as this. Forget about them if you want to it takes to
provide a job in Amer¬
accomplish anything worthwhile. Go to work on your Con¬ ican industry? On the average,
it requires $18,500 to make a job
gressmen.
Ask them to open up the traditional financing in the
paper industry, $17,300 to
and banking facilities that have always been available to
make a job in a chemical
plant,
'owners of securities in the past. My friend had the $8,000. $6,900 in a printing
establishment,
He wasn't using it. It bothered him because it was lying idle. $6,-300 in a rubber factory, $5,000
in the nonferrous metal industry,
But he was a business man.
That is how he got it in the
$2,600 in the lumber business and
first place—by using business brains and by working and
about $2,400 in the leather or, tex¬
saving. He was willing to buy real estate, with all its pres¬ tile trades.
ent day headaches, because he could make every dollar he
Roughly,
each
employee
of
Standard Oil of New Jersey is
owned do the work of four dollars. But in the
purchase of
working with $25,000 of invested
securities he would have to put up in cash 75% of the mar¬
capital; each employee of Inter¬
ket value of his investment. In other words, if this
national Paper with between $9,piece of
500 and $10,000; each employee of
property had been listed on the New York Stock Exchange
his down payment
effort
Coast, Bank of America, has 151,-
SECURITIES?
AGAINST
of
bank
One
and
public policies which would lead
to a better supply of venture capi¬
part
am
spending
of
my
time
"approve"
security,
or
nor
recom¬
do
we
make any representations as to
its quality, but we do
try to see
to it that the investor has a means
of
knowing just what he is buy¬
ing.
We
urge
the investor to
"investigate before he invests."
The
Stock Exchange does not
pretend to be the primary source
of new capital funds.
Such funds
are
often
provided,
however,
pendent
on
the weal
and
woe
of
the
mass, requires just as much
progress in human relations and
just
as
life
as
much progress in spiritual
in material things.
All around
that
pace
my
us
we
see
evidence
spiritual life has not kept
with material progress. In
IKe-time, there have been two
Wars surpassing anything
World
ever
and
known
in
destruction.
cruelty,
In my
carnage
life-time,
Number 4684
167
Volume
THE COMMERCIAL
1
,
,
„
I
political revolutions
hundreds of
&. FINANCIAL
CHRONICLE
with socialism
occurred, I have seen eco¬
nomic class arrayed against eco¬
nomic class, v I have seen the unhave
the equilibrium in the balance of
on.s so as to make
work.
ranit-filc
capitalism
payments of Great Britain. This
xaditional view is based, however,
-
on
Communism
the
assumption
that the
(1335)
With Charles A. Parcells
Landrigan With Denault
(Special to The Financial Chronicle)
FRANCISCO,
SAN
(Special
CALIF.—
de¬
James A. Landregan is now asso¬
and Glass Warfare
yrupulous dictator seize the
mand
for British goods in the ciated with Denault &
Co., Russ
One of the secret
power of the state and destroy
weapons of U, S. is large and elastic. It also
Building. He was formerly with
Communism, in this generation's ignores the
toe. last vestiges of human free¬
point that the trouble Davies & Mejia and First Cali¬
dom,
almost invariably without cold war of the ideologies, is the in Great Britain for the time be¬
fornia Company.
the consent of a confused and nurturing of class hatreds.
The ing is a
-
shortage of goods which
Jew, the Pro¬ are presently obtainable only in
against the Catholic, the
lie Western Hemisphere, which
debtor against the
creditor
the in turn .cannot buy goods which
employer against the
employee, Great Britain has to offer for the
the city dweller
against the farmime. being. It seems clear, there¬
Gentile against the
helpless people. I have seen the
'authority of the home, the au¬
thority of the church, the au¬
thority of law and the authority
of conscience too
often under¬
mined.
,
:
•
.
.
the
•
of Loss of Personal
":'V". Freedom'
Dangers
■
complicated
Our
of
way
class
life
Most of
ties.
lhave been attained in
where
state
police
initiative
all
handed down from above.
■
is
Amer¬
ica has grown up from the grass
roots of individual initiative. All
that
we
have is the. yield of free
enterprise.
/
i
take
We must.,
*
lest
care
we
do
{lip service to the - cause of free
,
enterprise and at the, same time
{allow it to become nothing more
than
a
meaningless shibboleth.
| Today free enterprise is engaged
:in
of ideologies against the
a, war
•
police state
of Communism
to
fignts
and
understanding
usually are attainable in an at¬
mosphere of more light and less
We
could
a
class warfare
our
cooperation
and
dictatorship. The enemies of free
know
exactly
what
they want, and they don't have to
.consider public opinion and hold
'enterprise
be
a
decided
the
at
where every American
erty
to
any
outside
his will without
express
restraint
whatever.
Few
countries still give their
people this freedom of choice. It
would be
of the poor as to
■free elections before they decide
under¬
stand, -and
make
our
people
understand, that capitalism is im¬
to
possible without freedom, just as
.Communism is impossible without
(dictators and the police state. I
.have not heard
who govern.
about
Stalin
luting his system with
terprise
so
as
make
to
rbut I have heard
•
recent years
free
di¬
en¬
it work;
great deal in
a
about how
we
must
the staff of
issue
who
man
of
survival
this
of
The
has.
generation
freedom
of
is
What
freedom,
cided
in
the
choice
is
more,
it
seems
exchange
should
of
be
to
me
to the deter¬
mination
concerned
rates
with
big
the
The issue
can
those
be de¬
rightly only if people wil
without passion,
substitu¬
ting love for hate admiration for
envy, and truth for propaganda
reason
valued. and that therefore a de¬
valuation of the pound would increase
•
.
;
exports, decrease imports,
and thus
automatically balance
the British foreign accounts.
As
with
to
the
the
first
laissez
'
point, I share
faire school a
strong aversion to economic con¬
trols, and particularly to exchange
controls.
.
(
i
While it is true that the
Present British Government practices control of the economy and
of
foreign exchange with some
relish, it is no less true, I think,
•
•
that in the
•
case
of Great Britain
of. all
is most probable in my
opinion, it is that after the huge
rise in prices we had, caused by
the inflation due to the war, we
shall have a fall in prices.
Such
fall in
controls
in
Great
agricultural products and raw ma¬
terials. Therefore, a fall in prices
will change the terms of trade in
favor of Great Britain and make
easier the balancing of her forer n
accounts.
Then, -and only then,
shall we be able to know what the
stable
pound sterling-dollar
It may very
rate
well be, and
it is probable, that at
that time the pound will have to
be devalued in terms of gold. But
I think that this will also be the
case of the U. S. dollar, if we are
reestablish
an
international
Britain to
■»
not concerned with the
suffering from the fear of in¬
security and new wars. They also
disregard the inflationary pres¬
sures
existing in Great Britain
which are potentially the stronger
insofar as the inflation has been
dollars, and
is
"suppressed."
Some advocate a
blocking of deposits accumulated
during the war, disregarding the
consequences to
Great Britain's
credit and confidence in her cur¬
a gradual retreat from controls is
rency..
a Preferable method of getting rid
of them. Those who advocate im-
tion
•
r
mediate
;seern
to
cessation
of
all
controls
not
yet in a
peace economy, and fur¬
thermore that Great Britain has
,
to
forget
recover
from
that
a
we
are
severe
shock
suffered during, the war. I will,
however, add the following ref mark
regarding exchange .con,trois.
-\v. >. :■ * .■ ;
.
/
Exchange
Control
a
Diabolic
advocate a devalua¬
pound (with mainte¬
nance of exchange control, I as¬
sume) are arguing that such a
devaluation would wipe out the
dollar deficit of Great Britain.
Those
who request that Great
Britain devalue the pound forget
Those who
of
the
that devaluation is an
alternative
that deflation if
in order onlv if prices and costs
are
higher than those of similar
to deflation, and
important currencies
I wish also to
raise the follow¬
ing question. In view of the
that most of the countries
fact
lack
if an adjustment of
to realistic
thing to do,
would it not be more sensible to
appreciate the exchange rate of
the dollar in terms of all other
currencies, rather than promote
competitive devaluation among all
the other currencies?
This idea
implies that the
present gold
value
of the dollar would be
maintained. Other countries like
the Swiss, for instance, could fol¬
low the same line of action as the
United States if it so chooses. This
is also the time to inquire whether
it would not be more sensible to
drastically reduce the American
tariff rather than push foreign
countries to competitive devalua¬
tions. It may be worth mention¬
ing that those who advocate the
devaluation of the;. pound disre
foreign
Railway Company (hereinafter called
Company) hereby invites tenders for the purchase by it of its
General and Refunding Mortgage 5% Gold Bonds, Series A, due
July 1, 1990 (hereinafter called the Bonds). The Company is pre¬
pared to expend up to $1,000,000 if Bonds are offered on favorable
All tenders must be submitted in
for Tender which will be
currencies
like the dol¬ gard that such devaluation will
There are,
'
triplicate on the Form
supplied by the Company upon
request. Forms for Tender may be obtained by addressing
the Company at its offices, Room 2105, 165 Broadway, New
York 6, N. Y., marked "Attention Mr. Paul J. Longua,
Secretary,"
Cotton Belt Building, St. Louis, Missouri,
or
marked "Attention Mr. F. II. Millard, Vice President and
Comptroller."
This Invitation for Tenders is made pursuant to the
October
6, 1919,
amended October 4,
as
v
favor
of
immediate
abolition
dollar
imports,
and thus
restore
1920, in its Docket Ex
Parte No. 54.
In
conformity with regulations of the Interstate Commerce Com¬
mission, each tender must state the name and address of the maker
of the tender
(owner of Bonds), and, if
and addresses of
its
a
corporation, the
officers, directors, general
manager
names
and pur¬
chasing or selling officer or agent in this transaction, and, if a firm,
partnership, or association, the names and addresses of each member
and of the manager, purchasing or selling officer or agent in this
tranraction.
Tenders must be enclosed with accompanying papers
envelope, securely sealed, bearing
maker of the tender
under
or
plain
of the
of the tender #nd marked "Bid
no
the amount
indication of the
in
a
name
Proposed Contract No. NY 100," and addressed to Mr. Paul
J. Longua, Secretary, St. Louis Southwestern Railway Company,
Room
2105, 165 Broadway, New York 6, N. Y.
All tenders must be received at the office of the
Secretary of the
Company, Room 2105, 165 Broadway, New York 6, N. Y., at or
before twelve o'clock noon, Eastern Standard Time, on April 5,
1948. Tenders received will be
opened by Mr. Paul J. Longua,.
or
in
by Mr. F. H. Millard or Mr. C. E. Scott, at said office,
immediately after twelve o'clock noon; Eastern Standard Time, on
his ahsence
April 5, 1948. Makers of tenders or persons representing them may
be present and examine each tender if they so desire.
Notices of acceptance of tenders, in whole or in part, or notices
of
rejection of tenders, will be mailed not later than twelve o'clock
Eastern Standard Time, on April 7, 1948, to makers of tenders
their authorized representatives, at the addresses appearing in
noon,
or
their
respective tenders.
the acceptance, in whole or in
part, of a tender must be delivered in negotiable form
be so delivered during the period April 7 to April 21,
and must
inclusive,,,
Bank & Trust Company, Agent, St. Louis
Southwestern Railway Company, Corporate Trust Department,
1948, to the Chemical
165 Broadway, New
York 15, N. Y., where payment therefor will
be made.
form delivered pursuant to the acceptance,
tender must be accompanied by all appurte¬
All Bonds in coupon
in whole or in part,
nant
coupons,
of
a
maturing
on
and after July 1, 1948. All coupon
registered as to principal only must be accompanied by duly
executed bond assignments, with signatures guaranteed.
Tenders must be signed by the owner of the Bonds and, if the
Bonds
principal amount of Bonds tendered by any one person (other than
by a bank, trust company, insurance company, or a member of a
national securities exchange or association)
does not exceed
$100,000, principal amount, arrangements must be made with a
bank, trust company, or member of one of such exchanges or
tendered, in case of acceptance,
associations to surrender the Bonds
in whole
ance
or
in part, of the
tender. Banks, trust companies, insur¬
companies, and persons tendering Bonds in excess of
$100,000,
with
principal amount, desiring to do so, may make arrangements
a
bank, trust company, or member of one
of such exchanges or as¬
tendered, in case of acceptance,
in whole or in part, of the tender. The bank, trust company, ex¬
change or association member signing the tender form in the space
provided therefor, delivering and accepting settlement for Bonds
pursuant to and in accordance with an acceptance, in whole or in
part, of a tender of another party or person, will be paid by the
Company $2.50 per $1,000, principal amount, thereof.
United States Stamp Taxes are not payable on the sale, as
sociations to surrender the Bonds
Bonds
purchased
are
to be
The Company reserves
cancelled.
the right, in its absolute discretion, to
reject any or all tenders of any of said Bonds, or to accept
portion of the Bonds covered by any tender and to reject the
accept or
any
balance.
ST. LOUIS
SOUTHWESTERN RAILWAY COMPANY,
.
.
regulations
prescribed by the Interstate Commerce Commission in its order of
values is the proper
however, no signs give legs to inflation in Great
Exchange control - is a diabolic that the British prices and costs Britain. From whatever point of
are
higher than those of the view one examines the question
f. mstrument and the source of many
economic and social evils. Besides, United States except in certain
of a, change in the rate of the
from a practical point of view, flagrant cases like coal. The rec¬
exchange control is-a perfect de¬ ommendation to devalue the pound pound sterling, one reaches the
is based on the
theory that .a conclusion that this is not the
vice for
preventing foreign capital
lower pound sterling-dollar rate
from
time to do it.
Neither, therefore,
coming into a country, and
would increase the volume and
mr
furthering the export and
is this the time to revalue the
value of dollar exports and de¬
flight of domestic capital.
exchange rate of the dollar in
ft is evident that those who are crease the volume and value of terms of the other currencies.
m
lar.
Instrument
Tenders
To the Holders of St. Louis Southwestern
Railway Company
General and Refunding Mortgage 5% Gold Bonds, Series
A»
Due July 1, 1990:
Fund.
:
Railway Company
Invitation for
All Bonds delivered pursuant to
get that there are huge deposits
accumulated during the War in
the British banks, and that Great
Britain, like the rest of Europe,
;
of the New York Stock Exchange.
St. Louis Southwestern
prices will affect primarily
politi¬ gold-standard system which is in
cal
and
social consequences of fact the avowed or unavowed end
the
International
Monetary
their recommendation. They for¬ of
are
Financial Chronicle)
Interest on Bonds accepted for purchase will be
paid to April 21,
1948, but not thereafter.
Should Pound Be Devalued?
omy sluggish and inefficient,
^ (2) The second line of attack
; is simply
that the. pound is over¬
The
terms.
I would say
(-Continued from first page)
to
BOSTON, MASS. —William B.
Armstrong has been added to the
staff of Kidder, Peabody & Co.,
115 Devonshire Street, members
we
thing
will be.
and tend to make the British econ¬
Chronicle)
the
long-term needs and equilibrium,
and not merely with temporary
person
of
Financial
St. Louis Southwestern
comes
soul, freedom of prop¬
freedom of markets, and
erty,
Kirkpatrick-Pettis Co.,
Omaha National Bank Building.
.
that when it
freedom of
the
(Special
Financial Chronicle)
OMAHA, NEB.— Herman E/
Aulmann, Jr., has been added to
Aim at Long-Term Equilibrium
the wealthy, to
,what to do.
should
(Special t,o The
staining of this great
phenomena.
Nobody can state
privilege, for which many of the
with any certitude what the level
people of Central Europe willof prices is vgoing to be in the
ingly would give their lives, if
world in the next few years. This
o u r
pre - election
campaigning level of
prices depends a great
should degenerate into an attempt
deal on the economic situation in
to array class against class and
the -United States. If one thing is
group against group.
certain, ,it, seems to me, this is
Ours is a great cooperative ex¬ that the terms of trade in Great
periment in living together peace¬ Britain's foreign business are at
fully in freedom.
This experi¬ present unfavorable to her. And
ment, still less than 200 years old, this is true each time the U. S.
is just as sacred to the welfare economy is booming.
If another
a
The
the
polls
is at lib¬
\
125%.
issues
the employee as to the employer
and to the man who has not as
We
want to dis¬
Kirkpatrick-Pettis Adds
ing fall in the standard of living
of Great Britain, and huge un¬
employment, Great Britain's for¬
eign trade cannot for a time be
determined merely by exchange
rates; the importations are deter¬
mined by needs, regardless of ex¬
change rates. I wish to point out
that in 1947 the volume of imports
in Great Britain was only 70% of
what it was in 1938, while the
volume
of
exports
was
about
Presi¬
Certain
election.
to
are
about to have
are
dential
{not the result: of planning' and
never
tends
heat.
great economic and social
progress
we
have attained in
America is a product of freedom,
It
freedom
purely imaginary windmills, and
all of it
submerges the fact that
ple, they tend always, more and
more, to circumscribe their liber¬
.regimentation.
warfare,
in much of tiiis
become license, and an ounce of
truth becomes a
ton of falsehood.
to another danger—
also a spiritual one.
We are in
danger
of losing our personal
freedom. As people seek to pro¬
ject themselves against other peo¬
The
per¬
who has not.
son
us
we
South against the
North, the regard the possibility of a shocks
who has against the
person
.
exposes
7?e Negro aSainst the White, fore, that unless
to
DETROIT, MICH:—Charles A.
Parcells, Jr., has joined the staff
of Charles A. Parcells & Co., Pen¬
obscot Building, members of the
Detroit Stock Exchange.
With Kidder Peabody& Co.
testant
;
27
Paul J.
New York,
N. Y., March 22, 1948.
Longua, Secretary,
28
(1336)
Is
Salesmanship Essential to Distribute Securities?
THE
(Continued from page 7)
must find out wherein their
we
interest lies
before
we
know
can
what to offer them.
From then
it's
salesmanship.
is going to
ance
someone
an
make
or
automobile, insur¬
an
investment, it's
job to get them to do business
our
with
If
of
matter
a
Assuming
purchase
on
instead
us
we
will
we
too
are
probably
The
ness.
service
manship.
best
article
then
is
business
not
with
the
sales¬
salesman with
article
and
may
get the
disservice
will
a
have peen done to the buyer.
This is a generalization but it
illustrates why salesmanship is
essential in the distribution
of se¬
curities, just
tribution
it
as
in
s
the
dis¬
of
anything from 5c
candy bars to religion. It's merely
a matter of
application.
rule
this
is
for
those
and
but
dealing with people's savings.
investor's success or failure
may
•
make the difference between
fort
In the securities
several
are
business, there
activity
branches; of
open
to
sales
department, then it is
but
us
advisable,
study
It is
the
in
are
the
most
to
necessary,
not
eco¬
profession and
a
highest
that
reason
the
we
not-
salesmanship and
nomics.
of
if
if
paid
there
one
failures in
selling profession is because
there
are
others
mislits
some
who
and
merely lack
and application.
then
training
This is true in all
professions.
Not all
long
towards insuring
way
Cutomer
success.
just
are
study
as
or
co¬
or
pro¬
instruc¬
no
study.
Most
the
risk
I am
of
rather
income
and
before they
experience
expect to be fi¬
can
Some
study, apply
gain
nancially successful
men,
at their
voca¬
the
on
hand, work hard without
other
success
because
they are perfectly good
square pegs in equally good round
holes simply miscasts.
The
first
job, therefore,
make sure you want to be
is
to
sales¬
a
man
by profession and that you
have the necessary qualifications
to be successful.
curity salesmen do
that appeals
securities
great
great
the
to
business
bus¬
a
In the
you.
have
we
a
opportunity
and
equally
responsibility. In the first
place,
the
life
securities
line
of
business
American
is
enter¬
prise.
Without the investment of
the savings of Americans all over
the country, we would nave no
General Motors, General
Electric;
Standard Oil, U. S.
York
Rubber, New
Central, Westinghouse, and
hundreds of other companies rep¬
resentative of our system of free
enterprise. These companies, large
and
small, are responsible for our
having the highest standard of
living in ail the world in peace¬
time and for saving ourselves and
our allies in two world wars.
No
socialistic
ernment
communistic
or
or
country
gov¬
approaches
this record of almost unbelievable
selling ability. Then, along
bear market and the
salesmanship
magic.
second
going tide.
formation
securities
on
offer
we
that they can invest their
so
saying
make
good
:
,
.
.
salesmen
with
with
in
the
same
results
combination
of
;
ings wisely, or
keeping
with
is
natural
sales¬
as
speculate, in
even
their
need-: and desires.
sav¬
individual
In many cases
and
Some
it
of
some
We
of
others
born with part
are
lot of it is
a
we
worth
attention
developing by paying
to
our
appearance, our
and our conversation.
when
there
is
it
to
comes
substitute.
no
work,
We
can
replace physical work
by mental work but it is difficult
for
compensate
interviews.
lack
A
of
large
calls
office
supply company once' put' on a
drive by paying salesmen so much
personal
per
their
call
business by
some
fully
planned so
amount
of
time
and
of
care
likewise
week
counts.
more
certain
to
part
new
loss
of
of
ac¬
childinshly
salesmen fail
most
arise from
ticularly
on
changes in major
during
seems
what
to
causes
bear
be
no
markets.
agreement
these
heavier responsibil¬
ity of advising investors who do
changes or
what to do about them.
Yet, they
have an uncomfortably strong in¬
not
fluence
we
or
have
the
have
the
make
the
time,
experience
their
own
the facilities,
necessary
to
decisions
prop¬
of
Place
Clients'
Welfare
First
ahead
be
of their
own
earnings will
likely to be consistently
cessful.
The
Golden
Rule
is
suc¬
the
almost
every
branch
security business.
Many
authorities contend that the mar¬
as
Only those salesmen who place
their responsibility to their clients
on
the
ket
erly.
is
a
its
barometer as well
barometer of general busi¬
own
ness.
This
is hard
to
swallow
when we have had a bear
market
for over 18 months and
general
business is still at
dizzy
peaks.
I have
my own
seen
bear
or
to
seem
they
although
have a
to
acquire,
instinct
strong
very
belong to them. Our modern
society calls it stealing, although
it is a perfectly natural human
ability to
function.
We
gradually con¬
are
ditioned in this society that if we
must buy it,
it given to us.
take it without the benefit
want
something
we
•
theory and I've
nothing to discredit it.'
It is
market.
experienced
two
procedure, we are called
society has provided
and
lodgings for such people with cute
iron grill-work in front of the
markets
to
most commen¬
believe
should
be
that
tied
We
the
closely to
Actually,
ings
both
into
enter
causation
of
bull
bear
and
the
and
feel¬
but
case
the
final
they
dump
or
they
to
human
Like¬
reason.
pessimistic,
are
stocks
all
without
of
I
this
any
am
con¬
is
closely
qualities, and the
being/generally speaking,
is
more emotional
than rational.
And if there is any battle between
emotion and reason it is
are
of
count
In
of
to
really
for
us
an
understand
Man ; is
endowed
cunning he
and
any
reason
develop in the
may
section of his
body known
brain is merely to aid his
for survival.
This one
instinct
for
mankind
other
the
extremely strong instinct
survivalship,
or
for
moment examine
a
homo.
genus
With
down
goes
10.
order
this, let
battle
pr'neipal
survivalship of
the
is
the
-as
divided
instincts
into
several
which,
when
certain actions.
cause
words,
all
instincts,
/
In
when
•
properly conditioned, develop an
appetite, and when that appetite
is
satisfied, that particular instinct
pipes down again and is dormant
for a while.
The best
example
of this
petite
I
give you is
can
for
little
a
aggressive
more
to get what we want.
When the appetite is satisfied or
dormant we take things a little
trying
Now
must realize that these
we
things
that
we
call bull markets
caused
by
than
acquisition
people
inflamed
an
in
at
the
if
see
and
mass
develops.
start
Let's
it starts
bottom
of
bear
a
food.
it
our
ap¬
has
Nature
ar¬
that
so
get
we
(Unfortunately,
some
result is
they develop high blood
the result is the op¬
pressure and
posite—they die sooner.) M
Human
;1
we
thin
the change?
causes
of
veneer
It's the
reasoning
power
of
few exuerienced and intelligent
men
activating their instinct of
acquisitiveness that starts the new
bull
market.
These
reason
that the
men
that
reason
few
prices are very low.
historically and otherwise. Thev
scared
are
time to
masses
that
and
of
people
the
is
now
buy good stocks.
As these
their
instinct
' aroused
an
choosy.
think
If
is
we
interested
are
Creator
our
out,
that
so
because
the
car
force
of
these instincts is inescapable.
that
first
of
of
instincts
the
when
appetite
its
aroused, makes
that
these
acquisition;
which,,
chasing selected
curities.
But
They start
and
pur¬
favored
remember
se¬
that
al¬
though th;s action is activated by
man's ability to reason, he is tak¬
ing the action in order to satisfy
his
instinct
wants
to
greed,
whatever
of
acquisition.
make
money
>
He
his
and
it
is,
are
who
is
instinct
is
of
satisfy the
the
baby
is
mother's
few
a
arms,
When
the
bit older and
feet, it
charts see a change
in the character of the
on
coming
in
here."
Some
power,
provides the
our
enterprise.
this
for
goods.
months
it
more
When
old
shows
in
seldom
when
inordinately
believe
an
excited.
this just
think of the famous Boston
night
club fire, or the
subway panic
London
that
killed
dozens
of
people
and
injured
hundreds.
Well, don't let's be a piker; look
The aggressor
at-wars.
nation is
always influenced
by an aroused
something that
belong to it, so they go
desire
mass
does not
for
to war to steal it.
In other
words,
over-expanded bull market is
very simple accomplishment for
an
a
human beings when their appetite
for
more
of
something
they
haven't got becomes inflamed."
Selling in
What does
Bull Market 1
a
the investment
\
;
man
do
in a bull market?
Well, he
gives the people what they want;
makes
lot
a
thinks
and
ful
of
or
hole
a
on
most
a
of
out
money
is
he
salesman
wears
this
in
child
get
is
a
its
on
makes
for the most perishable
a
little
own
beeline
but
glit
coat
it
success¬
underwriter. He
the back of his
patting himself
the back.
on
the mob; does the same
himself, and puts most of
of
one
the money he has made, or at
least what the government leaves
him out of taxes, into the same
overpriced securities that he sells
to other people.- They do*n't seem
to breed investment men minus
the instinct of acquisition.
1J/Jf
After all this, I think it is like¬
wise
very
where
to
easy
bear
source
understand
markets
have
their
and how
and
tired
the trend
once
and
reason
far
and
party
They don't
things.
time
cash
let
to
the
in
few
A
intelligent
the
looks of
turn
is started by
emotion.
and
enough.
the
more
not
experienced
decide that
men
has gone
like the
Thev think it is
in
others
their
have
and
chms
their
fun.
Once again this coldly calculated
reasoned
action
is
based
on
a
human
and
instinct
of
animal instinct;
self-preservation;
the
the
instyict that causes us to want to
keep what we have; the instinct
that causes squirrels to put nuts
for the winter; the instinct
us to be told
in the
away
that
caused
Bible to fill the granaries for the
bad years; to save some of
seven
the harvest and not plow it under
it utes by our New Deal
as
This
top of
intelligent, reasoned pur¬
chasing logically has the effect of
starting prices up. The sellers are
sold
calculated
friends.
selling
at
the
bull market is again seen
the
board
room
boys,
the
by
a
of
out
bid
and
the
for
the
buyers have to
small
available
chartists, and the ticker-tape art¬
ists.
They, too, have had a lot
experience in their end of the
and
sup¬
game
ply, » As
the
market
advances
other, investors who watch prices
going
notice the change and
they decide
that it may be time
to
they call "toppy."
They
like it and they think it is
little stuff.
ably smart to "lighten up."
buy
so
up.
into
of
the
some
They did not initiate
their
perk
a
happen¬
previously dormant
acquisition
„As
their
market,
ancl
more
advancing
starts
buying
prices
the
prices
to
comes
advance
action
of
attracts
the
still
other
buyers. This sort of thing
develops until after a year or two
bull
a
thousands
real
market
of
investors
scious.
hundreds
people who
get
market
of
not
are
con¬
Actually,
they hear of
or
acquaintances making
money and they want to get in
on
it.
Also, investors who have
friends
been
of
in
years
make
the
market
making
more
for
money
money
a
couple
want
because
to
these
on.
tion."
but they see it
move
instinct
of
its
ex¬
and
This
it
deficient in
can
usually
rooms
know who is placing them. They
the,sign of the times and prob¬
ably start to do a little buying
themselves.
ing,
call
stinct by grabbing at
eye-glasses
ear-rings, necklaces, watch-chains,
anything that glitters and attracts
it.
to
the
appetite
world's
board
You hear them muttering
themselves about "some good
Some
particular respect usually don
get anywhere as there is no
urge
to
and
watch
going
want something
it
for
People
tickers
market.
call
some
self-starter
around
got.
us
haven't
we
it
reason
don't
you
is
People do not
stop
to
or
emotion
satisfaction;
appetitle
fied
necessary to buy.
see
invest¬
plan of mankind will be
ried
acquisitiveness
ful and therefore have the money
the partners in big stock
change firms get the orders
only two of these major human
instincts, but they are very im¬
portant ones, and they have been
carefully placed in the human
the
of
aroused and howl for
they develop. The
appetite for acquisition gets satis¬
the
to
come
business
by
at
are
neople are experienced and intel¬
ligent, they are probably success¬
Investment
and
in
system
they
thing
at
of
Instincts
♦When
an
Unfortunately, too often he is just
buying
Business
ment
for
securities
that time
the great masses of people are
so frightened that they would not
buy $20 bills at half price. Then,
a
therefore
markets
bull
All
the
from
market,
Some
trace how
can
we
time.
action.
same
people call it
buy
as
What has happened is
very sim¬
Masses of people have had
more or
instinct of
large number of
a
well
ple.
nothing
less
as
more sense
scrambling
to
"out
what
that
reason
pro¬
are
gardless of facts
when
living,
our
by
phases of
Jut easier.
markets is
mass
psychology.
When
people
feel
optimistic, they buy ■ stocks re¬
wise,
earn
this perfectly natural
and strong instinct of acquisition.
When it gets particularly excited
pelled
we
facts
the
to
world
into the
thus launched
are
quality
going
worth.
in
windows.
attri¬
is
all kinds of in¬
"three times what
or
to
such
time
a
poorest
investors
literally
are
the
to .'their
comes
those who should have
very
thieves
The
*
the window" and
If
of
There
underwriting
work for it, or have
we
more
practically everybody is in
they opportunity
that does
take anything
must not
in
The
important
trends of security prices and
par¬
There
bull
ac¬
problems in the investment busi¬
ness
unde-
writers have
some
psychology,
tators
Bear market
a
our
that
and
from lack of plain hard work than
from any other cause.
Probably
church.
the
people think that they live
to eat instead of eat to live.
The
competition and
death is inevitable and the
only
offset to these, plus
opportunity
for increased
earning power, lies
in the development of new ac¬
elemental but
through the parents^and
Children are taught
continues
this buying comes into the mar¬
ket, these technical guys that hang
a
seeking
I know this is
education
This
touch.
the
mind is showing him the way. As
through
counts.
of
gry
every
now
and
again
and
want to eat, because without
food
we
can't
live.
devoted
gradual
baby
enormous
certain
a
things, they are "no, noes ;
hun¬
existing accounts
in
The
counts
that
is
when
ranged
Some securities salesmen try to
live off a few accounts. It's
poor
practice. Work should be care¬
each
his
child
the
favorable
are
excitement.
parents start to teach the
that
although it wants
mustn't
develop
conditions
on
increased
and
percentage.
taking
buted
mass
aroused,
sometimes
to
While
tributary
No Substitute for Work
But
than
appetites
reason.
represents
reaction
developed
learn,; what we say,
and how we say it.
Personality is
a very
important factor in selling
by what
actions,
rather
a
human
physical and mental char¬
acteristics.
and
with
tied
The
personality,
Personality
composite
our
animal
superior sort
a
that
from
Personality is important.
the
of
is
man
usually
acquired.
to
theory that
apparent justification.
comes
abilitv, and effort known
it
I'm afraid I msut subscribe to the
vinced
the same opportunities.
of
a soul."
Well, I don't ex¬
endorse that statement but
actly
tering object on the nearest table.
things have to be shoved
out of its way. - From that time
Then
not
said
beasi with the illu¬
a
desks
by side
the
and
Wylie who
office
side
in
bull
psychological.
are
Philip
was
that "man is
lose
good
and
the tides and the
bad markets are
difference
It
both
earnings and dividends.
Actually,
Selling in
responsibility is to
give them full in¬
clients; to
our
old
an
markets
two
bear markets
in
market
salesman is he who goes
faster with the
incoming tide but
is not carried to sea with the out¬
Take
Excesses
son.
brand
to
appears
There is
"good
remarked
earlier,
people
(not
necessarily individuals) are moti¬
vated more by their hearts than
by their minds—emotion, not rea¬
comes
same
good
accomplishment.
Our
to make
seem
great deal of money very easily.
They usually credit this to their
salesmen."
As 1
stincts rather
without too
a
that
by logic.
made
be
At times, during the
phase of bull markets, se¬
latter
rea¬
on
idea among many
that a large
a
much effort.
and
The next step is to enter
iness
ele¬
very
salesmen
can
explained
or
based
pendable ability to reason. When¬
ever
he is aroused, he is likqly
to be motivated by his animal in¬
common
securities
not
are
sion of
being
to say tiiat there is
sorry
of this but
have to
men
themselves
tion.
get along
application,
high in his
fession with little
or
can
musician
median may rise
tion
is
mental, I want to remind you
that, all other factors being equal,
work is the keystone of success.
salesmen, and
and
born
a
confidence
your greatest asset.
At
stincts and
your
manship.
men
only born salesmen
without
com¬
family. Respect your responsibil¬
ity to your clients and it will go
The
ones.
are
An
hardship for him and his
or
its
Economics
masses
son
selling
merchandise
a
ail major actions by
not
are
a
that
of people are activated by our in¬
of
Salesmanship
in
engaged
Thursday, March 25, 1948
CHRONICLE
FINANCIAL
&
business.
Selling securities
personal service business. We
a
the
sales¬
good
a
or
sale,
man
good
a
article
for
the
it,
busi¬
for good
need
interior
an
about
the
the
have
If
competitor.
a
lose
better
you
greater the
man,
of
reserved
first
COMMERCIAL
they see this selling
They call it "distribu¬
market what
It makes the
don't
prob¬
Thus, the selling started by the
who reason it out attracts
few
the attention of others who mere¬
ly
it happen and find that
instinct of self-preservation
see
their
is
being affected. They, too, don't
want
to
made,
so
chips
out
lose
what
thev
of
the
After a
game.
while the market gets real
people get
more
when
the
sell.
a
have
they start to pull their
sloppyj
fearful, and more and
There
a
time
throughout
comes
lot of investors
country begin thinking of the
They believe that
"Dow Theory."
when
the
market
spot, it confirms
bull
They
market
are
or
a
a
"fearful"
hits
a
certain
change from a
bear
market.
that this
spot
Number 4684
167
Volume
THE COMMERCIAL
They haven't
enough sense to get out
but they are nervously expecting
had news.
Thus in September,
1946 when the Dow Average did
hit the vital spot of 186, the sell¬
ing was such that the market did
not even pause to tip its hat to
the Do'w Theory as it plummeted
down.
There was an avalanche
of selling. This was merely an¬
other perfect example of what
masses of people
do when any
one of their instincts becomes ex¬
cited due to proper conditioning..
WM
got
reached.
be
quite
So now. we
this
they
moment, and
Uinely,fe?1 at the
u
tho
d°
neVGr
?1' that's the
I
way
again until the
next time
they
hats,
your
we
want it. Then hold
start all over
again.
Offer
People What They Want
My advice -to the investment
business in a bear market is to
offer
emotion.
they
They
want
servative.
They
whatever it
^
is,
to
buying, but the majority
on
bite
suffer from
the
that it is
eat
like, but certain fish
certain
only
bait.
certain
will only
birds
Certain
kinds
of
seeds.
prosperity evidenced during the Certain people like only certain
which is carrying colors, so on and so on. If you
forward. As these earnings con¬ want to do bus'ness with human
tinue high, and as nrices go down, beings, first of all recognize that
.price-earnings ratios and yields they are just that—human beings
bull market and
fantastic and peonle just
understand why such "bar¬
become
can't
gains" are available.
All it proves is that when peo¬
ple get
frightened and when their
—and
that
they
sometimes
times
by
are
reason
motivated
but
most
their
by
emotions, which
their natural instincts
arise from
and therefore
not to be denied.
are
In bear markets you can sell
self-preservation is
aroused, it is humanly impossible bonds, preferred stocks for income
for their instinct of acquisition to or even common stocks if they
; be even slightly interested in the are sound, are defensive and are
proceedings. They have no appe¬ offered on a basis of protection
tite for risk. They are too afraid and for yield- and
not on the
that they will lose instead of win¬ theory that they will go up in
ning. The bait of high earnings the market. Maybe they will go
and
high
yields - is
not
good up in the market, but the guy
enough to attract :; a> sufficient is not going to believe you. At
amount of buying to change the least most of them won't. In short,
of
instinct
state of stagnation.
individuals
Lots
of
buy
investors
avail¬
much
Likewise, many
who
ing, the masses of the people
tip the scales one way or another
are too cautious or too frightened
than sit
'• > '
to prove that the
other
anything
tight.
.
This all
goes
characteristics
boom-or-bust
mar¬
kets, just recognize that the ma¬
of
of business
jority of
in
your
the possibility
they have
Those of
business
of profit in which
faith.
no
in the mutual fund
us
have
vestment
seen
interest
increased
funds
market.//This is
even
in
greatly
in¬
mutual
during th*s bear
perfectly logical
development. As. the mutual in¬
vestment
fund
is
designed
to
the
bring
safeguards of careful
ample diversification,
selection,
ly grounded in human behavior¬
ism which is merely the outward
manifestation of man's instincts.
and
And
funds. The
through comolete loss in an individual issue
is impossible in a supervised, di¬
versified portfolio. Logically,: the
balanced funds composed of the
more conservative securities, with
you can't actually
instincts,
don't ever
although
these
think that they are not
a
part
nose
of
man
just
arm
an
as
anything else.
or
as
a
or
:
.
real
1
•
a practical question
O.K., suppose this is all
sol, what
are
we
going to do
about it?
Fortunatelv, that is a
question that is fairly easy to
Of course,
arises:
There
answer.
can
something we
Few of us know
is
do about it.
what to do because
we
don't know
what is causing the
condition. We
simply find ourselves a little bit
dazed and bunch-drunk and don't
know
what
offering
hit
We
us.
go
on
that has no
attraction to most people because
their
appetite has been taken
away
something
from
them.
They
won't
technical
training
In
end
the
of
observation, the
my
continuing supervision to the
investor, the appeal is
conservative
speculative
risk
of
a
in
even
type
of
the
more
,
tragedy
exert
a
strictly income objective,
a
strong aopeal under bear mar
ket conditions.
Don't
vestor
ever
,
does
of
them to some
course of action, but that course
must be one that will satisfv h.s
current feeling about conditions.
He wants to commit
This
discussion
may
seem
to
considerably from
title, "Is Salesmanship Essen¬
in the Distribution of Securi¬
have wandered
the
tial
selected
eligibles
although
sellers of governments.
iii
turning out a bunch of fairly
junior analysts and techni¬
cians, but few know anything
balance
on
Savings banks
.
mainly
into
the
tap bonds.
.
.
still
they
the
proceeds from sales
Commercial
.
minor
are
buyers of eligibles
are
and
the
2>/2s due 1956/58 and Sept. 15, 1967/72.
salesmanship.
Securities
over-supply not because
of over-production but because of
underpowered distributing facili-
TRUMAN'S
ites.
gram
.
have
banks
expanded their holdings of the taxable 2s, the 2Hs due
about
.
1956/59
.
in
are
the
we
do
attention
sales sheet
analysis
as
of a
the analysis of
balance sheet and we will be
to
the right road. Yes.
is essential in the
tribution
;
-
<
watching.
monetary authorities.
To
Requisitioned by
be
larger
Dutch Government
Treasury
,
due
1948.
,
Sept.
and
:
1969
with
1966
due
/
777 :•
Sept.
Topeka
would
due
1982
57*
ury
Fe
Co., first refund¬
Co.,
RR.
collateral trust
gold 47* due 1952 with coupon April, 1948;
also gold 47* due 1953 with coupon May 1,
v
City Southern Railway Co., first
Kansas
due
37*
gold
1948.
&
St.
and
first)
with
1950
coupon
April 1,
' x-:y: ■■
Louisville
east
:-;7;
—v:7.77
gold 3'!o
Nashville RR. Co., South¬
Louis Division, second (now
due 1980 with coupon
Sept.
V7;7'r;i:77:;::7:y7'
1948'.
,
increased
surplus
This could
...
in order to
remove
to be inclined to do things
seem
to
meet
would
larger
most
likely
of the main
one
deficit financing by
mean
out the defense program.
carry
government
sharply
be
;
.
Even if
.
the
expenses,
curtailed
which
that the monetary authorities
props
.
.
.
would be eliminated entirely and the control
used to retire government debt, while still
would pass by the boards.
.
that has been
keeping longs at 100,
.
.
•' 7-.- 7
;s:
Central
excess
Deficit financing would mean that the surplus of the Treas¬
Erie Railway Co., first gold
with coupon May 1, 1948.
&
Chicago
.
.
through
increased
have been using to curb the forces of inflation.
1,
debt service
With
allowed
rates be
-7,;/;{•/
RATES
INTEREST
due 1949 with coupon Aug. 1,
*
1948.
7
Despite the increased costs of rearmaments, taxes
...
were
Treasury
Ry. Co.,
with coupon
Santa
Central Pacific Railway
ing gold 4'/*
to
.
&
,•
tend
would
taxes,
YEAR
likely to be reduced.
taxes
gold 47* due 1995
April 1, 1948; also adjustment gold 4% due
1995 with coupon May 1, 1948, or Nov, 1,
1948.
be
possible, both parties
as
the Treasury
debenture
coupon
general
Illinois
painless
are
Inc.,
v-'
Service Co., debenture gold
with coupon April 1, 1948.
.
Atchison,
5'to
ELECTION
the easy way.
loan of
Co.,
income
inflationary forces which would result
777\. "^is is an electi°n year, however, and in order to make things
as
4'/a %
with
with coupon
2030
refunding
Co.,"
-Service
Cities
due
due
Power
corporate
new
corporations would most likely
profits levies or larger surtaxes.
AN
•
57*
gold
57e
1948.
'
Foreign
of
the
to
...
1948.
1,
Cities
gold
'
;
and
American
important
very
.
7
1977, with coupon June 30
due June,
debenture
1949,
external 4Va%
Republic of Cuba
1937
gold
August,
be
inflationary forces that would be added to with larger gov¬
ernment expenses for preparedness purposes.
Taxes of
1, 1948.
Aug.
coupon
external
Cuba
will
•
care
the
V T:;■'
■
.
of
^7'"-77. -7
'
.,
11, the list of dollar securi¬
ties
requisitioned
from
Dutch
holders by recent order of Finance
Minister Pieter Lieftinck, are as
1948.
Vv/\'7.,V7i' A7
from stepped-up government spending.
.
Tax reductions would
have to be postponed if we are to do a good job of keeping down
March
1909-10-11
.
A pay-as-we-go plan, that would call for
.
.
.
that will be used to take
expenditures
individual
higher
According to an Aneta dispatch
from
Amsterdam,
Holland,
on
of
pro¬
element that
an
.
method
limit the creation of
Republic
,
.
,7,7 77.77.•
.
the
sure,
nation's economy.
,
loan
"preparedness"
a
markets
money
.
:
List of Dollar Issues
Sept. 1,
the
into
put
While it is too early to even indicate
proposals, or what the
cost will be, it is quite likely that a good part of it will be adopted
(especially if conditions in Europe should worsen) and that will
mean
larger expenditures by the government.
Increased out¬
lays for defense purposes would be imposing another layer of infla¬
tionary spending upon an already inflated economy which has not
yet been too greatly affected by the credit limiting policies of the
on
■
have
will bear careful
dis¬
efficient
Truman's recommendations for
to
seems
what the Congress will do about some of the
a
Salesmanship
securities.
of
PROGRAM
President
Let's give as much
to
1,
.
.
and sellers in others with
cases
some
going
able
something with them.
He must do
Insurance companies, according to reports, have been buyers
.
now
are
1948..
forget that the in¬
have'surplus funds.
.
.
given to young men
in this business is heavily over¬
weighted in the technical end. We
average
.
...
.
the
business.
.
switching by banks and other institutions with the trend now from
shorts into longs and in some instances from eligibles into tap issues.
The restricted bonds, under good demand, moved above support
levels.....
7 7
•:7 "■
and typically, they would
better not to know too much
about
.
.
men,
do
.
.
need is more good sales¬
we
government
bond market, largely professional, is mildly
side, with prices of the eligibles giving some ground.
Prices were quoted down on very light volume..
There has,
however, been selling of the intermediate and long" taxables by
dealers who had recently increased their small holdings of eligible
Treasury obligations.
A feature of the market has been the
experts in the securities business.
a
the investment business are firm¬
see
The
the defensive
on
further
hardening of
the arteries. There are plenty of
good analysts and underwriting
What
Governments
By JOHN T. CHIPPENDALE, JR.
se¬
prospects have no
fellows:
desire to take risks.
They will
City of New York 4 '/a% loan of 1913
^ot exchange the protection that
due 1963 with coupon Sept. 1, 1948; also
their current emotion requires for 414 % loan of 1911 and 1912 with coupon
tive to them. But generally speak¬
do
bear
volume
securities that appear attrac¬
to
good
certain
big investors are always picking
up
a
up
buying
good yields when they are
able without worrying too
about the market.
keep
some
to
demands.
want to
you
meet
always
is
There
by
if
,
Our Reporter on
extract all
we
curities, I will guarantee that the
lifeblood of free enterprise will
a
you
If
from the distribution of
ness,
29
business.
salesmanship, and all attractive¬
be
on
the
•
(1337)
profession; the
a
prospect.
your
a
sound thing to
cautious /thing to do; a
sens.ble
thing to do; that it is
protective or that it will be safe¬
guarded.
Put
it in
any words
do;
of
profession of making a successful
to the mind and heart of
con¬
it
want
end
CHRONICLE
appeal
fear¬
are
something
FINANCIAL
Salesmanship is
is
current
ful;
tribution
people
what
they want,
dictated to them by their
what
basis
the bear side.. Curiously
enough, it is quite usual for earn¬
ings to be good during bear mar¬
kets.
They merely indicate the
is
•'
™
ottered,
have a bear market
things drool along backing
and fdlhig. Some individuals feel
differently than the masses and
and
do some
nfin'MRH
&
be inevitable
to increase
with
under the proposed
financing be done through shorts
be
adopted again
period?
allow
in
the
...
by
It does not
market
the
to
government.
.
.
seem
its
the
as
the
Treasury
;
they
as
though the
levels
burden
did
with
a
rate pattern
the
war
that be would
additional
increase.
help
not
to
seems
during
powers
would
financing
.
.
Also,
.
financing
by
7
7
7
'■ </7':'7>.;,
Would the
...
longs and would
or
„
financing that
new
issues would
<
7;
today, would interest
defense program?
own
debt
-
it is
as
authorities
seek
offing because
dropping prices for
the
the
;
?7:':/, • 77;'
burdensome
as
Railway Co., first
consolidated gold 4% due 1996 with coupon
Western
&
Norfolk
April 1, 1948.
Northern
gold
1948.
47* due
,;'v
1997,
■■
.
PROBABILITIES
77
:7
lien
Railway Co., prior
Pacific
■
with coupon April 1,
....
•'
7.7 •'■\'7.7
about
What
the
Co., gold ' 4V2'7*
May 1, 1948; also
due 1981, with coupon May 1,
greater regulation
authorities,
monetary
in
over
order
the
to
commercial
prevent
the
banks
by
creation
of
due
gold reserves, deposits and purchasing power that would feed the forces
4 72 7*
If wage and price controls were instituted to fight
1948. of inflation?
Southern Railway Co., development and
the forces of inflation that would be augmented with the rearm¬
aroused.
an
automobile or a security, we general gold 4T> series A, due 1956, with ament
coupon April 1, 1948.
program, \yould not greater power over the banking system
We all seem to understand that must appeal to man's reason or his
be sought by Federal authorities in order to limit the ability of these
in bull markets the public, in¬ instincts—possibly a combination
institutions to add to the inflation spiral?
vesting and otherwise, will buy of both. And also we must under¬ John B. Eaton Now With
almost
anything
because
they stand that all mass action is
7
The impact upon the economy of the country of a new re¬
caused by emotion.
are
It is psycho¬ Hooker & Fay in S. F.
going to make money. Then,
armament program would be inflationary unless severely re;
(Special to The Financial Chronicle)
in a bear market we find that the
logical rather than logical. Only
stricted and no doubt some limitations would be necessary in
SAN FRANCISCO, ' CALIF —
public will buy almost nothing the other day I saw a full-page
the money markets.
The feeling that regulations would be
because they are convinced that advertisement starting the cam¬ John B. Eaton has become asso¬
ciated with Hooker & Fay, 315
they are going to lose money. The paign of the March of Dimes.
applied directly or indirectly to the money markets is respon¬
instinct of self-preservation won't This advertisement, as well as Montgomery Street, members of
sible for the belief that the debt burden will not be allowed to
the campaign
iet them take
itself, had as its the San Francisco Stock Exchange.
any chances, real
increase with larger defense expenditures.
or fancied. What do
keynote
a
little crippled boy.
people do with
want
again
until proper conditions have again
caused
their
appetite
to
be
that
particular thing
think if we under¬
stand that no matter to whom we
are making a
sale, whether it is
ties?"
but
I
Southern
1969
with
Pacific
coupon
...
.
.
.
.
.
.
.
their
market?
Well, they either sit with securi¬
ties they don't
particularly like
or
else they put the money in
a
savings bank or buy government
bonds or Triple A's or kiss it
goodbye and put it in a life in¬
surance annuity in order to have
it doled out to them at so much
Per month until they pass in their
chips.
money
Their
G°d, let
me
in
a
bear
attitude
is.
keep what
"Dear
old. with iron braces
on
his legs.
The entire appeal
was made to man's emotions una
three years
reason.
Then recall
Government E. F, G
bonds were sold during the war.
Yes, salesmanship is absolutely
his
not
to
the
way
With
Wilson Johnson &
(Special
to
The Financial
PETALUMA,
and
is
not
willing to follow
the
the dis¬
Chronicle)
The
district
program.
.
CALIF—Carl T.
-
'
Italian
financial
Maib is now
Talbot.
.
.
ITALIAN ELECTION
Higgins
associated with Wil¬
son, Johnson & Higgins, 300 Mont¬
essential in the distribution of
gomery Street, San Francisco. Mr.
securities, and the man who dofs
Maib
was
formerly
Petaluma
not
believe this, understand it,
representative for Hannaford &
I've got rules, should not be in
Carl Maib Now
'
.
.
situation
as
the
is looked
key to
upon
what
in
most
happens
to
The Election of April 18 should give
whether vigorous measures
quarters
the
us
of
the
rearmament
the clue
as
to
will be adopted by the Congress to help
contain the Communist menace.
...
A further swing to the left in
Italy, even through a free election, would no doubt lead to imme¬
diate action by the Congress on
the President's
program.
THE COMMERCIAL
(1338)
30
except
The SEC and the Broker-Dealer
there
(Continued from page 8)
difference between ex¬
representation
press
hand
4
the
on
one
implied misrepresenta-
and
tion or concealment on the
the
market conditions from
over-
Such
protection will mean little if it
stops short of the point of ultimate
consequence,
namely, the price
charged for the securities."
reachings of those who do.
Importance of Market Price
Hughes
first
The
thus
case
import¬
obvious
the
recognized
the secur¬
A stock certificate has
of market price in
ance
ities field.
Unlike
value.
intrinsic
no
the
a grocery store it
eaten. Its value rests
produce from
be
cannot
the fact that it can pro¬
income or be converted into
mainly
duce
on
money—that it has market value.
hungry man is willing to pay a
A
vendor at a football stadium two
know
what
times
three
or
for
What
is worth
dog"
"hot
a
both
they
be¬
the buyer wants to eat it at
cause
Or, because of im¬
mediate use value, you or I might
decide
to pay several hundred
dollars more than list price for a
the moment.
which
car
euphemistically
is
But a secur¬
called second-hand.
ity has no use value. The buyer
of a security is interested only
How much income
in two things.
produce and what will it
bring in the market on resale?
And the income-producing feat¬
it
will
of
swered
things
in
the
left
unan¬
market
price in a
customer, the
is
condemned
as
And this presumably
the
ignores
with
transaction
fraudulent.
a
a
is that
firm which
fiduciary
a
agent
as
or
customer, rather than as a
in
an
stricter
dealer
much
ordinary
•
is
under
a
obligation than merely to
from
taking
excessive
refrain
included
first
an
plicable to each transaction. ,, It
specified maximum spreads which
would -be added to a so-called
price" when the firm sold
a
client or bought
from a client. For simplicity
"base
securities "to
them
I shall speak
here only of the sale
And I shall not elaborate on
side.
the various methods by which the
"base
price" was computed except
that it apparently bore
Hughes case mark-ups over the current mar¬
ket. Its duty as an agent or fi¬
Commission,
would guess, it not likely to at¬
duciary selling its own property
tempt
to
answer—is
precisely to its principal is to make a scru¬
what spread is reasonable in re¬
pulously full disclosure of every
that Mrs. Hughes was
lation
element of its adverse interest in
reasonable spreads in violation of
the
the
—and
all
which
to
the
the
market
current
The
cases.
Commission
in
has
revoked the registration of a suc¬
cession of firms whose average
mark-ups
line, but
transaction.
In
other
engaged
as
words,
when
agent to act
one
on
is
behalf
already out of of another, the law
requires him
no
arbitrary to do
just that. He must not bring
standard. Obviously we must con¬
his
own
interests/-"into conflict
were
there
is
sider the overall business conduct
of
or
particular firm and not
a
half-dozen isolated
a
tions.
Percentages
larly unreliable, it
saying, when
the
one
transac¬
with
his
must
client's.
explain
in
If "he
detail what
self-interest
)wn
does, he
in
the
his
transac¬
particu¬ tion is in order to
give his client
goes without an
opportunity to make up his
gross
dollar own mind
whether to employ an
amount of the transactions is rel¬
agent who is riding, two horses.
atively "small.
Nevertheless, the This
requirement has nothing to
Commission's application of the
do with good or bad motive.
In
first Hughes doctrine tended to
this kind of situation the
law
reduce substantially some of the
does not require proof of actual
more shocking mark-ups.
abuse.
The law
guards against
At this point the Commission's
the potentiality of abuse which is
work was soon supplemented
by inherent in a situation
presenting
the NASD as I believe Congress
conflicts
between
self
interest
intended it should be. As you all and
loyalty to principal or client.
know, whereas the Commission As the
Supreme Court said a
operates for the most part under hundred
years ago, the law "acts
rules phrased in terms of "fraud,
not
on
the
possibility, that, in
the NASD is in a position to at¬
some cases the sense of
duty may
tack the problem of unreasonable
prevail over the
are
-
spreads
the
under
broader
and
flexible
more
"high standards of
commercial honor and just and
ure is important in large measure
because
it
affects
the market equitable principles of trade." As
a
result of a 1943 survey of its
price.
If the
securities dealer
transaction
acting
transaction,
which in the
was
is
principal
Spread Is Reasonable?
Another question
nature
little later.
a
elaborate
schedule of rates and charges ap¬
February 18 of this
The doctrine of that case,
shall come to them
The
otherwise agreed.
as
contract
on
year.
in a nutshell,
other."
tive of securities legislation is to
protect those who do not know
applic¬ mission
able, even where there is no mar¬
ket, to a dealer occupying a spe¬
cial
fiduciary
position,
and
again: "The essential objec-
And
^
The law of fraud
market.
to the
knows no
other doctrines
are
Thursday, March 25, 1948
CHRONICLE
FINANCIAL
&
members' over-the-counter trans¬
actions which indicated that about
half
the
transactions
ef¬
were
fected at mark-ups of 3%
or
less
and
motive
interest,
the
but
it
of
provides
probability in
self-
against
to
say '
ket
first
and supersede that of
as
an
eloquent
put it
before
doctrine
the
"has
duty."
Tennessee
its
Or,
jurist
Civil War, the
foundation, not
charge
taking un¬
The
doctrine.
that the amount added
the
to
client's
the
"base
price"
contract
might
vary
from
$40 down to $10 per $1 000
face
value
in
depending
the
of
sale
and
down
point in the
to
stock,
V8
bonds
the amount of the
on
transaction,
from
depending
points
3
sale
of
"base
the
on
price."
:-r
The
firm
admittedly
advised
the clients with reference to wellbalanced
and
investment
made
It
tions.
specific
programs
recommenda¬
also
was
the firm's advice
admitted
that
followed in
was
almost every instance. In roughly
half the cases Mrs. Hughes sold
her
securities
own
tory,
and
the
in
first
obtained
then
went
from
remainder
firm
a
inven¬
through
she
order
the
form
doctrine
is
now
so
well
tained
have actually ob¬
criminal
convictions
of
oealers
in
we
a
that theory.
cases
a
number of
on
But like many great
first
the
cases
number
Hughes
of
case
questions
left
unan¬
swered.
comes
question which obviously
to mind is how to ascertain
the market which the Commission
and
ate
the
court
held
to
be
so
im¬
portant in the pricing of a trans¬
action,
The
over - the - counter
market knows
the. first
ticker tape.
no
Hughes
Commission
and
case
the
itself
court
In
the
relied
ment
I
it
infallible
last
reversed
year
in
disciplinary
action taken by an evenly divided
Board of Governors of the NASD
cannot
or
ity
being sold out of inven¬
was
not
a
particular
secur¬
tory,
or what the current market
her own cost was.
The most
clients
maximum
could
know
the
was
mark-up that might be
the schedule, which
in theory as much as
taken
under
could
be
point
one
on
stock "with
a
This time-honored
plies equally to any
is
in
a
another, whether he
an
an
executor
estate,
or
officer
unethical
went
the
beyond
fraud.
Commission said, is
normally obviated by
disclosure,
whereas conduct may be unethical
half
or
of
a
trustee,
of
an
or
any sort of busi-
adviser for that
ress
a
employer, an
director acting on be¬
corporation, an invest¬
ment adviser
broker.
be
lawyer Acting on be¬
client, an employee act¬
that
against
ap¬
who
a
a
on
dogma
person
administrator
behalf of
conduct
mas¬
fiduciary relation toward
half of
Fraud,
to the difference between
cipal and
On
ing
rules
two-
serve
against the firm of Herrick, Waddell & Co., agreed with the NASD
its
truth, that
it
mention
opinion
an
the
The
law
matter,
or a
a
"oase
an
a
prin¬
agency transaction.
these facts the Commission
held that it did not suffice
merely
to refrain from
selling at prices
not
reasonably related to the
rent
cur¬
market,
which is the duty
ordinary dealer in a prin¬
cipal transaction. Nor does it suf¬
of
an
fice
for
merely
the
the
firm
to
disclose
maximum
mark-ups
Rather, the Com¬
it will charge.
mission held, the firm must
dis¬
close fully the nature and
extent
of its adverse interest.-
always Extent of
Fiduciary's Disclosures
looked with such
on the quotations in the National
regardless of disclosure.
Never¬
suspicion upon
Just what does such disclosure
Daily Quotation Sheets and the theless, the Commission held that a fiduciary's dealing for his own
entail? Traditionally the law has
account with his client or
prices paid concurrently by the the NASD's action had been based
ben¬
always required disclosure of the
firm
as
sufficiently
indicating on
the
fallacious
theory
that eficiary that it permits the client
prevailing market price in the mark-ups in excess of those cus¬ or beneficiary at any time to set fiduciary's capacity and of his ac¬
tual cost in this
aside
absence of evidence to the con¬
the
type of case (or
transaction
without
tomarily charged are in them¬
in the case of a
purchase from a
trary^ But suppose there are no selves conclusive proof of viola¬ proving any actual abuse or dam¬
quotations in the Sheets. Or sup¬ tion of the NASD's rules,
while age. What the recent Hughes case client, the fiduciary's resale price
where known). In
does is to
pose there is no offer but only a disclosure
will
not
addition, how¬
say that such
always
conduct,
sleeper bid"; someone is hunt¬ obviate a violation of the rules in addition to laying the basis for ever, the Commission recognized
the obvious fact that in the
securi¬
ing for a bargain. The Sheets are against unethical conduct, the de¬ a private lawsuit, amounts to a
ties field there is another
not necessarily the last word, al¬ gree of disclosure made must be violation of the
criterion
fraud provisions
of adverse interest
which is usu¬
though they are very important. considered along with all other under the securities laws.
This
As long as the dealer is sure that pertinent circumstances in
judg¬ proposition, as a matter of fact, ally a good deal more significant.
That criterion is the current mar¬
there were bonafide independent ing
the
reasonableness
of
the is found in a number of earlier
ket price
—i
offers at a price reasonably near mark-ups and the ethics of the Commission
namely, the best
opinions.
The
sig¬ available
bid or offer, as the case
the dealer's sale price, the dealer transactions.
nificance of the recent
Hughes
may be, which the
is m the clear so far as the first
opinion in this
fiduciary is
Hughes case is concerned.
Doctrine
of
Arleen
W.
Hughes
Case
Now suppose it is impossible to
:
±md
In any event, the NASD's
any independent quotes
of
ap¬
kmd. Here there is precedent, plication of its "5% philosophy"
both in the Commission and in has considerably minimized the
the courts, for assuming that the enforcement problems under the
any
dealer
s
own
tion of the
cost is
a
fair indica¬
current market if the
Commission's fraud rules.
quently,
while
the
first
Conse¬
Hughes
dealers
purchase is substantially doctrine is still in full effect and
contemporaneous 1 with his sale. there are occasions even today
Of course, if there is no market calling for its
application, it is
and
the
dealer
has
held
the
se¬
curity for some time before sell¬
ing it, there is nothing for the
theory
to
operate
on.
I
should
perhaps appropriate
centrate
on
the
now
attention
second
of
the
to
con¬
case
case
—
the
own
the
securities to
a
client
or
buys
client's securities in his
own
name.
Mrs.
with
Arleen
Hughes registered
the
Commission
broker-dealer and as
ment
adviser.
The
both
an
bulk
as
a
W.
was
with
specifying that the
act
in
to
which
price unless
favorable than the price
the
buy from
fiduciary
disclosure
all
transactions
175
was
as
to
both
investment adviser and principal
being "taken for
ride," and it's not
a
free
a
1
one.
The Commission also spelled
out
in some detail how the
required
disclosure of
might
capacity and market
be made. The nature and
extent
of disclosure
with
respect
to
capacity will vary with the
particular client involved. In some
cases
of the term
use
itself
suffice.
may
"principal"
In
others,
a
more'detailed explanation will be
required.
the
In
all
burden is
acts
cases,
the
on
however,
firm which
fiduciary to make certain
as
that
the
ties.
In
client understands that
the firm is selling its own securi¬
where
disclosing
it
is
more
market
price,
favorable
than
cost, the firm must make certain*
that the quotations it furnishes
to
clients
reliable
are
dicative, of
the
and
truly in¬
current
market:
These
quotations
need
not
be
taken from any particular
source.
But they must be true
reflections
of the market price
at which the
transactions could
be effected as
agent with reasonable diligence, v.
No
Disclosure Rule of General
Applicability
Now,
an
to -mention
of
cost
normally be the
this
fact, except that counsel did
in
gue
the
that that
Arleen
was
Hughes
what
we
ing to do and that it
without
the
specific
a
try¬
illegal
such as
was
rule,
market disclosure
ar-*
case
were
rule which
was
proposed by the Trading and.
Exchange Division several years
ago and circulated to
for comment but later
the
public
specifically
rejected by the Commission. That,
proposed rule—and I do not want,
to get into its merits—would have,
required
,length
disclosure
principal
in
all
arm's-
transactions. Tn.
the Arleen Hughes
case, however,
the Commission emphasized in so.
many words that "it is not in-,
tended that the disclosure
require¬
ments, which we have found ap¬
plicable to registrant, be imposed
upon broker-dealers who render
investment advice merely as an
incident
to
activities
unless
of'
course
selves
in
This
position
we
are
of trust and
to their customers."
as
should
that
brokor-deajer
they have by a
conduct placed them¬
a
confidence
their
make
not
it quite clear
burying the mar-'
ket disclosure rule with
>
digging it
*
up with
one
hand
the other.
Summary of Doctrines
To
this all
up, the two doc-'
represented
by the two
sum
trines,
Hughes
cases,
are
as
follows:
First, a firm acting as principal in
an
ordinary dealer's transaction
must simply refrain from
charg¬
ing a price which is not reason¬
ably related to the current market
without disclosing what the mar¬
ket is.
Secondly,
in fact in
a
firm which is
a
fiduciary relation to
client—whether it calls itself
a
a
broker
or
a
dealer—cannot deal
with its client for its own account
without making
scrupulously full-
disclosure of its adverse interest,
which includes at least three ele¬
ments. The first is the
capacity in
which the firm is
ond
acting. The sec¬
is the dollars-and-cents cost
of securities
clients
(or,
which It sells
to its'
if -it
buys securities
clients, the proposed re¬
price where known).
And
from its
sale
the
third
element of adverse in¬
fiduciary affects terest is the best current market'
approximately
contempora¬ price ascertainable
by the firm in
where
the
dealer to offset
about
firm
same
proposes
sell to his client.
or
Furthermore,
neous
her
clients, each of whom signed a
"Memorandum
of
Agreement"
Arleen
at
more
of
two
decided by the Com¬
it is
invest¬
primarily
doc¬
able to discover in the
exercise of
reasonable diligence. Of
course, it
is not essential to disclose
the
best available market
and market will
business
trines, which finds its latest ex¬
pression
in
the
more
recent
emphasize that I am still talking
of the dealer who is affecting an
Hughes
ordinary
principal
transaction; Hughes
our
closure is required when a dealer
who has put himself in
a
fidu¬
ciary position chooses to sell his
bargain, where¬
in fact he is
as
and
has
respect is that it
elaborates the doctrine and
spells
out' in detail exactly what dis¬
10; disclosure of
cost alone would indicate that
the
client is getting a
necessary
whether
ters.' "
philosophy"
of
only to
round out the picture of the first
Hughes doctrine.
The Commis¬
sion, in
of
'a
"5%
this
on
rules.
own
wish here to elabor¬
no
the NASD.
which
The first
of its
purposes
I have
current market is
of
—
and the
positively
misleading.
Suppose,
for example, the fiduciary paid
50
for a security in
inventory and
is charging the client 20, but
the
and
most of the transactions at
applies both ways—to purchases
so much in the commission of
price" of $1, or 100%; fortunately,
ac¬
by dealers as well as sales—al¬ mark-ups of less than 5%, the tual
fraud, but in .that profound unduly high spreads were not
NASD instructed its District Busi¬
though in practice as we all
knowledge of the human heart taken in actual practice, as I have
know, spreads
are
usually far ness Condtict Committees to bear which
dictated that hallowed pe¬ already indicated.
Finally, most
those statistics in mind in deter¬
smaller on the purchase side.
tition, 'Lead us not into tempta¬ of her clients who testified
and
This first Hughes case was a mining whether prices were rea¬
tion, but deliver us from evil,' they were very friendly toward
sonably related to the market for
milestone in broker-dealer law
and
that caused the announce¬ her—weije typically confused as
the
settled that
closure of current market
may be
just to keep the record
buying the security for her own
straight, this case does not enact
account and confirming a sale to
; any market disclosure rule of gen¬
the client as principal.
She did eral
applicability. It should hardly
not make a practice of
disclosing seem
the
influence,
Hughes
not
specified
or
predominant
did
we
in
ercise
a
that
and
mar¬
schedule
and
the danger in all
cases, that the
dictates of self-interest will ex¬
many cases,
relation to the current
some
of cost alone without dis¬
closure
transaction
with
another
transaction with
a
client.
However, where the
fiduciary has held a security in
inventory
for
a
some
time
before
the
exercise
gence
where
jof
reasonable
dili¬
that
price is better
than the firm's
price, All this, of
course, is aside jfrom the duty an
selling it to a client, the fiduciary's agent always has to use reason¬
cost, though still significant, is of able efforts to give his principal
secondary
importance,
and
dis-
any
relevant
information
which
167
Volume
Number -4684
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
notice the principal would
"he has
day or mavbe rnhhL ?*
i* [other was a young spinster lady
have.
r r:en<4 years ^er Junior, Had the
entirely accurate J should crutches rthic ^
in one easel
wSf
ppene(* Commissipn. simply followed its
add that it is over-simplifying
few character, X
you *ee a earlier line of cases- the-Allender
somewhat to consider the two
I am sure
^SOn
5lelmack cases
Hughes doctrines as entirely distinct. Even in •» the first Hughes arm's-rlength transac
'case the court, though consider¬
a principal ! was? some language in the opin
ing the firm as a principal in a
sivl
cannot be, .qonqlu- iop, _ perhaps not too happily
simple vendor-purchaser transacirA,It
chosen— which, considered out
tion, referred to its special duty,
you decide? I am of
context, had the industry in
in view of its expert4 knowledge
a,f+t tn® answer cannot be given J something approaching a state of
and proffered advice, not to take witn anything
approaching math- consternation for awhile. I refer
'advantage oh its customers' ignor¬ ematical certainty. The only qn- to the Commission's statement to
ance
of market conditions. -• In swer l know depends not so the effect that a firm which somost cases there is, of course, mucn on any magic .-words but I licits an order for a
security when
some similar element
of advice upon all of the surrounding cir- it knows that it does not have
and of disparity
between the cumstances, including the degree the security in
inventory is norknowledge of market conditions oi sophistication of the parties and
mally making the purchase for
i possessed by the dealer and the cne course of conduct
between its customer and hence is subject
customer. We have felt, however, cnem. And this is one time
you to the duties of an agent, If that
that the essential doctrine of the cant blame the lawyers. The law statement
were taken
desire to
:
1
n
To be
-P^la-nd
portiSgTo eact1s
cumstance is the presence or ab¬
sence
of inventory at the time
American
th€; degree
qqlls
the
or
solicitation.
customer
a
absence
But when
and
"I
says
haven't heard
from you in some
time and I think you might be
interested in XYZ preferred," and
x
'
the
customer
and
the
'
orders
firm
then
100
trol of such funds
ties that
and
market, the firm is within its
rights. It may be an agent under
the
not
circumstances,
automatically
but
because it has solicited
'
literally, I
Hughes case is applicable must operate on the habits of peo- believe it is safe to
say that most
ole and the
even in a genuinely arm's-length
way most of us do of the-over^the-eounter securities
transaction, where the customer business.
business.- would, be put on an
was
previously unknown to the
A customer does not
typically agency basis. I am confident that
dealer and can take care of him¬ walk into a firm's
office with a r no such result was intended by
self and was not solicited and re¬ lawyer at his elbow
and say "Will the .Commission.
I am equally
ceived no advice from the dealer;
you buy me 100 shares of X stock confident that, insofar as the Oxand I believe this factual exten- at 50 or better on a
1% commis- ford case may have
been insion
of the first Hughes
case, sion?"
This would be
a
clear terpreted
in some quarters as
would be upheld by the courts.
agency transaction. Or, if a cus- automatically making a transacThis brings me to an important tomer were to come in off
the) Hon, an agency transaction, where
chapter so far missing in the story. street the way a housewife walks there is solicitation without inTo say this much without more is into a grocery store and say "Do ventory, the Oxford doctrine is
a little like the law school pro¬
you have any X stock?" And upon not, dead — it never lived. Witfessor who. was asked by a first- receiving an affirmative answer I hess the fact that about half the
were to ask "How much will
year student what the difference
you transactions in the recent Hughes
was
between 3 question of law charge me for 100 shares of the X case clearly fell within the Ox
and a question of fact, and re¬ stock you have?" and the firm ford pattern; yet there was no
plied that questions of law are were to say "48" and the customer mention of either the Oxford case
decided by the judge and ques- were to say "Let me have it," it as such or its reasoning,
: tions of fact by the jury.
That is would be clear that the parties
The present significance of the
all very true, but it did not in- had entered into a principal trans- Oxford
case, therefore, is simply
But what usually
L form the student how to tell action.
hap- this: Only a consideration of all
which category a particular ques¬ pens? If a customer does come in of the circumstances can determ
tion fell under.
Similarly here, without solicitation,, he is apt to Line whether a particular trans
first
,
works
.
.
is
just
It. would be nice if there were
such simple formula which
some
could
before
can
one
tell which of the
"Buy
say,
100
me
shares
effect
two Hughes doctrines to apply, it
stock"—which
is in
is necessary
vitation for
agency
is
iirm*
to decide whether
acting
in
a
particular
transaction as a dealer pure and
simple or as a fiduciary.
In
some
cases, as
a
in the Arleen
Hughes case itself,, the answer is
easy: A firm which is registered
as
an
investment
adviser, and
which admittedly renders invest¬
ment advice with respect to the
'
transactions in which it pur¬
ports
to
act
as
principal, can
same
.
hardly deny its fiduciary
status.
the
But
an
of
an
X
in-
J
the
transaction.!
salesman
happens to be
interested
in
principal transac
tions. So some vague talk ensues
which leaves the question of ca¬
pacity
quite
muddled and
a "principal"
firm then sends
firmation.
Very likely
a
an
the firm could show very
had
accepted
an express
into
enter
offer
to
istered
of
cause
endeavor, is not that simple.
I
do
wish
not
however,
on
to
leave
you,
discouraging note.
a
adviser and has
an
no
Even
decided
that with every
by
case
the
Commission the
situation becomes clearer. I think
applicability of
any of the
mission's rules
or
cases
Com¬
to
some
particular situation,
avail¬
we are
able at all times to consult* with
you
and give you
our
own
the benefit of
opinions for what they
be worth. Both our principal
may
*
,
;
in
Detriments for Acting
For
as
Brokers
Principles
or
ripnriv
thing, the confirmation,
important, does not give a
one
while
conclusive
The Commis-
answer.
sion's confirmation rule, which is
essentially
declaratory
of v the
•
common
law, requires the firm to
advise
the
before
the
in
customer
writing
of each
transaction whether it is acting as
completion
a dealer
foy its own account, as a
broker for the customer, as
broker for some other person, or
as a
broker for both sides. And,
where the firm is acting, as; broker
/for the customer
:
or
its confirmation
for both sides;
state
must
source and amount of
the
all commis-
! sions and either
state or announce
that it will furnish on request the
name
side
! date
of the person on the other
of the transaction and the
and
time- when
the
trans¬
action took place.
.
Obviously, where
•
,
-and
feels
counterprincipal
customer
the
Salesman
acTing
reliance
customer
salesman
the
were
quick to
see
the opportunities for consolidating their positions of power in
is
tomer's interest.
sequences
everywhere are suffering ecothe
nomic
terested
members
Here
something
is
the
of
you
public.
get
can
free from the Government. Don't
hesitaie to avail yourselves of it.
feels-toat Uliek
cSt
European
unless
ery
to
up
a
we
world recov¬
or
ready to
are
step
return of honest money
as
is
rest
number
our own
country.and in thecou
which we loan goods and
of broker-dealer
proceedings
in
the
Return to Honest Monetary
practices
_
•
discusr
pvtPndPd
£ SX SffiSm
"Tlnnle alLbv "teelLl rtiauS*
act as principals were |
aei
ynin-iytfig wxn
jmnortant Z
the circumstances o
circumstances.. of ftomyseU to one: importanrarea
in a .fiduciary position
fiduciary position
^genCTal fiew^tne area or
Commission found that firms pur-
porting to
to
all
firm con¬ those
cases
area
nne
a
problem.
as^^age^^ j^rious ^vernmwits throughr
SRSBflBSagMteum
crp
wUl" emembeL
.
...n„
I
njan gets
old
a
tooughoirt to
^^thkh
.
.
re^Ustruet
.1
lonely widow 80 years
in the world because
must
markets for the conversion of pa¬
into gold at prices for
papqr money vis-a-vis gold ar
rived at in open auction markets
per money
To
sum
up
remarks on
I want to make this
my
honest money,
statement with all the emphasis a
command:
A
to
return
honest
practices would have
to
suggestion
consider
management
various
contracts
American
corpora¬
and
groups
so
that the
skilled management personnel of
industry could function in the va¬
rious specialized fields, in har¬
mony with the general policies
sanctioned by the Congress and
executed by the general adminis¬
tration group for the European
_
a°90-yeLLu widow™nd'the
There is no use talking
Well, that's my story. I should
like to say by way of conclusion
that I hope that our country will
continue to discharge its respon¬
We
are
in
the
world
disturbed
situation.
miserable
and
confronting the spectacle of these
starving, wanting millions among
our
neighbors.
Among
these
neighbors in Europe we have
countless ties of blood. We admire
and respect the traditions of these
respective countries. We want to
continue to be generous and helpful.
-.V
Front
our
own
standpoint
American self-interest
be
helpful
in
we
of
want to
reconstructing the
road back to peace.
We want to participate not only
fully but also effectively in Euro¬
pean and world recovery.
Corp. Bond Traders
To Hold Outing & Dinner
The
Corporation Bond Traders
Club of New York will hold their
annual spring outing and dinner
June 11th at the Wingfoot Golf
Club, Mamaroneck, N. Y.
on
monetary
more
effect
European and world recovery
Bond Club of Toledo
the economic life of the worlc
as
To Hold Annual
plans under discussion a
the present time.
To put it another way:
The
world is eager and ready to go to
OHIO — The
Club, of Toledo, will hold
annual outing on July 16,
at the Inverness Country
Toldeo, Ohio,
expressed in production and
distribution, than any of the' re
work.
The
labor
and
tools
are
available.
The management skil
is available for planning and put
ing into operation the production
and distribution schemes needed
to feed and clothe the peoples
of
Europe and of the world. But we
need honest money to finance the
production facilities, and we need
honest money to serve again in
the
field
of
distribution
for
facilitating,
change of goods.
means
the
ex
Enlist Skilled Management
come
to my
Outing
TOLEDO,
Bond
their
1948,
Club,
Now Hamilton
Management Corp. I
DENVER, COLO.—The name of
Hamilton Depositors Corporation,
Boston
Building, has been
changed to Hamilton Management
Corporation.
as
*.•
Now I
to think he is the most won-
derful fellow
gold
free
to the
set up
returning
we
on
.
.
Further, as the
covery
om
"
gold and
standard,
my
broker for the
no
auction markets.
open
on
the same.
a
to the
me
government
our
sibilities
page 4)
about
ruinous taxes, opening step in the process of sta¬
and dishonest money, and bilizing paper moneys in terms o:i
simply one type of fiduciary tries to
and the obligations in this respect money.
In
This leads
that
tions
regional offices, including the
in Chicago, are staffed with
lawyers whose job it is to lend
interpretative assistance to in¬
tyranny,
is
revocation
money appropriated.
eral
of Statism, and people exchange rates arrived at in
in to
When you have
technically an agency relationship
does not matter, because an agent
are
respective fields should
made part of the administra¬
tion organization for the most ef¬
fective
and
direct use
of the
one
their
general stagnation in production
and distribution.
.
•
gotten to that point, you have
Therefore, I say that an lmporn o t h i n g
resembling an arm's- tant principle that should juide
lengths principal transaction re- American participation in Euiogardless of the form of the con- pean recovery is that our friends
firmation.
You have what is in in our own government must take
effect and in law a fiduciary re- stepsL/Wh^IW?Y;;as]S us ■0 +make
lationship. Whether or not it is (sacrifices for aid to Europe, to arthe
these
n
De
with
(Continued from
I the politicians
customer and hence subject to the same]
During ^ past twenty years.
The firm duties of disciosure
has assumed all the obligations
out the world
~
which the law imposes upon^ an
the leading cases of that variety. 1 have, broken
agent. But the sending of a prinr
game for. the -use of paper money
cipal confirmation is not'always
The Oxford Case
•
| and gold as media of exchange..
conclusive that, the firm is really
T
that rnanv more of We find ourselves, therefore, Jiere
dealing at arm's length atid hence
subject only to the first Hughes you
the name of and
doctrine. All you Jhave to do is see Oxford. The Oxford ease which
to
sJani/larl
nhmif twn VP8ra 3C0.
H»C1US w
'
°ne or two
cases where a sales-
firms
there
;
know,
under
a
advice that
his
upon
and
with
making
dominating
himself
practical
office in Washington and our sev¬
In European Recovery
unless
clearly
typically, of course,
more
the
government pays its
workers badly and does little to
attract skilled technical
help.
Obviously there would be a
advantage in dealing
European recovery by sub¬
that is notably true of the recent categories such as food, industries,
Hughes case. And insofar as there distribution, and transportation.
This would result naturally in the
may §till be unsettled problems,
corollary that skilled management
or doubts in your minds as to the
The fact is
the national life of Honest money means that we must
respective countries.
The abandon the Keynesian theories
movement throughout the world the so-called managed currencies
the customer does not come in off
into Statism was encouraged by and pegged and dishonest rates for
principal, rendering the incidental the street but is actively solicited
our
own
so-called
New
Deal. the international exchange of cur¬
investment advice which we all by a salesman, who will almost
World War II gave the politicians rencies and gold.
know is universal in the industry inevitably render some advice as
the golden opportunity of further
We must set up free markets
and without which it could hardly an incident to his selling activ¬
rationalizing state controls, with for the conversion of any coun¬
operate. When does such a firm ities, and who may go further to
the result that the world finds
try's paper money into the paper
cross
the line from the
first the point where he instills in the
itself today crushed by the conmoney of any other country at
customer such a degree of con
Hughes doctrine to the second?
as
fancy contracts with customers; it
simply buys and sells securities as
side the fields of
Conclusion
transaction.
a
use of the funds for
pro¬
duction and distribution.
the
that it had made and the customer
But suppose the firm is not reg¬
and hence
within the formula of the first or
the second Hqghes case. One cir-
fective
Steps should be taken to go out¬
bureaucracy in
recruiting management skills be¬
con¬
court of
transaction
agency
category,
agency
in
or
should be taken to enlist Ameri¬
can skilled
management in the ef¬
Recovery Plan.
law would hold that this amounted
to
action falls in the principal
American money as may be ap¬
proved by the
Congress,: steps
be readily applied — not
necessarily this one — but unfor¬
tunately life, at least in this field
■
*
or project ever
better than the
my recommendation is that
when the administration is set
up
for the control and use of such
.
.
any
ingly,
order
an
plan
no
out
character and capacity of the men
you pick to carry it out.
Accord¬
then bought the stock to fill
and
it.
it
agent
an
Congress
tlemen who have spent
your lives
in the fields of
management and
the creation of productive facili¬
buys 100 shares for its own ac¬
count, confirming as principal'at
a
price related to the current
all
the
as
may make available for
recovery,
I need
hardly remind you gen¬
shares
out
goes
in
;uropean recovery, a recommen¬
dation for the
management con¬
of
salesman
a
participation
J
of the transaction and another is
last genera
Clement A, Evans Co. Adds
(Special
to The Financial
Chronicle)
AUGUSTA, GA.—Henry B. Gar¬
rett, Jr., has been added to the
staff of Clement A. Evans & Co.,
seriously recommendation for'the guidance ' Inc., Marion Building.
32
(1340)
THE COMMERCIAL
As We See It
*
(Continued from first page)
passions is, accordingly, not nearly
mass
would otherwise be.
great
so
as
it
Of course,
technically the people
do not declare war in this country, but in
point of fact
their attitudes quite definitely determine
public policy
in this respect.
And the President and his associates have
succeeded in
us
arousing
disturbing.
most
Better
would
salutary if
someone
in
situation
current
forth
position of
a
in
better
perspective for the benefit of the great rank and file in this
country who have not had the opportunity to consider avail¬
able facts, both current and
historical, in a way to lead to
thoroughly rational set of conclusions. It would be foolish
deny — as poor Mr. Wallace is so fond of doing — that
Russia is apparently not interested in "
avoiding conditions
a
to
of which
out
have with
wars
distressing frequency arisen
It would be equally silly to assert — again as
the great "liberal"-of the
day is almost daily doing —- that
in the
precisely what effect our already exceedingly generous aid
and any that we presently add to it may have upon all this.
It would be quite foolish to assume that it will have the
consequences we wish it to have — almost as foolish as it
would be to subscribe to popular notion that communism
is the only "way out" for a starving or destitute people who
do not wish to endure the hardships their position imposes
upon them — as if communism was indeed "a way out" of
anything. Are We
now
Perspective Needed
the
set
a
past.
This leaves the
wholly of our own doing, or even,
our own doing.
There were three first
class powers and one third class
power, all ruled by what
in private life in this
country we should term gangsters, all
bent on imperialistic missions — or as we should
say in
reference to gangsterism' here,
"muscling in" where they
had no right to be. The thieves fell out
among themselves
we
saw
*
to it that all but
'
•
That
one
one
'
.
remains
the
on
'
'
were
'
*
was
to
badly misled ourselves
so
seems, we are now
that,
incredible
*•
it
shocked to find that the Kremlin is
—
light.
More
Self-Deception?
,
r
!"'[
J
self-deception could easily lead to similar re¬
sults now. We
may as well tell ourselves plainly and bluntly
that the people of
any nation on the globe — if our own
political philosophy is to be accepted — have as much
right
to adopt the communistic
system as we have to reject it.
If Italy in the
coming elections were to decide that it hence¬
prefers the communist system, we, for our
certainly be able to find no reason why we should either
directly or indirectly finance the conversion or the system
it is established.
once
At the
same
time, however,
we
Italy
for such
a
The
reason.
true of any
other
same
or
formidable
more
of
private
property, with private enterprise, and with individual
initiative, substituting therefor a statism which is
fully
developed as that of the communists (only at
most the element of
dictatorship being lacking at this
stage), a relatively large number of the nations are
already for the time being lost to any economic or
po¬
well
litical
doctrine
akin
to
the
American
tradition.
It
is
extremely doubtful if we can "save" any of these
people.
They must "save" themselves. How much and in what
way we can even
help them "save" themselves
to
is open
question. Apart from the smaller and weaker nations
immediately adjacent to Russia itself
where our effort
—
would be
Russia?
'
These
are
of
some
citizen should be
the
the rank and file to leave their
Of course,
there
are
other
in
some
of these
accordingly
areas
adroit enough.
more
i
is not
Russia
by this time, however, that it
difficult to get ourselves as much disliked as
any other foreign power
injecting itself into the
very
or
internal affairs of another
nation.
It remains
to
be
seen
market
n
Pennsylvania
values, rather than
values, will prevail in the
future
according to D. Emmert
Brumbaugh, State Secretary of
Banking. The new methods were
explained by Mr. Brumbaugh at
district meeting of the
Pennsyl¬
a
vania Bankers'
Association, it
was
stated in Associated Press
advices
from Harrisburg Feb. 23,
appear¬
ing
the
in
zette"
Pittsburgh "Post Ga¬
from
which
we
quote
the
past
has
following:
Pennsylvania
in
the
always
priced
the
investment
holdings of banks at market value
with the exception of government
the
the Near East and the
and
—
we
should go to war on this account
in view of the
so
a
corner
us.
we must
in the
past with
a
stable"
is
We
We
answer
which
do
conclude
have
as we
often concluded
so
statement that the British Empire is much
But, again,
are
wise to
we
the
pay
these
questions. We present no answer.
thoughfut American will find his own
quite independent of the Administration
and
every
of
course
anything
At
the
of
we
may
*
A
group
headed
by
Ha'sey.^
Stuart & Co. Inc.
publicly offered stock to present
$12,000,000 first mortgage bonds, than its parent
Directors of J.
Co. Inc. held
per-share
at
share
M, 3% due March 1, 1978
101.19% and accrued interest.
Award
was made to* the
group on
its bid of 100.719.
Corp. headed
underwriting
a
new
group which of¬
issue of 50,000 shares
of preferred
The
of
stock, $100 par value.
stock, having a dividend rate
4.20%
share.
per
were
priced
was
The
awarded
,
new
to
the
at.
101.205
^securities
group
on
a
bid
per
share to the company.
The
iaries
company and its
form an important
The West Penn
94.549%
Electric
of
As
a
part
of
its
of the
P.
&
the
following appointments
Mor¬
March 17
on
made:
were
/
Hartland
S.
West,
formerly
Vice-Pres¬
Francis K.
formerly Auditor, was
Vice-President;
Forester, Jr. was made
Assistant
Frank
Assistant
Comptroller,
pointment
to
the
at
for
holders,
the
each
rate
29
Mr.
J.
West
P.
of
offering is to holders
ord
March
24,
1948.
stock
will
Anv
be
one
held
of
rec¬
unsub¬
purchased
by West Penn Electric Co.
Proceeds from the sale of the
$12.
bonds, the preferred and
common
stocks will be applied to
retirement
of
the
company'*
loans
outstanding in the
amount of $4 million
and, together
with other
funds, to a construc¬
bank
tion
1948
program
calls
for
which for the year
the expenditure oi
$22,646,000.
part of
Co.
sys¬
common
After
joined
now
italization
of
of
of the
being offered
fund
mon
staff
of
a
been
Assistant
and
Comptroller in
Auditor
stork
$24,250,000.
$
Assistant
an
He will be
one
resentatives
and
in
1945.
Mr.
%:
Vice-President.
of the bank's rep¬
in
Ohio,
Michigan
parts of Pennsylvania.
James
A. Burke, President of
Borough of Queens, N'ew York
City, officiated at the ground
breaking ceremonies on March 15,'
the
for
the
Branch
Bank
•
$200,000 Union Turnpike
of
of
The
Bayside
National
Bayside, New York and
adjoining one-story building
the Utopia Station
Flushing Post Office, it was
which will be
of the
announced by J. Wilson Dayton,
President of the bank. The site is
at
186th
Street and Union Turn¬
pike,
Jamaica
Estates
North,
Queens.
When
completed
and
ready for business about Aug. 1,
the
new
two-story bank building
cap¬
ing facilities in New York City,
Mr. Dayton disclosed.
the
company will
$72,000,000 first mort¬
.4.20% preferred stock, and
3,035,raising 000 shares of no par value com¬
company is offering
5,517 shares of additional common
the
will have the first drive-in bank¬
giving effect to all
securities
consist
on
Manager in 1935. He
Comptroller ince 1937.
Mr. Gibbons joined the staff of
J. P. Morgan & Co. in 1916.
He
the
million
the
ap¬
Morgan & Co. in 1909 and
became
has
as
other
shares
The
scribed
this
effect
take
April 1.
appointment of Charles S. Bishop
stock, constituting 85.858% of its
voting stock, being held by the gage bonds; $29,707,700 of 4y2%
preferred
stock;
$5
million
of
parent companies.
program the
'
Central Hanover Bank and Trust
Co. announced on March 24 the
companies, at $25
series
fered
"
the
groups who were successful
pur¬
chasers of the securities of West Penn Power
Co." when offered at
competitive bidding March 22 publicly offered the'
securities on
March 24.
an
*
Forester is at present Treasurer of
Warsaw Elevator Company.
say.
underwriting
Boston
un¬
investments.
gan
1940
Offer West Penn Power Go. Securities
The First
one
need
are
regular meeting
❖
separate
will
to
change
involve
the real
*
■
became
Halsey, Stuart and First Boston Group
Two
that
subject
not
—
of
the
Gibbons,
underwriting of the British Empire?
ask
hope
and
made
obvious.
cost of further
state
worth of many
—
more
terranean
the
uncertainty of our ability to be Comptroller, was made
ident and Comptroller;
globe so much closer to Russia
'
Again,
of the
will
or
amortization.
in
Board
private citizens have
bonds
count that "market values
wise
Joj^
Government.
thinking to
corporation
to change its policy." The bank¬
ing head said that under the new
policy the state will take into ac¬
American
never
The latter have been val¬
lfess
bank
aggression in this direction would touch us
directly, but certainly he would be hasty
effective in
than to
tem,
We should have learned
-
It is
areas,
that is
decisively with the people of the countries involved.
help somewhat in some of them
if
are
i
sylvania's banks there is not
more
who concluded that
the
—
subsid¬
we
investments
banks at book
Middle East conspicuous
among them, where the situation
takes a different aspect. We have certain financial interests
naming the present offering
price with a compensation of
$2.65
—
H:
He emphasized that "due to the
y
questions
asking himself.
quite futile in any event — it is
probably true
that defense against the
type of intrigue to which Russia
is devoting so much of her
energy at present must rest
We may be able to
*
determination of values
of
sound financial condition of Penn¬
vigor?
Except for defense, how valuable would any of these
European countries be to a conquest-bound
with Russia
now con¬
The
cost
Western
them,
they
Realtors.
cipal and
power.
it is
York
be listed at the book value
easily converted into an aggressive
ready to risk an "all out" war?" Would
ours
should
sider their patron saint) are more
numerous than
any
other political
party or element. If to these we add the
socialists, who likewise would do away with
.
threat would she become
a
France be
enemy
would, of course, be equally
disciples of Marx (or whoever
F.
ued at cost less amortization.
enabling communist groups in West¬
Europe to take control? Would a communist-con-
trolled
There are, we are
sorry to have to say, a number
of countries in this world both in
Europe and Asia where
communism has taken
strong root. In a number of
these
was
Estate
Mr. Brumbaugh said that in the
future all high grade state, muni¬
ern
.still concede that the internal affairs of
Italy were the con¬
cern of
Italy. Certainly, there could not be the slightest
excuse for us to
go to war either with
as
on us or upon
vitally affected by all this than we, many times more
affected. Indeed, a Russian threat to the British
"life-line"
part, should
(assuming that it is still really a life-line) through the Medi¬
forth
Real
"bonds.
somewhat
Similar
charge of the Mortgage
Department. He
formerly President of Edwin
Armstrong
Company,
New
and
How much
be
"liberty" or "freedom"
and destroy them—and is not filled
with sweetness and
"impose" communism
the French nation be thus restored to its ancient
as
not in the least interested in
except to suppress
a
if she succeeded in
expected, but the resulting situation is not quite what
one might
suppose from a good deal that is being said
in high places. It would be a
good thing if all of us,
including officialdom, could largely drop the much
touted "ideological" aspect of the situation as such from
our
thinking. We refused to do so during World War II
and
(Continued from page 24)
will be in
immediate neighbors it will have to be by outright
war.
How formidable a threat is Russia to us anyhow?
v
as
Bankers
*
our
destroyed.
rampage,
News About Banks and
Danger?
question, and
If Russia is to
the current situation is
'
In
vital question it is, as
really endangered
by the spread "of communism across Europe even to the
Atlantic. If the danger is ideological, then fighting Russia
or
the communists anywhere is obviously not the proper
defense. We should in any event accept communism or reject
it according as our good sense left us or remained—that is,
of course, short of actual conquest by communistic nations
followed by an imposition of their faith from without.
It
would appear rather obvious that the type of intrigue that
Russia has engaged in in border countries, in Italy, in
France, and at an earlier date in Spain, simply would be
out of the question here unless we have reached a
stage
where we are not worth saving.
perhaps, chiefly of
—and
Thursday, March 25, 1948
CHRONICLE
to how much the United States would be
It would be most
influence
warlike spirit in
a
definitely
degree that is to
FINANCIAL
&
with
stated
value
of
*
«
Gustav
F.
P
*
Watters, of Buffalo,
N.
Y., was elected a director of
the Power City Trust Company, of
Niagara Falls, President George F.
Bates announced on March 8. The
Buffalo "Evening News" reporting
this stated that Mr. Watters is
Number 4684
Volume 167
THE COMMERCIAL
President of the
Falls Power Company.
&
FINANCIAL
CHRONICLE
(1341)
33
Executive Vice
Niagara
$
*
The State of Trade and
Industry
-(Continued
*
William P. Curtiss, Chairman of
.
Board of Directors of the
New Haven Trust Com¬
pany,
New Haven, Conn, died
on March 11.
He was 77 years of
age. Mr. Curtis at the age of 16
entered the employ of the Na¬
tional Tradesmen's Bank in New
Haven, it is learned from the New
Haven "Register," which also said:
the
Union &
remained with this bank for
"He
In 1903 he became Vice-
16 years.
President, Treasurer and active
Manager of The New Haven Trust
When this company
merged with The Union Trust
Company
in 1911 to form the
Company.
&
Union
present
New
Haven
Trust Company, Mr. Curtiss
con¬
tinued as director, Vice-President
On Jan. 10, 1918,
and Treasurer.
became
he
President, continuing
charge until he became
in active
Chairman of the board
1943."
'
.
:
-
.
❖
*
Jan. 4,
on
Company, of East Hartford,
Conn.,
will be held on May 5 to act
on
a
increase
to
the capital
from $150,000 to $200,000, it is an¬
nounced by Robert B. Olmsted,
President of the institution.
which
from
this
said in part:
At the
is
learned,
18,
also
; "
time surplus of the
same
will
bank
The
"Courant" of March
Hartford
increased
be
$50,000
from $150,000 to
$200,000. This in¬
crease will be made by transfer of
$25,000 from the undivided profit
account and
at
by issuing
stock
new
premium of $12.50
a
Tme^morJ^lp^^3?'! hold,been
out
® steel and have
-
on the basis that they
unable to get their share.
American Ir°u
rlav
Ifil Jrf
l"makins'
1 8
month ago
iaa1?*01
1,587,10° tons
1,725,000
to
aff0 and 1>281,210 tons for the
a
decrease of 2,873 cars, or 0.4%
a
1946.
in
below the
share,
a
consecutive
This
that
production
exceeded
the
of
plans call for the issuance
2,000 new shares, par value $25
which will be offered to
each,
the
stockholders
one
share
in
the
for three
at
ratio
$37.50
of
per
share.
M
/'
*
*
'•
:<t
■
.
AUTO OUTPUT SHOWS FURTHER
IMPROVEMENT FOR
LATEST WEEK
Production of cars and trucks in the United States
and Canada
advanced last week to an estimated
output of 116,023 units "Ward's
Automotive Reports," states. This
compared with a revised total of
114,689 units in the preceding week and 108,742 units a
year
United States
car
output of 79,571
,
Trust
the
Company
learned
Philadelphia
almost five times the total of 22
.of
Stewart
M.
Walker to VicePresident in charge of operations;
Horace
W.
Latimer,
Corporate
Trust
Officer,
and
James, Controller.
*
Edward
F.
meeting on March 9 of
Board
of
Directors of the
Corn Exchange
National Bank
Company of Philadelphia.
Edward W. Newcomb was pro¬
from
Assistant
Assistant
Cashier
Vice-President,
effec¬
°r
Bank
on
>!*
of
,.
Philadelphia,
March 10. He
The
age.
states
associated
was
Pa.,
73 years
Philadelphia
ning Bulletin"
Ruth
was
"Eve¬
that
Mr.
with
department.
tor of the
toany.
the
He
was
a
direc¬
Philadelphia Bourse for
years and was
Bankers
a
member of
Association
of
ago.
year
and
housewives
and
canned
k
considerably increased their purchasing of
following the announcement of the meat¬
meats
packing strike. The supply of fresh fish and poultry remained ade¬
quate and in large demand. Lenten specialities continued to sell well
the
approach of Easter stimulated
baked goods. '
the
buying
of
candies
housewives
Many
displayed interest
in
upholstery fabrics and
curtain and drapery materials.
Retail
volume
for
last
of
or
more.
numerous
Retail
failures
predominated, claiming 44 during the week,
compared with 41 in the previous week and
as
loss
1947.
18 in the same
The second largest number occurred
26
where
to
level, numbering
creditors,
went
concerns
one
out
than
more
of
last
business
in manufac¬
with
week and
10
probable
above
last
In. other industry and trade groups, few businesses failed.
year.
Geographically, the week'.s failures were heaviest in the Middle
None of the other regions had
Atlantic States and the Pacific States.
half
as
many
casualties.
,
"
that
above
far
failures, 90 out of 106, involved liabilities
Up from 84 a week ago. they were almost three
as last year when only 35 were reported.
Small
the
week
country
in
the
estimated
was
to
period
be
ended
from
6
to
of
a
year
PRICE INDEX
year
UP NINE
There
trade
was
during
below
the
a
the
level
slight decrease in the dollar volume of wholesale
week. While unit volume remained moderately
of
the
corresponding week of 1947, dollar volume
Buying generally continued to be for currentstock replacement and orders for most goods were moderate. Col¬
somewhat above.
was
lections remained
slow in
the
Federal
a
year
ago
the four .weeks ended
the year
CENTS IN LATEST WEEK
store
On the
Contributing to the week's rise were higher prices for wheat,
corn,
rye,
oats,
barley,
beef,
bellies,
lard,
butter, eggs, potatoes,
in flour, hams, cot¬
steers, hogs and lambs while declines occurred
tonseed oil, cocoa and prunes.
'
on
a
deliveries
\;-'?L.
country-wide basis,
index
for
the
generally
were
'.,
V
■
week
as
taken from
ended
March
13,
1948, increased by 4% from the like period of last year. This com¬
pared with an increase of 5% (revised) in the preceding week. For
March 13, 1948, sales increased by 7% and for
to date increased by 6%.
Retail
the index also registered $6.70.
v
Board's
Reserve
lines and
some
prompt.
--.V'-'' W"
Department store sales
in
trade
volume
was
New
the
York
the
past
week
displayed
signs
approach of Easter and department
estimated at close to the level of the similar
near
period of 1947.
a
corresponding date
Regional estimates exceeded those of
ago.
ago
Southwset 9 to 13 and Pacific Coast 1 to 5%.
*
$6.70 from $6.61 the week before, a gain of 1.4%.
to
rose
was
on
10%
by the following percentages: New England 4 to 8,
East 6 to 10, South and Middle West 5 to 9, Northwest 10 to 14,
a
of quickening with
FOOD
and
;
■
''
Wednesday
are
high
a
'■
■..
Some
fresh
week's
failures with losses under $5,000 continued at a low
16 against 18 last week and 12 a year ago.
COMMODITY PRICE INDEX MOVES
According
to
,
Federal Reserve Board's index, department
store sales in New York City for the weekly period to March 13, 1948,
increased 1% above the same period last year. This compared with
an
increase of 1% (revised) in the preceding week. For the four
weeks ended March 13, 1948, sales increased 4% and for the year
to date rose by 5%.
.
the
.
Peru's Second
daily wholesale commodity price index, compiled by Dun
& Bradstreet, Inc., trended upward in the latter part of the current
week
closing at 281.22 on March 16. This compared with 275.49 a
week
earlier, and with 269.25 on the
Grain price trends
similar date
a year ago.
with a rather
toward the close of the period.
.
last week were again mixed
sharp upswing in values
ijs
>
UPWARD IN LATEST WEEK
Exchange Offer Has Not Met
Unanimous Approval of Creditors
The
For¬
eign Trade.
&
blouse
the
bank for 52
years before retiring
hve years
ago as head of the for¬
eign
floor
slightly and
Consumer buying of practically all foods remained at
1946.
general strengthening in food prices the past week
and the Dun & Bradstreet wholesale food price index for March 16
Stephen E. Ruth, former VicePresident of the Philadelphia Na¬
died
as
the
of
There
4>
of
Demand for Spring and Easter apparel increased
volume held moderately below the level of a
level
to
tive April 1.
tional
.imes
&
Trust
moted
)f $5,000
turing
At the
the
week
its current survey of trade. Considerable
suits and accessories continued to sell well.
i^
Most
week of
>H
*!:
same
LEVEL
in
millinery departments attracted a large
number of shoppers with some interest in
lingerie and hosiery in
evidence. There was some improvement in the demand for mediumpriced Spring dresses and suits. Skirts and fancy blouses remained
among the best sellers. Men's light-weight gabardine and worsted
and
Despite this sharp upward trend, business casualties
of
1
,
in the
weather
to
Main
below the prewar level, claiming only a third as many as the 350
in the comparable week of 1939.
from
"Inquirer"
March 15.
TURN UPWARD
Following the preceding week's dip, commercial and industrial
ailures rose slightly in the week
ending March 18, reports Dun &
3radstreet, Inc. Concerns failing increased from 102 to 106, over
iwice the 47 occurring in the
corresponding week last year and
■
Philadelphia, it, is
FAILURES
unit
ago.
last week, while truck
completions were 30,394 compared with 29,913
(revised) for the previous week.
:
f
BUSINESS
levels
peak
high-priced merchandise turned consumer attention
away from luxury items and the factor of good quality at moderate
prices continued to be stressed.
with 78,525 (revised)
compares
the
..
•I Promotions
as
follows
have
been announced by the Fidelity
Philadelphia
resistance
5,000,000,000
was 291,000,000 kwh. below the peak figure of 5,436,130,000 kwh. reached in the week ended Jan.
24, 1948.
inclement
Bradstreet Inc., reports in
was
out in the
flgure' and
week
from
as
some
areas discouraged
consumer
bqying to a degree, interest in pre-Easter
promotional sales was
generally favorable. The dollar volume of Vetail trade increased
slightly during the period ended on Wednesday of last week and was
slightly above that of the corresponding week a year ago, Dun &
»
f™
minimum
a
SLIGHTLY ABOVE 1947
preceding week, but ex'SSS
4,759,066,000 kwh. produced in the week ended March 22,
1947 by
386,364,000 kwh., or 8.1%. The March 20, 1948 week was the
11th
Australia, about 20% in South
Zealand
RETAIL AND WHOLESALE TRADE MAINTAINED
5,145,-
was
oi i
at
was
same
ELECTRIC PRODUCTION LOWEST
SINCE JAN. 3 WEEK
139,211,000 kwh. less than turned
New
February. In the meantime, activity in the Boston
wool market
While
mnnnTr industry. for the week ended March 20, 1948
19o
' accordinS to the Edison Electric Institute.
in
dealers watched developments
the foreign primary markets.
Imports of apparel wools received
Boston, New York, and Philadelphia in the week ended March 5
represented 6,396,000 clean pounds, compared with 7,324,800 in the
previous week.
cars,
providing the other $25,000.
The
late
at
corresponding
1947, and
in
in
the Association of American
Railroads.
This was an
of 4,462
cars, or 0.6% above the preceding week. It
repre¬
decrease of 44,114
cars, or 5.2%
below the
in
vveek
reached
raw
according to
sented
a year ago.
little lower for some constructions.
a
Values dropped from 10 to 15% in
prewar year.
FREIGHT LOADINGS
5.2% UNDER LIKE WEEK OF 1947
Loadings for the week ended March 13,
1948, totaled 797,033
ncrease
total
January, and 840,000 in
Trading in textiles was quiet with prices steady
Africa, and from 20 to 30%
week
average
The
year.
in
consumed
week.
tons
as against 1,757,400 tons last week,
month ago, 1,697,400
tons, or 97.0% of the old
highest
bales
All foreign primary wool
markets, except the South American
market, experienced a drastic decline in prices during the past
93.6%.
operating rate is equivalent
i«^HAy*2neu.y'lar
1940, the
week
to
a
aiul castings
a
i
m
was
860,000
February
decrease of
with 97.5% one week ago. A
Thls comPares
the indicated rate
/hiS- we®.k's
compared with
capacity of the industry will be 95.7%
be§inni«S March 22, 1948,
o,e
1
estimated by
as
previous
and Steel Institute announced on Monoperating rate of steel companies having
\T ?ee,
94 o/
rtf
during February,
the New York Cotton
Exchange Service Bureau, was 780,000 bales,
marking the tenth successive month in which the use of cotton fell
below the
corresponding month of the
for allocations
a
The amount of electrical
energy distributed by the electric light
holders of the East Hartford Trust
proposal
from page 5)
,
*
special meeting of the stock¬
A
..
In the latter part of the
period prices were, bolstered by more favor¬
able reports on the extension of credit to
Japan and the prospect of
early passage of the European Recovery Program
by Congress.
Do¬
mestic consumption of all cotton
With
We
are
informed
by the New York Stock Exchange that up to
this year, only $8,374,500 of the Republic of Peru's old
external bond issues have been exchanged for the new bonds, out of
Feb.
a
26
of
total of $81,850,000 bonds
outstanding, viz:
following announcement that Sinking Fund:
7s of 1959
$ 852,000
the government would resume buying of cash wheat for export and
position for the new winter Peruvian Nat. Loan:
Philadelphia for many years, and reports indicating a very favorable
6s of 1960
4,770,500
wheat crop. The government also announced the acceptance of offers
also of the
Insurance Company of
6s of 1961
2,752,000
of 454 230,000 pounds of wheat flour, equivalent of 10,220,000 bushels
North
America, died on March 9
of wheat, to be exported against April and May allocations. Domestic
Be was 93
Three
issues
amounting
to
years of age. Mr. Kuhn
demand for flour, however, remained on a very limited basis. Corn $115,000,000
Vras aiso
were
originally of¬
well known as an art
No
Patron, and had formerly been a registered a mild advance in sympathy with wheat, sided by sbort fered in the United States.
covering and limited country offerings. Oats followed the lead of interest payments have been made
director of the
Philadelphia Or¬
wheat and corn and closed with small net gains.
for 16 years.
Peru's offer to skip
chestra
C- Hartman
Kuhn, a director of
the
Girard
Trust
Company
of
Wheat
prices soared on March 13,
4
holders not to accept the plan
offered
as
by the Republic of Peru.
i.
r
Association.
Despite the strike threats of
The election
of John
cash lard remained slow,
T.
Shirley
t° 25 board
°f directors of Potpe-u
e and Trust Company, of
itlsburgh, Pa., was announced on
u
^
In
noting
*?V''P°st
this
Gazette"
the
Pitts-
indicated
indications
Hog
prices fluctuated widely
in accordance with variations in
daily volume of receipts.
Cotton prices
week.
was
continued to fluctuate irregularly in the past
easiness at the start, the undertone
After showing some
generally firmer with the New
York spot quotation record¬
week.
agent
fn to"''.65' isDthe gfneral
Weakness in early dealings largely reflected uncertainty over
fn
iu
Western Pennsylvania
W
e New England Mutual Life the European political situation. Inquiries in spot markets were quite
urance Company of Boston.
numerous but volume of sales held about the same as a
£
ing
a
gain of 89 points for the
the
unpaid accrued interest for 16
and to exchange the old
years
bonds for
of increasing inventories.
March 9
by H. R. Hosick, Presi¬
dent.
stock yards workers, demand for
with large users showing no
new
bonds to bear only
1V2%
foi the second two years and 2%
for the third two years and 2xk%
to the maturity of the new bonds
in 1997, has not met with general
acceptance by the holders of the
old
bonds.
The
Foreign
Bond
1%
for the first two years,
Holders
l
Protective
ecommended
Council
American
has
bond
With Howard,
Labouisse Co.
(Special
to
The
Financial
NEW ORLEANS,
Chronicle)
LA.—Howard,
Labouisse, Friedrichs &
bernia
New
have
Co., Hi-
Building, members of the
Orleans
added
Stock
Gordon
O.
Exchange,
Quacken-
bos to their staff.
With Herrick Waddell Staff
(Special
to
The
Financial
Chronicle)
INDIANAPOLIS, IND.
liam
R.
staff
of
Ritchey
Herrick,
has
—
joined
Waddell
&
Wil¬
the
Co.,
Inc., Merchants Bank Building.
THE COMMERCIAL
(1342)
34
quality im¬ vious that a substantial invest¬
cost reduction, ment; will: be required for this
* ~ '
there are many. areas in which purpose:
If we are to have full develop¬
between savings i productive capacity was preached clearly defined new industries are ment of the
airplane
material
Obstacles to Financing Perpetual Business Boom
page)
for new
plant and equipment are high.
(2) Prosperity develops into an
inflationary boom when central
(Continued from first
housing and by business
bank
commercial bank credit
savings are used to
government deficits or
or
than
rather
finance
private capital expenditures.
(3) Booms terminate when the
sources
of new funds on which
they
dependent finally run
are
out.
(4) We do not experience deep,
long,
self-spirallihg depressions
unless credit is deflated rapidly
Furthermore, we know
amounts of new funds
quired if the rise
two
years
ago
that vast
are
re¬
which started
in our productive
capacity is to be continued over
the years ahead—which now is a
military as well as an economic
necessity.
Therefore, the questi'on.—
"Where
are
the
funds
coming
progress,
provement* and
width of the gap
and the need for
.•*
transport in¬
*
funds.
To be so assiduously in the depressed forming.
Some new. industries of the fu¬ dustry we shall need in addition
yields are still low as com-1 thirties that it? is difficult for us
large expenditures for planes and
pared with past periods of good to realize that basic changes'nave ture—and not so distant future at
business. But it now seems clear I occurred in our outlook and in that—are to* be expected in fre¬ ground servicing equipment, an
investment of several billions in
that while money has been cheap' our needs.
The belief that we quency modulation, facsimile re¬
: - •
production,
television in black airports.
it has not been available in the would always save too much
rela^
Expenditures by industry to take
vast
amounts
er
or
in
the
form | five to our ability to invest stifclb and in color, in frozen foods, in
care of the new technological de¬
needed if the present boom is to funds caused our tax authorities air conditioning, and in plastics.
This is but a partial list of the velopments, plus expenditures to
be perpetuated.
to
adopt tax
schedules, which
offset deferred obsolescence and
deliberately and successfully con- new industries, methods, machines
The Stage Is Not Set for a Rapid
whiclr applied maintenance during the war years,
*Mcted savings* it also induced and> materials
or
Substantial Deflation
when added to plant expenditures
our
monetary authorities to set science is making available to
While the funds do not appear uieir policies on the assumption American industry, yet it is long by municipalities and by Individ¬
uals
for
housing facilities, are
to be available to perpetuate a that credit expansion would al¬ enough to show that we are on the
boom such as that we have been ways stimulate consumption with¬ edge of a period when new indus¬ capable of raising total needs for
.
.
,
,
sure,
experiencing, there is little
and substantially.
Thursdays March 25, 1948
&- FINANCIAL- CHRONICLE
basis
or no
for
expecting a severe or
prolonged
deflation.
We
have
been
trying to finance a sharp and
substantial rise in working capital
needs
and
at
the
same
time
to
raise the level of production to a
new
time
some
plateau, to make up the waj>
deficiencies and to develop
of the
new
industries which I
the
out bringing inflation.
They sim-
possibilities of ex¬ investment funds to
tries and new
did not envision a condition panding old industries by reduc¬
where an excess of investment ing costs to the consumer will
piy
of
level
an
average
from four to five times
what they were in the depressed
'30s and perhaps, as high as two
saving would leave'a "gap" provide > a. basis for keeping our
times what they were in prosper-'
which would be filled by credit business operating at a high level
inflation. The "over-savings" long after the temporary postwar j ous '20s.
It thus has become clear that,
school has been noticeably less demands have been forgotten.
The
revolution
in J industrial 'without vastly increased supplies
outspoken of late, but the illusions
of new funds it will not be pos-j
it created die hard, and it will be technology gives promise th^t the
well for us all to recognize once threat "that we shall price Our sible for American industry to.
translate the immense potentiali¬
and for all that the nation must goods out of the market" can be
removed. * The
performance
of ties of the new technological revo¬
and can con s um e staggering
lution into a vigorous expansion,
amounts of new funds in the next American industry in the past as¬
of industry and a new high stand-'
decade. This is true for several sures that this is possible for its
*
phenominal growth and the ac¬ ard of living for our people.
reasons.
over
technological revolution has
from to finance expansion in our produced. We could have financed j
these demands largely out of curmarkets? "—demands the attention
rent savings if capital needs had,
of everyone interested in the fu¬
not been inflated by the rise in i
ture of the country.
prices and if inflation had. not,
(1) Our Population Is Increas- companying improvement in our A
Program to Insure an Adequate
of
Funds Are Not Available to
taken its inevitable toll on the ing Rapidly: Since 1940 our popu- standard
living to a point
i
Supply of Funds for Industrial ]
rate of savings. And of course the lation has increased 10% and the where it is the envy of the whole
Perpetuate the Postwar Boom
Expansion '
Vvj ■
world is the result of one of the
Recent developments
demon¬ threat of inflation finally forced number of families has increased
There are, I submit, three direc¬
the monetary authorities to take!' 13¥2 %. We have added in eight most powerful chain reactions in
strate conclusively that we are
tions in which we must move if ;
direction of years 14 million people—or more economics, i.e., from technological
not generating enough funds to some steps in the
we are to eliminate the threat of;
perpetuate the sort of boom we checking further credit expansion. | than the total population of Can- improvements to lower costs — an
inadequate supply of funds to
But there are many good rea- ada—and every month the increase from lower costs to wider markets
have experienced in the postwar
meet the investment needs re¬
sons
to assume that we face no in population is equal to the addi- —from wider markets to mass pro¬
period.
ferred to above.
It has been estimated that ap¬ contraction of credit large enough tion of a city of the size of Rich¬ duction—from mass production to
i
(1) Eliminate the threat that the>
Population in¬ still lower costs and from lower
proximately $48 billion of new or rapid enough to start a dis¬ mond. Virginia;
use of Federal Reserve credit to.
costs to still wider markets.
crease supports a steady substan¬
funds were needed last year to astrous spiral of deflation.
Our
support government bond prices,
expansion in our markets
finance capital expenditures by gold stocks are so high that it is tial
The pattern of rising consump¬
will convert productive prosperity*
business, individuals and govern¬ inconceivable that gold could be which requires billions of new in¬ tion .with lower prices was an
in
housing,* municipal outstanding-feature of our econ¬ j into an inflationary booip. Since;
ments. This compares with $40 a constrictive factor on the proper vestment
rising prices inflate the need for
billion of 1946 and with $16 bil¬ use of Federal Reserve credit. The facilities and industrial capacity omy prior to the great depression
[new funds and constrict savings,?
lion in 1939.
monetary authorities have sub¬ even if the standard of living of and the technological revolution l
it would appear to be essential;
our
people holds
unchanged— in which we now find ourselves
With demands for funds so in¬ stantial powers which they show
that the Federal Reserve authori-*
which of course it will not,
offers the promise that we are at
sistent it is a factor of vital im¬ every disposition to use in case
ties regain control over the most*
(2) Population Migration Stim¬ the beginning of a new period,
it becomes necessary to shift from
portance that money is not as
violently inflationary factor of*
ulates Demand: In the past several when
American
industry
can
anti-inflationary to anti-deflation¬
plentiful or as readily available
them all, namely, central bank
as it was a few months ago. It is
ary policies, Furthermore* we can, years about six million people bring larger and larger quantities
credit. At present the Federal Re¬
h matter of common knowledge in I think, count on the government have moved from rural to metro¬ of a wider and wider variety of
serve appears to be standing ready;
financial and industrial quarters quite proinptly to step up its re¬ politan areas and several million goods
and services within - the
at
all
times to
buy unlimited *
that sale of new stock to present lief and public works expendi¬ more have moved from one sec¬ reach of more and more of our
amounts of U. S. Government se¬
stockholders or in the market is tures to supplement the automatic tion of the country to another. people?
:
'
curities to support pegged prices;
This means increases in consump¬
not
readily accomplished,
that disbursement o f * unemployment
But we cannot have the mani¬
of such securities. " This means*
sale of bonds or preferred stocks relief funds. And finally the agri¬ tion and an expansion of the facil¬ fest benefit of such a revolution
that the holders of many tens of
in the new capital market is con¬ cultural price supports are likely ities necessary to supply" housing, in
technology without colossal in¬ billions of obligations have what
siderably more difficult than it to cushion the decline in agricul¬ governmental services and! em¬ vestment in productive enterprise.
they believe to be a "call" at their
was, that term loan funds are less tural prices and to make it much ployment.
For example, our railroads will own
option on Federal Reserve:
readily available from insurance less disruptive than the one which
(3) Income Shifts Mean Larger have, to spend several billion dol¬
credit resources. This is a serious^
companies and commercial banks, did so much damage to the econ¬ Mass Markets: The shift upward lars in the next decade if they are
and vital mater,' for if the next
in the incomes of millions of our to take
and that banks are under some omy in the early twenties.
advantage of the new period of prosperity is not to de¬
pressure from the Federal Reserve
Another factor of importance is people to a level where they'are light-weight streamlined passen¬
generate into another boom then,
Board to be more selective and that the financial
for the first time potential cus¬
position of the
ger trains, the new motive power, the Federal Reserve must have it
cautious in granting credit."
durable the new
country is strong. The banks hold tomers for consumers'
light-weight freight cars in its power to curtail or to stop
In an over-all sense, the fact large amounts of government and goods will in time widen many of with
modern
bearings and the the expansion of bank credit. This;
fhat funds for expansion in pro¬ other paper against which they our markets to a point* where new signal and radio communica¬ it cannot
do as long as it has an ;
ductive capacity are less readily can obtain funds from the Federal significant increases in capacity tion systems which make it
pos¬ implied commitment to "peg" the available today than they were Reserve Banks. Their holdings of will be essential. The number of sible
to
reduce
costs, increase market for government securities,'
spending
units
with speed and improve the safety of for if it
may be explained by a basic in¬ government securities are of quite consumer
restricts credit with one"
adequacy in the volume of sav¬ short maturity with a narrow from $3 to $5 thousand in income railroad
transportation.
Again, hand it must expand it with the
ing at a time when capital invest¬ range of price fluctuation. Their per annum rose, according to the frequency modulation radio and other.
Therefore, it is to be hoped
ment continues at a vigorous pace. loans are sounder than perhaps illuminating figures prepared by television can be made available
that the Federal Reserve Board
Personal liquid savings in the has ever been the case at the Dr. Arno Johnson, from 4.1 mil¬ to our
people only by the expend¬ will take advantage of any period*
lions in 1941 to 11.6 millions in
form of currency, bank deposits crest of the boom.
iture of vast amounts for broad¬ of
Furthermore,
strength in the market for gov-:
and securities amounted last year while
individuals and
corpora¬ 1947, an increase not far short of casting and transmission facilities. ernment
,
to
no
as
compared
more
the
tions have increased their debt in
200%.
with $15 billion -in
the past two years, the total debt
is still low relative to their in¬
(4) Technological Changes Re¬
quire Vast Investment in New, Im¬
proved, and Expanded Productive
$10-11
higher currently than when
national income
what
it
was
40%
of
is
today. Undistributed
business profits have arisen to ap¬
proximately $10 billion but they
do not fill the void when personal
savings
bonds
billion
than
1946 and $37 billion in 1945. They
are no
.
low and deprecia^
tion reserves are high in dollars
but probably do not cover ,re»-.
placement costs at present prices.
are so
the volume of business
being done, and their holdings of
liquid assets.
comes,
I think that
assuming
very
we
that
moderate
no
are
justified in
more
reduction
than
in
a
the
supply of the country is in
prospect even if there were to be
money
Because
Facilities:
We
plant phase of
in industrial
in the pilotgreat revolution
are
a
technology requiring
investment
in
productive
enterprise if we are to take full
advantage of the opportunities
vast
science affords to raise the standbusiness, for the ard of living of our people and to
this
nation
banks will probably add to their make
impregnable
AIT atempts to estimate the size
holdings of government securities militarily as well as economically.
of the "gap" between savings and
The significance of this revolu¬
If loan repayments'begin to bring
the need for funds are likely to
reductions in their loan portfolios. tion can be seen, from the impres¬
be futile, for our statistics are far
And it is well to remember that sive list of new methods* machines
from perfect and some of the ele¬
never
in our economic history and industries ready for develop¬
ments-are not measurable at all.
have we had a long or a severe ment in the years ahead.
But we get a rough idea of the
We are in the midst of a num¬
size
of
the
"gap" when it is business^ depression which was ber of "little revolutions" in elec¬
not initiated or intensified by a
realized that upwards of $9 bil¬
spiral
of
deflation
in
money tronics, dn illumination, in power
lion of new bank credit was re¬
generation, in air transport, in
supply.
quired last year to supplement the
metallurgy, in machine tools, in
savings of corporations and in¬ The Nation Faces an Unexampled
medicine, in home construction, in
dividuals.
Opportunity for the Productive agriculture, in the new metals, in
a
setback
in
large proportion of
the
housing construction which
now is planned will be on "raw,"
undeveloped property* an invest¬
ment by municipalities of close to
$1,000 per house will be necessary
for roadways, school facilities and
other
community
services, and
with housing scheduled at about
1,000,000 units per annum for
some
a
time ahead the required in¬
will
be
a v substantial
vestment
amount each year.
Because
-
industry 1 needs
vastly
increased
supplies
of
electric
if it is to make full use of
power
the
automatic
science
and
which
of
half has witnessed
clear
it
obligation—implied or actual—
buy these securities except
an expansion in Federal Re¬
serve credit is necessary and de->
sirable and is not likely to have
inflationary effects. This would:
not
mean
that
the
authorities r
no
to
when
would
the
never
market
provide support for>
that they would
or
"sell the market down."
Support
operations may at times be both ;
necessary and economically essen¬
tial, but they should be optional;
to and at the initiative of the Fed¬
eral Reserve if it is to
regain its r
vital power to restrain credit ex-1
by the
developed pansion at times when such actionuse
of is necessary to avert a debilitating electrical de¬ inflation with its sequel of de-;
increased
many
regarded as standard
equipment for the home, it has
now
been estimated that it will be
nec¬
flation.
The difficulties involved in
such
poli¬
essary in the next five years to
cies are sometimes exaggerated,
expand central station capacity by for in the
years ahead it should
one-third
—
which
would
exceed
Employment of New Capital in ' the chemical and petroleum inany five year increase on record.
Increased Productive Capacity
a substantial
.»dustries, in food preservation, and
The cost of full mechanization
and sharp rise in yields and de¬
The
notion
that
the
United! m a host of others.
of cotton farming is estimated at
cline in prices of corporate bonds States was
In addition to all these new
economically mature,
$50 per acre and since we have
and preferred stocks gives abun-1 that its frontier was
gone, that we products, processes and techniques over 20 million acires of land de¬
dant testimony to the reality and would
always have an excess of with their vast implications as to voted to cotton
growing, it is ob¬
The fact that the past year and
a
make
recently
because
power
vices
has
machines
to
that it will in the future be under
a
change iri Federal Reserve
be possible to shift to the
Treas¬
responsH
bility for any support deemed to'
be necessary in the market for
government securities. The Fed¬
ury
some
or
all of the
eral Reserve, authorities can
on
their
support operations
carry
only
Numbfer -4684
167
y0iume
,
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(1343)
35
of potentially: explo¬
^
volume
but
re central bank credit, vbut the « iunds to be idle large a because inated, Hold that a determined ef¬
pt
merely
fort to
them in check and to
Treasury has or can have avail¬ interest .rates are held near the
increase operating efficiency is
able several effective ' means of artideial levels established in war¬
called for.
It has been said that
managing the debt. For example, time. Already the authorities have
several
hv
the use
Treasury can4 exercise a pow¬
erful influence on the markets bythe
made
billion
some
commendable
stePs
that
*n
and
saved
from
dollars
the
direction, impairment
of
could
budget
be
without
essential
services,
purchases.; in the open but it is. time for them to pro¬ and the
burden of this analysis is
the account of the ceed more realistically in per¬ that
industry needs those funds
numerous
government agencies mitting interest rates again, to if it is
arid investment funds which have become an incentive to the em¬ If the _to make this nation strong.
international situation were
'available for such'USe several bil- ployment of all; available funds, in, -to make it
necessary for us to
vlion dollars each year; by the use mortgages, and in corporate and increase
our military
outlays sub¬
soi the substantial amounts of new municipal securities. In any event;
stantially then it would be doubly
funds obtained through the sale the rate carried by such obliga¬
necessary to eliminate those lux¬
tions is far less
or.
sales
i
[ of Savings Bonds to purchase and
retire securities offered in the
j market by other holders who have
alternative uses for- their funds,
and even, if necessary, by the use
of funds obtained by the sale of
short-term obligations to support
market for longer-term secur¬
ities.
It is essential, it seems to
me/if we are to avoid the obvious
! risks of inflation induced by un¬
necessary • emissions
of Federal
".Reserve credit, that the Treasury
.assume some or; all of the responsibility of supporting the market
for its own Securities.
>j. One additional point is worth
.emphasis/ It is that there is good
the
,
,
.
to believe that the market
reason
ifor
government
securities
neither "collapse" nor be
will
"hot¬
a
's tomless market" if policies such as
those I have suggested are adopt¬
ed. Investors need to be told that
strength of the U. S.
ernment
obligations they
Gov¬
the
important than
the
amounts
of
funds which
be generated for the
ness.
use
can
busi¬
of
//-//'V-,-.5;
(3) Eliminate the tax barrier to
the
accumulation of savings
df
'mitment
the
Federal
Reserve
ury-type expenditures which
cannot afford when
must
enterprise.
Another
vital
step
ment
for
changes-in the tax
provide an induce¬
individuals* to increase
to
their
mobilized
resources
into
a
high
Conclusion
;
I
In conclusion, let
convinced
am
that
a
say
that
program
along the lines of that I have out¬
lined will assure that this nation
will be
economically impregnable,
savings. This is far from
prosperous, and able to achieve a
for our government seems new
high in the standard of living
to have virtually limitless
demands •of our people. If we do not take
for -funds and the
concepfcof tax¬ whatever action is necessary to
ation according to
ability, to pay revitalize the whole
.
vide the funds needed for indus¬
dends is eliminated.
Reserve Board Studies
Higher Capital Cost
(Continued from page 21)
available for investment would be
decline less
than
other
bonds
in
'periods of general market weak¬
And the Savings Bonds offer
investors a priceless oppor¬
ness.
to
tunity
to purchase a bond on
they cannot take a loss in
principal and which affords an
which
v
attractive rate of interest.
It is sometimes
,,
forgotten that
our
government securities are the
safest securities an investor can
buy.
They
are
the
obligation
of
the strongest government and the
strongest natiomin the world. The
insurance
companies, s a
banks, commercial banks,
v
in g
s
corpo¬
rations and individuals who hold
•.such securities in their
portfolios
need the income
them.
debt of
they receive from
Furthermore, the public
tjiis country is quite well
distributed in the
sense
that
in¬
dividuals hold mainly the Savings
Bonds
on
taken;
which
no
commercial
loss
can
banks
be
hold
predominately short-term obliga¬
tions which have
range of
a
very
narrow
price fluctuation, and the
'insurance
companies and savings
hold long-term securities,
which by the nature of their lia¬
banks
bilities
are appropriate and desir¬
There is good reason to be¬
lieve that the authorities could
manage the unpegging operation
with the skill
able.
they have
m
shown
dealing with the other prob¬
lems they have faced in the war
and in the transition
period, so
that
the
prices of government
bonds would stabilize at a level
mot
far, if any, below
long-term 2 V2s.
/
.
par
on
the
,
J
We simply must devise means
for
management of our public debt
•without the use of Federal Re.
serve
credit, and this will be all
.the
more .necessary if the inter¬
national situation develops in such
a
way that we again face the ne¬
cessity of financing large
govern¬
ment deficits.
Another step which might help
the
the
amounts
exemption
from
of
funds
taxation /of
funds which individuals
save
from
their current incomes in the form
deposits in
commer¬
cial and savings banks,
increased
holdings of securities or increases
in redemption value of life insur¬
ficult to obtain
constructive action
that government expenditures
are so high. With plant expansion
and the nation
receivables.
row
more
Individuals will bor¬
to finance the acquisi-
ion of homes and durable goods.
The volume of new State and
funds
to
work.
It
Light
sold for $17 million
was
Texas
Utilities
Company
Light Sys¬
1946 Dallas Railway &
Terminal
Power
interest
&
was
sold
for
$3 million, and the remaining
equity in Utah Power & Light
(following that company's recap¬
italization) was sold for $650,000;
The company's bonded debt of $29
over
million
the
retired in 1945.
was
With
and
recovery
this
which
order
was
used
were
one
as
of three
test cases of
constitutionality of the Hold¬
ing Company Act, being finally
confirmed
by
the
United
States
Supreme Court late in 1946. In the
first plan in 1941 the company in¬
dicated that it wished to retain its
southern electric system, and alsc
the United Gas system, and hence
security issues the company proceeded to sell
will continue large
to pay for outlying properties as indicated
additional
construction
projects above. However, the SEC did not
and
further
veterans'
bonuses.
approve the proposal for retaining
Finally, the foreign demand for the top company with a single
credit will be large in spite of class of stock.
Hence new plans
improving economic conditions in were finally prepared in 1946.
local
This is
un-
isually favorable treatment for
iclding company warrant.
a
In
estimating break-up values/
United Gas on
the Curb (about 17) may be used
but it is necessary to estimate the
vslue of ALMNO. Taking the sys¬
tem's earnings for the 12 months
ended Jan. 31, 1948 and deducting
about $400,000 for estimated ex¬
penses and taxes of the new com¬
pany, there would remain earn¬
ings of about $1,63 a share.
Im- 41
mediately
after issuance these
shares might be estimated to sell
at around eight times earnings
(unless the dividend is generous)
or about $13.
Later, after season¬
ing, they might sell at 10 times,
the current price of
around 16 V4.
Using these values, liquidating
value of the $7 1st preferred may
be estimated at 169-83, the $6 at
153-67, the 2nd preferred at 16276—the
upper and lower figures
reflecting the multiples of 8 and
10
times
Since the
for
the
common
Electric
stock.
stock receives
little Electric stock, its value
mainly by United Gas and
may be estimated at 26, while the
warrants might be worth around
very
is fixed
8-9.
government
cause
being
threatened
of the inadequacy
kaw
&
Lesser,
711
St.
Charles
Street, members of the New York
and St. Louis Stock Exchanges.
be¬
of savings
faced with the ne¬
Theodore Hadden Dead
which they are
presently holding cessity of stimulating at all costs
Theodore Irving Hadden died at
unemployed in the form of cur¬ a great expansion in productive his home after a brief illness, at
rency and bank deposits.
With capacity as a matter of military the age of 76.
Prior to his re¬
; investment demand for the use- of necessity, we can-ill afford todetirement six years ago Mr. Had¬
those funds so
urgent, it is essen- lay much longer a realistic effort den was a partner in Kountze
ual that
interest rates and bond to reduce government-^expendi¬
Brothers, New York banking, and
yields be permitted to rise by the tures for all except the1 most'es¬ brokerage firm, to which he had
email amounts which would be sential purposes.
This does no
gone us an office boy fifty years
necessary to induce such holders mean that essential governmen
their
V
common.
United
/
Gas
seems
to be favor¬
it
,
•nave
Put
1945 the interest in Dallas Power
——
sach share of
Club
programs
10
Power Company
sold for some $10 million, in
.
is
people of this nation
colossal, volume of funds
was
owner- ♦-———
Idaho
ably regarded in the Street, While
might appear somewhat over¬
priced in relation to current earn¬
ings and dividends (about $1,45
and $1), it has large gas reserves
ance with the amounts of exemp¬
and earnings for 1948 are expect¬
tion limited to a stated proportion some countries.
somewhat
earlier
than
the ed to advance sharply, possibly
—say 10-25%—of total income. It
(Evi¬ to around $1.65. Hence the pres¬
"Savings available for invest¬ Supreme Court decisipn.
is not sound policy at a time when
ment <in other than liquid assets dently the company did not ex¬ ent price ma/ not be out of line
the country needs an increase in
with other issues.
However, the
may decline further, or at least pect a favorable result). Two plans
savings so desperately that in or¬ cannot be
expected to increase were filed in May by the company present market reflects trading in
der to
save
$100 an individual
substantially. As a result, there and by its parent, Electric Bond only about 5% of the total, since
with net taxable income of $10,000
These differed moder¬ Electric Power holds over 10,000,would be a continuing demand & Share.
must earn about $150, an indi¬
000 shares.
for bank financing, and total com¬ ately and a compromise plan was
vidual with $20,000 of income must
The present plan may have bet¬
mercial bank loans and invest¬ agreed upon and filed in July. The
sarn
approximately $200, an in¬ ments
SEC gave the matter prompt at¬ ter luck than the previous official
elsewhere than in Govern¬
dividual in the $50,000 bracket
ment securities would rise further. tention with oral argument Sept. plan filed nearly two years ago,
must earn about $315 and an in¬
Such an expansion in bank credit 20, but after that date little was but already some opposition has
dividual in the $100,000 bracket
heard of the plans, and they* never sprung up, a new group of com¬
would contribute to a resumption
must earn $575. When the supply
received the Commission's bless¬ mon stockholders contending that
of the general price rise or to the
of savings is as low relative to
terms to the preferred
ing.
are too
prevention of a desirable read¬
the demand for capital as it is
About all the stock¬
The company has recently indi¬ favorable.
justment among prices. Reserves
holder can do, therefore, is to pa¬
today we need to substitute pow
to meet the growing demands for cated its intention to file with the
erfui incentives to save, for the credit
will
become
available SEC a new plan, more in con¬ tiently await the final decision of
the SEC and the Courts as to the
penalties on saving adopted when
through gold imports or can read¬ formity wtih present market con¬
exact division of assets. However,
many
government officials be¬
ily be obtained by banks by sell¬ ditions, and presumably more in
lieved that the United States was
agreement with the Commission's with both sub-holding companies
ing Government securities to the
a
mature nation with a chronic
In the previous favored by the bright prospects
Reserve Banks.
In view of its present ideology.
tendency to save more than could
responsibility for maintaining an plan holders of the $7 1st pre¬ for
the
natural
gas
industry,
be invested.;
ferred were given their choice of
orderly' and stable market for
stockholders may benefit by the
Thjs program, unfortunately, is such securities, th^ Federal Re¬ receiving 10 shares of United Gas,
9 shares of the Electric Holding anticipated delays.
likely to be received with some¬ serve System would not be able
thing less than enthusiasm in many under existing powers to limit the Company, or $192 cash, with simi¬
lar terms for the other two pre¬
quarters. Many groups are bit¬ ability of banks to meet all the
ferred stocks — the common ob¬ N. Y. Curb Exch. Adds Two
terly opposed to any tax relief in credit demands forthcoming. Thus,
taining whatever was left. Under
the middle or high income brack¬
To Quarter Century
in the absence of additional Fed¬ the present plan the $7 1st pre¬
ets despite the need for more sav¬
ferred would have no choice but
Henry H. Badenberger, Presi¬
ings than it clearly is possible for eral Reserve authority to influ¬
would receive a package of 6%
dent of the New York Curb Ex¬
us
to obtain under present tax ence banking conditions, the pri¬
shares
of United Gas and
4J/2
change Employees Quarter Cen¬
rates.
Furthermore, it will be
mary check on future bank credit shares of Electric Holding Com¬
tury Club, has announced the ad¬
charged that a system providing
expansion will be through such pany
(usually called ALMNO, mission of two new members to
exemption for savings is difficult
after the first letters of the four the
organization. George J. Mcto design or administer. But such yoluntary restraint as may be ex¬
operating companies — Arkansas Kenney of 58 Garretson Road,
a system would be easy indeed as
ercised by lenders and borrowers."
Power & Light, Louisiana P. & L., White Plains, N. Y„ and James J.
compared to rationing, price con¬
Missisisppi P. & L. and New Or¬ Farrell of 12 Hempstead Avenue,
trol and production control, which
leans P. S.). The $6 preferred ob¬ Kockville Center, L. I., were pre¬
we know to be virtually impos¬
With Friedman, Brokaw
tains 5.9 shares of Gas stock and sented with
pins signifying club
sible to make effective in peace
(Special to The Financial Chronicle)
4.1 shares of Electric and the 2nd
membership.
time.
ST. LOUIS, MO.—Richard H.
preferred about 61/* and 4.3 shares
McKenney, who received his
The chief reason why it is dif¬ Kuhlmann is with Friedman, Bro¬
of increased
(2) Increase the interest rate
-incentive to the investment of idle
< funds.
The
a
In 1943 the stock
in
he
'/>-•'
increase
'prices may fluctuate a bit now
and then, but they are sure to
thip
in earning power
regular dividend payments on the
1st preferred stocks were resumed
saving-in¬
has been carried to such a ludi¬
in 1946.
However, no attempt has
vestment process we shall run the
crously steep gradation in the sur¬ risk of a period of economic stag¬ been made to pay off the accumutax rates that we have
hter arrears which approximate
severely nation caused only by our failure
constricted the ability to save. to make a
long overdue reorgani¬ $90 for the $7 preferred, $77 for
Recently a number of careful zation of our tax and monetary the $6 preferred and over $111 for
the $7 2nd preferred.
studies by competent experts have
policies.
In 1942 the SEC issued a disso¬
made it abundantly clear that we
lution order against the company
are not likely to be able to
pro¬
bonds of
Their
Power
forming with the Public Utility Holding Act. Investments in sub¬
sidiaries have been reduced from $185 million in 1940 to $153 million
in.1946.
tem), in
me
easy,
banks to support them in the mar¬
ket. There is solid value in the
government.
& Light, sub-holding company in the Electric
Bond & Share system, has made considerable progress toward con¬
o
'
bur
Electric
American
and
would involve
structure
be
our
we
military potential.
to their employment in
productive
have try unless surtax rates are reduced
purchased depends on something to a maximum of 50%, and unless
'more tangible than the mere com- double taxation on corporate divi¬
'
Electric Power & Light
for
market
services should be
ruthlessly elim¬
earlier.
lespectively.
After
disbursing
holdings to the preferred
stockholders, there would be left
somewhat less than half of Electric's holdings of United Gasthese
4,787,000 shares—and about
ALMNO holdings, or
720,000
shares.
In distributing
some
1/6
of the
these
to
each
share
common
stockholders
pin from Edward C. Werle, Chair¬
man of the Curb's Board of Gov¬
spent his 25 years on the
Exchange trading floor and is
currently employed as a reporter.
Farrell, who received his 25-year
pin from Fred C. Moffatt, Presi¬
dent of the Curb Exchange Clear¬
ernors,
ing Corporation, has been with
would get about lVs
the Clearing Corporation -since its
shares of United Gas and Vs share
organization and is now its As¬
of the Electric Company.
The
sistant Manager.
warrants which give holders the
Mr. Badenberger also announced
privilege of buying EL common
that the club's annual elections
without time limit at $25 a share,
would be held on March 25.
would obtain about Vs as much as
,
36
(1344)
THE COMMERCIAL
Problems
(Continued from page 2)
Confronting Industry
unit of equipment
costing origi¬
production which must nally $1,000,000 20 to 25 years ago
be fought
in mines, mills, fac¬ must now be discarded and re¬
tories, on farms, and in shipyards placed, one is apt to find that the
new facilities will cost
are simply the necessary counter¬
$2,000,000
parts of those in which shot and and that the depreciation reserve
shell are exchanged by opposing therefore is
inadequate by the
forces in the field.
American in¬
dustry, which developed under a
competitive system of free enter¬
prise, outproduced the conscript
industry of the Axis countries and
weighed heavily in the scales of
victory. It is fortunate that it was
strong
as
it
as
was
scended upon
when
de¬
war
and could be so
expanded to become the
us
readily
unfailing supplier of material for
the
Allied Nations.
Efforts
Maintain
to
Vigorous
Industry
Now where do
stand
we
efforts to maintain
in
our
vigorous and
a
progressive industry, adapted to
present and future needs?
Natu¬
rally enough, my thoughts run
immediately to the steel industry;
You might rightfully expect me
to confine my remarks to a sector
with
which
I
am
properly ac¬
quainted. This I shall do, but with
the
conviction
that
considerations
the
of
many
First
in
amount
of
$1,000,000.
citizens.
which
would have set aside
depreciation, has had
according
to
as
which
profit,
If
not.
official
tributed
be
holders, it would actually repre¬
a
distribution of capital as¬
sets.
On the other hand, if our
sent
prudent
the
business
additional
aside
set
man
necessary
amount,
as he
should, so that the produc¬
ing capacity of his company would
not
be
impaired,
that much
would
find
the
$1,000,required, because of
000 would be
the
he
than
more
heavy cut taken
by the tax
Thus, under conditions
collector.
such
business
as
is
experi¬
encing, the allowable depreciation
leserves might take care of
only
an
approximate 40% of their in¬
now
tended function.
order
is
mention
a
of
The
requires
funds
than
more
physical
ments and repairs.
for
replace¬
time
equipment, the plants
machinery by which steel is
produced.:* The very high operat¬
ing rate maintained by the steel
industry
throughout
the
war
years, in an effort to obtain every
of
ton
material
the
mills
could
possibly produce, resulted in ex¬
traordinary wear and tear, far be¬
yond normal proportions. During
the period of sustained operations,
only the most imperative items of
maintenance
tention.
accorded
were
at¬
Therefore at the close of
hostilities,
formidable
a
program
of deferred
maintenance, rehabili¬
tation, replacement, and desirable
expansion
confronted
the
indus¬
try. In the corporation with which
I
most
am
familiar, the
accumu¬
lated list of necessary projects and
those which were considered ad¬
visable entailed an estimated outlav of approximately
$500 million.
The insistent demands of the trade
for steel products indicated that
the contemplated program should
be pushed to completion as
rapid¬
ly as possible.
Every effort is
being made in that direction and
happily some of the new and re¬
vamped
facilities
already on
Discouraging
are
the production line.
delays
have been experienced in
obtaining
the
necessary
labor,
materials,
and
equipment
and
substantial
increases
over
the
estimated cost have been
tered
encoun¬
during the past three
years.
Depreciation
Allowances
This
latter
in
point
is
serious
but it likewise
serves to call attention to another
vital feature related to the matter
of
maintaining a strong, progres¬
sive,-and independent American
steel
industry.
ciation policy.
I
refer
theory, as
.equipment
used
depre¬
the
tools " and
in
production
out, an allowable amount is
subtracted
from earnings year by
entered in a separate
and
year,
account
.part,
to
the
sets.
offset, in whole
in
or
dwindling physical as¬
depreciation
reserve
This
receives its
credits from earnings
as
deductions before taxable in¬
come
is
determined.
But
how
much
is
it?
place
the
Will it suffice
the
Under
tion
worn-out
tax
policy
usually
amount
of
law
of
only
the
and
money
deprecia¬
government,
the
of
necessary
to
tainable, due to normal price in
the plight of industry
is accentuated
flation
such
as
in
a
the
steel
of
the
iron
more
and is
of
The
aware
and
for
for
steel
and
new
is
more
products
sums
additional
plants and equipment. At present
the annual ingot
capacity of the
American
steel
proximately
industry
94 000,000
in due course
is
ap¬
tons—and
will be added.
more
No doubt you have heard
of the recurring
cry for
or
read
im¬
an
mediate addition of ten millidn
more
tons,
conditions
present
or
is
of
doubtful
practicability. Our part of the in¬
dustry, and I feel that this applies
as
well to the others, is
already
overtaxing the
capacity of its
builders and suppliers in
pushing
to completion, within a reasonable
period of time, the program to
which
it
is
committed.
more, if ten million
tional
furnace
making
to
scrap
be
capacity for steel-'
available
were
knows
one
where
feed
is
today,
the
the
obtained,
subject
Further¬
tons of addi¬
necessary
furnaces
That
phase
beyond
no
feasible
as
with
the
realm
much
its
over
program
the
on
of
financial
side/Again I refer to the tax col¬
lector, who has taken away such
generous portions of corporation
earnings that little is left for fi¬
nancing substantial capital invest¬
ments.
There
be
may
a
loud
cry
enlarged facilities, but enlarged
facilities these days cost important
sums
of money.
During the recent
periods of capacity operation, the
policy of the government in re¬
gard
the
to
from
ate
taxation
amounts
earnings,
when
was
left
for
were
equated
such
that
investment,
very
against
moder¬
desir¬
able capital expenditures,
particu¬
from
of
the
No "Fantastic Profits"
which
any
is
corporation
to meet the
attempting
growing United States
America, and to do so efficient¬
needs of
of
of
a
have
little
productive
for investment
people.
indispensable to the national wel¬
Under present conditions of
for
their
earnings with the "fantastic prof¬
some
crying need
production of
a
demand
consumer
Industry can produce
only if it is equipped with ade¬
quate
tools
for
discouraging
capital
in
is
which
body
weaken
have
to
the
would
politics.
our
this
The
necessary
risk
force which works
opposition
measures
entire
production.
of
a
direct
very
it
us
so
of
vol¬
our
which
serious disaster to
free institutions—and to
nomic well-being.
Inflation
is
would
We
permit
rehabilitation
and
at 55
&
round
our
eco¬
•
us.
of it.
aware
attention
than
high rate of governmental
ditures.
This
is
another
about
its
manifestations and often confuses
them with its causes.
High
prices
are
typical symptoms of inflation;
they are surface indications of a
much
with
54.
in
C.
Reid &
Also
in the
The
has
hit
Investor Trophy" will be de¬
This
is
until
the
to
due
the
final
fact
expen¬
Anything can happen! The season
wind-up will be a banquet and
approximately $37 billion, presentation of awards, scheduled
for Federal Government
for May 5th.
V
alone, is
a heavy
burden. To that formid¬
The League consists of fourteen
able figure
must be added the 5-man
teams,
bowling
under
very considerable sums levied and
sponsorship
of • the
Securities
spent by various political subdi¬ Traders' Association. Its officers
saying,
in
part,
that
of
annual
an
cost of
■
visions.
Were the matter not so
serious for all of us, there would
be a ludicrous side to the
eager
search, continually in process, for
new
items to tax.
The limits
seem
be set only
to
of
by the boundaries
imagination.
At any
human
all
rate,
of
the
money spent
must be raised
indirect,
or
open
President, Clarence A. Horn,
Michigan; Vice-President,
Charles C. Becthel, Watling, Lerchen &
Co.; Secretary, Hayden
are:
Brown, William C. Roney & Co.;
and
Treasurer, 'Ross Sutherland,
Cray, McFawn & Co. Team stand¬
by
ings and league leaders
by
below:
that
taxes
are
definitely and in¬
element of cost in all
products and services you
evitably
the
an
buy; the higher the tax, the higher
cost.
At
prevailing rates of
taxation, that element is far from
being an inconsequential item,
It is little wonder
then, in view
of the two powerful
motivating
factors mentioned—and there
are
still
STANDINGS*
others—that
prices have inIrresistible economic
MARCH
The steel
.ap¬
First,
chasing each
ascending spiral
sort
a
of
progressive contest,
arriving' at
the
point
where equilibrium
might be es¬
tablished.
Wage increases have
without
industry has recently
been made the target of criticism
and even accused of
contributing
to inflation, because of an
upward
led
to
prices,
price
cited
are
adjustment in the price of some of
its
unprofitable
products,
not¬
demanding
withstanding the fact that the
we
eral
gen¬
creases.
■
as
the
higher
basis
wage
in¬
And so, round and
.round
■
• ;:j
with
that
of
42
41-
28
42
27
—
C. "Reid
Co._—
&
Co._—__—
41
28 *
C. Roney & Co. (Wallace)
Gecrge A. McDowell & Cb.„_i._
37'
32
24
35
Detroit
35
34
McDonald-Moore
&
Wm.
Cray,
Stock
Exchange
McFawn
—
Smith.
C.
G.
Wm.
22
Hague &
Co __;
McDonald
C.
Chas.
30
Co
—
Co.—
&
What
commodities.
During the eightperiod ending with 1947, the
wholesale
price
of
all
commodi¬
ties
is
the
remedy?
There
is
probably not a simple, lone anti¬
for
inflation, but certain
It
must
be
and
understood,
1947.
too,
that
each upward movement in
wages
and salaries has been attended
by
substantially higher
materials,
supplies
costs
and
in
as
It
would
to
balance
sharper
bring
with
production
demand,
competition
so
for
into
that
markets
tion into balance with
demand in¬
volves not only the
provision of
more
equipment,'but
maximum
productivity.
The institution of
economies in
services
government, or doing without the
things we can do without, and the
might be expected,
inseparable.
made
the
which
are
consequent lightening of the bur¬
den of taxation, should relieve
some
appear,
of
the
pressure
through the effect
on
prices,
costs of pro¬
Once again, private
cap¬
derived from
savings could
however, that steel; which along
with others is
ital
on
duction.
effects
of
suffering from the
inflation,
notably in the matter
this
and
of
flow more freely into
productive
enterprise and thus provide addi¬
tional
quantities
of
consumer
lagged
increasing
The disparity between
108%,
as
discussion,
evidence
has
on
mentioned
rather
goods, which in turn would absorb
the spending
propensities of the
in
strong
people.
the poiftt.
********
MM
f
If
they
want
goods,
let
them have them without
inflation¬
May I repeat that high prices
ary
*
games
—
41
OF PINS
NO.
Co.
&
Crouse
games—Wm., C.
High—3
Roney & Co. (Wallace) (2602).
Team High—1
game—Wm. C.
.
(Wallace)
Second
Team
(933).
Individual
*•'/:•
Roney
&
game—Crouse
&
(940).
High—l
'
,
.
.-..I
...
High—3
games—Fred Huber
Co.). (663).
Second Individual High—3 games—Edw.
Miller (Andrew C. Reid & Co.) (652).
(Andrew- C.
Reid
&
,
Third
Wallace
Individual
High—3 games—Robt.
Roney & Co.) (610).
High — 1 game — Moreland
(Wm.
Individual
(253).
C.
...
Second
Individual
Sutherland
Third
(Cray,
Individual
(Andrew
C.
Second
C.
Reid
High
Reid
High-^-1
game-—Ross
McFawn & Co.)
(250).
High — 1 game — Fred
&
&
Co.)
(244).
Huber
Average—Fred
Co.)
(1831.
Individual
High Averap"—Robt.
Wallace (Wm. C, Roney & Co.) (175). :
■
dote
might become the dominant
regu¬
lator of prices.
Bringing produc¬
1946
3
—
Team
Individual
face of substantial
wage and sal¬
ary increases in each of the years
1944,
High
Second
(Andrew
helpful measures might be
applied
Every possible effort' should be
1942,
Team
AND
41
(2709)..
Remedy
rose
108%, while the com-,
posite base price of steel, accord¬
ing to the "Iron Age" index, ad¬
vanced only 39%. This
relatively
low figure was obtained in the
1941,
LEAGUE LEADERS
39
39
28
28
Parcells &
Goodbody
39
30
Co
&
37
30
—
Roney & Co. (Boos)__
A.
36
33
Co.__—
&
Crouse & Co
Huber
The
other
27
of Michigan Corp
Paine, Webber, Jackson & Curtis
for
additional
price level of steel is low in
comparison
year
go.
increases;
Lost
Andrew
peared.
Within the kind of frame¬
work provided, prices and
produc¬
,
-Games-
Co.
Steel Prices and Inflation
forces have been set to work
and
inevitable results have
the
1018
10,
Wui
in
time controls.
shown
are
v
or
concealed, currently or later. The
important point to emphasize is
of
,
First of
Co.
war¬
two
way
tion costs have been
other around the
of
night.
that
"position nights" yet remain to be
bowled, including the final night.
the
proposals
return
April
pion, and winner of the "Michi¬
creased.
the
all-time
an
closes
season
but it is doubtful if the cham¬
termined
deeper malady. Because so
many persons are acquainted with
high prices, they make a favorite
subject
for political
discussion,
and unhappily form the basis of
for
Co.
run¬
bowling among De¬
brokers
high.
Costs
the
about
Everyone is painfully
Everyone
complains
careful
Andrew
are
Interest
troit
at
Among the factors contributing
high
prices,
none
deserves
more
Michigan
Paine,
time
ning is William C. Roney & Co.
(Wallace) with 51.
gan
to
of
same
points and McDonald, Moore
Co.
ac¬
expansion,
First
the
At
necks
come
the
of
High Rate of Government
taxes, direct
our
team,
leadership with First of Michigan
56 points.
Breathing on their
28
governments
position by failing to
properly un¬
Co.
at
cumulation 'Of adequate funds for
not
situation
can cause
high prices.
the
help
Let
derstood, for if it is not corrected,
39%
identifying
by
is
the
them.
difficulty
"corporate greed"
there
balancing
its prices.
ubly proclaimed
Adequate
capital is essential to the progres¬
sive development of industry, and
strong progressive industry is
inflation
most
our
current costs.
a
fare.
of
one
thought that industry
might well be encouraged to oper¬
ate on a profitable basis, and be
stimulated by a wise tax policy
in
So by the process of "syphon¬
ing off" earnings, both corporate
and personal, the usual sources of
equity capital for free enterprise
are
being restricted or are run¬
ning dry. This policy is posing
a
problem not only for industry,
the
is
back to the
ventures.
all
of
march
so
risk
left
indus¬
increased
that
belief
determined
a
powerful weapons in checking the
years,
savings
&
Webber, Jackson & Curtis put on
the pressure and now share the
firm
by the prevailing income tax
policy and, like the corporations,
ly with up-to-date equipment, find
in
their
Reid
five.
produced for sale is
than the demand. Hence, the
trial production
hurt
ments,
Looking at the picture as it
really is, the responsible officials
directors
many
were
necessarily purchased
by the industry. The two move¬
larly at present-day costs.
and
for
C.
league-leaders since Oct. 16, were
rudely jolted out of first place by
less
capital which
nourished the great American in¬
dustrial development.
Those in¬
vestors, however, have been badly
of
emphasize, how¬
lies
ever,
its" and
a
who,
furnished
the
knowledge or of enlightened con¬
jecture.
Nevertheless, the steel
industry is proceeding as rapidly
present.
If
investors
the Andrew
unit
in
shrinks
currency
sirable items
additional
capital
might either cut the
one
could
of
luted
pattern to suit the cloth, or go
into debt by borrowing the money,
or turn to the class of individual
proposal which under
a
period of in¬
industry
call
expending formidable
money
re¬
facilities?
fraction
a
to
provide replacements is thus ob¬
creases, but
and
for
In
wear
to
vestment.
quite
capital in¬
new
are
value, and prices are forced up¬
ward.
This trend is greatly ac¬
centuated when the supply of de¬
investing
funds,
for
means
There
—
ing the past 10 or Id years.
far below present re¬
so
trade.
The part of the expansion
prob¬
lem I now wish to
itself,
was
goods with the
This
DETROIT, MICH.
supply dur¬
With no "squatters' rights" on first
in
the
Detroit
more
dollars available to place
I know that it has been calculated many
Brokers'
Bowling League. This was force¬
on investment
figures originating perform the purchasing functions
for the people, the resultant di¬ fully demonstrated recently when
in periods when the cost of facil¬
capacities
should
be
in¬
creased, by expansion of facilities,
to meet the requirements of the
expansion and betterments.
Inadequate
enough
From time to
increase in the money
"fan¬
as
Rod-Hot Stretch Race
they are right, that first amongst
various causes is the terrific
"adequate," when
or even
but for
Financing Problem
Industry
something
investment
on
Detroit Bowlers in
the
which amounts
Well, in relation to the matter
appear,
dividends to the stock¬
as
7V2%
tastic,"
cf
regulations,
decidedly is
blithely dis¬
it
it should
to
to
economists
cannot
I
part,
my
return
a
but an atttendant
of inflation.
The
tell us, and I think
cause,
a
circumstance,
placement values.
additional
as
For
think of
ities
sum
by that deficiency,
the prudent business man
and
}
The
represented
which
apply
to
steel, apply equally well to many
other products.
not
are
battles of
Thursday, March 25, 1943
CHRONICLE
FINANCIAL
&
<*•
bidding.'
Halsey, Stuart Group
Equips.
Offers III. Gent.
A
group
headed
by
Halsey,
Stuart & Co. Inc. was awarded'
March
18
$4,977,000 Illinois Cen¬
equipment trust, Series
2V4% equipment trust certifi¬
cates, maturing $263,000 semi-an-'
nually Aug. 1, 1948 to Aug.v 1,
1957, inclusive.
The certificates,*
tral
RR.
Y,
issued
plan,
by
under
the
Philadelphia
immediately reoffered
group, subject to Inter¬
were
the
state
Commerce
Commission
au¬
thorization, at prices to yield from
1.25% to 2.55%, according to ma-*
turity.
D
n>
-
This
a
,
.
offering represents part of
proposed issue of $11,360,000 in
Series Y
Certificates, proceeds of
which will be used to finance not
exceeding 80%
mated
to
be
of
the
cost,
$14,214,609,
esti¬
of new
standard-gauge rolling stock.
,
i
specific
plants
some
estimates
The Outlook for Labor
total
(Continued from page 20)
to
the
volume
of
employ-
trade, service,,the profes¬
•anges'Jthere is a statistical
and government have been change in productivity. The post¬
war
demobilization of the armed
eiveii relatively little attention,
forces (and of
many branches of
largely because of the tremendous
tne civilian
government as well)
difficulties of measurement en¬ has
resulted in a sizable
shift in
countered in these areas.
the average
payment to govern¬
There is a' great amount of
ment military and
civilian per¬
work to be done in this field—not
sonnel.
During 1946 demobiliza¬
only in the area of aggregate pro¬
Hon
sions
ductivity changes
for the whole
but also in more inten¬
sive studies at the plant level.
For purposes of national economic
policy, the end objectives of such
work should be to achieve full
coverage
of
the - economy in
the measurement of productivity
changes in the past.
Special at¬
tention should be given to the
measurement (or, estimating) of
recent productivity changes. The
careful analysis of the causes
of the changes in productivity
should serve both as a basis for
economy
of future changes and
guide to economic policy de¬
signed to bring about an improve¬
ment in productivity with a re¬
sulting increase in the productive
efficiency of .our economy.
estimates
as a
Productivity Problems at the
.
National Level
tion
resulted in
tion
of
a
larger
privates
and
propor¬
low-paid
clerks
being released from the
government payroll than of -offi¬
and
cers
higher paid adminis¬
The net result is that the
trators.
average real payment to
govern¬
ment employees
rose frprn
1946
to
1947—thereby resulting in
statistical increase in
which
fect
a
productivity
sizable enough to af¬
for the whole
was
the
measure
economy.
Shifts
of
ect the
this
nature
will
af-
ratio
between manhours
worked and constant dollar
value
of product or
output even in those
areas of the
economy where the
output
is
Changes in
physical
a
the
product.
product
mix
of
the
economy, a shift from high
value-added products to a low
value-added products results in
an
and
industries, and management, engineering and
currently being agriculture;
very rapid rise in
(5) Encourage widesprea d
commensurate with the increase productivity for the economy as
adoption of known methods for
a whole during the next 10
in capital investment.
years. increasing
agricultural
produc¬
These estimates are, in my opin¬
tivity,
Productivity Problems at the
ion, statements of hope more than
The
Plant and Job Level
government can help by
objective calculations. In the ab¬
It is essential to measure over¬ sence of developments, not now providing the proper environment
and by eliminating barriers to in¬
all changes in
productivity at the foreseeable, we may well expect creased
productivity.
This will
the
national level. But, the further for
economy
as
a
whole,
not, however, increase product!vwe
depart from the plant and job somehting like a 3% annual in¬
ity unless specific action is taken
level, the less assurance we have crease during the next 3 years,
by both management and labor.
as to the exactness or the
meaning and a 2% average annual increase This means
that management and
of
the
indexes.
The
practical thereafter. The 2% increase is ap¬
labor work together in an all-out:
problems of increasing produc¬ proximately
the
same
as
the
attack on this problem.
The best
tivity lie at the plant and job secular trend since 1920; the 3%
level. It is at this level, too, that makes an allowance for an antic¬ way of doing the job must be
known and practiced.
New tech¬
we must secure data with which
ipated spurt in output per manto check the validity of the na¬ hour following the dislocations of niques and new equipment must
be
constantly
evaluated
and
war
tional figures as well as to gain the
and
the
reconversion
adopted when feasible. The best
an
understanding of what under¬ period. This increased productive
labor relations practices must be
lies the changes in the national efficiency will be counter-bal¬
followed.
This includes a wage
indexes.
anced, in part, by a decrease in
policy which shares the benefits •
At the plant level,
we
want the average length of the work
of
increased productivity with
practical
answers
to
practical week, and reinforced by a grow¬
workers. Some management en¬
ing labor force. Ten years from
questions.
gineer's have said to me in recent
We. may want to know what now, these developments should
weeks that there is hardly a plant
changes have taken place in out¬ give us a 30 to 35% greater vol¬
in the country that could not up ;
put per man-hour regardless of the ume of goods and services than
productivity by at least 10% with¬
cause of such
change. On the other we had in 1947. Even an increase
in productivity, at this rate, would out additional investment in capi¬
hand,
want
isolate
made
understatement of the actual
National Product. In doing this,
the first problem encountered is
pated.
that of
tional
deflating the
Product
con¬
defla¬
a
stant dollar basis.: Such a
tion is necessary in order to ob¬
tain a measure of total
output that
is not distorted
by price changes
that have
occurred between the
two periods measured.
Obtaining
accurate
price in¬
dexes that measure
price changes
throughout the entire economy is
less than most
Several
reasons
.
to
and
separate factors re¬ necessitate both basic and applied
on
a
more
extensive
for the change. There research
we may
the
measure
sponsible
may
be, for example,
a change in
change in plant
change in plant equip¬
worker effort,
layout
or a
ment.
a
/
'
First,
an
in contrast to the period
we were,
in 1945, starting from
extremely high level of
ductivity.
pro¬
Instead of only having
war-time losses in pro¬
ductivity, we had to move from
to recoup
which
levels
high.
Second,
were
ucts which
\V
already
very
to make prod¬
being changed in
style. A new model of
product may require
are
or
same
have not yet devel¬
oped
have dealt with index
.
Btatfeti/e*S
national
Wage and salary
payments in
at sector.
e
ated to
This total after being
ment
in
equipment in
it appears that the
capital
manufacturing,
equipment available per
akf6 c^anSes,- is the only avail- worker increased slightly if at all.
f hieasure of production in There was an increase in the
that
remove
segment.
the
effect of
If the ratio of this
capital
number
than
we
have
ment
ever
substantial
had.
ever
replacement
at a rate as high
experienced. It
It
practices
done.
improvement of
by
man¬
management
and
extirpate.
Valuations in produc¬
between different plants
within the
industry are no¬
Individual plant
same
toriously wide.
owners
or
ily
a
do
managers can ordinar¬
great
deal
to
increase
productivity if the problem is
ap¬
proached in a scientific and ag¬
gressive manner. The number of
plants that utilize the most effi¬
cient equipment, have the most
efficient
layout
possible,
and
really carry out up-to-date labor
relations practices, are in the mi¬
nority.
In many instances, labor
productivity
within
individual
establishments
could
be
raised
very
of known
employed
practically
a
time period
effectively studied.
into
Outlook for
that can be
Productivity
Increases
Because
increases
of the
in the
great potential
productivity of
torical
rate
of
increase
in labor
productivity only if restrictive
practices arising from this fear
diminish substantially in the fu¬
ture.
The
job
of
increasing
productivity for the economy as a
whole requires teamwork on the
part of the government, manage¬
ment and labor. The government's
function
is,
I
believe,
primarily
of maintaining an economic
environment conducive to action
that
management
by
and
labor
that
will maximize productivity.
The
most important single step in this
direction
will
be taken if,
as
called for in the Employment Act
of
succeed in stabiliz¬
ing production, employment, and
purchasing power at maximum
levels.
In addition, the govern¬
1946,
In
addition,
there
are
three
country is to enjoy
high levels of prosperity of
the
which it is capable. These errone¬
ous ideas are (1) that unless busi¬
ness
limits its capacity, either by
agreement, or by the suppression
of
new
techniques of production
it will find its production exceed¬
ing the capacity of the market;
(2) the belief held by some em¬
ployers that a considerable vol¬
ume of unemployment is neces¬
sary if labor is to produce effi¬
ciently; (3) the belief held by
some
employees that they will
work themselves out of a job un¬
less they hold back their produc-
ment may
be able to make a con¬
tribution by developing programs
-
*
(1) Encourage the replacement
of obsolescent equipment;
(2) Encourage new investment
the use of labor saving ma¬
and
chinery;
None
able
of these beliefs
in
a
maximum
are
ten¬
production
If these ideas are not
dispelled, production will fall far
short of the capacity of this coun¬
economy,
try to meet thejieeds of its citi¬
zens
and our responsibilities to
the world.
The capacity of the
markets to absorb increased goods
practically unlim¬
prices are suffi¬
ciently reduced.
Under the Em¬
ployment Act of 1946, the re¬
sources
of the government are
pledged to maintain maximum
production, employment, and pur¬
chasing power.
If labor is not
afraid of unemployment, positive
incentives will mean greater out¬
put. If labor and employers will
work together to produce effi¬
ciently so that costs may be low¬
ered, and if these benefits are
widely distributed, we can main¬
tain stability and continue to en¬
joy high production and maximum
and services is
ited if costs and
employment.
With
.
Amott, Baker & Co.
(Special to The Financial
Chronicle)
ME. — John T.
Hale has become associated with
PORTLAND,
Amott, Baker & Co., Inc;, of New '•
York City.
Mr. Hale was for¬
merly Portland representative for
Paul & Co., Inc., and prior thereto
was
with F. L. Putnam & Co.
and Eastman,
Dillon & Co.
Nathan C. Fay Co. Adds
(Special to The Financial
Chronicle)
PORTLAND, MAINE—Howard
H. Davis has been added to the
staff of Nathan C. Fay &
Co., 208
Middle Street;
With A. C. Allyn & Co.
(Special to The Financial
Chronicle)
ILL. —George #J.
Stasen has become affiliated with
(4) Support basic and applied A. C. Allyn & Co., Inc., 100 W.
research in industrial production Monroe Street.
(3) Encourage a large volume
of equity and loan capital;
-
tion efforts.
we
which will—
:
views commonly held by manage¬
ment or labor which must be dis¬
carded if this
;
Productivity
could,
however,
increase considerably above this
tivity
-
equip¬
agerial techniques, and progres¬
sive abandonment of restrictive
labor.
tal equipment, and without added
effort on the part of employees. If
this is even partially true, it sug-
gests the importance of every con¬
cern
giving productivity a high'
as we have
priority in terms of the job to be
assumes
a
of
,
we
as many large and expand¬
ing new industries in the postwar
period as we did during the early
numbers realize. In recent years,
twenties when
productivity in
for example in
1946, the problem manufacturing was increasing so
has been
particularly troublesome rapidly.
Productivity
increases
partly because of major changes are always greatest in new indus¬
Jh
composition of output, tries, and our electronics and electricity to buying it, man-hours
Partly
because
of
major
and plastics industries have not yet per unit of final product will be
rapid changes in the
quality of had the effect on the whole econ¬ reduced, .but the change should
hierchandise produced, and partly
hardly be classed as an increase
omy that the automobile, rubber,
because of distortions during the
in
labor
productivity for that
glass and chemical industries did
period
of
plant. It a concern produces more
price
control
that then..
U;...V'V.
'
uowed from black market
than one product, the question of
opera¬
Third, with demand at excep¬
tions in some
giving proper weights to the prod¬
sectors of the econtional levels, the pressure for cost
ucts must be met. Another prob¬
market production reduction and'efficiency has not
'
lem is to determine what part of
ptrading not only reduce the been very compelling. The result the total hours: worked in the
auchty of price indexes based on
has been a somewhat lower level
concern shall be used.
For some
°pen price
quotations, but they of productivity than would other¬
also
purposes, we may wish to include
result in a volume of produc¬
wise have been the case. This has
er and
trading taking place that been because obsolete equipment only the time of production
workers. For other purposes, we
has been used, production sched¬
may
want to include overhead
repor*e£* *n
ules allowing no lee-way for de¬
employees as well. In some in¬
n.hther major problem enlays in the flow of materials haye stances, problems of this nature
hvS i^d. is that of measuring been set, profit levels that may in have been so prevalent as to make
^oductivity in certain areas of some cases have_made manage¬ it almost impossible to measure
tivity in which there is no ment lax have existed, and the
labor productivity changes. Usu¬
easurable physical volume of
continuing tight labor market has
ally,
however, reasonably ade¬
Poduction.. The Gross National required the use of marginal labor quate measurement is possible,
originating in the gov- and overtime work, and has oc¬
provided the problem is broken
of 2,
an(i armed forces sector casionally permitted laxness on down into manageable segments,
me
economy, for example, is labor's part.
either as to the product measured,
a
culated on the basis of the total
Finally, despite heavy invest¬ the labor input to be used, or
always extremely difficult—as all
of you who
scale
assumes
considerably by the adoption
techniques which would
pay for themselves. Recognizing
much more labor than did the old
that the adoption of such devices
so
that changes in productivity,
and practices costs money initial¬
be it labor productivity or pro¬
ly, I still believe that the results
ductivity of some other factor,
might well mean that the invest¬
mean little if the product has also
ment would prove, to be costless.
changed during the time interval
The main obstacles to such adop¬
being studied. It is necessary, tion flow
out of an unawareness
despite the difficulties in obtain¬
of the technique or inertia on the
ing productivity figures that are
part of too many managers.
useful and comparable to establish
well-defined
classifications T One of the principal obstacles
of product, job
conditions, and to the attainment of a higher rate
of productivity has been fear of
physical equipment.
on
the part of
;
Even when a plant produces a overproduction
single
product,
problems ; still management, and the fear of un¬
exist.
For example, if the plant employment on the part of labor.
We are likely to exceed the his¬
shifts ove* from making its own
the
immediately following World War
I,
the time required
might be quality
mentioned briefly.
Gross Na¬
figure to
somewhat
people had hoped for and antici¬
.
,
,
—been
.
a
_
volume
of
physical production,
Despite
many
gaps
in
our
Regardless
of
our
thus artificially reducing the ac¬
objective,
knowledge, we do have fairly
it is not„ easy to secure reliable
tual
productivity increase that
sound estimates of the average
data which answer these ques¬
increases in labor productivity for might have taken place. There js
tions. Units of output may be
no way of
measuring the magni¬
a few decades in the past.
For the
difficult
to
correlate
with
the
tude of this shift but it is gener¬
economy as a whole, the rate of
ally agreed that the shift to high specific time spent to produce
increase has averaged about 2 %
them. In the case of shipbuilding
value-added products was con¬
a year.
But there have been wide
and construction, for example, it
variations as between years and siderable during the war, and that
is obvious that the measurement
-here has been a smaller but still
as between decades. >Vhen we ex¬
of production during any period
amine the method of calculating sizable shift in the opposite direc¬
must be the amount of work-puttion since then.. '
productivity on a national basis,
in-place rather than the output of
we discover
Of the three factors mentioned,
that frequently the
final products completed during
variations have relatively little to the first and the third have oper¬
that period. In other types of acdo with what many people think ated in the last year or two to
ivity where the production-period
of as being productvity. We also keep productivity for the
country is relatively shorter, the output
discover some of the hazards of as a whole on a lower level, sta¬ of final
products is usually used
measuring aggregate productivity tistically, than it otherwise would as the measure of work done. Care
have been. Nonetheless, produc¬ must be exercised to make sure
changes for a nation.
The basic method of measuring tivity increases from 1945 to 1946 that this
practice does not distort
productivity
changes'
for
the and from 1946 to 1947 have—even the measure of productiviy.
whole economy is to divide the after allowance for these factors
Also, it is difficult to measure
total number of man-hours work¬
ed into the dollar value of Gross
show
CHICAGO,
:
38
514.
about
314
Tomorrow's
Walter
equipment,
roads* is
Bethlehem
about
now
By WALTER WHYTE=
supply
elude
3414.
such
Street
saw
Douglas
they
bought
has been
were
at what up
of each dollar.
In
to now
Raise it
the bottom, at a time when
the
bulls
bought 21-22,
25,* has
to
for
the
was
thing I can't say now. Buyers
are
apparently anxious to ac¬
quire stocks today; anxiety
being fed by headline news
and
radio
commentators'
terpretations.
in¬
When this de¬
[The
had
time
not
Chronicle.
those of
They
Until Jthen,
*
.
«!«
are
Lerner
of
small
some
signs
point at which buying
can
dry up are not too far
away.
Under ordinary cir¬
has
Boston,
been
think
I
the
bit
in
/
aside at this
the
down
materials and
that relationship
on
low
as
36c
as
on
the
i.e.,
other words,
from the traditional
45% to 55% because of this lag in
the
Interstate
Commerce
Com¬
mission
a
in
director of Coplay Cement Mahu-
decision
of
nine
up
to last
months
1946.
Now
all in
the
advice
to
black.
we
come
year.
of these railroads took
managers
in $6 627,000,000 and they spent
$2,148,000,000 for maintaining
their
for
stocks,
property,
running
$2,682,000,000
trains.
They
and
their
8.4c out of each dollar.
What
of
and
should
from
bought at 31V2-
have
29
about
now
its
stop
32.
to
Louis
35 M2,
Nearby ob¬
also
Lerner
is
Steel
Ralston
of
director
a
Car
In
the
bought 4-414, is
now
Ohio,
and
•i
the
Victoria
Nova
1
1
Gypsum
that
1927
Scotia
1
successful offering
Intermediate
Credit
March
23
Banks
by
was
Charles
Schwabacher & Co.
hire
the banks. The financing consisted
$84,560,000
debentures
and
due
•
1.55% consolidated
dated
Jan.
3,
April
1949.
1,
The
Seta
San
York
Stock\
Francisco
Exchange
stock
Chicago Board
14WaN Street
of
(Associate)
Exchange
Trade
NewlYork S, NT. Y.
OOrtlandt 7-4150
Teletype NY 1-928
Private Wires to Principal Offices
Sen
Francisco
M—terey
—
—
Santa
Oakland
—
Barbara
Sacramento
'Fresno
was
placed
at
par.
Of
a
of
April 1, 1948 the total
is
new
money.
debentures
to
be
We have had
some
or at
those
an
payroll taxes,
increase in the
a
Net
railroad
the
is
operations.
operating
half.
a
to
a
dollar
see,
particularly selected, by the social
progress interests, for- increases in
As
outstanding
,
payroll
now
roll
taxes.
So
the
railroads
contribute 8%% of the
in
taxes
for
old
age
pay¬
1927
these
-
Let
us
an average
around
out in the three different
were
selling
of 154, the yield
was
4.6%.
went
by.
The 24
stocks at their highs in 1937 sold
the
how
see
;
were paying dividends aver¬
aging $7.00. The dividend-paying,
„at
income
to
24
teen
years
of these 24 railroads made •at- 55.
We lost
nine
of the
divi-1
periods.
dend-paying stocks. There were
10
In-1927 the net railway operat¬ still
paying dividends.
The
ing income of the 24 railroads was dividend-paying stocks were sell-;
Dividends averaged
$754,000,000 and the owners re¬ ing at 100.
dividends
ceived. in
The yield
$4.50.
$283,737,000
was*4.5%.
The;
price
of
the - dividend
paying
five railroads with net operating stocks,
however, had
declined
income
of
$79,547,000
paid no from 15.4 to par.. The group had
37.6%;
or
In that year, however,
that the
so
$283,737,000
42%
their
of
19 dividend
dividends
of
net
operating
or
in¬
It is also of interest to not*
come.
declined
The
;
creased
1947.
from
10
1
in J937
We started
.
paying
10
from 131 to 55.
,
dividend-paying stocks in¬
in
to
1927
14
in
with 19
dividends, selling at 154;
later
years
had
we
10
selling,
that the dividend
at par. Now we have 15 dividend-
non-dividend
paying stocks out of this group of:
24 selling at 50 to yield 8%. We
paying roads in
1927 saved 17*4% of gross and the
13%.
1927
The
out
roads
saved
non-dividend
the
of
24
only
roads
in
the
St.
were
Paul, Erie, Missouri Pacific, New
Haven, and Seaboard.
1937,
the
net
operating
in¬
of the 24 railroads equalled
come
$435,324,000
$120,584,000
dividends
and
paid
were
roads
and
naturally
dends.
as
The
paying
nine
divi¬
no
made
were
up
follows: B & O., St. Paul;
Chi¬
Rock Island-
Northwestern;
Missouri
Pacific;
New
Haven; Frisco, and Seaboard. Five
other' railroads,
the
Southern
Pacific; Southern Railway; Illinois
Central;
Northern
Pacific,
and
cago
Erie;
were
paying in
railroadsc paying
1937 (the
Atchison,
Line, C. & O., C.
Northern
also
1937.
York
and
Reorganized Railroads
1947, the
of
come
24
St.
Q., Great
Louisville &
operating
railroads
Paul;
Chicago
after'
stocks of.
Northwestern;
Rock
Island; New Haven, and
Frisco, the new stocks of four are
non-dividend paying and the
Northwestern,
only
paid
fifth,
50c
in
1947 after the best gross business
in peacetime history of the rail¬
roads.
V
\
-..."
■
-I
have
studied
railroad
reor¬
written
B.
net
the
that
"wiping out" all the old
in
dividends
46.4%.
or
reorganizations
ganizations for
Pacific) had net operating income
of $259,735,000 and
paid dividends
$120,584,000
sad commentary on rail¬
a
road
10
Nashville, Norfolk
&
Western,
Pennsylvania, Reading and Union
of
Central; New Haven; Frisco
Seaboard.
It is
non-
The
Atlantic Coast
Railway,
non-dividend-paying
stocks, as follows: B. &
O.; St. Paul; Rock Island; Illinois
Central;
Missouri
Pacific; New
of
1937
9
common
27.7%
or
in bankruptcy in
were
have
now
However, nine out of the 24 rail¬
in¬
was
years,
lectured and
on the subject
constantly.
keep asking myself^what did
they accomplish except; to put the
L
tax
collector
bondholders?
ahead
In
sold at
common
of
the ^old'
1927, St. Paul old
40, C. N, W..at 97,
Rock Island at 116, New Haven at
63, Frisco at 117, and Seaboard at
41.
All of these were
wiped out
as
being worthless, yet the new
common
stocks
(which
the
old
$554,200,000. The same 10 railroads bondholders received) sell as fol¬
that paid dividends in 1927 and lows today. St. Paul at 8, C. N. W.
at
1937 were still
15, Rock Island at 29, New
paying dividends in
Haven at 6, Frisco at 9, and Sea¬
1947. The net
operating income in
1947 of the 10 (mentioned in the
paragraph above) was $287,923,000
or
48.4%. Of the five railroads not
board at 15—none with the excep¬
tion of CNW, are
paying common
dividends.
?'■
paying in 1937 but not in bank¬
ruptcy, three of them, the South¬
ern
Pacific, Southern Railway,
The 15 dividend-paying stocks
today sell at an average price of
50 and the
average yield is about
and Northern
Pacific, were back
paying dividends but the Illinois
8%.
Central
indicate?
and
not.
New
The
York
nine
Central
railroads
in
Well,
did
a
what
does
You
8%
an
might
say,
yield
"What
4%% yield indicate in 1927
bankruptcy in 1937 had all been
with
reorganized
It indicated the confidence in the
the
stocks
selling
by the end of 1947
except the Missouri Pacific, and,
with the exception of Erie
and
railroad situation.
Northwestern,
50 to yield
dividends
stocks.
on
,
none
their
are
new
paying
common
;*;•••*"
when
.
the
-
.Among those 24 roads, on
basis, you will find
a
.
sta¬
some
that
over the
20-.year period were
always at. the bottom of the list
and some
agement
to
do
always at the top. Man¬
in my opinion has a lot
the relative
position
about
of each railroad.
These
and for .tistical standpoint.
took
the
them
only
Now,' however,
selling at
reverse
is true.
When
the
privately
only
operated railroads in
right
»over
ones
Jan.
left.
railroad
England
now.
1:.
We
are
T-j:---'
gross
.earnings
at a
peacetime peak; when
bad financial structures have been
are
revamped;
when " earnings
available for railroad
some
them
I can't believe
154?"
stocks
8%, the
are
and
world
-
what I might call the
"Management" factors from a s'aare
at
You all know that the American
owned
:
have
you
railroads
Management and Railroad's
Positions
tistical
the railroads have been
management
themselves, not
explanation.
an
railroad
stocks, at their highs, were selling,
at an average price of 131. Nine¬
railroad \i* Ten
from
saved
sum
owners
a
railroad
think
stocks at their highs
Income
Operating
Net
were
car
I
to
in
Back
lack of it.
freight car from a
day for a car belonging to
other
You
amount
will amount to $435,370,000.
for
Now, taxes have gone up. You
may say, "Well, that depends on
your net income," but not at all.
1
of
in
pro¬
like amount of debentures
$30,880,000
railroads
increased
and
issue
maturing April 1 and the balance
of
—
is because of increased
and
sbme
ceeds, $53,680,000 will be used to
retire
24
dollar
1948
the
saved
amount
periods—1927, 74.4%; 1937,
debit hire of
Members
New York Curb Exchange
these
answer
Dunn, New York, fiscal agent for
of
the
centage saved declined from 17*40
in
1927
to
8.40 in
1947?
The
R.
on
Pacific Coast Exchanges
periods,
railway operating income
is
Why you might ask, if the oper¬
ating ratio is still 79.5 (a jump of
only 5.1% since 1927, has the per¬
is¬
an
24
75.2%; 1947, 79.5%.
of debentures for the Federal
sue
made
Orders Executed
of
those
three
was
three
FIC Banks Place Debs.
A
taking
the
and
17^0; in 1937, 14.20; and
in 1947, 8.40. The operating ratio
of
Securities
tendency
a
as
event,
any
the net
Co., Columbus
Halifax,
Company,
Pacific Coast
much
as
railroads
—
Avco
to
reflecting their efficiency or
least
In
be
stockholders.
raised facturing Co., of Coplay, Pa. Mr.
stacle looms from 37 to 39.
to
seems
Spending
they take in and
to leave just about enough so as
not to justify some return to the
Lerner
C.
Are
railroad managements to
some
spend
Anaconda
-
Managers
There
fol¬
lows:
321^
over !
their control
Within
extent
spent
items
on
dividend
they ended up with
railway operating income of
$554,000,000 saved. Last year, the
would
as
$6,073,000,000,
and
New York Central
and
net
Individual
handling is
said, they had a',
as I
command
their
000,000
saved
ten
ethers for
These 24 railroads took in $6,627,-
S*
hold
now
last year,
In
there
when
('*rH
You
look
.
war,
the relationship of
wages to gross. But taxes came in
ate it all up.
After the war the
relationship went to 55% — in
its
*
Wages
and
between total wages
on wages,
dollar,
as
teeth, ob¬
stacles frequently mean little.
*
dollar.
each
they spent only
little
a
ceilings
went
suggest liquidation at such
points. But when the public
has
of
out
Earnings
46%
ceilings
&
elected
operating
railway
just
During
.
I
nevertheless
in¬
$435,000,000; they saved
railroads,
and gross revenues.
that the
cumstances
and the gross
about $3,000,000,000.
relationship of gross earnings .to
total wages got out of control. If
you go back to 1922 and go right
up to the war years, you will find
there was always a relationship of
the
Lerner
people's gross
point: It wasn't until 1946 that the
s|«
Co.,
There
C.
Louis
so.
must
paying railroads with net operat¬
ing income of $674,478,000 paid
Gross
Louis Lerner, Director
holding
positions is recommended.
think
dividends
And
sire is sated the market will
show it.
safety in the results of railroad
management, despite the fact that
the
f\
the author only.]
•,
; v? ■
freight cost. These two items ware 1937;
Now, how can it cost these 24.
increased, and whereas they took
in
8.1% of gross in 1927, they took railroads $2,636 000,000
1937,
cost
10.4% in 1937, and last year they and: yet
$6,073,000,000
in
1947? Is all that increased cost of
took 12.1%. The trend, therefore
and
is to show a narrower margin of imaterial
wages?
I
don?t
plant and $1,108,353,000 forerun¬
ning their trains.
any
presented
are
gross
1937,
14.2c
around
of
a railroad.
I
could be found to
That item does not appear in make this possible, because when
you ride a
train today, it's not
your operating expenses. Neither
does it in your increase in your 'materially different than it was in
tnink that wa.vs
$980,000,000 for maintaining their
in ,this
those
The trucks
Railroad
us.
With gross down,
Whyte
with
on
net
of
around
necessarily at
coincide
10 years, and
up
down.
goes
was
24
a
come
were
article do
move
versus
These
bought 15-16,
expressed
these
taining and funning
"problems."
their
be alone in
the bond
for
down likV most
business
Thursday.
views
we
was
1927
21.
—Walter
and
owners
gross
sion
*
some¬
money
forced reduced rates. The depres¬
of 23 should remain.
When that will be is
the
Now
.
More next
much
have at their control in
that
(it is always necessary to
spend over-90% of gross for main*
all
not
that percentage to
business, the railroads would
applied
holders.
United Aircraft bought 23The
problem isn't solved until 24, now about 29 is in the
paper
profits are converted midst of offerings but old stop
*
their
dollars—and think of what is left
sell congratulations.
*
Just
how
—
managers
All this is
into cash.
trains.
mind
looking for
quite now about 21, should have its
gratifying. I like profits as stop raised from 12 to 16.
well as the next man, but the Lockheed bought 13-15, now
column can't devote the space about 20, keep stop at 15.
storm cellars.
plant
for operating
keep that in
maintaining
$1,470,255,000
their
to 22.
G. L. Martin
were
for
and
now
stop at
a
1927, they spent $1,453,701,-
000
bought
Dresser
about
other
In
$750,000,000,
words, they saved about 17 xk cents
50-52, is
about buying them when no¬
now about 63. Raise
stop from
body wants them and selling 50 to 54. Offerings ahead are
them when everybody is buy¬
likely to prove thin. Same
ing seems to have worked out situation exists in Lockheed
again. At least the first part and G. L. Martin.
has been profitable so far.
Consolidated Vultee bought
Whether the rest of it will
12-13, now about 1614, has an
work out remains to be seen.
old stop at 12. Keep it there.
*
#
❖
From 17 on look for selling to
A casual glance at the list
of stocks recommended here develop.
will show
the New York Central for
of
come
ahead between 60 and 62.
Wall
Haven
with net railway operating in¬
up
buying may reduce
Caterpillar bought 54-55, is
selling obstacles. Raise stops now about 59. Suggest keep¬
where suggested.
ing the old stop at 52. Stock
*
*
❖
old
facilities,
paying
joint
New
1927, these 24 managers took
in $4,300,000,000 and they ended
Public
That
amount—
In
39.
to
rail¬
some
Grand Central.
offerings to increase from 36
range.
to
for
rent
the
as
rent to
Expect
which
of
hire
debit
and
tremendous
a
also
and
old
Raise
,
taxes
In other words, if you
retirement.
(Continued from page 14)
.
bought 30-31, is
stop from 30 to 3L
Thursday, March 25, 1948
CHRONICLE
FINANCIAL
&
Died of Management on
resistance
tience.
Whyte
near
stop from
Some
between 6 and 8.'
Stock will probably be a slow
mover
and will require pa¬
Says—
Stocks
Raise
414.
to
apparent
Markets
=
COMMERCIAL
THE
(1346)
ion
are
owners
managements refuse to.
a
dividend', then in
there
is
my
and
give
opin¬
something wrong.
Non-dividend p a y in g~ railroad
shares, when they represent 9 of
•Volume r 167VlNumber 4684
TIIEXOMMERCIAL
largest raiko^ds^can be the they're high grade; when they're
'first eas,y; step,,to.Apocialized rail- nigh grade, they'e eligible for in¬
'roads, especially when 15 of our vestment
The 4% bonds of. the
railroads in 1928 were
largest railroads- air this same time
selling
'.and under, the,same eireumstance
a? AaveraSe of 971/2 and all rated
pay a fair reward to their owners. A, AA or AAA; yet a few
years
I makemy/living at railroading
gter, the average price was 46.
and railroad securities. I see no High prices and high
ratings do
halos on men that have been run¬ not prove quality. I realize that
11; you re a
ning- railroads for.-20^years and
banker, you may have
'never y pa id -dividends.1
They to follow ratings. The 'system
should be
wouldn't last" that long in General
changed, but the im¬
petus should come from the
Electric or General Motors.
'
banks1.
I am not saying this to criticize
Contrariwise, low prices and
low
ratings do not necessarily
any particular railroad. I'm sim¬
ply saying to you young, fellows, connote low quality. One of the
things we have to contend with
I think you should know a little
our
a
_
this
in
about management and its
results. I may say it facetiously,
,but I mean it sincerely.
more
when
country
is the
fiduciary buys
a
bond and it goes
what Management Can Do
biggest
The
thing
that
a
that
railroad
fore, if they buy at par (as they
do) it must be 100%, which it is
"man¬
rjght. put
go
it
nurse
FINANCIAL
CHRONICLE
and sell it.
They
and get their money
along
(1347)
announced. Under this policy the
pfices at which the Federal Re¬
backi/V/'T
serve System would
buy the key
The.-system of fiduciary invest¬ issues were lowered to a more
ing hi Railroad bonds should be realistic basis.
This, of course,
changed.
unloosed an avalanche of
selling—
A few other
things — poorly in the final week, alone, of De¬
manageel- companies, particularly cember the Federal Reserve
Sys¬
in rails, may be the biggest bar¬
gains. Take a look at the com-
P^ny's^rpss. Look at others' gross
to jsee what "management"
might
be ahle to do.
elder
I think it
Morgan
bring
How
who said, "Don't
well-managed rail¬
me any
roads.
the
was
do
make
you
any
them?"
money .on
judgment.
bought
lion
there
is
to
my
than $1,100 mil¬
more
of
long-term governments!
Heavy sales by non-bank holders
continued in January but sales of
Dank-eligibles
by
commercial
banks were very light until on
January 23 the increase in central
reserve city reserve
requirements
This
to 22%
was
touched off
bank-eligibles
the
new
which
selling of
anticipation of
in
to
27.
announced.
some
requirements
reserve
were
February
To* conclude,
..
tem
from 20%
Another thing, information is
not judgment. It's a combination
...
down, they can't of your facts plus your knowledge
judgment, there¬ through experience that gives you
average it. Their
/'
fact
&
become
effective
During the first
four weeks of January, the Federal
Reserve System under its market
support policy bought $66 million
•
they
can
you
bankers
use
to
long
swap as
as
to
be
willing
are
39
outswapped!
Probable
End
of
Price
But,
for
it
will
them
to
Commodity
Rise
not
be
necessary
continue
swapping
longer. I refer to the prob-,
ability that we have seen the end'
much
of
the terrific upward
swing in
prices which has plagued us since
June, 1946. While no one can be
absolutely certain, it seems to me
that the
January and February
breaks in grain and the
resulting
in
general
declines
commodity
turning point of
the inflation,
boom.
True, we
shall have a cut in
taxes, espe¬
cially at the lower end of the
prices mark
the
scale which will be
definitely in¬
flationary.
Moreover, further
agement" can do to restore rail¬ not.
mind Very little difference be¬
wage increases, which are in the
Yet they don't make that same
road credit is to pay dividends
tween, speculation and investment;
offing, will be a powerful infla¬
when they<are earned.
There is rule in real, estate. If the bank both are attempts to forecast the of notes and
$1,686 million of tionary stimulus.
Also, I recog¬
.no such thing as a railroad
with gets stuck in real estate, it doesn't future.
long-term government issues but nize the power of the
government
credit, not paying dividends.
during the same period under its to push prices
up—and I know
The way to establish railroad
credit contraction policy it sold this is an
election year!
credit is to pay the owner of the
or
lost through redemption $2,-1
Nonetheless, the sharp decline
property something every three
325,000,000 of its bills and notes. in the price of farm
products has
•
earn
Money Market?
modern
I said before, that
relationship between wages
the
instance, of
to
came
ist sufficient now so that
with good management we should
have :• good r earnings
and more
dividend paying railroad stocks.
and rates
■
of
don't
you
it, don't pay it.
I believe, as
;
The
(Continued from page 6)
If
months when earned.
"Those
who
scoff, remained to pray."
Monetary Authorities Only
Unfortunately,
wartime
the
amazing
of
success
the
money
made, it is only step number one.
Look at England ...today. It's so
.
market
mental character and the control¬
easy
bankers
companies
.your
overlook
the
nomic forces involved.
utilities. Railroad national¬
basic
economic
eco¬
Too many
tides
—they only
ization will be only the first step. influence them.
Parenthetically, it
Railroad stockholders are a large cannot be too often
repeated that
and potentially powerful group. to- the extent the monetary au¬
The way to make those people thorities attempt to create, or for
really interested is to get them that matter, to the extent >they
on a dividend basis, they can help
disregard these fundamental eco¬
conditions
continu¬
nomic
Big dividends
not necessary, but dividends
Study this comparison:
ended
create
to
for
forces, they will fail.
Shortly after World War
ing the dividends.
are
II
in
August, 1945, a new
money market pha?e began to un¬
.<•'*./ •,.;. "
f
: "
("'i- fold.
The Treasury and mone¬
Junior Bonds of Dividend-Paying
tary authorities became concerned
Railroads
about being in the money market
\a' y.
■-y"• ■price
with both feet.
There was much
are.
■
Atchison adj. 4s/1995_
Atlantic Coast 41/2s/1964__..
.
108
talk
99
Chesapeake & Ohio
103
3V2s/1996
the
public
debt
the
...
Federal
bank
Reserve
and
commercial bank holdings of Gov¬
981/2
Great Northern 3V8S/2000-_
ernment
91
Norfolk & Western 4s/1996_
the
and
128
Pennsylvania 3V4S/1952J___
thereby
re¬
clearly recognized
of selective re¬
demption was inaugurated in the
early part of 1946.
deposits
'96
3%s/2003
and
bonds
ducing reserve balances and bank
Louisville & Nashville
99
Reading 3Vss/1995
getting
The desirability of reducing
ors.
"
Chicago, Burlington &-S
\ Quincy 3V8S/1985
of
into the hands of ultimate invest¬
,
was
program
99
Market Change
Northern Pacific 4y2S/2047_
Southern Pacific 4V2s/1981_
Southern Railway 4s/1956__
88
92
character
Erie
66
change.
(reorg.) 4V2S/2015
Northwestern 4V2S/1999
61
no
^
Paying Railroads
vr;/..'
-
■
.
*
Illinois Central 43,4s/1966__
Baltimore & Ohio 41/2s/2010
70
-
79
Rock Island 41/2s/2019._—
New Haven 4V2s/2022
money
our
on
their
though
the
economic system
major concern. Al¬
huge public
debt of
$270 billion could not be disre¬
garded for one instant, the danger
of wild inflation arising from the
swollen bank deposits and
money
supply became an equal, if
important,
problem.
55
not
Seaboard 4%s/2016
65
monetary au¬
thorities had to be taken with,
one
eye on the public debt and
the other eye on the condition of
business activity.
Credit control
became a monster balancing act;j
a
steering of the ship of credit
control
between the Scylla
of
lower bond prices and the Charybdis of higher commodity prices.
The interests of the government
Still in Section 77
Missouri' Pacific
^
In
•few
closing, I would give
you
a
rambling thoughts that I have
my experience.
Be¬
-Picked up, in
sides being a broker, I have been
lecturing now for 18 years; and
like to point out to young study
groups a few little things that I
•have picked
up in the course of
4
'Piy travels**
Rlrst,
.
popular stock, a stock
that the crowd is
watching or fol¬
lowing,
a
doesn't necessarily • prove
Quality.
say
as
time
And you have heard me
and time again, as far
bonds
concerned, that high
prove quality.
In
,°ther words, bond ratings, in my
opinion, follow prices. When
"they're high priced, they're high
rated; when they're high, rated,
prices
do
are
not
more
the
of
act
.
as
a
borrower had
to be weighed
The
a
for
money
new
a
restriction
pressure
bank
on
re- I
bought
February, the selling
dropped so sharply that
$538,000,000* bonds were
in the first week of the
been
son
it
such
powerful object les¬
a
to businessmen that 1 believe
will
end
the
ceaseless
and
senseless
bidding
spectacular
up
of prices. The
demonstration
of
the
grain markets that price is not
street,
one-way
a
has
made both
bankers and businessmen much
more
cautious.
Moreover,
the
month,
only
$81,000,000
were
knowledge that there is consider¬
fight inflation, graphic¬ bought in the last week. Signifi- 1
ably more grain than had been
ally indicates the mutually con-1 cantly, a number of bank eligible
thought, and further, the realiza¬
tradictory character of present issues rose above the support tion that most
commodities are in
day money market pressures.
prices and established a true free substantial
supply with prices at
The paradox of the
money mar¬ market level for these issues.
such high levels that
many con¬
ket managers is how to
•'
•'/ ■/;• '. ••
:
keep gov-; /
sumers cannot afford
them, have
Federal Reserve Activities
ernment securities at
par,
or a
both had sobering influences on
little better, and
Before
simultaneouslyi
going
further let
us all concerned.
carry out their historic responsi¬
summarize
the
changes in the
As prices recede, the demand for
bility of credit control. While at the
Federal
Reserve
portfolio credit will decline.
The increas¬
the moment
the
aim of
credit since
it
became
necessary
for ing risk will make bankers more
control still is to tighten credit them to
give market support to cautious. These developments will
and make it more difficult and
the government long-term issues cause
banks to turn to bonds, par¬
expensive for business to borrow, because of the effects of their
ticularly government bonds.
as soon as the
deflationary trend credit contraction policy. ; Since
Beyond .question, the end of the
becomes
more,
pronounced, the last November the System has boom will have a favorable ef¬
opposite will be true. At present, purchased nearly $5 billion ($4 fect on
government bonds and
the problem is how to keep
billion of which was between Dec. AAA
gov¬
corporate issues.
It will,
ernment security prices up with
24 and March 1), of government
however, have an adverse effect
one hand andihelp put
bonds from non-banking holders on
commodity
medium-grade bonds, especial¬
prices down with the other. But who wanted to invest in higher
ly those unduly subject to credit
mark this well: When deflation
yield corporate bonds and mort¬ factors.
Because
of
the
high
gets into full swing the problem gages and from banking holders break-even
point of industry to¬
will be how to keep government
who wanted the greater liquidity
day, even a slight decline in price
security prices down and help put of the short-term issues or had to of
product, or in business activ-'
commodity prices up. This money sell to meet their reserve require¬ ity,
might have such an adverse
market paradox will plague the ments. But, while they were sup¬
effect
on
a
corporation's earn¬
monetary authorities so long as porting
government
bonds
by ings that its bonds will drop be¬
we have a large public debt and
these huge purchases, their hold¬ cause of increased credit risk. - It
a
managed money. More specifi¬ ings of bills and certificates were seems safe to
say that from now
cally, I think it safe to say that reduced through redemption and on the readjustment in the econ¬
this paradox will not be resolved
sale by about $1 billion more than omy of the
country will cause a
measures;
1
■
our
It is
time!"
the total of their
pertient to inquire
now
as
of
Reserve
The
just how the monetary authori¬
are endeavoring to solve this
paradox by pushing up with one
hand
and
hand.
■>; '"v ■
Reversal
••:
with
down
the
other
to
these changes is that
in all
the
long-term
The credit tightening which be¬
par
tinued
to
government
though
even
We
System kept that
Federal Reserve
above
its
increase
issues in
it
con¬
pressure
must,
once
of course, anticipate
deflation gets under way
earnest,
the
authorities
Federal
will
Reserve
their
reverse
credit
tightening policies.
How
promptly they will recognize the
include, in addition, "de¬
frosting" of the bill and certifi¬
by steady, con¬
of the credit changed economic conditions, how
base of the country.
quickly they will change their
From a portfolio standpoint, the policies, and how effective their,
net effect of the sale of short-term changed policies will be, all re¬
cate rates,
securities
gan in a small way with selective
redemption of government obliga
tions
in
1946
expanded
was
in
1947 to
heavy sales of the
ment
se¬
govern¬
agencies, sales by the Fed¬
eral Reserve banks themselves of
quantities of their own
holdings of government securities
sizable
and, the offering mf a special, re¬
stricted, long-term, anti-inflation
issue in August.
By the end of
sQctober, 1947, the credit restrict¬
ion measures began to pinch and
the
to
Federal
Reserve
System had
step in on the opposite side of
government
,the
bond
market:
before,
their
problem
long-
Whereas
was
to keep the government
issues from going too high,
they
then
interest
thing
mind
the
V,
of Problem
term
market thus entered
purchases, which, widening in the gap between the
total Federal return on AAA obligations and
that amount. the return on those of mediumkeep
clearly in grade.
reduced
credit by
course,
ties
and
phase; the public
contraction
a
In
whereas
kept low and the insistence
was
Reserve,
more
serves.
pressure
stable economy.
against the need of producers
consumers
much
Treasury insistence
swollen curity holdings of various
Frisco 4V2s/2022
Every
a
government securi-!
on
credit
managers.
repercussions of the war fi¬
became
.
49
55
77
35
St. Paul 4V2s/2044_
The
the
of
nancing
Price
of
Financing the war was
longer the paramount consid¬
eration
:
that
on
result
(primary)
credit of $573 million during the
four weeks, which put just that
to
fundamental
this money market
the
note
Please
Junior Bonds of Non-Dividend-
New York Central 4s/2013-
ties be
Fundamental Character of Money
89
Union Pacific 2%s/1976____
mortgage and it is
that rates
"in
85
—
mar¬
net
Federal
funda¬ be used to
bankers forgot that the monetary
authorities •/, don't, create
these
into
and
to
many
ling importance of the basic
to move from railroad social¬
ization into your banks and your
insurance
caused
first
demand basis!
Another, thing, if a move for
socialization of the -railroads is
managers
lightly, the money
ket now, in effect, belongs to the
people but the government holds
the
Influence Money Market
;
somewhat
.
had
them to keep
to
begin to buy
them from dropping.
Throughout November they had to
against inflation
tinuous
reduction
to
credit
restrict
ex-,
main to be
long-term
the
obligations to support
government bond price struc¬
ture has been a swap
banks have
commercial
The
be¬
liquid through acquir¬
more
come
in holdings.
ing the short-term issues, the
Fed¬
Reserve
January
State
one
less
Reserve
banks have become
liquid through acquiring the
long-term
issues.
But, I submit,
liquidity in
this sense has little
significance
to
serve
banks.
the
They
Federal Re¬
able
to
bonds
as
are
these
long-term
told the
New
York
Association:
"No
has yet found a sure way of
about
pression."
just
not, only time
popular
a
Whether
meantime,
to
interesting!
can
is
tell.
may
de¬
right
In the
the
not
be
certainly will be
And remember,
darker the economic
your
little
he
paraphrase
life
song,
beautiful but it
better
hold
27,
Bankers
bringing
or
eral
seen.
President Sproul of the Federal
Bank of New York on
pansion and the purchase of the
the
outlook, the
government
bonds
will look!
long as they desire
really
makes little
to do so;
it
difference to
have long
Amott, Baker & Co., Inc.
government give the market a great deal of
or
short
maturity.
They can, Adds Geo. M. Shaw
support and in December it was
did not move out!
necessary
to give steadily in¬ therefore, continue to sell shorts
George M. Shaw, formerly of
The dual character of the money
and buy longs for a long time to Paul &
Co., is now associated with
creasing support with the result
market's
responsibilities is the
come.
They have $16 billion more Amott, Baker & Co., Inc., 150
that on December 24, the famous
real key to the actions of the
of
bills
and
certificates which Broadway, New York City.
"Christmas present" policy was
monetary authorities.
To put it
moved
in—but
them whether securities
the
-
40
(1348)
THE COMMERCIAL
Objectives and Our Resources
"In the past,
nations have risen to positions of
leadership through a gradual process over a period
of years usually measured in centuries. This has
allowed
for
commensurate
a
growth of
put more capital at the
company's disposal.
When bank
position involving
greater, perhaps,
nation in modern his¬
a
mind?
we
this
abrupt transi¬
could indulge our prej¬
and
feelings regarding
foreign relations with the knowl¬
edge that what we said or even
would
be
not
immedi¬
an
"The world
suffer
not
scene
the
*
us
tionment
of
that such
as
which
our
resources
and
is
other
about
borrower
loan
loan.
finding low interest rate loans that has
the origi¬ tempted so many companies
lately
capital.
Where
investor has fared only- mod¬
erately well or perhaps poorly,
new capital will be hard to come
by.
The Bibilical parable of the
talents
I
shocks the
inexperienced,
but its truth becomes
ent
as
with
we
the
quired
older.
grow
courage
to
more appar¬
The
and
skill
man
re¬
improve
opportunities
will
secure
more
opportunities.
Where courage and skill are lack¬
ing, the opportunities he pos¬
sessed will evaporate.
11
Difficulty
in
to
It
go into debt for their
is the inordinate
There
Equity.
Capital
is
plenty
of
capital
deposits and cur¬
Bank
outside
rency
of
banks
are
$100
billions above prewar.
But pre¬
cious little spills over into
equity
capital.
This
is
considered
by
practically all observers to
depressing influence on the
market.
used
Finding
capital.
difficulty of
finding enough equity capital."
around.
Recent
to
view.
examples
-
be
stock
are
substantiate this point of
Time
after
time
the announcement of
recently
new
financ¬
ing has depressed the stocks in¬
Now for the first time in
twenty volved. That this was not always
turning to the case is evident to those who
capital. The. can remember back to the 1920's
years, corporations are
their
for
owners
new
investor, or to finish out the an¬
alogy, the master of the house,
must
weigh to what use the talent
he loaned was put, and reward his
servants with
more
or
less capital
accordingly.
Much is written
situation.
editorial
Journal"
For
in
today about this
instance
the
a
"Wall
recent
Street
says:1
"Today there is very little risk
capital, and what there is comes
high.
It is not the 'cheapness' of
1 March
11,
194S.
when only a rumor of the
offering
valuable rights was sufficient
of
to send the stock
upwards.
The
tax
system
has
been
blamed, and rightly, for much of
the
difficulty
in
raising
new
equity capital. Concern has been
shown
over
in
the
capital.
the
highest quarters
shortage of this type of
Probably something will
be done to widen the
but hardly
enough to
market..
.
•
,
1
v
%
cause a
must
new
1Qdo
and
rpai
dence
oniH
is
his-
.A
5%
pay
in
In
is
normal
bull
For the five
Yasicall
Sound
in
the
forced
no
the
amount
of
capital'
i
In the
increase
an
in
about the terms
be employed is
importance.
1
twenty
have
because
business
matter
For
corporations
not
low
a
a
years
needed
level
combined
of
ing capital.
Now that this is no1
longer true, all concerned are re- 1
the investor is an
important part of the
economy.
The recollection of
of
twenty
investor
gle
to
ated
the
biggest
on
ally
mentioned
as
explained
June
Sr
1947
Another
&
Financial
and
Nov.
6,
articles
in
Chronicle"
1947.
'
and
British
after
World
immediately
war
top of the last will finish the
idly
The only
place for capitangibles, re-
.......
g°
mto
ls
World
the
as
When
War
II
stocks in
presence
depreciated.
currency
in
earlier, and
detail
in
of
Whether
see
as
frills,
taxes.
have
or
peace
should
high levels for security
few
next
years
Reorganization
Bill Approved
The
the
real
Senate,
Na-
on
Mahaffie
ization
Bill
March 23,
Railroad
drawn
as
passed
Reorgan¬
in
up
taken
shortly by the House or
Representatives. The measure win
permit railroads to modify then
financial structures under super¬
vision of the Interstate
Commerce
Commission, without a rec0.urs®,;p
bankruptcy proceedings in tn
courts.
It
railroads
is
thGV
iney
provided
tna^
undergoing reorin the courts may, j
ganization
|
also
now
ripcivp
aeare,
remove
remove
the
proceed-
^ interstate Commerc
Commission for final adjudicatio .
There are still 14 railroads tn -
|ngs
undergoing reorganization u -
are
der Section
77 of the
Bankruptcy
Lctw.
,
possibility
At
present
is
a
the
National Income.1.
cut
It
in
dent
Federal
of
A tax cut
through to the investor would
will
is
1
recalled
be
Truman
measure
the
car-
a
House-Senate Conference Report.
Similar action is expected to be
reasonable
Government collects 25%
ried
new
zero.
we
Rail
Investor's
a
other place to
prices.
to the, 7'3% leve1' Whe*
done and
less
the
war,
Share of National Income
ciency,
no
preciate toward
capital into the income statement.
Restoring Level
is
capital will rush into stocks—
than remain idle and de¬
go
previous
corP?rations in 1947 had
Profits of less than 6% of the
tlonal Income.
there
rather
articles, corporations were putting
a
large amount of their owners'
Another
for the inves-
previous
the
of a
socialist government, rose as rap¬
long neglected.
see
of
France, despite the
only natural that the price policy, a determination to
party with no value other
than get the last most profitable piece
historic association
should be ig¬ of business—these are the methods
nored.
that have been so
details
depreci¬
now
currencies
lowing
piece, it was
_JThe price today
securities. If
' gardless of current earnings. Fol-
war years 1940-
^ contrast to the precedmg ten years thls. sfen?e(ito AmaJ!y
thls
Price of Investor's
Dollar
profoundly
a
on
is
currency
War I.
worse
so-
possible
have
somewhere between the de¬
French
other
+h? has
strug-
get
will
comes,
Our
1
in
For the future then
is hard In
rui uie Iucure Inen management
those years the farmer labor
1
the Problem of restoring the
tax
and managment sat
around the table and
the
18
18 malntain^ consistently,
new
cake of national
capital
will
be
income. The in¬
available whether times are
vestor got the
good
crumbs. Some con¬
or bad.
scientious managements
tried to
Karriiv
ie
a
protect the owner's
Baraiy more is needed +
to do
interest, more
is
talked about it, but in the
this than thp intent
T\/fr.T.o
than the intent,
More effi-
divided
If peace
the choices anyone
with capital faces are limited.
cietv
coflector,
scene.
stimulating effect
i9R4|' the PercentaSe expanded to
years
functionless position
a
ignores the inter-
is maintained during the next five
years, then the new position of the
with '
discovering that
that
vacuum
national political
7
Produced the appearance of
subnormal
raw
material
prices' !arge Pfofits> but .the reality of
have enabled
corporations to con- !
caPital- According to the best
tinue
comfortably on their exist- estlmate? available,
owners
of
activity
stock
make
.
which it may
of first
on
a
The
turn
in
Coming Higher Security Prices
in-
-
will
...This analysis was not written in
than the economy as a whole al-
The
market.
boom
financing easier.
new
na-
lie
stock
mi£,ht
'
capital
the
market
years 1930-1934 no
4.7%.
In
investor fared
security
ftfraJt iT
"
v
®
requirements will be met.
profits will create a boom
his
war
was
real
again,
preciation
percentage
are
j- a
depression
words
once
though nobody but politicians, Procfss
5 Peru, he might were Darticularlv hanov or nros--to
feru, ne mignt,
i
ima
Lima,
i
Commercial
shortage
healthy
a
combined ba'sis^In theN*/
New
this much every month.
2F°r
•.
for
increased
lS«SlS?Wl5l
s..
tional economy
small
in
this
and
The nervous, unstable
earned| or the'
capital will not bebe
?JP10.sPerous period—but actually
investor was still the last
terest -rates.
In other words the!group
to £e considered in the
greater the demand, the higher 1 economy.
By 1947 profits in dolthe price.
|lars aPPeared to be so good that
The
fact
that
the
owner
of
corporations according to policapital has today anything to say tl1?ans were Profiteering.
Actu&
•>
bottleneck,
The other factor in the
commodity.
may
ici
1947
(Continued from page 2)
nal
that
the greater the price,
The expansion of bank loans
of
trouble
more
pi.P{..g
drastic
be
,
,
repeated
not fictitious -the badly
ahaken investor will feel confi-
7.4% 0f the National Income. For
available,
In Stock Market
least
°iu
holog
vffiagelnPeru he'migh^a"^" 1 perous'
Capital Malnutrition
the
J;*.
be
and that these earnings
a'ld,
management
7.3%, of
York and 6%% in a small town in
the Rocky Mountain States for a
smaller
have
I
"«
Capital responds to the law of
supply and demand as readily as
appear
f
will
'
.
needed
■
.
replaced
now
dissipated—but
pay
"*r
investors' share of
others
among
ShZ" hl™7r ??«?* ffuLfr0fit"
Secretary has been talking of late. Indeed
a prerequisite to such apportion¬
in any rational or effective way.
ment
duce a substantial boom. When it
is discovered that 1947 earnings
"Statesmanship"
years.
called for the
the nati0nal income to be divided
Yes, to the extent that his capital,
was
any
forces
depression
automobile
the full twenty-one year period
time they had lqst a large part of
corporations earned for their ownthe old capital.
1 ers
7.3% 0f the National Income,
Is this bad for the investor?
it seems reasonable to believe that
appor¬
our
After World
and
the price down,
placement costs. These are typical i
'In terms of the stock market
0f management attitude at even a return to a normal 7.3% share
the best
level, during the long of the national income will pro¬
increased capital is needed for
long-term development at just the
which the
it would
other dif-
by bank (the National Income.
This perloans—and more loans will come
centage increased during World
—rests uneasily on management. ,
War I and decreased immediately
They
have
suddenly awakened 1 after by about the same amount,
this past winter to the fact that
From 1923 to 1929 Profits were
our
the careful
as
the
prob!
successfully
,
civilization."
delimitation of
a
important
over
is now facing this
7 will solve it
ticuit problems of the past
twenty
yeaJs■ •
J-be investor can look forward
m tjhe next few years to honest,
solid profits that will tempt him
to invest his money. As confidence is restored the security
cutting
widespread dissipation of capital, and in turn the size of
large part of the capital pre- management's problem.
viously held.2
I
From 1909 to 1915 inclusive Net
This loss of capital, much of
Corporate Profits were
Secretary, or some of the rest
of them, would define our "responsibilities" a little
more definitely than can be done in such terms as
"safeguarding our civilization."
to
kince management all
country
a
We do wish the
seems
raUroad"
evaporate
3
only wheri^ it appears; that capital
will se
reward!
caused
—Secretary of State Marshall.
It
com
examples as the
such
General Electric
v sis ir z
world, far stronger.
;
"This position of preeminence demands on our
part a full realization of the degree to which future
events depend upon what we
say and upon what we
do. We can no longer count
upon others to carry
objectives is fully
radio
visited
the
our
the
Dissipation of Capital
Finally, and. 11.1. la «*
before and, in relation to-
safeguarding
a
skeptkism'will
will
pany's merchandise was below re-
airplane.
At any rate
enough
technological
advances I
were made during the war to outmode many previous operations.
today is vastly different. We
ever
in
aver-
the
and
common
was
management. &
a
discount from
whether tC
bank, insurance
at
value
#
industries grew up. Perhaps after
World War II it will be television
others in the last war. They have been greatly
weakened, some all but destroyed. We, on the other
hand, have emerged from that struggle stronger
the initial burden of
I
industries.
new
War
❖
destruction which
increase
10%
business available to
duce
upon
economically than
represent
I
management; and much more
to smart management.
Wars pro-
society.
>:«
sell
book
,
?.
by
W,
inis skepticism
answered
age
is for those who do
our
automatic
an
gross
not bear immediate and
primary
responsibility for the development of events.
"We enjoyed the great
advantage of having
strong friends who not only shared our concept of
civilization but, being close to the scenes of
trouble,
furnished the first line of defense of
to which
his capita
.
ately determining factor in one situation or another.
Foreign affairs were of secondary importance to
our
people. We could afford the role of critic, which
did
is
see
of
coring
skepti
prices on a unilateral basis. Withj out prior consultation with labor,,.'
or suppliers, and with admission
will come for the reasons given ( ^ was "economically" unjustifilater; but first, just how serious is ahie,
he
threw
stockholders'
the compulsion of management to
money to the winds.
Nor will we
get new capital?
in all
likelihood see again the™ar£®ts will rise. The investor
Twelve
million
persons
have President of General Foods admit has bden bitten so badly in
these
been
added
to
our
population without apology, as he did in 1947,, last years that his price is
high
since 1940.- Roughly this produces that the
selling price of the com- today. Fair treatment will bring
udices
<
that
When
again
have the answer to the next
boom in stocks.
I think the boom
"Before
did
their
the country, for the
first time in twenty years, will
make all decisions with one eye
on
the
investor.,, We will
not
head
Put
curities
throughout
Obvi¬
use
being
you
tion,
-
the
on
ously there is no point in the in¬
vestor entrusting more capital to
lutv
bank management.
lumtcectttctt,
What will change the investor's
tory.
George C. Marshall
rate
reasonable
a
capital they now control.
responsibility
,
of the
This is the basis for the belief
stocks, for instance, sell below as¬
value, as they do in general that good times are in store for the
today, it is but another way of investor in 1948 and subsequent
saying that the investor does not vears—iust as good times were
think bank management is able to ahead in 1922-1923.
Management
earn
restori™
Today the investor is
set
national
the United States has been
pro¬
than any
eye
vestor to
understanding of what such re¬
sponsibility entails. We in this
country have been given no such
opportunity. In a single decade
jected into
go a long way toward
the normal 7.3%.
irmal
dollar is still a fair return.
Management able to convince the
investor that it would be
Profit¬
able to put more capital at their
disposal will be able to secure
that capital.
tor's
equity capital is the jaundiced
with which the investor views
the
ability of management to
make it worthwhile for the in¬
of
Onr
Thursday, March 25,
1948
CHRONICLE
FINANCIAL
&
about
believed
present
proval.
vetoed
a
the
form
year ago,
measure
will
•
that Vre
a
simi
bu
in
meet his ap
Volume 167
Number 4684
THE
Indications
^own°,0fi^g statistical either for
tabulations
n
rs
AMERICAN IRON AND STEEL
co umn
are
PETROLEUM
Crude runs
to
cover
(bbls.)
Kerosine output
(bbls.)
~_2
IbbTs
oil and distillate fuel oil output
fuel oil output (bbls.)
stocks at refineries, at bulk terminals,
Finished
and
Kerosine
oil
Gas
that date,
Previous
Month
Week
Ago
or,
1,725,000
1,757,400
93.6
1,687,100
1,697,400
5,347,175
5,311.000
5,378,000
15,451,000
2,821,000
15,429,000
2,508,000
7,694,000
5,937,000
8,742,000
8,833,000
unfinished
(bbls.)
gasoline
(bbls.)
at
107,763,000
10,408,000
104,824,000
9,843,000
-Mar. 13
at
distillate fuel oil
and
Residual fuel oil
-Mar. 13
irtTanTitVndln'nlDeTi^T
(bbls.)
ASSOCIATION
OF
Mar. 13
at
AMERICAN
RECORD:
,
CONSTRUCTION,
:
,
.
Total U. S. construction—...
Private construction
rrivaic tuiiouuuuuu
and
36,195,000
50,038,000
,~
Mar!
13
ENGINEERING
coal
in
^
ai.iu
Mar. 18
Pennsylvania
output
Total
42,912,000
82,520,000
49,336,000
23,756,000
19,082,000
14,892,000
2,804,000
•
Mar. 13
IIIII"
13,314,000
*13,035,000
11,230,000
1,176,000
1,038,000
135,200
_,
*
126,300
All
INDEX—FEDERAL
AVERAGE=1O0
Mar. 13
_
279
*266
267
URBAN
(in 000 kwh.)
Mar. 2o
(COMMERCIAL
STREET,
5,145,430
Finished
steel
iron
&
5,254,002
PRICES
106
102
107
47
U.
Export
Lead
Lead
Zinc
refinery
tin
(New
(St.
16
II— ~Mai\ 16
,11111 Mar-16
$476,000,000 *$499,000,000
(East
St.
-
231,000,000
U.
S.
M.
J.
3.23940c
Average
Mar. 17
at
:
3.23940c
2.86354c
$40.29
$40.37
$40.37
$33.15
Private
$39.75
$39.75
$40.08
$39.61
Public
;
21.200c
21.200c
21.200c
Total
153,000,000
71,000,000
*65,000,000
41,000,000
*19,000.000
9,000,00©
*7,000,000
*11,000,000
8.000,000
1,000,000
*1,000,000
1,000,000
$474,643,000
CONSTRUCTION—EN¬
NEWS
RECORD
U.
—
Month
of
S.
construction—
and
of
February:
PRICES
DAILY
21.650c
22.150c
94.000c
70.000c
Bituminous coal and lignite
15.000c
15.000c
15.000c
Pennsylvania anthradlte
14.800c
14.800c
14.800c
14.800c
Beehive
12.000c
12.000c
12.000c
AVERAGES:
coke
Oven
111.25
100.73
100.71
104.71
111.25
111.07
117.40
(net
OF
116.22
116.22
114.85
114.66
110.70
110.15
MINES)—Month
(net
103.64
coke
105.86
105.69
112.93
112.93
112.75
118.40
115.24
115.24
115.24
Crude
121.04
105.34
112.75
Refined
In
of
(tons
Mar. 23
2.45
2.45
4,240,000
*603,424
528,510
6.468,330
5,864,906
6,489,537
6,201,960
5,886,474
5,618.586
603,063
3.10
3.11
2.78
Mar. 23
2.83
2.84
2.84
2.54
2.90
2.91
2.92
tons)
583,374
911,859
1,039,633
797,021
;
February:
U.
to
2.64
lbs.)———
2,000
83,052
S.
*82,427
74,560
93,588
102,314
97,598
106,823
118,855
122,157
70,146
71,533
88,368
customers—
A.
of
(tons
2,000 lbs.)
2,000 lbs.)_:^——
at end of period
(tons
——
2.18
3.10
Mar. 23
c
2.45
Mar. 23
.
(net
(tons of 2,000 lbs.)__
Deliveries
of
:
51,482,006
4,921,000
Copper production in U. S, A.—
AVERAGES:
Bonds
of month
COPPER INSTITUTE—For month of
Refined copper stocks
Average corporate
Jan.;
1
tons)_
Oven coke stocks at end
110.34
Mar. 23
DAILY
of
tons)———
(net
117.00
103.64
Beehive
120.22
110.70
103.47
Mar. 23
YIELD
tons)____
tons)
(net
cost
(net tons)_»—_
(net
tons)-.
122.29
116.41
115.04
..Mar. 23
_
;
,
(BUREAU
Production
100.78
Mar. 23
Group
54,980,000
4,675,000
10.500c
Mar. 23
Public Utilities Group
Industrials Group
28,757,006
'< 1
21.725c
94.000c
15.000c
.Mar. 17
at
99,167,000
(BUREAU OF MINES)—Month
.Mar. 17
at
127,924,000"
56,167,000
48,390,000
_____
228,567,000
603,424
.
178,259,000
550,000
Municipal
$356,491,000
207,529,000
234,426,000
113,385,000
_____
$441,955,000
227,010,000
247,633,000
construction
construction
21.450c
Mar. 23
Govt.
109,000,006
25,000.000
etc.«_—__________
94.000c
Mar. 23
S.
*262,000,000
79,000,000
3,000,000
.Mar. 17
Mar. 23
U.
221,000,000
21.000,000
.Mar. 17
II
at
Bonds
BOND
*480,000,000
109,000,000
68,000,000
etc.
construction..—
alterations,
COAL OUTPUT
21.225c
Mar. 23
MOODY'S
42,000,000
451,000,000
228,000,000
.Mar. 17
York)
corporate
Railroad
*66,000,000
155,000,000
alterations,
building
ENGINEERING
3.23940c
QUOTATIONS):
at
Louis)
BOND
Govt.
*164,000,000
69,000,000
—
*269,000,000
176,000,000
residential
COKE
MOODY'S
$230,000,000
S.
non-residential
State
York)" at
Louis)
$12,976,000
134,248,000
&
refinery
(New
651,000
$12,965,000
February:
.
Straits
Jr66,OO0t
711,000
,
Electrolytic copper—
Domestic
1,396,000
820,000
of
;
non-residential
CIVIL
2,837,000
VALU¬
THE
_______
residential
GINEERING
Mar
ton)
gross
(E.
OF
LABOR—Month
—
Additions,
Mar>18
ton)
gross
(per
PERMIT
AREAS
OF
New
4,759,066
BRAD-
___
(per lb.)
(per
Scrap steel
METAL
INDUSTRIAL)—DUN
INC
5,284,641
COMPOSITE PRICES:
IRON AGE
Pig
AND
3,410,000
$25,619,000
,
Additions,
$7,654,000
2,509,000
979,000
.
DEPT.
Federal—all
238
1,705,000
1
—
non-residential
New
INSTITUTE:
356
1,346,000
liabilities—:.—____
building construction
New
••i 238
70
$6,892,000
,
alterations, etc.
Non-Federal—all building construction—.^—
RESERVE
22
1.987,000
______________
Additions,
SALES
2®
29
'
New residential
New
23
417
liabilities
IN
34
$17,897,000
_
liabilities
service
S.
92
43
153
44
_______
108
22
__
CONSTRUCTION
ATION
137,900
126,700
151
BRADSTREET
number
liabilities
BUILDING
1,195,000
■«
251
1,842,932
35
liabilities
Total
13,396,000
1,214,000
Mar. 13
—
*251
*1,980,075
165
New
FAILURES
&
___
26,560,000
30,254,000
45,643,000
-30,751,000
251
1,946,927
$109,080,000
46,660,000
■
$88,555,000
183,184
_
service
Commercial
$95,996,000
2,649,348
237,464
144,827
February:
number
—U.
Mar. 13
STORE
ELECTRIC
Electric
$90,318,000
32,729,000
57,589,000
38.877,000
18,712,000
reporting
(tons)—_
December:
(tons)
SYSTEM—1935-39
of
number
Manufacturing
and
Beehive coke
EDISON
742,009
MINES):
lignite (tons)
anthracite (tons)
DEPARTMENT
841,147
669,847
233,368
169,028
transported
number
Construction
Mar. 18
Bituminous
734,262
722,851
3,069,994
2,608,912
266,000
number
Retail
Mar. 18
Mm-
OF
792,571
711,433
NEWS
;
BUREAU
'
carriers
Construction number
j
I"
S.
797,033
1
2.987,107
2,769,608
—
ASSOCIATION—
FAILURES—DUN
INC.—Month
Manufacturing
Retail
Ago
Month
January:
motor
freight
Wholesale
Year
Month
3,204,636
For
—
therms):
Wholesale liabilities
Federal
(U.
of
of
of
BUSINESS
43,217,000
M_r
TfcarsTIIIIZIII
municipal
OUTPUT
Month
Number
Volume
10,601,000
33,269,000
48,114,000
<M
TRUCKING
Commercial
—
Public; construction
State
32,749,000
48,546,000
AMERICAN
RAILROADS:
Revenue freight loaded (number of cars)
Revenue freight rec'd from connections
(number
ENGINEERING
111.474,000
Mar. 13
.
(bbls.)
4,844,500
4,928,000
111,918,000
9.677,000
32,108,000
.Mar. 13
at
ASSOCIATION
Natural gas sales (M
therms)
Manufactured gas sales (M
therms)
Mixed gas sales (M
therms)—
15,005,000
2,190,000
7,354,000
8,700,000
GAS
of January:
Total gas sales
Previous
Month
5,352,900
Mar. 13
of that date) :
are as
Latest
AMERICAN
97.0
5.407,000
15,608,000
2,547,00
; 7,754,000
9,292,000
.Mar. 13
month available (dates
or
oi quotations,
cases
Ago
97.5
5.264,850
-
)
in
41
Activity
Year
-Mar. 13
-Mar. 13
.
?;
on
Mar. 13
•
~~
Gas
COAL
month ended
95.7
Mar. 28
Residual
CIVIL
or
Week
Mar. 28
(bbls. of 42 gallons
each)
average (bbls.)_
(1349)
production and other figures for the latest week
Latest
INSTITUTE;
_
,
CHRONICLE
INSTITUTE:
stills—daily
Gasoline output
'
FINANCIAL
oil output—daily average
Crude
"
&
of Current Business
the week
Indicated steel Operations (percent of
capacity)
Equivalent to—
Steel ingots and castings produced (net
tons)
AMERICAN
COMMERCIAL
DEPARTMENT
SERVE
STORE
SYSTEM
—Month
of
SALES
—
(FEDERAL
1935-30
RE¬
Average=100)
February :
'
?:
Mar. 23
Railroad
Group
Public Utilities Group
Industrials Group
3.13
3.13
3.16
2.80
Adjusted for seasonal variation__:_:__:___ii:;
283
283
266
3.53
3.53
3.15
Without
237
224
222
3.40
3.41
3.43
3.02
3.01
3.01
3.02
2.73
Mar. 23
.
3.54
Mar. 23
1,
Mar. 23
Mar. 23
Baa
2.89
2.89
2.89
.2.60
S52.27
*$52.74
$47.10
55.71
*56.52
48.62
*48.78
40.6
*41.2
41.0
*41.7
seasonal
EARNINGS
FACTORY
WEEKLY
DEPT.
MOODY'S
COMMODITY
NATIONAL
ITY
INDEX
FERTILIZER
INDEX BY
Mar. 23
:
ASSOCIATION—WHOLESALE
407.4
411.7
HOURS-
AND
AVERAGE
OF
—
ESTIMATE —U.
LABOR—Month
of
S.
January:
Earnings—
All manufacturing
423.6
409.3
adjustment
Durable
COMMOD¬
goods
Non-durable
GROUPS—1935-39=100:
2—__________
goods
_——
—
Hours—
Foods
Mar. 20
Fats
Farm products
Cotton
,
_
____;
Grains
Livestock
226.2
227.6
223.6
246.2
242.1
243.5
328.3
Durable
Mar. 20
___.
232.1
251.5
251.2
248.2
249.8
Non-durable
Mar. 20
oils
Mar. 20
322.5
319.7
303.3
332.7
Mar. 20
and
266.7
264.6
263.8
245.2
All
manufacturing
—
_____——
All
Metals
Fertilizer
Farm
materials
Orders
received
211.7
210.5
163.5
163.5
163.5
147.9
233.4
232.8
232.8
203.<
156.8
157.0
157.0
154.1
137.7
137.6
137.6
128.(
143.0
133.7
143.0
143.7
138.1
138.1
137.2
214.8
214.3
Index
of
MAGNESIUM
OF
Production
(tons)
Percentage
of
at
AND
DRUG
REPORTER
PRICE
Railroads
188,537
193,205
183,376
102
104
101
104
481,757
480,791
450,393
Utilities
595,648
"
,
Banks
145.9
146.4
146.9
159.8
160.4
159.7
148.?
.Mar. 13
184.9
187.1
Mar. 13
——
S.
DEPT.
:
-
'Foods
Hides and leather
—
171.2
172.2
.Mar. 13
1
products.
Chemicals
and
Miscellaneous
187.9
146.7
:
131.6
98.8
155.7
154.8
140.2
192.5
192.1
192.0
175.3
136.5
136.6
134.0
700,000
143,7.
143.6
137.7
119.4
120.2
113.0
.Mar. 13
119.5
of
5.6
4.6
6.5
6.8
5.4
OF
Feb.:
(25)
AMER.
3.4
5.8
5.5
4.7
of
$750,734,787
$807,428,182
631,150,228
$685,629,934
615,855,516
82.03
78.17
78.63
$79,004,455
$80,843,092
$75,131,474
41,297,152
80.022,688
58.498,861
19.000,000
58,000,000
31,500,000,
4.2
■;
>
-
3.3
(ASSOC.
ROADS
I
RRS.)—Month
January:
——_—__
'
4.6
—
operating revenues—.——_
T&xcs
4.7
4.8
3.5
______—
(10)
——
*****
—
539,120,865
126.1
.May. 13
commodities
131.7
155.9
.Mar. 13
products
goods
145.9
.Mar. 13
allied
■
138.3
131.7
—
YIELD
STOCKS—Month
operating expenses
Operating ratio—per cent.
175.7
145.9
:
Total
166.5
<
.Mar. 13
.
materials
Housefurnishings
196.2
.Mar. 13
products
Fuel "and
lighting materials
Metal and metal
products
Building
187.1
173.3
.Mar. 13
Textile
275,000
January:
Total
384.?
180.9
s
of
(25L
(15)
OF
LABOR—1926=100:
OF
All
314,000
(DEPT.
:
EARNINGS—CLASS
RR.
WHOLESALE PRICES—U.
commodities
Farm products
(125)
(200)
*Revised figure.
155.4
Mar. 13
.Mar. 13
AVERAGE=100
132.5
of
—
PRODUCTS
AVERAGE
Average yield
INDEX—1926-36
at middle
pounds)—
COMMON
Industrials
Insurance
PAINT
WROUGHT
WEIGHTED
163,207
179,819
Mar. 13
1
,
(tons)
Employment
(1935-39 Avcrage=100)
(in
158,637
255,552
Mar. 13
__
_
activity
Unfilled orders
188,104
Mar. 13
—_
(134.2
COMMISSION—
COMMERCE)—Month
Shipments
200
.Mar. 13
.
j-
COMMERCE
Railway
February
199.:
—
i26.r
216.5
goods
INTERSTATE
ASSOCIATION:
(tons)
U31.7
5.5
211.3
MOODY'S
NATIONAL PAPERBOARD
*1.196
6.9
210.8
Mar. 20
.
*1.356
'5.9
Non-durable goods
Mar. 20
—
combined
*$1,279
1.213
-i_—
163.6
iLMar. 20
—
groups
Durable
164.9
169.7
Mar. 20
!
■
machinery
All
242.5
220.8
172.8
.Mar. 20
.___
.'
drugs
Fertilizers
240.5
220.8
173.5
Mar. 20
materials
and
241.6
220.8
—_Mar. 20
I—_____
______
Building
Chemicals
241.0
Mar. 20
Textiles
40.8
$1,289
1.359
manufacturing —'
Mar. 20
commodities
40.1
Hourly Earnings-
.Mar. 20
Miscellaneous
-■
_
—,
goods
Mar. 20
'
Fuels
OIL,
goods
,
Net
Net
railway operating income before charges
income after charges (est.)——
TRAILER
131.7
COACHES—HOUSING TYPES ONLY
(DEPT.
OF
Production
Shipments
Shipments
COMMERCE)—Month of Jan.:
(number
of
(number of
(value of)
5,508
4,309
units)—
5,303
4,093
—
5,098
5,042
S7,222,334
units).
$8,788,434
$8,287,711
Special groups—
Raw
I
articles
Ail
other than
rnmmnri(tiAs
other than farm
"Revised figure,
farm
j
173.4
154.1
155.6
TRUCK
145.0
TRAILERS
—Month
154.3
154.3
154.5
142.1
Production
.Mar. 13
154.2
154.4
154.9
140.5
.Mar. 13
Shipments
products and foods—
.Mar. 13
147.3
147.3
-
commodities
176.5
153.7
products
Manufactured products..
All
174.9
164.1
.Mar. 13
.Mar. 13
materials
Semi-manufactured
147.5
130.0
Shipments
of
OF
(DEPT.
January:
(number
of
;.
COMMERCE)
..
units)
—
(number of units)
(value In dollars)
3,482
3—
3,285
(Preliminary figure.
7.511
$9,090,839
...
$10,879,562
1
'Revised figure.
.
5,781
_
Uucrease—all stocks.
$12,253,522
42
(1350)
(Continued from page 10)
forces with
currently
which
dealing.
The
rlinA
cline
are
of
process
and
far
so
the unfavorable
as
we
inventories, could
figures red.
Many
divisions
efficient.
Why Have We Had
a
We
have
which
nomena
had
not
the
ordinarily
duce
phe¬
have
we
had
22
months
the
which
have
principal
worried
pessi¬
ling
blind
has
industrial
pro¬
about 90% above the
is
1935-39
It
average.
optimism to
level to continue
borders
war
of
In
the
trial
past
needs
for
two
years
equipment
at
rate
a
seen
expansion programs
being completed.
In
to
supported
the
by
bonds
the
their
banks,
new
money
borrowing
quality of
or
the
securities diminishes.
they seek
new
When
from their
money
stockholders, the earnings of their
stocks
diluted by the greater
are
sumer
lending have shown great
advances.
has been
With
Often
in
a
the
creasing,
need
to
a
weak
stock
are
to their
fi¬
market,
unfavor¬
With loans
high in relation
reluc¬
bond
new
offerings
ably received.
in¬
money
are
already
own
favorable
•
two
much
basic
of
nomic indices
1939
Many of
are
normal.
as
probably
based
our
1935-
on
But 1935-39
subnormal
instead
units
of
of
goods
production
capi¬
much goods at the higher
prices. Nor will his income do so.
assets.
used
Those
up
whose
popu¬
their liquid
incomes
relatively fixed have
pecially hard hit.
been
are
es¬
The Federal Government is de¬
flating. It is withdrawing
purchasing power from the
of
more
econ¬
than it is putting back into
the spending stream, for the first
omy
ment,
possible
markets
to
low
by
We
the
big
witnessing.
be
days.
cause
duce
it
is there that
the
maximum
it
can
pro¬
deflationary
efect.
is in the process of
manent
lar
break-even
points.
it
has
high
Industry's
"cost of living" has also risen
pre¬
cipitously. Profit margins are not
as
high as we would normally
expect in
a
boom.
Many of them
keep its in¬
Recently govern¬
ment bonds have tended to rally
away from the
peg points. The
banks
whole
factors
they
are
in -the
not
are
to be
on
The
carefully
as
the
bad
as
to
tion
This
not
excesses.
satisfactory stock and-bond
a
per¬
future
much
scrutinized,
they appear
investment
It, is
adjustments are being made
individual industries as
Thoueh
the
adjustments,
over-all
activity continues
satisfactory level.
Backlogs
of
demand
are
at
a
houses
and
near
power
of
has declined since
the
peak
war
(due .to an
over-rapid rise in prices since the
war), purchasing power has in¬
creased
years.
the
greatly
since' prewar
Our figures indicate that
American, after
average
ing his taxes,
ent
years
income
pay¬
out of his pres¬
can
buy about 40%
in
And
present
that
there
enough
apartments,
autos,
electric
rate
automobiles,
if
the
could
interference
not
may
yet
it
is
be
assets
times prewar.
than
diate
less
Labor ef¬
if
riods
goods
same
when world
as
in
past
goods
pe¬
were
in
oversupply.
It is true that
business failures
1947.
this year at
present price
government
year.
as
high
as
Moreover,
be at very
Still
for
support of the
farm prices will
satisfactory prices this
more
important, farm¬
have used their
prosperity to
reduce debt. This time
they won't
lose their farms, even if
prices de¬
cline further. Industrial
from
than
prices
1939 to
half
as
demands
capacity,
continuation
of
the
we
or
ac¬
boom.
than twice its prewar peak.
Private debt is low in relation to
more
probably
upon
can
off at
pay
of
interme¬
as
in¬
an
avoid those
even
savings
bonds.
wait
to
and
in his
he probably
dynamic trend
favor. If he has
little
longer for rising
over,
long
a
working
domestic
:
world-wide need for
a
will
regardless
government
has
national income and liquid assets.
demand is
grades
fluctuations; and
able
a
term
prices, he's likely to be
goods, for much of which we are
the only practical source of sup¬
ply-, :.
; v'•;•'■■■ - •
sated
meanwhile
dividends.
by
From
the
compen¬
handsome
-
standpoint
.
if;. There is some evidence
eventually revise
in
a
manner
of those of
shall
we
vestment
tax system
favorable to
our
more
yet
may
our
use
power
as
a
long period of
There
is
a
deal
for
if
the
■
in the in¬
shall
we
clients best in
them to
urge
we
months
coming
profitable
ment.
evi¬
of
run
long
probably providing
v
peace.
great
a
serve our
regard"
nation to lay the groundwork for
are
profession,
the
private enterprise.
There is growing evidence that
we
who
us
probably
long
,
as
opportunity
an
invest¬
term
■-
The Inflation Tide Going
(Continued from
inflation
V
-
>,
I
leave
Wage
aside
for
the
of
expanding
1948 have risen less
much as farm
prod¬
lixed
added; and,
on
the other hand, net profits
could rise considerably more than
earnings
take
of
and
employees,
increasing shaTe of the
national income, while the share
of the other income receivers de-
moment,
the
an
clines.
demand
;
60 cents tor
say
costs and net profit is
Inflation
preliminary stages where
impact
material costs still the same
the
and
Out!
1
15)
markup of
respectively.
Profit
the
page
and
raises prices without
able to elicit
want
to
a
as yet
being
larger output. What
stress
here
is
that
Impact of Wage Demands
the
profit inflation is inevitable, that
profits must rise sharply even if
is
given
time
to
characterized
wage
of
of
the
existing apparatus
There
are
two
Profits will rise, in such
as
is the
"ill
fixed
be
creased
costs
spread
sales
of
the
over
a
volume.
paradoxical
arises. On the one
boom.
Thus
higher
e.g.,
to
a
dollar
of
labor
characteristic oi
is
always
a
grea
the one hand, it rais*y
level of costs, espe¬
cially also in manufacturing i *
dustries the level of prime cos
on
general
and,
on
the
other hand,
it ad
*
purchasing* power to an a*
ready " over-expanded
demai
new
However, in most business eye: •
are certain
dampening ia
there
tors
a
than
There
because,
the
|
hand, the gross ;
profit markup on the
firm's basic !
costs for labor and
materials (the
prime costs) is not
before,
are
danger that this wage movemeni
leads to a new round of inflation
manu¬
situation
phases
inflation, not only wartime
inflation, but also of the credit in¬
flation which characterizes any
enterprise
greatly in¬
seemingly
bonus,
share of wage
the
of any
industries, net profits
substantially because
rise
the
can
in most
restore
income in national income. These
marginal
case
not only
kind of cost of living
to
two
as
agriculture and mining,
together with prices.
Barring the
opening of new land and new
facturing
from the
a
but
fields
costs
earners
rising prices, by asking
for
production.
reasons.
by
loss of purchasing power
ex¬
pand, in response to the stimulus
of higher
prices, by a better util¬
ization
of inflation is
the attempt of
to make up for tne
The second phase
mines,' ; production can be
in¬
tending to rise; but
possibly creased in these fields
only at ris¬
be
equally impressed ing costs.
/■
v' v'y^.y'■
with the fact that
they are still
But even where the
relatively low.expansion
of output and the
improvement
Even
with
the
recent
sharp of utilization can be;
achieved
break in farm
commodities, farm without the increase in
in
other
From the standpoint of the stock¬
holder. most of his bear market is
should
income
the
fluctuations if he chooses redeem¬
three
are
we
the
a
dividual he
National Income is
?Superimposed
high
maturity
barring
;of outside fac¬
more
are
production
the
have
his
supply the
Purchasing power is huge. Liq¬
uid
y;
far
are
the effects of
devaluation of
foreign currencies
under
present
conditions
of
world-wide
shortages of
will
of
Turning
to
theinvestment
problem itselfFrom the stand¬
point of the bondholder, though
his bear market may be young,
is
'
tors.
were
the high level of
activity, appears
to be higher than in
1939, even if
it is much less
than might ' be
doubtful
all
industrial
our
centuation
1947
example,
for
we
the
At
demand for several years,
lot
a
■
is
It
at this
prices
ficiency, largely as the result of
technological
improvement
and
It
developed
against them.
fabulous
are
than in 1946.
to
ament
of passenger
production
Qf
doubtful
the general price struc¬
numerous
eco¬
severity of *1921. It is even pos¬
sible that if we are to add rearm¬
the primary favorable
satisfied.
from
far
brought its weight to bear
difficulties
many
troubles fac¬
have
improbable that we are
time facing a depression
commendably attempting to de¬ within limits, themselves the deown
debt, the rate of de¬ termining factor of the price level,
Let us briefly
flation is low in
analyze the two
relation to the
inflation that has
already taken phases, profit inflation and wage
Labor
also
we
is
flate its
upon
political
cushions
many
is
which
us,
have
we
and
shall
While the Federal
Government
and
Conclusions Can We
draw?
■
1929.
have
common
long lapse.
a
more
The domestic need for goods
more
ers
still
very great in important sectors of
the economy. We do not
yet have
anywhere
accom¬
purchasing
individual
levels, could be about
Meanwhile, despite all the fears
very
was
plished.
more
many
the
mar¬
achieved.
individuals already have
their houses in order, or at least
know how they would
proceed to
handle business reversals. Piece¬
all
financing
money
ture.
private
and
cau¬
and
fully
likely that after two years of
warning many businessmen and
by
Only
psychological pressures
by
government
fiscal
policy restrain them. Despite un¬
unfavorable
and
ca¬
imposed
in¬
even fear¬
attitude of caution does
breed
is concerned.
so
place
community is cautious,
ful.
do
are
surface:
business
huge
pacity to expand their loans fur¬
ther, so far as their legal power
our
world
making
many of the
have
Americans than there
likely always to be
higher than in the past.
When
themselves
1929.
revaluation of real prop¬
terms of currencies. Dol¬
measurements
great powers to
terest costs low.
regard
that this pattern
may
reestablished in 1946
been
upon
are
to
good
as
factors:
to
more
business
Industry believes
has
are
year
overimpressed
The
likely
remain
low since the Federal government
is a primary borrower and still
creased the supply of dollars since
prewar
they
nor¬
their turn comes.
banks, be¬
with past perods of trouble. More¬
over,
These
stated
be
should
and
can
low compared
very
in
dollar' totals we
We have greatly
heavy
the
still
are
at
levels of activity.
may
ing
why the worst is un¬
reasons
Thk
mounting
prior tn
which
us
their
tops
of
tops
suppose
after
But
stated negatively
but
could
our
to
have
how strong they are.
the rebuttal was
—as
of
long term invest
ments, no matter when they
were
bought. It is not wholly
irrational
positively.
goods
with
see
rates
tending to rise,
led
nomic
Interest
of
of
1929
likely to happen at this time. It
are
term
stocks
some
market
"pattern"
long
they are—then
what
see
bull
Though
torically high, they are low as a
percentage . of national
income.
he
coincide
present
(2)
his¬
are
to
to
0f
at most
marked
penetrated
the
was
have
we
the
first
loans
indices
merely exam¬
unfavorable factors-
far
thrust,
we
previous
Favorable Factors?
So
further
one
utterly disregard the far*
that in 1946, for the
first time
since 1929, all the stock
Positively
Are There Any
ined
consumer
year-capable
only
But
What
before
years
than
^rowing world interests, rising
living standards
we
may
find
today's normal is not too far be¬
meal
on
banks and
as
abo5
months.
they were in
be
may
low
as
units
Widening
time in about 17 years. It is
using
its
budgetary surplus to bring
pressure
It
come.
only
Considering population
growth,
technological
improve¬
economy uk V
We continue to
worry
a
bear market that
may alreaH,
be in its final
strengthen our friends; Eng¬
may
been
1929.
The Marshall Plan
fact that:
the
some years
be
may
are
as
to
for
90%
mals.
further.
Purchasing power of the indi¬
vidual has declined since 1944 and
1945. His liquid assets will not
relation to prewar
some
25% higher than present-day
counts
have
were
depression
being
"normal," it
erty in
Important segments of the
eco¬
years; it is certain that they were
years
of
great
unemployment.
surplus, banks are hesitant
expanding their loan ac¬
lation
the
concerned, we should take
ation is
considerable encouragement from
exports will remain very high in
kets last year, a great deal of new
that
underlie
units of goods.
about
buy
fac-
—
becoming
declining bond
encourage
stock
tal and
this
is
a
underwriters
nancing. In
new
for
money
market,
the
past
sign of trouble.
harder to get. In
tant
con¬
again duplicate their sensational
1947 performance, with a Marshall
Plan we can have confidence that
,
above
money, commercial loans and
the
accepted
Nor should
pessimistic thinking:
(1) We may be overimpressed
by the "height" of the boom in
ings, dividends are kept abnorm¬
ally low in relation to those earn¬
ings. '
Reflecting the huge demand for
war.
blindly
probable
fallacies
Thus,
,
is
rule out
can
,
is
number of shares. When
they try
to finance their needs from earn¬
.
situation
one
be
disregard
It
a
they seek
from
not
tors.
have. When
No
possibility of
we
na¬
production, at
high prices, with large inventories,
issuing
international
must
The high level of
more
the
have
without examination.
indefinitely
great deal of moneythan
many
corporations
to
as
These unfavorable factors must
be taken most seriously. But they
tions to pay.
requires
We
of elec¬
year
Is There Anything Wrong With
This Pessimistic Appraisal?
are
by the ability of the foreign
a
certainty
recently lis¬
strong proposals for the
of price controls, alloca¬
The
the
be
It is
no
deplorable.
past year we have
exported goods and services at an
unusually high rate—too high a
rate
sharp
a
tions, ^excess profits taxes, no re¬
duction
in
the present stifling
rates of personal income taxation.
before. An important number
(d)
effect
to
revival
we
of
now
experienced
with
tened
never
these
depressing
_
land, France, Belgium, The Neth¬
equipment, public highways m
erlands
and
Luxemburg
have
good repair. We have certain basic
formed a hard core of military
shortages, such as in steel and
defense argainst communism; we
labor supply, which prevent the
ourselves are awake to the prob¬
other shortages from being filled
lem and seem to be choosing to
much more rapidly than we are
make ourselves militarily strong.
now
doing.
All "bear" markets eventually
While
inventories
are
higher
end.
This one is 22 months old.
than
ever
before, they do not
The average bear market in stocks
seem
to
be
especially high in
in the past 50 years lasted only
relation
to
the - level of
sales.
19 months. The longest was 34
Though plant and equipment ex¬
months.
At best, the bear market
penditures
may
diminish from
have
ended.
At
last year's historic level, they are may- already
likely to remain rather high this worst, it would be reasonable to
year.
Though exports may not expect that we were in its last 12
1946, and 1946 was high.
Though commercial loans of the
outcome.
plant and indus¬
new
a
ities, oil industry equipment of all
kinds, rail equipment, agricultural
they go
tion
already been filled.
built
exerted
is not clear.
(b) Inventories have been built
to unprecedented levels.
(c)
In the past,
foreign currencies
next.
of
The American political situation
up
have
ster¬
break.
civilian goods. Now we are filling
those abnormal backlogs. Some of
them have
pound
r\rrvHiinfirm
production anH transmission —
and transmission fSCli-
recently
a
built
we
The
American prices and exports.
Business failures are tending to
Farm products prices have
indefinitely.
During the
large backlogs
reviv¬
generating equipment, natural gas
our
economic frontier*
pushed
back again
that we have regained
the dv
namic quality which
had alwav*
characterized our
have-
nearly as vulnerable.
As^far as the international situ¬
be
rise.
This boom is supported
by sev¬
eral non-recurring factors:
(a)
is
reappear¬
on
on
such
expect
running behind
are
be
may
revaluation
Index,
duction
to
Foreign currencies such as the
lira, ruble, and French franc are
factors
the
re¬
Im¬
numerous
Competition
ing; buyers markets are
ing.
As measured by the Federal
Reserve
rise
continue
schedules.
in production for eight successive
years.
risen
to
industries.
Some have already cut production
of
continuous boom
a
have
declined.
strikes
being revalued.
We have had
not
are
likely
business
shipments in
mists:
up
rates
are
New orders
declining or sidewise movements
in stocks, and 23 months or more
falling bond prices.
are
labor
threaten.
of
Here
if
portant
accom¬
Employment,
business
activity,
earnings, dividends, have all risen.
Yet
many
further, would be difficult to
long bear markets in stocks.
pany
turn
are numerous.
of
Wage
sharply,
very
"Bear Market"?
nrinw
•
Labor difficulties
factors,
recognize them.
can
in
black
will be to examine both the favor¬
able
low by any standard. A dein
r*r»
in vnlnmo
volume, or in the price
are
we
dence that
not therefore
prices, should
ucts
Current Investment Prospects
nomic
Thursday, March 25, 1943
FINANCIAL CHRONICLE
&
THE COMMERCIAL
preventing
the
^
cumulat
effects of profit inflation
wage inflation from becoming
Plosive.
The
main
of_
that t
have
characteristic
postwar period has been
dampening
effect?
>
167
Volume
Number 4684
THE COMMERCIAL
&
FINANCIAL
CHRONICLE
reduced and. that the is very
unlikely that this in- oess saving performed in 1947
itarian reasons.
price rise has obtained a differ- creased
What about the
employment in construc¬ currently
ent pattern and a higher degree tion
equalling 160% of div¬ two others?
took
away
workers
from idend payments in contract to the
; of intensity.: . The fixed income reI shall limit the discussion
consumable goods
to
industries, since, .Isual" 50%, we shall realize that the
ceivers have .been
able, thanks the mobility of
measures
of tax
policy and
workers betwebri r substantial declipe in
largely to the accumulation of
industries, is not great. But the .demand can materializeaggregate credit restriction as proposed now
without from
wartime savings, to maintain, de¬
various sides.
intensity of investment activities
causing more than the reduction
spite rising,prices, their effective in general
In general, of course, tax ,reoverstepped the bounds of profits to normal. We move
demand "for
consumables
of the useful.
to
a
duction is inflationary, unless the
here in fhe realm of
surmises; for
| larger extent than otherwise could
Again, as in the case of
it is, of course, possible than an Government spends commensube expected; technological
wage
prog¬
rately less; but, as shown before,
inflation, the lack of control
economy accustomed to
high
•(1351)
largely
.
.
posing
has been retarded during the
period of transition
or
reconver¬
sion from war to peace and partly
also because of the psychological
>.'■
difficulties
workers, encountered
adjusting ; to a completely new
in
largely, disappointing; situa¬
tion.
And ' thirdly, as
already
and
pointed out, the elasticity of
mechanism
credit
immensely;-'
it
has
the
increased
would
finance
very
of
the
money
played
an
and
credit
profits
Volume
important' rolev-' One mistic
doubt that domestic
invest¬
ment would have
increased to the
may
same
extent
amount of
available
to
have
We
why
reasons
-
indicated
above
the
rise in profits and
a
prices was quite inevitable during
wartimes, though it must be re¬
that
membered
the extra
a
profits
large
part
of
were taken away
by excess profits taxation.
It
was
for consumables
current
rate
prices
resist
.
croaehment
of
the
national
in
its
share of labor.
fiently
it
taken
'
in
What
is
if
was
less
the
somewhat
.for
capital;
there is
in
free
to
mechanism
enterprise
cause
"absorb"
with
earnings
secondly, that
automatic
no
the
also
increased
and
which would
to
was
of
rising prices and of the
that a higher level of utiliza¬
fact
,
the
than
account
tion must be associated
•
not suf-
that
was
due
the
on
first
profits
appeared
en-
share of prof¬
income
realized
C increase
the
system
entrepreneurs
increases, i.e
"reduce-, voluntarily the gross
.profits
.in
margin
our
cents
wage
,
(from
example,
for
$1
60
to
labor
cents
50
say
and
,ma-
.terial
costs); if his activities increased., Anyway, the movement
did not succeed
in
worker's share.
of
increasing the
The general level
consumption
of
the
workers
of course, increased in 1946
above the 1945 level as that of
any
other consumer because a
was,
.exchange
But
been
it
in
must
picture of the state of inflation in
and
securities
become
the con¬
level only in the
spring;
rise in meat prices will
sumers'
and
this
again
scarcity of food will
noticeable
induce
on
to
saving,
though ,to
inflation
duced extent.
to
consumers
tribute
by
a
lowering
greatly
re¬
will be expanded
by a new round
of wage
increases, not controlled
by credit restriction.
course,,
here, of
the problem arises in full
strength: Will the
purely inflationary,
more
But
less
or
ployers,
wage
or
rise
be
cuts
structure
.
serves.
by
em-?
v-.
4*1
rx
I
...
:
.
,
.,
i
,
worst
would be
have
we
,
which
already seems to have
started. Only if the
Aid-to-Europe
program stimulates
for investment
,
these
farreaching
following
Thp
Se MS
T
.
hrinf
.
bil-
,
.
1947
(on account of
business
gross
net
savings
rate
burden
investment.
in
funds
residential and commercial build¬
ing alone would be
(3) Most of
paid
the' American
remember that
no
control
calendar
tor
"net
amount' of
additional
foreign invest¬
1948,
an
of
the
volume
context
we
months
lower in
1948
of
certain
to
be
they were in
But this again would be an
interlude with an impact on
prices
1947.
T
1
1
.«
.
.
considerably
im¬
parted
im¬
less than that
the inflationary
by
petus in the second half of 1948.
In
<*i
_
the
x •
subsequent years,-the in**-
_
-
-
-
flationary pressure" will rapidly
decline, even if the scheduled reduction in the
normal
credit
Aid-to-Europe
level
will
pro¬
and
consumers'
not
expand indefinitely. We may not have yet seen
the peak of the costs of
living but
apart from the effects which a
last
I
am
round
we
to the
From
nuiu
1941
i»tx
about
one-
the third
sure
of
inflation
in
are
public
groups headed b.y
new
offering
are
securities of In¬
terstate Power Co., Dubuque,
tion
credit.
These
always should
a
under
Holding
the
the
Public
Act
Utility
of
1935.
offerings consist of $20,000,-
000
first
due
apply the radical inflation cures
recommended by the Nineteenth
Century economists. They would
la.,
plan of reorganiza¬
Company
1978, priced at 102.72%,
3%%
mortgage
do not want to
we
although
come,
than
Underwriting
more
to
to
almost
are
issued under
refers
measures
the
profits
Smith, Barney & Co.
if
available would scarcely
sufficient stimulus to use
tionary
re¬
the inflationary pres¬
which, at the moment, seems
to
abate, will gain a new life in
sure,
Interstate Power Sees.
are
a
pro-
tax
Smith, Barney Offers
The second group of anti-infla¬
export surplus
by
them, the fact that
of farreaching
living now, will
eventually leave us far from the
them productively.
;
our
will: be
be
sufficient to
absorb personal net savings.
had
And
conse-
200% mark of the costs of living
we
investment
Hence,
available for investment.
as
Aid-to-Europe
index.
account.
billion
the
and
which
increase in investment. At the
moment, we do not have unem¬
ployed workers or unutilized ca¬
run
simple. It
ductions,
and
an
of
quence of the
gram
are
impossible that
dle of 1946.
pacity in equipment goods indus¬
tries, which could be made useful
if-only more funds were made
an
conclusions
not
by
present,
$12 V2
and would scarcely reach
$14 billion mark in 1948, even
if wage increases are taken into
now
Our
is
third: they increased the second
time by one-third, since the mid¬
the higher
At
credit limitation,
to the middle of 1946 the costs of
living increased
way
however, there is not yet the need
and not even any
possibility for
In this
The last question is by
purely academic. After
in
extent
Z'V-—"
.notyrt foreseen,
in general, could be
recommended.
substantially slacken.
oiciv-ivcn.
current
current
g00ds. There is, indeed, some reason in normal times to reduce the
tax
demand
an
-
termination of rent control cannot
to exercise, the rate of in¬
crease in the costs of
living should
production
apparatus
and
eventually the current supply of
private
sav¬
savings plus deprecia¬
tion allowances), which can be
put at $12-13 billion.
annual
for
lor
the
goods to
.
fail
brackets and possibly also for corporations in order to stimulate
(net
(2). Personal
adequate funds
«u*=q-uaws 1UI1US
income
some
of
able
J™"*™?* A° <in this
.the
.
and agricultural plant and equipment will, for all we know, be
in
numerous
particularly in higher
income brackets, to make avail¬
ncti
industrial
in
of
tax reduction is
necessary,
conclusion:'
.
,
(1) Investment
opinion
Congress leaders,
the President has warned
quently?
propo-
,
gram is offset by commensurate
tax reductions; for private invest¬
ment activities will settle on a
able to forestall
..
I
set aside net reserves of $4-5
at
President
e
wage round, we have to
dispose here of the main economic
expect sals.
ci70
minimum
the
reduction of business
a
lower than
may be
we
tifying
to
both
argument brought forward in jus-"
corporations tn pay out
to
about $8 billion dividends and to
ings
as
any
~
i
of
will it be followed by Government or take the form of
the "disastrous break against which
gifts from American residents. But
fre¬
»
_
Congress leaders and discard¬
hope that by tax reduc-
ing
tion
Ski.w
abling
linn
minds
and
of
or
so
.
materialize
never
the
■
The
•
will it .be
"absorbed"
t
.
unsound
con-
Above all, demand
$2-3
inflationary pressure, since
corresponding
expenditure
the
fol¬
inventory liquidation and of
the working up of backlogs) but
1948. We have not
yet seen the
peak in meat prices, since the full •should still slightly exceed the
effect of the
between
the
the
speculation
of
corporation
4-v.rt
The total effect of
finance, which could not stand the
the impact
«jliuh+pst
of these forces
slightest; riprlinp in nrnfits
decline in profits, anrl
and
and the
ensuing now
corporations burst with re¬
price rise was, (1) tok
prevent
Using this general pattern of
explanation, we also can draw a
of
billion, to make sure that the
deflationary pressure, especially
under-.vahj^d. vThe typical finan¬
cial crisis was predicated upon an
saving, the more
they had accumulated
savings during the war.*'-
however measured.
level
a
planned.
by
a
crude
awakening.
Nothing of this kind is visible Leaving aside the political reasons
which probably are dominant in
now; if anything, securities are
lowed
of
phase of wage inflation after the profits
again in the field of manu¬
war,
as- distinguished
from the
facturing and trade. The increase
milder attempts to make
up for in
corporate profits from $16.5 bil¬
.certain losses of purchasing
power lion to
$23.1 billion (before
taxes,
during , the >wartime itself. Psy¬ after
inventory value adjustment)
chologically the movement can be is
symptomatic and
certainly ex-'
■understood. There will be
always ceeds the rise of the
price level
the tendency
to
normal.
over-valuation
purchasing power
by reducing their
^'largely the abolition of the excess
consumption in real terms
from
profits,-which led the American
rising;. (2) to increase investment
economy into the really
serious in real
terms; and (3) to inflate
at
4V»/\
stock
since
so
extra
keep the
second half of 1948, will
not become too
strong. Actually,
pointed out that many of the
influential groups in Congress aim
symptoms of a boom which pre¬
at
a
far
larger tax reduction,
ceded the crisis in other times are
which scarcely can fail to add to
absent this time. A boom meant
commodities like food
limit the
consumer's effective
strengthen their
produc¬
plus
the ex¬
had
to
be
removed because
consumers could
Wartime Profits
greatly
and
what in other times
considered
de¬
increases of previously not mand for other
consumables; this
experienced dimensions.
restrictive influence
was
largely
wage
investment
are some reasons
Federal cash surplus at a level of
$4-5 billion and the budget sur-
activities, if once
tremely high profits are reduced
had
higher
and
there
pessi¬
very
anticipations
restricts
not
a
large
additional credit been
low interest
rates.
inflation fed on infla¬
some
with
tion
at
Moreover,
tion.
Ordinarily,
for
reacts
stringent conditions,
accelerate the process of
curtailment
in
investment
activities
r
ress
more
43
bonds
and
555,039 shares of common stock
surplus of goods
all, most crises of the 19th Cen¬ and services) of $3.5 billion is
priced at $7.35 per share. In addi¬
great
tury and 20th Century have been estimated representing a reduc¬ not have minded to obtain the
number of goods became avail¬
tion, Smith, Barney & Co. has of¬
the
current
supply of goal of lower prices by a tempo- I
able which had not been available preceded by wage increases, which tion- of
fered and sold, at 100%,, $5,000,proves
the fact that; wage in¬ goods and services available to rary curtailment of employment.
during the war time. Neverthe¬
000 4%% secured
creases
do not always lead to the American
debentures, due
public of the same ' And, indeed, nothing affects the
less, there is no doubt that the
once increases. What
happened to amount; as to counter-times, we I demand for consumables so thor- 1968, of the company.
wage round of 1946 was followed
Under
the
'b.y a proportionate or even more bring about the crisis was, the shall have a Government cash sur- 1 oughly and reduces prices so rapprovisions of the
collapse in the private investment plus (budget surplus plus payments idly as widespread unemployment,
than
proportionate
increase
in
plan of reorganization the net
activity,
possibly,
though
not into trust funds) of between $7.1-, especially if it lowers wages. The , piaiA Ui
"v«
'manufactured goods prices.
necessarily, caused by the /fear $7.7 billion, provided no tax re- problem of our times is: Can we proceeds from the sale of these
that the higher wages spelled the duction were enacted. These two find measures which would, if still securities wili be used to retire
Labor's Attitude
means
ment"
(export
«,
•> The
of
doom of
of
process
did not
course,
Nevertheless,
inflation,
wage
in
cease
1947,
I cannot help feel¬
ing that
labor's
attitude
had
changed considerably on account
of
the
.1946,
shocking
that
inflationary im¬
leveling off in general
headed
were
equilibrium.
dencies
of
the
petus was
and ;that we
new
experience
for
These
to equilibrium
forces.
were
These
com-,
forces
(1) the increase in the for¬
eign demand for American
goods
in
an
export surplus
of $11.5
billion in 1947
against $8.1
billion in 1946;
(2) the failure of
the American
corn crop, exercis¬
ing
a
prices
(3)
for
.very
of
the
strong effect
virtually all
increase
in
on
food,
the
the
and
demand
investment goods of all forms
equipment,
residential
(plant,
building,
other
construction,
ventories). r There is a basic
ference between these first
factors and the investment
mand. Some
ical
Necessary
of
full
in¬
dif¬
two
de¬
increase in the phys¬
volume
for
of
ernment
slight inflationary pressure men¬
far
tioned in number 1.
consumables
finances and the export
surplus behave, which have in¬
SO greatly the level of
activity in the U.„ S.
during the last 14, years?
construction
was
obtaining the level,
economic
Grain
Prices
'
,
.
j
of grains had been driven up far
the
normal
cost
level
■
wi¬
the first six months after the last
the
bulk
of
Thus, the effect of whole¬
restriction
is largely
(1) to pre¬
In
....
a
similar way, if we look at
—
— -
—
foreign
excluded for
political
demand,
is
prices of investment
There cannot be any
these
watch
.
and human-
first
10^7
mortgage 5 k bonds, due 1957, at
,
.
,
.
Par anc* accrued interest; to prepay
$2,000,000 (out of the $3,000,-
000
outstanding)
of
collateral
promissory notes; and to
interest
accrued
date of the
to
plan
on
the
pay
the
effective
the outstand-
and
,
a^he
source,
ri,i*
from an .-expansion of on the
6% demand note of the
credit, especially on
j company. Upon the effective date
consumers' durables; and (3) to
reduce the inflationary pressure of the plan the 994,961 shares of
from an expansion of productive
common
stock
which
are
not
Reding of
first
outstanding
hrmric
consumers'
doubt that
goals should have been pur¬
sued in the last fifteen months;
tain a
the banking world certainly, de¬
sale at a later time.
scarcely
be
expected
to
last
serves
praise for its attempts to
wheat became
unprofitable and through 1948.
bring about a voluntary limitation
the ensuing surplus had to bring
"Tt is now not difficult to judge
by moral suasion. At the present
down the market price sooner or the various measures proposed to
moment, however, credit restric¬
later to a more normal leveV >he fight current inflation. Any meastion should p be limited
to such
present price level in
graias-£ffi?| <ures to stem its tide must affect fields of consumers' durables, like
ototj of the three big sources of
compares well with a
automobiles, where the inflation¬
flated grain price ruling
demand: foreign demand, domes¬ ary pressure is still strong.
As
end of 1946, even if the rise tn
tic consumption, or domestic in¬ to the goals (1) and (3) above,
farmers' cost is taken into ac¬
vestment. ' A curtailment of the on the other hand, we have to
count.
by government purchases,] producers to charge the whole
wage increase to' higher prices;
large part of the crop Tor hence the'high profits of 1947 can
and the decision of farmers to re¬
**/
pressure
^
harvest
.
company's
.
tlon; (2) to reduce the inflationary ing 6% debentures, due 1952,
by a rise in output per manhour j 2.
lifxr
and, .partly by the inability of »00ClS'
J
of the
concerned, since
generally not bought on
are
-vent further inventory accumula-
~
impact being mitigated partly
are
prices
limited to three goals:
e^omvls
above
the
credit
some
safely assume that this slight
deflationary • pressure
will
be
j
as
the
substantial unem-1
answer is no, as
^
.
The
ployment?
credit.
may
•
creating
these
Since, however, some kind of
reduction is inevitable, we
tax
t
necessary, mitigate inflation with-
out
of about $4 billion,
which would be reduced by the
pressure
The
price fall in grains which economy is to be expected
to De expected,
ine
we
experienced
during
recent increase in domestic consumers'
weeks can, as such, not be taken demand,, as associated in particu¬
as
indicative of an approaching lar with the wage increase, may
general slump. The market price make for somewhat higher prices,
The
employment in 1947; and it 1 the extraordinary amount of busi-
items combine to a net deflation-
fluenced
a
•were:
culminating
ary
to
ten¬
pletely outweighed, however, by
the -impact of
three largely un¬
foreseen
profits. Is Something like
be expected at present,
and, in particular, how will gov¬
that
very
the
current
development
carefully before we, by im-
being
publicly
placed
in
offered
escrow
termination
of
the
subject
will
be
to
de¬
rights of
the
holders of the 6% debentures, 6%
demand
note
and
the
$7 and
$6
preferred stocks.
Upon the consummation of the
plan,
the
outstanding
capitaliza¬
tion of Interstate Power Co. will
consist
of
fered by
ditional
stock
to
the
new
securities
of¬
the underwriters, the ad¬
994,961 shares of common
be
placed in escrow and
$1,000,000 of collateral promissory
notes
evidencing bank loans.
THE COMMERCIAL
Thursday, March 25, 1943
CHRONICLE
FINANCIAL
&
Wasted
How British Dollars Are
Observations
intended for such unwith long-term State Department policy, was at least to some extent requited expbrts.
But holders of
motivated by
home political exigencies.
But even so, had the unfunded sterling balances are in
counterpart occurred in the Soviet Politburo, a facile about-face a position to buy up existing sup¬
could have been made and the damage repaired without the home- plies of goods.
To the extent to
front
which
knowing of what was going on.
even
public
15)
than the avoid losing them in wrong
sacrifices involved
effort to
is
this
Britain's ex¬
done
ous
the
sterling. Yet,
Minneapolis-Honeywell
Privately
such use is a heavy
This is the case
particular with the use of ster¬
the result of
dollars.
of
loss
discovered how hopelessly
he was about Britain's
capacity to assume the burden of
convertibility.
Government
displays a
childish pride in the extent of the
The
international use of
Mr. Dalton's reputa¬
way as
suffered when the British
position porting capacity is wasted. More¬
in
regarding partition because it feels that the threat of Russia's over, unfunded sterling balances
can
be
sold
to third
countries ling for triangular trade by Bel¬
Harold W. Sweatt, President
presence, including the permanent stationing of her troops there,
of
which in turn can convert them gium. She buys up the sterling
Minneapolis-Honeywell Regulator
outweighs any other consideration; and if, under those compelling
balances of other countries and .
or
use
them for financing unre¬
Co., announced March 2 that an
circumstances, and to forestall a bloody and altogether hopeless sit¬
quited
exports.
Month
after converts them into dollars under issue of $7,500,000 2.85%
uation, we actually have made a deal with the British for the con¬
deben¬
month passes without any effort the Payments Agreement of Sep¬
tures
tinuance of their mandate; our State Department is put in a hole
maturing March 15, 1963
on. the part-of the Government to
tember, 1947. The gold losses an¬
had been placed
by the necessity of submitting an explanation to our people for their
privately with
put an end to this state of affairs. nounced by the British Treasury five institutional
satisfaction and approval to which, under our system, they are en¬
purchasers
month after month are largely
The only action taken up to now
titled.
through Union Securities Corp!.
in that direction was the freezing due to the operation of this ex¬
The issue will have a $300,000 an¬
Likewise abortive is the airing of our Secretary of State's dif¬
of the Palestine and Transjordan ceedingly foolish agreement which
nual sinking fund commencing in
ferences with our powerful Congress, including such incidents as his
balances of
about
£100,000,000., Mr. Dalton insisted on conclud¬
1950. Funds received will take the
supposedly anti-China pronouncements, which again proclaim to the Even in that instance the right ing
against the advice of his
place of a $10,000,000 five-year
world the confusion that exists in the country's long-term foreign
>
thing was done for the wrong experts.
revolving 'bank
credit which
policy. The, Kremlin, in contrast, has a completely free and auto¬
If
V
if they are
at variance
This decision, presumably
Palestine.
of
result of
a
tion
(Continued from page
(Continued from page 5)
partition
as
optimism, in the
same
}
UN's
to suffer
likely
is
lui unwarranted
t
h
w
I
United
the
has
States
changed
its
propounded
Places Issue
,
f:
>;
u
reason.
externally—without
hand, to play its diplomatic game
nomous
even
revealing its long
"«
short-term aims to anyone.
or
The Effect
The
jiolicy.
President
Obviously
the
is
balances
official
charged
with
setting
foreign
our
Realizing
he
citizens.
must
•decisive, clear,
to
them.
under the Kaiser in 1914
ally go to
I-.
decisive
a
i
on
war.
a
limb
far removed from his
so
is little
II
of attack having been necessary to get us to a
question about nothing short of
at
i
the
a
tries,
broader
current
scale
this
initiation
of
kind
of
decision,
tries,
the
of
Western
are
whether Mr. Bevin
but
a
seriously worrying the leaders of our
can
actually make of the group "not
end
a
are
coun¬
of maintain¬
sake
To that
currency
to
countries
soft
in hard
bought
goods
even
ed
re-export¬
are
countries.
currency
does not re¬
alize is that it would be wiser to
European
lose
recover
for the
the markets
and
allies^as to
them
present
the
for
later,
sacrifices involved in the effort to
conference
'
workshop."
goods
of
currency
ing traditional markets.
'powers., Sovereignty and the other counterparts of democratic free¬
dom of action
the
for
;
,
soft
though they could be
even
in 1941.
even
to
difficulty is already emerging What the Government
alliance
the
Cripps moved heaven and
to
dual
and
exchange rate
them would be less
recover
;
operating in
is
tem
is
lars
very
oner-
and
1,243,800
stock.
a
Offered
by Firsl Boston
Gas & Electric Corp.
competitive bidding March 23
awarded a new issue of $45,000,Columbia
Kong
Hong
j
Columbia Gas Debs,
free
at
1973 to
000 debentures due
t i
substantial. A Bank
0 n w
id
e
underwriting
na-
a
group
headed by
The First Boston Corp.
submitted a bid of
the position, but
100.55999, naming an interest rate
such measures as are likely to be of 3V4%.
The issue is being redecided upon are expected to be offered today at 101 V\ and accrued
interest to yield 3.18% to maturity.
"too late and too little."
of England
exported to hard currency coun¬
public. There
Continuing foreign policy cannot be set by plebescite!!
On
exported
foreign Pearl-Harbor kind
a
this
if
others
quantities
Large
would actu¬
we
quickly realized it was necessary to back-track because
on
While-Sir Stafford
earth
prevent France from adopting,
$11,000,000 of
preference
ing instance.
proval. The resulting loss of dol¬
help
to
aggravates the dollar drain.
Witness President Roosevelt's faltering step toward
he found himself out
debentures;
2.85%
with the British Government's ap¬
she
expected
policy in his famed Quarantine speech in Chicago in 1937,
which he
Following issuance of these de¬
however, which are
cannot reasonably be
that
so
much
is
payments
April 1
bentures, the company's capital¬
ization consists of the $7,500,000 of
kept 3.20% convertible
open as a matter of policy.
The stock, Series A;
gap of Hong Kong is an outstand¬
shares of common
others,
than that of most countries,
worse
epitomized over the long-
%
ii
greater
J'v
Hitler in 1939 that
or
of
balance
by the inability of Great Britain and ourselves to acquaint Ger¬
term
many
cannot
terminated
:
gold market, that very same sys¬
has been
processes
Gov¬
the
which
vented.
ernment refuses to face is that the
to the international situation rendered by our char¬
democratic
fact
The
bargains with
harsh
1952.
the various
with which it is circum¬
Many of the loopholes
be
helped.
There
are
position ancf prospects of Britain's
'
acteristic
too
methods
have
would
Volumes
sieve.
a
could be written about
confusion and even
; risk.
The damage
drive
exchange control is
reaction, the possibility that
than before—presents an even
even
unfair
than in Britain it would be
possibly scuttle it in the end—a result which would render our inter*
national status far worse
of living
standard
the
since
like
leaking
a
throw his policy into public
Congress will
of
defense
in the creditor countries is lower
But the result neverthe-
and politically courageous.
less is that dangerous as is the Russian
his
that
of last week was forthright,
Surely Mr. Truman's address
the
for
to the assembled Congress and his anxiously expectant fellow-
sage
.
this,
The argument
this policy is
partly in sterling.
nevertheless, in addition to outmaneuvering our opponents abroad, ALSO perform a "selling" job to
his fellow-citizens at home. So he necessarily delivers a special mes¬
tance.
on
excessive
realesed, partly in dollars and
are
consistent course of action is of crucial impor¬
a
terms
amounts
concluded
are
which
under
Our Chief Executive
on
The British
.
sterling
funding
Agreements
s
official has been sent
The
group
out to investigate
from
Proceeds
Unfortunately the subject is too
financing
the
will be
applied to the current con¬
technical to arouse widespread in¬ struction
of Columbia
program
terest. Nevertheless, a vague if in¬ Gas System incidental to storage
articulate
uneasiness
developing
distribution
and
is gradually
of
natural
tiated in 1946 with an
cians, similar to the feeling that
gas
Ini¬
brought from the southwest.
politi¬
British
among
expenditure
$19,000,000, the program
developed last summer about con¬ of additions and betterments was
continued during 1947 when $32,vertibility, long before the failure
of
the
experiment
of
279,024
officially
was
over
was
expended.
mated that an
It is esti¬
additional $47,000,-
admitted. And in the long run the
000 will be spent
reputation of Sir Stafford Cripps
ent year.
during the pres¬
i
-"4
.
f
■v.
i
•' LA
.
Securities
•
jj]
American
Broadcasting Co., Inc., New York
13, filed 250,000 shares common ($1 par) at pro¬
posed maximum offering price of $12.50 per share. Un¬
Feb.
1? i
derwriters—None.
!!i
Company
now
Proceeds—For
has plans to
television facilities, in
San
Francisco and
corporate
purposes.
spend about $5,325,000 for
New York, Los Angeles, Chicago
Shares will be sold to "the
with which the company had network affiliation
agreements at Jan. 31, 1948, and to such other persons
as may be selected from time to time by the company."
American
in
stock
($20 par), 1947 series. Underwriter—Paine, Web¬
ber, Jackson & Curtis, New York, and Mitchum, Tully
& Co., San Francisco. Price—$21 per share. Proceeds—
To expand facilities.
,
Atlantic
Feb.
Coast
Co., Boston, Mass.
general mortgage and col¬
filed
$556,500
lateral
trust
convertible
par)
common
Buffalo.
stock.
Offering
i
bonds
I
■
i\
stockholders at the rate of
number
against
conversion
for
of
Graves
•
i
for
}
& Co., New
working capital.
shares
common
of
bonds.
York..
;
To
(20c.
par),
to be
Underwriter—Gordon
pay
income
taxes
and
if
will
publicly
.
•
Angelus Beverage Co., Los Angeles, Calif.
March 17 (letter of notification) 1,000 units of "Series E"
U. S. bonds of $75 value and one $25 note for $100.
To
buy bottling machinery." No underwriting.
! f
A
Corporate and Public Financing
; i-
i
v
Atlas
March
Film
16
the
bonds.
by
Unsubscribed
underwriter.
New York
'
Chicago and other cities
bonds
Proceeds
—
i
Corp., Oak Park,
(letter of notification)
Auto
III.
50,000 shares
$3,000,000 short-term bank loans
Security-First National Bank, Los Angeles.
Brockway
Feb.
$50).
be
,
(Pa.)
Glass
Co.,
Underwriting—None.
Offering—Both issues win
offered at
$50 per share to residents of
Proceeds—Construction and purchase of new
•
California
Oregon
Brockway.
equipment.
Power Co/ (3/30)
:
■
•
n
March 4 filed $4,500,000 first mortgage bonds and 100,uuu
shares of common
stock
(par $20).
Underwriters--to
be
determined
through competitive
Halsey, Stuart &
bidding.
Co. Inc.
Co., Inc., and The First Boston
Corp. (jointly); Merrill Lynch, Pierce, Fenner &
(common); Harriman Ripley & Co.; White, Weld
bidders
include:
(bonds only); Blyth &
Lynch,
Pierce,
Fenner
&
Beane
and Kidder,
m
Inc.,
Norwich,
N.
Y.
mmlp
III
■
yyyyy-y,
gxg&c
OPS
ivx
nCR
-
Boray
C. L
.
filed
CO.
(3/29)
sinking
/
Underwriter—Mohawk Val¬
ley Investing Co., Inc., Utica, N. Y.
Price—Par
Pre¬
payment of mortgage ($130,000)-. Corporate purposes.
stock.
'
Inc.
5,000 shares of 5% cumulative preferred
(par $50) and 7,150 shares of common stock (par
26
stock
Inter¬
Proceeds-—
payable to
Inc.
10
Bennett-Ireland,
March
Pittsburgh
Department Store, Inc. - (3/30) ■ ■
80,000 shares of cumulative preferred
To redeem
Merrill
Finance Corp.,
filed
stock ($25 par).
Underwriter—Blyth & Co.,
est rate and offering terms by amendment.
Probable
Charlotte, N. C.
(letter of notification) 6,000 shares of 5%%
cumulative preferred stock..
Price—$50 each.
Under¬
writers—Interstate Securities Corp..
Charlotte, N. C.Citizens Trust Co.,
Greenwood, S. C. and others.
For
additional working capital and
general corporate pur¬
•
CORPORATION
Boston
($1
Co.,
The stock will be reserved
March 22 (letter of notification) $200,000
15-year
fund first mortgage bonds.
FIRST BOSTON
}
&
being offered to
$1,500 of bonds for each 1,000
poses.
The
*
shares
Doolittle
($1 par),
common
stock, to be offered to the company's 37 stock¬
holders at par.
For working capital.
No underwriting.
•
'if
of
offered
166,950
—
are
General corporate purposes.
•
i t-
I
bonds
stock held.
conversion
be
March
Ut
common
The
11
Names
..
r;, f
.
shares of
—
and
Underwriter
termined
.'.
I '■
I
Broadway
March
Fisheries
2
held
i
.
PREVIOUS ISSUE
Associated Telephone Co., Ltd. (4/6)
March 15 filed 75,000 shares of 5% cumulative preferred
Machinery Corp., Orlando, Fla.
March 11 (letter of notification) $295,000 10-year first
mortgage convertible 6% bonds, due 1958, and an unde¬
V
f
Registration
INDICATES ADDITIONS SINCE
Detroit.
persons
Now
Sign
Co.,
Washington,
D.
a»d Bo
C.
17
(letter of notification) 400 shares of common
Price—$60 each.- Underwriters—James Privett
DeHarte and C. Booker
Powell, all of
To
develop machine tools for production
electric signs.
Washington!
of
patented
Y0rk
sto"
GO
OlC*
flfXUftS
UNDERWRITERS
Bosro*
mi
Number 4684
167
Volume
THE COMMERCIAL
&
FINANCIAL
CHRONICLE
(1353)
stock
Bennett-Ireland, Inc.
Cameron Aero
._
Bonds
___
Corp.._______.....Common
(CST)
Noon
11:00
&
Equip. Trust Ctfs.
&
Debentures
Noon (EST)—___
„
March
30, 1948
9:00
a.m.
(PST)_____
Ohio Power Co.,, 11:30
(EST)
a.m.
Oklahoma Gas & Electric Co.
11:00
(EST)._.__
a.m.
.
,
,•
Preferred
Ctfs.
Holders
holders
Co.^^__.l_.U....Bonds
Co^......-Debentures
Mountain States Tel. & Tel.
basis
on
of
one
share
Price—50 cents per share.
Offeringstock (par $1)
given right to sub¬
common
new
stqck in ratio of two shares
(par
50b) for each $1 par share held.
Rights expire March 29.
Pay outstanding claims, etc.,
working capital.
•
Mammoth Silver
Lead, Inc., Spokane, Wash.
March 15 (letter of
notification) 500,000 shares of com¬
(Texas)
mon
non-assessable
stock.
Price—20b each, to be
by the company, and 50,000 shares of
sold by Morris
Pearson,
Corp.;
Georgia Hardwood Lumber Co.j_.PreL & Common
v
t Michigan Consolidated Gas
of
scribe at par for
Halsey, Stuart & Co. Inc.? The First Boston
Blyth & Co., Inc.; Equitable Securities Corp.;
Harriman, Ripley & Co.; Glore, Forgan, & Co., and W. C.
Langley & Co. (jointly). Offering—Debentures will be
offered publicly.. Stock will be offered
present stock¬
"a;r-K
Schenectady Discount Corp.....^Debentures
Latin American Airways, Inc., New York
(letter of notification)
327,630 shares of com¬
stock (par 500).
Underwriter—Willis E Burivude
& Co., New York.
bidders:
April 1, 1948
19
March 16
mon
Power & Light Co.
Feb. 26 filed 68,250 shares of common (no par) $4,000,000
25-year sinking fund debentures, due 1973. Underwrit¬
ing—Debentures to be offered competitively. Probable
•
(EST)..Equip. Trust
noon
-
Expected early in April.
Dallas
Business—Soft drinks.
Laboratories,
Inc., Milwaukee, Wis.
(letter of notification) 27,500 shares
($1 par)
stock.
Price—$6.50 each. Underwriter—Loewi
& Co., Milwaukee.
For working
capital.
March
~
March 31, 1948
Pennsylvania RR.,
capital.
-Bonds
;
—
Sheboygan, Wis. Pro¬
bottling plants in California
common
($1 par) common stock. Underwriter—P. W. Brooks &
Co., Inc., New York. Proceeds—To retire secured in¬
debtedness, finance inventories and supplement working
....Bonds and Common
._______Pref. and Common
Colonial Stores, Inc
Lakeside
,j.vfJs
.Or April 6,
\-
1948
8:30
a.m.4
develop and equip mines.
•
Martinez-Boll
March
for
12
No
—Preferred
V 0/
.
v'
,
(PST)_i._.__-j^-'..^—_.—..-Bonds
Virginia Electric & Power Co....
..Debentures
.
April 15, 1948
Florida Power Corp.—___^_—Pref. and Common
v
May 5, 1948
California
Gas
Co.—,
Bonds
& Co. (jointly on bonds); Salomon Bros. &
Hutzler; Shields & Co. (bonds only). Bids—Bids for
purchase Of securities will be received at office of
Peabody
American
cisco,
•
Trust
prior to
Co;,
9
Cambridge
March
464
California
(PST)
a.m.
(Md.)
Street,
San
new
Industries,
•
6%
Florida
Engine Corp.
,
Underwriters—Kidder, Peabody & Co. and Mer¬
Lynch,
and
110,000
Pierce,
Fenner
&
expire April
Flotill
for
14.
Proceeds—Construction
Products,
Inc., Stockton, Calif.
•
holders
<j'xi V
March
Development Corp.,
Underwriter
Price—preferred $10;
will
sell
—
$6.
Proceeds
preferred
shares
—
Stock¬
up
/
and
250,000
125,000 preferred shares
and 75,000 common shares. The company's proceeds will
be used for general corporate purposes.
Central
shares
common
18
(letter of. notification) eight notes of $5,000
each and one $10,000 note.
To be secured by 198,000
shares of stock put up by six stockholders.
To complete
smelter plant.
No underwriting.
•
Gem
and
Mines,
Inc.,
000 for the
—None.
account of Claude
Boise,
Price—$2
share.
a
purchase and general funds.
•
Champion Paper & Fibre Co., Hamilton, Ohio
March
19
(letter
of notification)
up
to 15,000
common
shares, to be sold for the estate of Logan G. Thomson,
deceased, at $19 each or better. Underwriters—Goldman,
Sachs & Co., New York.
•
?
Colonial Stores, Inc., Norfolk, Va. (3/30-31)
16 filed 40,000 shares of 5% cumulative preferred
stock ($50 par), and
49,431 shares of common stock ($2.50
par). Underwriter—Hemphill, Noyes & Co., New York.
-
•
Commercial Finance Corp., Muskogee, Okla.
March 15 (letter of notification)
14,975 shares of com¬
mon. stock.
Price—$29 each. " For operating expense
and indebtedness.
March
1
due 1963.
share
P-
Co.
of
N.
Y., Inc.
filed $57,382,600 of 3% convertible debentures,
for
Convertible at the rate of
each
stockholders
to
Edison
$25
of
debentures.
of record March 25
one
common
stock
Offering—Common
were
to be given right
subscribe for debentures in ratio of $5 of debentures
each share held.
S. Commission to
has been
Due
to
aoprove
failure
the
of
issue,
the
the
New
York
financing
postponed.
Underwriting—Unsubscribed de¬
bentures will, be offered at competitive bidding. • Prob¬
able bidders:
Morgan Stanley & Qo.; Halsey, Stuart &
Go.
Inc.; The First Boston Corp. Proceeds—To redeem
*<3,566 shares of
outstanding $5. cumulative preferred
Inc.,
New York
Working capital—development ,of gold
—$3 per share.
-
mines.
March
17
(Jay)
Price—S100 each.
stock.
common
company.
No underwriting,
v
For operation of the
' '■
Corp.,
Underwriting—None. Offering—11,571% shares
value)
being offered pro rata to stockholders on basis of one
share for each three held, at $100 per share, 85% shaies
are
•
being offered at net asset value at $110.61 per
Gulf States
March
1978
share.
Utilities Co., Beaumont, Tex.
19 filed $12,000,000 first- mortgage bonds, due
Underwriters—Names,uto be determined by corn-
Probable bidders: Stone & Webster
Corp.; Halsey, Stuart & Co
Inc.; Salomon
Bros & Hutzler; Merrill Lynch, Pierce, Fenner & Beane
and White, Weld & Co. (jointly).
Proceeds—To finance
net itive
bidding.
Securities
construction.
Oklahoma Gas & Electric Co.
(3/30)
Feb. 20 filed 65,000 shares of cumulative
preferred
Kold-Hold
March 15
common
Manufacturing
'(letter of'f&tification)
stock.
Price—$2 each.
Lansing, Mich.
50,000! shares ($1 par)
To be sold by H. BarkCo.,
stock,
com¬
toward construction
stock
office
■
of
Chase
York,
up
to 11
program.
Bids—Bids for the pur¬
will be received by the
company at
National
a.m.
Bank, 11 Broad
(EST) March 30.
Old North State Insurance
100,000 shares of capital stock ($5
par).
each.
Underwriter—First Securities
Price—$15
Durham,
Street, New
Co., Greenville, N. C.
March 15 filed
Corp.,
N.
Pacific
C.
Proceeds—General
business
purposes.
Gas
and Electric, San Francisco
686,953 shares ($25 par) common stock.
Underwriting—none. Offering—To be offered at par to
holders of outstanding common stock of record Feb.
27
Jan.
29
filed
April 9.
•
Proceeds—To finance
18
assessable
ore
a
10 held.
Rights expire
construction program.
Panther
March
Development Corp., Houston
(letter of notification) 4.500 shares of non¬
stock.
Price—$25 each.
To stock¬
common
mill.
No
ore
at mines in Arkansas and erect
an
underwriting.
Playboy Motor Car Corp., Tonawanda, N. Y.
Feb. 13 filed 20.000,000 shares common
(lc par).
Price—
per share.
Not more than 100,000 shares will be of¬
fered to employees and officers at 87% cents
per share.
Underwriter—Tellier & Co., New York. Proceeds—Foir
-capital equipment and working funds.
•
|j
Portersville
Oil Co., Baltimore, Md.
j
(letter of notitication) 2,400 units, consisting
of 48,000 shares of "B" common stock at $1
par and 12,i
COO shares of "A" common at $1 par, in units of 20 "B"
March
16
and five "A" shares for
$25. To drill for oil.
writing.
•
No under¬
'
Princeton
March
(N.
J.)
Water
.
Co.
u
r\
22
(letter of notification) 900 shares of common
stock
(no par). Underwriting—None. Price—$60 per
share. Repay promissory notes, additions, etc.
;
Public
.
•
Corp., 30 Church Street, New York,
(EST) March 30.
$1
New York, N. Y.
^ /,
March 11 filed 11,657 shares stock ($50 minimum stated
Graham-Newman
are
a.m.
pile manganese
Industries, Inc., Denver, Colo.
(letter of notification) 164 shares (no par)
Goodwin
•
to 11:30
at the rate of one share for each
•
(letter of notification) 5,000 shares of capital
(par $1). • Underwriters—Stein Bros. & Boyce,
Baltimore, and Filor, Bullard & Smyth, New York. Price
,
Offering—New common stock to be offered present
stockholders at rate of one new share for each 12% now
held. Price—By amendment. Proceeds—To buy machin¬
ery, trade fixtures and equipment for new stores.
Ridge,
16
stock
Mar<?h
Consolidated
Gold
March
and $31 million to be deposited
trustee under the mortgage secur¬
Bids—Bids for purchase
purposes,
corporate
chase of the
Georgia Hardwood Lumber Co. (4/5-9)
March 11 filed 69,500 shares $1 convertible cumulative
preferred stock (no par) and 10,425 shares of common
stock
(£l par). Underwriter—Reynolds & Co. Price
by amendment.
Proceeds — To selling stockholders—
(Equitable Securities Corp., A. C. Allyn & Co., Inc., and
Clement A. Evans & Co., Inc.)
Neon, Inc. Underwriting
Proceeds—For equipment
the
Boston
March 15
Challenger Airlines Co., Salt Lake City, Utah
March 1 filed 600,000 shares ($1 par) common
stock, of
which 400,000 are being sold for the company and
200,-
about
Corp.; Harriman, Ripley & Co.; Lehman Brothers and
Blyth & Co., Inc. (jointly). Proceeds—To be
applied
Idaho
(letter of notification) 200,000 shares of non¬
assessable common stock (50 par).
Price—7% cents per
share.
To develop mines.
No underwriting.
Expected
($100 par). Underwriters—To be determined under
petitive bidding. Probable bidders: The First
company
Consolidated
State
1948.
•
of the bonds will be received at office
of American Gas
& Electric Service
Floyd D. Cerf Co., Chicago.
common
260,000
31,
•
ing its first mortgage bonds.
March 6 filed 385,000 shares of 60 cent convertible
pre¬
ferred stock (par $5) and 325,000 shares of common stock
(par $1).
$41,000,000 March
construction
with
expenditures.
cancelling $15,000 open account for
tools.
Price—$2 per share.
Underwriter—
Henry P. Rosenfeld & Co., New York. To provide oper¬
ating funds,* etc.
•
machine
Mining &
Colo.
•
,
,
Webster Securities Corp.
(jointly). Proceeds—To be ap¬
plied toward the retirement of 6% gold debenture
bonds,
due 2024, prepayment of
$9,500,000 of notes floated for
Beane.
Offering—Com¬
mon stockholders of record March 30 will be
given the
right to subscribe for the new common stock.
Rights
additional underwriting consideration and 7,500 shares
will be issued to American Die & Tool Co. for invest¬
City,
.
Ohio (3/30)
mortgage bonds, due 1978.
Underwriting—To be determined by competitive bid¬
ding. Probable bidders, Dillon, Reed & Co.
Inc.; The
First Boston Corp.;
Halsey, Stuart & Co. Inc.; Glore,
Forgan & Co.; Harriman Ripley & Co., and Stone &
($100 par) cumulative pre¬
shares ($7.50 par) common
stock
rill
as
Central
,
1
Ariz.
Ohio Power Co.,
Canton,
March 2 filed
$40,000,000 first
(4/15)
stock.
(3/29)
Dec. 29 (letter of notification) 101,000 shares of common
stock (par $1), of which 85,000 shares will be sold to
the public; 8,500 shares will be issued to underwriters
ment in return
Corp.
40.000 shares
ferred
Cameron Aero
l
Power
March 2 filed
about
April 5.
Ferguson Furniture Co., Inc., Jackson, Miss.
March 18 (letter of notification) $100,000 of 6% serial
debentures.
Price, par.
For capital structure.
No un¬
derwriting.
*
•
■'
To
No
underwriting.
t
to
working capital.
•
Inc.
(letter of notification) 1,000 shares of
preferred"stock ($100 par).
Price—$100 per share.
expand plant facilities and furnish working capital.
*
: \
each four held
25,000 shares of common stock.
Price—$1 each.
$60 per -share.
To develop mine
Texas Utilities Co. (parent) will
proper-ties.; No underwriting...
\
acquire 62,292, shares. Proceeds—Construction program.
;
. *
Bonds expected about April 20. •
Michigan Consolidated Gas Co.
".'-./vVj-r;.V*
(4/5)
Feb. 26 filed;
$7,000,000 first mortgage
•
Denver (Colo.) Speedway
bonds, due 1969.
Bowl, Inc, V
Underwriters—To be determined
March 17 (letter of notification)
by competitive bidding.
300,000 shares ($1 par)
Probable bidders,
Halsey, Stuart & Co. Inc.; Lehman
common stock. v Price—$1
per share.
To build a 20,000
Brothers; Dillon, Read & Co. Inc.; Glore,
seat concrete stadium.
No underwriting.
Forgan & Co.:
■ •<.'
White, Weld & Co.; Harris, Hall & Co.
(Inc.). Proceeds
—Construction program. Expected
Equipment Finance Corp., Chicago, III.
about April 5.
Feb. 26 filed 15,000 shares ($100 par)
v
Mountain States
preferred stock.
Telep. & Teleg. Co. (4/5)
Offering—To be sold to employees and officers of the
March 5 filed $25,000,000
30-year debentures, due April
company and its parent, Curtiss Candy Co.
Price—$100
1, 1978, and 191,881 shares of capital stock
($100 par).
per share. Proceeds—To be used for trucks in connec¬
Underwriting—Underwriters for bonds to be determined,
tion with the Curtiss' franchise method of distribution.
through competitive bidding. Probable bidders:
Halsey,
•
Stuart & Co.
Esterbrook Pen Co., Camden, N. J.
Inc.; Morgan Stanley & Co.; Harris, Hall &
Co. (Inc.) and Drexel & Co.
March 17 (letter of notification) 1,500 shares of common
(jointly). Stock will be of¬
fered stockholders of record
stock
(par
$100).
Price—Par.
March 24 at $100 per share
Underwriting—None.
on a one-for-three
Offering—Stockholders of record April 7 will be given
basis. Rights expire
April 26. Amer¬
ican Telephone
the right to subscribe for one new share for each four
& Telegraph Co. owns
73.35% of out¬
shares held.
standing stock.
Rights expire May 7 and subscriptions are
Proceeds—To repay advances from
American Telephone &
payable at First Camden National Bank & Trust Co.
Telegraph Co. expected to amount
For
Fran¬
March 30.
15
Florence^
Mining Co.,
To
'
i
,
;-:V April 7, 1948
Chesapeake & Ohio Ry.,
...,...,/
'/
Noon (CST)
.Equip. Trust Ctfs.
Solvay American Corp._________
—Preferred
Southern
underwriting.
(letter of notification)
sold
stock to be
cents each.
at
:y^v."v ;
-
same
President, at 11
.
Associated Telephone CO., Ltd...
Southern Counties Gas Co. of Calif;
stock.
common
& Co.,
and equip
Price—$1 per share.
cities.
•
Proceeds—To be added to general funds for
of additional capital stock in the
company's
Crampton Manufacturing Co.
j
Feb. 5 filed $600,000 first mortgage 5%%
sinking fund
bonds, due 1966, with warrants to purchase 60,000 shares
Broadway Department Store, Inc....... .Preferred
California Oregon Power Co.
filed'1,500,000 shares ($1 par)
ceeds—To open
(jointly); Dillion, Read & Co. Inc.; The First
Corp.; Halsey, Stuart & Co. Inc; Morgan Stan¬
operating subsidiaries.
Bonds & Debentures
Maich 22
Underwriter—Heronymus
Curtis
purchase
Utah Power & Light Co.
45
ley Johnson and James J.
McQuaid, both of Los An¬
geles.
Underwriter—Buckley Brothers, Los Angeles.
®
Kool-Aid Bottling
Co., Inc. of Calif., Sheboygan.
Wisconsin
15 filed
ley & Co.
Bonds
expen¬
'
Boston
Service Co.
(EST)—___
a.m.
treasury for expansion
Natural Gas Co., New York
$30,000,000 of debentures, due 1988. Int.
rate and price by amendment.
Underwriters—To be de¬
termined through competitive
bidding. Probable bidders
include: White, Weld & Co. and
Paine, Webber, Jackson
Chicago Milwaukee St. Paul & Pacific
Texas Electric
reimburse
Consolidated
March
29, 1948
<
Engine
to
ditures.
NEW ISSUE CALENDAR
March
and
Feb.
6
Service
filed
199,627
Co.
of
shares
(Continued
New
($10
Hampshire
par)
on page
46)
common
•
stock.
**
46
Underwriting—To
(Continued from page 45)
Underwriters—Kidder, Peabody & Co., and Blyth & Co..
Offering—Offered
York.
New
Inc.,
holders
present
each 3M? shares held. New Eng¬
land Public Service Co, will waive its rights to subscribe
at rate of one share for
shares which will be purchased by the under¬
by amendment.
Proceeds—Construction
to 141,101
Price
writer.
short-term loans.
and retire
program
.
Expected late
month.
this
underwriting.
Florida,
of
Inc.,
,
New York
March 18 (letter of notification) 3,800 shares of com¬
mon stock (par $1.75),
Stock will be sold on New York
Stock Exchange, through Wagner* Stott & Co.
Price—
approximately $26 per share.
Schemey Distillers Corp.,
•
Shareholders'
Trust of
Boston
proceeds to the trust will be $20 per share. Business—
A newly-lormed diversified open-end investment com¬
pany.
i
Inc., Fargo, N. D.
notification) 4,000 shares 6% cumu¬
lative preferred stock ($25 par).
Price, par. For gen¬
eral working funds.
No underwriting.
Smith,
March 18 (letter of
Soft Water: Finance Co.,
•
mon
remains
•
•
from
not
Utah
\
Electric & Gas Co.
South Carolina
Dec. % filed 80,858 shares ($50 par)
cumulative convert¬
ible preferred and 404,293 shares -($4.50 par) common
for sale, and 687,293 Shares reserved for conversion of
Underwriter—Kidder, Peabody & Co., New
York. Offering—Shares initially will be offered for sub¬
scription by company's common stockholders, the pre¬
preferred.
ferred
on a
l-for-10 basis and the common
on
a
l-for-2
publicly.
Price by amendment. Proceeds—Proceeds together with
other funds.will be used to purchase all of the outstand¬
ing common of South Carolina Power Co. from the
basis.
Unsubscribed
shares
will
be
offered
Commonwealth & Southern Corp,
5%
series in an amount
preferred
shares
10,00(1: common
preferred and one
For expansion; No.tmderwriting.
March
16
filed
Power
(5/4)
$15,000,000 3y4%. first mortgage bonds,
&
Light Co.
and
offering of the shares.
,
(3/29)
,/•
$74,600,000 for new construction/ Of this, $11,900,000s
through preferred stdck or:.bank loan,
Will be financed
$18,700,000 through first mortgage bonds and $7 * OOO^OOGj
through common stock, or contributions by-holding com-,
panies.
mission
May 4.
Gas Co.
of Calif.
bidding.
Probable bidders: Blyth & Co., Inc.; Halsey,
Co. Inc.; The First Boston Corp. and Harris,
(Inc.) (jointly); W. C. Langley & Co. and
Glore, Forgan & Co. (jointly); White, Weld & Co.
Pro¬
ceeds—To reimburse treasury for capital expenditures,
including construction costs.
Bids—Bids for purchase
Stuart &
Hall & Co.
t
Rights expire April 5. Price—Par.
expenditures, etc. Issue of
$10,000,000 3% 1st and ref, bonds, series F, due 1978,
offered March 17 by White, Weld & Co and associates
•
•
Southern States Iron Roofing; Co., Savannah, Ga.
March 23 filed 40,000 shares of 5% cumulative convert¬
ible preferred stock ($25 par) and 80,000 shares ($1 par)
stock, to be reserved for conversion of preferred.
Underwriters—Equitable Securities Corp., Nashville,
Tenn., and Clement A, Evans & Co., Inc., Atlanta, Ga.
Price by amendment. Proceeds—Corporate purposes and
debt
payment.
Business—Roofing and
prefabricated
buildings.
common
•
Suburban
Gas
Service, Inc., Ontario, Calif.
March 22 filed $500,COO 12-year 6% series sinking fund
debentures, due March 1, 1960, with purchase warrants
attached for the purchase of 50 shares of
common
stock
($1 par).
Underwriters—Lester & Co. and Wagenseller
Durst, Inc., Los Angeles. Proceeds-^To purchase the
&
California Butane Co.
Texas
Electric
Business—Utility.
Service
Co.
(3/29)
struction
program.
Bids—Bids for purchase of the se¬
curities will be received by the company up to 11 a.m.
(EST) March 29 at 2 Rector Street, New York.
•
Texas
Gulf
Producing Co., Houston, Texas
March 15 (letter of notification)
11,952 shares ($1 par)
common stock, to
be issued, in exchange for 41,832.5
shares of capital stock in DeLarge Oil Co. on the basis
of
one
stock.
Texas Gulf share for each VA shares of
DeLarge
No underwriting.
Texas Power & Light
Co.,
March
Dallas, Tex.
8 filed
$7,000,000 sinking fund debentures, due
1973, and $2,000,000 of first mortgage bonds, due 1978.
.
No
development costs.
Investors
Plan
Morris
by stockholders
one new
of
•:
New York State
under¬
March 24 in
ratio
of
Inc. and Smith, Barney & Co.
Pennsylvania RR.
Price—$12 per share.
Proceeds—Plant
additions and purchase of securities and :assets of other
companies.
Michigan
Power
Co.,
Bids
$14,000.G00
first
bonds, 'due
1978.
Underwriters—Names to be determined through
competitive bidding.
Probable bidders; Halsey, Stuart
& Co. Inc.; Lehman Brothers; Blyth & Co., Inc.; Glore,
Forgan & Co., and Harriman Ripley & Co., Inc. (joint¬
ly); Shields & Co.; White, Weld & Co. and Kidder, Pea¬
body & Co. (jointly); Harris, Hall & Co. (Inc.) and The
First Boston Corp. (jointly);
Dillon, Read & Co. Inc.
Proceeds—Proceeds together with $1,000,000 from bank
loans and
$1,000,000 from the sale of
Wisconsin
•
stock to
•
Marshall & Ilsley Bank $200,000 in bank loans.
Corporate
•
purposes.
^r; Harriman Ripley & Co.,
Inc. and Lehman-Bros.
Oomtly); Blyth & Co., Inc.; Harris, Hall & Co. (Inc.).
Pacific
RR.
to increase the authorized common stock from
to 8,000,000 shares and U
for-one.
•
.
United
'■
/-•-"•
Air
Lines,
Inc.
-
April 13 stockholders .will yote
-
5,000,000
split the preferred stock four■'/
/
►
"
v
proposal to Increase
the authorized cumulative
preferred stock from'94,968
to 300*000 shares, and increase from
2,500,000 to 5,000,000
on .a
shares of the authorized
common stock. W. A. Patterson
expressed the belief the company; should be in a position
additional capital in 1948 if. market and other
conditions permit.
Traditional underwriter^ Harriman
Ripley & Co., Inc.
;
v/ :
;
to raise
(3/29)
The company
ceived before
Sunray Oil Corp.
oil lands, buying the securities of .other
producing com¬
panies and expansion of Sunray's refining and transpor¬
tation facilities. Stockholders on
April 27 will be asked
(CST) April 7,
for the sale of $5,500,000
equipment trust; certificates,
to be dated April
15, 1948 and due annually April 15,
1949-1958.
Probable bidders include:
Halsey, Stuart &
Co. Inc.; The First Boston
Corp.; SalOmon.Bros.. & Hutz-
&
Birmingham, Ala.
SEC for
preferred stock to raise between $9,400,000 and $16,800,Corporation has not decided specifically on what
the money is to be spent, but it listed as
possibilities
the buying and development of
unexplored and proven
Prospective Offerings
Paul
asked
000.
Chesapeake & Ohio Ry. (4/7)
Company will receive bids up to noon
Chicago, Milwaukee, St.
$10,995,000
March 22, reported corporation has been negotiating with
investment bankers for a. public offering of convertible
•
Workers Finance Co. of Nortir Bergen, N. J.
March 18 (letter of notification)
$150,000 6% cumulative
deferred debentures, due in 20 years from date of issue..
Underwriting—None.
of
permission to sell $28,000,000
of first mortgage pipe line sinking fund bonds, due 1968,,
and $11,550,000 of 2Mi % serial notes. /Bonds to be offered,
under competitive bidding.
Probable, bidders include:
Blyth & Co. Inc. and Kidder, Peabody & Co. (jointly);
Halsey, Stuart & Co. Inc.; The First Boston Corp; Pro¬
ceeds, will be used to construct additional facilities. ;
Co., will be used to redeem
$12,500,000 of 3%% of first mortgage bonds at 102y4%
and to repay the Central Hanover Bank & Trust Co. and
Price—Par.
purchase
Southern Natural Gas Co.,
March 22
Electric Power
common
the
;
equipment trust
(EST) March 3l,
at office of Geo. H. Pabst, Jr., Vice-President:
Probable
bidders:
Halsey, Stuart & Co. Inc.: Salomon Bros. &
Hutzler; Kuhn, Loeb & Co. and Blyth & Co., Inc. (joint¬
ly);, Harriman Ripley & Co. and Lehman Brothers
(jointly); The First Boston Corp.
•
-
Milwaukee;
mortgage
for
(jointly).
(3/31)
certificates will be received up to noon
Wisconsin
filed
Probable bidders
Halsey, Stuart & Co. Inc. (bonds only); The
First Boston Corp.; Harriman, Ripley & Co.; Hemphill,
Noyes & Co. and Drexel & Co. (jointly); Blyth & Co.,
pire April 30,
22
v
include:
share for each eight shares held. Rights will exr
Wisconsin
Electric & Gas Corp.
has application pending before New
York PS Commission for authority to issue $10,500,000
bonds and $6,000,000 of preferred stock. New securities
are
to be sold through competitive bidding.
Proceeds
.
record
capital stock
March 24 company
Feb. 25 filed 32,937 shares of common stock .(par $10).
Underwriters—None.
Offering—Offered for subscrip¬
tion
Corp*
would bb used to finance construction;
Wilson-Jones Co.
'
-
capital stock of Morris Plan Co. of Calif., a subsidiary.
Industries, Inc., Salt Lake City
For mining tools and
writing.
:
by $250,000, which will be offered to stockholders pro
rata.
Proceeds would be used to purchase additional
Feb. 20 filed $5,000,000 first mortgage
bonds, due 1978,
and $5,000,000 of sinking fund
debentures, due 1973.
Underwriters—To be determined by competitive
bidding.
Probable bidders, Halsey. Stuart & Co.
Inc.; The First
Boston Corp.; Harriman, Ripley & Co.; Blyth &
Co., Inc.,
Kidder, Peabody & Co., and Smith, Barney & Co.
(jointly); Glore, Forgan & Co., and W. C. Langley &
Co. (jointly); White, Weld &
Co.; Hemphill, Noyes &
Co., and Drexel & Co. (jointly). Proceeds—Finance con¬
Products Co.
Screw
Masco
Directors have voted to increase authorized
construction
Western World
March
April 6.
■
issuance of about 150,000 shares
of common stock (par $1) late in April, to be offered
for subscription by stockholders. Proceeds would finance
recent acquisitions and moving of plant.
holders of record March 15 at rate of $100 of debentures
to
on
shares of its Kansas,
250,000
for each 25 shares held.
•
(PST)
■
,
•
of the bonds will be received by the company at Room
South Flower Street, Los Angeles, Calif., up
a.m.
.■
March 17 company plans
934—810
8:30
sell publicly
to
Virginia Electric & Power Co. (4/6)
Feb. 17 filed $11,753,800 convertible debentures due 1963.
Underwriter—Stone & Webster Securities Corp., Boston.
Offering—Offered .for subscription by common stock¬
(4/6)
Feb. 26 filed. $7,000,000 3 lk % first mortgage bonds, due
1978.
Underwriting—To be determined by competitive
-v
holdings.
It has also requested to be exempt from the
competitive bidding rule.. Probable -bidders: . Dillon,,
Read & Co. Inc.; Blyth & Co., Inc.,.and The First Boston
Corp. 1 ■.'
.,1.'' .■/ ■ , •/'
March 15 (letter of notification) 40,000 shares of common
non-assessable stock (20c par).
Priee—50 cents-a- share.
Southern Counties
•/■■.
&
Gas
Kansas
New York.
Co., Inc.; Harris, Hall & Co. (Inc.); Merrill Lynch, Pierce,
Fenner & Beane. Proceeds—To reimburse treasury for
expenditures made to expand properties.
Expected
•
■■■
Electric Co.
;
March 16 American Power & Light Co. asked SEC per¬
•
at 100.99 and interest
around
j
v
Utilities Corp.
j
1947 annual report estimate cash, requirements of
Public
General
The
due 1973,
and $3,000,000 of sinking fund debentures, due 1973,
Underwriting—To be determined, by competitive bid¬
ding.
Probable bidders include: Halsey; Stuart & Co.
Inc.; The First Boston Corp. and Blyth & Co., Inc. (joint¬
ly); Kidder, Peabody & Co., Merrill Lynch, Pierce,
Fenner & Beane, R. W. Pressprich & Co. and Equitable
Securities Corp. (jointly); Smith, Barney & Co. and
Union Securities Corp. (jointly); White, Weld & Co.;
Harriman Ripley & Co.
Proceeds—For corporate pur¬
poses, including construction.
Bid's—Separate bids for
the purchase of the securities will be received by the
company up to noon (EST) March 29 at 2 Rector Street,
Underwriters—Names by competitive bidding.
Probable bidders. Halsey, Stuart & Co. Inc.; Blyth &
due 1978.
not yet determined;
&
Feb. 19 filed $3,000,000 first mortgage bonds,
Proceeds—For
Southern California Gas Co.
1» ■
possible issiie of a convertible
Goldman, Sachs
Co.; Merrill Lynch, Pierce, Fenner & Beane and Piper■
Jaffray & Hopwood are expected to head any public
in connection with a
way
Triplex Corp. of America, Chicago^-/March 16 (letter of notification) 10,000 shares-*^ 10 par)
No underwriting.
ical firms.
■•K-
2 750,000 to 3,500,000 shares. The directors have
determined when any public offering of the pre¬
ferred stock would be made, but work is already under
•
share for $10,
Solvay American Corp., New York (4/7)
March 19 filed 200,000 shares ($100 par) cumulative pre¬
ferred stock.
Price by amendment.
Underwriters—
Lazard Freres & Co. and Harriman Ripley & Co., New
York.
Proceeds—To buy 297,897 shares o; Class A stock
of Wyandotte Chemicals Corp. at $42.80 each, and for
general funds. Business—Holding company for chem¬
r
^
Harrisburg.
Refund $35,750 first mortgage 4% note;
pay $5,000 5% demand note; pay 1,250- 4^%: demand
notes held by Engineers Waterworks Gofprr^r ~ >
Co.,
To be offered in units of one
supplies.
'
Merchants & Business Men's Mutual Fire Insurance Co.,
-
shares.
•
Inc.
Gamble-Skogmo,
Morgan
The First
April 8 stockholders will consider a proposal to authorize
150 000 shares-of new preferred stock (par $50) issuable
in series and ifi increase the authorized common stock
Water
common
(letter of notification) 100,000 shares of com¬
stock ($1 par).
Price—$2 each. For equipment and
Probable bidders:
determined;
be
to
Stanley & Co.; Harriman Ripley & Co., and
Boston Corp. (jointly); Lehman Brothers.
Hart*isburg, Pa.
March 23 (letter of notification) $40,000 4% first mort¬
gage bonds, due April 15, 1973.
To be purchased by
Trevorton
mon
?(
•
No underwriting.
March 17
$ !■
h
Power Co.
..."
reported company may be m market this year
with $15 to $20 million new securities, the nature of which
Consumers
•
March 23
16
—
1948 to 1951, Charles Y. Freeman
definite program for financing has as^yet
been formulated, but it is expected that, steps will be
taken in this direction in the not too distant future."
j,.;
caid that "no
Mining Co., Denver,
(letter of notification) 50,000 shares of com¬
stock.
Price
500 each.
For mining costs and
complete its $360,000,000 expansion pro¬
$300,000,000 of which remains to be com¬
about
pleted in the years
Colorado
March
'will require $100,000,000 of new financing "in
company
due course" to
Gil Refining Corp., South
Milwaukee, Wis.
March 19 filed 850,000 .shares ($1 par); common stock:
Price—$1 each. Underwriter—Distribution by company.
Proceeds—To build and equip machinery. Business—Re¬
fining of crudd oil.
Gold
'
-
Commonwealth Edison Co«y Chicago
t
; i
March 22 in annual report stockholders were informed
•
Trans-Marine
cumulative
Pueblo, Colo.
Merle-Smith (jointly).
gram
Treasure Mountain
(Inc.); Kidder, Peabody;1 &:Co; and Dick &
Hall & Co.
purposes.
•
Lehman Brothers (jointly); Harris,
Ripley & Co, and
(jointly); Lehman Brothers. Proceeds—-For construction
equipment.
March 16 filed 500,000 shares of capital stock (par $1).
Underwriter—Harnman Ripley & Co., Inc. Price—Net
through competitive
determined
be
Thursday, March 25, 1948
CHRONICLE
FINANCIAL
&
bidding. Probable bidders: The First Boston Corp.; Hal-:
sey, Stuart & Co. Inc.; Blyth & Co., Inc.;, Smith, Barney
& Co. and Kidder, Peabody & Co. (jointly); Hemphill,
Noyes & Co. and Drexel & Co. (jointly); W. C. Langley.
& Co., and Glore, Forgan & Co. (jointly); White, Weld
& Co.; HarrimarT Ripley & Co., and F. S. Moseley & Co.
•
Boston
March 19 (letter of notmcation) 55,200 shares ($1 par)
common stock.
Price—Par.
For working capital.
No
Mills
Ramie
•
COMMERCIAL
THE
(1354)
has issued invitations for bids to be re¬
(CST) March 29 for $2,640,000 equip¬
ment trust certificates. Certificates
will be dated April
noon
1, 1948, and mature in 20 semi-annual
instalments from
Oct. 1, 1948 to April
1, 1958. Probable bidders include:
Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler;
Kuhn, Loeb & Co., and Blyth &
Co..(jointly); Harriman,
•
Wayne Pump Co.
B; F;
..
,
•
•
Geyer, Chairman* states plans are being - discussed
for issuance,
through underwriters,, of 60.341 shares of
common
stock.
Proceeds would be used Tor working
capital.
•
.
Number 4684
167
Volume
THE COMMERCIAL
&
FINANCIAL
CHRONICLE
Reporl Suecess With -Radioactivity ■ •■ on Crops Chile Announces New Plan
Pregel Brothers, executives of Canadian Radium and Uranium Cor¬
poration and ('International Rare Metals Refinery,
Inc., have
launched program for improving crop yields
by application of radio¬
!
>
active materials.
Tests reported successful.
Plant operated at Mi.
Council of Foreign Bondholders m<S>
London,
'
:
<
;
and industrial
Republic of Chile announced on March
24, the basis of a
readjustment plan to the holders of its external
bonds issued in
new
dollars, sterling, and Swiss francs
following negotiations with the
Foreign Bondholders Protective
Council, Inc., of New York the
Kisco, N. Y., for production of radioactive materials for medical
s
and
the
Association.
uses.
service
Cr°i'chb/n^^lLr^a^"nC,?d
and
Swiss
The
Council
has al¬
offered
under
Law
5580
unsatisfactory, and has'
by ,h,C:
the Department of Agriculture, will Ato™ic E»ergy Commission'
continue research launched peatedly urged the Chilean
as;-
several years ago by the Canadian Radium and
Uranium Corporation
Metals
RefihA^
of New
Yor&^j
experimental
plantings
been
ed
tcese
of
>
agricultural
stations
•
taken,
iri
,
and
active
Boris PregeL
Dr.
farms all over
the
medical
applications
products.
and
for
Their
applied
materials
active
to
the
soil affect favorably the yield of
radio¬
in
France.
The
Pregels
es¬
cucumbers, toma¬
and sweet potatoes. '
k
toes
'
with vegetables,
been
have
peas,
The purpose of the present pro¬
gram
the
is to confirm the results of
previous • experiments / both
under
in
laboratory
actual field
the
conditions
trials.
government
Parallel
field
the
tests
and
cooperation
carry
research
of
to
with
commercial
which
first
led
Canadian
Uranium
for
one
1/10,000
best
acre
of
results
an
ounce
active material in
rier.
The
will
be
dosage indicated
is approximately
a
radio¬
of
neutral
car¬
which
will
materials
be used in these experiments are
non-fissionable
radioactive
com¬
on
to
or
to
holders
of
materials, especially ra¬
dium, and the research, into. appli*
for
medical
and
•
dollar
substances
industrial
International
favorable
Rare
active
in. the country.
Kisco, N. Y., pro¬
variety
of
and
the medical profes¬
variety
a
of
Interest
Due
the
•tive
gold price-now run*
ning from $35 per fine ounce to
and A
stabilized price
of bringing
out of hiding Europe's hoarded
gold. Hoarding will cease when
the hoarders get in exchange an
equivalent in value. Breaking the
gold hoard, in this nation as well
will
*
Bluff, Cal/fc^I
^consideration
by Congress,
f
According
-
to
'Mr. Hall:
,
"continue
have gold
to
j.
p.
Hall
be
issued
nations,
depending upon
United
Jbe International
weakness,
all nations
°f
no
all other
especially those
The
States
or
Monetary Fund.
of
the
currencies
with, little
or
no
gold bears this out.
"It is now admitted
the
m
higher prices
lcan
are
in
However, the Amer-
gold producer, held down by
excessive taxation and
costs, is forbidden
increased
the advantages
as
our
Committee
—
on
also have -a
communism. '
we
do
new
the
extent
bondholders
purchase
.
Treasurer
corporation
of
W.
.
J.
BURTON,
SOUTHERN CALIFORNIA
EDISON COMPANY
>
Vice Pres. and Secretary
Common Dividend No. 153
a,cp
American Car
The Board of Directors has
following quarterly dividends:
Company
37V2 cents per share on the
Common Stock, payable
Church Street
30
April
New York 8, N. Y.
There
has been declared
a
30, 1948, to stockholders of
dividend
of
one
record
and
said stock at
be
mailed
by
New York.
not be closed.
Trust
*
4
on
Series,
payable April 30, 1948, to
stockholders of record
Checks will
'
share
the
Cumulative Preference Con¬
vertible Stock, 4.48%
Company of
'
April 5, 1948.
on
28 cents per
the close of business
Guaranty
of the U. S.
price of $35
non-interest-bearing
on
April
5, 1948.
1
o. v. showers,
Charles J. Hardy, Chairman
Howard C. Wick, Secretary
Secretary
March 19,1948
/ /
BRITISH-AMERICAN
TOBACCO COMPANY, LIMITED
NOTICE
Law which
were
sur¬
at the time of
Coupons on bonds assenting to the
plan that are dated three to
three and one-half years prior to
the
of such assent,
year
will be
BRITISH
considers
Council
the proposed
that
plan of the Republic
of its dol¬
of Chile for adjustment
lar bonds offers
material improve¬
ments,-including a service on the
bonds greater than at present or
otherwise in prospect. When the
Republic makes a formal offer on
completion of the necessary legis¬
lative and other formal measures
recommend
Council will
the
ac¬
ceptance by dollar bondholders.
Schedule of Future Payments—
in¬
dollar bonds will
During'the '-years
PHILIP MORRIS"
TAX
CERTIFICATES
The
2
usual
V2 %
the
the
on
Stock
(less
Six
half-yearly
dividends
of
Five Percent Preference
Tax) and of 3% on
Percent
Income
New York, N. Y.
March 17, 1948
Income
Tax)
Preference
for
both
Stock
the
year
ending
The
September
1948
will
be
payable
respectively on the 31st March 1948 and
30th April 1948.
Coupon
No.
Preference
the
with
for
89
dividend
National
the
Five
be
must
Provincial
$1.00
Percent
1948-1953,
clusive, the new
share with all other bonds of the
external-funded debt in a general
amortization fund, in an annual
(excluding
is
virtue
of
Treaty
States
and
credit
under
States
Internal
plication
New
before
pay¬
There
of
XIII (1)
the
of
Double
Section
131
Revenue
of
the
United
can
Code
by
rates
of
Tax appropriate
dividends.
United
to all
of
Six
Pursuant
a
shares
or
on
of
Common
Stock
Certificate
Certificates
or
Common Stock of the
Preference
shall
each
Holders
have
been
par
Certificates
of
for
each are,
for
therefor.
$5
for
Certificates
must
be
dollar
new
applied to amortization
bonds assented to the
share, on the basis of two shares
new Common Stock
$5 par value,
of
for each share of Common Stock of the
value of $10.
L.
BANK
OF
The Chase National Bank of the
share
on
stock of the Bank, payable
HANSON,
G.
Treasurer.
CITY
THE
OF
NEW YORK
City of New York has declared
the 7,400,000 shares of the capital
May 1, 1948
to
holders of record
at
April 5, 1948.
plan.
raise in but also will correct monetary
price would fall as an extra load conditions abroad, thus reducing
on the American taxpayer.
It will the amount of necessary aid by
be noted that the above plan will way of loans and the Marshall
not only not affect the taxpayer, Plan."
The transfer books will
payment
for
Common Stock of the par value of
per
vmmmmzszmiszmmzmszzm
NATIONAL
the close of business
of
shares
therefore, urged to exchange
Certificates,
such
new
TOBACCO
dividend of 40*5 per
new
value of $5
issued
Common Stock of the par value of $10
COMPANY LIMITED
a
a
of
for any purpose, until surrendered, and
par
CHASE
at
July
Certificate representing
no
the par value of $10 each is recognized,
1947.
THE
the
resolution adopted
1945,
share
Kingdom
the above
Stock, Five Percent Preference Stock and
of Ordinary Stock may also by applica¬
tion to Guaranty Trust Company of New
York
obtain
similar
certificates
giving
particulars of the rates of United King¬
dom Income Tax appropriate to any and
all
dividends
on
any
such stock paid
from January 1st, 1945 to April 30th,
BRITISH-AMERICAN
to
Stockholders' Meeting held
10,
a
Percent
declared
37V2<f per share
the
ap¬
mentioned
Stockholders
been
able April 15, 1948 to holders of Com¬
mon
Stock of record at the close of
business on March 31, 1948.
between
the
United
Kingdom to a tax
United
Guaranty Trust Company of
obtain certificates giving par¬
the
also
has
and an extra dividend of 25( per share
on the Common Stock
($5 Par), pay¬
be entitled by
to
York
Income
the
many
of
Series have been declared pay¬
May 1, 1948 to holders of Pre¬
ferred Stock of the respective series of
record at the close of business on April
15, 1948.
quarterly dividend of
Article
Taxation
ticulars
Saturday)
who
Ltd., inc.
dividend
able
made.
Stockholders
quarterly
3.60%
Lim¬
ited, Savoy Court, Strand, London, W. C.
for
examination
five
clear
business
ment
regular
per share on the Cumulative Pre¬
ferred Stock, 4% Series, and the regu¬
lar quarterly dividend of 90f per share
on
the
Cumulative
Preferred
Stock,
deposited
Bank
Morris &Co.
Philip
(less
30th
days
Foreign Bondholders' Pro¬
The
tective
INCOME
2,
A
cancelled.
OF
PREFERENCE DIVIDENDS ANID
cer¬
new
of
au¬
thorized the payment of the
Foundry
and
.
ounce.
held
MORRIS H. WRIGHT
Cumulative Preference
Convertible Dividend
who
"Treasury Secretary Snyder has
always
-
'
of
their assent, regardless of Whether
or not they still hold such bonds.
-
April 1, 1948.
on
to purchase
recommended ~fo
Continuance
fine
The
stockholders of
to
the close of business
at
State-Wide
has
..
per
coal
Directors
-
:
-
re¬
offered,
license;
Treasury
record
Bondhold¬
annually to, amortization of any
^ of the external bonds of Chile,
"(2) Restoration of the people's but
at
least
a
proportionate
right to hold gold; and
v.
;iamount *>i the amortization fund
port
"(3)
by all that
paid for gold
many foreign countries
y. S. dollars.
will
-
new
non-interest-bear¬
certificates to
offered
•
Company, payable April
15, 1948,
has
about "the
Mining amount in dollars of $2,531,000, a
sum equal to 1% of the debt out¬
standing at Dec. 31, 1947, con¬
Congress:
verted at current exchange rates.
"(1) A world free gold market
The fund will be applied semi¬
without the necessity of an ex¬
situation,
course for
the
effect
Europe,
"Feeling
as
monetary system, and there is
loans from
As
the
deterrent effect
the basic element of the nation's
other
have
in
as
'We must
,
$100.
over
Clai.iE*
Engle of Red
world
the
March 18, 1918.
this Corporatior
today declared a dividend of $3. per share
on Its $3.
Non-Cumulative First Preferred Stock.
50c per share on its 50c Non-Cumulative Secoiv
Preferred
Stock,
and
$3.
per
share
on
itr
Preferred
Stock
($50 par value);
all payabh
April 12, J948, to stockholders of record at thr
close of business on March 29, 19<»8.
of
Transfer books will
tificates to the extent of payments
■
valley
Board
assented late to Law 5580 will be
•
the
on
outstanding Preferred Stock of
require¬
annum.
share has been declared by
per
the Board of Directors
dollar bonds at
per
Company.
quarterly dividend of $1.25
March 18,1948
Furthermore,
industrial
meeting of the Executive members of the Statewide Mining
Committee, held in Sacramento, Calif., on March 5, J. P. Hall of Au¬
burn, Calif., President of the Western Mining Council, Inc., an affilia¬
tion of Western mining groups working for the
expansion of western
i
mining,
dis<S>|closed a new.
of the foreign market. No other
monetary plan
industry is in the same category.
; which will be
"The spread of U. S. ugold in
submitted
t o
foreign marts will aid the recov¬
Senator
Pat
ery of those nations and stabilize
new
commenc¬
March 29, 1948.
payments offered under that Law.
polonium and a
luminous radioactive
materials for
uses.
ing
radium,
duces
sion
will
materials
Its plant in Mt.
lehigh
The
is of¬
the
to
5580, but who accept the
adjustment plan
when
Refinery, Inc., owns the only in¬
refinery of natural radio¬
dustrial
A
requirements
applied
bonds
dollar
Chile.
who have not assented to Law
ers
a
Representa-Ai
Chilean
bonds.
Past
use.
'-Metals1
treatment
rendered by them
•'Nevada
any
bond than
It will be subject
by
The Weatherhead
propor¬
record of
is accorded
fered
Corporation is engaged
of^ radioactive
plan,
three-quarters per cent (124%) on the
preferred stock of ttiis Company outstanding,
payable April 5, 1948, to the holders of
external loan
30, 1951.
new
until
DIVIDEND NOTICES
be in¬
ment
and
Western Mining Group Head Wants Free
Gold Market
McCarrano f
ni¬
or
exchange
open
DIVIDEND NOTICES
agree
iodine
copper,
remain
extension
31,
Jan. 1, 1948, more favorable treat¬
of: the
Radium
3%
will
Cleveland, Ohio
hereafter
trate revenues, to secure an.y ex¬
ternal debt, the new dollar bonds
will thereupon share in such lien
under that
At
will
are
in the processing of natural radio-, .under the new plan, the Republic
of Chile will extend such more
active
The
The
the building
reaction pile.
to
chain
The
jects is to determine the optimum
dosage and the conditions under
the
liens
poration with furnishing the ma-,
pari passu with other creditors.
terials
for
the earliest experi¬
ments on nuclear fission at Col¬ (/Among other things the new
umbia
University, / experiments plan will provide that if, after
cations
obtained.
Government
any
created
a'om bomb credits the Can¬
adian Radium and Uranium Cor¬
fertilizer companies and planters.
The emphasis of the present pro¬
iwhich
sufficient to retire the
as
if
that
the
interest
new
be
to
March 11, 1948
issue by maturity. The new
bonds will not be secured, but the
Chilean
to
there will be
difference between
service
of
offer
dollar bonds when quoted
new
new
the
the
programs,
companies will continue to
on
and
of
June
issue of
new
timated
caped from Paris the day the Ger¬
the size and quality of the mans entered and made their
way
fruit and vegetables, .and the rate to the United States
where they
of maturity; In one case an in¬
worked
on
problems ; connected
creased yield of 92% has been with the Manhattan
Project." Tne
reported. The most significant re- Smyth Report on the history of
especially
rate
bonds
1954,
the
on
formal
bonds
new
annually
the
fund will
readjustment
the
presently
outstanding
bonds, the new issue to bear in¬
terest at IV2 % for 1948; 2% for
1949
and
1950; 2V2% for 1951,
1952 and 1953; and at 3% there¬
after; with a 1% sinking fund es¬
crops,
suns
the
for
agricultural field during 30's
vaded
a
1,
total-
ments
announcement
new
Dec.
on
under
the annual
46-year dollar
bonds of the Republic of Chile ex¬
changeable on a par for par basis
United.,
■
v.
led to the
development of a prod¬
States. An analysis of the results
uct which had been tested
and
of these test programs • indicates prepared for commercial
distribu¬
that minute quantities of radio¬ tion just before the
Germans in¬
the
the
and
plan it is proposed that there will
in¬
work
the
Jan.
provided
been
the
For amortization of the
ing
The
extension of the
an
issued
bonds
The Republic reserves the
right
to apply additional amounts to the
amortization of bonds.
dollar
new
additional
be
dollar
will be made.
be
dustrial
experimental
further
C Under
of
have
measures
a
development
at \
1944
radioactivity to agriculture
France long before the war. The
Pregel brothers were botn. active
n the
refining of radium and the
,
corporations /•
since
the application' propriate
If under
tion.
the external
Inc., and his bonds of the Republic. The plan
Alexander Pregai, Vice- .will be submitted promptly to the
President of both
Chilean Congress and, after
ap¬
companies, be- >
on
of
corresponding
Refinery,
their work
amount
in
aggregate
the amount of service will
creased in
brother
gan
the
proposal,
Chilean authorities of the need for
on
of
should
maturity date. The re¬
adjustment plan, as now proposed,
is a recognition on the
part of the
Uranium Cor¬
International Rare
and
service
4%
outstanding
1953.
rates and
improved service
Metals
c£v
sponsor- :
by
-
>
bonds
au¬
adian Radium and
have
c.rops
of Can¬
of
principal
re¬
poration
on?
variety
a
Boris Pregel, President
;
Sixty-three :>
;
compa¬
•,
botfo$£
Inc.,
ery,
pounds prepared by the
nies. ■■ -y
•
■■■'.'■•
total
pay
amount
thorities to make a better serv¬
ice? plan with definite
interest
apd the Inters
Rare S.
Commencing Jan. 1, 1954, Chile
will
below par, otherwise
by drawings
at par.
outstanding dollar bonds for
—
Banker
considered the 1935 plan of
ways
The research program in the direct stimulation
of agricultural
national
External Bonds
on
The
not
be closed in connection with the
of this dividend.
THE
OF
CHASE
THE
NATIONAL
CITY
OF
BANK
NEW YORK
that 'any
Albert
J. Egger
Vice President and Cashier
48
THE COMMERCIAL
(1356)
Thursday, March 25, 1948
FINANCIAL CHRONICLE
&
of
titude
BUSINESS BUZZ
of
from the Nation's
,
Capital
y /\||
to
them
would
how
take
at
UMT,
least
a
a
partially-trained recruit for the
armed forces,vis going to do any
JL- Ir Iv
I'M
" xJLf
on
and one-half to produce
year
>f
no
want to be told
things. They want it
explained
which
Behind-the-Scene Interpretations
that
They
one.
lot
a
•
•
is
from, they are from Missouri
this
on*
Congress
matter where Harry Truman is
in the present trading of
blows with Russia.
good
diplomatic
They want to be told why it is
that economic aid will not stop
Russia when for so long the Ad¬
responding to the big new swing of the
relations, and it is easy to understand why.
During the past several days there has been about as sharp a
change in the course of relationships with Russia and the rest of the
world as it is possible to imagine <£——
■
taking place in such a short time.
Mexico, a favorite of Mr. Tru
man, that the President has no
On
the diplomatic front, the
Congress is sluggish in
helm in foreign
seem
State
the
and
President
ment
eral retreat against
for
under
'Way
four
than
more
Russian presr
been
has
which
sure
Depart^
to have ended the gen¬
years.
The
ministration
*!»
race
must
long
as
is
symptomatic of this. The Ad¬
also
is
trying
to
crawl out of the impasse it got
into by backing the partition of
the
ministration
stantial detail.
in the military as
Palestine. And
diplomatic field, the
Administration also has acted. It
the
as
support the 50year, western European protective
alliance against Russia.
has
proposed
to
♦
*
j
This is rather
;
sizable dish,
a
and it is not difficult to under¬
that
stand
the
perhaps the country too, cannot
t
time.
(Congress for a long time has
been told that Russia does not
down and digest it at one
I
to
want
next
during the
fight
'j several
years. Now the Administration is saying that maybe
is
It
*
in its calculations,
perhaps Russia will not
wrong
'
that
until
;
wait
:
bomb
to
she
has
fight,
establish
if
her
.
atom
the
hegemony
over
any rate, if
start shooting,
Rus-
Europe. Or at
\
sia
i.
!
doesn't
to
necessary,
then
maybe her little minions will
get careless with their firearms.
Likewise Congress has been as¬
that
economic
aid
alone
would
achieve
the
of
Russian aggression through hired
containing
fifth columns. Now it is admitted
that
economic
enough.
The
U.
mobilize
to
aid
alone
S.
is
must
of
not
prepare
its
military
power. Then that military power
additionally will be used, if nec¬
essary, in support of western Eu¬
rope.
So the Marshall Plan has
gone
the way of lend-lease as
a
some
supposed
the
U.
strategem to secure
against entry into the
S.
war.
Small
a
little
wonder
that
Congress is
in the
appropriate
situation
The
!(t
U.
the
that
the
western
its
on
have
the
Certain
ears.
been
accurate
in
Democratic
Convention,
will
National
his
announce
withdrawal.
Obviously,
however,
cannot
point
is
out, Mr.
confirm
deny such
these
an
and
Truman
may
intention. The
that
he
feels
it
even
rea¬
ings with Russia and the rest of
the
openly
with
consent
in
world.
Mr.
Congress.
understandably
is
point
this
getting
There
cannot
S.
an
alliance
without the
country
of
was
man
U.
into
enter
any
old
an
Tru¬
vague
across.
which
notion,
began with George Washington,
that the
into
S. should not enter
U.
alliances. Gen¬
eral Washington's advice on this
entangling
score,
in
February 22. This
is read
Congress
come
year
every
point of view is ingrained pretty
well in the national feeling. Mr.
about
hesitant
Truman
was
directly
ghosts.
conjuring
such
any
this
the
unwillingness of Mr. Truman
The
point is
due
directly
preparation
by Mr, Tru¬
measures
proposed
then Russia receives
This
it
the
U.
S.
has not
notice
commitment
in.
sunk
yet
falls
When
has, Congress will realize that
has an embarrassing situation,
even
rectly
if
it
to
western
is
not
become
European
*
In
the
called
long
upon
di¬
party to
alliance.
the
a
<:
man
has
S.
U.
run
aspects,
Truman message heralds a
ize
to
do
perhaps
armed
the
violent
%
Z
Took
us
out of
hundred
in
men
the
the
President
to aid
campaign.
Mr. Truman and just
to
interpretation
is
considerable segment
a
Congressional opinion.
very
Democratic
for
that matter,
forth
new
to
regulars,
hope
that Mr.
ployed full time, would
thousand
addi¬
create
not
are
going
,
to
is
there
to
is
in
itself
Stalin
ages
S.
to
in sight is rationing,
Soya Corp.
production.
Ultimately
allocations,
some
inflation.
of produc¬
developments
ing the material of warfare. He
mean
knows, because he is using
These
and
more
higher
M.S.Wien&Co.
ESTABLISHED
of
taxes
Members
40
of
these
U.
self-same
S.
A.
is
that
theory
would
beginning
who could
country
use
and
up
can
*
get
the
take
the
S.
men
produce
so
year
even
by at
Compared
a
to
hundred
during the late
the
bil¬
U.
S.
short
world-wide
for
the ap¬
Truman,
If
go
he
so
far
For Dealers
military
full prepara¬
of
*
Mr.
HA. 2-8780
though the U. S.
falls far
well.
limited expansion in arms
if
tion
.
1919
Security Dealers Ass'n
believed
are
even
immediate
#
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figure of around
a
things
sight,
potential,
not
production.
in
the weapons the
Ultimately, however, and be¬
fore many months, the revival of
the
military
manpower
draft
a
these
be
Y.
Teletype N. Y. 1-1397
proach is merely to "strengthen"
Politbureau
the
to
to
official
notice if they thought the U.
was
All
in
made
the
Hence
sit
of
items
merchandise,
more
N.
Exchange PI., N. Y. 5
in time.
some
:
short¬
price control, and
the
that
Tucker Corp.
sub¬
diverted
are
begin
war
a
acute
force.
is capable
A.
of
materials
as
on
to
knows
.
mean
course
military
enough
a
U. S. Finishing
They suggest the
reappearances
will be impressed if this nation
establish
England P. S. Pfd.
Dorset Fabrics
in itself
•
financing
stantial scale.
actually
Russia
deficit
hope; as
Remington Arms
much. They suggest an increase
angle, Adminis¬
that
New
alone,
'
new
of the party.
men
Hence the implications of the
President's
will
Russia
of the revolt among
yet there is little to bear it out.
inconsiderable shortages
and bottlenecks.
for
said
be
no
of striking
move
contain
some
Even
party
This may be a forlorn
with the dregs of labor now em¬
Con¬
these
tration spokesmen will tell Con¬
to
services
armed
the
million
one
is that
manpower
bestirs
of
private
soldiers
What
division
into
Russia, if their intervention
is called upon, with their fists.
gress,
program
$10 or $15 billion, in the light of
present capacity domestic produc¬
tion for civilian needs, would up¬
set the domestic economy. Even
stop
the
armaments
limited
a
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Circular
Up-to-date
Now Available
>3
of
as
;
warfare.
course,
to
would
suggest this.
Oregon Portland Cement Co.
did
Henry Wallace would
get a vastly increased increment
of
popular support. While Mr.
Truman did not point out these
possibilities, other people do. The
President has merely warbled the
dawn of
war,
a
new
The present
HAnover 2-0050
military day.
overwhelming at-
LERNER & CO.
Investment
10 Post Office
Securities
t.
Square, Boston 9, Mass.
Telephone Hubbard I960
Teletype BS
19
Teletype—NY 1-971
Firm Trading Markets
Who has not said—
Last week's market
the
this
quiet
reaction
hundred
tional
will
it
is to mobil¬
several
forces.
gressional
several
mes¬
all the
show
to
additional
thousand
lion
<?
the
see
back western Europe
least
announcement
a
Congressmen
would have to be followed
❖
feot!"
my
doesn't sound like much. But even
interpreted literally,
sage
boys
that
basket off
economy.
to
military
rooted in
emergency
southern elements
the
man,
in. the office after five just to get
paper
in the entire
change, ultimately,
Russia, however, probably will
get the point. If Congress declines
the
v
I'll stay
waste
a
military
Senator Carl Hatch of New
Breathes there
to
spell it out.
take
'■
to
$
get
to
be darned if
"I'll
Joe
>is
that
an
swing
new
was
reelection
Truman's
contained in his farewell
message,
will
weaken his prestige in his deal¬
by
■>s
As
the
course
belief
his
the
alliance.
it
"
sources
defensive
European
Hence the failure of Congress to
their forecasts of such things, say
that
President
Truman, shortly
son
U.
big
of
western
tarily and in other ways necessary
gre&t deal of the motiva¬
biased, it is at the moment held
dominant agency of
in
foreign affairs,
S. will support mili¬
the
S.,
government
*
well-informed individuals who in
before
the
was
European alliance. This is a com¬
mitment from the" President of the 1
fall's
suspect
by
requires."
situation
next
They
in
defeat
unfair
support
the
means,
the
which
see
Whether
of last week. That point was
the U. S. shall extend, "by
that
behind the
the
can
in
election.
a
in
glossed over what his advisers be¬
lieve is the key point in the mes¬
sage
Truman
must have
L
.
President
the
Immediately
they
in national affairs
U.
situation
past
.
view
greatest
prospective
tion
immediately or
;
long run.
Mr.
key Con¬
the
the
that
one
of what is in store
the
is
national
thing, the Administra¬
tion has not told the story frankly
For
*
!i:
the
of
Congressional
to the
against Russia.
bold front
that
"emergency"
store
en¬
correct
are
many
express
privately
big swing
*
they
great
a
gressmen
the
the
to
not,
or
■
is its political ef¬
Whether
fect.
*
*
,
of
stickiness
dizzy.
Meanwhile, there was another
last possibility that would again
practically stand the entire politi¬
cal
tire situation
other reasons for the
are
reaction
Of
sured
*
_
and
Congress,
so
*
the background of the
In
the President waits until:
of the Democratic Con¬
There
-
*
vention, he will be free to decide
to run if events materially change
national sentiment toward him.
well
it
*
great deal of information in sub¬
aggressive stroke of proposing the
return of Trieste to the Italians
eve
*
is that it will move cau¬
tiously, and only after getting a
Any report at this time of the
impending
withdrawal
of
Mr.
Truman
from
the
Presidential
for
them
So the present attitude of Con¬
dicative of this state of mind.
discounted,
told
gress
intention of withdrawing, is in¬
be
has
will.
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