Full text of Commercial and Financial Chronicle : March 28, 1946, Vol. 163, No. 4476, Section 1

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In 2 Sections-Section

1

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Reg. U. S. Pat. Office

Volume 163

Number 4476

New York N.

Y., Thursday, March 28, 1946

Soviet Withdraws From Council The 100%

By WALTER E. SPAHR

Professor of Economics, New York
University
Executive Vice-President and
Treasurer, Economists' National

&

Committee

•;

Delegate Gromyko Refuses

to Abide by Security Council's Decision

Hear Iran's Complaint.

Thereupon, in Explaining His ObjecRepresentative Charges That Russian

to

tions

Delay,

Iranian

Economist Cites

|

Between

1 Brilliant Advocate of
r Is About to Be

Bad Case.

a

Intensified.

;

He Declares That the Seltzer
Proposal Would Make the Treasury the
Dictator, and Effect Centralized, Federal, Executive, Totalitarian Management of Our
Money, Banks,
Credit, and Prices. Disapproves of the Leland Plan as Completely
Overlooking the Proper Relation¬
ship of a Central Bank to Its Member Banks, and the Relationship of the Government to the
Money
Markets.
The CED's Recommendations, It Is
Charged, Represent the Most Extreme Scheme for Dic¬
tatorial and Totalitarian Control Over
Money, Prices, and Fiscal Affairs.—

Appeasing Words and
Gromyko Performed as a
The Veto-Rule Controversy

/

HUNTER COLLEGE, New York, March 27—With
Delegate A. A.
Gromyko's dramatic stalking out of the Security Council Hall here
late this afternoon went

<
.

The

The immediate

|L •/>
h

li

s

'

of

cause

today's rupture

was

the insistence of the Council members, excepting
*7

only Russia

and

her Polish

satellite, that

the

!

President, The Equitable Life Assurance Society

Mr. Parkinson Calls Attention to the

Has Resulted From

con¬

.

/

obviously
mockery
A.. Wilfred

dictated

of

fit

Moscow,

by

week's

made

solemn

May

a

assur¬

Why do

by

when the rules

ciation

can

its own demands.

hear

the inexorable logic

Against

boasting about

of Secretary Byrnes,

of

T. I. Parkinson

1

Regular

Features

*An

on
,

Nu-Enamel
*

Prospectus

on

Common

request

Prospectus

or

/

(Continued

on page

Successors

to

Members New York Stock

CO.

HAnover

2-0600

Teletype NY 1-210

Cleveland

Chicago
Geneva

London

(Representative)

64 Wall

PROSPECTUS.ON REQUEST

1927

Street, New York 5

HUGH

Troy
Albany
Buffalo
Syracuse
Pittsburgh
Dallas
Wilkes Barre
Baltimore
Washington, D. C.
Springfield
Woonsocket

FINANCE

BROKERS

48

WALL ST.

30 Broad St.

634SO.SPRING ST.

Common

Tel. DIgby 4-7800

LOS ANGELES 14

5

The Firth

v

BULL, HOLDEN & C2

&

MEMBERS NEW YORK STOCK EXCHANGE

INCORPORATED




T«L

Security Dealers Ass'n

REctor 2-3600

New York 5
Teletype N. Y. 1-576

Philadelphia Telephone:

>

dressed

up

some

in

a

garb, sometimes in-

(Continued

1658)

on page

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CITY OF NEW YORK

THE

New

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England

Public Service Co.

Carpet Co. Com.

Solar Aircraft

PREFERREDS

Company

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Prospectus

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45 Nassau Street

been

new

Brokerage

$2.40 Conv. Preferred

TELEPHONE-RECTOR 2-6300

slightly

-

NEW YORK

.r

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These old fallacies have in

Members New York Stock Exchange
Members New York Curb Exchange

-INCORPORATED

SECONDARY

Members N.

dangerous to
get advocates—often surprisingly
respectable ones.
or

Detroit Harvester Co. Com.

BOND

MARKETS

Walter E. Spahr

seems
to
be too ridiculous

Hardy&Co.

w/lONG and-GOMPANY

PHILADELPHIA

CORPORATE

14 Wall St., new York 5, N. Y.

to its absurdi¬

ty,

State and

and Dealers

Whotesoflo^D^^butors

SECURITIES

BOSTON

evi¬

history
might yield as

y.

Acme Aluminum
■■'A

much

dence

Request

Established

and other Exchanges

bank¬

Service

R. H. Johnson & Go.
INVESTMENT

25 Broad St., New York 4, N. Y,

etary,

instances

for Banks, Brokers

Exchange

mon¬

1648)

Bond

MAMATTAN

Stock

on

a

,to

some

extemporaneous address by Mr. Parkinson at a meeting of
Society of Security Analysts, March 25, 1946.

Hirsch & Co.
HIRSCH, LILIENTHAL &

great Russian
country and its gov¬
Yes, I am for America

nothing to do with your immediate
my subject.
The fact is that in 1929

Pratt's Fresh

Frozen Foods, Inc.

as

the New York
.•;;

a

and to

it

solution

corporations and individuals on the basis
they had made by their previous loans.
Today

of a market which

1684.

r

own

But that has
concerns

San Francisco Mines
Aerovox Corp.*

offer

the banks made loans to

(Continued on page 1676)

Index

of his

ernment a short time ago.
and for America's form of government.

Mahmoud

dom, and Mr. Van Kleffens of the Netherlands; Soviet delegate
Gromyko went down fighting to the bitter end. In filibuster-fashion

page

along the line that the

leader boasted

Hassan Pasha of Egypt, Sir Alexander Cadogan of the United King¬

Gaumont British

.other

constitutional government?
I would like to
a little more of
praise and

America

Soviet Puts Up Bitter Fight
*

turn with adoring eyes and appre¬
so-called democracies without

we

to

constantly emphasizing the glory of this Ameri¬

changed to

are

monetary
political
and

and

Urges That We Get Bonds ing, or other
Out of the Banking System and That the Federal economic
problem.
No
Reserve and Congress Alter Policy of Low Interest
monetary
Rates and That a Monetary Commission Be Created
plan,' regard¬
less
of
how
to Formulate a New Fiscal
Policy.
v

and unilateral action,

last

her

v'"'":

Monetary Inflation.

radio and press conference.
It
makes crystal clear the Soviet's philosophy
ances

that it will play the game only

V

Suffer From Excessive Increases in
Deposits and

;

Today's arbitrary

Sees No Immediate Reversal of This Trend
Warns That. Banks as Well as Others Will

and

permanently

.

in

Monetization of Government Deficits,
by Having history
the Banks Create Deposits
Through Purchases of science
Bonds.

principle, so forcefully
championed by Secretary Byrnes, that if the pre¬
scribed rights of the small nations—not members
of this higher Council—be disregarded, then the
destroyed.

Increasing Money Supply Which

attempt to un¬

?

practically every
fallacy known

By thomas i. Parkinson*

fundamental

world's confidence in UNO would be

a

cover

seem

this

in

of money: It is the

sideration of Iran's complaint be not postponed.
But more important than this immediate issue
was

1932

to
country
peculiar disease in the field

characterized

by

ity's hopes for peace.
The Soviet Government's
non-cooperative attitude toward the United Na¬
tions' spirit, after smoldering through the ap¬
peasements of San Francisco and London, finally
exploded here.
;:;7': •' •

since

years

be

goodly share of human¬

a

V'

•..

Misuse of the Term "Reserve."

Moscow's

Her Actions Are Quickly Revealed.

Monetary Policy

'/100% Money" From Those of Irving Fisher to the! Current Proposals by Professor
Leland, Professor
Seltzer, and the Committee on Economic Development. Dr. Spahr Charges That All These Plans Involve

j .Is Interfering With His Government and People; and Denies the
j Existence of the Alleged Agreement for Their Withdrawal. Comtplete Contradiction

on

the

Numerous Historical Monetary Fallacies Advanced Since
1932, Particularly the
Many Suggested Devices Based on Fiat Paper Money.* He Traces in Full Detail the Schemes for

Troops' Presence Is Inconsistent With Sovereignty Rights, and

-

'

•

to

•,

'*

A' WILFRED MAY

|

Copy

a

Money and Other "Reserve" Proposals

-

Sabotaging UNO

Price 60 Cents

Enterprise 6015

on

request

HART SMITH & CO.

Members New York Stock
Exchange

Broadway, New York 6, N. Y.
Telephone:
Bell

REctor

Teletype NY

and

Members

Reynolds & Co.
120

New

52

York

WILLIAM
Bell

Security

Dealers

ST., N. Y. 5

Assn.

HAnover 2-8980

Teletype NY

1-395

2-8600

1-686

ira haupt & co.
Members

111

New

Broadway

New

York

REctor

York

Stock

otheb Principal
6

2-3100

Exchange
Exchanges

10 Post Office 3%
Boston

Hancock

9
3750

Tele. NY 1-1920

New York

Montreal

Toronto
Direct Private Wire te

Bottom

THE COMMERCIAL & FINANCIAL CHRONICLE

1630

Thursday, March 28,

1946

Trading Market$ in:

Arnold

Is

Brilhart, Com.*

Stock Market

a

N. Y. New Haven R.R.
Old

Pfd.

Security Prices as (I) the Shrink-'
ing Supply of Stocks and Bonds; (2) the Plethora of Money; and (3) Eagerness of Banks to Invest
Deposits. Holds There Has Been No Unorderly Stock Speculation and That Speculation and Price
Advances. Are More Rampant in Real Estate, Farm Lands and Commodities.
Contends There Is No
Inherent Cause for a Stock Market Crash, and if 0 is Comes, It Will Be Due to Outside
Conditions,

Higgins, Inc. *
General Box

§

Prospectus Upon Request

Such

KING & KING
;

Established, 1920

'V; '.y

Members

"

New York Security Dealers Ass'n
•tfat'l Ass'n of Securities Dealers, Inc.

HA 2-2772

40 Bxohange PI., M.Y. 5

BTY 1-423

BELL TELETYPE

Wall. Street and .the Stock Mar-.3>—?
ket

be

critic

if

y/X
:

,

find

Delaware Rayon

of
aji

Mitchell & Company
Y. 5

There Is No

harpooning
Street,
many of

.

SALE

400

0:00-];

are

Lloyd W. Maxwell

shares;

•j.

injected
public ; press—fear that

the

a

Exchange

One

Telephone COrtlandt 7-4070
Bell

8ystem Teletype NY

was

in

a

boom, and

was

collapse

imminent.

article, in the Reader's Digest

'/

\

*Mr. Maxwell is Economist and
Statistician

1-1548

head

for

Louis

H.

White¬

Co., New York City,

(Continued

on page

■-*

1652) vgf

■

' ,4"«

/

;;

in

and
etc.

tween

Al-

Home Title

|g§
Guaranty Co.

A. S. Campbell
Common

Lincoln Bldg. Corp.
Capital Stock
:
.

antagon¬

ism

a

B

i

r

i nst

g a
t

i n,

a

ings

H. G. BRUNS & CO.

frfC PONNELL & CO.

20 Pine Street, New York 5

Members
New

York

Stock

Exchange

New York Curb Exchange

'

;

120

BROADWAY, NEW YORK
Tel.

s

against^

Middle

ent

re-

til

They
cleverly util-:
;

Dr. Melchior Paly!

REctor

2-7815

publicity and diplomacy, support¬
ed by the fifth column methods of
Communist- parties
and fellowtravelers.
Sympathies for Britain

or

-to

were

be

by

a

alienated; here

and

rattling

the bones of
Greece, In¬
dia,
Egypt and
Indonesia;
by
charging that the British "threat¬
en" Russia /by Polish and ^Nazi
armies;, that they support Fascist
regimes
in
Spain,
Italy
and
Greece; that they use Japanese
troops a gainst, natives whom they,
supposedly mistreat; that they are
preparing a western bloc (while

the

England Co.

offer

37 Wall

Bell

St„ N. Y. S

&

1127

Stock Exchange and Other

Bowser

Russian

criticism

68 William
BOSTON:

Street, New York

201

Devonshire

GOVERNMENT,

Harrisburg Steel Corp.

St.

'

MUNICIPAL,

INDUSTRIAL

INVESTMENT
'
•

V

X-.'-.V

Knowledge

•

...

Common

/// '

BONDS

Experience

*

for Investors

:*

.

Facilities




York Curb

;

Exchange

•

NEW YORK I
HAnover 2-9470

Teletype NY 1-1140

bluff

Moscow's

5n

+

playing tip

ore * allv
against the ofrer har
been called. The end of that pol¬
icy was ushered in. by -sharpening
dissension •. with1- .Washington on

such 'taunor" tissues as Austria.
Korea and Bulgaria. The Irafrer
and
th.e
Manchurian
conflicts

Give lo the
GEO GROSS

.

brought U, S. diplomacy fully
Britain's side.

tive

ing which
man

*o

That

m eahin g

is

the

/ Vv

nosi-

the

v'S'p,?

Members New York Stock Exchange

^

Dlgby 4-7060 "/

Teletype NY 1-1958

ac¬

in

Persia,

and

Their

>

on

foreign policy

our

V; I;.-:-

± -

v

t Wall St., New York 5, N, Y.

pro¬

on

behavior

Htissian

of

:

Gude, Winmill & Co.

American fooke«-

climaxing in

1

v

vi.:v;;:)■• v.:, iv::

after' th e. other administered

Russia,

•■■■'-'

or

of the verbal 1 ash¬

one

■■■■■

Eastern Sugar Associates

one

can¬

Common

&

Preferred

rebuke,

Haitian Corp.

the

^oason

to

Allies

have

1-872

view

it

as

on

page

SOLD

—

120

Requdst

New

York

Stock

Exchange;

WALL

ST.,

NEW- YORK

i

Jefferson-Travis Corp. ;
Western Union Leased Line Stocks
International Ocean Telegraph Co*.
Pacific & Atlantic Telegraph Co.

;

QUOTED

Coffee & Sugar Exchange

1666)

Securities
*

York

TEL. HANOVER 2-9612

Curb and Unlisted

MICHAEL
—

New

a

CORPORATION
Common

Upon

parr & co.
Members

every

complete
own policies.
For
almost five years they have been

& ELECTRIC

BOUGHT

Quotations

fiasco of their

NATIONAL GAS

;'

Punta Alegre Sugar

defeat, or rather the
rebuke, Russian diplomacy

,

J-G-White 8 Company
'•

^

Members New

04 WAUL ST.,

HEANEY, Mgr.

WALTER KANE, Asst.

Mgr.

Southern & Atlantic Teleg. Co.
Empire & Bay States Teleg. Cou

Bought—Sold—Quoted

STOCKS
I'-V«5

Frank C. Masteison & Co.

tuned

were

Hotel, Inc.

dissatisfaction

•:--■/:

Kingan & Co., Com.

RAILROAD, PUBLIC UTILITY V
&

.

of

However, if the Kremlin has to
recognize this development as. a

.-,

Teletype NY

Inc., Com.

Commcdore

has suffered since 1942.

NEW YORK 6, N. Y.

Getchell Mine, Com.

Eastern Footwear

was

(Continued

Members New York Stock Exchange

Common Stock

Anglo-American Fiasco

Principal Exchanges

Telephone BArclay 7-0100

R. W. PRESSPRICH & CO.

Central States Elec. (Va.)

first major

Securities Dep't.

115 BROADWAY

/

.

second

a

from the British
(and the Chinese?).
That .is the

,

Hanover 2-4850

Teletypes—NY 1-1126

.

Bell System Teletype NY t-19.19

not be separated

GOQPBQDY & CO.
Members JV. V

;

*

Broadway WHitehall 4-8120

to

Soviet

and

^

CANADIAN UTILITIES
Canadian

50

\

policies in Japan is ex¬
pressed mainly through non-par¬
ticipation.

first

United Artists Theatres

Members New York Stock Exchange
Members New York Curb
Exchange

our

Manchuria

CANADIAN MINES

Assn.

;

the

war

the lack of

MacArthur

on

down,

pointf that

Oxford Paper (o.

Members N. Y. Security Dealers

Iit||

,

Edward A. Pureed & Co.

organizing

meaning is* clear at least

CANADIAN BANKS

&TeeTvetoicompan^

>

Soya Corp.

relative mildness. Even the at¬

with

.

CANADIAN INDUSTRIALS

Colonial Mills

Northern New

.

R. Hoe Common

conspicuous—un¬
month ago—by its absence

tacks

,,

We Maintain Active Markets in U, S. FUNDS for

V"

7% Preferred

eastern bloc) etc.,

during

,

time,

*aire

count

Boston & Maine R.R.

Central States PrV &

was

the U. S. A.

ents
against * the
m

West.

is

tests; notes of Mr. Brynes

Stamped Preferreds

branch offices

Electrol

<

lengthen the
Russian-British
alliance,
to
50
years), and carries on an unrelent¬
ing campaign that goes so far as
to incite trouble among the-Arabs,
Indians, Javanese, ; etc.
At the

both, and.Central European;
Eastern

an

Bevin's

French fee 1-

•

Teletype NY 1-1843

our

Anderson Pritchard

tives, alleges sinister intentions
ignores all friendly gestures (such

British imperialism in

Bough t—S6ld~-Quoted

Bell

to

Magazine Repeating Razor

being put at London's
doorstep.
Since, Moscow ques¬
tions at every turn England's mo¬

to Ameri-

abroad

•

Telephone: WHitehall 3-1223

?"/./

•

front

lies, playing
c a n

arming

*, Already
blame for

the

ern

'

►

NY 1-1557

•

Moscow

reality

in driving
wedges be-

ize for this purpose the UNO it*
self, in addition to all devices of

Byrndun Corporation
Common

•

''"I

La.-Birmingham, Ala.

Direct wires

j

<§>-

s

and

York 5

'
.

.

of Wall Street jitters was

Street

Curb

*

-

About nine months ago a wave

that

York

sis t

on

up

-

Wall

New

c

west

Vanderhoef & Robinson
Members

and accuracy; In

eyes that profess to see
Street too often seem to be

brief, the

into

Common

31 Nassau Street, New

of Soviet

included.

Company g|"

■fr

tive

astigmatic.
They •/ distort
many
things in the picture and omit
numerous
things that should be

W. & J. Sloane

'

...

foreign policy

in thoroughness
Wall

New Orleans,

"Take them on one by one" was a leitmotiv of the Hitler-Ribbentrop diplomacy, and it worked for a; while. Similarly, a prime objec¬

sadly C lacking
FOR

HAnover2-0700

Necessity of War, but There Will Be Unending Ten¬
Forcing an Armed Trace.
/

St., New York 4, N. Y.

"

'

Russia's First Defeat

so-called

analyses

25 Broad

sions and Crises

been

and

the

Members New York Stock
txchange

Awakening!if!

Wall

•

1-1227

N. Y.

Sunday

Supplements

WOrth 2-4230

;Ben Teletype

sorts

magazines
ll

have

Members Baltimore Stock Exchange
120 Broadway, N.

writ¬

All

ers.

Quoted

***

Steiner, Rouse & Co.

^ Russia's "Iron Curtain'^ in Euroj^ vHa% Disrupted Europe's Eco¬
nomic System. Praises
Strong Atliaide Toward Russia and Accuses
Latter of Encouraging World Revolution and Communistic
Ideology,
When Britain Is Weakest and the U, S, Is War-Weary.
Holds

shortage' of
critical

Sold

■.

Allies Themselves Have Made a Fiasco of Their Policies.
Says
U. S. and Britain Have Forced DcuMe Dealing on China and That

there been any

Bought—Sold—Quoted

•

to

.

A & B

/

.

Asserting Thai the Calling of Russia's Bluff at the London Confer¬
ence of the UNO Resulted in That
Country's First Diplomatic De¬
feat Since 1942, Dr. Palyi Points Out That, at Same
Time, the

pub¬

a

'

By MELCIISOR PALYI

.

lisher. Nor has

;

r—

a

please the
public-; and

A & B

V

—

Points Out Level of Stock Price
in Other Recent Boom Markets.

Rude

he

wishes

Rayon

or

—

subjects of
discussion. Judging by observation
in recent years, a writer on either
topic
almost
to

CO., INC.

Bought

present

ever

are

|| 4

Political and Other Action Destructive of Private Enterprise.

as

Advances Has Been Less Than After Previous War

has

New Bedford

P. R. WU10RY

Mr. Maxwell Lists New Market Factors Which Have Led to Rise in

*

Miss. Valley Barge

*

Collapse Coming?

By LLOYD w. MAXWELL*

Com.

&

Simons, Unburn & Co.
Members New

^

25 Broad

York Stock Exchange

St., Now York 4, N. Y.

HAnover 2-0600

Tele. NY 1-2908

'

I

'y

INCORPORATED

37 WALL STREET

NEW YORK 5

'.

Joseph IHanus & Co.
New York Curb Exchange
Chicago Stock Exchange

Members

ESTABLISHED 1890

39 Broadway
Tel. IlAnover 2-9300

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Dijfby -4-3122

New York 6
Teletype NY 1-1610

V

**' is

W

Y

bought

-

sold

•

/

quoted

//>>

Arnhold and S. Bleichroeder
INC.

30 Broad St.
WHitehall

3-9200

New York 4
Teletype

NY

1-519

'

1631

FINANCIAL CHRONICLE

THE COMMERCIAL &

'Volume 163 ' Number 4476

Inflation Under Price Controls

Are Price C«nliols Necessary

lensTtin

B. S.

By ALAN H. TEMPLE*

"Unprotected''?

Tor the

' '

F. A. HARPER*

By

fif

-

University

Professor of Marketing, Cornell

,

'

1

*

*

Vice-President, The National City Bank of New York
f

j
j

„

AND COMPANY

'

Asserting That the Increase in the Supply of Money Is the Original •},

and Primary Source of Inflationary Pressure, Mr. Temple States
That Price Control Does Not Operate to Reduce the Money Supply
?or Prevent Its Further Increase.
Contends Also That Low Interest
Further Inflationary Pressure Not Affected by Price
Controls.- Holds Direct Attack on Basic Causes of Inflation Can

!

"

!

Asserting That Price Controls Are Adaptation of False Notion That
Can Perform Temporal Economic JSalvationy Prof,

>

"Government

7 Rates Are

Harper Argues That Such Controls Tend to Become Permanent.
Points Out That Greatest Production and Protection of Poor Comes
Without Price Controls, Since Controls Clog the\ Economic Pipe
Lines and Reduce the Size of the Melon to Be Divided Among Con¬

■

A

7'
r

.

Well

1

•

as

v

Con- j

.

:

protect the American

against*
Wage

what disaster?

people?

i

claimed
them?

^

This

is

;

no

small

we

phy
i

been

*

fear

It is a re*

address

by

Prof.

country

was.

founded, and
in the

1946,

(Continued

that

1946."/

'

■

iplS: AMERICAN
PHENOUC
CORPORATION
Analysis

on

Request

»*

(Continued on page 1670)

: r

Teletype NY 1-1203

HAnover 2-8970

Board, New York City; March 21|
m

J.F.Reilly & Co., inc.

Securities

New York

j

Members
'. * ^
Dealers Assn.

Security

40 Exch. PU New York 5, N. Y.
2-4785"

HAnover
Bell

--?vT'r

-7

:

•

New *crk 6, N. Y.

-v.-!

1654)

Commissioners

SEC Vacancies Afford

j

System
^

Wires

Chicago

Boston,

NY

-Teletype,

Private

.

^

7

• ■

Angeles

Los

&

^

1-2733-34-35

to

Important Opportunities for Relief to Se¬

curities Industry by Proper Replacements. Appointment of Political
:
i Hacks 7or the Mo^ving Up of Present Employees of the Commission '
| Opposed, Sbme Qualihcations JSuggested. Background of Pros- (
! pepts Should- B^ Publicized.
Dealers; Brokers! and -• Underwriters j j
jr.

j

Theoretical and Unfair
Approaches to Pricing Problems Are Impeding Production and Throttling

^Recommendations.

Contending That; OPA^ - CurrenttUnrealistic,

Prominent - Retail,. Executive

Urge;! That Industry Insist That Congress Restrict
7 It and Require Removal of All . Inflationary Con*
trols.
Cites OPA Powers That Require Elimination
or Restriction and Gives Illustrations of How High4 Priced .Novelties Are Obtainable -WheulConsumje^

TRADING MARKETS
Thlokol Corp.
Miller Mfg. Co.

iThrough/ Theur. Congressmen Should^ Airange; for Commendable
■;

Industrial 7 Activity,

/ 7

fore the 277th meeting of the Na¬
tional Industrial Conference

Harper

Vice-President and Comptroller, jYV. T. Grant Company '
'

'

•

;

on page

By ROBERT A. SEIDEL*

■

-

39 Broadway
,

*Ari address by Mr* Temple be4

bull

*

.

Brunswick Site

Members New York Security Dealers Aasn.

saving the
excess, Thq

Board', > New York City, .March 211

the reverse was true.

belief that

•

of

AI?n H. Temple

that governperform temporal ecof before the General; Sessipifc of .#>4
Industrial»Conference
salvation for the. peoplei. National

has enjoyed unique success,

v

'

third V is

r

;;7

L J. GOLDWATER & CO.

have resulted in infla¬

wars

more

freely instead
L

Works

Dye

Piece

7:777^7--77;

can

This

.

7 they

spend

VORK

NEW

Huron Holding Co.

;

nylons, the men-fear no

no

shorts, and the shorts fear a
*An

liistory—the- belief
.nomic
.

before.

All

of

version to the pattern of most

.vnent

money

The second iS
that

.

■

tion, because in war the increase
in government debt leads -to ari
increased supply of money. At the
same time a large part of current
production is for war instead of
civilian use, and the goods are not
available for purchase by the peo¬
ple who receive the money. 7 The
war
is over, and the war goods

r

of

part

large

-

i. the 7'c^ilized";worlds

-than

governmental of|
both at the

lot

a

profits.*7The ^returning,veterans
there arerhot
fear that they will have td con4
goods ahj! services in, the market?
tinue to live in tents: The ladieif

ing across this
country and a

!•:' F. A. Harper

/

more

go up and workers fear that they
will not.
Business fears falling

sweep¬

people

have

Consuml
producers

is

One

that

time/ which may be' called
uncertainty >and confusion. Pro4
ducers fear that wage' rates swill

gen*

In in¬

7 c ondi tions
exist.

;

,

flation 7 three

same

philoso¬
that has
~

deflation;

and

causes

rather than its

effects.

•

Artists

United

United

price increases are the effect;
the consequence, of the three basic
inflationary influences.
. •
' r j

ficials apparently fear

really discussingvis the
eral

inflation

fear

fear

are

whole

Against What? 4 > |

What are thesd fears?

ers

subject.

What

:

•

The

empha-r

sizes its

i

argument can have no. meaning
unless there is. a threat or a fear}
real or imagined.
..-j.**

for

•

which

b$ proteqtea
against hothing^The prbtectibnist

s

■'

push prices up;

These

It is impossible, to,

•

ccomplish

what

Protection

,

Do

controls

these

7

*

•"

:

STREET,

WALL

j
]

•

conditions

>'' ■'

Be Less

its cure, is one

r

•

Obsolete Securities Dept.

09

The most
description of inflation, and the one best calculated to pro¬
mote soun d<3>
—7
''v,,7'
7
thinking as to to satisfy the enlarged demands.

historically tin *

successful notion.

the people or
some
of
the

4

-

/

,77:

•

'.•"V,

different things to different people.

means

controls are an

and price

adaptation of that

all of

Protect

a

We must inquire: Prof

people against disaster.

tect

i

;

here.

it

Telephone WHitehaH 4-6551

Restrictive,' Since the System of Free and Voluntary Association
■-in Productive Enterprise Cannot Function Properly Under It.
■

useful

maintained to

and price controls must be

It is claimed that wage

,

j
I

.

strongbox,

your

like

-

Inflation

|eludes "We Should Junk the Entire Control Machine Now"

:

a

Urges That if Price Control Act Is Continued, It Should

-

Line,

National Socialism, Make ; People j Waste: Time Waiting in
% Create; Black Market! and Put; Premiums on Dishonesty.

in

junk
remember—I

don't like that obsolete

If you

;

Monetary and Fiscal Policy That Reduces
Money Supply, and Attacks Recent Wage Increases as Intensifying
Inflationary Trend, / Says Price Controls Restrict Producton and

:;fBe Made Through

Causing Its Inequitable Distribution. Contends
Controls Generate Wholesale Unprotection and Foster Practices of
sumers, as

7 IT HERE!

j

a

LIKE

I

j
)

•

,

7

-i

•-

president.

Bijlings & Spencer

4
! .1

Wile ox-Gay

v" ,,f"

1 \

,M

now on

the desk of the

1 ^

if.tHat resignation is accepted there will be two vacan-l
filled, and the calijbre of the replacements is of
vital importance; to all jthosejwhose activities are affected by

,cies to be

Corp.

.Kinney-Coasta|7pil

'

Ganson Purcell has also

resignation, which is
7

i

Sumner:Pike becomes

April 307

In the meantime, Chairman

tehdered^his

f

----- s

•

.

The resignatiori of Commissioner

effective
*

-

V

Reeves Ely

Lab. Pfd.

m

Iti hi alb & dfo.m
Members New York Security

170 Broadufay
BeU System

Essentials. Arf lLacking.^ Denies Industry Favors the.
rulings of the SEC.
Inflation or Resists Realistic and tHonesiv Regula-j
Understanding the significance of the patronage systenij
tions and Acchses OPA of Using Gestapo Methods.;
(Continued on page 1642)
{
"Attack! Cost-Absorption Policy,
v■
f?

Dealers Assn,

A WOrth 2-0300
Teletype NY 1-84

^

■

-

^

of the Office
of Price Administration is costing- the American
consumers billions, of dollars per year, and it .is
high time that consumers be advised of -the-j:eal
effect of unfair and unworkable pricing regula¬
tions.
Now our brain trusters in Washington
have a new ^prize package" which they call ja
"Wage-Price" formula containing new and more
Robert A. Seidel
complicated methods of curtailing-production
squeezing profits and stimulating
Inflationary trends. It's hard to.

Haytian Corporation

.

Purita Alegre Sugar*

..The stupidity and incompetence

.

r-.;;rv>Wr,'

v

unit

linn,.!

ii

^

v

I

n\f ji,

v

^*Aii aiddress by 'Mr, Seidel-be^
meeting of the Na-;
tional Industrial Conference

3oard, New
^

1946.

*

/

*

"

'

•'

.7

.'-tV

v

U. S.
"4

AIRCRAFT

'%•,

I''. J

.

['f-/.■

.t'.'

-

,

■

PressOrelube, Inc»
*

71.

DUNNE & CO.
Members New York Security Dealers

York

Assn.

725 Broad JSC New York 4, N. Y.

Teletype NY 1-5

' ''

Members New York Stock

Sugar

^

I'.V-''W;

A4

.'7-77

.7-4°,/' t/:;

«.•,A. v

Vj. j

General Aviation Equip.

Spencer TFrask & Co,
Telephone HAnover 2-4300

(Continued on page 1668)

o

and Industrial

m.'v'-.'-"

•

Assoc.

Lea Fabrics

PREFERRED STOCKS

PARKS

'

A

■:

25 Broad .Street, New

York City, March 21,.
'

Public Utility
•'

::ri

rr-

offerings of»

.High Grade

-m

-fore the 277th

.

.

Weipxe interested in

Eastern Sugar

Exchange

WHitehall 3-0272—Teletype NY 1-956
Private Wire

5

to Boston

Sales & Service

TITLE COMPANY

Bond & Mtge. Guar,

••

Co.

v;

.7

N.

Co.
Y. Title & Mtge. Co.
Prudence Co.

-

„

-

32

Co.

» Members New York Stock Exchange
N. t. 5

Boll Telotype

WHitehall 4-6330

OT1-2033




N.

Y.

Security

Broadway

NEW YORK 4
.

40 Wall St,

'

•'

if.

i'/:." ••/

& Trust Co.

:;-

!'/7y'7 i':v7:K;7>
'

National Radiator Co.

Bought—Sold-—Quoted

STRAUSS BROS.
Members

,it

Newburger, Loeb &

•

;

Lawyers Title & Guar.

.

':•••• •-

Common & Preferred

y

y

Lawyers Mortgage Co.

..

Public National Bank

American Bantam Car

Inc.

CERTIFICATES

.

DIgby 4-8640
Teletype NY 1-832. 834

:

CHICAGO 4

Direct Wire

•

'

HonRgSESTRSsrai

Harrison 2075
Teletype CO 129

\

1

Service

New York—Chicago—St.
Kansas

1'* Analyses

available^

to dealers

Board of Trade Bldg.
..

''

<

Dealers Assn.

]

j
Louiaj
;

City—Los Angeles *7

-

.

Estabushed

1914

C. E. Unterberg & Co.
.

^

*

Trinity Place, New York 6, N. Y.
Televhone:
"7*7*
'1 \/> Teletypes:^,
7
BOwliiig Green 9-7400 7 :
? 7
*{NY 1-375 & NY 1-2751
.

-

-

74

r

only

Members N.

Y. Security Dealers Ass"n

61 Broad"v»Y

New York 6, N. Y.

Telephone BOwIing Green 9-3565
Teletype NY

1-1666

1632

,

THE COMMERCIAL & FINANCIAL CHRONICLE

The Inflation Outlook
President,

Stage, "Runaway" Inflation.
As Safeguards
Against Runaway Inflation He Proposes (1) All-Out Production
by Elimination of Price Controls; (2) A Sound Wage Policy; and
(3) A Sound Fiscal Policy With a Balanced Budget of Not Over
$20 Billions. Contends OPA Is Impeding Production and That

|

Transport

Price

Automatic Instrument

Pfds.

issued

Marriner

statement

a

Wason

j

-

:

of

:

the

to
;

mous

liquid

available

t

the New Eng¬
land
climate

New England rich in every gener¬
ation for the past two centuries.

Douglas Shoe*.

Yankee

text

Getchell Mines

and

fertility of
your
granite
hills long have
taught youthe

General Machinery
'

for

Hartford-Empire Co.

.

■

In

Kaiser-Frazert
Lear Inc.

kept
gain

Robert R. Wason

scarce, you
that
increased

tools

the

West

can re¬

liberties lost in thirteen

mar¬

expanded and

ma¬

the world.

When the leather industry grew

.

to

England, the arts and crafts had
their earliest and highest expres¬

large proportions in New Eng¬
land; you financed the industry
in all parts of the world. The

sion.

Mohawk Rubber*

National Fireproofing
N. Y. New Hav. & Hart.

First

It

here

was

manufacturing
and

best

factories

Polaroid Com.

American

its

Boston

and

rivers.

Sylvania Industrial
Taca Airways
Upson Corp.
IU. S. Air Conditioning

Lacking

Boston

*An address by Mr. Wason before
the: Boston
Chamber
of
Com¬

the

on

raw

of

:

Boston; Mass., Match 21,

merce,
1946.

waterfalls of the Connecticut and
other

Bank

mate-

-

' (Continued on page 1664)

;

state¬

the

Assets

^Electronic Corp.

^Princess Shops

fYork Corrugating

United Drill "B"

fLe Roi Company

as

or

businessmen, -

line

will

meet

be

that

held

future

the

and

needs

Alabama Milk*

or

Textron Wrnts. & Pld.

Special Letter
-/fk

-

*

'\

United Piece Dye fx

52

Wall Street

York

throw the Nation into

•

-

•)?'

on

apparently inter¬
figure of 145
referring to the Federal
Reserve estimate of liquid assets
(that is currency, deposits;:and
U. S.
securities) held by indi-

*'

New York 5,

Greater New York Industries

Great American Industries;

N. Y.

Teletyve NY 1-2425

BOUGHT

On

individuals,

are part of the
^
-

checking.

*Figures itsed by Mr. Bowles
were derived fom Dept.
of Copiestimates

merce

of i individual

savings during the
coincidence
to be the

same

war

period. By

total

the

happened

FRB

figures for
personal holdings of liquid
assets as of Dec, 31, 1945. Accord¬
as

total

^
f For
figures,

a
see

breakdown of these
Federal Reserve Bul¬

letin for

February, 1946, p. 123.
(Continued on page 1683)

The COMMERCIAL

and

FINANCIAL CHRONICLE

request

on

William B. Dana

'

Established 1908

:

\
25 Park

Y. Security Dealers Assn.

REctor 2-4500—-120

Y. 1-714

Herbert D.

to vote on

William Dana
William

of merging this corporation with

1

r'W

ARNOLD BRILHART
;

.-j

^

'V-

,

■l'\

■,

\1i.i.'- .IX' 0

-

Teletype NY 1-960

-

:

'

.

.

'.

•

A

-V

r

.*4-

feelbert, President I

p. Biggs, Business Manager
i

'W -V

r

J

t

V'"'.

'

't

Published twice
every

1

,'Lft

^

.

j'Jw;

a

week,

Thursday

«.(generai news andt advertising issue)
and every

DU MONT ELECTRIC

Broadway, New York 4, N. Y.

request

'

,

L. E, CARPENTER CO. %

HARDY & HARDY
11

.

Thursday, March 28, 1946
.

fProspectus Upon Request

Selbert,

Editor and Publisher

Wit

JACK & HEINTZ PRECISION INDUSTRIES INC.

& El. Gbni. '!

Place, New York 8

REctor 2-9570 to 9576

Broadway*;

Bell System Teletype N.

Company

Publishers

*

.v

upon

* Prospectus

Members N.

Spec. Pfd.

Circular

ex¬

'

J.K.Rice, Jr. &Co.

QUOTED

April 17, Stockholders will be asked

United Public Util.

or

purchases

Homestead Fire Insurance

SOLD

the matter

Southeastern Corp.

Bulletin

by

Kingan & Co. Com. & Pfd.

EISEMANN CORP.

S'nd P. & L. Com.

^ Stand: Gas

are

Reg. U. 8. Patent Office

Derby Gas

,

part of the in¬

The danger of

clusive.

Bowles

Anderson-Prichard Oil Corp.*

,

North'n New Eng. Co.

".v

consumers.

Carolian Insurance Co. ;

New England P. S. Com. i

;

a

as

ingly, Mr. Wason's interpretation
readily explained.

% '*<

Iowa Pub. Ser. Com.

{ Puget

much

is

Cent. States Elec., Com.
.

Business demand at this
as

It excludes
Treasury de¬
posits which will be added to pri¬
vate cash holdings and

as

^

American Gas & Pow.

•

(excluding

(2) Even the $225 billion hold¬
ings for these groups is not all in¬

to

Wason

Mr.

billion

$52 billions of

broader picture:-

of

Request

,\V

as

price

wild in¬

a

of

cessive inventory accumulation is
an important factor.
Thus, liquid
assets held by
businesses, as well

anticipated price increase, these
vast
wartime
savings
could

Security Dealers Association

-

Tel. HAnover 2-S0S0
t"£r;:*._•.

>

FIRST COLONY CORPORATION

■

Members New

It'"-!.-'••.Cil

,

by

con¬

rush

If

holdings

flation problem

once

ahead

$28

time is

follows:

confidence

be

total

insurance companies)
billions of holdings by

lions.!

significance of these

"Should people, whether
sumers

must

unincorporated & businesses
are
added, the
overall
figure
for
December, 1945 becomes $225 bil¬

wartime

*Prospectus and Special Letter Available
fStatistical Study
'!]$,;%
•
, r vV •
:s-

.

and

wartime savings of the
people now
amount to $145 billions. He
ap¬

savings

businesses.

corporate
banks and

.

prets

^Simplicity Pattern

ted

savings. In discussing consumer
demand, Mr. Bowles stated that

praised the

it

Wason's
no

lic. It is limited to personal hold¬

testimony

of

outset

Mr.

ings only and excludes holdings
by corporations and unincorpora¬

earlier state¬

accumulation

the

overall figure
liquid assets held by the pub¬

for

with regard
potential inherent

Mr.

*Dumont Electric Corp.

(1) : At

ment by Mr. Bowles
to the inflation
in

>

$145 billions is

in opposition to the extension of
the Price Control Act on March
on an

-

Wason's Figures

noted; that

on

flationary scramble exceeding
any it has ever experienced." ■■

.

.

Mr.

en t
Wason of the National Association

18 commented

$145 billions
$17 billions, and how

mere

inflationary

sid

of Manufacturers in his

differ¬

danger if only production is al¬
to expand without
price
ceilings?.
;

follows:

Liquid

Eccles

lose

lessons.

in

National

first

Lacking coal
iron, New England built its

and

Pfd.

that

received

S.

a

Mr.

NAM
Marriner

to

was

lowed

'

;;;

was

productivity. When

in

ers in

years, peace and war. Here in New

Pfd.

labor

chine ' tool
industry.
In "New
England you have many of the
finest precision tool manufactur¬

that always

sense

free, and that alone

our

reproduced

foundation of the American

common

us

and

of

Eccles'

reference

the

?Mr.

does he conclude that these
assets
do not constitute an

danger at

ment

now

quantity manufacturing was
needed, New England produced
repetitive
tools
that
are 4; the

England

and of

Missouri Pacific

Old

kets

gospel of econ¬
omy, of work

Conv. Pfd.

Old

of

adheres to the

Maxson Food Systemf
.j;

labor's
era

deficit,

New

f M. Lowenstein & Sonf

When

produced

:

an

public debt
and

imitated

that

parts of the world.
,

England

great.

markets

throughout America and in o^her

that'made
New

available

are

toil and thrift

| Gt Amer. Industries*

*

to

this time. The

and the limited

|v

at

does Mr. Wason
manage to reduce
initial figure of

inflation¬

ary

funds

Although

data, Mr. Wason's interpreta¬

his

o

an

ingenuity devised ways
means
of fabricating goods

trust

1945. V

How, then,

of

funds

Dayton Malleable Iron9

,

Bowles'

accu¬

mulation

make

and

of

ent

rials, it built ships that searched
* seven
seas
and brought the
to

Board

testimony

tion will be followed for
purposes
of these comments.*

riches

lands

Reserve

enor¬

general
public does
not constitute

other

Federal

effect

the

of

the

close

Manufacturers

the

rigors of

of

viduals

As-

that the

<S>-

the nation.

The

the

on

National

1

be discussed in New England. Here,
where dwell 24% of the American people, are 17.3% of the
savings

(savings and
time deposits)

Eccles

March 25 in which he attacked
the
f
President

o

Ceilings Will Not Hold.

S.

on

"

It is fitting that inflation

•

S. F. Bowser
Old

f

Inflation

on

Figures.',';;.

Chairman

Says Nation's Economy Must Be
Expanded to Meet Heavy Increase in National Debt.

American Bantam Car

Chicago R. I. & Pac.

j

the* Second

vent

28, 1946

Chairman Eccles of FRB Holds Enormous
Accumulation of Sav¬
ings and Liquid Assets Are an
Inflationary Menace. Questions
Wason's Interpretation of

National Association of Manufacturers

;NAM Executive Asserts That We Are in the First of Two Stages
of Inflation, and That a Policy Should Be Put Into Action to Pre¬

Air Cargo

Contests NAM Views

By ROBERT R. WASON*

.*,;•

Thursday, March

*;

Monday

{

(complete statistical issue—market quo¬
records,
corporation,
banking,
clearings, state and city news, etc.) ■
tation

WHitehaU 3-4490

PRATT FROZEN FOODS

Other

Offices:

135

8.

La

Salle

St.,

Chicago 3, 111. v (Telephone: State 0613);
Drapers' Gardens, London, E. 0., Eng¬
land, c/o Edwards & Smithv
•
1

W\RD & CO.
EST.

1926

Bought—Sold—Quoted

gllllllf MOTOROLA' if *§
1

;

N. Y.
Direct Wires

1-1287-1288
to

"

Prospectus

on

Request

Made by

Galvin

on

Subscriptions In United States and
Possessions, $26.00 per year; in Dominion

J. F.

request

Seligman, Lubetkin & Co.




•

'Sv'V
y

.

41

v

Reilly & Co., inc.

Members New York Security Dealers
_

40 Exch. PL, New York 5, N, Y.
HAnover 2-4785 '

Association

HAnover 2-2100

':

;

New York Security Dealers Assn.

Incorporated

Broad Street, New York 4

second-class matter Feb¬

of

Members

ENTERPRISE PHONES
Hartf'd 6111
Buff. 6024
'< Bos. 2100

as

'

;•

Chicago and Phila.

Reentered

ruary 25, 1942, at the post office at New
York, N. Y., under the Act of March
3. 1879. .:
;

Manufacturing Co.

Circular

•

-

Radios & Phonographs

Members N. Y. Security Dealers Assn.

120 BROADWAY, N.Y. 5
REctor 2-8700

-

Copyright 1946 by William B. Dana
;■ V
Company

Bell

System

Teletype, NY

'

Canada, $27.50 per year: South and
America, Spain, Mexico,
and
Cuba,
$29.50
per
year;
Great
Britain,
Continental Europe (except Spain), Asia,
Central

Australia and

Africa,

$31.00

Otlier Publications

per

*

year.

'.''

!

Bank and Quotation Record—Mth.$25 yf.
.

Monthly Earnings Record—Mth.. .$25

1-2733-34-35

Private Wires to

-Boston, Chicago Sc Los*-Angeles

yr.

NOTE—On account of the fluctuation*
in the rate of exchange, remittances ton

*:"

foreign subscriptions and advertisement*
must be made in New York funds.

.

Volume 163

CHRONICLE

THE COMMERCIAL & FINANCIAL

Number 4476

foreseeable

the

A Post-War Economic
By

BERNARD

Elder Statesman Recommends

Policy

The World Bank Bonds

Proposals, Chief Among

By WALTER C. LOUCHIIEIM, JR.*

Which Are:

XI) Increased Production; (2) Curtailment of Increas¬
(3) Maintaining High Taxation for Balanced
Budget; and (4) Cessation of "Bunking" the Public by Saying"
Wage Increases Can Be Granted Without Increasing Prices. Wants
Price and Wage Controls Modified and Continued for a Year and
Action Taken to Stimulate Small Business, but Says Price Controls (
Alone Will Not Be Effective. Denounces the "Race of Selfishness"

Advisor

ing Money Supply;

Criticizes New

With.

All Along Line,

Wage-Price Policy

and

Holds We
Aiding

Squeezing Taxable Profits.

as

Obligations and the
Will Not Have
Investment Bankers Underwrite Its Obligations, but Will Use Their
Services and That of Other Institutions as Selling Agents.
Says
Bank Has Authority to Engage in Market Stabilization Operations,
and That Bonds Guaranteed by Bank Can Be Marketed Through
Private Negotiations.
Lists as Probable Purchasers, the Commer¬
cial Banks, Trust Funds, Charitable Institutions and Individuals.
Sees Need of State Legislation to Permit Insurance Companies and
Savings Banks to Invest in Both the Direct and Guaranteed Issues

Should Take Stock of Our Resources Before Financially
Other Nations/

»•.v-

at being requested to appear before you on

I feel honored

-

important subject of price control.
In these days

of

;

,

\'

-

p\it

lar

suggestions in
a

form

"he

that

so

who

Take

Make

capsule

•

-Take f

is

/,

the

and

Law

Bernard

M.

-

shortly
beginning op¬
erations, that

blindly

-

Baruch

Prophets—without it the rest of
my suggestions/are meaningless.
So I say again: "Increase produc¬

qnthese.

;///

should save.\v

we

lockouts

conducive

International

Bank,

what

of

groups

among

or

investors

it

is

the

all-important

are

of its almost com¬

t

s

i ;x

plete dependence upon

of

vision

capital,

subscribed

its

W. C. Louchheim, Jiv

of which will > at any
time be available for loans; so
that for at least 80% of its loans,
the Bank wiil have to raise funds

only * 20%

are

in the

capital markets of its mem¬

can

bers.

This in turn means

United

market its

se-

* ; curities in the

"

.

that for

States—in

words,

other

what distribution methods and fa¬

cilities

are

may

available to it; and (2)

be expected to buy the

in this

//♦The views expressed

the author and
necessarily, reflect official

article are those of
do- not

general;
will be made
possibility of undue

(3) that every effort
to

avoid the

1662)

(Continued on page

for

of the

successful functioning

Bank in view

those methods most
public interest

the

to

of investors in

and that

likely to find its most receptive
customers?
The answers to these

questions

all classes and
(2) that, there¬

among

particular segment of the invest¬
ment industry but will employ in

the Bank best

for a year but arrange that hard¬
Stop increasing money supply.
who
Stop
decreasing ' taxes
until ships are guarded against., - , •; , v
V Set up a High Court of Com¬
budget is balanced. - .
^
merce—a
sort of * Supreme EcoI r Stop bunking the public by say¬
ing wage increases can be granted comic Council which, can decide
without increase in price levels, i
/"Statement of Mr. Baruch be¬
Do not fear to increase prices
fore the House Banking and Cur¬
or wages where necessary to get
and stimulate production.
: rency Committee, March 25, 1946.
Continue
(Continued on page 1673)
price controls, sub-

;

x

questions
'(1) How

costs, includ-;

ing Federal, State, County and
City. * In ; time of . deflation we
should spend? in time of inflation

e

months./. The

•

Eliminate all strikes or

tion/'

n

the

within

is

Save in .Time of Inflation

Cut .Government

the

7

before

v/,-

.

production.;
This

;

increase the pressure

we

-

Increase'

■

:

and

fore, they will not wish to select
the distribution facilities of any

the private
capital.markets for its funds. This
after dependence derives from the di¬

Develop*
ment will face

lending—-make- inventories of; our
goods, our cash, our credit before

form.

Here they are:

stock

and

struction

/'■

-

Bank

Recon¬

for

-

ing-Small Business.

at

-.

Interna¬

in

goods

of the

tional

pensate forshortages.
■
;
Stimulate founding and financ¬

submit¬

"the •
outset, certain
Of my ideas inting

-

the di¬

rectors

military hands available to com¬

digestion
o f
his reading 1
-

of

discuss

questions

which

—

y surpluses

i 11

two'

will

discussion

sizes of investors;

guaranteed bonds of the

or

7.7

7-

;

their offerings

direct

which it ap¬

velopment projects
proves.

sible

article^

This
w

clerks, government
employees, pensioners, et al. y".

and to aid the

am

1

:
of those between the

care

Predicts That Bank

;

'*

~

/•;

'

group.

millstones

runs

read,"

may

of the Bank.

ject to indicated modifications, for
a year.
Allow profit but no profit¬
eering. v
;■r 7*:
V'
Avoid favoritism to any particu¬

and
emergency, it
is good prac¬
to

the

'
1

speed

tice

'"'-0

creditor

countries, to finance substantially
all of the reconstruction and de¬

proceed
upon
several
gratuitous,
but
seemingly quite reasonable,' as¬
sumptions as to the motives which
will impel the Bank's directors in
marketing the bonds. For exam¬
ple it assumes (1) that the direc¬
tors will wish to effect as wide a
distribution of the bonds as pos¬

national Bank in the Marketing of Its Direct
Guaranteed Bonds in the U. S.

private

upon

Canada and a few other

This

Available to the Inter¬

Mr. Louchheim Discusses Various Methods

Causing Price Increases

as

of World Fund and Bank

Technical Expert at Inaugural Meeting

Not Be Interfered

-and Warns That the Price Structure Should

■r

Commission

Foreign Investments, Securities and Exchange

on

future the Bank

investors
principally ;in4 the United States,
and to a ' much lesser extent in

Marketing of

BARUCH*

M.

Series of

a

The

call

will

A. M. Kidder t Co.
Will Adail Penick
Wall

1

Co.,

&

Kidder

A.^M.

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

Exchanges, will
partner¬

and other leading

admit John D. Penick to

ship
~

on

The

Amos

April 1;

;'

: :

-

membership

Exchange
Kidder

M.

will

be

will continue
firm.

7-

as

a

of

trans¬

ferred to Milton E. Lawrence,

who

partner in the

•

and Ex¬
other gov-

opinion of the Securities
change Commission or

ernmeht agency.

:

; :'

■

;

CANADIAN

Service

Direct Private .Wire

COAST-TO
■filiUA'i
-

1

v

•

-

Chicago

^

St Louis

^

,

-A

1 '/

u

<•

-i>x

•

Kansas City

-

Bank of Montreal

COAST

-

1,W-."\
A >/'
*'
r/1." v- ^Vr-

y'

New York

-

SECURITIES
,

'1

Bank of Nova Scotia

.w;-\

Los Angeles

•

Bank of Toronto

Canadian Bank of Commerce
Dominion Bank

STRAUSS BROS.

Imperial Bank of Canada
Royal Bank of Canada

Members New York Security Dealers Ass'n
Common Stock

Board of Trade Bldg.

32' Broadway

CHICAGO 4

NEW YORK 4

Harrison

DIgby 4-8640

Teletype

Teletype NY 1-832-834

Andian National Corp.

i

2075

CG 129

7% Pfd.

Assoc. Tel. & Tel. $6 &

>

& Pfd.

Brown Company Com.
White & Company

50

BROADWAY, NEW YORK 4

Baum, Bernheimer

ST. - LOUIS//;:"

Incorporated

BOSTON

.

Bulolo Gold Dredging
v

v

Pledger & Company^ Inc.

WHitehall 4-5263
PHILADELPHIA

Co.

KANSAS CITY

WASHINGTON

Electrolux

Private Wires to Principal Offices

.
„

Canadian Pacific Rwy.

Canadian' Western Lumber

LOS ANGELES

International Utilities
Jack Waite Mining

PANAMA COCA-COLA
We maintain

an

1946

Quarterly dividend payable April 15,

active market in

Dividends 1946 to date

—

Approximate selling price

Kinney-Coastal Oil

;

Utah Southern Oil

Analysis

Minnesota &. Ontario Paper

-

Pend

$1.25
—

Sherritt Gordon

31V2

Iron Mines

request

on

Life Assurance

Hughes Mines

Hon Rose S Truster

Equity Oil
74

MffOOLAN & CO.

67 Wall

J

ESTABLISHED 1914

HART SMITH & CO.

Specialists in Soft Drink Stocks

JAMES

Co.

Noranda Mines

$.50

Telephone:

Street, New York

Telephone HAnover 2-9335

Trinity Place, New York 6, N. Y.
'•

v

C

BOwling Green 9-7400

52 WILLIAM

Teletypes:

NY 1-375 &

HAnover 2-0980

ST., N. Y. 5

Bell Teletype NY

NY 1-2751

New York

1-395

Montreal

;

Toronto

Teletype NY 1-2630

ACTIVE MARKETS:

Boston & Providence

7
-

.

Soya Corporation

Harvill

Corp.

Old

Jeff. Lake Sulphur Com. & Pfd.
Lane Cotton

of America

Railroad

Mills Corp.

Rademaker Chemical

Colony Railroad

DI-NOC CO.

&
preferred

Chicago, Rock Island & Pacific, old com.
Missouri

Pacific, old common and

•

y- RedaPump

One of the most promising

/

companies in its field.

New York* New Haven &

Stand. Fruit & S/S Com. & Pfd.

and pfd.
preferred

Hartford, old common

St. Louis & San Francisco,

old common and

SOYA CORP.

United Piece Dye Works

Present Market about 5

;

Analysis
t

y*

+

w-'

-v

on

United Stove

*

*•

-

- -

.

%

; PETER MORGAN & CO.
;31 Nassau Street

-

iTel. BA 7-5161

•<New York 5, N. Y.
-

—

sold

—

quoted
V

V

•

■'/

"■

Request
,•

,

V'/Bought

"

Tele. NY 1-2078




T.

I, FEIBLEMAN & CO.

Members New Orleans Stock Exchange

New York 4, N.
41 Broad St.
Bo. y-4432

,

.

Y,'
7

«

..

New Orleans 12, La.
i Caroudelet Bldg.

...

Bell Tel.—NY-1-49S

s

•

v.

...

"

,

FREDERIC H. HATCH i CO., INC.
Established 1888

V4

MEMBERS N. Y: SECURITY
<•

SIEGEL & CO.

.•>.

19 Broadway,

f

Belt Teletype

N.Y. 6

Teletype' NY

DEALERS ASSOCIATION
NY 1-897

..

^

DIjby 4-2370

1-1942

/

THE COMMERCIAL & FINANCIAL
CHRONICLE

Echoes of the Savannah Meeting

Thursday, March 28,

Statistical Miasma and Administrative Blunders
,

,

PACIFIC COAST

Fuller

By A. M. SAKOLSKI

I

'/.t

.

-a.

-

Houses, Inc

Capital Stock

HAWAIIAN SECURITIES
Direct

•>'••• •"

Private

•

:

v

,;

•

—

wall

;

,

LOS ANGELES STOCK EXCHANGE

street, new York
-V;

SAN FRANCISCO

■

74

'.:V

''

.

Telephone:
BOwling Green 9-7400

~

Telephone; BArclay 7-4300
•

LOS

ANGELES

Trinity Place, New York 6, if. Y.

-

V"'.'

;

ESTABLISHED "1914

\

SAN FRANCISCO STOCK
EXCHANGE

HONOLULU STOCK EXCHANGE

i

Co.

&

MEMBERS

■

v>"V.-,'i V'",i'

Bought-—Sold-—-Quoted

Wires

Dean Witter
••

NEW YORK STOCK EXCHANGE

*

1

Teletypes:
'
NY. 1-375 &' NY 1-2751

1

HONOLULU

For Dealers

A

Chicago and

Quality Stock timely for participation in

Airlines, Inc.
,r

Excellent—Dividend Record Consistent.

'•

1

§3 Descriptive circular

Blair F.

*

^

Harrisburg-Pittsburgh-Syracuse-Miami

'

$

,

Beach

\\[\

Manufacturers of Airplanes and
Helicopters \
Designer and Builder of Navy's first i(Pure all-Jet"

x

-v

^ 7( •

United Public Utility

All American Aviation

'
-

ON

V

•

Common

,

\

■

v;

15 Broad
•

Street, New York 5, N. Y.

telephone: HAnover

2-6388

:;

C

Baker Raulang

Brockway Motors

WiSxC

A tok % \;;

Balatoc

Mining

■}$.i-."ftv;.-r..» \v-v'jM

Crescent Pub. Serv.

.

Carbon Monoxide

iy.

Bridge

Preferred

v

*

Common & Preferred

T

&

Common

American Beverage

f
*-

•

Big Wedge Gold

>

Mindanao Mother Lode
..

,,

:

V-.

Quotations
.

*.

Benguet Cons. Mines

Eliminator

American Insulator

Patlie' Industries

REQUEST

F. H. KOLLER &

Exchange * I
Exchange

associate members N. Y. Curb

Detroit Int.

Powered Fighter Plane

■;/i,

>

and

V. Furnished

on

information
Request.

:

.

-

Preferred

CO., Inc

Members N. Y. Security Dealers Ass'n

BROADWAY, NEW YORK 6, N. Y.




Rubber

•

f',

members New York Slock

''

McDonnell aircraft corp.

BArclay 7-0570

«?•

BURNHAM & COMPANY;

Claybau^h & Co.

72 WALL ST., NEW
YORK 5, N. Y.
' \ "
WHITEHALL 3-0550
:%>
Tele. NY 1-2178

111

'

upon request.

Members Philadelphia Stock
Exchange 1

MEMORANDUM

Getchell Mines
Master Tire &

Continental

Magor Car Corporation
Management
i

s

Southern Airlines^ Inc,

Railway Equipment Demand

NY 1-1

1946

P. J. Steindler & Co
Members New York Security Dealers
Assn.

11

Broadway, New York

Digby 4-0330

NY

4

1-1340

Established

PETER BARKEN
32

Broadway, New York 4, N. Y.

Tel. WHitehall 4-6430

Tele. NY 1-2500

1922

Members N. Y. Security Dealers Ass'n.

42

Broadway, New York

Dlgby 4-6320

Teletype NY 1-1525

Volume

ThePostwar Boom In Capital
if*-

Economist, International Statistical Bureau and

'

7..

7":-

i;'„

■

yi::

Fairchild Publications

In Hctel Securities

.

Goods I

:—

—:

——."

'■ V

.

| Bankers Warns Investors That the Present Prosperity in the Hotel
Industry Is Based on the General Wartime Boom. Mr. Kleeman
Points Out That the Present Inflated Volume Will Be Required to
.

Industries
*

;

It is generally agreed that the
capital goods industries are vitally,

important in the American econ¬
omy.
In fact, business men are
.

sometimes

no
a n

i t h

lem

in

"been

a s

the

p;o

t

nical

Venezuela and

tions
i t

1

a

expert
d e

in
-

ation."

-

Round

"ment~- during

A.

?

7 Table

New School

Zelomek

W.

compared
,tvith tnose of prosperity^ The in¬
strategic and

as a

ac¬

barometer : of 7 business?

for Social Reh

sea r c

'

■

<

<a>

.

the

a

boom

in hotel build¬

ing.
t i

; ;

£

r\i

erating

new

Frederick

Haussman

on

in-

barrels is gen¬

"The Anglo-American Oil Agree¬
ment and the New Situation in

East," attended by rep¬
resentatives of oil companies and

the na¬
bank¬

ruptcy, foreclosure, and/or reor¬
ganization. The prime reason for
this was that hotels were going up
than

faster

Arthur S. Kleeman

improving business
furnish
the

could

conditions

facts/

guests to occupy the

Many of us who have had long

;

experience in the banking busi¬
ness have, heard such stories be¬
fore. Hotels were crowded during

•

.

financial

collapse. By 1935, 81% of
tion's
hotels
went into

too low,

erally regarded- as far
Dr. Haussmann stated. •

the Near

profit for the
'20s. 1944 sales

World War I resulted in

the new

mate of 5.7. billion

fair

of it, .it

ho¬

tels,: but

a

$l1/2

peacetime year, and on the face
would appear that the fu¬
ture is
bright. But the abovementioned
unbridled; boom via
new
hotel
construction
after

cities do

need

at

billions were more than
50% over 1929, the industry's best
of

Unquesr
o n a b 1 y,

some

of

first time since the

,

vestment

■

7"

overbuilding were writ¬
ten in bright red ink.
The record reveals that the $5
billion hotel industry now is op¬

country

needs

particularly
professional

^—

suits

figures to bankers, indi¬
vidual inves¬
Middle East
oil discoveries have brought the tors, or com¬
munities, be¬
reserves in this region to 26.8 bil¬
lion-barrels, £ while, the United fore e x pendStates oil reserves are estimated ingtheir
money, should
at 21.5, and Venezuelan reserves
the 7 full
at 5.6.
The Russian reserve esti¬ get

held at the

periods of de¬
ion as

press

•

that

show

;

prob¬
thorough reconsider¬

gnostica-

p r o

tors, to
pro¬
claim that

%Dr; Haussmann cited

on
•

Addressing a

invest-:

dustries act

lem needs a

oil,~

on

1 ared

March 23.

cap-

curate;

c

occupation,

tary^

that the whole Near East oil

international

the

though it
mili¬
s demonstrates

.cannot justify any prolonged

ernment of

fluctua¬

*

.'treaty of 192f with Iran,

Gov¬

-

anwhen

note

wide

-

^adviser

the

to

Question is
•we

be

formerly tech-

:tant? -.T hla t

jswered

a

Dr.

Haus smann;

a s t. Why >,
dhen, is it so
m

to

?

Frederick

!p
7i

prob¬

is

reached,

greater

-tlh

the

of

he

together

condition of the nation's hotels,
prompts some casual observers, as well as

The present crowded
in larger cities,

continued, "to> piece
the
established
facts
■without prejudice and propaganda
•and to arrive at a sane judgment
•of the-rights and wrongs of the
different national positions. The
reference made by Russia to the
rumor,"

•

.

Financing.

cooperative rather than a purely political and legalistic ap¬
proach to the tangled oil dispute in the Near and Middle East is
sane

they find that
.private .-cap-.ital formation

Dispute

Support Higher Costs, and the Equity Behind Current Earnings Is
Very Thin. He Recalls the Financial Collapse Following the First
World War, Occasioned by Previous Over-Building and Unsound

A

urgent if a
solution

•shocked when

.is

The Near East Oil

By ARTHUR S. KLEEMAN

^

7

~r

,■

'

>

President, Colonial Trust Co., New York City

This Will Actually Be Furthered if

200% Above Prewar.

Importance of Capital

'■
M

International Tensions Continue, Because
of Their Stimulation of Defense Expenditures.,,7 Mr. Zelomek Forecasts a Very High Level of Non-Resi¬
dential Building for at Least 5 Years.
He Anticipates More Favorable Psychological Attitudes by
Businessmen, Which Will Remove Restraints on Private Investment. *
„ - ^
to

7 7

j

Average 100%

Capital Goods Industries Will Until 1950

Business Economist Predicts That Activity in

Investigate Before You Invest

Goods Industries
■

a-w- zelomek*

1033

FINANCIAL CHRONICLE

THE COMMERCIAL &

Number 4476

163

of

rooms."

over-supply

...

V
The barometer of the hotel bus¬
;: Calling for a marketing under¬
iness is occupancy. Before the war
students, Dr. Haussmann asserted standing with respect to Eastern World War I.
were' covered
,It appeared then, as operating ■ costs
in 1932 was only $2.2 billion. Main
that theTraniah dispute is threat^ ,and-: Western Europe, Dr. Haussf
it appears now, that new hotels when occupancy reached 65% of
items/ in thisi were expenditures
mann
pointed : out that Russia
ening the. working of; the; UNQ- It
capacity. Today the "break-even"
tyere a real necessity, At that time
for,^ plant- ;ahd;vequipment;^$ net j is
regrettable, he added; filiate the wou^d ihus, receive bitterly need* a boom was born^ but not long point has risen to more than 80%»
change in inventory; and- net bal- Anglo-American:^■; oil 7 agreement ed
drilling land refining equip? afterwards the catastrophic re- a?7; (Continued on £age 1645)
?
l ance of'foreign trade.
Ih 1929 it is not
yet ratified, for its elastic ment from American firms to in¬
S had been $17.6 billion.? That great
organization would offer; a neutral
difference marks the v distinction
basis for discussion with" Russia crease her domestic oil industries
between prosperity and/depres¬
and the oil supply for her indusand other parties to the dispute

jhealth.

7; Private

gross

capital formation

r

sion/Investment activity, irx short,
I^can^b^yregarded a$ aVplainv indi¬

l|Pt:^timeUd>t^ue fruth^fromiitml^ development '

cator of good or bad business con¬
ditions. > It is rather pointless to
argue whether good business will

| automatically. : stimulate

We have prepared a Memorandum^on an

important lead

and silver 'mine' producing- company,-

invest-

^

•

The Local Investment Firm

-

>;•

ynent, or whether a high level of,

The Fresnillo

Investment f
i

wi 11 automatically
prcduce good business.^ The fact
remains that the. two $re /associ¬

brokers

psychologically

banks,

dealers.

!-.D;

EVERY section of- the

"

„

investment banking

Troster, Currie & Summers

Significance: ; In 1937, the prewar
Vear of peak recovery from the

* /.

,

Members New

York

Security Dealers Association*

Trinity Place, N.Y. 6——HA. 2t2400.

74

!

anii

considerable

This last" point' has

-

Company

which is available oh request tp

connected

and

ated /physically

*A speech by Mr. Zelomek be¬

Cleveland

-

ciation of Eastern New York, Al¬

Chicago

-

Detroit

-

Pittsburgh

~

>

form

*

St. Louis

-

, -

,

?

(Continued

on page

Air Cargo

TRADING MARKETS
>£

7-'-' •" \V"'?

r$?.L£«' '

^

'

''j?

V,-'.

'.vv-'v.

;C."(-C-'')'

...

«r

-

* 'I j,v

M.

Transport*

.

years,

IN

Lowenstein & Sons * /

Marmon-Herrington '

Ariderson-Prichard Oil*

Maxson Food System *

Arnold Brilhart,

Reorganization

National Maliinson Fabrics*

Ltd. *

Bates Manufacturing*

Rails

Milling *

Giddings & Lewis

Chicago^ Rock Is!aii<{
& Pacific

r Standard

1 Standard Stbker

Grinnell

V

^

-y,

V1

^Prospectus
».

*

*

7- vi.'

'*

^

-<

"

'<

- '

M:S' :i

in the

' ■; Vr,

available to dealers &\ bankers.only

G. A. Saxton &
J:

70 Pine

contributed to their

77 'f"

"a /f-'•

;

v'if-•

>

^ ■"

Corporation welcomes' the op-7
i \

Lf''"

^

'V

j

c

-

r

porfuriityofworking with local investment bankers
origination—as well as the

distribution—of

the securities of their local industrial concerns.

%

1>

Missouri Pacific R. R.
Old Cora. &Pfd.

.

i

The First Boston

:

helped to raise the

growth and success.

r 7,

"

F

17

| Tenn. Gas & Transmission*

\

i.'

1

created individual investor interest in many

American businesses and have

Rockwell Manufacturing

Colonial Mills*

it is

organizations which have, through the

billions of dollars which! have

| pratt's Fresh Frozen Foods*

Bowser," Inc.-.

Old Com. & PfcL

*.

Anchorage Homes '^

/ {

firms of high standing which

integral part of the national facilities for

these local
MARKETS

is served by local

Youngstown

1661)
TRADING

country

financing of business. In large measure

the

,

bany, March 21, 1946.
;

an

Teletype NY 1-376-377

Private Wire# to

fore the Purchasing Agents Asso¬

•'r\' '

Co., Inc.

Street, New York 5, N. Y.

WHitehall 4-4970

' t"

.

7 Teletype NY 1-609

New York, New Haven
& Hartford

:iTheWM

Old Cora. & Pfd. /'!;?>•• ':r",
"C'A-HV

.;,r:

:

]■>*:*;

■

•

•:

MAHER & HULSEBOSCH

"S;

•••

.V•;';*{•

••

■tl

FIRST BOSTON

.

Brokers & Dealers

St. Louis & San Francisco

\n investment Securities

.CORPORATION'

Railroad:Jv
Old Cora. & Pfd.

Specializing in

>

Unlisted Canadian
'

120

Broadway, New York 5, N. Y.
Teletype NY 1-1950

COrtlandt 7-9400

89

for

-

-

.v, \

^ Domestic-Mining

Teletype BS 208
Direct private wires between New York,
Philadelphia, Boston and Haitiord

'

4-2422

-




,

Issues

',•• ! :
'"•• V v7 Street, New York 5, N. Y.
t

\

..

7.

;
.

Branch
113

Office

Hudson Street, Jersey

-

City, N. J.

Chicago

Boston

New York

1

7::'.

1

One Federal Street

100 Broadway

231 So. La Salle St.

:-;sr*Vr^

Teletype NY 1-2613

Devonshire Street, Boston 9

LAfayette 3300

"

Banks, Brokers and Dealers only

62 William

WHitehall

11

-buffalo

7

providence

cleveland
1

rutland

•

hartford

" san francisco

philadelphia

springfield

if

1036

THE COMMERCIAL & FINANCIAL
CHRONICLE

John P. Myles

If

Rejoins
Ciaybaugh in Syracuse

Loew

Building,

duties

as

resuming

sales manager.

v

Walter

^:;X-XX

Prices

^

Emerson

tra-strength.

XyX

Drug

ages

Noxzema Chemical

STEIN BROS. & BOYCE
Members

New

York

&

Baltimore Stock

Exchange* and other leading exchanges
6 S.

CAI.VERT ST., BALTIMORE 2
Bell Teletype BA 893

New

York

Telephone

Rector

can

desire to take stock

But until

certain

pass

200

cient

figure might be suffi¬
point to a mainte¬

to

of

nance

there

aver¬

three New England
holding companies—N. E. Public Serv¬
ice, N. E. Power
Association, and N. E. Gas & Electric—have all madeX
marked progress in the
past few weeks or months with their
respec¬
tive recapitalization and

show
across

bull

a

be

must

trend.

"

But

and

2-3327

& Burr for

WALTHAM

(Continued

WATCH

*

'

ized

earlier

The

New

sociation

of

court,

and

\

Available

United Light &

security

company

to

Reda Pump

Company

Rys.

,

_

du

Porit, Homsey Co.
31

MILK

HANcock 8200
N.

MASS.

CAnal

-

Common'

A

DES

V

9,

New York,

IOWA

"

-

Street, Philadelphia 2
'.

Pittsburgh, Pa.

Bell Tele. DM 184

Los Angeles

-

Hagerstown, Md.

N. Y. Telephone—WHitehall 3-7253
Private

I

Wire System between

-

Philadelphia, New York and Los Angeles

424

DETROIT

6-8100

ttoston

Bates

Shelter

Bag & Paper Co,

;

Manufacturing1

5%-6

.

■

'

Leece-Neville
.

Pressurelube

Norma-Hoffman

Tybor Stores

t

•TfRepbtts* furnished

11.;%

■

i

■

Incorporated

49

10,

New

•' "

'

"

.

CAnal 6-3667

;

1606 Walnut St.,

Philadelphia 3

:
PH SO
Private Phone to N. Y. C^4^^-.

:

COrtlandt

r

7-1202

•

'

Philadelphia

Washington
Easton
Harrisburg Portland

Alientown

Providence RE.

Power and

of

the

New

•,'' X 1 X' "H X

1 •

New England Lime
Common

"•

•'

X

"X'X- */L;

-;v

X%

Philadelphia Co.

earning-power within three
after

consummation

the

share

stock.

Based

on

seems

RR.
Submarine Signal

f.r *' X

4%%

rate

of

in

15 Federal

Street, Boston

;

10

Private New York
Telephone
REctor 2-5035

& CO.

RAPIDS

2

"

r

Teletype GR

H. M.

General

Public

Utilities

\

-.

new

on
basis until a' pro- forma
becomes avail¬

the

on

2,300,000

work out as follows:

consolidated

shares might
Including the
tax

return

(which would be reduced

continued

on. page

capitalization

'

Common
:,v;

OFFICE

'

-

-

<.

Public Service of Indiana
Cofrimon;■

i;v X,:

'.'v."'.'.7."

.

'

7-77

'■

'■•.'«

BOUGHT —i SOLD

X;..:v-7

■-

ir:"-

—

■'

QUOTED

'

,

ri

.

X

'

X- •'

X -XX*

\

t'r

1

v> *

■

'V\.; V-XX'.-'X

/•

•!

-

Exchange BIdg. Phila. 2
Tele. PH 73

Paine, Webber, Jackson & Curtis
'

ESTABLISHED

1879'X

^ .XX-'

'

ST. LOUIS

»

Annual

*

Good earnings

■

capacity 650,000 barrels.

through

—

war

years."

»

Average dividend 1940-1944, $1.45.

•

Market

about

Midland Utilities

Merchants Distilling Co.A
-

Louisville Gas Pref.

Stix & Co.

Winn & Lovett
Grocery

INVESTMENT SECURITIES
509

BANKERS BOND ^

Inactive Securities
10

POST OFFICE

OLIVE

STREET

Teletype BS

X

St.Louis LMo.

Incorporated

SQUARE;

Midland Realization

Northern New England common

Gilbert J. Posti.ey & Co.

l«t

BOSTON 9, MASS.
Tot HUB 1990

S

available

LERNER & CO.
'

,

:
:

16.

circular

common

Girdler Corporation

28,030
shares,
capital stock, $25 par value.

69




Floor, Kentucky • Home Life
BIdg.
LOUISVILLE 2, KENTUCKY
Long Distance 238-9
Bell Tele. LS 186

,

Federal Water & Gas
'

American Air Filter

common

1678).

-C.-'Common -X;-■-V'v/

American Turf Ass'n

Sole

credit
some¬

what if the New Hampshire sub-

"

*

Byllesby & Company

Phone Rittenhouse 3717

LOUISVILLE

►

.

anyvic-

statement

"

SPOKANE, WASHINGTON

it3

estimates*' ? oft ^earnings

DEALERS:

Spokane Portland Cement

for

holdings of second preferred and
common
(and ; in settlement of
litigation).
The
new
financing
probably won't come for at least
several months, since it has to go
through the SEC and a Federal

Delaware Power & Light

common

common

PHILADELPHIA

Stock
184

(the plan is flexible in this
respect) with the balance going to

able,' However, based on a' rough
estimate, common stock earnings:

Assuming
$1.10; and a

basis, the common
might eventually be worth
the neighborhood
of $23
a

,

"

MICH. TRUST BLDG,

Phone 94336

stock,
$1,000,000

income

yield

■

Warner Co.

GRAND

(sales

value) new
together
with
Treasury cash.
The old preferred will get 84^%
of the remaining common stock

the

stock

Sterling Motor Truck

Inquiries Invited
■

Members Detroit Stock
Exchange

.

:Xlt isi^difficulti^taiimake

of

companies.

dividend-

Pittsburgh Railways

v

WHITE, NOBLE

be sharply re¬
hurting
junior
Approximately $35

can

million

curate

might be paid
$1-$1.20, with the
"plowed- back" into the

rate

Vinco Corp.

Dayton Haigney & Company

Now, however,

common

Court*.'

rea¬

new common

XX

-

the
new

such

expect that dividends

■

■,;XX

of

the

on

earnings it

to

operating
a

a

Empire Steel Corp; com,

Common

XX'X'-.: Old Colony

$11.5

about

com¬

panies. Under the plan each share
of NEPA preferred stock
(with
arrears) would be exchangeable
for 5%ths shares of new common

■

New Haven RR; Cominon

value for the

or no

without

stockholders.

England

sub-holding

Botany Worsted Mills pfd. & A

Conv. Preferred

great¬

Dealer Inquiries Invited

Aeronca Aircraft

Boston Edison

debt

duced

stock, the latter to be al¬

assumptions prove
correct, the equity value jfor the
?

Boston &

and

company

share. If these

TRADING MARKETS

was

a

bonded

stockholders

sonable

Pennypacker 8200
,

|

Several

years.

much more liberal. aa-»
praisal 6f the portfolio value,' the

(together with cash in
instances) to various public

some

balance

Buhl BIdg., Detroit 26 •
Cadillac 5752
' Tele. DE 507

with

located

estimated

BOENNING & CO..

Members Detroit Stock
Exchange
!

common

at the

& Dolphyn

recent

the company

preferred stocks.

of

common

Common Stock

stocks.

common

million bonds will be retired with

years

Mercier, McDowell

:

Mass.

Teletype BS 189

York Tel.

New York

' I '

in

have left little

probably

provides for a merger
holding companies with

plan at $1.59

Grinnell Corp.

request

on

'

the second

owns

and

proceeds: of $22.5 million new
sinking fund collateral bonds and

on

1

Investment Securities
Federal St., Boston

Tel. HUB. 0810

JV

(now General Public

ly concerned over SEC efforts to
enforce the theory that bonded
debt should amount to only 50%
of capital structure, (or of net
plant account). At that time such
a
readjustment would probably

pro¬

The company has estimated fu¬

\2%. 2%'

W. H. Bell & Co
■

Manufacturing Corp.

is-i5%:

'

X the

plan fol-

new

$85,000,000 bonds, and
6,695,075 shares of $20 par value

ture

Common Stock

41-41%

.

announced
a

is¬

Southern Advance

32-32%

Baltimore Transit Com.

stocks

of

stock.

Electromaster, Inc.

Baltimore Transit Pfd.

..

Electric

other

years ago

minor

the

&

systems, NEGEA has
greatly benefitted by the big ad¬
vance
in
operating X company

be
necessary
without
the main outlines of

parent

suance

Members New York, Philadelphia and
Los Angeles Stock Exchanges

1529 Walnut

preferred

accorded

since

Gas

litigation with the Associated

Like

may

involve

not

outlines' of

en¬

disapproval

100

plan was
work out at

:\V„XX-

Utilities), which

The plan

BUCKLEY BROTHERS
:■*

- -

BUILDING

MOINES

FTioite 4-7159 5

Teletype BS

Y.'Telephone

*

EQUITABLE

STREET

BOSTON 9,

*

an

to

of :the

might

Gas system

if

of all the
the

Rath Packing Co.
>

of

expected

terms

will

disturbing
the plan.

Memos on Request'--;~-i^y\ \:v'

r}

,

is

holders

voice

exchange

them, this

Western Lt. & Telephone

plan

sub-holding

litigation,
adjustments could

Preferred#

-i-

SEC

tracted

Iowa Power & Light Co.
XXXXv; .-I>re'erre<*#'LXXI

1

the

87

ad¬

lowing Va compromise settlement

forcement order. It is thought that
while some of the

effected

*

amended

shortly to apply for such

the

Bird & Son, Inc,

main

As¬

a

continue

INCORPORATED

Power

(which

around

1 New England
(NEGEA)
has X

single holding company for
NEPA and its four
sub-holding
companies. Thespian must now
be approved by a Federal district

PHILADELPHIA

Descriptive Circular

England

(NEPA)

from

approval

announced)
around 122.

sale

.cleared up. X

are

preferred

final distri¬

a

was
recently approved by SEC.
The plan provides for substitution

1677)

WHEELOCK & CUMMINS

This

years.

after

securities, after

further details

DES MOINES

CO.

in

clears the way for
bution of cash and

-v-

on page

$16,000,000, a far bet¬
price than it could have real¬

ter

XX

■

—

dustrial
properties to
a
group ^present
headed by First Boston and Coffin '
vanced

the

ability to penetrate a previ¬
of ous mass. Right now the de¬
meaning¬ sire is present. But then a
less so far as the main trend contra-swing of the
pendulum
is concerned. It will continue is always present after it/has
meaningless until a few moved in a wide arc in any
things happen. X On the up¬ opposite direction. It is what
side the familiar industrials happens after it hits dead
will have to go
through their center that fecorngs signifi¬
old highs of 206.97 while the cant.
*
*X-:;:;XXXXXX
rail averages either stand still X^XXXX'X; *
or also
The. action of the rails is
manage to move above
the 68.23 figure established something else again, t think
the majority of traders while
the early part of February.
,

super¬

arranged

with court approval to sell
its in- <»——:

distinction

a

obstacles between the desire

integration programs, under SEC
v.v,i;f
New England Public! Service
(NEPSCO) last October

vision.

The slow creepy advance
the past few days is

Baltimore

--

.

fact

future still doubtful.

X First National Bank of
.

The

Utility Securities

Reorganization Progress of the New
England Utility
Holding Companies
The

such

a

Present

Public

not

for

that the industrials

advance points to further in-

Common

1.

of decision.

In practise it is

;

necessary to wait
full confirmation.

slowly approaching the

new zone

J>avls Coal & Coke ;X-

^

Of course, the above
fig¬
mentioned are the ulti¬

mate.

WTiyte

==By WALTER WHYTEee

Bayway Terminal

trend,

ous.

Says—

BALTIMORE

bull

a

sounds omin¬

news

Thursday, March 28, 1946

the

seen

if the

ures

his

is

even

Markets

SYRACUSE, N. Y.—Lieutenant

above

market is still in

Tomorrow's

John P. Myles, AUS, has returned
to
Blair
F.
Ciaybaugh & Co.,

the

Members St. Louis Stock
Exchange

X X

29 BROADWAY,

NEW YORK 6, N. Y.

Direct Wire fa, Chicafa,

v

_

;

;

} *

Volume

163

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4476

-

1637

interest

Railroad Reorganization—

debt has been not

r

.

garding

tion and Consolidation.

realistic remedies.

of

•

of shares in bankrupt

Threatened with confiscation, the owners

A

deluged their Representatives and Senators with pleas to
pass the Hobbs^ i>-.
...
Bill. Senators
;
On the eve of apparently the

railroads

the

on

•

and

railroad

providing for future reorganiza¬
But, amazingly,
he utterly ignored the $2 billion
of par value; of common stock
which is now in process of being
destroyed in the midst of pros¬
perity.
Yet' the ICC since 1920
had approved, for issue, 100 % of
the no-par value" common stock
and 38% of the $100 par stock
which it is now declaring worthy

flation

stockholders,

less.

Reed stated at

recent

the

of

hearings

tion of railroads.

Interstate

the

Commerce

Committee
that

public
opinion would
undoubtedly
force action to

avert

expro¬

priation of the

that

and

1

Wheeler

Senator

the

took

bold

a

It attests to his open-mind t

Hobbs Bill

step.

could

edness and his fundamental faith

ate
,

easily
the Sen-

pass

if

in

the

democratic

process, 1 He
As he

rewrote the Mahaffie bill.

the bill

stated at the

were allowed to come to the. floor
for debate,
-• a
X -Ky: H

hearings repeatedly,

statement

a

regarding

in¬
the

of

the

policy

Administra¬
tion for curb-

man

i

specula¬

of

(stock

only

n

g

tive

transactions.

(

inflation

Emil Schram

tion

stock

"has

uninformed
have
even
the

that

upon

discussion.
been

Federal

the public'

of

the public

as

security

monetized

Reserve

banking

the real

and that

By HAROLD JOHNSON
Vice-President National Association of Securities

Administrators

debt

extent; unprecedentnow

pre¬

vailing are desirable from the
viewpoint of the public interest.
"The main problem is to reduce
the holdings of the commercial
banks

and

portion

to

the

increase

Federal

the

of

pro¬

in

debt

the hands of individuals and other
non-bank

investors, su.ch as insur¬
companies and mutual sav-

ance

(Continued

1665)

on page

SCHENLEY DISTILLERS CORPORATION

NOTE;—From time to time, in this space,
there will

advertisement which

appear an

hope will be of interest to our fellow
Americans. This is number 119 of a series.

we

f -;,

SCHENLEY DISTILLERS CORP.

Talking^ Figures

•

purchase

securities

by the

supply

the

system

will continue to

thus tending further to

and,; possibly,

By MARK MERIT

'so long

of

increase,

reduce the

Figures

"talking-up" in this

are

piece—and not in
reason? We hear
the

"is enormous"

whisper. The

a

frequently that

present-day

distilled spirits,

There

of

consumption

whiskey, gin, etc.,

so

let's give the fig¬

chance.

ures a

(Investment Education!
^liAnd;(PublicitylliS

national

our

edly low interest rates

debt(continues to be

through the

Government

of

money

causes

and to what

and bank deposits at the disposal

T here

prices was a primary cause of in*
flation( The. most unfortunate ef¬

underlying

Governors

danger which overhangs the
all fronts is

fect of such suggestions has been

1674)

on page

of

System,
recently pointed out; that
primary source of the infla¬

to confuse people as to

(Continued

of

the vast accumulation of currency

suggestions
in

advance

Board

domestic economy on

the
market," Mr.. Schram stated,
been the subject of much
pressures

of. the

the

'the

( "The impact
of

reflect

to

ties, in an early end of deficit
financing,;'', through
a
balanced
budget, and in a sound national
debt policy,,'
' (
. 1
'
"Mr. Marriner S. Eccles, Chair¬

pres¬

and

sures

failed

inflationary dangers that exist.
for the problems of
inflation are to be found, not in
interference
with free
markets,
but in intelligent measures to re¬
lease our great productive capaci¬

similar

other

insensitive

been

had

"Solutions

data, contains

and

have

it

the

condition of its

greatest: boom in American his¬
tory, Commissioner Mahaffie of
the ICC had drafted a bill, S. 1253,

Wheeler

Elisha M. Friedman

indeed if

the

finances

would

ket

Ex¬

change,

It may be re¬

marked, in passing, that the mar¬

transactions

Finally Been Heard

amination

policy/including the distribution
of the debt by classes of holders
and maturities; and for an objec¬
tive study of the question whether,

.

the

volume

Railroad Stockholder Has

and government securi¬

ties, but also the chief factor in
present easy money condi¬
tions. The time has come, it seems
to me, for a comprehensive ex¬
the

( Being Heeded(the Senate Committee Having Revised Bill S. 1253 i
to Include Roads Now in (Courts,
on Speculation but in End of Deficit
Urges That These Roads Be 1
Financing and Reduction of
(((Returned to Stockholders. He Declares That Railroad Reorgani- j ( Bank Bond Holdings. (Reports Increase in Stock Exchange Trans¬
actions and Income.
*
(( zations Need Not Be So Drastic, as Present Property Replacement
( Values Are Greatly Above Total Debt.
He Recommends EstabEmil Schram, President of the New York Stock Exchange, made
,( lishment of a Joint Congressional Committee on Transportation;
public on March 15, the 1945 Annual Report, which, in addition to
furnishing in-,;;, i}'
*
in¬
and Noting That No^ British Railroad Has Faded Since 1923, He *
formation re¬
to
postpone the application of
Urges That Such Committee Visit England to Study Their Coordina-, ;

Small

only the chief

the growth of deposits,

currency

In Annual Report of the New York Stock
Exchange, He Points Out
That Inflation Pressures Upon Stock Market Has Been Subjects
J of Misinformed Discussion and That Remedy Lies Not in Curbs

( Economist Notes That the Pleas of Small Stockholders Are Now !

The

!

.

,,

factor in

By ELISHA M. FRIEDMAN
■

savings and in¬

on

"Mr. Eccles is correct, of course,
in- that ' increasing^ government

The New Government Policy

:

rate

vestment funds.'

"If-

\

<

,

three factors which

are

should be considered.
*■ *

I

-

•.

THE EXCHANGE TELEGRAPH COMPANY

r

■■

■v

capita consumption

2. Average national income

,;j

10$3. Population

LIMITED

1

■■

--k

IS Per

.,

^

.

-

In the years1900 to 1917, the aver*

Assistant Director and Counsel, Bureau of Securities,

capita consumption of dis¬

age per

tilled spirits was 1.59 wine gallons'

Official of

National Association of Securities Administrators Calls

Attention to Present Conditions Which Require

Protect Investment Public From .Stock Swindlers.

Placed

(a

Immediate Action to

Urges That

Be

Losses Than

Punishment After the Act, and Outlines an Educa¬

on

tional Program to

on

Be Given Wide Publicity.

(CARD) SERVICE

Stock Swindlers and Draws Attention to Canadian Mining Boom (

and the Steps Being Taken to Prevent Wild Speculation in
Shares. Cites Action by Nebraska Bureau of Securities.

riod

;■>:

have heard

be¬

case

The

fore.

market

so

of

which

much.

entific discoveries of the

for

tangible goods

riod.

They hear of real develop¬
of

hitherto inaccessi¬

is restricted

ment

and uncertain.

ble; of the finding of new supplies

The

of

hu¬

very

man

to

urge

make

a

oil.

.

and

They

littler

vinced

"run (

be

money

areas

metals

are

of

new

strikes

ready to

be

con¬

in

backing

inven¬

new

lot;
tions or in opening up new land
Harold Johnson
quick" is pres- 1
for the production of gold or uraent as always. ;?
( These conditions all add up to
(Continued on page 1671) y

Kingdom

United

and

The

had

Abroad.

Service

I DEALERS"

on

Essential to all who require
Current Traderindustrial and

.

on

the Stock

1919*
(

5000

some

Exchanges in Great Britain, and provides ONE
Company showing details and records over a

NEW

YORK

NEW

YORK

CURB

EXCHANGE

STOCK

'

number of years.

published, Divi¬
development takes
card is issued in replacement.
Immediately Reports

are

SAN

LOS

2□

FRANCISCO

ANGELES

repeal. From 1934 to 1944, the
consumption per capita
was 1.02 wine gallons. In 1945 the
estimated consumption (was(ly4Q(
wine

PINE STREET,

NEWYDRK

5




,

-

:

«'

grown

.

population has

from 126 millions in 1934 to

about 140 millions in 1945. This is
an

increase of approximately 10 %. v

During that

same

period,

billion in 1934 to

a new

Financial, Trade, and other Statistics

are

included for all

principal Countries. British, Dominion, and Foreign Loans
a

concise form.

by Graphs together with authoritative reviews.
are

well covered

Traffics, Mining Returns,

Outputs, etc., are published weekly

comparable form.

Brit¬

by the inclusion of annual,
or

monthly in tabular

X

»

almost

of

300%.

The obvious conclusion

then, is

this. The per capita consumption
of distilled spirits

during the ten

was

is less than it
years

prior to

prohibition, despite the tremendous
national

increase

in

America

today is not spending

large

-

estimated $160

billion in 1945, or an increase

are

Commodity price movements are

an

a

our

income.
as

percentage of its national
distilled spirits

income for

□ Hunt Foods, Inc.
□ Pacific Western Oil
Corporation

1 5 □ □

RUSS

SAN

FRANCISCO

BUILDING

4

PAULSEN

'

^

particulars and specimens

as

it

be obtained from

frequently referred to
old day*."
:

as

"the good

>

the
BLDG.

SPOKAN E

may

B

Company's Head Offices:

64 CANNON STREET,

"

<

LONDON, ENGLAND

FREE—Send
OF

N.

a

postcard to MARK MERIT

SCHENLEY

Dept.
Y„

18A,
and

containing
various

350
you

DISTILLERS

Fifth
will

reprints

of

Avenue,
receive

earlier

subjects in this series.

'

our na¬

tional income increased from $49.4

Full
"""*

EXCHANGE

EXCHANGE

gallons.

Since repeal, our

did in the pre-prohibition period,

'

EXCHANGE

STOCK

STOCK

*

Now,let's take the yearsfollowing

place,

□ Creameries of America, Inc. '

~

?

>

1918 and

i'

>'

*

dends imade known* Meetingsi heldj or any

quarterly, and monthly statistics.

MEMBERS

•'

not

adopted prohibition before the (

States during the years

card for each

and

Kaiser & Co.
V..

are

was finally
adopted in 1920. There is no way
of estimating the amount of illegal

as

comprises information concerning

ish -Industries

□ The Anglo California National
(
Bank of San Francisco

they

eighteenth amendment

Companies (including important International and American
industrial Companies) whose Stocks and Shares are dealt in

shown

IN IHE MARCH ISSUE:

93 millions.

average

set out in

(

$33.9

representative. A number of states

,

"IDEAS FOR

was

been omitted because

Financial Matters;

of

of the financial profits to

made

into (a

Statistics

they

war pe¬

the

years was

whiskey consumed in the United

Recognised

They hear

everywhere of the changes in our
way of life which are to • come
about on account of the great sci¬

than has been
the

America

dustrial

nothing about
'investment

by Banks, Stockbrokers,

Industrialists, Insurance Companies, Accountants, the Daily Press, etc., etc.,
throughout

Now, in the year 1946, there are more people in the United States
with money to invest than there have ever been before.
Incident¬
ally, there is
a
something resembling a swindler's
larger per- ;
paradise, especially a phony-stock
centage of
salesman's paradise.
this investing
Here are in¬
experienced people with a little
public which
knows little or
money believing in the great in¬

128

The figures for 1918 and 1919 have

Investment Trusts,

Mining

of

national in¬

billion. The average population of!
the United States during this pe¬

Describes Methods of
As used for many years

consists

average

during these

come

Before Public Incurs

Prevention

More Reliance

gallon

wine

ounces). The

DAILY STATISTICS

CORP.,
N.
a

Y.

1,

booklet

articles

on

<

1638

§;

:the commercial & financial chronicle
Dolphyn, Buhl

Trading Markets

Delta Electric

•.

;i;£

^

Globe Steel Tubes
United

Recommendations and Literature

Mfg.fp

Fuller

C.L Schmidt & Co.
Established

and

1922

Tel. Randolph 6960

King,

&

v

4\

.

44v: v.fi'.7'/

Bank

the Bank Stock situation and the

Amott,

outlook—Lewisohn

Broadway, New York 7, N. Y.

&

Co.,
Broadway, New York 6, N. Y.

CARTER H.C0RBREY&C0.
Member, National Association

ond

Wholesale Distributors

Grade"

rail

bonds

for

Bank

Refunding 5s
—Bendix, Luitweiler ' & Co., 52
Wall Street, New.York 5, N..Y,

>,

UNDERWRITERS
MARKET

DISTRIBUTION

above

135LaSalieSt.

1936-1939

Michigan 4181
255-.:#

Canadian

.

.

The

Chicago Corp.

:

of

'

Circular

on

Members Principal Stock

Exchangee
Chicago Board of Trade i K -

Home

Bird' &

Son

:

1 WaU St.

and review contain¬

~r"

of

monthly

details

Co., Common

^

Request,

in;

on

Reda

■

on

10 So. La Salle

'; Co.—situation
discussed—Brailsford & Co., 203
South La Salle Street, Chicago 4,
m.

•

Na¬

;>>"■

j; "i.;

y ■- y -

N. Y.

St., Chicago 3

:

'

Philippine

Big

& Co., 42
N. Y,

FINANCIAL

ADVERTISING
Branches j

Prepared—Conference hunted

Albert Frank

-

■;

Ricks & Price, 231 South La

.

4;?,

telephone

COrtlandt 7'?G60

lar

Wedge,

;
Also available is a recent
orandum on The Muter- Co.

CO..

Salle!

|

company—Ward

available

O'Kane, Jr.,

are

Great

& Co-.,

126

— v

late memoranda on:;

American

Alabama-

Industries;!

Inc.;
Douglas;
Tin; Unc«n
Co,;.

Mills;' Mo¬

leaflet

Members
Stock
Board

of

A

208

SOUTH
Telephone

LA

4,

SALLE
4068

System

'

:

.\U'

.

Markets In—.'

CG 837




&

**'.

*

>

;

-•'"*/

v.';

v

on •

Boston 10, Mass,

H. M.
■*

'r

v

Galvin

"

Incorporated"

.

J

.*

135 So. La Salle Street, Chicago
Telephone State 8711
'

3 '•

<

Philadelphia

Pittsburgh

Corporation

)

■

or

interesting "possibilities — Hoit
Rose & Troster, 74 Trinity Place
New York 6, N.'Y. ■> ■
^
Public National Bank

& Trusl

'

.

Soya Corporation—late

'■

x;

memo*

randum—Peter Morgan & Co., 31

Nassan Street; New York 5, N. Y.
;4;';4v
;
Spokane' Portlands Cement—
Bulletin on recent developments-^t -erner i■ C6;Vr 10
Post Officfe

Square, Boston 9 Mass.

:

Thiokol—Descriptive booklet

|

on

manufacturer of synthetic rubber,
plasticizers and chemicals—Amos

Treat & Co., 40 Wall
York 5, N„ Y.
•
^

Waltham
t.'ve

;

'

Watch

Street, New
•

"

'4

Co^-Descrip-

circular—du

Pont, Homsey
Co., 31 Milk Street, Boston 9, Mass.

'

■:' *

«

^

Teletype CG 273

New York

4

m-——r;
y Panama Coca Cola—Circular

Byllesby and Company

v

-

--

N, Y4

y

i

u.:?%-v/y. %::<k£

U
j Netv, England Lime CompanyDescriptive ? circular — Dayton
Haigney & Co., 75 Federal Street.

-

Distillors

■

>.

'

Sfhcnley

,

*4Brochure of ayticlea they .have,
been running in the Chroniclewrite to Mark Merit, in care of

: ^

Sy\ Manufacturing
Co., makers of the
f] Electromaster - % Inc7»--^.Becenl.
Motorola Radios and Phonographs
leport — Mercier, McDowell
& —Seligman, Lubetkin & Co., 41
Broad Street, New York 4, N. X-

NORTHERN STATES POWER CO: 6 & 7 Pfds.

ST.
*

t

>

T Minneapolis

%

-

W

for11946—Comstock

Motorola—circular

r:w-.'

.

in thefsecurities' business.
Carmichael
was
formerly

with Kirchofer &

Miller Manufacturing: Co.—Am
Schenley Distillers
Corporation,
alysis"4)f current Situation' '4and; 350 Fifth
Avenue,'New York 1,

#

y

Direct Private Wire to New York
Bell

study of L. A% Darling.

a

DEEP ROCK OIL CORP. Common

ILLINOIS

Randolph

at this-timO,:

M-3—Fred

Duttoh—-Analysis—More- Co.; .231 South La Salle Street
Co.; Penobscot Building, Chicago '4,411.•' k'4

CHICAGO SO. SHORE & SO. BEND
RR. Com.

Trade

study of Midland Utilities

CHICAGO

&

W,-- v.*'v.-;jV*•
J*:; V'*-v
J
'
»
rf "" "

■

—We Maintain Active

'

M-3-—

circular

Fairman & Co.,'208 South LaSaik

prospects

C. H.
land

Mr.

'

'4

Midland Realization
For

for

Detroit 26, Mich.—Also available

Midland Utilities

Write

cur¬

is

4,i'4v4
Exchange4 :'7

Chicago

—Herrick, Waddell & Co., Inc., 55
Liberty Street, New York 5, N. Y.!

gage

Stores—analy¬

showing 'estimated earnings for

Street, Chicago? 4^ 111.

Petroleum, Ce¬
ment, and Motion Picture indus-

Real
Estate
Equity " StocksAnalyses of situations considered

CHARLESTON, W. VA.—John'
H. Campbell, Jr; and Asa B. Car-;
michael, Jr., are forming Camp-?
bell, Carmichael & Co. with * of¬
fices in the Union Building to. en*

■

A. de Pinna Company—circular

rent trends in the

u FredJ.FairmanCo.
<4

indicating

in Charleston, W. Va.

descriptive : of the .common
interesting railway equip¬
Claybaugh &
72 Wall Street, New York 5,

write

*.

.

the

Campbell, Garmichaei

J

]

J

>

>

Mills,

General

New Jersey Worsted
hawk Rubber.

Beaver Street, New York
4, N. Y.
Also available is a Review of
Electric Power & Light Corpora¬
a

'j

Demal Coch¬

ana

will

be associated with
firm at that office.
,4

1946 at $7 a share, as against about
$2.50 estimated earnings for 1945
—Herzfeld. &
Stern, 30 Broad

\

appreciation; fori

this

-

^specially ^tractive

Chicago

4

Arnold, Inc. and
prior thereto with the-New-York
office of, Scott, Horner :& Mason,
Inc.
Mr. Campbell was formerly
Street, New York 4, N. Y,
4
Shelby, N. C. representative for
Kirchofer & Arnold, Inc.
McDonnell - Aircraft'
;
Corp.—
Memorandiirn—^ Fr-i H. Koller &
Richardson Company — circular
Co.; Jnc., HI Broadway, New'
York 6, N. Y.
on interesting growth
•.
opportuni¬
T'
ty in the plastics industry—Amott,
Midland Utilities and "Midland Baker & CO., 150 Broadway, New
York 7, N. Y. ; ;.
Realization — detailed study> 74

mem-j

Broadway, New^ork 5;N^ Y» Alsc^

Mindanao

Broadway, New York 4,
1

H. L. Matthews

.V

,

May Department
sis

^Dayton Malleable Don
Co<-J
Study of outlook and speculative
possibilities tot

Stocks

and

;

N. Y.

r

.

Chicago Philadelphia San Francisco

I SINCE 19081

.

*

stock of

Street; Chicago 4, III.

:

Mining

'

,

Consolidated Gas Utilities and*
ChicagoCorp.—Circulars—!

Railroad Liquid; Resources; and
Debt
Retirement
analytical
memorandum—H. Hentz & CO., 60

tion, and

incorporated '
'
' >< \
131 Cedar Street
NewYork6,N.Y»
Boston

>

Magor Car Corporation—circu¬

—

Hans

■

Lipe-Rollway Corporation—Circular-rHerrick, Waddell & Co.,
Inc., 55 Liberty Street, N'ew York
5, N.- Y,
.
.
.
-

The

Shoe;

'

Courts in Nc;w Location
in Charleston, S. C.

ment issue—Blair F.

memorandum for dealers only
giv¬
ing late, details on Benguet Con¬
solidated w Mines, Balatoc Mining
Mother Lode—John J.

Its

Savings iBank of Pasadena; re¬
cently he has been on active duty
Naval Reserve. ,1

:

Doyle, O'Connor & Co., Inc.; 135
South La Salle Street. Chicago
3,

January Railroad Review—sum¬
of situation—Vilas & Hickr
49 Wair Street, New York '5,*

■'/; Teletype CG 405
;
»*
Rockford, 111.,
Cleveland, Ohio

All

Rhodjes

with the U. S.

ran

Chicago South Shore & South
Bend: RR.
Revised "bulletin -4

containing

California

ey,

Co.,

In

Mr.

jnahager pf the investment
department of the First Trust .&

*

York Corrugating.

waukee,; Railroad

mary

-

Indianapolis, Ind.
,

officer of R;

-

Detrola—Memo-

,

Tel. Franklin 8622
"...

in the past was an
N. Gregory & Co.

p-'ii

late data and annual report avail?
able—B. E.: Simpson 6c Company.

■

brochure

Anglo

••

Established 1916

Members Principal Stock Exchanges
V-'/ Chicago Board of Trade
!y

-

Klnney-Cbastal Oil Compahy4-

Pump Co.

and Western Light & Telephone.

Co., Russ Building, San Francisco
4, Calif,
' '

Paul H.Davls & Co!
1

.

& Co., 209
South La Salle
Street, Chicago 4,

ern

'

New investment Firm l

of

iandum—Cruttenden

—MerhorandUih~t

memoranda

are

tional Bank, Creameries of Amer¬
ica, Hunt Foods, and Pacific West¬
Oil Corporation—Kaiser &

Snap-On Tool* Corp., Com.
on

Co.

was;

International

Ideas for Dealers—current issue

Industries, Inc., Pfd.

Prospectus Available

&

'1945,;;statement4;

'

,

Bailey & Rhodes Form

of

LOS ANGELES, CALIF.—WarCalifornia,
210 West Seventh
Street, Los An-- ren B. Bailey and Foster B;
Rhodes have formed Bailey and
geles 14i Calif.
*,
'
Also-available are a tabulation Rhodes with offices at 210 West
of 1945 insurance
company results Seventh Street to/ engage in the
and Highlights of
; the -Bank of investment business. I Mr. Bailey

Philadelphia' 2, Pa., Also available

Pitt Bridge' Works -land Welch
Grape Juice CoY-Strauss Bros., 32

Wells-Gardner 8c Co., Com.

*Camden Forge

Company

Buckley Bros., 1529 Walnut Street

News—brochur^

Broadway, New York 4, N/Y."

•Woodall

Insurance

Butler-Huff

Steel

•/

are

Upson

'New#*York-^summary for-1945-4

Company Sand'National
?

and

All

-

-

CHICAGO 4

Randolph 5686—CG 072
•

Co,; Michigan

Treasurer.

California
Building, Denver 2,
:■? Bost,-Inc^-detailed bircuiar
•
CHARLESTON, S. €.—As of
L
'
*'
' ■* '
oi| Colo.
April 1st the Charleston, S. G.,
interesting low-priced speculation
Appliance Co.; Pettibone Mulliken
—Hardy (& Hardy^. Jll Broadway
Le Rqi; CompanyStudy, oi office of Courts & Co. will be .loCorp.;
^
Armstrong
Rubber
Co.; New
cated on the ground Boor of
York 4, N. Y.
V
common stock as a sound
.theOhio Leather Co.; American Fur¬
specu¬
Also available is a circular Or
Peoples Bank Building, 18 Broad;
lative^ purchased-First
niture C04 Punta Alegre Sugar
Colony
Sports .Products Inc^
'
Corporation, 70 Pine Street, New Street under the co-managersbip;
Corp.;
Ilaytian
Corporation
of
of E. Prloleau
York 5, N. Y. Ravenel, Jr. .and
America; Latrobe Electric Steel
W. E. Martin,
Also available is a,study'oi Robert F. McNab.
Co.; Ray-O-Vac Company; Fort ;U Chicago, North $hore; & Mil*

HICKS & PRICE

Now York Office

on

Products; WellEngineering Co.; Kendall Co,

-irn K

Iron

Assistant" Secretary

formerly of R. A. Shillinglaw &
Co.; Mr. Jordan being In charge
of the Memphis pffice, > ■ ,1'

Tennessee

The Upson
Company; Lawrence
Portland Cement Co.; The Parker

Request

231 SO. LA SALLE ST.,

comment

Also detailed circulars

-

Co.;
mail

Yt

:

ing brief analyses of Philip Carey
Manufacturing Co.; Sargent & Co.:

The-Muter-Co.

;

Nationa

American Phenolic Corporation

Terminals Corp.

Utilities Corp,
Geared to the

Rapids

Mich.

King &: C6^>6r Broadway;? New
York 6, N. Y.
;
;

Consolidated Gas

Grand

-

Charle.*

—

Lauper,

Service Co.—Circulai
—Adams & Co.; 231 South La Salle
Street, Chicago 4, 111. Also avaib
able is a recent'cireular oh E. & G America based Upon the Dec; 31;

Stocks—Current Re¬

issues

.

.Co.—Descriptive Circu¬
lar—Seligman, Lubetkin & Co.,
41 Broad Street, New York
4, N. Y.

Building, Grand Rapids 2

showing
earnings,
pricO Brooke
range,
dividends and yields of Casting
Canadian

President; F. Lee Nel¬
Vice President and Secretary;
Matthew. B.; Pilcher, Vice-Presi¬
Fresnillo
Company — corrected dent and Treasurer; V. M. Choate
and Robert H. Jordany Vice-Presi¬
memorandum
on
earnings
and
dividend-r-Troster, Currie & Sum¬ dents; Porter L.; Easton, Assistant
"V ice-President,
a h d
mers, 74 Trinity Place, New York
Rudolph.
Assistant

American

view

115

son,

4, N. Y.

average—E.

Company; 61 Broad¬
way, New York 6, N. Y,'
?

650 S. Spring St.

:

CG 99

the

F. Huttori

LOS ANGELES 14

State 6502

156
p !

—Analysis—J. F. Reilly & Co., In¬
corporated, 40t Exchange Place.
New; York 5, N. Y«

Building Stocks—study of'out¬
for these securities, indicat¬
ing that earnings should run 75%
look

CHICAGO 3

Inc.,

Mid-

—

F; Madden,

Galvin

Tornga,

Mis¬

souri Pacific 1st and

For

SECONDARY

&r; Co.,

American Forging and Socket-,
Circular—De
Young, ^ Larson

Switch—detailed circular

recommending exchange of "Sec¬

;

/Middle West 4* Pacific Coast

Baker

'

Bond

:

-.

of Securities Dealers

61

TENN.

the investment business. .Officers
of the new organization are Bert

tion.

NY; Savoy Plaza; ard 870 Seventh
Ave. Corp.—Ask "for list C21-L

Stocks—special study of

NASHVILLE,

South
Securities
Co.
is
being
formed with offices in the Ameri¬
can Trust Building, to
engage in

Also Available is a circular; oh
the. New England;Power Associa**

Co.l

Hotel Statler Co.; Roosevelt Hotel

*

Tele. CG 271

Brunswick J Site"

Formed in Nashville

Co,—

,

Commodore Hotel; Hotel Lexing¬
ton, Inc.; Hotel Waldorf Astoria
Corp.; Hotels StatlerCo.4N.Yi.

Li-

baire, Stout & Co.,. 50 Broadway,
New York 4, N. Y.

120 South La Salle Street

CHICAGO 3

profits—Eisele

-

Electric

Mid-South Securs. Co.

7^

Preferred; Stock: Guide—G. A.
Saxton & Co.; Inc., 70 Pine' Street,
New York 5, N/Y.
'

.

including

District

Thursday, March 28,1946

on

in the current issue of The

memo

Stockyards Pfd.
Auto Truck Industry—memo On
situation indicating record volume

Empire

*

■{..■■■■It is understood that the firms mentioned will he
pleased I
4
to send interested parties the following literature:

i4

Building,' Detroit;

16, Mich.
•:4r^;y;>:VV
Also
available
a
report
Sheller Manufacturing Corp.

Dealer-Broker Investment

Central Electric & Gas

•

V*

Co.—Analysis, for dealers only—
C. E. ITnterherg ^ Co.. 61 Broad¬
way.
<

New York 6, N. Y.

'

Also for dealers only is an anal¬

ysis of National Radiator Co;

4;

i Wellman Engineering Company
—circular—Wm! J. Mericka & Co.,:

Inc.,

Union

Commerce

Cleveland 14, Ohio."

/' v

Buildipg,

Volume.' 163

THE COMMERCIAL & FINANCIAL CHRONICLE

Number .4476

-

1639

Conrad Nongard With

Business Outlook and Trends

Cruftenden & Company

*

GORDON*

; By BEN J. H.

NSTA Notes

I Regional Business Consultant, U.. S. Dept. of Commerce

Department Spokesman, After Reviewing Reconversion
Progress, States the Reasons for His Belief That the Business Out-;;
look for 1946 and 1947 Are Excellent
Sees Immediate Heavy;

Commerce

CHICAGO, ILL.
has

Nongard

P.

Conrad

—

associated

become

with Cruttenden & Co., 209 South

La

:'

•

.

Mr.. Nongard

merly Jan

•

officer

for¬

was

Bennett, 'j

of

Spanier & Co. and A. A. Bennett'

.

,

Street, members of the

changes.

>

-

•

Salle

New York and Chicago Stock Ex¬

Pent-Up Purchasing Power > NATIONAL
SECURITY TRADERS* ASSOCIATION
as As suring Fnil Employment, but Cautions. That When These1
£aul I. Moreland, Moreland & Co., Detroit, Mich., Chairman of
Factors Disappear, in Order to Prevent Deflation, There Will Bethe^EducationalCommitteepfthelNationalAssociationofSecurity
Need of Continuous Technological Improvements to Lower Costs
Trader^ has, addressed'the'fblldwing cpminunication^tb "all inembers
of the Association:
:
I and Keep Up Demand. Looks for Largely Expanded Foreign
-"At the request of the Officers and Executive Councilr and with
Trade, and Decries Inability of Other Countries to Pay for Our A the approval of the National Committeemen of the National Security
f Exports.
Points Out Vital Role of Commerce Department raH Traders Association, Inc.', I we are addressing you this important
Shortages of Goods and Homes and a

CoV

&

,

Donald

'•

J.

Klein,

has

who

re¬

f

Shaping Prosperity.

f

t

•

"You

are

is- the^

course

fort

we

the

war.

four

after

ed

fears of forced

n

i

th e

g at

n

dollars

lion

:y ear.

a

Over 52 million workers are

peak, a figure
higher than
our normal
total
produc¬
Benjv H; Cordon.
rious

-would

time, that se¬

readjustment problems
develop.
The wonder is
change-over took place

full

ly after V-J Day. Indeed we have,
-with the exception of the indus¬

nance,

at

the

of

individual

insurance and

investor

in

Chicago 3f III.

all, security

transactions.

be an absolute prerequisite to
acceptance of ,an order to purchase
common stocks.
A commission or trading 'profit" made today is a
,

detriment
r

to pur profession if it .offers, the risk of destroying the

ffndnfcial soundness of the^ client tomorrow. 4;
^

.

-

1

.

frictional-

sure,

Mr. Gordon be¬
Rotary Club of New York

♦An address by

■*

.

THE .SPECIFIC :CLIENT BEAR THE RISK?

knowled^; and

experience,

Chronicle)

CHICAG6, ILL —Chas. Siebeni

BLOOMINGTON, ILL.—

Michael K. Garst has become

Slay ton & Co., Inc.,
135 South La Salle Street/- << -vp
mann

af-

Co.,
Inc., Livingston Building. He has
foeen serving in the U. S. Navy.
iiliated with L. B. Jackson &

■

-.n

v

.

Vz-W y..

(Special to The Financial .Chrqwcle)

Chronicle)

r

CHICAGO, ILL.r'— John W.
Allyn has rejoined the staff of A.
C. Allyn & Co., Inc., after serving
in the armed forces, a a
7
-v

(Special

to The Financial

CHIGAGOi ILLV

.

—

(Special to Thb Financial

CHICAGO^

ILL.

—

135 .South La

Robert G.

Fredric

-(Special to The Financial" Chronicle) '

CHICAGO, i ILL.—Charles
Lundfelt, f John W« Stewart
Robert K„ Wallace

$.'Army..;'.

(Special to The Financial

Chronicle)

ILL. —Merle

ROCKFORD,

;

:

...

(Special to The Financial

Barrows

'

S.

Chronicle)

is

r

has-

&

f;
•

Co.'

'

•

(Special to Thc Financial

CHICAGO;' ILL.
has

Higinbotham

~

D.

Brown, formerly with First: Se¬
curities Company of Chicago and

Ryan, Nichols & Co., has become
associated with Paul H. Davis

Chronicle)

Harlow N.
Co.,
rejoined Hul—

-

CHICAGO,

ILL

has

been

Leonard
staff

of

135

—

South

J.

Richard

added

to

revised bulletin

Ripley
La Salle

Street/
after serving in the u. S. Navy,

Naess

&

now

Cum-

before

the

-

CHICAGO,

!

i

ILL.

—-

Carl

Brown, Jr. is with; D. B,
Co.,
I

Alex.

Brown

&

Sons

Copies available

Is

5..:,;

■

r

upon

f

[

der

Peotti

'in

.<:<•■'

-.u.

.
.

&

Co.,

National

Bank

business as.

SECURITIES

„

,

0101

Company

fc

Burgess Battery Co»
Howard Industries,

Inc.

Hydraulic Press Mfg. Co.
Kropp Forge Co.

&

Light Co.

COMSTOCK & CO.
.lifl/;;; CHICAGO 4
231 So. La Salle St.

Hamilton Mfg.

James Manufacturing

•* '

Tool

Co.

Northern Paper

All Wisconsin Issues

Mills Co.
Co..

-

-

Co.

I0LLEY, DAYTON & GERNON
Member—Chicago

CHICAGO 3, ILLINOIS
^

Dearborn 1501

Teletype CG 955

105 So.

I

,

Miller Manufacturing Co.

Froedtert Grain & Malt. Co.

l:.Vv.';;.




T

H PHONE" STATE

Gisholt Machine 1

National

INCORPORATED

Dearborn 6161

A SALLE STREET

OF

DOYLE, O'CONNOR & CO.
Telephone:

t

CHICAGO 4, ILLINOIS

Appleton Manufacturing

Weyenberg Shoe Mfg. Co.

'

.

request

TeletypeCG 1200

ADAMS & CO.

Macfadden Publications

CONTINUOUS INTEREST JNi

Cons. Water Pwr. and Paper Co,

i I

j

of

Building, is now doing
a corporation. QfRcefs
are Wayne J., Estes,
President;
Jack B4 Snyder; Vice-President
and ? Treasurer; William B. Pesell,
Vice-President;
Bernice Mc¬
Gregor, Secretary; and-Robert C
Guthrie," Assistant Secretary. .!
?
Topeka

Nekoosa-Edlwards Paper Co.; > J;Central Paper CoJ Com. I

-v

135 SOUTH LA SALLE STREET

•

request

TOPEKA, KANS.—Estes, Sny¬

jlll .West-Monrqe Street.,,

on

;

on

f!

Corporation

a

Wisconsin Power and Light Co./.

^

-:v

•Recent circular

Puget Sound Power

Compo Shoe Mach. Co1.

'•<1

" ■?

Common

i

Estes, Snyder & Co. Now J

Frank

(Special to; The" Financial- -Chronicle); ;;

;I;

Ghicago South Shore & South Bend R. B.
^

'

-

war

as manager of the
Department of Sutherland,
Tuttle & Brennan in Atlanta.
II

(Special to The Financial Chronicle)

|i

Koehring Cov;

4

*Mich.^Steel, Casting Co.

Co.,

THE

i

Common and Preferred

the

&

Harriman

.

a

*Nat'l Terminals Corp.

Trust

,

prepared

with

Thielbar

with

.

We have

Common

Baltimore and

•

10 South La Salle Street.

'r./,•' ^

/ 'J

(

with

-

&

Warren

duty

investment^ counselors of

Mr.

; CHICAGO, ILL. —Herman W.
Chandler, - 208
Chicago; ill.—John ^ Wat¬ Brann is with Zippin & Company,
jSouth La Salle Street, He, has re¬
son
has become conhected with Ijnc., 208. South La Salle Street,
cently, beeij with .the War Ship¬
John' A. Dawson,;! North La Salle after serving in the armed forces.
ping1 Administration.
' (7

burd,

active

had for some years been, engaged
in the investment advisory field

o =-

Common

TEtETYPE C® 364

New York, Boston and Baltimore.

(Special to The Financial Chronicle)

i

I

Co., -Talcott

ILL.—Herman

re¬

Mr. Wallace has
in. the,.. Nayy;; J prior
thereto he was with Harris* Hall

J.

(Special to The Financial Chronicle)

CHICAGO,

is'

also?

joined ihe->staff

Sandeen

Mr.- Stewart

~

the U. S. Navy.

&

with

Brailsford &rCo'.*v-'"rr~

V

from

the U, S. Naval.Reserve; is
mihgs,

Street.

Inc.,

Enyart, - Van
•Camp St Co., inc., IGd West Monxoe Street. He was formerly with
Hut tgen

A.

Building.

CHICAGO, /JLL.^Anthonr B.
;

with C. J»

;.

..

■

V

Henry B- Thielbar/ having booh

released

associated

'

I

are

-

E.

-

and

B. joining the firm after: serving .in

Salle Street. He. was

formerly; in: tbe p.

with

recently been

serving in the U. S. Army.

Chronicle)

>:

*E. & G. Brooke Iron Co.

-r

Henry Thielbar Joins
Naess andCwmmings

Salle

Welch is with F. S. Yautis & Co.,

Chronicle)

'Brailsford, & Co., 208 South La
Sgdle Street/ He h?is

previously with

the:Centfal Republic Company,

Devine & Co., Inc.,-135 South La

<

Frank has become connected

was

.—

CHICAGO; ILL. —-Lloyd
U.
Strausz has rejoined M. B. Vick
& Co., .120 South La Salle Street,
after serving in the U. S. Army. ;

<r:

'• s

231 SOUTH'

Street.-' He

*

L".

(Special to The financial

is with

•>

J.--1, ■'

-

qualified to- supplyvthp answer than are the dozens of
amafeur,- would-be. advisors;. It Jsj our obligation as skilled members
of ap, honorable profession to do so honestly, impartially and per¬
sistently.n 7;fry• -yr-■ I ;• ty'i*.>■■£rr|,c'

Illinois
>

American Service Co.

R. Hoe & Co., Inc.
,

•
"For the; future of our - business and the high standing of our
Association, ask yourself this question" IS THE PRICE OF THE
SECURITY JUSTIFIED BY THE' INDUSTRY, THE PAST, PRES¬
ENT AND FUTURE EARNINGS AND DIVIDENDS, AND CAN

Association^ from,

Trading Markets *

Preferred, Class A and Common

f

"Members, of burr

to The Financial

*

"We- believe; fully, that savi: ig$ are; of. greatest value to our

enterprise.
Our sayings are of such magnitude that there are today
adequate funds., available^ to /fina'nee^ all such enterprises without
resorting' to the cashing of.Savings,'War, or Victory Bonds.
We
will have sufficient opportunity tp apply, our talents to the. intelli¬

are: better:

(Special

Active

:

.

national economy.when.invested in legitimate and sound productive

that-concentrated--on
Cityi Ma^cji ,7; 1946.,
^
shipbuilding and Ord¬
{Continued on page l€i^i)
already
reconverted or

Tele. CG 28

Adequate

'

sufficient reserves" in cash and Savings Bonds should

reconversion and
gent investment' of excess-currentj incomes and uninvested surpluses
employment have been set
Without bein^- a party to the-cashing of bonds.

fore the

J

Tel. STAte 4950

that normally we

areas

aircraft,

135 South La Salle Street
'

security analysis, it becomes our obligation and
duty to weigh carefully the risk -factor in relation to the position

unemployed, that is, workers
changing jobs and the like.
• be

Airlines

-,

These

"As experts in

ly

To

States.

v

of all of us.

of what was

have about two million

rapidly and as smoothly as it
For we must not- overlook
the fact that we suddenly cut our
annual war production rate from
billion to 25 billion immediate¬

as

Mid-Continent
;i-

$181 billions present a constant target
high-pressure promoters, chiselers and-frauds.This buying
power^ if- protected and preserved^ can assurb. the stability of busi¬
ness and promote, prosperity for mbny
years to come. ■ IT MUST BE
PROTECTED AND PRESERVED! TO THE ULTIMATE BENEFIT

anticipated

noted here

be

did.

trial

one-third

Chicago & Southern

se¬
in cur¬

in the United

by many
economists this spring.
It should

originally

the

that

than

trading Markets

^

i

for

employed, a number in
excess
of any peacetime period,
and our unemployment of about
two and one-quarter million is
less

in a position
public savings.

.you

our

curities, $54' billions in savings accounts, and $63 billions
rency and checking accounts were- credited to 85,000,000 individuals^

present

tion in peace¬

of

use

.

particularly good, showing a
of only about 8% in manu¬
facturing employment during the
period from V-J Day to the first
of the year, while the loss" for the
nation as a whole was about 14%.

at its

particular, places

our

"As of Dec. 31,1945, approximately $64. billions in Federal

„..

is

Tate of 90 bil¬

of

in

matters

position, we have a very definite obligation and
responsibility to aid ii) all ways possible-, to * safeguard the wartime
savings .now
the hands 6f the general public.
-!
7
7 P

loss

run-

in

financial

with

powerful influence toward the

a

Because

State our record

In New York

-draft war pro¬

duction

to eXert

10%; of

management disputes that devel¬
oped during the past few months.

It is

expect¬

be

to

about

tically complete, despite the slow¬
down due to the rash of labor-

exert¬

winning

ed in

but

production facilities, and by
fall reconversion
will; be prac¬

production efI

all

our

d i g ious

p r o

•

converted

the

of

result

connection

'

firm's staff.

vital factor in the economic stability of our nation.

a

in the midst of a

are

Army, has also been added to the

communication.. ||■■

significant period in our economic his-r Your superior knowledge in
idry with strong1 inflationary and deflationary forces at worko This general and investment media
We

S.

cently been serving in the U.

♦

.

I

I Member$ Chicago Stock Exchojui

225 EAST MASON ST,-v,

MILWAUKEE (2), WIS.

PHONES—Paly 5392 Chicago: State 0933

•

"

|

Teletype-MI 488 J j

CG 262

I

Stock

Exchange

La Salle St., Chicago 3, 111.
.

Central 0780

;

lOfflces

Eau.Ckiit
M"

'

to Wisconsin

Fond du Lac

Ls Crosse

's Wfln^nn

1640

THE COMMERCIAL & FINANCIAL CHRONICLE

££?■ 5: e!l°6pal "o Free London Exchange Dealings
Charles

Real Estate Securities

R.

Gay, former Presi¬

dent of the New York Stock Ex¬

change, died at the

age of

/.

-J

...

in

was

'

v

:

h

■

•_

,

•

Gay,

first recommended the pur¬

we

British Observer Points Out That Even Should
the Terms of the
Anglo-British Financial Agreement Be Carried Out, There Will Still
Be a Restricted
Exchange Market as Compared With Prewar Years.
Foresees Breakup of Speculation and Private

;

two years. Mr.

V'*"*

December, 1942, that

By PAUL EINZIG

seventy,

after being in
ill health for

It

of

chase of Hotel Bonds in this column.
Prices of the bonds recom*
mended have continued to rise.
Lately, however, the demand for

in

spite

his

Dealings in Foreign
Exchange, With Government Fixing the Rates and Requiring All
Private Exchange Balances to Be Turned Over to Banks.

ill

health had in¬

this type of security has resulted in prices that have exceeded
any

sisted

expectation of ours.
J
s
•
\
The following comparison of prices during
December, 1942; and
at present is quite remarkable:

rying

on

car¬

his

on

;

Hotel-

■"Hotel

1942

Clinton

St.

118

present reduction

88

79%

interest rates

86

106

10
4Vfe

__

Astoria

;r

will

provide

stock representing equity.

investigated the' current1
buying of these securities and
found that the buyers had evoked
a .new
theory for their pur¬
chases. It is, namely, to ascertain
the original cost of the hotel and
We

if the bonds can be purchased at

price which discounts this cost,

a

the purchase is made.
The
theory is that

existing

hotels are in an extremely advan¬

tageous position to. withstand any
competition from new hotels be¬
cause of higher construction costs.
•

economic
factors
follows: With current occu¬

f

pancy at its peak, the probabili¬

increasing revenue of ho¬
tels are nil, while operating costs

Mr.

quate services to guests; expendi¬
tures for advertising and business
promotion and large sums re¬
quired to be spent to rehabilitate

interest

lower

due

rate

to

and

R. Gay

retiring in May 1938.

of

Winthrop,

Whitehouse

risen.

the

as

about

announced

60%.

In his

and it is time for

REAL ESTATE

General Instrum't

SECURITIES

Common Slock'Offered

some

above

tain

are

holders

and

therefore

v

do

■

represent' new.. financing,
priced at $19 each.

securities.

1

"

Outstanding
Corporation

486,858

only

SHASKAN & CO.

Bell

shares.

other

The

'getting stale.'

decision to retire after six years'

"Mr.

the

Pike,

cier, started

as a

clerk in

two

are

public

a

after he

soon

graduated in 1913 from Bow-

was

an

Chicopee, Mass.,

Dlgby 4-4950

doin College, of which he is

issued in connection with the pur¬
chase of the F. W. Sickles Co. of

Teletype NY 1-953

54 years ago in

a

bank¬

Paui Etad*

now

operated

»

as

wholly-owned subsidiary.

he

now

circles are; kept
guessing
about the scope of the Bill.
All

the

to

Pike, it is stated,

was

born

Lubec, Me., where

1

SPECIALISTS

CO!

/ » > (!( *.• !

.•J'v".

Commission.

only

The

ciates offered 98.309 for the

-• >

-

.

Incorporated

r

<

r

»,

■

Members New York Security Dealers Association

41

Teletype NY 1-1203

Broad Street, New York 4

Series

G

the

bonds

ft

sale

>

of

the

will be

ap¬

plied toward the redemption on or
about June 13 next, at 101%, of
$25,000,000 Series A 2yg% bonds
due Jan. 1, 1961.
new

Series

G

bonds

guaranteed unconditionally

principal

and

interest

by

are

to

as

the

Southern Pacific Co. In the opin¬

Island, and for fiduciaries

Pacific

REAL

Broadway Barclay 2/56 ft

Broadway Motors 4-6/48

We

ESTATE

HAnover 2-2100

.•

,165 Broadway 4^/58
Poll New

Commodore

W

Hotel
^

1

Hotel, Inc. Com.

Lexington, Inc. Com.

tem.

bank .loans and
equipment obligations, on Feb. 28,
1946, amounted to $520,227,286.
Interest charges for the year 1946
are
estimated
at
$20,114,000,
including

which, based on the 1945 income,

Y.

Hotel

Tele.

Montgomery St., San Francisco
SF

61

&

62

EXbrook




4

1285

At

Spencer Trask arid Company 25
Broad; Stret,
New York City,

members of the New York Stock

Exchange, announce the associa¬
tion with their firm of Philip N.
Dumbrille, of New York, Green¬
wich, Conn., and Brockville, On¬
tario.

Mr.

Dumbrille

was

edu¬

cated at the

University of Virginia
and, before the war, was in the
security business for several years,
being last associated with Fellows
Davis and Company.
During the
he served as a captain with
the United States Marine Corps,
war

Mr. Dumbrille is

a

member of the

Metropolitan, Union League, Met¬
ropolitan

Opera

and

Canadian

Clubs.

2.9 times.

■

Ingraham Admit De Socio
Samuel

Tr<De < Socio has

been

admitted to partnership in L; H.

Ingraham & Co., 72 Wall Street,
New York City.

Mr. De Socio has

beeri associated with the firm for

many years as cashier.

Co.

,

on
..

request.
-v

:

ft

Incorporated
BArclay 7-2360

HELP WANTED

•

POSITIONS WANTED

-

fj

OTHER CLASSIFIED ADS

\

AMOTTrBAKER & CO.'

150 Broadway

"

Com.

870 Seventh Ave. Corp. Com.

TeL

FOR

Savoy Plaza Class "A"

'

155

Spencer Trask

y*

Com.

Statler

Roosevelt Hotel NY Com.

Copies of our statistical memos win be sent
'■
iAsk for List C21
«

Philip Dumbrille Is
With

STOCKS

Hotels Statler Co.

N.
•

Hotel Waldorf Astoria Corp. Coirt.

-ft.

J. S. Strauss & Co.

1669)

ended Dec.

special /consideration at this time of Real
Estate Equity Stocks.
Among those we believe to be par¬
ticularly interesting are the following:

r

England 5/83

EQUITY

page.

suggest

Brunswick Site Co. Com.

Broadway New St. 3/61 ft.

Transportation

the year

would be earned

Trading Markets Maintained:

on

31, 1945, amounted to $32,981,000,

Seligman, Lubetkin & Co.

:

(Continued

same

'

.

from

Proceeds
new

System for

':

*t

before, exporters will have" to

attracted3>-

sale

other syndicate bid. Halsey, Stuart & Co., Inc., and asso¬
one

Southern

,£•;••■.*»?\i

v

.

Broadway

HAnover 2-8970

.

As

no

syndicate headed by Kuhn, Loeb & Co., was
a new issue of
$25,000,000 South¬
bonds, due Jan. 1, 1961, re¬
ceiving the award on a bid of 98.319% for a 2% %■ coupon. The bonds
were immediately reoffered to the public at a
price f of 98 3A and
accrued interest, subject to approval. of the Interstate (Commerce

compared
with
$36,719,660
in
1944. Outstanding debt of the Sys¬

Members New York Security Dealers Assn.

39

|.yW;yy:

Since 1929

L J. GOLDWATER &
New York 6, N. Y.

,v.

•

foreign bal¬
longer have to aplply
for permit.
Their bankers ;,v$ll
sell them the amounts ' required.
will

Pacific RR. first mortgage, Series G

Consolidated net income of the

Real Estate Securities

Stocks i Bonis

fixed; buying .apd

Southern Pacific RR. Soils $25,000,000 Bonds
To Kolw, toot & Co.—Issue Reoffend al 98%

Rhode
Wy

at

for the transfer of

ances

not

in New Jersey.

in
aw;;.

or

The

of counsel, they are or will
legal investments for. savings
banks in California, Illinois, Mass¬
achusetts, New Hampshire, New
York,
Ohio, Pennsylvania | and

1

REAL ESTATE

sold

Under the new'Bill
those wanting to buy sterling for
current commercial requirements

some

ion

keeps his residence.

Offerings Wanted
1

Gov¬

selling rates.

of its details.

be

/,

and

re¬

will

British

from

maintaining / the
existing methods,of dealing,' 'un¬
der which exchanges are
bqught

to the changed conditions in gen¬
Even the Treasury has not

One thing seems certain.

the

prevent

ernment

that is known for certain is that

The

Overseer."

Mr.

pur¬

would

ing

successful finan¬

a

above

free convertibility does not
There is noth¬
ing in the Bretton Woods' or
Washington Agreements that

Iflur-!

interest rate.

company's utility corporation

securities

The

a,t,,

of

common

loan.

for; the

even

the successful bidder March 25 for

contrary, Mr. Truman

was

freely
months

An underwriting

terseness."

service.

Oct. 31, 1945, was

on

"accept

2% % serial notes of $625,000 each,

Memberi New York Slock Exchange
Memberi New York Curb Exchange

40 EXCHANGE PL., N .Y.

not

were

*

to

Chief Executive felt that the 'pub¬
lic will be the loser' in Mr. Pike's

:

,

estate

Mr. Pike

12

of the

"Times"

said that he could not believe that

being sold

within

ad¬

"Times" "continued: *'

"On the

the

free dealing.

mean

Mean-

ern

for the account of certain stock¬

cer¬

of ':.;$e-

The

a

shares, which

but. refused

with such Yankee

syndicate headed
by Burr & Co., Inc., and including

The

the New York

for

made

poses,

con¬

Exchange Control Bill

the thesis which you put forward

Hirsch & Stroud & Co., Inc.; Otis
& Co. and Butcher & Sherrerd.

unlisted^ real

;

by

to

nation,

.

March 25

instances;

blocks,

o

to quit."

me

the President accepted the resig¬

of ($1 par) common stock of Gen¬
eral Instrument Corp. was made

prevailing ofr

lected

Corp.

vices

Public offering of <79,590 shares

fering prices for

job,

be

the ratification

But

yet made up its mind about

"I am getting stale on this

and

foreign balances that

must

convertible
after

stated, told eral.

According to Washington

prevailing bid' prices:

not

while,

the President:

in occupancy.

crease

and in

the

letter/was and
Washington Agreements and

March 21.

on

letter Mr. Pike, it is

As

BLOCKS OF

above

of

by Congress,
its
adoption

quirements of the Bretton Woods

Truman in a four-line

housing condi¬
tions becomes better,, hotels will
gradually be facedwith a de¬

will, pay

tion
loan

sidered

.

We

of

sterling

Commission, tendered to President exchange restrictions

Current high earnings are be¬
cause
of capacity occupancy
against
normal * occupancy
of

WANTED

payments

transfer

in the ratifica¬

Exchange it aims at adapting the existing

ahd

maintain. restric¬

mercial

gent.

Commissioner

a

Securities

this

all

to

unaiithorized; intern^

tional capital transfers.
It is only
for the purpose of current com¬

session. Owing
to
the
delay

is

resignation of Sumner T.

Pike of Maine
of

Government

introduced

at
Charles

e

Gay later became head of the

The

term.
Under
the
Bretton
Woods Agreement it is the
right
and even the duty of the British

tions ;

be

Pike Resigns as SEC
Commissioner

down properties and to make

run

the

delayed
for
months,
may not

ating costs are* rising because of
the necessity of giving more ade¬

Favorable economic, factors of
up deferred repairs resulting from
existing hotels are a; prospect of War-time conditions.
Labor costs
refunding outstanding hotel bonds andI cost of
materials have also
a

t hre

firm

is
be

...

Post-war oper¬

v.

at

r

terms

of

continue to rise.

o

provide for the restoration of free
dealings in foreign exchanges in
London, in the prewar sense of

and

in
serving

1935

<S>-

■

some

elected

President

Unfavorable

■

Loan

December,
likely
to

Exchange
1911; he

was

^:

Agreement in

of

since

ing the equity. '

ties

member

on

Washing-

ton''

theN.Y. Stock

addi¬

increase value of stock represent¬

are as

the

He had been
a

tional funds for amortization and
( 'Carriea

,

the debate

and

welfare work.

of debt

by re¬
organization or sinking fund op¬
eration. Refunding of debt at low

9

•'

♦Sherry Netherland
Waldorf

114

S

the Chancellor of the

edu-

cation

cheap money, high earnings and

42

George

re¬

in

ligious,

52

—,

...

♦Savoy Plaza
■

91 <

ac¬

tivities

Current^-

23

24

Lexington

"Park Central

manifold

K
:;9

.j; LONDON, ENG.—The Exchange Control Bill, foreshadowed by
Exchequer in the course of his speech during

,

♦Governor

Thursday, March 28, 1946

New York 7, N. Y.

Teletype NY 1-588

(

SEE INSIDE BACK COVER

C

'

Volume

Ohio

Ford Steele Wins AIB

Municipal Comment

Public

V

By J. AUSTIN WHITE
A

Cleveland

::/ under 1 %. For$>y ears ' there
hard

Additional Members for

and fast

rule

with

many

banks

Speaking Test

nual

v

been / a

Ohio Bievities

Central

of

Steele

Ford

(Nickel Plate)r announced that the road expects to have ready for
competitive bidding about April 16 a new offering of $41,500,000 of
40-year bonds. -V
\ 7
1
.
. •
,/
The road said it was offering the new bonds to take advantage
,

outstanding $41,796,000 of 3%%<s>refunding mortgage bonds, due common shares, totaling approxi¬
resent the local * chapter * at the
Jan.
1, 1975, which were sold mately $15,000,000.
semi-final contest in* Fort Wayne,
Dec. 19, 1944, to an underwriting
The company plans to give

CINCINNATI, OHIO—Six addi¬ Ind., in May.
group headed by Halsey, Stuarc
firms; have been I R." Ross Ellis of National City
& Co. of Chicago, at a price and
the Cin¬ Bank was second and Dorothy
interest rate averaging an annual
cinnati Stock Exchange.
Included Drukenbrod of the Fourth Fed¬
interest cost of 3.73%. The 33As,
portfolios a t are: Edward Brockhaus, Edward
eral v Reserve
Bank .was
third. Davin said, will be retired July 1
less than
1%
Brockhaus
& -Co.;
W.
Power
They also will make the Fort at 105V2 and accrued interest. The
yield. As a
Clance.y, W. P. Clancey &-Co.; Wayne trip.
The national con¬ road's treasury will contribute the
result of this
Gilbert A. Davis, Harrison & Co.;
test will be held in Cincinnati the balance
needed
to
retire
the
rule, and the
L. W. Hoefinghoff, L. W. Hoefingfirst week in June.
First prize in bonds.
steady rise in
hoff & Co., Inc.;
Lee R. Staib, the finals is $500 and second is
the municipal
The new financing will be the
Geo. Eustis; &
Co.; ; Joseph R. worth $250.
market, these
fourth;. under/ the debt simpli¬
Work, Weiss,{• Work & Co.
bankers
have
fication
program Isiarted
by
-1 Several: other firms are consid¬

that

mu¬

no

nicipals would
\ be put in the

quit

"either

buying munic¬
ipals, have

J. Austin White

tional brokerage

elected to membership in

applications.

ering filing

applications are the re¬
of the Exchange
to increase its usefulness to all
brokers and'dealers in securities
in the vicinity and increases Ex¬
change, membershihp to twentyThese

sult of

a

program

Cunningham Co. How
Incorporated; Officers

and longer

to

until
a few months, nay, even a few
weeks
ago,
a
bond could be
"given" away at a 1% yield,
but just let the price on the
same
thing be
0.95% and it
{ often stayed •; on the ; list * for
such

an

extent that even

,

the city.
Other firms{ Who are members

ties firms in

of the Exchange, are:;
J. L. Barth Co., Benj. D. Bartlett

Co., Otto Baum & Co.,. H. B.
Cohle & Co., Dominick & Domi&

a

20 years just to
1%, or per-:
haps only slightly more.
15

or

that mythical

get

Effects of Low Money

The HI

Rates
•

is

There

a

great deal of talk

the ill effects of
low money rates.
In fact, one
often reads in the press today of
concern; being
expressed about
these ill effects, usually by the

these days about

head of some insurance company,

bank

or

other

institution which

Jack'M; Mandaville is the Secre¬

Co.

Many months have been Spent

tary.

derive

the

invest
funds ^entrusted to their care

in

the

tend to cause investors to •

iv.i

surely
decline

further.
,

The truth of the matter is

that

Cincinnati

securities

listed

more

and stands to be trimmed fur-

Alleghany subsidiary, and onethird
for
interests
associated

{ther with the new proposed fi¬
*

Huff & Co. of

California, 210 West

J .< / ■'./' •./•v,.-,.;'

-r:

Decision Limited

■

declining yields. A part
the explanation is that inves¬
tors are merely human, and it is

low and
! of

:

•

only human that in times of pros¬
perity the experiences of adversity are forgotten. S In good times
we
forget bad times.
To forget
is human:- to remember, divine.
In the realm of municipal bonds,

least, the defaults and adversi¬
ties of the '30s are forgotten in
at

{the prosperous '40s.
!
^
Another explanation of the will¬

Mar.

since

Ohio

the

Court

ruling

the

in

/

week

it

had

account to bid for pro¬

offering of stoclc by
Indianapolis Power & Light rCo.
of Indianapolis, Ind.
v
Otis opened a

fight for the new

issues late last week when it was

the

learned

utility

Indiana

was

planning to turn over the offering
to a group of 80 leading v bond
houses

competitive* bid¬

without

,

/{Z:.
William S.; Jack of Cleveland,
and B. C. Milner Jr. of New York,;

head the new company of Jack

&

Industries, Inc.,

Precision

Heintz

formed early.in the month by

the

of Cleveland's famed war
plant, Jack &" Heintz, Inc., and
Precision Products Corp., recently

merger

incorporated. 'V

/

(

Chairman of
the board in charge of all produc¬
tion and was succeeded as Presi¬
Jack took,

to submit a

Mar.

•

;

Supreme
,

1.30 \

1.02

1.30
1.30

1.16

19,1945— 1,29

1.02

/
/

1.39
1.45

14

Oct.

17

19
18

June 13

May

16

Apr.

18

—

over as

.32

1.15

/

tive

1.17

1.42

1.02

1.39

1.02

1.19

1.35

1.02

1.19

__

1.62'

1.34

1.03

1.27

__

i.58

1.21

—

bidders."

It was

then

papy

ucts Corp., Cleveland, Manufac- {
tur^rs Trust Co. and Murray; I

City of IndU

Corp.; Byron C. Foy, a director
Chrysler
Corp.,
Electric
National Dairy;

of

bidding and

would

ask

bids

for

on

the

proposed issues—120,000 shades of
4%

preferred stock and

,

Auto-Lite. and

telegram from Power & Light to

tors

Harold C. Richards, a

are

director of Midland Steel Prod-;

reported over the

Otis stated it believed the direc¬

•

Milner,
other ^new
of the merged com-;

Products; T. Seward Harris, in-.
;

dustrialiDt in^New England, and;
Edward R{ Legg, formerly with
Nash-Kelvinator

Corp.

.

"Holdup tactics": of a group of
(Continued on page 1669)
>■

142,967

.36

1.18

;

a

\

directors

.

that the

'

>

Besides

.35

1.50
1.54

1.38

1.22

—

.30

Z:

1.40

—

year,"

by the company and the prospec¬

.28
.28

.

1.09

1.32

—

.28

I

1.13

1.36

„

__

.28

Z

1.02

1.24

16

Nov.

1.01 S:

1.16
..

Feb:: 20::,//...
Jan.

.27%

1.26%

1.29

1.16

6

Feb. 27

5

t Z

1.15

r_

proposal to you on a
mutually agreed: upon

date to be

anapolis had asked the utility to

1.13%

20,1946.

Mar, 13

July

.40

1.18

.45
'

Gruen Watch, Com.

.40

.37

Sport Products

.33

:

.31

■

;

1.43

i.ii

1.30

1.47

1.14

1.33

1.49

1.17

1.50

Jan.

1.34
1, 1944— 1.41

1.58

Jan.

1, 1943— 1.83

2.01

Jan.

1, 1942— 1.92

2.13

1.70

.43

Jan.

1, 1941— 1.88

2.14

v 1.62

.52

Jan.

1, 1940-, 2.30

2.58

2.01

.57

Jan.

1, 1939— 2.78

3.33

Jan.

1, 1938— 2.98

3.42

Whitaker Paper

Mar.

14

Feb.

14

Jan.

17

Jan.

__

1„1045~~

.32

•

.32

1.23

'

.35

1.65

{

Underwriters and

.33

1.18

/
Z
/

I 2.24

.32

.36

and Corporate

Securities

Globe Wernicke Com. & Pfd. :

W. D. Gradison & Co.

OTIS & CO.

1.09

/

fU
Index for .20 bonds
lower grade bonds. tlO higher grade bonds
§Spread between
high grade and lower
grade bonds. ? h r5
-■
;
.,
1
.

data compiled by J. A. Whit»
'•

Members? 5VeuI

(Incorporated)

.87

dhbinnati

j

Y. Curb Assoc.

:

York

Stock Exchanges—N.

Established 1899

•Composite

Foregoing

Philip Carey Com. & Pfd.

■

: 2.55

'

& Cou Cincinnati.:;,;

Land Trust Certificates

Distributors of Municipal

Dixie Terminal

CLEVELAND

Building

CINCINNATI 2

New York
Chicago
Denver
Cincinnati
Toledo *

Tel. Main 4884

Tele. Ct 68 3t 274

•

property owned by a city
village and used in the Opera¬
railroad system

that all
or

tion of any type of
was

taxable.

.

Wellman Engineering

,

Glander's

ruling may not end
the matter for his decision in sub¬

OHIO

Company

ject to a court appeal.

Foster Bros.,
to
:

Circular

Young Co.

Admit John P. Lins

;

SECURITIES

—

Sold

—

WM. J. KIERICKA & CO.

Quoted

INCORPORATED
"'

.

Request

(ALL ISSUES)

Bought

TOLEDO, OHIO—John P. Lins

will acquire the

on

Industrial Brownhoist

I

New York Stock
ingness to invest in risks of poorer Exchange membership of Oscar R.
Foster and as of April 4th will be
quality seems to be that confi¬
admitted to partnership in Foster
dence begets confidence. There is
I apparently a universal confidence, Bros., Young & Co., 410 Madison
Avenue.
•?;
•
;
| |
(Continued on page 1673)




Cleveland, re¬

of

this

consider competitive

W& Tlof a——

Aug. 17

Cleveland
Lower Qual ity Comes Also With transit system case. Glander held
$$0$
Confidence '
: ■■ that feldctricliglit, g&S* hfea*tin£ ahd
However, the explanation for water: plants > owned by munici!
this buying of poorer quality is palities and their product sold to
not merely ■■ that investors have citizens or consumed by the mu¬
been willing to - sacrifice quality nicipality; in its government oper¬
Glander held
to obtain income in a period of ation was tax free.

;

Co.

new

week-end

Price Index

Sep.

Ohio
//.

•

♦

early
an

leghany Corp.; one-third for the
account
of, Pititston
Co.,
an

Now

Ohio Municipal

Dec.

Cleveland Transit Tax

r

/.'/

&

Otis

ported

Robert

-

with Otis & Co.

nancing,

the Exchange are:

Ruling of C. Emery Glander,
practically all investors have al¬
that
ready, for several years, been Ohio Tax Administrator,
adding to their portfolios securi¬ municipally owned public utili¬
ties of lower and lower quality, ties are not subject to taxation,
and such a practice will not be clarifies considerably an uncer¬
started but will simply be con¬ tainty. which has existed in the
tinued
if money
rates decline minds o£ city officials throughout
further.

group

With Butler Huff Co.

that has not

yet developed but will
plague us if money rates

associated with Chair¬
R.
Young
and
President Allan P. Kirby of Al¬

a

,

Lewis Whitney

.

of

haps even something

Williams, the Cleveland firm an¬
nounced.
/;/• { ,

dent by Milner, Precision Prod¬
working out v Mr/ Cunningham was head of
{■ The Cleveland firm then sent -■ a ucts Chairman and President of
changes in Exchange Rules mak¬ the. Cleveland exchange for three
telegram to Indianapolis Power Several other industrial concerns.
ing
membership
attractive ; to years, from 1939 to 1941, inclusive. & Light in which it said "if com¬
Another Jack & Heintz officer,
brokers and dealers in the various
petitive bidding is utilized in the Ralph H. Heintz, Vice-President
vV ' 'V,
eji' '/ \
types of securities business in the \ I;
award, with provision made for and Secretary, was named Vicecity.
sealed proposals to be opened in President Ofzthe; new concern to
The addition of the new mem¬
the presence of the bidders and head all
engineering.
bers is ; expected to be of mutual
for award of the .underwriting to
At the time of the merger,' Jacfc
advantage to the" brokers and to
the: bidder: offering 1 the
terms
stated "we expect our plants to be
the Exchange and in the opinion
LOS ANGELES, CALIF.—Lewis most advantageous to you/Otis &
of Exchange officials should make
rolling 100 % ; at the close of the
J. v Whitney, Jr.{ is1 with Butler- Co. and associates are prepared

J., B.: Reynolds, Benj. JD. Bart¬
lower and lett & Co., Chairman of the Board;
lower quality in order to secure C. H. Steffens, President; L. J:
more liberal returns;
Nussloch, W. E. Fox & Co„y ViceFrom the complaints on this President; A.
W. Korte, C. H.
subject heard today one would be Reiter & Co., Treasurer;, M. W.
inclined to think that such a prac¬ Lepper,: A. Lepper & Co.; H. B.
tice of buying lower and lower Cohle, H. B. Cohle & Co.
quality is something hew, or per¬
securities

has

Co.

by Otis & Co. from
interests associated with Harrison

been bought

by Exchange officials

income,

its

-

shares of

Electric

States

Central

#

ding.

largely attractive to the public by the
Seventh Street.; In the past he
from invesMents^The complaints resulting increase in marketabil¬
was an officer of Huff, Geyer &
are to the effect that extremely
ity.
Hecht, Inc.
Present trustees and officers of
low, and declining, money .rates

must

*

common

man

at

.

interest

.

ing out

•»

million

Two

$151,662,000.' Annual
charges, NKP stated,
have been cut to $3,800,000 from
$7,500,000 at the end of X936

stood

which posed

nick,W. E. -Fox & Co,,' A.I& J,
will
continue
under the same
weeks.
Finally, it now appears
Frank Co., W: D. Gradison & Co.,
that this old btigaboo of a 1%{ Hill & Co., W. E, Hiitton & Co., name. / /
"
' *
yield has been routed.^ More{ Don D. Kuemmerling, A. Lepper *: Raymond M: Baird ;and Edward
Al Stanton
have I been elected
.and more bankers are seeing
& Co., Merrill Lynch, Pierce, Ferithe
wisdom
of ;buying
short
Vice-Presidents, the latter to be
ner &Bearie,: C. H. Reiter & Co.;
maturities at yields slightly un¬
S. F. Stephenson, The Weil, Roth the company's representative in
der 1 % in preference to stretch¬
& Irving Co: and Westheimer and Plainesville;
east of Cleveland.

.

com¬

new

'

The announcement added that

has' been elected Presi¬ formed

of the new company

dent

the

offered

be

mon.

one-third of the shares was for

reduces
the
nondebt to $99,500,000.
At the end of 1936, this figure

•;>.

dent: of; the Cleveland Stock Ex¬

change,

first

and

Cunningham, former Presi¬

Mr.

present preferred holders
opportunity
to
exchange
their stock for the new pre¬
ferred and that common holders

the

the

equipment

1944,

effective

corporation,
next Monday.
formed

September,

directors in

NKP's

out
maturities
CLEVELAND, OHIO — Russell
get their "minimum" yield, or
I. Cunningham of the; Cleveland
have dropped into lower and lower
securities firm of Cunningham &
quality to get the yield.
seven persons representing : twehCo., Union Commerce Building,
'! This situation! prevailed to
ty-three of the outstanding securi¬ announced he and associates have
/ reached

into longer

refund the

continuing downward trend in interest rates, to

of the

National

and will rep¬

B&nk of Cleveland

Cincinnati Exchange

Louis RR,

President John W. Davin of New York, Chicago & St.

CLEVELAND, OHIO—The an¬
public speaking contest of
chapter, American In¬
stitute of Banking, was won by

growing number of bankers around Ohio, let heaven be
are finally coming around to buying municipals at yields

praised,"

has

.1641

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4476

163

Field, Ruiwds & Co.

//

Tele. CV 174

>

-

Z

Union Cent. Bldg.
;
CINCINNATI
Tele. Ci 150

Wire

to

Troster,

Currle & Summers,
p

'

..

CLEVELAND 14

New York

■/Z;''''

Members Cleveland Stock Exchange

-

Union Com. Bldg.
CLEVELAND '*

'

•''.'{Union Commerce Building

.

29

,

-

-

Teletype CV 594 1

BROADWA?

NEW

YORK

«

THE

1642

COMMERCIAL & FINANCIAL CHRONICLE

Thursday, March 28, 1946
that

Replacing Resigned Securities

Bank and Insurance Stocks

0. 1

This Week—Insurance Stocks

weeks' ago this column presented 1945 vs. 1944 operating
results for 16 representative stock fire ^insurance companies, com¬
piled from Best's Bulletins as prepared from the filed convention
statements of the companies.
This week similar tabulations . are
shown for 16 additional companies, together with revised figures for
Insurance Co. of North America.,All figures are on a parent com¬
pany basis.
Two

f

■■

-V-

n

,

'r;;

r

Net

%

Und.

1941

.

'

Total

-Fed.

Net

■I-'

d»

:-i;

American
Boston

1.97

0.44

3.13

0.84

Fidellty-Phenix
Franklin

-p

2.41

——

0.77

:

Oper.

,

1.75

0.09

3.12

0~03

3.00

2.49

0.71

'

0.94 T

3.12

—0.98

1.35

1.49

2.74

:

0.28

—1.71

1.12

;

o.4o

1.40

0.35

1.25

1.91

0.35

Hanover

—

0.28
2.29

—1.79 j

—0.59

—

—0.81

1.77

0,531

1.61

0.26

0.77

0.78

5.05

3.84

3.72

1.25

6.31

0)17;

3.54

—.—,

0.98

0.10

1.59

—l.-

.

Hartford

•Ins.

;'i

————

Co.

of

0.25

N, A-.

1.44

1.52

1.41

1.47

0.64

2.24

2.06

4<32

1.00

5.38

1.37

National Fire—

—2.67

2.33

CrO.Ol

—0.33

—1.20

New

—0.43

2.22

Cr0.07

1.86

—1.31

2.28

C?0.07

V 1.87

0.18

2.65'

/

1.34

1.80

0.49

2.65

2.88

—0.48

Prov.

S.t. Paul F. & M

1.92

A

elbow-lawyer in

an

000

73.72

4.50

0.59

72.41

:

1.21

::

——-

4.32

1.90

2.97

"0.91

0:06

0.92

—0.04

1.69

0.01

0.01

4.36

—1.63

5.78

Hackensack

1976

every

est.

at

105%

The

Co.

first

and

accrued

inter*

bankers

March 26

repeated reaching out for powers not

Water

mortgage bonds, 2%% series due

on

won the award
their bid of 104.42 %l

The proceeds, together with other
funds of the company and the pro4
ceeds of short-term

borrowing, if

required, will be

applied toward
that, using its rule-making power as the
redemption on or about June
a
guise, the SEC has in effect usurped certain legislative 10, 1946, of its outstanding $14,—
functions which the Congress never intended to
delegate to 350,000 first mortgage Abonds, se¬
it, and which, .even if the;Legislature intended that there ries A, 3 V* % due Oct 1, 1968 at
107%% and accrued-interest.
be a delegation;of such
power, the law-making body was
The 2% % bonds are redeemable
powerless to assign.
at prices ranging from
109%% to

1.04

0.96

Hampshire-—-Washington—l._

Halsey, Stuart & Co., Inc., heads
underwriting group that is of¬
fering today (March 28) $15,000,*
:

We have contended

'

Home

.

criticism.

2.81

'
'

Globe & Republic--*.-

are

home

an

among

The Commission's

-

de¬

the
1

on

embraced within the Securities Act has 'received bur
steady

1.45

'

dollars,

off-

Hackensack Water 2%$

men will have been indoc¬
existing ideology of the Commission, im¬

securities house.

3.15

0.53

0.61

; 2.90

0.20

1.69

—-

the

come

Halsey, Stuart Heads
Syndicate Offering

other things, regimentation of the securities
industry,-control of profit, the prying questionnaire tech¬
nique, disregard of trade custom and usage, and hair-split¬

'

—0.54

———

Glen Falls

thousand

getting
journey.

3.04

.■

of

some

oh how lucky they

in

this because these

oppose

trinated with the

plying,

of

/

ting interpretations requiring

,v.

1.26

3.42

2.81

0.35

Net

v

—2.73

—0.91
0T5

2.70

Fed.

Taxes
It

©

0.44

7

Net
Inv. Inc.

•

Und. ;

dj

>0

—2:88

Equitable—

—•—i.—

Continental

Total

Net

Net

Iny. Inc. Taxes Oper.

'

-■'Y

1945

•

We

;

bills

several

pending

(Continued from page 1631) \
we nevertheless feel that the
appointment of political hacks
is to be
sedulously avoided. i
It will be asked, how about
appointing men who are
already .employed by the SEC4~moving them up, so to speak.
,

:

to

Commissioners

By.: E. A.-VAN DEUSENi

the

delegates to Savannah will

3.96

.

Security
;
*

—0.70

—

Springfield F. ■ & M—
1

1.68

V

7 —1.35

5.72

■

1.64

4.15

*1,200,000 shares ia 1944; 1,500,000 .shares in 1945.

In

It will be observed that

;

ican Equitable

public each report net operating
in

losses

1945.

National Fire,

also

as

in

1944.

however, reports

net

operating
profit
against a loss in 1944.

our opinion the new Commissioners should have a
par, plus accrued interest to the
knowledge of the securities business gained .through redemption date. The bonds alsb
are
-redeemable' under
certain
actual experience;
|
conditions as set forth in the mort¬
Before appointment, their
gage at prices ranging from 106%
r; Fire Losses: Thus far in 1946
.qualifications; should be
to par, plus accrued interest to the
fire losses have been heavy.' As
efficiently probed and publicized.

Amer-^

and Globe & Re¬

in

a

1945

1 " i"

New

Hampshire,
Springfield.

and

Security

basic

«...

^

reported by the National Board of
Fire Underwriters, January and
Continental,
Fidelity Phenixj
February: estimated losses
for
Franklin, Hartford, Home and Se¬
1946,
compared1 with previous
curity, show .improved earnings
years, are shown below.
in

1945

while
over,

compared
with
1944,
Boston, Glen Falls, Han¬
New Hampshire, St. Paul and

Although the Commission' administers a number of laws,
including; the Investment Advisers Act and • the Holding
Company,Act, it- is- in the -Trading and ExChaing6 Division
that repeated weakness has, b6en showh.
jf|...
Losses for the 12
months of
The Commission needs the vibrant
1945
energy of men who
amounted
to
$455,239,000
compared with ( $423,538,000 in understand trading from all of its viewpoints, over-the-

Springfield report lowered earn¬
1944, .an increase of $31,701,000 or
v
Net operating earnings for 7.5% Despite this, many stock
"Prvidence Washington amounted
fire insurance companies showed

ings.

.

jto $2.65 each

year.

'to

of

Insurance

With regard

North

America,

the drop in earnings per share is
occasioned by the increased cap¬

italization

from
$12,000,000
to
$15,000,000; aggregate net earn¬
ings for the company were $6,..769,000 in 1945 compared with
•$6,454,000 in 1944.
,

Most

..

companies show moderate

^betterment in net investment inicome,

,

while

Hartford

ington

and

show,

Franklin,

Home;

Providence-Wash¬

striking

which

show

writing losses in 1945
ican

underwriting
results
in
1945 than in the previous year;
Thus, heavy fire losses in any one
year
do not necessarily imply
lower underwriting profits Dr un*
derwriting losses. ; Relative fire
losses year
by year must be
weighed against the net premium
income, which may be expanding
sufficiently to cushion some of
the; shock of a high volume of
losses. Thus, despite the 7.5 % in¬
crease in losses during
1945 over
1944, 16 of the 32 companies

imprqve- shown in this

;jment in net underwriting results.

Companies

better

are:

under¬

ported

Amer¬

underwriting

Equitable, Boston, Globe &
,

week's

table

and

the table of two weeks ago,

improvement

an

results.

in

re¬

counter

Further¬

as

well

on

as

Not

only must the point of view of the general public

present" financing,

after the

gage

bonds, 2% % series due

and

307,500

shares

of

stock ($25 par value).

Toppell Back From
Extended Business Trip
Jack

Toppeli, Director of

January

.i—$49,808,000

,

The addition of brass-hat bureaucrats must be avoided.

trial

he

company

visited

—

41,457,000

opportunity is now afforded to place in key posi¬ highly optimistic about the gen-1
tions two men of sympathetic understanding who will see. era! business
picture. He pointedto it that the unnecessarily restrictive shackles which now out that
although the consensus
of opinion was one of criticism of
hamstring those in the investment field are removed.
Dealers,

brokers

and

underwriters

should

forthwith

Congressmen to the end; that

proper

OPA pricing

current

policies, it

felt that the basic

was

forces

appointees be recommended.

will

reassert

Total, 2 months

$101,567,000

$86,322,005

„

of 242 stock fire

panies,

which

com¬

underwrite

ap¬

rise

of less than one
point in
their 1945 loss ratio of 57.9%, and

and

INSURANCE

fractional

a

ratio

STOCKS

to

loss

99.1 %.

premium
over

Laird, Bissell & Meeds

decline

41 ;2%,V

combined
to

bringing

and

Their

income

in .expense

their

ratio
aggregate net
expense

expanded

8%;

1944.

Despite this .favorable

,

showing!

firm

BROADWAY, NEW YORK 5, Jf. Y.
Telephone: BArclay 7-8500
V

fire

-insurance

stocks

should

be

fundWill Be;Hottsed

m

Hotel Washington in

National:Capi^

Bank Will Be Quartered in State

Meet in

to

industrial

May.

NEW SOUTH WALES
(ESTABLISHED 1817)

ters for the World Fund will be in the Hotel Washington, just across

rooms

include

engaged

for

the

In

;May only the executive. di¬
rectors i and alternates >of Fund

.Reserve Fund
Reserve

until

adequate for

The

headquarters

BOSTON 9

Post

•NEW YORK 5/;

Office Square

67

Wall Street

.

•1

HUBBARD 0680
WHITEHALU 3-0782

BS-z97

NT

1-287J

S. CaSalte Street

FRANKLIN 7535

CG-io$

NEW YORK,
BOSTON, CHICAGO,
PHILADELPHIA, ST. LOUIS, LOS ANGELES
:
-

'•

PORTLAND, Enterprise 7008

PROVIDENCE, Enterprise 7008




receive

=3

?

Bank's' temporary,
are

in the State De-:

*,

.

'

1

*

weeks ago may serve as a guide
in pointing to those
companies
whose
underwriting
experience

during; the war years warrants
the
assumption that they ; will
again do comparatively well in
1946.

;^-v:

v-*

-

THOMAS BAKER HEFFER,

-

add

and

LONDON OFFICES:
'

^29:

constituting

cannot

fhreadneedle Street^ E» C.

47

up

comes

to

very

close

compensation.

It

If,

obtain

as

-

NATIONAL BANK
of INDIA, LIMITED
to

the

Government in

Kenya Colony and Uganda
Head

Branches

is

Office:

;

77■;; .7

Bishopsgate,
London, E. C.

In

India,

26,

Burma,

Ceylon,

''

Kenya

Colony and Aden and Zanzibar

,

Subscribed Capital

Paid-Up CapitalReserve
The

space

plane, train or boat as soon as he
wants it, all he has to do is wait,
—at' $50 a day. It is estimated

;■\\]t

throughout the U. S. A.

to

has occurred, he
on a return

2

Berkeley Square, W. I

Agency arrangements with Banks

in many
a
sizable

paid, for the period beginning with
the individual's departure
from
his home and ending with his re¬
turn there.

-

t

Bankers

will

amount

■

General Manager

"

The fifty dollars a day

cases

».

Head Office:. George Street, SYDNEY.

governors

company,

•

CHICAGO 4
231

PRIVATE WIRE SYSTEM CONNECTING:

HARTFORD, Enterprise 6011

will

t

Aggregate Assets 30th
Sept., 1945
:
£223,163,623

September.; Governors

alternate

for those execu¬
and alternates de¬

.

Liability of Prop.- 8,780,000-f.
£23,710,000

next

two institutions are not scheduled

approximately

rooms

directors

6,150,000;

■

meetings
the boards of governors of the

of

thirty bed

i

■'

-.

required to meet in

are

Washington.

hotel will set aside

room

;

3

and Bank

purpose

the
initial meetings of the executive
directors in May. In addition the
a

'S

; Paid-up Capital _________£8,780,000
:

Treasury, commencing-the latter
part of this week. The mezzanine

•"

j.

the street from-the United States^

partment.
10

profit

:I:SW bank~6f Sf®lf i

WASHINGTON,. March 27.—Temporary Washington headquar¬

$11,500 net.
1 The
World

INCORPORATED

operating

Australia and New Zealand

Department. Executive Directors
System of Compensation of Directors and

Governors/

ecutive

GEYER & CO.

normal

a

margin.;-

and
under f the
selected this year with great care,
tive directors
Bretton Woods Agreements
are
in View of the continuation of
Bell Teletype—NY 1-1248-49
siring them. Travel, hotel and not to be paid for their services
A. Gibbs, Manager Trading Department)
heavy fire losses..; The figures
other necessary expenses will ail by the Fund and Bank, but rather
presented
this
week
and - two
be taken care of by the Fund, as by their respective governments.
is provided in the by-laws adopt¬ However, according to a decision
ed at Savannah. In addition, ex¬ reached at Savannah, they are to
ecutive directors in
both
Fund get from Fund and Bank their
PRIMARY MARKETS IN
and Bank are to be paid $17,000 actual travel expenses plus fifty
per
annum
net
after
national dollars a day, with a slight deduc¬
BANK and INSURANCE STOCKS
taxes, provided they work > the tion whenever accommodation is
full year; and the alternate C ex-: supplied. by
the transportation

Members New York 8tock Exchange

(L.

$74,852,000

insurance

proximately 95%Ofthetotal fire
and marine business^ showed
a[

SANK

180

-

economic:

themselves

and allow the average

38,280,000

-

-

werfc

The

$36,572,000

51,759,000

—:

February. 1

1944

1943
$44,865,000

Re-

of the; trade must constitute; the basic background of their western; New
York, Ohio and
experience in the securities business.
Michigan. He said yesterday that
There are.such men and their services are sorely needed. the
top officials of every indus¬

.

1946

197)5

common

_

,

Republic, Hanover, National Fire, ports that; the annual statements
;

wilt

consist of $15,000,000 first mort¬

be understood but those' of the dealer and the broker must
search for Luckhurst & Co., 40
also be encompassed.
'
Exchange Place, New York City*
Above all, a sound knowledge of the customs and usages
has'just returned from a circuit fit

communicate with their

re¬

;

Capitalization of the company,

the

exchanges.
It needs men who Have; spent tnany years in the activi¬
ties of underwriting, buying and selling.

1945

Best's Bulletin Service

more,

.

redemption date.

;77

Bank

Fund
conducts

£4,000,000 r.'
£2,000,000
£2,200,000

description
banking and exchange business
every

of

Trusteeships and Executorships
.

also undertaken

.

1

i

Volumo J 63

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4476




at^here

JL
'

'

is much good news for policy-

holders in the 1945 record of the
A/"'»

V

^

->1,^

y<j

\ J J>

,'K>

TJnassigned surplus funds at the

Would longer

year

' * jAj

,,

Metropolitan Life Insurance Company.

dition the

Company had special

.

sur¬
In what

plus funds of $109,400,000, of which

Payments to policyholders and
beneficiaries

reached

new

a

their

all-time

high of $623,000,000.

$95,100,000 represented
serve

Mortality among policyholders, ex¬
war

record The

deaths, vtfas the lowest on

yield

on

the Company's in¬

vestments followed the general trend
and declined somewhat

The Company

had asset

gains which made it possible

to revise

policy and annuity reserves

so as

t|o reflect lower interest earnings.

Scales} of dividends .to policyholders
maintained, and

or

in

some

a

Group Insurance

a

special

would be
a

about National

advise

Service Life Insure

ance?

policyholder

In

addition to

many
a

answering these and

other questions, the report gives

financial

summary

of the Company's

operations duriflg 1945. Whether or not

likely to ask if he could make

you are a

pqlicyhplder,

this report

interesting and informative.

questions answered,for example, are...
Were there many extra

cases

ments

■

claim

pay-

last year due to the war?

To get a copy,
the

you

$31,261,969,817

\

*

just write and ask for

"What's New at

PahMof Life Insurance Issued During 1945

ltd Policyholders During 1945

v

V

Metropolitan?"

i

$623,443,185.86

*

Metropolitan Life Insurance Company
Sr i

(A MUTUAL COMPANY)

Frederick H, Ecker, CHAIRMAN OF THE BOARD

Leroy A. Lincoln, PRESIDENT

-

will find

Company's annual report entitled,

HIGHLIGHTS OF 1945 OPERATIONS

Endof 1945

-r

personal visit to the Company. Among

slightly increased.

Life Insurance inForce,

:

:

What does the Company

for epi¬

In its report to policyholders for
1945, Metropolitan provides answers to
a

"

.

represent an

;

of the questions

of investments did the

''

$14,300,-

extra cushion of safety for policyholders.

many

types

Company put its money?

re-,

fluctuation in

reserves

demics, etci These funds

'

-were

for possible loss

the value of investments and
000

cluding

life for policyholders

reduce the cost of Life Insurance?

end amounted to $448,600,000. In ad¬

1 MADISON AVENTJJt, NEW YORK 10,

N.Y«

1644

THE COMMERCIAL & FINANCIAL
CHRONICLE
capital

obligations

common

nior

stock.

senior

The

to

se¬

of the

as

end of 1945 amounted to

$354,748,300, including $124,172,800 of 5%
non-callable preferred.

Obviously if the additions

The common stock of

Atchison, Topeka &"Santa Fe has been
large volume of investment buying recently and as. a
been giving a better market performance than
railroad

attracting
result

has

the

war

cut

debt

Despite the basic strength of the

Rather,, it has en¬
aggressive debt re¬
tirement program which compares
of

ments

with

the
of

many

which prewar were

ments,

most

as

carried

4%.

of

ings

the

earn

also

are

total funded debt

standing amounts to

now

only

the

and

1945, inclusive,.
this

third in the past few years to the

money

on

new

cash

rather (than

*

There

are

few, if

any,

car¬

an

crease

,

it;'fa K"v%

'1

,

>

t

-

*

Chicago, Milwaukee
& St. Paul
5s, 1975 & 5s, 2000

outlays

Of years.

;

oyer ^ a

long period

Alabama Mills

v t?

pf cash for debt retirement

Los

Angeles Transit
Lines

I

Common

51

Ernst&Co.
New

York

MEMBERS
Stock Exchange

the

in this rate in the

will be

and .property

improvements and
additions, the road has achieved a
very strong financial status.
As
of the

of

course

of

tainly they should not drop below
$15.00-$18.00 even in 1946 which

Despite the utilization of large
sums

It

is

stock

a

generally poor railroad

replacements over the
past 15 years to show that cars in
solete and

generally in

these roads

inefficient

condition.

service

are

years know the

and mere

tions

worn,

cars

replaced at

a more

Demand

estimated

passenger cars
be between

RAILROAD

were

is

rate

all

The

,*,

*

-

recommending

are

Circular

*

v

;V„,.

ex¬

Refunding 5's.

on

25

built dur¬

estimate

on

years

that

.For, Banks and. Brokers
RAILROAD STOCKS-BONDS

SS Broad Street

:

; New York 4. N.

.

.

.

..

.

.

Northern States Power
V.

7

% Cumulative Preferred

Telephone BOwling Green 9-6400
Teletype NY 1-1063

request.

—-

>

.

BENDIXy

.

Company (Del.)

LUITWEILER & CO.

6% Cumulative Preferred
MEMBERS

North West Utilities
♦

•

Company

NEW YORK

1% Cumulative Prior Lien Preferred

NEW

YORK

VARIOUS

Bought

~

Sold

—

SUTRO BROS. & CO.

Kendall Company

STOCK

CURB

EXCHANGE
EXCHANGE

COMMODITY

EXCHANGES

Quoted
SZ

in

terms

units
less

of

tractive

power

hand, the railroads

on

than

in

1925.

In

that

locomotives owned by Class I
totaled
64,357 units with

roads

total tractive power of 2,596 mil¬
lion pounds.
For 1945 the

figures

are
39,221 and 2,093 million, re¬
ductions of 39% and 19%,
respec¬

tively.
Since

only

able

were

brink

handful

a

to

avoid

at

of

roads

best

the

of

bankruptcy during the
1931-1940 era it is not
surprising
that rolling stock deteriorated to
serious extent. The further bur¬

placed

on

this already obso¬

Now, the financial condition of
the railroads is excellent and
they 1
anxious

are

cash

for

the

total

and

ready to spend
equipment.
Whhe
working
capital
of

new

Class I roads
was

at

the

end

of

1930

$120 million, the 1945 yearfigure was $2.1 billion. Fund¬

ed debt, too, improved substanti¬
ally, down to about $8.5 billion
from $10.7 billion in 1930.

Export potential for cars
locomotives over the next

and
few

is huge.
Freight car needs
may reach 300,000 with the longer

WALL

ST. -730

NEW YORK,

Members New York Stock
Exchange
120 BROADWAY, NEW YORK
5, N. Y.

1725

CITY, N« J,

Telephone REctor 2-7340

total

pointing substantially
Foreign requirements for

locomotives

even

now

are

ap-;

proximately 10,000 and this figure
could double in the
coming five
years.

Immediate

prospects

by Russia and include France,;
Belgium, Holland and Turkey.

Traditionally, the railroads
await definite signals of uptrend-*

ing
industrial
activity
before
making long-term commitments
rolling stock.
Consequently;
the
large orders have not yet
been forthcoming, although pres¬
ent activity at builders' plants is
for

Mclaughlin, reuss & co.

GETCHELL MINE, INC.

"

Members New York Stock Exchange

■

UNITED PUBLIC UTILITIES

Adams & Peck

BOND BROKERAGE SERVICE

UNITED PUBLIC SERVICE

9-8120

Tele. NY 1-724

Philadelphia

Hartford




ONE WALL STREET

1. h. rothchild &co.
Member of National
Association

o/ Securities Dealers, Inc.

'

TEL.
\

"

52 wall street

HAnover 2-9072

■

'

n. y. C.

c

Specializing in Railroad S&urities

63 Wall Street, New York
5

B

NEW

HANOVER 2-1355

TELETYPE

YORK 5
NY

1-2155

;

Tele. NY 1-1293

are

led

5TH AVE.

N.Y.

BOARDWALK

ATLANTIC

term

higher.

Common Stock

Boston

old.
over

years

INCORPORATED

BOwling Green

hand

lescent equipment by war neces¬
hastened its deterioration.

61 Broadway, New York
City

Timet

over

sities

change of "Second Grade"

cific 1st and

were

50% of those

are

.

1,000

1,200 locomotives annually will be
required over the next six years.

den

■'

We

period.

approximately

builders

year

•

1921-1930

war,

now

own

*

1932;
substantially

was

locomotives

even

Both

t,

the

ing the

and

BOND SWITCH

PFLUGFELDER, BAMPTON & RUST

%

of

new

according to

%

The result at the
that 18% fewer

in service than in

also

Although

the American Association of Rail¬
This means that only 18%

;*

was

In the decade
prior to 1940,
annual
replacements of 2%
in
terms of cars on hand was
less
than half of the 4.6%
replacement

roads.

/VS;

equivalent to only 45%

1943

less.

end

SECURITIES

GUARANTEED

cars

stalled by Class I roads
compared
with 13,782 retired,

.k

Red Cross

at

of

capacity

in

Rail Bonds for Missouri Pa-

Situations

end

rapid rate than

for

to

were

of retirements.

have passenger cars—none of the

i

■Specialists in

Selected

in

during the war
shape they are in
observation of freight

passenger

ATTRACTIVE
to

1943,;

installed 404,249 cars
(an average of 33,700
yearly) and
retired
889,181
(an average of
74,000 yearly), so that installa¬

a

Riders

other

GIVE

cars

for the most part ob¬

order from Class I roads.
Between 1932 and the end of

ing capital amounted to
only 37,940 in 1943. Between 1931
and 1940, the railroads installed,
000, equivalent to almost 50% of
NORFOLK, VA. — Charles L. on the
the total funded debt,
average, 0.5% in terms of
including
Ivey is forming C. L. Ivey & Co.,
equipments.
It is interesting to
passenger cars on hand, compared
with offices at 201 East Plume
note that year-end net
with a replacement rate of 4.5%
working
Street, to engage in the invest¬ in the 1921-1930
capital plus the 1940-1945 addi¬
period.
ment business*, Mr.
Jvey was for¬
tions arid betterments (a total of
A n t i c I pate d
requirements
merly a partner in Virginia Se¬
through 1950 for freight cars from
$329,758,000) .would cover 93% of curities Company.

St., Chicago 4, III.

As of

freight,

were on

a

and

orders for 70,000
sizable relative to the
cars,

be

level of recent
purchases.
Feb. 1, 1946, 38,000

and

•

:

would

senger cars in service in 1932 and

Charles Ivey Forming
$108,339,- Own Firm in Norfolk

end of last year net work¬

Broadway»New York 5,N.Y.

j 231 So. LaSalle

clip than

passenger

not

of the passenger cars retired were
replaced. There were 49,353 pas¬

year.

V

I roads total
70,000 units.
While replacement of
freight cars
has proceeded at a faster

the

industry to be
sufficiently large to keep the
manufacturers busy for five years.

leading Security and Commodity Exchs.

It 20

in

10,000
Eliminating the extraordi¬
and 15,000, plus 3,500.
Pullmans,
nary item of amortization and ad¬
about half the number of Pull¬
justing to the present Federal in¬
mans now in service.
Between
come tax rate, pro-forma earn¬
1932 and the end of 1943,
only
ings on the stock last year would
in¬
have been close to $40.00. • Cer¬ 2,511 passenger cars were

$!$!!

°

the

time.

during the war years. Moreover,
these capital expenditures were
superimposed on liberal mainte¬
nance

those

remaining debt nor latter
were
manufactured
the preferred stock can be
called, either 1943 or 1944.
many rail men •' look for an in¬

can point
aggregate debt only moder¬
ately; higher than gross ^ capital
expenditures
pn
the
property

to

of

power

a

none

riers in the country that

Cons. "A" 5s, 1927

since

share- Considering the corripany's
strong finances and the fact that

financed.

major

gross

and

In recent years dividends have
cars indicates their
poor plight.
been paid at}, the rate of
$6.00 ar Freight cars,
however, have been

equipment, including a substantial
number
of
road
freight diesel
locomotives, which were paid for.
with,

Chicago Railways

spent

on

made

of *; more than
share in recent years. This
is after allowing for a Federal
income tax rate of 38%.

$9.50

A large part of

was

will

company

15%

enormous.

The market for such
equipment is<S>
both by railroad men
Class

estimated

necessary to
quote
beginning of 1940, which ap¬
many figures on present rollirig
conservative, and allowing

potential- earning
Atchison common

betterments to property and
equipment in the period 1940-

cut nearly a

of

expenditures

Railroad equipment shares have
done little more than
follow
during 1945 and so far in 1946. Certain
underlying fac¬
tors lead to the conclusion that
once industrial
activity takes a firm
upward turn, the railroad equipments will better
the averages.
There is no question but that deferred
demand both here and
abroad for locomotives and
freight and passenger cars is
the market

pears

575,500.
In comparison the road
has spent $221,419,000 on additions

mar¬

the

for the reduction in fixed
charges;
there has .been
an- increase
in

$230,-

strictly

a

capital

out¬

accomplish¬
the railroads

that
return

assumed

of

coupons

There

lines,
bring very substantial sav¬
in operating costs. * If it is

should

.

ginal in character or even on the
bankruptcy. Non-equip¬
debt has been

than

V The

verge of
ment

inasmuch

strong earnings position.
many of the improve¬
particularly dieselization

very

of mountainous
sections, reduction
of grades and
curves, and installa¬
tion of heavy rail on main

rep¬

somewhat

was

a

Actually,

outstanding $27,420,000 of equip¬
ment obligations.

an

favorably

charges;

retired

more

its laurels.

gaged in

in

wider

years.

road's debt structure the manage¬
ment has not been content to rest
on

to

entirely by non-callable
4% bonds maturing in 1995.
The

both physical and financial,
by the management during

ress,

made

stock has been advanced

common

as a whole.
Atchison has long been considered
among the
prime credits in the rail field, a confidence certainly justified by its
record of profitable operations in every year since its
organization

$203,155,500

Domestic and Export Potential for Cars
and
Locomotives Huge

of recent years have
had any economic
justification the

securities

somewhat more than 50 years
ago.f>
To this inherent strength has been present level of
added the very substantial prog¬ resented

and

Prospects for the Railroad
Equipment Industry

betterments

a

1946

the

of

total

capital obligations

Thursday, March 28,

Philadelphia Telephone

—

Lombard

9008

)

;

Volume

1645

CHRONICLE

THE COMMERCIAL & FINANCIAL

Number 4476

163

water

covery

(Continued from page 1635)
is going higher because of
price ceilings, on the one hand,
and increased operating costs on
the other. For example, Govern¬
figures show that hotel pay¬

ment

rolls are up

the land for
purchased at,

public soon filled the gap left by

this often happened:

and

68% over 1939.

hotel

new

a

the

$25,000, and was put into the
at $100,000. Then a bond is¬

say,

deal
sue

was

1

'

'

1

■ *

t

1

•

'

institu¬

increase

these publicly

OfA course,

6% bonds, sold to a

1907%

1932; rails made

over

This

dustry
bilitate

a

yf

in¬

authority, showed only 103%

dis¬

in 1940

crease

(

1932.

over

*

was'not'geared to reha-i.
existing properties thor¬

oughly and to offer future guests1
top-notch services and accommo¬
dations. However, the American
Hotel Association recently com-\

cent

per

;

warning would be some¬
if the hotel in¬

ill-advised

what

gain; but hotel
securities, according to a reliable

•'111'••'•*

.s.1.V

.

Public Issues Defaulted

$750,000

floated for, say,

was

face value of

conservative

more

•

tional lenders.

the fi¬

into

seeps

nancing.

of hotel business was re¬
in the prices of hotel se¬
curities.
For
comparison, DowJones averages
reveal that in¬
dustrials in 1940 showed a 175%

Hotel Securities

Investigate Before You Invest—In

no

flected

-,

thus pro¬ tributed bond issues became in¬
pletted a comprehensive survey
The figures reveal that - the
ducing $675,000. From the pro¬ creasingly risky. The proportion
which discloses that some. 13,000
business upsurge caused by war
of equity to borrowed money de¬
ceeds, $100,000 went to the owner
hotels will, as promptly as pos-,
creased so that in some instances in Europe, as well as our own
of the land and an excessive profit
sible, spend almost $1V2 billion for
it represented but a small part of lend-lease and defense programs,
was
paid to the builder. Thus,
modernization, expansion, and re¬
was not felt by the hotel indus¬
when the new hotel opened its the total capitalization.
habilitation. In short, the industry
,The proof of this is recorded in try until 1942, when this country
doors, it had to earn $45,000 an¬
will offer the finest facilities in
nual
interest
on
$750,000, al¬ yellowing newspaper files. A New was actually at war. Therefore, it the
history of the hotel business
is
York daily, on Oct. 31, 1930, car¬
only logical to assume
that
though the actual investment was
as soon as materials become avail¬
security house at 90, and

,

Occupancy Tells the Story ,
One has only to trace the oc¬
cupancy records of hotels to see
what
unwise
overbuilding did.

Jv
'

From
tel

high of 85% in

a

1920, ho¬

droped to 70% by
Even in the era of prosperity

occupancy

1924.

ried

$600,000.

under

1928—it did
not exceed 70%. In the depression
year 1932, occupancy hit an alltime low of 51%. In spite of all

—from 1925 through

smaller cities, the
community-financed
hotel
be¬
came the vogue. Local citizens or
In

many

promoters decided that
this, in each year from
1927
through 1930, an average of $140 the city needed a grand new ho¬
tel. The arguments were so im¬
millions' was5 invested in new
passioned that anyone who resisted
hotels. : V'/V-./
7IfI;
In those days, hotel construc¬ them was considered as totally

eye

by

a

with this headline:

fu¬
exceeds

hotel accommodations, even if
ture

travel

materially

peaks.

pre-war

.V-.-

THE ISLAND OF MANHATTAN
An

able.

there will, in most cases, be ample

then-prominent real
estate mortgage company, the ad¬
vertisement caught the inventor's

outside

■

when conditions return to normal

impressive advertisement.

an

Placed

-f

<,

'

,

Four Points for Evaluating

.

A.

Robert

Reinholdt & Gardner

New Hotel

Impressive Record of Sound
Lending

.

'.

*

A

the

in proper

facts

true

.

'

become
of¬
Reinholdt & Gardner; 14

Robert

With

Krieger Joins
E.

Kreiger has

associated with the New York

It then went on to say, among perspective, it is my opinion that fice of
extra lacking in civic pride.. Enthusiasm
high cou¬ was stirred up and then came a other things, that; "A survey of investors and financial instiutions Wall Street, as manager of the
series of deals.
The land often our lending operations will show
municipal bond department.
Mr.
pon second, even third mortgages.
should adhere to these four points
Kreiger
was
formerly
trading
Too many investors believed they was purchased at an unreasonably why we consider bonds secured
if a poor hotel 'investment is to
manager for Charles H. Drew &
were putting their dollars
into a high profit to the owner. Local by r Manhattan
properties ; the
*
building rather. than a business— contractors were awarded jobs at soundest real estate mortgages in be avoided:
tion

with

loaded

waS

charges, bond discounts,

a

mildest fluctua¬

over-paid

economic condi¬
business with large capi¬
investment and comparatively
of general

tions

tions;
tal

-

sales;

to

a

As A Business

world,";

Of
22

One of the reasons for
was

defaulted—six within

one

the

'

advertisement's

three

were

interests

.until

hotel

as an

tion against operations, reasoning
that It would be more than offset

appreciation.

land

.

Instead,

real estate values droped, and
tels were sold for a

^

original

cost.

When

one

Chicago's

v,«

Stevens

hat

could with an op*
eration in which he had no hand

earn enough to
capital, charges. Un¬
like the electric power industry,
however, hotels can •' not depend
on steady year-in- year-out busi¬

unable to

in the

planning.

The result of the
boom

Money

'7

vi*'-

* ••

an

NEW

V'

Dated

,r':

no

ness.

builders

ISSUE

pansion in most plants will be
useful during this period. The de¬
clining importance of company
shops in the passenger car field
will aid American Car & Foundry,
Budd and Pullman, which corn-

companying table indicates latest
earnings, dividends, prices and
ranges, together with latest earn¬
ings adjusted to the present 38%

war

'

combined

Federal

Earned

Per Share

Price

1944

52

•

to

2.77

12.05
6.20

32'/8

3.81

10.15

0.73

2.84

General American

Transportation..

-I'!

63%
56

60 %

earnings.




81-23

1.65

59-6

2i00

\

73-16

'

73

*■1945

Range

1.65

3.77

4.58

Price

Dividend

Tax Rate

*5.25

fe iv**'-

1945

38%

36 V2

22

the Offering
'

•

■M7

Bonds 214%, Series G
Due January 1, 1961

i'

OFFERING PRICE

98%%

AND ACCRUED INTEREST

fit

Copies of the Offering Circular are obtainable

from only such of the undersigned as may
securities laws of the respective States.

legally offer these Bonds in compliance with the

Kuhn, Loeb & Co.

.

3.05

17.30

n

*2.28

3.81

3.99

8.27

■

"

Harriman Ripley & Co.

;

x7'°''77777i7:-'77Y7'''::Y7777^yY7'7':7-Si77iY7y:^:: Incorporated

7ir

Mellon Securities Corporation

Lazard Freres & Co.

Kidder, Peabody & Co*

Union Securities Corporation

Stone & Webster Securities Corporation

-

,.

"

Incorporated

<

s

E. H. Rollins & Sons

F. S. Moseley & Co.
•.

Shields & Company

Lee Higginson Corporation

Dick & Merle-Smith

A. G. Becker & Co.

Incorporated

■;'

/

v

25-2

86-29

2.50

"

-•

;

.

"

L

-

:

>

Salomon Bros. & Hutzler

White, Weld & Co.

Hallgarten & Co.

37-5

0.25
2.50

7.15

*5.68

1.50
•'

Goldman, Sachs & Co.

Glore, Forgan & Co.
..

The First Boston Corporation

Eastman, Dillon & Co.

Blyth & Co., Inc.

and

1937-1945

Adjusted

42 l/t

Locomotive

income

surtax.

Current

American

•' •» '

'

January 1, 1946

during the base years. ; > The ac¬

and

■

But to relatively small earn¬

built ex¬

equipment

v;*-VV-»!*

of these Bonds are subject to authorization
by the Interstate Commerce Commission.

longer considered a sound in¬
did
not
discourage

however, will un¬
witness a flood
of

trial- outlook,

the*'

- >

construction was

cation that hotel

ings during^ 1936-1939, the* base
years for computing excess prof¬
its taxes, the equipment producers
were
in the
high tax brackets

All

V

*• v...-. y-

^

I

panies handle most Of this busi¬

stand to benefit

v:J;-

v

>

at a very satisfactory level.
A
clarification of the whole indus¬

-

Harvey,

C.

Lyle

by

The issue, sale and guaranty

1927, because by that time
lenders had largely
from financing % hotel
projects. Unfortunately, this indi¬
withdrawn

something like

,

nounced

President of the Company.

institutional

type or another.

-

cautions taken to be sure that

xw

building. Increased numbers of
bond issues for sale to the general

.

4

alistically financed and i pre-

Unconditionally guaranteed by endorsement as to principal and interest
by Southern Pacific Company,

vestment

;

4. The property should be re¬

it in

purchase real estate; and: build

•

operating

the

in,

88-13

2.00

99-20

3.00

72-17

Hemphill, Noyes & Co.
March 26, 1946

of
ap¬

for

First Mortgage

conservative

hotels were raised on loans of one

•

been

ifn $25.000.000 BiiaaaM
Southern Pacific Railroad Company

owned 138 hotels.
Certainly banks have learned
their lesson. In fact, they learned

three-quarters of the funds used

doubtedly

Company
has

should

Offering Circular, The offer of these Bohds Is made only by means of
Circular, which should be read prior to any Purchase of these Bonds.
!>

pany

During the hotel building boom,
from 1920 to 1932, promoters and
builders put entirely too much
emphasis on mortgage money and
not enough on risk capital.
It is
conservatively estimated that

;

' ■*

*

■'>

hotel business,
whether they liked it or not.
At
one time, a large insurance com¬

Over-Emphasized Borrowed.

orders,

Ohio,

Cleveland,

hotel building

that even

was.

selves

larger cities,

s..,

This is not

institutional lenders found them¬

volume.

In

Vice-President

Heater

do the best he

meet fixed

to

;

.

Rieley,

Bryant

^

in¬
select the
management of a new hotel until
it was ready for business.
Con¬
sequently, if an experienced man¬
ager' was hired, he was forced to
Furthermore, in too many

stances, builders did not

parallels that of hotels. 31% of
the total IL Sv railroad mileage
was in the hands of receivers and
trustees by 1939. Like hotels, they

66% in only

figures, the sluggish re-.

cupancy

economically;

Gordon
of ;

pointed director of the newly es¬
be ' re¬ tablished building and construc¬
guidance through
tion price division of the Office
every step of the planning,
financing, building, and on of Price Administration, and is on
/through the management of leave of absence to assume his
the business;
4 !
new duties immediately, it is an¬
tained

In addition to the oc¬

knows

ho¬

millions.
;

as

who

Rieley Heads Bldg. Price
Division of OPA

fraction of the

cently, Hilton Hotels of America
purchased the Stevens for $7%

$12 billions; has average annual
sales of $1.75 billions, or a 15%
turnover. Railroads, having a val¬
uation of $25.6 billions, have a
13 % turnover. In fact, the rail in¬

high

as

year.

architect

management

/

era

reached

d

3. The best available

and

1939,

a n

how to build

realty

understand just what

we

the

parallel to this large capital Hotel is a typical example. It cost
investment, small sales turnover, $28 millions to build in 1927. By
can
found in several heavy in¬ 1930, bonds on this, ..the largest
dustries. For example, the elec¬ hotel in the world, were offered
tric power; industry, valued
at for a few cents on the dollar. Re¬

ness

1938,

a n s1

hotel

easy to see why,
of
recovery—1936
through 71940--hotel
occupancy

in

A

were

by

supported

project;
specifications
Should be .prepared and su¬
pervised by an experienced

2, P1

of

eight within two years; two with¬
in three years; and the; remaining

the fiasco

invest¬
ment in real estate. Many hotel
builders did not charge deprecia¬
new

a

1. An independent survey should
> should be made to ascertain
the soundness of the

appearance;

year

usually con¬ happened, it is

that .the public

sidered

Similar

dustry's experience s o m ew

'

,

listings
issued,
hotels. Of this 22, 19

on

were

~

-

188

the

1940, when they, too, defaulted.

by

•

Should Be Evaluated

A Hotel

depreciation.

Problems

entrusted

ager.

tively
small
when
projected
against capital investment. Esti¬
mates? say
that it takes hotels
from three to five years to turn
over their capital. The hotel deb¬
acle taught investors that suffi¬
cient earnings must; be derived
from relatively small sales to pay
interest on funded debt, taxes and

Other Industries Had

contribution.

inexperienced hotel man¬

an

the

was

building was com¬

pleted, the business was

business
With high fixed capital charges.
Annual hotel sales are rela¬
annual

in¬

many

architect

his

for

And when the

a

small

In

over-fat,/figures.
stances,
a
local

business whose earnings feel re¬

actions from the

Merrill Lynch,

Pierce, Fenner & Beane

\

THE COMMERCIAL & FINANCIAL CHRONICLE

1646

need

for

constant

supervision

by

investment /analysis,

professional
•!

to

,.«*-• •»♦"**1

•:•///v./*

&

Research

Timing to a discussion
of "The Inadequacy of the Admin¬
istration's '-f Wage-Price X: Po icy."
Feature by feature this policy is
analyzed and the conclusion is
reached that it is not ai new; policy

frequently become

engrossed in the daily routine of our

so

respective jobs that it is~easy to lose sight of the long-term factors
us.
For example, here are some of the sober facts which
are

1.

/money/ supply
deposits and money in

bank

,

amounts

circulation—now
This compares
about $55
2.

billion in the booni

1929.

year

to;

$185
billion
with a* total of

approximately

Today our money supply rests

through

sale

the

bonds

ment

created

been

has

debt,

Government

largely on
It.

largely

Govern¬

of

the

to

_

•
.

;

It

banks.

,

.

..

,,

,

distributed

widely

more

owned

by

our

for those

of

who

assets

ferred

OPA

beyond

June

,

of

'v

•

Investors

Mutual

is the factor in the

problem which should

see

Fund's

mon

this

consid¬

pany

are

as
-

of Feb. 28,

i

$15,005,599—
^

<

.

Lord, Abbett—Cm rent issue of
Abstracts
discussing
the; first ?
quarter
dividend
on
Affiliated;
Fund.

/ Selected

Investment?
issue
of / "These
Things Seemed Important." .;
.

.

Co.—Current

com¬

held uninvested cash in the

?

.

of

amount

at

/. Mutual Fund Literature

com¬

In addition the

■

•

•

showii

are

,;,

Quarterly Report of /

Fund, net assets

Ib46,;

- v

equivalent to $15.66. per share.

16.3% in¬
in, bonds; '31.3%
in" pre¬

stocks, and 52.4% in

'

In the 53rd

portfolio of securities

stocks.

pricing

Fund

.

15, 1946, ■ were $83

of March 15 showed:

vested

30,

engaged erable relief over
the/ next few
jn the investment company busi¬
months;" v
»' / r
" * • \ •
ness?
Simply this—the need for
sound, well-managed investment Railroad-Stocks
v.
companies is greater than ever be¬
"Good Value in Selected Rail¬
us

*'AX1'

Mutual

of March

tend

to

up

Net
as

as

"time

./ What do1 these facts add

.'-/■/•/f/
;-r
Massachusetts Investors Second /I/

.

,

the

the

had

$359,316,000 — at;
during the

Investors

.

,

of, the price increases grant¬
inadequate. While it
is expected that Congress will ex¬

■

these funds

growth of over 600%
last five, years/!
<,
;

many

people—than
history. /

more

before in

.

of

which the management believes to
be attractive.
" /

ed will prove

; is

1940, amounted to $50,-

As of .Dec. 31, 1945, to- /
assets

increased,' to

c

um® "°* mvestable funds the
'"world-has ever seen.
•
Our huge money supply is
ever

,,

.

p

j

tal net

Companies.-

assets of such funds oq

31,

883,000.

but an adaptation of the old.
Its 418,567; with
shares currently
principal favorable feature is rec¬ owned by more than 40,000 share¬
ognition of the inevitability of holders.
;
price - increases but Under/ QPA's
Continuing to follow a "middle
of the road"
investment policy,
present attitude it; is likely that

going to have a direct and predominant bearing on the future of
business in this country:
v

Our t total

Dec.

.

the investment company

of v Investment

ation

Total net

should develop, these
bonds may be traded into stocks

Investment

which affect

has

now

grade bonds. If another favor¬

February

Corp. devotes the current issue of

We

Selected

buying power,in the form of high¬
able opportunity to buy as in late

National Securities

•

Thursday; Marcli 28,1946

ahead.

est

v

Wage-Price Policy

The Sober Facts

lie

$6,586,422:

Net asset
value per share on March115 was

Keystone

$13,885,

figures

the

,

Co.—Revised- issue

folder
as*

"10

of
with

Securities"

of Jan. 1, 1946/

.

does

not rest
be

can

V

loans which

or

mortgages

The economic "area" requir-

fore.

road

be foreclosed.

Stocks," is the title- of

Union Bond Fund A
In

a new

In aj ing the type of services which mu-.
folder by Distributors Group.
It
a very real and practical sense,
tual funds, perform has broadened
reveals
that: selected ; railroad!
it. is a permanent supply.
In; in volume and scope far beyond stocks
today Offer:
* *=;
terms of its purchasing, power even the mbst
Visionary dreams of;
|
it represents the greatest voir their sponsors only a" few, short 1.'More* than twice the earnings!
1
per dollar that the same stocks
years ago. Today all, the mutual
offered
jn a vpast' period of;
funds together have less than; $1 xk
which

*

on

called

can

LOW PRICED

* ;

*

•

comparing the

market action or
this Fund with that of the Dow-

*

3.

investment"

during the Feb¬
Whereas the general

ruary,

break.

stock

market

was

Estimated future

<

dustrials

about

a

afforded by

account of Harvard University

Average.

third of the price pres- • cent

trial stocks

as;

.

the Indus- j

in the

V■/:-

-.■A: v-

sponsor,

Dow-Jonesi

.

share. Thus,, states'the
is UBA fulfilling the ob¬

jective for which it was created:
"A broadly diversified portfolio of
good
grade bonds selected for

O

Securities——Plus Management

per

relative stability; and a reasonable

t

Fund, 50.42% ; was invested in
Selected Investments Co., in the i
bonds; 11.06% in preferred stocks; current issue of Selections points ^return®^';;^^
34.37%
iii common, stocks "and' out 'that when you
purchase ?the; Broad Street and Nationalin

real

estate

Only. 1,84%
/
>

gages.

cash.'

.

FROM

Distributors Group, Incorporated
6} Wall Street

v

.

.

New York 5, N.

Y,

One

Keystone Co. points out, in

securities and individual issues;
second, is the need for competent

NATIONAL
Securities Series

y

policy

every investment program regard¬
less of size, first, is the need for
diversification among
classes of

of the
-V'?-

'■

a

177 corporate bonds in the
portfolio, 94 preferred stocks and
180 common stocks/ with the larg¬
est /single 5 holding representing
less than 3% of the total..

As

investment research in the selec-

tioixof securities- and third/isthe
„

^

:

an

investment company'

"you buy management

as

well

Union Service Corp. and in * cur¬
the performance of!

At present, the management of
Selected American Shares believes

rent: letters

;

each/;fund* for the
are
probably in a transition, years is shown.
period from one phase to another;
In the case of National Invest¬
in a broad, long-term bull mar*;
ors, total appreciation in net as-i
ket. It believes some of the stocks
set value per share from the be-;
it has held are no longer particu¬
ginning of 1942 through the end,
larly attractive and that other of 1945- amounted-to

tive

178.3%

becoming more attrac¬
was previously
recog¬

are

than

compared with

as

gain of 74.2 % • in

a

the; Dqw-Jones

nized.

Group
31, "1946 to

stock of record April 30.

S.R. Palm Public Gov.

Industrial

Aver-

Under

which

a

management policy
bonds and v pre¬

Schram/ President of the
New/York?Stock 'Exchange,
nounced the election, of C; Robert

of the Exchange,
He suc¬
ceeds. Robert V. Fleming, Presi-/
dent hnd. Chairman :of. the boar A
of the Biggs National Bank of
ernor

.

Washington, D. C., who resigned
after serving from Feb. 13, 1942.

Mr. Palmer is

.

native, of Iowa

a

Broad Street, whose manage-;
ment has been in the hands of Un¬

utilizes

During the same
period the Dow-Jones Industrial
$28.5.4 to $41.27.

showed

Average

a

net

decline;

Trom; 248.48 to 192.91, or 23.5 %.

STOCK I Sh ares

? the / Man^
•
Trust Company pf New, York, He
Jives at 12 Plateau Circl^ Bronx/

ville.

Hi?, office is, at 10 East 40th

Street.
V:---•■•/;

*

A^rrew folder

<

on

*
■.-

•

..

The

Investing Your Backlog

Priced at Market

Exchange

Emir

and; was educated in that/State/

LOW-PRICED

Fully Adminis¬

v

■

•/

"V

*
■;

';■■/*

•'

Constitution,

■

the

of

change provides for two

■

•

Ex¬

-

Public

Governors.

The
other
Public
published last i
b^ Distributors/Groups Iti Governor is John Quincy; Adams
reveals' that in the/recent* set-1 of Chicago, who has been a mem¬

Shares

tered

-was -

week

Prospectus upon request from.
your investment dealer ot

ber

NATIONAL SECURITIES

RESEARCH CORPORATION

Lord, Abbett & Co.

perform the Averages.
-v/

•

New

York

•

Chicago

•

Philadelphia

;

;

•

Los

Angeles

Securities & Research* Corp, pre-,
sents

in

chart

form

the

growth

figures of specialty funds recently

SHARES OF CAPITAL STOCK OF

Feb.

13,
>

on

Non-

:

Member Cu8tomers,

Fjunds

memorandum from National

A

Board, since

•

NYSE Reports

. ..

Growth. ofSpecialty

/

of the

back, as in the preceding year hi
1942.
advance,
F u 11 y
Administered I
Shares' has continued
to
out-?

incorporated

120 BROADWAY

New York 5, N, Y,

Institutional Securities, Ltd.—A
cash distribution of:

semi-annual

50c per share on Aviation
Shares payable May

having attended Upper Iowa Unir
versity, v He joined Cluett, Peabody: & - Go., Inc, ;iq ,Tro,y, ; Ne\y
ferred stocks, when a period bfi
ion Service Corp. over a longer
Yorkv in 1908 as a-salesipan and
unsettlement or change is believed
period shows an increase in asset! advanced
by' steady promotion to
value per share between1 J an.- 1,1
the Presidency, in; 1929,
He is a
1930,v and Dec.: 31,
1945, from5 director of
.

published by the National Associ¬

M^rgm Accounts
-The New York' Stock Exchange
in a notice to the Clearing/Mem-*
ber. Firms of the Exchange on

March 18 stated; tiiaf
recent changes in, margin. regula¬
tions tending to decrease the num¬
ber of shares bought ahd sold for
non-member
customers'
margin;
-

Si

v.#

accounts; clearing member firms'
longer will be required to

no

PUTNAM'

port

these

items

on

Form

ing Secretary Korn,

re¬

120."

The announcement made by

FUND

Act¬

added:

>5

"Beginning with the trade date
Monday, March 11, and until
further notice, reports on Form/
of

mlcm

120

will

be confined

to

informa-?

tioh relative to all round-lot sales,

and,
Prospectus

from

pour

map

be obtained

local investment dealer

Prospectus

local investment dealer,

Prospectus upon request

Congress (Street, Boston 9, JVtass.




THE

PARKER

reported

,

change, settled

or

The
were

CORPORATION

ONE COURT STREET. BOSTON 8, MASS.

>

Putnam, Fund
50

State

Distributors,' Inc.,
St.. Boston

separately,

short

sales-o^tocks made

Keystone Company

of Boston
50

be obtained from

or

your

The

may

<

Palmar/; |^esidentiof:Clueit,Pea^
past" several
bpdy\& Cqi/Inc; as r Public Gov/

we

stocks

-

of M. Y.

T"

The in vestment management fori
these two funds is provided by the!

as

securities."

University follows
pi/wide/^
were

YOUR INVESTMENT DEALER OR
'■

mort-i shares of

held in

.

The

A "PROSPECTUS. ON REQUEST

and

was

1946, to share;

payable April 20, 1946, to
shareholders of record March 29;

declined

$8.50, the de¬
earnings for! cline in XIBA amounts tov only one

ently

2.31%,

f

payable April 20,

off. approxi¬

and, on the:day^he Dow-Jones In¬

tj

*

Keystone Co.'s current issue' of
Keynotes analyzes the investment j
of June 30, 1945. Of .the $163,000,OdO book value in the Harvard

Investor? M u t u a 1, Inc.—A
quarterly; dividend of 8c a share

Jones Industrials

•

{. today.

"Fundamentals of Sound

Affiliated Fund, Inc.—A regular!
quarterly dividend of 3c per shar^ <
payable April 20, 1946, to stock oj
record April 1Q.
'; \

.

scratched.
*

on

holdef& of record'March 31,, /;
.//More thari twice the earnings I mately 10% during" this decline,
Massachusetts Investors Trust-^UBA actually' showed; a slight in¬
per dollar that a representative;
A quarterly dividend of 22c
crease
in
per asset value per share share
list of industrial stocks offers

2.

ously the surface has hardly been

Dividends

memorandum

Umou Bond Fund A, the sponsor,
Lord -Abbett,
presents a
chart

■prosperity.

billion of assets to manage/ Obvi¬

current

a

ent

or

Clearing

.

on the Ex¬
cleared by you."
Member

Firms

asked to inform correspond¬
for whom they carry

firms

omnibus
in

accounts of this change
Exchange's reporting pro¬

the

gram.

■

-

1647

& FINANCIAL CHRONICLE

THE COMMERCIAL

y olume 463 ;/ Number '4476

let for

Blunders

Statistical Miasma and Administrative
and

(Continued from page 1634)
capital. The Brookings Institution
}'■:

in Washington,

if ; I the concept of
capital is wealth dedicated to the
production of further wealth, a
house may not be capital, and if
come.'',,, Yet,

the Bureau of Eco¬
and

nomic Research in New York,

National
Economic
Committee" ; of
Con¬
gress
have made investigations
along these - lines. IBut * very Tlittle
in the way of theoretical or prac¬
the defunct "Temporary

its

use

savings' inusC be
distinguished, and Lord Keynes
may be right in holding that a

furnishes no monetary re¬

turns, : according to the common
accounting concept, it is not con¬

ing and investment is so essential
to

stable and prosperous econ¬

a

earnings used by present day
statisticians in their, calculations
of the • totals which private re¬

established.
The character of capital forma¬
The rate

still unverified.

as

capital-formation is still un¬
determined, and such conclusions
as have been drawn are largely a

If 'varying

matter

tions

.•

of

guesswork

orr

deduc¬

f rorri < "metaphysical'!; and

*prazy-quilt:sources.

•.

-in

,

be cleared up,.; be¬
elaborate; computations

capital must
fore

the. "XJhited

r

States from 1923 to 1929,

considered'if

any

tbe

nomic'or

industrial

individ- British / economist,

iials' savings flowing into savings
institutions,, with the flow of sav¬

less

trends.

fMassau

W.

jSehior^vvho was/ highly respected

far

human welfare

as

is

capital
- !
hias'r the -Statistician^

industries

new

16%,

"/But

been:

-

.

worth

'

and

are

in

Undertaken in this and other |l

of

excess

provision for capital

<

and inaccurracy
/jrisiy how bey available, the prob- of data, they are to a considerable
Jem is still .beyond human calcu¬
%xtehty yfnere / Statistical exercises.
lation. No single investigator or
Any reliance upon. them .as a
Corps of investigators/rife capable
guide to economic trends or as a
inadequacy

;hb adequate

-

established

there is still

lators of statistical data

basis for their calcu¬

They are - as ;yet unmeas-

lation.

ol the Haryard "Review
nomic Statistics"

offsets
would

"Hansen:

if

we

"

tirable phenomena, conceived in
the minds Of men* but having no

cofnposi*tidn, .Who knOWs when an indi¬
vidual
makes
an
investment?
fixed physical form

or

so

/Hansen;;

Eleventh 1Y0 Branch

'

as

Reserve Office, the firm's eleventh in New
with ^Lord 'Keynes' York City, will offer midtown in-/
theories, he would increase gov¬ vestors complete facilities, with
ernment spending to offset the personalized
service 'for each
stagnation arising from impeded client.
:
' J \
capital accumulation and in this
The firm, with main offices at
way .combat the effects of busi¬
Drier Well Street, is also a memr
ness depression.- In his view, the
ber of the New York Curb Ex¬
automatic forces making .for in¬
vestment outlets have - declined change
arid 'leading coimriiodity
since World. War -1 and .this /has
exchanges.
-.
led to the nation attempting- to

Board.; In line

.

-

W;C.Dick¥.-P.

a

he hblds, is.

policy,' Which,

poses

like

hew internal;
the

Tennessee

of E. F.
/

Wall Street, New

deyelophidnts
Valley

Gillespie

E. F. Gillespie & Co., 4nc.y 67

nounces

and

that W. Carson Dick has

Missouri "Valley- authorities and Been elected "Vice'president of the
similar/.projects * to find new put- 6'ompany. Mr. Dick is in charge

follows:

.

lets for

investment arid ^expansion! bf the

new

Business departirierit.'.1

'&llM*a iolicitatiQn'<)}'>M offer 4o buy these securities,
offering is made only by the Prospectus,

The

dollar

$15,000,000

as

/Hi

1

;

Gompatiy ■ |;

come

First Mortgage

or

economic, agnosticism,:

;if he calls

attention to these mat-.

Mistical

,

-

The

Parliamentary * investigating ^com- ]

capital actually-exist¬
-living American
ing: it does not create capital; it
^economists; -Prof. Irving Fishery
determines only' by whbfn that

decades'ago wrote an elab¬
papital is to: be employed."
orate ;philosophical' and
mathe¬
By using the word "employed"
matical treatise on the subject, en¬
Ricardo placed a limitation of the
titled "The Nature of' Capital'and
capital ^concept.
Because capital
Income," but he does not conclu¬
is wealth that is productively em¬
sively furnish' a definite Or uni¬
versally
accepted
concept
Of ployed, its use arid employment is

important to human
Hb defines
ivelfare -than its- mere-, existence;
^Capital,": briefly as "u stock ?of
and if credit c(as it actually does)
^wealth existing at -an instant of
intensifies and improves capital
time" and "income," he says. is
4<a flow
of." service through a use, credit in this sense, may be
feven

economic terms.

of1 hmo." •-..•He

iperiod

-

these

definitions

illustrates

by -explaining

that Ma dwelling house

samb as an additidn
cboth ^capital artti rpUrchasing

to

-is capital" rpower.




It is for" this reason

that:

1,1976

and accrued interest
M'.

.

v

}

;v-

•wV, >•***.*

^he'Trotyectus \hay he obtained,™ any'State in which this announcementis circulatedfrom only such
of the undersigned and. other dealers as, maf lMfullf 'tiffiirihese iectyrities in* such State; - * * ,* t
-

■

';A' ' V\

!' u ^

.; i y

;>7.

>;: ».* i

HALSEY,
t

L. F.
T'

,

,

t

.

j..

n

~r~

.T

,*- ;. j.

STUART & CO. INC.

'tyi

ROTHSCMlLt)

...

-7-

OTIS & CO.
(iNCOKPOirSrib)"""

more

Said kto be'the

r

Due March

Price 105%

four

"these

-<

it."//

nature

Tenowned:- Of

wr-v';

Dated March 1,1946

voluminous", analysis 'of Hcredtt
4>a Vid ORicerdO 1 Yves asked by -a

/'H -- v'/Hi mittee' whether he regarded credit
;of capital itself isas a form of capital. To this query,
'still very: rpuch - id doubt, Respite! Tticardo
Replied: ?"Credit "is. ;a
'the fact that it is-defined and
means which is alternately, trans¬
ieven ""fully.^explained • in . every, ferred from one to another, to
textbook'on economics. The most
make use of

7ters.H;~

v

Bonds, 2/l% Series Due 1976

p.yr

•

CO.
:•» ' "

R. W.

BLAIR &

BEAR, STEARNS & CO.
//.-■•

*

'

-

-'1

.

-v>

-

THOMAS &

PERRIN, WEST &. WINSLOW, INC.

- '
'v 1
•},-(

/ /

PRESSPRICH & CO.

7

HORNBLOWER &. WEEKS

March-28,1946.

i

York City an¬

physical phenomenon,
in terms of the

does Wealth "actually be¬
capital? ; What is 'the * ba^is not
nnty fits material wealth at«ed
«br the * method ,ol calculating in¬
in ;produCtion /but;/also/existing
come? These questions have never
indebtedness. More .thanf amali•been satisfactorily answered, and
Century before McLeod wrote -his
one should ,riot be accused of sta-i
'When

ing ^aff of its saving

#hiS"ifan£urirtriltfit is

the :use that is maderif it.
It is not surprising therefore that
some
economists, notably, Henry
Dunning
McLeod,
argued that
credit y eohstitutes Capital/ -ahd^a
nation's total capital consists •' of

sign,

,

t

coricept is that capital 4s. not

much

measured

/

Francis I. duPont

capi¬

gave

,

presented

the" Federal

to

advisor

of :Eco-

/

asked to rely on
and shape

are

Francis 1/ duPont & Co., mem¬
is quite
widely; known/ advocates ,attifir bers of the New York Stock Ex¬
cial stimulants. to expansion of change, announce the opening of
capital growth; and was a leading a new branch office at 201 West
inciter to the New, Deal policies. Seventy-second Street, with Her¬
He was until recently an economic man Keller as manager. The new

Professor

-Decline in population

^generally

disturbing "differences in his

«cale and On the basis of

they

unpredictable;

are

increase

talism a chance;"

by Prof. David

McCord Wright as

neglect/ a, fundamental* concept.
This

-

of'measurement. 'Yet, this
attempted today on a large
these at-?

is

boom, ex ante "savings prob- pur -policies" accord ingly."
ably will exceed offsets.
"Terborgh: Possible savings is
exaggerated by general averages;

^^ebbhomic •: phenomena growth removes ah impbftarit out¬

.

in economic science,

er¬

pol-

pnits

war

,

the constitution
may. lead, to Serious; mistakes..
Cf ^Savings, and /the'/publicity <or
-registration oractual savings and tioh and
capital growth, the-col¬
investments have not yet -been

iTirnily /conceived of

and

the data

basis of administrative

a

end

ebfoad-4-a
hot
pf /Economic Maturity." The ar¬
cult aiid /perplexing. /Even:/with
they are'to• be used' as ptirriii^fadie
the, elaborate statisticstmf earn*.
easy; or appropriate for this coun^
■evidence. 'Yet-, without going into guments bf the two ecdnomist^ are
Zings, •, .savings* /. • investment and a" technical ^rgUmeht^tegaffiing summarized in the:current issue try/to-follow.: He therefore ;pro4

ture of earnings,

casefe, ./inaccurate
data and using

many

;as

tempts, we
porate ^enterprise;f : ? • '
..
: "HahsCn;
Once past the post¬ the results

,

guage

be
re¬

roneous

unpredictable.

times; there -still / remains uncor-

•

/Of doing the work. Since the na¬

re-

may

expense

and

the time

Such

and

quired by it.
It is merely a pro¬
against making calculations
on the basis of incomplete and, in

hatiuns}; yHowever; nbt f consumption; corporations .v are
with'a great Ueabpf success;; Great; largely self-financing only in good

-

the

economics.

laudable

test

average, of gross capital

on

is

Search

industrial

,

which

more

y or

.

■other economic, phenomena

is

what

the productiveness of

in

research

prospect and
have tend to be capital

formation

Britain is about to launch a new
in his day, though he seems to
and permanent scheme of bureau¬
ings through demand deposits and have' preferred social advancecratic/ ctedit jycorrtrpl,' htit, tas T:
I through .investment /trusts,/ trus-? merit ' to f scientific /economics,
wrote .rather
pessimistically 'a pointed nut in the "Chronicle," in
tees ; and foundations, .averaged
the issue of Feb. 14, it :is faced
from $5 to. $6 billion/Ter /yeari half-cehtury aigo that "Capif alhas
not/idnlyr withy difficulties; but; Is
During the. same years business been so variously defined it, may
be doubtful whether it--h~as any likely:'to"be' perverted 'from •eco¬
•enterprise invested in addition an
nomic to/political obj ebtives^ and
average .annual, amount of
$6.4 generally. if e c e i v e d meaning.*'
Since Senior's time, hundreds, and ultimatelyrfail:in Its purpose./ . v,
trillion from' fuhds accumulated
"J
f ' ' "U" ~~j"l
^ ^' "I')*" .
1 *.
from internal sources, i. e., re¬ perhaps even thousands of econo¬
^Hansen-Terborgh Controversy
tained earnings, plus allowances mistshave; expounded on -tide^ na¬
Today, there' is a bitter/contro¬
ture of capital without cqm ing to
for ^depreciation / and depletion!:
versy raging 'between tWo Schools
These two figures indicatevan, av? a, generally accepted;meahihg/:ih ofthought regarding the accumu¬
fact, some, prominent writers, such
■erage annual amount of savings
lation of capital and its produc¬
■iof about $12 billion, or aboUt 16% asThe German vBdsch^,uahdfthe
famous English economist, Alfred tive use. " One school, represented
«jf the average annual national inby: Prof. A1 vin Hansen, of Har¬
•bome for this period: 6f seven Mar^al,;..hav^;;reyisacl
tiohv df Capital/iii successive edi¬ vard -Dniyersity,h61da that be^
^years.; Likewise, -for the decade
§ cause"the' nation is; reaching h
ifrom f929.10 1938, /inclusiVe, we tions of their'textbooks.
"mature economy ," is hot accumu¬
are told, by
Simon. Kuzets, an
Discretion imtJseof Statistics
lating more capital and /has no
•economist of the National Bureau
new frontiers;> the main incentive
•of Economic Research, that the .- If this is /the situatioii; ..'should
for investment and otheKfOrms'of
Average annual net capital forma- there not be more discreetness in •credit'
teXpahsioh, las well as ieapI4
itiori constituted only 3% of the the, preparation '•and rise *ot statemerits
made regarding - percent¬
Rational income, the lowest' perages of capital formation and cap¬ explains the depression that "oc¬
ifcentage in any /previous period. t
ital growthrTheseitemsareyj^Ven curred In themro^ar /years; /The
4t Ts.? quite Evident: that
in .definite
figures' with dollar pppbsite/ school
ito obtain - adequate - and -accurate
signs, as if they 'appeared in bodks ffk'tbief :pi^t^oms^
•ilata to»arrive «at. these far-reach¬ of account or were'tabulated from
Terborgih1, author of . "The Bogey
ing estimates is extremely diffi¬
eXaet fecofds.It' is expected that
.

and

—

The
\ // "Hansen: Internal funds are be¬ Icy and economic/controls.
economic statistician
or
analyst
analyst' any 'ineans bf measuring •• coming ^ - more important for- fi■has pot the same exact and ascer¬
the quality of credit?
The qual-; nahcing;/ expansion is/ possible
tained material to work with as
ity contfbl -5 of. Cfedit -is the: most through replacement/funds alone.
the physicist.
He cannot isolate
difficult of all economic controls. // "Terborgh: At the beginning of
economic maturity, replacement is his data and remove qualitative
Because of its importance, it has

The
L

so

Great

saving/ ^T;r
"Terborgh: The capital saving
idea is incorrect; great hew in¬
dustries have 'only' absorbed about

Misdirected

concerned as wealth not employed
as

investment

important,

to be in

seem

those we

unproductive credit is as use¬

and

"Hansen:

don't

statistical analy¬

sis is to be'infallible.

-

:) -As an example, we are told-in a
of its amount and its growth can
inonograph 'entitled^-Savings, ;iri4
Vestment and National /Income," be relied upon as accurate data
by Oscar L. Altman, published by pn-vrhich; to base administrative
the Temporary NationalEconomic policy, or as. an indication of eco¬
■Committee,., .that

df ctedit
prosperity

.capital accumulation,- its quality
as-well as .its quantity'must be

serving as Sta¬
tistical diet to the public, iff/' J;
i»The:confusion of the: concept.of

At least,

could

ties

"Terborgh:

/

ybiiiqie

,

ous

ground

little

be

controversy.

capital—are still'to a large degree
That "happened ~50 unascertainable-phenomena.
years ago; there may be a new 1 This essay is written not with
a view to discouraging
statistical
foreign trade frontier.:X:
/

as

most continuously,

there

appeared.

has the same effect on

organizations and the vari¬
Government bureaus are al¬

if

or

for this
both par-1
agree as to the facts,
which they do not.
The growth
of/physical assets and tne flow of
would

growth rates began 70 years
ego; why does it trouble us only
now? Also, a greater proportion
of
old
people means increased
consumption.
U - r
;
•
"Hansen: The frontier has dis¬

^uillty as WVell
Duatiitty Essential,7'-

search

of

such data could be obtained,

'

-

-

,

had

if we

obvious,

is

it

Now

the adequate and accurate data,

•

in

y

;■

,

or

.

of

stagnation

j "Terborgh: Percentage decline

Consideration "of

sidered- .as

tion have not yet been

'V ' J j

'

"

omy.

income// -Certainly;
tical results have been accom¬ neither the/house 'nor the; ehjoyplished -from these studies.
The ment thereof, would appear in the
tabulations of capital investment
definite sources of capital forma¬

tion

relationship between sav¬

proper

r

Thirties.

investment and

shelter it affords is in¬

"the

the

ex-'

investment and helps

plain

CO., INC.

■

GREGORY &, SON
V I
-Hi v i

COMPANY

■

INCORPORATED

fi]'' J.

B. HANAUER & GO.

WM. E. POLLOCK & "CO.,'INC.

:•

1648

THE COMMERCIAL & FINANCIAL
CHRONICLE

Thursday, March 28,

1946

Financial Facts and Fancies

(Continued from first page)
BRUCE

By
&>■, It is

WILLIAMS

immutable fact that unless whatever is

an

spent is earned
whole must suffer.
The "Alberta Bill of Rights
plausible attempt to offer something for nothing but
it will have tragic consequences for the Province of Alberta if ever
it is implemented. Apart from the<S>
and would-be producers?
What
impossibility of estimating the to¬
the

as

economy

Act" makes

the

be

buying of Government bonds.

a

attitude

of

the

producers

incentive
wealth

will

if it

there

is

to

be

L

t

■

I-'}'

Saskatchewan

intent

that

its

dismissed

lions. You know that the
process
of treasury sales of Government
bonds to the banks
during the

dole for all

a

last few

Payable

Price

•

ments

>

\

:

v

V

$ V1, ■/;

1

'/*- V

JJr\',?/,&

in the

Province.

'

It is to be

Alberta

of

has

-1

during the

ordinary guy, far away from
home, and I never get very far
away from home,
x

Street,

Today when the fi¬

encouraged

to

enter,

Assistant Treasurer.
Mr. Dickson
for the past ten years has been a
partner of Dickson, Jolliffe & Co.
of Toronto*.

prairie farmers have contributed
such a disproportionate, share in
the

wilderness of the
Laurentian shield its vast riches
of mine and forest—such
people
doctrines

Without

such outside
assistance
the tremendous
natural wealth of

endeavor is

deterrent

local capital.

a

a

who

linked

to

to

NY-1-1045

dian Pacific

the

millions

—

whose

a

thinly

were inclined
in sympathy.
The internal
was also quiet and
prices

*

With regard to future
prospects
little change is to be foreseen in

Atlantic

mere

for

week the high
iheld firm
but

9y8%,
,Priced by'security operations.

by the vast Cana¬

was

reward

shade off their recent peak
Free funds were firm at
and were largely influ-

level.

the

Railroad System when

population

the

high.

Saskatchewans

ease

section

virile young

the

so

considerably reduced turnover

and

country and her peopletare noted
for their sound
commonsense. The
people

when

externals

were a

Happily Canada is

accept lightly, socialistic

activity was at a, very low ebb.
Albertas again receded
slightly on

■'

with the Pacific
RECTOR 2-7231

grade

ex¬

even

not

During the past

necessary to
regard the housing' situation in
Alberta during the last decade to
realize that political influences
a

few

the; inhospitable
do

been

world —whose

hardy pioneers have wrested from

Province, notably for the develop¬
of
promising oil deposits.

have

point

of

high grade section but the

cent "reaction

3 Vz

in

Albertas

Saskatchewans is likely to

spread

tinue.

-

re¬

and
con¬

dangerous going
this

of

kind

bewilderment,

on

all

a

and

deposits, various
deposits, but all
to

kinds

of

of

them

draft

bank

years.

-

'Who -would not have
that bond yields were

known

going down
when there
the,, constant increase in the

and

prices going

was

up

amount of money available in the

offer, subject:.

m

STOCKS

Industrials

Banks

—

—

You

-

.

^

-

look back

can

now

and, I

think agree

that you could have
paid ahigher price for most any one
of those issues in last few
years for
which

what

Halsey, Stuart & Co. paid
we
then thought was :,t6o

much, and held
few

months,

to them for

on

a

Halsey Stuart did,

as

if you could afford
it;: and you
would within a few months have
sold those securities at a still

higher price because in those in¬

tervening months
ply

was;

the money sup¬

mounting

higher, and

more

higher

and

and
of

more

it

seeking something for investment.
is

arithmetic, not statistics,

that has been

trouble

was

involved. The only
was hard for

that: it

'

Canada plans to cancel the debt
of $425,000,000
incurred by the
United Kingdom under the Com¬
monwealth Air

100

in

^

1950)

New

..

\V /

York

or

Montreal.

of

:

the

Bank

It is stated that

agreement,

a

of

sup¬

covering

unsettled
war

claims arising from the
efforts of the two nations,

provides that the United Kingdom
will pay the Dominion
$150,000,000

and will cancel all its claims

against Canada outstanding as of
Feb. 28, the bank reports.
The
Dominion of Canada will recipro¬
cate

by cancelling all of the out¬

standing claims against the United

Kingdom;

not

otherwise,

dealt

with, including the cost of food
and

other

supplies delivered to

Britain between V-J Day and the
end of

February.

many

Price -101

&

CHARLES KING & CO.
Royal Bank Bldg.

61

Broadway, N. Y.
Whitehall 4-8980

a

credit of

Teletype NY 1-142
„

—Direct-private

wire to Toronto




14 Wall Street, New York 5
~

Direct Private Wires

to

Toronto & Montreal

,

supply

money

was increased by
value of the bonds sold.

the

par

We

also

got

of it

some

after the

Treasury ceased to sell directly to
the
banks,—which ..was
much,
later, by tfre way, than the general
public thinks,—through the banks
going out on the market and buy¬

ing Government bonds, which in¬
bank
deposits and the
money supply just the same as if
creased

the banks had
bought the bonds
directly from the Treasury,

banks as the result of this increase
in money, the banks
sought more
and other opportunities for invest¬
ment and for
earnings, and they
bought either directly from cor¬
porate issuers or qn the market
corporate bonds, which likewise
increased .bank; deposits and the

supply.

money

I

hope

*•

all understand, as
Eccles
suggested the
other day that we ought»to under¬
stand, that the use of bank re¬
we

Governor

serves

th buy Government'bonds,;

corporate

'

bonds

almost

or

any

•

other damned

thing, results in an
increase in bank deposits and in
what,we call the money supply.
«
X wonder f sometimes whether
those of you who are connected
and the

enjoy the opportunity

responsibility of consult¬

ing with
the

your

moment

superior officers at

when

they

are

sidering transactions, loans
purchase of securities
ket which have

on

con¬

the

or

the

mar¬

this effect of in-f

creasing bank deposits and money
I
wonder
sometimes
any considerable percent¬
of bank administrators them¬

age

selves understand what Mr. Fccles
thought the people of the

said he

dountry
stand

^id. to rthe United, Kjngr

dom

more

to

than $5,000,000,000.

Included in this

are

the outright

gift of $1,000,000,000 made in 1942
and

approximately

$2,000,000,000

given in the form of mutual aid

or

better to under¬
the* bankers make

decide to buy bonds

/

3-1874 *\

on

the market. They certainly havev
to take into consideration to some
extent the effect on their liquidity
and
solvency as bankers have
always done on such occasions,
though I suspect they do not have
to take quite so much
concern

abdut the effect on their
liquidity
since the banking
legislation of
the early New Deal
makes any old cat

days, which

dog in a
portfolio
eligible for the
Federal Reserve, but they must
or

bank

to

some concern to

liquidity and

solvency.

r

Situation of the Banks
Do

give

they

also

or

should

some, concern to the

whether

they

question

theseloansthey

are

making or these securities they
are buying will go on
increasing
the

supply to the point
maybe it will not be so
good for the public welfare, in¬
money

where

cluding the banks who have

Wall Street, New York 5
WHitehall

ought

when

loans

Canada brings the total of her fi¬

nancial

'£'•

Incorporated

of its bonds

to the banks,
time it sold its bonds to
the bank deposits of
country
and
the
resulting

$1,250,000,000, the bank points out,

64

Wood, Gundy & Co.

Toronto, Canada

Members Toronto Stock
Exchange

this^

banks

contribution

to

made

this increase

our

money supply?
In .1928
and 1929, when the banks were
making huge loans, demand loans,
street loans, they had to
give con¬

sideration to their liquidity as af¬
fected by those loans, but did
they
also

give consideration to the

sible

Canada

interest

•

and every

effect

creases
*

of

through the Treasury selling too

give

By recently granting

& company

:

Money

all

according to the March 22 busi¬ whether
ness; summary...

TAYLOR, DEALE

V'

get

money? I think it is pretty
gen¬
erally agreed now that we got it

in

Principal and interest payable in

Bought—-Sold-—Quoted

we

Training Program, supply.

since that time.

3V2% Bonds, Due June 1, 1978
(Callable at

did

with banks

Canada to Cancel Debt
Owed by Britain

Province of Alberta

Mines

developing.

:

vestment. '

$100,000

;;

ahead,

community and, demanding among
And then with the accumulated
other things, opportunities for in¬
funds
which
floyred into the

.

CANADIAN

then

was

Source of Surplus

the
We

it

as

How

the

questions with which we investors
have had to deal in the
interven¬

ing

'

•

the

the

far

very

con¬

within

or

see

we

tinue

some

That increase in the amount of
the country's
money supply since
1929 from $55 billions to
$185 bil¬
lions ought to answer most of

to

us

knew that the facts
would
depend upon some other factors
like politics, and we were
not too
sure that the
process would

subject

at

of

and

1

money, we have too much money
from many points of view.
That
$185
billions
is
made
up
of
about $28 billions of
money in
circulation, f and the balance of
more than $155 billions of
bank

plementary

the

fully

are

S.

ment

Alberta will never be
ploited.
It is only

Officers

Dickson, President;
Morlock, Vice-Presi¬
dent; William B. Malone, Secre¬
tary and Treasurer; and Alan C.
Kilgour, Assistant Secretary and

been placed, on
sound footing,
the: prospects for the
proper de¬

beem

West.;

John St. Clair

the apparent
increasingly conser¬
vative outlook of the Social
Credit
party over the past few
years, has

v"

much

an

Foreign capital, impressed by feeding

NEW YORK 5» N. Y.

"

an

William

past

velopment of this area of tremen¬
dous virgin resources are
jeopard¬
ized by political recklessness.:

TWO WALL STREET

f'*

am

King

•

It

"

TORONTO, ONT., CANADA—

.

INCORPORATED

i

Toronto Mines Finance, Ltd., has
been formed with offices at 25

of the
province, largely
through outside assistance,- have

A. E. AMES & CO.

-

<

not and I do not pretend
expert in this field. As
have often said, an
expert is

I

idea

been

Canada.

ern

CANADIAN STOCKS

* '

is

group

subject which is confusing to the

It

nances

CORPORATION

x\"

Money?

Toronto Mines Finance Co.

detrimental to
the progress of the whole of
West¬

MUNICIPAL

I' v

individually,

has too

to be

com¬

placently :■ concededivith the

decade

PROVINCIAL

Is '

'

-

his interest in the public welfare.
How much money is

hoped therefore that

the initial round will not be

ing

GOVERNMENT

ques¬

nobody
money, but I
am not asking the
question from
the individual's point of view—
that is, the individual's immediate
point of view—but rather from

employ in¬

that the scheme will be
ultimately
defeated.: The poor credit stand¬

CANADIAN BONDS

-'j.

£ speak

we

ever

direct methods to reach their
goal.

Bell System Teletype NY 1-702-3

the

Now, I know that even in this
distinguished group of experts, if

There is

from

will be encouraged to

v

,

Is There Too Much

of

directly attaining the
main objectives, the
party fanatics

40 Exchange Place, New York 5,N.Yi
•',

been

doubt that the
provincial
courts, and certainly the Federal
Government, will bar any tamper¬
ing with the currency, but thwart¬

Grporatio?i

i"'

of

how much money is
enough?

little

"

jDoMiMiox Securities

<u V

today

<

raises

once

money

enough from
the situation are all the
greater. - the point of view of the
public
The Social Credit
I
party has welfare?
think, you. experts
given the Province good govern¬ would
probably
use
different
ment over a period of
years and phraseology. You would
probably
has thereby gained sufficient
make a "very polite, talk on the
pres¬
tige to sway the" moderate ele¬ quantity
theory of money.

ed

>

at

a

a

by somebody
time, either immediate
a short
space of time.

mar¬

tion, have we too much money,
and then, of course, the
question,

obliged to take such a strong
stand to placate his extremist fol¬
lowers/ the inherent 5 dangers of

106% to yield 3.80%

Toronto and Montreal

That

he is

Direct Private Wires to Buffalo,
;

produced
in this country

about $185 bullions.

insincerely

•*

the

on

have

supply

introduced the bill with the con¬
viction that his plan will
never
be put into practice.
If this is so
and political pressure is such that

United States

in

Canadian currency,

or

bonds

Another attitude adopted is that
Premier Manning has

January 15,1957

bonds

ket, and of bank buying of other

somewhat amused contempt.

4*/2% Bonds
Due

has

attitude

an

of bank buying of

years,

Government

of false securi¬

menace

with

money

supply in this country of $55 bil¬

ty by the insidious delayed action
policy of the social credit zealots.
The party has been in power so
long without exhibition of its real

Province of

a

create

has been received.
The potential
objectors to the scheme have been
sense

starter, I have

developed

unpleasing feature of this
situation is the complacency, with
which this
fantastic
proposition

a

a

realize it

into

mean, the subject of money. My
thesis is that with $185 billions
of

general observations.; You
know that in 1929
that, process of
bank lending

One

lulled into

as

some

and sundry within the Province?

$100,000

that

gratuitously

be

dissipated to provide

to

With

;

a

tal assets of the Province what will

I

the banks buy Government bonds
on
the basis of a market which
they have made by their previous

in

of

the

bank

pos¬

mounting
deposits

in¬
and

money

CANADIAN
SECURITIES
Government

Municipal

Provincial

Corporate

supply?

of that

huge increase to $55 bil¬

When

lions at that time

banks suffered

as

the

came

along, the

did

everybody

else. Will the banks suffer

everybody
comes

effect

else, when

the

as

will

effect

along of this excessive,

as

Volume 163

I

view it,

increase in

further

supply?

in

It is not yet ended. You know
that the Government is not now

credit;

selling

a

of

either Government bonds

with

bank

but

of

deposits and

those

"Well," I said, "I have some
banking
responsibilities
myself

necessary

know, too, that while many
thebig
corporations
have

well supplied themselves
liquid funds for the imme¬
postwar period, there are a

pretty

porate bonds.

diate

a

lot

Only the other day
big industrial corporation, by¬

who

"What are we'going to do with
money," a Philadelphia bank¬
er said to me'the other day,-"We
must have earnings."
)
»

like to

and I

30 years

the banks have

see

earnings, but I do not like to see
the banks have earnings at the ex¬

active money

the

are

this country

of

makers

the

You

cor¬

or

of bank
supply?

money

deposits
are going
up, and it is because the
banks are buying on the market
bonds

going to result
expansion of bank

the funds? Is that

money

our

1649

FINANCIAL CHRONICLE

THE COMMERCIAL &

Number 4476

a

in 20, or

from now. Are they go¬

if it is done

analysts, and
of it;

ing to be willing to pay the taxes

y-:v;

*

the advice of

on

have had some
•:\.
wc

to do what then has to
Value of Investment Analysis

done

be

little bit of luck in investment,

even

currently,, and, in addi-r
tion, pay the taxes necessary to
pay off the huge debt that we
have created and liquidate the fi¬

There

are

many

phases of the

problem which we all

investment

face. We need not merely

statisti¬

nancial
situation
that
we
have cal
pense of the soundness of the cur¬
information, that is history.
that are
We need to know the present and
rency of this country for which developed?
passing) the investment bankers not so supplied. There will be a
its trends and we need to analyze
they are primarily responsible."
v, I often wonder why we are so
as they sometimes do these days,
lot of new businesses, too, that
to some extent the future. That's
Who is going to take care of fearful of making use of the tax¬
coming to the life insurance com¬ will want bank funds, and those
panies directly, sought a 15 or 18- very proper provisions of bank the soundness of our currency ing power now and yet seem to why I say you analysts should
believe that it can be used on our have a little of the prophet in you.
year loan, and we made them the
funds for small businesses
and if the bankers do not? You can¬
sons and grandsons in the coming
For example, when we made that
not expect the politicians to do it.
best terms that we thought we
new businesses must still further
investment in public utilities to
You
cannot
'
could possibly ; justify, but they
V "
expect the people generation. '
increase bank deposits and
the
themselves to say, "We have too
shook their heads and said, "No.
You are as good a judge of that which your Chairman referred a
money supply.
.;:
; moments
ago,
it was the
much money and we want to get as I am, and better probably, be¬ few
The„ banks will make us the loan

small

of

businesses

.

1

for

10

it

was

Danger of Further Money

rich for

too

was

Why

us.

not too rich for the

do

we

at l3/4."

years

That

,s

banks,

the officers; of that company
to

)Us, #"There') isn't

any

We

the

about

it.

let

can

said

hurry
matter

It

money.

has

-

around. It has been in
ness

world.

been

the busi¬

But this

It will stick.

we

are

this

call

to

choose

That

have any doubt about the reason
for booms in real estate or even

baby booms as yet on the stock
market, and low interest yields
on
bonds, well, you just take it
from me, the answer is that huge
supply of money being constantly
called out of chaos by banking

operations.
Patriotism and Prudence

the

mean

bankers.

to be critical of

certainly had
to finance the Treasury's opera¬
tions during \the
war, and the
most important source of all this
supply of money is, of course, the
They

Federal) deficit; If more money
had beep raised by taxation, there
would riot have been -such

big
money supply, at the end of the
war. If more of the money bor*
,

had; been

rowed

had

who

a

secured

.

from

existing
money, that is; the people and
their savings institutions, there
would not have been so big a sup¬
those

pre

ply of money at

-

the end of .the

#

cannot

And

expect

result of

are analysts, and that
if
you
are
successful
analysts,-that you are a good deal

cause

you

is,

to

sell

of the

more

Government

bonds to finance the war to

the

know, it is said of the old Equi¬
table/from whom we got our

people themselves during the war,
because you are not going to gel
this huge
money
supply down

name, that it would
better. off in 1917 if

until you can get the Government
bonds and some other bonds out

and

of the

consols during

banking system.

going to do that?
Government ! can; tax
and pay, them off. I am hearing
you" say, / "That guy has never
been in politics."
Or, somebody
can
buy these bonds from the
banking system.
Who?,: You do
How are you

the

Well,

,

have

been

it had

ac¬

left it in

and

1917

on

it

likewise

analysis as well as

Indeed, it was rather
more legal than statistical.
When
we considered making those rail¬
road investments we were faced

possibility that the un¬
lien of the first-mort¬

bond-might

was

patriotic to

sup-

port the Government's issues, but
all through the war on many oc¬
casions when I had the honor and
the

responsibility of advising with
Treasury officials, I took the posi¬
tion that it was j ust as

patriotic

to insist that the war be financed

soundly as it was to help finance
it. You know that a comparatively
small percentage of the funds ex¬
isting In ? tlie )jbommunitY) were
Used,for ■financing the Treasuryrs
needs during the war, and a very

large
volume came
from
the
banks, and the expansion of bank
credit and of the money supply
resulted.

.

.

,

^

qf the Federal debt, we all agree
that

flood

we

country

the

with

is to
prevent the. banks going on the
market and buying up all the
and more money. ^What

more

in

the

been

intervening

company

years

paid for

had

and

not

as

that the

conclusion

t

back from the banking system ex¬

loss to % the

cept) at

a

What

there in

You

is
say

it

The

ment.

bankers?

it for: anyone?

riskless invest¬
Government bond is
is

debt

and

taxes

run

the risk of having

capital decreased in
period of five p| six years,:
your

a

having

the

is fortunate;
That is what makes business op¬

the same way; .That

portunities for us.
Just

were

we

left the office,

before I

I

While
railroad

handed these figures.

buying

bonds, to which
has

those
your

referred), another

insurance

institution

Chairman
important,

was' selling

Here ' are five
items sold during 1941 of a par
value of $26 millions. The prices
received: for the sale of these
bonds.

railroad'

bonds, none of which {defaulted,
just $11 millions less than
the present market value.

institution.

our

Production

Will

■■

them

during the

war

making

loans in foreclosures. You cannot
call the United States Government
bonds

cannot foreclose.

and;, you

has
provided by deficit financing
it was in)
jthe early 1930's. It cannot be
wiped away - by production. Pro¬

The

supply of money which

been

cannot be wiped away as

duction is feminently desirable, but

expansion

after the war in

case

.

I remember very

into

billions of those two
holdings that are going to come
least

on

the market at some time in the

near
.

$50

future,

and

when

they

are

financed?- who is going to provide




of

offices

the

in

Drug Products C6., Inc.
Common Stock

well walking
the

German

of 1920.
They
their hands and

July

rubbing

Par Value $1 per

Share

■m

In 1921, they were pointing their
fingers to their still further in¬
creased
bank deposits, but they

be

corpora¬

The

smacking, their lips over their
huge increases in bank deposits.

were

they

Price $4.50 per

rubbing their hands, and
not smacking their lips,

not

were

and in

1922, of bourse,

everything

immediately
of

175,000 Shares

table, and that is why I am here.

promptly;: after
the
war,
either to buy things that were not
available during the war in the
case of individuals, or to finance

tions. You know that there are at

'

-

wanted the job, and
they wished it "on me! It turned
out to be the best job in the Equi¬

used

business

.

up your

So' nobody

were

to

Reduce

minds as to
what to do for the future, I think
you can see very clearly that the
dominating factor in my Jnind ; is
the supply of money. It was re¬
duced after 1929 by the call of
In

were

Equitable that had ever gone into
the foreign business had gone off
the dock in some way or other.

bought and sold under the impres¬
sion that money was being put
into

Not

Money Supply

not all see these things

We do

was

holders of

production and the sale of auto¬
mobiles and washing machines'
We have been fortunate enough and refrigerators will move the
have
think that its goodness on those railroad purchases that money around, but it will still
is, go back into the German bank
reports and periodicals of 1919 depends on the taxes which; this we made to have just the opposite be there.
■
*
and 1920. The first job I ever had
(Continued on page 1650)
?
Government
can
collect
from experience. We realize there is
for the Equitable was in 1920, a
big innocent just out of the aca¬
demic world, when
I went to
This announcement appear* as a matter of record only and is under no circumstances to be construed as an offering of these securities
Europe fori the Equitable and was
for sale, or as an offer to buy, or as a solicitation of an offer to buy, any of such securities.
The offering is made only by the Prospectus.
))))
' ),
in Berlin in July of 1920. Nobody
else wanted' the job; It was a blind
NEW ISSUE
alley. Every vice-president of the
mikl

were

that

courts would

priority of the under¬

think for

.

You know that there are at least
two large blocks of Government
outstanding

common

a

in ; the case of munici¬
pal" issues. " After examining the
legal situation we came to the
pot

sustain the

the consols.,

in

securities

dinate

all
re¬

amount of cash

less than the

the

had

that

life insurance

just as good as the Government's
and monetizing it,
taxing ; power during ' the next
monetized the Fed¬
generation ori two.
That is all
eral debt, perhaps they will go on
that stands behind the Govern¬
the market and buy up all the
ment's promise, its taxing power.
corporate bonds and monetize that
debt, too, and then why not go on
.More Taxes
the market and buy all the mort¬
It is all right with me. I lived
gage debt and monetize that, also,
in this grand old country before
and -liquify
everything in the
1900. I will not be paying the
form of wealth?
taxes that are going to. pay off
this huge debt. You young fellows
German Monetary Experience
are going to take
that on, and I
After World War I
sometimes shiver a little when it
Some of you analysts, I think,
is urged upon me that the Gov¬
would enjoy what I was not able
to do to my own satisfaction; that ernment bond is. riskless, and I

Federal

,

bonds

its

legale priority but might suffer
being. merged with subor¬

lying bonds and they did.
)
a minute that the
That could happen again. Maybe
companies are going it * would not be such a bad * idea "{ We guessed right, and, there-:
fore, invesments at a time of
the money supply.' That is what to buy back the 2's of 1952-54 to follow the advice of one of
panicky selling of underlying first
I have at last come to realize is from„banks that are paying 104 your houses not4 very long ago
mortgage: railroad bonds was a
the meaning of monetizing the to 105 for them with a yield of : to put your cash away rather than
one and a quarter or thereabouts?
take a return of 2.8,—and that is good investment, and it has turned
debt.
out very beneficial to the policy¬
Who is going to buy those bonds high now—and pay 50% income
If we monetize more and more

bankers

•

retain

not

from

.

I know it

bought rail¬
the

we

was

statistical.

gage

interest

ceived

bonds

result of legal

that the Government con-

means

that

When later
road

derlying

the vault

sol market value in 1917 plus

was

generating and distributing
companies would be good even
though
the
holding companies
might be affected by the death
sentence legislation.
the

buying Government
that period, which

of

instead

the

a

with the

cumulated its cash between 1895

statistical analysis

some

good deal of legal analysis.
As the result of both we came, to
the conclusion that the bonds of

and

means,

excessive

an-

■

I do not

down."

supply

their public
representatives to do it, at least,

do you want as much
money you are going to get from money as there is national wealth9
the banks is newly created money.
Do you want as much money as
It is coming right out of chaos,
there is debt, government, cor¬
invited into this world by the
porate, and private, or do you
banks. It has had no experience.
want) only as much money) as
It has not been around. You don't
there is government debt?
know
what
may
happen.
Of
Mr. Eccles said the other day that
course* it is all the same "kind of
the monetizing of the debt should
money after it gets here. But just
stop. I think he had in mind the
suppose somebody closes the gate
monetizing of the Federal debt.
from chaos before you get that
Now, as 1 have said to you, that
new money."
is just another of these poetic or
Well, the gate is still wide open, technical phrases to describe the
but 1 am only emphasizing the
very simple transaction of putting
fact that the new money is still debt in the
banks, whereupon the
being created by the banks. If you amount of the debt is added to

.

money

you

not until the bankers provide the
poetic arid a little prophetic." " '
and point
out
the
leadership
.1 sometimes wonder what would
money supply, but how are we
necessity from the point of view
happen if the Equitable Life As-'
going to prevent it growing much
of the public welfare of doing it. surarice
Society sold a good big
larger? Again I ask, how much
block of its 2's of 52-54 at a 5money is enough?
How much * Get Bonds out of the
Banking
point profit, and thereby put in
money do you want?
I mean for
System
the till two and a half years' in¬
the use of the community. Do you
It can be done, but it is a hard¬ terest, and let the money stay in
want the whole national wealth
You
to be turned into liquid form? er job than it would have been the bank or in the vault.

I

ride.-' We said, "Oh, no, we advise
you to go get that money quickly.
This money that we offer you is

experienced

question is not merely
going to reduce what

So, the
how

yet know. But, when

not

Increase

blew

you

Copies of the Prospectus may

know

Some

with

of

you

be obtained from the undersigned.

loose.

Bond & Goodwin

Responsibility of Banks

j

Share

must

be familiar

INCORPORATED

u

that

atmosphere in the En¬
glish language and the American
banks, with similar increases in
bank deposits looked upon with a
certain amount of pride and en¬
thusiasm.

63 Wall Street
March

26, I9t6.

'■

-

'

New York 5, N. Y.

THE COMMERCIAL & FINANCIAL CHRONICLE

1650

"Our

Reporter

jV (Continued
:

By JOHN T, CHIPPENDALE, JR.

be

from

clines in notes and bonds due within the next five years.

the

a

result of one fairly substantial institutional buy
/

V

■

This issue becomes bank eligible on Sept. 15 and because of
the

of

scarcity

intermediate-term

issues

that

the

banks will be able to buy, there is accumulation
tion by institutions which

^

commercial

of this obliga¬

believe that this bond has very, good

<short-term appreciation possibilities.

.

.

.

,

«

.

.,/ *

.

It

seems

as

now

in

j/I know

the

an

v

and

man;

.

.

i

a,

further decline in this rate, if the monetary authorities de-

.With

increase in; the cost of short-term money, and longterm funds on a 2.25% basis or lower, the Treasury< by its cash
payment of: part of. the debt; will] oontinue to keep the? debt burr

\

the United

nn

*

EXCESS RESERVES.

//*■

It is

also

v

!

the

monetary authorities;

are

going to

bring excess reserves of the banking system down to levels where
the member banks will not have too large
amounts;. of surplus funds,
to put in the market,
This will take some of the pressure of
bank buying from the
.

.

outstanding obligations and thus prevent

By limiting the
for
/

•

resources

.

»'

.

.

.

the

deposit

more

and all

.

.

.

.

It is indicated that when

new issues of
long-term bonds are offered
institutional investors in the
future, there will be. restrictions on
the purchasers, It is believed that
they may/be,informed that if there
should be selling of bank eligible bonds topay for the new money
obligations then subscriptions will be

to

r

sharply curtailed,

*

...

or;

even

,

Therefore* in order to. be in

position to take

on

sizeable

/ amounts of these new securities when they are available, with/;/ out selling bank eligible obligations, the savings banks and
insurance companies
/

may now do some eliminating of
eligible
issues, and reinvest the proceeds in short-term securities.
;

Then when the new bonds' are
being offered these1 institutions
will be able to
buy substantial amounts of * them and' will use the
funds obtained from maturities of
short-term

investments-to pay for
part of this commitment;
It may be-that selling* of-bank
eligible
issues in / anticipation; of new
offerings will cause some weakness
in bank ehgible obligations.
.

.

.

.

.




.

rate.- While

est

.

.

though

an

con^

stroys the purchasing value of the?

interesl

net

our

:. 7

_

the

„

interest' rate continues to

to

emphasize low interest, rates
because of; its great; value; to the,
people of the country,
;

ted to be likely.

/

^

dollar;'/

"/■■.■;:/'■

•//.

;

So; I say- the time h?s come for.
Congress to appoint a Monetary?
Commission of men of experience?
in Congress and in the business
and:^ banking-.world to do what,
was done In 1912, that is, examine*
the

whole

banking;

anc£

debt

monetary situation^ so that Con¬
gress- oan deal; intelligently and!

quickly with the subject;

go

/

.

'y.people^ of, thef country^ It

one.
•

Room

not

to

mention

the

A higher bill; rate would only; tighten

/

Treasury

money*

re¬

long-term.rates.

v

.

,

.

.

carried

v

.

over

until

DEPOSIT

GAINS

6:15

p.m.

at

mercial

banks will increase very much
during 1946*
.This is a
opinion since it had beem expected that bank deposits would
show fairly sizeable growth for the
year. V
It is believed that the
.

.

of

currency

from

.

circulation

.

will be

smaller

than

was

previously anticipated, due to:
(a) Higher wages.
Higher prices. '
'
'
(c) 1946 is expected to be a great tourist year.
(d)„ Black market operations.

for guests at. dinner,

Higher
and

while

tourist

mean

that the

will not be

payments

wage

finished

as

goods

will

and; higher

mean

expenditures

and

fast

as

was

black

expected,

'

market

after

dinner./■///■/./

The

/.! /'V//;/*.-//
Nominating Committee con¬

sisting of J. Ray Baldridge, Chair¬
man; Owen Kraft, T. O. Harris;
Harry Steele, and Thomas O'DJ

'

-

operations

will

large and the return flow
.

Board

The slower return of
currency from circulation will mean that
increase in bank deposits this
yeqr will be less than had been
forecast.
Newly mined gold coming to the Unitpd States will not
be too substantial.
All decreases in loans to
the

.

.

.

.

others will most

.

brokers, dealers and

.

likely offset the increase

in

commercial

loans.

.

presents

the

following;1

*/
Officers: S. W. Steinecke, S. K-

Cunningham
&
Co., President;
Franklin Maroney, Blair & Co.;
Vice-President; Joseph Buffing-1
ton, Jr., Mellon Securities Corp.;
Secretary;
Bernard
C.
KeHey,
Halsey, Stuart & Co., Treasurer. /

prices

...

//

for cards, etc.); in the East! Room

members for the coming year.

,

<,

for commodities
currency
in circulation,

more

of currency will be

use

,

-/

Arrangements have been mad^
,

Murray

,

NJ:: (b)
v

ex?~

\

There will be a charge: of $5.00>

EXPECTED

revised

flow

/annual

the members-

„

Because of the debt retirement program of the Government and
changed economic conditions, it is not believed that deposits of com¬

return

the

meeting because of lack of] time./
/ A cocktail bar will be set up»
in; the Gold Room beginning at
pense.

NO

at this meet¬

v

,

mediwm

*

-

on

coming members of; the National
Security Traders Association. The*
latter* question; was < discussed* at
a special meeting on March 15, but

rates, in. the/ large

financial centers and would have' practically , no effect. -on
or

.

at

filiated with and its members be-;

im excess

bills.

Hotel

Roosevelt

ing, and in addition members will
consider the question of the Boncf
Club of Pittsburgh becoming af¬

system-are-held largely

lower? yielding

the

laws wil be voted

// by the country banks, and these institutions and their customers /
are not very much interested
in the % % certificates of indebted¬
ness,

of

today; March 28; 1946. The
proposed amendments to tjie by-r

that everything, depends on Trea¬

of the»banking

an¬

meeting and election

5 p.m.

.

reserves

PA. —The

PITTSBURGH,

of officers will be held in the East

entire country/ The experts say

increase in the bill rate would result in ..a* decrease
/

|

nual business

.

?

.

//

on

This money matter, is an ex?
ceedingly, confusing and difficult
subject involving; many corporate
and private interests, and espe¬
cially; involving the welfare of the

upvvaiue to/ the; thrifty sav¬
ing people of/the -country who
provide the capital that makes
one generation a/little better than
As I said the other day, ta.an-v

Meeting of
Pittsburgh Bond Club

Treasury Policy

is of

the-previous

Annua!

-

Everything Depends

Is the low interest: rate of value
to. the

*

.

.

some

soling incidents. of the low-inter¬

-Treasury policy*; says the down. .We can administer the-life
Secretajcy/of the Tteasury4and; /the insurance, institutions.; in
any
President himself, will continue
atmosphere* that T have yet admit*-

.

.

entity: alohe/there ar6

bene*-

notwithstanding; many good /re¬
sults, if this process of monetizing;
debt goes on to the point of creat¬
ing a money; supply*" which de-,

.

The excess

There seems to be considerable discussion about the
elimination
of the pegged rate for
Treasury bills, and the effect this might have
on the money markets..,
It is quite obvious that if the
fixed buying
rate of Federal were taken out
of the market, the bill rate would
go
to at least ^ of 1%.
A* rate of 4£ % would be in
line with a %%
rate for certificates.
./.. This would be another factor
in the firm¬
ing of short-term interest rates.
%
Treasury bills are held princi¬
pally by the Federal Reserve Banks, and an increase in the bill rate
•would have the greatest effect on the
Central Banks.
It would help
the earnings of these institutions.
It does not seem as

life< insurance companies and all
thrifty citizens, *• From the
point; of view, of the-corporate

coun¬

his

and

possibly get the/
things for which he bought? those*
policies. I have given 25 years oD
my life to administer the Equi¬
table, a great semi-public institu-i
tionj and I; am/ proud of. everyt
minute that I have spent, in that]
job, but; it is utter failure for me;

it,

•

y -

the- policyholder*

ficiaries' cannot

The

serves.

Another poTENTiALixy

;which the Equitable policies are?
paid decreases to the: point where-

which .*
earned last year up at the Equita*
isthe thrifty, hard-, ble went down to about
2.82% of
working people, who* suffer./ It is •our*total
assets, our profits real¬
only the thrifty who put aside ized and in
the till exceeded $51
some part of the results of their
millions.
Therefore,.; I am
not
present labor for some future use.
pleading for the life -insurance
The ne'er-do-well, dpes not suffer
institutions. I am pleading for the
by low-interest rates. He spends,
policyholders of life
insurance
all the money be gets his hands
institutions wbh will: heye/tP/pay
on and does
not put any of' it
more net for
their insurance if

.

...

you

flicts with the best'interests of the
65
million a policyholders of : the

artifical
if / has been

away.

for Congress
making of Trea*^

come

to take back the

of monetary soundness and
money:

;Whaf pbssibie public/policy can
representative? of. the- people
accept as satisfactory if. it con¬

other / investors

by

means

Whether there will be selling,of- the 1952 and longer maturities
eligible issues will probably depend upon the reaction of
insurance companies and savings banks to
changed credit conditions
and their preparations for new
offerings of bonds.
It may be that
insurance companies and
savings banks: will sell some of the bank
eligible bonds at present high prices and reinvest part of the
pro¬
ceeds in certificates and part in
long-term restricted obligations.
...

or

the, tune of
$130 millions, since

other

all

,

respond

sury policy and all Government;
policy with respect to this matter*

on

live to

any

supply and the

created;,

•••"/

can

/

thrifty people in the

money

'

eliminated entirely.

and.

great

supply, because everything that'
do and everything; that T dof
financial apd. monetary siuation depends upon 4t,; - /
;
iriythi? country .were* put/ on a i / My life is a failure if the pur-/
sound
basis, - the* expansion of chasing' value of the dollar irr

try: are suffering is. due .to the

MARKET RESPONSE AWAITED

Of bank

we

about.$i25

companies,
:

a.

Responsibi 1 ty. of Congress

,

the first of. this year? and - if / the

L will, not risk "giving, you. any,
advice. I.r simply state : that the?Ihr

holders

r

'

;

Effect; of Low Interest Rates

:

ance

institutions will:

largely in certificates of indebted*- ;
ness because
of the satisfactory return, shorter
maturity, small//
premium, if any, and the practical immunity to; risk of.
price
fluctuations..,.
<
>

,//'■

'

terest rate from which life insur¬

of the commercial banks available

investment, it is believed that

concentrate these funds

an

...

/

non-Governmentobligations

the. investment^ world.

.

increase in bank credit and deposits.

'

has

The time has

s

likely to be /increased
some of the reasons that/p have,
bpsifle?s/tba^^QUld go !on4n;this
suggested here today, well,, you do JcpubfryZ very.promptly: ; yrquld:
noU need much more analysiSi/to very / quickly ,
provide, us / with
decide mpsf of the questions/that satisfactory and sound, investments
are
uppermost in your minds; in for, life insurance
money..

.

indicated that

'

Board

serve

sibilityK and, it; has? indicated; itar/

the* Equitable have invested in

which

by

.

^tandard in 1933, it turned over;/
in

States Govern¬

see the debt of the
United States wiped out entirely;

also that it is

.

since..the. cost of carrying the; debts will- not be
allowed; to increase..
./:

rate, / and
who:
makes -Treasury
policy?
When'
Congress took us off the gold

.would rather

It you think that nqt only is it
going to be difficult to reduce the
volume? of. our money supRly,/but

den: bearable

only/

low and;

a

interest

in, order: that banks precognition of the danger: con<4
wi 11 fronting us, but it has not acted!
something to invest in. /, I to control Treasury policy.'
;
■;

have

to build carriers
implements of war,

Other:

community.

no

Treasury >
has

and

.

be

\

life- insurance "companies

or

however, be no increase in the coupon rate of short-term 'created/to. payfog themsuryiyed
issues...
By keeping offerings of. long-term obligations scarce, there, jits/ original; Use; by tbe. Governwill be no increase in long-term interest rates; in fact there
may iment and. still, stalks, through the

even

is

policy, and that is

lower

*.

theirf purpose, have |we. will find/' something else> to
|been -destroyed,; but the money jinvest irtj/As/a matter pLfapt/ we

.

What

Treasury

qr at * any rate

rwhich served

There will,

one

you all say, "Oh, he is

insurance investment-

wants

Jmaterials used

Treasury and

a

in the money

sury policy.
policy?
The

home

ment/ to create debt on any. terms

supply today which
created, to pay for wages, and

was

short-

credit policy which may have important consequences
market.;/. By a moderate increase in short-term rates,
the pressure will be relieved on intermediate-term obligations.
on

also other bonds.

lions of money

though the trend toward, somewhat higher

term interest rates indicates an agreement between the

Federal

by; purchase
non-banking

,

SHORT-TERM, RATE ADVANCE INDICATED

coming

have the privilege and
advantage
of paying$10,000 •; for
a
$5,000
house* That ,is what the low-inter-

community even after the
production has been destroyed/"//
There is plenty of this $185 bil¬

J,;

r

veterans

.

■■/,/•/://

■

or

the

of

the

fact, to the Treasury : experts,,
the making of
Treasury policy af¬
banking, systgm;; is. taken; out,pf ihe is
feeling the - pinch of the fecting the value of every dollar'
the banking system. - ,, /■ 'V lower, rates and he
In your pockets
hopes there
today/ It is the;'
{,»: I would like to call your atten¬ will be a turn."
Yes, I hope there Treasury experts who make cur-/
tion to the fact that not
only, is it will) be a
rent Treasury
turn, but not for the
policy, and who ares
true that war production is, sub¬
life* insurance company's benefit; they? I do not know,' and I will/
ject to destruction, but also it is
rather for the benefit of the.gen¬ bet you do not know.
You
true that the money/ created to.
cer-/
eral welfare of this country, now, tainly would not accuse the Sec-'
pay for war production survives
and for the next twenty or
thirty Iretary of the Treasury of making/
its original use and stalks
through years. I am not^one of those who
jthose policies./ The Federal Re¬
,the
and

.

•.

of

part

the part

on

Why

.Government/ bonds

partially exempts, the Government markets have been quite
stable, with changes in the longer-term issues confined largely to
fairly narrow limits.
.
There has been good buying, recently in
the 214s due 1956/59 and this bond was run up about 8/32nds last

week, largely as
:v./'
'

other group like
this, the low in-^
rate is one of the reasons

terest

community/this great volume of jest rate does,
particularly,

.

of the

order.

Government;
the

on

Aside
price adjustments in the shorter maturities and all

.

page 1649)

This money supply is going to
roaming around the country,

until, by taxation
With maturities up to 1951 giving ground, the firming of shortterm rates is being felt in the Government securities markets./.:. .
The higher return available in certificates has resulted in price de¬
from downward

1946

Financial Facts and [ Fancies

Governments f:

on

Thursday, March 28,

.

.

of Governors:

Robert

C:

Schmertz, Phillips, Schmertz &.
Co., one year term; John E. Fri¬
day, Mellon Securities Corp. and.
John Klima, R. H. Johnson & Co.,
two

year

terms.

*

1651

FINANCIAL CHRONICLE

THE COMMERCIAL &

163 -" Number 4476

Volume

goods and cap-

both for consumer

and Trends

Business Outlook

(Continued from page 1639)/'
back about four months as the re¬ //And now we come tp the great¬
sult of strikes.
It is to be hoped est of all potential sources of bus¬
that a satisfactory formula may be
iness,
the construction industry.
third
successive- year
reflected
found that will do away with this Few if any industries suffered as
this surge of buying and uptradmuch attrition during the war as
antiquated procedure and a fair
It is esti¬ ing. Dollar; volume sales in 1945
method of settlement devised that civilian construction.
exceeded those in 1944 by 10%,
will obviate the waste and losses mated that it will take from eight
and the first two months of 194-3
that strikes jentail. £lt would seem ;to 1 Of years to fill our require¬
1

.

.

that in this 'enlightened age some

ments in this field,

and commer¬
We need four
to five million residential units to
fill our immediate urgent needs,
of which two and one-half million
ate for veterans' use.
The Bor¬

plan similar to that of the
UNO, or something similar to the
Swedish plan which has practical¬
-;•. /'•/.*

our

a

1946

Let

excellent.

tell

me

cial

outlook for

The

1947?,(

and

is

outlook
you

why.

this very moment
three million square

short

over

short

is

state

i

Department of

S.

Region,

I

qualified to produce.

provided by
helped to industrialize and it is today our best
customer in this hemisphere.
In¬

by

10%,'and with Ithe availability

increased.

•

j

,

1

-

goods

all the Latin coun¬

together.

,

:

Technological Progress Basis of
Our Economy

Hawaii, the Marshalls and
Gilberts, the Marianas, Okinawa,
such countries as the Philippines,

You

are

basis of

familiar

all

with

omy.

shattered,

mass

reconstruct—buildings

/

and

railways bombed out, ships lying
on
their sides, industries broken

profits

either

the

have demand

these

wider
increased

of

larger volume,

on

on

as

prewar policy of
two-thirds capacity

traditional

operating at

everything necessary in the; re¬
of

based

costs

lower

higher prices. We
cannot be satisfied with much of

low-grade textiles, we
for practically

some

will

at

development
resulting in

rather than

few
things to sell/ : Except for lumber
and

production
the

markets

often,

has been the custom too

with business and industry

countries

in the

of their stores. past.i;^.;./
thing applies/I am told, /In this full production, full em¬
degree to parts of ployment program
the United
t' This all "adds up tcf prospective
prosperity
for; the
immediate ^Europe/ Thehv; too//in the Far States Department of Commerce
Secretary Wal¬
East nearly a billion people liv¬ has a vital role.
years«that lie ahead, But the time
jwill come when j our urgent wants ing under low standards may be¬ lace stated recently in an address
are: filled
and our. shelves, are come
prospective customers as in this city that "it is the depart¬
again restocked/ and we. Will - be their financial condition improves, ment's job to promote business;
faced; with the danger, .of unem- because .they are becoming indoc¬ to provide services that business
jployment and deflation unless. we trinated; with the idea that; living can't provide for itself; to speak
conditions
can
be made easier for business and government; and
goods* on which otir expansion de¬ |use; protecfive measutes.}| To .pre¬
vents this;; we will need, .among through -the use of modern goods to work for a climate of public
pends was badly run down, 70 %.
and equipment even though these
other things increased mass pro¬
policy favorable to business ex¬
to 90 % of our equipment I being,
of
modest
type. Have you pansion.
duction : through continued tech¬ be
The
department's ef¬
more than 10 years of age at 'the
thought what the use of kitchens forts have been and will continue
start of the war.
Replacement nological; improvements^ Which iri
to replace outdoor cooking would
to be devoted to advancing all le-^
turn; will /decrease- costs; so /that
has been at a low ebb-during the
mean to our industries as well as
our lower income bracket families
gitimate competitive business inpast four years. It nyiil take years will
j..;
be able to purchase products in the improvement of the nation- terestsi'j;;/
to replace1 this wornout and obso¬
It is with these general goals in
normally out of their.? reach/ We hl health of the underprivileged
lescent equipment. • * • "A "*
saW this process well illustrated jpersons in * mafty foreign coun-: mind that a plan has been devel¬
oped for strengthening the pro¬
{ The.Perit-.Up Purchasing Power > an the case of the radio, which tries?:/;:;/H;>/^
'
tame down from $200 to $20 or
Under
Of ;course" the question arises gram of the; department.
r jI;have referred in-some^detail
less, per receiver, in the space of at once'howvwill; these' countries this plan, the department will un¬
jto the pent-up demand for-vari¬ a; few .'years, thus providing al- and these people be able to pay dertake to provide:*
r
ous types of products now facing
Revitalized
foreign
trade
for the things they need?
In the •"l.
r
> •
us.
I should now like to speak of post universal ;nse,.
1 ' Another
■;
these > purchases may promotion services.';/:/
way to avoid deflatiori beginning
Ithd purchasing^ ;power ^or rincoine
.•1 2. Management aids, technologi¬
Which is ahiinportant factor to be will bd to develop Our distribution have to-be financed through the
cal aids, marketing aids, and oth¬
to credit facilities provided by the
iconsidered,, siqee it along ,with Sand 'X advertising ' techniques
er forms of direct service for busiBretton Woods program and the
Shortages of goods.'is' acting" as a make mbre readily available and
Strong;inflationary infhwnce,/ More/acutely desirable; the prod- Export-Import Bank. • We "are, : * 3. Strengthening of the techni¬
however," helping many countries
j The American people savhd pets; Which we have not been accal bureaus and offices of the de¬
to inventory their own resources
during the war years some 135 bhSibfted 'to^'usin^. VStill another
partment. : n" >
billions of dollars, a sum greater important way to avoid deflation both natural and human so that
;; 4.: A; strong, balanced program
than thd entire national income and keep our wheels turning with |ive> can balance our exports eventof current and "benchmark" sta¬
iduring any ; year prior' fOy 1942. iresultant full employment will'be ually- with " their exports; to - us, tistics and a complete analytical
Persons with annual incomes un¬ ^;o develop our/foreign trade both We can use their oil/ tea; coTfee,
program
to give business and
der : $10,000
have accumulated in imports and axports, these be¬ olives,-" minerals, -precious * and
I need not semi-precious metals," hides, silk, government current a information
savings equal to that-'of, an entire ing interdependent.
on " the
economic situation and
tell you-of the enormous foreign lace, handicraft,-and the like,
single peacetime year. A substan¬
business outlook,
"'y
, /
tial portion of this will be used to markets that lie waiting for us f "We heed not be afraid of com¬
and in

When Danger of Deflation Comes

The

the Tilling

same

in' even; greater

...

.

.

tjie demand of the large number

:

who never owned a
but now want and can afford
to buy one.
By 1947 it is likely
that the sales volume of automor
biles ^ and automotive equipment
persons

car

•

;

Will be 15 % greater

than in 1939,

at 193^ prices.;
: In the household "appliance
,

v

-

,

field

resulting from wornout mechanical re¬
frigerators; ; washing
machines,
We have similar shortages

'

H

ijroners,. radios,

cleaners,

yacuum

pianos and the like, with the de¬
mand made more acute as a

re¬

sult of; thecropof, hew* families
,

that have been added since pro4

duction \ ceased/It is / estimated
that the sales volume for 1947
Will

above that of

be over 67 %

1939.
In the, -apparel field \ we ' are
short about 40 million men's and
•-

.

boys' suits^to say nothing df large
<^Uantities :M^women's, children's
and infants' rapparel.i //
«•/ •,
7, Our shoe stores need 150
lion pairs of shoes to fill the, gaps
on their shelves.
*'7 v
;v.;
In the plastics field it is esti¬
*

mated that even

if plants should

Work at capacity for the next two
years, the industry could not fill
all the orders in sight.
/The furniture and house fur¬
.

;

,

.

-

make important major purchases
as soon as

able.

supplies become avail¬
•-

..

.

However, when this urgent Re¬

j.

This advertisement

ultimately satisfied, we
knay - expect a - self-sustaining pe¬
riod during Which -purchases will
depend on 1 the current incomes; of
is

mand

our

'

workers.

^

.

j, v,i,

fv

products,

chemicals,

'

In the field .of transportation
equipment we have-great ^quanti¬
ties % of unfilled and: prospective

,

; orders/ ;■? Our

;

,

•

„

v

,t

».? • v» ;

v ^

,,

securities
..,

:railroads are badly

rpn down;' locomotives, passenger
'. cars and freight cars need to be

replaced;
road'; beds
improved,
bridges repaired or reconstructed.
The strain on the present equip¬
ment has been unusually heavy,
as
illustrated right here in the

-

city of New York in the number
of passengers
vania Station.

from
109

"using the Pennsyl¬
This number rose

million in 1941 to over
million in 1945.
Nor do I
61

heed to tell you of

1

greater by 1947
,y
:
'
.O




129,242 Shares

that

& Company

Common Stock
(Pat Value Jl Pet Share)

prevailing

the

of

in, view

jU E* Carpenter

It is. anticipated

brackets.

come

high wages, about one-half of this
number will continue to remain
in their new

higher income brack¬

et, with the result that this group

jwill become potential-purchasers

Copies of the Prospectus may be obtained in any State only from such dealers partici¬
pating in this issue as may legally offer this stock under the securities laws of such State,

for which it had not 4>een
despite
the increase in the cost of,living.

of goods

in

the

We

market heretofore

thus faced with a tremen¬

are

purchasing power that only

dous

another

wave

|

We

see; this

can

<

,

new-purchasing

exemplified in

some

people

who

formerly

all over
particu¬
Madison

patronized

\

a • v

"y

-.

>«,

v '

--

'•

"' :•

"

V

,.

'

'•

•'

1' :

:

s-f •:V

'

j,

•/

••

A. M. Kidder & Co.

March 27, 1946

Stroud & Company

Dempsey & Company

Hirsch & Co^;

York in
working

Burr & Company, Inc

'

re¬

'?

,

of the
types of customers patroniz¬

power
new

strikes

of

duce materially.

job

try will be 75%
than in 1939.
y

1

■

,

required in the motor ing our exclusive shops
transport, bus, subway, street car the country. We notice it
and shipbuilding fields.
It is esti¬ larly in the City of New
mated that the sales volume of the
our
Fifth Avenue and
transportation equipment indus¬
Avenue
shops,
where
tion

v

the rehabilita¬

;

ts .not^ and is under no circumstances to be construed as, an offering. of these
for sale, or, as an offer. tobuyror as a-solicitation-of an offer to buy, 'any of such securities. The offering is made only by the Prospectus.
,
.

,

>

In the war years, incomes in¬
electrical and non-electrical itta- creased % rapidly; and the; $ trend
chinery,' rubber; products,* stone, Since then- has been to keep them
at a high level.
clay, and glass, products, petro¬
leum,8 coal, processed foods,: print¬ [4 Si* millibh families have moved
ing and publishing, paper, textiles up from the "under $1,000" brackahd lumber all look forsubstan¬ jet to the "$1,000-$2,000" bracket.
tial increases in sales volume/run* lAltogether, somp .10,000,000 fam¬
ning. from -25. to 75% greater by ilies have increased their incomes
1947 than in 1939.' 14 '
7' 1 sufficiently to rise into higher in¬
'Tobacco

«

'

.

nishings -industry'; is
swamped
With unfilled orders, with a :• pro¬
spective sales volume that will to¬
tal nearly 50% greater by 1947
than in 1939.

the

sound national econ¬

our

It is constant technological
improvements providing greater

Japan, and China.
I saw destruc¬
tion that will take many years to

construction

.

.

more

>

as

down into rubble and stores

;of durable • goods j once more in
sight with the settlement of our
steel strike, this figure should be

we

buys

Canada

tries put

Closed, down or with only a

probably: exceed those of
record-breaking year of 1945

which

from us than

dition to the islands in the
such

19

An ex¬

cellent illustration is

I visited in ad¬
Pacific,

Secretary of War.

the

,

Square feet. To this must be add¬
nearly 28imillion passenger cars ed repair' and. rehabilitation of
on our highways.; At; the present buildings
in cities and farms,
time there are less than 23 '.mil*, many of which have been sorely
lion, practically all over four neglected during the depression
years ? of > age, with most of them years and war years.. Construc¬
well .past the normal: prewar ^re¬ tion programs of public buildings
tirement, age. i We need to-fill the and; highways; must also: be taken
urgent demand for five million jinto consideration.
.
t
cars that this gap represents in
"These
construction " proj ects
order to bring us up to prewar
Represent a source of employment
level. We must also'replace cars directly and indirectly for about
that have been outworn, which :10% of our entire working force'
represents an even greater num¬
jwhehin full operation.
^
ber,- and 7 finally, we must meet
j
During the war our capital

.

military economic mission to the
Far East at the invitation of the

would

and the rest of the
about, six ; million

feet of space,

;

material

best

joint deed,

I recently returned from a

■

it

products

and

the

Canada,

/

j.Foreign Trade Outlook

found evi¬
dence that would r indicate retail
sales
for
19464 in 4 this
region

i New

space,

U.

Second

Commerce

York City is at

First let us consider the i deferred
demand for goods of all kinds.
/ At the end of 1941. there were

;

industrial

and,

five million workers.

check which I recently made in

the

000

year.

per

in the postwar period, thus
providing
employment
directly
and indirectly for, an additional

have they been as
liquid nor as free from failures as
they are at the present time.'From

"

:yi What is the business

to

below

were

year

nor

petition resulting from industrial-/
izing these countries. It has been
our experience that the greater a

three billion foreign country becomes indus-j
We will have trialized, the better customer it be-j;
raise it to 10 billion dollars per comes, so long as it specializes in1

ports

dollars

retail merchants enjoyed such

prosperity,

ough of Brooklyn alone needs 30,new hemes. >: As for commer¬

Excellent Business Outlook

increases over the corre¬

sponding months of 1945 by about
;15%.
Never in "our history have

cial

the

v

including resi¬

dential, industrial
construction.

procedure to avoid industrial con¬
flict might be set up perhaps on

ly eliminated strikes.

showed

in the countries
Before the war our ex¬

equipment

overseas.

popular-priced stores are now
doing <some of / their important
quality shopping.
?
: The
retail trade has for the

the

Industry

Construction

tal

.

// •

7

Incorporated

M. M. Freeman &

Conine*

.R.

•/<'

:

t.

1652

THE COMMERCIAL & FINANCIAL
CHRONICLE

Joe Warren Vice-Pres,

Securities Salesman9s Corner

of Dallas

Is

Thursday, March

a

Rape Co.;

July, 1945, stated that

the

se¬

curities

curity markets "are being whip¬

Somebody Should Introduce Mr. Higgim

Andrew J. Higgins of New Orleans should meet
Henry Kaiser
and ask him a few
questions.
Both of these esteemed industrialists
have been doing some
public financing lately.
This has necessitated
contact and dealings with the SEC. The manner in which

Mr. Kaiser's

Municipal Department.

financing was expedited and cleared through the Commission, and
the obstacles which Mr.
Higgins had to face only a few months later,
certainly is leaving a lot of people pretty high in the air.
\
C One thing about Henry Kaiser, ever since the war
started he
-

has known

Andy
a

'

what side of the bread his butter

on

Higgins

shouldn't

not

manner

have

popped

off

spread.

was

several

on

„.

back in Wall Street

tion of Jos B. Warren as
VicePresident in charge of the firm's

Mr. War-

,

Maybe
in

never

millions of

made

an

dollars worth

of

stock

in

a

extent

of/the

final

Joe B. Warren

have it that somebody resigned from the New
Jersey political
just about two hours after the SEC paid him a visit* It was all

light for Kaiser-Frazer

to

sell

at

in

15

the pre-issued

market, but

it. wasn't
according to
.

hoyle for the Higgins stock to do 'the same.
Whether the charges and rumors that have been
going the rounds

.;

regarding this entire affair are true or not, is hardly the issue. Cer¬
tainly it is not the fault of the public, and the
Securities industry, if
such suspicions of evil

there is

doing

rampant regarding the SEC.

are

Where

much

as

indecision, lack of policy, and, the hit or miss meth¬
laying down rules and regulations, as has been the case with
the,Commission in the past several years, it is no wonder that
ods of

confi¬

dence in that government
agency is at such a low

point that security
dealers and brokers don't trust the
sanctity of their telephone con¬
versations on important matters.
We haveheard that
some

better known
every

underwriting firms

day business matters

over

in the Street

afraid to discuss

are

the telephone.

of the

They don't know

the profits of enterprise were

pointed

of

manager

the

strikes

of

their

having

censure

by the SEC.

dragged

name

That's

a

pretty

low state for the Commission to
have sunk in the eyes of
many of

1he people in the
industry.

It's time for

a

complete airing of this

Whole business.

.♦

v

/

in

luncheon

a

years ago

was announced at
given by the firm in

One

analytical j udgment of critics

watch

that most of them overlooked

on

behalf of. the > firm .and

its employees.

Among

large num*ber .of constructive

.

more

than

*

100

present at the luncheon
resentatives

in

p

.

„#

Circular

ori

of investment

market factors which have

rep¬

into

houses

Antonio.

r

play

in

two years.
Mr. J. B. Garrett will
be transferred from the Cashier's

Department

assistant

as

to

in

recent

PHILADELPHIA, PA.—The

,

1945

was

following

unjustifiably

an¬

into the

Wall

is

Frank

E.

Co., Inc.

&

( J!

prolonged period
Day

was

real

a

elsewhere
for the

phobia

the

so-called

a

itself—to

becoming too bmir

were

the Federal Reserve Board

forbade

all

trading of securities

margin. The Chairman of the

on

Board

explained his fear of in¬

inflation

flation and his theory "of

Huhn, Jr.; John S. P. Makiver,
Penington, Colket & Co.; George prevention. And
L, Morris, Hornblower &
Weeks; writers began to

new

a

warn

of

crop

the public

Frank, L.

Newburger, Jr., New- against the pitfalls of speculation
burger & Hano; Edgar Scott,
in securities.
/
'
' *'
Montgomery, Scott & Co.; Charles
Let us take a clear and careful
Sheridan, Sheridan, Bogan Co.;
David S.
Soliday, Hopper, Soliday look at Wall Street as a market,

inland

mar¬

50%

up

or

pretty

loofc

sure to

But the farmers, in

situation

methods of. Wall

by

raising

than by heaping
the market place, :

,

-'"v

V;

>s

'

!

HV'W*

—

ig'fji

'

—

V

i'.

??

rV;*: •;

—"h1

The Increased Money Supply *"

Another

evitable

recent

pockets

is

years

income,

of

which

only $71' billions ^ in

was

that

full

were

National

money.,

security

justified and in¬

were

in

people's,

why

reason

price rises

1937—:.

the best year in the whole. <iecacie/

of the 1930's—^increased to about

$160 billions in 1945.

The money

available for investment in 1937,
measured

as

by bank deposits in

Federal Reserve banks, was under

billions, whereas in

had increased to

over

Facts such as these
which

1945

are

the

ones

been overlooked

have

it

$60 billions.

by

recent critics of the; stock, market.

to

them',

giving consideration
accurate market ap¬

an

praisal is impossible. With nation¬
al income

more

bank deposits

it

is

natural

only

doubled, sindi'
that

large

a

of potential investors should,

crop

be

than

practically trebled,;

looking

-•

bargains., The

for

Over-the-Counter Quotation Services

V:32i;Y?ars#illSiii|

Co.; Edward J. Tague, Jr., Turton &
Tague; Henry G. Weeks,
Weeks &
Co., and Spencer; D.
Wright, Jr., Wright, Wood & Co. !

and

try to

ahead. If danger is found to exist,

-

let

us

determine

and how to

of stocks

on

Exchange
1,258,000

the Hew York Stock

averaged
shares

only

about;

day,

whereas

the average was

1,365,000

a

/.;/ v,

,

•
.

Established 1913

-

46 Front

Street, New York 4, N. Y.

Chicago




t

PORTLAND,

San Francisco

-

ORE.

—

John

;
J.

Hess has admitted
George A. Mc¬
Faul

!

1937

the

a

ber

Hess

to

&

partnership in John J.
Co.,
American
Bank

Building.
Mr. McFaul has been
Vice-President of Daugherty, Cole
& Co. for a number
of,years.

seen

of

in

the

Wall

first

Stocks

things

Street,

as

a

to

be

factor

accounting in part for the market
performance

in

1945-46, .is

the

when

of

transactions

was

in

the

12

year

or

two, the

volume

of.

last
se-.

market,

Stock prices in

ber,

the

was

in

1920,

was; gen- ;

was

more

than 207% above the 1945 volume..

for sale—merchandise in the form
In

day

erously permitted and the public

of

bonds.

trading

margin

cf January to

and

was

num¬

3,866,000. : Thus, the daily

shrinking amount of merchandise
stocks

i Market"

of shares traded per

appraise and avoid it.
of

"Boom

really justified, the average

why it is there

Supply

day. Back in 1929, when

term

about

Shrinking
One

in John J. Hess Co.
NATIONAL QUOTATION
BUREAU, Inc.

in

shares

volume

6. A. McFaul Partner

-

if there is danger

see

,

wonder is that in 1945 the buying

.

&

~

more

rather

or

danger

an

If the

cause.

critics, proceed to correct

And without

"Boom

that

are

cause.

blame jupon

released

was

Charging

signals
nous,

of

wave

public press, ostensibly to

Bust."

presidency
of
Baker,

new

the market from

save

and* 12

a

an

goes

contrast to the

$21

machinery.

forestall

Baker

V-J

Street

in the

Monday, April 1, betwen the

Weeks & Hafden.

a

Early in 1946

Exchange

the

prepared to

were

^

the' OPA threw monkeywrenches

Philadelphia
Exchange for President and

for

high,

possibility until the strikers and

election of the

a.m.

suddenly

a

100 % the farmers of Missouri and

and

and that

Philadelphia Stock
Exchange to Elect
Stock

ket

i

recognition. Indeed,

Timbuctu, is

price of mules in

come

years,

in

or

effect rather than

mules

the degree of
activity in
Wall Street which many traders

Mr.

Pearson.

nual

Wall Street

a

new

Mr. Pearson, the new
Trading there is sound reason fof
the
Department Manager, has been
to Mr. Jacques the past belief that the market at no' time

Nominated for the Board of
Governors (8 to be; elected) gre
Howard Butcher,
Jr., Butcher &
Sherrerd;t Holstein De Haven Fox,
A. O. Wood, Jr2 &

55 LIBERTY
STREET. NEW YORK 5, N. Y.

supply, prices are pretty sure to
The price level, whether in

rise.

not been given their deser¬

ved degree of

Cd.; John' R.'

Herrick,Waddell

was

assistant

Nominated

request

mar¬

only another demonstra¬

was

V''

guests

were

Houston, Fort Worth and JSart have

hours of 9 o'clock
o'clock noon.

Class A Stock

with

Street

for the error in the

reason

long association, D. Gordon Rupe,
Jr., made the presentation of a

on

$0.60 Convertible Preferred Stock

kind

Last year's action of the
ket

one

the Industrial

and in recognition of the

members of the Board of Gover¬
will be held at the

Company

in. normal
same

nylon
buyers becpming ,/ln*?-sistent and prices going
up,
hose,

en¬

day, and in early February
Average climbed to
the
Texas
Room
of
the
Baker 206.97. This was the highest level
Hotel, honoring James F. Jacques, since October, 1930, at a time
whose resignation as head of the when stock prices were on their
Trading Department becomes ef¬ way down from the high of 381.2
in 1929.
fective April 1.
Mr. Jacques came from Chicago
to j oin the Rupe organization 12 Constructive New Market Factors
Department, it

nors

A. DePinna

of factors
fashion. The

results may be found. in ;the:
markets for butter, beef or

about .to end, the
gained, about five points

and

possibility

thisX set

market

were

market

Trading

for

public

i

of

„

G. Harold Pearson has been
ap¬

welcome

a

been

dangered,
and
in
some
cases
tion of the well known economic
1945, having seen service as a entirely stopped, by strikes. When
principle that when demand Lor
in late January there
Major in the Fifth Marine Diviarose an
goods increases faster than the
overly optimistic belief that the
sipn.

expected

barrassment," andv the

to

a

vigorous new highs were made
early
January,
1946,
even
though production of goods and

where they -stand with the* SEC.

through the mud of

registering

have

naturally serves to
strengthen prices in a period when
the buying power of the
public is
increasing. Wall Street responds

December;

G. Harold Pearsor

some new

They don't know at what point
rule may be
sprung upon them that will lead to their em¬

tion

about 26% in the last six
months of the year. After a lull
in the latter part of

Rupe organization upon his re¬
turn from overseas in September,

Higgins

rumors

race

.

1945,

companies

others
are \i in
of liquidation. This reduc¬
in<: number "Of; bonds and

stocks for sale

in

politics.

handicap enough, but to be penalized by that guardian savior of man¬
kind, the SEC, well that's too much of a handicap for anyone. The

of

Many pre¬
public
utility

in

liquidated,-and

Dow-

ren, with 19 years experience in
the securities business, Joined the

enough

recently

half

stocks

course

rise of

charges to keep a thousand Philadelphia lawyers busy from that time
forward until Henry finally
produced an automobile.

suspended you from something or other.
To be a Wall Streeter and
to run for public office
(against a Democrat or a New Dealer) is

are

off the market.

holding

in the
warning
by subsequent action

price,
instead of declining
sharply after
this blast was
sounded, continued
its upward climb
throughout the

company that

place shouldn't have been so active in New Jersey
After all you can't get very far in politics, if your
opponent
can say
something to the great gullible voting public about the fact
that a certain government
agency known as the SEC had

taken

ferred

error

market itself. The
Industrial Average

Jones

automobile, and had nothing else in the shape

It is common talk that certain underwriters who
had the

of

is indicated

of assets except a few blue =.
prints, at the price of $10 a share; and a
few months later had the
temerity to double the dose at $20 a share,
the chances are the SEC would have cracked
down with

deal in the first

.

By

virtue of the fact thaf banks
gorged
with
money,
they

priced stocks did not collapse. The

were some things that
you
doing, you either kept quiet,
Henry got his money. If someone

else had sold

on

off the

was

didn't like that the New Dealers were
or better
still, said YAH! Anyway
had

trading

Money to pay
bonds in many cases has
been* borrowed from
banks. ■

scale not

premature and greatly over¬
stated, because quotations on low-

good little boy; and if there

a

for

again
are
cat-and-dog stocks are swinging eager to make
long-term loans at
through sensational gyrations — interest rates
lower than the pre¬
rising 100% in ten days, then col¬
vailing rates on corporate bonds.
lapsing."
"
'
'
—
:.;v Furthermore, bonds are not the
Apparently that flurry of fear only securities which are
being

complimentary concerning some of the present
administration's labor policies..
With Henry it has always been a
practice to take all the government money he can
get, government
contracts ditto, raise wages (what's the difference if
it's at govern¬
ment expense), and if
not, do it anyway just as long as you are in
right with the OPA and can get some brand- new
ceilings to cover
the higher costs.
Henry has spread the New Deal managed economy
line, played | ball with the Washington bureaucrats, and
smiled,
smiled, smiled.What Andy Higgins didn't know is that you can't
get government contracts, government loans, and build a little two
by four motor boat factory into a gigantic industry without continuing to be

a

for 16 years,
trading millions
of shares on the basis of
rumors,
hunches and impulses. Once
seen

occasions,

too

on

available

the New York
Stock Exchange
has been reduced
by hundreds of :
millions of dollars
by means of •'
bond retirements.

DALLAS, TEXAS—Dallas Rupe ped up by the scandalous opera¬
& Sons, Kirby
Building, invest¬ tions of tipsters and unscrupulous
ment bankers, announce thfe
'advisers.",' That
"the'public is
elec¬

to Mr. Kiiser

ing

(Continued from page
1630)

of

By JOHN DUTTON

28, 1946

went

up

1945, from the low

the high of Decem¬
29.3%, whereas in

months ended

high in

with the March

1937 they went up 35%,./.

THE COMMERCIAL & FINANCIAL CHRONICLE

Jfolume J$3; -Number. .4476

;/jfrnJ2;$or; ili^ ydate ofrHtHe

market;

peTf^mancecln,-. 193"5r37*

September high in 1929 the rise In vthat." period the country; was
was- 60%,
recovering; from a severe idepres*
/,:■
"
" siorii ; Early in -1935>the: security
No tJborrterly Stock Speculation markets began; to advance
yigor^
These ;facl§seem to indicate oiisly, corporation Earnings' Oxthat; |u; comparison withi jsecutity padded, 'employment Increased,
prices in T937. and U929^ the ,1945 and the country iseexhed to he
market in Wall Street: was order? pulling out/, of : the * -^c^homic
Jy,vsound; well-justified: and con¬ slump. By - the end of 1937, iiri~
servative. Indeed,, Wall Street employment had bebm reduced1 to
during .the: recent, warfwas not around 8,300,000, and the patibiial
lucrative enough. to attract; its income that year was 71 billion
Usual, proportion: of the nation's dollars. The highest closing price

'«■

.

played a major* role;in holding straints „upoa .traders. as. well as. to seer the high . production to
the"market down. This element upon company earnings. The num¬ which the public is entitled, and
the veritable missingt .link—was ber of bargain hunters was great higher wages in every justifiable

.

-

v

,

the /relatively low :

earnings of a
number of the.country'& outstand^
ing
corporations.
Taxes,.' price
ceilings, "priorities, renegotiation
and other controls kept war earn¬
ings, low, and the wave of market
optimism/which* surged up after

DoW'^ohes ^Industrial AY^t
better-bargain;! ielsewhere; land age in.l937-Was I94.4,\being apn
stayed away from Wall 'Street. We proximately the; same as-the high
A

-

read in

lot of

the daily

money

press

found

of the

that" the of 195.8 in December, 1945.
r

Stock "Market
Advance

The Extent of

It is reported that date

booming.

the

postwar period there

.a

great increase in net
* i
'z •' ;

rncomesl> i-\f
ed

California

in

made 100%

or

in

1944

better on their en-

and"

entitled

were,

attractive^ to .hold^ the Usual co-

to

established by a study of-the fi¬
nancial /statements it at i tJhry Slef

:?

in California or

controlled, by a ceiling,
advanced .118% from the low of
though

1938 to .the high of 1945.
"Hog
prices did not reach their depres¬
sion low for two years after 1938,

and: then

advanced '194 %

they

what-they

succeed in

communistic country

a

and many of where the government is a
opportunities torship. / >
~
■
in rural markets.
Indeed, the * success
of

o

i

Street

Wall/Street Not
manufacturers.

Considerable

Isolated.:

market

a

as

dicta-*Wall
is

place

de¬

pendent upon the success of busi-*
ness
and of- all other types
of

As to the future of Wall Street;

market

places

throughout, the

country. The Stock Market .is sure
iFIs:tiedru)p with^^-the futqjto
jmarkets for commodities*; farms; to collapse if private enterprise is

labor; and all kinds of personal killed; Private enterprise may be
service;- Millions of \ civilians ere killed unless ,it receives an in¬

jhuhgry^^ for :autontobileS| |ref rigeiv

creasing degree of encouragement.
But if the rest of the country does

ators, surloin steak, smoked ham,
shirts with adequate • tails,• suits

and the entire span of the short
but severe depression of 1938.

the drying

>an

Market.

taches to the fact ^fet stock

iMarket securities during the re¬ able for
investment,
cent war. The price of cattle, even

However,

worth

be

the whole economic structure,

relief Sterie of speculators,
trom.earnings restrictions can be jthem found- betterr

Chrysler's net in¬
significance at¬
come foir^he five:/years spf 1940prices
44 was smaller by approximately
tire'iinyestn^ntin:date:grdves; in 1945, after a long war. in which
tofmiuclrWall street money national - Income inereasedenor* $82,000,000,6^ 31%: thanlearhings
for the five years of 1935-39, de¬
went to California.
mously to unprecedented heights,:
that the earlier
1 As a matter of fact,-there were were only fractionally above their spite the fact
many types of speculation which maximum' level
ih 1937, In rer. pertod^ebntained the ^closing' year
; of ; the- great-*' depression: ofl 1929
were more attractive than Stock
flection of the jatge funds Ovhil^
growers-

■

in

-case

.

/That numerous, companies heed¬

market for farm lands, apartment
houses and business properties is

in

would be

as

where enterprise
jis "ai /yirtufe,- but J they had to

Day, no doubt was at least
partially ..inspired by the belief
that

should be .the

(

employees mUst
are paid, or
and
search far and wide for profit op¬ Wall Street, may
collapse. Theportunities. Instead of centering idea : of getting pay for. doing
their activities in Wall Street, or nothing, in a country where- pri¬
the Chicago .Board of Trade, or vate-enterprise prevails, can only
the Cotton Exchanges, they oper¬ be a resounding fallacy. Even in a
ated
^humetousmarketi places truly socialistic nation it would
! throughout the country,
1 As was scarcely prove successful. Nor
is;
jindicated in.a previous paragraph, any informed person likely to be
Wall Street
so naive as to suggest that it could;
was not sufficiently
enough;

case.

;a free country

V-J

v

resources.

1653

its

land; dresses, hylon hose, and other
Comparative earnings of other thousands of •' articles. requiring
tractive outlets for yehture oaplbig corporations in 1940-44 ver¬ ihanufatithre; /^JMbreover, ihe pubsus 1935-39 show that net Income
lic has the money with which to
hess and profits, of the leading
of General .Motors declined 1%,
buy, If production were adequate,
corporations would be tremendous
American
Smelting & Refining there would ;be; a yeritabie. orgy
aftoft ther War;ithd surprising thing
i
about the 1942-45. marjkef Js.ihaf 10%, :National Biscuit f.?4%, and |of buying "and .consuming,
\American Tobacco: 5.4 %.' A few
The one. thing now necessary to
it did not carry through to a .plane
well above that of the short booim large units which increased earn¬ •swing the country; into; a period
ings Idurihgr: thea war^UbUtt/hOi oFhtgh earnings, increasing wages
in 1936-37.;
:
'/J:-:/:;;/.;/'/
enough to crow too much about,
I.fills true that mnriy?of the low- are General Electric, 24%; General and .ntonting stohdards of living
is heavy production. If labor and
priced stocks on the New York
Fodds/9%JolmS-ManvUto/S0%^ jbanagement •- do thbir part, and
Stock^Exchange j have "goner up dn Packard Motors,; 34%; Phelps
are not restrained by uneconomic
price more than the Dow-Jone§
Dodge, 32%; Union Carbide & laws and regulations, there will
Averages. Back jn 1935 Our Con¬
Carbon, 23%; and Westinghouse, be-much more reason to expect
gress passed the PubliC; Utility.51%:-ci
the Stock; Market to go up than
Holding Company Act/
United States- Steel, when ap-- down. Other types of .markets win
death? sentence -clauses; Thiartookpraised in. this manner, made a be, similarly affected,: and. the
the lasfspark of life?out of/many:
highly /creditable gain of 129 % . country, will have genuine prossecurities, and marked,^jthelon-^
,

part, Wall Street and labor and
industry, and all" legitimate mar¬

kets far and wide; may look

ward to

one

for¬

of the most profitable

periods to Amerietohistpry £ :;a

■«>-/

'

from the low of 1949 to the peak

in' 1945,>The priceml eggs; M a

period, went up " 203%,
while the advance in butter was
104%.
These examples would

Similar

^eem to indicate that

any man
Who remained in Wall Street dur¬
ing World War H was a piker,
because stock, prices, as measured

by ; the 1 Dow-Jones, Industrial
Average, advanced bnlyfi8%: from
the depression low of 1938 to the
high of 1945; From the ,day prior

io the outbreak of warinEyrope

-

-

wardv march&;a^govemmfntat
|n September, 1939,to the dayjn theory which dissipates private
December, 1945, when the highest
initiative'-as :W£ll:KAs?;fQr
security market of. the year was
Subsequent action by the Securi^
Recorded, stocks in the Dow-Jones.
Hes and Exchange cCommissibh,
Industrial group went up pnly
and the integration, reorganiza¬
4b%t while the .approximate ad*
tion or>, liquidation of.numerous
Vance in cattle prices was 71%,
public utility, holding companies
hogs 130%, butter 89% and eggs
has iproven 1 that ;many ^securities:
134%, "

/

'

The

farmer

whp

never

heard

/Wall:street eseapt: ht & ;de?
rogatory
sense,
having always
been told that Wall Street specu¬

lators rare; the world's champion
gamblers* rushed t out ta buy a
<?olt or a hunch
shoats or a;
herd of; calves or an adjoining

which the market

a

few years ago

appraised
as " worthless
should
have been regarded with much

greater respect < ManyI of ;"thenr
possessed enormous hidden asset
values, Discovery of these .legiti¬
mate

values

three

in

; measure

the

last

two

or

in, large

accounts

years

tor/the*^

|afpi'' This r /quality of fpresight iptmSny loW*pricedatocks.:
frU
caused him to belookeduponby
Still another factor has had a
his neighbors as a good-business
man.

He probably made a bigger

profit, and certainly, took a bigger
risk than most, men who bought,
securities in Wall Street, His live¬
stock Was liable at .any, time to. he
stricken by;, lightning or; fire: or
disease or flood, causing a total,
Iqss, Yet this rural trader, in the

of

war

-

■

thattheyears -1935^39,with which
comparison is vmade; constituted

In one of those years

company.

Big Steel had a deficit: Of $7,700,000, and in another it little better
than broke even.- Common stock¬

holders /received

in

dividend

-a

only, one: of/those five years; and
that dividend amounted to only
one dollar.
c?
/:/'

Largely'/because ^ -many
porations

cor¬

make

unable'to

were

satisfactory/ profits,' s'e cu r i t y
speculation was less attractive in
World War: II than in previous

Moreover,

wars.

there

re¬

were

spin*

'

-I -te-

companies

electronics

■'

.

of such

•

in

flashes

the

pan.

mo\ jolt

horse

a

or a

advanced ;price ^levels.

Whether^;they; arp |pp*,
erating in ?Wail^ Stmet; or in tthe"
trading center of a i rural village*
lapse comes at any- early date it
is likely -to? be the result of ex*
Effect of Low Industrial Earnings
<cesses
or - foolishness
elsewhere
t^an in Wall Street, because peo^
pie still have money, and any re¬
wilting of their confidence
be restored quickly if labor

down

do

work-and
not meddle

to

much. -;;rI•'•
i'

the
too

difference

.

In contrast with

SO

Other. February

/figurescom*,

although vthe .blame

lie regional :rcserya?systtolls;play-^

would

/;^:/;.>•::// ipg; Jn/hOhiO jftoncingtopcrationsi
in this district;; Thare^^ are 142 as-.
•Wall'Street at present is de*
spciations, using the .Bank's credit»
pendent to -an unusual extent up*
and;.mailing ;it in their: cbm-/
m uutsid®
develppmento/- The
"Street" would like to see.an un¬ ihwnlttos tp borne, .owners,/com-;
pared with; 102 a year ago*. The;
common degree pf.' wisdom dis*
-

volume:of

advances

outstanding;

played > by /pollticiahsi /;govern^ to
the^e : institutions is .more than.
'mentalbgehcies, IabpY1f^6rs
doublb/that. :of^year/ago, $30,-/
7.51,953 compared with $13,515,839. :
ih^ustrial-managers. l.t would like

79,590 Shares,

:

..

;

able market factors, the

combined
arir

influences of which resulted in
active and
for

note

the

Common Stock

;

($1

■

; ;/..

;

.

/;•

par

value)

,

,

.

.

•

/ r

.•

,

'

.

/

r.\

•'

'

:

|

" ■f1

*'

.

,

j/o/
C

*"
>f"-'y •

«

.

• •

it*'■*

i
>

'<*•• fi-: h-

- - -

r

•

/ ;

•'

.

,

Price $19 per share

■/'
■■try

*•».

f

-J

r.•:

:

//^nJ; '
f

"

; ,-J

fft -f

^

.

^.

x.$- f5$ 'i

•(?*'

Coptescdj the,. Prpjppctus may be bbuutfedf id
pdiing in this issue asjpay legally offer this stock

siW

under the securities laws of such State.

-•Mr$ Sift'tY?

Bari'^Goinpah^I^

.

HirschStCo*

A.M.Kidder&Co.

DempseyStQompany

steadily rising market

securities,

which

'

»

v.

Corporation

Many favor¬

it

absence

is necessary, to
of, one feature

ordinarily, is

required

in,

"j; Further light can be thrown up¬ reasonably full measure to create
a
genuine bull market. / Indeed,
on the present status of the stock
the absence of this factor probably
price level by comparing it with




»"

:

,;
/'

.

cultivator at current

All; menof are alike when it comes to bar¬
of gain snatching, and it r makes no

community. Peace

-.found .investors • with . plenty
•confidence and pockets full
money—two factors which do not
"(breed a market collapse. If-a col¬

politicians

,

,

General Instrument
.

ket for his holdings if the time new; ideas of great promise. Per*
combs 'when sale seems advisable.- sons;who.are attuned to such
Thus far, not once since the mar¬ developments would have .been
ket rise began in 1942 has the in- dumb not to- buy the stocks,. an.d
-vestor been faced with any press* to sell them at a profit is no-more
:ing peed- to become a seller; The diabolical than to sell a house or

fettles

reported

.Administration; In
Washinjgtoh,-1^A tbt^l tof *$1,513^755.
was-;advanced
to
Illinois ; and
Wisconsin savings, building and
loan associations, which was only
9% ' under
the/ all-time, record'
February .of two years ago. The |
advices from the (Chicago, Home'

offering
ihts*
buy,.any ;:,
securities.. The o fferhg is made only by the Prospectus,
/

They

.

can

-

Bank

elsewhere.,

:

represent new industrial horizons
part of -the time Upon reliable fi¬ which only spme aiert individualsnancial advice, unless he himself have, hepn,able to :See, ThCy re¬
is an expert, and has a ready mar¬ flect a sound market appraisal of

cent

Gardner, -President,

Loan

have risen in

mere

in

March 11 ta the Federal Home

on

trenspp#/

huya for cash* keeps h|& securities
in a safety vault, acts at least a

to the financial

R.

This advertisement is ;not, andrh under na circupistancQS lQ,be^ eonstrued as,an
securities for sale, or as an-effet to- buy, pr as a wlicitatwn ef an offer to

.

plastics, -./ chemicals,
Outside of Wall Street;/
drugs and some tothbrS?./ /These
The speculator in Wall Street ad^hceaM ^tock prices are hot

end of the: war brought

February

tragedy for which bfneito, buito. a further picture: of.
iWali Street would; have to/suffer,: the; Expanding ^ part vwhicli /this'

,

'

active

most

lending history of the Federal
Loan Bank .of Chicago, A*.

Home

period
Loan Bank added:
tails

$

//ltoU6iay btbUu<ntouCundUly

would be- a

price, from practical¬
ly nothings to many dollars per,
^yes of hiSrheighbbrs, Isrh gentle¬ share, on the strength of Tpmaiice
and earnings,
man, not a. speculator.
;
•
prospects, The same
has been true
Cause for Crash May Come

the

to' the dis-

materials led

of

labor, markets into, a long;

'aldepressto; peribct fo^ thd kteei of/deieneratiou:iit not into^

cbyery o£ many new and :amaiing.
industrial processes and products*.
Electronics
is; a new industry.
Stocks

force, the .security - markets, and

February of this year was the,
second

Production

effect.

supplemental

perity,However,persistentstrikes
resulted not so much from big or
.unjust I. restriction Pf/ brofits
wartime-earnings as from the fact could seripusly retard output.aixd

Chicago FKLB Reports
Large Feb. Leadings

7:;

/(Incorporated):

81
:'X:

Stroud &. Company

Otis & Co.

Butcher & Sherrerd
i

£*■ ft *"'V *

.y

■-

c;

I. r

j "/:

Incorporated

/•

/:,

FINANCIAL CHRONICLE

THE COMMERCIAL &

1654

!

Thursday, March 28,: 1946
■ifil- t

Aie Price Controb Necessaiy
■;Ye. (Continued from

page

1631)

marKet, etc., etc^Amuug tne xew

a

manent.
In

abundance

in

currently

things

as

cause

view

people rwere-6 standing// in
line
hours .to buy a pair., Is that the
way to protect the unprotected?

for the

platform it is so per¬ protection by quack doctors who
busy themselves spreading epi¬
*
: 1
* v '
of this evidence, those demics;/ r 1T* *»'• v

Controls raise such havoc in
continuation of con¬
this country because ours is such
An
overly ambitious govern¬ trols in the interests of the poor,
an
intricate
economic machine.
ment, in attempting to be :: all during this emergency of inflation, This
intricacy makes possible our
are not really asking for tempo¬
things to all people, is likely to
high standard of living, the high¬
Welcome fears, then the people rary extension. They are, in terms
est in the world. Our system may
will
demand
more
protection. of their argument, asking that
be compared with. the intricate
SUch a government might even they be made permanent—as per¬
network of water pipes under*
ufce people's tax money to finance manent as the: ever presence of
lying a great city. We all know
the poor, .v1
a campaign of fear.
But we need not be so pessi¬ how one or a few breaks or clogs
U Not that all
these fears are
mistic about the plight of the poor. in these pipe lines will affect the
groundless! The fear of inflation
city's water \ supply; it may be
and rising prices is the one most In another and more useful sense,
are

fear and money.

;

'

v

v'

<

who request

-

about, most real. Who suf¬
from inflation, and, therefore,-

talked
fers

who needs

Pareto's
ness

in

work
an

how

absolute sense

the necessary

protection from it?

shows

poor¬

is not

destiny of any part

nation. The lowpqss of the
low third in any nation depends
on the average production of that
nation. The poorest of one nation
of any

S

Who.Needs Protection?

A person is harmed, economi¬
cally, if he is prevented from pro¬
ducing or if any part of the worth
Of what he produces is taken from
him. On a national basis, the first
;

of these affects the size of the
melon, so to speak,, and the second
affects the way it is sliced. Infla¬
tion may affect either, and one
Who receives a smaller piece for
either reason thus becomes "un¬

A reduction in the

protected".
size

of

melon

the

forces

most

Everyone i n t o the unprotected

be economic royalists com¬
pared with the poorest of another,
as illustrated by the United States
compared with Asia. The average
person here produces in an hour
nearly ten times as much as the
average for the continent of Asia.
That is why the most povertystricken feW'(per cent) of but pop¬
ulation are able to consume six
times as much of the luxury meats
may

and livestock p r o ducts as

the

class; otherwise, the unprotected average of Asia, both rich and
are only those who; suffer from a poor, and how they can indulge in
changein ■ the way it is sliced. I other; .luxuries almost• iinheard f of,
by anyone there.
f
shall, discuss both.
On*, a short time basis, the poor
There are also the renters, who ;
can .be given a larger share.
One
mel unprotected, and I will have a
word to say about that situation. way to do this would be to allow
Finally, but to be discussed first, everyone to rob his more prosper¬
ous neighbor,but there are Other
is the plight of the poor.
supposedly more respectable tech¬
rt
Protecting the Poor
niques for accomplishing transfers
Any" of
r-\I wish first to 'discuss the pro¬ of wealth and income.
.

.

tecting of the poor,-because it is a these offer/only sbort time bene¬
ihental decoy that gets us off the fits, after which the share "for
main track of wage and price the poor" becomes a smaller and
controls in this emergency period smaller piece because of; reduced
Of inflation. It is an important production.
'
• '
; V
and fascinating subject, but there
The greatest total production
and the greatest; welfare oi the
is not the time to treat it fully.
;f"The poor we have with us al¬ poor, on a sustaining basis, will
ways" At least, we have with lis, occur in the absence jpf controls,
always, the would-be benefactors where each person is free to be
of the poor. They are claiming in enterprising arid to get ahead, and
„

;

,

without

left

except that
carried in pails.
When controls
break our economic pipe lines the
same thing happens.
It drives us
back
toward ; self-sufficiency,

probably
of

water,

more

no

than one-fifth

present level of living.
will observe that no such

our

Some

dire disaster occurred under war¬

time controls; I would answer
true prices i were not/ heid,
controls/were

these

in

a

that
that

large

either ignored or evaded
that was the salvation of

measure

and

the situation.

As to how controls Affect pro¬

duction, consider automobiles, for
instance.
They are a complex
assemblage;of many, many parts.
Lack
of even
one
small/part
makes

lallsfhe rest ofit*useless;

Automobiles cannot and will not

be produced; under enforced con¬
trols. I believe every; automobile
producer knows that, and will tell
you so,

either

privately. The public must
told convincingly that

be

this is true, and why it is true,
otherwise, they are likely to have
to learn the: hard way arid go

without5

cars.

And who gains by

that process? The poor as well as
the millionaires would go without

this country even
the best jalopy
afford, and will even go
"adequate' housing" in

cars, because in
the poor have

they can
without

order to have

a car—one

that will

'

nearly

high-lights the

these days. I refer to the
wheat situation.
Remember that

news

current discussions that these con¬

trols should be continued in order

'

possible the equivalent of what he wheat is too valuable as human
produces. In all truth and veri¬ food, even in this prosperous na¬
fied. by the experience of all tion, for much of it to be used as

infla¬
tion. But the plight of the poor is
not a new and emergency prob-,
Jem, calling for peculiar iheasures
at this time. In fact; it is even less
of a problem now than before the

receives

Another good illustration of the
effects of controls

where

to protect the poor during

he

run.

as

as

history, such is the way to pro¬
tect the pooftyiWe must* if we]
really wish to give them Sustained!
help, discard 1 the belief that" a
war, because the incomes of the nation's economy is like a pack
lower third have increased more Of wolves fighting over one sheep
than those of the middle or upper carcas. Ours is not that kind of
an economy. It is more like shep¬
third.
^
Production is of prime import¬ herds who produce sheep, and

livestock -feed in normal times.
Remember, too^^thafcthe hurhahi
feeding pbwer (Calories )'of grain]
reduced

98% When
spite of an
all-time record wheat crop in this

is

fed

by

85

livestock.

to

to

In

country last year, added to an
unusually large carryover, we
now find ourselves in danger
of
know that the more they being short of wheat for bread.
ance in helping the poor, A nation who
can consume no more than is pro¬ produce the more they will have.
Why?
If you could, for instance,
duced for consumption.
They will quit producing if there sell a bushel of wheat for no more
Anci when I say "production", I are too many ravaging wolves;
than $1.50 as wheat, but you could
mean quality as well as quantity
So much for the plight of the get $1.75 for it in the form of the
•y-ihhat people want, as well as poor. Now let us return to the livestock products it will produce,
bow much. The idea of produc¬ special problem of inflation and which way would you sell it?
tion in any other sense makes those who become unprotected as That is what they
did.
More
If the demands of the

nonsense.

people in a free market do not
guide what is to be produced, the
production figures; are. inflated,

a

result of

inflation;

This is en¬

wheat

was

sent abroad during the first

was

of the poor.

six months, and the amount was
three-fourths as much as we ate,
ourselves.

reduce production, and,

trouble

to

reduce

what

is

available

for

Without Controls

In the absence of controls, mod¬
consumption—for the poor along
^ith the uhpoor. Any haberdasher erate inflatton.!do£s jiblreduce the
must

know

that you

cannot sell
$nirts when there are no shirts,

to livestock than

tirely separate from the problem

^he net effect of controls is to Changes in the Size of the Melon
therefore,

fed

size of the melon
of economic

(national, total

production). In fact,

The basic

cause

of the

price, and it is not
yet corrected nine months after
was

harvest.

Wheat

Heartrending appeals for
to--send Abroad,

orders

about milling percentages, and all
the other similar devices do not

advertising executive it has a stimulating effect on pro¬ change existing price relation¬
advertising does duction. Even during violent in¬ ships, the heart of the problem.
flation, as in Germany' during the Nor will they bring back the
ijjot produce shirts,
jjll The original; work of Pareto, early twenties, production seems wheat that is gone. So we are
Confirmed by many others since, to run at a high level for a long asked to continue, in the interests
$as the scientific discovery of period. At a later point produc¬ of the poor for whom bread is the
he ever presence of the poor in tion is retarded*
staff of life, these devices for pro¬
ly country. His studies revealed With
tecting them. I would say, instead,
Controls
amazingly similar pattern of
that price controls could be the
The inevitable result of con¬
cause
of widespread
hunger in
lequality of income in different
trols, on the other hand, is to
)untries at different times and reduce the size of the melon be¬ urban areas of this country; ' a
land of plenty.
j tnder all sorts of different gov- cause of interference with pro¬
Here is another illustration to
duction. In other words, controls
rnments and conditions. In other
clog the economic pipe lines and show how people spend untold time
rords, in each country there will thus tend to make
everyone char¬ trying to. get what isn't there, at
iways be a third that is ill-fed, ter members of the-unprotected bargain ceiling prices. When leav¬
ll-clothed, and ill-housed as corn¬ or disadvantaged class. How, then, ing my hotel a few weeks ago, I
and

any

must know that

ered with the other two-thirds;

can
are

law." It affords
tis seems to prevail as a sort of
excel¬
atural

an

lent issue for any

aspiring

to

fairly be said that controls
necessary to protect the un¬
it

protected,

when

witheut-d&pm

there would not be this" wholesale

political party Xmprotection? A comparable line
be¬ of reasoning would be to demand

permanent rule,




traced

line of people tQ .a little

a

hosiery store; 427 people in line at
8:30

a.m.

and about 50 still in line

These and countless other illus¬

.;

trations show how controls reduce
the* size

of

the

"production"
tion."
With

melon,

and

in

both

in

at the

1:00

p.m.

-/

cents
These i wholesale

devices

for

helping

the unprotected fail in
their avowed purpose. Their Oper¬
ation can be compared to a
phi¬

"distribu¬

lanthropist: who

would

-

aid

<

the

smaller melon, the
average size of the pieces must be

children

reduced.:

grownups in front; so he gives
everybody, tall and short alike, a

a

Controls

create

emer¬

gencies, and the resulting fear is
used

to

extend

controls

in

the

pf protection;:' Controls, in
other words* breed unprotection

name

on

a/

wholesale basis rather than

protecting the unprotected.
>

So

for

much

the' size of

the

melon.

Changes in the Division/of the
Melon

Aside

from

size

of

at

the

over

a

sports event to

shoulders

of

the

see

taller

two foot box to stand-on,: Or it
be

can

compared, also, to a com¬
medical project • which
gives colored water to everybody

munity.

rather than real medicine to the
one small boy who is sick.1
*

Why do we fall into the trap of
reasoning that everyone can be
protected this way?
I believe it
results

the

from

the

confusion

be¬

the

tween money and real welfare.
melon, inflation affects the way it We forget that money is the means
is,sliced.
Who. becomes unpfo4- to the end, and riot the-end in it¬
tected for that reason?
I am re¬ self,
and
so
are
enticed

ferring now to selective, not
wholesale, unprotection.
If everyone's income and the
worth of their Savings increased
in exact proportion as inflation
proceeded,; no one would lose in
buying power.
For instance, if
they; all increased ten per cent
while the- prices bf everything in¬

schemes

to

by
raise the incomes of

everybody and reduce the cost of
things everybody buys. Even with
prices at zero and incomes at in¬

finity,

we could have no more to
than what is produced.

consume

We

cannot

eat

the

money,

and

for purposes of wearing ap¬
parel and housing it has serious

even

creased

ten per cent, everyone
buy what he could before.
People would merely have to
carry more money.
This would

disadvantages as compared with
other materials: in common use;
This is regrettable,, since money
is soAasy to produce.W. ?
:
hold true, for inflation of 10 %,
So much for the question of the
100%; or 1,000,000%. UBut that is division of the melon, as affecting
not the way it works. As inflation people\ differently during infla¬
." ;//•;
proceeds, some persons are short¬ tion,-.:." 'VVv ;
ed in the size of their pieces; they
Rent
1
j
become '.'unprotected" while others
The; current; housing; situation
benefits
•
i $ ;
* '
'
makes of those who rent a special
Since -1939; the income ; of the
group, supposedly in need of pro¬
average family, has about doubled.
tection; ; I am giving;; rents thi$
In other words, anything that has
emphasis, because nearly everyone:
not doubled in price is now cheap
11 kribw^yeri>includih£/mostbi
by comparison, for the average
those who understand why con-;
family. Any family whose income
trols will completely stop the pro¬
has gone up less than this (dou¬
duction * of automobiles when the
ble) has lost in bidding power for
production of one small piece of
what is available; that family has
the carburetor is interfered with
become brie of the "unprotected."
—says: "Yes, but rents—; I agree
Items thus adversely
^fected as to the wisdom of taking off
by inflation include savings in the
these other controls, but we need
form, of money, or its equivalent
rent control under present condi¬
in the many forms that are loaned,
tions" So let us take a look at
and also the group of items like
that problem.
;
pensions, contracted items, and
According to the official fig¬
slow-moving salaries and wages.
How this group is affected is il¬ ures, rents are now only about
lustrated by the plight of profes¬ half their prewar burden on the
average family because rents have
sors in China during its recent in¬
flation.
From 1937 to 1944, their gone up little and incomes have
about doubled. This point has! 'a
pay increased 58 times. How could
they tfe called "unprotected," with great deal to do with theMpritical
shortage," and- we are
this increase? Because the cost of housing
living rose 515 times, which left likely to forget the importance of
this demand side. When anything
them in a position equivalent to a
reduction in pay from $2,000 to a is offered at a bargain, there will
always be a critical shortage of it.
little over $200 a year.
The shortage will disappear only
Note, however, that whereas some
items of income lose out in the in¬ when it is no longer a bargain.
Suppose rents were no burden
flation race,
we are
concerned
How;
with persons*
The two are not at all—housing was free.
much space would people use?
the same thing. Any person's in¬
One family might try to use all of
come may be one item,, or a mix¬
ture of items.
The number of it, except for the costs of upkeep*
could

■

.

..

,

arid; there would

possible combinations are as nu¬
merous

as

then

be

forty

million too few houses and apart¬

the blades of grass on

ments in this country.

Strange as
"unprotected

the prairie.
In order to identify
the disadvantaged persons as in¬

it sounds, the
dividuals, it would be necessary renter," if he wants a place to
(though I am noti recommending live, is best served by a free mar¬
ket.
A controlled market, with
it) to collect detailed information
rents too low, allows the protected
about the income of every person
to use too much space and crowd
in this country, and to do so con¬
out the unprotected, as between
tinuously (because of constant
the inflation gambler
change).; Then we would J find renters;
will crowd 6ut th'eVidbwdA pen¬
,

that both rich and poor are among
those disadvantaged by inflation.
The control authorities,

appar¬

ently conceding the impossibility
of such continuous

personal inter¬

view, attempt wholesale protecttbri by giving everyone the con¬

trolled price and the controlled
and the spec¬
estate, along

The gambler

ulator in Florida real

Willi.

the widow

on

pension, can

sion.
.

The assumption is

always made

that the landlord is protected and
the

renter

is

unprotected during

inflation.

This is not necessarily

true.: He

may

have less wealth

than his renter; I know of many
such instances.
And under pres¬
ent conditions he is being

penal¬

ized about half in his share of the

dollar

nation's

income.

Is

it

a

controlled crime for the landlord to share
price (if they can find them). And equally in the doubling of • the
buy goods at the. same
the

the

by

rise in wages is

same

more

or

of fairness

aroma

the%

boards."*

allowed,

less, to everyone,

•

name

These

■:

despite

introduced

"fact-finding

boards

perform

thecomplicated^{mathertiatical

feat of adding together a wage
Probably it takes
offer and a wage demand, divid¬
only a few minutes of work to
make a pair of nylon hose, but ing the total by two, and arriving

at

iW

prescribed answer? of 18 Vz

money

that

Has

become

it

is

floating
a

crime

around?
to

own

property in this country, too?
This brings us to the supply
side.
With low rents and high
costs of

building and upkeep, who

is some difference of
opinion on the derivation of this
figure. Some say it can be found
by subtracting 15% from 33%. 1
fThere

.

1655

Number 4476

Volume 163

build :the 'additiari^^houses
these controls,

and expenses) add to the problem,
about like this. Let us say that $6

the only one in
position to do so, because it alone
has the legal power to send others

represents .people's iincomes re¬
maining after personal taxes and
normal savings. ' But we spend

■pari^

for rent? *£ Under

the government is

ceilings,

poses; to violate its own ;
and to send us a hill for

ference.i ^Who

is

■<

the dif-

render^A pror

■

renters, and the; housing
(Re:

Summary

situation.
Needs

"Who

Protection"?)

the

duce

from sev¬

We have considered,

each will

the question of "who
needs protection."
It seems that
from all these angles, the argu¬
ment
about
the unprotected ris

or

amount

receipts, or re¬
of goods that

buy/ ("higher prices");

declare some of the warehouse

receipts invalid ("price control").

of price control
problems and con¬
fusion. It makes people spend un¬
productive time standing in line.
It generates black markets and
all sorts of premiums for dishon¬
esty- and shady practices; if It/in¬
/

merely window dressing for the
real .issue.
The; real issue is
whether we shall continue to ex¬

The

causes

pand these practices of . National
Socialism (of our own brand and

'

goods

fewer warehouse

eral angles,

label, of.

are

course)»{,

but

we

the job for us,,
How do wage

/•

,

do

r

The pre¬

sumption in this plan is that any
wage or price arrived at in a free
market or by free bargaining may
be of a criminal nature; We treat
them as such under controls, and

By the same
rendering my

punish the offenders.
token

I

would

be

the

policy

endless

wprld where tribute to
Jupiter was confused

and

Zeus

with

production:
starved.! r"' 1 '
Shall

and

people

these

or

Later?

controls

are
unwise,
they should be discontinued now.
If they are wise, they should be
continued forever.
The question

is

one

time.

of type, not of degree or of
In my opinion, we should

Those who

for

stored

the

emergency

move¬

coal, food and clothing,
The present coal famine in Cen-i
tral and Eastern China is caused
of

ment

lines

broken

primarily" by

of

communication.: In most cities the

shortage has forced utilities

coal
to

operate::; on

schedules.

greatly

The

will

credit

Bank

reduced

Export-Import
provide
ap¬

miles of track,
providing rails
and other railway equipment for
a
little less than 500
miles of
track. From both programs, China
570

proximately
UNRRA

is

also

will be able to .re-lay

about one-

which ' are*** $o"* >fundav
half of her destroyed lines.
/
the basic task of re¬
"The full extent of damage to
construction.
The
credits will
provide only for partial restora¬ the coal mines is not known. It is
tion of damaged equipment and estimated that about one-third of
prewar
annual product
do not furnish materials for. new China's

systems

to

China's

foreign

trade with the
other coun¬

and

States

million tons

h&s

caused both by mine
damage and interrupted commiinication.
The
present Export*
been

restoration of

of assistance in the

United

tion of 30 to 34

The credits will be

development.

lost,

Import Bank credit will provide
f' *' W
for certain: general repair itemsl
which
"The 10 auxiliary power plants
vary somewhat, as to terms, are:
of 5,000 kw. are to serve as jjk
1. Ten, N-3 SA-2 coastal cargo
' AA+lAfASA
general ' emergency pool, as * they
vessels to be purchased from the
support continuation
can be placed inside larger plants
U.* S. Maritime Commission, $4,tries."

junk the entire control machine
now, not just keep changing driv¬
ers
or
replacing nuts here and
there.

apparent loss of ship¬

9,000
miles, were substantially
damaged or destroyed. At least
1,000 miles of track must be re¬

China's transportation and power

mental

1

Discontinue Controls

We

Now

If

'

of China's

ping during the war.
"■&
"Approximately 2,000 miles of
railroad line, out of a total of

■

•!;

individual. credits,

The

of controls .fall into two groups:

where required, or operated sep¬
those who favor the basic 243,750; 2. Sixteen coastal cargo arately
to
provide
emergency
operated by
of controls, and- (2);i those vessels previously
power independently.
The total
the Army Transport Service, 11
We subsidize abroad and at home. who are being dishonest in sup-;
50,000-kw. capacity will replace
of which are privately owned and
No lone seems'able to tell us the porting something they know is
about one-fourth of the po\yer
five owned by U. S. A., $2,600,000;
total amount of subsidies now in unwise.
/
•
<- £ damaged during the war.
/w
equipment;
Some profess to be opposed to 3. i Railroad / repair
effect, including both the: direct
"The terms on the credits vary
and the indirect. But one Column¬ controls after July 1,
1947, or $16,650,000; ; 4. Auxiliary : steam
Somewhat because of* the differ¬
ist from Washington suggests that some other future date. A person power plants, 10 units, 5,000 kw.,
ences in type of equipment to be
if subsidies planned by the Ad*> either believes in these /controls, $8,800,000; 5. Coal-mining equip¬
purchased. Loan to be made for
ministration for the next year fundamentally, or he does not. ment, $1,500,000. A grand total of
75% of the purchase .price.of the
five credit lines, $33,793,750.
were ^put: into - effect, in addition The calendar has nothing to do
N-3 ships will run for 20 years
The announcement issued by
the question.
to what we have, the total would with
A • control
with principal to be ? repaid in
be boosted to somewhere between which is judged to be unsound in the Bank also says:
semiannual instalments with inj.
12 and 15 billion dollars, which 1960, or *1950, or July 1 of 1947 is
"The ship credits from the Ex¬ terest at 3V2%. China will make
adds further to the pile'of useless also unsound on July 1 and March
port-Import Bank will provide a down cash payment of 25%.
And if the idea js for" about 67,500: tons of coastal
warehouse receipts when*we are 21 of 1946,
These terms / are * equivalent, jtp
supposed to be fighting, inflation. basically unsound for one person, and river shipping compared with those established ;
by, the Ship

(1)

idea

.

and price controls

intoj this pattern?

fit

Directors of

of

Board

,

prefer to hire able, spe¬

cialists like J. Edgar Hoover. to.

The

and

wage

Export-Import »Bank v has - given
preliminary authorization in prin¬
ciple to five credits to China, , to¬
detailed phases of our intricate
taling $33,793,750, William McC.
economic system any more than it
Martin,
Jr.,;; Chairman of - the
Cari T steer
everyone's' car from
Board, announced on March 19.
Washington. "
The details of the proposed cred¬
: We may be seeing a :test of the
its fare
subject to negotiation;
wisdom and foresight of Madison,
which is
expected;/to be com¬
who ^warned that a common pas-'
pleted in the next f few 4 weeks.
sion would come to. sway the ma¬
The credit lines will enable China
jority/ in a democracy; that they
to purchase in the United States
would quickly force the ruler to
a
limited number of ships, railbecome a tyrant; that a swift and
Way and coal-minipg repair ma¬
violent death would be its fate.,
terials and equipment, and aux¬
/perhaps sour descendants .will
iliary power plants, according to
look back on these economic ex¬
Mr. Martin, who said: '■}■■■ ^.4}. f/fj.
periments, which we are discuss¬
"These credits havev been ar¬
ing, and ridicule them as we. now
after careful study to
ridicule the pagan beliefs of the ranged
hasten *
the • reconstruction / of
ancient

Controls reduce production and, terferes with production arid 're¬
therefore, generate wholesale un- duces the goods in the warehouse
while increasing the
warehouse
protection. Price and income ben¬
efits to everybody are protection receipts. This generates the infla¬
tion it; was supposed to prevent
to nobody.
And the problem of
the poor, neither now: nor newly (as Mr. Temple has so well ex¬
critical, is made worse by the ad¬ plained).
verse effects on production.
Reduced* production in time of
Con¬
trols do, of course, offer a form of want makes a hot seat for the
protection to some politicians and control agency to sit on, so it has
been insulated by the use. of sub¬
governmental employees.
In thinking of the government sidies which are an idea borrowed
as
a
device for protection; we from the totalitarian regimes of
must, I- think, consider briefly the ancient, medieval, and recent
what
government
should ( and past. First a wartime expedient,
should not try to do.It should subsidies have become a peace¬
punish those who practice fraud, time "necessity," ever increasing.

predation and violence, 'In this
the government4 can perform "an
Important function, but it has no
mysterious, capacity* in . that re¬
spect. ; It merely specializes in the
fob. j It cannot prevent crime; it
can: only punish those .who prac¬
tice it, in such :a way as. to dis¬
courage others or even sometimes
eliminate the - practitioner^ • All
this we could do as individuals,

made /about

be

price controls.
The government
cannot
successfully guide these

,

tection. byrthat :pfbcess?i c ^: .•
So much, for the: plight: ol the

k

well

going into the
warehouse (in addition to all the
dollars that have accumulated).J
What can be done about all
these accumulated claims, and the
continuing excess? We icart issue
there

Export-Import Bank Credits to China

reap, we should soon want bread."
The same sort of statement could

only $5, leaving $1 as an economic
orphan;
So we are daily.issuing
more
warehouse
receipts
than

bill for the losses; it now pro¬

a

ington when to sow and when* to

I

have

j)aper

here

costing

somebody to

a

little

$6.33.

some

It

piece of
entitles

butter, cheese,

milk, ice cream, beef, lamb, sugar,
beans, corn, cotton, peanuts, to¬
bacco; flour, /soybeans, wool, and
goodness knows how many other
things;
It also entitles me to a
ride on a railroad (a "railroad

one Industry; one

commodity^it is China's present available coastal
Sales Act.
For the other cargo
and river tohnage. of about 183,ships, the loan will mature in 15
Suppose we were, discussing the 500.
Before
the war,
China's years, with principal to be repaid
question of robbery. Some might powers driven coastal and river
semiannually during the last
take the position
that robbery fleet was approximately 370,000
years. Interest is at 3% %.
■
should be approved, and some
tons,
The additional; ships will
"Terms ; on the railroad; and
that it should be condemned. What
cover, therefore, about one-third
would you think of those who
power equipment loans provide
professed opposition to robbery,
for repayment of principal in $0
unsound

for

another.

,

(

-

country: a service in its fight
rize with this, issue.;
Let me re-!
against inflation if I used fraud, ticket"). As n0a$y as I c&h fig-j
years, with repayments in semi^
&ou might suspect such persons peat;?,the question is one,of type,
predation or violence to forcelmy ure, $4.40 of the. full amount; of
having in mind a little project not of degree or-of time../It is no; annuat* installments , during the
represents the cost of the ride and
neighbor to sell his wheat below
which they hoped to have com¬ time for those who believe in eco¬ last 25 years; Interest is at 3%/';!
what he can get elsewhere. Is not the other $1.93 covers the other
nomic freedom to weaken in the
'Xoans
for the purchase; pf
The ride is mine pleted by that date. What would
the government itself, by these things (taxes).
face of charges of greed and self¬
you think of those who professed
controls, practicing or encourag¬ and I pay for it as such; the other
If coal-mining equipment run for
in the belief that robbery should ishness, or other accusations.
ing the very things it is supposed things I may or may not get,
be condemned, but who said their we abandon what is right, the re¬ 20 years, with principal repay¬
to be protecting us against? I though I must pay for them in
minds had been changed by the wards for being right will aban¬ ment in semiannual instalments
submit that a government may order to ride on the railroad. This
don us.
Truth pays no attention
results of a/public opinion poll?
during the last 15 years. Interest
hire a non-specialist to render applies to a millionaire and a poor
to expediency, nor to mob psy¬
I cannot stress too strongly my
man
alike; both, whether they
1
punishment for what should not
itySl
chology.
\
-V is at 3%."
ride for pleasure or to work, are belief that we should not tempobe considered as a crime.
prohibited by
our
government
And
the
government
should
from buying the ride at its cost
also protect us against instability
without also paying for a part of
in our national currency.
As has
somebody's grocery bill (subsi¬
This advertisement appears as a matter of record only and is neither an offer to sell nor a solici¬
been pointed out, (by Mr. Tem¬
dies). Under guise of a program
ple) these controls fail in that
tation of offers to buy any of these securities. The offering is made only by the Prospectus.
for helping the poor and the un¬
purpose, too;
The panicky at¬
protected, we are as individuals
tempts to conceal the failure per¬
forced to invest in a type of eco¬
petuate and enlarge it.
nomic
organization common in
All this may suggest what fur¬
the Old World where the poor have
:
ther might be said about the claim
for
untold
centuries
remained
that wage and price controls pro¬
-

119,000 Shares

tect the

unprotected.;
:

'J

|

♦.

poor.
•/''** <

'

Wafe and Price Controls
:M
:OperateA'A'-- >
.

problem, and the
way wage and price controls at¬
tempt to solve it, is about like
Gur inflation

this.

Here is a dollar

of warehouse

bill,

a

receipt entitling

What; the government is, doing

4

IIow

.

•

General Products Corporation

,

','v'

sort
me

tto some of the gpods and services
of this country.
The number of
these in the hands of the public

i

help the unprotected is com¬
parable to a project to flood the
country with water, to be fol¬
lowed by another project to build
to

COMMON STOCK
Par Value $1.00 per

able leaks in the walls.

/

Jefgegson

directed by Wgsu-

$Survey^ of Current Business,
Js about 100 billion {dollars) more
In the final
than before the war, but the ware¬ January 1946,1 p. 4.
house is empty. So, if we were to quarter ? of 1945 at annual rates:
try to use them,- we - would. find Income payments, $154.5 billion;
them to be worthless^ Just ;paper. disposable income, $135.2 billion;
$107.0
We call it wealth and savings, but consumer / expenditures/
We;Should ;think ;of~ it;; instead,/ a? billion;; net savings of individuals,;
the increased
government 'debt $28.2 billion. Normal rates Of sav¬
that created it. ' These dollars are ing might be somewhere between
lying quietly- at the moment, but the $6.0 billion ..of 1939 and $10
they-are like ^ sleeping volcano billion which would be about 9%
;that ma-y, suddenly, come .to p£e> r.J qf disposable incomes without any.

Share
•"/

'■;/*

protective walls around every
home, farmland factory, and . to
hire guards to plug the innumer¬
said: "Were we

.

•!.

'f

'

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•

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.

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MILL, THOMPSON

A CO

,

r.

INC.

ai Vt' £ UJ'
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.vl 3ldi3T.CC;;

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*,

obtained from the

Copies of the Prospectus may be

v'Qtij? curferif operations; (income e'xbes^savings:J
.

s.

/

Price $2.50 per Share

V;,.y.

v

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of New. Jersey

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undermined.

ROSSMANN

R CO*

1656

THE COMMERCIAL & FINANCIAL
advertisement

CHRONlCllt

Thursday, March 28,1946

advertisement

ADVERTISEMENT
0 '....V':.•

SOUTHERN RAILWAY COMPANY
Z:

Fifty-Second Annual Report -for the Yecir Ended December 31,-1945

'

-

Richmond, Virginia, March 25, 1946.
?
j

To the Stockholders of;

>

.

.

;

<

v

After-providing, for,the

•

of ^operation, taxes

expense

\•

>

and-equipment and joint facility rcnts/tnere Was brought
down 4;0f. fixed pharges-and'for
other ^corporate'needsfcorpo;

<

kOptHERN kAlfWAY COMPANY:
The Board of Directors submits the

following

12.80% in 1944.

report

of the affhirs of the

.Compahyior the year,ended Decentber;31, 1945, which is ..the .annual .report it 1$ cdhtehi?
plated formally itO -present, to the^ stockholders of •the
Company, at the annual meeting ~due.to be held on
May 21, 1946.

:

war

-

.

Net income
(after, charges and
for 1945
amounted to $16,298,721r as, compared with $22,261,814
for the previous
ior tne previous year.
year.
r
..
„
.
■,
r'
'
J ' *
■

A

.

v

v

"...

v

(

\

r.

>

Part I of this Report will state

-.

'•

-

.*•'

.

*

*\\

*'

'

'

r

'

*

•

the facts and figures

attributable

to 'the

"war.

period," 1940-1945*

I.

■

•

•

:

follows:

•'

.

V <•-

iG :r.

i*;

,

jt*

»•

-.i

-/rv

*\ *J

f
"•>

*

Year

'

■

J.Y/'

i

.,i

-

?.

:

'

i3 "
!

;

j

jf

■

7vl*

r;

After successive increases iir

year

from $105,905,395 in 1940 to $260,978,544 in 1944,
the Revenue, from; Operatidn bf the
.railroad, in 1945 de-?
year,

jcllned to $247,536,833,
The

volume

of

a

The.

handled and the receipts
year Were:'
J

•

*

•

-1945

Freight

moved'

(tons)

U3,6C>5,131

•

Average distance moved

(miles)*

1944

'

•

235.97^

Ton

$174,307,392

$166,821,086

•

Kumber of

passengers_i^_j__i__ *"
13,465,541 , ?
Average jouniey ^milesl-^w^—»
2
2
193.51
Passenger mUe& ^_._^^iJi^_-_-2,605,75e,203
1
per

passenger

mile;

Total

-

"

passenger

*

*

*

.an

*

0^0
$59,270,726'!

.

1

'

Freight revenue for 1945.amounted ta
$174^97,392 and
revenue to $57,361,906,
declining 0.65% and
3.22%, as compared with 1944, respectively.
V
'

The proportion of
passenger revenue to. iatal rervenue
relatiyely high ratio of 23%, thishiore^
than-normal proportion of
passenger

.

Tevenue.-being ntr <
in 1944,- to the extraordinary movement of
the armed, forces during the
peric^ of hostilities earlier in

Ahlne

carrying

Company

therein

During

forces, and on regular trains the Company
total
of 12,069,357
passengers, more than half of this number,
being service-personnel
*
•
enmrinrAd

Of

December

31, 1945.

•

,

.

■•-■I

Y

.

y

:

-

-

;^

Operating Expenses for 1945 amounted
an

increase Over the year 1944 of

$159^711,715

to

'

$173,945,28(5,

$17,033,799,

may be termed

or

the

This

10.86%.

Operating Expenses for the year, their-increase of 1.78%
the corresponding figure
foy 1944 being due to the
relatively small decline in the volume of freight and

years,

quarterly

-j

'1

rSf
was, not

foSaM ^

era

to

follow,

so

equipment because a higher standnecessary^^^^attract andbold competitive^^traffip*
Most important was the fact that wage costs and ma¬

ard

with an increase

supply prices reached

imperative to reduce
.

*num

a new high' and it was

man hours and to

hold to

a

mini-

Way, and $13,853,563 charged to Maintenance of
Equip¬
For

the year 1945,
Railway Tax
accruals for Excess /Profits

munitions

Accruals, including
Taxes, amounted to
$43,044,685, as compared with $66,641,178 for 1944. The
reduction is attributable to the combined
effect of less
Operating* Revenues with greater Operating/ Expenses.
Contributing to the latter was the charge out of the

as

of gross

of every dollar

revenue.

rated

The

Y

out of each dollar of
revenue, were as follows:

JIRL

Maintenance, of Way..
:

Maintenance of Equipment.^
Traffic ■■ exoenses—
General

—

expenses.

incidental expenses.




1945
30.580

28.690

12.750
22.320

..

Transportation

15.700

1944
11.740

1.290
2.220

1.900

1.110

1,100

.990

87.660

65.660

between

war

'

1

supplies,

^

all

A
.

.

the more important points;oh the
System,
and a program was put into
operation for more expeditious
handling of cars in terminals, both in through service and in
the placement and despatch of loads for
consignees and shippers.
The programs of
improving shop machinery and practices,
and of installing labor
saving equipment, ditching and other
roadway machines, and highway trucks used by the Maintenance ;
of Way Department, were
augmented; the long-life tie installa¬
tions were continued with
consequent saving in future main- ;
tenance,
and
a
comprehensive program of improving
com¬
munications, so vital to efficient operation,; was
vigorously

//puraued/GGG/;;;,^^
;
To keep step with the
necessity

60.120
25.540

highly remunerative

With the purchase of Diesel
power, light steam power iti
substantial quantity was set aside for sale or other
disposition,
thereby obviating considerable maintenance; heavy repairs were
effected on a large number of cars, and others, obsolete, were
scrapped; a Diesel running repair shop
was
built and the
Company's plan of modernizing its mechanical shops was con¬
tinued and expanded.
/Several fast freight Diesel-operated schedules were
Inaugu¬

Projects, just men¬
tax reduction of $11,514,827,
of which $7,314,827 was
applicable to the year 1945, and
approximately $4,200,000 to prior years. Despite the
a

comparative ratios of the several categories of
Operating Expenses, expressed iri the number of cents

and other

mentioned earlier in this Report.

A few examples of the results of the
Company's efforts
in 1945 to meet this problem were:

unamortized cost of National Defense

more than 170 out

For

example, immediately after "VJ" Day, the average
freight revenue per car dropped from nearly $90.00 to
approximately $79.00, due to the sudden stopping of

ment.

in

bonds

of

subsidiaries;

1

»

-

and

-

,

r

/ ?

.

There remains at December 31,1945,
$155,309,221 lii
the credit, balance in the Profit and Loss
Account, largely

Invested in property,

m

increase: therein of $79,831,96(7,

compared with December 31, 1939*

*

Capital Improvements /
J .
.
•!
v As
just shown, during the six-year period, there hav^
been put into and on the property capital improvements
costing the Treasury over $62,250,000.
•
(
Additions to roadway and structures have accounted
-

,

r

.

for $23,680,906 of that amount/n
These additions and betterments include,
many

aggregating $1,970,000; capital charges incident to the
continuing program of falling in. trestles, during the sig
years there having been eliminated more than ten miles
—
^
of wooden trestles, at a capital cost of $4,353,000, in¬
cluding the installation of 16 steel bridges; the erection
of new dr improveriient to existing structures^ including:
stations, office buildings, coaling facilities and Diesel
shops, at an aggregate capital cost ,of $2,885,000; the in^
stallation of additional automatic train signal and com¬
munication apparatus at an aggregate capital cost: of
more than $653,000; and the expenditure of over $2,714,000 for new shop machinery and new roadway machines,
including mechanical tie tampers, bulldozers, automobile
tfiicks, and many other mechanical devices for on-line
rail cropping and other renewal operations.
Between 1940 and 1945, inclusive, the Company's ex¬
penditure from, the Treasury for additions or capital
improvements- to. its; rolling , stock -have , aggregated
$38,588,200.
;
.

.

Within these years the Company has acquired
has placed in service the following new equipment:

ana

New Freight Cars
4 Diesel-electric 44-ton Switch Engines

8782

7

Diesel-electric 600 or 660-horsepower Switch

38 Diesel-electric

Engines

1

lOOO-horsepower Switch Engines
; ife;
U
2000-horsepower Road Passenger Locomotives

3

Diesel-electric

5

Diesel-electric 4000-horsepower Road Passenger Locomotives
Diesel-electric 5400-horsepower Road Freight Locomotives

12

6

g/V

//.A
econdfeiy in the transition.

together witli
thousands^ of smaller itemsi the capital portion of

the' cost of installing new rail and other track material
in the amount of over $7,100,000; new industrial tracks

'

Modern

streamlined

passenger

trains, .being the-equipment

for "The SoutJaerner"'and "The Tennessean'V

.25 Steel Baggage-Express Cars/,

period and for the future, accounting practices and procedures
During
Y were "streamlined," and progressive techniques were
applied in TS.
ments on
,1945 tq the ticketing and
accounting for the Company's pas-

G'isemger -traffic*--'//;//;//,;

r

■
'""

•

-

the use Of inaterials. : Added to the pibbfem of con-

in the average revenue per ton and revenue
per car.

necessary in the interest of National - Defense,
between $380,002 charged to Maintenance of

-

*

was

terials and

CorpbratidhJ

<c) To disburse dividends to the stockholders aggregating
nearly $20,000,000 between November 2, 1942, and December 15,
.1945, the first since 1931,
;

.

wouldbel^^needed/ ahd'imihalntenahce of'way1.

pany

decrease, tax#* took

•

(a) To put back over $62,250,000 into capital improvements
to enhance .the-efficiency of the«pvoperty;
I
" (b) To accomplish "debt retirements" in excess of
"$91.600,0w,
including the acquisition or retirement Of interest and dividend
bearing securities on which the Company was obligated, the
retirement of its R. F. C. indebtedness
(a portion of which
was repaid, prior to
January 1, 1940) and the acquisition of and

as

trolling operating costs was the fact that a large volume;
of freight traffic had to be handled at a drastic reduction

tioned, Which produced

1940-1945/ Inclusive

Of the' 1930's, the .Company eh^
war engendered
activity, commence

v

investments

that

amortized remaining cost at the termination of the emergency period of facilities previously certified to the Com¬

the

.

rz ]?•

all of the Company^ operating

and maintenance of

^

as

t
-

During the six-year period, 1940-1945, inclusive, prog¬
improvihg these conditicmsv
-years-{'-th^ Company;:ba&' been enabled
fafter paying all tho thousands of items cdmprisedsiii
operating expenses •(—; including*unprecedentedly. large

required, many adjustments and refihements in

schedules

materials, and in¬
creases in. the unit costs of labor
during 1945,
/.'■<*'.
■The non-recurring
extraordinary charge to Operating
Expenses amounted to $14,233,565, and was the tih-

divided

and

Within the

transportatioh and mainteharice; ih * transportation,- be->
cause more modern
power, better equipment and*better

ordivAiif

over

passenger business for the year, coupled
In the cost and use of maintenance

1%%

ress has been made toward

the Preferred Stock, and of $3.00
Common Stock payable in
on

the highly competitive peace-time

'

Of this total

\

^

years

,u

•.

begiiming; withAthe Summer^1945;/everyieffoi:t -was
directed^ toward putting ther railroad in:
position where
it! could^compete successfully forpeace-time Itraffi^
"f •

-

revenue/

.

automobile box; cars,

' ——'—

•,{

that pmod it
question of how mfudh, traffics
-"could be secured but of how much .the Company'SYfacili
ties? could handle. Competitive efforts were
ties*.could handle.. .Competitive Efforts were.larpelv Tah
Jargely, laid

with that

fiharply as freight revenue, with the consequence that
transportation costs could, not be reduced in proportion
to the decline in

t '•"rV»'

•

a financial back-log^ and With its fixed
charges
high in relation to earnings of the depression period.
'

£:'.:T
»

aside. New- passenger equipment, was unobtainable and
(hostilities with the Japanese in August 1945, and may
fee attributed in
large part to the cessation of the move- - materials land supplies were limited, to essential needs, ment of munitions and other
g ThCse conditions
Continued- -during ;the;firsi? quarter ol
Mgh^class long-haul heavyloading war commodities; the volume of*,
1945, when; signs of the cessation" of hostilities began to
freight - traffic
for, the entire year, however, not having declined' as ; appear,ithen eaxne/ abruptl^r the need fbt adiustment to •

,

.•'■■■ i:-''

annum.

debtedness to the Reconstruction Finance

.

'

■

r

.

:

^ it

-

The decline tn freight revenfiP

as

Dividends

jtfee^war

,

.

$39,664,1-17,' as shown in the balance
reducible^ by items which were not.

through the banks

^

^

,

share on the
installments of 750 each, were continued.
Y/ YHk'■*%
p
Operations and Maintenance

Salted f

"

The Six Years

T

After the lean

tered the period of

.

r,■

.

memherf nfStfna

.^cdvetm 194^^

's-.

delivery of all of which is expected during 1946.

•

and (b) cash of
the latter being

per

8,441 special and

ran

Report); '

14~-1000-horsepower Diesel-electric switchers,' •*"?
16—6000-horsepower Diesel-electric freight locomotives,

and equiprtieiit) %moufnt4<f to $15,871,428,
$3,607,127 over cariesponding: expenditures for

(road

ol

Dividends of 5%

accelerated rate in the demobilizatioii

period. During 1945;the

* * ••

without

;

as

-air

'-'-v." -•/

ing in 1940, needing capital imptovembnte: and addition^
to itl roadway- and
equipment," its" track, particularly
needing installations of new rail/purchases of which hacf
been* reduced during the depressionj with a
large in¬

cleared

,

remained in the

the year and

pl8nt

increase

.

;

tributable,

u

4000-horsepowef

lOOd—'SO' 6" 50-ton stee) sheathed

w

•«

passenger

.

'1** '■?

needs,
sheet,

-

ZMl$

-1' '• ;•

r-2'

cdntinuing program of "debt re$16:426,834/ in addttfoW td a;,
^2,000,000 purchase of bonds of a subsidiary, "
1. »■
»"i - <3) Dividends aggregating $6,894,600 were paid dufing the year1,
at/th»?rateskshown-below, r
•
•»
/*", *
!
r
"(4) There remained en hand "on December 31, 1945, <a) 11, S,
Tax Notes in the principal amount of
$46,160,000, as reserves
against accrued tax liabilities of $40,139,324/and other
corporate

"

,

* \

•'

.

Cofnpan^ used its

resources in

1944. i'
">>
v
???• 12) Disbursements- in
the
tiremenit"i
m

19S.46

-

.

---■

$57,361,906

revenue^'

; ' t6 ,tlie

1

2,687,308,323

-

...

-

!

13^72,869

-

.

Averagejrevenue

;

;

*

--

•

-

•

1945^ (after payment of its.running expenses/ taxes .payable during the year ahd alt fixed
charges)Were as follows:
j
..
X* *^reiu$tiiir-.-.fd£UitL -^150^ capital.
improveihentS,

\

rifles
15.009,130,558*
•
16.033^55,370
*
Average revenue 'per ton mile^j
r
<'1162^ r.
^
"1.1650
Total freight revenue

major items for which the

treasury

65,587,514 • J244.4S

v

•

»

decrease of 5.15% from 1944.

business

^^ "l.

.■

competitive bidding, again ori the interest basis of
per*annum.
In addition, there are now on order:

10.24 *

ipse fit 1945 of the Cbmpaiiy's Fixiahcial;Resources

..a

.therefrom, compared with the previous

'

15.81
14.84

:J

"•;.; iv* •'u'- ■ I'1 ':l-\

Diesel-electric passenger locomotives referred to in thd
1944 Report, but they are expected
shortly. Notes to
payable over a six-year period- with reference to
ap¬
proximately' 75% of their cost have been sold, undeif

.23:41

1945

fey

Operating Revenues,

•

1%% per

$' 3.35

1944

i

(7)

-

"12.61

1943

r

v-Pi.': sr

>•*»

Seven

Bebausb of Iabbr difficulties of the
manufacturer, de¬
livery has been deferred on the six;

.

.

"

:

'

'2't

•-

1000-horsepoWer DlOsel-eiectric switchers and fdtit
44-ton Diesel-electric switchers, • which were
paid for in
cash; and three (3 ) 5400-horsepower
Diesel-electric freight loco¬
motives, approximately 75% of their cost
being financed by
ine,an$ of 24 months'; paper at

'

1942

Operating Statistics

-

•

(4)

of Commdn Stock

-,

1941

•

-

;

Net Earnings Per Share

1940

The Year 1945

.

Jf

—

hi^ income in 1945^ wa¥ ^diiiValeht tof $10.24 per
Common Stock, as compared;with fh4 five prior

years, as
: •

■

of

ance

..

New Equipment,

During 1945 there were received (in addition to the
two. 5400 DiesCl-electric freight locomotives deliverecf
in February, 1945, as mentioned in last year's

Stotjk, the.bal¬

share of

inclusive.
:

U

-t r\ a r*

■*>:-■

/

•

/ The Company's fixed charges were covered 2.19 times
'I
in-1945, as compared with a ratio of 2,55.time^ in 1944.
»' After dividends
of *5% on the Preferred

'

Concerning the year 1945,. and Part II will set out briefly
what the Company has accomplished with the increased;
revenues

taxes)!

.

.

itself and of the partial transition to post-war.
....

..

.

'

year 1945, there ended a cycle of six years,
1945, inclusive, which may .be bracketed and
period of the country's preparation for war,
^fiueu.rux^«ve^i^:v^^'vV.vwfu;^,v^iiUvpu;Muuu.^ui;.;^aj;i;
conditions.?

•

v

to

jwwtrli'fiAvict

■

.

,

.

termed the

of the

•

v;..
'

With the

1940

'

15.355 tons

Thus Nert;- Railway. Operating Income showed for 1945: /
1941^4 t
' £.y"26,925/a"Y> ' *?'■■■ <<"•
-•-/•1942
i
' 38,787
' ' "
;
its third; successive decrease/and illustrated thedifficulty -v
40,733' "
of controllings expense in;a* periods#
tr 1944 •>,
"
vV 47,171-;:"/-;s
:$".■/
■
ascending j prices and increases in -cost per, unit of
-..vXj
1945^..,..,..,.^.., .
,,, 50,659
productivity.
'
Orders for 1946 haye been
placed for 40,000 tons of
Net Income
hew rail.
-J .•
■

Foreword
,

New Rail

D'uri
DUrin^ the si* years, 1940 td 1945; inclusive there
havo^been^aidmeWralrai:foildWs: l§
; #..
have h

,,...

;

m&k

i

I '

'

.

''

/
%'

t

^

this period, the aggregate of the deferred pay¬
account of rolling stock, represented by the

Company's- Equipment T^st or Conditional Sales obli-*

,

Voiume

163

:

y

V.

The management is grateful to the personnel for its
steadfast effort in the trying war period.

s

..

to 1945,7did not inte^
contributed to the long term upward trend

wari years, 1940

Respectfully submitted, by order of the Board,} i

"industrialization" of the South, the re¬
gion served by the lines of the Company and its affili¬
ates, known as Southern Railway System.
Cotton textiles,- rayons, - iron and steel//aluminum,

period etidiiig with 1945; the Comabandoned 169.50 miles of track* ,..v

The Company

,

toward greater

.

;

Tho

■

the contrary,

During the six-year

pany

Industrial,Developments-

<

gations, did notrhowever, materially increase, ,the Com-;
pany "owing; uiider this category asiof December 31, 1939,
$24,059,000; and $26,707,759 at December 31,1945.
;
'.v.''.,;' r.:,; . ; v ■■ ;

ADVERTISEMENT

ADVERTISEMENT'

■;

•

1657

THE; COMMERCIAL & FINANCIAL CHRONICLE

Number 4476

ERNEST E. NORRIS,

thus enters the post-War period, com¬
conscious of having; performed'its

mencing. with 1946,

patriotic task of providing the requisite facilities to Serve
the country'ss war-time; needs; ? Its road . and equipment

President,

,

manufacture, and tobacco—these great industries,
among othersV played their indispensable part# in South- :
ern territory, in the collective effdrt of the country which
contributed so much to the winning of the war.; Their
paper

i
J

\

SOUTHER^
financial Results for the Year

r

In 1944

In 1945

-

I

The Oompaiiy received from freight, passenger:
" /. ■
'
* prospects of continued activity and further increase have
and miscellaneous operations a total rev•
1
•". •
•
notbeen dimmed; by ther ending of ths Waributard'en-'':/
enue ol
$247,536,833 $260,978,544
$
era—except for the meed'of new passenger, equipment of ^ handed as 1946 begins.'
The cost bt maintaining the property and of
In 1945, the cotton growing states consumed 88.4 %
modern design, the purchase of iwhich is in: contem¬
operating the railroad was——
173,945,280 156,911,481
of thO total cotton consumed»in/th^-Uhited^States; andplation.

condition and wolume, 4t is confidently
believed, to handle the coming business of the post-war
arei in adequate

Debt and Fixed Charges

The Reduction of

„

'

j

expansion is in definite prospect.
after record breaking production
in 1945, has announced definite expansion plans in the
territory, including the construction of a new cellulose
acetate and spinning plant of tremendous capacity, to be
i
further
■

During 1945; the Company continued its program of
reducing debt, with the consequent lightening of its bur¬

.*

charges*
to acquiring the balance outstanding of
the Mobile and Birmingham^ S's and 4's which matured

den of fixed
In

•

addition

in the aggregate principal amount of
$i;80(),000f;and acquiring or providing for the redemp-;
tion of various other bonds which the Company was
July

1945#

1,

obligated to Service; some of them: having been acquired
by a subsidiary, in the additional principal amount of

during. 194o:

$461,000, the Company

Jointly with the Louisville and Nashville Railroad Com¬
called and paid off the total issue of the L&N-Southern
Monon Collateral Joint 4% Bonds, due July 1, 1952, Southern's
(a)

pany,

;

proportion so retired being the principal amount of $5,892,500;
(b) Acquired and cancelled $7,277,000 principal amount of its
Development and General Mortgage Bonds, due in 1956, thereby
reducing this Issue, which originally stood at $111,333,000, to
$71,877,uu0 at December 31, 1945, and reducing * the interest
payable on the balance outstanding, composed of 4's, 6's and
tiVa's, to the average rate of 4.89%;
(cJ Exercised on December 28, 1945, Its option to purchase
as
of March 1, 1946, the stamped or guaranteed 9% stock of
The Atlanta and Charlotte Air Line Railway Company at the

'

<

•

•

,

metal is ihtensifiedi

r

-

'''

•

prospective growth of the wood-pulp,' wallboaird
and paper industry in Southern territory is also imprest
sive, being evidenced, for example, by the imminent
consthiction off two additional plantsrto? be |serv6d:b^
Southern System lines, the prospective initial invest¬
ments
^ these new facilities being estimated at more
The

than

side tracks whioh

South.

including the pending reduction from the
acquisition of The Atlanta and Charlotte Air Line stock,
Were approximately $11,900,000 at December 31,. 1945IT
: V On the same basis, the fixed, charges were $16,500,000
«m December 31,/1939, there having thus been effected
a reduction of $4,600,000 a year, or 27.87%, in the Com¬
pany's fixed, charges.in the six-year period. - ^
the Company,

December
cancelled and retired, 22,484 SouthJanuary; 1, 1941, and

31, 1945, there were
Railway-M&O Stock Trust Certificates; reducing ,^ie
number of Certificates outstanding from the original
amount of 56,702 to 34,218, and reducing the miscel¬
laneous income charge thereon to $136,872 annually^
of December 31, 1945.

em

Funded Debt

•

4;

.

funded debt at the end of 1945

-

During 1945# 178 new traffic producing industries wer£
established on the lines of the Company and its affiliates;

establishments were' enlarged.

and 65 existing

:'

Public Relations

*

•

,

fully acknowledged. „
;
The Company continued
newspapers,

its advertising in on-line
in farm and state teacher journals circulated

and in nationally-circulated business maga¬
zines and financial periodicals, with a total circulation

,1

'

;

t

<

<

On
Increase oC

December

December

had investments
Jn land, railroad tracks, terminal facilities,- shops, locomotives, freight and passenger
cars and other fixed property

*'•

COMPANY

On

The

;;

'

1

'

End of the Year

Financial Position at the

Decrease

31,1944

Company

»

!

.

•: v;

;

*/:

>

*
t

-^-1- $572311,07$

of

the; Company had
Investments in stocks, bonds

in

^

„

„

$5,082,98$ :

$566,828,063

addition

and

notes

affiliated

of

;

.

com¬

'

panies ahd other investments
carriod at

Company had eash
and
special deposits amounting to^.
temporary investments in
U. S. Government Notes.
Other 'railroad 'companies and

The

the

owed

others

in

46,160,000
7
j
^

'

.totaled

23,927,453
i

"

1

' ;

equipment

the

—...

„

f\

'

•'

-

*

V

,

,

14,470,000

13,689,502

of

Assets

v
4,518,799

,

unadjusted

and

debits, including items owed to
but not yet available to the
Company
—...—
The

*< -

v

.
,

order

assets

:

72,300,000

19,408,654
,

- r
$11,239,325

"' ■ ■ "

$32,934,682
• ■

Company—._

and

road

good

T$8,932,640r V

■

■

$44,170,007

The Company had on hand fuel,
rails, ties, bridge material and
other
supplies necessary for

Deferred

2,949,657

52,598,362

55,548,019

$628,359,095 $6l9,426,455

Total Investments

keeping

relationship between the
Company and public authority, and with the Company's
customers,: have been cordial and helpfuh-^ind are grate¬
exceptions the

«

Company >

8,791,105
4

......

89,927,519

$760,578,363 $770,505,882

...

in the South,

of 94 million.

showed the

u

,

And

^

,

^

owed for materials, :
supplies, wages and balances
'v
to
other railroad companies,
and- interest • dividends and
rents accrued but not yet due
$34,667,386

'The' Company
v

locally-circulated advertisements, emphasis was
placed on the progressiveness of the Company and the
•following comparisons with 1944 and 1939:
vital part it. Qccupies--as: a transportation agency, tax¬
Dec. 31, 1945
Dec. 31, 1944 Dec. 31.TD39
payer job provider, and customer of local business—-in
Funded Debt.
$194,650,500 $207,820,000 $241,499,500
R. F. C. Notes—
—•27,041,700
the economic life of the communities along its lines.
Leasehold Estates
52,923,6001
52,929,6002
53,154,000
The nationally-circulated advertisements continued to
Equipment Trust Obligations-26,707,759.-: 30,666,658
24,059,000
V
——
I,,
.
nrlrt-f.
be built around the basic theme of "Look Ahead—Look
Totals
$274,281,859 $291,416,258 $345,75*200 * South," and were designed to create a nation-wide
awareness of the territory served by the Company, its
wealth of natural resources and advantages, and its at¬
Includes $8,082,000 of Bonds acquired by the Company or its sub¬
sidiaries since January 1, 1940; >...
tractiveness as a location for industries seeking oppor¬
Includes $5,000,000 of the Atlanta
and Charlotte Air Line Second
tunities for greater growth and prosperity.
The table of

-

SOUTHERN RAILWAY

nearly "swamped" the capacity of the

"4'vi/'

With few

In ' addition, between

l,v., *

<

31, 1945

$16,000,000.;

While these

amount

i

for./T./.
facil4
of the amount received by
;
;

:

TheSe

-

$37,425,885

$30,546,868

—

other companies

•

engineering department of the Company as soon as the
war ended, evincing the determination of "small busi¬
ness" to fiiid its place: in the sun and in the growing'

»

balance of—
paid to

a

Company

hire of equipment and use of Joint

;

:

•' The Company's fixed- charges, 5 on sm annual basis as
defined by the Interstate Commerce Commission, less
•Income from securities: of its leasehold estates ownedtby

;

The

>

items. aggregate' iiv face value -or principal
$18,780,000 . of ' Obligations acquired or pro¬
vided for in 1945, excl^^^
of equipment trust install¬
ments paid during the year.
*
>
" /
' ' t
B v

'

Leaving

v

Company's lines; and the construction of itiea Jn excess
•
* It from those sourcee>«irf—3,729,101;
4,010,044important hyloil plant in the Company's territory is'
in immediate contemplation.
Iron and steel capacity in the South was Expanded
Leaving an income from railway operations of
$26,817,767 $33,415,841
Other inebme derived from investments In
during thd war years by the investment, governmental
sfocka bnd bonds and miscellaneous items *
•
and private, of upwards of $270,000,000 in new facilities, $
Was.
—
:
3,521,283
3,518,811
which should result in a permanent increase in the num¬
bers of jobs and in greater steel production when the
Making a total income of_—-J-J $30,339,050 $36,934,653
Interest on funded debt and equipment trust
•;1
cutbacks, due to cancellation of war contracts, have been
.obligations, rents paid for leased railabsorbed, and reconversion to civilian use accomplished;
''roads, and miscellaneous deductions to•
and the same facts are apparent with reference to the
taled
14,040,329
14,672,838
tremendous aluminum capacity in Southern territory, as
constant search for new industrial uses of the lightweight
Resulting in a pet income of——#
$16,298,721 $22,261,814

major industrial developments are heart- /
ening to those who have staked their future in the South,
as
is the kindred expansion in prospect in automotive
manufacture, lumber, chemicals, tobacco and its products
and in the: great fields of agriculture and coal, the most
hopeful sign of future development in the territory ia /
the many hundreds of applications for new industrial

„

$73,591,553 $104,067,063
43,044,685
66,641,178

Leaving a balance from railroad operations of
Federal, state and local taxes required,^—

.

air

,

•

'<%

served by the

option price of $250 per share, of which there were 15.82&
shares,, and. on the same>date .offered^ to-pay the same price ,
for the unstamped or unguaranteed portion thereof,
namely,
1179 shares, thereby to effect an annual reduction In Company's
fixed charges of $157,000} and
,-t . .
.
.
(d) Acquired $2,000,000 remaining: principal amount of the •Georgia Southern and Florida Railway Company's First Montgage 5% Bonds, due July 1, 1945, after that Company, a subskliary, paid $2,000,000 on account of the $4,000,000 maturity.

;

,

,

The rayon industry,

In the

—
—

Taxes

accrued

but

not due...

.*
,

,

if;

•
.

,

40,139,324
63,515,116
2,284,359. v 2,080,873

Operating reserves^i^wi^fc^iU
of road
and equipment and amortiza-tion of defense projects
i_.,
Deferred
liabilities, S including

;'y

Reserve for depreciation

},

,

$2,691,399 -p
23,375,792 ?.
203,486 /

$37,358,782

"

93,044,784

17,279,153

»

W't

24,438,072

68,606,712

15,062,406

'

'f,

V

»

'

'

;

i

-

'

.....

i,

yet adjusted
The

i

2

Mortgage 3%'s owned

by the Company.

_

Future Maturities
Reserves have

"J

of the

Georgia Midland 3% Bonds outstanding in the principal
amount of $1,650,000, maturing April 1, 1946.
Between 1946 and the year 1956, there occur the^following maturities of bonds on which the
liable as maker or endorser (exclusive of
•terminal issues):
■; .
i.t

]•-;*}

'■

'

Year
1949
'

/

•

c

■■

Issue

v;

1956
^

--.^i—

Principal
^Amount

$' LSbCTOOO

4's_^».1—

Atlantic & Yadkin

12,474,tK)0
44>«00,000
First 5's—-__ .12,770,900,,
Development &' Geh. Mortgage Bonds (originally
/? :

Southern's St, Louis Division 4's
1953 New Orleans Terminal 4's—
1956 East Tennessee & Virginia Consols

1951

Company is
minor joint

$111,333,000)

—

—•;

WQ

——

The
on

Board

November

1,

■

compensatory
pointed out




-

"

„

'

$791,117 $
'* £

/'

>J. /

for the capitalization

of the Company,
The

net assets of $573,163,357

$583,881,993

$10,718,636

capitalization of the Company
consisted

Funded

1

-

v

of

/-

the following:

Debt, including bonds,
trust obligations,
i $221,358,259 $238,486,658

Preferred

has given in this Report an account of
its stewardship during the six-year war period when
more-thait-normal reveiiues were available. Entering the
post-war period, when revenues will inevitably be less,
the Company believes that its plant and its finances are
in shape, the better to serve the South, and to maintain
the owners'

outlined by the "Jour-

~

an

;

Stock..^

Common

Stock.

60,000,000

129,820,000

The Company

wheih • they may# without
approval, give salary in- rial of ;Ck>mnierce''t in;&^ Washing^
i
sases which are to be included ton dispatch,of March 20:
1/ An increase ill /the saiaiy of
I

applications: for

$187,415,006 $186,623,889
-I:
ssaai:

was
:

^

,

liabilities,

etc.

ior

ice irelief: it was

'

Conclusion '

Department's Sal-? that such increases would not be
permissible inJthe case of an em¬
jr Stabilization. Unit issued on
irch 20 its regulations defining ployee earnings more than $7,500
a year, specific authorization; for*
S ternis under which: salary in4
such rises to be required from the
»ases may be granted under the
Treasury Department.
w wage-price policy. The rules
form
employers U of the basis ;' Following are- the regulations
der

,

2,216,747 *

equipment

Treasury Regulations for Salary Increases

as

with deep regret, the death
1945, of their esteemed colleague,

these
reserves

After deducting these items from
the
total
assets
there
re¬

records,

John K. Ottley.

rhe Treasury

brief,

of

and

mained,

individual employee is permis¬

Making
After
tion

a

total capitalization of. $411,178,259 $428,306,658

deducting
from

,'mained
vested

60,000,000
129,820,000

a

in

net

this

the

—

—

i

$17,128,399

capitaliza¬

assets

surplus,

$17,128,399 ,«

there

re-

largely

in-

property, of

i. $161,985,098

$155,575,335

$6,409,763

coiifidehce in their property.

Treasury regulations granted by the Treasury Depart¬
possible, the "Jour¬ ment may be applied to salary
rate schedules,
•■able by the National Wage Sta? nal of Commerce" points out, for
So-called "approved" increases
bilization -Board to correct intra- employers to make salary adjust¬
ments with individual employees granted
to individuals lit '.con*;
company inequities.
t
formity to the new regulations are
2.. Such an increase is permis¬ along the same dollars and cents
lines as wage increases granted automatically approved and the
sible if it is not granted to an em¬
may • include
these
workers who bargain collectively. employers
ployee ■ whose salary is in excess
Thus,; higher paid salaried workers higher salaries in any application
o£$7,500 a year.
'
;;
.;
for compensatory price relief would not fare as well, percent*
V 3. No increase given an individ-*
No applications for approval of
ual employee and effective prior agewise, as wage earners. The ad¬
salary adjustments made in con¬
to the issuance of the President's vices add:
formity with the new regulations
executive order of Feb. 14, 1046;
Such individual increases made are necessary, the Treasury De¬
can be approved^
Under j /te
general approval partment announced.

sible

in

total

credits

^

been set aside for the acquisition

due to others, but not

items

t

—

ii

■

it is not in excess of the

dollars and cents increase approv-

The/ new

will make it

.

.

1658

THE COMMERCIAL & FINANCIAL

The 100% Money and Other
A

(Continued from first page) >
ilocently because of ignorance,
sometimes apparently "on purpose
either with intent to /deceive or
because their; authors.are jremarkably credulous,
/
•-

The

some

and

worst

.

trouble¬

most

type

came a

plan for 100% re¬

serves- circulated in memorandum
form by a group of economists at

the

University of Chicago.

It is
to this group that Professor Fisher
seems most directly indebted.

of. money known to
man—fiat paper money—has at¬
Then came the first edition- of
tained a high rank among the old
Professor Fisher's "100% ■ Money"
monetary fallacies that have been
(The Adelphi Co., New York,
dragged out, dusted off, and of¬
1935), followed by a second edi¬
fered tothe American people in
tion in 1936, Now he has a third
all seriousness as something new
edition, and, in connection with a
and proper and genuinely promis¬
solicitation
of
support
for his
ing in the social benefits it is said
plan, he is offering ai-compli¬
to guarantee.
1
1
mentary copy to the recipient of
;
The devices suggested for pro¬
his request card. Professor Fisher
viding our people with the alleged states "that he is
soliciting ap¬
"blessings" of fiat paper money proval of his plan from
"4,069
have taken a variety of forms,
economists, bankers and economic
ranging from open and direct ad¬ students,"
and,
on
December,
vocacy, generally by those inno^ 1945*.repbrtpd thatf/he had re-,
cent of any knowledge of the his¬
ceiVed 985 approvals.
It will, of
tory or principles of money, to course, be
interesting to learn just
shbtle and indirect schemes of¬ how
many of these 985 are wellfered by people who should know
trained and experienced students
■

.

better.

■ Some
of this advocacy
became so; strong in Congress in
the early 1930's that the Thomas

fiat money law of May 12, 1933
(Sen; Elmer Thomas, Okla.), was
passed—the first time since Civil
War days that Congress had reach¬
ed such

degree of wildness in
monetary
matters.
Fortunately
that law, which permitted the is¬
a

suance of fiat

paper money up to
fc billion dollars, was repealed by
£ saner Congress on June 12,1945.
)' The "100% money" proposal,
popularized chiefly by Professor
rving Fisher of Yale University,
e Constitutional
Money League,
nd Representative Jerry Voorhis

Congress, is
n

illustration of
attempt to foist a prodigious
an

hmount of fiat paper
money onto

J;he American people

by a

some¬

what devious device.

The

amaz¬

Following the
edition

appearance of the
of
his
"100%;

Money,"
able

Professor Fisher
was
to stir up some interest in

the

subject among that group in
Congress whose members gener¬

ally seemed ready to embrace fiat
money-

similar s wild*
Because interest
in, and discussion of, the proposal
or

some

money scheme.

people

that

"All

human

beings

ever devised.''~

\

is that it should be taken
seriously by anyone of responsi¬
bility who has had any significant
amount of training in the history
and principles of money. While
; jmost of the advocates of the
pro; bosal seem to be a
motley assort¬
of

"reserve" proposals which deserve
special scrutiny because some of
them emanate from Federal Re-

Iserve

bank circles and from econ¬
omists, some of whom have been

closely tied in with Government

"planning" agencies.

One variety
!is the Treasury Certificate Bank

jReserve Plan

advocated by Simeon
Leland, Chairman of the Federal
Reserve Bank, of
Chicago, and

'professor

of

troit, and reputedly one-time staff
member of the Federal Reserve
Bank of New York and of the
Board of Governors of the Fed¬

A somewhat

'different variety is offered
by a
igroup of economists employed by
■the Committee on
Economic De¬

velopment,
:

often

referred

to

as

the C. E. D.
The Fisher Proposal

I

.

~

York^ 1926) 1

"cPegidirig~ that; ecQnomists"
-

book] does not reveal to
the?reader just what it is to which

.

did ;not

-v

-

otherwise,
!

let (p. 4).:-"History is strewn with
the ; wreckage
and < records - of
human suffering -caused

that of

was

the; impression that it
churiimy with the "powers-

o, convey

was

League's

genious

devices'
to
'control' the consequences
flowing

broadcasts opened with, a cheerful
greeting by Mr. BinderupJn some

from, inconvertible paper money.
These efforts to create wealth
out
of paper, to make
of nothing, are a

magic,

such

as

the

following:

J

i

4

■it»;




program;

something out
0

our

bers

of

/

the; Senate

members of

-

•.

and

j^eseemsrtEseq

between govern*

Professor; Fisher
The

House,

name

fiat

money;

terly

that

proposes.:

of the

Money League

President's Cabi¬

our

ence a

securities rand

and he appears to
support all

again bid good morning
President Roosevelt, Mem¬

we

species of black
they have always

and

manner

dif f

no

ment

Constitutional

rested upon

an

ut-*

unwarranted

interpretation
"Professor Fisher's plan is no net, and members of the Federal of the
meaning of the "value of
; Reserve Board."
better than many of the others
("Congressional money" clause of
the
Constitution;
Record," June .1, 1939, p. 9187.)
that have preceded it.
In some
and the- League's
members and
respects it is much worse than1 ^Another- device»employed, "hot supporters ■ repeatedly
r'eiteratdcl
some of the others.
necessarily4 as part of Its radio the fallacy involved.
"The
Fisher proposal differs broadcasts, was to appropriate or
They insisted that the Consti*
claim support whether or not it
from iother inconvertible
tution reposed in
paper
Congress the re¬
money and inflationary schemes actually existed or was given. For
sponsibility; Of
regulating - the
principally in its intricacy, in¬ example in February-March, 1939, value of money, that this
six men, of which Professor Fish¬
meant
genuity, arid the cleverness with
that it was the
duty of Congress
which the hocus-pocus involved is er was one* i*om; six universities, to
stabilize the price
level, that
circulated "A Program for Mone¬ since the
covered up."
price level fluctuated
tary Reform" among "a selected Congress was
remiss In its
The Constitutional
duty;
Money League group of economists who are in- and that
only the government
Early in 1939, a group in and vited to signify their approval if (Congress) had the
1
authority to
;hey will." What they were asked issue
out of Congress, whose members
money,
Money; not issued
0 approve was the
were interested in
Fisher-CohsU- by Congress or its
pressing for
agent was not
tutional Money League
fiat money, Fisher's 100 %
program Constitutional
re¬
money.
The view
serve scheme,
repudiation of the although;neither the League nor as to what was good and
Consti¬
fisher's program Was mentioned:
Federal debt by the substitution
tutional money was stated
by
Of fiat moneys (which was hot In the "Constitutional Money Ad¬ Voorhis;
at one of the
League
vocate" of Jan. 1,
called
debt
but
1940, pp. 17- breakfast broadcasts as
"Constitutional
follows:
Money"), goverrimerit-"managed" 18, these six fecorioniists turned up
What- we;are trying to do. is
under this statement: "In
*

.

.

.

its edu¬

cational

to work toward that
greater ideal
of a truly free America in-com¬

Money

work, the Constitutional

1

Nation's

fiat paper

its

over

100%

money,

Monetary Authority,

price-level

stabilization

scheme.

For this

reason a brief account of
that organization's nature and ef¬
forts becomes an appropriate part

Money (But All of It Inconver¬

Fisher has been an ardent advo¬
cate of price level stabilization
by

17-18.

currency manipulation since he
his book, "Stabilizing the
Dollar" (The Macmillan
Co., New

i

i

ta,

Hemphill

credit manager of the
Reserve Bank of Atlan¬

executive secretary. Rob¬
ert
L. Owen,
one-time United
States Senator from Oklahoma
was head of the
was

Honorary Advis¬

Business

ory

the
or

was

Besides
was

to be, an Executive Busi¬

Council

tribunal

paper

Council.

Honorary Council, there

ness

money.
This
would eliminate much of the Govt

and

"honorary
economists, with ;

of

an

membership of

more than 100 pro
fessors of the Nation's
outstanding

debt,

interest, and give the banks
100% reserves—of fiat
money.
When one considers that the de¬
mand deposits of all banks in
the

universities, monetary authorities

United States amounted to
$104,650,000,000 on Dec, 31, 1945, one
can see what a huge volume of
fiat money Fisher would
have the.
Government issue.
As
pointed
out in this author's
pamphlet (p.
3): "Stated very briefly, Professor
Fisher's proposal would hurl this

various

save

verted

*

Robert

Federal

the power to manipulate the cur¬
rency supply by the issuance of
fiat money, he proposes that all

interest-bearing

Nebraska, Charles

Binderup.

one-time

put
in the hands of the Government

ernment's

one-time Con¬

G.

York, 1920). To require the banks

change fiat

was

gressman from

to maintain 100% reserves
against
their demand deposits and to

Gpver^er^waqld
into

'inconvertible.
most
-

-

monetary economists
others tried repeatedly and in

ways
to find out who
these "more than 100
professors

but

Binderup'

evasive and,

so

knows, th^ facts

the

far

300 economists."

This

author wrote

each

of

the

six economists

asking whether "A
Program for Monetary Reform"
which they had sponsored
was

.

were never

matic, and Professor Fisher stated
emphatically that it had no con¬
nection with the League.
An

apparently

a man

different

very

by Binderup to

who had written him about

the

League's support and pro¬
gram.
'He said: "The Constitu¬
tional

Money League of America
and is
promoting the

endorses

for monetary reform that
is sponsored by over 300 academic

program

economists from 48 of

our

leading

colleges and universities such as
Yale, Harvard, Princeton, Colum¬
bia, Cornell, etc. (listed in the
"Constitutional Money Advocate")
under the leadership of six cour¬
ageous leaders (also listed in "Ad¬
vocate")" — the six economists
mentioned above.

-;

;

r

t

,

1

*

v.

ly running. from xnoy^. T, luovj to
inmg ironi Nov, jl^ 1939,* xu1
April l, .1940j-rin
ariy event/ this

Icould riot ? obtain

•

copies

after, the..filths issuer cits,
editor

Congress to fix the
weight, fineness, and alloy of the

standard monetary unit and of
other coin, and the character
and

denominations
kinds

i'i i.

of

of

our

various
Profes¬

Even

money.

sor

Voorhis

of the

and

other

members

League.

;

<

As recently as July 2,
1945, Repi
Voorhis made a speech in the
House on "A Bill to Prevent In¬
flation and Deflation and Answer

America's

Debt Problem."
This
speech repeats practically all the
major contentions of the League

and

Fisher, and is being circulated
by Professor Fisher in the latter's
recent efforts to drum
up

"the

among

bankers

and

4.069

support

economists,

economic

students

who received such cards."
The Leland-Seltzer-C. E. D.

>}

Treasury-Certificate
"Reserve" Programs

\;

Whereas

Professor Fisher and
Voorhis would compel the
banks to, exchange .their; govern¬
ment
securities for fiat paper

Rep.

porting the League's program, but
he always refused. One economist

Q.E.D.* in recent proposals; woulct
require the banks to exchange

me
<

the power of

Professors Leland and
Seltzer and six economists of the

him

"that

it

•

is

-

not

to doubt: that

sucE

money,

part of their securities for special

Treasury certificates which would
be counted: as preserves"; against
their deposits—"reserves"
in; ad¬

If you have
is quite clearly dition

support.

support it

duty to make the names
known;' If'. it : really;be "true that
professional;, economists are- en-,
dorsing your plan biit are unwill¬
ing; to let their names be made
public, the situation is almost de¬
plorable one.bJVly.own extensive
acquaintance - among the :econo¬
mists- of the country frankly leads

'tiofralMoneyAdvocate," apparent

figments of imagination and ut¬
terly wrong.
That provision of
the Constitution refers
solely to

the institutions he listed, as sup¬

maji£ fessional

The League published a month
ly magazine called the "Constitu

All these contentions as to the
meaning of the "value of money"
clause; of the Constitution
were

-FrsherT ir\ his "100% Money,"
part pf that of the Constitutional
fell'dnto. jthe'same error
df^|riis*
Money League. Three denied that
iriterpfretatiori of; the ^^
indneta'iF
they knew anything about the
;provisions' of theTConstitution es
League, two were somewhat enig¬ did

always 'cricket' to -exploit; your ideas
this author
.with a vague statement of pro¬

,

author
r

of:

were

was

as

.

papef

econo¬

leadership

economists

Following the names of
these six men was a list of ,48 col*
leges and universities said to be
"among the universities and col¬
leges also represented by these

reminded

group and to head it, but he de
nied it.

corn

academic

the

six

named]."

available to the public or to Con
; |hat
gress.
It was reported that Pro
; jyoiir
fessor Fisher was to marshal this

effective device

defrauding inno^en^^pxf
.*

.

Various

were,

[then

Varibus requests went to Bin*
derup to name the economists, in

in political
economy."

and

under

answer was made

Its president

wrote

mists

you

-

have yany

kupport^:

to the present reserves#
The total "reserve" ratio need not

necessarily be 100 %y although
could

*

serve"

on the
average, this to be
in addition to present -reserve

re^

quirements.> He suggests that "the
precise percentages might be. left
to the Federal Reserve
authorities
who Would ^operate .within limits

Probably ;the most;active\n)em-j
help-1 was "Charles^ G.. 'Binderup,' and it; bet "6
of^thej; LaagS&;
-Congress; ^ suggests- that banks with
'

{•'d*.r

i|

be.
Professor Seltzer sug¬
gests a flexible certificate "re¬
serve" ratio, perhaps a 50% "re¬

,

it

the

and 1 Fisher's

Voorhis?ds>an -advqcate:; of fiat
;hat-be" and had
widespread and money^Eq^WOUldAhaVeithe
^govr*
by 'in¬ important support. For instance, ernment ?buy .up ' its a securities
issue, and practically all Tuesday-breakfast wilEsucfe money

reserve,

the 100% refers" and that if the
title and subtitle Were
accurately
stated they would read: "100%

Stages

-

v,

League's ■he "Congressional Record^"; and
broadcasting and he regularly introduced, a bill; in
attempting Ctfpg r &»s:\ ■:? incorporating:;;

its

,

business, he suddenly money—the
O'c'orioftiist ariri^upplfed "for^
,

in

.

know their

?

tactics,

Money > League: of America; en¬ mand of our
own economic des¬
dorses-and promotes the 'Program
League."
tiny, which was expressed
*
in
Irying Fisher's 100% Money Pro¬
for Monetary Reform'
(including the issuance of lawful
Although that organization the
posal" (Farrar and Rinehart, Inc.,
money by
principles
of
Government Abraham Lincoln.
seems quiescent; and it
New York, 1938), 41 pp.
that
may be
is#
^
monetary issue and control and greenbacks or fiat
defunct, some of its one-time most
money. ("Con¬
In this pamphlet it was
100% reserves back ;of demand
pointed active members in and out
gressional Record," March 3,
of
1939,
out
(p.13) that "the - title [of
deposits) sponsored by over 300
p. 3183.)
^
Congress are still trying to put of
"•%
Fisher's
the

The major
aspects of the 100%
money scheme, such as Professor
Fisher proposes, can, be trafeed
back to the British
chemical engi¬ nation headlong into a thorough-1
neer- and.
professor ' at Oxford, going system of inconvertible
pa¬
Frederick Soddy,- who
presented per money.- The
presumably good
rhisviews- in .a .book- called
assets of: banks,- and,, the
presum*
"Wealth,' \ Virtual
Wealth
and
ablygoodsecuriti.es of. the United
Debt" (Dutton,

Newj

Mutual. ^tatiori;iot cthe
District :of
Columbia;
Among ^he
t

iri importance' in the face of
this major fact."
\
r *
J
.
;
It is said further-in that
pamph¬
ary

called "The Constitutional

Government Finance,
banks turn over to a Federal Cur¬
■the University of
Chicago,'and by
Lawrence H, Seltzer, Professor of rency Commission their Govern¬
ment securities and receive in ex¬
lEconbmics, Wayne University, De¬

eral Reserve System.

-

decidedly second-

monetary quacks, the
tible Paper Money)."
The last of a
Fisher scheme has had
support of
description of present-day
paragraph of the pamphlet (p. 41)
bne sort or another among
agitation for 100%, or near 100%,
people reads:
"Thus the evidence forces
from whom something
bank "reserves.
quite difirent would normally be expected, us to conclude that the proposal
W
Although there was much about
This is one of the striking features for 100% Money is not a proposal
the Constitutional
for
100%
Money League
good money but for
Of that peculiar
monetary disease
and its tactics that did not
100% inconvertbile paper
readily
Which has afflicted this
money
country,
meet*, the
eye,
a
considerable
particularly since 1932.'
r<
if amount of insight into the formal
Professor
Fisher
i On top of the
objects
to
100%
W fractional
aspects of the organization can be
reserves
J00% bank reserve agitation of deposits in banks against demand obtained from the "Congressional
and he wants
Professor Fisher and his associates
Record" of March 3,1939,
pp. 3183the Government to issue all
and followers, we
paper
have, in recent
3185, especially p. 3185, and from
money and to do it in a manner
months, been offered some new
the League's "Constitutional Mon¬
.Variations of 100%, or near 100%, that will stabilize the price level. ey Advocate"
(Jan. 1, 1940), pp
^

was.

-

tions, and proposals of Professor

appeared to be increasing suf¬
ficiently to indicate the possibility
of some dangerous
developments, currency, and stabilization
of the
this author prepared an analysis
price level, organized what was

of the Fisher plan in a
pamphlet
called "The Fallacies of Professor

morning
Breakfast
Talks,
broadcast over station
WOL^ - the

arguments,^> conten¬

Fisher become

failed.

.,4nd
Binderup;
anv.active paEticipant in
the
league's breakfast
broadcasts, he
inserted the League's
material in

day

,

other

28, 1940

,

ing thing

ment

in the fields of money,
banking,
and
fiscal
affairs, should their
names ever be divulged.
second

less

probably have

Thursday, March

issued. from' his home at
Min* and; the'^persis tent;
den; Nebi'LMAT
supporter; bt'»
Fisher's plan was, and
-is, • Rep;
From March 3, to
June 1, 1939, Jerry Voorhis of
California. Voor^
tie League
ran a series of Tues¬
lis,
like : Fisher
was

"ReservedProposals

them and the world with what he
deemed to be the proper; answers.

Next

CHRONICLE

*-'

•

s

i.

j

'

]

«

.

rieppsita
tf
■

VI

:

fpfilill S:®#i
'

A

,

.

..

THE

Number 4476

JVolume 163

■

'^-4

t

COMMERCIAL & FINANCIAL CHRONICLE

■MMmm

£

Government,

and the
Commer¬

the Banks

National • Debt" in "The
cial

and

Financial Chronicle" of

January 17, 1946.
It was an ad¬
dress made by Dr. Leland before
the Institute of Business and Eco¬

:

committee of eco¬

deChazeau

Ynte-

;yprk;-17, .N. Y., March L 1946).
an44|^een^ reasqhaqJwP sup¬
pose that they rested in large part
Seltzer,

Leland,

and

had been
1 published earlier, although none
I ©f these preceding proposals is
plans which

mentioned.
The Seltzer

highly debatable question
event,
Rep.
Voorhis
seemed to regard the governmentcertificate "reserve" proposal suf¬
ficiently in harmony with his
ideas
of j how
the
government
should manage this country's cur¬
rency supply and banks to justify
his endorsement of it.
He said
("Congressional Record," Mar. 18,
1945, p. 2426): ". .. In the interest
of our country, in the interest of
controlling inflation, in the inter¬
est of solving the problem of debt,
get the banks out of the Govern¬

ably

their recommen¬
dations in "Jobs and Markets" (The
Committee for Economic Devel¬
opment, 285 Madison Ave., New

the

are

posals, but whether or not they are
basically very significant is prob¬

ma—published

Robinson

Proposals

In

apparently, could call
ence

•

/

into exist¬

little, much, or no fiat mon¬

ernment securities

in

excess

is substantially

of the total amount

their demand deposits.

of

He

-•1*4 •'.r*y

-•

Then we
national
debt to manageable proportions
*Leland was also acquainted and have lifted a tremendous and
completely unjust
burden
With Roland I, Robinson's "Mone¬
from the backs of the American

type of

Reserve System—a
statement that fits well

-

from

or

runs

.

.

Aspects

of

National

Folicy,"' Piiblib Finapqe and

>

1 nors' of the Federal Reserve Sysvtem. Wash., D, C,, Dec., 1945), in
which Robinson, of the Board's
-

staff, presented a

similar plan.




creases or

ings

of

Government

could be better

liberate

;;? '!

Seltzer says- that' *Tn
reductions in bank hold¬

regard

securities

regulated with de¬

for their effects

7.111,610

8,233,521

5149,383

.

♦

,

«

•

•

•

•

,

♦

•

«

•

.

,|

.

.

•

.

,

.

,

$

#
r*

•

.

•

,

4,740,903
10,496,179

.

.

15,237,082

y

Earned Surplus

Summary of Consolidated
Balance, January 1,1945 *
Add: Net Income for the year

53^68,662

261,805

.

Net Income

$:'68,805j744

19,527,500

*

.

^ V

,

•

•

,

ended December 31,1945

.

5 $ 12,340,773
10,496,179
$ 22,836,952

Deduct:

9,796,107

..*••••««••»$

Dividends
Miscellaneous

charges (net)

.

♦

♦

.

«

•

♦

.

.

,

688,879

•

Balance, December 31, 1945

*

10,484,986

.

Consolidated Balance Sheet^Becember

31^1945

Liabilities

Rights, Fran¬

Plant, Property,

Stated

chises, Etc. (Stated substan¬

tially at cost)

j.;;

.

tioned

Capital Stock (Par

by United States Govern¬

Value $25 per

of settlement not

ment (amount

determined), less partial pay¬
ments received of

$900,000

•

,

Miscellaneous Investments

.

Debt Discount, Redemption

share)

1,614,052
Preferred—

3,707,452

Premi¬

um

Common—

period ending

over

December

3,466,857 Shares $85,441,811

being

($9,834,384),

amortized

.

.

Refunded

and Expense on

Issues

less

1959,

31,

net

ing issues ($2,507,280) being
amortized over lives of such is¬
.

.

•:?;» ;f:.«

•

70,743,697 $156,185,508

3,182,805 Shares

outstand¬

premiums received on

sues

Capital:

,

Requisi¬

Cost of Electric Plant

•

»

•

•

•

Long Term Debt

138,000,000

,

•

7,327,104
Current Liabilities:

Capital Stock Selling Expense on

f»

Original Issues
Deferred

.

.

.

.

3,368,417

and

hand,

ernment

6onsf

♦

♦

$ 6,713,189

Taxes Accrued

(subject to final
determination)

obliga-

at cost

«

:t

Working Funds ♦ $ 5,782,966
United States Gov-:. '
1

dends Payable

.

y

*

Cash in Banks and
on

Accounts and Divi-

.

Charges

Current Assets:

«

25,017,704

•

1,405,000

33,730,808

■

Accounts

and

Interest Accrued

33,135,893

Notes Receive;

less

able,

$741,650
serve

ables

Reserves
;;

Receiv¬
•

•

•

Contributions In Aid of Construc-

5,096,048

•

1,446,893

Materials and Sup¬

plies,

3,202,569/

cost

at

Prepaid Taxes, In-

.

(Earned Surplus

and

surance

2,634,241

Other expenses
4

96,387,100

Re¬

for Uncol-

lectible

,

Debt
Full people."
Professor
Employment|-(Bo^d*: (^ - Gover^

tary

* «

$ 18,284,843

.

Interest and Other Deductions

failure.

would have reduced our

-j . 4.

■

•

»

•

Depreciation . . . . .
Frequency . Change'Expense . ....
Amortization of Acquisition Adjustments
Gross Income

and a widespread de- inflation. Then every bank in the
redemption would ema¬ Nation would be forever safe

nate from the

•

-Provision for

-

c

mand for

•

«

Earned Surplus Account

♦

.

r

deflation

*

.

31,. 1945

'

,

'

•

«.

•

•

«

*.•

-Operating Expenses and Taxes^^
.Operation and Maintenance
•
' Tgxes^State, Local land Miscellaneous
Provision for Federal Taxes on Income

says

-

COMPANY LTD.
'

fi

,

Consolidated Income Account

If we per¬

that his proposed mit the Government bonds to be
Reserve Certificates "would be counted as part of the required
payable [by the TreasuryJ upon 100% reserves, we would freeze
the demand of any bank," but he these bonds in the bank vaults
does not specify the type of mon¬ and prevent their becoming a base
for a further multiple expansion
ey in which the Treasury is to redeem them. It would appear that of bank credit money. »•; For the
/ if
the demand for -redemption time being, the banks could re¬
Should be. heavy, the Treasury ceive the interest, but since the
Would be compelled to redeem bonds would, in ]e«eqt, have been
them iii fiat money.
The silence monetized as part of reserves,
of Seltzer on this point raises the therefore when they came due,
question as to whether he is con¬ they could and should be replaced
with cash money created by the
sciously or unconsciously offering
Government without capital debt,
a plan which conceals a road to
This
fiat money.
He does not think interest charge or taxes.
that the demand for redemption money would take the place of the
bonds as part of the 100% retv would be heavy "barring a deflaserves
in the banks behind ;alji
tionary policy by the Reserve
their demand deposits.
Then we
•System." That statement seems
to imply that all the causes for would be safe from uncontrolled.
ey.

.

Consolidated Income Account and Summary of
for the Year Ended December

ment's business of creating money.

At the present time the holdings
of all the banks of cash and Gov¬

»

t

a

would

Whereas the Fisher plan

Professor Seltzer, also

SOUTHERN CALIFORNIA EDISON

.C.

any

Supply the banks with fiat money
at once, the Seltzer proposal is
considerably more indirect, and,

*

money-"managed"

fiat

the

rates,

TH ANNUAL REPORT

100%

variations between
the Seltzer and Fisher-Voorhis pro¬

G.
Hart,
Gardiner C.
Means, .Howard B. Myers, Her¬

upon

Money
plan.

There

>

Albert

bert Stein, and Theodore O.

League

stitutional

,,•

.

coursed

of Professor
Seltzer also fits into the desires of

This recommendation

provide the Treasury with
permanent market" at such

"a

by pursuing that

trouble

these low, or lower, interest rates

Nation af¬

headed into serious

ter nation has

and to

It? 4? J

work of the Fisher-Voorhis-Con-

reserve

G.

value of her currency.

to .perpetuate

,

Goldenweiser, who > is| listed as
an
economic
advisor
to
the

nomists—Melvin

designed

is

plan

ing and after World War I andt
which led to the destruction of the

Treasury a, or 'the, central
banking institution for the banks
of this country.
Just what the

..

C.E.D.

nately /small ratio of capitaLac?
counts to their deposits and their
holdings of government securities,
with all the risks involved, his

the

>

The

inordi¬

an

va

not

,

logic or virtue in such an ar¬
the Leland pla$ seems to rest,* rangement would be is not clear.
This proposalj like that of the
was presented in a paper entitled
"The
Changed- Environment of Constitutional Money League,
would put the Treasury still fur¬
Monetary Banking Policy" at the
convention of the American Eco¬ ther into the banking business.
Seltzer's recommendation that
nomic
Association,
Cleveland,
January 25, 1946, and printed in Congress rather than, the Treas¬
excerpt form in an article, "A ury fix the interest rate on ihese
Uniform Treasury Certificate as Treasury Reserve certificates, lest
Bank Reserve," in the "Commer¬ the Treasury be "charged with
cial and Financial Chronicle" of imposing too. low a rate," raises
February. 28, 1946.
He had also the question as to why Congre
•presented the idea in two other would not fix an even lower rate
There
•publications, in 1940s and 1944, or abolish it completely.
end -Leland was acquainted with are some Congressmen who would
his
proposals. VThe-American try to do it; and to place , that
Banker" of February 4, 1946, re- ; power. in the hands of Congress is
ports that Seltzer was "borrowed" lamiong the things: that the. Consti¬
last summer from - the Reserve tutional Money League and other
Board by the Federal- Reserve fiat money advocates desire.
In outlining what.he. insists are
Bank of New York and that his
plan in its latest form was writ¬ ; the virtues of his proposal, Pro¬
the large
ten
under the auspices .of the cessor Seltzer says: ".
bank, not the Board.
"Seltzer iaggregate reserve requirements
rthen ; returned tor -hii^ post In would promote: ar stability in the
^Washington "Teported^TheAmer- volume of deposits approaching
||lean Banker;" whiph went on to say that of a 100% reserve system."
Much of his argument and the
that "Seltzer's plan is looked on
With favor by certain members of implications involved seem to fit
the Board staff, including E. A. rather neatly within the irame-

||f Board.

sueh

.

.

/

any

low-inter-

with large holdings of
est-rate securities and

cur4y

points out rency-Federal Monetary Author¬
that "If it were decided to finance ity—100% reserve group. .
Professor : Seltzer I insists;/ that
the increase in debt which was to additional deficits by the sale of
est because the Reserve certifi¬
be absorbed by the commercial securities directly to the Reserve his suggestions are in harmony
cates would bear interest "at per¬
with the "far-reaching shifts in the
Although one Banks instead of to the commer¬
haps 1%'Wa rate which he thinks banking system."
banks,
similar certificates climate of opinion" and with "the
of the purposes of the Seltzer plan cial
Congress, not the Treasury,
(Continued on page 1660)
could be issued, r ♦."
If there is
should specify.) This would make is to strengthen the position of the

nomic Problems, the University of
Pittsburgh, January 16.
The Seltzer proposal* on which

.

known valid argument for
procedure this-Author is
acquainted with it.
That is
the road that Germany took dur¬

banks which now find themselves

within the thinking and program upon the.. country's volume of
of ;!• the, ^ Constitutional ' v Money, behk deposits arid : rate of spend*
: from-tbexce^ificate""rweB^'7^f
ing,: instead y of being permitted
jeague.
quirement. - i - % J
to occur in response to other in¬
Professor Seltzer y recommends
§ J The Seltzer-Leland-C.E.D. rec¬ that the Treasury rather than the fluences without regard to their
ommendations 1 seem to have Reserve banks be the depository monetary effects." If that means
enough in common .with the Fish- for these new "reserves," and anything it means a recommenda¬
er-Voorhis-Constitutional Money adds that "Were it not for the tion that Washington manage, or
League 100% money and reserve unnecessary break with tradition attempt to manage, the "country's
program to warrant consideration that would be entailed, the addi¬ volume of bank deposits and rate
of spending."
of them as a variation, if not a
tional reserve requirement could
He says further: "A permanent
lineal descendant, of it,
consist simply of interest*bearing
The Leland proposal was pub¬ deposits
with
the
Treasury." market at a low interest rate
lished in an article entitled "The (These deposits would bear inter¬ would be assured for that, part of

million be exempt

of less than $1

"50,446,732

'

1

:

^

$437,507,360

12,351,966

$437,507^60

The 100%
/ (Continued from
rise

of

for

page 1659)

Governmental

new

deliberate

exertion

of

is

tools

mone¬

tary influence not yet coordinated
with Federal Reserve machinery."

One

transition."

Money and Other "Reserve" Proposals

well ask just what or
whose opinion is worth while in
may

vmatters of this sort? Is any opin-

of those who

one

would

sit in

securities

judgment on what "legitimate"
profit margins for this and that
business and person should; be,

willing

to

to the forces of

it

leave

this

the

would not

In

the

Chapter VI, on
Public Debt

and

Transition,":.;

sections, :.the

banks, and !'it
provide a "reserve," if

in

and

Leland's
ommendation was

matter

competition? Does

Seltzer

proposals

not

second

rec¬

also; in

the

but

Portland Reserve

.

-

Professor

3

other

authors / reiterated
much of the- argument
and pro¬
gram presented by Professors
Le¬
land and Seltzer, and also

that word is used in the
appropri¬
ate sense.

and that he is one of those who is
not

in

.

"Money,- Credit
in

The election of
ton

rec¬

treated

imply acceptance of the somewhat
incidentally i: by him. securities in hanks and for creat¬
: ion of
any value that is not based profit-management concept?
Leland makes it item No. 2.
He ing a central
monetary authority
upon well-tested experience and
Why professor Seltzer .should says: "A second
suggestion is to under
the *, President
which
principles? Does merely a change call, his proposed Reserve certifi¬ permit the
Treasury to borrow di¬ "should be - charged with
"in the climate of opinion"—what¬ cates bank
develop¬
"reserves" is one of rectly from the Reserve
Banks ing -and directing a
unified pro¬
ever^that mayihean-rprbve ,that the puzzling aspects of his plan. whatever
funds are required to gram
of
fiscal* monetary and
a
certain procedure in Treasury This raises the fundamental
ques¬ finance the government.
In the price control. action to .maintain
and banking
affairs, no matter tions as to what are the nature
coming
years,
therefore,
the price stability and high
how bad it might be, should be and functions of bank
reserves. If
Treasury would borrow from the ment in the transition." ! employ*
adopted?
Does "the rise of new reserves are, or should be, in the Reserve
System enough to pay off
Although the recommendations
Governmental tools for deliberate form
of
money
(or a deposit its obligations to the
commercial of this group follow ■
exertion of monetary influence" which
closely those
can
be
converted
into banks."
of Leland arid Seltzer in
several
prove
that they are wise and money), that can be paid out
"The
thorough unsoundness of respects,
there • are differences
should be continued?
The -an¬ upon demand, then Seltzer's. gov¬ any such
procedure as that has al¬ that warrant comment.!
questions WbuldL
these

to

ernment certificates would not be
bank reserves; they would

to be obvious.

be, in¬

The Seltzer plan is fundamen¬ stead, I a particular type of nonreserve
bank asset.
He
is not
tally another proposal for more
1

dealing with bank reserves, if that

monetary management
by
the
Federal government.
The gov¬ term is to be used in any reason¬
What he proposes is
ernment's tools of monetary con¬ able sense.
trol are "not yet coordinated with a plan to inject much greater in¬
Reserve

Federal

machinery,"

flexibility into bank investments

so

while it is greater flexibility, not
less, that is needed.

Professor Seltzer offers a program

to "coordinate" the banking sys¬
tem with Treasury policy;
The

unfortunate
,

results^ which

world has seen
when

It is quite true

point

tral Banks"

London,
37.
say

.

indirectly with the

it

from the bank,

re¬

becomes

-

nance

to

by

entries

and
a

thrim

fi¬

means

short

inated

has
been ' "coordinated" ; with serves' in the ' Federal Reserve the first step toward
currency de¬
"Treasury policy constitute a dark banks, Congress, apparently un¬ preciation and
inconvertibility."
chapter in monetary and fiscal wittingly,.legislated into existence They say further (p. 22):
"There

history.

.that cannot be paid out.
Professor Seltzer says that ' A But that bad piece of
legislation
new
question arises respecting provides ho legitimate reason for
the legitimate level of bank earn¬ making the situation even more
ings when the latter are mainly irrational by calling government
derived from Government securi-; securities, "reserves,"
particularly
ties."

a reserve

Who

raises

this question,

when they cannot be
paid out to
depositors upomdemand and since
the 'depositors would want

and

why should it be raised? Al¬
though it is raised by the fiat
cash,
money advocates in and out of not government securities.
Congress, there is no valid reasori
The argument which Professor
for doing so.
Just why a bank as Seltzer uses in defense of
convert¬
a purchaser of government securi¬
ing part of the banks' government
ties should be treated less favor¬

ably than

any
far from clear.

performs

securities into "reserves" involves
a; false analogy,
says: "Just

other purchaser is
A bank probably

more service in connec¬

tion with its purchases than does

other buyer. The notion that
there should be. .such, discrimina¬
tion seems to rest, upon nothing
more than an anti-bank psychol¬
ogy.
The problem here is dot the
any

size of bank

earnings

on govern¬

ment securities bearing am abnor*
mally low interest rate but, rath*
the dangerously low ratio ^of
the banks' capital accounts to

it

as

[Congress]

quired* that

formerly

national

bank

re¬

note

currency be secured by United
States bonds bearing the circula¬
tion privilege, Congress Could re¬

quire all banks*. »
to maintain;
in addition to other
reserves, '**
rbse'rve's in the form of special
Reserve Certificates or Reserve
bonds. *Security and'reserve
are
two
different
tional bank notes

things.
were

Na¬

money,

and the securities behind them
their deposits and investments in were
not "reserves";,
they were
government securities. Peculiarly securities
which were'to be liqui¬
enough, Seltzer makes no sug-r dated at the time of the
retire¬
gestion that the banks increase ment of the bank
notes.
Demand
the ratio of their capital against
deposits are supposedly payable
their deposits and holdings of in
ties

!

professor Seltzer raises a ques¬
as to "the legitimate level of
bank earnings when the latter are
tion

mainly derived from Government
securities"

demand; and securi¬

mpney on

government securities.

by

do

not

and

cannot

this function.

.

perform
..

.

interest for the .seyvicq qf agencies

substituting its superior and bet¬
ter known credit for the inferior
and lesser known credit of the
borrower is strikingly inapplica¬
ble to the present .?■ situation in

cisely

would :be avoided." Pre¬
It "would

so.

maket the
Treasury the^ j)ictatb#^ It li the
Federal Monetary Authority idea
of the Fisher^ Vobrhis* Cdnstittir
tional Money League
group.

which the commercial banks [ex¬
tend so much credit to the Fed¬

centralized,

eral

money,

government]." : It is not ; U
question of the banks providing a
"better known" credit but a mat¬

totalitarian

Federal,

of

our

banks, credit, and prices.

ter of the banks providing a usable

; Professor, Leland made two rec¬
purchasing power, against ommendations
"for
considers*
which they are required to main¬ tion."
One was for
"legislation
tain
adequate /reserves, In Cex-j providing a special non-market¬
change for a form of credit that able security for bank owner¬
is not usable as a medium of exr
ship*'. ,This is Simply the Seltzer
change.
plan with very minor variations
Furthermore, just what sort of and, therefore, except for the fol¬
standard
does
Professor Seltzer lowing observation, calls for no
employ when he speaks of "the additional comment.
legitimate" level of bank .earn¬
PC te^nd says that "What thj^i
ings?
Do we have a law that
plan amounts to is not a freezing
warrants his use of the word "le¬
of 'governments' in the
banks but
form of

,

notion

what

the

minimum

that

should

he

may

be

the

have

as

to

maximum

earnings of banks?
Does npt all
imply that Professor Seltzer
,

this




France

intensified

establishment

reserve

in

of

a

government

bonds applicable to all banks." 'It.
is the opinion of this author
thiat

just the opposite is the
plan, would, freeze

from

the

Bank

the

The

proposals of this type as
advanced by Leland and Seltzer
fly in the face of such evidence as
that presented by Kisch
and El¬
kin-and others.

Professor

Leland

continues:

"This plan, while it
sounds radi¬
cal, is really only an extension of
the

present

system

under

which

the Treasury has sold
Treasury
bills to the banks which, in
turn*
have sold them to the Federal Re¬

Banks. The

serve
as

well

Treasury might

have

borrowed directly
from the Reserve
System in the
first place."
That notion

simply
overlooks practically
every major
principle involved in the proper

relationship of a central bank to
its member
banks, and the part
a

government, seeking and
spending funds, should play in the
nation's money markets.
In
to

one

sentence

recognize

the

proposal when

Leland

danger

seems

in

his

he.says: "The plan

case;. The

government

new

into

inter¬

System," that the au¬
recommend; and that is, in

thors

several

of
its
essentials, , the
Leland-Seltzer-Robinson plan,

of

expedient of borrowing from the
bank, a practice which, if contin*
ued, can only lead to a repetition
of past disasters." v
f

a

Reserve*

deprecia¬

tion of the franc and
contributed
to the financial crisis which
cul¬
minated in 1926."
They say still
further (p. 37):
..
It is of cardie
nal importance that it
should be
made as difficult as
possible for
the government to resort to
the

of

reserves

est-bearing type." It is the third,
which they call the "
'Security

question that the power
to force in¬

loans

by converting them

required

government

Alternatives

V

volve

the

(2)

word "reserve"

At

(3)

in¬

of

the

is found in the

as

Leland-Seltzer

and

misuse

same

recommendations.

the /C.E.D.^ £roup
proposal" to
"a special form of govern¬
ment security which banks car
hold,; dollar for dollar, against
one-

to

seem

point

support "a

offer

savings

deposits—other

^requirements :;being

existing evidence

as

un-

these

depositors

when

they

MacNaughton

until Dec. 31,

runs

1947.
Mr.

Stewart

,

named

to

Portland

the

was

originally

directorate of the

branch

of

the Reserve
Bank in June of 1945 to
fill the
vacancy caused by the death of
Paul S/ Dick, Chairman of
the
Board of the United
States Na¬

tional Bank.
at the end

,

He

was

reappointed

of the year.

Wheri he was; elected last
riiorith:
represent the group of banks
with capital ranging from
$150,000
to $1,OQQ,OO0 on the board of
di-»
rectors of the head office of
the;
Reserve Bank there was a result¬
to

ing vacancy
Portland

on

branch

the board of the
of the Federal

Reserve, Bank/JJ.
V ;
Besides Mr. MacNaughton, other
f

members

Portland

on

A

the

board

branch

of»the

of
the
Reserve

Bank include D. L.

Davis, who is,
managing director; W. H. Steen,
Milton, Ore., wheat grower; and.
William C. Christensen,
of the

President,

Commercial National Bank!

of Hillsboro.

Mr. Steen is Chariv

man.

as

to

how

to obtain cash
it if there is

are

want

.

Ban^ Aid NY State
Small Business
Program

:

nothing huf goyernriierit securities \1 More Ihan 700
New York

com*'
mercial banks of 62 local and re-»

held against their deposits*;
Unlike

-

C.E.D.

Professor

group; do

.

Seltzerj

not

appear

the
to

recommend?that the'Treasury be
the

central

banker

to

hold these

"reserves/':
But in another
way
they go about as far as anyone
could go' in recommending cen¬
tralized

-

executive

totalitarian

This

dictatorial

control

country's fiscal,
price policies.
•

-

is what

over

monetary,

-

gional bankers
been

say

and

"What is most important is that
there be an effective body specifi¬

cally responsible under: the Presi¬
dent
for
coordinating
fiscal,
monetary and price policy during
the transition.
They also say
(p. 70): "It is particularly im¬

the

have'

New

York

New York State program for de¬
and ; expanding
small
business.
/ *::;v -•
"
v/- ';-:v

this

(p. 70):

associations

by

veloping
A

series of four special adver-'

tisements
for

they

invited

State Bankers Association and the
New York State Department ofCommerce to participate in the

small

featuring banking aids
business,

a,

booklet,

"Financial Services frir the Small
Business," posters for window and
lobby display, and suggested local
news

of

,

stories constitute

informational

the

"kit"

material

„

de¬

veloped to help bankers let small
businessmen know that the banks
are

and

ready tq aid them with credit!
business counsel.

.

The goal of the
program, says
the. Bankers Association, is

the,

creation of 100,000 new businesses'
to more than offset' the.
IQQ.OOO'
"Coordination -of policy at this small
onterprises that closed
level will require Special machin¬ ing the
-war tand to provide for.
ery.
It means the. development
,?what might have;! bemi expected;
and operation of a single, program as
Jhenormaigrowth ih-that fields
which involves major policies of in New York
State ;duripg

monetary ^fiscal policy.

Leland's recommendation in the

face of

,

the

for
The ques¬

prove

mends it and argues for it.

MacNaughton fills

reserve

waived

deposit? 8a hacked. * *
tion naturally arises-

portant that tax policy, expendi¬
beneficial in opera¬ ture
policy, banking policy and
tion or it might be a
calamitous debt policy be fused into one ef¬
failure."
Nevertheless he recom¬ fective, flexible/; instrument: mf•

might

to its

liar" notions

as to the virtues of
spending and debt, brings us back the

to the observation
made at the be*

ginning, of this analysis that

The Leland Proposals

gitimate"?
Or does the woitf *lefather
gitimate" arise from Some ethical

the

dangerous
aspects,
especially
It is 'when
the government has
"pecu-j

Executive,

management

no

creased

which

.

Professor Seltzer says that "By
making the Treasury, rather than
the Federal Reserve banks or the
Federal Deposit Insurance Cor¬
;

stating a proposi¬
tion that is incomplete and inac¬ poration, the
depository agency
curate.
He says: "The traditional for the
new.reserves, the jurisdic¬
concept :that a commercial bank tional " limitations of these other
earns

of

.

,

be

can

-into

of government bonds
canbe elim¬

loans

which is

course

Frank Barton, from
which.

Mr.

be reduced by

can

required v reserves of the present
non-interest-bearing type"; and
(3) "The 'excess reserve'
quality

fatally

the government
itself for a time

its'financial;

editor

:we-alsp ta^e the/folio wing:

thus succeeds

gov¬

(2) "The 'excess reserve' quality
of governmentbonds canbe
elim¬
inated by converting

.

for

easy

on*

iFrancisco 'Reserve
Bank, it is
learned from advices in the
port-*
land VOregonian/': by

alternatives:

eliminating their automatic con¬
vertibility into legal reserves";

the operations of the
central bank
lies directly or

government,

three

'reserve'qualitypf

ernment bonds

20-23, 28,

pp.

offer

(1) "The

example, those authors
(p. 22):
If the control of

of. book

for

nomists

(Macmillan&Co.,Ltd.,

1932 ed.),

For

cates alone lawful money

the

again and again

Anyone

to satisfy himself on
might well begin by
consulting Kisch and Elkin, "Cen¬

this

announced;

expired term of Charles H. Stewv
art, President, of the •
Portland
! Trust & Savings
Bank, who wasrecently elected to the directorate
of ->the: head office of
the SamTov control "hank credit
expan¬ Francisco
Reserve
Bank.
Thesion, this Committee of six eco¬ term to
which Mr.

who wishes

that, with the
passage of the Jaw of June 12,
1945, which made gold certifi¬

nation's banking structure

a

ready been pointed out.

was*

by. Harry R. Wellman,.
Chairman- of *the San

Deputy.

.

seem

Bank of

San Francisco

March 8

,

swers

E.:B.;McNaugh-»

(Presidentlihf^he^First/^Na^

ommended, .under the name of tional Bank of
Portland, Ore.) -as'"Security Reserve'; System," a a director of the Portland
Branch
program for freezing government of the Federal
Reserve;

we

Treasury, the Federal Re¬ same; periods:
the priee control agency

serve,

the,

;;

.

;

■

>■.

.

arid

certain
other
government
doubtful that anyone could devise!
to; be labor¬ agenpies.
Essentially, ; responsi- a scheme for a more centralized,
ing under a peculiar disease in hi
lity for such - coordination rests
the field pf
dictatorial, ^and totalitariah form *
money—namely, the with the President.
There is
of executive control over
perpetual attempt to solve some .need
mone-»
for an
instrumentality to
tary, pricey and fiscal affair? thanmonetary, banking, or other eco-;
prepare an integrated program that
nomic problem
proposed by this C.E.D, com-;
by offering some for review by the President and
old and
mittee
well-established fallacy, to see that the various
acpnoiritsts^Although^
pnrts of
much is-said by this Committee;
perhaps in a different garb, as a the
approved [by whom?] pro¬
"new," or "bright," or
about these - programs, * oh various
"progres¬ gram are carried out/at the prop¬
aspects of them, being designed
sive^ or "promising" solution.
! er time." And further (p. 81):
fpr Av'transition" period; :it;would;
*The
The C, 12. ©/Staff's
monetary: auth<|rities should seem to be quite clear that if a.
"Security
be enabled to expand .or contract
Reserve"
Recommendation
the money suoply to Stimulate or program such as-this should ever
This proposal was contained
in limit demand,"
be! adopted the ."transition" would'
& study
by a research staff of the i •;Despite the many
extreme have: beeri;.
Committee on Economic
effected^ and that it!
in this
country seem

.

.

.

Develop¬ recommendations
wlpch the advo¬ would he; a transition to a
cates of a
state;
government-managed
of affairs which
economy have beeri: making, and
only the advo*- •
prevent in-; striving to make effective, in this cates.
of";£tptaiitaHan^goyeiimn^nt-

ment on "Jobs and
Markets" (re-i
leased March 1,
1946), devoted to

the matter of "how to
flation

and

•

depression

in-" the

country in recent years; it

seems

jpretend to want,

i

yolume 163

1661

FINANCIAL CHRONICLE

THE COMMERCIAL &

Number 4476

Having experienced their
disillusionment,
they
are

be

Capital Goods Industries

The Postwar Boom In
Private

(Continued from page 1635)
depression,

private gross
capital
formation ; amounted
to
$11.6 billion.Between 1923 and
1929 inclusivej. private capital for¬
mation exceeded $15 billion an¬
nually except in 1924, when it was
$13.3 billioni;I mention these fig¬
ures because they seem to me to
be a significant revelation of the
importance of psychology. Indus¬
trial production in 1937 was just
as high as
in most years of the
late twenties, yet private capital
great

formation

its

It may be argued

earlier levels.
that

recovered

never

the

of

private invest¬
1929, resulted
in over-capacity. But it can hardly
be denied that investors in 1937
lacked confidence that a high level
some

in

ment

1928

and

of

activity would continue and
that
private
investment
could
safely be made.

Equipment

of Durable

Producers

iVery similar conclusions apply
to the outlook for industries pro¬

Prir
vate purchases of such equipment
in the past have also been closely
related to the general{level of
business activity. A study of these
past relations provides convincing

ducing durable equipment.

Government
much

were

less

during the war
would

than

1 The first step in discussing the
outlook for, capital goods indus-.
tries is to consider what has hap¬

The wartime

of

plant and equip¬
ment, financed by both Govern¬
ment and private funds, has a
bearing on the outlook.
Some observers point to the
fact that $23 billion were spent
for plant and equipment between
July, 1940, and June, 1944, of
"Which
$15
billion represented
government funds. Since this ex¬
.

penditure was so large, they con¬
clude immediately that substan¬
tial over-capacity already exists.
This

conclusion

is

emphasized

after allowance is mader for

-even

position. Even though heeds

same

for

types of equipment may

some

standby : condition; and

a

possible

press

■

the

on

for

market

many

to come. While each com¬
modity must be studied individu¬

years

I

shall not dwell

long on such
topic as the last

much

weight should be given to

the effects of Government owned

surpluses in making estimates for
the future.

<

,

-

The situation becomes plain if
we

attempt a little mental arith¬

metic in. connection with machine

unpleasant

great depression. It must be

menM

policy became

vinced

that

our

con¬

economy

It is not my purpose to argue
the pros or cons of this theory.
The. mere fact that it was widely
:

held

in

mate

of

Total
tools

shipments

between

clusive

were

1940

machine

of

1945

and

in¬

valued at about $4,-

600.000,000.
Of

this

than

total, however, more
billion dollars worth

iy4

exported.
addition, it

were

In

Government circles

to

oosed

our

to minimize the difficulties
foreign policy will encounter,

I must nevertheless warn against

the

was

more

have been

chance of.

sia

conflict between Rus¬

a

United

the

and

future

near

in the

States

to

seems

be

to

me

exceedingly remote. Russia knows
fully as we do that the United

as

States

is

•

moment'• the

the

at

military >

strongest

power

in

the

world.; I have heard the Russians
accused

have
of

of

never

things;

many

heard

them

the

suicide.

commit

to

I

accused

stupidity

type of
would lead them
tional

but

that
na¬

If

fact that

public investment polcies
could not be or were hot projected
into the future, so that business
men would know precisely where
the "public domain" began or left
off, had the effect of making in¬
vestors cautious.

which

The confidence

private

investment

is

based was undermined.

The important' fact at the mo¬
ment is that this

theory has been
or is being discredited, so far as
policy-making circles influential
in the Federal Government are
,

This is the net result

of economic developments

the /

during

because

they are convinced that
the United States will not begin a
will enter one only if

war, and
attacked.

'

*

The fact that these
in national

ences

created

sharp differ¬

objectives have

great a disturbance so
openly and so soon after the war
has
ended will,
however, have
some effect on national policy.
In
this

our

it

so

period of uncertainty, / when
foreign policy is being shaped,

seems

Federal

highly doubtful that the
Government would

mit actions

per¬

depressing to the cap¬

ital goods industries. I do not be¬
lieve that the risk of 7 surplus

- period.
The economy dumping was ever very great, and
dramatically that, it pos¬ I believe it is even less now.
Some of you may find the pre¬
Moreover, it can be estimated sessed a tremendous potential for
cannot be converted to peacetime
on the basis of past relations that
expansion. Fewer people now re¬ ceding remarks far from reassur¬
•production.
almost tl/2 billion Worth would gard the economy as "mature" or ing.
While I have expressed a
Before accepting this conclu¬ have been purchased during the in need of stimulation. The mere "positive belief that no armed con¬
sion, I believe we should analyze six year period, given the levels fact that this earlier belief is no flict between the great powers is
fhe previous relation between in-- of .industrial
production that ex¬ longer widespread automatically imminent, you may well ask me
•dustrial activity and plant con**' isted then.
an
In fact, this is prob¬ removes
important restraint whether it may not come, within
struction.
This will help us to
Tech¬ a period of five or ten years.
ably an under-estimate, since if from private investment.
I
measure excesses or deficiencies
makes insufficient allowance for nological advance will be stim¬ believe we would all be making
•of the war period, and ta relate a
a mistake if we tried to make up
high rate of depreciation that ulated.
these to the level of activity ex¬ comes about
How long this will Continue can our minds about that point at this
through three shift;
pected for the longer-term post¬ operations and inadequate main¬
hardly be answered unequivocally time. It certainly does not seem
war period.
tenance.
at this point.
My own opinion is .to me.

that

others

structed

poorly

were

for

or

some

other

:,

con¬

kept in stand-by condition.

a

be4made."

accurate

more

export

war

showed

reason

<

past twenty-five
years there has been a very close
relation between non-residential
building and the general level of
business activity.
In fact, there
have been two distinct patterns,
one
that held good during the
twenties and one that applied to
the
recovery
period
following
1933.

the

The

level of business

same

activity in the latter period gen¬
erally inspired a somewhat lower
level of construction activity. This
is easy to understand, since during
the twenties many business men
thought prosperity was here to
stay. This faith in the future suf¬
fered a great shock during the
we use

that

these past relations to

the actual expansion of

it/ is

estimated

than $300,000,000 worth
original total are special
types .of tools for which postwar
demand will be negligible.
of

more

the

If

all

these

deductions

are

that it will

continue for at least

One of

the

most

basic

facts in

the world economy at the moment
—and

that

one

current

political

helps to explain
tensions—is

fact tnat all the world desperately
needs industrial supplies and

only

place

where

tney

can

sibly be obtained within

will

used

to

go

or six years and* quite pos¬
sibly for several years longer. All other world war will earnestly
the studies my organization has seek some means of averting it.
respect for the expansive powers It seems quite possible, to me,
to the belief that industrial pro¬ even probable, that the present
in
Western Europe,
the
duction will a vera g e 50-70% crises
above prewar for this period of Mediterranean, the Near East and
time. Activity will be higher than the Far East will run their course,

five

regular purchasers of
This remainder

tools.

must

be

tools

treated

assumed

period of time is the United
States.
We should not lose sig-.t
of

the fact that

dustrial goods

the

need

for in¬

of all kinds is tre¬

mendous.

I shall not attempt any forecasts
this point. Quite ob>viousiy
their
volume
dependte
greatly on political developments
,

of exports at

abroad, and

forecasts made an}
might tend to be o»

any

the moment

the pessimistic side.

T^ieir volume;

also depends upon the

icy

United States, whieh
appraised in terras
that are

the

of

that

and

are

were

in

all

most mis¬

the

could only be

of; political settlements
still to be achieved.

Conclusions '

/////l//////.

Looking forward to 1950 I be¬
lieve we must conclude that the
outlook

for

goods indusF-

capital

tries is the most favorable in tne
hation's history.

Based on the ex¬

pectation that total industrial ac¬
tivity will be 50 to 70% above
prewar, the average gain for cap¬
ital goods industries will probably
be between 100% and 200%.

Although important uncertainhpolitical con¬

ties connected with

abroad

ditions

of durable

with

and

exports"

equipment exist, at the

moment, and may continue for
some
time, this is not likely to
invalidate the above estimate.
If
we

assume, on

the

one

hand, that

the period from now through 195#
will be one of; continuous war

scares,/this is/bound to have at*:
expendi¬
and,

on; Government

effect

for

tures

defense

purposes

therefore, to jnaaintain; high" levrf,

in' capital/ goods

activity
tries.

If

we

assume, on

induW

the other

poorest

work, he is forced to conclude, for
the next few

ducers

plants against the level of busi¬
ness activity during the war pe¬
riod, we, reach, a definite and en¬
couraging conclusion.
'1.;
The volume of Government and

construction

private

combined,
1941 through
|1944, seems to have been about
$10 to $12 billion less than would
during

the

normally

years

have

been

undertaken

by private businesses in order to
meet the expanding level of busi¬
ness activity.
If, in addition, one

| makes allowance for those plants
that

cannot

be

used

,in

civilian

at least, that
there will be a high level of non¬
residential building. Furthermore,
years

he must make
fact

that

Will

be

be followed by a period

encouraging

more

in whiefe

progress

this field
by Gov¬
ernment attempts to guide build¬
1946

ing materials into badly needed
housing.
It would seem, there¬

fore, that non-residential building
a high level can be counted on
to continue at least through 1950.

-at
.




/will

international un¬

derstanding, then we must expeef
that exports

of durable

equipment}

States will ex-

Ellsworth to Open
CORPUS

CHRISTI,

TEX. —C.

Bruce Ellsworth will engage in an
investment business
615

at

Mr.

North

from offices

Upper

Broadway.

Ellsworth has recently been

and

the

disposal of even
this amount is likely to be spread
out over a

period of years.

•

Political Trends

V/ Political trends have

he was with W. J. Lackey

& Co.

INVESTMENT

a

Administration in

tion with wage and

.

The

>' Exports
•

*

•

.

.

BANKERS

connec¬

price controls,

Members New York Stock

Other Leading

present moment is

not a
propitious time for any speaker
thing about exports,
We are in
the midst of our first great post¬
war crisis.
Millions of people be¬

lieved, six or eight months ago,
that an international organization
could consistently and easily set¬
tle differences' between the great

§f§|§§

,7

Exchange and

Exchanges

'UNDERWRITERS AND DISTRIBUTORS OF

who finds it necessary to say any¬

vitally
important bearing on the outlook
for capital goods industries. I re¬
fer here not to day to day actions
of Congress, the fluctuating policy
of the

period.

.

.

77

INVESTMENT SECURITIES

BROKERS OF BONDS, STOCKS,

Private Wires

•

In

serving in the armed forces.
the past

pro¬

allowance for the
in

be made toward

v

expansion in

limited

will

hand, that the present crisis

Unfortunately, I am not con¬
vinced that this high level of pro¬
duction and business activity will
fully absorb all those who are
looking for work. ; Five million

condition, which will limit their
marketability.
Finally, there is
the general inefficiency of sur¬ people will probably be unem¬
plus disposal /and a ; continuing ployed by mid-year and this num¬
possibility that some of> the/ tools ber will be substantially increased
in the years to come.
A modified
will be shipped abroad..
"Full Employment Bill" has been
The net result of these calcula¬
nassed by Congress and there is
tions, for which exact accuracy is
little doubt in my mind that some
naturally not claimed, is to reduce
the shockingly large total fo $4,- form of action will be taken un¬
der its authority.
I merely 'ex¬
600,000,000 to a final figure that
almost certainly will not be larger press the doubt, in view of cur¬
political trends, that this
than two to three hundred mil¬ rent
administrative action will be dis¬
lion, or, quite possibly smaller. In
other words, this last figure is the turbing to the psychology of pri¬
vate investors to the extent that
magnitude of the surplus / that
it would have been in the prewar
might affect the position of

measure

,

credit pol¬

Unemployment

also

contain

to

pes-

a reason¬

able

jto be, inevitable; and I am from the- United
sure*/mat^'anyone who contemblatlsf* the5■ consequences of an¬ pand sharply.

made, the original figure of $4,600,000,000, which seems to indi¬
cate a tremendous potential sur¬
perhaps
not
without
plus, has been reduced to about in any other peacetime period. It although
$750,000,000, But still further re¬ is my belief that the new-born Some fighting by smaller powers,
ductions must be made. Many of respect for the expansive powers reaching a conclusion that may
these tools will be sold to insti¬ of private industry will live at provide an opportunity to reach
tutions that do not ordinarily buy least as long as this high level of more general agreements, even if
on a modified basis.
Should this
hew machine tools. Many of them activity continues.

those

great depression.
If

Furthermore,

can

>.'./•/: .V

.

During

esti¬

possibilities

v

concerned.

has been prothat about $800,000,000 be

Without wishing in any

moment.,

the period will have

case,
when

is somewhat warped at tne

ment

way

I believe their judg¬

cases

they use ex¬
discourage private in¬ treme measured, which seem to in¬
vestment,:sincethetheory stressed vite retaliation, if not war, in or¬
the need for an expanding level der to achieve certain national
of public investment.
The un¬ purposes, it must be, I believe,
bound

on

tools.

many

In

disturbed.

exaggerated fears that
so freely expressed in
the/ past: few weeks.
Since the
tioned," however, 'because it led"
foreign political trend will have a
many people to accept an eco¬
bearing on activity in the nation's
nomic philosophy that can most
capital goods industries, the pos¬
aptly be described as "defeatist."
sibilities must be examined.
Many of those who influenced or
First of all, let me say that the
helped make
an

ally^it is at least possible to take
a. typical
example and see how certainties that this entailed, the

the fact that many plants may be

/kept in

political philosophy
that influences the attitudes and
activities of the Government.

had
grown
older,
and ■ that having
reached its maturity, it no longer
possessed resiliency and the forces
ity. There is an accumulated de¬
of expansion that in earlier gen¬
mand rather than a surplus.
/
erations ;had led to/successively
S Naturally* all producers of ma¬
rising/levels of production and
chinery^ and. durable; equipment
living standards.
will notfind themselves in the

be substantial, it is quite

expansion

nor¬

mally have been made by private
industry in order to achieve the
wartime levels of industrial activ¬

that surpluses of other types will

Wartime Developments

pened since 1939,

of

purchases

durable equipment

I refer to the

■

private

combined

that

evidence

and

the outcome of Congres¬
sional elections this Fall.
Ratner,
even

or

Expenditures for

confused and

now

the

come

powers.

first

COMMODITIES

Office: Atlanta • Phone ID-159
Home

1662

THE COMMERCIAL & FINANCIAL
CHRONICLE

would result in

the

The municipal bond market has
been an anomolous aftair

in

the

ding

of

pace

for

tinued

distribution,
business

new

has

con¬

operations

manifest indifference of investors
to dealer offerings.
In this situ¬

tate

in

in the stock market
easier tone in the market

an

for

Governments,.
Factors

in

include

the

Among
interest

-

stability dis¬
tax-exempt field

reinforced

conclu¬

that
(1) the Treasury is
firmly wedded as ever to the

policy

of

interest

keeping the
tol

rates

level

nificant in

of

est

a

improvement

etc.,

of the current year.

put

for

the

than

more

has

dis¬

the low¬

the

fact

that

the

project,

Gardens

cost

issue

was

total

of! $3,142,000

the
the

of

Deen

been

project,

or

are

be

to

soon

The first low-rent

from

1948

to 1952

lic

no

the

proceeds

of

the

As the bonds
of :New

York,

the

'direct
fact

$1,400,000

name a

sin¬

more

temporary
notes, bearing date of April 17,
1946, and maturing on April
17, 1947.

-

..q.l

SEALED PROPOSALS

(herein

called

-

the

the

will be received, by the'! New York
City

Housing Authority

"Authority") at the office of the Comptroller of the
City of New
530, Municipal Building, in the
.Borough of Manhattan, City and State
of New York, at 11
o'clock A. M, XEastern Standard
Time), en the '

York,

Room

;

2nd

for the purchase

principal amount
order

on

of
of

Day of

April,

1940

Jamaica. Bay; Houses Bonds of
said Authority' in the
aggregate
$1,400,000, dated April 1, 1946, and
maturing serially in numerical

April 1 in each of the years and
amounts

11 v'>■'*

',vfYear

follows:

as

'

1948__>

,

1950-.*-.^..^..

.

1

*

\

,

/ r 1951.;.,,.—
1952

—
.

eight

President

,

The

one

as

a

radio

declared

made

the
•
,

U*,
280,000
Bonds •will. be. in ithe
denomination of $1,000 each,* will be
numbered from
consecutively upwards in order of
maturity, will be issued in the form of
coupon
bonds, registerable as to
principal only, or as to both
principal and interest, with
the privilege of
reconversion at the expense of the
holder into coupon
will bear interest at
bonds, and
the rate to be determined as
hereinaftr provided,
'
Both principal and semi-annual
interest (April 1 and October 1) will be
at the
payable
principal office of the Fiscal Agent of the
Authority, The National City Bank
of New
York, in The City of New
York, New York (or at the principal office of
any successor Fiscal
Agent, in The pity of New York, New
York).
The Bonds will be
issued by the Authority for the
purposes of providing funds
for the
payment of a portion of the cost and
expense of the acquisition,
and
construction
development of a housing
project commonly known as Jamaica
located in the
Bay Houses,
City of New York,
.' i

nent-prosperity; /During
of

substantial

and

incidental

purposes

thereto.

KI

The Bonds will be direct
and general
obligations of the Authority and the
payment of the principal of and
interest on the Bonds will be
guaranteed
The City of New York
pursuant
to a
Guaranty Contract to be executed as of
March 28,
1946, between the Authority and The
City of New York.
The payment
of the
principal of and interest on the Bonds will
also be
certain other funds and
additionally secured by
revenues derived from the
operation of the aforesaid
project.
^
Bidders must state in their proposal the rate of Interest (naming a
the bonds are to
single rate)
bear, not
punctual

by

per

annum,

will

be

interest
date
the

of

expressed

sold

of

the

in

a

bidder

and

bidders

or

(1.20%)

the

Bonds

offering to take such Bonds at the lowest
and
to
pay
therefor not less than
par and accrued
interest to the
The interest cost of the
Bonds shall be determined
by aggregating
interest requirements for

cost

delivery.

annual

rate

to

exceeding one and twenty hundredths
per centum
multiple of one-tenth of one
per centum

such

interest

offered by

specified

such bidder

5 ft proposals
furnished

or

in

the

bid

Bonds

and

bidders.

the

over

life

of

deducting therefrom

the

the

of

the Bonds

shall

be

at

premium,

*

for the purchase

Bonds

submitted

if

forms

on

the

the

Board

of

Estimate

of

Bonds

and

of

the

execution

of

the

be

Guaranty Contract

The

City of New York, and the award of
the Bonds
subject to such approvals by the Board
of Estimate of The
City of New York.
In
the event
that
prior to the delivery of the
Bonds
the
income
received
private holders from bonds issued
by public housing agencies in

will be

by

with
of

low-rent

any

be

federal

relieved

in

such

The

without
to

be

of

of

of

slum

or

hereafter1

turning

of

Mitchell,

charge.

the

the

right

form

by
Guaranty

the
and

York

Bonds

whose

The

New

Proposal,

the

shall

successful

be

taxable

bidder

to

reject

any

or

all

may,

proposals

/•,-

validitiy
&

enacted,

projects

the

will

approving
of

such

Authority

Contract

to

New

be

approved

opinion

approving

authorizing
be

executed

Authority,

may be obtained
York
17«
New

Mitchell, 115 Broadway,

upon

York.
York

and

request
or

6,

will

be

opinion,

the
as

by

Messrs.
the

issuance
of

copies

from

form
of

By

to

23,

1946.




to

of

the

and plastics.

the

farm

and/

Reporting that
dustrial plants
in

Georgia last

"there
ward

ican

is

a

300

new

*

in¬

were

year,

of

definite

trend

to¬

decentralization of Amer¬

industry."

*

! Thomas F; Doyle, formerly cap¬
tain, A. U. S., has become asso¬
ciated with Lobdell &

Co., Inc., 20
Exchange Place, New York City.
Prior
to
military service, Mr.
Doyle was with G. M.-P.
Murphy

Authority
Caldwell,

at

122

form

East

V

v

of- loan

NORTH and SOUTH

This

latter

desideratum

a

all

interested

better

several

any such

-

operation

securities

-

on

ex-»

for a number of years.:
As the bonds of the International

Bank will

inequity

probably be registered

*

for dealings on a number of < the
national securities exchanges, this

basis

Another

to pro¬

seem

for

offering 'method

not
"special offering"

unrelated to the

anticipat¬

|o

which

the

Bank's

managers

instruments

which

carry

rights :to

their

It

v

provide a good method for reach¬
ing the public.- The, usefulness of
this method denendk in part upon
how immediately

quite evident that the

seems

Bank's directors will not consider

This

offerings/ oi its

on

should

because

should

the
in

time find

evident

be

Bank's

•

the

course

most

bonds.

only
obligations

of

institution

of

the

for
dimensions

expense

the International Bank

list the

more

to

;

There

tacts

I

en¬

institutions

It

with

in

number

is, however;
function

for

a /very

the

im¬

its actual

would: seem

of

different

to

as

in

not

terms and

rate, amortization!;:
maturity. "This would/

coupon

bonds and that is the distribution

enhance the liquidity of the out¬

and actual

standing bonds, larger issues be-.ing as a general rule more readily,

j

CRAIGIE&CQ;

siastically particularly in view of

ume

the current and prospective scar¬

will

Teletypes

RH 83 & 84

Telephone 3-9137

-

issues to a;'
only as between:
the kinds of obligations but also.:

minimum,

invest¬

banking industry to perform
the
offering of the Bank's

investors.;

desirable v from

the pointr of view of * investors as
Well
as
the Bank to keep/the;

limited resources of

private ^banking

!

process

ing-mosb "economical, as well* as
providing to the Bank direct con-'

act of excessive condescension in¬

of

.

Sues.

a

volving unnecessary

continuous

specific offering of individual is-.
The; tap offering seems to .-;
have the added advantage; of be-;

short

a

.

d

v as:

While concurrently raising lunds'
for its additional, needs by the;

not

ready market, but also
because it would appear to be an

$n

It may^ be that the Bank
use this kind of
offering al-;

Could

|iWpiyes/'the\w

•

•

the, issuer needs if

distribution procedure which funds..

any;

•

in the/ sale of several series; of;
national issues.
"Tap offerings";

bankers will probably greet this
prospect of business quite enthu¬

RICHMOND, VIRGINIA

•

changes

are

the

nor

national

■F. W.-

Bell System

could

investors and" their'

salable, and would also
the problem of educating
ors
on
the merits of the

CAROLINA
MUNICIPAL BONDS

^

probably best- be achieved by the
Bank's giving public notice of its
intended financing and
inviting

selling of them. In the
early period of its operations, at
least, the International Bank will
probably call upon these services
of private bankers.
Investment

i

not/It

orderly; distribution;On

an

ment

VIRGINIA-WEST VIRGINIA

•

Bank's

|the other l hand,' they preclude the
entry■of dll firms into feachoffer-i
Ing by "the International * Bank,

No Underwriting

portant

Dealers in

Trimble

BUTLER, Chairman.

the

Whetheror

successful

fare

this way.

42nd

Marshall,

Ing

guaranteed

question,

sucJh
disparate
holders.

!

.

and

the

would

in

another

risks

Resolution

Sale

placement of

will be necessary to
organize ac¬

amendment of the Bretton Woods

Arnall said

purchaser

Bonds, the form
1946, between
The

the

on

obligations.

to the direct

Agreement, it would

established

Tkomas Doyle Joins
Staff of Lobdell Co.

& Co.

of

an

•

home

mortgage debt in the South."

the

28.

Notice

employment

and dealers on
agency basis.
This would involve the payment of commissions

a

ing that the direct method of fi¬ might wish to
give consideration
nancing would be -preferred. is the
"tap offering." This distri¬
Surelythe Bank's directors will bution
procedure has been quite
We have pretty welt hotAvish to create different types
popular and successful in England

terms

adjourn

the

be

bankers, - brokers

developed sdriib new
wholly non-competitive in¬
dustries | based upon wood, pulp
and

Marshall.

the

this

the

B.

or

the Bank's" securities'

would

holding its debentures.

here

vide

election,
Bonds,
and

March

of

from
Messrs.
New York.

EDMUND

the

arrangement for the dis-"

jtribution of

|he indentures on each type of
type of distribution may 1*5 found'
obligation; If, however, this in¬ to be
.quite feasible.,
*
equity should turn out to be un¬
avoidable; without some radical
"Tap Offerings"

to

income."

his

Caldwell,

delivered

NEW YORK CITY
HOUSING AUTHORITY
Dated March

by

at

bonds

probability that

ber-farming—and I mean literally
growing trees as a regular cropto replace cotton as a source of

eliminated

Bank's,

Perhaps the most'generally saisfactory

could be cured in the drafting of

dairying, beef-cattle faising,. tim¬

"We- have

as

Agents

guaranteed

on

The merits of this calculation
hot

"Our people," Georgia's Gover¬

"are

that

,

than those

eco¬

connection

clearance

obligations
under
theJ contract
to
purchase • the
deposit accompanying his bid
will
be
returned.
reserves

-

New
6

the

adopted

the

City

his

Authority

sale..

Trimble

law

of

case

The
the

housing

one

any

to

anteed

in

-

the nation's number

the

by the Authority, must be for
all of the Bonds and must
be unconditional,
except as stated herein.
Each proposal must be
accompanied by a Certified or
Cashier's or Treasurer's check
for $28,000 and a
computation on the form furnished
by the Authority
showing the aggregate of the annual interest
requirements of the
Bonds, on the basis of the interest
rate
specified in thf proposal for the
Bonds
(expressed as a percentage carried out
to four decimal
places) on the foregoing basis.
K:'
The Bonds will be
authorized by a Resolution of the
Authority adopted March
7, 1946, which Resolution will
take effect upon
approval of the Project and
approval of the issuance of
upon

by

the

years
since the late
Roosevelt described it

asserted,

Bankers and Dealers

agents to participate.
This would\
be: a,; kind ibf. - "first come, / first
that in the event of a necessitous
Served"
arrangement, .not-very/
liquidation of the Bank and only
different, however, from the "spe¬
partial meeting of its total liabili-^
cial of fering" procedure Which ha^l
ties, the creditors who hold guar¬ been
in

South

progress

_

j

the

and

ing statutes.1/--;;

higher investment rating than its
This argument
|rests in part upon - fa Calculation

broadcast, Mr.

that

campaign to per-,
participation as*
distributors of the

This would require v
amendment of the Federal
bank-r.

direct Obligations.

nomic problem.

nor

premiums

as I compared

effect

a

active

as.

bonds of the Bank would have

that the South is destined to lead
the nation on its way to perma¬
course

dealers

put forward in
the

their

Bank's bonds.

There is, however, an argument
some quarters to

of

campaign
to
obtain
uniform
freight rates throughout the coun¬
try, recently expressed the view

has

-$280,000
280,000
280,000
'280,000

Arnall

of late by virtue of his

news

Arnall

Amount

,

'

:

,

G.

Georgia* who has been much in

Jamaica Bay Houses Bonds

-

Ellis

something of

obligations.

Prosperous^ South

investment

tual selling groups for this purpose? J
in
long
remains to be seen.
Such groups;
.insurance
have the advantage of
guarantee-'
may % also limit

such

Companies,; and
market

financial

hand, there;

interested

issues,

bonds

large

On the other
active group of

an

mit

in case of de¬
This may cause some con¬
to those investors who are

term

banking in-;

tne

centers.

initiated';,;

Among the

against contingent or
obligations and the

particularly

in

v

the;

banks,;

Bank's, directors
cern

some

on

who are more alert to
the poten¬
tialities of the Bretton Woods
pro-;
gram and have
already

statement that it ban be paid off
at par at the discretion of the

$9,100,000

of

its program
of the

men, particularly those attached1
to the large
commercial

an

fault.

toward

is

carry

/,_•

the Bank for

time to come..

Bank and

part

the Bank! (Article
IV,/Section/?)
under which every bond guaran¬
teed by the Bank must

indications

'

At present there is
evidence of
wait and see attitude

a

;

as

'

through

stitutions

bor¬

guaranteed bonds are not.' This
arises because ofaprovisionin
the Bretton Woods Agreement on

strikingly attractive basis.
Authority, by the way, will
open bids today (Thursday) on

Governor*

the

own
bonds
unconditional promise of
Interest and principal for a defi¬
nite Stated period whereas the

Arnall Predicts

NEW YORK CITY HOUSING
AUTHORITY

of

that the Bank's

iare ;

oh a.

of

and

.

guaranteed

The

total

bonds,

for this likelihood are the
known preference of investors for

additionally

are

the

placed

the

in the interest of the
well as that of investors

the foreseeable future.

are

issue

Bank

reasons

for

Housing Authority, who noted

that

the

offering of debenture bonds
likely to be the principal mar¬
keting operation of the Bank for

inclusive, and

he bidder is asked to

gle rate of j, interest of not
than 1.20%.

a

of

The

Bay Houses bonds.
"will mature serially

issue

"

•

be

some

s

housing proj¬

that the Housing Authority
will be able to market the loan

■'

with

Debenture Bonds to Be Offered

retired,

Jamaica

This

100%; by direct private

Bank

capital; and (4)

the; managers

rowers.

ect to be similarly financed en¬
tirely by private capital, inciden¬
tally, is operated by the New York
City, Housing Authority, which; is
currently asking for sealed bids
until April 2 on an issue of
$1,400,-

This latter point was
empha¬
sized
by ; Philip M. Klutznick,
Commissioner of the Federal Pub¬

rep¬

in

according to Mr. Klutznick.

000

sources of

Sank as

bonds
.development

entire

secured by guarantee of the City

capital.

that

the

by

will be careful to achieve all fea¬
sible economies in the costs of dis¬

mar¬

except for
>258,000 bonds that have already

achieved

ever

obligations of that

which compares
of 1.2428% at

average

nanced.

The total out¬

period

on

average

taken, become the second lowrent housing project to be fi¬

months

$151,266,598 and

cost

and

Mulford

programs,

during the first two

The

which the financing was under¬

This latter fact has been
clearly
evidenced in the results of
opera¬
tions

interest

nature

far from promising.

are

of

success¬

an

tribution,

covers

de¬

items

that the agency

in the sale of

that the prospects form a great¬
ly enlarged supply of local taxexempts, in consequence of postWar

recent

the highly

was

posed of the bonds

minimum,
(2) the mounting evidence

and

the

likely to

months hence.

refunding bonds by the Yonkers
Municipal
Housing Authority.
This operation was twice sig¬

sion
as

is

ful award of $3,142,000 series
A

the

played in the

side
some

2.06%,

the

at

The World Bank Bonds
(Continued from page 1633) y

keted.

the

the supply
velop until

precipi¬

investors

which the latest

mod¬

a

Moreover, judging
increasing reports of
bond
elections, the chances are
that no material improvement on

decline

and

...:

period
a

and

scale.

from

moreover, the price level
remained
substantially un¬

changed, although the
question has witnessed

States

other than

on

erate

ation,
has

rate ' of

that

municipalities, for one reason or
another, have not been able, or
disposed, to indulge in new debt

exceptionally keen and at
which
sharply belie the

levels

private

with

suggest

Marketing of

competition

figures

bid¬

The

capital

Gardens,

private

a relatively
slight gain
disposals of $135,934,588 in
the comparable 1945 months. These

over

the past month or so, in the sense
that despite the marked letdown

entire

Mulford

consisting of $919,000 3% series B
bonds held by the FPHA.
Fur¬
thermore, the Yonkers unit was
able to refund the $2,223,u00 oi
series A previously acquired by

resents but

during

in

1946

the retirement of

Government's

investment

Thursday, March 28,

city of

ferings

new

and

most of the

domestic securities of¬

the

probability

that

foreign financing will

bonds.

reduce

.-:

invest-.
Bank's

'

In view of the substantial vol-!

have

of securities which the

offer

to

felt

that

commission

the
a

market,
stock

Bank.
some

exchange

might well be suffi¬

cient under present circumstances
to
elicit
the active interest of

Volume 163'

gelling community in

is

commission

exchange

stock

the bondgeneral. By

and

dealers,

brokers,

THE

Number 4476

representative of the borrow¬
country .or the investment

the

ing

banker

would

both

or

approacn

the Bank's management.
In this
generally meant Vs to Vi of a
'instance, the issue of bonds would
point-^irt other words, $12.50 to
probably be fully' underwritten
$25 per $1000 bond* Whether this
is adequate compensation to deal¬ by private bankers.
Careful screening of loans which
ers and brokers would depend in
part upon how much of the edu¬ the Bank may guarantee is as¬
,

cative selling the Bank manage¬

sured by the

provisions contained

ment itself; is prepared tb under¬ ;in Section 4< of Article III of the
take and how much is left to the. Agreement; : One of these provi¬
responsibility of its agent. If the sions requires that, a favorable

the merits of

written report upon

preparation of the market and' the

proposed financing, must have
submitted • by* a competent
1 technical committee of the Bank.
larger discount
left

education of investors is

the

en¬

been

tirely; id the personnel, of'the se¬
curities industry, a
or
commission will; probably

These

be

On the other hand, if
the Bank, through its staff, is pre¬ rate

usual
speed with which invest¬

retard

looked for.

1. /

"Suffice;, "

to

of

are

extent the

some

in the United States

ment bankers

pared to "condition" the U. S. in¬
vestment market, a selling com:missiop : commensurate with ; a
Simple. brokerage, operation may

general may

in

conditions

accustomed to prepare an

that

largest' class

the

far

have

vestors in the United

in¬

of

been

substantial investors in highgrade bonds.
Recognizing this

this

was

several

a

to

real

and

made

.This

sahie

reasoning

Commission and that,
literature, the prospecprepared under the
watchful and experienced eyes of;
its staff, should be of real assis¬
the selling

tus,

institutions.
are

they should be afforded the op¬
portunity to participate in the
program by purchasing Interna¬

State

issue

.

tional; B&qk

charter

These

entirely new genus of security,
they might be scrutinized,
care and some skepticism by;
many U, S. investors;
Further¬
more, by some, the Bank's guar¬
anteed bonds and perhaps its di¬
rect'" obligations
also,
will
be
classed as foreign securities.
and

with

insti¬

tutions have also been consuming

bonds if they desired

But this,

an

not,, restricted by
other laws, but only by

provisions.

this direction.

in

process will inevitably
take time.
Bank bonds represent

generally
or

be

educative

investments

Their

will

tance

plies to charitable and educational

development program of the Bank
expressed the view that

to.

a

Exchange

ap¬

interest in the reconstruction and

and many

the bonds

of

registered with the Securities and,"

ment

the

to

stocks

the pressure

Much

which are
investors

aspects

interest

attitude

substantial

in; common

estate.

assure

for new invest¬
outlets, /together with the
high rating of the Bank's bonds,
should give them a warm recep¬
tion by trustees.
.-V ' . ,

and

those

ready market
among
individuals
at
present..
The fact that the bonds will be:

have

and

commitments

press

primary

their investment prac¬

lively

very

the

sions it is

more

tices

brought to their
months
ago.

evidenced

prominent in
and in public discus-,
hardly likely that suffi¬
cient emphasis has yet been given

find¬
and

by force of

become

circumstance

and

savers

Although Bret-

ton Woods has been

held in
further¬

liberal in

Representatives of these institu¬
tions

years,

trustees have

more,

tunity to extend their investment
outlets,
the
present
restrictive
state statutes with respect to the
Bank's bonds

recent

In

cash.

believing that these institu¬
would welcome the oppor¬

attention

funds

investors absorb?

in¬

an

that much of them is now

very

tions

for these

outlets

ing

public, the individual'

other investors

experiencing

creasingly difficult task in

States, their

purchases and holdings of munici¬
pal and corporate bonds exceed¬
ing those of any other class of
investors.
Savings banks are also

and

like

trustees

companies constitute

Insurance

by

for public ; salei r On tjie other
hand, a procedure could no doubt
be-worked out whereby registra¬
tion with the Securities and Ex¬

,

1663

COMMERCIAL 8c FINANCIAL CHRONICLE

rather sizable amounts of. common

to- do so.

stocks under pressure of idle and
hoped, by these liquid funds and a need for higher
early conversations that amend¬ returns than is afforded by cur¬
5
The placing of bonds, with ulti¬
; But these prejudices and qualms,
ments td: liberalize
state laws rent yields on government bonds.
mate investors and the holding of the study by-the Bank's technical
would be submitted to those legis¬ They ; also should- be good: cus¬ will be overcome eventually as
committee,
;.
them over long periods will' be
latures
which - were in session tomers for the Bank's; bonds and the U. S. public comes to under¬
The second of the conditions of
helped, in part by the relative sta¬
stand the purpose and nature of
during the first quarter of this they, have substantial funds to
bility of the market for the Bank's Section 4, Article III of the
the
International
Bank,
as
its,
year.
These amendments would invest.
bohds.; This stability; might result Agreement reads as follows: "The have
Board pf Directors become known
given insurance companies
from the natural operations of the Bank is satisfied that'in the pre¬
Will Business Corporations Buy? and as it becomes more clearly
and savings- banks in such-states
market itself; particularly if the vailing; market
conditions the as New. York, Massachusetts and
Although general corporations understood how all powerful is
Bank's ..bonds, are widely
dis¬ borrower would be unable- other¬
substantial the National Advisory Council on
New Jersey the right to invest in cquIcL p u r c h a.s e
tributed-, among many investors. wise to .obtain the loan under con ¬
amounts
of Bank
bonds,
there International Monetary and Fi¬
the; first issues; of the- Interna¬
;On the- other hand; stabilization ditions, which. in the opinion of
tional- Bank; which m
well be may be considerable-doubt. as to. nancial Problems with respect to
operations through market pur the, Bank: are reasonable'ifor the
quite'attractive from the. inves-? how much, they, will-actually, be the Bank's offerings in the U. S.,
chases> ^artd; sales*. of the bonds borrower," * A; good question is
f, t,
tors' viewpoint.
Some State au¬ willing so. to. invest. Corporations capital markets.
might also- be heeded, especially what' kind oh evidence will: the
thorities,- however, ■ decided- to hold enormous sums in bank de¬ ^-There. is no doubt that individ-;
;in the early periods;* Section- 8 of Bank require to satisfy it that in
defer submission to the- legisla¬ posits and in government bonds ual investors in the United States
"Article IV- oti the Agreement* on the prevailing market conditions
of
short
term.
Their have" ample investible funds to
tures/until after- the - Bank had largely
the
Bank' provides- for certain a given borrower is unable othercommenced* operations., As a re¬ working' capital held in - these absorb ~aljL the bonds that the In¬
miscellaneous^ operations;^ which wise. to. obtain s loan on reason¬
sult, the Bank's bonds will not be liquid forms has increased more ternational Bank is empowered to
include the buying'and selling of able terms?
For example will
The cash
legal
investments" until next than 300%. since before the war offer and guarantee.
securities which the Bank has is¬ the opinions - of "a selected group
and is by far the largest in-his¬ and
bank"deposits held by indi¬
year's session:of these State legissued or which it has guaranteed. of < commercial. banks, or.. invest¬
tory.
There seems little prospects viduals' in this country is esti¬
latures.f
The; Bank- itself* ' therefore;
is ment bankers. be received as an
of their being, offered new- gov¬ mated at over $100 billion, while
vested with powers to stabilize adequate
index.. of the private
ernment issues for some time to the maximum lending power of
Commercial'-Banks as Purchasers
the market for its own securities. capital market's view, of a pro¬
come
except in refunding*
This tft£-Bank if all its authorized cap¬
The Bank may, however, sell
; There
are
certain,, considera¬ jected loan [j Probably the Inter¬ its bonds to commercial banks might indicate the probability oL. ita? ts actually subscribed, is $10
nationalBanlo; will:wish" to make
tions which affect bonds guaran¬
a
substantial demand fox.-Bank billion.
Furthermore, individuals
which are not generally governed
teed by the Bank more than its a more careful and open canvass
bonds by U. S. corporations^ But as investors have been constantly
by State statutes in their invest¬
of .the
private capital markets
•direct obligations.
For example,
ments.
Commercial banks which against this must be weighed the losing
their holdings of highthere is the debatable proposition prior to its approval of a loan
apparent penchant of corporate-! grade bonds and preferred stocks
are members of the Federal Re¬
than has been undertaken hereto¬
that-the bond of any foreign gov¬
through the corporate process of
serve
System are permitted to managements for an extreme de
ernment guaranteed by the Inter¬ fore by other public financial inr
gree
of liquidity which limits refunding at ever lower coupon
purchase the bonds of any one
national; Bank would be as, good stitutions. in the field of foreign issuer in' an amount not to ex¬ their investments to shortrterm and dividend rates and by the
loans, : For this purpose it will
as that of any other government
On balance, there¬ direct selling of new issues to
ceed 10% of their capital and sur-- obligations.
have available a method which
with its ; guarantee.
A corollary
plus.
It is estimated that on this fore, the Bank may find-,. from institutional investors, including
"to. this proposition is. that ; any has in large part superseded the basis these banks could purchase corporations a good demand for commercial banks.
There should,
Bank-guaranteed, bond. of
the older one of direct negotiation a maximum of $600,000,000 of its obligations of short'maturities, therefore, be a healthy appetite
between a borrower and a par¬
v$ame terms will sell at the same
Bank bonds.
It may well be that but considerably less for its more for the new Bank's securities. To

Market Stabilization

Commission
might
be
undertaken / concomitantly
with

Operations

change

bad .-been

-

.

.

It.

_

,

ticular banker, i.e., the method of
which will competitive bidding. This method
be proven true or: false by. the should be peculiarly adaptable, to
combined judgment of future in¬ the needs of the Bank for a pro¬
vestors;; It may. be expected, how- cedure Which is. fair to all* open
to the public and assures a sound
everv that the width of price dis¬
parities betweeni different Bank appraisal of a particular issue. It
is here put forward as the best
; issues wil? be- attenuated by pro¬
fessional
arbitrage
or
hedging method for satisfying the Bank as

price in ; the market as any other.

5 These are statements

whether,

transactions,; Some feel; howeverj

to

that any price differences- in the
various biitstahding. obligations of
the Bank would make for an un¬

loan can

be J. obtained

To

public;

upon

impression

desirable

the

this

the

overcome

Bank could have recourse to the

miscellaneous opera¬

of

powers

tions cited; above and buy. up
issues in the market which might

'

~

be offered at; prices below those
at which other issues, including
its direct obligations, 'were pre*

'

vailing.
Offering of Guaranteed; Bonds

-The method of. offering and dis¬
tributing, bonds guaranteed by the
Bank may be substantially different from that of: its direct
.obligations.
In part, this /differ¬
ence would stem from the mari¬
.

;

the

which

in

ner

issuance

of

guaranteed bonds would probably
initiate.'

the

While

Bank

itself

be, the "j udge as
when and where

would probably

I to

how much,

to float its own direct obligations,
its guarantees

f solicited
•

•

from

would probably be
outside either by

by the
investment bankers.
It may be
that a foreign government wish¬

the. borrowing country

or

ing to obtain funds in the U.

S,

capital markets will directly ap¬
proach a. banker. ; After negotia¬
tions between them, an agreement
to

underwrite and offer bonds to

public might be reached con¬
ditional upon the attaining of a

the

/

guarantee from the
Bank.

"

In

such

an

on;

vestors

.from private, in¬
reasonable conditions

Article

the Agreement.

HI' of

Who Will; Buy the

will wish to permanent form of. bond

place its early offerings with the
commercial
banks,
particularly

Bank's Bonds?

purchases of. the; Bank's dir
rect or guaranteed bonds by stat¬
utes of some, of the states- in which

from

they; are: incorporated;:''• Most
notably this applies to insurance

and

..

sayings

whose investments are

obligations. This may assets, these- sums varying with
quite feasible for the Bank at the stock market prospects as they
the outset but eventually it will appear to the trust managers/;In¬
trusts
generally
are
wish to refund these obligations vestment
and
offer,
additional
ones: for insistent upon
the liquidity of
longer periods than the commer¬ their- holdings, liquidity in this
instance meaning primarily ready
cial bahks may be able to lend.
short-term

be

banks

prescribed

funds

are

subject

in

some

f As of the date of this writing,
however,^it is learned that the

investment/

Very

eign bonds are included on these
lists.

being

an

stitution
are

International Bank
entirely new kind of in¬
and sui geners, its bonds
qualified under existing

The

not

State laws.
and

Insurance companies

savings banks in many State

jurisdictions
from

therefore, depurchasing
these

are,

Co.Common Stock Solil

~

Co., Chicago,

Comstock &

and

Irving J, Rica & Co., St. Paul,
Minn., on March 12 announced the
sale of 2,587 shares of common
stock

(par, $10) of Four
These 2,587

Drive Auto Co.

1,623

saleability.
As the securities of
the International Bank, particu¬

represented

larly
its
direct
obligations,
should enjoy a stable and liquid
market: for reasons cited- above;

for subscription

shares out of

Wheel
shares

unsubscribed

13,269 shares offered
to common

stock¬

;and« 964 free shares.
1
The common stockholders io£
record
Feb. 11 of Four Wheel

holders

they should have considerable ap¬
peal for investment companies, Drive Auto Co. hadx been given
assuming that the yield on'bonds the right to subscribe on or be¬
of the Bank will be somewhat fore March 7; 1946 for a total of

higher than that at which U.
Government bonds, are selling
the open

few for¬

State

Auto

S. 13,269 shares of stock at $20 per
in share on the basis of one new
share for, each 14 shares owned.
market.
important states to the same laws
With the 'issuance of the above
that affect savings banks this is ft There are, however, two factors
14,233 shares (including 964 free
not so general as to preclude their which should indicate a cautious
view as to the Bank's addressing shares), the outstanding common
present participation in the Bank's
stock totaled 200,000 shares.
/offerings to a substantial extent. its offerings to this group to any
First, the fact that the
The
common, stockholders
of
In fact, it has been estimated that extent.
trust

approximately 80% of trust funds
now in, being are free of the re¬

for

predict that this potential demand
be actualized would be to

Will

Four Wheel Drive

laws and administered
by insurance superintendents and
banking
commissioners.
These
laws
most frequently
take the
form of a list of securities eligible
by

;

until individual

preceding discussion has
raised some questions and at¬
tempted to give some answers as
Trust Funds and Institutions
to how the Bank might; sell its
The Bank will no doubt make a
bonds.
There is .also the question
careful study, of., all segments of
as to who will- buy these bonds.
The
discussion has; emphasized the U. S. securities markets and
the : importance
of obtaining a the proclivities of other types of
Among these the most
wide distribution for them among investors.
all kinds of investors.
At pres¬ homogeneous; and perhaps best
informed group are trustees, in¬
ent,; however important - institu¬
While
tional. investors
are
precluded dividual and corporate.
The

companies

offer¬

ings, '

Investment companies or/ in— make a judgment in the realm of
investprs are suf¬ investment trusts may become irr popular psychology from which
4
ficiently informed to insure an terested in holding bonds of the this writer will refrain.
active: public
interest in the International Bank of long as well
as short term.
These companies
Bank's- offerings.
But, in:adapt¬
ing, its financing, to - the commer¬ sometimes carry rather, substan¬
cial banks' requirements the Bank tial sums in cash and government
or cannot
relative
to
their
total
will have to depend. primarily on bonds

required by Sectiop 3,

as

International' barred
event, either ' bonds.




a

the Bank's directors

,

,

.

strictions of the legal lists because
of their terms.

N.

Y./State

adopted

an

It is well known

Legislature

amendment

to

has

the

laws to permit savings
banks to invest in the direct and
banking

gauaranteed

obligations

International

Bank.

of

the

The bill in¬

corporating this amendment. ; is
awaiting the Governor's sig-

now

nature.

/:••-;/••

i,

deposits held by record March 19,: 1946 are to re¬
trusts is not large ceive on March 29, 1946 a dis¬
measured by the amount of bonds tribution of one additional share
which the Bank will be offering of common stock for each two
This will bring the
to the market, and, second, that shares held.
the investment trusts are not de¬ total outstanding common stock

total

cash

and

the investment

pendable holders because of their
habits of frequently switching in¬
vestments according to the trend
of the securities

Individual
There

remains

markets.
Purchasers
to

these

issues

to 300,000 shares.

Cohu & Torrey to

Admit

1 Wall Street,
New York City, members of the
New York Stock Exchange, will
admit John Hall Allen to limited
Cohu. & Torrey,

-

/

consider the

prospects of the Bank selling its
bonds to individuals.
How much
of

up

partnership

might the U. <S. April 4.

in

the

firm

as

of

t

1664

THE COMMERCIAL & FINANCIAL

I

•»<

building
Aires

at

is

leather

and

^Argentina
in

iorida

i-

much

as

New

England.

by price con¬
policies have

market. '

include

This
the

inflation

excessive

the

world

Boston
ton

ond,

does

stop.

flation
flation

that

OPA

still

chine

but

tool

.England.
of

The

it

is owned

in

cost

quantity

produc¬

The
shoes

by

New

the

amount

says

of

food.

in¬

8%

in

of

the

Subsidies not paid

taxes

new

to

paid

are

deficits.

by

moved

new

»

OPA

West,

has

ment

nationwide and worldwide.

are

/§Always New England
its
V

has saved
Always New England

money.

has

looked

to

itself

for

the

sup-

port

and strength that only you
yourselves /can supply,
/Always

in

its

-.

Sooner

or

fiscal

later, this hidden in¬

has

:

American

to

be

faced

by the
the prices
Mr, Bowles

in

consumer

of the goods he buys.

*•»

recent

I years

savings, built up in
centuries,
dissipated
in
thirteen
years
of
extravagance
waste, in peace and
have
watched
the

You

war.

-purchasing

of

power

your

though

even

decline

money

the

principal reunchanged. "• You > have

mained

watched the return in profits and
in
dividends
decline
one
year

/

below another while your costs of

living and of doing business have
increased.

//Because
er,

,,

/

,

'

,

.

.

/

•

of New England's high¬

percentage of savings, the
burdens

does for the less
—

ideate in

nation.
money

•

is

for

na¬

than

you

thrifty and

other

parts
Because / the
.

it

prov-

of

the

unit

unchanged, people

of

•

are

how much its value has
reduced. While your inter¬
est
in
inflation
is
vague
and
limited, its power to destroy your
unaware

savings increases. Inflation is at
hand just as the atomic
bomb is
here. You may never learn
about
the
atomic bomb as/Hiroshima
learned it. You can
only avoid
learr iv* ahout inflation
by recc¬
ing debt and increasing
produc¬
tion.
•
_

Two Stages of Inflation

z/Roughly

and crudely, inflation
divides into two
stages. One is the

expansion of money and credit in
the absence of
production.
That
inflation is here now., The
other

is

runaway
inflation
resulting
from faar.Z
Today's discussion is
directed against this second
and

more

destructive stage of in¬
flation that must result from
con¬

1

tinued spending.
Since
1939,

tn

/fv

.

•

,

according

to the
Bureau of Labor Statistics'
index
of // wholesale ;/
prices, /!£house-

furnishing
building

goods

material

increased

32%,

textiles

1939,

now

cost

-.7":.

$1.39.

$1.00 in
That's in¬

..V.

///

7 That figure does not
include the
rise of prices which
has been, and
will
be, made under the new
■

are

no

talk

about

in

terms

lions

of

dollars

savings
to

owes

in

debt.

It

must

no
s

at

good

reason

p e n t

With

full

current

people

wages,

biles,

radios,

less

/////

■/'•"'z/Z

■■■

/1

-

The

free

the

is

sands of

and

things the American pub¬

the

We

bil¬

need

to

test

Adminis¬

every

the

nation

tration

be

talked

Will
it
help production?
Our
general attitude must be that' if

policy

by

the

trol

is

by

the

the

price control that
right things get
made
in
the
right
quantities.
Price control by the
American
housewife is the kind of:
price
that

assures

the

overwhelming.
OPA gives lip service to

The

the thesis that it wants to

remove

controls; but its operation hinders
to

nesses

With

3,000,000 busi¬

regulate

and

8,000,000

prices to set and police, it is not
possible

bank

deposits
bonds, savings/ cor¬

With

others

for

of goods—plus the
capacity of all the
people and all businesses. This is
the "potential"
buying power that

create

Inflation is caused, not
by the
existence of these "liquid

mere

they have to
What

can

frightened
of

their

ings"?'./
There
1.

pay

•

// ::

are

People

future

still

more

get

world.

on

is not offset

now in existence.
The
has. ended everywhere in the
world except in
Washington."

er

The need for economy is
great¬
than ever.
The Tax Founda¬

tion has demonstrated that
budget can be balanced at
billion
mit

less.

or

This

would

reduction of taxes.

create

incentives

to

•

the

$20>
per¬

It would

investment.
buy
tools;

1936-39 level and

figuring profits

net worth instead of
upon
the volume of sales
.destroys the
incentive to try to
upon

all-out

the
Administration
predicted"; eight
million
unem¬
ployed. It prepared for deflation.
It

sponsored, wage increases.

limited

OPA

production,

causes:/., shortages,

frightened
because of Government
financial
policies.
Continued
large
def¬
icits are
likely to have this effect.

of

Administration's surprise,
conversion / by
industry
promptly completed.
held "their
savings
production

of

and

< an

What

•

if

can

we

price controls

goods

are

*.r

greater

look forward
on

z

"

to

manufactured

increases, intended

.

>

7// '

!:

/ ///'

up

•.

to

.•7.

pre¬

deflation, actually increased
Secretary
Wallace's
formula, used to obtain wage in¬
creases, was disavowed by him as
worthless two days after
the. General / Motors strike was
settled. The

Administration's

tribution to

inflation, therefore, is

con¬

MacArthur

ary,

no

such. It is a jerrypatchwork of. expediencies.

It is based

as

subservience of the

on

in

America

if

inflation is to be prey
The Allied command der
manded
that
deficit
financing
vented.

,

and added this order:

cease,

7

7

■

1.

The

Japanese

^

must

cut

Government;
to

expenses

the

mini¬

mum;

2.

Deficits

from

be

must

the. saving

financed

of the Japanese

people—or from actual bank de-f
posits rather than from newly

printed currency;
3.
The Japanese
must

r

* -

/

Government

refrain

from selling to the*
Bank of Japan or other banks
hypothetical obligations demand¬
ing in exchange actual circulat •

ing.

currency. *

Mac Arthur ^

Japan is

fiscal policy iot
plan for solvency.
It

a

should be New England's plan for
America.
Federal spending must
we

to amortize

are

$279 billion with

over

which this nation is burdened. We
must

stop adding to the
not five years hence,

now;

tions, like individuals,

debt

Nay
their

pay

debts only when they plan td do
Debt retirement at the rate of

so.

Administration to CIO.

do

must

runaway

be reduced if

has

the

policy. He required
Japanese Government to do
Japan what our own Adminis¬

the debt of

Administration

required:

the

not

The

// \

.

policy is well
known
in
New England.
It is
well known in Tokyo,, In Janu-»

production

confined to its prevention of
and
its
increase
of
debt.

policy.

/ Correct
; fiscal

being

disputes can. be settled $1 billion, $2 billion or even $3
peacefully with justice to labor, in¬ billion a year would be regarded
dustry, the public and investors, as onl'y token payment in view of
Labor

when

the

Administration

the size of the debt.

quits

tion

bailing labor out.

business

structive Z program
for
about industrial peace.

The

con¬

The

2.

solely
people
tisan
ment

3.

labor

z/.///...:

./ '//•'"

should

serve

■

/;.?x>. z

Collective

bargaining should
be
conducted
just as close as
possible to the plant level where
disputes arise.
•
Such

the
It

a

program

would

peace

in

no

for

would

make

of

industrial
curtail

sense

basic rise of labor.

protection

;

,

possible

the

the

public interest
assuring
a
co ntinuous
goods on the market at
prices which would be fair to the
public./ At
the
same
time
it
of

lion

r

.

.

.

*

.

(

'

J

'1

Government

billion

of

$29

a

'.-'J

'

at

than the

more

revenue.

If

the deficit is $4

billion, the sup¬
ply of money actively seeking
goods'" is immediately increased
_

by that amount.
The supply of
goods in the market remains the
Prices

same.

flation.

To

go up.
That is in¬
the Government, any

proposal to cut expenditures is
politically unwelcome. Always a
heavy tax load to support Gov¬

expenditures,

suppresses

production.
The explosive nature of deficit
spending / arises from the fact
,

that

it

money

want

„

to

would enable management to pay-. is
-paid
.

:

.

Association

is figured
$31.5 bil¬
Expenditures of $35.8 bil¬
are
planned.
This is $4.3

the

lion.

ernment

.

through
flow

by

an

labor.

or

liberal
services

the current fiscal year

re¬

and

umpire; and for the
as a whole, not as a par¬
suporting either manage¬
as

National

.

' V'■ duction, ? will' be: adequate-y to
serve this nation.
The revenue of

law, and equality of

Government

Debt reduce

lasting benefit

billion budget, including debt re¬

pro¬

1. There should be equality be¬

fore the

a

Manufacturers believes that

bringing

is briefly this:

gram

be

,

manage¬
a

would

Any
advantage
from
spending
on
current,
would be temporary,

NAM' Labor Program

before supply sponsibility, between
demand on an1 management, v / •.%/.;

'

was

public

waiting for
Therefore,

removed

-

re¬

inflation.

American

continued

even

danger of inflation.

goods.

The

ment- believes that it has
means

To

the

,

Effects of OPA
Policy

Continuation

policy that is
Wage increases

would /

basis by correct fiscal

tration

inflation

vent

will

accuracy
of
OPA
guesses, instead of upon the real¬
ities of
the marketplace.
And
holding profits 25% below the

sav¬
.

;

needed
labor

a

end,

wage

high,

points of unbal¬

war's

the

upon

value

//'•/;/// ■/■ --

second

non-inflationary.

production.

"liquid

three basic
may

too

production

^

and

_',

Labor Policy

The

people to get

the

over

money

prices

low,

get

for goods.

cause

rot

the

by goods

in

"

facts, labor
policy
will make production
dependent built

savings." It is caused by people
actively using these "liquid sav¬
ings" to bid up prices.
Runaway
inflation is caused
by people be¬
coming frightened over the fu¬
sav¬

prices too

ance// Fixing prices on the
basis
of QPA's theoretical
estimates of
future
production
a nd
costs,
rather than on established

times—the real "in¬

"liquid

some

and

tempts to correct this unbalance
by price adjustments will always

flationary potential."

convert them
into goods—no matter
what price

some

too

delays

out
of balance
because
producers will naturally concen¬
turning out those, goods
which are most profitable.
At¬

,

their

prevent

trate on

.

of

to

remain

>

value

and

correct fiscal

prosperity

I////:/: //// /; /z /

without equivalent increases
in
production are inflation.
At the

the proof must be

^inflationary

ings" and rushing to

for

those who advance the
policy and

policy restricts production, the
burden of proof has to be on

poration bonds,
mortgages, stocks
—in brief,
everything in the form
of "liquid
savings" that - can be

ture

rust
over

Japanese Government to follow a/

maximum

a

production.

into cash and used

con¬

housewife

of

safeguard is

confusion—with

exists at all

one regrets
incurred. ; The

war

effort

Price:

American

kind

question,

high, others too low.

purchase

No

losses

goods produced
battlefields all

every manufacturer to meet
the wishes of the American
house¬

is, real price control.

the

the

be spent.

money

The money printed z

of

first inflation safeguard is
production of the thou¬

potential" in every highly devel¬
oped economic system. This "in¬
flationary potential" consists of all

converted

to

the

,

market

♦

Investment

The

worth less and less.

Government

had

markets, not by the money

supply.
/

the

Tools would create jobs. Prosper-/
ity could be put on. a permanent;

all-out

blight¬
ing, greedy hand, can make the
workingman's wages, though they
be more and
more* actually be

currency,

good

buy automo¬
washing machines,

by competition

in free

'

,

validate

can

budget./ should /be
bal¬
anced.
Before the war, $40 bil¬
lion was spent to create
employ¬
ment,'but in January, 1940, 10
million were unemployed.
/The war had to be won. Money

and

*

■

|

alone

.

can

Runaway
inflation
can
be wife, to give her what she wants
by three / principal safe¬ at a price she thinks is fair. That

ernment. The people can't
pass the
debt along. They are the end
of
the line. Inflation with its

an

at

y:

The

purchases.

employment

.'./:

Financing

issued by the Administra*

money
tion.

is

,

/'•/

Deficit

third

which

why savings should be

for

•

there

wages

and

guards.

terms of what is owed
by the people who pay for gov¬

There always is

ac¬

convert

money into goods.
If we have
full production and full
employ¬
ment

workers

safeguard is to end
deficit financing. Deficit financ¬
ing
creates
money,
credit
and 1
purchasing power without pro¬
ducing the goods and services

redemptions,

of

rush

wiia

its

averted

free

of

that

The

savings.
significant in¬

no

End

7

to

/

to

wages

dustry. 7.7.

whole

a

inclination

bond

war

in¬

wartime

drawing down

counts,

cam¬

catches up with
Continuing
the
wage
formula—an
money-printing
impractical
item-by-item basis—before there
presses is almost certain to
political attempt to inflate
do so.
'wages
are
enough automobiles to meet
and deflate
2.
People may get frightened
prices. This price in¬
pent-up demand?
because of
^
crease, Marriner Eccles
continuing and grow¬
says, may
Would prices
reach 10%. That's
skyrocket? Many
shortages / of goods.
inflation! This ing
Con¬
t
inflation
does ? not' include
unless the Government people think so.
the versely,
is running the
But do you think
breaking of its own price line
women would
printing presses, a
by
OPA to gain
Congressional sanc¬ rising avalanche of goods gives stand in line to buy nylons at $6
tion
fo/ extending its controls. Al¬ people confidence in the future or $8 a pair if they knew that
lowed increases in
next month
prices of meats, value of their money.
they would be $2?
grains, textiles will
Do you think
3. People
continue to re¬
people would pay
may get
frightened
duce the
$10,000 for an automobile if
purchasing power of the because of scare
they
propaganda — are
doTar until production
convinced that in three or
of goods at statements that
prices are going
a fair
six months
profit is permitted.
Goods up—that
they can buy the same
the
nation
is
on
the
which cannot be
car
for $1,000?
made at a fair verge of a
Do you think a
disastrous inflation,
profit just don't get
store could sell a
made. Tnat etC.
V
simple white
/ :
is how OPA
shirt for $10 if
restricts production.
people knew that
///■:/:'// Bowles' Position
It increases
in a matter of
inflation. ^
/
/
weeks they could
Mr. Bowles said
on
;
This inflation does
Feb.
18:
buy all the shirts they want at
not include "It
would be. difficult
to exag$1.95?
People do
not
bid




in

and

as

competitive production and lic wants and that business wants
pricing, the sooner the danger of to
produce—washing machines,
inflation will be re¬ automobiles,
r a d i o s,
clothes,
shoes, food, f arm machinery, control that assures
Inflation is not
something to building materials, furniture, etc. production—jobs and

21%,

45%, and food 54%. In the terms
of .what the
people can buy, goods
that could be
bought for
flation !

to

no

clear

runaway
moved.

.

even

back

Subsidies

worth

full

borrowing
.»

get

is

no

their

There has been
crease

Inflation

NAM'S Position

we

inflation.

ZZ/IZ- /' '/''//

NAM's position is that the sooner
the bad news of inflation is re¬
vealed to the, people, and the
sooner

In Feb¬

redeemed/ This

continuous

shown

squander

Safeguards Against Runaway

i! j;,

''t1-

*e) \

stage.

lave

sec¬

''

;

been

:

/•.* vi^

We

billions in exchange for votes of

about in

tional debt of $279 billion carries

greater

u

have

you

watched your

three
and

*■

it

pressure groups.

New England has expressed the admits/that whenever price con¬
trols are taken off, / this
Conservatism ' that
hidden,
grows // with'
inflation will cause prices to rise.
cash and fades with
spending,
tin

the

fear

creasing shortages.
So far, the
people

stage of in¬

avoid

runaway,

become

policy.
flation

must

good

a fair
profit for those who
risk their money in American in¬

earn

only when

etc., out of current earnings, as
they always have/in: the past.
less; if Every dollar of goods
produced
the cost of living,
goods, clothes, simultaneously
creates a dollar
household
furnishings, daily ex¬ of buying power—in
wages, inter¬
penses, are not to go higher, this est or.
prof its, If we'produce $150
inflation must be
stopped noW. billion of goods and
services, we
Inflation can be stopped when¬
thereby automatically create $150
ever
the
Administration
quits billion of buying power.
spending the nation's money in
Prices are fixed

not

.weaknesses

/•/'•■./ /

is not true.

first

they

propor¬

ouflage that hide inflation. If the
people's savings, their \yar bonds,
the money in their
pockets, their
insurance, their wages, are not to

stopped inflation.
It is only trying to conceal infla¬
but quality and quantity
produc¬
tion of shoes still thrives in New tion from the people.
England.
New England is: the 0 OPA is a camouflage operation
financial parent of industries that to hide the true facts of Govern¬
also

Thursday, March 28, 1946

.

continuing confidence
in the ability of this nation
to
pay its debt.
Rising prices are not causes of
inflation. They are the
symptoms

present being hidden
Government subsidies, which

by

ma¬

industry moved West,

much of

tion

them.

possess

include

the

We

.

evidence of

at

not

in

or

than

This picture of in¬

does

management that developed them.
It is largely New England
savings

CHRONICLE

■

ruary, the public bought $60 mil¬
lion
Government
bonds
more

prices

.

cannot

*

,

explosive

statement

flation.

as

manufacturing devel¬
oped in the South, it was New
England savings and New England

I,

:/ /

'

still

are

for J the/' constantly •
are
increasing
grown
with
their market. When cot-' black-market goods 'which OPA
creates
and
textile
officially/., admits,: it

;of

reached

This

low-priced goods,; shirts,
shoes, overalls, house dresses, off
the

:

the

tions."

not

*

.

driven

-

*'

*«■•••

gravity of the infla¬ prices
when
an
avalanche
of
tionary crisis we face
Every¬ goods is coming onto the
market.
where the inflationary pressures
People bid up prices

the higher prices the general pub¬

in many parts

crops

'

,

have

trols

the

producing
parent bank here

as

wool

in

v

lic is forced to pay
because OPA

'

Buenos

home

wool

industrial
The

in

99

at

,r

..

gerate

The Inflati on Outlook
(Continued from page 1632)

.

is

borrowed

which
use

out

someone

for

money

did

consumption.

by the

—

not

It

Government,

,

«■-.

v

/

f:

Y

r.!,,?1'

.«•

'

Volume

r':. •'"l

' .'i-'" ^

'-i1;1

to public ' ser¬
of it im¬
mediately on 1 consumption.
The
failure of the Government to col¬
lect sufficient taxes to
avoid a
largely

however,

vants who will use most

leaves the uncollected
pockets of the public.
Shortly 'the
uncollected tax
money will enter the market in

deficit,

*

taxes in the

search of goods.
'

Limits

of

production

the

on

and the creation of debt
further in¬

money

must be established if

flation is to be

A The

prevented.

„

•'

'.Vj:

War

"World

iave

-V 1^ • -'

'

■" ■'

-

'

of

coins.

your

Deficit

£

financing

is

gamble where you can't iwin.
ypu sell yourself out of business.
a

:

/

all

robs

page

'■

potentials and when

of

so

particularly
national

many

people,

it

important V that

debt

policy

be

is

government-securities to
non-bank
holders : who
might
,

of

of

end

November,

1945

lions of dollars):

(in mil¬

•

Mutual

Savings Banks—
Companies
Other Investors' holdings:

8.9

the fact that in 1944 the Exchange

•

received the benefit of the carry¬

'

^

;

„

100.0%

ing OPA to cover up a basically
unsound position, instead of cor¬
recting it.
'

travel

groups

program-—

elimination

fiscal

sound
of

three-fold

of a

adoption

The

price

policy

controls to

permit production, sound wage
policy—would not prevent a!"
price increases from here on.
Present Ceilings Will

Nothing 3 can

Not1 Hold

price

prevent

•

is

policy which
urgently needed." ,
?

so

Mr. Schram
was a

Transactions

reported that "there

further increase last year in

of share transactions.

the volume
A

comparison with recent

years

shows to what extent the

;ies

its

of

regular additional compensa¬
to employees are related :to
the volume of trading on the Ex¬
tion

recovered from
extremely loW point of 1942
the

volume

change and the number of em¬
ployees on our active payroll for
the period.;! In addition, the Ex¬
change paid to emDloyees a yearend bonus for

"The

since

1913

create

new

causes

that

pressure

will support. These are
being offered as concessions - in
anticipation of votes. - This - Ad¬
ministration policy, if pursued,
must gradually reduce a rich peo¬

ple to poverty.

-

*

that
England- great are
needed in the Administration to

made

fiscal policies

sound

The

New

keep America solvent. The Ad¬
ministration ; must quit searching
for causes, behind which pressure

increases above the present ceil¬

groups can be organized to press
That is true because of the for expenditures of billions of
of purchasing dollars in exchange for votes.

ings.

accumulation

vast

in the hands of the pub¬

power

lic as a result of the war

financ¬

ing, and because of the Govern¬
ments drive to increase the over¬
all level of wages by 15%
to
20 %'Those

I

Our

I:

factors1 assure

as

that

problem is to keep this price

low as possible.

take

constructive
to pile

continue
-

■

will have to pay a price for
What
has
already been done.
We

power,

duction,

If we fail to
action; if we
purchasing

up

continue to curtail pro¬
continue to force in-?

: : creases in the

cost of production

is almost certain to be¬
unbearable. The
Government debt
over¬

the price

The

budget must be balanced at

tax

levels

that

The

duction.

fix the needed

will

tax

assist pro¬
funds should

peacetime Admin¬

expenditures at less than
$20 billion.
, I;'1"'
/r.,
istration

The

»

Administration

must

quit

labor with inflation
each time it gets into difficulty.
out

bailing
The

present policy of inflation by
injections in billions of dol¬
is at the cost of every citi¬

conceivable

management of
is

a

specialist system.

It

months),

stantial number of the more thdn

The

year

any

*

-

Total Shares

1942-.-

1943--..
1944__.

1945—

125,685,298
278,741,765
263,074,018
377,563,575

300

icy and other fiscal policies. Their
inter-relationship is such as to
require ai coordinated program
The problem is a grave one and

"TVtra

The

xrnlnmO' rt-f
volume of

volume

people,

where

transfer

d

the
will

debt

belongs

banks

enable

assist

production.

Pro¬

duction.

It should be determined

by

hangs your job, your chattels anc
whatever savings that you have

debt.

solvency

assist its solvency.

debt.

On this

program,

nationa
tools can

what reduces

sound

fiscal

increase;
increase; venture capital would
return .to the market.
Jobs can
can

Production, if unfettered by the
policy of deficit financing
Administration, will increase the
levies its costs against your living
be provided, wages can be raised,
S and your future just as surely as making of much needed goods as
a
can
be, made
partial offset to the national and % prosperity
:
it pays interest on Government
debt.
If it is not unfettered, the available for all of the people,
bonds. Deficit financing reduces
debt will increase as the nation a On this sound program, New
the value of every insurance pol
moves toward insolvency.
England grew to greatness. ?Our
icy on every life in this hall, on
'
The Administration should quit nation became great.
every
relative ; and friend you
It can again be great when we
have, by reducing the purchasing pushing its debt into banks bycoercive
methods.
It
should
live within our income and libpower of the money.
Deficit fi¬
nancing reduces
the value of transfer more of the bonds now erty is restored to all the people,
v

Your




As

services.'

&n

with the

report

the

of

date

I

the past 25 years
equal to the 1920-1944

over

with the abnormal years
of 1928 and 1929 left out of the
calculation.
/
average

was

***»

Completely

tO

basis of operation.

3 peacetime
Aa of Dec. 31,

1945, the Exchange and its affiliated companies had on their active

payrolls a total of 1,160 employees,
compared with 975 as of the be¬

ginning of the year."

.

that these and

"It is important

to our capital
clearly understood.

other facts relating
markets/ be

Any imisihterpretation of the, facts
could operate to the detriment of

L. E.

Carpenter Stock

An

underwriting
syndicate
our markets at a time when their
headed by Burr & Co., Inc., made
smooth functioning without un- a public offering March 27 of 129,necessary restraint is essential if 242; shares of L. E. Carpenter* &
we
are
to have a free flow of Co.!($1- par) common stock'/ at
capital into productive enterprise, $10.75 per share.
/ Vr y!;
The financing of the reconversion
Proceeds from the sale of 50,of our war-expanded industries to 000 of the
shares, which are being
a

peacetime basis and the reha¬

sold for the account of the com¬

bilitation of large portions of the

pany,

world, devastated and industrially

tion

will be used for construc¬
a permanent addition' to

of

,

goods cannot entirely
validate the nation's outstanding
can

re-

sub¬

^prepared, there
were !
approximately
125
em¬
ployees still on leave of absencb;

in 1945; as a matter of fact, was
smaller than the average annual
and about

a

.

duction

of

this

while

absence

of

armed

1,470,502,630
1,489,367,030
1,492,277,716
.1,592,111,825
+rurlirtcf
trading

in

fortunate'

was

the

war

employees who had been

leave

(Year-end)

cViora
share

the

impoverished by years of total the Wharton, N. J., ..plant and fpr
should
be
faced
courageously war; will require healthy and ef¬
the acquisition and installation of
without
permitting any. single ficient capital markets. • - ; ;:;
additional productive facilities, as
group,
whether government or
well as. the moving of
certain
private, to impose its views or
Net Income for 1945
equipment from the Newark plant
wishes regardless of the impli¬
"The consolidated net income of to the new Wharton addition. The
cations and consequences to the
the Exchange and its affiliated other 79,242 shares are being of¬
economy as a whole.
I strongly
companies for 1945 was $856,026, fered for the account of; stock¬
urge that an able commission be
<<) "
compared with $673,758 for 1944, holders. ;
set up representing Congress, the
an
increase
of
approximately
Company was organized oh July
Treasury,
the Federal Reserve
$182,000.
In addition, the Ex¬ 2, 1925, under New Jersey" laws,
Board/ the commercial banks/ the
change received as contributions for the purpose of taking over
large non-banking institutions and
to the capital investment of the that part of the business of the
other groups to study this whole
Exchange
from
initiation fees Zapon Company which-was rep¬
$248,000 in 1945, compared with resented by the manufacture and
in. banks into the hands of the similar fees of $160,000- during sale
of lightweight coated fabrics

come

It

pol¬

take

Administration
off

Debt policy

cannot be divorced from tax

must

and at the cost of

Outstanding

Continuing, Mr. Schram noted: I
*

of

end

obtaining the services of

.

Total Reported
Share Volume

Year—

the

"With

,

and child is involved.

production by increas¬
ing available funds. The Admin¬
istration's policy should be de¬
termined
by what assists pro¬

economy.

restrictions

bur national debt

the welfare of every man, woman

to

of Boston

the

task for the best intelligence

lars

total

»■»»"

Exchange

statesmanship in this country.
is no exaggeration to say that

This

zen

lot

Board

(not
counting 1914 during which the
Exchange was closed for several

and

wage

the

policy

'V*

ser¬

the year with reference to floor
trading and the operation of the

the Exchange was the smallest

on

10%.

the Coist
special studies prepared for
of Governors
during

of the
the

transactions

of

1945 of

of 'professional

item

vices research' represents

securi-

business has

when

for

the Exchange

tion Bonus Plan' whereby amounts

is

particularly; interesting in that it
i

.

year

A

Volume of Exchange

"The establishment of the wis^-

est

'

.

adopted an 'Incentive Compensa¬

of the broad national

,

^ representatives

1

losses.

question and submit recommenda¬
tions looking to the establishment

Administration improvises istic plan to balance the budget. sume the risks of equity invest¬
Until it is balanced, we cannot
One unfortunate policy to correct
ments, and has made a major
another unfortunate policy. The sweep back the rising tide of in¬ problem for life insurance comflation. There.. are plans to keep
attempt is being made through
the budget unbalanced. Adminis¬
the OPA to correct the inflation¬
America and abroad to invent and

:

respect

20.9:

$263,416

—

The

tration

of the tax law
previous years'

provisions

with

"During the

;

method of financing the war,
which piled up such huge liquid
debt.
The Administration is us¬

to

over

,

ary

including bonuses

15.3

& 40,200/
55,000

•

'

,

advertising prd-

The

-•/!

1
u-

''

by

$528,000. The large increase in the
item of Federal taxes is due to

3.7

/"/•/ 8.5

22,500

....

f

paid to employees during the year,
increased by $671,000, and Fed¬
eral income
taxes were
up
by

32.5
•

!

'/,•

1945 exceeded
approximately

for

expenses

aries and wages,

10.2%

>m

Insurance

Non-Marketable Securities

.Vy

$1,834,000.

of Total

Banks

Street

Broad

20

gram mentioned earlier accounted
for $464,000 Of this increase; sal¬

,

$26,844
23,472
85,600
9,800

Commercial Banks

Marketable Securities

the

"Expenses
1944

government

Millions

device

a

distribution

Agencies and Trust Funds

Reserve

in

Expenses for 1945

Percentage

Federal

during the early

Building.

interest-bearing obligations at the

of

U. S. Govt.

loss

•

the

.

the

the

to

tenant

and ser¬
vices, and (3) to avoiding further
increases in bank holdings.
f
"The following tabulation shows

directed

,

which would otherwise add

come

our

(1) to maintaining the attractive¬
ness

due

part of the year of the principal

to the demand for goods

ing power of the dollar is in the
minds

Free Markets

on

them, (2) to in¬

tercepting the flow of current in¬

to giveTotal
gifts to pressure groups at the
Expand the Economy to Meet
; "Almost one-third of the total
expense of all the people.
It is
Expanded Debt
a selfish plan
to enjoy privileges debt today is held by commercial
The only way to handle the
and immunities in the present at banks which also, during the next
Governmentdebt is to expand :;he
several years, may have to assume
expense of our children and
the economy to fit the debt. The
grandchildren in the future. Def¬ a substantial part of any securi¬
debt can be destroyed by delib¬
icitfinancing is' a war on. all ties issued to replace non-market-erate repudiation. 1 It can also be
able securities held by private in¬
American savings from Plymouth
destroyed by - runaway ' inflation; Rock and Jamestown until now, vestors when they are turned in
The necessity of expanding the without
a
declaration
of war. for redemption.
economy to the scale of the debt f Deficit
financing is an invasion
"Treasury policy of recent years
snakes labor peace .vitally impor¬ of the
purchasing power of the has been dominated, insofar as
tant. We cannot have production
poor.
It reduces the ' amount of the entire structure of interest
Stoppages. Labor troubles are di¬
groceries the housewife can pur- rates is concerned, by the desire
rectly tied to OPA in the new cha se by increasing their prices, to
keep down the cost of borrow¬
Wage-price policy of the Admins
t increases the rent of the poor ing. , But the question now arises
istration. The Administration says
by adding the increased tax bill whether the saving in interest
it fears inflation, but it inflates
of the landlord.' Deficit financing will not have consequences more
wages
and restricts production. raises the costs of shoes and
costly in the end than rates of
If the Administration wanted inclothing by increasing the costs interest sufficient to provide a
flption/"its present policy would of the farmer who supplies cot¬ sounder
money, market.
Higher
assure it.
ton,. Wool and leather,: Deficit interest rates would make it pos¬
Recognition is given to the in¬ financing invalidates the wage in¬ sible for banks to sell some of
flationary pressure of the monies creases of labor by reducing the their government, bond holdings
proposed for loans to foreign purchasing power of the money to non-inflationary buyers of the
are
governments, so far as the monies with which the increases
types above mentioned. Idle bank
have call on American goods. Yet paid.
Deficit financing menaces deposits would be attracted, re¬
there
is
no
indication of the the security of all Civil Service ducing
inflationary
tendencies;
slightest consideration by the Ad- employees,
of all white-collar and currency in circulation might
workers who function as servants be reduced, adding to bank re¬
f ministration of the inflationary
pressure of a deficit equal to the in all parts of the economy but serves.. ^
f ItS® & ^
proposed British loan, when that not as pressure groups.
"The whittling away of interest
deficit comes onto the market in
rates has resulted in real hard¬
No Realistic Budget Plan
the hands of American public
ship to institutions and individuals
The Administration has no real? unable to shift their funds or asServants, seeking goods.
is

peacetime,

1665

otherwise convert

1637)

to the future purchas¬

as

concern

for retirement or for
Deficit financing, hi

education.

'

In this period of vast

ings banks.
inflationary

on

and young,

J\/ V

'

(Continued from

the sunset side of
on fixed incomes or
annuities,
and - who
lack
the
strength to re-enter the ranks of
workers. V Deficit
financing
re¬
duces the values of trusts for old
elderly who
ife depend

v'

Schram Scores Curbs

Government
bond
you
bought; of every mortgage,

that you own. Deficit fi¬
nancing goes through your safe
deposit box and reduces the val¬
ues
in it without 'opening
the
box. Deficit financing reduces the
value of every savings bank de¬
posit without changing the credits
n your bank book. Deficit financ¬
ing reduces the value of the money
in your pocket while you hold it,
without changing the numerals on
the folding money or the figures
on

''

'■

THE COMMERCIAL & FINANCIAL CHRONICLE

if any,

after
it

-

every :

The in¬

history of Europe
I shows that

flation

,■

1,

security that you hold,

every

by busi¬
nessmen
during a runaway in¬
flation would shrink as fast as
any others. In disposing of goods,
the businessman would have little
chance to replace them./ No one
would want his money.

r

-

■

in

taken

dollar

•/.

v

4476®

Number

163

-

r

1944.

commonly known

expanding
volume
of
trading on the Exchange resulted
in. substantial increases both in
the income and expenses of the

artificial leather

"The

Total income for 1945
$7,509,850, an increase of

as

or

imitation

or

leather cloth.

For the year 1945 the company
has reported total sales of

$9,316,528, and net income of $205,401.

Exchange.
was.

$2,044,778
A

large

was

over

portion

income for 1944.
of the

increase

accounted for in listing fees

received

during

the

year,

which

totaled

$1,718,000 for 1945 com¬
pared
with
$741,000 for
1944.
Other items of income directly
related to the volume of trading
on
the Exchange also increased
during the year. The, one item of
income which showed a substan¬
tial reduction during
that of rents which

the year was
decreased by

approximately $57,000, this being

1
I

Russell Rovvies Opens
Own Invest!men! Firm
HOUSTON, TEXAS—Russell R.
Rowles has formed Rowles & Co.
with offices in the Bankers Mort¬
gage

Building to act

investment securities.
was

formerly

mar

& Co. and

Co.,

in

office.

an -

charge
!/•.

-

as

dealers in

Mr., Rowles

officer of Ditt-

Mahan, Dittmar &

of

the

Houston
j

1666

THE

Rude
(Continued from page 1630)
cuddling and courting the Rus¬
sians
as

as

integral part of

an

alliance in a fashion
that might be denied without los¬

conceived One

World,

naively

a

as a kind Of

be

"democracy"

that
cannot
do
As a matter of fact, the
fundamental
axioms
of
the

Other

and

prin¬

perfect gentleman with whom

around

Russia

thereby

and

to

more

-

the

the

expansion,

ruthless-exploitation

Soviets, obviously to

the

impression that

ment

the

tion -authorities

in

Berlin

Soviets

erwise.; This
Churchill
"for

the

-

the

fall

fabrication;

merely

want

"security"

of

harm

no

Dealers and Labor parties

to

course

their

<

of

does

lution, thfeft. all

the

occupied ter¬
ritories and beyond, it meant the
complete fiasco of the Allied pol¬
icy of appeasement.
' *'«'<■ *'

completes the picture.

On
efforts

brought
about
a
farreaching
revision
of- American
foreign policy is, of course, not a
to the

tic

Charter.

of

Iran

ethical

more

value

of

are

to

the

no

State

Department (and, for that matter,
to the Foreign Office) than the
inalienable rights of Poland and
Yugoslavia, which had been sold
down the Volga,
It was British,
lesser

to

extent,

submit

to

a

foul

to

old

nationalistic

greatly

enhanced

enthusiasm,

through

seven

years

of

war and immense suffer¬

ings,

is

inflamed

by the

looting

of Manchuria and the obvious at¬

tempt

to

apply sovietization
Mongolian pattern

the Duter

northeastern China

as

on

to

well/China

is

being carried by a nationalistic
wave against Russia as it was car<ried'against Japan in 1937. Wash¬
ington is faced with the explosive
prospect of a -Sino-Russian con¬
flict

unless

outset.

'

it

is

stopped
'

'

at

the

•

:r.:-Far more Urgent ahd effective
is London's pressure. ; In despair
over

•

the

British

future

officials

the

of

make

Empire,

no

bones

about their

resolution, implied in
Churchill's speech, to fight if the
Russians penetrate forcefully into
Turkey and Iraq, or to "the Per¬
sian Gulf and

the Mediterranean.

They

permit

cannot

foothold

in

a

Russian

Italy

(via Trieste),
nor
the cutting "across the Em¬
pire's' throat" by way of Saloni¬
ka,
Tripolitania
and
Eritrea.
They also are aware of the fact
that

Russian

be

thrown

the

on

street.

concessions

in

fered

"fraternal"

the

on

a

Iran

neutralization

nelles

basis,

the

of¬

trusteeships

Italian

a

of

Gulf, and

volve

Soviet military

Russia

seems

nonsensical

tentialities of another
devastating
for the sheer benefit of some

tion

which

war,

it

idea
to

public.

to

During the

.

blocks

the

conclusion

of

treaties, and that the So¬
policy of an "iron curtain"
around the occupied lands, Which

fed

peace

become

viet

hard-headed

are
being systematically bolshevized, disrupts Europe's economic
.system, reducing to nil the Chances
of
its
recovery,
and
therefore

those of Britain

as

well.

far, what is done in the first place
is
to follow
Vandenberg's pro¬
found advice, and talk "bluntly"
them.

en

to

Russians/ hoping to fright¬

send

and

no

It

was

Churchill
one

a

shrewd move
to

familiar

the

front—

with

such

operations doubts that he was be¬
ing sent—to bring home to Mos¬
cow
the threat
of
an
Anglo-




another

crowd

trop), the emphasis shifted
run

ideology toward specific and
The underlying
thought does hot change,-for rea¬
immediate goals.

sons

fectly plain, by words "and deeds,
that they are as totalitarian
"and

her

they

Promptly,
The

have

a new

has

an

myth

was

day

ran

yond.

excess

of

<*e'*-eontained

and

"accordingly

as

a

was

Pictured
of

beauty

and

also

in

the
in
an

far west

as

Paris,
naked

and be¬
Machia¬

power-politics, 'the

ideology

of the international
jun¬
the cynicism of
Real-Politik
carried
over
by the -Bismarck-

gle,

raw

Ludendorff school into the
tieth

twen¬

century, that has 'Corrupted

thoroughly

the

Continental,

espe¬

cially also the Russian mind.

isolationist.

sort

as

Tt .is the
vellianism of

materials and manpower, she will
have no desire to interfere
with
the Peaceful
development of other
e^ntries.
At worst, she will be
The postwar world

history, but

in

mentality typical .of
Eastern Europe—that
reaches to¬

being fully ocwith building ud her ColWtivist System;
therefore, and
she

past

fairy tale

new

not

ineradicable

ever

in terms of Russia

since

anchored

only
present system of
Russia

per¬

as

under

Stalin from the
general and long-

of

.

this myth had to be
abandoned
because the Soviets made it

formed.
;So

uptopian

businessmen
and
democratic patriots. After
victory,

been.

The New Diplomacy

to the

just

collectivist

Something had to be done.

the

on

the Bolsheviks ceased
Utopians—that they have

be

co¬

thumb. Tnterventioh 4n otheri

stresses foster the trend towardboth: expansion and isolation. One

indication is the apparent rivalry
between Molotov and /Zdanov.
Since
1943, five "independent";

ished;

they

were

been -abol¬

even

in¬

more

fested by fifth/columns

Than/thei/

rest,

y The absorption of largeTer^
ritories rwithv reluctant, if not > hos¬
tile, /populations / mre a n s new
strains as well as added
strength.
A •colossal, fmultilingiial
:armyj of-/

>

cirptO-lfterates^'^ /ebullient; Tfritl^ ^
hatredhf LoreigriCrsi TtsTappetite? /
Whetted "by /victoryTand

Tooting;'

rightedusiyi/:convinced
whole*

.<$f

the

world'^T^llgatiphs^lit-t

self;; has To
else faced

be used 'abroad
a

as

or!*

at home.

menace

peace;

nojpeaee
is possible under capitalism. The
Soviet leaders '• made ho secret of
their /suspicions,;

na^L tcmvictionSi

about

the

fundamental

hostility

Of the West against their
paradise.

They

emphasizedvV the

absolute

not

-devastations.^^pf The

/war aref

<

repaired by the plunder/Of the
;ThP war. has revealed

deadly weaknesses of

ah iiidus-:
setup "which is carried by.
untrained, overly.-exploitetl and
idolent masses.
To bring it up to.
trial

the dazzling pace/of American
progress, and to do so Under mis4

necessityhfhiilitary i^eparedndss management by bureaucrats
and
ahd strong-arm /policies To- sur¬
ideologists, will take some time,
experiment

carry on their great
in economic and po¬

dictatorship.

Their actions

tally

with their words, with ho
riddle /left Tn
understanding why

they

jmshTdrwatd^ ^

propitious moment: when Britain
is

at

.

her

weakest, and the U. S.

at its war-weariest, state.

Through

-

Sovie't

spectacles,

enemies lurk /behind /every bush,
Of/course, htospof ft TsTheirhWh
doing, but that makes their po-r

gition 'the more precarious. Prop¬
erty-minded.'middle. classes, and
peasantries/ the majorities every¬
where, -are natural enemies. / .So
-

the churches, especially the
Vatican, with its immense spiritual

are

influence,

Army*,

y

Wherever

goes, / people

the.

■

Red

turn

antibolshevik,. shown by -overwhelm¬
ing votes in Austria and Hungary.
Their inability to gfasp the West¬
ern

.point Of view, the grudges of
the past,- the mutual suspicions of
the present,The

impasse in trying
to. get along on any important
peacetime question, the bitter na¬
tionalism of the Russians aroused
by -Hitler's invasion, all contrib¬
ute to "the bolshevik conviction of
fundamental, gap that no insti¬
tutionalized formula can bridge,

a

Nor <cah it be overcome *by a
-balancb-rOf fpower /diplomacy," in
which.-the Soviets /have/proven

The Russian "Mind"
i
To bolsheviks *•(as to
fascists), ^themselves
-

"

immunize all

or

to put it mildly;

-

*,

/

-

**

past

masters.

-They

<

-

-

•Enlarging the -radius of /action
-rthat

•

w;hat the. sum total of
underlying conditions, dictate to
the 'Soviets. vRaradoxiCal as it
is

:

may/sduttd;Their/ecdnomy/ireeds
manpower and /resources: to

cure

waste

by volume, as their security
demands to substitute territorial

conquest fot international, good-,
will./ Constantly worried about
the/obvious industrial .and nt>ili4
tary -superiority Of r the / Allies,

'

„

they

cannot /"forego
expansion:
..than temporarily without
risking disintegration. Unable and \
more

unwilling / to
withont

One

>

basic

visualize
conflicts

a
world
(short of

World-/-theirs),.they

orotept themselves against

>

'try to
war

by

forcing guarantees which, in

'turn

create

they

the

Vicious

conflicts

dread.

»

;

That does not mean the neces-i
sity of war, certainly not in the
;

near

future.

The Soviets arc not-l

ready for a real showdown (un/
actually attacked), and are.

less

astute

enough

to

battle. /But it does
tensions
peace

poning

and

avoid
mean

a

losing

unending

crises, turning The

into an armed

reconstruction

truce, post¬
indefinite¬

•v

7

.

down

people's affairs isTaboo to the one*
side, as it is a prime requisite for
the benefit of the hthier. \ r*
Moreover, Russia's i n t err n a 1

solemnly hrihouneea: that

.

While their basic ^attitude >>
has
not varied an iota
$their> Middle
Eastern
ambitions, e.g.,take .at
present exactly /the
shape- of the
1941 Molotov
proposals to Ribben-

own

The

.

that

Korea)

for years

fed

was

was

the

chahce/;///////M^

puzzling,

complete misinforma¬

the Western

sabotaging of every
Teorgnization in Europe (as in

so

on

Kaganovich,

/of - early
February,
should offer no surprise.
Stalin

litical

tion

break

operation/ tuiless putTrrider her

campaign

opportunity

old British pattern, or
along the Marxian lines of revo¬
lutionary boring from the
inside,
the Soviets almost
never miss the

and

delivered in the so-called election

the

expansion, T>e it by di¬
military action rof Ithe Prus¬
type, by -.economic penetra¬

<

sian

war

all

Kalinin, Molotov

vive and To

rect

Anglo-American
good
will, and to face the doubtful
po¬

the

at

the

programmatic Speeches of
Stalin,

arises Tor

for

forego all political and
financial advantages of the phe¬

to

Leninism

on

In*view of this mentality, the

Outlook

the defensive,
seemingly reversed;
But
whenever -the

nomenal

due

of

dictatorships.

Marxian doctrine that .pretends «to
debunk all ideologies
(except its
own).

vik

to

land-grabbing. It's

reaucratic

of bu¬
"Russian

cynicism is fed in addition

Warsaw, in 1920, bolshe¬
ambitions have been curtailed,
and at times, when
they were on

with

to

It

-

Say 'nothing

.

they are
stand, nor with the
alleged cleavage between 'their
objectives and those of the Fas¬
cists.

and all kinds of law¬

lessness, To

Soviet foreign policy.

/But Will /that Satisfy the/Rus¬
sians? / To
the
/Anglo-Saxon the failure
rriind, 'their behavior is inexpli¬
gates, of

supposed

occupations,

tances permif. It
began with Len¬
in's call for world
revolution,
which would have meant
his own
domination over the world. Since

What Xs Russia tip To?

cable.
It is not consistent
the high ideals for which

it,

immense

only Tri appearanee;, in
reality, it is as logical as circum-

.

Which it derives strength;
Russia;
being
a
ldfte
/Wanderer,.v tnUst

generation /works/ raisedTft Soviet 'republics have

of-fpower intrigues; bloody rev¬
olutions, in coup d'dtats, 'foreign

devious

foot¬

one another/That's
the continental mind of

two world Wars, endless balance-

,

holds.

way

this

small

zigzag diplomacy can be solved
with the aid of *a few clues.
It is

colonies; in short,'to any
does1 hot in¬

new

unavoidable; the Only two World
left, they are "naturally"

powers

The mystery of Russia's
alleged

former

over

of

own

Russia's International

Russian

reasonable claim that

permis¬

De Gaulle Is quoted
^shaving
that a "showdown between
the TLB/ A. and the
U.R.TS./R. is

zling only to those who *did not
bother to study the
deeper trends

as

Darda¬

are

said

power, offer sufficient security?
The answer is
no, and it is puz¬

had; been offered 'before.

London may accede to
free port on The Persian
to joint

forces and all tricks

sible.

holds, and

iriteffnatiohal^'coobferatioh/f r o mT

every /weapoii We/do
a proof of our War¬

give them,

the

in addition to her

Oil

be

may

of

dr-underwe'arisa "glow¬
example of an exploitative

themselves against such inhuman

peace-

Western

expense

Trade; it lis poison TO col¬
and dictatorship./
The
more so, for other ;
freedoms, ''except the /freedom To'
bolshevise. /The/ West Tongs for '
lectivism

same

mongering
imperialism.
Small
wonder that they have "to defend

maneuvers,} against

the

dom of

m achineS

not

;

logical ^eqheI toj/bdth.-T>eihodraeyi i

•nessmdniWho'tries"to "Sell dewing
ing

'V'

ership and a ruthless autocracy; ;
seclusion' '/froth " abtoad " 'is" the

*aij

the/grabbihg'first. u/'Ever^"bUSi-

capitalism;

y'v

intlthately: /

at iher J disposal to gdt the
same results for; herself.
If Ave
protect Iran, it is to grab its
oil;
the more reason for Moscow to
do

of

'J'

'>•../ T•

tied up. with their own power- r
position which rests on State own¬

or

for

* Use

;v-«

..

perilous is the 'vested iritereSt of
Russians tulets/ift this
auli-Occi^ /
dental philosophy; Tt is^

Open Door,

Russiamust

-•'J'vV

What rmakes the Situation /most

advocate the Cause

means

'they -directed?

generosity of the

powers—at

dissolv¬

are

is

antagonistic to

*

Hitler*

The Peril to Reace

-

because that serves bur

so

| Therefore,

nations—the expansion of Russia's
frontiers and economic
potentials,
the guarantee by the UNO
and all
the international force
behind

ing the Polish army of General
Anders, once the "gallant Allies,"

.

Its

The British

we

vious

can¬

rest.

Soviets.

If

Afid
the /Elimination of
the aggressors, should
not the ob¬

the rocks wfth-

on

are

with

such game is possible
any

\'i'y!

If it does put
up

exploitation and to
gain allies for wars of expansion.

why? / After

com¬

no

wherever possible/ and to break'
/
Up the'encirclement from the in¬
side, as in France and China, with
the aid of Communist
parties. 1 T'

only because it is too weak

markets

only in

ecutity

do

we.

mobilize by September and
fresh
classes called in)
indulge

of the Ad¬

cornersone

over

.

"

\

of

are

capital¬

purpose; to opeh up resources

to
the
42 to de¬

,

teeth, With those

Accordingly, all ^at¬
tempts Will be made to pacify the

by the Russian show of force that
to

a

let it go

tion

Chiang
Kai-shek
is
ei her so subdued by our doubledeilings with his Communists or
seemed

assuming that the
loving Soviets
(armed

bUt losing a mdst important
^pillar
on which the
prospects of reelec¬

pressure.:;

he

But

s

not

Chinese

compromise.
But Chinese public
opinion is not likely to submit.

with

whom

as

ministration's policy to win
ing elections at home.
They

,

and

UNO, not

a war

so

evident.

was

drily limit

the

of small nations or the

security claim, once it is con¬
ceived irrespective of the
self-de¬
termination 'Of other' nations.

going

The -Four Freedoms

Turkey

the

save

the

Russia, which the UNO could not
stop, and which the Russians are
riot likely to
want, but rather to
maintain the international
organ¬
ization itself.
It has to/bei
kept

ideals of the Atlan¬

and

are

much out of fear of

so

that the sky is /the

other hand, strenuous
underway to get over

the crisis and

What

return

the

Tt overlooked

tools of

opposition, then the wickedness

.

in

mere

to oppose them.

Central

country's
Europe;-'it is The off iciaL Soviet
"security."
'•/':// American-equipped and
trained line to which the
Davies, Peppers,
Central Europe was handed out Chinese
divisions; are To
be and Wallaces
cling.
Incidentally,
openly (Northern China and Ko¬ shipped from Burma 'to
Manchu¬ Ludendorff
and
Hitler
never
rea in a more
camouflaged fash¬ ria is an even more impressive
asked for more than
the "securi¬
ion) to Russian control- with the "diplomatic"
gesture."Public ut¬ ty" of their frontiers.
(Plus, a
expectation that Stalin will re¬ terances Of
high military authori-' few little Colonies—the
same
as
spect the vested interests of -the ties in
discussing the modalities Stalin requests
-now.)
The need
"West. It was a rude awakening in of a new
American mobilization, for
security is to subterfuge for
September, at the fdrefgrt minis¬ and the Administration's
emphasis every kind of imperialism. If the
ters' meeting, when Molotov
just on renewing the draft,
belong in New Ydtk^'^Times" :editorialized
would not remember the unwrit¬
the game chapter. "So does its de¬
lately that; we must hot assume
ten deal.
Coming on top of £11 cided attitude Of bringing the
any other but security motives on
other violations of the letter and
Iranian
question
before
UNO. Russia's
part,-especially no intent
spirit
Of
agreements, -and ; '01 The evident support to bolster for
world conquest* or world
revo¬
blocking all reorganization or re¬ Persian {and Turkish resistance
construction

"the other of the

more.

ists.)
If the West makes conces¬
sions;/and courts the Soviets, it

oth¬

the
original
Roosevelt justification
was

parceling <out

or

alliance

a

non-

trustful had to

frontiers, meaning

changed their tenor, too: instead
courting the Russians, they
have turned pro-British on
every
question. The announcement that

of

But

the

.-(Present-day France and *
anything Italy are poor substitutes.)
The /
"superstructures", perpetual fear of
being encircled "
to camouflage the
underlying eco¬ by
an T- overwhelming
/.Anglo- t
nomic .interests and
political am¬ American bloc has become a dis¬
bitions. : Marxian
/ education—is tinct possibility, with no Axis
left.}.
there someone left in
Russia who to forge a
/ counter .plot.
/That /
had any other education?—is cen¬
driyes/The. ^Krcmlln, in /a ,:;hear4/
tered on the destruction of
every hysterical fashion to arm; to force
belief, religious or profane, in any riiihor
/nations/oihTJL
ideals inherent in
capitalistic so¬ tial ring and into Soviet domina¬
ciety.
(Social - democrats,
New tion; to acquire
military 'bases

and enslave¬

million

last line of

a

the

insure -'the;

have

of

to

oh

150

some

Russians,'the
back

that

"toughened-up" line. Since
late February, American
occupa¬

his

of

in

and human rights are

cy

dreaming was a rude one, too, but
it did not .end the
mythology. In
the face of obvious
Russian ag¬
gression and

ways.

ing

else than verbal

The awakening from
this naive

semi-official

v.

economic / sys¬
-form of internation¬

new

side

one

1946

game, as it suited them, culminat¬

might. They have
nothing but "contempt for the sug¬
gestion that our ideas of democra¬

al

tion's

one

and

home

many,

played

ful ..nation

between

a

Thursday/March 28,

for treasure and

competition: who tan make the
world happiest and do
^so fastest?

"busi¬

mean

brought
in

official

convey

divide up the world and rely
on his word that all he wants is to
eliminate the danger of a cordon

sanitaire

we

nation stands for the Administra¬

can

guarantee

was

against

securing
"perma¬
that Stalin is a

(2)

peace;

tems,

propaganda machine of this coun¬
try .has
been geared
suddenly

ciples, if necessary, for
Russian cooperation in
nent"

That

Russians
The

Churchill-Roosevelt foreign policy
were twos (1) to sacrifice the At¬
Charter

called.

ness"

wrong.

lantic

contest

ing Tace—to bluff without run¬
ning the risk that the bluff might

,

it is axiomatic that
every power¬
is on a ruthless hunt

Awakening!

American

"peace-loving nation,"

a

COMMERCIAL & -FINANCIAL
CHRONICLE

ly,-and Tormenting general uncer¬
tainties ,of The Type that causes,
wild market

gyrations.:>'•/

;

//•.;/'

1667

& FINANCIAL CHRONICLE

THE COMMERCIAL

Number 4476

Volume 163

be well to take a look at

it might

Firstly, the
assumption that the shortage is
chiefly the result of the cessation
of building construction during

the housing shortage.

(Continued rrom page 1634)
of ^reserves against the

creation

ties

wh^h are certain to devel¬
op out Of the present abnormal
and artificial situation in housing.

losses

These

lower

allow

which

rates,

of

volume

great

life

and real estate.

jpIahK and the
growth of thrift institutions,
the Federal Savings

as

supply of capital seeking in¬
vestment;:•///:■/'//;/'/'•
To
come
even
closer
home,
the widespread inclusion of amor¬
history of mortgage lending. Yet,
tization provisions in real estate
paradoxically,; wef see both pri¬
vate -and institutional lenders in mortgages in recent years fur¬
nishes a new and continuing sup¬
this, field making many* loans on
ply of funds to the capital market
the basis of valuations which can¬
which must not be underestimat¬
not be justified, .even at the mo¬
ed, particularly in its effects on
ment, to say nothing of the "long
interest rates.
;
//,,■;./:'
irun" justification.
-The greatest
Now let us look at the influ¬
shortcoming,- in fact the curse, of
low interest.rates is. that they fre¬ ence of public, debt monetization
At the be¬
quently force lenders, in the un¬ upon interest rates.
of. January,
1946, the
ceasing search for satisfactory re¬ ginning
commercial banks and the Fed¬
turn/into marginal loans, excess
eral Reserve banks held $114,000,valuations,
and; other
unwise
000,000, or 41.3%, of the $276,000,practices.
Today, .1 want to say a few 000,000, public debt outstanding.

Very little margin of safety for
losses, call for the most cautious
and conservative operations in the

the

-

rates now vary from 3 ¥2%
4%%, with -most large, good
urban mortgages being made at
mortgages on private
are,/of course, somewhat
ligher, with some lenders in the
traditional pattern of rugged in¬
dividualism getting as much as 6%
% v Small

homes

here

'

'..-/A'

,'f

'.

J"',.

.

/i v 'fr J

,

»j

V

r;

/ The Outlook for Interest Kates
/Firstly,; there are many:reasons,
the increase in bank

in addition to

caused by Government
purchases,' for the prevail¬
ing "low"; interest rates.
Many
deposits
bond

seeking; ian explana¬
tion of the decline in rates look at
economists

monetization of .the pub
and cry, "Eureka!"'; but

the vast
lie

debt

they

should

look; further—there

other important economic and
nati, Cincinnati, O., March 22,1946.
financial pressures involved.
are

5

>

tional
a

all

or

'a financed with-

Historically, the' basic trend1 of

45,3%

Deposits

$150,000,000,000 of bank depos¬
omy/(which is another way of its* I know of at least six power*
ful forces which will increase de¬
/saying that we have reached the
/end of pur "economic.ropeU.lt is posits still further; and I. do not
incontrovertible that as an econ¬ know of; a/single economic factor
of any consequence which will
gets older the supply of capr
•decrease, deposits in the next year
/ital increases, under commit op * of
PT so.
/security, and the demand for cap¬
ital does not show a proportionate v So, even if the Treasury did not
increase.
That is* while dpmapd Want low interest rates/the hat*
.increases/absolutely,, it does not ural economic equilibrium would
increase relatively./ This devel- be In the direction of stability at
"ooment has been intensified in the present' levels, or-even lower lev¬
But, the Treasury does want
United States by our-great nat- els.
/imal resources and. our enormous Tow/ interest rates! / And there/ is
no
question -whatsoever in my
"productivity. These, coupled with
mind- as to the ability of the Gov¬
our economic and financial poll.'cies af the, last. 20 years, would ernment .to keep interest rates
have given -us lower'int*»rest:rateg- low. /1; will evea go a. step fur
thero and/ say: that; interest; rates:
even if we had.not had World War
/H and its sales, of bonds to the .may go lower than: at .present* if:
the Treasury does not take defi¬
.banks.
nite steps to support the present
J'; Also, the exemption by Provi¬
,
dence / of/ our^ country Z from * the pattern, and •. level, of rates.
In this connection;* I must point
-heavy v physic^/destruction/auf-.

omy

.

■

.

but thatZthere

are

many

econo¬

the Gov¬
put up
prevent w;ld in¬

mists-who maintain that
creases

the simply of capital and

demand;J
; might add, too,: that the unparal-,
.leled- safety• -which^ our- country;
.has enjoyed ^ince ,Civil War days
.credit relative! to the

.has

caused

a

liquid capital of the

.

world to seek

•sanctuary on our shores.
Still

•

of the

great deal

another

•

•

-

important factor

interest rates is the
modern banking, system which we,
have, today.v: As we economize in
'the/ pse of, gold: and erect: more
i and more of a credit structure on
a given quantity of gold, the sunply of credit so created presses on
demand. / That? is/, as our confi¬
dence in our banking system in-<
•creaks." as we :refine our credit
granting/methods, ; and as we
•learn to "safely have additional
.in

lowering

•

ernment will be forced to
interest rates

flation.

to

I do not1 agree

with'their:

contention;' I- analyzed - this con-:

tingency at length in a talk which
appears in full in the January 10
issue" of the "Commercial and Fi¬
nancial Chronicle." / May I refer
you to it for an exposition of
relation of interest rates and
-

the
inr,

flat! on

So much for the supply

of

.

■

credit

outstanding

families

not

credit

in the next year or so.

or

capita

the

will

in¬
these do

completely explain the short¬

people
a

important reason?

now

maintain

a




become painfully obvious in

.Business

Some

city home

country

people formerly satisfied I
with hall: bedrooms now demand«
apartments. Still others refuse to
"double-up" with the old folks al-:
though they would be glad to
have the opportunity to do so if
Other

be afefforts

property will
adversely by. the

fected

.

which will be made to reduce the
costs of distribution.
lean

struggle, which

ness

in

will

undoubtedly

the field

The Hercu¬
we

shall wit¬

distribution,

of

1

unfa¬
vorable effect on many small in¬
dependent distributors and mer¬
chants, forcing their properties on

v

Spe-

-

the

rental

have

market.

sale

or

an

normal

the

were

.

r

;

fleeing income taxes,

individuals

with swollen war earnings and

labor-savihg /methods

that

will

A Sound Mortgage

Policy

,.

f

I

have to be introduced if construc¬

.What/ then, is sound mortgage Z
large; assortment of plain, . old- tion is to continue at a high level.
policy at present?./ You have to,
fashioned suckers have rushed in
And, when you consider the mil¬
continue operating, You can't just
and ; driven, farm land in i many
.

lions of substandard housing

areas

and states .ta

units

unconscionably qun people now : occupy, the/bp^; lock the door and say we don't
like developments §0 we won't
portunity - which confronts the
play! So; as a practical: matter,; a/
building industry is indeed great;
compromise has to/be made on
but/this opportunity does not lie
rates if mortgages are to be ob-Z
along the road of higher costs. tained at all.
Likewise, an increase/
Housing is riot immune to the eco¬
in Z appraised
value beyond the
nomic limitations of "ability to

high levels/ Also, developments
in
many' suburban
areas have
been almost as. dangerous.
And
here is tb
real / tragedy/ of the
situation: Many lenders have con¬
tributed to this unhealthy devel¬
,

-.

1939^1941: cost level is frequently

opment instead of exercising sore¬

nay." For example, the National
Housing Agency estimates that out
of a total housing need of 12,600,Of course, there are curren
economic reasons for these devel- 000 units at least 8,400,000 units
opments-^reasons; but/not j ustifi- would "have to rent for less than
cation for the actions 'of both $50 per month. Public housing and
lenders and
borrowers.
Among slum clearance in large volume

ly needed

these

necessary

restrain ing influences

/reasons,

the,

following

may,

to

order

meet the.

valu¬

safely go in this increase in

tq say. Certainly, no
yardstick can be used! Every dol¬
ation is hard

lar/ of;

be expected to

therefore,

in

competition of some of the other
•lenders. / How far a lender can

transaction

such

every

should be ■- closely scrutinized and
°'et under way in the next two or
should be put high: on the: list:
watered. Furthermore, such mort¬
X. The supply of credit and cap¬ three years. This will/ adversely

seeking investment employ¬ affect the value of a great deal of
is/greater than ever before present property, particularly that
2/ There is a serious fear of in¬ occupied
by
the low income
flation and a general - belief that groups.

should require

ital

gages

ment

amortization during

substantial

the next three

that when the in¬

to five years so

.

evitable decline in real estate vaL
is
a
good hedge
real'/ estate
Government policies will, also,
ues sets
in, the mortgagor will
against inflation.
adversely affect real estate val¬
3. The supply of available mort¬ ues at the other end of the scale. have a : substantial equity in his
gages has been severely/limited 1 refer, particularly, to the effect property.
Let me say that again:
by.'the; restricted private building on the value of luxury homes and A graduated amortization scale is
apartments of the heavy Federal
aptivity/of the war years; and the
imperative for the next five years,
japi4.^repayment. of mortgages taxes, which we are certain to have
future, as far as you and
(To say nothing of ur¬
ban tax burdens!) If you do lend
in

I

the

can

see.

on

such

uation

properties, do it on a val¬
based

<*•

5.

Many

further

' ■ •
people fear that still cupancy!
When
the
in the cost of

increases

on

middle class oc¬

////'./I.
new

/

'' *'

,

houses / and

if

even

offered
.

The ; present
supply
of • both construct!on will take place,; v; i apartments adaoted to modern
dollar of gold, we in¬
Z 6. There is a real housing short¬ needs, such as lack of domestic
crease'the supply of purchasing long and short-term capital.ap
help and smaller families, become
power-, without,
necessarilv, in- oears to be more than equal to age. - summarize: The fear of in¬ available, they will have a very
To
.creasing
the demand; This, of any demands which ar°i likely to
be experienced—and
the supply flation, the higher construction unfavorable effect on the values
course, forces interest rates down.;
is increasing!
On the basis of the costs, and the expectation that of buildings erected before the
co^+s will go even higher, couoled war even though at lower costs.
I Increasing Investment Capital
pertinent facts, then, it seems in
in
your
valuations you
rJisoutable to me that, the era of with the housing shortage, have Also,
In the cabital market the r->te
in combination caused the rapid should keep in mind that women
and. volume of private accumula¬ low inferest ^ates, whict> we. have
are having more and more to say
tion have increased.
The shift of entered, will be with us for a long rise in property values.about housing. They are not in¬
Population'• from the. country to time.
The Outlook for Real Estate
terested in the beams and the so¬
•the cities has forced more and
Low Inter^t and Real Estate
Let us now turn our attention lidity of construction. They don't
.jro^e people to seek economic se¬
to the outlook for real estate. Be¬ worry about the foundation. Thev
/-:•/._ •
.. Mortgages
•
;
curity through institutional s»vNow let us see how this lower fore we go any further, however, are npt looking for a house which
-ings.; The.' great increase in the

against a

housing

for

demand

the future.
•

home where one
would do if times were not good.
and

heavy

the strong rent structure, but
it is there just the same, and it
and

age./ Is not the high level of in¬
come an

,

ent, this obsolescence is hidden by

rapidly

is

family

the American

changes in

wartime

creasing, but to my mind

older

years

itself, improved labor-saving gadgets, and heavier taxes. At pres¬

marriages and, too, the number of
separate

buildings
than
before the war.
Fur-

five

now

they were
thermore, practically all of them
nave
heavy unrealized obsoles¬
cence
because of social changes,

Of course,

many

>

to

•/".// z/v/v/'

/•

//>.'

.

.

.dollars

.

been

have

.

great demand for

no

-

empty house?

an

there

side,
Aq for the demand side, I do
Pot' have enough time this after?
noon to make a-complete analvsis
through amortization and other¬
for you.; .Sufficient to/say tha
wise by mortgagors.
other than-; credit/ • forv/consum ers
4. The cost of construction has
and mortgage:/money/, #o&/^ome
building/which/will
Jh/strdh# increased some 35 % over the pre-i
/ .«
■;
/
demand, I do not foresee -any ,war figure.
:

was

10 to 15
in which

herself

daily constructed buildings will
economic compulsion be required by many of these new
present. May I say that, in chain distributors. This will tend
my
opinion, unemployment and to reduce the value of existing :
declining payrolls could remedy small business property../\
/'
mdiyiduals—both credit and capir
the housing shortage practically
; Also,
easy : credit
terms,- will;
tal, //Goods can be produced in
certainly cause many to go into businesses
this country to meet even fantas- overnight,, ; which - is
much faster than the construction for which they, are not properly
tic/demands.
And, goods are the
prepared. The resulting failures/
reals antidote to inflation.
Fur- industry can do it!
dump
distressed / property
However, I do- not anticipate will
^eitoire; v in: the: past/: inflations
with its chain of consequences on
have "always arisen from depres- heavy unemployment in the next
the market.
:'Z
sion^never from booms;; Arid; two or three years, and it will
In view of the foregoing, and :
aren't we. going to have a boom take at least/ that long for the
next/year? / Higher prices* yes; building industry to overtake the many other factors, it is my conr'
present shortage. So, we can safely sidere.d opinion that, while the
inflation, no."
that
the
shortage
of immediate outlook for real estate ;•
But when I said that there was estimate
is good, the long term outlook is
no probability of
inflation in the housing will continue for another
not
favorable.
This
should
be
United. States, I had my fingers two to three years. But, after that,
fully taken into account by mort*crossed on real/estate.
Speculat¬ what?
" /"
'
' •
gage lenders as their loans tie up
ors, AAA allotment chasers, city
It seems
clear that building
their funds for a; long period of:
people seeking a hedge against in¬ costs will rise during this initial
time, /;//:/
>/: ••/v/ >' /
flation/ black market operators catch-up period with the result

,

of the other; counr

or

Europe—a
increase
in

*

fered by most

\

there

war

one

worked

Effect of Obsolescence

shortage; in fact, it was
opposite.
What, then, has
happened to make it impossible
now
to find a vacant apartment

wild//unreasoning
prices/ v Thev United States is: in
the best position of any nation in
the world because we have no di¬
rect war; damage, pur productive
facilities are far beyond the needs
of the country; and we; have; by
far the strongest financial posi¬
tion of banks, corporations, and

of

United States has a-mature econ¬

/h; , J

.

the

the

as

Don't forget that all

:

the

term is. understood in

swollen /total

.To return to s- the

implying that, the

,

death!

•/

housing

"I do not fear inflation- as the

bank-credit.'

Forces Increasing. Bank

t

such

mother

her'

period when many

.

Before

wants is one of those sub¬

stantial old houses with

think construction was at a stand¬

Orleans in the following

of New

wordsk

woman

are

sociation of Commerce of the City

banks of

No, they
labor-saving
ideas and devices. And, the last
thing in the world the modern

accommodations converted or

still!

things!

look for gadgets and

rooms,

Duilt during a

hundred years; women

a

like # old

don't

between July 1,
1940, and Aug. 31, 1945, there
were built 2,290,731 family units,
1,658,007 single-person units and
81,136 stop-gap accommodations
giving a ; grand total of 4,029,875

by the lenders! //>;/.
On Jan. 3, I reassured the As¬

of the
total debt. The purchase, of these
securities has cause# -an equiva¬
lent' .increase ' in- /deposits
and
money in circulation^; Thus/ cor¬
porations and individuals have an
ad dft ion a I $125,000,000,000. to
spend over and over again, which
they-; would not have had other¬
wise/^ ZZ:///:/- Z //;>/// H/Z
! / Parenthetically,/ may/* I
point
out that' onlyi $64,000,000,000
of
the $276,000,000,000 public debt is
directly held in- the -hands; of in¬
dividuals and, of course, a sizable
proportion of that $64,000,000,000
$125,000,000,000,

Interest-rates has long been downward throughout the world. With¬
out in any: way

by

holding

the

out by

borne

Thus, under, the war. hous¬

.program,

ing

made

been

is not

war

facts.

portant, the appraised values of
properties have been materially
increased.;
And,
please
note,
'hese increases in valuation have

addi¬
$11,000,000,000 which gives

total

the

there. / But, in general,

and

competition, vamong the various
enders, for mortgages is very
keen and not only have'rates de¬
clined, but what is far more im¬

banks held an

The savings

ex¬

gage

,

outlook for inter¬
est rates and a great many words
about the economics of real estate
valuation/
words about the

mortgages

As might be

to

,

,

affects

pected, mortgage rates have held
their relative position in the pat¬
tern of interest,, rates and1 have
declined in line with them. Mort¬

and
Loan Associations, graphically in¬
dicate the tremendous increase in
such

level

interest

annui¬

insurance,

pension

and

will la'st

lower

|rates have to be
such a scale.,

to get

In conclusion, may

I leave this

thought with you. In your opera¬
tions

a

conservative policy is in¬

believe

building

activity will be high in

the next

dicated

if

you

few years, as

that will reduce the

values of present
other

hand,

a

buildings. On the

conservative pol¬

believe

icy is also indicated if you
the

that

building

boom

will

be

short-lived/ because without large
scale

construction

activity,

em¬

ployment will not be satisfactory
and

payrolls will not maintain the

present levels of rent and
tion/

tZ

■:

/

•

...

valua¬
;

1668

THE COMMERCIAL & FINANCIAL
CHRONICLE

Production

Controls that hamper reconver¬

sion;

don't

general
affect

direct wage

■

payments, but

and

agency, that it has
peacetime economy.

used

manufac¬

by

Our Government is doing

that

grand job of promoting inflation.
Slowly but surely we are work¬
ing our way into an economic
a

that

will

continue

"The

Czar," and that price

trols will

as

have

now

the old "freezes," and a
tinuing unworkable program.

to

OPA will

ply.

a

■

law

same

for

another

con¬

is still well

them.

stocks of unfinished goods clutter

up.

factories and warehouses,
appliances that are minus parts,
up

the Industry
They will determine

If

they

grant

out

furniture

-

without

to

all

these

Consumers spent 84%

more

in

for

1945

than in

mately the

1940

100%

anyone

with

dented prosperity" that is around
corner.
And he describes in

the

discriminating unfair tactics.

been, and to

have urged that some attention be

tions'. v

trol has not

paid to the words "fair and equi¬
table," and we know that produc¬
tion is the only possible antidote

to

v;

The American business

continue to be treated
he

were on

prove that price con¬
hampered production,
he explains that in World
War'I,
production increased 25%, while
in World War II,
,upder OPA, it

man

will

though

as

relief, and if he doesn't

like

it, he can
kangaroo court.
One fact

appeal to

OPA's

is crystal

clear:

consultations

Just what

,

con¬

nection there is between OPA and
War Production is not at all clear.

.u

,

for inflation.

increased 116%.

r:v'

re¬

I'm

production will -stop inflation
only if we can keep OPA from

unreasonable

stopping production.

bombers.

sure

they

didn't apply their
tactics in
pricing

.

Or by quoting overall sales arid
profit figures of a limited cross-v

/ Consumers and the Retail Business
Most of

section of industry or
group of
stores, he attempts to show that
OPA activities have not interfered
with" civilian production.
But it's

in the retail business

us

not

are

happy with/the job we
are doing.
Consumers have been
extremely tolerant, and they still
are, but there is no earthly reason
why they should continue to tol¬
erate extreme

tials

or

shortages of

never

sales

not

overpriced sub¬
stitutes. Nor will
they. Consumers
will soon coolly
appraise our per¬
v:

tain terms that
a

;

job. And

we

us

we

in

are

no

have been severely
throughout the war

handicapped,

and currently,
by a series of OPA
actions that have caused line after
line of low-priced
goods to dis¬
appear from the
market, and have
forced
drastic

deterioration

of

quality as well as price increases
in those lines that
have remained.
„

We know; too, that OPA's cur¬
unrealistic, theoreticaland
pricing prob¬

impeding production and
literally throttling industrial ac¬
tivity throughout the country.,
Although the
for

seven

war

has been

consumer essentials is
acute than at
any time

/ :War.

.

^

over

months, the shortage of

-//J,~

now

.

•: •-

Industry must insist that Con¬
gress restrict the activities of
OPA
require

the

moval of all

particularly:

immediate

re¬

inflationary controls,
-

•

essentials.

Price

Everyone
costs

The

strikes

production
harm

are

more

are

currently

harm than good.

which
and

have

caused

stifled

' so

much

largely

the result of
faulty price control policy. Cur¬
tailment of production is the worst

possible thing that could happen
to our country today—much worse
in its overall effect than
price
increases.
■

Andy just at the time wheri

pro¬

duction is sorely
needed, our Gov¬
ernment
threatens
a
group
of

manufacturers, by saying in effect:
"Unless you ship the goods
you are
now
holding at a loss, we won't
let you make any more at
That is really incentive
.

a

loss."

pricing.'

OPA Injures Consumers

•••

remains that the bulk of their im¬

portant
are

regulations, particularly
low-priced essentials
concerned, have worked in re¬
as

verse, and the end result has been
a

forced

that

labor

and

consequently material
sharply since
1942, that operating costs £or every
type of business are far above
1942, and that industry generally
costs have increased

is

faced

with

further

in labor costs.

stances, it
prevent

is

increases

hardly possible to

to

mean

some

advocating

runaway

prices

inflation.

or

Certainly there is nothing infla¬
tionary

or extortionary about a
FAIR price.
OPA implies in their
letters to Congress and in their

statements to the press that
pres¬

pricing policies permit manu¬
a price sufficient to
de¬
fray current costs and yield pre¬
war
profits, but all industry knows

facturers

that this is not the

ing ;fof riiulas^inake

The pric¬

only

partial

allowances for current labor and
material costs and administrative

The strict application of
this policy has been and is cur¬
expenses.

rently

major impediment to pro¬
Manufacturers are com¬
to discontinue production

a

duction.

pelled

of prewar commodities
they were
skilled in making in

great

umes,

and

to

shift

to

vol¬

lines

in

which

they are not experienced.
They have been forced to develop

wholly unnecessary "new" prod¬
as a
subterfuge to obtain price
relief, whereas the new products

ucts

in most cases not

equal to the

prewar products in either

quality
utility. At the same time, the
pricing agency, with their "in¬
or

line"
less

theory, has permitted count¬
thousands

of

newcomers

to

enter the

manufacturing field and

produce

similar

commodities

at




a new-

our

facturer;

•

overhead

producing one million dozens
"new" number in dress hose

a

able to obtain

was

a

dozen of the "new" number than
he ever would pre-war on his full

production. J But
be

another good
Old line manu¬

mowers are

for

example.

85%

of

prewar accounted
total production, are

and the

is

reason

•/.

Maine

manu¬

y/ / ;•/

A/://
over

the ceiling price for

piece goods
for outsized
dresses;
\• - •.;')'
;
Or why plain wooden
chopping
bowls are not
available; c5 v.; M ■
tOr
why we buy Argentine socks,
gloves and bags;
,.

,

V

,

Or why 1 to 6 year olds have
to
play with dominoes and checkers
instead of blocks;

-

/• '
electric

v

/ Or why the low-priced
iron

current

•

Or why we pay Mexicans

will

consumers

shy sixty million pairs of work

socks.

production

twelve

during

months

has

the

been

past

exactly

K:s| Yrf/;///v' ///

zero;

Or

why we have purchased
250,000 -vacuum
cleaners
from

Britain;

>

Or why babies have to wear
excessively heavy weight diapers/
.

Grey; castings

have increased
35%; malleable castings 45%; la¬
bor
50%.
Last
October,
OPA
authorized

overall

an

the

increased

•costs.

labor

and

material

Industry has protested, in
:

OPA

requires < the
to

be

low-priced

produced for $6.73.

The manufacturer requires
$7.76.
As a result the largest manufac¬
turers

in

industry have

notified

the trade that
they cannot pro¬
duce, and the only mowers avail¬
able are extremely high priced
"new" numbers produced by new¬
comers in the industry^ \ who are
able to obtain high price authori¬

zations
under
OPA's
ridiculous
"in-line" pricing theory.

Instances

of

this

kind

create

very real problems for retailers.
Our customers need lawn mowers.

Commitments
to

once

must

obtain

be; made

ing

at

delivery in time.

Shall we buy from the

realizing that

ers,

we

mowers at much

newcom¬

will be sell¬

higher prices

than

if skilled old-line manufac¬
turers were permitted to produce.
Or shall we hold off and take the
chance of being out of the lawn
mower business all season.
This
entire situation is inexcusable and

severely penalizes the
Chenille robes

consumer.

becoming in¬
creasingly popular. But OPA has
just ^notified that industry that
are

from now on out they will be re¬
quired to produce under the Maxi¬
mum

Average Price

means

that

the

program. This

average

price

of

goods produced currently may not
exceed the average price of goods
produced during a base period in
1943.
nor

This

is

not

price

control,

is it legal, but it is in effect.
case of four or five of the

In the

largest

producers,

production

of

robes must not average over $2.25
The cheapest robes that

each.
can

be

produced

proximately $3.25.
case

today
So,

cost ap¬
in the

as

of thousands of other

essen¬

tials, chenille robes will disappear
producers will make
bedspread^, not subject to jthe

and all of the

MAP program.

Last

month,

Instances of this kind could be
quoted by the hour.
'

But

the

answer

OPA's

same:

cover

vain.

mower

;

increase of

17%, not nearly enough to

to

is

the ;

refusal

to

Y/y/Yt-Y

Of course

ferences

each

adamant

be fair,; Y

there

on

are

honest

dif-/

pricing technique, but

every
reasonable
that competent,

person

agrees

equitable, clean-

cut

and

prompt

decisions

are

needed to encourage
industry, to;
put men to work, and to produce

goods quickly
act

the

are

and

thus

inflationary

now

being

forced acute

counter¬

trends

that

stimulated

by

shortages induced by

Governmental

restriction.

OPA's Bungling and
Delay
'But instead of prompt

decisions/

we

have continued stupid

bungling
delay.
It is difficult nowa¬
days to pick up any newspaper
or
magazine, any day, anywhere,
without finding a
story or two on
and

how OPA restrictions

are

retard¬

ing/progress.
All industry has
complained—Wool, Rayon, Cotton,
Lumber, Steel, Coal, Meat, Dairy
Products, Oil—and the complaints
have
ers

from

come

as

well

as

primary produc¬
manufacturers and

distributors of end-products. Can
you help but ask, "Are we all out
of step but Bowles?"
/
It would

seem

that any reason¬

able

person
would
accept
the
premise that no one will produce
goods except with an opportunity
for profit—but not OPA—at
least

not

the

head

of

their

Consumer

Advisory Council who insists that
industry is on strike, that they
need; no price, concessions, and

that they will produce when
they
get "hungry enough."
If OPA would concentrate
their

activities,

on
encouraging produc¬
tion, they could get the unquali¬

fied and solid support of
industry;
generally.
A tremendous amount
of good could be
accomplished this

spring toward satisfying the pentdemand for "hard to get"
goods.

up

If

such

action

were

taken

now,

there would be much less likeli¬
hood of any

widespread upward

price trend when controls
July.

lift¬

are

ed next

we

contacted

27

''K/;vt*

OPA Has Not

producers and found only two that

cheapening of quality and {Trices
Controls that retard
considerably higher than could deliver any robes and both
production; disappearance of goods, thus com¬ would be
of these are
Controls that force
discontinuing pro¬
necessary to enable oldquality de¬ pelling consumers to purchase in
We did find one gentle¬
line manufacturers to remain in duction.
terioration;
:•
A...; price ranges much higher than
man
their businesses.
who would deliver
Controls that force items out
12,000
of those in which they would nor¬
.V-.•;
robes provided they were
paid for
This situation is of course com¬
production;
-"
'
mally buy.
in cash (no
checks) at $7 each. If
Controls that
encourage subter¬
This series of regulations may pletely ridiculous, but the condi¬
the MAP plan i$ continued, your
fuge;
be briefly described as
first, the tion is widespread and inexcusa¬ wives can wrap themselves in
•

import

liable product of

:.

case.

Or why we have to

the

Under the circum¬

increases in prices
consumers, but this does not

are

OPA presumes to act in the in¬
terests of consumers, but the fact

insofar

knows

ent

controls

more

What OPA Activities to Restrict

and

or

charged that OPA
handicapped sales or profits—

doing much

during the

' ;-'VI,//!; \V \

for

having broadcloth; shirts

sumer

rent 1

unfair approaches to
lems are

excuse

know that they have seriously
restricted the production of con¬

doing

we

high priced

we

.

We know

on

valid

a

that high

were

ears,

We haven't
has

will give them what

they want at a price they are Will¬
ing to pay, or we'll be out.

are

me

But most

industry
meaningless
and industry advice fell on deaf

Wash dresses.

uncer-

not

high profits

novelties

essen¬

inferior

formance and tell

been clear to

or

We

bottoms;
number in

facturers, that

glittering terms how "extraordi¬
narily successful" his program has

and

advantageous to

load West Coast lumber in
British

i

profitable price. And he will make
a
greater profit on one million

the,

inspect
the books each ninety
days, and
to order refunds and
price reduc¬

production,

cloths;

is

nor¬

of

goods.

never taken such
We have attempted to

it

to

his

for which he

on

obtain realistic and honest
regula¬
tions.
We have counseled'against

why

of

he is

in

Industry has
position.

a

Or

he

bone, and now, instead of produc¬
ing five million dozen work hose,

for

advocating

time substitute

con¬

cut his labor force to 20%

who does not \ not
producing,
arbitrary ' obvious.

is

exported; -V:'.' //:•/./;'
k
Or why 95% of current
yardage
production is in sub-standard war¬

clothespins from Den¬
mark and sell it at twice the
price ;
we used to
charge for the old re¬

their

viewpoint
runaway inflation.

quit.

available

$1.25 each.
j
We might discuss
why there is "
broadcloth or 80 square cotton
print, or why all of our sateen is ?

produce

"

profitable

sockets

no

red?

war,

made

impossible/ he

mal,^ and

Industry Does Not Favor Inflation

narrow

the

well afford to

now

Lawn

position that

government

on

loss.

a

the

that

only

in the Black
Market.
Eight
cent socket for 60
cents, large size
32 cent socket for

present

is

the

were

no considera¬
had operated

he

j

1

approximately

He's > fi naliy given, up.' He put
80% of his machinery in grease,

money

OPA stubbornly adheres to

Was he

the

!,

manu¬

brass shells for
light '
When his costs increased

a

Soon

to
'

One

the

point
production

the

'

approxi¬

same amount of

to

Could this be

under

throughout

could
at

; Of
course,: as every housewife
knows, it is ridiculous to assume
that the "line"
has been held.

agree

unexpected speedy recon¬
version," of our "excellent out¬
look," and the period of "unprece¬

tracts

or

indices

Not

Because

profitably

are

these

use

in

of

produces

sockets.

or

not, he deserved

tion.

the table.

linings, lamps with¬
or

throw

"the

concession, they will as a consid¬
eration, reserve the right to regu¬
late

sockets,

regulations.

bay, and put all the cards

hardware, Mr. Bowles speaks of

price

any

our

suits without

which of your costs are allowable
and which are not.
If they deter¬
mine a manufacturer's
"hardship'"
is temporary, the matter will be
closed.

suits, shirts, shorts,

practically non-existent, and while

for the

guides, we won't know where we
are going
or when we get there.
the

;

And while

OPA will still set

Standards.

>

continue

90%

socks

with current costs.

becoming more and more preva¬
lent, or the cost of subsidies.
If
we

•••'• '•;

•/::'

work

.

States,

permitted?.

the Black Market deals which

facturer

months to get a price that would
enable him to produce profitably

If

instance.

go

summer.

Another

in the world, for
that matter.
His capacity is five
million dozen pairs—sixty million
pairs of hose.
He tried for nine

it

availability of . goods,

or

of

Absorption" at all

a new name

bedspreads when they
beach this

Let's start with the largest man¬
United

Keep in mind that price indices
not reflect
quality deteriora¬
nor do they reflect produc¬

Let's

wash dresses and piece goods are

all-out production

jammed

v

effective and he plans to continue

-

to

retarded pro¬

But Mr. Bowles "assumes" that
price controls have been highly

industry what their sales will
toe, what their costs ought to be,
and what profits they will be
per¬
The road

means

do

tion,
tion,

"Successful"

p Effective?

vv/ >,,i..
They will still be in position to
gaze into their crystal ball and tell

earn.

levels, simply

sup¬

Have Price Controls Been

>.

mitted to

Control."

<

that

/

ufacturer

same type „of unrealistic
and in¬
equitable approach as has obtained
throughout the past three years.

"Pro¬

'

twelve

all

'

exceed

fact

instance, the

Cases of Impeded Production

low-

three,

have "Cost

we

sound

means

bat.

| months,
;

to

control

of

has been amended countless
times;
and now in addition to these

supply

as

duction, reduced employment.
Industry cannot "deliver" while
in a strait jacket.
£t's like attempt¬
ing to win a ball game without a

be

*

soon

These

bound

price control

old

same

is

Price

duction

doing business at
stand, and, if the
President has his way, under the
the

"as

or

demand."

demand

con¬

"chills" in addition

new

notwithstanding the

good, but they are steel traps. So
long as production is held down,

higher level, doesn't change the
overall picture one iota.
We will
now

possible"

thousands

in every
suffers.

mention

be cited.;

to make
adequate provision for
mounting labor and material costs,

permitted to remain after

equals

in¬

be determined at

now

place in a
Any controls

no

-

definitely.
The fact that Mr. Bowles is

are

which

will

Thursday, March 28, 1946

only a few of
the countless
examples that could

producers cannot possibly
operate;
third,
the
"Maximum
Average Price Plan," which fails

definitely limited.
Nor would I go along with such
high-sounding
but
meaningless
phrases as "lifting controls as soon

find more
retaining
present controls, and for devising
ones

under

wartime emergency

a

I

priced

June 30 must be

mess, and soon we will
and
more
reasons
for

new

of

•...

that OPA is

supplies

cost

'

they increase the cost of materials
turers.

the

' V:■'*
• .'C■',
Controls that keep us from do¬
ing our job.'
"
//;///;■;,;.
We must keep firmly in mind

that

understand

raise

living;

increases not only

wage

that

And

consumer

"Rigid Freeze" technique, which
plainly discriminated against the
low margin
producer; second, the
"Highest Price Line Limitation,"

vi^

Controls

Obviously, the President and his
advisors

Unrealistic Controls?

or

(Continued from page 1631)
keep up with those boys in Wash¬
ington.

ble.

we

•../

V

Encouraged

Production
But

'

/

\i

all know that OPA has

not

encouraged production, that
they have not shown the slightest
inclination to encourage produc¬
tion.

Industry has advocated in¬
pricing for years. OPA is

centive

finally adopting it. But

most regu-

|

■

Volume 163
have

lations

-THE COMMERCIAL & FINANCIAL CHRONICLE

Number, 4476
impossible

tered the Army he was a

$8.75.
4 ; All this under the

No Free London Exchange Dealings

expand, line by line, and
price range by price range, and

program

the end is not in sight.

salesman

;

\

justifies

such

guise of Price

either fail or prosper on our own

4444444®-;44-44-■ -4 experiences, not on on statistical
averages, and it is perfectly clear,
Methods of OPA Supervision
considering the wide dispersions
potatoes, furniture made entirely
Everyone should read OPA's of margins and expense rates of
of glass, ice cream sandwich waf¬
instructions to their enforcement the various types of distributors,
fles, and imported and domestic
canned eels!
;:44 ;'4;- agents which appear in the Jan. that it is quite impossible for any
18 "Congressional Record."
This pricing regulations based on in¬
You've all seen their untruthful
propaganda on oranges and coco¬ writeup completely describes all dustry averages to be fair and
the slippery, slimy methods which equitable.
.
nuts.'
»
'
■
OPA agents are instructed to use
4 Of course, if volume increases,
■;•■ OPA has not shown the slightest
intent to prepare for discontinu¬ to worm their way into the con¬ expense ratios will drop, and mar¬
fidence! .of a, victim and get him gins and prices can be reduced,
ance of price control-r^-ever.* C 4*
4
Chester Bowles says that con* to admit he Violated some one of and industry would like nothing
Control,

'

i/

4

.

>

trols

unthinkable4 except

are

in

and that no one who
in free economy wants

emergency

believes

them continued

is

a

day longer than

usual,

but; as per

necessary,

PPA has taken

action.

no

I wish that every person here
could have : seen and heard the

OPA's ;

60,000 4 regulations. ' The

Gestapo could not have done a
better job. To read this, one would
think that the business men of

country are the vilest ene¬
mies of society.
I am advised that Mr. Bowles
this

:

,

ex-real
the

estate

has

attorney who

job in OPA of determining

destroyed.

instructions

let

But

quote, "from it—and I'll leave
With your secre¬

me

complete copy
44! 4

when

price controls can be lifted
by item.
And you should
have heard him explain what he

a

tary, '

meant when he took the controls

Blame" is interesting:

A

off of all baseball equipment ex¬

be involved with the wit¬
phrase you questioning to
transfer the blame for the illegal
transactions to the shoulders of
ness,

the other party.,, This eases the
tension on the conscience of the

rather

witness and make it easier for
him to explain the position to

and

profits unduly indefinitely,,

you."
Or

"Endeavor

-

messes, after weeks of
consultation with advisors with

of 4

the

problem.
A Politician's Paradise

Mr. Bowles' program is a "poli¬
tician's paradise." He's for higher
a shorter work week, a
higher standard of living and low¬
prices. He doesn't even men¬
tion production;
Of course, this
program doesn't add up, but Mr.

wages,

er

Bowles

eat

can

I received

will

ness

French

"Law

of

the

a

they

had

Maxi¬

base, periods

plies

dried

and

up,

distribution

qualify deterio¬

Butter; eggs and meat
were peddled in alleys at night.
People stood in line for hours to
scarce;

Before

bread.

long

erable and mobs marched

on

Paris

shouting, "Down with the Maxi¬
mum"

and

"Down

of Famine."

4

with the

Law

iv?

v

need today,4 as
then, is more production and less
controls. We cannot possibly have
a
free ? economy
without • free
v

Our

greatest

.prices.

sires ;

,

him

make

■

want

to

write the music." 4
one:

.

"When

the

economic situation became intol¬

the

of friendship

commercial:

profit he had gradually accumu¬
through weeks and months
of hard work; Now. that no risk

orders,

need be taken,

arbitrage it would be possible at
all to find

a

counterpart to many

buying
or. selling
unless the Government
provided it.

lated

ers

will

the executive will
if the

less: worries, 4 even

have

be

the

you've 'got' the case.";

(2)

4

(3)
4

sufficient to

ity

.

v

4'

its

proposal for unification of

the four roads," Young

said,

At
the
annual meeting next'
. & 4 Ohio
Railway's 4with-;
drawal of its offer to merge the Monday, stockholders of Marion
New York, Chicago & St., Louis Steam Shovel Co; of Marion, O.,

enable

him

securities of¬
NKP pre¬
ferred at Feb.
14 this year
would have! commanded a price
of about $152,^compared with a
■market price of ; $124 * share
for NKP preferred at that date.
The maximum claim of NKP
.

to

an ■/

"The

C.

&

O.

fered in exchange for

at current costs
opportunity • for

and all controls
that stand: in the way • of
legitimate
production
be
' promptly;; eliminated, and J preferred holders amounts to
$184 a share, but if that sum
this includes the MAP prowere paid in full, the recipient I
. gram, and all like it.
44;y:4;
■

they're instructed to use the "false
statement" technique,
4
Who
said,
"It can't happen
;;v

(Continued from page 1641)!

peake

profit.
(4) That any

witness to "break" any other way,

4

goods

with

;

paragraphs telling
agents how to create alibis, to use
alternate questions, sympathy,
flattery, face-saving, justification,
and finally, if they can't get the
Then follow

her.e!"

Try. «•>?(■

manufacture pre-war qual¬

story,

4.

Ohio Brevities

itf5® M

Railroad (Nickel Plate) last year! will be asked to approve. an in-;
in
authorized
common
Chairman
Robert
R. Young crease
100,000 to 400,00ti
made this statement Tuesday to shares from
of fictitious price levels.
and changing the
comstockholders of Alleghany Corp.' shares
That the job of pricing be which controls the Chessy Lines, pany's name to "Marion Power
restored to industry, to pro¬
including Nickel Plate, Pere Mar¬ Shovel Co." A proxy statement
ducers
a n d
distributors,
also seeks to- remove present re¬
quette and Wheeling & Lake Erie.
where it properly belongs,
strictions-of two years on bank;
Young declared the leaders of
and that OPA, if retained at the
opposition group bought their loans to permit, loans up to 10
all, have limited review and NKP stock at low levels in recent years.
supervisory authority;.
The proposed amendment would
years, and the price has risen in
That every producer be peranticipation of an offer by C. & O. permit the conversion of a twomitted to establish prices

4

get

tions during. the six war years.
The partial relaxation of the con4
wjJ l be welcomed, and the.

: trol

Kingsley Wood. 4And it would be City will settle down to its activldifficult to enforce distinction be-1 ties under the new system.-

progressive de¬
Nickel
Plate ; preferred
stock¬
control now and for complete dis¬
holders
led
by
a
number
of
continuance of practically all con¬
foreigners now residents of the
trols by June 30.
4
United States resulted in Chesa¬

.

you

principle
which was accepted
also by the Conservative Chan¬
cellor
of
the
Exchequer,
Sir

must be made for

learn to 'take it
Convey to him
impression; that you think
he is probably right.
In doing
so, you are, selling yourself to
the witness as being a 'right
guy.' This makes the witness
feel that whatever ■ he may tell
you as to what he did and why
he did it will be understood by
you in the light that he de¬

rated, and black markets reached
enormous proportions.
Food was

obtain

.

.

the

Production declined, sup¬

costs.

ing state of affairs

exchange deal¬ earnings of the foreign exchange
disappointed when department are not up to pre¬
ing 1936 through 1939,4with mar¬ they will realize that they 'will war level.
As for business firms engaged
gins substantially^ the same as to¬ never have a change to practice
day, over half of all retail estab¬ their skill.
As for the banks, in imports, so long as they are
lishments lost money.
they will accept the change with relieved of the necessity of ap¬
But regardless of retail margins, mixed
feelings.
The Bank of plying for exchange permit, it is
our
greatest need today is pro¬ England itself, having organized a matter of indifference to them
duction, and unless goods are pro¬ a highly efficient department to whether the dollars they need are
duced rapidly, we will really ex¬
deal
with
foreign
exchanges, supplied by the Government or by
perience sharp; Inflationary trends, would be reluctant to relinquish some other, business firm; through
So" long as industry is uncertain, that
activity in favor of private the Intermediary of its bank and
confused; and -without incentive, dealers and
foreign : exchange
market.
brokers. ' In
any the
we
can't; expect maximum pro¬ case, already under the Governor¬ Nor will exporters be placed at ai
duction.
ship of Lord* Norman; it had ar¬ disadvantage by the maintenance
The answer to alt of this is very
rived at the conclusion that the of the rule that they have to sell
clear. We cannot permit the ex¬
resumption of free movements of to their bankers the proceeds of
tension of the Stabilization Act in
"hot money" would be contrary their sales abroad. - London has
its present form..
^
tb the interests of the country, a grown used to exchange restric¬

you personally;
with a smile.'

then, and maximum average
prices.
They also made the mis¬
take of freezing prices at unrealis¬
tic levels, or not allowing for

■transportation

not

unduly unhappy if the exist¬

Trained foreign

point out that dur¬

I would recommend tha^ indus¬
"Don't argue with the witness;
Agree with him even though it try immediately insist:
hurts. You are there to get the
(1) That Congress state in plain
facts; If he damns the OPA; the
i
English that maximum pro¬
regulation, the Administration,
duction is far more impor¬
the Enforcement
Division, or
tant than the maintenance

,

mum" of 1793. Interesting 1 y

enough,

ascertain

to

sing to get even. When he sings

the current activities of OPA with

the

figure is

-

Or this

A few weeks ago,

absorb

...

left.
.

exchange transactions would

were substan¬
tially 4 maintained.
Under
the
present system they earn a fair
1939.
There will be no return to profit on foreign exchanges, with¬
the ; prewar
system of feverish out taking any risk whatsoever.
activity in the foreign exchange Before the war they had to give
market, with rates fluctuating ac¬ a reasonably free hand to tneir
cording to supply and demand; chief dealer to job in and out of
and certainly there will be no re¬ the market, engage in arbitrage,
turn to speculation and arbitrage. and even to "take a view"
(as
Before the war; at least 90% of speculative operations were dis-^
the turnover of the foreign ex¬ creetly referred to) provided that
change market consisted of specu¬ at the close of the day they had
lative or arbitrage transactions, no overbought or oversold posi¬
This activity of the foreign
that the turnover would in the tions.
circumstances be very small even exchange
departments was;; 01*
if
free
dealings were restored. the whole, profitable, though if
the dealer was caught out once
Indeed, it is doubtful whether in
the absence of ; speculation; and in a while he usually lost all the

.

—you

Very interesting letter from a gen¬
tleman in California, comparing

be

and volume of sales. The
national average

The bigger banks which handle
of the commercial foreign

and will cover their
deficiencies by obtaining foreign
exchange from the authorities, as
they have done since September,

parties concerned.
We cannot immediately remove
"If you find any degree of an- all controls. Certain of them may
! imosity, play* this factor up by
be necessary, ; The acid .test Vof
inference to the witness's
whether or not pricing is ade¬
mind...
quate is production. I repeat, OPA
"Point out to him; that possi¬
is a wartime emergency agency,
bly he is being taken advantage
that has no place in a peacetime
of, is holding the bag, or being civilian
economy.
Continued re?
played for a sucker .
strictive control can only be rec¬
"Each little pin-point penetra¬
onciled with a; lack of confidence
tion that you make in the witin our productive capacity.
Plans
.

cake three times and still have it

'

a

"hot money."

will

.

5

non-existent

a

to

the witness, and third

between

4 pricing

inadequateknowledge

"Animosity

! status and degree

to buy its way out of important

of

they

exchanges,

sharply by type of store and size
of store,

banks,

ex¬

.

called

one

Third Party":

And it won't help matters any
to have the White House attempt

or

the

for

foreign

transactions and transac¬

tions arising from movements of

most

The ability to absorb varies

costs.

It is well to

may

dangerous program that is bound
to handicap industry throughout
the transition period, and squeeze

a

that, retailer's

of

measurement

Nor
as

,

commercial

tween
change

place at the disposal of the au¬
thorities their surplus of foreign

paragraph called "Switch the quite impossible. 4

No, there is no indication of a
real desire to take controls off, but

self-perpetuating

jected on the basis of a national
average figure that includes auto¬
mobile and appliance sales.
can
such: a figure be used

use

4 "When the facts in the case
indicate
that
another
person

;

cept balls, bats, mitts, apparel and
shoes.
We thought he took con?
trols off home plate* but no—he
meant to include all the bases and
the catcher's mask as well.

of

dry goods store cannot be pro¬

a

h^stily^ ordered all v6p»ies of these ability to lower margins

item

a

But the sales potential

better.

As

':-;4<

(Continued from page 1640)

■

.

surrender, however; their foreign
exchange to their banks; they
will have no right to dispose of
them freely; 4
: ••,

Of course we all know that we

,

"

:

-

•

actions by
preparing
charts v and
booklets
showing national averages in total
industry sales and profits. .4;-?!4-4>;
OPA

$8.75 dresses, he could not. be a
manufacturer of $10.75 dresses. His
dresses cost him $9.50 each, but
OPA insists he can't charge over

goods pile up
in
warehouses,
because
OPA's
MAP plan makes it illegal to ship
them,,OPA close their eyes and
become very much interested in
taking controls off imported de¬
hydrated banana flakes, manholes
and manhole covers, canned Irish

only to be

applied to the barest of necessi¬
ties. ; Since, we
have seen that

of

And while needed

restricted program,

a

along

going

was

fine, until OPA's Washington of¬
fice overruled New York and de¬
cided that because before he en¬

a5 15%
increase. - Of
there are no such shirts.'

course

he

and

stores

have

may

well received by New York

were

off

cut

points—a complete farce.
Anyone
manufacturing
men's
broadcloth shirts for $1.03 or less

1669-

^

•

(5) That the false theory that
all increases needed to pro¬
duce goods at current costs
can
be
taken
out
of the

-

I

would have less after taxes than
by acceptance of the C. & O.
offer," Young stated. ;
.4

year $1,000,000 bank loan,
in 1945, into a long-term

made
bank

releasing funds for the re-?
habitation of the plant without
impairing the company's current,
position, it was. announced.

loan,

4 One of the, best offers
recently for railroad
trust

certificates,

made

equipment

according

Chesapeake & Ohio, was the
of

Halsey,

which

bid

Stuart

&

Co..

to

bid

Inc.,

99.612 for $1,750,000

iy8% C; & O. serial equip¬
the C. &. O. offer
ments.
The bid represents an
it also was in
interest cost basis to C. & O. of
tributors be discarded.
4; excess of anything that the Nickel
example, that they can prevent a secondary problem. 4 Mr. Bowles
1.198%.
-v
44 (6) That industry be given the Plate stockholders may ever hope
believes that retail margins are
men from starting new businesses
4 ;
7 'immediate4 right to
chal- to receive.In a letter to Judge
by merely withholding price au¬ excessive.
"Before this proposal could be
Vinson over a year ago, he an¬ ;4;i lenge any and all regulathorizations?
4.44 -;•1
"4' *. 4
tions in our regular Federal submitted to the stockholders or
Walter J. Connolly Dead
nounced-his
deliberate plan
to
/: A wounded ex-prisoner of war,
to the Interstate Commerce Com¬
" \
^
Who served over four years in "substantially reduce existing re¬ f - % - courts. 4 ;, |
4; Walter J. 4 Connolly,' head of
opposition
Unless principles of this kind mission, V organized
the
He started with a
army,
made
arrangements tail margins."
Walter J. Connolly & Co.,; Inc.,
developed*
-4.* '
»
"
are incorporated in an aggressive
limited list of low-price essentials,
with
the Veteran's Advisory
Boston; died suddenly. His firm
"Unwilling -to meet the un¬
Branch, of OPA to manufacture which. retailers generally .* wore program, and carried out without
will continue in the investment
dresses at $10.75 each.. He started quite willing to sell at reduced reservation, our return to normal
predictable terms of this hold¬
his plant, entered into; a union margins, or no margins if neces¬ is certain to be unduly delayed
business from
its offices at 24
up group, C. &
O. was relucand industry will be hamstrung
sary,
and at that time it was
; contract, committed for materials
tanllv
rnmnftlled
to; withdraw; A Federal Street
•'for years to come.
77 777
§tnd started production4'Hls'dresses carefully explained that this was
I wonder if many of you real¬
ize how far reaching certain OPA
;

controls

are.

Do you realize, for




_

_

,

;v'-4 \4Cost,Absorption;'
;

Just

a

word

f"'44

-v v ;

Cost Absorption,

on

>

hides of producers and dis¬

of

"Not only was

more

than fair, but

-

.

.

.

1670

THE COMMERCIAL & FINANCIAL
CHRONICLE

ative action of releasing wages
from control, which mattered.: •

Inflation Under Price Controls
(Continued from page 1631)

even

have

disappeared. But the debt
remains, and the increase in the
money supply remains.
Since the

beginning of the war
the money supply, consisting of
bank deposits subject to check and
of currency outside the banks, has
In

than

more

addition,

the

three

people

times.

the

of

individuals and business,

country,

hold other liquid assets—time de-

-

posits,- war

savings bondsi; and
government securities—in

other

amount

an

times

also

the

end

were

of

1945, compared with
$65 billion at the end of 1939. Peo¬

money
source

Price

sure.

control

does

not

a

run

and: borrows

'

the basic

ward pressure.

the

other

cited.

does

not

further.

goes

It

Interest Rates

or

The
not

interest rates has

bonds

after

S.

ipermitted it.

But

should

we

decline in interest rates

investments

not

from

all

prices of other
the past year or
This rise is

eral

to

investments,

in

In

wants

to

power. To a man who
take a $30-a-day vaca¬

Florida, or to a woman
who wants a $5,000 fur
coat, it all
the

second

the

same

place,

money.

In

capital

gains
probably add to the disposition to
spend. They come as a windfall
to

the prudent and

conservative,
they are consciously sought by
the optimistic and the
venture¬
some, and they carry with them an
atmosphere of buoyancy and cele¬
bration

whose

effects

many directions.
I also think it

extend

in

asserted,




heavy income tax
The budget will be bal¬

this quarter.

There is real

that

any. deficit
small and that

be

1947 will show
there

hereafter
the fiscal

surplus. Of

a

are many

uncertain¬

about such projections.

on

If

would

monetary and fiscal
try to do the job by

we

monetary

redemption

continue

to

promote

the

to

say, the approxi¬
balancing of the Federal
budget does not lessen the need
for Treasury economy. We ought
not to be content with

halting the

monetization of debt; we ought to
get to work reversing it, which
will require a

budget surplus and

retirement of government securi¬
ties from bank holdings. A start

already

been

made

in

debt

retirement, but out of the cash
balance
previously
borrowed
rather than
come
<

of

out

surplus.

We also

a

current

in¬

-i

,

need

that
we may produce a
surplus and at
the same time provide tax relief
in
quarters where it lis. badly

needed.

'

must be

one

Tax

economy so

policies,

however,

of the reliances in the

battle to reduce

inflationary pres¬
sures at the point of
origin. The
principle is that taxes should bear
upon spending rather than sav¬
ing.
Excise taxes, for example,
are
appropriate to the needs of
the

have fumbled

we

an

strictive.

alone,

measures

have to

they
impossibly re¬

be

Nevertheless, the

support

appropriate

to

present

conditions and to

the

our

battle

means

excess

of

against inflation, as a
diverting more of the

purchasing

markets.

power

from the

./'■"'•X/X

Attack Inflation by Monetary

Policy
Direct

attack

upon

Xx;X X:/ ; x;
the

basic

the

•

lower

:

I

costs.

of

much

as

come

up
Or

trol?

is

it

of

another

pressure

group in the

Just

before

the

a

tion

and

the

answers

as

consumers,

responsibility

this

to

such

a

but not of their

as members of a co¬

operative productive organization.
Government > interventions pro*
duce pressure groups^ as they long <
ago produced - the: farm bloc; the
labor bloc, and let us say, too, the

Christ-

General

that

me

question must be governed by the
feelings of housewives and others
who are conscious of their func¬

Electric

a wage

,

ever intelligently ob¬
working of a free mar¬
ket in anything. In most agricul¬
tural commodities, no one under'
35 or 40 has witnessed, with ma¬
ture observation, a truly free mar*

ket.

tunity,
fore

served the

a

a

as a

glorious oppor¬
reluctant retreat be*

lude, relatively peaceful, between

national failure to establish

the reconversion
'

r

A

"•

A Device of Statism
:

policies and achieve unity in mak¬
ing them effective which would
have provided a stable basis for

inter¬

the satisfaction of one set of de¬
mands and the presentation of

I think it is

vote.

a

tain dropped on a

the pattern are

an

job ranging from fair to

a

Let those who in the future will
write the chronicles of this period
take note of those words as a cur¬

new

merely

.-XXX-

25 who has

demands to
Is this- wage con¬

to it.

willing to accept price fixing

existence

Stabilization Basis

obtaining wage increases in
excess of an
industry or area pat¬
tern, if the effect is to raise prices.
However, all who have not yet re¬
as

Company,

as

Opportunity Passed to Apply

from

ceived

too

,

The labor

unions, having received if not all
they wanted at least more than
they expected, are now prohibited

invited to make

quate. The second danger is that
the American people may become

tariff bloc and others.
v
increase
and to apply for price increases.
Perhaps
you \wi 11r
ponder
He said it was apparent that "the another .* point also. : If we > place
the beginning of economic literacy
company can no longer adhere to
its policy of maintaining
and awareness of economic princi*
prewar
price: -levels.
We
regret
that pies and events at the age of 2d
through this decision we join the or 21; there Is no one in the couh->
forces of inflation."
try today under the age of 24 or

our

any wage control?

dan¬

.

measures

thousands
others arein

of

Company to offer

subject is wage con¬
should like to ask, and I
do not intend this
flippantly, have
we

two

something to ponder.
I doubt
greatly that it is in any sense the
expression : Of • an* -informed or
thoughtful economic opinion^
Rather, it is the- evidence of the

Mri Wilson announced the deX

cision

Wage Control
Since

Electric

devoted,

millions

;■mas

•

X",'X

with

First, that in relying upon
price control to fight inflation, we
shall rely upon it - too
generally
and too exclusively,. and that the "
direct attack upon the
monetary;
fiscal and wage aspects of the
problem will be weak and inade*

continued after June $0. I won-*
there should ■ be gratificaJ

ing to make goods better and at

the latent infla¬

v

ourselves

concern

gers.

tion at such

country, to the philosophy of try¬

ficulties in the way of price con¬
•'

General

man
,

trols; th^ any other development.
XX''

the renewal will be not for a
year
but for a shorter term. We should

der if

think, in two sentences uttered
by Mr. C. E. Wilson, President of

tionary danger, and to put dif¬

-

and

.

I

and compound" its in¬
Wage controls also are a
part of our subject here tonight,
and most,appropriately so. Recent
increases in ' wages
have: done

X

controls

very good, < and that 75% think
the price ceiling law should be

culminated was marked for history,

fluence.

•

other

the

country;; For inevi-J
tably—and I say it with full re»
strengthened union demands.
The moment wheii theseforced spect and sympathy—it seems • icf

accelerate

-

and

limit

standards, both those
govern pricing arid those
which govern decontrol; and that

done

"to maintain purchasing power."
Government memoranda arguing
that large wage increases could be
paid * without ^ advancing prices

secure

.

severely
liberalize

Which

;

demands for large wage

increases

inflationary danger are not estab¬
lished. Paticularly we must
guard

more to activate

ton.

f presume that Mr. Bowles: la
gratified by the fact that an opin-*
ion poll has shown that 80 % '■ of
those polled believed OPA has

depression led the government to

many ears as long as unified fiscal
and monetary policies

Xxi

;

being taken in Washing¬
Apparently the Price Con¬

prise. '

creases

ring, in

y,

are

substitute for the free market
which is the sopl of free enter*

tailment of production and to in¬
of costs were developing.
Mistaken fears of deflation and

argu¬

living,

momentous decisions

are

as a

toward full production by Spring,
Meanwhile, however, the condi¬
tions which have led both to cur¬

ments for extension of
price con¬
trol will have a hollow

trol

mate

'

may be

of

Needless

the

capital

like

month

bonds, to encour¬
age saving instead of spending. X

sev¬

in

looks

policy.

The inflation of money purchas¬
ing power is now a hard fact; Let
us now consider
elements which

has

period of wage and price

adjustments

debt

sale of savings

so.

inflationary in

that

our

budget, and keep ourselves
against a return to deficit
financing and monetization of

pres¬
Fortunate¬

will rise further.

should

property, during

spending

tion

system,

financing

including the accrual of interest
on
outstanding bonds, exceeded
redemptions by $57 million. We

high¬

on

first place it
gains for those
who wish to take
them; and capi¬
tal gains add to
spending power
exactly as increases in income add
ways.

banking

which should induce redemptions
by strikers. But new sales, not

inevitably

higher capitalization of

produces

the

rest

now

It is the

savings bonds are also
heartening. February provided a
test, for it was a month of strikes;

a

other words, to higher market val¬
ues for
income-producing assets.
We have evidence of this in
the
rise in stock
prices, and in the

1

interest

spending.

The figures on the

inflationary effects. A

a

low

of the U. S.

cline in interest rates, or the
pros
and cons of the
Treasury and Fed¬
eral
Reserve
policy which has

leads to

by

tent.

'

;

is

seen.

In this

and particularly

economy

cost of

trol Act will be renewed—let us
hope with amendments which will.

among

stability. For two or three months
after V-J day the prospect; was
present pumping out purchasing
bright beyond all expectations.
power; we should not contend that There was reason to think
that the
the full
responsibility or even the automobile industry in general
major responsibility for combat¬ would be under
strong momentum
ing the inflationary danger can
by the turn of the year and moving

do

But,
in general, we can
say that the
Treasury deficit is no longer add¬
ing continually to the inflationary
pressure and will hot •; in * the ne^t
18 months to any significant ex¬

ma¬

around

situation
of

consensus

Treasury requirements for funds.
Since the Treasury is not at

pres¬

outstanding issues, the

ties

) We lack time tonight to discuss
the technical reasons for this de¬

income

in

course

all

Government

holding

larly affected.

grade

They

inflationary

will

V^k % yield until about a year ago
have dropped to a 2.11% basis.
Corporate issues have been simi¬

est

the

year

S. Treasury secur¬

U.

overlook its

not

because of redemptions or shifts

hope

until the end of
1944; but since
then the: yield has
dropped to
of

present

the

monetary opportuuityto; mdve far i more
policies, at a time when an ap¬ rapidly toward
capacity produc¬
proximately balanced budget is at tion ,0f,civilian
goods than we
hand, is still the same as that de¬ have
done, and on terms 'which
vised to '< support;
unprecedented would maintain: cost and price

directly, the ar¬
for: price control f lose

receipts.

ity sold slightly below a 2% basis;
there was no material change

Similarly the longest

the

framework

be

forecast,

the

•

seven-year U.

but

the

I cannot

area

decline
had

What' may
come of course

system

ly

public attention it deserves.
after
Pearl
Harbor
a

1^4%,

no

that

they expect to get, I be¬

productivity. If so, new upward
will
be
exerted
on
prices. Are we then to maintain
price controls to escape the fact
of this pressure? If so, no end can

of

our

our

These

pressures

independently in
Treasury opposition.
happen in the weeks to

face

in

recently ob¬
an installment

only

were

that

come.

controls

in

-

ex¬

the

at» the

danger.
lead

argument

knowledgeable people would be
that many labor unions will con¬
tinue to demand wage increases
outrunning the increase in labor

pansion, and Chairman Eccles of

item to our

one more

created

anced

Shortly

turities

are

supply of goods.

touch

sure

flationary pressure which price
control does not touch. One is the

interest-rate policy.

credit

inflation

,

this

,

the

of

other sources of in¬

lieve

re¬

the

where prices

either because of deficit

Obvious¬

in

over

We ought to con¬
in
those
areas,
wherever they are truly important

tinue

increases

what

on

Board of Governors has ex¬
pressed himself forcefully on the
question, the System has not been
inclined to move

lodge

§:• ,vvvPressure x: $
are

impressed by the need to

assert some control

Federal deficit which has created
the inflationary
pressure, and if
further Treasury securities are to

not

Inflationary

as

are

eral, touch the inflationary pres¬
generated by declining in¬
terest rates. To be sure, at times
the opportunity for
capital gains
is
closed
in certain speculative

the -latest indications in this
are
reassuring. The Treasury
had a cash surplus in
February
suggests that it does.: and
undoubtedly also in March,

Control even

the

more

sures

that of Federal

travel, the indulgence in*«rec-

There

This & leaves

much of their effectiveness. The
first main problem is, of course,

ly it does not increase the supply
of goods. No advocate of
price

i

higher yielding

the
does

the

tained

months. The Treas¬

seven

time to

of

Many labor leaders have said

that

does;: not appear to have in
mind any early
reversal, and al¬
though Federal Reserve officials

governments for the banks to take.
Price control does
not, in gen¬

guments

volume of retail trade, the amount
reation and amusement.

investments.

us?.

war

for

over

To the extent that these
prob¬
lems are attacked

diminish the disposition to
spend,
as shown
by the rise in spending
and : decline of saving since the
end of the war, the unparalleled
of

to

order to sup¬

ury

rates,

the

does

demand

sures

of the up¬
does it cure

ability of people to spend, but the
contrary, since to the extent that
price control is effective people's
money

verts

Where

uation

financing, are still in
effect, although the war has been

securities

arises

now

we can
justify contin¬
price control on' the
ground that wage policy has aug¬

mented

port the

less attractive to people who want
them for income, and di¬

to

tf

diminish

supply.

money

lowed by price rises all out of
proportion to any new production
that they could induce for a
long

is whetner

be made

may

credit expansion in

the

to hold

not

inflationary conditions

It

government

the

They do not reduce, or. pre¬
the increase of, the money
supply. They do not reduce the
ability or the disposition to spend*
They diminish instead of adding

cause

Nor

It

makes

in

banks, with resulting

in

vent

Price control therefore does not
remove

debt

government

expansion

list of what price controls do

from
-

,

of

of inflation

causes

through monetary policy. A gen¬
eral policy, and specific
measures,
originally designed to facilitate

do.

op¬

the, Treasury continues to
deficit

a

the banking system*

tion

commercial

This adds

further increase in the sup¬

ply if

provable,

promoted further concentra¬

speculative money, and

erate in any way to reduce the
supply of money. Nor will it pre¬
vent

interest rates

of control that this country would
ever endure could close them all.'

increase in the supply of
is the original and primary
of the inflationary pres¬

The

has

not

in

ceiling. But other outlets exist for

ple can convert time deposits and
savings bonds into money if and
when they so elect.
'
" 1;
V.

is

it

The question which

markets

three

figure.
Total
$225 billion at

prewar

liquid assets
the

than

more

though

the decline

•

increased

that

Thursday, March 28, 1946

•
Price control is a device of
statism, of totalitarianism. It ex¬

alts the decisions of government,
above those of the free individual,
in a sphere where
all history!

period,

For the purpose of combating
interlude
during
which controls will be in exist¬ .inflation, which is my part of this
discussion, we must therefore con¬
ence, but largely nominal.

another—an

seems

to

me

to have demonstrated

that

the

free

individuals - will

combined

decisions

of

produce a]
cede that price control can have superior result.
Ip ; the. modems
After V-J day Wages were de¬
world' we expect government to
beneficial effects. At the same
controlled, with scarcely a voice
time, - and
again
within : the do many things which affect busi¬
heard in opposition. It was
recog¬
framework X" of *
anti - inflation ness. ' We are puzzled to know'
nized, I think on all sides, that
policy, it has harmful effects; ' It where to draw the line against'
wage
controls suitable and
■

en¬

forceable in time of

would be

war

inappropriate,

unenforceable and
disruptive of true collective bar¬
gaining in time of peace. There
has followed,
cumulating in recent

weeks,

a

succession

of

in¬
creases
manifestly too great to be
absorbed without
raising prices.
wage

Immediately, the wage-price spi¬
ral

was

tary

accelerated, while

factors

receded

importance.

trols.

policy

we

during the

period

was not

It

relative

we

that/ what

realize
from

in

Now

wage

mone¬

have

to

suffered

decontrol

the absence of

con¬

harms

but

was '

the

kind

by

of

many

ministration.

It

was

the

also

restriction

because

made.

But when it withdraws

are

production, on one side of the
question, as: it is to reduce the
supply of money—actually or rel¬
atively—on the other.
XxX

from business management it can—:

Price

controls

duction.

do

restrict

pro¬

I think the industrial

or¬

turning out, and that repres¬
OPA ceilings are one of the
why we are not doing bet¬

ter than we are.

that
the

there

are

effective

duction

where

are

But I also think

some

areas

limitations

not those of

de-control

where

on

pro¬

price, and

would

be

power

of individual

decision'

not expect that the system of freeand voluntary association in pro¬

ductive enterprise will function at

•full efficiency.

»

1

ganization of this country in a
very short time could turn out
15% to 20% more goods than it is
sive

rise of wages, rather than the
neg¬

necessarily affects the cli¬
mate, the environment, the atmos-'
phere in which business decisions
the

reasons

positive

ment

of

production prevents a final solu¬
of the problem of inflation.
just as vital to get increased

wage

actions resulting in the excessive

case

It is

labor

leaders and supported
by the Ad¬

government intervention. In this'
the line is clear.'
Govern-;

production,

tion

now

followed

if it restricts

us

not only because production is the
source
of welfare and progress,

fol¬

The trouble with overhead con-'
trol of prices is that it doesn't:
function unless it is supplemented

by other controls and compulsions;
The trouble

with

ally is that there

controls gener-j
are

not enough

brains in the world to do the job.
The tensions, strains and responsi¬
bilities

become

evidence is

on

unbearable.

all sides.

the situation in the

the

distorted

The

Consider',

grain markets,

price relationships,'

/.

Volume

163

sion

:

This is accomplished by
passing on to the various admin¬
istrators, suggested material and
ideas to be used in the various

(Continued from page 1637)
or
oil.
They are pitifully
ready to become the victims of
the ^confidence man's technique,

states.

It is not enough for public author¬
ities ' to. .spend their
efforts in

states in carrying on

•

liium

'catching swindlers after they have
their

fleeced
be

kind'

some

there must

victims;
of

prevention

can

worked out which

protect the

investing public before its savings
are lost.

;

..

.

.

.

...

.

Investment Public Worthy of
'

;

~

Protection

^

Today's investing public is par¬

ticularly worthy of protection, It
; includes the young soldier home
from the war, with a few hundred

idollars in savings and musteringput pay; it includes the beneficiaiy of the gold-star veteran's life
'insurance policy, father; or moth¬

widow; it includes the
war worker who sees his savings
disappear as reconversion lags
and who desperately tries by "in¬
vesting^ his cash to win security
er; a young

tot

these

troubled

These

years.
are not

doubtful

and

all people who

are

vesting public and who therefore
informed either of the

are not

ac-

tual-valid operations' of bbnatfide
.stock salesmen or of the existence
:

of the

fraudulent dealers.

the people? who noiv
mally in the course of ;the next
20 years would become, the finan¬
t

These

securities.1.
These

for the

contain

releases

most

part, material which the re¬
cipient might pass,on to its spe¬
cial

let¬

public by means of form
ters, posters, and placards or

adr

yertisements in the newspapers
and magazines.
Many institution!:
were so impressed with the value
of such a campaign that they used
all the methods suggested above

in¬

to put' the dangers of lunwise
vestments before the people.

'

.

.are

of the swindlers.

••

-

>

a

dif¬

ficult problem.
It is not possible
to' legislate
investment', intelli¬

into the buyers' heads.

A

campaign of education appears to
be the only solution-of• the diffi¬
culty.
Somehow these unwary
people" must be told about the dif¬
ferences between true andf false
.

,.r
>.

"

"

•

...

by > the Educa¬
tional and Publicity Committee of
the "National Association of Se?
curities Administrators* The^Com¬

position that

to work

administrators

with

the

various

the

of

did not publish it, the
end of the page, for

their

dresses.

allocations,

the

and

confusions

over

contentions
the

world.

Compare it with the past in which
price
governed
distribution—in
which the grain merchants of the
world performed almost

automati¬

cally, and with a minimum of con¬
scious planning, the task which
today has us dissolved in confu¬
sion.

Danger of Further Inflation
:

We

faced today with infla¬
menace of fur¬

are

ther i inflation. Tt is a' condition;
not a theory.

tend

in

some

We are about to. ex¬
degree or manner

the Price Control Act.

It ought to

be extended in little degree for a
short time, and not iri full degree
nor

for

out

to

If the

long time. ;

a

be

a

good

controls

or

are

; It may turn
a bad thing.
liberally ad¬

ministered, they will gain us time
—time which we have used so in¬

adequately in the recent past. Let
us not deceive ourselves, however,

/I>ykv thinking
battle to
is

a

that

the,. battle

is inherently a
control prices. Rather it

inflation

against

battle to increase production,

and to do it without increasing
money

the

supply further. It is a bat¬

tle to limit Federal expenditures
and

balance the budget.

battle in which

It is

a

monetary policy is

weapon.

It is a battle requiring

individual

self-restraint, working

and

saving

instead

and adding to

more

spending

the pressure in the

markets until the
becomes

of

supply of goods

adequate.

battle for unity and

It

is

cooperation.




rich

The mats cost

ad¬

and

10 cents

is

When this

out,
the stock will go sky high! Better
put in your order right away.
news

shares?"

the would-be

All

goes

to do is to

sign

a

has

investor

check The price

the shares is ridiculously low.

of

might

most

in
dream

bring

people

•

The

voice

persuasive

the

on

telephone/goes

on, far past the
three minute limit of most frugal

calls.

telephone

times^ the veteran
widow

or

the

Far too many
the veteran's

or

war

worker or the

school teacher who -never had a
hundred

dollars

to

invest

before

release

contained

a

poster entitled "Our Open Letter

the

bonds

as

they

instead

time

are

of be¬

help the owner on "the way to
cashing war bonds to* stop and
consider.
Or there is the folder, "Specu¬
lating in Gold Mine Stock," .pub¬
lished originally by the National
Association of Better Business Bu¬

in -New York City.
This
a most effective, head/

a

'

"It is anticipated that there
frauds

-

in

by confidence men in the

future.

near

increase

tremendous

will

Swindlers have pre¬

pared their postwar planning and
will exert great effort to obtain
a

large share of the 148 billion
of savings stored up - in

dollars

their

statements and other mail¬

ings.

One bank is reprinting this

material at their

and

customers.
in Nebraska
and organ¬

finding

are

expense

own

concerns

izations

are taking
this publicity
seriously and are cooperat¬
ing in an effort to warn the public
against securities frauds.
We be¬
lieve that every state will find
this splendid cooperation to ex¬
ist.
Respectfully submitted: Har¬

very

Johnson, Chairman; Allan S.
Richardson,
Edward
J.
Samp,
Ruth Ruen, Kenneth Weddle."

old

There are, as has been said be¬
fore, always those members of the
buying public whose desire to get
something for nothing is so strong
as to blind them
to the'plainest
signs of the swindler and the con¬

fidence

man.

For

-

them

there is

little

protection anywhere.

there

are

But

also those whose sheer

ignorance makes them easy prey
for fraudulent stock swindle. They
are

the

talk

of

people who hear vague
new products which

the

will be available for the world of
tomorrow and who buy

stock in

bonds and bank deposits.

"Every dollar lost in frauds is
one

less dollar prosperity to your

Your cooperation in

community.

this program will be greatly ap¬

Oct 23, the

Education and

in¬

and who would

atomic bomb

vest, hopefully

preparing
;

The

in the company
secret defense.
:~K$

a

only thing that can save
people is to make them

these

preciated."
On

phony plastic company on
half knowledge; the people

of the

aware

existence

of

swin¬

Securities

salesmen, to give them an oppor¬

a

telephone, charges off -the $30

tional

Association

of

was

able to inform

the Commissioners as follows:
"We

are

happy

to

#

advise the

Commissioners of the fine recep¬
tion

obtained

from

the

various

tunity

to

learn

rities
find
a

the

elementary

investment in

truths about

secu¬

and, to hope that they will
the knowledge

safe

thus offered

guide through the mined

They are fol¬ fields and booby traps on the road
v
•
I ?
suggestions set out in to financial security.

banks of Nebraska. ;

lowing

our

this release in the United States,
much publicity was given the
Canadian gold mine situation that
even
the Canadians took notice

so

Please

of it.
*

Canadian
The

Mining Boom

greatest difficulty in edu¬

cating the public away from the
phony gold mine stock market is
the existence of an actual boom
»n

DON'T

bona fide Canadian gold

•

point.

exclamation

breathless

There follows in the

pamphlet; a

mining /securities in the early
stages of exploration and devel¬

most

illuminating discussion of opment."
gold mine promo¬
The general feeling by some is
tions, the present; promotion/ by
that if an investor is so Unwise
which so many ignorant United
as-to buy stock on the basis of 'a
States investors are being freely
telephone conversation from an
victimized by stock salesmen op¬
unknown individual, little can be
erating safely across the line in done for him and he
might as well
Canada.
This must not be con*
be victimized first as last.
fused with the legitimate gold
This is not the feeling of the
mines in Canada, whose existence
National Association of Securities
and
productivity give the pro¬
Administrators.
They know
of
moters a talking point.*
course that there will always
be
Methods of "Finger Men"
some members of the public who
cannot be educated.
But if there
Through the operation of local
"finger men," that is, men who are only a few who can be saved
two Canadian

investigate

community to find
little money
names,
ad¬
dresses
and
telephone 'numbers
gets into the hands of the stock
a

out who may have a
to
invest, a list of

salesmen.
list

To

the

name

the

on

the

enticing
circulars:
profit within the past few
weeks!
It may be the biggest
go

"250%

&agic

of

from

the

their

ignorance, the effort at ed¬

consequences

ucation will have been very much
worth while.

A campaign of

lic education by a

pub¬
state authority

the investing pub¬
lic, but also the sharpers and con¬
fidence men that in this state the
authorities are alert and interest¬
warns

preventing swindles as well
in
capturing and punishing

ed in

once!"

swindlers.

bring / responses

.

the

circulars

from ,the

.

ad¬

as

B&f/we Ifou Stweii.
INVESTIGATE
NEW industries—new businesses—will the future.war's
end and begin* shaping the world of follow the
Planes and

plastics, radar and rayon, transportation and

television, will show the way to the new world

The Ontario Securities Commis¬

of

our

dreams.

Capital is needed to make these dreams come true.
Invested
We urge

capital will

earn

profits—if it is invested wisely!

investors to exercise caution in making invest¬

ments.

Do business only with

REPUTABLE men.

Secu¬
rities Commission, Bank of Lansing Bldg., Lansing 4, or
2000 Cadillac Square Bldg., Detroit 26, as to whether or
not the man who solicits you is properly licensed and his
Get information from the Michigan Corporation and

proposition is legitimate.

not only

gold mine in the world! Avoid
disappointment
by
ordering tat
Sometimes

a

their
who
"One of the methods used to
hear of the gold rush and who
prevent such crimes is distribu¬ lend a receptive ear to the man
tion of information and warnings
calling long distance; the people
to the public in advance,
who
have
shuddered
over
the
war

Commissioners

.

mines.
ing-^torn strips■ from a number These reputable mines suffered
of phdnyi ^tock -prospectuses^ ar^ from the adverse publicity given
scattered
across * the
heading— the fly-by-night dealers in Cana¬
"Make More Money Faster!
The dian gold mine stocks,
;
biggest boom in Canadian History!
The Hon. George A. Drew, Pre¬
$48,000
to
the
ton!; Canada's mier of Ohtario, stated: "We <Io
greatest gold
mining develop¬ hot belieyeitis withinithe powav
ment! v 700% profit in one year! of
any government agency to take
Buy now and I'll get you out with investors by the hand and guide
a profit!
Buy now and hold for them past every pitfall they may
future development of this bud/ encounter.
Investment in securi¬
ding mining empire!"
So shriek ties is atj all times a ♦speculation.
the
headlines,
each - with * its This is. particularly the case of
folder has

bureau is to police the state as to
illegal securities transactions and
to warn the public against securi¬

with

bank

Duxandrakes mine, which
consisted mainly of an office with

the,'New York Stock Ex- worth of
phone call to overhead,
change.This letter told in the collects the
$170 balance of the
clearest possible terms the value
$200 check as pure profit, and
of hanging on to series "E" War
gets another number by long dis¬
.Bopds. \The. dramatic graph on tance
to the States.
the leaflet showing the increasing
Following the distribution Of
full

This division adminis¬

Sky Law of Nebras¬
One of the functions of the

a

a

dis¬

obtained by
supply of this

enclose

to

that business

ters the Blue

be

requesting

"We

' J/

/ The Nebraska Campaign

ties frauds.

banks

material

Further

58.

being

sending it to 6,000

i; The Nebraska Bureau of Secu¬

ka.

is

tribution

dlers.. along-side legitimate stock

from

of

//

which he has launched.

No.

release

to

Publicity Committee of the Na¬

an

The

Another

ures

the letter of transmittal attached

order over the telephone
and later puts the check in the
mail/
*
"
'
gives

..

desired."

undertaken

mented upon his corrective meas¬

Duxan/

at

,

tion and with the

a

names

own

each in case such information

reaus

the

drakes!

riches

held for

undertaken

are

it

They struck

about.

.

mittee has taken the

our

on

the

value

The Educational Campaign

its duties

preferred customers'
mailing list!
I've just got a flash!
are

ministrators, is well worth read¬

This campaign of education has ing cashed immediately, ought to

been

ly suppressed excitement speaks.
"This is Joe Doakes of theDuxandrakes Mine. You remember, you

investment

use

How. to achieve this protection
for the would-be investor, is

*

husky voice iull of bad¬

a

The

agency,

has

steps to correct any bad condition
which may exist among certain
operators located in Toronto'. Mr.

Securities.

Then,

...

Commission to the National Ad¬

er

the initiative of the
McTague, Securities

rities is part of the State Depart¬
evening when he is home, from ment of
Banking.
A letter went
work, the phone will rin^-;bn -/a;
out to all the banks of Nebraska
person to person call—long dis¬
from the bureau on Oct. 17, 1945,
tance.
The operator will say—
which states very clearly the pur¬
"Toronto calling!" and while the
pose of the Nebraska educational
man
in the United States waits
campaign.
:
for the connection to be complet¬
"The
Department of Banking
ed, he develop's a healthy respect
has as one of its divisions and un¬
for
the
unknown/ in
Toronto.
der its jurisdiction, the Bureau of
Rhone calls cost money,
,
,
*

How many

Miss ;Ruen states; in] part: j-In
the event the banks, or some oth¬

P.

well. // McTague is to be highly compli¬

as

inquirers' names go first
on the telephone list; but whether
the recipient of the folder writes
about? it v or not, his/telephone
number is going to be called. One
These

typical advertisement print¬
herewith, submitted by Miss
Ruth Ruen, Secretary of the Mich¬
igan,. Corporation and. Securities
A

backbone of the investing blank, at
public;- it is therefore; a matter of 'Name' could be eliminated and
prime Importance to. see that-their it could be used as departmental
first experiences are not the trag¬ advertising.
In this case, where
edies which follow the operations 'Name' is shown, the banks will

Investment.'

romantic

venturous and

ed

cial

gence

stock, and speculation sounds ad¬

ing.

pat of the in¬

normally

their respec¬
tive programs.
To the Securities
Administrators and other inter¬
ested organizations the committee
has sent, during the year 1945 and
continuing: during - the year 1946/
a series of releases covering a va¬
riety of subjects ranging from an
explanation of the notorious swin¬
dles now being practiced, to. sug¬
gested publicity for the general
education of the public in buying

by buying gold mine

made

been

C.

Commissioner,

all,-fortunes have

after

dressee;

upon

Hon.

Investment Education and Publicity
1

1671

FINANCIAL CHRONICLE

THE COMMERCIAL &

Number 4476

-

[

Name

,

1672

THE COMMERCIAL &
FINANCIAL CHRONICLE

;

Echoes oi the Savannah

Meeting

r

■4 lion head.

Mr.

nomic

System—Alexander

kov—The

Macmillan

Company,
University
Press
Avenue,
New
11, N. Y.—$6.50.

Cambridge
Dept.,
York

60

rtnevihe, Kr', H V

Tt-.-.n; «{»)•

was

with » B.S,

After graduating from Harvard he
York's foreign service
wt•■%#&

*

*

.

■

*

'

economic situation

in

observed:

1939

comment

to

1943

he

was

IV-

general

H

manager

it«»-

Liberia, and during this period thanked
zurrm,
the pound sterling to the U.S.
t'dk
one to help establish its new exttrevrr, Mr
tHrr
by the U. S. State Department,
m
It-

the

on

Luxembourg since the liberation, Mr. Gallais

Mr. Blowers has been Governor M me

State

■:V; X;;

■

"The northern part of
Luxembourg, which is agricultural,
partly devastated during the Battle of the Bulge, but

Cost
Analysis —
Sevin—United States

H.

Department

of

Commerce

~

for

by Superintendent of Docu¬
ments, U. S. Government Printing

Washington

25,

.

The rtru%im thmi%

nately the southern part of the country,- which' has the
iron ore
mines and the steel
furnaces, escaped damage. To repair the devas¬
tation in the north would take at least several
years, we figure five
years, andt.the ,Government is helping all those who
have suffered.
Obviously, to/enable the country to recuperate our steel
factories

sale

Office,

was

fortu¬

very

Distribution

Charles

.>

.

.

|S||Interviewed

"Luxembourg is 80 % self-sufficient

vice

Housing After World War I—
History Repeat Itself?—Na¬
Housing Agency, Washing¬
ton, D. C^--Bulletin No. 4--paper.
Will

tional

;

we

are

f

a

U.

ket Success—George Seamans—A
new edition,
revised and rewrit¬
ten to take into, full account the
present market position right lip
toi the time Of going to

press^Seamans-Blake, Inc., Dept. C-l, C-2,
841

West

Washington Blvd., Chi¬
cago 7, IIl.-~$3.00. with privilege of
returning for refund within fifteen
days.
'
:(Fifteen Facts

on the Proposed
Loan—Committee on In¬

British

ternational

Economic

Policy, 405
West 117th Street, New York
17,

N.Y.—paper.

ing

lowing

and

Russia—W.

„

Conference
nomic

L.

Trade

With

market at all.
of

Union,

t

..

f

370

a

Our problem is of

larger country.

:•

try, there
ments in

are

factories.
cultural
to

—

The Bretton Woods Agreements
study embracing the accom¬
plishments of the United Nations
held

at

Bretton

Woods

name

a

market

not as

complicated

as

that

to the organization and pur¬
poses of the International Bank for
Reconstruction and Development
ence

•^Wm. E. Pollock &
Co., Inc., 20
Pine Street, New York

5, N. Y.—

paper.
vUpP

-

■

■

•

■

-

v

.

New York Stock

Exchange
^/eekly Firm Changes
M The New York Stock

bership of the late Warner Cos¬
grove to Warner G.
will

be

change

Cosgrove, Jr.,

considered
April 4.

on

by

the

Ex¬

It is under¬

stood
as
*

l

that Mr. Cosgrove will act
individual floor broker.

William

R.

Taylor Will

retire

J from limited partnership
Burnet & Co.
pn

in W. E.
March 31.
•: ;

7 jKtntzing P/Emmdns, partner in
T.
L.' Watson
& Co.,
died on
March 21.

*

the

consideration of

>

i

LEXINGTON, KY.

—

Harry L.

Edwin A. Long have
opened offices at 257 West Short
Street to engage in the securities
business under the firm

-Russel

&

Long.

merly associated
Hooser & Co.

'

t

C. E.

Both
with

name

were

J.

D.

of

for¬
Van

Wilson, Sr. Dead

C. Emmett Wilson, Sr., produc¬
tion manager for J. A.
Hogle &

Co., Equitable Building, Denver,
Colo., died of a heart attack.
,v
f




bodgeC

r

la

the

*§-t-

Contrary to newspaper report a.

/|Mr.

Montero

/ after
his

"We have had

no

on

the labor situation in

strike in

received

he returned

talks

tatives.

tive

and

was

ternational

a

native of

here

how

Luxembourg, Mr.

on

"After

March 16:

the

first

of

-

we

„

;

'• ? •;/

agricultural country and is very-

,

and

even betun fa*
staffs, who wuL

;

me

Mn-

sponsible for the bufdeh

rfad-

when the gvatlaUt mww
is still unccrU-m.
/

"It is not

taken
seen

M

drdtkxt

^

l

u

at Bretton Ta*fa

—and

it

has

turned

m

our

expectation#—w-t
posed that the

the

*-

an

severe,

have

actual

<

Therefore all Maria Theresa dollars
coming into possession
of the bank are shipped out of the
country and sold as bullion in
the open markets of the Middle East, where a
premium on silver

«»:'

iremwrwrai.iow-

with such filch wtt*Surr*ut\( lot
of officials.
It U all the wrnm

is

*

lead to

would

This
Majesty Haile
'/

the

to

criticism to load the budge--.* of t

country.

culate it.

v

fm i

,

relates

by the Ethiopian

the Italian
occupation a very strenuous effort was made
by the Italians to make
the Italian lira the currency of the
country.
They were not suc¬
cessful in this because the native refused
to accept anything but
the Maria Theresa Thaler in payment for
his products.
This dif¬
ficulty has not been encountered by the new
currency, which is
being accepted throughout the country. The Maria Theresa Thaler
has not yet been outlawed in
Ethiopia, but circulates at; its silver
bullion value, its rate of
exchange with the Ethiopian dollar being
published each day by the State Bank.
However, it will eventually
disappear-from circulation because the State
Bank, while permitted
to purchase the Maria Theresa
Thaler,; is not permitted to recir¬

"Ethiopia is primarily

0

*

Directors and their Alternate*;

ver-

':ۥ

Directors and llmr

.

latterly prevailed.

#

paragraph in the Report «<• t&e:'l

occupied countries
which completely reestablished her
currency.
In July* 1944, the
new Ethiopian dollar
(burr) was issued. This, dollar exchanges
with the U. S. dollar at the rate of
40^4 cents per Ethiopian
dollar.
In keeping with the
requirements of the Bretton Woods
Agreements, the Ethiopian dollar's value is expressed in terms
of gold, one dollar being held
equal to 5.52 grains of fine gold.
Both notes and coins are in use. The notes
are of the following
denominations: $500, $100, $50, $10,
$5/and $1. There is a silver
^rcoib of 5Q cents abd copper <coinsof 25 cents,vi0vcents,;5 bentsan
Ay
; 1 cent.
The notes were printed in the United
States by the
Security Bank Note Company of Philadelphia, and the
coins were /
minted by the

has

in

consultation with. tht- ■ 'Ctoft'iWe-; td/tl
'"'-'much''■ regret that I em on felt

"Although Ethiopia has had a most difficult time in reestab¬
lishing its financial machinery because of lack of
personnel, remark¬

probably

th#

Keynes Holds Salfaff

Kentucky.

is

unable to

■

Following is text of siaicmciit

.

Keynes

Government, and besides being fiscal agent of the Government

"Ethiopia

-iu

-

represented; at the inaugural meetings of the In¬

the bank of issue and the sole
commercial bank of the
bank was established in 1942 soon after his
Imperial
Selassie returned to his throne.
"

was

*

Luxembourg for 20 years."

"The State Bank of
Ethiopia is wholly owned

of

howdbol

much of Peru4* dollar

In response to inquiry by the "Chron¬
icle's" reporter at
Savannah, Mr. Blowers said:
.

em

enmtyteme

fork

understanding with the

Monetary Fund, and Bank for Reconstruction, and Devel¬
opment by G. A. Blowers, Governor of the State Bank of
Ethiopia,
and

New

When he resigned a* lima,net

Statement by Ethiopia's Governor
Ethiopia

fail

the

from

repatriated by Peruviang by

During

Russell and

the

From reliably informed source* Mm It I*
of

Mr, Montero

The customs union with Belgium will
for the products of American branch

"The present amount of coins and«notes
issued totals $35 mil¬
lion.
This new currency
replaces the silver Maria Theresa Thaler,
which has circulated in ;
Ethiopia since 1780.

Russell & Long Open
Office in Lexington

Perevt«tf|

was

Exchange able progress has been made and the
country has operated on a
has announced the
following firm balanced budget each year since the leoccupation.. It has no internal
i
changes:
or external debt.
Transfer of the Exchange mem¬

mi

entire cabinet*

There ai;e opportunities for the
manufacture of agri¬
and construction
machinery and office .furniture, just
three things."

Asked to comment
Gallais observed:

in

July, 1944, with particular refer¬

whefi

*****

Congress of Peru the Peru* Ian

particularly in view of our steel indusopportunities for American direct invest-

Luxembourg.

Monetary and Financial Confer¬

-

course

Luxembourg's population

many

help to make

Lexington

3,.^

d

that

made

me

promise."

is only 300,000.
We
hard-working people like the Belgians."
V Asked whether Luxembourg offers
any opportunity for Amer¬
ican investments, Mr. Gallais stated:

—a

vn

to

•

^

tfll

return

my

This

.

11

ence

due

are

White^--Citizens

Avenue, New. York 17, N, Y.
paper.

able to

am

-

International Eco¬

on

I

November, last,

official agreement in New Terlu

"Most emphatically,

Must

in

plan informally resulting from the 0mm
Foreign Bondholders Protective Cowmit #rr
Peru recognizes the principal of the
sentatives cooperated with Camille
Gutt, who is at this Conference M; Past due interest is to be cancelled,.
as Belgium's
Governor of the Fund.
We have been able to
1% interest will be paid from Aug- t<
put
ih
those plans into effect.
during 1947; 2% during 1948; 2^% tet
"It is noteworthy that in
Jan. 1,1950, 3% interest and
wemttmtkm,
Luxembourg there has been no black

*

Can

I'w#;

there a prokef of
in December, If IS.
That tsr#|e |
the consideration of the Cagrm theft,
There fa

Netherlands,

"The monetary unit of
Luxembourg, the Luxembourg franc, is
identical in value with the Belgian franc.
Incidentally, we, have
profited from Belgium's example in
tackling currency-stabilization
problems. We have followed closely the
program worked out during
the war in London, and in
working out that program our repre¬

——

We

the
be ratified by the
parliaments.

A.

debt.

know, Luxembourg and Belgium have a customs
uftion,
that there are no import duties on
commodities mov¬
the border;
There is also a union with

although this still has to

Uirnvtey

the Foreign Bondholders' frotrctitt t mmnrit in >;l

means

across

refers.

S.

p

Orbs# H-.mtw

Q Government of Peru ha* presented the

"As you

which;

:This Is The Road To Stock Mar¬

ptem

fkm

defaulted dollar debt,

of World Bank and former

ment

,

?i

*

e

Hwt

"I do not know to which Frruvbn

foodstuffs.
Of
great exporting country and serve the
largest
steel production per capita of any
country in the world.: And,
naturally, we are vitally interested in the stabilization
of exchanges, in the promotion of sound foreign
trade, and, therefore,
in the Bretton Woods institutions.
course

'

the

on

ernor

to

as

at Savannah

"Herald Tribune" of March IS,
the Peruvian Government and

must work.

D. \C.-r

paper—150.

Bj

New

Singapore, Shanghai, Tientsin,

V

When asked by the "Chronicle's"
reporter to

Fifth

born

at

of

Hugues Le Gallais, Luxembourg Minister to
Washington,
on
Luxembourg's Recovery

Bay-

(ptw'f,

The pfiuttpat pmmee t*

country.

Blowers

t*w4

large

a

Columbia Military Academy,

for her

.

now

from which he graduated

own benefit and for the
benefit of all friendly nations with
yvhich she contributed to win the war."

; Development of the Soviet Ecot

fctfij-la

Some pregrm hm

within the

a

ptimtipfel

the

The number

1 tion and there is

.

:

cultivated,

and livestock.

(Continued from page 1633)
''
better consumption of
products and the Encourage¬
ment of international commerce,
j
?
"The Articles of Agreement
entail, through the mechanism of
the Fund and
Bank, these high human hopes. 'Honduras in so far
as
possible is ready by means of these
organizations to do her share
visable for

widely

Tk»«4afe

from the itaft are KM.mtml

tNljKeyne*
provided or shared by the mim¬
electing them and not by the
would have allowed the necessary gUtficttj
imM)
widely differing levels of official
m* -Tt:1
Unfortunately, that course was r.ot
...
tm ;*
us has been greatly increased by the dec iP*
f
time service by, directors, a derision whtcb we
Lord

...

ing

or

sistent with the

best efficiency of th#

I

aggravated through the wholly uw*iwcted
services

by Alternates, not merely, m
pals, but in addition to them. N*>r do me
can wisely spare from their wn
6f so many individuals of the tmhbre
^

tries

bru-ev# r& j;n.4n

"These decisions, however mistaken in e®*
theleSs been made.
The-difficulty of tfe#
-

faces
to

is obvious..- A more wipbHwa*t dwfy
today 1 have seldom ex.periet'ua.i
I

'

/'

**$&■

us

me

$<4

especially old and. mpceted
reward.
But In our view to large §
properly be remunerated o-n the vert 'tugft
equals or greatly exceeds the highest w.fi
any

man,

proper

countries for public

service.

"My country feels, therefore. tM ihrp
the

responsibility of this

||/||

V/;/-'--.,
-

Functionaries and Their

-

-/"In planning for the early May

fat fa {

tors of the Fund and Bank, repre*rrvtat»vet *4
directors

were

elected at Savaruah

t ot

;

1672

THE COMMERCIAL & FINANCIAL
CHRONICLE

widely

Echoes oi the Savannah
Meeting
(Continued from

for

ment of

better

a

consumption

page

of

by means of these organizations
benefit and for the benefit of all

own

W':'

r'

Development of the Soviet Eco¬
System—Alexander Bay-

kov—The

Macmillan

Dept.,

Company,

University

60

When

Press

Fifth

Avenue,
York 11, N. Y.—$6.50.
: '

^Distribution
H.

Cost

Sevin—United

States

paper—15^.
'•ij

D".
~

"The

years,

\

northern part of

After World War I—

;

we

are

naturally,

r

we

which,

ket Success—George Seamans—A
edition, revised and rewrit¬
the

identical,

U.

of

customs

noteworthy that in Luxembourg there has been
Our problem is of

larger country.

a

are

Policy, 405
West 117th Street, New York
17,
N. *Y.—paper.

course- not as

no

complicated

try, there

*

;.:;We Can and Must Trade With
Russia—W. v L. i ; White—Citizens

ments

in

help to

;

International Eco¬

cultural

to

:

name

many

our

The

customs

union

with

"We have had no. strike in

study embracing the accom¬
plishments of the United Nations
Monetary and Financial Confer¬
ence held at Bretton Woods in
July, 1944, with particular refer¬
ence to the organization and
pur¬
poses of the International Bank for
Reconstruction

the labor situation in

This

changes:

i

grove to Warner G.

Will

be

change
stood
as

considered
on

that

R. Taylor will retire
from limited
partnership in W. E.
Burnet & Co. on March 31.
-;

]-i'

represent

When he resigned as Finance Minister, it was with the
entire cabinet.

vj/Kintzing P. Emmons,
L.

v

Watson

March 21.

1

&

partner in

Co.,
1

died

*.

•

...

;

on

-

LEXINGTON, KY.

i

,

repatriated by Peruvians by open-market purchases at default prices*

Keynes Holds Salary Payments Too High
Luxembourg, Mr.

Russell

and

Edwin A.

business under the firm
&

Long.

merly associated

Both
with

name

were

J.

D.

of

for¬
Van

Hooser & Co.

'

C. E.

Wilson, Sr. Dead

C. Emmett Wilson, Sr., produc¬
tion manager for J. A.
Hogle &
Co., Equitable. Building, Denver,
Colo., died of a heart attack.

,»'■




is text
March 16:

on

of

the

one

has

Italian

cessful

the

in

Maria

ficulty has

made

at

Savannah

by

Lor<$

>

...

the

Chancellor of

the

*

Exchequer, I

that I am unable to support the
paragraph in the Report of the Committee which
regret

relates

to

Directors
,

would

the
and

lead

remuneration

their

to

of

Alternates.

severe

and

the

We

Executive
feel

that it

well-justified

public

criticism to load the budgets of these new bodies
with such high emoluments for so large a body

of officials.
we

It is all the

worse

at

time before

a

have even begun to consider the costs of their

actual

staffs, who will, we hope, be mainly re¬
sponsible for the burden of daily business, and

This

when the available income for such
is still uncertain.

expenditure

J

"It is not uncommon to find that one mis-;
taken decision leads to another.
If we had fore^
seen at

—and

Bretton Woods what was going to happen
has turned out widely different from

it

Lord

in

-

circulated

in

since

1780.

During

the

staff,

provided

or

their
are

Alternates, who, as distinct
National Delegates, should be

shared by the governments appoint¬

ing br electing them' and not by the institutions themselves.
This
would have allowed the necessary elasticity for adjustment to the
widely differing levels of official salaries in different countries.
Unfortunately, that course was not followed. ;The difficulty facing
us has been greatly increased by the decision to
provide for wholetime service by directors, a derision which we believe to be incon¬
sistent with the best efficiency of the institutions; and still further
aggravated through the wholly unexpected provision for whole-time
services by Alternates, not merely in the absence of their
princi¬
pals, but in addition to them.
Nor do we believe that most coun¬

mil¬
Thaler,

Ethiopia

and

from the

Keynes
>.

dollar being held equal to 5.52 grains of fine gold.
are

expectations—we should certainly have pro¬
posed thai the remuneration of the Executive.
our

Directors

Italian

a

very strenuous effort was made
by the Italians to make
lira the currency of the
country.
They were not suc¬
this because the native refused to
accept anything but
Theresa Thaler in
payment for his products.
This dif¬
not been encountered by the new
currency, which is

being accepted throughout the country.

; The Maria Theresa Thaler
yet been outlawed in
Ethiopia, but circulates at its silver
value, its rate of exchange with the
Ethiopian dollar being
published each day by the State Bank.
However, it will eventually
disappear from circulation because the State
Bank, while permitted
to purchase the Maria Theresa
Thaler, is not permitted to recir¬

has

not

bullion

culate it.

Therefore all Maria Theresa dollars
coming into possession
are shipped out
of the country and sold as bullion in
the open markets of the Middle
East, where a premium on silver
has latterly prevailed.
of

statement

"After consultation with

;

"The present amount of coins and
notes issued totals
$35
This new currency
replaces the silver Maria Theresa

occupation

opened offices at 257 West Short
Street to engage in the securities
Russel

-

which

Harry L.
Long have

Following
Keynes

use. The notes are of
the following
denominations: $500, $100, $50, $10,
$5 and $1. There is a silver
coin of 50 cents and copper coins of 25
cents, v10 cents, 5 cents and
i 1 cent.
The notes were; printed in the
United States by the
Security Bank Note Company of
Philadelphia, and the coins were
minted by the U. S. Mint.

lion.

—

'

Montero was unable to tell the "Chronicle's" representaV
five" here how much of Peru's dollar bonds in default have been

■

^

Russell & Long Open
Office in Lexington

i

-

Both notes and coins

.

v

tatives.

Belgium will

was

•f of gold,

51 William

1

Mr.

"Ethiopia is probably the first of the
occupied countries
which completely reestablished her
currency.
In July, 1944, the
new Ethiopian dollar
(burr) was issued. This, dollar exchanges
with the U. S. dollar at the rate of
40^4 cents per Ethiopian.
dollar.
In keeping with the
requirements of the Bretton Woods
Agreements, the Ethiopian dollar's value is
expressed in terms

individual floor broker,

\

i

able progress has been made and the
country has operated on a
balanced budget each
year since the reoccupatiori.
It has no internal
external debt. -

April 4.
It is under¬
Mr. Cosgrove will act

1
/

Montero received the full confidence of his government
after he returned from New York and revealed the results of
his talks and: understanding with - the. bondholders*

."Although Ethiopia has had a most difficult time in reestab¬
lishing its financial machinery because of lack of
personnel, remark¬

Cosgrove, Jr.,
by the Ex¬

M

Mr.

'

established in 1942 soon after-his Imperial
Majesty Halle
Selassie returned to his throne.

Transfer of the Exchange mem*
bfership of the late Warner Cos-

That project is now, under
There has been a delay
of the budget. , We reached an un-

<

f

Contrary to newspaper reports, Informed quarters- state. that

We

Luxembourg for 20 years."

or

1

\
v

1% interest will: be paid from Aug.: I,31945. through
1946;4%^
during 1947; 2% during 1948; 2% % during; 1949, and commencing
Jan. 1,1950, 3% interest and % % amortization.

wholly owned by the Ethiopian
Government, and besides being fiscal agent of the Government is

Exchange

a

consideration

icle's" reporter at
Savannah, Mr. Blowers said:
"The State Bank of
Ethiopia is

JjVeekly Firm Changes

some

Congress folproject of settlement for the dollar

Past due interest is to be cancelled a.

steel Indus-

the bank of issue and the sole
commercial bank of the country.

The New York Stock Exchange
has announced the
following firm

the

opment by G." A.* Blowers, Governor of the
State Bank of Ethiopia,
and a native of
Kentucky.; In response to inquiry by the "Chron¬

bank

made

we

in December, 1945.

was

Statement by Ethiopia's Governor

^paper.

last,

return there

my

Ethiopia was; represented at the inaugural
meetings of the In¬
ternational Monetary
Fupd arid Bank for Reconstruction and Devel¬

Development
—Wm. E. Pollock &
Co., Inc., 20
Pine'Street, New York 5, N. Y.—

hi

November,

much

and

New York Stock

in

:

are

on

■

The

,

The Bretton Woods Agreements

Bernales, Gov*
Finance, said:
*
J

From reliably informed sources here it is learned that the terms
the plan, informally resulting from the conversations with the
Foreign. Bondholders Protective Council are:,
:
,<
Peru recognizes the principal of the debt.

market

Asked to. comment
Gallais observed:

concerning a press report (New York:
15, "Wall Street Comment") criticizing

March

of

for the products of American
branch
opportunities for the manufacture of
agri¬
and construction
machinery and office .furniture, just
three things."
<
a

There

of

In presenting the; plan to the
Congress of Peru the Peruvian Government has carried out its
promise."

opportunities for American direct Invest¬

Luxembourg.

make

factories.

nomic
Union,
370
Lexington
Avenue, New York 17, N. Y.—
paper.
h
>

emphatically, particularly In view of
are

J

at Savannah

official agreement in New York.

<

"Most

*

-

with

that

Luxembourg's population is only 300,000.

Ethiopia.

negotiations

due to

black

as

State Bank of

the consideration of the Congress there.

uftion,

„

■m.

A.

lowing

hard-working people like the Belgians."
Asked whether
Luxembourg offers any opportunity for Amer¬
ican investments, Mr. Gallais stated:*

Economic

S.

debt*
a

mill

the Foreign Bondholders' Protective Council in New York.
Government of Peru has presented the Peruvian

of souiid foreign trade, and, therefore,

monetary unit of Luxembourg, the Luxembourg franc, is
value with the Belgian franc.
Incidentally, we. have

"It is

on

Of

largest

rib

and -cotton

hydro-electricity.";,

"I do not know to which Peruvian statement the
press comment refers.
I, am able to tell you- that when I came to the

any country in the world.
And,
interested in the stabilization of ex¬

are

of the

of World Bank and former Minister of

ernor

in

market at all.

■:.{ Fifteen Facts on the Proposed
British Loan—Committee on In¬

Conference

that there

interviewed

"Herald Tribune"

capita of

vitally

factory

*

>

the

cement

the Peruvian Government and himself for not
haying resumed ser*;
yice on the defaulted dollar debt, Carlos Montero

factories

foodstuffs.

large

a

The principal power is

j

The Peruvian Bonds

suffered.

steel

\

y

New

;■

figure five

have

serve

now

was

profited from Belgium's example in
tackling currency-stabilization
problems. We have followed closely the
program worked out during
the war in London, and in
working out that program our repre¬
sentatives cooperated with Camille
Gutt, who is at this Conference
as Belgium's Governor of
the Fund.
We have been able to put
those plans into effect.

mans-Blake, Inc., Dept. C-l, C-2,
841 West Washington
Blvd., Chi¬
cago 7, 111.—$3.00 with privilege of
returning for refund within fifteen

„

country and

know, Luxembourg and Belgium have

means

"The

present market position right up
to the time of going to press—Sea-

ternational

per

to

as

is

country.

Mr. Blowers has been Governor

import duties on commodities mov¬
ing across the border.
There is also a union with the
Netherlands,
although this still has to be ratified by the parliaments.

new

account

.

in the Bretton Woods institutions.

This Is The Road To StockMar-

full

;/

.

great exporting

are

we

our

*,

changes, in the promotion
"As you

into

a

steel production

History Repeat Itself?—Na¬
Housing Agency, Washing¬
ton; D. C.—Bulletin No. 4—paper.

take

V'

.

Luxembourg, which is agricultural,

"Luxembourg is 80% self-sufficient

Will

ten to

V

by the "Chronicle's" reporter to comment on the
Luxembourg since the liberation, Mr. Gallais

must work.

tional

•

"

'

the north would take at least
several years,
and the Government is helping all those who

course

tiousing

*

Obviously, to. enable; the country to recuperate

C.*—

'

-*

■

barley

graduating from Harvard he joined the National City Bank
York's foreign service and served with them in
London,
Singapore, Shanghai, Tientsin, Hankow and Peiping until 1937* From
1939 to 1943 he was general
manager of the Baink of Monrovia,
Liberia, and during this period changed the currency of Liberia from
the pound sterling to the U. S. dollar.
When Ethiopia wanted some¬
one to help establish its new
currency, Mr. Blowers was suggested
by the U. S. State Department, and so from 1943 to the present

tation in

—

Washington >25,

f

being wheat,

is estimated at 22 mil-

After

."

of

partly devastated during the Battle of the
Bulge,' but very fortu¬
nately the southern part of the country, which has the
iron ore
mines and the steel
furnaces, escaped damage. To repair the devas¬

—

Department of Commerce
for
sale by Superintendent of Docu¬
ments, U. S. Government Printing

Office,

asked

observed:

Analysis

*

share

economic situation in

New

-

Charles

'

'

her

Hugues Le Gallais, Luxembourg Minister to
Washington,
oh
Luxembourg's Recovery
'

nomic

Cambridge

*" '

do

to

friendly nations with

which she contributed to win the war."

principal products

y Mr. Blowers was born at Pineville, Ky., in
1906.
He attended
Columbia Military Academy, Columbia, Tenn., and Harvard
College,
from which he graduated with a B.S,
(Economics) in 1928.

of

possible is ready
lor her

there

encourage¬

commerce.
J
"
;
<
"t
Agreement entail, through the mechanism of
Bank, these high human hopes.
Honduras in so far as

"The Articles

and

the

The number of livestock

Some progress has been made toward industrializa-

-within the

the

international

the Fund and

tion

,

.

and

lion head.

v

1633)

products

cultivated,

and livestock.

f

visable

Thursday, March 28, 1940

tries
6f

so

can

wisely spare from their own pressing problems the services
individuals of the calibre indicated.

many

"These

decisions, however mistaken in

our opinion, have neverdifficulty of the resulting dilemma which
unpleasant duty than that which falls
to me today I have seldom experienced.
I do not wish to deprive
any man, especially old and respected friends, of their due and
proper reward.
But in our view so large a body of persons cannot
properly be remunerated on the ver.y high level proposed, which
equals or greatly exceeds the highest remuneration available in most

theless
faces

been

us

made.

is obvious.

countries for public

The

A

more

service.

-yNv/i;:

"My country feels, therefore, that they cannot share in any way
the responsibility of this decision."
I;'
,

the bank

•

.

"Ethiopia is primarily

an

agricultural country

and

is very

Functionaries and
'

Their

Emoluments

'

In

planning for the early May meeting of the executive direc¬
tors of the Fund and Bank, representatives of those countries whose
directors

were

elected at Savannah and riot

appointed

are

discussing

-

plans for

assuring representation of the maximum number

of; their

executive

This sharing of the honors—and the powers—certainly will he
practiced by the Latin Americans among their group, by the Near
Easterners among themselves, and by the Europeans likewise,

friend
and
citizen
examining
(Continued from page 1633)
questions involved in the above with you our past in order to
guide .our.future,
points and related subjects. * /
,

Remember that a sore or rotten

spot anywhere in our
spreads and causes an
everywhere.

.

-

v
•

example, Czechoslovakia at Savannah secured
Fund's executive, directorships with the help of

For

director must select his

,/The Czechoslovaks

>

of the
Poland and

His

likely to be a Yugoslav or a Pole. And on the
Bank, the Poles secured one of the executive directorships for Mr.
Baranski, who therefore may be expected to chose as his alternate
a Czechoslovak or a Yugoslav.

alternate therefore is

There

are,

matters stand, twelve

as

,

We reduced taxation

billions

said,

The Price Structure

system
illness

The Increasing Money Menace

1;

nearly $6

the purpose, it was
stimulating
business
orders that it
years to fill. At the same

for

of

which already, had

structure is one that will take
through the years by time that we lessened our income
„
trial and error, with the law of by $6 billions. v><? asked for new
Avoid an economic dictatorship.
supply and demand, increasing loans. This bond issue was over¬
We are still a free society based
on the enterprise system.
Let us transportation, finding b e t i e r subscribed, mos,ox it creating
methods of manufacture and dis¬ credits that can be turned by the
abolish neither without the con¬
tribution, with each government, Federal Reserve Bank into printed
sent of the people. "
community and individual fitting money. There lies a grave men¬
And, above all, we should keep itself into that structure.
You

,

one

alternate.

Policy

A Post-War Economic

countries.'^ It is therefore expected "that many: of the elected
directors v^ill appoint as their respective alternates^ na¬
tionals 6f one oranother of the; countries w^ich at Savannah, helped
elect them but which otherwise could not put their elbows at . the
icouncil table.

fellow

;

io/J

& FINANCIAL CHRONICLE

THE COMMERCIAL

Number 4476

[Volume 163

.

in mind that the humanities come

It

before the dollars.
to

executive directors of the

it

say

again

may

be trite

it should be said
again—that our first

but

and

With the same number of alternates
runs to
before Business,
there are therefore a possible four dozeri jobs to be allotted.
In each dutywe must Manforget that some¬
but
not
institution five of • the places are set aside for the "Big Five" and times the two are interchange¬
therefore are not elective.
Since the Big Five are not beholden to able.
the voters of others,* they are under no pressure to divvy up with
Having finished with an index,
jother nationals.
I proceed to my content.
With the score of Latin Americans, however, this is not the case.
"The Race of Selfishness Is On."
The Latins are limited to two executive directors and two alternates
on the Fund and the same number on the Bank.
The executive
There is nothing much I can
directors are elected for two years. - Having made inquiry, the add to the statement I made be¬
Latin Americans—and
this goes for others, too—are satisfied fore this honorable committee on
that they may rotate the alternate directorships more' frequently Sept. 19, 1941. What was applica¬
than every second year, The chance^ are they will do so every year. ble then is applicable now—with
If this becomes the general practice, it is possible-^-since the execu¬ this difference.
Then we were
tive/directors under the Savannah compromise need not be person¬ about to fight the bloodiest and
ally' present 4n Washingtori. throughout their terms of office—that most devastating war in all his¬
practically the whole membership of the institutions will at some tory. There was unanimity of
time or other participate in the work of the powerful executive purpose
in the country which
boards.
_
grew
with the war's approach.
Now there is a new feeling that
Some of the foreign governments fail to see why such a large
and highly paid board of directors, and alternates is necessary. The comes because the war is over.
The race of selfishness is on—each
British, of course, were most vocal at Savannah in their opposition.
Lord Keynes is quoted as using the word "scandalous" to describe segment of society and eacli in¬
dividual
seeking an advantage
/the high ,salaries which the inaugural meeting there voted to the
The shooting war
executive directors and alternates. It is interesting that the strongest over others.
fight for the high emoluments was made by one of the beneficiaries may be over but its aftermathof the decision, Harry White. His highest pay to date, $9,800 a year military, economic and spiritualFund and twelve of the Bank.

The price

has

•

.

grown

•

,

.

...

xl

ace—money

violent hands
it to function in
the way that will give everything
that is needed, nor cure all hard¬

cannot suddenly lay
on

it and expect

ships and injustices. One appar¬
ently insignificant act, here' or

there, may change the life of a
whole community and upset the
lives of many far distant, just as
the strike of a few will cripple a

increase.

•/:f

,

promises to other na¬
tions of loans for purchases gen¬
erally to be made here. And if
not here, then in other places in
We make

the world where we compete.

On every side the Federal, state;
city, and county governments have
rebuilding programs which will
increase the demands upon an

air

be

ready limited supply. They can

city or nation overnight by clos¬
easily postponed to a later date
be as when
they will be needed.
• ^

ing some function that. may
one

necessary as

of the

vital*or-

of the body.
The New Wage-Price Policy J,f
We cannot be complacent as we
Then, while endeavoring to hold
are
being beguiled with more prices, we remove the indirect
money,
with
less
purchasing control over wages by getting rid

gans

The gold dust thrown in
by political abraca¬
dabra, only confuses, with gain to
no one except temporary power to
the economic magicians. We must
mix brains with our brawn if we
would keep our world leadership.
We must steady ourselves in these
bower.

of

all our eyes,

(which

Little

the

was

but

Steel

Formqla

weak substitute

a

control) and grant the
18% cents increase for steel.' Thii
for wage

all

will be followed by increases

along the line, no matter what
anybody thinks .to the contrail! y
Call

it,

a

bulge but it is really

and keep our break—and a
grave one. This wi^l
ship of democracy
inflationary.
will wallow in this sea of confu¬
I do not blame labor for want*
sion, spring a leak and disin¬
ing to retain their standard of liv¬
tegrate;
Whole segments of society have ing. For the decrease of $6 Bil¬
is still here.
Before the peace
lions in taxes and the throwirf&
lost their perspective as to the
terms are set, we are adopting a
over of the Little Steel Formula
rights of others. Many have lost
scuttle-ands-run
policy
on
all
their
capacity
for indignation naturally made Jhem feel' they
fronts, eager to get home and back
Should take care of themselves.
over their
own wrongs and the
to normal. Pressure groups are oh
would want my take-home pay to
Wrongs- inflicted
upon
others.
the march.
remain the same. The corpora¬
Many could not make up- their
On Sept. 19, 1941, I said—
tions and smaller income groups
minds whether we were going to

as Assistant Secretary of the Treasury, automatically becomes the
equivalent of about $25,000 a year when he assumes the post for
Which fhe Senate some time ago, confirmed him: United States Ex¬
ecutive -Director on the Fund. The Senate did not pass on/the salary,

emotional

heads

or

sweeps

the

$17,000-after~taxes. That salary .was fixed only ithis month
what one of the British delegates describes as
"bulldozer" tactics.
"Except for human slaughter have inflation or deflation. The benefited mostly from the $6 bilEven more puzzling to foreign officials than the large group of
and maiming and all that goes wonder to me is that things are lion tax reduction. Private own¬
executive directors with net salaries second only to the President of
ers of .business, large and small,
with themr inflation is the most not even worse than they are.
the United States is the so-called Procedures Committee created at
were
seriously
disadvantaged.
"destructive of the consequences of
Savannah to function between meetings of the full board of gover¬ war. It might double or more the
And so it is with every group.
The Postwar Adjustment
Policies Report
And all of this must be followed
cost of the war, it imposes the se¬
nors of Fund and Bank. With between two and four dozen
directors and alternates to be on hand at all times, these officials verest
hardships on our people,
Before the report on War and by increases in pay or pension- to
profess to wonder at the need for an additional committee not con¬ and, through inevitable deflation Postwar
Adjustment Policies was the white collar brigade^ govern¬
templated in the Bretton Woods agreements.
that follows, burdens the future made in February of 1944, prac¬ ment
workers, firemen, 1 police¬
The defense of the high salaries for the executive directors with a constantly increasing debt
tically I everyone predicted
be¬ men, teachers, professional people,
centers on the argument that this was necessary to attract the ablest and a long period of painful and tween
9,000,000 and 15,000,000 un- veterans and the Army and the
talent from1 the attractions of Wall Street remuneration. , So far* all bitter readjustment, destroying the
/;That prophecy - prbved Navy.
that it has done is attract a couple of government economists from confidence of people in themselves
unf6biidedv Thi$ Kind of thinking
Squeezing Taxable Profits
'''they best' pay they have ever earned to a take-home pay from and their Government, leaving shows how momentary emotion
And what becomes of all of the
two to three times as large.
The reactions of Washington's bureau¬ them open to all the old and new can affect a whole people..
isms. * * * With payrolls soaring
cracy, already seeking a general pay boost, will be watched with
This report recommended cer¬ people when ; we expect govern¬
ment to pay out more if taxable
and shortages developing, more
Interest.
tain things of which but one was
money bidding for less goods, the
profits are squeezed? Who gets
adopted—contract termination.
danger of an inflationary price
Another plan had to do with any advantage if goods are not
rise is imminent. If it is not taken
disposal of surplus property. If produced faster than wages are
firmly in hand in time, it may get this had been worked intelligently advanced and money printed? We
beyond the possibility of control." and courageously many of the cannot call this holding the line
(Continued from page 1641)
That can be said again today. things the public wants and which or just a bulge. To make the takeversal practice, for the past few
that business, in America at least,
Let us stop trying to do a thing are available would have been home worth while, more things at
will be active and profitable, that years;1 and probably such. will but not do it both at the same distributed
and become useful. lower prices must be produced.
continue to be the practice until time. We either must suffer what
That is up to labor more than
Some of the .factories which we
employment will be high, in fact,
£ that everything will be "rosy" for something develops to shake the inflation brings or prevent it.
built could have been put in oper¬ management.. Unless each man
"at least a few years."
In such present universal confidence.
ation long ago, The surplus prob¬ produces more than he receives,
Price Control Alone Not Effective
increases his output, there will be
an environment it is only human
lem has been so tied up that it
Longer Maturities Also Being
less for him and all the others.
I have advocated for war time is not yet functioning properly.
for investors to pay only lip serBought
Each
,one
will
receive
more
an over-all price control; includ¬
vice~-if actually even that-^to
Congress has just passed a law
It must be admitted that during
ing wages, adjusting: injustices or which will enable us to sell our money but have fewer things, .ypreparation of one's portfolio for
the years of the war financing
We might as well admit we
hardships where they exist. Price ships. This was delayed too long.
adversities of the future.
True
most banks and other institutional control
by itself will not be effec¬ They should be turned loose on have made tragic mistakes. The
enough, we sometimes hear some
investors of the country added tive. It must go hand in hand with
the best terms possible to all na¬ race between prices and the cost
modern Elijah warn of the dan¬
vast amounts of Government se¬ a
sharply defined tax program; tions that can use them for com- of living is going pn here and,all
gers that lie ahead, and frequently
curities to their portfolios, and it the1 siphoning off Of1 excess: savings
we
echo these warnings in con¬
m&ceydif9 fishihfc.'/TKey' ift'fbnt over, the world. Ask the bouse-*
versation with our friends*// Some- may be afgued that, therefore, the and earnings by selling govern¬ will seek out in every port of the wife. She knows better than the
quality of. their assets is today ment bonds to individuals instead world even small cargoes of ma¬ economists and statisticians.
^
times even we may actually be¬
higher than it has ever been. of banks; by controlling all loans; terials that can be used," thereby
Let us now face facts. We must
come exercised about these dan¬
Without arguing the point, how¬ by not favoring any one segment
affecting the national and interna¬ have full production. Without it,
gers facing us, and lament that ever, it is true that even as Gov¬ of society over another; by prior¬
tional outlook.
we cannot keep any semblance , o£
nobody appears to be willing -to ernments were bought in large ity, licensing and allocation to the
A highlight recommended in modern, civilized economy ,or even |
cooperate to alleviate these dan¬ quantities, other securities, cer¬ greatest needs, and above all, by the report was to put one man in government.
We risk inflation.
tainly municipals at least, have increasing production.
charge of human demobilization We mute the voice with which we
gers.
I quote again;
been bought with less and less
for workers and returning veter¬ speak for peace in the world, t
'But if our thoughts actually
which is

at: Savannah, after

.

executive

,

.

Municipal Comment

Ohio

*

,

.

•

_

far as considering what
should be done to prepare our
portfolios for adversities, we
usually only "think it over," and
if we actually reach a conclu/ sion it is too often that we are
1 "too busy" to do anything.
"Busy-ness" is so universal to¬
go

as

consideration: of quality for - the
reasons

over,
to

More¬

mentioned above.

the confidence

as

above

referred
and

approached more

"Piecemeal

eral

day!
In

such

an

.environment .it y is

only human to

look at the yield

rather than at

the quality of the

borrower.

And such has been the

'

tendency, indeed the

almost uni¬




a

vestors

state of-complacency, in¬

have

bought their

and less re¬

ernments with less

gard for maturity.
In

these

Gov¬

•

1

/'

,•».■

circumstances, it is

indeed encouraging to see more

Ohio buying
municipals at yields under

bankers: around
short

1%.

,

"

.

. ,

N'i

It allows the

price level to

with
prices. # *, *
dealing

,

more

price fixing will not

halt inflation.

"As
that
date

a

inflation

are

fixed

and

occurs

soon

must

gen¬

wild, while
few individual
run

the

prices

become out of

be

adjusted up¬
ward. /: Irregular rises
in prices
destroy the relationships between
various
costs,
requiring
even
greater adjustments."
&&S'0i
•

;>

So much for the past.

wish to appear as a

ing "I told

you

I do not

ans.

If

it

had

been

promptly

would have escaped
many of our present difficulties
among z Veterans,
workers, and

done,

we

civilians.
There was

advanced a plea for

opening ^ up credits; for z Small
through the Federal Re¬

Business

but nothing definite has
about that, i *
world is watching us,
amazed at the exhibition * of a

serve,

been done

The whole

giant who cannot pull himself
gether even :ytqy take care of

prophet say¬
so" but rather as //own needs.

to¬
his

With full production, we can es¬

cape inflation and have our peo¬
ple re-assume their leadership/; t 1
In my appeal for legislation,* in
my appearance before this Com¬

mittee in 1941, I said—

'

prices is essen¬
tial for the successful conduct of
our national defense, for avoiding
social and economic aftermaths of
"The control of

for taking the profits out of
for the maintenance of mor¬
ale, the stoppage of inflation, and

war,
war,

(Continued on page 1674)

1674

THE COMMERCIAL & FINANCIAL CHRONICLE

A Post-War Economic
I-

tion and then allocate the balance,

V (Continued from page 1673)
the

placing of America in the
dominating place at the peace
As I said before, with such
great stakes we cannot afford an
ineffective program of price con¬
trol. Some persons, while admit¬
ting that everything I have said
is true, have argued that the pub¬
lic is not ready for such drastic
measures; that various
interests
have to be pacified at the expense
of others; that the best law that
can be had is a stopgap measure
with
compromises,
one
which
while unable to prevent inflation,
will keep prices down somewhat.
table.

,

To them

I recommend the

words

of

George
Washington
to
the
members
Of the
Constitutional

they; come to hand, where it
help the most.;
must
stop treading' this
economic primrose path. There is
only one way to stop inflation and
that is to get production.
What
as

ticular

would

must be done later

done

can

work

do

patching later on, and on,
and;'-on.
Happily, the delegates
chose to be guided by Washing¬
more

like to

please the
people, we offer that; we our¬
selves disapprove, how can we
afterward defend

raise

us

wise and honest
•

work? Let

can

repair. The

event is in the hands of God.'"

And

so

here we

today.

are

Out of Gear

Structure

Price

A

our

standard to which the

a

The

price structure is out of
I never favored subsidies
but they have become a part of
this ^tottering .price
edifice.
I
would continue those now in ef¬
gear.

fect.

I would

For

one

give no more.

year

.

I would extend the

present

war powers, price fixing,
and include wages, with the prov.sion that no raise in prices be

made

without

OPA,

and

scales

the% approval

increase

no

without

in

approval

of

wage

of

the

common

r

Because
will

we

but

it

of

the

wage

by indirection.

and

higher taxes than

ured

We

have

shifts.
back

made

too

We will either
and

it

do

else.

anyone

have to

right,

Do

increase prices to put everyone on

be forced to raise prices
be with a firm and

creates.

war

does

not

will

to

agen¬

$ /*.

1

•

•/f

^

wild—they must be limited
Let us be realistic

fairness.

tors

.

composing

economic

our

within

our own

gates.v"

' '

"

v

decrease.

There may be wisdom in rein¬
stating the $6 billion tax reduc¬

I give you this thought:
There should be a high court of
set

commerce

to which these
disputes, can be taken for, adjudi¬
up

cation in order that
out

a

we may

try great.
shall

soon

work

the basis of the

program on

principles which made this

coun¬

If this is not done, we
find ourselves in the

of

It cannot be said too often:

Certainly I would continue
renegotiations on war contracts.
These steps might take care of
profits.

excess

*

~

bit of profit out of industry in or¬
der that some segment of society

*;

<

Government expenditures should
be cut to .the bone.
>

tThe

strictest

v

;

allocation

;

apparently

may

..'

the

should

judge of this,

loans

economy

of all money so that no
will be granted, or under¬

proved

by

social

counties, unless ap¬
the Treasury which

in

with

we

will arrive at

our

industries

revolution

confusion

that

portions than we
American labor will-,
much

as

others.

-

rue

I

as

'

Any type of control should be

charge of production.

directed first towards food, cloth¬

Helping
I

Foreign

not opposed to helping for¬
nations.
But until produc¬

am

eign

tion warrants

it, I

lending them

money

them

except

for

am

opposed to
assisting

or

direct

needs

to

where.
cruel

to

demand.

hold

out

not be realized.

It would

be

keep the
goods necessary to prevent infla¬




,

an

econ-<

of abundance, which should
guarantee a return to free -enter¬

omy

prise' in

can

he live

der the present schedules?

un¬

cut

;

interest

to

the'attempt;of the
Committee to revise rail¬
road reorganization
procedure. It
Senate

reflects

also

the

on

unbusinesslike

The

;

.

old

stocks, preferred and!

provides.

However, if the assets are; insuffi-4
cient, then the old stock can be!
allowed

plus

an

rant

fraction- of

a

would

either

cash to retire bonds
could be exercised

The percentage of fixed
interest

the

victims

of

tion

beneficiaries

do

wish

not

to

neW

the option

>

board of directors. The bondhold¬

the

war-*

furnish
or

by tendering
outstanding bonds of tile road, in

lieu-of cash.

bonds should be
of the total

are

stock

new

option warrant. This

complished: either. directly or
through their representatives, the

ruthless reorganiza¬
procedure.
Obviously, the

out

common, can be continued if the
assets exceed the
capitalization,as
the Hobbs Bill

not in the bondholders.but in the
stockholders.
This should be ac¬

present

and

courts, which utterly .ignored this

basic fact.

control of railroads taken

the

unwise

plans worked

by the ICC and approved by the?

out of the courts should be vested

beneficiaries and

,

sig¬

nificance

III

the

in half. \
Government'

on

railroads' interest
charges in the
above worst year would
have been
covered about 1.10 times.
This fact adds tremendous

to suspend at once action

are

0.55V
rates

reducedvto 2Vi% and 2%. Thuftf
at these lower rates the
bankrupt

..

ers

charges
interest

almost

bonds of 414% and 4% have
been

the

and

interest

been

Rates of

use-

pending before them.
But, even if it is possible to defer
final action by the courts until
Congress can provide legislative
relief, prompt action is imperative
in Congress.
*

reduced

to

capitalization,

19A valuation.

40%
or

of

Railroads be¬

come

bankrupt
becauseI fixed
charges are not covered by earn-*
ings. Rarely does a maturing debt
cause
cover

bankruptcy if the earnings
the

interest

charges. Ex¬
temporary financing
had, even before the
and
McLaughlin Acts
.

change the procedure. The holders
of all the chips in a game like the
existing rules of the game*
Of
course, the approval of the bond¬
holders is essential in finally ef¬

fecting

a

settlement.

The law* should

tensions

or

to

be

were

Chandler
for

voluntary reorganization, <■ •
Therefore, do not reduce 'the

r

total

principal of obligations. In¬
stead, substitute income bonds for
...

cover

even

the

roads

on which
balloting of the
security holders has already taken
place
This should be done 'also

in those cases in which the courts
have approved the ICC plan, but
in which the plan has not yet been

put into effect and the

case

dis¬

charged from the court.

all the fixed-interest bonds above
the 40% of the
capitalization or of;
the 19A valuation, * Income bonds
receive interest only if earned.

These bonds ihight be secured
by
a

lien

on

the property.

However, make !it' possible for
them

to be eliminated in: a
boom;
by making them convertible. The

,

conversion

high

y

as

price need not be as
$100 par.v Generally the

assets of the roads exceed the

a year,

\

Besides, •" some railroads Issue
declined, from -no-par; stock, and thus also the
conversion price need not be as
4*4% to 2.
The back interest in
default should be recalculated on high: as 100.' In fact, some bonds
coupons

bonds

ment

basis

FIG Banks Place Debs.
A successful

sue

offering of

an

is¬

of debentures for the Federal

Intermediate
made

Credit

March

21

by

Banks

was

Charles

R.

Dunn, New York, fiscal agent for
the

banks.

The

financing

con¬

a

like

amount

of

deben¬

maturing April 1, 1946 and

$15,970,000 is

new

money.

April 1, 1946, the total
debentures

Prides amount to

As of

near

loans,

interest
was.

3%...

On several

Finance

Corpora¬

accumulated

had

settled

accrued
at

at.

unpaid
6%

Indeed,

4%.

but

the

Senate Committee
reorganization (S. Res.
192) stated that even 4% is too
high and the rate should be 2JA%,

report

on

to

of the

railroad

allow.

above

%%

the

to

cover

expenses

of money to

2%. cost

the Government.

-

%

Railroad reorganization need no

longer be

so

is

more

worth

All property
current higher

drastic.
at

levels of commodity prices. Post¬
war
national income should be

high.
clined

Rates of interest have de¬

sharply.
The ICC repeat¬
edly stated that property value
will already exceeded capitalization of
## the railroads. At the present high

amount of

outstanding
$277,355,000.'

tion

fon Govern¬

have

Reconstruction

-•

down.

from;

rates

Meanwhile;

some

retire

businessman. How

ICC

Meanwhile

have

all cases

The

;

leading bankrupt roadsv

the

times.

relief, perhaps it would be possi¬
ble for the Senate Committee to
the

group of

earned

North Western, now expropriated,
To; supplement such legislative

quated

This would result in

tures

I heard much during the war of
an endeavor to
protect the little

hoo°s that will

I would

:

tage of another, in a few months
you will see an amazing change.

At this time that would be

increase

rapid

late to do justice and to give relief
to the owners of the Western
Pacific and of the Chicago and

both

the

.

mpre

none.

it is not disfavored to the advan¬

make purchases when we know
they cannot be made here or else¬
to

-in

ing, civilian services, housing and sisted of $38,950,000 %% consoli¬
transportation for everyone.
If dated debentures dated April 1,'
you will give the American peo¬
1946, and due Jan. 2, 1947.
The
ple an opportunity to function, not
issue was placed at par.Of the
by fear nor yet by favor, and let
every segment of society feel that proceeds $22,980,000 were used to

Countries

Inter¬

.

or com¬

near¬

greater pro¬
now realize—one

on

made

has

futile,
A ■ dead man needs
neither drugs nor doctors.
Such
remedial legislation is already too

courts

interest'! :

in

1930^!

a

and

request

decline

favors the debtors.? In
worst year of the
depressed

'

on

sharp

rates

will

an

of

that

must seek the approval of the Office of War Mobilization which is
*

advantaged,
being the sole

ly all nationalized without a vote
of the people—an economic and

taken here by private concerns or
by the Federal government, states,

and

be

government

be made

cities

We

.The

con--

cap*
Excessive, interest rates should
'add better:
italizations and ; additional com¬
be reduced.
Back interest of rail¬
things at loWer prices. Down that
mon stock can be issued
up to the
path we can safely go to the bene- roads now in the cxmrts, has ac-; limit of the asset
value, as under
cumulated at excessive and anti¬
fit of all and the
the Hobbs Bill.
disadvantage of,

share

can.

must have production to save our¬
selves and the world. But, if a
close-fisted policy squeezes every

tion.

is to be

*

ing bankrupt railroads. To be

the

;

.

efficiency is-;

at a record
peak and should
tinue to rise.

sec¬
reor¬

the procedure of reorganiz¬

prove

stockholders
A High Court of Commerce

To those who paid little atten¬
are increased and they
of
the
law which gives them tion to the OPA and used the Covenant of human liberties and:
black markets during the war,
parity, and therefore higher prices
dignities, our form of government,!
there has been added many good will have
as the
average price levels go up.
been lost.
And then the wages of all civil citizens who are just beginning
The advance in wages can make
that practice. If a wise course is true a wish
servants, the white collar brigade
that we all have
—the recipients of fixed incomes not pursued, that practice will be fathered—that
is, if labor and ■
—have to be increased.
And, as extended. Prices and disrespect management sp will it, more and
I. say, you will have to increase for law will mount, and, qualityu>f more wealth: can
be produced—|
goods and respect for law will more things made—so that each
pensions,
a

high peace-time levels of;
national income are
expected af-:
ter the. war. Railroad
income is a:
fixed ratip of
national income*, <
about 6 %.
Railroad

get

we

bring us either to fascism
munism; and that Ark

their costs

have

New

the bill, S. 1253, to im¬

progress on

■1

capitalization, including stock.

difficulties will

our

when

to

morass

Black Markets Growing

Commerce

as

recognize that, at the, same
time getting away from any un¬
just opposition to any of the fac¬

the

delay by the Office of War
' (Mr.
Snyder)
to
Congress has given the
power .to do just that. Of course
all can appeal to the President.

profiteering.
If
advanced, the farmers
surely come along because

well

shortly.

The Senate Committee
state

have*with which to help

as

cost'

II

stand and

we

-

workers—or

introduced

(S. 1253)

debts

our

setup whereby
All parts of
society because of
Mr.
Secretary
Anderson
has
modern communications have be¬
charge of production of agricul¬
come so entwined that it can
only
tural products, with the provision
function well as a whole. Some¬
that prices made by the OPA
times only one, sometimes two or
should be subject to his approval.
three missing parts will cause a
As all other production is in
breakdown of the whole machine,
charge of the Civilian Production
or cause it to slow down.
Society
Administration under Commodore
cannot permit a few men-—labor,
Small, all prices for that produc¬ or
management, or farmers, or
tion
shoul<| meet with his ap¬ professionals, or
politicians, or
proval.
"
members of any group—to stop it
There should not be any strikes
because of differences in ideas or
or lockouts for a period of at least
practices between some parts of
one year, by agreement preferably
society; While we< sire setting tip
-—otherwise by law; Mr. Bowles?
a machinery to stop wars between
new office can carry this out, tak¬
nations, we Tiave not solved ! it
ing care that no hardships are in¬

which

mean

know how

a

i

'

'

commodity prices,; the

of
replacing the bankrupt
railroads is far above the old total

,

body.

out

are

what

.

and

I approve of the

the

ganization bill

resources
\

greatest of all—the de¬
function—the " desire to
prpfit,? BUt those desires must not
sire.

show.

Mobilization

depend upon the personal initia¬
profit incentive, but that

wages

we

run

cies involved must be solved with¬

tive and

our

.*

completed, and

ond revision of the railroad

of

1946

Policy

1637)

page

levels

fful and effective, the amended
be
bill must be passOd in time tq save
going. We ! the roads whose
owners are soon
cannot get going by
adopting po¬
; to be
expropriated.
Otherwise,
litical instead of economic and hu¬
the hearings and the resulting leg¬
man methods.
The human equa¬
islation will be largely academic
tion is. the

have controls.

Any dispute between the

We will have to

know what

Many of

unending demand. How long that
will last will depend upon the

to

have been

<

ourselves? v
Do we know how much the
Others really need?

would starve,

must

hand, so as to get the neces¬
sary production.
Remember, we
have not the stimulus and unity
that

we

others

But - they can shut
down and live while the workers

wise

<

.Do

As I predicted two years ago, 1
see at least five or seven years of

we

pushed

much.

are?

what

Currency inflation.
Great demand being made
upon a limited supply. The
law of supply and demand
will take tiirje to work and
it is during this period that

wisdom

be

•;

,

solved

we must

good-nat¬

are

so

Do we know

two»things:
1.

we

are?

accepted the mistakes of the past,

2.

only

the
American

can

A final word:

go

having

or,

We

have

re-examing the present bankrupt¬
cies in the light of the fundamen¬
tal change in the financial condi¬
tion of bankrupt roads and of the
prospects for a high level of earn¬
ings.
Three weeks of hearings

and

the

people who

around but

make¬

many

employers.

increase,

of

sense

what the ICC should

done several years ago.
He made
provision in his revised' draft for

people. We must close our ears to
those who try .to turn us to statism

>

As everyone knows, I have ad¬
vocated > a stricter price
control

volved

Office of Economic Stabilization.

he did

evil, I would
that I have faith in

say

I would do.

other dreadful conflict is to be

to

(Continued from

American: institutions

Tt is too probable/ he told
them, 'that no plan we propose
will be adopted.
Perhaps an¬

If,

\

Whatever is necessary
now to do to get that production,
now.

ton's advice:

sustained.

without profits.

To the prophets of

be better

know,

you

in the business, but for
industry., People will not

Faith in American Institutions

a higher plateau.
The only hope
the we now have is that production
will then be so large, inflation will
delegates to that Convention orig¬
inally were , supposed merely to be stopped.
patch up the Articles of Confeder¬
Causes of Rising Prices
ation. They could have done just
that and told themselves wo will
Rising prices have been due. to

As

Convention.

set up not for each par¬

one

whole

a

We

Railroad Reorganization—
The New Government

Policy

must be

Thursday, March 28,

have had

relatively low

1

conver¬

sion

prices such as the: Great
Northern |bonds- convertible first
at 40, then at 75.. .Let the
conr I
yersion. price be on a scale up for $

blocks of bonds.

For

example; let

the-first fraction of the total issue
;
be convertible at

a

price of 25 for

the

stock,, the next fraction at 30',
next at 40,
and, so on up.
Otherwise, jf the entire bond issue
the

is convertible at

;

one

price for the
stock, the stock can -hardly rise
above the conversion price until
all

.

the bonds,

are

converted.

Be¬

sides, the conversion will be slow.

Furthermore, .a rising fecale of
prices keeps down the number of

-J
.;

shares resulting from conversion.

Institutions, savings banks and
insurance companies should prefer

>'v

this procedure.
new

This

common

They now receive
stock for old bonds.

procedure

has

several

dis-

%

THE COMMERCIAL &

Number 4476

163

Volume

1675

FINANCIAL CHRONICLE
of

deplorable, confiscation-of, haps the ICC too should have a'
National
Advisory
Council, V to
property of many hundreds of
thousands of citizens is a result of keep it in living contact with the
thus increasing the margin of
world, which it affects.
such unrestrained powers, the ex¬
'safety for bonds. ^ Dividends are
The Joint Congressional Com¬
not so deductible.
State insur¬ ercise of which the courts have
mittee on Transportation should
refused to review.
//
ance commissioners criticize stock-*
from time to time investigate the
There seems to be no provision
holdings of life insurance comdifferences of opinion inside the
for
judicial review in the bill
panies./;
.
*
.
•.
S. 1253./ Therefore, it should be ICC, a creature of Congress, so
;-'i ; Again, i n s u jc a nc e companies amended so that the courts be re¬ that ; this Joint Committee/can
have difficulty in recovering the
exercise its own judgment on the
quired to - make full and critical
"principal amount of the bonds, be- review of
merits of the two sides. One mem¬
every phase of ICC de¬

advantages/^Interest' on bonds is
deductible from taxable income,

,

not

if

first

bonds about a

mortgage

month ago.

the

cost basis to the

The indicated

Hackensack

f

ap¬

was

company

The Madi¬

2.417%.

proximately

'

financing was done on an in¬
cost to the company of

son

dicated

*

about 2.4265%.

/

,

when railroad securities are
/issued after reorganization/stocks
give a higher yield than bonds.

,;*■ cause

'

Or stocks seil lower than

bonds in

cisions./

insurance'companies stated
new
common stock was

for the

the

that

i

when

,

-

*

ber of the ICC

<

received
■;,/ a convertible income bond, as sug¬
gested here, it would have to sell
for./If they had instead

presented by injured

,

par¬

It was

Miller

the

The Joint

XII

which

covering

The next few months,
the

period right through to the
season, promises to yield
new securities all

f

they can handle pro¬
investing public and
not

institutional investors do

Committee of Senate

forecasting earnings and House should visit Great Brit¬ in their ideas in the meantime.
as
a
basis of capitalization, be¬ ain to make a study of its rail¬
Certainly the rate at which
roads.
It should study methods of
cause "we are not omniscient and
prospective new issues are be¬
oh over a 10% basis:to give them
cannot forecast the future."
The railroad reorganization there.
ting t filed with the Securities
as low a market value as these
pourta ignored his dissents/but;^ "Stockholders are generally not
a n d
Exchange / Commission,
••/j institutions ' now have through was the stockholders who paid the wiped out. "Various types of se¬
plus discussion of potential new
their
common,
stock holdings;
curities are invented to give the
penalty for the ICG's indiscretions
/undertakings such as that con¬
/Bonds would not long sell at sucli and the courts'neglect. ;
owners a continuing interest, such
templated by Shell Union Oil
,a, high yield.::
On, a 4% . coupon
The McLaughlin Act, t think, as option warrants, and deferred
Co., indicate that new securities
and a 6% return, an income bond
provides for judicial review by a stocks coming after the common.'
will be forthcoming either by
would sell at 66 and it couid rise
The brilliant legislative achieve¬
special three-judge court. Should
way of refinancing, or for new
above the original $1,000 when the
not a similar judicial review be ment of consolidating 126 British /
capital, as long as the market
! stock rises so that the bond con*
required under this bill for rail* railroads into four System, and of
shows a disposition to absorb
: I version privilege; becomes attract
coordinatingrailroads^t rue k s;
road reorganization?
;
.

coastal shipping and airways

Back interest should be' paid,
•! not in cash, but in
new prior
preferred stock, convertible into
common.
This is not a new or
! revolutionary idea/ Mr. Justice
; Lamar of the U.S. Supreme Court,
/in art opinion ifcariy years ago in
ithe
Northern \ Pacific
Railway
J Company v$. Boyd, stated that it

|

•f

#

.

/is

v

r

to

not necessary

pay

-

off the

"

.

*

'

creditors compromise
practical plan to.operate the

debtors and
i on. a

/road efficiently.
/
'

war

railroads met it;
*

of the naTherefore,
in
reorganization, hold- the
and pay off accumulated in¬

"pace with thfe advance
'tional

.

economy.

-'railroad
cash

terest with a new

non-eumulative

preferred stock, Or unsecured de-«
'bentxires'paying contingent inter*
est.Make these ^securities con-

-

-

.

chairman of the Senate

-

and House
of the

Committees and about nine

ablest members,.

provided a test. The
This may not be
the last war; Railroads must keep
The

has

economies and low¬

Cov^rnmenit machinery must be ered costs*
strengthened. The present railroad
Our consolidations threaten
reorganization procedure / shows again Jo be haphazard. Recently,
the -need for improving govern¬ smalt roads have been tonsolidatmental machinery.
The ICC set ing; with/ resulting considerable
up reorganization plans in th6 increase of efficiency and service.
depression land • stuck to theni Such sporadic mergers may not
when the depression was gone, fit* into a national...plan, which
like a gunner who shoots at a Congress should later authorize.
target that is no longer there, or A Such; a national system of consoli¬
manufacturer who insists on pro*
dation, as Commissioner Carroll
during buggies in an age of auto¬ Miller
has
repeatedly
stated,
mobiles. The ICC was out of would lower costs, reduce rates to
touch.' with rapidly-changing eco¬
shippers,
stabilize employment,
nomic trends.
It was irresponsive increase
earnings, give value to

interest can
be- preserved, by Issuance of income boiids or preferred stock/*
This practice prevailed for. many
years in railroad reorganizations.
The cash should be used to in-, to the wishes of the electorate. It
refused to adapt itself to changed
crease earnings and efficiency, to
-buy better equipment and heavier conditions. % It exercised arbitrary
The courts were equally
rails, to build stronger road-b2ds, power.
and to install signalling systems, at fault. This bill, S. 1253, could
; etc.
' The sparsely > sett, ed West cure the present unfortunate situ4
-needs first-class railroad service--* ation, but it will not remedy the
I fast, cheap/ and efficient. y Avail- basic difficulty.
able cash should be put back into
What is the long-term remedy?
the property, not • paid
out to Tbe v Committees of Interstate
'* creditors.
A railroad reorganiza¬ Commerce of the Senate and of
tion is not a liquidation but a re¬ the House are very powerful.
construction.
Therefore the rule
(A)
They should set up a Joint
.of absolute priority of a liquida- Congressional Committee
on
tion should not apply..
Let the Transportation consisting of the
creditor in cosh/ ''His

*

effected great

$23,200,000 of new first mort¬
sinking fund bonds of Sag¬
uenay Power Co., Ltd.
/

f

-

■"

,

This body should have a

(B)

stocks now threatened

<

even,

with con¬

" v,

bit slow

;

chiefly

the

case

of

into

their

term

being what they

circumstances

railroads,

So far the evidence has been in

Relief must come immediately*
on

zation; (S. Res.

been

have

XIII

The recent; report

the bankers' favor.

of the Senate

railroad

reorgani-

hesitant

Major buyers
to take on

large commitments of the recent
ne^y issues in their initial stages,
but indications are that

they are

192), shows keen gradually coming around to recog¬

analysis and constructive states¬
manship.
Its /recommendation!
should be translated into law,

nize the new conditions.

The Hackensack

Co.'s

Water

bew 2%s made' an even more

showing, ;; despite

| impressive
i

their record low yield.

/ indicated
bers

it

»

Reports y

syndicate memcompletely sold out
the
impression

that

were

and

was

around the Street that the bal¬
ance

in dealers' hands was not

burdensome.

•

■&; Investors continue to
nibble
away at the recent large Union
Pacific offering, but dealers re¬

vol¬

port bonds around in good
in this issue.

ume

/;/•

•.7.;..

•/

^
"'/

'" /
v/

House Rejects

'

/

^

//

-

/ /•/

•;

-fi /'•

t">.

-

Cutting

Lend-Lease Further

.'V

171 * to 1481 the
House, on March 13, declined to
meet the demand of Representa¬
tive John / W* Jaber / (R-N.Y*.)
that it cut down lend-lease bal¬
By

Ten Cents a

\

their bank¬

completely satisfied
ing sponsors.

was

obligations, many
of
which have only beep outstand¬
ing for a few years.

*?^

{ New Issues Moving

Although Southern Pacific's new
214s were not a "red hot" propo¬
sition marketwise, being offered
at 98% to yield about 2.35%, the
bonds were reported moving out
to investors in a manner which

porate

consoli¬

not

it

//

-

'/y:?/■'••,/*•".

■

are,

funds to redeem ail
outstanding long-

in

debt.

.

in

But

revenues.

private

■

bonds,

high-grade

(

/

of its currently

in

institutions

Z

company

probably .would put up consid¬
erable resistence to any further
cut

satisfactory

operation, .together with
sale of $5,400,000 of
2%; serial debentures to a group
of
Canadian banks
placed the

realized that potential

buyers,

with

/This

underwriters,

| a, They

out

the

True a few have

issues.

said

speed.

'iV.

'a

be

were

reasoned that time
would
justify their judgment
avoid future bank-*
/ in venturing to refinance cor¬

yet,/went into bankruptcy
receivership.••

Committee

/

' v

to

and

moving

moving out.
realizing they
were entering into another phase
of the prevailing "cheap"; money
market,. were not given to ex¬
pecting any miracles.
.i
been a

But

dated
or

such

of

ruptcies/ Since the .consolidation
in 1923, not a single British rail¬
road became bankrupt, but 40% of
American

*

■/,

-

receptive

rather

a

market

Despite the further shearing of
on the latest; refunders
there has been an apparent ab¬
sence of any serious "backing-up"

version privilege attractive/ would
reduce railroad debt and thus les¬
or

) // *'

met

have

yields

fiscation, and by making the con*

sen

\

in¬

103 and accrued

Price at

terest the bonds are reported to

them.

\

group

gage

,

XI

banking

a

yesterday
brought

here

marketed

when

,,

VIII

Canadian utility issue

out

•

tive.

Power Co.

Saguenay
Another

ex¬

pronounced change

any

2f4s on their re¬

price of 102 H-

was

perience

opposed

he

sale

the business

the

.afforded

yield

Madison Gas's

underwriters of

the
the

under
by

just

it

puts

2.396

summer

suppressed inside the ICQ.

'/>••/ .^4'.

; to
the
purchaser
approximate
2.390%

yield

would

vided

1939, and repeatedly since, dis¬
sented from rulings which wiped
out the stockholders' interest and
in

the

for

fixed

consistently fought

against "guessing" future earnings
and against wiping out stockhold¬
ers
in reorganizations.;
But his
voice was not heard by Congress.

due weight

Commissioner Carroll

ties.

of the old bonds
*

i

courts and be accorded

only 35% of the principal
exchanged there-

worth

v

Dissenting opinions within the
ICC should be considered by the

"relation to return. The spokesman
'•

/•

price of 105
Hackensack 2%s

At the reoffering

,

Thousand

a

vote of

Things certainly have under¬
economists, ac-» promptly and without delay. Bet¬
countants,
engineers, and legal ter a quick, if imperfect, law on gone a far-reaching change since
draftsmen.
Their; function * would railroad reorganization, subject to the days when corporations sold
ances an
additional $200,000,00Q,
be to provide this Joint Commit/ amendrftent / later/ to
save
the their /bonds direct to /selected the Associated Press
reported from
groups
by negotiation.
tee With "facts/ cbfrtment on ICC owners of the remaining railroads banking
Washington. Drawing special at¬
policy, and analyses, of proposed now in the courts, than a more And underwriters' are really get¬
tention to a Government report
legislation, c v.:v '.. >.■ /-'/1
perfect law, too late to prevent ting down to brass' tacks these obtained
by the House Appropria¬
of
the
The Senate Committee on Inter/ confiscation
remaining days when they go after an issue.
tions
Committee
showing
that
state Commerce has great respon-i equities. Prompt action is essential.
It s no longer a matter of fig¬
shipments to Russia are still con¬
sibility to the people, but it has
uring what the market will
tinuing, Mr. Taber declared: "1
no equipment of its own to dis¬
take /and then
going to the
question whether we should be
charge it. It had to rely on the General Products
prospective issuer. The banker
sending that country anything fur-*
ICC;; Administrators; thus' dfreCtecf
these days must, in addition,
ther under lend-lease." Said the
legislators., Even the ICC should
to PubSic figure what his prospective ; Associated Press:
'
welcome. such
a
corresponding
competitors will be willing to
Offering; of_119,000 shares of ($i
"The office of foreign liquida/
body of experts serving the Conoffer id order to get the loan.
tion of
the State Department,gress.iTbelCChasgreat/power par) common stock of General
What has happened becomes
which handled postwar lend-lease
without responsibility to the peo-; Prpducts Qorp. of New Jersey ,was
apparent when it is realised
goods distribution, gave reporters
pie.
Congress has great respon-i made/ March 25 by Hill, Thomp¬
that bids which won the awards
this explanation when asked about
sibility, ta ;the; peopie^; but lacks son & Co., Inc.,. and F, L* Rossof / two. substantial issues this ; Representative Taber's statement:
Its; own" experts arid" necessary mann & Co. The stock was priced
staff / of experts,;

,

.

avertible;
:

,

';//

>

IX

:•

/; /■•

Excess cash should retire bonds.
Excess cash should be used to re-

lire bonds by purchase; in the open
'market, at low prices, exempted
from the capital-gains tax. Bonds
outstanding / accumulate /interests
But unpaid interest does hot com-

I

:

'

'-pound and Is bo- burden./ Therefore, cash should be used to retire
1 bonds outstanding and thus reduce
interest charges.
The
.

;

v

roads that barely

escaped

bankruptcy, like the . Baltimore
andOhio, /the'/Missobtf//Kansas
iand Texas and the Illinois Qeiitral

bought back their, bonds rat low
prices in the open market/ Thus
they put their road in good financial condition.
But the trustees
of railroads in the courts showed
ho
such
wisdom ; or prudence.
Some allowed

interest to accumu*

6% when* the; princioal
could be retired at 1% or 2%. This
at

late

neglect is another evidence of the
defect of the present reorganiza¬
tion

procedure.

«

/

Corp.

SteckOffered

.

t

A Federal Advisory

(C)

The

limited.
are

too




the

week

share.

per

sale

cents

10

only

were

$1,000 bond better than

the

of

'

a

those of

"The

total of

Russians

are

obtaining a

$290,000,000 of goods and

the nearest rivals*

.

more,

sweeping and its discretion
broad.
The present unhappy,

from

•:

the ICC

too

public at $2.50

oh

of the Interstate
Commission should he

The powers of

the

Proceeds

attached to this Joint

to act

powers

Coun/

services, but on a credit, rather
Transportation/ should bej shares initially will be added to
than a cash basis. They are re¬
Committee; the treasury funds of the corpora¬
Southern Pacific's $25,000,000 of
ceiving these goods and services
It Should consist "of $1-a/year men| tion, which has entered into a con¬ new 15-year bonds were sold as
under an agreement made with
representatives of shippers, .con-' tract for the purchase, on April 2%s at a price of 98.319 with the
the United States weeks ofter war¬
sumers, operators, investors and 1, /194^, of a plant site at Bay- second group offering to pay 98.time lend-lease was ended follow¬
labor.- Such a business body could onne, N. J.
309 for the same coupon.
Again
ing the
defeat of Japan. The
keep Congress in- close touch with
Hackensack Water Co.'sZ $15,000,agreement provided that the Rus¬
rapidly changing conditions and
Alfred M. Seaber With
000 first mortgage bonds were sians would receive $240,000,000
with public sentiment. This body
worth of goods and $50,000,000 of
awarded on a bid of 104.42 for a
should meet periodically and make, Merrill Lvnch Pierce CoM
services
such// as transportation
recommendations
to > the
Joint
JACKSONVILLE, FLA. — Al¬ 2 %s coupon,
The next nearest
andf docking services.
Committee.
It would then be*un- fred M. Seaber has become asso¬
bid was ,104.41.
//^Shipments under this agree¬
necessary
for
private
citizens ciated with Merrill Lynch, Pierce,
ment began in mid-November, and
sporadically to bring to the atten¬ Fenner & Beane, 116 West For¬
', Another New Mark
tion of this Committee grave evils
The
Hackensack
Water Co.'s by the end of January totaled
syth Street. Mr. Seaber was for¬
of which the ICC seems utterly
cil

unaware..

riommerce

to

knowledge.

Indeed, the ICC refused
when its attention was

even

called to

tjiese grave evils.. Nay/

it tried to defend its errors,
living in a vacuum, unre¬
lated to the realities of life. Per¬

It

merly in charge of the Miami-of¬

operation was interesting in an¬

fice of the Ranson-Davidson Com¬

other

pany,

office

and in the past of the Miami
of

Merrill

was

Fenner & Beane.

Lynch,

V *

Pierce,
*

respect

slightly the
the

Madison

since

it

shaded

cost basis on which
Gas

&

Electric Co.

disposed of an issue of $4,500,000

$120,000,000.

;

"The goods must be paid for in
22 annual installments beginning

July 1, 1954.
an

interest

ning

The credit carries
rate

of

July 1, 1947.

2%%

/

begin¬

1676

THE

Bond & Goodwin Offers
Arnold Brilbarf Com^
Bond

•

to

the

&

Goodwin

public

Inc.

today,

Soviet Withdraws From Council

v

26,

r

143,925 shares of common stock
&? (par $1) of Arnold
Brilhart, Ltd.
at $2 per share. The outgrowth of
■

a

Brilhart,

a well

instrument

artist and

Stalin

ies,

precision

industrial

and

consumer

products.

plastics
Sales

in

company

proposes

to

use

ment

consisting of injection mold¬
ing machinery and other corpor¬
ate purposes. Two plants
having a
total of 30,000 square feet of floor
space are operated in Great
Neck,
New York. Giving effect to this
financing : the "company's
outStanding capitalization will con¬

in
of

1

as

common

war the
company
the fabrication and
precision parts " for

one

the

of

last

year,

the

'■;

■

*

*

saved the

American Conversion Miracle in

was due largely to the
sharp drop in dividend and
interest disbursements at the beginrng of the year. After allow¬

this

and

other

(1935-39-100).

Income payments in
January, af¬
seasonal

adjustment,

were

equivalent to the annual rate of
$155.6. billions, as compared with

Girls'

a

College

The readying of the quarters in time for
the scheduled opening
perfectly typifies American ability in conversion. It took only three
weeks to transform Hunter's main
gymnasium into a dignified and
beautiful chamber for the august
proceedings of the Security Council,
and the former mermaids'
swimming pool into the

seasonal

influences, the Department's in¬
dex of total income
payments de¬
clined from 234.1 in December to
231.6 in January

Geneva, they have at least

day.

seething

press

headquarters. It took just 17 days to construct an absorbent
ceiling
for the Assembly Hall* to cover the
gym's steel girders with special
walls of serrated
mahogany plywood, to hang three thousand yards
of- red-brown drapes, to install 554
very luxurious sliding seats, and
to construct 10 radio
booths, one television booth, and one movie
booth.

the

actual record .total of
$160.8
billions in calendar year 1945.
iThe Department further

-:.v

Simplicity the Keynote

•

'V' 'I

'

■

:•>

J''*'*'*y

v'-%.

••

'f'- .'V

..

•

•

V

-v

Council,

Iraa

repudiation

number- 1:
of

^

have

'

and

there

of

Gromyko Took Over

*

would

have

Anglo-Russiaii

Teheran; and would

handed

over

regarding treaty obligations to

Dr. Quo Tai-Chi

) $ >>?<•/
v

then

the:

repv

.

all

discretion

Moscow.,

..

'

At the second session,
marking the opening of the Council's real
business, scarcely a moment was lost in the
Soviet's taking-over?
literally as well as psychologically. With the in^
troducfcion of the Iranian
in his opening blast took
held it until 11:59.

question, Mr. Gromykov
the

floor at 11:10 and

It took him

just 12 minutes of
talking to get to the charge that those
members,
who supported Iran's
petition for a hearing, were
guilty of "aggravating the political

atmosphere

of the

world
,'V and engaging in
propaganda. :
destined to foment a new war
by sowing distrust
and anxiety among the
.

peoples."

In his tireless pleas to
remove th'e Iran
the agenda, the Russian's

ques-'
underlying

tion'from
and

ever-recurring theme

and

Iran have

that his country
agreement, and that
occasion for Iran's
complaint,
the Council's interest.
When he was finally

hence there is
on

to

come

was

an

no

the.

elimination
question, and
changed to agitation for postponement to
April
10, he inconsistently altered this theme to hold

that the

continuous session

quarters in the Brohx may be (7 to 10 miles from the
delegates'
sleeping and working headquarters), and though they are
creating
growing nostalgia for quiet and beautiful

Depart-

of

for

entered into

the

•

good' judgment

considered; would have

treaty and the Declaration

or

*

of

the

'the Iranian
question, would have
world, that justice for

appeasement

sanctioned

•

Uncertainty

.

entire

not even to be

was

:
-

on

the

resented

V

i.f-'

^President

vindicated

"negotiations for agreement" were only,
well-started and would take further time to
com¬
Andrei Gromyko
pleted and get information on. • (For
verification;
he cited Associated Press
dispatches for the benefit of this Judicial

inhospitable bickerings, Hunter College turned out to be the good,
at first somewhat,
diffident, host.
Inaccessible as these head¬ body),

decrease

ter

^

if

usual

-

i J *

'

Monday afternoon. To enable this eleven-nation
world body to embark on its
epochal career, after all the previous

Commerce; reported on
March 12;, The January total was

ance

'r'-i

at 2:30 o'clock last

9% below December income pay¬
ments of $14,272 millions, but the

v

notified

that Russian

-Si/

Organization, the Security Council

Drop

January totalled $12,936 mil¬
lions, .3% less than in the same
month

I'-

C,-

■

Schedule

on

proceedings,by Dr. Quo,

(irrespective of her real motive) for
fur¬

ther stalling

outvoted

Income payments to individuals

ment

:Vv-

...

in

•

-'-'t

.j
,w:

schedule,

mand

Nine months after it was conceived in San
Francisco, as the
"Board of Directors"; for all fifty-one countries of the
United Nations

Income Payments

,

>

fought for.

*of the major dicompany's enter¬

prise.

.

\

,

a decisive
bombshell of gravity
During recent heated episodes, the
optimists have consoled themselves with the fact
that, "after all,
they are still talking and blowing off
steam," or "they are still
smilingly sitting next to each other." But
now; even this is ended. :
Of immediate concern-te the
possible operation of the UNO and
the functioning of the Charter without the
Soviet. There is the basic
question whether any single Power is to have the
right to keep
the entire organization from
functioning.
Specifically, under the
voting rules the Soviet in its absence automatically
exercises its veto
power, where such yetq power applies.
If the Soviet is declared a
party to the Iranian dispute, it will not have veto
power until the
matter reaches the" stage of action.
But in all other stages its absence
automatically exercises the application of the .veto which in the
Charter's formulation, is so zealously

into

and appliances as a subcontractor. Retooling and other
changes made in connection with
these orders established industrial
of

*

The Soviet withdrawal throws
the international outlook.

;

ments

visions

v

to

quotations

Complaint

Soviet Action Stimulates

electrical devices, electronics, tel¬
and many other instru¬

plastics

attributed

including

,

evision

<

Ghavam,

agency, "Tass.".

r'<

v."-

During the
engaged
molding

statements

Minister

current

28, 1940

of
President Truman in
having refused the Soviet's
request for a two-week
postponement.
If the
President had not taken this firm
stand* the UNO
would have died before it
bad even a chance of
getting really started. To accede to
Russia's dei

troops are still in Iran; with
absolutely no assurance that they will
get out at all—much less by any
specific date.He reported that
the Russians were
interfering with the functions of his
government,
and with the
people's daily lives—all directly inconsistent
with
fundamental sovereignty rights.
He further
categorically denied that
an
"agreement," as described by Mr. Gromyko, exists
otherwise than
in the mental processes of the
Soviet.
^

the proceeds from the sale of the
stock for additional plant
equip¬

sist of 533,625 shares of

news

government

•v;,.

The

on

When the Iranian
representative, Ambassador Hussein Ala, was
permitted to tell his story to the Council
this evening, the reasons
for Moscow's
attempted obstruction were understandable.
He re¬
ported that he had direct word from his

$761,638 and net
income before Federal taxes
$43,-

v.

.

own

Iran's

1945 amounted to

•

Iranian .Prime

Meeting Opeiis

The start of the

y

China's

per¬

in 1943 to manufacture and deal
in three principal
types of plas¬
tics j musical instrument accessor¬

•>

and

from the Soviet's

company was formed

radio

At Least the

(Continued from first
page)
he used every available
forensic weapon,
including irrelevancies,
repetitions, "evidence" consisting of press

known reed

former, the

N.

.

business started in 1939
by Ar¬

nold

Thursday, March

Sabotaging UNO

offered

March

COMMERCIAL & FINANCIAL
CHRONICLE

.

Mr. Byrnes Argues the Case
Secretary Byrnes has

to

these meetings "as special coun*
(with permanent representative Stettinius seated
beside him)
personally to argue the Iran case; and he is
putting his heart and
soul into the cause. To
many it seemed that, his answers to the
come

sel"

Soviet representations showed them
up as the world's record in in*
If there has beeii an
agreement reached

ternational "double-talk."
since the filing of Iran's

complaint, said Mr. Byrnes,

certainly it
should at least, be verified
by the two alleged participants. All he
was that the Iranian
Government, whose representative was ii*
in the hall* be given the chance
to state whether there is such art
agreement.
asked

,s

r>

'.V

-

?

'

1

iV

v-'

w*
\

•-

1

1

j

.1/

.

;

'

*v

•

-

,""

•

\h~l

It seems to this observer that
the following excerpt from his
reply to Mr.: Gromyko clearly and
correctly went to the nub of the
entire controversy:
„

r.

"Today the

representative of the Soviet Government* states that
there has been an agreement. If that
information is correct, then the
Soviet Government should
have presented to the Council for its
consideration a joint statement from the Iranian
Government and
the Soviet Government
stating, that an agreement had been arrived
at and asking that there be no further
consideration of that

Despite the ample luxury here, the atmosphere is in
strong con¬
trast to thejspectaclepf the San Francisco
Conference, where tho
"The January decline in the in¬ general meetings were held in j the
sumptuous Opera House* and
dex of total income payments re¬ where the participating countries numbered 51
question.
instead of the current But that is
not the case; The Iranian Government
sulted in part from a sharp re¬ 11. In place of the former enormous and
has not withdrawn
bedecked opera house,, the
its letter.
duction of total
present assembly hall resembles a modernistic
military pay re¬
broadcasting studio.
flecting continued demobilization In place of San Francisco's sumptuous dining places, Hunter offers a
"Though we have tried to ascertain the facts, we have
not ascer¬
of the armed forces.
Contraction self-serving cafeteria—for the most important delegate as r well as tained from the Iramian
Government that there has been an agree*
the humblest clerk.
in factory pay
•
rolls—attributable
ment. Therefore, when a member of
to strikes—also was an
the United Nations advises the
This business-like
important
simplicity extended to the conduct of the Council
that a situation exists which
factor. However, income payments "opening exercises."
threatens the peace and
The addresses of
security
welcome, by Messrs. Truman
to civilians remained
of the world, we cannot
substantially (by proxy), Byrnes and Dewey, established a record for
deny to that nation the opportunity to be
brevity as
unchanged from
December
to well as pungency; and the enterprising President of the
heard, to say whether or not there has-been an
Borough of
agreement, to say
January, since gains in income the Bronx, Mr. Lyons, fortunately limited-his
contribution -to a letter whether or not they wish to withdraw their
paid -out by trade and contract read by the Chinese
complaint.
Chairman, Dr. Quo,
"If that is not
construction establishments and a
correct, then all a government represented on the
Mr. Lyons, the one-man Chamber of
Commerce, elicited the Council would have to do when a
large increase in unemployment audience's sole
humorous reaction of the
complaint was made against it
day, with the interpreter's
benefits approximately offset the
would be to advise the Council that
reading of the French translation of his
there has been an agreement
repeated plugs for "Le
and,
drop in total factory pay rolls. Bronx" for the benefit of the
on the strength of
annals of history.
that, ask that the complaining government be
The volume
reported:

„

of
as

(seasonally adjusted)
was
virtually
large in January as in July, the

,

denied the opportunity to have

civilian incomes

last full month of

The Battle of the Bronx

war.

At the opening ceremonies the
underlying question was whether
(in baseball parlance) they malked the
warm-up for the Battle of
the Bronx, or a
meeting to pave the way to a period of

President Urges Senators
Remain in Jobs
;V
President Truman's recent action
in urging Senator McFarland
(D.¬
Ariz.) to * remain in the Senate
rather than take a Federal

peace for this
sorely-tried world. And if a
battle, was it to be a good-natured sham
affair with cream-puff
weapons?
The unfortunate answer
was not
to be long in
coming.
<(

f|£

%

j

? r\-

.

V'W- * M

-

■«'->

$

\_?

i

-

-

,

Soviet

Psychological Dominance
Judge¬
'"'iV'1^
'■
*
'V1"*1 i*'/*
'«
' ' '.Ir
-V'-''
'i;
-71 ,;f
ship in his State brought inquiry
The feeling pervaded here to
a remarkable
at a subsequent news conference
degree-L.from the
opening banging of the gavel on—that all
-i

\

v

r

<

J

•

r-s

-

-

.

as to whether the
President con¬
sidered this a good general
policy.
To which Mr. Truman

replied,

according to an Associated Press
"Washington dispatch of Mar. 14,

place in a vacuum excepting when
they
nizable reactions of the Russian
tional meeting has been
the opening

proceedings

were

Government.

one-Power

at

were

taking

tied with the
recog¬
If ever an interna¬

conscious, it is this

one!

Even

proceedings the unanimous reaction to the
ringing
speeches of Messrs. Byrnes and
Dewey was that their "meat" was
that he thought' Senators
with entirely contained in
thinly-veiled nuances that referred to
lengthy service were invaluable Soviet. In
the
fact, press and audience kept

to their States in the Senate
and

should remain there
take other jobs. •• *

rather




than

automatically watching for
the discernible reactions of Mr.
Gromyko, her delegate, who was dra¬
matically (and coincidentally) seated at the Council
table's extreme

left.

-v

.vs./..-

^

a

hearing."

Support From Egypt
And the

sentative
seemed

to

following statement by the

of

Egypt, Mahmoud
analyze the matter

repre-

'

Hassan
Pasha
with extreme

,clanty:'v;gg;||i^^
"Mr. President, I think I would like to
say
just one word. Up till now we have heard one
side of the story and a third
party is getting into
the matter.
I think before we can form a real
opinion we should hear the other side of the

story and this other side of the story can
only
through the delegate of Iran. The question,
to my mind, should be divided
into two sections.
come

One is the question of
knowing if this case should
be brought to the Council. To
my mind, it should. >
The other question
is, after hearing the explana-,,
tion of the second
party, should the Council
retain this question or not.
It is only on the
explanations of the second party which is a
party
in the debate that we can
make
up our minds as

to whether this question should
be retained by the
or not."
t .
"

y-.'.4y Council

Mahmoud Hassan

j

[Volume 163

-

British
<, Sir

-

British

terms,

more

vitally
of the

subtle, and

conveyed ^skepticism

about the actual existence of any such

postpone.
v
"I visualize a situation when international peace

agreement

armed force as in this case

our

a

on

two-sided basis:

get an opportunity to present

never

Alexander Cadogan in

typically

and can
its case when its interests are
affected, as every member of the Council knows the interests
Iranian Government are vitally affected by this motion to
threatened can come to the Council

international peace was

Subtlety

as

well

as

167 7

FINANCIAL CHRONICLE

THE COMMERCIAL &

Number 4476

criticism of the, sentative

Tomorrow's Markets

A

Walter

;

is threatened by

and the Council says, 'Your repre¬

attend, but he cannot present his caseWe wired anc
have also written to the Government and in the meantime what
can

Whyte Says-

(Continued from page 1636)

they

talk about the railst
purchases iii

may

concentrate their

the industrials.
So the rails
happened? No one of us can tell. We Cannot, proceed to vote on av seldom show
mobility com¬
British request for information which has been question of postponing upon a matter of this kind until we give the
parative to the industrials.
long since made under the Treaty of January! representative of the complaining government an opportunity to be

I ay Soviet's refusal .to give any direct answer to the j

heard.
*

1942.
In

contrast

the

to

the

suavity!

Australian Delegate!

typical Evatt form, practically1,

Hodgson, who, in

»

diplomatic

Cadogan's

directness of

passed the lie to the Soviet concerning its claim'

of an agreement with Iran.;

Sir Alex. Cadogan

The Soviet's

of this Council will be interested to know

difficult ever to gets its case presented, to the
Security Council. We can't do that.
We must give them* a chance
to be heard.
After we have heard them, after we have heard the
representative of the Iranian Government speaking for his Govern¬
ment, if his statement does not appeal to us, then we can postpone.
But to postpone without giving them a chance to be heard would be
aviolation of the spirit of the Charter."
1

is quite

whether it

was

But lack of

...

"Every non-member

-

:

so

^;■

,

Diplomatic Tactics

Comparisons; with San Francisco come to mind. C- Primarily; the!
controversies-are more dangerous now; because the formulation'of a?
charter last Spring was, worked out in an academic spirit, ■whereas I
the present operations* thereunder .are "substantive" and entail con-;
"Crete decisions, action,'and actual performance,
—
'

df* the ^vory

One

.

■

■■

Intensification of the Veto Issue

*,

tbpmost

nosticating class. On the con¬
trary, because they are not
loaded with public buying,
their action may well be more
significant, ; i reflecting the
opinion of better informed
buying.
'

Issues still before the6

is^^'goihg^follow;^the :Russiah;derhahd

whether? it^^

on

-i;''VA-tf

Couh6iMw
voting'^^

:

come

to

its^ logical crisis- conclusion in the

early stages of the

Stalin's eleventh-hour UNO-appeas¬
ing pronouncement to the presS, and the Moscow-radio support of the
United Nations and the equality of nations, ran headlong into. Mr,
GromykoY boycotting of the Conference when he was over-ruled.
In other words, Moscow will play ball as long as the established rules
«f the game accord

with, or are changed to accord with, its own- in¬

dividual desires, i

\

Gromyko Versus Molotov

'

The personalities of Foreign Commissar Molotov, who
most of
his
country's negotiations at San Francisco,

handled
and of

M. Gromyko are almost as different as if they were not countrymen.

Whereas M. Molotov was aggressive and truculent, and gave impres¬
sions of great cynicism; Gromyko argues like an extremely brilliant

lawyer—albeit with a very- bad case—with a manner of great sin¬
cerity.. Although one may feel that his" country's case in the Iran
proceedings are absurd, one admires this 37-year older personally
for the able and energetic job that he performed against the big odds
of common sense.
^
Molotov at San Francisco gave, the impression of playing the

role
in
of
greats "concessions" to an appeasing world. Gromyko, at this early
stage, appears to have been sent in by the higher-ups at best to "keep
*em talking," and at worst td take extreme steps like withdrawal on
of "throwing his weight around," of intentionally acting like a bull
a China shop, and ending self-started controversies with gestures

instructions from home.

-^* -i

•'* /.St -i*.--' •v\

On the down-side the

;

a

.*'!■

same^

vorable

signs crop up. On a
day to day interpretation the
rails should stay above the
63 figure. When it is realized^
that the current

price is about

65, it will be seen that the
leeway is small. This doesn't
that if the rails break

mean

The veto 63 everything is up with the
(2) The market, The industrials wilt
next stage-—that embodying discussion—can be reached only by an
still have to confirm it. But
affirmative vote of seven, including the Big Five.
An exception is
the! burden of proof will then
made in case one of the Big Five is an actual party to the dispute,
in which case it can neither vote nor exercise the veto. (3)
The have to be on the side of the
ultimate stage is that of action against ah aggressor; which must be bulls. It is interesting to note
approved by seven members, including each of the Big Five, whether that it was the rails which
they are parties to the dispute or'mot^'*; H;:v
broke through their? previous
rough resume of the existing veto rules follows: (1)
cannot be-used in the initial discussion stage of a dispute.

lows first. The industrials fol->

Operations of the Security Council
lowed, but it was a matter of
A detailed summary of the make-up and working of the Security
hours.
Today it is still the?:
Council follows:
'
" '
"
'r
"
to show
The Security Council is one of the six principal organs of the rails which refuse
tinited Nations. It consists of eleven member nations, five of which any enthusiasm/ They go up
have permanent seats, while the remaining six non-permanent mem¬ with the older
averages but
The Rules and

bers are elected for a two-year

term.

show

France, the Union of
and the United States.
At the first election of non-permanent members, held in London
January, Egypt, Mexico, and the Netherlands, were elected for
year; Australia, Brazil, and Poland were elected for two years.

The five permanent members are: China,
Soviet Socialist Republics^ the United Kingdom
.

last
one

at the

seven
seven

%

is

In votes on question

tion that in the case-ease of

the outlook
clear.
It

from

is the time to sell every-*

Caution is, of course^
Bujt show me a

the majority of
with the excep¬

necessary.

questions raised under Chapter VI of
of Disputes—parties to a dispute >

caution

time?(when

can ;

be*

thrown to the winds and I'll

v:;^:?';:.!.* /rl''

abstain^ from voting.

caught off guard it was revealed that; this must have
resulted from "great modesty."
Similarly, Gromyko here spoke in
Russian, but when the interpreter into English made the slightest
change in one of his intended nuances, he jumped in with an inter¬
rupting correction.
yet when

means;

far

thing.

the Charter—Pacific Settlement

The attitude of both men toward the language question is alike,
At San Francisco Molotov categorically denied knowledge of English,

still

now

of procedure, a majority of any

Members suffices, j On all other matters
must include the five permanent Members,

All this

doesn't, however, mean that

decided by a majority vote of seven

questions are

All

members.

aggressive tenden-?

no

cies of their own.

each of the eleven Members has one

In the Security Council
vote.

j-v

*

•

A

Pre-Conference realization of this prompted

Mr. Byrnes' decision to grgue the Iran,case! personally, to stop
outset the probabilities of a pervasive appeasing atmosphere.

A ■$*>< <£* '• V

rail action that certain unfa¬

Francisco, London, and now in New York, .the Russian. power by the* Big Five, would have it. encompass practically all
The present vetp
representative
governed by home office instructions more than is proceedings "that can come before the Council.
rules are surely bad enough in preventing the UNO from taking any
any other delegate^ Impression of the underlying Soviet technique is
enforcement action against any of the Big Five, hut the Russian de¬
that their foreign relations are strictly divided into two separate
compartments: one being embodied in "public relations," the other in mand is to permit even the barring of discussion of a dispute in
which cne of the countries with vetoing-power is involved. How this
action—with frequent complete inconsistency between talk and per¬
can be conceived of as conforming to Generalissimo Stalin's vaunted
formance.
championing of "equality among states" is indeed most difficult to
This dichotomy between words and performance took little time
comprehend!
'
to
present Iran discussion; when

•

thing is true. And it is in the*

cedure, which would completely paralyze it as a functioning body,
and make if the: tool of the Big. Powers |n- tactics of aggression. The
Soviet's demand foir further extension of the already-wide ' veto

At San.

v

mobility doesn't

them from the prog¬

remove

show you a

millenium.

"

the Members in
#•
*
*
*
the English alphabetical order of the names of the" member nations.
Meanwhile you are
The term is for one calendar month.
Thus, the representative of
still
Australia, Mn Norman Makin, presided over the Council meetings
long of a list of stocks. Some:
in London which opened on Jan. 17.
The representative of Brazil
of them are nicely in the!
was next in order and for the meetings beginning on March 25 at
Gromyko's Bad Case
Hunter! College in the Bronx; the representative of China took the black, some are about even,
Unfortunately for Mr. Gramyko, the Soviet's fundamental stand
chair,
:
*
and some are a little in the
trying to boycott Iranian discussion was so weak, that if forced him
The Presidency of the Council rotates among

v

•

.

■

.

in

into legalistic quibbling, absurd rationalization, and childish com¬
plaints. He ptit himself iivthe position of a schoolboy who has hit
one of his mates; and when the latter complains to the teacher, he
insists that they are pals but that his mate shall not be asked
.whether that is O. K. with him.

position can be summar- ;
they have announced through the press, and

Or the absurd Moscow-Gromyko

Ized

■

as

follows:

other informal channels, and through Mr. Gromyko's personal

j

word, that some "understanding" with Iran has been

reached;

I.. but its details must remain completely unknown to the Iranian
Government as well as to the Security Council; the unilateral

>

^ ^word and wishes of Russia thereon must be accepted; and any -i

inquiry byi the Council, are resented as "a"slur on:"
Moscow's veracity. Do those, including Mr. Wallace, who condoubts

'►

or

tend that Moscow is entitled to keep grabbing for
conceivably believe in the UNO as a real body?

\

Mr. Byrnes

for & two-week

postponement, were most succinctly and .memorably answered; by
Secretary Byrnes as follows:
; .*
' » - - "
/"This is

.

a

rather remarkable proceeding.

that

a

adopted at San Francisco last

the

the decisi<tos of: the^Becurity Council, in accordance
* v
ki'yk
'

present Charter,

situation exists which threatens the

If you

red.

your

hadn't, sold half

position

on

the

first

up from the lows, I
wouldn't consider the posi¬
burst

with

tion cottifortable.; But

' /

having';

there is some comfort
Parties to a dispute must refer that dispute to the Security Coun^
that even if they turn around
cil if they cannot reach a. settlement by peaceful means of their Own
choice. The Council is empowered to recommend terms of settlement. $nd go down from here your
n

.

,

done so,

loss will be limited.
The Council may investigate any dispute, or any situation
❖
*
which might lead .to international friction Ypr-.g\ye^ ris^ to,.au 4
•* s *.
vT'1*'.
dispute, in order; to determine whether the conlinuance of. the
? You now hold the following
dispute or situation is likely to endanger the maintenance of
half positions: Air Reduction;
^international peace and security,.
;
;
;

,

(

bought at 52, now about
dispute or situa¬
attention of the 53%; American Car & FouriA
dry at 60, now about : 64;
the Council may take American Locomotive at 36^^

Any Member of the United Nations may bring a
tion likely to lead to international friction to the

economic

.

r

Against

.

or

a

.

.

,

>

f

State which disturbs the peace,

military measures.:

; :v

i

*

current

continuously, its member nations assign¬
The Iranian Govern¬ ing permanent representatives for the purpose at the headquarters
of the UnitecLNations,
,
^
-

representative brings to the attention of the Council
international peace and
security. ? When the Council meets to consider it, the representative
of the Iranian Government, as most , of us know, is in this hall too.
He can hear the representative of the Soviet Government speak for
the Iranian Government.
He can hear The Associated Press quoted.
He can hear everybody speak for a government, but he can't speak for
his own Government. 1r" *
' r H
' *'

ment through its

carry but

Council.

Versus the Stall

The Soviet's delaying tactics, and her agitation
*

"security,"-

The Charter of the United Nations

year lays on the Security Council the primary responsibility for: the
maintenance of international peace and security. * To enable the
Council to carry out this task, very wide powers have been con¬
ferred on it and all Members of the United Nations are pledged to

The Council- functions

.

.

^

On all military, questions, the Council is assisted by' a
Staff Committee which is composed of the Chiefs of Staff of
r

permanent member nations of the Council, or their

purchase

the same as
figure; American

price

Steel Founders at 42, present
Military level about the same; Bethle¬
the five
hem Steel at 09,

representatives.:

Military Staff Committee is responsible, under the Security, 105; Chrysler at 120, now
Council, for the strategic direction of armed forces placed at the
about 129, Electric Auto-Lite
disposal of the Council by the Members of the United Nations. The
about 71, now about 69; Su¬
first meeting of the Military Staff was held in London on Feb. 4, 1946.
*

The

'

j

"The small nations of

what

we

the world will watch with much interest

do here;.; A great power

is vested in us.* We must use it

,

:v:

Charter
to

the

stipulates
United

.General Assembly,

Wjisely.,, We cannot say:that ihis Council which undei^ the^heory uf
'.-mi?
the, Charter ;was to .have: its: doors Open* to a nation: that believed




The

Members

it

that, while .the admission of new
shall t>e; by decision of the

perheater at 30, where it is

Nations

must be on' the

recommendation of the

(Continued bn-page:l678)^

;

at this

writing; U. S. Steel at

(Continued on page 1678)._

>

>

1678

THE COMMERCIAL & FINANCIAL

Norris & Kenly to Admit
Hazlehurst as Partner

CHRONICLE

Soviet Withdraws From Council

Nations, like individuals, should

disputes

CHICAGO, ILL.—Andrew

Ha¬
zlehurst, member of the New York
Stock Exchange, will be admitted
to partnership in Norris & Kenly,
209

South

La

Hazlehurst, who
as

floor

Sabotaging UNO
(Continued

Mr.

broker

on

Jan.

17

1

,

Truman

With Herrick, Waddell
(Special

to

The

KANSAS

CITY, MO.—Maurice

has

Green

A.

with

become

Herrick,

I welcome

Com¬

&

after serving in the U. S.

the

members

Nations has chosen
(Special

LOS
rell

to

The

Financial

We will do
at home.

./v

"But there

ANGELES, CALIF.—Dar-

A. Dolan has

the

become associ¬

with William R. Staats

Company.

Walter Whyte Says:■)

*

■

'

•

'

Nations

united

*

Security Council

and

our

.

There is little point in reo
ommending any additions or
deletions from this list with

hay and

grass. Holding on to present
stocks and
waiting for proper

signals

seems

about the thing

to do..
■'/

■

//■/'A-'

J

;

So far

as news

unless

the

anywhere

United

to

work

*

for

together,

peace

another.

or

international drumbeat will
be quickened. Various news¬
papers will give various in*
; terpretations
of what it all
News

means.

'Ou here.
We will follow your work with the
itmost of good will, with high hopes and
prayers
hat your labors start us on the road to
permanent
peace.

also

chosen

New

York

City

to refrain

from the
the defense of law.

use

or

There press upon you many

of millions of people await with anxiety your

action.

Many had believed that the defeat
of Germany and Japan would automatically
start; a new* era of harmony and peaceful
They are bewildered at the stresses and strains which have

I appeared.

That

was

am.

LAMBORN & CO.

market and let
alone. At least

news

the

99 WALL STBEET

My advice is to keep

the

using

news

as

a

barometer for

market action is

NEW YOBK 5, N. Y.

the

now

advised.

More next

SUGAR

[The
article

Exports—Imports—Futures

jities of common periL

With the end' of peril,: the victors are wont
go their separate?way^ tb try tb:pluck but of th^ confusion some
particiilar advantage. This usually happens when a military,
coalif
ion has won: its victoryiC It! happened
happening now. * It is precisely: the situation; which ;.was foreseen
xnd which the United Nations Organization was designed to meet.
v
:' "While the war was still unwon and the United Nations were only.%

a-military coalition, they took counsel from these lessons of the
past.
They pledged^ themselves, beginning at Dumbarton Oaks and
then at San Francisco to become a coalition for
.^eace.
That pledge
then and now has the support of both great
political parties
in the United States.
The new United Nations now exists..

James F. Byrnes

had

are

all

—Walter Whyte
views
do

expressed

in

this

not

necessarily at any
time coincide with those
of the
Chronicle.
They are presented as
those of the author only,}
;

the

world

to

Pacific Coast

*/•//:
New
New

York

New

York

Commodity
Chicago
New

/

Members

York

Securities

Exchange,

other

Orders Executed

on

be

item

of

Inc.

,

!

Members

,/

New

N. Y. Cotton Exchange Bldg.
NEW YORK 4, N. Y.

York Stock

•

Exchange
t

14 Wall Street

new

figure

new basis.
fixed charges

,

Teletype NY 1-928

Private Wires to Principal
Offices
'

San

Franelsco

Monterey

—

—

Santa

Oakland
Fresno

—

entirely deaf-whether

On

being

tax

not, there
saving (due to the

of only

about $55,000.
assumptions earnings

amount
on

the

to

new

about
common

880

stock,

dividends might* be in the
neighborhood of 60-700. On this
basis the new common
might be
offered at around
$12-14 a share
(the minimum acceptable bidding

>

the

issue

may

July 1, 1947).

be

delayed

to

duty to the troubled peoples

well

differences

which

bound

were

to

a

to the strong.

as

;

\

ing, that of genuine conciliation.
It is that spirit which led the
peoples of the United Nations, by the Charter^ to pledge themselves
'to practice tolerance and live together in peace with one another
as
good neighbors.'1 All who abide by the spirit of the covenant
shall be judged good by the conscience, of a world which cries for

PeaC"The

people of the world are not experts in international law.
They do not know the technicalities of the Charter. But the ordinary
people everywhere will be sensitive to the spirit the nations bring
to these proceedings.
Your public deliberations make that possible,

and

that alone" is

in the

a

mighty contribution by this* great

venture

new

of peace.

All the world will know what you do and
the spirit in which it is done.
That simple fact goes -far to assure
that the results of your labors will be responsive to the conscience
cause

of mankind,
/

^

^

.r* *x*--^

^

j

"Success may not immediately crown your every effort.

failure

would

success,

mutual confidence will grow and finally flourish.

a

price is 10, and if only 11 is bid

Barbara

Sacramento

a

these

would

are

a

for propaganda for stirring up unrest and confusion in the world.
They can be misused in a spirit of maneuver with the hope that
by clever tactics one or another nation can he: embarrassed and;
put in a false light.' But any nation that sits on the Security
Council or comes before It in such a spirit commits a; crime
against humanity.
' *
*
'
'
"There can be only one spirit admissible within this -gather-/

amortiza¬

the

on

and

New York 5, N. Y.

COrtlandt 7-4150

"/>

interest

the present
basis, but as¬
that they are

law)

share

(Associate)
Chicago Board of Trade
.y: '

V

PITTSBURGH




on

suming

Schwabacher & Co.
i

GENEVA, SWITZERLAND

It is not

new

Trade

(with

$168,058 might also

wiped out

would be

Exchanges

DETROIT

present

$1,753,404. The heavy

tion

paid

New York Curb Exchange

CHICAGO

of

the

any excess profits taxes

Exchange

Orleans Cotton Exchange
And

.V/"t

Exchange

of

with

in

the

this Security Council are used for their intended purpose.
There
will always be temptation to misuse them.
The processes of
this Security Council can, of course^ he made a sounding-board

charges
only $675,000 compared

would be

5

i'11 S V. '•> "v::

Pacific Coast Exchanges

Exchange

Curb

Cotton

3s

are

There* is

settle

spirit of fairness sind justice to all—to
That opportunity, which Is now
yours, has been bought at the price of much blood and anguish;
Upon it center the hopes and fears of all mankind,
Those fears
must be dissipated and those hopes justified.
"These high objectives will be achieved if the processes of? •<

for

.

.; fi'. •*>.? y

>.

./••/;

Stock

Board

bonds

new

a&

Assuming

are in the
neighborhood of $700,000, this would mean a
saving of
about
$1,230,000, which would be
reduced by taxes to
$760,000. This
added; to the above ; net income
figure would produce
$1,975,000
earnings. " • <
'
r;. ,<■'

/;

1850

H. Hentz & Co.

income

settle them

coverage- of abput
six
times before taxes and
four times
after
taxes)
interest

Assuming that
•j

distributed,

rYou

its strong right arm.
over

arise—to

1636)

page

or

$1,215,106.

was

the

sold

likely) net

interest

Thursday.

Plgby 4-2727

Established

1945^.

that

war

pro*

contrary, the" end of the fighting releases many
selfish;plansand motives which hadbeen. bottled:up.?by the neces^,:

Utility Securities

seems

the

as

fighting is

claimed.'• On the

(Continued from
as

E. Dewey

; "A World-wide conflict of .such fundamental; nature
iow 6nded does not subside "the instant the end: of

its

are

no

oc-r

/

threat of force, except in

sidiaries

There is

inevitable has

5/eurred,. 'men'should:: lose,;hap^.-

strength

Public

inevitable.

feyeasprt!;;'why;/because ; the

the weak

to

:

I cooperation in the world.

1

not sanctify ancient privilege. It does
an
ever-changing world. It
they states, large and small
alike,
of force

during much, disillusionment

problems and throughout the world hundreds

/

grew

as

■

and much fear.

,

attempt to outlaw change in
does, however, obligate all

I

-

"You meet

states

has

"The Charter does

4

not

ing and hearing everything
you'll be just as confused as

'

.

f

Byrnes

"It is, I am sure, the firm
resolve of the
American people to
uphold the Charter.
I am
sure this is the
equally firm resolve of all the
peoples of the United Nations who have
joined
together to preserve the
peace under law. ,•

commentators

i

State.
Cach of you and every nation
represented here
nay rest assured that the people of our State ;!
ind of our nation are
genuinely happy to have

■:

Must Maintain Peace:

temporary abode will likewise grow in
and survive
every crisis..
1

!;will do likewise. After read*

i

he State of New York and to
welcome the United
Nations to its new headquarters in our

and for

*

It

which

plenty of it

fight.

Dewey Cites Coundrs Responsibilities
•
' •!
Text of Governor Dewey's address of
welcome to the
Security
TotmcU's opening session March
25, follows:
;
"It is a privilege to
greet you on: behalf-of

Nations

strength and has played jts part in
preserv¬
ing the blessings of liberty for all
mankind.
Let
us hope that the
new and broader
union of

is concerned

With the UNO in session the

-rv;

That is the road to "peace. ^
And
peoples of the world want to travel
"We are here to carry out their
mandate; • Gentlemen of the
council, we must not let them down."

.

make you feel

home

no

Continue

in

V A"

'!//■/

you can expect
from one source

../•■

act

must live by; the Charter.
he road to peace is
the road the

country for its

to

than 160 years ago that our 13
sovereign States entered into a union for
their
common defense and to
promote the general wel¬
fare and to secure the
blessings of liberty for
themselves and their
posterity.
That was then
an untried
experiment and many doubted whether
such a union of free
States could long endure,:
It is fitting to recall
that that union also
chose;
as its
temporary abode the City of New York. J
"Althuogh it was later to go
through dark
days of trial, that union did survive.

,

the market between

right

"Questions affecting the peace of the world
must not be treated
questions of honor which cannot be
discussed.
Questions of honor
letween individuals are nor
longer left to' the ordeal Of the duel
Questions of honor between nations
cannot; be left to the ordeai
>f battle.
%
;

82, now about 85, and U. Sf
Address of Welcome of Hon.
James F. Byrnes, Secretary of
Rubber at ffiVz, now about 69. State, to the
Security Council, March 25, 1946, follows:
\
*
*
*
"It is less
•

the

disputes cannot be settled
brought before the Security

^

'

(Continued from page 1677)

-

be

can

in

best

our

"The people of the United States not
only
wish you success, but
they pledge to you
their wholehearted
cooperation to give to the
United Nations the strength and the
will to
maintain peace and freedom in this
interdependent world." <
r

President Truman

?-V

must be

is

Security Council

as they have
fought together, for
freedom.

Tomorrow's Markets
■

United

remain

ated with Harker & Co., 210 West
Seventh Street. In the past he was

site

a

home.:

| /

Chronicle)

adjust their

has

"Upon all the members of the United
Nations rests the duty
to cooperate with the
Council to enable it to meet
its responsihility.
They must be willing freely and
frankly to discuss their
grievances before the Council.

Secretary-General of the United Nations
and their staffs to our
country. "We are greatly honored : that the United

Arm^. r;

Joins Harker & Co.

best to
nation

no

If

-

of the

and the

Inc., 1012 Baltimore Avenue,

pany,

friendly, negotiations, they

their

But

hands.

gravest responsibility for
It must of necessity deal
problems about which nations in
the past* have been prepared

to

Pledges Support of UNO

"On behalf of the people of the United
States

connected

Waddell

do

litigation.

own

\ "Upon, the Security Council rests the
^maintenance of peace and security.
vith

President Truman's address of
welcome, de¬
livered by James F.
Byrnes, Secretary of State,
is as follows: /
' .-v-

Chronicle)

Financial

its

"That is why the
Security Council must at all times be
prepared
promptly.
That is why the
Security Council must be pre¬
pared to function
continuously, If the United Nations is to
endure
there must be no excuse
pr need for any nation to take the
law
into its own hands.
to

and

twenty-three meetings

•

,

into

Council.

page

Feb, 16, when the Council
adjourned,
were held in London.
1
Two items have been carried over
from the London
meetings:
(1)The report of the Committee of Experts—on
which all members
are represented—on the
rules of procedure;
(The Committee
of Experts will be
meeting in New York, beginning shortly.)
(2)
The application from Albania, which was
transmitted by the
Yugoslav Government, for membership of the United
Nations.

for many years,
will
make
his
headquarters in
New York City,
Effective March 31, Perry H.
Kenly, member of the New York
•■Exchange, and E. Arthur Doern?
will retire from partnership in the
"

without, resort to
the law

#

Between

Exchange,

firm.

on

take

by

1677)
Security Council.: Applications for
membership, therefore, must
be considered first hy the
Security Council.

active,

has been

individual

an

the

Street.

Salle

to

he

irretrievable

and

unforgivable.

But

/

With.every

Every

k
.

*

step of progress for freedom And peace will make possible an-,. <.
;, other step.
And with each step the confidence of the people •
will grow firmer.
///
i';, ;' v :
'
,
"Surely there is no people anywhere which seeks anything but.
peace.
Surely there is no legitimate claim which cannot be achieved
by peaceful means.
You, here, are the means.
With courage and
,

firmness for

...

^

the right, and with justice for all there can, indeed,
lasting peace.
With Divine guidance and an abiding sense of
responsibility for the peace of the world, you shall surely succeed.
be

Calendar

New

of

of

shares

to

issue
were*

of issues whose registration statements

:r List

than

less

dates

20

days

ago,

on

March

filed

9

120,000

on

filed

March 12
of

shares

opportunity; to exchange their

Corporation.
•

...

'

——

American

basis

of 48/100 of

held,

common

share for

of

distribution

the

common

that'end the underwriters have

With

ment

share

each

of

r Company • and
principal stockholder,
of Miami Beach, Fla., desire to secure

IL J. Reynolds

wider

a

Mr.

Reynolds

stock,

and

entered into

whereby,

as

Mr.

an

Sold by certain stockholders.
For details see issue of
March 21.
Offering^Price to the public is $1375 per
share.
Undeiwriters^^nderwr iters5 include:1 Almstedi'
Bros., Equitable Securities Corp., Bankers; Bond Co./

Reliance Manufacturing

The price to public is $20.60 per share.
writersr-Blyth & Co., Inc.

registration statement for 30,000
shares.of cumulative convertible- preferred stock (par
on

March

13

filed

$100) and 110,000 shares of common (par $5),. The divi¬
dend .rate on preferred stock will be filed by amend¬
ment,
Preferred stock; is being sold by company and
common stock hy certain stockholders.
For details see
issue of March 21.
Off ering-LPrices to public will be
by amendment.
Underwriters—Union
Corp. heads the underwriting group.

Securities

Under-

^ *

»

-

Aro
on

March

14

filed

Equipment Corp.
a

registration statement for 30,000

shares of; cumulative preferred stock,

registration statement for 150,000
stock (no par). For details see issue
Of March 14.'. Offering—Price to public will be filed
common

Underwriters—Underwriting group is

headed by Bfyth & Co., Inc.
Minnesota

Mining; & Manufacturing Co.

March 11 filed

registration statement for an in¬
determinate number of common shares (no par).
The
shares are issued and. are being sold by certain stock¬

on

holders.

:

a

For details

issue of March 14.

see

4% % series (par

and 20,000 shares of common (par $2.50k
For
see issue of March 21.
Offering—The prices to

the public will be filed by amendment.
Underwriters—•
Central Republic Co., Inc., and Reynolds & Co,
Buffalo

Offering-

Under-,
writers—rGoldman, Sachs & Co. and Piper, Jaffray &
Hopwood.

Sunday, March 31
Alexander Smith & Sons Carpet Co.

March 12

filed

registration statement for 50,000
preferred Stock (par5 $100) and
156,312% shares of common stock (par $20).
Dividend'
rate- on preferred will be: filed by amendment:
For
details see issue of March 14.- Offering—The offering
prices to the public will be filed- by amendment. Under-5
writers—Morgan Stanley: & Co./ Dominick & Dominick/
Harriman Ripley; & Co;,; Inc./4 Goldman/ Sachs & Co.,:
Kidder, Peabody & Co., Lehman? Brothers / and Smith/
Barney & Co.
shares

of

a

cumulative

Scott

Paper Co.

^

filed a> registration statement for 65,000
shares of cumulative preferred stock (no par) and 67,065

on

on

March

14

filed

a

registration statement for 60,000
The shares are being

stockholders, i For/details see issue of
Offering—Priced to the/public will be filed
by amendment.
Underwriters—Hornblower & Weeks

sold

by

two

March 21.'

head the underwriting group.

Qolorado Fuel & Iron Corp.
statement for 275,000
Shares are issued and
are being sold by certain stockholders.
For details see
issue of March 21. Offering—Price to public according to
14 filed a registration
shares of common stock (no par).
on

March

the prospectus is "At the market"—on the New t York
Stock: Exchange or other exchanges on which the stock
is listed. Underwriters—There is no underwriting agree¬
ment;
Stock will be sold from time to time at the

prices then current on the New York Stock Exchange
other stock exchanges/on yridch the stock is listed/

pv

Peninsula Telephone Co.:
a registration statement for 80,000
$1 cumulative preferred stock (par $25) and
26,799 sharesxof common stock (no par). For details
see issue of March 21.
Offering—Holders of outstanding

on

March

14 filed

100,000 shares of $1.40 cumulative preferred class A;
(par ,$25) of record. April 3 are offered the privilege
to exchange 80% of their holdings for the $1 cumulative
preferred, stock on a share for share basis, plus a pay¬
ment by the exchanging stockholder of an amount per
share: to be: filed iby, amendment.The exchange ;privil-;;
ege will: commence April 5 and will expire April 15;.
Tolders pf. common stock will be given the right to
subscribe" to additional common shares on basis of one
additional share

for

The.
FIRST BOSTON
CORPORATION

New York

•

Boston

•




Chicago and other cities

each five

shares

of

common

held

April 3, 1946, at price to be filed by amend¬
Underwriters—Morgan Stanley & Co., Coggeshall

of record
ment.

&

Hicks,jG. H. Walker & Co., White, Weld & Co.
Publicker

Industries, Inc.

Saturday, April 6

March 18 filed

shares
will

registration statement for

a

220,000

preferred stock ($100 par).
Dividend rate
filed by amendment.
For details see issue of

of

be

March 21.

Offering—Company will offer

to holders of

7% preferred, $6 preferred and 5% $50 preferred stock
the right to exchange such stock on the basis of one
share of

new

preferred for each $100 par

value of old

The balance of new pre¬
underwriters, to be

selected

by competitive bidding, for resale to the public. Offer¬
ing price to v the public will be filed by amendment.
Underwriters—Names of underwriters will be filed by
amendment.
..
;
>4

Compania Litgrofica De La Habana
(Havana Lithographing Co.)

S. A.'

'

.

on

March
of

18
6%

a registration statement for
cumulative convertible preferred

filed

19,419
stock

(par $25) and 197,000 shares of common (par 10c).
All of the 19,419 shares of preferred and 162,000 shares
of the 197,000 common are being purchased / by the
underwriters from certain stockholders. ; The remain¬
.

ing 35,000 shares of common are

being purchased from

For details see issue of March 21. Offer¬
ing.—Prices to public will be filed by amendment. Un¬
derwriters—Hirsch & Co., New York, is principal under¬
the company.

5

writer.

Sunday, April 7

..

■

Inc.;
registration statement for 12,000

Allianceware,
on

March 19

filed

a

shares of $2.50 convertible preferred stock (par $50)
and 25,000 shares of common (par $1).
Common shares
are being sold by certain stockholders.
For details see
issue of March 21.
Offering—Prices to the public will
be filed by amendment. Underwriters—Principal under¬
writers are Hayden, Miller & Co., Hawley, Shepard &
Co. and Maynard H. Murch & Co.
V
on

March 19

Flintkote Company

fiied

a

registration statement for

150,009

Address—30 Rocke¬
Business—Various asphalt
and siding products, struc¬
tural and decorative insulating board products, etc. Of¬
fering—Price to public will be filed by amendment.
shares of common stock (no

par).

feller Plaza, New York, N. Y.
and asbestos-cement roofing

for acquisition and
facilities and equipment.
In addition to proceeds from sale of common stock, com¬
pany received $2,775,000 from sale of 25,000 shares o;f
$4 cumulative preferred, sold privately by Lehman
Brothers at $111 per share during current month.
Pro¬
ceeds from sale of preferred stock will be added to work¬
ing capital and used for general corporate purposes.
Underwriters—Lehman Brothers heads underwriting
Proceeds—Proceeds

will

be

used

construction of additional plant

group.

registration statement for 400,000
shares of common stock (par $5). The shares are being
sold by certain stockholders.
For details see issue of
March 21.
Offering—The price to the public will be
on,,March 14 filed

Corporate and Public Financing

on

shares of

March' 12

.

the; underwriting group.

Central Maine Power Co.

shares

Forge Co.

shares of common stock (par $1).

Price to public will be filed by amendment.

on

Inc., heads

,

$50)

11 filed a

by amendment.

March 15

demption on: July 1, 1946.
ferred stock will be sold to

Tuesday, April 2

Lion Oil Co.

shares of

Samson United Corporation
Xfiled a registration statement for 125,000
shares of cumulative convertible preferred stock (par
$8) and 166,666 shares of common stock (par $1).
Divi¬
dend rate on preferred will be filed by amendment.
The 166,666 shares of common which constitute 51.4%
of the outstanding common are being sold by ClarkBabbitt Industries, Inc. /For details see issue of March 21.
Offering—Prices of preferred and common to public will
be filed by amendment.
Underwriters—Burr & Co.,

C

/

on

details

March 11 filed a-registration statement for 100,000
shares-of eapital stock.($l-par)./*For details see issue
of March. 14.
Offeringr/Shares / are to. be offered at
public offering price in effect at the time of sale. The
offering price fluctuates from day; to day in accord¬
ance with the changes in the net asset value,
Under¬
writers—North American
Securities Co.,
San Franeisco, Califlv ?/'''•
March

be
&

preferred plus a cash adjustment. All outstanding shares
of old preferred not exchanged will be called for re¬

on

on

issue

Rights will expire 3 p.m., April 24, 1946.
Price to
by amendment.
Underwriters—Smith, Barney
Co. heads the underwriting group.
(

a

agree¬

t

Commonwealth Investment ~ Co. r

-

amendment. For details see

will be filed by

March

•

Reynolds'

rights.

i

a

21.; Offering—The 316,967 shares of new
preterence stock are being offered to holders of com¬
mon stock on the basis of one share of preference for
each four shares of common held of record April 8.
of

Co.

filed

toward

12,000" shares'. gf^additional common which Mr, Reynolds
iagrees to acquire: through* exercise, of his' subscription

■v'

Co., Inc.

bn March 13 filed- a registration statement for 101,086
shares of' common stock (par $1).
Shares are being

agent, they will offer to persons designated by him
$11 shares, of unsubscribed stock purchased by them*
from':the* company plus; as Mr. .Reynolds' agent, up to

:y

15 filed

March

stock.

American Air Filter

,

49,602 shares of
common - stock"
(no par).
For details see issue, of
March 21; ^Offering-MI!dmpany ^is offering to common
stockholders the right to subscribe for an aggregate of
49,602 shares of additional common stock at $20.50 per
on

registration statement for 250,000
For details see issue of

a

common

14.

Mail Line Ltd.

has filed a: registration statement for

share

Company

Monsanto Chemical
on

W. E. Hutton & Co., and Stein Bros. & Boyce.

Saturday, March 30

•;;

principal under¬

filed

Monday, April 1

preferred; vrtlL be allocated on, a. pro . rata basis, the
exchange carrying ataskadjustment.; A
balance of: new? preferred will be sold to underwriters
and 1 offered
to the
publicr .Underwriters—Lehman
Brothers, Goldman, Sachs & Co. and The First Boston
.

& Co.*

/Offering—Price to public is 50 cents per
share.
Underwriters—;Mark Daniels & ' Co.,, 371Bay
Street, Toronto, Canada, is named imderwriter.
March

shareff 'idriiihe 120,000 shares-of 4% preferred; and ip
the; event of over-subscription the 120,000 shares of new

1

Co. is named

writer.

rate

Verity Porcupine Gold Mines/Ltd.

cumula¬

offering to holders of 140,591 shares of 5Vi%

&

Underwriters—Allen

registration statement for 316,967
shares ox cumulative preierence stock, series A (no par)
convertible into common before June 1, 1956.
Dividend

•

shares of 4% cumulative preferred stock (par $100). For
details see issue of March 14.
Offering—Company is
tive ,preferred atockr the

of March 21.

group is headed by Drexel & Co.* Smith, Barney
and Merrill Lynch, Pierce, Fenner & neane.

.registration statement for

a

on

For details see
Offering—Company is offering to

each 12 shares held at a price to
amendment. ? Unsubscribed common shares
will be offered to public by underwriters at a price to
be filed by amendment.;
Underwriters—Underwriting

/ v

Indianapolis Power & Light Co*

.

Dividend rate

additional share for

unless accelerated

Thursday, March 28

.

j

be filed by

according

f grouped

at the. discretion of the SEC.'

''.;

par),

holders of common stock of record April 1 the right
to subscribe to 67,065 common shares on basis of one

which registration statements will in

on

normal course become effective#

(no

stock

common

Flotations

Security

preferred will be filed by amendment.,

NEW FILINGS
filed

1679

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 44761

Volume 163

Registration Statement No. 2-6237.

a

Form S-l.

Harrisburg Gas Co..
on

March 19 filed

first

a

$2,200,000
Bonds will be

registration statement for

mortgage bonds due

May 1, 1971.

competitive bidding and interest rate
lfiled by amendment.Underwriters-^Group. is headed;
filed by amendment.
Address—14 South Market Street,
by; Merrill, Lynch, Pierce, Fenner & Beane. ;
Harrisburg, Pa.
Business—Public utility. OfferingPrice to public will be filed by amendment.
ProceedsNet proceeds are to be applied to redemption on June 1,
Wednesday, April 3
1946 at 105 of an equal amount of first mortgage 5%
bonds requiring $2,310,000.
Company will use general
Benguet ConsolidatedI Mining Co.
'funds to extent necessary and to pay accrued interest.
on March 15. filed a registration statement for 702,302
Underwriters—To be filed by amendment.
Registra¬
shares of capital stock value (par 1 peso, equivalent in
tion Statement No. 2-6240.
Form S-l. . :
U. S. currency to 50 cents per share). The shares are part
of a total of 852,302 shares purchased by Allen & Co.,
Stromberg-Carlson Company
' , f
offered for sale at

from five
were

sold

stockholders.

Of

privately at the

the 852,302

The

offering

price

will

be

shares, 150,000

cost price to Allen &

Co.

share. Offering—
supplied by amendment-

Purchase price to Allen was $2.10 per

on

filed a registration statement for
convertible preferred stock (par $50).

March 19

shares of

'</»OA\

67,731
Divi-

1680

THE COMMERCIAL & FINANCIAL
CHRONICLE

Calendar
(Continued from page 1679)-.

■r->

I

.

of
sale

at

price to be filed by amendment.; Price to the public
will be filed by amendment. Underwriter—First Boston

Tennessee Gas
March

on

000

first

filed

19

a

mortgage

7

& Transmission

v

In addition to fixed assets of Mt.
Car will also purchase

-

Co.

stock, 350,000 shares are to be purchased by underwriters
'from company, and 134,444" shares are being purchased
from certain stockholders... Address—Commerce Build¬

Busiiiess-r-Operates

a

natural

Underwriters—rKuhn, Loeb

istration Statement No. 2-6242.

sale

received by

from
shares of

•6n March

19

filed

Flour

Mills

.

..>

..."

Tuesday, Avril 9

Bendix

March 21 filed

offering

Home.Appliances/ Inc.

exchanged

hand and anticipated.
It is estimated that the
duction and sales of Bendix Home
on

disputes

supplies

shares of

been

settled

and

:

registration statement for 24,000

shares

preferred stock, 5%% cumulative (par $25).

to

Proceeds—From sale of pre¬

ferred stock, and of $750,000 10-year
promissory note
will be used with
$499,063 other funds to pay in full
$1,789,063 of temporary indebtedness incurred to com¬
plete the purchase of outstanding capital stock of
pred¬
ecessor
Underwriters—First Califoria Co. is named
principal underwriter.
Registration Statement No. 26244.

on

trustee

as

acquired

and

March

shares of

20

filed

Registration Statement No.

Proceeds—To

Company, Inc.

a

company

'

will

be

used

to

increase

filed

net

on

is

Wis.

of

new

common

for

common

stockholders
each

price to be filed by amendment.
shares and preferred stock will

five

Co.

heads

group.
•••'
_

&
on

basis of

shares

of

Registration
..

^

held

Unsubscribed

at

_

•.

filed

common

a

store.

common

-




of

21

v/r •'/,* ,V'\f c'i-Xi1"-;

^

filed

a

% I

M.'i

Inc.

registration statement for

J'

:

a

Kop-;

•

,

100,000'

'

a.

registration, statement for 125,000

cumulative

production of truck trailers.

This

amount

.

will be

applied to programs presently in progress at the fol¬
lowing locations: erection and equipment of a plant at
Ohio, approximately $7,600,000; an addition
to plant arid equipment; in Fort Wayne, Ind., division,
approximately $800,000; and an addition to plant at Ver¬
non, Calif., approximately 500,000.
A program for erec¬
tion and equipment of a new plant at Pomona, Calif., is
under consideration, but no final determination has been
v

.

Following the sale Endicott Company will
balance of 36,879 shares of
Hearn.
Address—74

Palmetex Corporation

>

March

22

filed

'

registration statement for 250,000
shares common stock (par $1).
Address—Pinellas Park,
Florida:
Business—Production of cement board products
and palmetto products, all primarily for use in the build¬
ing industry.
Offering—Price to the public is $3.25 per
share.
Proceeds—Will be applied for purchase of a
plant occupied by company under lease, for a new dryer,
for repayment of notes and royalties and balance for
working capital. Underwriters—Floyd D. Cerf Co., Inc.,
Chicago, is named principal underwriter.
Registration
on

Business—Department

Offering—Price to public will be filed
by amend¬
Underwriters—E. W. Clucas &
Co., and H. M.
Byllesby & Co., Inc., are named
principal underwriters.
Registration Statement No. 2-6248.
Form S-l. "

•/v/Yv Norwalk Tire & Rubber Co.
March 21 filed a
registration statement for $1,444,500
convertible debentures due
April 15, 1956. Interest rate
will be filed by amendment;
on

a

Statement No. 2-6255.

Form S-2.

v

,

.

Business—Automobile, truck' and bus rubber tires and'
Joseph Light & Power Co.
tubes, etc.' Offering—Company is
on March 22 filed a registration statement for $3,750,000
Offering to common
stockholders right to subscribe for
new-debentures at'
first mortgage bonds: due Aprils 1,; 1976."Bonds will be*
rate of one $500
debenture, for every 70 shares of com¬
sold at competitive bidding with successful bidder nam-1
mon stock held' at a
price to be filed by amendment/7 ing interest rate. Address—520 Francis Street/ St. Joseph,;
.

•

? "i

.

filed

St.

-

r1 $/>■;%

Estimates in connection
with this plant" are
placed at $2,900,000, and,: if finally determined upon, it
is possible a portion of net proceeds might be expended
for such purposes.
It is stated that if developments re- in¬
quire funds in excess of net proceeds it may be advisable
to provide additional funds through the sale of stock, H
bank borrowing or other financing, but company has no
present plans for such additional financing.
Underwrit¬
ers—Lehman Brothers and Watling, Lerchen & Co.. head
group.
Registration Statement No. 2-6254. /Form S-l; t.

common

Avenue, New York, N. Y.

of

be

Address—Norwalk, Conm

.

registration statement for
100,000;
(par $1). Address—2500

stock

4

Department Stores,

r/,?;

March 22 filed

made,

ment.

a

Statement; No.: 2-6243j
;/

v

y

stock (par $100).
Dividend rate
by amendment. Address—10940 Harper
Avenue,
Detroit,
Mich.
Business—Manufacturer
of
truck-trailers.
Offering—Price to public will be filed

:

Hearn.

Fifth

one

be

Pressed Steel• Car
Co., Inc.

March 20

shares of

.

March

hold

publicly offered by
underwriters at prices to be filed
by amendment.
Net
proceeds will be available for general
corporate pur¬
poses and will be added to
company's working capital 7
pending specific allocation.
Underwriters—Wisconsin
Form S-l.

^

,

Avon Lake,

stock ($5 par).
Shares are being
by Endicott Co., Inc., a
stockholder, which on Feb.
1, 1946, owned approximately 48% of the
outstanding
stock, including shares to be offered.
Endicott Company
is wholly-owned
by Maurice Levin, chairman of board

Business—In¬
on

;

.r.

shares

for

sold

Offering—Common stock

being offered to

share

,•

shares

registration statement for 7,500
; shares 4%% cumulative preferred stock
(par $100) and
126,164 shares of common stock ($4 par).
Address—500
Oklahoma Avenue,
Milwaukee,
dustrial engine radiators, etc.

on

will

St./
Offering—Prices to

for

Hearn

a

W.

1

Company

Fruehauf Trailer Company

„

,

%

7

*

Business—Sugar.

Wall

head: the group, ..V;
Reg¬

by amendment. Proceeds—From net proceeds approxi¬
mately/ $8,900,000 will be expended for construction/
acquisition of, or additions to, manufacturing facilities

securities

Form S-2.

Perfex Corporation

v.\.H on March 20

Address—99

Corp.

.

uV.

being issued by Cuban
purpose of acquiring
all the outstanding
(except directors' qualifying shares) of the
corporations which constitute the Hershey
sugar mills,
refinery, railroad and other enterprises in Cuba. Under¬
writers—Group is headed by Wertheim & Co., and Ladenburg, Thalmann & Co.
Registration Statement No.
2-6249. VForm S-l. i
■
/
:
:■
Atlantic

working capital in order to permit company to build
up
an
inventory for civilian business, to, carry
receivables,
to purchase new
machinery and equipment, etc.
Un¬
derwriters—Bond & Goodwin,
Inc., heads group.
Reg¬

istration Statement No. 2-6241.

registration statement for 30,000

Atlantic.

Securities

debentures, and to redeem at $21.50 per share 37,500
shares of 5% preferred stock.
Balance of proceeds will
be applied to general corporate purposes.
Underwriters
—Underwriting group is headed by Van Alstyne, Noel &
Co; Registration Statement No. 2-6253. Form S-l.
v

public will be filed by amendment. Proceds—The 30,000
shares of preferred and
175,000 shares of common to be
offered form part of 60,000 shares of
preferred and 275,000 shares of common which are

stock

common

Cuban

Union

of others to be filed by amendment.
Form S-l,

Cincinnati, Ohio.
Business—Chemical manufacturing.
Offering—Price to public is $25 per share.
ProceedsWill be used to redeem at 106% $1,467,000 5% 15-year

part of 40,000 shares of preferred and 137,500
to be issued by
company to the trustee
the consideration for certain assets to be

by

and

names

Drackett

common

of

part

New York, N. Y.

registration statement for 200,000
(par $1).
Company is selling
-,50,000 shares and certain stockholders are
selling 150,000
| shares. Address—61 Sherman Street, Maiden, Mass,
Business—Manufacture of radio receiving and transmit¬
ting apparatus.
Offering—Price to public $6 per share.
-

a

;

March 22 filed a" registration statement for 103,000
shares of14% cumulative convertible preferred stock,
series A (par $25); Address—5020 Spring Grove Avenue#

cumulative'preferred stock (par $100) and

are

shares of

Form S-l.

National

filed

registration statement; for 105,000

on

175,000 shares of common (par $5).
Of the total 20,000
shares of preferred and 137,500 shares of common
are/
to be purchased by underwriters from
company; and'
10,000 shares of preferred and 37,500 shares of common
from Hershey Trust
Co., trustee of Hershey Industrial
School of Hershey, Pa.
Shares to be purchased from

Francisco, Calif. Business
chandlery and com¬
Offering—Price

5%

Weeks

with

available, will total 50,000 per month, or a
sales volume per month of
approximately $4,000,-

March 21

on

&

common

istration Statement No. 2-6256*

pro¬

materials

a

stock (par $1).

Shares are being sold
by certain stockholders. Address—120 Wall Street, New
York, N.: Y.
Business—Refining and distribution of
granulated jcane sugar, production of liquid sugar, sugar
syrups, edible molasses, etc./ Offering—Price to public
will be filed by amendment.
Underwriters—Hornblower

are

have

'

I Wednesday, April 10 •P|||

\

March 22 filed

on

Cuban Atlantic Sugar Co.

Hendry Company

Address—27 Main Street, San

Edison Co. subject 7 to certain
Underwriters—To be filed by amendment.

American Molasses Company

Laundries, when in¬

dustrial

000.
Underwriters—None.
2-6247.
Form S-2.

—General wholesale and retail
ship
mercial. fishing supplies business.
the public $25 per share.

Pennsylvania

stock

common

Monday, April 8

shares of

of

I |

a

for additional working capital to finance
the purchase
of inventories and increase
production to fill orders now

total

C. J.

of thd

'

r

a price to be filed
by amendment.
Issue is not
being underwritten, but holders of common of record
on March
30, 1946, in addition to their pro rata subscription rights, will also be given an opportunity to
purchase any shares which have not been purchased
through subscription warrants. Proceeds—Will be used

t

filed *a

Proceeds—Net proceeds from sale

($5,000,000) to be received by company from sale of 10-year
notes and proceeds
($1,376,860), to be received
from sale of 68,843 shares of common stock to Asso¬

assets

held at

op¬

working capital.
Underwriters
—Group headed by Kidder, Peabody & Co. and Rauscher, Pierce & Co., Inc.
Registration Statement No. 2-

March "20

Amendment.

bonds and preferred stock, together with proceeds

ciated Electric Co. will be applied toward the
payment
to Pennsylvania Edison Co. of
$42,451,400. being pur¬
chase price for acquisition by company of all of the

ness—Manufacture of Bendix Home
Laundry, an auto¬
matic washing machine;
Offering—Company is offering
to common stockholders of record March
30, right to
subscribe to one share of new common for each 10 shares

pre¬

on

Address—-

Levergood Street, Johnstown, Pa.; Business—Public
utility/ c Offering—Prices to public will - be filed by

serial

registration statement for 104,301
(par 33% cents per share.) Ad¬
dress—3300 West Sample Street, South
Bend, Ind. Busi¬
shares of

ferred which will be offered to
public at a price to be
filed by amendment.
Proceeds—Will be used to redeem

S-l.

dividend rates will be filed by amendment/
222

.

Underwriters will purchase any
unexchanged new pre¬
ferred shares plus 13,290 additional shares of new

Form

registration statement for $32,000,000
due May 1, 1976.
Bonds will be
bidding with interest rate to be filed

Registration Statement No. 2-6250. Form S-l.*
>

portunity to exchange such stock for new preferred on a
share for share basis, with an adjustment of dividends.

6239.

Registration Statement "No. 2-6246. Form S-l.

a registration statement for
$23,500,mortgage bonds, due 1976, and 101,000 shares of

liabilities..

Building, Dallas, Texas. Business—Flour
milling, terminal grain elevator operations, feed milling

®

were

cumulative preferred stock, series C, par $100.
Securi¬
ties will be sold at competitive bidding, and interest and

•

Bank

at $103 per share
any shares of old stock not
for new and to increase

■*!"'

6% gold debentures at 110% which, ex-,
interest, will require $45,828,750. Underwriters
be filed by amendment.
Registration Statement
No. 2-6245.1 Form S-l.. -

a

an

000 first

$5,000,000

on

preferred stock

loan

March 21 filed

on

elusive of

Co.

and bag manufacturing.'
Offering—Company is
to holders of 26,710 shares of 7%

bank

Pennsylvania Electric Co.

-

—To

registration statement for 40,000
shares of cumulative preferred stock
(par $100).. Divi¬
dend rate will be filed by amendment.
Address—Mer¬
cantile

a

modernization. \ Proceeds of

derwriter.'

proceeds from sale of bonds, and $11,500,000 bank loans
and cash from general
funds, will be used to redeem
$38,500,000 3%% first mortgage bonds at 104%, and

Corp.;.'53,172 shares;' Mellon Securities/Corp., 53,172;
White, Weld & Co., 18,100, and Central Republic Co.;
Inc., 10,000.
Underwriters—Group is headed by Stone
& Webster; Securities Corp. and
White, - Weld & Co,
Registration Statement No. 2r6238.v Form S-l. *
Tex-O-Kan

<

for

extent of $503,930 to redeem on April
1, 1946
company's 7% cumulative preferred stock and partly
for purchase of buildings from RFC.
Balance of the
proceeds will be added to working -capital. • Underwriter^
—Carl M. Loeb, Rhoades & Co. is named
principal un¬

Address—Kearns Building, Salt Lake 7
City, Utah. ; Business—Pubilc utility.
Offering—Price
to the public will be filed
by amendment. Proceeds—Net

funds of company.- Proceeds from sale of
134,444 shares
iof common will go to selling stockholders.
First Boston

•

used

Reg¬

group.

Form S-l.

purchased by under¬

used to

by amendment.

bonds, preferred stock and 350,000
and from $10,000,000 bank
loan, company will
hpply $36,078,625 to redemption of $34,525,000 first mort¬
gage pipe line bonds 3% series at 104%; $8,100,000 to
redemption of 75,000 shares of 5% cumulative preferred
stock at $108 per share, and
$15,000,000 to repayment of
.2% bank loan.
Remainder -will be -added to general

,Y:r

heads

be

approxi¬
mately $265,000 will be expended for completion of cer¬
unfinished buildings erected by government and
purchased from RFC and approximately $200,000 will be

first mortgage bonds
sold at competitive

common

;

March 20 filed

on

company

of

Co.

will

tain

sup¬

Utah Power & Light Co.

gas

transmission pipe line system, extending from the Stratton-Agua Dulce field in Texas to West Virginia. Offer¬
ing—Prices to public will be filed by amendment. Pro-

| ceeds—Of net proceeds to be

&

debentures

writers who will offer them to the public at a price to
be filed by amendment.
Proceeds—Part of the proceeds
will be applied to the payment of bank
loan;

plies on hand at the take-over date July 1* 1946.
Mt.
Vernon has estimated that such
inventory will approxi¬
mate $600,000.
Payment therefor will be made out of
Pressed Steel Car's general
funds, as will working capi¬
tal for operation of Mt. Vernon
plant after acquisition.

registration statement for $35,000,pipe line bonds due 1966; 100,000

ing, Houston, Texas.

Unsubscribed

Vernon, Pressed Steel

inventory of materials and

shares 4.10% cumulative preferred stock ($100 par) and
484,444 shares of common stock ($5 par). Of the common

"

Business—Manufacture,

-

and

repair of railway freight and passenger cars,
subway and industrial cars, etc. Offering—Price to pub¬
lic will be filed
by amendment.
Proceeds—Will be ap¬
plied on account of purchase price of
physical assets of
Mt. Vernon Car
Manufacturing Co., a wholly-owned
subsidiary of H. K. Porter Co., Inc. Balance of purchase
price will be provided out of general funds of
company.

to new preferred on basis of one share of
preferred
for each,four shares of common held of record April
8,

»

Security Flotations

Building, Pittsburgh,"Pa.

pers

.

dend rate will be filed by amendment.
For details see
issue of March 21. .Offering—Company is
offering to
holders of common stock pro rata rights to subscribe

Corp. is named principal underwriter.

New

Thursday, March 28,19461

:

/

[Volume 163

>.

Number 4476

v

Cardiff Fluorite Mines,

stockholders are selling 17,020 shares of preferred and
' Business—Public
utility.
Offering—Price to the.
public will be filed by < amendment.
Proceeds-^-To be ' <100,000 shares of common. Address—30 Rockefeller
Plaza, New York, N. Y.
Business—Cosmetics and toil¬
used to redeem $3,635,000 first mortgage bonds, 4%%.!
etries.
Offering—Prices 1 to public will be filed by
series due 1947, at 100 and any balance will be added to
amendment.
Proceeds—Of the proceeds to be received
treasury funds for construction purposes.
Accrued in- ;
terest will be paid out of general funds.
Underwriters ,by company from the sale of 20,200 shares of preferred
—To be filed by amendment.
Registration Statements- £stock, $500,000 will be used to make a loan to company's
/ subsidiary, Avon Products, Inc., to apply in reduction
No. 2-6251. Form S-l,
*
*
.
of $1,750,000 2%% bank loan.
Balance of proceeds,
with other funds, will be used to expand and modern¬
United Biscuit,Co. of.America.X
.
ize facilities of company and its subsidiaries.
Under¬
on March 22 filed a registration statement for $10,000,000
writers—Group is headed by Hemphill, Noyes & Co.,
debentures due April - ly 1966. "Interest rate'Will be filed';
IrSy* S. Moseley & Co. and H. F. Boynton & Co., Inc.
by amendment. Address—1041 West Harrison St., Chi- ;
Registration Statement No. 2-6263.
Form A-2.
cago, 111.
Business—Manufacture of varied lines of crack¬
ers, cookies and biscuits.* Offering—Price to the public
Red Top Brewing Company J/f '
]\ t
will be filed by amendment.
Proceeds—Will be applied
on March 26 filed a
registration statement for 150,000
to redemption of $4,270,000 3^% debentures due April
shares of class A common stock (par $1). Shares are be¬
1, 1955, at 103V2 and of 25,000 shares of 5% cumulative
Mo.

1681

FINANCIAL CHRONICLE

THE COMMERCIAL &

registration statement for 250,000
shares of common stock (par $1).
For details see issue
of March 14.
Offering—Price to public is 60 cents a

•

.

funds.

group.

Underwriters—Goldman,

^

v.

Form A-2,

Registration Statement No. 2-6252*

Saturday, April 13

\

'

42 East Avenue, Rochester, N. Y., will handle the issue

y
'

in

filed

of

by amendment. / Pro*
will be applied to re¬
demption of first mortgage 5% sinking fund bonds,
$1,610,650 to redemption of 5% sinking fund debenture
tbonds, and $982,800 to. redemption of the first preferred
stock.
Balance will be added to working capital.
Un¬
derwriters—Blair & Co., Inc., New York, heads group.
Registration Statement No. 2-6257. Form S-1.

determined

$1.20

present below a list of issues whose regis¬
days or more

We

offering

whose

but

ago,

4

or are

not been

have

dates

Clinton Industries,

unknown to us.

,

Inc.

Airlines,

American

■

filed a registration statement for 97,350
shares of common stock (par $5);. For details see issue of
March 7.
Offering—Company is offering to issue 97,350
on

March

4

all stockholders of Mid.Continent Airlines, Inc., in exchange for common stock
of Mid-Continent in/ratio of one share of common stock
of American for each four shares of copimon stock of
Mid-Continent, (par $1).
Underwriting—None named.

registration statement for 148,448
Shares are being sold
by certain stockholders.
Address—1412 North Webster
Street, Kokomo, Ind.
Business—Manufacture of auto¬
mobile * parts,- radio ^receiving sets, vacuum cleaners,
hydraulic lifting devices, etc.
Offering—Price to the
public will be filed by amendment.
Underwriters—
Alison & Co., Detroit, heads group.
Registration State¬
common

a

stock (par $1).

•

on

March 6 filed a

.•

F. H. McGraw & Co.

Products Co.

r,

be

common

stock

registration statement for 478,194
shares of capital stock (no par).
Shares are issued

so

are

Form S-1*

of stock at public sale to the highest
qualified bidder. Bids were to be received at office of
the Custodian, 120 Broadway, New York 5, N. Y., before
11 a.m. (EST) on March 27.
- - $0 ' r
X
/'.va'JT:-'}.-■ .ii'S5J.'-"!*1?;:tiji"','-■ £,&■ '•;/-..
■"■■>.•'
Ampal-Americait Palestine: Trading Corp. //

;•

-

registration statement for 400,000 shares
of 4% cumulative preferred non-voting shares.
For
details see issue of Oct. 11.
Offering—Price to the pub¬

on

on

March 25 filed

a

dend

rate

will

by

amendment.

of the directors and employees

Co., Chicago, is named principal underwriter.
Dallas Title &

on

Feb. 21 filed

of

$100). Divi¬
Address—110

27.

shares
Divi¬

For details see
Underwriters—Blyth & Co., Inc.,

of

issue

March

7.

underwriting group,

capital stock rights to subscribe at $20 per share to new
one share of; new for each share held.
Company reserves right to sell any unsubscribed stock
at public or private sale at $20 per share. .Underwriters
stock at rate of

—None named.

Dallas Yellow Knife Gold Mines, Ltd.

;

t

)4

,,

>,t

,

'

.

statement for 300,000 shares
of capital stock
(par $1).
For details see issue of
Feb. 14.
Offering—Shares are offered at 50 cents per
Feb. 8 filed a registration

on

share

Daniels,
Bay

Underwriter—Mark

speculation.:

a

as

Philadelphia,^,Ta., and 371

Building,

Morris

1840

is named < underwriter, with, commis¬
additional allowance to cover
advertising and traveling expenses.x*

Street, Toronto,

and ;5%

30%

of

sion

District Theatres Corp.
',.Xvr'

'

•.

?>.'•*

v

Xi"

"

m

;•»

26 filed/a registration statement for 140,000
of common stock (pa^ $1).
Shares are- beir^g

Feb.

on

by

For details see issue of
the' public will be filed

Colony Corp.,

Underwriters-^First

amendment.

Simons, Linburri & Co.,

Inc.| Courts & Co./ Johnston,

Irving J. Rice & Co., Ira Haupt & Co.,
and Coburn & Middlebrook.

Lemon* & Co.,

,

Drug
Bassett Furniture

Industries, Inc.

*

-

registration statement for 25,000 shares

sold by certain stockholders.
March 7.
Offering—Price to

Engine Co.

dend rate will be filed by amendment.
heads the

a

,

Guaranty Co.

stock (par $10).
For details see issue pi
Offering—Company has granted holders of

capital

shares

Imperial Diesel

Feb. 28 filed a registration statement for 30,000
of series A cumulative preferred stock ($50 par).

Business—Pub¬
proposes to issue the

utility.
Offering—Company
150,000 shares of new preferred for purpose of refinanc¬
ing at a lower dividend, rate the 148,186 outstanding
shares of old preferred, 5% cumulative, series A.
Ex¬

&

Underwriters—Shares will be

,

on

Indianapolis, Ind.

lic

$5.50 per share.

Atlas

registration statement for 150,000

filed

be

is

a

sold through the.efforts
of the corporation*

Inc.

shares of cumulative preferred stock (par

North Illinois Street,

Oct. 3 filed

lic

V

Public Service Co* of Indiana,

a

the 478,194 shares

Lord and Bear, Stearns

tion Statement No. 2-6260.

filed

and are being sold-by the Alien Prop¬
erty Custodian. For details see issue of Jan, 3. Under¬
writers—The Alien Property Custodian proposes to sell

Underwriters—Granbery, Marache &
& Co. head the group. Registra¬

working capital.

28

and outstanding

that

of class A stock, 75,000 shares of common stock and
simultaneously 36,000 shares of preferred stock and an
additional 250,000 shares of common, are to be authorized.
Out of. proceeds of present financing,".-company Will
apply $383,971 to payment of notes issued to F. H.
McGraw and J.: Metz McGra# in connection with pur¬
chase of their shares of company's former or old com¬
mon stock, r*. Balance of net proceeds will be added to

Dec,

on

outstanding 1,250 shares of
to be reclassified into 100,392 shares

reclassified

Chemical Corp.

American Potash &

(par 10 cents)./Address—780

preferred to public is $25 per share and of
$13.50 per share. Underwriters—Paul H. Davis

of

common

Feb.

Windsor
Street, Hartford, Conn.
Business—Industrial construc¬
tion* Offering—Prices to public will be filed by amend¬
ment.
Proceeds—Financing is in connection with pro¬
posed recapitalization of company. : The capital stock is
to

shares of common (par $5).
The preferred
5,695 shares of common are being offered by com,pany and 39,305 shares of common by certain stock¬
holders.
For details see issue of March 7.
Offering—
Price

registration statement for 150,000

Detroit, heads underwriting group.

*

March 25 filed a registration statement for 36,000
shares of $1.50 preferred stock (no par) and 100,000

^

registration statement for 40,000 shares
4V2% cumulative convertible preferred stock (par $25)
a

and

on

common

^" \f.'

and 45,000
~

;shares of common stock ($2 par). The shares are being
sold by five stockholders.
For details see issue of
March 14.
Offering—Price "to public will be filed by
amendment.
Underwriters—Watling," Lerchen 4 & Co.,

.

shares of

'

Cribben. & Sexton Co.
Feb. 28 filed

on

-

American Metal

*

Form S-1.

ment No. 2-6258.

Inc.

March 5 filed a registration statement for 100,000
shares ol capital stock (par $1).
For details see issue
of March 14.
Offering—Price to public will be fileel
by amendment.
Underwriters—Smith, Barney & Qo.
and Newhard, Cook & Co. head the underwriting grou^.

on

Kingston Products Corporation
March 25 filed

by amendment.
The 100,000 shares
initially being offered by the cor^

are

a price to be filed by amendment.
Undcrwriters—As to the preferred, Childs, Jeffries & Thornr
dike, Inc., and H. C. Wainwright & Co.,. and as to the
common, First Colony Corp.,
:
r
c ;,
' • . ' •

;

shares of its common stock to

shares of

stock

common

poration for subscription to common stockholders at a
price to be filed by amendment, but 50 cents per share
under public offering price, ? • The unsubscribed balance
of common will be offered to the public by under¬

tration statements were filed twenty

Price to the public will be filed
ceeds—Of net proceeds $423,100

on

be filed

price to
of

writers at

DATES

of

41/2%

and 100,000 shares of common (par 10c).
For
details see issue of Feb. 14. " Offering—The preferred
'stock will be offered to-public by underwriters at a

OF OFFERING UNDETERMINED

cumulative preferred stock (par $25),
with common stock purchase warrants attached. Address
—1302 E. Creighton Avenue, Fort Wayne, Ind.
Business
—Manufacture of liquid control devices, etc.
Offering—
shares

Investment Corp.

registration statement for 15,000 shares
cumulative convertible preferred stock (par
a

$50)

Offering—Offering price to public is $10.50 per
V; share. ; Underwriters—Group is headed by Westheimer
& Co., Cruttenden & Co., A. G. Edwards & Sons, Loewi
& Co., Stein Bros/ & Boy ce^ thei Ohio Company and
Piper, Jaffray & Hopwood.
Registration Statement
No. 2-6262. Form S-1.
' -s * .
and ale.

registration statement for 200,000

a

States.

Feb. 8 filed

on

Bowser, Inc.
March 25

United

the

Chain Store

stockholders. Address—1747 Central
Cincinnati, O. Business—Malt beverages, beer

Avenue,

a

/Marshall has subscribed for 100,000 shares at 40 cents
per share to net the treasury $40,000, with the underistanding that he will later purchase on additional 400,000
shares at same price.
Underwriters—Frank P. Hunt,

ing sold by certain
v

will be added to the general
Sachs & Co. heads

The remainder of proceeds

filed

6

share, Canadian funds. Arrangements have been made
with registrant to sell 500,000 shares at 40 cents per
share to net company $200,000.
It is intended, tnat
250,000 of these shares shall be offered in the United
States and 250,000 of same offered in Canada.
F. R.

-

.

preferred stock at $107.50 per share, requiring, exclusive
of accrued interest and dividends, a total of $7,106,950.

March

on

.

on

Ltd.

'

•

-

,

^

y.

%

.

<«

.

r\,*

-

M

on Feb* 26 filed a'registration statement for 30,000 shares
change will be on a share for share basis with cash
adjustment. Any of the 150,000 shares not issued under
of common stock (par $5).
The stock is to be pur¬
exchange offer will be sold for cash to underwriters,
chased from W. M. Bassett, President.
For details see
and proceeds applied with treasury funds to redemption
issue of Feb. 27.
Offering—Price to the public is $30.
of unexchanged old preferred shares.;. The services in | per share.
Underwriters—Scott, Horner & Mason, Inc.,
effecting the exchange offer and sale of unexchanged
Lynchburg, Va., and Kirchofer and Arnold, Inc., Raleigh,
preferred will be at competitive bidding. • Purpose—To
N. C., are the principal .underwriters,.
„
-.
X*
a
i'
t
* - /
'♦1 -A #*v
> ** rvr
V ""V
' 'fa k
j
>
refinance outstanding preferred stock.
Underwriters—
j1'1/ "" ^
'
*.
f
f < ,
'• *•
v- /*
-X
'X
To be supplied by amendment.
Registration Statement
Bendix Helicopter, Inc.'
No. 2-6259. Form S-1.
"
on Feb.
13 filed a registration statement for 507,400
Sonotone Corporation
shares of common stock (par 50c).
Shares are being
sold for the account of the estate of Vincent Bendix,
on March 25 filed a registration statement for 60,000
deceased.
For details see issue of Feb. 20.
Offering—
shares $1.25 cumulative • convertible preferred stock,
Shares will be sold in; the over-the-counter market.
series A (par $20). Address—Elmsford, N. Y.
Business
Underwriters—Kobbe, Gearhart & Co., Inc.,; is named
.—Hearing-aid instruments. Offering—Price to public is
principal underwriter.
$25 per share.
Proceeds—Of proceeds, $250,000 will be

on

25

Feb.

Products Co., Inc.

filed a registration

statement for 225,000

(par $1).
Of total 175,000
shares are
public through underwriters
and 50,000 shares are offered to warrant holders.
For
details see issue of Feb. 27.
Offering—Price to public
on 175,000 shares is $4.50 a share.
Underwriters—Bond
& Goodwin, Inc., *is. named principal underwriter. . & :
of

shares

J'Xf >1v''

1'

common stock
being offered to

iX

,

\

1

•.

X

«^

Xv1"if»

x

*

,-v.

♦i/yXs

c f

1A

4

i

.

-

.

•

used to retire a bank note

and approximately $550,000

E. W. Bliss Co.

reacquire from a bank all of the customers' instal¬
•/on March 7 filed a registration statement for 100,000
ment payment contracts previously sold to the bank.
shares of $2.25/convertible preferred stock (no par).
The balance will be used to augment working capital.
For details see issue of March 14.
Offering—The price
Underwriters—Group is headed by Van Alstyne, Noel
to the public will be filed by amendment. * Underwriters
& Co.
Registration Statement No. 2-6261. Form S-1.

on

March 7 filed a

(F.)
f

Avon Allied Products, Inc.

v
on

Sunday, April 14 \

shares. 'Price to be filed
Company is selling the unsubscribed
stock to underwriters .who will offer it to the public.
Underwriters—Merrill Lynch, Pierce, Fenner & Beane

share for

each four common

by amendment.

heads the

underwriting group.,

pany

v

,

Of the total, com¬

is selling 20,200 shares of preferred and




.

* -

*

.

certain

Feb. 28 filed

*

Electromaster, Inc.

statement for 200,000
For details see issue
the public is $4,375
per share.
Underwriters—S. R. Livingstone & Co. and
Mercier, McDowell & Dolphyn, Detroit.
/X/ //; ,

March 4 filed a registration
shares of common stock (par $1).
of March 7.
Offering—Price to
on

X '

a

Offering—Price to the public will be filed by amendUnderwriters—G. H. Walker & Co., St. Louis,

i ment.

principal underwriter.

•

'

r •'

'

\

f

K

::

a registration statement for 37,220
cumulative preferred stock (par $50) and

100,000 shares of common -(no par)/

,

p

Burkart Manufacturing Co.

registration statement for 10,000 shares
of common stock' (par $1);
Shares' are being-sold' by
certain stockholders.
For details see issue of March 7.
on

March 26' filed

shares of 4%

-

registration statement for 178,364

stock (par $4). For details see issue
of March 14.
Offering—Company is offering the new
stock to holders of its common stock at rate of one new

shares of common

to

—Allen & Co.

Co.

Eaton Manufacturing

on

shares

shares

28159
/

Equipment Finance Corp. V/ ;;

•'",//

1

25'filed a registration statement for 13,877
4% cumulative series 2 preferred (par $100) and

Feb.

;

of common (par $10).
For
(Continued on page 1682)

details see
:■

THE COMMERCIAL & FINANCIAL CHRONICLE

1682

of

Calendar
; ;

proposed

a

(Continued from page 1681)
Offering—Price to public is $100 per

.

New

For details see issue
Offering—Price to the public will be filed

of Feb. 27.

share for preferred

by amendment.

additional shares of

.

For details

Underwriters—Allen & Co., New York.
r.,

.

,

.

■

.

.

...

.

.

-

.

...

:

,

J.an.

on

reserved against warrants.
of Feb. 7.
Offering—Price to the

common

issue

see

public will be filed by amendment.
be supplied by amendment.:
" •"

■

,

Gulf Atlantic Transportation Co.

Underwriters—To
:;

•

National Distillers Products
Corp.

17

registered 270,000 shares of common stock
on Feb. 4 filed a
For details see issue of Jan. 241
Offering—
registration statement for 379,894 shares
of common stock
public will be filed by amendment.
The
(no par).
For details see issue of
securities are being offered initially for a
Offering—Stock is being offered by the comperiod of K Feb. 7.
15 days to present shareholders under
j pany for subscription to the holders of its
preemptive rights
common stock
(par $1).

post-effective amendment.
Under¬
writers—Sale of stock will be made through company's
own officers and employees.
will file

company

Flotations

'

standby agreement.

issue of Feb. 27.

and $10 per share for the common.
Company anticipates that all of the preferred and
common will
be sold to employees and officers of the
company, and employees and officers of Curtiss Candy
and its subsidiaries.
'In the event of a public offering,

Security

Thursday, March 28, 1946

a

Price

-

to

the

•

a price to be filed by amendment.
Holders of ap¬ j of record March 20 pro rata, at the rate of one-sixth
proximately 200,000 shares have agreed to waive their ;i of one share for each share held at $62 per share.
Rights
on
March 4 filed a registration statement for 300,000 | preemptive rights.
The underwriter will receive 50,000 g expire at 3 p.m. April 8. : Unsubscribed shares will be
shares of capital stock.
five-year warrants to purchase common stock at a price
offered to the public by underwriters.
For details see issue of March 7.
Underwriters^
to be • filed i by amendment,
Offering—The price to the public is 50 cents per share.
For these warrants the
Glore, Forgan & Co. and Harriman Ripley & Co.,-Inc. '
Underwriters—Mark Daniels,, 371 Bay Street, Toronto, :
underwriter will pay the company 10 cents each or a
total of $5,000.'
Oklahoma Gas & Electric Co*
Canada, holds an option on 300,000 shares of capital
Underwriters—Principal underwriter is
S :

?; at

Garthack Mining Co., Ltd.

:

.

'

His plan

stock.

optioned

him

by

allow them

of distribution is to

a

-Bv.

withdrawn March 21.

Feb.

on

27

filed

Mines, Ltd.

a

stock

common

offered

; shares of

'

.

ferred. for each share of old preferred. As the
.amount
new preferred will be limited to
675,000

of

statement for 40,000

by the company in Canada to its own share¬
(par $3).
For details see issue of
March 7.
at $5 (Canadian) per share.
Offering-^Shares are being offered to holders
For details see
of common stock at rate of one share of new common
issue of Feb. 27.
Offering—The offering price is $5.10
(Canadian) per share, or the United States equivalent. j for, each Vfa shares held on March 8 At $15 per share.
Toronto Mines Finance Ltd. intends to Offer 44,195 of
Unsubscribed stock will be sold to public by ^underwrit¬
common

holders

shares

such

in

blocks

of

not

less

than

five

shares

to

at

ers

'$15

heads the

shareholders of Frobisher Exploration Co., Ltd., of rec¬
ord Dec. 15, 1945, as resident in the UnitedStates in

share.

per

Manager—Merrill Lynch, Pierce, Fenner & Beane.

group.

Hood Chemical

shares
by them, and to shareholders
of Ventures, Ltd.,sof record Dec. 15, 1945, as resident
in the United States, in the approximate ratio of one
share for every 20 shares of Ventures then owned by

Feb.

on

26

filed

Co.; Inc.

'

registration statement for 205,000
stock (par 33c).
For details see
Offering—Price to public $5 per share.
Underwriters--^underwriters. Company is-undertak¬
ing to distribute its common stock directly to the public.
shares

of

a

,

cofnmon

issue of Feb. 27.

The balance will be offered in Canada and the

United States to such persons as Toronto Mines Finance,

Ltd., may determine, who may include officers and
employees of the company.
Underwriters —Toronto
Mines Finance, Ltd., 25 King Street, West■; Toronto, is
named underwriter.
It is wholly owned and controlled
by its parent company, Ventures, Ltd.
Glore Aircraft
March

filed

statement for 150,000
cumulative convertible preferred stock

shares of 5V2%

For details

Corporation

Corp.

see

issue of March 14.

in consideration therefor

450,000 shares i Of

pany

issued to the Texas

com¬

share

shard basis to holders

for

the shares of

common

of its

common

8

each

which the Texas company has received and the Texas

Adolf
Jan.

10

filed

a

u

For details

common

tails

per

share.

on

on

per

share.

March 7-

Offering—Priee
Underwriters—Straus &
'

-

;

*

G.

LeTourneau, Inc.

B

public
by amendment.
Underwriters—Underincludes Alex. Brown & Sons, Dean
Witter & Co., F. .S.
Moseley & Co., Kebbon, McCormick
& Co. and Shields & Co.

will
*

be

filed

writing

group

City Porcupine Mines, Ltd.
on

Feb.

March

Underwriters—No underwriters named.

Feb. 21 filed

>

28

filed

4%
and

an

for

bentures,
may be

and

issuance

25,000

upon

shares

the
of

common

shares to be
of the

which

de¬

shares

issued to Allen & Co., New York, pursuant to




26

Hampshire

registration statement for 102,006

a

pany's $6 and $5 dividend preferred stock

on a

share for

a registration statement for $23,500,006
mortgage bonds, due March 15, 1976r and 100,000
shares of cumulative "preferred. stock. (par, $100),. Iriterest and dividend rates will be filed by amendment.

filed

a

registration
stock (par $5).

*

'

For details see issue

details

see

issue of March
per

share.

;

^

of Feb.

14.

'Offering—Bonds and

preferred stock will be sold at competitive bidding.' Un-|
■

amendment.';'

statement

for

133,000
shares of common
Of total 102,150 shares
are being sold
by company and 30,850 by certain stock¬
For

Feb, 8 filed

g; derwriters—Names of ^underwriters will be filed by

7.

Offering—
Underwriters-

Angeles, Calif.

conversion
common,

Feb.

holders.

a

indeterminate number of

filed

first

a

common

7.

Price to public will be
$8.25
Lester & Co., Los

;

registration statement for $12,000,000
secured convertible debentures due March
1, 1956, i

reserved

1

shares of preferred stock ($100 par).
Stock is to be offered at competitive bidding; with dividend rale Supplied
by amendment.; For details see issue of March 7.
Offering—Stock will" first be Offered 'to holders Of cOirH

on
.

Mission Appliance Corp.
ton

Graham-Paige Motors Corp.
on

■

a

,

,

registration statement for 250,000
(par 10c).
For details see issue of
Offering—Price to public-is $3 per share.
Underwriters—Bond &" Goodwin, Inc.
•
'
shares of

Offering—Company is offer¬
stock to public at 50 cents U. S. currency
If company accepts offers from dealers to

and $195,000 U. S. currency minimum, if ail shares
sold, and assuming in any event that all the shares
;

filed

I wiirbe^^called6x^ redemptiorf 'at: $107,50- for -the -$6 and
t$105 for'the $5-preferred, plhs accrued dividends. Un¬
derwriters—To be filed by amendment..
\

Linn

Coach & Truck Corp.
(Formerly Oneonta Linn Corp.)

a

mum,

sold.

March

18

Public Service Co. of New

,

are

Feb.

Scranton-Spring Brook Water Co.

purchase the stock, company will sell to such dealers,
if any, at 32.5 cents U. S. currency
per share for resale
at 50 cents U. S. currency per share.
The estimated
proceeds to be raised is $300,000 U. S. currency maxi¬
are

.

.

share basis/with cash adjustment.
March <7 filed a registration statement for
Unexchanged shares
50.000
B bL new preferred are to
shares of $4 cumulative preferred stock
Isold to hnderWrtters for re¬
(no par);
For
details see issue of March 14.
sale to public. All shares of old preferred not exchanged
Offering—Price to

issue of Jan. 10.

see

common

:public, at. $14; her share^ Uh-"
derwriters—^Herrick, Waddell 8c Co., Inci, New Yorlv

on

registration statement for 600,000 shares
stock (par $1) Canadian currency.
For de¬

ing

see issue of

public is $25
Blosser, Chicago;

*

of

Unsubscribed shares r will, be ,sold to

share.

Piper Aircraft Corp.

?

^

Gold

per

underwriters and iold' to

-

R.

syndicate.
Underwriters—No underwriting
discounts and commissions are being paid.
*

Jan. 4 filed

$14.

heads the underwriting group.

a

to

bers in the

on

"

on Feb. 28 filed a
registration statement for 60,000 shares
of $1.20 cumulative convertible
preferred stock ($22.50

for

412,899
shares of common stock (par $1).
Shares are being
sold on behalf of the Adolf
Gobel, Inc., syndicate. For
details see issue of Jan.. 17,; Offering—Common stock
will be sold through regular market channels over the
New York Curb Exchange at best
price obtainable in
small lots so as not to unduly depress the market.
The
proposed stock offering constitutes 63.9% of the com¬
pany's outstanding common stock.
There are 12 mem¬

I at

registration statement for 150,000
issue of March 7.
shares of' cornmon stock (par $1).
Offering—Price to public is $25
For'details see issue
Bbf Feb* 20. i vOffering—Price to the public will be filed
share.
Underwriters—Richard J. Buck & Co.
by amendment. Underwriters—Hayden, Stone & Co. ;
Kerr-McGee Oil Industries, Inc.

par).

statement

^

registration; statement

.

Gobel, Inc.

registration

'

registration statement for 30,000 shares
preferred (no par) and
130,000 shares - of common (par 25c).
Common shares
are reserved for conversion
of preferred.
For details
per

public offering price is $10 per share.
Underwriters—
Kobbe, Gearhart & Co., Inc., and Newburger & Hano.

on

Feb. 27 filed

see

that portion t of I the, offering which iftay not
subscribed for by the common stockholders.
The

be

a

•

Corp.

of $1.25 cumulative convertible

;

them

to

filed

(

Jefferson-Travis Corp.
on

Peerless CasualtytCo8

*

stock in the Delaware company

company will be dissolved.
Company is offering hold¬
ers of common stock all of the
preferred stock on the
basis of one share preferred for each 3 shares of
com¬
mon at $9 per share.
Company has agreed with Kobbe,
Gearhart & Co., Inc., and Newburger & Hano to sell

March

share of new

one

group
& Co. and The First Boston

stock

v.w.,,|lS5C
on

for 50,0d0
shares of common fetock (par $5), For details see
Jdssue^^ of March 14, ^ffering-^ompanyv Is offefjngBtlj#
common for
five
shares
held.
SO.OOOfshares pf commonxto common, stockholders in
UnderwritersKr-Underwritlng
ratio of 5 additional shares for.
is headed by Lehman Brothers, Goldman, Sachs
eaph 11 shares held,

"amendmentat rate of

and agreed to
assume the liabilities of the Texas
company.
Pursuant
to the plan, the Texas company will distribute on a

28

registered 20,000 shares of common stock
($100 par). For details-see issue of Jan. ,3; Offering—; Offering price to public $100 per s^re, Uhderwriting-p:
No underwriting.
B

filed a registration statement for
142,967
shares of common stock (no par).
For details see issue
of March 14.
Offering—Company is offering the stock
to holders of common stock at a
price to be filed by

stock,

common

March

on

Dec,

on

Indianapolis Power & Light Co.

was

purpose

and

Palestine Economic Corp.

Underwriters—Names will be filed

by amendment.

Offering—

organized in Delaware, Feb. 23, 1946,
of acquiring the -assets of Globe. Aircraft
Corp. (Texas).
Pursuant to reorganization plan, com¬
pany acquired all of the assets of the Texas company

for

issue of March 7.

price to be«filed by^^ amehdmenfc^^ Uhiori OUgCo.; of
California, beneficial owner of 212,234 shares (42.45%)

capital stock of. pacific, has agreed to purchase at
subscription price all shares of capital stock offered and
not subscribed* Union OU wjli acquire shares for
inyest^
ment only.
Underwriters—None mentioned.

debentures due 1966.
Securities will be offered
for sale at competitive bidding with
price and interest
rates to be named by the successful bidder. H For details

registration

a

mortgage

Corp.

registration statement: for 150,000
shares of capital stock (par $1.)g For details see issue
of March 7.
Offering—Company offers to stockholders
the right to subscribe for
150,000 shares ohl basis of
three-tenths of one shajre for each share of. stock -held
a.

of

registration statement for $45,000,000
bonds due 1976 and $9,000,000 sinking
a

fund

see

6

(par $10).

first

filed

28

■

Illinois Power Co.

Feb. 27 filed

on

oh' Feb.

But
-

on

Shakes, the

right is limited .to holders ;of old' preferred: Who first
deposit an aggregate of 112,500 shares (76.8%)" of the
old preferred.
The holders of the remaining 33,978
shares (23.2%) of old preferred will be required to
take
the redemptiprf price of theit shares in cash;
Deiler-

Pacific Airmotive

the approximate ratio of one share for every 15

of Frobisher then owned

them.

•

Underwriters—The Wisconsin Co.

underwriting

a

,

on Feb. 21 filed a registration statement for 81,249 comment.
Underwriters—Laird, Bissell & Meeds.
imon shares ($ 1 par, Canadian).
Shares are being of¬
I
fered to residents of. United States and Canada by
Hein-Werner Motor Parts Corp.
Toronto Mines Finance Ltd.
These shares are part of
a
on March
1 filed a registration
recent offering of an aggregate of 525,000 shares.
..

Feb. 7 filed

registration statement on 675,000 shares
of 4% cumulative
preferred stock (par $20). For details
see issue of Feb. 14.
Offering—Company intends to call
for redemption its
outstanding >146,478 shares of, 7%
cumulative, preferred stock (par $100). The oldpreI ferred is redeemable vat $125 pet share
plus dividends.
; Company is granting to such holders the
right to r6ceive the redemption price of their shares of old
pre¬
ferred ' by the delivery of six shares of 4% new
pre¬

registration statement for 215,000
($2 par). Shares are being sold
by certain stockholders. For details see issue of March 7.
Offering—Price to the public will be filed by amend¬
shares of

Giant Yellowknife Gold

-

Hayes Manufacturing Corp.

commission of 25 %

tion Statement

g.

•,

on

American .brokers and
for selling. Registra¬

different

to

Allen & Co.

allot the stock

Morris Plan Corp. of America

;/■

on

Dec.

shares of

26

filed

common

^

,

;

':

a

registration

stock (no par).

.

-

I

-

:

statement for

150,000

Shares are being sold

by H. F. Sinclair.
For details see issue of Jan. 3.
Of¬
fering—Price to the nublic will be based on market]
estimated at $18 per

s

'".

Sinclair Qil Corp.

share.

Underwriters—Kuhn, Loeb

& Co.

on Jan. 29
filed a registration statement for
v..
<
Southwestern Public Service Co.
100,000
shares of preferred stock, series A, with common stock ." oh Feb. 27 filed a
registration statement for two classes
purchase warrants attached (par $1) and 150,000 shares H. of cumulative preferred stock, consisting of
65,000 and
of common (10c par).
Dividend rate on preferred will50,000 shares, respectively.
Dividend rate will be Filed
be filed by amendment.
The statement covers
200,000 : by amendment.: For details see issue of March 7.„ Of-

Volume

Number 4476

163 ;

aggregate of - only 65,000 shares of
classes of preferred stock are to be issued at this
Holders of outstanding 4%% old preferred will be

Underwriting group is headed by Smith,
McDonald & Co. and Shields & Co,

both

fering—An

time.
given

Textron, Inc.

-

statement for 300,000
shares of 5% convertible preferred stock (par $25). For
details see issue of Jan. 3. Offering—Price to public Willi
be filed by amendment.
Underwriting—To be filed by
filed

28

Dec.

on

registration

a

amendment.

*

ber • 1945

than

Currency,

prior to Feb. 1, 1951, 20,000 were issued to stock¬

holders

on

recapitalization and 20,000 are being sold to

underwriters

Underwriters—Willis E.

10

at

cents

be necessary to retain OPA price
controls indefinitely^ Inflationary
the fact that there

Interpretation

residual I

Wason's

$17
billion were accepted*:
would be. no reason for

log

well

as

while

lines

are

large back¬
demands

acr,

in

American Car and

current

as

the

supply

goods

of

drawn on
under any circumstances.
That
depends on people's expectations
as to price developments.
5) Next, Mr. Wason points out
that personal incomes have about

and

volume

will

sellers

increased.

be

There has been

„

the form of currency

mark,

demand

or

deposits are tnore likely to be
spent than those; held in the fo.rm
of time deposits or as investments

««***» tjp-.o

of New York:

i to fear that the .purchasing
of their investments might

value

dwin¬
dle away due to price increases,
securities would be - offered for
sale on a large scale. In protect¬
ing the1 Government security mar¬
ket
the
banking system would
have to stand ready to absorb
and in the process

these securities

they would be transformed into
cash and jdemandCdeposits, which

under

factor
when

a

large part of

tional product Is

use

to what extent tHey
have been thus used to date, but

not yet

available

purchasers and pro¬
adjusted to de¬
Thus, liquid assets held by
businesses and individuals were

duction is not yet
mand.

penditure!

_

had

which

national product in
for .the end of 1945 the same

60% of gross

1941;

reached 30%

in

quarter of 1945 are now
less than 20 % and may decline
still further in the course of the
This tendency should not
be accelerated by raising expecta¬
tions that those; who do not buy
now
will have" to pay higher
year.

i

alone, the increase is from 30 to
Taking the $43 billion of
48%. Taking U. S. security hold¬
currency
and demand deposits
prices later on. Such a develop¬
held fcy individuals*Was&n ings, the- increase is froni 12 to
ment i wouldbeeinvited
by a
50% *4 These are large increases
argues that- thefamount; held in
weakening of .OPA controls.
and should not be dismissed as
1939, or $11 billion, should be de¬
Mr.. Wason is correct in point¬
merely |he result of. higher levels
ducted and'only the increase of
ing out that the use of liquid as¬
of income arid production.
...
sets for purchases does not of it¬
$32 billion be considered.
Som-a
.

LIQUID ASSET

HOLDINGS AND: GROSS

*

On Billion Dollars)

„

.

NATIONAL PRODUCT,';/

self

reduce

Demand
r..y c'-

7;

■i-.'

'V.Ayi

^

r;V'"■'

Calendar

159.7

jgnp
:

29.6

41.1

26.5 V- i 22.7

61.6

12.0

69.S

9.1

52.9

28.9

For

:.

V7.1 ;:V

'28.6

22.1

:

>17.5 7

-

16.6.

13.8

31.

further details

1

30.7

Sec.

49.3

n.o

7

:

15.8

23.3

t

:

J1.0

22.5

v

29.8

27.5

^

30.0

44.8

16 4

61.T

22.2

28.8

10.1

0 24.8

23.5

26.6 %

74.8

28.1

12.4

savings banks and Insurance com¬

V;; V- ;
and liquid asset figures
.

end of year

,

Federal Reserve Bulletin for February, 1946, p. 122.




,

lo.O

17.5

27.1

,

-

see

Govt.

92.1

10.0

of June 30. Commercial banks,
excluded.
^
:v;. y:
is tentatively estimated annual rate for

for Dec.

3^

59.6

; 13.2

27.1
26.7

■

De¬

26.5

V-48.0

69.7

tHoldings as

panies are
are

57.6

43.7

'
■

7 70.7
•

89.7 V

--T*A

v

:

posits

and

123.8

U.S.;

Time

i

Curr.

Total

Sec.

66.9

?5.0

;733.9

60.7

posits

U. 8.
Govt.

■

:

48.2

.

i

f .0

99A

1929.

87.4

67.6

V f.4

1<»32-

v

Do-

74.2

•:

■i. 97.1

V-

posits

67.8

90.3

151.5 '
120.5

,

130.9

187.8

1940.

and
Curr.

225.3

1S8.7

1941.

posits
.

182.0

Time

;:<•
4

New

unlisted firm. Box M 21,
Commercial
'\V

'

'

'v

,-i?

&

•'-

*'*

<V ? * >

;

•'

has this
regular quarterly dividend of 50c per share

clay declared the
1

the outstanding

on

i

capital stock

payable May i,
1946, to stockholders of record
at the close of business April 15,
1946. Books will not be closed.

of the Corporation

#v

Chronicle, 25 Park Place.
New York

'* 1 V-v.

r-

Th« Board of Directors

Financial

-OVu

of N.Ym Inc.

SUNDRIES V.
Conshohockcn, Pa.1.'

TIRES, TUBES &

8,N.X

total

volume
or

A. S.

TRAINEE

of

Securities

Christian

Educated; prefer Sales;
Underwriting Clerical; Personality Indus-

Veteran,

'

trious.

321, "Commercial
Chronicle," 25 Park Place,

Box

B

-

& Financial
New York 8

A

quarterly dividend of twenty-five cents (25c)
.share on all the outstanding stock of the

r>°r

Company has been declared payable April 15,
1946 to stockholders of record at the close of
business April 6,
1946.
v.; ;:;.;
M. SCHILLER, Treasurer.

Universal Pictures

TRADER-ANALYST

Company, Inc.

Analyst, Co rrespondent.
TRADER EXPERIENCED unlisted indus>

Security

trials,
Local
Box

new
or

A

issues, have clients situations.

Foreign

"Commercial & Financial
25 Park Place, New York 8

322,

Chronicle,"

DIVIDEND

draw

commercial banks to nonbank in¬
vestors.

Mr.

Wason

is

therefore

It

does

not

follow, however,
that because large liquid assets
will continue to exist, it will also

declared
share
stock of
the Company, payable April 30,1946
to stockholders of record at the close

The Board of Directors has
a

DIVIDEND NOTICES

quarterly dividend of 50c per

on

the outstanding common

of business

UNITED

STATES

on

April 15, 1946.

.

-

SMELTING

COMPANY
declared a quarterly

REFINING AMD MINING
The

Directors

dividend of

have

1H %

(8TV* cents per

the Preferred

St0Ck*
FRANCIS
March 20,

1946

—:

UNITED

share)

Capital Stock payable on
April 15, 1946 to stockholders of record
at the close of business
March 29, 1946.
No dividend was declared on the Common
on

right in emphasizing the need for
a balanced budget and contending
that liquid assets cannot be ab¬
sorbed by increased production.

COMPANY

Dividend No. 164

21;

busi¬

on their liquid assets
purchases, the result is
merely a shift of funds from the
buyer to the seller. The volume
of liquid assets can be reduced
only to the extent that Govern¬
ment debt is paid off out of tax
receipts or securities are sold by

THE SUPERHEATER

Insurance $30-5.

or

POUCHOT

Treasurer

March 27,1946

to'finance

De¬

De¬

Total

GNP

Year—

■

of GNP

Demand

,j\V',

the

such assets. If individuals

*

nesses
As Percentage

—Individuals and Businesses—

with

PRODUCTS

Youngstown, Ohio

Zjfc/

York Stock Exchange or

the

second

(4)

I

REPUBLIC, RUBBER
INDUSTRIAL RUBBER

experience. Seeks

connection

i§ a fact that there has been a
sharp reduction in the rate of
saving. '■ Personal savings as a
percentage of disposable income

available for ex¬ percentage is estimated at 124%.
Taking
demand and currency

would then be

& TIRE
CORPORATION

it

civilian

to

say

j. Hardy, Chairman
C. Wick, Secretary

LEE RUBBER

r

j

cult. to

Company

March 21, 1946

LEE TIRE* RUBBER CO.

20 years

'*■

of liqqid assets but by their
to bid up prices. It is diffi ¬

ence

the gross na¬

Checks

-

-,

Howard

TRADER

caused not by the .exist¬

tion is

\

-

' Charles

v

When

ihs* liouid assets may

be made for
well be helpful in maintaining
expansion ihkthe
adequate ui^wand and> high em¬
in U. S. Government securities, level of output and income. Some
ployment. In the present situa¬
this difference is one of degree increase in the level of liquid as¬
tion,
if expended
prematurely,
: only;
Certainly, it is not justifi¬ set holdings is to be expected.
they would have disastrous infla¬
able to exclude altogether the $86 However, the sharp increase in
tionary consequences.
billion of time deposits and U. S. liquid, assets relative to the level
It is true, of course, that infla*
security holdings by individuals* of national income that hats ocr

exceeds* a
for,,; this
present conditions,

'

will not be closed.

books

„

the simultaneous

curred (see table) iar
reasonable
allowance

this Company,

mailed by Guaranty Trust

will be

this

J ikely effect later on
when the economy has returned
to a more normal situation, - At

lowance can properly

Should investors be given reason

*

1946.
Transfer

ahd their

J

IWhen considering the increased
volume of liauid assets, some al¬

held in

arguing that liquid assets

preferred capital stock of

payable April's, 1946 to the holders of record
close of business April 1,

of said stock at the

happens, price controls can
hold¬
trust funds pected to carry approximately vanced. '
be removed safely even though
twice the amount of their prewar
as all time
; Because of the ' abnormality of
liquid asset holdings remain large.
holdings of liquid assets, eductdeposits ($45 billion) and tJ, S.
ing another $15 billion on these the present situation, a sharp dis¬
security holdings ($41 billion) of
tinction must be drawn between
SITUATION WANTED
individuals. Thus, he reduces the grounds, he arrives at a total of
about
$17 billion.
Again, Mr. the economic significance of these
total from
$145 to $43 billion.
Wason
much
overshoots
the liquid assets in the current setting
While there is justification fov

ings of all types by
($16 billion) as well

,

the

sufficient

in

take time.
Once goods become
liquid asset figures in itself
it is; available in ample supply to sat¬
related to the abnormal economic; isfy current demand and the most
situation with which we are con¬
urgent backlog demand has been
fronted at this time when, as a i
met, the excessive pressures from
result of the war, demand is fair
in. excess of supply* It is obvious buyers will be reduced and at the
that
in
urban
and farm real same
time
competition
among

people may^ hence

that

N. Y,

New York 8,

'

and

declared, out of the earnings
of the fiscal year now current, a dividend of
one and three-quarters per cent (154%)
on

distribution

concludes estate, in security markets and in
other areas; not subject to price
be ex¬
controls, prices have sharply ad¬

doubled since 1939 and

by individ¬

Church Street-

30
"

production

Foundry

Company

does not mean much unless

be

cannot

;

and

of the

Yet, it

entire v amount?

holdings

inadequate

is

because

months

,

DIVIDEND NOTICES

1

that, therefore,
of prewar

follow

»

at this time result from

pressures

customed tor some time,.
not

Under¬

warrant share.

per

writers—Van Alsyne, Noel & Co.

cannot become adequate in a few

the

For details see issue

40,000 warrants to purchase common stock at $8.25 per

share

complacency. It is still twice the
corresponding
1939
figure and
sufficient, if expended rapidly, to
touch off inflation.
An analysis

does

statement for 100,000
$1). . Company is also

7.| Offering—Price to public is $8.25 per share.

many

he excludes

uals—that .is,

(par

exercise of warrants.

upon

there

approaches $275. billion,

other

ance

of

may be expected to draw
readily upon recent addi¬
tions to their liquid assets than to
reduce
their holdings below a
level to which they have been ac¬

companies) for Decem¬

demand deposits held

stock

nesses

(3) In reducing the $145 billion
of personal holdings to $17 billion, Mr, Wason first excludes &U
items

Mr.

registration

a

common

more

disbursed. Also, it ex¬
cludes holdings of liquid assets by
non-profit associations, State and.
local
governments and certain
other groups.
A more inclusive
figure (still excluding holdings
by Government trust funds, com¬
mercial banks, savings banks, and
insurance

if

of

of Feb.

Inflation

Even

filed

29

registering 40,000 shares of common reserved for issu¬

York.

Mr. Wason's

adjustment Of this kind is not un¬
reasonable. Individuals and busi¬

is

ance

Burnside & Co., New

Underwriters—

share, United States funds.
Ltd., Toronto, Canada.

per

shares

k

States funds.

cents; United

a

Young Radiator Co.

Of

28

filed

13

Jan.

on

June. 24 filed a registration statement for 220,000
shares of capital stock, par $1 (Canadian). • For details
see issue of Aug. 2.
Offering—Offering price, to public

NAN Views on

'

cents

on

0

(Continued from page 1632) -■
accounts when the Treasury bal¬
'

Feb.

J. J. Carrick,

Virginia Red Lake Mines, Ltd.

March* 8 filed

Contests

»

;:-v.'

Thompson Products, Inc.
a registrationstatement for 40,000
shares 4% cumulative preferred stock ($100 par) and
75,000. shares' of common stock (no par).
For details
see- issue of March. 14.
Of fering—The offering prices,
to public will be filed by amendment.
Underwriters?;

cm

registration statement for 1,000,000
shares of common stock, par $1.
For details see issue
of Feb. 20.
Offering—Offering price to public is 30

Jan. 29 filed a

•

Mines,'Ltd.

Yank Yellowknife Gold

registration statement for 92,344 shares
of common stock, par $1.
For details see issue of Feb. 7.
Offering—Company has granted to holders of common
stock rights to subscribe for not exceeding 92,344 shares
of common at $11 per' share at rate of one new share for
each V-k shares held.; Unsubscribed shares will be pur¬
chased by underwriters and offered to the public at a
price to be1 filed by amendment.
Underwriters—White
Weld & Co. named principal underwriter.

ing of one $1,000 debenture and 30 shares of common
stock, at $1,050 per unit.: Underwriters—Sills, Minton &
Co., Inc.
'
1
•
'
, „
*
v

preferred is $25 per share. Offering price of common
will be filed by amendment.
Underwriters—The under¬
writing group is headed by Hemphill, Noyes & Co.

on

offered in units, consist¬

bentures and common stock are

a

($1 par).
Of the total shares covered, 13,266 preferred
20,000 common are being sold by a stockholder.
details see issue of March 14.
Offering—Price of

after the effective date of registra¬

United States Radiator Corp.

filed

8

and

stockholders at $15.50 per share. Shares
not purchased by th s stockholders will be offered by
underwriter at $15.50 per share.
Underwriters—P. W.
Brooks & Co., Inc., New York.,
1

on

March

For

will offer the 42,000 shares for a

period of two weeks

31, 1860, and 22,500 shares of common stock (par
For details see issue of March 7;' Offering—De¬

;'3

j

•

Offering—Company

F$b. 27 filed a registration statement for $750,000
4%% 15-year convertible subordinated debentures, due
Dec.

.*•

tion for sale to

on

$1).

;

registration statement for 42,000 shares
capital stock, (no par).
For details see issue of Feb. 7.
Feb. 4 filed a

on

Factors' Corp.

Standard

,

registration statement for 60,000
shares 5% cumulative preferred stock ($25 par) with
non-detachable warrants, and 120,000 shares of common
on •

Union Wire Rope Corp.

'

•

old preferred for the
new
preferred on a share for share basis,: with cash
adjustment.
All shares of old preferred not exchanged
will be redeemed.
Unexchanged new shares will be
offered by the underwriters at price to be filed by
amendment.
Underwriters—Dillon, Read & Co. Inc.

Brothers

Wilson

Barney & Co.,

to exchange the

the opportunity

1683

COMMERCIAL & FINANCIAL CHRONICLE

THE

vv

FISKE,

Treasurer.

GAS

Common

CORPORATION

Stock Dividend

of the .Board ot Directors of
Corporation held March 27, 1946,
a dividend of
twenty cents (20c) per share on
the Common Stock of the corporation was de¬
clared
for pavment Aoril 30,
1946, to stock¬
holders of reoord at the close of business on
April 10, 1946.
The directors have not estab¬
lished a fixed annual dividend rate on such
At

a

United

meeting

Gas

Common

i.-'jiS."

Stock.

J.

H. MIRACLE,

Secretary.

;

THE COMMERCIAL & FINANCIAL CHRONICLE

1684

(Special

LOS

to

The Financial

ANGELES,

Chronicle)

Thursday, March 28,1946

index

CALIF—Lee

11

E. Barnes

has been added to the

*i

staff of Wttherspoon & Company,
Inc., 215 West Seventh Street.
;

NSTA

Bookshelf

(Special

to The Financial

(Special to

Chronicle)

Financial

The

Chronicle)

Chronicle)

Canadian

••

Spring

South

510

•/.

,'

•

1

„

Co., 634 South Spring Street.

MICH.—Russell

has become

to

affiliated

a

the

previously with the War De~
partment.
'
"

v

of Buckley

Brothers,

(Special to

The

Financial

LOS

chronicle)

(Special

to The Financial

'•

Chronicle) v

CALIF.—Roy

ANGELES,

■

F. Holcomb has become affiliated
with Edgerton, Wykoff- & Co., 621

South Spring Street.

RAPIDS, Mich.—John
D. MacNaughton, Jr., has become
associated
with
MacNaughton-

Scophony, Ltd. :
1638
•:

Funds

.i.........1646
and

Oakland; calif.—John w.

Reporter

Governments..... .1650

Hann

is

connected

with

Mason

Brothers, Central Bank Building.

Notes.........1662

J Says

N

"B"

Securities,..................1644

Real Estate ^Securities

oakland, calif. — Richard
T. Hamilton has rejoined the staff
of Stephenson, Leydecker & Co.,
1404 Franklin Street..--^

^f|?Cinema

Utility Securities,.*.....,,,.1636

Railroad

Salesman's

Tomorrow's

Chronicle)

on

U. S. Finishing

Lowenstein, (M.)
^^■;-v.jMexican Corp^t?|^§

Reporter's Report..............1675

Public

Securities

was

-

Literature.

Our

Chronicle) *

(Special to The Financial

Mr. Thomas

Building.

staff

and

Recom¬

Out

(Special to The.Financial

■.

added

been

Mutual

•

•

530 West Sixth Street.

with C. G. McDonald & Company,

Guardian

Hotchkiss has

mendations

Gaumont-British "A"

.....1648

Investment

,

ANGELES, CALIF.—How¬

ard D.

A.

Dealer-Broker

^

Security Flotations.1679

Municipal News

'

(Special■<to The- Financial Chronicle)

LOS

to The Financial Chronicle)

DETROIT,

Thomson

.

LOS ANGELES, CALIF.—L. G.
Halverson is with Dean Witter &

■

s':':

(Speclal
'

Co.,

&

Street.-

Navy^v;

■

..

shears

Building, after serving in the U. S.
.

LOS ANGELES, CALIF.—Rus¬
sell J. Hendrickson is with G. Bra-

.

Rhodesian Selection

,....1672

Securities

1

DAVENPORT, IOWA—John M.
Beyer has rejoined the staff of
Quail &
Co., Davenport Bank

England Public Service

Logansport Distillery

1639

Man's

Calendar of New

(Special to The Financial

1642

Notes

Business

New

Page

\

Bank and Insurance Stocks

..,..,,.,.1640
Corner

M.S.Wien&Co.

1652

Markets—Walter Whyte

ESTABLISHED 1919
Members N. Y. Security Dealers Ass'n

1636

.....

40

Ohio Securities Section

on

Excbangre PI., N. Y.

page

Teletroe

N.

HA. 2-8780

S

Y.

1.1397

1641.

GRAND

Greenawalt & Co., Michigan Trust

He was formerly in the

Building.

U. S, Army. :.', r.\

:;

(Special

'

.

LOS

1 j.

to The Financial Chronicle)

W. Schlutsmeyer is with Maxwell,

Marshall &

.

(

C.

row

Moyer

with

is

Merrill

Lynch, Pierce, Fenner & Beane,
Circle Tower.
'

(Special to The Financial Chronicle)

•mDIANAPOLIS,

.

y

(Special to The Financial Chronicle)

.

Amalgamated Sugar

Int'l Resist. 6% Pfd. & Com.
Ironrite lfoher.Com, & Pfd.

Baltimore Porcelain Steel

c.fc

(Special to Tas Financial Chronicls)

Kropp Forge

Bendix

ANGELES,

CALIF,—Ted
C.
WiUsoit
is. connected with
Mitchum, Tully & Co., 650 South
Spring Street.
.

|

LOS

IND.—Lewis

B. Shultz is with Ferd A. Meyer,

L.

gene

8 East. Market Street.

ANGELES,

Kahn

Gackle

CALIF.—Eu¬

and

Edwin

with Slay ton; &

are

C.

Worcester Trans. Assoc.

Monolith Portland Midwest Pfd,

Keyes. Fibre

..

Lear Inc.

Appliances

_

Sprague Electric

Buckeye Incnbator

Majestic Radio & Television
O'SulIivan' Rubber

Da Mont Laboratories

RALPH F. CARR & CO.

Sheraton Corporation

3

Globe Aircraft

Telecom

Com¬

Greater N. Y. Industries

i

pany, Inc.

Bendix Home

United Elastic Corp.
r

y

-

Clyde Porcelain Steel

i■

(Special to The Financial Chronicle)

.

Helicopter

"

■■XxMSx Lithomat Corp.

Kut-Kwick Tool

.

LOS

Princess Shops

in

Artkraft Mfg. Com. & Pfd.

Co., 647 South Spring

Street.

INDIANAPOLIS, IND.—Wood-

Trading Markets

ANGELES, CALIF.—Max

f

Milk Street, Boston 9, Mass.

" 31

Boston

Corporation

Now York

Hubbard €442

Teletype

••

Hanover 2-7913 ;r- BS 328

Wilcox-Gay Corporation

(Special to The Financial Chronicle)

(Special to The Financial Chronicle)

'INDIANAPOLIS, IND.—Will J.
Goodwin

staff of

added

been

has

Slay ton & Co., Inc., Circle
%

Tower,

ker is

A. Burton has been added to

the

staff

Ill

North

Slay ton &

Fourth

Co., Inc.,

Street,

St.

Louis,

Mo

Insurance

(Special .to The Financial

NEW
len

He

yM::-0yyyyiNcoRrwnATBo' X
Membert

are

Neto

nassau

ORLEANS, LA.—Dorothy

:■X

Dealert

new

1^: Investment Trust

TELEPHONE

PHILADELPHIA TELEPHONE

REctor 2-3600

YORK

Enterprise 60X5

Public

5

new

1-576

York

HAnover 2-0050

Sgff

Securities with

a

New Eng. Market

Frederick C. Adams & Co.
The

Financial

Chronicle)

-■

A Market Place

Hamilton is with Southeastern Se¬
curities

Issues

Utility Stocks and Bonds

TEXTILE SECURITIES

BELL TELETYPE

;

Corp.,

.

304

West

,

Teletype—N. Y. 1-971
For Banks & Brokers Only

Huron Holding

Kinney Coastal Oil

J

Lava Cap Gold

Copper Canyon Mining

Ley (Fred T.) & Co.

Dri-Steam Products

Realization

Martex

^

Metalastic Mfg.

|p

Differential Wheel

■

'

Oklahoma, Interstate Mining

.

Haile Mines

South Shore Oil & Dev.

Happiness Candy

PAUL MARKS 4 P.O. tea

Harlow Aircraft

SPECIALISTS

50 Broad Street

,

<K'

v

^

Bost
Buda

Camden Forge

Southwest Gas Producing

.

*

Devoe & Reynolds "B"

Swift Business Machine

Hoosier Air Freight

FOREIGN SECURITIES

.

Red Bank Oil

Reiter Foster Oil

v.(

Petroleum Conversion <■';
Rademaker Chemical

Globe Oil & Gas

:

Trading markets in

'1

v;; yy."'

«

»■

Electric Steam Sterilizing
Federal Asphalt
Gaspe Gil Ventures

"Old Shares99

Tele. BOston 21

Jardine Mining

Cosmocolor II

Upressit Metal Cap

Maine Central Common

New York City

Maine Central Preferred

Morris Stein & Co.

Mar-Tex Realization

Established 1924

so

Broad st;, n. y. a

hanover 2-4341

Pollack Mfg.

teletype—n. y. 1-2866

NEW ENGLAND

Pressurelube

T E X TIIES
&*•'''*U

New

t

Jc. •

V'A)$■•£<; 1'ry.rtv»»\.

".'•/

Av'vt Jau

/

;

Simplex Paper

jU'

England Local Securities

Tybor Stores

Specializing in Unlisted Securities
iv^:Vvii'

WALTER J. CONNOLLY & CO.
j.Hi;
W

^

BANK

INCORPORATED 1923

—

INSURANCE

/iyj.v'v'

»'i

i :Vij>

•rf. »■*: -r-

148

24 FEDERAL

STREET, BOSTON 10, MASS.

Telephone Hubbard 3790

H

^

\

Bell System Teletype BS-128

PUBLIC UTILITY

INDUSTRIAL

—

—

REAL ESTATE

,TaL

State

St., Boston 9, Mass.

CAP* 0425

:

I

Teletype BS 259

\^n^y^teleph^

LUMBER & TIMBER
"
-

BONDS, PREFERRED AND COMMON STOCKS

San-Nap-Pak

Sunshine Consolidated

Active Trading Markets In

•&>

»

-■

BOUGHT

Pressurelube, Inc.
U. S.

DOYLE MFG. CO.

Radiator, Pfd, 1

Reiter-Foster Oilr

I

Preferred & Common

••k'v

./

t:;

—

SOLD

' ■*' '"•'•vv'

4

—

.

;

v'/;Vr>*v.v

3

QUOTED
"

*v

v

'*

'■

i"'f-*'v.*

'* .t,

Susquehanna
Mills

■'

REHER, MITCHELL S RETTZEL, INC.
208 So. La Salle

St., Chicago 4

Empire XX/A
1

RANdolph 3736

w. t. bonn & co.
120

Broadway

New York-5

Telephone COrtlandt 7-0744
Bell

Teletype NY 1-886




WESTERN UNION

Amos Treat & Co.
40 Wall St.

BO 9-4613

New

York S, N. Y.

Tele. NY 1-1448

TELEPRINTER

"WUX"

BELL

Steel Corp.

SYSTEM TELETYPE
CQ-989

,

Hill, Thompson & Co., Inc.
Markets

120

^

Established In 1922

•

Tel. HANcock 8715

Admiralty Alaska Gold

Duquesne Nat. Gas

REORGANIZATION RAILS

Specialists in

England Unlisted Securities

24 FEDERAL STREET, BOSTON 10

Low Priced Unlisted Securities

Adams
;

Hew

for;;

Automatic Signal
Bendix Helicopter

Trading Markets

Industrial Issues

■: -:

Association

with Weil & Co., Richards

Street, Jacksonville, Fla..

;

Security

street,

Chronicle)

ORLANDO, FLA.—Mrs. Ada M.

LAKELAND, FLA.—Walter M.
Ruby is with Cohu & Torrey, Polk

York

Insurance and Bank Stocks

Building.

Chronicls)

•'v

Theatre Building.

Groover,

Building.

R. Henderson and J. Thomas Wha-

(Special to
;

W* specializes in all

Kobbe, Gearhart & Company

formerly in the U. S. Army.

(Special to The Financial

KANSAS CITY, MO.—Bernard
of

and

45

(Speclal td the financial Chronicle)
,

with Brown

Bankers
was

f

-

MACON, GA.—Lowell II. Bar¬

the

to

> •

and

Situations

for

Dealers

Broadway, New York

Tel. REctor 2-2020

5

Tele. NY t-266Q